Consumer
products firms target hair-care market for growth
Cosmetic industry giants are trying to tap into higher growth by
introducing new premium-priced hair care products into the market
this year. Although hair care is a fiercely competitive business
with untold numbers of products on the shelves, companies are appealing
to baby boomers’ sense of vanity, and using scientific developments,
to charge a little bit more for the promise of beautiful hair. If
successful, the payoffs could be substantial, say business analysts.
Companies saw hair sales of mass-market hair care products like
shampoos, conditioners and home coloring kits reached $5.5 billion
for the year ended May 21, 2000. With premium shampoos often selling
for more than twice the $2.75 average price of their mass-market
counterparts, the profit margins are much more substantial.
"Companies have realized that hair care is a big area and
consumers will pay for different attributes," says William
Steele, consumer products analyst at Banc of America Montgomery
in San Francisco. "The typical shampoo section used to be 6
feet wide. Today it is 25 feet," notes James Parr, vice president
of research and founder of Advanced Research Laboratories a Costa
Mesa, Calif.-based company that develops beauty and hair-care products
such as Citre Shine and Zero Frizz. "It just amazes me that
companies can sell so many products that don’t even have that
much of a distinction, but I think that’s what companies are
doing: trying to make a distinction," Parr says.
P&G Works on Its ‘Physique’ P&G, for instance,
introduced its Physique hair-care line earlier this year and plans
a re-launch of its Vidal Sassoon brand this fall. Although a P&G
spokeswoman would not comment on sales figures, the company cited
strong sales of premium hair-care initiatives such as Physique as
one of the main factors behind a 7% sales increase in beauty care
products for the January-March quarter. The line, which retails
anywhere from $4 to $10, features special formulas designed to give
hair anything from more volume to tamer curls. P&G officials
say the premium products are meant to solve some of women’s
biggest hair-care complaints. They aren’t concerned that the
line will cannibalize the company’s other hair-care brands
such as Pantene, Head and Shoulders and Pert Plus. "There are
so many consumers with different needs out there and each line brings
a different technology," says Tracy Long, supervisor of public
relations for Procter & Gamble hair care. "Three out of
four women aren’t getting the style they’re looking for,
and that led us to Physique."
Another initiative comes from Avon, which is also using scientific
developments in a new 22-product hair-care line called Advance Techniques,
which will hit the market this September. The line features patent-pending
technology called Balancing B2 Complex, which Avon claims is the
first-ever weather-responsive formula. The products will sell for
$2.99 to $4.99, slightly higher than mass-market hair-care products.
Advance Techniques will replace Avon’s Techniques line as
its only U.S. hair-care line. Including other global hair-care brands,
Avon expects to achieve $300 million in hair-care sales by 2002.
On the higher end of the price scale, cosmetics giant Estee Lauder
recently acquired a majority stake in Bumble and Bumble LLC, a high-end
hair salon and products company, which sells its hair-care line
in more than 1,400 top-tier salons and a small number of select
retailers worldwide. The company did not disclose financial details,
but Goldman Sachs analyst Amy Low Chasen estimates annual sales
of about $25 million, with most of that coming from sales of products
to salons. Estee Lauder’s Clinique line is also launching a
line of prestige hair care products in July.
Though many companies are betting that consumers will pay for
scientifically advanced hair products, do they really work? Experts
say the science behind hair care has become far more advanced in
the last 10 years, but many new products popping up on beauty-care
shelves are also masterful works of marketing. "It’s just
money," says Dr. Mary Ann O’Donoghue, of the growth in
new products. O’Donoghue is associate professor of dermatology
at Rush-Presbyterian St. Luke Medical in Chicago and vice president
of the American Academy of Dermatology. "The cosmetic industry
is a multibillion-dollar industry. People like new products, and
sometimes it’s just the little thrill of getting something
new," she adds. But bad hair sufferers can take heart. Dr.
O’Donoghue says some of the more effective products on the
market today include those that straighten curly hair, make the
hair shaft thicker and give UV protection.
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