The Cosmetics Industry

The history of the cosmetics industry can likely be traced to some of the very earliest days of civilization. It was in the lasthalf of the nineteenth century, however, when toiletries and cosmetics began to be produced and marketed on a mass scale, as opposed to being concocted in essentially local establishments (Moskowitz, Katz, and Levering, 1985). In 1880, the country's largest cosmetic firm, Avon, was founded (Moskowitz, Katz, and Levering, 1985).

Industry sales in 1990 were $11.4 billion, which represented a 9.6 percent increase over the $10.4 billion of 1989 (Royce, 1991). From 1987 through 1990, industry sales grew by 34.1 percent, and by 1993 should near $15 billion, a gain of 31.6 percent over 1990 levels (Royce, 1991).

Operating margins in the industry are relatively high, with 17.5 percent being recorded in 1990 (Royce, 1991). Operating margins increased annually from 16.1 percent recorded in 1987, and are expected to reach 19 percent by 1993 (Royce, 1991).

Net profit in the industry is also strong. The net profit recorded in 1990 was 7.5 percent, up from 6.8 percent i

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all or in partby a decrease in product demand, as a consequence of changing consumer perceptions of the quality/ price relationships of the affected products. A premiumbrand cosmetic products refers to those products in the 95th or higher price percentile. Thus, such perfumes as "Chanel," "Joy," and "Giorgio's" are included within the definition. It has been found that consumers do not generally resist the use of bar codes on the packaging of premiumbrand cosmetics. Resistance is strong, however, to the placing of bar codes on product labels, and on package tops. It has also been found that demand for premiumbrand cosmetics would likely suffer to a statistically significant extent if bar coding were placed on product labels and on package tops. Packaging, thus, is an important factor in the marketing of prestige brand cosmetics. Distribution Shifts in the distribution of cosmetics are resulting in changes in the industry's product mix (Standard & Poor's, 1990). Cosmetics distribution was, but a short time ago, dominated by department stores. In the early1990s, supermarkets and drug stores account for a majority of the sales of both makeup and skin treatment products (Standard & Poor's, 1990). The distri
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Approximate Word count = 2114
Approximate Pages = 8 (250 words per page)

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