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Creating the Perfect Product: The Role of Engineering Technologies
By: Brian Bell, Peter Spicka and Aniruddha Mukhopadhyay
Posted: October 13, 2008, from the April 2006 issue of GCI Magazine.
The worldwide cosmetics and toiletries market was estimated at more than $200 billion in 2003, with an annual growth rate of about 5%.1,2 Comparatively newer markets such as China and India are developing faster. In the Western world, tactics such as product differentiation based on age groups, sex, race, and specific skin and hair conditions within each market segment also assisted growth. More importantly, technological innovations and continuing development of the upper mass-market segment influenced growth. However, product innovation within the context of these growth drivers remains central to success in the global cosmetics and toiletries industry.
This is especially important in a mature market such as the United States, where the spiraling impact of a weak labor market has reduced consumer confidence and prices have been driven down through intense competition among retailers. For example, national retailer chains in North America have launched more aggressive ad campaigns to attract specific groups of consumers—as evident in the August 22, 2005, issue of New Yorker in which Target Inc. was the sole advertiser.
Facing price pressure from giant retailers, leading cosmetic manufacturers have focused on counter measures to sustain long-term growth through strategic consolidation and in-depth, continuous, integrated innovation programs. Innovation is driven primarily through Consumer Experience and Relation Management (CERM),3 but there also is a focus on cost savings in manufacturing, design, R&D and marketing. From a competitive standpoint, the focus on attracting customers comes from brand differentiation, quality and connection with consumers. The goal is better management of customer relations and experience and, thereby, base retention.
Companies must use innovation to bring newer and better products to the consumer at lower costs. Frequent product design changes are required to meet competitive pressures, and time-to-market is especially important because of the competitive advantage and the improved recovery of development costs that result.
From a product design perspective, the cost of perfecting any product design and often the associated delay in time-to-market outweighs the merits of such a product. From the business standpoint, a “perfect” product is much less rewarding than the optimum product that meets the demands of the development cost and time criteria and helps both customer base retention and promotion.