BIRLA INSTITUTE OF MANAGEMENT

AND TECHNOLOGY (BIMTECH)

SUBJECT : MANEGERIAL ECONOMICS

NAME : SEJAL AGARWAL

ROLL NO. 19DM188

COURSE : PGDM

BATCH : 2019-21

SECTION : C

ASSIGNMENT ON

M.A.C Cosmetics
 TABLE OF CONTENTS

CONTENTS PAGE NO.

OVERVIEW OF COSMETIC INDUSTRY

1.0 M.A.C Background 3.

1.2 M.A.C Brand Promises

2.0 Market structure

2.1 Market Analysis 4.

3.1 Economic trends

3.2 Social trends 5.

3.3 Media

3.4 Substitutes

4. Factors affecting supply of the company

4.1 Technology

4.2 Demographic Trends 6.

4.4 Political

4.5 Legal

5. Challenges faced by M.A.C 7.

6. Recommendations 8.

7. References 9.

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OVERVIEW ON COSMETICS AND TOILETRIES IN MALAYSIA

According to a report, Malaysians spent about US$600 million on cosmetics and toiletries products,
appliances and equipment in 2008. This demand was mainly met by imports. Skin care products remain
the main driver of growth for the cosmetics market. Apart from skincare products, the second largest
contributor to the cosmetics and toiletries is Color Cosmetics.

1.0 M.A.C BACKGROUND

Makeup Art Cosmetics Brand idea started in Toronto due to the frustration of a photographer Frank
Toskon and a salon owner Frank Angelo. Their frustration was about the quality of makeup because
they could not captured applied makeup so well into their photographs, therefore, they decided to
create their own makeup products

1.1 Mission & Vision of MAC

"All Sexes, All Races, All Ages" is the motto to embrace all consumers. To be the world's leading make-up
authority among both professional make-up artists and consumers. To meet customer need for superior
quality services and to provide secure & challenging work environment for all employees. To meet
everyday needs for hygiene, nutrition and personal care with brands that help people feel good, look
good, and get more out of life. As an organization, it commits itself to maintain high standards and
creative development with an enterprise concept that all pains have gains. M.A.CAIDSFUND.ORG was
launched in 1994, supporting men, women, and children affected by AIDS/HIV globally. M.A.C
introduced the "kid's helping kids" which, with sale of greeting cards, painted by the kids, will be
donated to pediatric organizations.

1.2 M.A.C Brand Promises

MAC promises on 4 things :

1. Distinctive

2. Valued

3. Consistently Delivered

4. Kept over time

Elaborately MAC brand promises a creative makeup experience giving consumers the confidence to
stand out and be stylish.

2.0 Market Structure

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M.A.C which is from a Cosmetic Industry is classified under "Monopolistic Competition". So there is a
type of imperfect competition such that many producers sell products that are Differentiated from one
another (e.g. by branding or quality). With cosmetics, there are many different sellers and buyers for this
market. some other examples in cosmetic industry are, Chanel, Revlon, Loreal, Estee Lauder and Marry
Brown.

Although, the makeup products made by these companies include basis features that we would find in
other products within the same category, each one that is created is slightly different from the
competitor only with some features more enhanced than others. For ex. maybe one lipstick has SPF
protection, while the other is designed to be water-proof and so on.

In addition, in this industry, there is an easy entry and exit . There are many cosmetic entities from sole
proprietors who make their own cosmetics, to independent shops in the mall, to big companies that we
may find in drugstores, to other large companies found only in department stores.

2.1 Market Analysis

The cosmetic and beauty industry is a competitive market have four classifications. Prestige denotes as
the department stores and specialty stores in which beauty products are sold. The Sephora, Macy’s, Bay
and MAC fall under the prestige classification. Mass merchandisers are classified as broad. This could be
Costco and Sam’s Club. Mary Kay and Avon are classified as alternate and involve direct sales. The final
classification is specialty. The Body Shop and Bath and Body Works fall into this category as well as
specific products/product lines sold at spas and salons.

The industry made nearly $35 billion in 2010. The industry experienced an yearly growth of about 4%
from the four years before. The growth of the market is expected to stay around the same until the year
2015. It estimated that the value will grow to $42 billion.

FACTORS AFFECTING DEMAND OF A COMPANY

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3.1 Economic Trends

The ongoing recession has led to many consumers trading down on some products and as a result
they become accustomed to buying lower-priced products. While drug store brands might not
offer consumers the same benefits that high-end brands like M.A.C. can, they cost much less.
High-end products can really take a bite out of your budget which can hesitate consumers from
spending their money on our brand. With a poor economy such as this one right now, people are
finding ways to save their money. The truth is that drugstore brands offer some amazing products
and so there is an industrial concern that the consumer might continue these habits as financial
pressures ease up in the future (Carrillo, 2007).

3.2 Social Trends

Social trends change with time but it is important to keep up with these trends. By knowing
what’s going on in the industry and in the market helps brands so that profit can be maximized.

There is a lot of money minting in the cosmetics industry. Consumers are constantly searching
for new products in market and to keep up with demand, companies are regularly introducing
new products in the market.

3.3 Media

Celebrities are called by many cosmetic companies to promote products because it gives their
brand a lot of exposure. While many actors/actresses not actually use these products, consumers
truly believe these products will make them look as attractive as women seen in movies and on
TV. Media has a growing influence over what is described as beautiful in today’s society.

Social media is also used by a large number of companies and brands to help them connect to the
public. Tools such as Facebook and Twitter are now used to launch new products, to give
consumers a play-by-play of a show, to get feedback and a number of other things

3.4 Substitutes

Substitute of M.A.C is L’Oréal brands, Maybelline and Revlon. L’Oréal currently holds the top
spot in cosmetics. Cosmetic brand, Maybelline, makes up 22% of the North America's market
share. Its wide availability and affordable pricing gives the brand strength in the Canadian
cosmetic industry.

Revlon is another competitor in cosmetic industry, however it does not fall into the luxury
segment. Revlon can be found in department stores, in stores like Walmart. The products of
Revlon are sold at competitive prices while MAC is sold at value-based prices.

FACTORS AFFECTING SUPPLY OF THE COMPANY

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4.1 Technology

The cosmetics industry is continuously growing, now more than ever and big thanks to the
Internet. Many companies can now sell their products online, making it easier for some to sell
products in countries where they don’t have any representatives (Pitman, 2011). Thus, allowing
the cosmetics market to become highly competitive in nature.

4.2 Demographic Trends

Use of cosmetics has become more common among men in today’s society. Although women
continue to outnumber men, the male population is expected to grow at a somewhat faster rate.
This can be used to our advantage (gender factor) as it would provide us with an opportunity to
increase penetration of cosmetics and fragrances among the growing male consumer base.

4.3 Consumer Data

Convenience While M.A.C. is sold at stores that are located in big malls, smaller brands like
Cover Girl and Almay are sold at drug stores and grocery stores. Visit to these stores is much
easier as they are conveniently located close to your home. One might rather choose to visit the
store around the corner than a mall that may be located as far as 5 hours away.

4.4 Political

The main political factor that influences the MAC Cosmetics Company is the political instability
on foreign markets as its consequences such as terrorist attacks, retaliation and the threat of
further attacks or retaliation pose a threat to opening stores in new locations.

4.5 Legal

Legal factors consist of restrictions and laws applied by foreign countries which can forbid
certain ingredients in cosmetics like silicones, parabens. For example, China requires all
products imported to be tested on animals therefore MAC must pay for this testing adversely
affecting their ethics.

CHALLENGES FACED BY M.A.C

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One challenge the company is facing is that the pricing of its products are more than the average
drug store brands. For the average minimum wage consumer, MAC Cosmetics’ prices could be a
deterrent to purchasing the product. Also, the general public is unable to get the MAC Cosmetic
PRO color line, only professional make-up artists can. By not having their professional color line
available to the public through online as well as offline, MAC could potentially be losing
customers who are searching for professional grade, long-lasting make-up.

Another challenge that MAC Cosmetics is currently facing are mainly competitors. In regards to
competitive threats, competing department store cosmetic companies include Lancôme, Clinique,
and L’Oreal. These brands are similar in pricing , easily accessible, and rival the quality of MAC
Cosmetics. In addition, drug store brands like Revlon and Maybelline, though lesser quality,
offer very competitive pricing and are much more widely available than MAC Cosmetics.
Although the economy has a serious negative effect on several non-essential industries, the
cosmetics industry has remained rather unscathed according to The Economist.

Recommendations

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M.A.C is an innovative company, the brand loves to make people feel and look good on the
inside and the outside, and it has experienced great success by evolving to stay relevant. It is
easy for M.A.C to stay close to its customers and never lose touch with them, mainly through
their advertisement online, on many websites and their own official website. The brand has used
the effective brand management planning to reclaim the brand and to turn around. M.A.C’s
vision and values all revolve around the notion of individuality, equality and originality.

M.A.C needs a fashion film to have improved and more exciting advertisement and marketing,
the customers are always involved when the company brings something new and unique to the
brand, film advertisement will bring new customers and give a new meaning and message to
people who don’t believe in advertisement through graphics, this is a unconventional and
innovative marketing, breaking away from the safe and obvious.

M.A.C barely uses film advertisements to show their products, there are just few short films on
M.A.C’s website that show new collections with different celebrities. The fact that M.A.C used
basic and easy way to promote the company doesn’t necessary meant that they have to stay with
this technique continually.

It’s always better to improve the strategy if there are possibilities, film advertisement might help
to spread the products more around the world, more audience will be intrigued by the film. The
fact that" M.A.C is for everyone" claims that there should be also diverse type of advertisement
aimed at different type of customers, public want to have realistic understanding of the products
and some believe that photography and graphics might be professionally Photo shopped to make
the products visually more exciting.

References

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Web Page

MAC Cosmetics in a Perfectly Competitive Market. Retrieved from

https://prezi.com/xetbzqj_0ftq/mac-cosmetics-in-a-perfectly-competitive-market/

MAC MAKEUP. Retrieved from https://prezi.com/xkhjii650tu8/mac-makeup/

How M.A.C cosmetics became the world’s leading and famous makeup company?. Retrieved

from

https://dsim.in/blog/2016/12/15/case-study-m-c-cosmetics-became-worlds-leading-makeup-company/

Mac Powerpoint Retrieved from

https://www.slideshare.net/fanninm/mac-powerpoint?next_slideshow=1

Works Cited

http://www.prettycompact.com/brands/mac-cosmetics

With M.A.C., Estée Lauder Enters Emerging Markets.

http://www.bloomberg.com/bw/articles/2013-03-21/with-m-dot-a-dot-c-dot-est-

elauder-enters-emerging-markets

http://www.maccosmetics.jobs/mac/our-history.html

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