Larger manufacturers are streamlining their portfolios to achieve greater competitiveness in the face of growing pressure from smaller players with a narrower but more in depth focus. This is increasing segmentation in the industry; however, in the process there is a danger of overlooking growth opportunities in some other areas. If portfolio gaps are addressed, the growth rates of the larger companies stand to benefit.
The growth rates for the top 10 beauty and personal care companies has slowed down for two key reasons.
The first is increasing competitive challenges from the smaller players, which are able to offer in-depth beauty solutions due to their narrower focus.
Secondly, in trying to emulate the smaller companies’ narrower focus, the larger companies are prioritising specific markets and categories and in the process are overlooking growth potential in other areas.
In aiming to beat competitive challenges from the smaller players and boost top line growth, it is necessary for larger companies to expand their priorities. Larger companies have access to a vast resource base and hence are able to juggle multiple priorities simultaneously.
There are four options for manufacturers to fill portfolio gaps. The first is expanding in new markets, the second is the creation of new opportunities through innovation, the third is strategic acquisitions, and the fourth is taking share from competitors.
The larger companies are in a good position to beat the competitive challenges from the smaller players, but need to consider the gaps in their portfolios to ensure well rounded optimal growth across their wider beauty ranges.
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