CPGmatters: Makers of Ethnic Cosmetics Need To Increase Business Intelligence
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
Ethnic cosmetics are severely underdeveloped in food, drug and mass channels where they post only two percent of category sales. Obviously, product manufacturers must take a fresh look at their
go-to-market strategies and how they use market intelligence to gain strategic advantages.
"This audience is not maximizing the opportunity that the marketplace extends," said Jeffrey Joyner, a consultant specializing in data mining.
"Quite simply, consumers are being underserved and often inconvenienced. There are many more opportunities for innovation, distribution methods, sales techniques and product placements. There are many opportunities to become a greater resource to the progressive retailer and to create a more complete environment for the consumers shopping those retailers' stores."
Mr. Joyner, president of the Dallas-based J. Joyner Group, recently spoke at the American Health and Beauty Aids Institute 2007 Mid-Year Buyers and Marketing Conferences in Las Vegas. AHBAI is an international trade association representing black-owned companies that make ethnic hair care and beauty-related products.
The key reason why the ethnic cosmetics market is underdeveloped is that some manufacturers fail to communicate clearly and convince retailers of the sales opportunity that exists, according to Joyner.
"Often retailers and manufacturers accept that product can only be sold in a small grouping of stores," he explained. "This thinking ignores the scores of customers in the so-called mainstream stores who are looking for these products. Often they are affluent and have some influence on others who may become shoppers of a particular retail outlet. Additionally what's often overlooked is the 'halo' effect that carrying the ethnic products creates. That is, 'If you have my ethnic product, I will likely buy other mainstream products from you as well.'"
But to take advantage of these sales opportunities, Mr. Joyner said, manufacturers must increase their business intelligence. Mr. Joyner said that significant market surveys found that retailers believe "consumer insight development and category management expertise" are the least-developed supplier skills. Such a finding obviously puts pressure on Key Account Managers who must develop new and unique skills that are very different than the traditional sales training.
"The most compelling issue facing category managers today is lack of time to do their jobs," he said. "These important folks are very busy. They seek trusted allies to help them get their work done. However, those trusted allies must bring factual and reliable solutions to bear that can stand the scrutiny of the marketplace. They cannot be as effective as they must be just by offering a product at a price."
Discussion Question: Why do you think FDM's share of ethnic cosmetics is so low? What have been the challenges in tapping this apparent opportunity? Do you also agree that not enough business intelligence is being used in targeting ethnic groups?