Managerial Economics Essay

Submitted By alice771028
Words: 2001
Pages: 9

Economics Analysis:

Toilet Preparation Manufacturing Industry and L’Oreal S.A.

Toilet Preparation Manufacturing Industry, or called personal products is

categorized to the consumer goods sector. Cosmetics companies began to emerge

during the 19 century because the increasing industrialization and growing worldwide

economic participation. And then, the cosmetics industry was established in the

beginning of the 20-century, and it is truly an international business. One of the oldest

cosmetics firms in the world is Yardley, a company that was first formed in London

in 1670. And in Japan, Tokyo-based Shiseido controls about 30 percent of the

cosmetics sales. As for France, it has been considered the home of fragrance for a

long time.

Type of product

The toiletries industry manufactures beauty-related goods, such as cosmetics,

perfumes, shampoos, and related personal toilet preparations.

Cyclical or non-cyclical industry

Cyclical industry is sensitive to economic cycles and moves in step with them

like automobiles, housing, and steel industries, which prosper in times of economic

growth and stagnate in times of recession. On the other hand, industries, such as drug

manufacturing and healthcare are generally non-cyclical.

The difference between cyclical and non-cyclical industries is that cyclical

industries produce luxury, and non-cyclical industries make necessity, such as certain

items that we can't live without, even if when times are tough. It means that non-

cyclical industries can against the effects of economic downturn, providing great

places to invest when the economic outlook is sour. For example, personal products, a

fancy term for the things you use up quickly around the house, such as toothpaste, soap, shampoo and facial cleanser may not seem like essentials, but people can't

completely ignore these products, and wait until the discussants.

Number of major suppliers in the industry

The total number of companies in the toiletries industry is 433, including 17

major suppliers in the world.

Size of typical firm

Sunstar Inc.
Unilever N.V.
Procter & Gamble Hair Care L.L.C.
L’Oreal S.A.
Dial Corporation Mexico S.A. de C.V.
Schwarzkopf & Henkel.
Estee Lauder Companies Inc.
Avon Products Inc.

Product cycle

The Non-Cyclical Consumer Goods and Services include fishing and farming

Operations, the processing and production of beverages, food, and tobacco,

manufacturers of personal products and household, and providers of personal

services. Thus, the personal products like cosmetics, perfumes, and shampoos

that made by the toiletries industry are classified to the non-cyclical product.

Growth factors

The cosmetics and toiletries industry was also becoming more global than ever before, as industry leaders continued to capitalize on developing international markets. Indeed, in 2004 Argentina, Brazil, Russia, and China were the fastest-growing markets for cosmetics, with sales in Argentina alone growing by 17 percent compared to 2003. China's cosmetics market grew by 12.5 percent in 2004, while India's increased by 7.7 percent. Together, China and India accounted for US$10 billion in sales in 2004. The leading category in terms of growth was skin care, followed by hair care. Sales of skin care products in Asia reached about US$17.5 billion in 2004, led by Japan.
Because each consumer market had its own unique preferences and needs, a one-size-fits-all approach was not the key to success for industry players. For example, in less developed nations like India, leading manufacturers were challenged to penetrate distant rural areas where residents were consuming products like hair oil, bar soap, and even lipsticks in growing numbers.