Cosmetic Industry outlines the production, manufacturing, distribution, and retail of cosmetic products and goods. They comprise cosmetic items like bath soap, toiletries, hair color, conditioner, shampoo, haircare, cleansers, and moisturizers. Today, we’ll discuss the PESTLE analysis of Cosmetic Industry; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Cosmetic Industry
Some of the main political factors in the Cosmetic Industry PESTLE analysis are as follows;
I-Government Regulations
The government regulation is very strict for the cosmetic products manufacturing companies when it comes to the consumer health safety. They need to comply with the “Personal Care Safety Act” and require approval from the FDA (federal drug authority). However, the objective of government and FDA approval requirements is to ensure the safety and health of ordinary consumers.
II-Ingredient Disclosure
Speaking of government regulations and FDA approval, Cosmetic companies need to disclose their ingredient list and product testing methods and practices. The goal is to ensure that all the ingredients are natural and safe to use on human skin, and the company has tested the product in a closed environment.
III-Trade Policies
Cosmetic companies are operating their business worldwide and they need to procure material and ingredients from various locations. That’s where the role of government trade policies comes into play. If the country has a strict trade policy, it would increase taxes and regulations to decrease the import and export of cosmetic products and goods to particular countries.
Economic Factors Affecting Cosmetic Industry
Some of the main economic factors in the Cosmetic Industry PESTLE analysis are as follows;
I-Price Sensitivity
The cosmetic and skincare consumer market is highly price sensitive, and they don’t take the price change lightly. Cosmetic companies procure ingredients and materials from various countries. A small change in currency exchange rate and oil price would negatively impact the sales and revenue of Cosmetic companies.
II-Cosmetic Spending
The overall spending on cosmetics, skincare, personal care, and hair care products has been increasing for the past few years. Both men and women have become conscious about their skincare and personal care and they are buying cosmetics products. High consumer spending on cosmetic products is increasing the growth of Cosmetic Industry.
Social Factors Impacting Cosmetic Industry
Some of the main social factors in the Cosmetic Industry PESTEL analysis are as follows;
I-Large Network
Cosmetic Industry has established a very large supply chain and distribution network to make their cosmetic products available worldwide. They have employed millions of people worldwide performing various roles and tasks in the cosmetic industry. It shows the company’s strong commitment to the local community and investing it back in society.
II-Makeup and Fashion Trends
The trend of fashion, skincare, personal care, and makeup products has been increasing a lot in recent years. It is due to various factors, social media is among them; it compels them to look pretty in the videos and pictures for posting it online on social media.
III-Ethical Practices
The consumer market has become highly cautious about their environment and the practices of companies. They don’t buy from companies and promote such businesses that are engaging in unethical practices. However, Cosmetic companies need to engage in ethical practices, no animal testing of cosmetic products, and ethical sourcing of raw materials and ingredients.
Technological Factors Affecting Cosmetic Industry
Some of the main technological factors in the Cosmetic Industry PESTEL analysis are as follows;
I-VR Technology
Cosmetic companies are investing a significant amount of capital resources in the development of AR (augmented reality) and VR (virtual reality) technology. It allows them to test the skincare and other cosmetic ingredients virtually. Most importantly, it helps them to offer customized personal care solutions to the customers relevant to their skin tone and color.
II-Advanced Technology
Cosmetic brands are employing the latest and advanced technological tools and equipment to achieve efficiency and reduce cost. They comprise AR, VR, AI, ML, data analytics, IoT, and others. However, it allows them to efficiently perform various operations without any delays and disruption.
III-Influencers Marketing
Cosmetic companies collaborate with various fashion and makeup artists and influencers for the promotion of their cosmetic products and goods. They have a massive fan following and a very large network, and their brand endorsement would attract a lot of new potential customers and it amplifies the company’s sales.
Legal Factors Impacting the Cosmetic Industry
Some of the main legal factors in the Cosmetic Industry PESTEL analysis are as follows;
Regulatory Compliance
Cosmetic Industry needs to comply with the regulatory requirements of different countries. They consist of no animal testing, full disclosure of cosmetic ingredients, FDA approval, license and approval, trade regulations, and other legal requirements. Regulatory requirements would help cosmetic brands to smoothly perform their operations without any delays and disruption.
Environmental Factors Affecting Cosmetic Industry
Some of the main environmental factors in the Cosmetic Industry PESTEL analysis are as follows;
Sustainability Initiative
Cosmetic Industry should make a strong commitment to environmental sustainability. They need to take steps like ethical sourcing of raw materials and ingredients, ethical practices, renewable sources of energy, and biodegradable packaging. Environmental sustainability initiatives would help them to attract the attention of eco-friendly customers.
Conclusion: Cosmetic Industry PESTLE Analysis |PESTEL Analysis of Cosmetic Industry |External Environmental Analysis of Cosmetic Industry | Strategic Analysis of Cosmetic Industry
After an in-depth study of the pestle analysis of Cosmetic Industry; we have realized that Cosmetic Industry is the world’s top growing and proliferating industry. If you are learning about the Cosmetic Industry PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
