Factors driving market expansion include new product formats, gener-specific products and technological developments. Companies are focusing on new products and extending established product lines, with innovative offerings for product applications and formulations. An example of an emerging company is the household products industry, is JHS Svengaard Laboratories Ltd., the country’s largest oral care products manufacturing company, has tied up with Proctor & Gamble, the world’s largest FMCG manufacturer, to manufacture detergent exclusively for it. JHS Svengaard is currently one of the top financial performers. Indian personal care products are making a recent emergence in the industry. India has faced a revolution literally in all wakes. With the rise in dispensable income, there is high consumerism in the country. With opening up of the emerging markets, the cosmetic companies are broadening in response to the vast diversity of populations. The Indian face wants to look good. The Indian Women are no longer limited to their homes, but have come out & are walking with the same pace as the men. Hence they are more conscious of their looks & are widely opting for the cosmetics that is available in the market. It is not only the female section of the society, who use beauty & cosmetic range but the Indian men too are worried about their looks. There are lot of products specially designed for men too. The cosmetic companies not only produce the traditional makeup items like compact, mascara or lipsticks, but are rapidly adapting themselves to the changing demands of its customers. Today the markets offer a wide range of cosmetic products to choose from. There are smart products like anti-aging solutions, concealers which has taken a lady’s beauty to a new level. Fragrances, body lotions, hair products, hand & foot care products, you name it & you have it. Some emerging Indian companies include Ayur, a Herbal Cosmetics business since 1984. Ayur provides a wide range of beauty cosmetics strictly prepared with herbal components. The products are made from herbals. The cosmetic products range from hair oil, shampoo, natural henna & conditioner to sunscreen, face pack & cleansing milk. The popular products are Tulsi neem soap, rose water, fairness bleach, wax, body lotion, cold cream, face pack & scrub, moisturizer, skin toner, hand care & foot care products. Shahnaz Hussain, India’s leading company in the field of natural beauty and anti-aging treatments. It started in the 1970s by Shahnaz Husain in New Delhi. It has a chain of over 400 beauty centers worldwide. The group has activities as diverse as beauty training institutes, herb plantations, retail stores & products. The company is very popular for its specialized clinical treatments and therapeutic products for specific problems like acne, pigmentation, scars and blemishes, skin-sensitivity, dandruff, hair loss and alopecia. The product range has over 350 products in 20 different categories for skin, hair & body care. All the products are sold under the brand name of Shahnaz Hussain.

Who have been some influential leaders (Founders, CEOs) in the industry over the past 20 years?

To discuss this question, I have chosen two different leaders within the industry. The first is Bob McDonald, the CEO of the leading company within the industry, Procter and Gamble. The other, Bobbi Brown, is the founder/CEO of a sub-brand of Estee Lauder, one of the industry's leading companies.

Bob McDonald CEO and Chairman of the Board of Procter & Gamble 

Bob McDonald began his career as CEO and Chairman of the Board at P&G in July 2009. Since assuming his position, he has strived to to achieve the strategy of, "touching and improving more consumers' lives, in more parts of the world, more completely."  During his time as CEO, the company has experienced significant gains in its sales, despite the economic downturn. 

His goal of extending the presence of P&G into new markets is exactly what P&G needs to accomplish to stay on top of the industry. The well-established markets of the United States and Europe are stable and not experiencing significant growth. Targeting new customers in new markets, like those in Asia, Africa, and South America, coincides with McDonald's vision. 

McDonald is currently in the stages of making this vision a more immediate reality. Recently, McDonald announced a $10 billion spending cut. The cut includes laying off 4,000 workers, reducing spending for their maketing budget and packaging, and developing a more efficient supply chain. This spending cut save the industry giant exorbitant amounts of money and will allow the company to allocate that money to penetrating into new markets.  

Bobbi Brown Founder and CEO of Bobbi Brown Cosmetics 

Bobbi Brown Cosmetics began simply because Brown, a make-up artist, believed that women want make-up that makes them look natural and fresh. Her make-up line began in 1991 as a collection of 10 lipstick shades only being sold at Bergdorf Goodman. Four years later Bobbi Brown Cosmetics was acquired by Estee Lauder Companies in 1995. The cosmetic brand is now sold in 56 countries and territories all over the world. 

What makes Bobbi Brown unique as a founder and CEO of her own company is the hands on involvement with her brand. She is continually working on developing new products that would enhance the natural beauty of women. She still also works as a make-up artist for high-end fashion shoots and events, further helping her understand what consumers are looking for trend-wise. 

In addition, she also has two prominent causes that her company strongly advocates. The Bobbi Brown Cosmetics company places a strong emphasis on its mission to, "do what we can to help improve the lives of those in our community and beyond." The two selected causes are Dress for Success and the Broome Street Academy. Not only is this a great reflection of CSR on Bobbi Brown Cosmetics, but both of Brown's causes are highly promoted, showing her dedication and passion for this vision. 

On another completely unrelated note I wanted to share, an interesting trend I noticed while researching the major players of the Household and Personal Products Industry. I noticed that the majority of the CEOs were appointed around the years 2008 and 2009, coinciding with the United States' economic downturn and recession. For example, Bob McDonald of P&G was appointed in 2009, Kasper Rorsted of Henkel in 2008, Paul Polman of Unilever in 2009, and Fabrizio Freda of Estee Lauder in 2009. I found this to be interesting because it surprised me that each of these companies had a change in leadership all approximately around the same time and during the recession.  

In what areas of the industry are there opportunities for innovation?

In one area of the Household and Personal Products Industry where there is opportunity for innovation is in understanding and developing the type of relationship buyers has with a brand. This includes the ways used to attract costumers. For example, Lancôme has a particular relationship with costumers in comparison with it main competitors such as Avon, Estee Lauder and Clinique. Lancôme relationship with costumers is based on exploration and experimentation. This means that this relationship makes women to discover their selves with creativity making them put aside the ordinary elements and have adventure in their lives. Lancôme products make women want to explore their self-identity with originality.

http://www.youtube.com/watch?feature=player_embedded&v=jOjSBzTeJBE

This video is an example of a Lancôme advertisement based on exploration and creativity calling the attention of women.

In another area of the Household and Personal Products Industry where there is opportunity for innovation is in the large-scale application of digital technology and advanced analytics across every aspect of a company operations and activities.

In a third area of the Household and Personal Products Industry where there is opportunity for innovation is in the marketplace. It consists in expanding to new markets. “Marketplace Innovation is all about developing new ways to reach and delight the customer in engaging new ways.” This can include everything from reaching new costumers to developing new methods of operation. “By coming up with unique modifications for products, services, and delivery methods, its aim is to have a positive impact on people’s lives.” Most of the key players of this industry have began to expand to new markets. Expansions have been beneficial for the key players in capturing the market. Although companies in this industry are already doing this. There are going to be more opportunities for them to continue to do this and to modify their operations to success and increase costumers.

http://www.innovationexcellence.com/blog/2012/03/27/lancome-engaging-women-through-exploration/

http://www.innovationexcellence.com/blog/2011/12/26/10-predictions-for-innovators-in-2012/

http://www.innovationexcellence.com/blog/2012/03/25/four-types-of-innovation-–-part-3/

How has the competitive landscape changed as a result of leading entrepreneurs in the industry?

In general entering into the Household and Personal Products industry is tough. Reason being, as most of the products are soap, detergent, toothpaste, and cosmetics; consumers have long been purchasing these products so there is little incentive to actively seek out different products from purchase to purchase. Additionally, the barriers to entry within the industry are rated medium but increasing. This keeps competition from entrepreneurs low because of the difficulty in entering the market. One of the largest barriers is the high costs entering the Household and Personal Products Industry. Though it is easy to launch small businesses within the industry because of the minor technological skills and financial resources required and because the ingredients used to produce the products are common, the costs of manufacturing, marketing and distribution are high. This results in large corporations dominating the industry. Specifically, cosmetic and beauty products manufacturing requires a factory and production equipment, which can add up to a substantial cost. Acquiring the financial means to start production and continue at a profit is increasingly difficult. Clorox Company states that newly introduced products face intense established competition and, as such, requires substantial advertising and promotional resources. This is very true with the most well-known brand names belonging to this industry which serves as a large deterrent for new entries.  

Recently, however, there is hope for more entrepreneurs to enter into the industry. This is due to the new “green” trend. The search for more environmentally friendly products with natural ingredients is increasing in demand. A great example of a successful entrepreneurial entry into the industry is Rockin' Green, a maker of eco-friendly laundry detergent and cleaning products. The company’s founder, Kimberly Webb, was named “Best Entrepreneur” and the company named the “Fastest-Growing Company of the Year.” Though there are some instances of entrepreneurial success the numbers are small. The development of new innovative products, the maintenance and improvement of existing products or the extension of an existing product range are the major demands within this industry thus it is very hard to accomplish for new entrepreneurs who lack capital to mass produce, market, and distribute. Therefore the competitive landscape has not changed much due to leading entrepreneurs.

Sources:

http://findarticles.com/p/articles/mi_hb3042/is_1_49/ai_n58539009/

http://clients.ibisworld.com.proxyau.wrlc.org/industryus/competitivelandscape.aspx?indid=499

http://clients.ibisworld.com.proxyau.wrlc.org/industryus/competitivelandscape.aspx?indid=495

What workforce trends is the industry experiencing?

The household and personal products industry relies heavily on innovation as well as cheap manufacturing to keep companies competitive. As a result, a good portion of the industries will invest in Research & Development as a major part of their annual spending. Innovation becomes a critical part of household and personal products industry, largely because research is not something that is allotted within one year. Research can take anywhere from five to fifteen years. As a result, companies need to constantly be investing and evaluating projects throughout the years while maintaining spending. Innovation also becomes a way to keep developed markets growing.

The emphasis on research and development is most evident in companies annual reports as well as in their letters to stockholders. For example, just looking at P&G, in the notes of their annual report, they mentioned spending approximately $2 billion on research and development alone. In their annual letter to stockholders, they emphasized the fact that they spend close to 60% more than their competitors on research and development. The evidence of their constant dedication to innovation is clear in their constant need to create new products. Just recently, their new Tide Pods line of detergent was launched after eight years of development. In addition to that, in 2008, four of the top ten new consumer products were launched by P&G. By constantly trying to stay ahead of the competition, they lose the risk of becoming irrelevant, which means greater profits in the long run. It also keeps their brand names in the spotlight, which is important for a large industry such as household and personal products.
On the cosmetics side of the industry, L'Oreal also puts huge emphasis on the need for innovation and creation. In their 2011 annual report, they announced a total 613 new patents since 2010. They also reported investing approximately €721 million ($961 million) in research. What makes L'Oreal innovation unique is the fact that even though their main selling point is cosmetics, they make innovations in the field of science as well. The 2011 report discussed the discovery of the LR2412 molecule, which helps prevent aging. This then become a selling point when the products containing this molecule hit the market because it's something only L'Oreal can claim to have. They have 17 patents regarding this discovery alone, leaving other companies in the dust.

The profit and loss statements of a company and the balance sheet must be prepared in order to arrive at a clear picture of the company’s financial stability. It is vital to note that the two refer to very different statements of financial information, with significant differences in the data recorded in each. However, the two are related to in each other in that the balances recorded in the balance sheet are directly affected by changes in the financial information recorded in the profit and loss statement. The balance sheet is a statement of financial position. Sales in North America increased 2.3%, declined 4.6% in Western Europe, and increased 6% in the rest of the world year over year. Sales in all divisions except consumer products decreased. Consumer product sales increased 1.5% to €8.5 billion. Active Cosmetics reported the steepest decrease in sales of 4.3% from 2008. Western Europe experienced -6.3% like for like growth as a result of poor performance in Spain and in retail travel. North America reported -3.4% like for like growth due to tough economic conditions. The professional products division did have a good year in gaining market share in the region. The Rest of World regional segment experienced strong growth with double digit growth in China, South Korea, Argentina, Chile, India, and South Africa. Of all L'Oreal's divisions, consumer products had the biggest sales increase of 3.2%. This was due to larger invoices in skin care and in particular by the Garnier and Maybelline brands. Luxury products was the worst performing division with -9.0% like for like growth. The weakness of the perfume market and the economic conditions in Western European market in which the division's brands are leaders affected performance. The Body Shops ended the year with 0.7% like for like growth with retail sales growing by 1%. Comparable store sales were down 0.6%.

Current Events in Accounting

            A little over a month ago, key player Procter & Gamble announced their new plan to cut costs and reach $10 billion in savings by 2016. The plan calls for a major overhaul and restructuring of many of the company’s various departments. To shave $10 billion off of their bottom line P&G CEO Bob McDonald laid out the multi-faceted plan, affecting many areas of the balance sheet, in late February 2012.

The first order of the plan calls for approximately 5,700 jobs to be cut from its nonmanufacturing work force by June 2013. These cuts will initially lead to savings of $800 million by 2014, rising to savings of $1 billion by 2016. The company plans to make adjustments to their marketing budget to save another $1 billion. To save $6 billion in their expenditures, P&G also plans on using less expensive materials for packaging, developing a more efficient supply chain, and altering products to be more concentrated. To achieve this multistep plan of $10 billion in savings will eventually cost the company close to $3.5 billion in restructuring costs.

In addition to the cuts within more their more stable markets, P&G is setting its sights on expansion in emerging markets in Africa, Asia, and South America. Expansion into these new markets includes opening 20 new manufacturing plants by 2015. Overall, the main goal of expansion is to increase revenues and add to their bottom line, while simultaneous cutting costs to create a larger profit margin.

Investors and analysts welcomed these extensive cuts to P&G’s budget. Many investors had been deterred by P&G’s inability to operate at more efficient costs, especially when sales growth in well-established markets, like the United States and Europe, has not been as strong as it once was. Upon announcement of the plan, stock rose 3%.

P&G’s budget cuts and new market expansion represents the company’s repositioning within the industry’s market, affecting its competitors. As P&G attempts to increase its market share by earning more, it inevitably takes away from fellow companies in the industry. This strategy also demonstrates what’s expected of a company from investors. Investors are looking for efficiency and future expansion. P&G is catering to what investors expect through the implementation of their four-year plan.