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.
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).
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 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 the beginning of the 20th century in for example Europe, where it was considered that a 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 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).
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.
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 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 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.
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.
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.
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 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.
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.
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.
The younger interviewee is interested in how the sun care products are manufactured and what kind of science is behind the manufacturing process. Her main source of information is the internet, as she considers it fairly easy to find the manufacturers' web pages and relative information. Also, information from other sources than the manufacturers is easily attainable online.
The older interviewee is more dependant on information provided by personnel in pharmacies and on brochures available. She also reads many women's magazines where there are often articles on sun protection and comparisons of products. She is interested in the scientific research having to do with developing sun protection products, but often lacks the energy and time for studying the information available.
The information provided by a pharmacy in Helsinki suggests that there is a clear season for protecting sun care products - summertime. However, there is an ongoing demand for sun care products as people travel more frequently than before. Families with small children are often highly interested in high factor products which are water-resistant. Elderly people are also increasingly informed about the dangers of high exposure to sunlight and are interested in protecting their skin. Furthermore, allergic people with sensitive skin are the biggest consumer group for protecting sun care products sold in pharmacies. People who acknowledge that they have sensitive skin and people who tend to get sun burnt easily are most interested in protecting their skin. This group contains people from all ages and both genders, however, it is mostly women who take caution in carefully protecting the skin from sunlight.
The interviewees who have not used protecting sun care products sold in pharmacies identified as the main reason for not using these products that they do not need them. 10 of the 12 interviewees in this group admitted to use sun care products sold in stores. They reasoned that their skin is not sensitive and does not get sun burnt easily. Hence, they have no need for sun care products with high scientific qualities, which are sold exclusively in pharmacies. When asked whether they would use such products had they sensitive and easily sun burnt skin, they all said yes. The remaining two interviewees claimed not to use any sun care products as they do not sunbathe. When asked if they were to sunbathe, would they purchase pharmaceutical sun care products they said no, as they would purchase some product available in their local grocery store. All twelve interviewees in this group did claim to acknowledge the risks with excess exposure to sun, but were convinced that products available in stores are adequately protective.
According to the data collected from the interviews, there are two main consumer trends: 1) the consumers' increased awareness to the risks of high exposure to sunlight 2) the largest consumer group is those who are allergic and have sensitive skin. 100% of the interviewees acknowledged the risks with inadequate sun protection and 80% of the interviewees who do not use pharmaceutical sun care protection considered that they would use these products had they sensitive skin. Only 17% of our interviewees do not use any protecting sun care products.
Vichy has a long history, dating back to the 1930s when they stated that the skin is not only covering our body, but it is an actual living organ that is individual and needs to be taken care of. Everyone's skin is unique, and Vichy seeks to understand these differences and to develop products that are suitable for everyone and will bring benefits to different types of skin.
The Vichy brand has built its image as a trustworthy and high quality range of skincare products. As a brand it emphasizes the effects of the thermal spa water it uses, the research they do at Vichy laboratories, and the general respect for different kinds of skin types that Vichy have. Their products are suitable for anyone, no matter what type of skin they have.
The trend of people being more aware of healthier lifestyle, and the hazardous effects of pollution and general everyday life manners have on your skin, has its effects on the cosmetics industry, for obvious reasons. People are becoming increasingly interested in skincare and how to work for a healthier looking skin and slow down the ageing process in every way they possibly can.
Vichy laboratories are constantly doing research to improve their products and want to bring that out to the public through their advertising. This at least seems to be the perception that people get from their advertisements. A large part of Vichy is also educating people on skincare. People want knowledge and Vichy wants to provide it for them. The best possible skincare, requires understanding for what you are doing and why. Otherwise it will be extraordinarily difficult to maintain the high level of skincare that you want to. Vichy laboratories do research and develop and get new findings, and this is what they want to bring to the public.
Vichy products go through extensive and exhausting testing before they are actually brought to the market. They want to make sure that their products are both efficient and safe for everyone to use. The products are sold through pharmacies and drugstores and are dermatologist tested and this evokes trust within consumers.
Talking to people and asking what comes to mind when they think of Vichy, the general response was that they provide high quality skincare products for everyone, and they are perceived as trustworthy and reliable. If people go out and buy Vichy's products, they expect a certain standard for the products, and they seldom seem to be disappointed. So L´Oréal seem to have succeeded in promoting their brand in an appropriate manner. The question might be, how to get more people to see that this is actually what they need. Even if they think it's good and reliable among other things, they still might withstrain, for whatever reason. Instead they might just go to a convenience store and buy something from another brand, because they find it sufficient enough.
Nivea is a large global brand on the market for skincare and beauty products. Nivea is owned by a German company - Beiersdorf. Nivea was founded in 1911, whereas Beiersdorf was founded in 1882. The trademark "Nivea" was expropriated in many countries after the second World War. Beiersdorf completed buying back the confiscated trademark rights in 1997. Internationalisation during the 1980s propelled the Nivea brand to a wider global market. (http://en.wikipedia.org/wiki/Nivea)
The revenue of Beiersdorf was in 2006 € 5, 120 million and the net income was € 385 million. Beiersdorf employs 16 500 people. The Headquarter is in Hamburg, Germany. Beiersdorf's brands, in addition to Nivea, are Labello, 8x4, la prairie, JUVENA, Hansaplast/Elastoplast and Florena.
Nivea's product range consists of suntan lotions, shaving creams, shampoos, facial toners, make-up products, and body products. The Nivea brand consists of Nivea Sun, Beauté, Visage, Hand, Nivea for Men, Baby, Crème, Body, Hair Care, Lip Care, Intimate, and Soft. Today Nivea is the worlds' biggest personal care brand.
Nivea can be considered to be Vichy's competitor, even though its products are not sold exclusively in pharmacies. Nivea's competetive advantage is its status as a globally recognised brand. Its sun care products are sold very broadly, and the products are cheaper than those of Vichy. Nivea has focused its protecting sun care products and marketing on families and children.
On the market for protecting sun care products available at drugstores, one of Vichy's competitors is the Farmos Group, which is the LUMENE Group's subsidiary. Farmos produces a range of products on the market for hygiene products. Farmos only produces non-perfumed beauty products, most of which are sold exclusively in pharmacies. Farmos Group is the leading company on the Finnish market for products in the range of wash-, cleanse-, hygiene-, and industrial chemicals. Their product range provides solutions to everyday cleanliness and hygiene.
Farmos Group employs 250 people, 70 of which work abroad. Farmos has subsidiaries in Russia and in the Baltic region; Estonia, Lithuania, Latvia, Belarus and Ukraine.
Farmos Group's main sun care product is the Favora sun gel. It is a sun care product based on the protecting qualities of titanicocside (found in Finland's nature). The gel also contains aloe vera. The gel is non-perfumed and does not contain additives.
LUMENE Group was founded in 1948. Today its product range consists of products for skincare, make-up, professional hair care and professional cleansing and hygiene. Its most important business sections are Lumene Cosmetics, Cutrin, and Farmos. The turnover of Lumene Group was € 136,5 million in 2006. LUMENE Group employs about 1000 people. The Headquarters are in Espoo, Finland. LUMENE Group has a strong position on the Finnish market and has good opportunities for growth in Russia, the Baltic region and in the USA. The subsidiaries of LUMENE Group are in Estonia, Latvia, Norway, Russia, and USA. (http://www.farmos.fi/index.php?option=com_content&task=view&id=83&Itemid=131)
LUMENE Group and Farmos Group have a strong position on the Finnish market for beauty products. Both produce products for protective sun care, however, only Farmos Group sells these products in pharmacies. The core competitive advantages of both companies are their knowledge on the northern regions of Europe, and that LUMENE's products are produced in Finland, whereas Farmoses products are produced in Finland, Russia, and in the Baltic countries. These are competitive advantages as the knowledge on these markets provides opportunities for growth. Producing the products in the northern countries provides the companies with good possibilities for effective control on quality. Also, having a good image as an employer further strengthens the foothold of the companies on the market.
Vichy's strengths are in their products. Research, in form of interviews, has shown that customers know what to expect of Vichy's products and they get their expectations met by the products that are of high standard. Vichy's image is about quality and their products have lived up to their image. Image is clearly a strength for Vichy, with their image and products they have built a lasting relationship with their customers. Vichy's image is built by their products, their products are expensive and are clearly meant for people who are conscious of the damage the skin suffers from the sun. By keeping Vichy's products expensive they keep up their image of high standard skin care. The high price of the products can keep their devoted customers but can also push away new potential customers. The fact that Vichy only sells their products in pharmacies is also a strength. This gives customers the assurance that their products are of high standard and can be trusted. People who care about their health also care about their skin and by distributing a product only in pharmacies attract customers that are conscious about the condition of their skin.
Vichy's weaknesses would be in their market share and in the mix they use. Their market share has a possibility to grow but at the moment it is not at the best possible level. The mix they use might contribute to this, by only selling Vichy's products in pharmacies in Finland it is not as easy to purchase a Vichy product as it would be if they were distributed in grocery stores. To reach young customers Vichy should sell their products in stores that young, busy people visit. This means selling their sun care products in grocery stores or in specialised beauty stores where it would be easy to grab the product on their way in or out from the shop. The price for Vichy's products might also be a barrier for young people when buying sun care products. Even though Vichy has an image of great products the price might not be appealing to young people and because of this they might choose a product that is not as expensive and that also easier to find and purchase. Vichy's market share is a weakness and an opportunity; a weakness because their market share is not great but an opportunity because they have room to grow.
Vichy's opportunities lie in their consumers. They have the possibility to expand their consumer basis by attracting more customers and also by keeping their old ones. By new advertising campaigns suited for the younger audience they might get the interest from young consumers that appreciate skin care products of high standard. Vichy's customers also recommend their products so word-of-mouth is vital when marketing their products.
Vichy has increased awareness amongst customers about how vital sun care products are for the skin. Their education strategies can really be seen as an opportunity to educate the public and at the same time market their own products. Education about the dangers of the sun are very important today and educating the public is definitely positive for Vichy's image.
Vichy's market share is an opportunity for the company. They have room to expand their market share and there are several possibilities for this, both in Finland and in the world.
Competition from other brands is a clear threat to Vichy. Many other brands that reach young people are cheaper and easier to buy. For example, when interviewing many people found Nivea's products more appealing because they were used to finding their products in stores they visit often, such as grocery stores or department stores. The brands that young consumers use have also marketed their products well to their target group. Using famous spokespersons and with young, hip advertising they have reached a bigger public.
Another threat for Vichy is the Mix, their availability and distribution. Because Vichy is only sold in pharmacies it has not reached the young buyers.
After studying Vichy and interviewing customers we have come to find that Vichy is a well-known brand amongst people who have sensitive skin and see a reason for using their products. Vichy is a respected brand and is known for it's high-quality products. Vichy's market strategies should focus on the younger customers by new advertising campaigns that speak to a greater public. Vichy is a brand that will always have their devoted customers that are used to high quality products. In Finland Vichy should think of maybe varying their distribution channels to other places than pharmacies. It was interesting to study a brand that has so many possibilities in the future.
- Grant, R M, (2005): Contemporary Strategy Analysis: Concepts, techniques, applications.
- www.brandstorm.loreal.com (Research Pack)