Expansion of a Low-Cost Shampoo in the Russian Hair Care Industry
Hair care has become commonplace globally. The Russian hair care and cosmetics industry in general is growing at a steady pace (Canadean Ltd, 2012). In the low-end market, a research by Euromonitor (2012) found that local firms dominated, with Kalina Concern’s core brands being among the favorites. There is intense competition in the middle-class segment though Euromonitor (2012) reported that local brands were performing much better than foreign counterparts. The high-end market is dominated by French, Spanish and Swiss Brands (Euromonitor, 2012). L’Etoile is the leader of this market segment in Russia with outlets in all major cities. Competing products in this segment come from such companies as LVMH, which manufactures the popular Dior products. Foreign brands are believed to have guaranteed quality.
Russia has an alarming income disparity according to a report by the country’s president (Rianovosti, 2012). Rianovosti (2012) observed that the latest statistics also indicate that the country’s poverty levels increased in 2011 to 12.8%. In the OECD better life index (2012), Russia is below the half mark on a scale of 10, with a household disposable income of 13 911 USD, compared to the OECD average of 22 378 USD. This trends and characteristics imply the presence of a wide low-end market in Russia. The upward trend in poverty reported above also signifies a bigger challenge to bring the figure down. However, a rising middle class in Russia is a positive indicator for businesses. Gessen (2012) noted that political laxity and failure to address such issues aggressively offer minimal remedy to the Russian public. The low-end market conditions for hair care which is dominated by local firms, enhanced by the persistent low income population in Russia support the expansion for a low cost shampoo product.
Canadean Ltd (2012). Haircare Market in Russia to 2016: Market Profile. Retrieved from:
Gessen, M. (2012 March 4). It’s Not Just the Russian Middle Class in Revolt-This is
a true Mass Movement. The Guardian. Retrieved from: http://www.guardian.co.uk/commentisfree/2012/mar/04/masha-gessen-russian-putin-election
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