Overview India, with a population of nearly a billion people, is a country of contrasts. India’s urban population is the main engine that fuels the demand for various cosmetic products. Although Indians are strongly attached and committed to their traditions, and culture, the advent of television and the awareness of the western world is changing the tastes and customs of India. The ‘morphing’ of India is subtle and the changes are not visible for the irst time visitor. However, the market liberalization process that began in 1991, along with the crowning of three Indians as Miss World and Miss Universe during the preceding four years, have made Indian women conscious of their appearance. Consequently, the cosmetic consumption patterns of Indian women have changed, and this trend is fuelling growth in the cosmetic sector.The Indian cosmetics and toiletries market grew by 8. 7% in current value terms in 2001, with value sales amounting to Rs126 billion. In 1999 the Indian cosmetics and toiletries market grew 8% over 1998. Total value since 1995 was 54% in current erms, equating to 25% in constant terms. The increasing size of the middle-? class population in India, representing a growth in disposable incomes, has led to more consumers for the cosmetics and toiletries market. Such consumers are more inclined to purchase higher-? priced products. Most multinationals that entered the market have however revised their estimates of the number of consumers able to buy their products. Optimism has been tempered by a gradual dawning of the fact that middle-? class India is not as big or as active as many marketers had believed. The size of India’s Color cosmetics market is Rs 250 rore. That of fragrances is Rs 85 crore while the skincare market size is larger at Rs 400 crore. While lipsticks account for nearly a third of the Color cosmetics market at Rs 90-? 100 crore, the market for nail enamels is estimated at around Rs 110 crore.The remainder consists of products such as mascara, eye-? liners etc. The market for cosmetics and toiletries in India is characterized by high volume sales of low-? end toiletry products, while at the same time the legendary emerging middle-? class has generally been fuelling demand for cosmetics and upper-? mass toiletries. Products that are too specialized ave yet to be successful on the Indian market. Examples include toners, hand care and other value-? added skin care products, bath & shower products and aftershave balm. Only the richest consumers can afford these; indeed, the average consumer may be unaware of their purpose or even existence. This also explains the relatively poor showing of perfumes, especially the premium variety.Most major cosmetic companies profess the need to tap the upper market segment and create exclusive products, but market studies reveal that most cosmetic users are unwilling to cough up more to buy these exclusive products. Only 40 per ent of Lakme’s customers expressed their willingness to pay more in anticipation of superior quality. When the domestic players have looked at the premium segment they have adopted a very cautious approach. For instance Lakme has now introduced its export range `Wild Orchid’ into the domestic market and also recently launched `ultra premium’ range. But these are limited product ranges mainly in the perfumes and Color cosmetics segment. Indeed a more recent feature across all sectors, whether basic toiletries or more luxury products, such as Color cosmetics, has been for manufacturers to concentrate on the mass market.For toiletries, this is a result of many consumers trading down, forcing manufacturers to respond. In skin care and Color cosmetics, it is more a result of trying to increase demand in the growing market for mass products, especially among teenagers. Brand image and high degree of consumer acceptability need to be established in the personal products sector, and call for heavy promotional investments in awareness building, besides tie-? ups with good FMCG companies to leverage their distribution strengths. The growth of direct marketing as an alternative channel without incurring high promotional and developmental osts needs to be evaluated by new entrants in the sector, in order to formulate the most appropriate market development strategy for their products. MARKET SIZE Since market liberalization, several multinational companies, such as Revlon, Coty, Oriflame, Chambor, Avon, Yardley, Nina Ricci, Garnier Laboratories, and L’oreal, have entered the Indian market.These companies initially cashed in on their international brand image; however, repeat purchases were not forthcoming because the products were not priced competitively. Consequently, these companies became price-? sensitive and most of the international brands are ow priced competitively in the Indian market. The Color cosmetic segment which has Indian players such as Lakme Lever, Tips & Toes and Shenaz Hussain and multinational company players such as J. L. Morrison, Ponds, Unilever and Colgate Palmolive, offers the highest competition. Domestic players like Lakme, Tips & Toes and My Fair Lady, mainly dominate this market. • Revlon has a market share of 80% in the premium market. Lakme is the overall market leader in the color cosmetic segment (lip care and nail enamel) with a wide range of products and prices, both.The organized color cosmetics market is estimated at Rs 340 rore currently. • Revlon’s sales account for Rs 60 crore of that. Lakme leads the market with sales of Rs 100 crore. Lakme, has recently joined forces with Hindustan Lever Limited (HLL) and calls itself Lakme-? Lever. Other international brands in the sector include L’Oreal, Revlon, Maybelline, Benckiser and Avon with a major part of the rest, some of them engaged in the multi-? level-? marketing model for their products. The most important global players are already in India (except perhaps Estee Lauder, Mary Ann Kay, Kao and Body Shop) and are in an advanced stage of market development. They are already exploiting rospects based on imports of active ingredients, packaging and completely built products. In that regard, new entrants have to contend with serious competition in India from local as well as global players.Multinationals feel that Indian companies -? Lakme, Pond’s, Nivea-? makers J. L. Morrison and Tips ; Toes makers Paramount Cosmetics -? have not identified the changing needs of the new Indian woman. It is therefore that Switzerland’s Torstone’s Chambor, Sweden’s Oriflame, USA’s Avon Cosmetics, Revlon, Benckiser (Coty Vitacare), Paris-? based Escada group and Laboratories Garnier (Synergie) are ambitiously fishing n the Indian waters. It is not coincidence that many of these MNCs entered the Indian market in the mid-? Nineties. Fired with the zeal of changing the complexion of the cosmetics market, they are fuelling the change using satellite television, women’s magazines and beauty pageants.Maybelline competes with Revlon and Lakme in the Color cosmetics market in India. Revlon too has grown 65 per cent to strengthen its share to 13 per cent during the period. As per the data, Lakme’s share stands at 34 per cent, and that of Elle 18 is 25 per cent -? both of which have suffered a de-? growth over the previous period. The lip nd nail Color market, at Rs 107 crore, has registered a growth of 11 per cent. Mass market products account for a major share, around 70 per cent, while the premium segment accounts only for a mere 9 per cent in lipsticks and 5 per cent in nail enamels.