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Paradigm Shift for India’s Hair Care

Priyanka Bhattacharya

With a growth rate curving upward, the hair care market in India is going through a major paradigm shift. With consumers ready to experiment with new products and services and marketers churning out new products at an impressive rate, there is a sense of excitement in the industry. The potential is such that major Indian manufacturers are now relaunching hair care brands that did not survive in earlier market scenarios.

According to a recent study by AC Nielsen Global Services, the Indian hair care market has shown a growth of 3.8% over the previous year. Although the numbers may not look impressive at first glance, they are positive compared with earlier market growth trend, and the industry is excited about this change.

The change is visible at two levels—consumer behavior and marketers trying to grow the market by introducing new product categories and services.

What was once considered to be an occasion-linked beauty regimen has now become a consumer way of life. The traditional hair care and hair styling methods are changing, which means that buyers are now ready to accept newer product categories. With globalization and greater purchasing power, consumers are willing to pick up higher-priced brands. “There is an increase of awareness amongst Indian women about hair care,” said Samantha Kochhar, hair expert and trainer, Pivot Point India. “Although hair colors as a market has matured, slowly we are seeing a demand for hairstyling and hair care products from consumers. There are still more female buyers than male buyers. The companies also are launching separate men’s hair care ranges, but that still has to mature.”

This also shows that there is a deeper market penetration. The aspiration value has increased beyond consumers in the tier one/urban markets across the cities. Consumers in the tier two and tier three markets, including those in rural areas, also are demanding more and new products.

At the second level, marketers are trying to sell the items more as a benefit proposition rather than just as cosmetic product. They also are trying to increase awareness among consumers through creative marketing strategies. Some of the marketers are, in fact, going for a try-before-you-buy method to educate consumers about the products. Although existing marketers are changing their marketing strategies, there are newer international players who are looking to establish business in India.

Changing Consumer Behavior

Traditionally, Indian women have been very nonexperimental with hair care and hairstyling. Most preferred to go for conventional methods, using oil to condition hair, henna to color it and shikakai powder or soaps to wash hair. Other than this routine, most of them did not use any hairstyling or hair care products.

But since 2000, the usage pattern has been changing, resulting in impressive growth for the hair care industry. There is increased awareness among all levels of consumers—from the elite buyers to lower–income customers. Male consumers also have evolved as a category, and products are being introduced to meet the specific needs of men.

The purchasing power of women has improved, and they now are willing to spend more on personal grooming—with hair care taking precedence. In addition, with more available global fashions and trends, women consumers also are ready to try out new hairstyles and colors.

“The Indian women today are much more up-to-date about trends, and do appreciate good service,” said Smira Bakshi, business manager, Kerastase Paris, L’Oréal India. “In fact, our studies show that they are also more willing to pay for good service and are ready to accept the latest hair treatments.”

Throughout the past year, there is an increased demand for aspirational products. Women are willing to pay a higher price—particularly urban customers in tier one markets across India’s five major metropolitan areas. “Our clientele prefers to spend some extra money to buy international brands,” said Dharmendra Khanna, business manager, Kunchals—a leading beauty retail outlet in Delhi. “And there is strong demand for high-end hairstyling products like Tigi. They even demand brands like Paul Mitchell and Vidal Sassoon. They can shell out as much as 1,200 rupees for a shampoo.”

Men are fast emerging as a separate consumer category in a market traditionally dominated by women. The change in the buying pattern includes men looking for care and styling products that cater to their specific needs. This has led to marketers launching SKUs specific to male buyers’ needs—Shwarzkopf’s BC men hair therapy range of products, for example, has been designed for men. Similarly, styling gel brands such as Brylcreem, Marico Industries’ Parachute After Shower Hair Cream and Set Wet Hair Gel by Paras Industries all target men with male-specific advertisements.

In addition, consumers in rural areas are buying products further up the value chain. Market research done to gauge the consumer buying pattern in rural areas showed that only one Indian state had 25% penetration in 2000.

Hair Cosmetics Market

The Indian hair cosmetics market, which includes both hair care and hairstyling products, has a unique characteristic. This is one segment where the traditional hair treatments sell as much as newer category hairstyling and hair care products. Traditional herbal powders and hair oils for hair conditioning share the same shelf space with high-end conditioners and hair care products. Providing a feel of the market, Anmol Sherpa, coordinator of AC Nielsen Global Services, said that, unlike any international markets, India has a large proportion of consumers whose hair care expenditure also includes hair oils. In fact, hair oils showed a growth of 6% in 2005 over the previous year. Rural India saw a faster growth rate of about 11%, while urban India grew by 4%. The AC Nielsen study on the Indian hair care market identified shampoo as the fastest-growing hair care product category, while conditioners have the maximum growth potential. The shampoo usage has increased across the board in both urban and rural markets. According to AC Nielsen, shampoo is one of the fastest-growing categories within the Fast Moving Consumer Goods sector, registering a value growth of 10.9% between April 2004 and March 2005.

Marketers have responded by launching newer variants of their shampoos—or by bringing in a whole new range of products. Some established brands also have entered the shampoo and hair care segment to ride this growth wave—Hindustan Lever’s leading cosmetic and skin care brand, Lakm, is one such example. The company has ventured into the shampoo and hair conditioner market with a new subbrand—Lakm HairNext. “We are extremely pleased to bring to the Indian woman a wide range of hairstyling products that will transform her hair into gorgeous tresses within minutes,” said Anil Chopra, vice president, Lakm Lever, when the product launched. The aim was to get a complete hair solution on the market.

Meanwhile, conditioners are showing a steady growth rate in the urban markets. In fact, this is one product category that is expected to show exponential growth this year. To push this market, midrange consumer brands such as Garnier Fructis, P&G’s Pantene and Lakm’s HairNext are selling shampoo-conditioner duos as a complete hair care solution.

Hair Color Market

Once bought only by the affluent as a beauty treat, hair colorants have now become a lifestyle need, according to an AC Nielsen report. Overall, the hair colorant segment is showing a strong growth rate of 8% year on year. It is expected to show even stronger growth in 2006. “In India, hair colorants have proven to be the hair care industry’s crowning glory,” said Nielsen’s Sherpa.

The hair colorants market has two distinct segments—the professional coloring service offered by salons and the at-home hair color market.

L’Oréal Professionnel, followed by Schwarzkopf and Wella, dominate the professional market. This segment has seen steady growth, predominantly in metropolitan market because the pricing of the color services can be prohibitive for tier two market consumers. “Hair color has been big in the country for some time now,” said Adhuna Akhtar, hairstylist and director, B: Blunt Salon. “Today, we can say ... Indian consumers, especially women customers, are very mature when it comes to hair color and other chemical treatments. They follow the international hair trends very closely, and are willing to spend more to get the style they want.”

However, it is the at-home hair color market that has really excited the big marketers. It is the market that is generating the highest volumes for most of them, and it also is the segment that is going through a transition phase. In addition to L’Oréal and Laboratoires Garnier, some big Indian players have entered the market. This market can be divided into permanent haircolor products, powder hair dye and oil-based hair dye segments.

Revlon, which has been selling its ColorStay range of hair colors, now is looking at introducing an India-specific hair color brand. The company already is in the process of test marketing its Top-Speed brand in the south Indian markets. “Until now, we were choosing the brands from our international portfolio,” said Deepak Bhandari, marketing manager, Modi Revlon. “But now, we will be creating region-specific brands for countries such as India and China—especially in the hair coloring segment.” With this strategy in place, the company expects to grow 40% in the hair color category by the end of 2006.

Fostering Aspirations

As the market matures, marketers are looking to create more awareness and feed the fashion and beauty aspirations of Indian consumers. Companies now are tying their retail products in with salon services. L’Oréal has even introduced its Kerastase Institute’s premium hair care service to meet the need. The company already has opened hair spas in Delhi and Mumbai, and it has plans to increase the number of Kerastase Institutes across the country, targeting major metropolitan areas. “In terms of services awareness, the consumers are still not mature,” said Kerastase’s Bakshi. “But the potential is immense. Through our services, we are trying to create more consciousness and bring in the awareness that hair care is as customized and as evolved as a skin care regimen. We are hoping to bring in that change amongst the consumers in the country. In fact, we are looking to foster their need for world-class hair treatments.”

In offering such treatments, marketers have strategically kept the pricing on the premium side. This can be interpreted as a way to create a more mature customer base in the country, in addition to generating higher revenues for the companies.

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