Analysing marketing opportunities by CX9Qm392


									                                 Analyzing Marketing Opportunities

For providing I have chosen such a sphere of market as cosmetics for men. The country I have

chosen is Ecuador, as the components in the micro-environment are very interesting and

complicated, but in spite of this one winning point is natural sources for my business to nourish.

Priority product groups consist of cosmetic for men with pharmaceutical ingredients (e.g. medicinal

plants, essential fatty and aromatic oils), fibers, latex, resins, gums and gum by-products. These

products have high value-adding potential and can generate local income by involving local and

indigenous communities while also contributing to the conservation of biodiversity. In order to

define a sector plan for the development of the natural ingredients for cosmetics and

pharmaceuticals sectors in Ecuador, it is important to judge the baseline situation of the sector in the

country. To that end, the Biotrade office in Ecuador, the BTFP and the EPP program led by CBI in

Ecuador have joined forces, held meetings and engaged in other activities with the relevant actors in

this sector. The aim of these meetings was to identify the real situation of the sector and particularly

the service requirements of the companies so that they become successful exporters to the EU

market. Information collected and its evaluation will be used as a resource for the elaboration of a

strategic plan for the proper development of the sector in Ecuador.

“Since dollarization, the macroeconomic figures of Ecuador have slowly improved. However, the

real sector of the economy is still in recession. The cost of credit and inflation are still high,

especially within the framework of the dollar. GNP growth is still slow, with projected growth of

only 3 per cent for 2003. Social sectors still complain since they see no opportunities to improve

their quality of life in the midst of slow growth conditions, inflation and absence of jobs. In turn,

business sectors complain of high costs of operations in the country since the Government has

increased the prices of electricity, communications and fuels, and certain taxes.”(2)

In some cases, it is not enough to offer new and innovative products; it is important to include

ecological and organic certifications. As an example, we can see market figures of exports from

developing countries. In 2000, the leading developing country suppliers of medicinal and aromatic

plants to the EU were China, India, Egypt, Morocco, Chile, Turkey, and Albania. Almost two thirds

of the EU imports from developing countries medicinal and vegetable saps and extracts originated

in Madagascar, China, and Congo. More than 80 percent of vegetable alkaloids from developing

countries originated in Congo, Turkey, China and Brazil. EU imports of the three product groups

decreased considerably between 1998 and 1999. In 2000, imports of medicinal plants increased,

imports of medicinal and vegetable saps and extracts decreased, while imports of vegetable

alkaloids increased considerably.

The socio-economic conditions of Ecuador are the worst of the past years. After the banking crisis

and before dollarization, the country hit rock bottom, but after dollarization its main

macroeconomic indicators have improved. Nevertheless, the overall conditions of the lower social

strata, have not improved and many rural activities such as agriculture have been severely hit by

imports from neighboring countries, by inflation and by the overall operation costs of the country.

In this scenario, all income- generation activities oriented towards rural communities are badly

needed, since most regions have lost their competitive edges and are nervous about new vocational

activities. The natural ingredients sector offer a promissory alternative to small growers if they can

be efficiently organized around productive networks as sustainable suppliers of natural ingredients

for local and international buyers. In many cases, the income generated by the project is a lifesaving

resource for the already depleted livelihood of very poor rural communities.

Ecuador, like other Andean countries, has experienced a population boom, the result of a decreasing

death rate and a continued high birth rate. This rapid growth has resulted in a relatively young

population. The country has attracted immigrants from neighboring Colombia and from East Asia,

and there has also been a small migration from Chile, including political refugees. Significant

numbers of Ecuadorians have emigrated to the United States. Deprived northern highlanders tend to

migrate to Quito, seeking opportunities for income not available in the countryside. The rural

coastal people, on the other hand, have generally migrated to the north-central Costa and to

Guayaquil, and the southern highlanders to the southeastern and northeastern Oriente and to the

north-central Costa, as well as to Quito and Guayaquil. In areas where people can generate a more

substantial cash income, migration has been slower.

As of 1994, it was estimated that, at current deforestation rates, coastal forests will be completely

eliminated within 15 years and the Amazon forests will be gone within 40 years. Traditional

farming practices have been blamed for most of these problems, but oil development has also

played a role in the clearing of forests. A program for reforestation and maintenance of existing

forests was initiated in 1979, but only 4,000 hectares (10,000 acres) were reforested annually during

the early 1980s. Ecuador's principal environmental agency is the Ministry of Natural Resources and

Energy. Land erosion is accelerated by deforestation.

Flooding and desertification are related problems which have damaged or eliminated valuable soil,

particularly in the western coastal region. Water pollution is a problem due to the influx of

domestic, industrial, and agricultural contaminants.

Ecuador's cities produce about 1.2 million tons of solid waste per year. The nation has 442 cu km of

renewable water resources with 82% used for agricultural purposes. Some 90% of all urban

dwellers and 75% of the rural population have access to pure drinking water.

The expansion of Ecuador's population centers threatens its wildlife. As of 2001, 28 species of

mammals in a total of 302 are currently endangered. Fifty-three of 1,388 breeding bird species and

12 of 380 reptile species are also endangered. Of the 19,000–plus plant species in Ecuador, 642 are

threatened with extinction. An extensive wildlife protection system was established in 1970. As of

2001, 42.6% of Ecuador's total land area was protected. Endangered species on the Ecuadoran

mainland include the tundra peregrine falcon, yellow-tailed woolly monkey, five species of turtle

(green sea, hawksbill, olive rudely, leatherback, and South American river), and three species of

crocodile (spectacled caiman, black caiman, and American).

“In order to foresee future trends, here is a list of consumer behavior considerations based on

customers in the United States, which could be partially assimilated to EU trends:

Factors affecting market growth

• A health-aware population

• Nutrition as a consumer priority

• Aging population boosts sales

• Natural products seen as alternative to conventional medicine

• Growing interest in vegetarianism

• Organics on the rise

• FDA ruling increases awareness of organics (not applicable to the eu)

• High prices for organics not impediment

• Positive studies boosts sales growth

• Younger generation has growing interest

• Products more user-friendly

• Consumers willing to spend more

• Mainstream media have positive impact on sales

• Growth of health and natural products in conventional channels

• Herbals moving to mass market

• Supermarkets learn how to merchandise natural products

• New products increasingly available in conventional outlets”(2)

The second main product line within the natural ingredients sector is the cosmetics on personal care

products. With more than 1,500 new products introduced since 1990, this $1.3 billion market is still

growing and changing rapidly. Today this sector includes more than 20 personal care categories,

including aromatherapy, bath, skin, hair, cosmetic and oral hygiene products.

The EU is the world’s largest producer of cosmetic products, with United States and Japan

following at a distance. The main EU producers are multinational companies such as Unilever

(Netherlands), L’oreal (France), Wella (Germany), Sanofi (France) and Beiersdorf (Germany).

Many of them operate across a wide spectrum, being involved in other sectors such as

pharmaceuticals, chemicals, food or household products. Retail sales of personal-care products in

the EU in 1999 grew to (US$ 50.1 billion). In 1999 and 2000, the market continued to grow and

reached (US$ 46.3 billion) in 2001.

According to Retail Intelligence, the market for “green” cosmetics in Germany is growing by 10-20

per cent annually. Whereas the market was until recently mainly in the hands of specialist vertical

chains (e.g. The Body Shop and Yves Rocher), other suppliers are now moving towards mainstream

retailers to target younger customers. In 1999, the leading EU markets for cosmeceuticals2 in the

EU were Germany (US$ 1.7 billion), France (US$ 1.1 billion), Italy US$ 863 million, the United

Kingdom (US$ 652 million) and Spain (US$ 568 million). The major growth markets were

Germany (13.6per cent) and Spain (13.4per cent), followed by Italy (8.8per cent), UK (7.6per

cent), and France (3.6per cent). Natural personal-care products accounted for US$ 1.4 billion in the

1996 global personal-care market. By 1997, this figure had grown to US$ 2.8 billion. Average

annual growth in the natural segment of the market is estimated at8-10 percent. The natural

component is more significant in some product categories than others. Although the acceptance of

the term "natural" is changing among countries, the trends for cosmeceuticals are positive. The

ageing population and the global trend towards more natural, sustainable and down to earth

products will keep a positive trend on the sector. Also, certification formats will be important in this

sector for the future. It is important to promote these products among mainstream consumers,

making prices and availability closer to the purchasing budgets of the general population.

Opportunities for exporters in developing countries lie in the following product groups:

• Essential oils (geranium, jasmine and ylang ylang, citrus, vetiver, patchouili, sandalwood, mint

oils, cedarwood, nutmeg and clove);

• Vegetable oils and butters (castor oil, coconut oil, peanut oil, sweet almond oil, cocoa butter, shea

butter, illipe butter);

• Natural colours (indigo, cochineal, carmine, curcuma/turmeric, marigold and henna);

• Botanical ingredients (also refer to the EU Market Survey ”Natural Ingredients for


• Organic cosmetic ingredients.

Another source of business within the natural ingredients sector is natural dyes, sometimes used

within cosmetic formulations or pharmaceutical preparations.

As explained in the economic conditions section, the Ecuadorian economy has not shown signs of

strong growth, and employment and new venture generation are still low. The economic conditions

of the majority of the population are poor and some estimates indicate that at least 70per cent of the

population is considered poor. The situation in the rural areas is even worse. Many staple and export

crops are depressed and therefore affect the overall economic situation of rural areas. The same is

the case for local communities and indigenous populations, whom are always in need of jobs or new

entrepreneurial activities that will provide income.

As we see the situation in the country because of economic, growth of population and unstable

natural phenomenon is not safe, but it needs strongly a new and fresh current to raise economics.

Having so beautiful and rare and cheap ingredients with the help of which the cosmetics for men

will be made of, it is not so difficult to organize the business. We should not forget that here, in

Ecuador, we will have a lot of cheap working force. People will be interested to work, and the

uniqueness of product the cosmetics will be very popular not only in the interior market but also

abroad. This will bring high income to my company and to the economic of the country. Production

of man’s cosmetics is the field of marketing in the given country which ahs a lot of perspectives.

The only point is to organize everything in a proper way. That is to find a good place for

production. This one is supposed to be near the places where the components of the future

cosmetics are settled. Or at least , the transportation, gathering and processing of them will not be






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