ABC Cosmetics' target market and natural product line strategy

Cosmetics - Target Market

Today's economic agents strive to increase their competitive positions by developing and implementing the most adequate strategies relative to all of their categories of stakeholders, including employees, customers, purveyors, intermediaries and other governmental and non-governmental organizations, such as environmental institutions. The key to succeeding in this highly dynamic market is that of properly identifying and addressing the target market.

The Company

ABC Cosmetics was established five years ago in the Kane County, Chicago Metropolitan area, Illinois, where the organization is still headquartered. The founder and chief executive officer is a former fashion model and her experiences with wearing makeup have materialized in a line of successful products, to be used by both women at home, as well as professional saloons. ABC Cosmetics employs 80 individuals, organized as follows: 10 employees in research and development, 30 employees in manufacturing, 10 administrative staff and 30 employees in sales. The company ended fiscal year 2008 with a net profit of $7 million, revealing a constantly ascendant trend. The financial crisis revealed at the international level has only limitedly impacted the economic agent in the meaning that its growth rate shrunk by 2% relative to fiscal year ended in December 2007. This is mainly because the cosmetics industry develops independently of other industries and that the demand for such products tends to remain constant despite fluctuation in economic conditions. The product lines of ABC Cosmetics include lipsticks and lip glosses, nail enamels, eye shadows, skin foundations, body milks and moisturizers.

4. The Target Market

The new creams developed by ABC Cosmetics will be available for sale for all interested consumers. However, it necessary to identify those categories which are most likely to be interested in purchasing the items. There are two such categories: the individual female consumers and the corporate consumers. The market of individual consumers is composed mainly of mature women, between the ages of 30 and 55 and who register medium and above medium income. The age limitation was given by the fact that women younger than 30 and older than 55 seem to reveal a reduced interest in bio products, as their priorities fall into different categories. The income limitation was given by the fact that the manufacturing of the bio creams implies more costs than the manufacturing of the chemical-based creams, generating as such a higher retail price.

The Kane County has a population of 501,021 individuals (estimations for 2007), out of which 49.3% are female. 53.4% of the total population is aged between 18 and 65. The median household income in 2004 was calculated at $61.246 (U.S. Census Bureau). As a comparative note, the per capita income in 2008 at a global level was of $10,500 and in the United States it was of $48,000 (Central Intelligence Agency). More detailed information is undisclosed to the public, but an estimate of the actual target market of individual female consumers could revolve around the figures of 120,000 women.

The second target market is formed from corporate customers, including basically the beauty and spa saloons, modelling agencies or fashion designers. They would use the products to increase the satisfaction of their own individual customers, in the case of the saloons, or to enhance the image created by their products, in case of the fashion designers. The segmentation criteria used in identifying this target market are less restrictive than those for the target market formed from individual clients due to the following reasons: first of all, it is generically implied that the spas and the fashion designers will purchase and use the best products in order to sustain their cause; secondly, they often possess the required financial resources. As a result then, ABC Cosmetics will promote its new bio items to all identified potential corporate customers in the region. Planet Discover (2009) reveals a total of 80 organizations in the filed of beauty and spa in the Kane County and only two fashion designers. While the number of spas could make for a satisfactory customer base, in terms of fashion designers, this segment is rather inefficient.

The target market formed from individual consumers is expected to generate lower but more sustainable revenues. They are expected to turn into cash cows if you will. The market formed from corporate customers will generate higher incomes, but their stability will not be reliable. They will be somewhere between stars and question marks. As the previous lines showed, the numbers of corporate customers are relatively reduced in the Kane County, requiring as such the development of a more complex approach than initially believed. In this order of ideas, the company should either relocate its headquarters to regions richer in potential corporate customers, or it should develop partnerships and a strong logistics and distribution network to these regions.

5. Conclusions

In order to succeed in this highly competitive and dynamic environment, organizations have to recognize the importance of the role played by their clients. A most important step in this direction consists of the proper identification of the target market. ABC Cosmetics' target market for their new bio creams is formed from 125,255 individual customers and 80 beauty spas in the Kane County.