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External Environment Factors Affecting the Cosmetics Industry

Essay by   •  March 8, 2011  •  Case Study  •  1,897 Words (8 Pages)  •  16,083 Views

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1. Government

"The Food and Drugs Act and the Cosmetic Regulations are the governing body as stipulated by the Government to outlines safety requirements that cosmetics sold in Canada must meet. The regulations also stipulate that cosmetic manufacturers must disclose ingredients in their cosmetic product to Health Canada. Departmental officials then review this information to ensure that the product does not contain ingredients in quantities above acceptable concentration. In their review, Health Canada officials also ensure that the product does not contain a substance found on the Cosmetic Ingredient Hotlist. In addition, Health Canada scientists are continually monitoring Canadian and international scientific studies and research on the risks posed by chemicals used in cosmetics." (Health Canada Sun & Skincare Education 2007)

In constructing a specific monitoring system for cosmetics, the government will convey to the consumers that they are concerned for their general welfare. This will boost consumer's confidence to purchase cosmetics that are distributed locally as they have been tested and are in within regulations rules.

Marketers have to constantly be knowledgeable about the new developments within the industry, so that there are aware of every new ingredient and the potential risk. This will affect their promotions of the product as well as developing strategic and tactical plans in order to ensure that each product gain approval, especially if it's a product that is being demanded by the market.

2. Political/Legal

"The Federal Agency most often involved in regulatory encounters with the industry was the Food and Drug Administration (FDA) restricted the use of some specific ingredients including mercury compounds, chloroform, and methylene chloride. Other regulations dictated that cosmetics contain no poisonous or harmful substances and no filthy, putrid, or decomposed substances; they must also be made and held under sanitary conditions. The FDA also instituted labeling requirements that compelled manufacturers to list cosmetic ingredients in descending order according to the quantity used, with some flexibility allowed for the protection of trade secrets. The FDA also had the authority to take legal action against cosmetic companies if problems developed with the safety of products already on the market. To do so, the agency was required to prove in court that the product was harmful or misbranded." (Highbeam Business Magazine-Perfumes, Cosmetics, and Other Toilet Preparations)

The current authority and regulatory posture of the Over the Counter (OTC) program is in essence an outcome of the evaluation of the FDA. Most consumers do not question the safety and many do not question the effectiveness of OTC drugs. Since the inception of the OTC drug review, the agency has maintain that a monograph describing the condition under which the OTC drug will be generally recognized as safe and effective and not misbranded must include both specific active ingredient and specific labeling. The more knowledgeable a consumer is of the ingredients within a product they will be more inclined to purchase the product, thereby increasing a company's profit margin. They can measure the benefits to be derived from purchasing a particular products as well as ensuring that it's the correct products which meets their needs. Therefore it's in the best interest of the manufacture to follow the guidelines implemented by the FDA to ensure lasting sustainability.

Marketers have to beware of the legal aspects associated with the promotion of the products they market. If a particular product does not meet the guidelines of the FDA, then the company may be sued by the FDA if complaints are filed by consumers. Although it may not seem likely to be the responsibility of the marketer, they are responsible for the image of the company and products.

3. Social/Culture

With such a diversity of cultures within our society, manufactures of cosmetics have to be more creative in the creation of their products, in order to appeal to a wide range of users with various needs. Culture affects the production of products, as each region has a different need different from the other. If the company desire is to be globally recognized, then extensive research must be conducted to explore the cultural acceptances as well as the wants and needs of the consumers.

The lifestyles of consumers are constantly changing to meet the demands of life. Consumers have limited time throughout the day to accomplish numerous tasks. Making a product that is long lasting and easy to use along with health benefits will draw the consumers' attention as it blends with their demanding lifestyle.

The age of consumers within society that uses cosmetic today varies from teenagers to senior citizens. These cosmetics products enhance their physical features as well as now trending towards using natural ingredients resulting in a healthier end product.

The target group of the cosmetic industry is primarily geared towards women with a smaller product line available to men. Women are mainly conscious of their physical appearance and how to appear more physically attractive.

Social trends within the cosmetics industry changes on a regular basis affecting its consumer's likes and preference in choices. Consumers may have a product that works for them, however due to the constant change in trends the product will lose its appeal eventually being withdrawn from the market. Due to this factor, the company may experience a reduction in the total percentage profit.

Being aware of these social trends marketers will have to be current and ready to make changes to their promotional and informational campaigns. Especially, appealing to the target groups that tend to be the trend setters. By offering special sales discounts and product usage the marketer may boost the sales of products which may have lost its appeal in the market place.

4. Technology

In today's society, technology plays a vital role in the development

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