Special Report: Health and Beauty Marketing

DIRECT LISTLINE SPECIAL REPORT
A focus on market statistics and trends
A PRIMEDIA Property
September 20, 2004


Welcome to our Special Report on Health and Beauty Marketing

Welcome to the latest in a series of special reports from Direct Listline.

This edition is about health and beauty marketing.

In this special, we explore how to reach one of the hot new markets for health and cosmetic products of all types, and how to drill down to ethnic segments. We also report on trends and offer statistics on the market in general.

These reports are designed to provide a snapshot of a niche at a given moment. We are planning several more this year.

If you have any comments or suggestions, please contact Ray Schultz, editorial director, at rschultz@primediabusiness.com (mailto:rschultz@primediabusiness.com).

Thanks, and we hope you enjoy the report.

MARKET OVERVIEW

Grooming for Success
By Jim Emerson

In the health and beauty market, one of the fastest growing segments happens to be one of the most difficult to reach--men.

Last year, men spent more than $16 billion worldwide for personal care products, reflecting greater than a 7% increase worldwide. Growth in the men's grooming category is second only to the much smaller $4.3 billion sun care product area, according to Euromonitor International.

Among all packaged goods, personal care products and dietary supplements are two categories that are booming. The Natural Marketing Institute, which combines figures for both sectors in a single database under health and wellness products, reported U.S. sales were $59 billion in 2003.

Nearly 6% -- or close to $1 billion in dietary supplements -- were sold in the United States by mail and more than $250 million worth (1.5%) were sold via the Internet in 2000, according to the Dietary Supplement Information Bureau.

As many as three out of five consumers regularly take dietary supplements. Three decades ago less than a quarter of consumers augmented their diets with vitamins or other dietary supplements. College graduates are 70% more likely than nongrads to consume such products, according to research from the National Center for Health Statistics. So a test of an education list select could have the potential to lift response.

Standard tools for attitudinal, behavioral and transactional data analysis can be applied to lists as well as raw data for predicting product preferences and purchasing habits. There are numerous specialized health and beauty magazine lists available, plus fitness magazines that cater to both interests.

Demand for male-specific brands of personal care products has outstripped the general market for the last few years, particularly among young men. The market research firm Kline & Co. said this trend for greater awareness and acceptance of products in this category has been reinforced by the Bravo cable television show "Queer Eye for the Straight Guy" and magazines such as Men's Health, Stuff and GQ.

Direct marketers shouldn't overlook ethnicity as a selection for testing when prospecting for new customers. By 2008 sales of personal care products among African-, Hispanic- and Asian-American men are projected to reach $1.7 billion, reflecting nearly a 20% increase in four years, according to Marketresearch.com.

Men in general can be broken down into two categories with respect to personal care products. One type is the much publicized "metrosexual" heterosexual male who's keenly interested in his appearance and willing to use more grooming products than previous generations. The men resisting personal care items can be labeled as "grunginators," difficult but not impossible to convert to customers. Experts say the key to reaching these men continues to be educating them about products, such as the benefits of anti-wrinkling creams.

Analysts say Internet use is a good indicator for identifying customer prospects in this segment, because men are comfortable getting
information about personal care products from Web sites. Other reliable list sources for metrosexuals include men's magazines that feature editorial and advertising related to personal care products.

Experts claim the key to selling personal care products to men involves providing plenty of information about products, without making their grooming habits more complicated and not playing to their insecurities.

A common strategy used for targeting women--associating the use of personal care products to overcoming insecurities--is generally considered a poor strategy for targeting men.

STATS

Facts and Figures

*Estimates of worldwide sales of cosmetics and toiletries vary and some exceed $200 billion annually. The U.S. represents about 25% of the global market. High-growth product categories include color cosmetics, skin care, sun, teenage and hair products.

*With more than $45 billion in annual sales the United States is by far the world's largest market for cosmetics and toiletries. Americans on average use nine personal care products every day. Women< typically use 12 personal care products daily, twice as many as men. An estimated 90% of girls age 14 and older regularly use cosmetics.

*Demand for cosmetics and toiletries in the United States is twice that of Japan. A projected 6.6 million pounds of raw materials will be used in the United States annually for manufacturing such products by 2008. The American market is roughly four times larger than each of the next three largest markets--France, Germany and the United Kingdom. Venezuela ranked first as the world's fastest growing market for cosmetics and toiletries in 2003, followed by Ukraine, Vietnam and Argentina.

*Worldwide, the largest personal care category is hair care, followed by skin care, color cosmetics, fragrances and products for the bath and shower. The quickest growing product category is sun care, followed by men's grooming, oral hygiene, deodorants and baby care.

*Only 18% of American teenage boys have never used fragrances. Boys age 13 to 17 make 12% of their fragrance purchases via the Internet, telephone, mail, television and shopping mall kiosks. Teen boys are attracted to fragrances they perceive as masculine, clean and fresh. Only 9% of teenage boys will buy a particular fragrance because their friends wear it.

*The words "natural" and "healthy" appear to be gaining marketing currency for attracting consumers' attention. The domestic market for natural personal care products is projected to grow to $5.8 billion by 2008. Through 2002, the domestic market for natural products was expanding by about 14% annually, compared with a 2% decline for mainstream items. One study found Hispanic consumers are more likely to purchase natural or organic products than the general population.

*The European Union banned the marketing of all cosmetic products that contain chemicals that are known or strongly suspected of causing cancer, mutation or birth defects, effective this month. New regulations require that only reformulated products be sold in the EU. About a third of personal care products sold in the United States contain one or more ingredient with some evidence of being carcinogenic.

*Dermatologist-brand products, a $500 million market segment at the manufacturer level, represent a potential opportunity for alternative distribution channels to drive growth and build sales. There's little competition besides retail spas, which dominate this category. In fact, they're ahead of even mainstream retailers. This segment has been growing about 10% per year over the last five years.

*Estimates for annual U.S. sales of dietary supplements and vitamins vary and some run higher than $17 billion. Vitamins account for more than a third of dietary supplements sold and multivitamins are the most popular. Herbal supplements are the second largest category, pulling in about 25% of sales. The biggest herbal sellers are ginko bilboa, St. John's wort, echinacea, ginseng, garlic, saw palmetto, kava kava and valerian root.

Sources: Datamonitor, Dietary Supplement Information Bureau, Environmental Working Group, Euromonitor International, Journal of the American Medical Association, Kline & Co., Natural Foods Marketing Institute, NPD Group Inc., Packaged Facts, Soil Association.