Consideration (Brief Summary) of Differentiating Strategy of General Products Stores (A company) in Japanese Cosmetics Industry

~From Perspective of Working Women~No.2/3


1.5 The Times and the Trend
It is not too much to say that makeup equals fashion.
Makeup has trend such as popular color of the year every year. The economic circumstances affect the trend.
● In 1960’s: Tokyo Olympics was held in 1964, in the years of high economic growth.
Miniskirt became extremely popular and psychedelic fashion and pantaloons were big boom.
There was the fixed image such as a beauty = fair skinned person at that times. Tanned skin became the newest fashion at the times.
Wearing light color makeup was popular.
● 1970’s: There were Osaka Expo, oil shock, and Lockheed scandal etc.
First food stores and convenience stores showed up.
The commercial with the catch phrase “Skin of Beautiful Cocoa Brown in Summer” was broadcasted. The commercial was representing the times. Healthy tanned skin took root as a fashion. Makeup that emphasizes eyes had become popular.

● 1980’s: The Equal Employment Opportunity Law was enacted, and women started taking more important roles in the society. For example, Ms. Takako Doi became a female leader of a political party. Thick eyebrows represented “an independent lady.” Cosmetic industry started paying attention to importance of cleansing and face-wash, and beauty essence of high quality showed up.
The makeup in this times gave others flashy impression.

● 1990’s: The bubble economy had burst in 1992. The Great Hanshin-Awaji Earthquake had hit Japan.
Young girls imitated a singer “Namie Amuro,” and they were called “Amurar”. Brown hair and dark tanned face became popular.
On the other hand, tanning was recognized as cause of aging among female office workers and housewives
Thin eyebrows are back in fashion. Makeup features are “thin eyebrows” and “strong eye makeup.”
● 2000’s: The deflation rate increased. The Internet and mobiles had become daily necessities. Gloss that emphasizes burnish, not color was brought in, and mascara and nail fashion had spread out. Regarding skin care, people got interested in “anti-aging” that tries to stay young, and numbers of products that contains coenzyme Q-10 had increased.

Shiny skin makeup that emphasized eye rush were featured.
Most of cosmetic products contain pearl.

Spots, flecks and skin dullness caused by ultraviolet light used to be considered as problems of aged women. However after 90’s, people became aware of harm caused by ultraviolet light, and it created the boom of beautiful skin care. They became basic items of skincare.
The needs of the women in 20’s who had had their face tanned increased.
Also, one of the reasons is growing tendency to marry late and more working women wish to stay being young. Products or foods that contain coenzyme Q-10 become very popular. The theme of this time was to be beautiful both inside and outside.
Fashion and trend influenced the styles of makeup.

Popular products and tendency by facial parts
Women in Taiwan tend to buy all the products from one brand. However, thanks to various domestic brands, there are many people who use different kinds of products from different brands and use the different products pats by parts in Japan.
I investigated popular products and tendency based on a hot-selling raking.

2. Current distribution, products, and sales policy
Framework and structure of cosmetics industry
2-1 Distribution system
It is divided into 5 groups in a major way. 5 major groups are following.
1. “System products” by counseling sales. 2. “General products” which can be selected and bought by customers themselves at drugstore. 3. “Door-to-door sales” by a sales person. 4. “Mail-order sales” which consumers and manufacturer directly deal each other. 5. “Professional use products” for beauty shops.
Foreign manufacturer are recognized more in each channels. Recently one manufacturer has different brands that target customers of different age group.

Ratio of shipment shift by distribution is below. System products are 32.3 %. General products are 33.7%
In 2007, general products exceeded system products.

2-2 System products cosmetics / mechanism of general products
System products
A brand bear all the cost of producer, brand controller, wholesales, sales people.
In this system, brands can develop their products to raise their brands image, advertise, and conduct their PR activities, and promotions.
As their brands image go up, they can make more profit because they have power to control their products prices.
General Products
General products need reasonable price. However, they cannot be sold, if the sales prices which meet the quality of their products are maintained and the brands images are good.
In other words, the quality and the price of the products need to be well balanced, and the price should be reasonable. To lower the price of the products, brands have to make effort to save the costs in every process. The brands need delegate the production to OEM (Original Equipment Manufacturing) cosmetic manufacturers.

General products manufacturers usually bear both of producer costs and brand controller costs, and sell their products to retail stores. Therefore, about xx % is the rough indication. However, negotiation on volume of transaction or various conditions make this percentage go up and down. The cost will be cheaper if wholesales sides bear the cost of clearance goods.
Bearing wholesale cost, wholesale store distribute products to retail stores. Because wholesale stores do not have sales people such as beauty experts, they do not need to bear the cost of retail sales, and they can distribute products to retail stores with xx % of multiplication. The percentage can be lower depends on volume of transaction in this case. General products of self-selective sales normally have xx % of gross profit. However, drugstores use xx % of budget for salaries of sales people for discount resource. Moreover, competitive retail stores allow xx %, xx % reduction in prices by reducing retail sales profit which normally can be made approximately 15 %.
Regarding general products, manufacturers bear the producer costs and brand controller costs, and wholesale stores and retail stores are responsible for the each costs.


October, 15th 2009
Tate Business Consulting
Takashi Tate