L´Occitane Market Analysis
by Adrien Saget, Daniela Zuluaga, Eugeniya Shurinova and Mary Arro
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Executive Summary Cosmetic industry is one of the fastest growing industries in today’s economy. Despite the financial recession and instability the market of cosmetics keeps growing. Trends are changing rapidly: what a couple of years ago was a niche market and was aimed at a narrow range of customers today becomes a must if a company wants to survive. A number of EU countries have developed a large trade surplus and a significant comparative advantage in cosmetics products. French and German companies sustain their comparative advantage by allocating more resources to innovative activity and new product development than other countries. The result is a large number of patents and successful new product launches in each company's established markets. In general, EU companies have had little success in penetrating the market in Japan and China. Regulatory barriers may have been an issue for EU firms in the past, however, the accessibility of the Japanese cosmetics market has greatly improved since it was deregulated. Regulations in the industry play a key role when entering the market. They can serve as an entry barrier for new companies due to additional costs and bureaucracy. But as well they can serve as an indicator of an environmentally friendly, cruelty-free company. L’Occitane is an all-natural beauty products provider, based in Manosque in the Haute-Provence region of southern France. A fixture in Europe, L’Occitane has a growing retail presence in Japan, China, Hong Kong, Taiwan, Korea, Australia and elsewhere in the Pacific Rim. L’Occitane is one of the most successful EU companies. When going international L’Occitane faced challenges, was operating in red but in the end it yielded high profits on the Asian market and now the main company’s activity is concentrated in that region. A detailed study of the company was conducted in order to assess company’s current situation. One of the
1
Executive Summary Cosmetic industry is one of the fastest growing industries in today’s economy. Despite the financial recession and instability the market of cosmetics keeps growing. Trends are changing rapidly: what a couple of years ago was a niche market and was aimed at a narrow range of customers today becomes a must if a company wants to survive. A number of EU countries have developed a large trade surplus and a significant comparative advantage in cosmetics products. French and German companies sustain their comparative advantage by allocating more resources to innovative activity and new product development than other countries. The result is a large number of patents and successful new product launches in each company's established markets. In general, EU companies have had little success in penetrating the market in Japan and China. Regulatory barriers may have been an issue for EU firms in the past, however, the accessibility of the Japanese cosmetics market has greatly improved since it was deregulated. Regulations in the industry play a key role when entering the market. They can serve as an entry barrier for new companies due to additional costs and bureaucracy. But as well they can serve as an indicator of an environmentally friendly, cruelty-free company. L’Occitane is an all-natural beauty products provider, based in Manosque in the Haute-Provence region of southern France. A fixture in Europe, L’Occitane has a growing retail presence in Japan, China, Hong Kong, Taiwan, Korea, Australia and elsewhere in the Pacific Rim. L’Occitane is one of the most successful EU companies. When going international L’Occitane faced challenges, was operating in red but in the end it yielded high profits on the Asian market and now the main company’s activity is concentrated in that region. A detailed study of the company was conducted in order to assess company’s current situation. One of the