Author: Diana Dodson
Date published: 16 Jul 2007
Segmentation, one of the most prominent trends shaping innovation in the beauty market in recent years, is set for a change in focus or will die out altogether according to Euromonitor International's new-look 2007 Cosmetics and Toiletries Global Report.
The report structure has been revamped this year, the content refined down to hard analytical insight interspersed with charts and graphs, and supported with up-to-date, real-life examples in the form of case studies. The 2007 Global Report also has a strong future focus, with each section ending with a forward-looking statement and the final section devoted to possible scenarios beyond 2011.
One of the key predictions of this year's report is that the segmentation trend is set for transformation over the coming years. For some time now, industry watchers have been forecasting an end to segmentation, arguing that consumers may feel overwhelmed and confused by too much choice, instead reverting to simple, no-frills brands they know and trust. Euromonitor International supports this analysis, suggesting that hygiene essentials, such as soap and toothpaste, will be the first hit. While consumers may be willing to spend time browsing crowded shelves and experimenting with different shades of lipstick or fragrance brands, for example, they are less inclined to shop around for basic toiletries.
From segmentation to simplification
The 2007 Global Report also notes that there is some evidence of a move away from segmentation among cosmetics (hair care, skin care, colour cosmetics and fragrances). In the US, there are the beginnings of a back-to-basics movement which is encouraging women to streamline their beauty regimes. Dermatologists, for example, are denouncing the 3-step facial routine, arguing that all that is needed is a good quality cleanser and moisturiser. Euromonitor International's figures suggest that consumers are listening; sales of toners have been declining in the US since 2000.
Instead of seeing this as a threat, some brands have spotted the opportunities. L'Oréal's Biotherm Healthy Difference, for example, is a facial moisturiser for normal skin to keep it looking healthy and balanced and does not have any of the added extras of products tapping into consumer segments. Procter & Gamble's Pantene Pro-V Classic Care hair care range similarly offers simplicity in a market of increasingly convoluted product claims.
Segmentation by demography replaced by lifestyle groups
This year's report goes further too, suggesting that manufacturers will be reluctant to abandon a strategy that has proven so successful in recent years and could instead look for ways to get more mileage out of it rather than going down the back-to-basics route. Euromonitor International's findings suggest that segmenting consumers by demography is becoming less effective. Increasingly consumers do not identify as much with their age group or gender as they do with people who lead similar lifestyles to themselves. Manufacturers should then be tapping into psychographic segments instead.
Top lifestyles trends companies could use as inspiration for new product development include “retreat”, “escape” and “indulge”. The first refers to followers of the health and wellness trend and this group would be most receptive to natural and organic products. The “escape” lifestyle broadly encompasses those who are nostalgic for more innocent times past, and vintage and home-grown brands would appeal to this group. “Indulge” lifestylers see themselves as true connoisseurs and demand luxury and exclusivity from their beauty brands.
Steady growth forecast to 2011
Other key findings from the 2007 Global Report include the fact that the trend towards natural and organic ingredients is coming into conflict with ethical consumerism and sustainability issues, and the prediction that the pace of new product development in the industry will slow as manufacturers look to extend product lifespan by putting more time and money into delivering true innovations. Longer term, Euromonitor International predicts a reversal of the premiumisation trend as globalisation grows the divide between rich and poor and technological developments mean consumers can get more for less.
To 2011, however, the future looks bright for the cosmetics and toiletries market. Projected growth is 16% from 2006 to 2011, with even the most developed markets delivering gains, and greater dynamism predicted with the rise of new emerging markets including the Middle East.
Diana Dodson, Cosmetics and Toiletries Senior Industry Analyst:
For further detail about this article and other related findings, please visit Euromonitor International by clicking here.