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PRE-CASE STUDY OF VICHY (1B)

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PRE-CASE STUDY OF VICHY (1B)

    PRE-CASE STUDY OF VICHY (1B)

     23028 Image Management, 2007

     Examinator: Åke Finne

     Team C1

     Maria Krogerus 061770

     Maria Sjöblom 032150

     Heini Vesander 060240

     Maria Krogerus 061770 1

     Maria Sjöblom 032150

     Heini Vesander 060240

Table of Contents

    1. The Market ................................................................................................................... 2 1.1. Differences in growth between regions ................................................................. 3

    1.2. Growth opportunities ............................................................................................. 5

    2. The Competition ........................................................................................................... 5 3. Consumers and Trends ................................................................................................. 8

    4. VICHY ......................................................................................................................... 11 5. Competition ................................................................................................................ 12 5.1. Nivea .................................................................................................................... 12 5.2. Farmos Group ...................................................................................................... 13

    6. SWOT-analysis ........................................................................................................... 15 6.1. Strengths .............................................................................................................. 15 6.2. Weaknesses .......................................................................................................... 15

    6.3. Opportunities ....................................................................................................... 16

    6.4. Threats ................................................................................................................. 16 7. Conclusion .................................................................................................................. 17 8. References .................................................................................................................. 17

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    1. The Market

    In this day and age, it is considered beautiful to have a tan. In the summertime a tan gives the impression of a person that spends time outdoors, as opposed to a pale person whose skin reveals that they spend more time inside than out. A tan gives you status. With growing awareness of what the harmful rays of the sun, UVA and UVB, can do to you and your skin, a need for sun care products for has been created and planted within the consumers. Therefore you also have a market (New Insights for Sun Protection EADV 2007).

    The section for sun care products might be the smallest one of all the sections within cosmetics and toiletries, but it is, none the less, one of the fastest growing sections within the industry (Suncare Products Global Market Overview, Euromonitor Data 2001). There are several reasons contributing the growth of this section and they also vary, between different markets and areas. Some of the differences can be linked to cultural as well as geographical aspects.

    Quite obviously the market for sun care products is very sensitive to time of year and weather conditions. For example, you are not going to have much use for high SPF lotions in Finland in November. On the other side you have got for example some Latin American countries, where you might need SPF all year around, not just during summer.

    Probably the most significant factor, and contributor to the growth of this particular section of cosmetics, is the growing awareness of what the harmful rays of the sun can do to a person and their skin. The increasing fear of skin cancer is forcing people to take a step back and consider their sunbathing habits, and perhaps re-evaluate their priorities in this area. Also the increasing pressure for both women and men, to look good at all times and most of all, look younger than their years, is a contributor that plays a significant part in this industry overall. People are becoming more and more aware of the fact that lying in the sun for hours at a time, can age your skin quite significantly. As we live in a world where vanity is a part of everyday life, this does play a major part also in the business of sun care products.

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    Because people want to avoid ageing and the damaging effects of the sun, while still being able to look tanned, the sun care business has a chance to boom. Self-tanning products have also taken a leap in growth, since they provide the kind of safety that no sun screen can match. And when adding SPF to a self-tanning product, how can you compete? Products with additional benefits, such as skin replenishing ingredients like vitamin A and E, are also on their way up. There are several ways that companies have started to take into consideration these additional kinds of benefits that they could offer, like creating waterproof sun screen for people who enjoy getting wet while being in the sun, or sweat proof sunscreen for athletes. Many athletes train outdoors in the summertime, and some sports are even mainly played outside, such as beach volley for example (Suncare Products Global Market Overview, Euromonitor Data 2001). .

    1.1. Differences in growth between regions

    In 2000, the most significant markets for sun care products accounted for nearly 80 percent of the world market, and they were Western Europe and North America, with North America being the fastest growing separate market globally (Suncare Products Global Market Overview, Euromonitor Data 2001).

    In Western Europe the products became increasingly sophisticated and what really boosted the market was the companies including some highly technologically developed anti-ageing ingredients in their products. Also the growing concern for the harmful effects of the UV rays added to the sales of higher SPF products. On top of these factors, there were things like spray formulas, which made it easier and less sticky to apply sun screen, as well as self-tanning products being developed to be more user friendly, easier to use and a natural looking, trace without streaks was guaranteed to up the sales of sun care products (Suncare Products Global Market Overview, Euromonitor Data 2001).

    Eastern Europe was still a bit behind on the growth here in the beginning of the century, but the signs were looking good. Increased tourism and travelling added to the sales of sun care products, but the base to start out from wasn‟t very high either so the market

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    not reaching the same numbers as Western Europe can hardly be deemed as surprising, by anyone (Suncare Products Global Market Overview, Euromonitor Data 2001).

    The base to start out with in the Asia-Pacific area was very low, but the area showed strong growth in the market of sun care products. One of the trends that probably helped boost the market was the boom to have white skin (Suncare Products Global Market Overview, Euromonitor Data 2001). It‟s as if they would have gone to the way it was in

    th century in for example Europe, where it was considered that a the beginning of the 20

    tan made you look rough. You were supposed to look like you preferred to stay indoors and amuse yourself there.

    The modest growth in Latin American countries can probably be traced to several different reasons. The extreme difference in income within the population is one factor that probably played its part over here. The money is distributed so unevenly in many of the countries, that the number of people, who could actually afford these products, is quite limited. The culture and the “relationship” that the people have with the sun over there is also a thing that can‟t be understood by everyone. Some of them just don‟t care and some just don‟t understand because they don‟t want to. The sales of sun care

    products in this area, was largely driven by the influx of foreign tourists (Suncare Products Global Market Overview, Euromonitor Data 2001).

    The European Commission wanted to improve the labelling system of sun care products, and make it coherent within the EU. This makes it easier for consumers to know what they are actually buying since it‟s the same as they are used to. For protection from the UVB rays, the minimum of 6, as obtained in application of the International Sun Protection Factor Test Method, was set. Therefore the scale went from low (6 and 10), to medium (15,20 and 25) to high (30 and 50) and added on the very high which was anything above 50. Also it was stated that the UVA protection factor should be at least 1/3 of the SPF, as obtained in application of the Persistent Pigment Darkening Method (PPD). Therefore the SPF/UVA-PF > 3. This should make it easier for people to understand the protection provided toward the UVA rays, without having to read through every ingredient and the whole specification to get the information they want

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    and need. Also, through this system you can make sure that everyone using sun care products actually protect themselves from UVA rays, since not everyone have completely understood the difference between the UVA and the UVB rays, and the effects they have on your skin, since the damage the UVA rays do, aren‟t as quickly visible as the ones of the UVB rays (New Insights for Sun Protection EADV 2007). 1.2. Growth opportunities

    There is growth in this business and it will continue. Educating people, and even scaring them, with the facts of the damages that UV rays will do to their skin is a way to create need for sun care products. The growth in after sun lotions has been more modest and is something that could be used. Getting people to understand the benefits of continuous usage of after sun lotion, instead of using it as a remedy when they get burned, is one way to create a need for it and that way increase the sales. Also using more and more ingredients that provide secondary benefits appears to be the way to go, when you want to increase the usage of sun care products. And creating options, for a tan without exposing yourself to the sun in extensive amounts, is another area that still has a lot of potential. People want to be outside in the summer, but providing a self-tanning product that also has SPF, would encourage people to cover up and be careful with the amount of sun exposure. They could get a tan without overexposure to the sun, and they would be covered to a certain extent so that they could be active outside without worrying.

2. The Competition

    Vichy is one of the top five brands in sun care and protection in Western Europe, but there is still room for them to increase their market share over here, as well as in other areas. As stated earlier in defining the market, North America is the fastest growing area for sun care products, and this is a great opportunity for Vichy, since they don‟t really

    have a market share within the U.S. Even though Vichy is nr 1 in the ranking of brand according to retail value, in Russia, they are not so high up on the list when you look at the percentage of retail value for brands. Also, in the Asia-Pacific area there is fierce

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    local competition, but that gives Vichy a chance to increase their market share since it really can‟t decrease a lot. Vichy‟s mission to educate people on skincare, and even more importantly sun care, should be a suitable approach for the Latin American market. Here the opportunities are basically unlimited, since the market overall is so nonexistent at this point, that the competition is not established here yet.

    The great difference between the U.S. market and the European market is that in the U.S. you have got a few very established brands with sun care products, and they dominate the market. Only two brands stand for about 50 percent of the sun care market. In Europe on the other hand, you‟ve got several brands with smaller market shares, the two

    leading brands combined have less than 30 percent of the market, while „other brands‟ come up to 44 percent, when this same number in the U.S. is 6 percent. U.S. is unique in this sense, because the markets in Eastern Europe and the Asia-Pacific area do resemble the European market more or less, with more brands and smaller market shares. This difference is significant in the way that the competition on the U.S. market is very strong and it will take quite a lot of investments of resources to properly be able to penetrate the market and get a foothold among the other brands within the sun care section of cosmetics. Especially since the two leading brands, Coppertone and Banana Boat, are specialized in sun care products and don‟t really do other cosmetics.

    Neutrogena is another brand that is strong on the U.S. market and is quite comparable with Vichy since it is also mainly distributed through pharmacies and drugstores. Hawaiian Tropic which would be the fourth brand worth mentioning is also very established in the U.S. market and are well known for their beauty pageants that they arrange, and which bring them additional publicity and attention and that way also market share. (2004 & 2005)

    In Eastern Europe, and more specifically Russia, Vichy is ranked the nr 1 premium brand in retail value. Still when you look at the whole market they don‟t match up to the less expensive brands that are distributed through convenience- and department stores. It is a good sign that they are ranked number one within premium brands, such as Christian Dior, Lancaster and Lancôme, for example. This means that people, who are willing to use a bit more money and go to a pharmacy or a drugstore to get their sun

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    care products, trust Vichy and are satisfied with their products. However premium brands only stand for 14 percent of the whole sun care market. In this sense Vichy should use their educational approach to make people more willing to spend money on their sun care products. (2006)

    Vichy is really not represented at all in the Pacific-Asia market. In that area you have got quite a number of local companies, such as Shisheido and Kanebo, that take up a part of the market. The market in this area resembles the European market more than the U.S. in the sense that there are several brands and they all hold a small market share. It is actually even a step further away from the U.S. market model that Europe, since there are more brands that share more evenly distributed market shares. In China the premium brands hold a little over 20 percent of the total market, so the competition here is, as in Russia, stronger in the mass brands of sun care products. (2006 & 2007)

    The Latin American market is still so small that there really aren‟t a whole lot of numbers to compare brands with each other. On top of that, most of the market is actually divided between Mexico and Brazil, they stand for 65 percent of the sun care market (2006). Only about 25 percent of Mexican and Brazilian women use cosmetics with SPF daily. But the awareness of health issues connected with exposure to the sun is rising, so there could be a lot of potential in this market. The problem here could be the uneven distribution of wealth. A lot of the population in for example Brazil, are not going to be able to afford a brand such as Vichy. On the other hand, the ones that can afford sun care products, are in the upper income class, and might just be willing to spend a bit more money on the products. So there is a lot of potential here. But Latin America as an area seem to be quite significantly behind the rest of the world when it comes to actual awareness of the hazards that constant exposure to the sun can bring, and they don‟t seem to be as worried about it as people are say for example in Europe. This is why Vichy‟s educational approach could work really well here. And since the

    market is so small at this point, there isn‟t a whole lot of established competition, so this can also provide tremendous amounts of possibilities for Vichy in this area.

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    3. Consumers and Trends

    According to the data collected from the interviews, two consumers who use and purchase protective sun care products from pharmacies could be identified. From these interviews and from information provided by pharmacies, some trends could be identified.

Frequency

    A female, 21 years of age, described her purchasing habits of protective sun care products as frequent during summer time and when travelling to warm countries. When purchasing these products, she tends to buy several products at once. Reasons for this purchasing pattern, according to her, are 1) the need for products to protect from sunlight and also the need for repairing and calming products to be used after exposure to sunlight 2) the need for different products for the face and body 3) the need for different protective factors 4) buying many products at once saves time.

    A female, 67 years of age, described her purchasing habits of protective sun care products as frequent, as she travels to southern Spain several times per year. She purchases these products both from the pharmacies in Finland and Spain. Her main reasons for buying sun care products from pharmacies are 1) the feeling of safety and 2) the possibility of finding the same products in pharmacies in many countries. She also prefers pharmaceutical sun protective products as they are often of high protective factors, which decreases the risk of skin cancer. Protecting skin properly from excess sunlight also slows down the aging-process of the skin.

Preferences

    The younger interviewee named her favorite product Favora protecting sun gel. She

    also uses some of Vichy‟s products, especially when in need of very high protective factors. She also experiments between products and manufacturers, as she finds all sun protective products sold in pharmacies reliable and of high quality. She is rather satisfied with the current offer, although there are huge differences between pharmacies and their selection of sun protective products. She also pointed out that during summer time, sun care products are better represented than during winter time, so when

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    travelling abroad during winter season, some products are harder to find.

    The older interviewee prefers Vichy's and Roc's products as she perceives them to be of high quality. She uses a broad range of products, as she travels to Spain during many seasons. During summer time she prefers sun care products of very high protective factors for her face and upper body. However on her legs, she always uses products of lower protective factors. During winter time, she finds it unnecessary to use products of very high protective factors and prefers lighter products. She is fairly satisfied with the current offer, but does point out that in Spain the pharmacies have a much broader product range year round.

Rituals

    The younger interviewee does not purchase protecting sun care products very often (2 times per year), but she does purchase a broad selection of products at once. She does not ask for help from the personnel, as she prefers to search for products online. She usually knows beforehand what she is going to buy, and does not consider herself as easy to persuade other products. She does change between brands and products, according to the information found.

    The older interviewee buys protecting sun care products often (once per month) and she also likes to buy many products at once. She appreciates the personnel‟s advice and often ends up buying products that are new to her. She tries new products, but also often buys her favourite products from her favourite brands such as Vichy and Roc.

Attitudes

    Both interviewees share similar expectations on protective sun care products. The color is expected to be white or slightly beige. As an exception, however, the interviewees mentioned products that contain self-tanning pigments, in such cases, the product is expected to be slightly orange. Texture of the products is expected to be creamy. After sun products are expected to be less thick in texture and more liquid-like. The fragrance of these products are expected to be very light and non-perfumed. As both interviewees admit to have sensitive skin, they avoid highly scented sun care products.

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