1. It is very dynamic and the product life cycle is sometimes counted in months, rather than years.
2. The barriers to entry are low enabling even a housewife to develop a competitive product in her garage.

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:

• 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.