PROFIT
Profits are the lifeline of any business, enabling them to cover costs, invest in development, and repay investors (Thangavelu, 2020). Sufficient profits allow money to be reinvested into research and development. This, in turn, leads to innovation and is essential in today’s climate where markets are constantly looking for more cost-effective and environmentally friendly alternatives.
The cosmetics industry has seen continual growth, valued at over $500 billion in 2018, and projected to reach around $758.4 billion by 2025 (Petruzzi, 2022). However, cosmetics is a diverse industry, spanning skincare, makeup, fragrance, haircare and more. While makeup has dominated, skincare sales are rising fast, with an expected growth rate of 4.7% annually from 2022 to 2030 (Grand View Research, 2019). The rising demand for personalised scents and hair products has resulted in the fragrance and haircare sectors experiencing steady growth. By 2030, the fragrance market is forecasted to reach $18.8 billion (Singh, 2021) while, according to Mordor-Intelligence, the haircare market is valued to reach $87.39 billion in 2023.
The rise in workplace diversity and increased awareness of the importance of organic products, has been driving market growth. Social media has contributed to the rapid spread of information with people growing more aware of the adverse effects of chemicals such as paraben and aluminium in products (‘Cosmetic Products Market Analysis – Industry Report – Trends, Size & Share’, n.d.). The rise of social media is causing men to become increasingly more conscious of their appearance (Byrne and Milestone, 2022). This presents new opportunities in the rise of men’s grooming. According to Statista, by 2028, the market for male grooming products will be estimated to be worth $115 billion, up from just under $80 billion in 2022.
In uncertain economic times, rising costs and squeezed wallets mean customers are pickier. Therefore, it is essential that businesses understand their target audience by offering products that provide real value at accessible price points. Businesses must make strategic decisions on discounts without sacrificing quality as the new generation of consumers value honesty, amongst other core values, when forming a relationship with a brand (Francis and Hoefel, 2018).
Creative directors must be able to make appropriate business decisions, whilst keeping innovation at the forefront. An example of this is make-up artist Pat McGrath, creative director of Pat McGrath Labs, who turned her artistry into commercial products which have become a hugely successful empire, valued at over $1 billion (Blanchfield, 2018). She achieved this by learning what consumers are demanding and then translating it into her signature collections. She amplifies traction through limited editions, creating a sense of urgency as well as collaborations with influencers like Rihanna and the Kardashians (Hughes, 2017). McGrath proves that those who successfully integrate art and vision can yield extraordinary financial success.
Reference list
Blanchfield, E. (2018) Meet Pat McGrath, The ‘Self-Made Billionaire’ Whose Brand Is Now Worth More Than Kylie Cosmetics Stellar. 24 July 2018 [online]. Available from: https://stellar.ie/beauty-fashion/meet-pat-mcgrath-the-self-made-billionaire-whose-brand-is-now-worth-more-than-kylie-cosmetics/59808 [Accessed 22 October 2023].
Byrne, A. and Milestone, K. (2022) ‘He Wouldn’t Be Seen Using It…’ Men’s Use of Male Grooming Products as a Form of Invisible Consumption Sage Journals. 27 February 2022 [online]. Available from: https://journals.sagepub.com/doi/full/10.1177/14695405211066314 [Accessed 21 October 2023].
‘Cosmetic Products Market Analysis – Industry Report – Trends, Size & Share’ (no date) www.mordorintelligence.com [online]. Available from: https://www.mordorintelligence.com/industry-reports/global-cosmetic-products-industry [Accessed 21 October 2023].
Francis, T. and Hoefel, F. (2018) ‘True Gen’: Generation Z and Its Implications for Companies McKinsey & Company. 12 November 2018 [online]. Available from: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies [Accessed 21 October 2023].
Grand View Research (2019) Skin Care Products Market Size | Industry Analysis Report, 2019-2025 Grandviewresearch.com. 2019 [online]. Available from: https://www.grandviewresearch.com/industry-analysis/skin-care-products-market [Accessed 21 October 2023].
Petruzzi , D. (2022) Cosmetic market value worldwide, 2018-2025 Statista. 2 February 2022 [online]. Available from: https://www.statista.com/statistics/585522/global-value-cosmetics-market/#:~:text=Global%20value%20of%20the%20cosmetics%20market%202018%2D2025&text=This%20statistic%20shows%20the%20value [Accessed 21 October 2023].
Sali Hughes (2017) Beauty Queen: how Pat McGrath revolutionized Makeup the Guardian. 6 August 2017 [online]. Available from: https://www.theguardian.com/fashion/2017/aug/06/beauty-queen-how-pat-mcgrath-revolutionised-makeup [Accessed 22 October 2023].
Singh, S. (2021) Fragrance Market Size, Growth and Trends Forecast By 2030 www.marketresearchfuture.com. February 2021 [online]. Available from: https://www.marketresearchfuture.com/reports/fragrance-market-4689 [Accessed 21 October 2023]. Thangavelu, P. (2020) Why Cash Management Is Key To Business SuccessInvestopedia. 26 December 2020 [online]. Available from: https://www.investopedia.com/articles/investing/041515/why-cash-management-key-business-success.asp [Accessed 21 October 2023].