Section 1. Market
1. Porter’s 5 forces model
• Competition in the industry
Moderate: There is a lot of professional hair care products available. However, very few of them are organic or semi organic. The main competitors are L’Oréal, KeraCare, and Kerastase.
• Potential of new entrants into the industry
Low: In France, hair care products are considered as part of the cosmetic industry. French government has strong requirements concerning the launch of a cosmetic product. These requirements are design to ensure customers’ health security. Therefore, the threat of new entrant is low in the French market.
• Power of suppliers
Low: There exist hundreds of different hairdresser’s salon in France, including afro-hairdresser’s salon. Moreover, it is possible to sell online. A lot of French people are looking online for professional hair care products for their daily use.
• Power of customers
Low: MPV Hair’s customers are people with African roots. In France and its islands, in 2017, 39% of the population has African roots. Furthermore, people are looking for professional hair care products for their daily use. The demand concerning organic products also increase, which means the demand for MPV Hair’ products will be high.
• Threat of substitute products.
Low : There is not a lot of substitute products in hair care industry.
According to Porter’s 5 Forces model, the french market seems to be an attractive market for the MPV Hair company.
2. Analysis of market factor (PESTEL)
Political and legal
To export hair care products to the French market, companies need to meet the following requirements, for detailed information use link below:
According to the European Union Cosmetics Regulation (Regulation (EC) 1223/2009) each company shall provide information on the physio-chemical (physical and chemical), microbiological and toxicological characteristics of ingredients. Also, packaging must contain required information such as ingredients, manufacturing number and precautions for use. Hair care products are not allowed to contain prohibited and restricted substances, see the link below:
Companies must provide the right documentation, which comply with all legal requirements.
All of the ingredient used in company’s product should be registered under REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals):
If the ingredient is not registered, company have to find out whether it must be registered or not. If yes, company must register it, proving its safety.
There are also rules for Classification, Labelling and Packaging (CLP):
It is really important to include information on potentially dangerous characteristics of chemical substances.
Most manufacturers try to use ingredients with proven effectiveness. If the company uses new ingredients (the effect of which has not been proven yet), the company must submit all the necessary documents and research findings to prove the value and effectiveness of new ingredients (Claim substantiation (Regulation 655/2013). This is a very important requirement, if the company uses innovative ingredients and technologies in their products, because it provides consumers with more security and stimulates their demand.
Also, there are some requirements for organic and natural hair care products (COSMOS and NATRUE standards):
French market of hair care products shows some negative dynamics for the last three years.
Revenue in this market segment dropped from 2307,67 million USD in 2015 to 2272,5 million USD in 2017. Moreover, according to the forecast, it is expected that hair care market will grow annually by -0,9%.
The main reasons for these negative tendencies are unstable economic situation and increasing number of terrorist attacks, which cause great harm to the French economy. People began to distribute their money more efficiently. They started to buy beauty products of less expensive brands (niche brands), trying to reduce their costs in such way. Nowadays, mass-market products are much more popular than premium care cosmetics.
Also, tough competition at retail level and emergence of new brands is significantly affect prices. To remain competitive, companies are forced to lower prices.
Small companies gain ground.
Small cosmetics manufacturers becomes more competitive from year to year. They are even able to compete with market giants, such as L’Oréal. Low price strategy and positioning as natural led lots of SMEs to success. About 25% of market in divided between SMEs and niche brands.
Hair care market turns online.
Online sales of f cosmetic products amounted to 12% in 2017 of all sales. According to forecasts, 16% of total revenue will be generated through online sales by 2021.
African people in France.
Official statistics claim that number of African people forms 3.5% of the population in France. However, other sources estimated African population in France of about 9-10% of the total population. Moreover, approximately 40% of the French population has African roots. Ethnic cosmetic products are a best prospect opportunity in France due to an increase in purchasing power of ethnic communities.
French cosmetics is considered an undoubted classic. For a long time, it is valued among consumers all over the world, including local people. The French pay special attention to the choice of hair and body care products. They are always open to new products, especially if they meet all their expectations and requirements.
France is considered an extensive merchant marine. It is a strategic maritime partner for many countries with around one hundred shipping companies, which operate over 1400 ships.
Furthermore, there are lots of international seaports and harbors on the territory of France. The main ones are Bayonne, Bordeaux, Boulogne-sur-Mer, Brest, Calais, Cherbourg-Octeville, Dunkerque, Fos-sur-Mer, La Pallice, Le Havre, Lorient, Marseille, Nantes, Nice, Paris, Port-la-Nouvelle, Port-Vendres, Roscoff, Rouen, Saint-Nazaire, Saint-Malo, Sète, Strasbourg and Toulon.
The French market of hair care products is very dynamic, consumer tastes change quite often. Companies have to launch new products every year. Only those companies that can constantly support the innovative development of their goods and product lines can successfully operate in the French market.
As it was mentioned earlier, niche products are gaining more and more popularity. Therefore, the formula for success is below:
Niche products = narrow specialization = modification of products for specific target consumers = innovations.
Hair care products made with organic ingredients are becoming a main trend of French market.
Awareness of the potential side effects and possible diseases from some chemical (artificial) substances is rapidly grows among French people. They tend to buy hair products made from organic and natural ingredients (macadamia, jojoba, coconut, avocado, etc.) that will not harm their health. Consumers began to give preference to niche brands, instead of buying goods from well-known manufacturers of cosmetics. Especially, they pay attention to products that are made outside of France.
The contribution of the cosmetics and personal care industry to Europe’s economy is very important and continuously growing. Europe is a major exporter, employer, and investor in research and development in personal care products, which is why France would be a considerable market for MVP Hair to enter. According to “Consumer Insights 2017”, a survey done to provide information about consumers in the European market, hair care products makeup 85.06% of the personal care and cosmetic industry. There are many competitors in this industry that need to be analyzed before starting a new company or moving forward with an existing company. Most Valuable Product have been selling in Ghana and other African countries since 1998. MVP hair continues to research new ways to compete in the ever-growing market. There are five main competitors to MVP Hair that will be discussed. These brands are known worldwide and their products are sold online as well as in-stores and salons in many countries. The first and largest competitor to MVP Hair is Head ; Shoulders. This company mainly focuses on shampoos and conditioners to treat dandruff but offers some variety of other products as well. They released a new line of products, the “Royal Oils Collection”, in order to reach an even wider range of consumer groups. This collection is made up of six products developed specifically for African American hair. It is designed to relieve the scalp and moisturize hair for all natural, relaxed, kinky, and coily crowns. Head ; Shoulders also offers a line of hair products for men, which is what MVP Hair is looking to do. They do not boast about using “natural” ingredients in their products, which could be an advantage to MVP Hair. Head ; Shoulders is known worldwide and is sold at a reasonable price for consumers. The next competitor is Franck Provost, “The professional answer for all hair types around the world”, as stated on their website. This brand offers a wide range of hair products and is present in many different countries’ markets. They do not offer an African-American specific hair product line which makes them less of a competitor for MVP Hair, but the do offer a simple line for men. Franck Provost created three shampoos designed for men called “100% Man”. This is similar to what MVP Hair is thinking of creating in the future. MVP suggests that men only need two products for their hair, a shampoo and a moisturizer. Franck Provost offers three shampoos for men but no moisturizer. Provost also boasts about his use of natural and healthy ingredients like keratin, creatine and UV filters in his products. More importantly, he uses Jojoba oil as well as avocado oil, similar to the ingredients MVP Hair uses in their products. The third competitor in the hair product industry is Schwarzkopf. This company is offered in 30 companies around the world and sells a variety of products like shampoos, conditioners, oils, dry shampoos and hair masks. They advertise products based on their customer’s hair type- thin, frizzy, damaged, etc., as well as advertising based on what consumers will be using the product for- straightening, combing, protecting. There are five different brands within the Schwarzkopf name. These brands include göt2b and göt2b Color, GLISS, Keratin Color, and ULTÎME, but the main brands associated with hair care are göt2b and GLISS. They do not offer any line of African American products nor do they specifically market to men. Another world-famous competitor who began operations in France in 1904 is Garnier. This company is present in 20 different countries and offers six different hair care brands for consumers. These brands include Fructis, Fructis Style, Whole Blends, Nutrisse, Olia, and Color Sensation. Garnier highly promotes their use of natural ingredients like avocado, essential oils and coconut, which is also similar to Franck Provost and MVP Hair. They sell products based on need of consumer like anti-frizz, curls, color care, etc. Garnier does not offer any products specifically for African Americans nor men, but they promise that they offer products for everyone with their Whole Blends line of shampoos and conditioners. L’Oréal is the last competitor for MVP Hair. They offer many different hair products similar to the other competitors which include hair masks, oils, serums, and treatments. L’Oréal also has multiple other brands within the L’Oréal hair care brand. Ever, Hair Expert, Elvive, and L’Oréal Kids all offer a wide range of products for different consumer groups.
All of these competitors each have their own reasons as to why they are a strong competitor to MVP Hair. They have all been established for quite sometime in the French, hair-care market, and have expanded to many other countries already. Head ; Shoulders is the biggest competitor because it already has a product line for African Americans as well as for men. The only way MVP Hair can distinguish themselves is by moving forward with their plan to offer products for specifically African American men. Franck Provost and Garnier use and promote natural, hair-healthy ingredients in their products but do not offer any type of African American hair products, so this is where they can fall short and MVP Hair could take over the market that those companies are missing out on. Schwarzkopf and L’Oréal are both well-known hair brands that hinder MVP Hair from successfully entering the French market.
4.SWOT Analysis of MVP Hair
France can become a very potential market for MVP Hair. If we make a SWOT analysis about it, we will understand that. So, we are providing a SWOT analysis about it below:
1. Strong Background: MVP Hair has a successful background as it has a good record in Ghana and some other countries close to it such as Nigeria, Ivory Coast, Togo, South Africa. Thus it also has a highly intensive product distribution channel in African countries. It’s now expanding to Europe and France will be the first country which has a large hair care industry and good environment for business.
2. Problem based approach: MVP Hair has a specific need for hair for the young and middle-aged people of France. Our products are mainly for greasy, kinky, coarse ,damaged and dry hair. We have different kinds of shampoos for that. Some of them are for squeaky clean, some to encourage growth, some for instant grease removal and some are sulfate-free shampoo. Our hair moisturizers are filled with shea butter, coconut oil, argan oil, sunflower seed oil, Olive oil etc. This makes our products popular for those having hair problems.
3. Strong R;D sector: As we have to put chemical ingredients in our products, our chemists did lot of research to make the perfect mixture of ingredients and we have a strong sector of this part. We need different kinds of oils for our moisturizers and different elements for shampoos, only expert chemists can do this successfully and we are strong in this part.
4. Proper target market: We are targeting young and middle-aged male people of France and they are people of color. As MVP hair has a successful market in Africa and most of its consumers are African people, it could help in European market too as France has a good population of people with African roots. So, we have a strong target market in this regard.
5. Wide distribution Network: As we said about it before, MVP Hair is already in Ghana, Togo, Nigeria, Ivory Coast and South Africa. Its now expanding to European market. So it has a brand fame and its an great advantage in the competitive hair industry.
6.High quality, Natural and Organic products: MVP Hair has a great brand image and die hard fans who buy our products again and again. Our products always ensure high quality as we have expert chemists ,proper equipment, right chemicals and organic elements. It is 100% natural and organic in nature and hence the choice of animal lovers.
1. Problems of internationalizing products: As we are expanding our products to new countries and mostly to the people of same color, there are still differences in skin and hair types. Sometimes, customers can’t understand which are best for them and if they choose the wrong ones, it could be very bad for them. There’s also a chance to get sued by the customers for it.
2. Having to much sub-categories: We already have lot of divisions of products for female hair and now we are having shampoos and moisturizers of different varieties for male hair. Sometimes it becomes a problem to run everything smoothly.
3. Very Competitive Market: Hair care industry in France is very competitive and as most of them has online market too. We have to market, package our products in a very innovative way to get new customers. In the ‘competition’ part, we can know a lot about it.
4. Profit margins are low: As we are shipping our products in another continent, investing a lot in R;D sector and organic products, packing our products in attractive ways, creating marketing campaigns and advertisements for our product, our profit margins can be low. So, that can be a weakness
1. Increasing importance and awareness to hair care: People now become more conscious on how they look. The weather also gets warmer and humid than before. So, men try to keep them cool all day and if they have hair problems, they look out for solutions. So, that’s a clear opportunity for hair care companies to go through.
2. Taking the advantage of men hair care market: As other companies are also creating products for men hair care, men’s market is on a sharp incline. So, as this market is gaining more popularity, it’s the best time to get into this emerging market.
3. Growth potential in moisturizers market: We have different kinds of moisturizers as we stated it before. Proper packaging, advertising and marketing can make these products more popular and it can get a lot of growth over the years.
4. Product mix expansion: Increasing the product lines with creating new products in product mix can complete product mix expansion, that can be a good opportunity for our company.
1. Health Issues: Our customers can maybe unaware of the chemical elements of the products. Some products could be harmful for them. This can be a potential threat.
2. Nature of hair care industry: The hair care industry is constantly updating and we have to always keep up with the market trend. We can’t keep all the customers happy always and the competition is sound so that sometimes we need to take smart technics, instant decisions on our own.