BUSINESS 401: Strategic Group Analysis of US Cosmetics Industry

This report provides a strategic group mapping analysis of the US cosmetics industry, identifying key competitive characteristics such as product variety and customer service. The analysis categorizes ten leading cosmetics companies into three strategic groups: high (MAC, CoverGirl, Maybelline), moderate (Sephora, Avon, Urban Decay, Tom Ford), and low (Anastasia, Too Faced, Bare Escentials). The report discusses the competitive dynamics within each group, including barriers to entry, using Porter's Five Forces. It also identifies potential open market spaces, particularly in emerging Asian and African markets, emphasizing the importance of affordable, high-quality products tailored to local cultures. The report concludes that companies in the high group possess strong brand value and customer bases, while those in the moderate group face greater competition and potential for new market entrants, and the low group struggles with product variety and customer service.

RUNNING HEAD: US COSMETICS INDUSTRY
US COSMETICS INDUSTRY
Name of the University
Name of the Student
Author Note

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Executive summary:
Cosmetics industry in the US market is very popular and rich with lots of reputed companies.
Strategic group map in this paper reveals that there are three groups in the cosmetics market of
the US and top leading group consists of MAC, COVER GIRL, and MAYBELLINE. Products
and services of those companies are very high and people are satisfied with their products. Few
companies are also in threat due to lack of proper service. There is a chance to expand the
business in the emerging market of the ASIA and definitely all the companies will grab these
advantages with their quality and variety product.

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Table of Contents
Introduction:....................................................................................................................................4
Part 1: MAPPING............................................................................................................................4
STEP1:.........................................................................................................................................4
STEP2:.........................................................................................................................................5
Part2: Written analysis.....................................................................................................................6
2. STRATEGIC GROUPS:.........................................................................................................9
3. OPEN MARKET SPACE:......................................................................................................9
4. BEST PLACE:.......................................................................................................................10
Conclusion:....................................................................................................................................11
Reference list:................................................................................................................................12

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Introduction:
The cosmetics industry is the fastest growing industry in the world and collected the
highest revenue in the last year. The reason behind this is quite apparent that is an increase of the
demand of the cosmetics material, and also the current trends play a vital role in uplifting the
industry. Numbers of well-known cosmetics companies already producing the brand new
products in the market every day to attract the customers and research has been done extensively
to develop the products more. Competition in the market is also high, and this allows the
customers to choose their favorite products to glow the beauty. In this paper, strategic group
mapping will be done to understand the position of the cosmetic companies in US and
description and evaluation will also be commenced to draw the better picture of the cosmetic
industry in the US.
Part 1: MAPPING
STEP1:
Product and the customer service are the main two competitive characteristics that can
help to differentiate the firms to do the strategic group mapping.

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STEP2:
CUSTOMER
SERVICE
Low
1 2 3 4 5 6 7 8 9
CUSTOMER
SERVICE
GG
GROUP B
Group A
MAC
COVER GIRL
MAYBELLINE
URBAN DECAY
AVON
TOO FACED
ANASTASIA
BARE ESSENTUALS
TOM FORD
SEPHORAA
PRODUC
LO MODERATE HIGH
LOW
MODERATE
HIGH

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STRATEGIC GROUP MAPPING OF COSMETICS INDUSTRY IN US
There are three groups in the map, in Group A, enlisted companies are MAC, COVER GIRL and
MAYBELLINE. In Group B, there are four companies such as SEPRHORA, AVON, URBAN
DECAY and TOM FORD. Three companies such as ANASTASIA, TOO FACED and BARE
ESSENTUALS are in Group C
Part2: Written analysis
Strategic map of the cosmetics industry in the US reveals the competitive structure
depending on the products and customer service. There are three different groups which reflect
variety of the products and customer service (Castellano & Del Gobbo, 2018). In the strategic
map, 10 different cosmetics companies are placed according to their variety of products and
customer service help. There are three criteria that are low, medium and high and all the ten
companies are differentiated along their services in the cosmetics market of US. Each dimension
in the map helps to determine the ranking of these ten companies. In the map, MAC is in top
position with the high variety of products and smooth customer services due to their wide range
of products. MAC is one of the best cosmetics company with the range of products like lipstick,
eyeliner, fountain and many more. Basically, their lipsticks are most popular in the US which
every girl wish to have in their pocket (Wang et al,.2015). Not only products their customer
service is also flexible and people get the information or help regarding any product related
issue. That is the reason MAC is in top position on the map. Below this, there is a company
named COVER GIRL, which is also a reputed brand, and products variety is also high. Their

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shades products have been accepted globally and also have different other products which are
also accepted by most of the girls. Customer service of the COVER GIRL is also good, and they
cover every quarry of the customers (Reed, 2015). MAYBELLINE is another big branded
cosmetics company, which has the parental influence of LOREAL. MAYBELLINE produces
high quality lipsticks, and these are world famous. Besides these many other products they
produced are mascara, face makeup, eye makeup, nail polish and much more but their customer
service is somehow not up to the mark but still is good enough to stay in the strategic map
(Shumenko & Reva,2016). These three companies make a group, which is at the top of the map
and their popularity, products are more or less same demanding in the market.
In the map, there is another group, which belongs to the moderate level, and rankings are
under 3 to 7. Companies in these groups are AVON, SEPHORA, URBAN DECAY, TOM
FORD all these companies are also well known in the US market. Among this group, AVON is
in top position with their range of products, but their most of the selling products are skin care.
Typical cosmetics products like lipstick, eyeliner and much more are not so popular in the
market because people still like to afford the cosmetics of the reputed company belongs to the
higher group. Customer service is not promising, but still, they have different customer’s service
stores to support and improve the service. Below this, there is the company named SEPHORA,
which is also a reputed brand but their brand values, is not much high and products cost is low
which precipitated a bad image in the market (Hennessy et al.,2017). Product collection in the
stores is not so exciting for the girls because products quality is also another factor. Customer
service is moderate among the belonging group on the map. Website and other facilities are
available for the customers but sometimes it is time-consuming. URBAN DECAY is standing in
the lower position because their various mascaras are not up to the level and collection of

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lipsticks and the foundations are also limited. Few lip-glosses are also not good for the skin. All
these things pull down the URBAN DECAY in to the lower position, but their customer service
is also not in good position due to lack of the proper response (Byrd & Ross, 2015). TOM
FORD is in the lowest position of this group where their products are lower selling and variety is
also low in response to other three companies in this group. Customer service is also not well
structured to support the customer all the time. All the companies in this group are trying to
capture the market in greater sense. They have the band and customer base, but still, due to lack
of variety and quality products, they find the struggle in the market against the high brand
companies.
Three companies are in the last group which have the lowest product variety and
customer service. All the companies are in the rank between 1 to 3, and this means their brand is
not so high in the market. ANASTASIA is one of them which is one of the cosmetics company
in the US. They have the products like lipstick, eyeliner but there are some issues with all of
these products. Sometimes there is quality issue, sometimes lack of variety, and all these factors
restrict the company to become popular (Fred, 2015). TOO FACED is another company, which
also offers the same products in the market and belongs to these groups. Products variety is not
so promising for the customers and customer service facility is very poor in response to others.
Last company, which is placed lower corner of the map, is BARE ESSENTUALS. This
company is still searching for determining the products because their products are not much
popular in the market and their profit share is also low.
All these ten companies are placed according to product and customer service in the
strategic map. The first group which consists of three companies are highly reputed, and their
market shares are also high. Next group is the moderate group consists of 4companies, and all

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the companies are reputed but not much as first groups (Barbas, 2015). Last groups are in the
lower position, their market share, products variety and customer service are not so promising in
the market.
2. STRATEGIC GROUPS:
In order to determine Porter's five forces to detect the barriers to entry, it is necessary to
choose two groups from the map. For the first group which consist of three companies, has the
high brand value in the market.
Group A: According to Porter's five forces, GROUP A is highly strong in the market. All the
three companies like MAC, COVER GIRL, MAYBELLINE are the highest selling brand in the
US market as well as globally. They have the financial support, variety of products, quality
products, strong customer base and much more to stay strong in the market (Thorpe, 2015). It is
very tough for the new companies to invade the position of these three companies because to
grab the customers of this group is highly suspicious. These three companies have strong
customers base, which is nearly unbreakable. The risk from the new entry is less for this group.
Group B: In this group, there are four companies like AVON, SEPHORA, URBAN DECAY,
TOM FORD are highly competitive because all the companies are trying to increase the business
and develop their business in more expanding manner. These four companies also have the threat
from the lower group like ANASTASIA, BARE ESSENTUALS AND TOO FACED and rivalry
in the group is also high (Mori, Gold & Jose, 2017). A new entry can be possible in this group
because all the companies still do not have strong impression in the market and new companies
can take this advantages to build their business.

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3. OPEN MARKET SPACE:
All the companies want to invade the new market to facilitate the business properly. The
new market is the place where a new companies can take the advantages of all new customers
and produce new products to grab the customers. This will also help to increase the band image
in the market. The Asian market is the place where all the company can take the business
because Asian and African market is the emerging economy where making profit is easy (Ramli,
2015). This place is still not filled up completely because demand for cosmetics in this two
market was not so high but recently as the economy is moving in growing manner demands of
the customers is also increased rapidly. In order to take the advantages, in the country like India,
Hong Kong, Nigeria and many more the company needs to produce the products, which costs
low but quality is good. Quality products at affordable price are the best strategy to invade the
emerging market. Another strategy maybe is to produce the regional products, which gives the
value to the society and also the culture where company might deal. For example if the company
want to grab the Indian market then they can produce the lipstick which defines their culture or
in the African market they can produce black lipstick which is quite famous in their culture
(Sulu, Saerang & Massie, 2016). In order to gain in the business, it is essential to buildi a strong
customer base, and quality products at affordable range are the best way to get the customers.
4. BEST PLACE:
a) The group which involves MAC, COVER GIRL, MAYBELLINE is the top position and
also have the high brand value. They have the various products and strong customer base. In
strategic group map, they are in top position, and this position helps them to get more business
(Wu, Yeh & Woodside, 2014). Their products are high quality and also good for skin and this the
reason people want to buy their products.

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b) The last group in the map is in struggle because their brand value is low and product variety
and quality are also not promising in the market (Safford et al.,2015). Due to this, they will be in
struggle if they are not able to improve their services.
c) In this map, the upper position is determined by the amount of product variety and level of
customer service. Companies which are in this position are better because their service is high
and sales are also high; this makes the position better on the map. Middle zone of the map is the
moderate area where all the companies are trying to grab the market by improving their services
and products (Castellano & Del Gobbo, 2018). Lower zone of the map is for the companies,
which are not so much promising in the market, and this zone is not safe for the companies.
Conclusion:
From the above discussion, it can be concluded that cosmetics market has leaded by the
few companies like MAC, MAYBELLINE COVERGIRL, AVON. Details description of the
cosmetic industry through strategic group map is in this paper which reflects the position of all
the companies of US market. Description of the companies is also there for better understanding
of the market condition and barriers of the new entry are also described in this paper.

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Reference list:
Barbas, M. P. B. S. C. (2015). The world of Sephora: managing strategies as a retailer and
private (Doctoral dissertation).
Byrd, K., & Ross, L. (2015). Global Opportunity Identification: Exploratory Analysis of the
Precursors of Franchisor International Growth and Development.
Castellano, N. G., & Del Gobbo, R. (2018). Strategic mapping: relationships that
count. Management Decision.
Fred, S. (2015). Examining Endorsement and Viewership Effects on the Source Credibility of
YouTubers. University of South Florida.
Hennessy, J., Carter, J., Carter, J., & Tybout, A. M. (2017). Maybelline Inc.: About
Face. Kellogg School of Management Cases, 1-28.
Mori, G. O., Gold, M., & Jose, S. (2017). Specialty Crops in Temperate Agroforestry Systems:
Sustainable Management, Marketing and Promotion for the Midwest Region of the USA.
In Integrating Landscapes: Agroforestry for Biodiversity Conservation and Food
Sovereignty (pp. 331-366). Springer, Cham.
Ramli, N. S. (2015). Immigrant entrepreneurs on the world's successful global brands in the
cosmetic industry. Procedia-Social and Behavioral Sciences, 195, 113-122.
Reed, J. (2015). The beauty gap (Doctoral dissertation, uga).