Harely Davidson

Introduction

Nowadays, cosmetic products are easy to find and to purchase. They are used by every American people on a daily basis and enjoy universal acceptance among both genders. The market is huge and offers a wide range of opportunities for businesses. The industry is definitely very significant for the nation’s economy.

The sector accounts for a large part of the United States GDP and it is expected to generate a $36 billion business in 2005. It has been one of the fastest growing and most lucrative markets over the past 50 years. Moreover, the industry contributes significantly to the United States job creation due to its diversity as well as its dynamism. As innovations constantly appear, the industry becomes more technologically sophisticated and focused, and the demand keeps rising. Therefore, the sector offers challenging opportunities for people with various educations and backgrounds to contribute to the creation of new and superior personal care products.

This analysis will begin with a description of the cosmetics market giving information about its classification codes, its structure and some specialized sources. Then, the industry background will focus on the major companies and their offer as well as their market share. It will also give an outlook of the market. Furthermore, these main players will be presented from a financial facet through a stock market and a financial performance overview. Marketing and advertising methods will be discussed to determine how customers are encouraged to purchase personal care products. Human resources will be analysed from the various perspectives of career development. Finally, the analysis will focus on the industry prospects and overall attractiveness.

Industry description

The United States possesses the largest personal products market in the world, accounting for 26 percent of global sales. It includes some of the most important consumer goods companies worldwide. The industry is service oriented. Therefore, businesses must continually be aware of the new trends and be able to predict the future desires of customers. Actually, they have to focus on creativity, innovation and to understand the complex nature of the sector. In 2004, the U.S. cosmetics market represented $34 billion and had realized an average growth of 4 percent since 2000 (Toiletries and Cosmetics, 2005).

The term “cosmetic” must be defined in order to understand the substantial size of the industry. Actually, this word generates confusion as many people still associate it with “make-up”. However, the reality is that the term “cosmetics” is a contraction of “cosmetics, toiletry and perfumery”. It includes any product that cleanses (other than soap), beautifies or alters the appearance of the human body without affecting the body's structure or functions (Federal Food, Drug and Cosmetic Act, 2004). The market is all about personal care, hygiene and comfort.

Some cosmetics are also considered drugs if they have two intended uses: medical and aesthetic. For instance, a make-up product with a sun-protection index intends to beautify but also to protect the skin from sun aggressions. Such products are often referred to as “cosmeceuticals”. However, this term is not defined by the law.

Classification codes

The Standard Industrial Classification (SIC) was created in the early 1930’s by the United States government in order to classify industries by a four digit-code. It was developed at a time when manufacturing ruled the U.S. economy. However, the system has suffered from denigration since that time: it was accused of having difficulty dealing with the rapid changes of the economy.

The Cosmetics industry falls under the division D of the Standard Industrial Classification, which is the “Manufacturing” division. It depends on the Major Group 28, which is composed of “Chemicals and Allied Products”. The industry group is 2844: it encompasses “Perfumes, Cosmetics, and Other Toilet Preparations” and is defined by the Occupational Safety and Health Administration (n.d.) as establishments primarily engaged in manufacturing perfumes (natural and synthetic), cosmetics, and other toilet preparations. It also includes establishments primarily engaged in blending and compounding perfume bases and those manufacturing shampoos and shaving products.

Since 1997, the North American Industry Classification System (NAICS) has replaced the SIC. It is considered as a support for the compilation, aggregation, arrangement and analysis of data concerning the American economy. It uses a six-digit hierarchical coding system to classify any economic activity into 20 industrial sectors (U.S. Census Bureau, 2002).

The cosmetics