Product innovation set to propel Japan’s cosmetics industry
In a region where product development and trends are innovative, rapidly adopted and expansive, Japan is one country within the Asia-Pacific region (APAC) that has seen weak current value growth.
In June 2016, Euromonitor’s report on beauty and personal care in Japan put this slow growth down to mature product areas, and an aging and declining population.
As Japan focused on colourful cosmetics, this trend was replaced with demand for natural hair and makeup.
However, as consumers seek multi-purpose products, the Japanese market boosted sales with value-added skin care offerings.
The weakened Yen has also played its part in attracting tourists to brick-and-mortar stores, who have sourced both bargains and high-quality products. Japanese consumers also sought premium products in Japan rather than searching for them overseas.
Despite these promising projections, the Japanese market has been criticised for its inability to place sufficient value on product innovation and communicate these successful developments to appeal to the mass Asia-Pacific (APAC) market.
Masahiko Uotani, CEO, Shiseido emphasised the importance of strong marketing in June: “We are talking about strategic marketing. For us to position consumers at the centre of what we do, all functions have to work together to build the values of the brand”.
Strategic marketing is still crucial even when the economic landscape does not offer ideal market conditions: “When we see tough times ahead, we have to be more aggressive in our market activities”, Uotani goes on to say.
As the forecast period is expected to see growth, Euromonitor highlights the importance of innovative product development that appeals directly to local consumer’s needs. The combination of this forward-thinking approach and consumer-driven marketing is set to improve the outlook for Japan's cosmetic and beauty industry.
It is important that brands stay ahead of the trends and are aware of how their products are reaching their target demographic. At the end of 2015, CDA reported that the skin care, hair care, and make-up sectors were prominent, with products focusing on anti-pollution, anti-stress and anti-aging markets that appeal to older consumers.
Japanese consumer cosmetics manufacturer, Kao, plans to increase its profit margin to 10%, by fiscal 2020.
Following losses in 2013, the consumer product developer will seek to expand its main brands throughout Asia. If successful in reaching its target, Kao will reach an operating profit of more than 30 billion yen ($294 million).
Kao’s 10% goal far exceeds leading cosmetic maker Shiseido’s 3.5% projection, after its announcement that it will be restructuring, yet is less than cosmetic giant Kose’s 14.2% forecast, which it has set for fiscal 2016 during its 70th anniversary year.
In a bid to compete with two of Japan’s leading cosmetic product innovators, Kao’s 30 billion yen profit target will match Shiseido's 30 billion yen ($294 million) and move it closer to Kose's 36 billion yen ($352 million) target.
Establishing and implementing these key trends in Japan’s product innovation plans is key to developing a niche, and maximising awareness and sales throughout the APAC region.