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Cri-report Competition Analysis Of China's Shampoo Market And Future Strategies

(Cri-report) - Shampoo is a hair care product with nice fragrance and various functions of anti-dandruff, greasing, anti-loss, softening and nourishment, anti-bifurcation, removing itch and so on. It is a kind of hair cosmetics with high consumer penetration rate of 97.4% in 2008, 97.7% in 2009 and 98.1% in 2010. Shampoo market competition in China is highly intense with high concentration; however, the total market potential is as high as CNY 10 billion.

Among China's daily use chemicals, the whole hair washing and hair care market is generally moving from growth stage to maturation stage. Among over 20 leading brands, the joint venture enterprises occupy 80% of the market share. The consumer loyalty towards shampoo brand is increasing. About 65% of the consumers have formed the habits of using certain brands or regularly altering among 4 to 5 brands.

Domestic hair washing and hair care market can be roughly divided into three groups: P&G occupies the dominant status in the market with its army of 4 household brands: Rejoice, Pantene, VS Sassoon, Head-Shoulders. The largest competitor Uniliver and its Lux, Sunsilk, together with P&G constitute the first group, the leading group. The second group is led by Sifone of Kao Corporation, Slex of C-Bons Group and so on. And most domestic brands including Houdy, LaFang, DHZX and Bolis are in the third group. The brand concentration is rather high. According to the statistics, the concentration rate was 66.8% in 2007, 69.1% in 2008, and it surmounted 70% in 2009.

Due to the increasing operating cost, adding up the highly competitive shampoo market, the former marketing mode of "celebrity endorsement plus TV ads in provincial channel" is not suitable anymore. The advertising cost keeps an average increase of 10% in recent years. While shampoo is a popular consumer product highly dependent on TV ads marketing, it is challenging for new entrants and small-sized enterprises with insufficient fund.

However, there are successful examples of domestic and foreign brands in the competitive market. The key words are specialization, differentiation and definite brand positioning. Firstly, consumers are now increasingly focusing on specific functions, nourishment, anti-loss, softening, etc. And the main stream is anti-dandruff. Brands with ambiguous function categories will be generally forgotten by consumers, for example, Clairol. The positive case is Clear promoted by Uniliver with its definite route of mineral anti-dandruff. Investing several hundred million CNY of advertising, Clear with its idea of "professional anti-dandruff product" successfully and directly challenges its biggest competitor, Head-Shoulders of P&G. Secondly, differentiation is particularly important in sharing the cake in the competitive market. In the anti-dandruff product market with the sales revenue of CNY 10 billion, Dianhong Kangwang Compound Ketoconazole Hair Lotion pioneered in the drug dandruff field. With the unique concept of Compound Ketoconazole and the suitable channel, OTC drugstore, Kangwang achieved success. Thirdly, enterprises should have a definite brand positioning. To take L'Oreal as an example, it originates from hair dye, and the core value of the brand is "beauty". Therefore in the high-end shampoo market, L'Oreal launched two products: one is after-dye shampoo, the other deep revitalizing conditioner, in coordinate with its value.

Generally speaking, the shampoo market competition in China is and will be highly intense. Domestic shampoo enterprises are under the pressure of the foreign mighty brands. However, if the enterprises improve their situation in the aspects of market, brand and management, such as focusing on the core value of the products, innovatively establishing the brand and so on, adding up the strategies mentioned above, the market potential is large.

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