There is no argument
about two facts about the personal care industry:
- It is very dynamic and the product life cycle
is sometimes counted in months, rather than
years.
- The barriers to entry are low enabling even a
housewife to develop a competitive product in
her garage.
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While these attributes
give wider choices to consumers and drive innovation
(which benefits everyone), they can also mean a
challenging an environment for established companies
who have to deal with mom-and-pop businesses that
often come up with remarkably good products.
Several large cosmetics and beauty products companies
have managed the situation by simply acquiring these
companies once they pose a material threat to their
business. It is then a win-win situation for
both parties. However, for other small and
medium-sized competitors, things can get pretty ugly
and their very survival comes under threat. That
is why so many personal care businesses shut down each
year. |
A portfolio approach can diversify risk
If you are new to
portfolio approach, you can read a primer on portfolio
management approach.
In the personal care
industry, the portfolio management approach works as
follows:
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- If you have established yourself with one
product, consider product line extensions.
For instance, if you have a shampoo, consider
adding conditioner, hair spray, hair dye, etc.
- Once you have established yourself in a
category, for example hair, add related
categories of products, for instance, body care
or nail care.
- Once you have exhausted these extensions,
consider adjacent markets, for instance,
equipment for home treatments, apparel that
provides a lifestyle consistent with your
personal care line, etc.
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