PROFIT

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PROFIT

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Within the fashion and cosmetic industries, the yearning for profit kickstarts many careers. When wanting to grow a business, often money is the main agenda. The generalised meaning of profit is ‘money that is earned in trade or business after paying the costs of producing and selling goods and services’ (Cambridge Dictionary, n.d). To others, the meaning of profit can be metaphorical, whereby profiting in some way does not have to be financially, but environmentally and personally. In 2021, sales growth in the cosmetics industry hit $26.8 billion (Maamoun, 2022). This huge amount of money is generated by popular brands in the United States such as Ulta Beauty and Sephora. Fashion brands such as Goodwill create more than $3.79 billion annually, where any products they don’t sell are sold to outside companies (Hethorn, 2015).

The cosmetics industry consists of a variety of sectors, including: skincare, make up, hair care, fragrances, hygeine products. Statistics from L’oreal’s 2021 Annual Report show that 41.80% of the cosmetics market is from the skincare segment whilst make-up is 15.70% (L’Oreal, 2021). The female skincare market is growing alongside the male. Many brands have advertised male orientated skin care ‘to fulfil the demand and also to maintain them into cosmetic market competition’ (Junaid, 2012). By widening the audience, the number of people who feel they can buy a brand’s products increases, therefore increasing the profit a brand accumalates. Whilst the male skin care industry is expanding, the male make up industry isn’t. With brands still targeting their make up products to a female audience, males may feel excluded from this market, therefore explaining the lower sales. Skin care is a more diverse trade compared to make up.

During uncertain economic times, many brands may see a decline in their markets. During the global pandemic of COVID 19, many stores closed whilst others used it to their advantages. It was thought that in 2020 after the pandemic, the earnings of the cosmetics industry would drop 20-30% (Gerstell, 2020). L’Oreal continued their production of hand sanitizer, a necessity during these times, and provided face masks to medical personnel (Elle, 2020). To thrive in times of jeopardy would mean aiming products at the right audience whilst building a positive memorable reputation. During these times, the bridge between creativity and commerce crumbled. With innovative planning from creative directors and communication with business leaders, a balance between futuristic ideas and profit needs to be examined for a business to flourish.

Bibliography:

Barrett, N.E., 2022. Fashion Fair in a Fenty World: Intersectionality, White Privilege, and the Importance of Black-Owned Brands in the Cosmetic Industry Through Critical Ethnography. Temple University.

Cambridge Dictionary (no date) Profit. Available at https://dictionary.cambridge.org/dictionary/english/profit (Accessed: 21/10/2023)

Dixon, S. (2023) Share of Gen Z users in the United Kingdom engaging with selected social media platforms daily in October 2022. Available at: https://www.statista.com/statistics/1341903/social-media-daily-usage-uk-gen-z/  (Accessed: 14/10/2023).

Elle (2020) How Beauty and Fashion Brands Are Responding to COVID-19. Available at: https://www.elle.com/beauty/a31477276/beauty-brands-respond-coronavirus/ (Accessed: 21/10/2023).

Fenty Beauty (no date) Foundation + Concealer. Available at: https://fentybeauty.com/collections/makeup-foundation/products/pro-filtr-soft-matte-longwear-foundation-420?variant=35178864508973 (Accessed 14/10/2023)

Francis, T. and Hoefel, F., 2018. True Gen’: Generation Z and its implications for companies. McKinsey & Company, 12, pp.1-10.

Gerstell, E., Marchessou, S., Schmidt, J. and Spagnuolo, E., 2020. How COVID-19 is changing the world of beauty.

Hethorn, J., & Ulasewicz, C. (eds). (2015). Sustainable Fashion: What’s Next? A Conversation about Issues, Practices and Possibilities. New York: Bloomsbury

Junaid, A.B. and Nasreen, R., 2012. Determination of consumer behaviour amongst millennials in dermaceuticals (skin care products). International Journal of Marketing Studies, 4(3), p.91.

L’Oreal (2021). Cosmetics Market. Available at: https://www.loreal-finance.com/en/annual-report-2021/cosmetics-market/  (Accessed: 21/10/2023).

Maamoun, A., 2022. THE COSMETICS INDUSTRY IN THE 2020S: A CASE STUDY. Global Journal of Business Pedagogy Volume, 6(1).

Wood, S., 2013. Generation Z as consumers: trends and innovation. Institute for Emerging Issues: NC State University, 119(9), pp.7767-7779.

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Profit

Profit

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Profit is a crucial pillar within every industry as it is a determining factor in the success of a business. The beauty and personal care market generated 430 billion U.S. dollars in 2022, indicating how highly lucrative the cosmetics industry truly is (Amed et al., 2023).

COVID-19 proved to be a major difficulty to many businesses and industries due to the uncertain economic period, this presented many new challenges to brands they needed to overcome to remain competitive. The purchase priorities of the consumer changed from colour cosmetics and fragrances to hand sanitisers, soap and self-care, so brands changed their manufacturing to meet the change in demand. The NPD Group (2021) tells us that in 2020 make-up had the greatest decline of 35%, in comparison to 2019. Whereas anti-acne skin care products increased by 32% due to the development of ‘maskne’ caused by the increased face mask wearing. Brands that closely followed the requirements of the consumer were able to remain extremely competitive even during the unsettling economic era of COVID-19.

The post-pandemic chapter in 2023 is new territory for beauty and personal care brands to navigate, with the exploration of creative commerce becoming an increasingly important aspect of the success of brands and with the rise of social media influence, creativity is rife. 

Creativity within a cosmetics brand is vital to remaining competitive and setting one business’s product separate from another. Art and the cosmetics industry are interlinked, especially when considering colour cosmetics such as makeup; therefore, bridging the gap between creativity and commerce is important. Many brands collaborate with artists and other brands to bring out unique lines of products that display a more artistic approach than their usual products, where cosmetics will have more intricate packaging and be more visually appealing to the consumer. Ipsos (2018) states that 72% of American consumers agree that attractive packaging on a product will influence their purchase.

ColourPop (2023) Star Wars Collection.

ColourPop frequently collaborates with influencers and celebrities, creating limited-edition collections which sell out quickly because the audience is widened to include both ColourPop lovers, but also fans of the brand they’ve collaborated with. This makes the brand more competitive because consumers are seeking out these creative collections which are exclusive to a singular brand. This widens the market to which the cosmetics appeal to, ColourPop currently in 2023 has a range of collections attracting younger audiences, such as Disney and Star Wars, but in the past have also had more mature collaborations with influencers such as Alexis Ren. This is an easy way for creative directors to bridge the gap between creativity and commerce, whilst also offering something new to a widened target audience. 

Reference List:

Amed, I., Berg.A., Hudson.S., Rao,P., Jindal,D., Saint Olive, A., Weaver, K., Balchandani, A., et al (2023) The State of Fashion: Beauty. Available at: https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/the%20beauty%20market%20in%202023%20a%20special%20state%20of%20fashion%20report/the-beauty-market-in-2023-a-special-state-of-fashion-report.pdf?shouldIndex=false (Accessed 19 October 2023).

NPD (2021) The changing the face of prestige beauty. Available at:https://www.npd.com/news/pres-releases/2021/the-changing-the-face-of-prestige-beauty/ (Accessed 19 October 2023).

Ipsos (2018) Most Americans Say That the Design of a Product’s Packaging Often Influences Their Purchase Decisions. Available at: https://www.ipsos.com/en-us/news-polls/Most-Americans-Say-That-the-Design-of-a-Products-Packaging-Often-Influences-Their-Purchase-Decisions (Accessed 19 October 2023).

Image Reference List:

ColourPop (2023) Star Wars Collection. Available at: https://colourpop.com/products/wherever-i-go-he-goes-shadow-palette-set (Accessed 19 October 2023).

Profit Featured Image (no date) Available at: https://www.vecteezy.com/vector-art/11773042-salary-dollar-rate-increase-statistic-business-profit-growth-margin-revenue-finance-of-performance-return-on-investment-roi-concept-with-arrow-icon-coin-flat-vector-illustration-isolated-on-white (Accessed 19 October 2023). 

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Profit of the cosmetic industry

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The fashion industry currently contributes to 2% of the world’s GDP amounting to approximately 3 trillion dollars in economic gain (Akram et al, 2022). Cosmetic Industry, a subset of the fashion industry, is responsible for approximately 1.1% of the world’s GDP (Mintel market sizes, 2023). This contribution has increased over the past 10 years and has reached about 1.2% in recent years (Figure 1). It is evident that the cosmetic market has lucrative opportunities beneficial for both the producers and consumers. According to data collected by Mintel, in 2023 coloured cosmetics are the largest contributors providing 26% of the market share and the lowest contributors are body care with only 9% of the market share (Mintel market sizes, 2023) (Figure 2).

Regardless of such a massive contribution to the economy, the total market value of the industry has declined in the last few years. This can be attributed to the global pandemic and the recession that followed. The pandemic posed an uncertain economic situation where owning cosmetics products, specifically coloured cosmetics, became less of a priority. Therefore, brands started producing higher quantities of ‘cosmetic needs’ like hair and skin care products to maintain profits. (McKinsey & Company, 2020). According to data collected by Mintel, the contribution of the body care sector in cosmetics increased by 4.5% in 2020 (Mintel market sizes, 2023). This includes the rise of brands like ‘Keys soulcare’ that focus on skincare and cleanliness. The brand partnered with dermatologists to create a soothing skincare line that received media attention from outlets like Allure and Refinery 29 (Keys soulcare, n.d.). Thus, the brand maintained its profit and production throughout uncertain economic times. Furthermore, to make their brand stand out, companies like Charlotte Tilbury started providing online consultations and virtual try-on sessions for a luxury experience. Therefore, a brand could invest in having exclusive luxury products and services available for its customers (Nazir, 2021).

Considering these parameters, brands find it difficult to maintain the commercial value of products with unlimited creativity. Consequently, it is important for a creative director to maintain a balance between creativity and profitability of the products. A hair care brand ‘Function of Beauty’ managed this by creating a digital platform where consumers can purchase products tailored to their hair and skin type (Function of Beauty, 2023). Here, the creative directors ensured that the interactive platform and new personalized formulations provided a creative, experimental outlet for the employees. The spectacle and uniqueness of the product make the shopping experience stand out to the customers thereby increasing the sales. Thus, the company could bridge the gap between the creative and commercial aspects of the brand. With ample competition in the industry and uncertain economic situations, it is crucial for companies to employ similar strategies to ensure that the brand stays profitable.

Reference list

Akram S.V., Malik P.K., Singh, R., Gehlot A., Juyal A., Ghafoor K. Z., Shrestha S., “Implementation of Digitalized Technologies for Fashion Industry 4.0: Opportunities and Challenges”, Scientific Programming, 2022, Article ID 7523246, https://doi.org/10.1155/2022/7523246

Function of beauty (2023) About us, Available at: https://www.functionofbeauty.com/about-us (Accessed: 20 October 2023)

Keys soulcare (n.d.) About us Available at: https://www.keyssoulcare.com/en_GB/about.html# (Accessed at: 20 October 2023)

McKinsey & Company (2020) How COVID-19 is changing the world of beauty? May 2020 Available at: https://www.citethemrightonline.com/sourcetype?docid=b-9781350927964&tocid=b-9781350927964-19 Accessed: 20 October 2023

Mintel market sizes (2023) Colour Cosmetics- ­Available at: https://marketsizes-mintel-com.arts.idm.oclc.org/query/201756285/performance/market (Accessed: 19 October 2023)

Nazir, S (2021) How the beauty retail market can survive Covid-19. Available at: https://www.retailgazette.co.uk/blog/2021/02/how-the-beauty-retail-market-can-survive-covid-19/ (Accessed: 20 October 2023)

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Blog 3 – Profit

Blog 3 – Profit

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The fashion industry is driven by profit. Without profit, redeveloping existing goods, research and development on new products would be impossible. The industry employs a workforce approximately above 300 million people (EllenMacArthur Foundation, 2017) can be concluded that the industry is costly to maintain. In the United Kingdom, a fashion designer typically earns £29,921 a year (U.S. BUREAU OF LABOR STATISTICS 2023). The fashion industry has grown gradually undergoing 4 industrial revolutions (IR). Mechanization (1st IR), mass production (2nd IR), and digitalization and automatic production (3rd IR) and now in the 4th revolution when technologies and innovative business models are able to aid hyper-personalization and environmental sustainability (Byoungho Ellie Jin & Daeun Chloe Shin 2021), it has become clear the industry will continue to expand.

For both branded and non-branded businesses. Demand based pricing is applied. The method focuses on customers and their responsiveness to different price levels (Brassington and Pettitt 2006). They are prices based on the customer’s demand for a product so prices are set with demand and market considerations in mind (Lancaster and Withey 2005; Holbrook, 1994) This means the price will be set in line with the customer‘s perception of the product or it will be priced too high or too low for the target market. (Farese, Kimbrell and Woloszyk 2003) Another way of gaining profit is by building a clear image of the brand, like advertising an eco-friendly concept. Over twenty global brands have committed to detoxing, more than half a million people have signed up to join the campaign (Domenica Peterson 2015 ) demonstrates famous brands that are being sponsored as they seem more reliable and people are willing to pay for what they think is truly environmentally friendly.(International Journal of Research in Management, Science & Technology 2014)

Under uncertain economic times like the covid-19 pandemic, offline clothing consumption at mass markets has decreased, whereas sales of luxury fashion brands at offline department stores have grown. Study in Korea’s fashion industry shows an increase in online sales from 64.418 trillion KRW to 78.269 trillion KRW (Wonbae Pang et.al. 2021). Therefore having a loyal customer base online is beneficial as consumers are more likely to buy from a well known brand with global approval and recognition. In order to accomplish a deeper understanding of consumer’s demands, big data analytics is used to acknowledge consumer trend forecasting, consumer experience and consumer engagement (Madsen et al., 2020). Consumer sales data collected from real retailers can provide firms with greater insights into their target markets than their competitors (Erevelles et al., 2016)

Moreover, brands need to continuously find new creative ways to freshen their merchandise and brand image by including promotions, gift cards and vouchers that would draw consumers and build connections. A study conducted by the international Journal of Business and Social Science (2016) portrays purchase rates for promoted products for free samplings being 40% higher. This tool is very effective to stimulate individual behavior towards purchasing decisions and it can encourage consumers to switch from planned to promoted brand.

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Reference Citation =

(Domenica Peterson 2015 )Social Media as a Tool for Social Change

(Byoungho Ellie Jin & Daeun Chloe Shin 2021)The power of the 4th industrial revolution in the fashion industry: what, why, and how has the industry changed?

(EllenMacArthur Foundation, 2017) Beyond plastic waste

U.S. BUREAU OF LABOR STATISTICS (2023)

International Journal of Research in Management, Science & Technology (2014) A Review of The Effect of Pricing Strategies on The Purchase of Consumer Goods (Brassington and Pettitt 2006) (Lancaster and Withey 2005; Holbrook, 1994)((Farese, Kimbrell and Woloszk 2003))

(Wonbae Pang, Jisu Ko, Sang Jin Kim, Eunju Ko Asia Pacific Journal of Marketing and Logistics 2021 ) Impact of COVID-19 pandemic upon fashion consumer behavior: focus on mass and luxury products

Madsen, D.Ø., Silva, E.S. and Hassani, H. (2020), “The application of big data in fashion retailing: a narrative review”, International Journal of Management Concepts and Philosophy, Vol. 13 No. 4, pp. 247-274.

Erevelles, S., Fukawa, N. and Swayne, L. (2016), “Big data consumer analytics and the transformation of marketing”, Journal of Business Research, Vol. 69 No. 2, pp. 897-904.

(International Journal of Business and Social Science 2016) The Impact of Promotional Tools on Consumer Buying Behavior in Retail Market

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