Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

A Comparitive Study Of The Iran Cosmetic Industry

Paper Type: Free Essay Subject: Marketing
Wordcount: 4060 words Published: 28th Apr 2017

Reference this

This study performed to clearly understanding the structure of the cosmetic industry in Iran and the UK. This will involve the full scale from out sourcing or production to distribution and marketing. For the purpose of the study we will look at the makeup and perfume segment of the cosmetic industry. To get to the bottom of the story a qualitative research is required to fully comprehend the differences in the performances.

To look at available opportunities in Iran and finding out the gaps in the market when penetrating the Iranian market and understanding Iranian potential opportunities and threats.

Background on Cosmetic Industry

Tracing back to the ancient eras of Egyptians, Greeks and Romans cosmetics is used daily by most women all around the world. (Kumar. S 2005). Media’s pressure to look and create good first impressions has increased the popularity of the cosmetic industry. According to market research, four out of five women wear makeup and use skin treatment products (marketresearch.com 2005). Women use cosmetics to improve their physical attractiveness as they express a more positive body image and self-image when wearing makeup (Guthrie. M, Kim. M, Jung. J 2006).

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

The growing demand has contributed to the global cosmetics industries net annual sales of $20 billion (Kaye.L, 2010). Cosmetic industry has been increasingly moving towards globalization in the latest centuries. This has resulted in the industry leaders focusing their product lines and marketing at the ethnic niche market in USA, primarily targeting the specific makeup and skin care needs of Asian, African-American, and Latino consumers. This segment reported sales of $210 million in 1997, and this market is expected to continue its rapid growth (Kumar. S. 2005). New markets started to develop in Latin America, Eastern Europe, Pacific Rim, Russia, and the Asia Pacific increasing the demand of cosmetics. In the early 1990s, USA was the largest national cosmetic market in the world and 55% of the nation’s imports were received from France (The Gale Group 2010). The US cosmetics and toiletries industry made $33.5 billion in 2005, at the manufacturers’ level, a 4.1% increase from the 2004 sales of $32.2 billion In the USA, ten companies make up 63% of the total cosmetics and toiletries sales. Proctor and Gamble owners of CoverGirl holds 18% of the US market share, while Estee Lauder owners of MAC and Clinique contains 7.5% of the US market share. (Kline and Company, 2005, 2006). The new data available in Cosmetics & Toiletries USA 2008 indicates that sales have reached a total of $35.6 billion at the manufacturers’ level (Beauty Package 2009).

French cosmetics have a long-established companies and brands. According to Kumar in 2005 France is still the biggest European market for cosmetic sales with the highest proportion of premium product value sales in Western Europe. Estimating the cosmetics and toiletries industry in France at $20.1 billion in sales and dividing it into the following categories, Beauty products 37.1%, Hair products 23.3%, Perfumes 19.8%, Toiletries 19.3%, other 0.5%. Euromonitor International in 2009 suggested that L’Oreal SA remains the global leader in color cosmetics with (19.9%) market share in 2009 a Estee Lauder Company (8.5%), Avon Products Inc (6.6%), Proctor and Gamble Co round out the top five global cosmetics market.

Statement of the Problem and issues facing cosmetic industry

The European society is changing shape and form making cosmetic industry attractive to many investors. The trend towards market-based economies has opened flood gates of opportunities foreign companies. To remain competitive, companies have been pressured to come up with other sources of increasing revenue. Increasing sources of revenue can be especially helpful to survive a down-turned economy a company is required to look for new sources of revenue. In the past few years, cosmetic companies are expanding their product lines to include products for men. Another way to maximize the return on investment is to market the products and the company in different countries. Thus in recent years many cosmetic companies have had an overall growth and become global such as Revlon, Procter & Gamble, Coty and Tokyo-based Shiseido (Ejiofor.M, 2006).

Globalization however has its own challenges such as pricing, currency fluctuations, free trade agreements, etc (Kumar. S 2005). Therefore we will be looking into the challenges involved in an organization entering a new country.

Significance of the Country chosen for the purpose of this Study

Due to the cosmetic industries nature of highly competitive environment and given that most cosmetic companies produce products suitable to a big variety of ethnic back grounds, it is in their interest to target to as many countries and cultures as possible. This task can sometimes be as simple as having a website translated to other languages. A proposed area for any cosmetic company is to reach out to the Middle East.

Entering the Middle East market is a good strategic move for any cosmetic industry. Middle East cosmetic consumption is high. Perfumes sales are up 41% and cosmetics 70% in Dubai, 72% and 114% in Qatar while combined figures for Bahrain show an increase of 48%, Kuwait 28%, Abu Dhabi 19.27% and Oman 13.9%. Iranian, Arab, and Turkish women have traditionally used more cosmetics than women in western countries and still do. (AME information 2004)

The Persian culture has had a strong emphasis on beauty, aesthetics, art, fashion, design and poetry of years more than anywhere else in the Middle East. Iran has a history of searching for great cosmetic brands. In the beauty revolution in the West from 1920s and 30s, cosmetic brands were imported into Iran and actively purchased by the Iranian elites. Iran is the second largest market for make up in the Middle East after Saudi Arabia. Iran is ranked as the seventh largest consumer of cosmetics in the world. Iran has a domestic cosmetics industry where as the majority of the cosmetics are imported from China, Korea and Turkey. Premium Western cosmetics brands such as Clinique and Estée Lauder are also well received amongst Iranian elites to this day (Joffe-Walt, B, 2010). Therefore there are strong opportunities for the Western nations to benefit from penetrating the Iran Market. However this requires understanding the religious overtones that influence the government and the culture. (Mafi. M & Carr. LP I990)

The European cosmetics industry has thrived over the years and invested lot in R&D. The European cosmetics industry is a world leader and dominant cosmetics exporter, a highly innovative sector. The EU’s involvement concerns mainly the regulatory framework for market access, international trade relations and regulatory convergence, all aiming to ensure the highest level of consumer safety while promoting the innovation and the competitiveness of this sector. There is no wonder why European cosmetic products are well received by other cultures. For the purpose of this study I will be comparing Western markets with Iranian markets. The western is originally defined as Europe, most modern uses of the term refer to the societies of Europe and their genealogical, colonial, and philosophical descendants, typically also including those countries whose ethnic identity and dominant culture derive from European culture. The Western market will be a good yard stick to fully understand the extent that the Iranian market has been developed, and how these countries could penetrate Iran.

Purpose of the Study

The purpose of the study is to understand the gaps in the Iranian market in order to be able to improve its industry to reach Western cosmetic industry standards. This study can be used as a tool for companies hoping to penetrate the Iranian market to understand the current gaps in order to capitalize on them. Also could be used as a guide for anyone currently operating in the Iranian market or anyone hoping to operate in the market.

Highlighting the biggest differences in the business structure of Iran in comparison to the West?

Can the Western companies move into the Iranian Market capitalize on these differences and use them to their benefit?

The limiting factors influencing the overall cosmetic industry in Iran?

Chapter Three: Methodology

The purpose of this study was to gain a better understanding of how the marketing mix in Iran and West differ. The next step would be to pin point the differences in the Macro environment of Iran against the West. Having compared this factors I will then establish the gaps in the cosmetic industry in Iran and use qualitative research to dig deeper into what is lagging behind and behind it. This will give a good understanding of the factors influencing the cosmetic business environments of the West and Iran. We will then see how this could affect the overall structure industry differently in Iran and Western countries. The Western market will be mainly used as a yard stick against Iran. We will also look into the fundamental elements of marketing strategy and the marketing mix (product, price, place, and promotion) to understand the different in these elements in Iran and the Western countries. This will give us a clear understanding of how the differences in these elements affect the overall difference in the industry. Also helping organizations wanting to penetrate the Iranian Market be able to see these differences and devise strategies accordingly.

For this study method of research will be comparative analysis using lens comparisons in particular in this case Western countries are used as an example to bench mark the activities of Iran against. This is useful for illuminating the challenges involved in entering the Iranian market. (Walk. K 1998)

Qualitative methods can generate a huge amount of data. It is therefore essential to select and justifying what to include in a key task. Too much information and the point can be missed. Too little information and the point cannot be proven. There is however some issues presenting qualitative results where information is gathered from individuals. If confidentiality is promised it needs to be preserved, which involve more than just removing or changing names, there has to be no clues in quoted results that could identify the data giver (Stannard Gromisch . E). To complete this study quantitative or qualitative method is required as there is no sufficient time to use both. Qualitative methods are used to get information not obtainable by quantitative methods. It can be used for hypothesis-generating or they may be used to test hypotheses. In qualitative research, the conceptual framework arises from the data rather than from fixed hypotheses and its therefore flexible, spontaneous. You begin with qualitative when there is not sufficient amount of literature for guidance. It is a exploratory Study as they are used for gathering and analyzing investigative data (Interactive text book). The difference in these two strategies comes down to flexibility. Quantitative methods are not flexible as participants get asked identical questions allowing meaningful comparison across participant (Qualitative Research Methods: A Data Collector’s Field Guide). I decided to use qualitative to dig in deeper to find out the pressing issues that publish data have not covered. I will be making use of qualitative research with knowledgeable industry participants in Iran to define and verify the nature of the current and future competitive and business environment. The use of Iran alone in the qualitative research is due to the fact that there is a lot of published information on the Western market and deeper research into Iran is required to make a fair comparison. The qualitative method I am going to use is in-depth interviews as this method is used for collecting data on personal histories, perspectives, and experiences, particularly when sensitive topics are being explored. As I want to obtain sold information on the experiences of the organizations with certain amount of sensitivity, I will be using in depth interviews. Open-ended questions have the ability to evoke responses that are meaningful and significant to the participant, unanticipated by the researcher with rich rationalization. (Qualitative Research Methods: A Data Collector’s Field Guide)

The sample chosen for the Iranian market were divided into two groups. First would be the group of suppliers or those who have hands on experience of working for the suppliers. Second would be the shop keepers. I will be making use of standardized, open-ended interview which would mean that I would ask the same standardized questions to each interviewee. I preferred this approach as it facilitates faster interviews that can be more easily analyzed and compared. All sample questionnaires was collected from Tehran the capital city in Iran.

The questions will be open to get to the bottom of the overall strategies in either of these countries. The questionnaire be written in Farsi and then translated into English. The audience to be questioned will be divided into two; the shop keepers and the industry leaders and distributers.

Chapter two: Literature review

The Evolving Trends Affecting the Four P’s of Marketing

Ever since cosmetic use started, its trends have been evolving as it adapts to the culture of the society. To understand the evolution of the market trends, the effects of cosmetic industry on the micro environment is analyzed.

People Changing Needs

Consumers are increasingly difficult to stereotype; thus deep understanding of consumer is required. Sales in the cosmetic market are parallel to industry trends, increasing the need to understand consumer requirements to increase service levels. To anticipate demand companies have been pairing up with industry leaders to introduce new capabilities to help provide accurate forecasts of consumer demand (Simpson. G, 2007). The life cycle of brands are decreasing, due to the constant need for innovation to meet consumer expectation. The typical cosmetic product stays on shelves maximum of four years (The Gale Group, Inc 2010). The editorial coverage means that people are much more aware of what is on the market.

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

In the UK, idealization of celebrities has resulted in celebrity endorsement in the cosmetic industries; however, in the mainland Europe the celebrity culture is not as strong. ‘Celebrity sells’ remains especially true in the fragrance market, which has resulted in celebrities such as Beckhams, Kylie and Britney all launching new fragrances. The UK fragrance has divided into the premium fragrances, high-end perfumery and mainstream premium brands. There consumer types are either driven by the exclusivity of the perfume for super high-end luxury such as Ralph Lauren’s “Love”, launched exclusively in Harrods at £1700 a bottle. Second is the large segment of consumers with less shopping budget whom purchase masstige fragrances (Cosmetic Businesses 2006). The Iranian youth are highly brand-aware, follow western trends, demand western products and have adapted to the many Iranian and foreign brands. They idealize celebrities’ especially western celebrities (Euromonitor International 2009). Iranian women and men are some of the world’s top consumers of cosmetics. Valuing appearance especially the young has made beauty products and cosmetics are very popular amongst women, particularly young girls. Urban Iranian women with the age’s range of 15-45, spend an average of $7 per month on cosmetics. The average monthly salary in Iran is at approx $600 to $700. Iranian annual spending on the cosmetics market is above of $2 billion accounting for 29% of the $7.2 billion in the Middle East (Joffe-Walt, B, 2010).

The mass retailers are driving prices down with ease and increased accessibility. Consumers are moving towards discounter items, although they still buy into lifestyle choices and spend more for brands that promise exclusivity and luxury. Over time there have been shifts in the social norms of using makeup. Trends are advances in the technology of creating makeup. Consumers’ now buy into goods perceived as good for the environment resulting in increase demand for natural solutions to skin care. The grown demand has resulted in increased pressure on manufacturers to demonstrate their environmental credentials (Cosmetic Businesses 2006). Iranians consumers’ levels of awareness of the world’s latest trends and health issues are increasing starting to impact on Iranian consumer choices. As wealthier Iranians follow the latest western trends they are showing interest in natural products and products offering health benefits. (Euromonitor International 2009)

The new generations of men are showing more interest in the cosmetics and are shopping for themselves. As they have become conscious of the need to look clean and well presented, both at work and socially. The popularity of men’s lifestyle magazines has encouraged them to care for their appearance and regard this as a masculine activity. This has encouraging production and development of cosmetics and toiletries specific to men (Austrade 2006). At 2006 UK male grooming market was reported to have grown close to £1bn. This means that the men’s grooming is no longer a niche market. The entry of large multinationals and their heavy advertising and promotional activities has had a strong effect in raising awareness of grooming products for men. The move of industry giants such as L’Oréal and P&G in late 2004 and early 2005 was a strong indicator that male grooming is expanding. This has created an opportunity for specialized, niche brands to enter the market either as extensions of more established women’s ranges or exclusively male focused range. (Cosmetic Businesses 2006) In Iran the products aimed at men, in particular are demonstrating high growth potential. Iranians urban young men take pride in their appearance and use of beauty products. (Euromonitor International 2009)

Wealthier women and men have moved away from older brands in search of higher quality and more exclusivity. Due to the youth’s higher pocket money and rising of their earnings in mature markets younger children and teenager are becoming interested in cosmetics. The increase of life expectancy around the world has concerned the graying population with their appearance resulting on increased spending on cosmetics. A lucrative niche is the growing number of ‘young seniors’ (50-65-year-old age group), preoccupied with youthful vitality, due to the high disposable income of these group. The key to survive the highly marketed maturing sector is fine segmentation (Austrade 2006). Estée Lauder and rival prestige brand L’Oréal’s Lancôme have been competing for the piece of the upper class anti-ageing market with Lancôme delivering Absolute Premium BX, aimed at the 50+ age group, and Lauder launching Resilience Lift Extreme, designed for menopausal skin (Cosmetic Businesses 2006). The percentage of graying population in the UK is much higher than Iran; this will be further explained in the following pages. With all these different niches entering the market there is no wonder why cosmetics are attracting so many investors. To keep ahead of the competition the cosmetics companies are now working harder to anticipate the changing tastes of consumers.

Market Trends Affecting Pricing Strategies

To move away from the traditional department stores upscale manufacturers sold greater volumes to discounters. This was an opportunity for retailers to place items on sale. Reducing the price of the brand sometimes can destroy its image and integrity. As reducing the brand price is trading high-end image for something perceived as cheaper and lower end (Hanson. JG, Coleman. GL & Florio. RC 2010). Retail products were therefore divided into three the upscale, mid-level, or low-scale brands taking into consideration pricing and structure. Premium product lines are generally sold in major department stores or specialty boutiques; mid-level product lines are sold in department stores at lower prices; and low-scale product lines are sold in drug stores, discounters, or through catalogs. Between the 1990s and into the 2000s there were no mass discounters. Then came the bridge brands that targeted the niche between the upscale and mass markets. (The Gale Group, Inc 2010). The constant development of brands such as L’Oréal, Gemey and Nivea, have began to bring closer together mass and premium brands, giving consumers better value for their money. The mass-marketers are now focusing on increasing volumes to generate more profit. This has resulted in the increase of mass market’s share in France (Austrade 2006). Despite the credit crunch the growth of mass fragrances in Europe has not affected the premium fragrances as fragrances are bought less frequently. Therefore they were not traded down to cheaper brands (Lennard. C 2005). Iranians that attain middle-class urban lifestyles mixed with Western lifestyles are being targeted by inexpensive consumer goods, and mass-produced products. Given that low incomes and widespread poverty in Iran there is also high demand for low-cost, mass-produced products. So far only China has been able to cater to this demand, with cheap products manufactured at prices below domestic equivalents. Genuineness is a problem when purchasing perfume in Iran as there are many fake equivalents that have been imported from neighboring countries. Low prices and poor packaging are signs of fake products. (Euromonitor International 2009)

The recession has resulted in less spending on cosmetics in general, making consumer cautious and reducing launches of new cosmetics in 2008. However, mass brands like Garnier skin care and Neutrogena sun care have had incomparable growth. Within the luxury brands market La Prairie was an exceptional case which had attained high profits. Proving that price is not the only concern for consumers even at harder times. Other well performing brands such as Bare Escentuals, had slower growth in 2008 (Beauty Package 2009).

Potential Problems Limitations of the Study

There is a problem accessing information from the university and problems in accessing first hand data and resources. In Iran especially it is hard to get access to fist hand information due to the fact that neither companies nor governments have sufficient information on the industry transactions. This is because many products are sold which do not pass through customs. This results in the lack of clear information on the companies and the government. Furthermore companies can be quite secretive about their activities, especially this was found with the shop keepers in Ian as they feel that our business may be under threat by new entry.

The restrictions on advertising in Iran

In Iran given the cultural, religious and legal there are many limitations in terms of the advertising of makeup and perfume. On the rare occasions that the distributer or the wholesaler is the sole trader, it will use it marketing budget on other sources of promotion. Incentives are provided with the use of discounts, creating seminars and their own market research, catalogue, billboard, posters. Some of the suppliers conduct advertising via satellite, Iranian speaking channels, which are produced outside of Iran

The questionnaire

Where are the places that the brands are sold and what differentiates them?

How do you encourage buyers to purchase products in Iran?

Who are the consumers of these products?

How does the industry work?

How do the macro environments affected the industry in the past and now?

What are the limitations in advertising your products?


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: