GROUNDWORK: MARKET ENTRY Armed with experience and education, Angie set about turning her idea into reality. Before jumping into her new endeavor, however, Angie knew it was wise to create a business plan. Her first step was to determine if she could enter the cosmetics industry. A new entrant in this industry will face many challenges, such as gauging consumer preferences, competing with large, established players, conforming to government regulations and gaining necessary approvals, and protecting her unique product design. Facing competitors like Bonnie Bell’s Lip Smackers, Lancôme’s Juicy Tubes, and Mac’s Plush Glass, Angie knew it would be no easy feat.
Angie employed online resources to assess the industry – including US Fed News and Packaged Facts. She determined that the U.S. Cosmetics industry is a $35 billion market. Retail cosmeceutical sales have grown over the past few years and were expected to continue to grow for the foreseeable future. Angie saw this market growth as an opportunity for her to carve some space in this industry. Her research also revealed that the cosmeceutical retail market is divided into two sectors: mass retail and prestige retail. The mass retail sector, which includes supermarkets and drug stores such as Wal-Mart and Rite Aid, accounts for 61% of sales, while the prestige retail sector accounts for 39%. Prestige cosmetics are typically sold through department stores like Bloomingdale’s and high-end specialty shops such as Sephora. As the cosmetics industry continues to grow and consumers are looking for high quality products at affordable prices, “masstige” products are breaking through as a third market sector. As the name implies, masstige products are a cross between mass retail and prestige products. They are mass retail goods with prestige characteristics. Angie was excited. This category represented her opportunity. She wanted to offer high quality lip gloss through mass retail channels. Angie, then, asked herself, “How does the lip gloss market fair against other cosmetics? While the cosmetics industry is growing, is there room for me to enter into the lip gloss market, specifically?”
With women striving for the natural look and young girls yearning to wear make-up, lip gloss has been the solution. Lip gloss is easy to apply and makes young girls feel like they are wearing make-up. It makes them feel important, popular, and adult-like. It provides women with the bit of color they desire to accentuate their lips without the appearance of wearing heavy make-up. Angie found from her research that North America holds 26% of the global color cosmetic