Managing Product Portfolios In Mature Market

Published Date: 02 Nov 2017

The market for shampoo in the UK is now mature with sales value flat. What strategies can brands in this market pursue to achieve growth?

Introduction

The UK hair care market (comprising shampoo, conditioners, styling products and hair sprays) was worth more than £712m in grocers and chemists for the year ending August 2002.

The market is growing at only one per cent just below the rate of retail price inflation.

The research suggests that product prices in the market are actually falling. However, there has been a consumer trend towards buying smaller - and proportionately more expensive - packs which have kept overall sales value at a flat level. This trend is most noticeable in styling products, where smaller, premium-priced packs continue to perform well.

Segmentation

Shampoo remains the key hair care segment, accounting for 41 per cent of sales. Although overall sales have remained flat year on year, medicated shampoos are offsetting a decline in the two-in-one shampoo sector. Sales of medicated shampoos are driven by traditional brands, such as Head & Shoulders.

Hair conditioners are performing well (sales up four per cent since 2001) and making some gains as consumers shift away from two-in-one shampoos. The customer's desire for greater convenience appears to be declining in importance, with the "two-in-one" market now accounting for only 19 per cent of the overall shampoo market, with sales down seven per cent since 2001

Low customer penetration of conditioners

Interestingly, only 50 per cent of UK consumers buy hair conditioning products. This presents an opportunity for growth if brands can persuade more consumers into the market.

Retail purchase data shows that on the occasions when people buy a shampoo and a conditioner at the same time, they are more likely to pick up the shampoo and conditioner from the same brand.

Promotional strategies to drive sales

Of the available elements of the promotional mix, the use of sales promotions continues to be popular in the hair care market and the volume sold as part of promotional deals has increased.

Over half of conditioner sales are made through sales promotions. in particular, "multi-buy" promotions have proliferated in both the shampoo and conditioner sectors, with a quarter of volume in both these markets sold through such offers.

The continuation of such heavy promotion continues to encourage consumer switching and hampers brand loyalty.

Competitors

The key manufacturers in the market have remained the same for many years. However, through company and brand acquisitions, the major players are continuing to expand.

Procter & Gamble (which recently acquired Clairol) is the largest manufacturer with a 21 per cent market share by value.

The L'Oreal group (which includes Garnier) follows with a 16 per cent share, but its sales are declining at four per cent year on year as the Elvive brand suffers.

New product development and brands

Hair care consumers tend to shop for promotions and new products. Perhaps influenced by advertising messages that shampoos need to be changed regularly, or possibly because of the glut of multi-buy promotions, consumers are now much more fickle than in the past.

As a result, new brands have made life more difficult for established beauty brands as consumers like to experiment.

The main area of hair care where new product development can drive growth is styling. Styling now accounts for 21 per cent of the hair care market. New launches have included Spritz from Fructis, with its spray-gel format, and mud and clay products from designer manufacturers.

Styling products still have relatively low penetration - only 45 per cent of UK consumers currently purchase styling products. This compares with 79 per cent who buy shampoo, suggesting there is still plenty of opportunity to capture non-users.

The trend across hair care is to add value to the market. This is happening through a shift away from convenience products to larger hair care product repertoires, and innovation in styling and conditioning. The market's focus has returned to beauty, while consumers continue to switch to find new and improved brands. With shampoo in almost every British home, marketers will need to focus more on styling and looks, rather than the functionality of cleaning.