October 8, 2007
CPGmatters: Makers of Ethnic Cosmetics Need To Increase Business Intelligence
By John Karolefski
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
Ethnic cosmetics are severely underdeveloped in food, drug and mass channels where they post only two percent of category sales. Obviously, product manufacturers must take a fresh look at their
go-to-market strategies and how they use market intelligence to gain strategic advantages.
“This audience is not maximizing the opportunity that the marketplace extends,” said Jeffrey Joyner, a consultant specializing in data mining.
“Quite simply, consumers are being underserved and often inconvenienced. There are many more opportunities for innovation, distribution methods, sales techniques and product placements. There are many opportunities to become a greater resource to the progressive retailer and to create a more complete environment for the consumers shopping those retailers’ stores.”
Mr. Joyner, president of the Dallas-based J. Joyner Group, recently spoke at the American Health and Beauty Aids Institute 2007 Mid-Year Buyers and Marketing Conferences in Las Vegas. AHBAI is an international trade association representing black-owned companies that make ethnic hair care and beauty-related products.
The key reason why the ethnic cosmetics market is underdeveloped is that some manufacturers fail to communicate clearly and convince retailers of the sales opportunity that exists, according to Joyner.
“Often retailers and manufacturers accept that product can only be sold in a small grouping of stores,” he explained. “This thinking ignores the scores of customers in the so-called mainstream stores who are looking for these products. Often they are affluent and have some influence on others who may become shoppers of a particular retail outlet. Additionally what’s often overlooked is the ‘halo’ effect that carrying the ethnic products creates. That is, ‘If you have my ethnic product, I will likely buy other mainstream products from you as well.’”
But to take advantage of these sales opportunities, Mr. Joyner said, manufacturers must increase their business intelligence. Mr. Joyner said that significant market surveys found that retailers believe “consumer insight development and category management expertise” are the least-developed supplier skills. Such a finding obviously puts pressure on Key Account Managers who must develop new and unique skills that are very different than the traditional sales training.
“The most compelling issue facing category managers today is lack of time to do their jobs,” he said. “These important folks are very busy. They seek trusted allies to help them get their work done. However, those trusted allies must bring factual and reliable solutions to bear that can stand the scrutiny of the marketplace. They cannot be as effective as they must be just by offering a product at a price.”
Discussion Question: Why do you think FDM’s share of ethnic cosmetics is so low? What have been the challenges in tapping this apparent opportunity? Do you also agree that not enough business intelligence is being used in targeting ethnic groups?
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Ryan Matthews and Mark Lilien boiled down pretty well. They just said it all in a much nicer way than I could ever do. To me it looks like Mr. Joyner is trying to convince retailers that there is this underserved market that is just waiting to be tapped. We hear this line all the time in all segments of retail, particularly in location evaluation. Then as usual, nothing happens, and for good reason.
There are two separate but related questions being asked. Not enough business intelligence is being used to market to consumers from an ethno-centric, culturally focused standpoint. Therefore, it is still not clear as to whether an ethnic cosmetic line is needed by consumers and would succeed in a highly profitable manner. When I say needed, it refers to the fact that existing product is satisfying the diversity of skin tones, hair textures, etc. While there are certainly differences that would open the door for highly targeted product, there has not been enough research and enough product development to truly support a successful ethnic line extension. It also takes deep pockets to do all that is necessary so young cosmetic entrepreneurs will have a hard time getting product to market.
Halle Berry, Queen Latifah, and Salma Hayek are models for cosmetics firms. Mass merchandised cosmetics are not ethnic, but instead offer broad choices of skincare shades that include the darkest of the dark and the lightest of the light. It’s just good bidness. These include Revlon, Tommy Hilfiger, and MAC among others. Additionally, there are online cosmetic merchants that serve the ethnic market such as Makari, Rainbow Beauty, Black Opal, Iman, Interface, and Sepia.
If retailers honestly wish to pursue this market, they should spend a few minutes online to find suppliers. They’re out there.
It has been the eyewear industry’s experience that customer segmentation of ethnic consumers is of limited value because more often than not an ethnic consumer will gravitate to the same top selling eyewear any mainstream consumer will. There is a niche where specialized product does exist, but despite all efforts to grow it, it languishes as only a minor niche. Many successful retailers will opt to skip that niche, and never miss it, by selling the same fashionable styles to all consumers, regardless of race.
There are some issues of matching colors to skin tones, however, skin tones vary considerably even within any one race, so going multi-cultural is hardly a big step.
Our data indicate its the same story for cosmetics–sometimes the name of your brand makes a difference to ethnic consumers, but the product itself isn’t all that different.
Ethnicity still frightens mass marketers (manufacturers AND retailers). Look at the way that the CPG and retailing industries thinks of women in general and then ask yourself why their judgment should be better when it comes to women of color or women of different nationalities. The fear of offending becomes a blanket of denial and so richly deserving markets continue to go underserved.
Ethnic cosmetics have been on mainstream retailers’ shelves in select locations for over 50 years. Often the sales and margin generated per square foot simply wouldn’t be competitive for all locations, so the merchandise is displayed selectively. If the potential for wider display was terrific it’s likely that it would’ve been discovered already, since 50 years is a long time.
Ethnic products are often the victims of one dimensional thinking by retailers. The standard metrics, such as profit per linear foot of shelf space, fail to account for narrowly targeted ethnic items.
Ethnic cosmetics are a particularly difficult issue since the retailer needs to carry a full line of products, varieties and fragrances to satisfy the target consumer even though many of these items would individually fail to meet the accepted retailer metrics.
The problem is further complicated by the tendency to tag stores using the simplistic “ethnic” or “non-ethnic” classification. In reality, as Jeff points out, most stores today have a range of shoppers with many different ethnic backgrounds.
Retailers need to think more in terms of satisfying their shoppers. They should be willing to pursue emerging ethnic growth opportunities as they would other new products and allow them to demonstrate profitability over time.
Tesco, with their new U.S. entry into the Fresh Foods market, took the needed research steps to understand how its potential target consumer evaluates, buys and uses a product. This consumer research driven, U.K. foods corporation utilized ‘in-home’ placement studies (i.e. besides researchers, its management spent at least a month living in the homes of targeted shoppers) to understand and then develop the right products, packaging, and marketing programs.
Tesco showed its commitment to serve the target consumer and future shoppers.
Why is it so hard for the many cosmetic companies that have a very high gross profit margin in their products to properly segment the market in order to secure some very loyal–and growing in numbers–ethnic groups? Hmmmmmmmmmmmmm
I am in the process of finding funding for an ethnic cosmetic line I formulated. Just completing the business plan was a tiering process. The market research for sustainable ethnic line simply doesn’t exist.
The issue with marketing ethnic products is that most of them are inferior. Most general-market companies simply add deeper pigment to a base of zinc and titanium (white pigments). The result is a poor color match. Mineral lines may try to create darker shades but darker pigments (iron oxides) are unstable without a carrier.
The bottom line is that ethnic consumers purchase very little prestige products (foundation, powder and concealer) opting instead to buy lip color and mascara. The majority is not accustomed to using prestige products and the products they have tried fall short.
Sounds like I’m swimming up stream….
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Ryan Matthews and Mark Lilien boiled down pretty well. They just said it all in a much nicer way than I could ever do. To me it looks like Mr. Joyner is trying to convince retailers that there is this underserved market that is just waiting to be tapped. We hear this line all the time in all segments of retail, particularly in location evaluation. Then as usual, nothing happens, and for good reason.
There are two separate but related questions being asked. Not enough business intelligence is being used to market to consumers from an ethno-centric, culturally focused standpoint. Therefore, it is still not clear as to whether an ethnic cosmetic line is needed by consumers and would succeed in a highly profitable manner. When I say needed, it refers to the fact that existing product is satisfying the diversity of skin tones, hair textures, etc. While there are certainly differences that would open the door for highly targeted product, there has not been enough research and enough product development to truly support a successful ethnic line extension. It also takes deep pockets to do all that is necessary so young cosmetic entrepreneurs will have a hard time getting product to market.
Halle Berry, Queen Latifah, and Salma Hayek are models for cosmetics firms. Mass merchandised cosmetics are not ethnic, but instead offer broad choices of skincare shades that include the darkest of the dark and the lightest of the light. It’s just good bidness. These include Revlon, Tommy Hilfiger, and MAC among others. Additionally, there are online cosmetic merchants that serve the ethnic market such as Makari, Rainbow Beauty, Black Opal, Iman, Interface, and Sepia.
If retailers honestly wish to pursue this market, they should spend a few minutes online to find suppliers. They’re out there.
It has been the eyewear industry’s experience that customer segmentation of ethnic consumers is of limited value because more often than not an ethnic consumer will gravitate to the same top selling eyewear any mainstream consumer will. There is a niche where specialized product does exist, but despite all efforts to grow it, it languishes as only a minor niche. Many successful retailers will opt to skip that niche, and never miss it, by selling the same fashionable styles to all consumers, regardless of race.
There are some issues of matching colors to skin tones, however, skin tones vary considerably even within any one race, so going multi-cultural is hardly a big step.
Our data indicate its the same story for cosmetics–sometimes the name of your brand makes a difference to ethnic consumers, but the product itself isn’t all that different.
Ethnicity still frightens mass marketers (manufacturers AND retailers). Look at the way that the CPG and retailing industries thinks of women in general and then ask yourself why their judgment should be better when it comes to women of color or women of different nationalities. The fear of offending becomes a blanket of denial and so richly deserving markets continue to go underserved.
Ethnic cosmetics have been on mainstream retailers’ shelves in select locations for over 50 years. Often the sales and margin generated per square foot simply wouldn’t be competitive for all locations, so the merchandise is displayed selectively. If the potential for wider display was terrific it’s likely that it would’ve been discovered already, since 50 years is a long time.
Ethnic products are often the victims of one dimensional thinking by retailers. The standard metrics, such as profit per linear foot of shelf space, fail to account for narrowly targeted ethnic items.
Ethnic cosmetics are a particularly difficult issue since the retailer needs to carry a full line of products, varieties and fragrances to satisfy the target consumer even though many of these items would individually fail to meet the accepted retailer metrics.
The problem is further complicated by the tendency to tag stores using the simplistic “ethnic” or “non-ethnic” classification. In reality, as Jeff points out, most stores today have a range of shoppers with many different ethnic backgrounds.
Retailers need to think more in terms of satisfying their shoppers. They should be willing to pursue emerging ethnic growth opportunities as they would other new products and allow them to demonstrate profitability over time.
Tesco, with their new U.S. entry into the Fresh Foods market, took the needed research steps to understand how its potential target consumer evaluates, buys and uses a product. This consumer research driven, U.K. foods corporation utilized ‘in-home’ placement studies (i.e. besides researchers, its management spent at least a month living in the homes of targeted shoppers) to understand and then develop the right products, packaging, and marketing programs.
Tesco showed its commitment to serve the target consumer and future shoppers.
Why is it so hard for the many cosmetic companies that have a very high gross profit margin in their products to properly segment the market in order to secure some very loyal–and growing in numbers–ethnic groups? Hmmmmmmmmmmmmm
I am in the process of finding funding for an ethnic cosmetic line I formulated. Just completing the business plan was a tiering process. The market research for sustainable ethnic line simply doesn’t exist.
The issue with marketing ethnic products is that most of them are inferior. Most general-market companies simply add deeper pigment to a base of zinc and titanium (white pigments). The result is a poor color match. Mineral lines may try to create darker shades but darker pigments (iron oxides) are unstable without a carrier.
The bottom line is that ethnic consumers purchase very little prestige products (foundation, powder and concealer) opting instead to buy lip color and mascara. The majority is not accustomed to using prestige products and the products they have tried fall short.
Sounds like I’m swimming up stream….