Beauty products industry, which encompasses many field, is a growing industry. Although the competition is fierce in the industry, many enterprises entry into the attractive industry. Besides, there are other factors that affect the beauty product industry. Under the competition, enterprises need to take measures to adapt to the environment. This paper is going to discuss the competition of this industry. Why do incumbents have long staying power in this industry? How do new entrants overcome entry barriers? How do incumbents react to new entries? Why do retail chains gain bargaining power as buyers at the expense of department store? Should traditional competitors focus on expanding new country markets in emerging economies, or on entering hot, new growth product markets in developed economies?
The paper is divided into five parts. The second part is the analysis of reasons of the long staying power that incumbents have. In the third part, the paper discusses the entry of new entrants and the reaction of incumbents. The fourth part compared retail chains and department store. Finally, two choices of traditional competitors are discussed and conclusion is drew.
2. Case Analysis
2.1 Analysis of Reasons of The Long Staying Power That Incumbents Have
When it comes to buying beauty products, some brands always firstly come to people’s minds, such as L’oreal, Shiseido, Elizabeth Arden. These brands have shown remarkable long staying in beauty industry. In our perspective, the resource of this power is brand power, technology innovation, appropriate market positioning, advantages in distribution channels and globalization.
2.1.1 Brand Power
People usually are very careful about things that will directly work on body, such as food, medicine and beauty product. As the old saying, practice is the only criterion for testing truth. Long history, corporations’ culture, good brand image and good word of mouth always help to convince consumers of the...