If you ever go into a makeup or beauty store, it seems like there are hundreds of different brands to choose from. There are dozens of the same products repeated by different brands, like foundation or moisturizer, and it may seem like each brand is completely unique. However, many don't know that 7 companies control most of the beauty products you buy.
These huge companies, Estée Lauder Companies, L'Oréal, Unilever, Procter and Gamble, Shiseido, Johnson and Johnson, and Coty, own together 182 brands in total. These include high-end brand like La Mer and drugstore brands like Maybelline. L'Oréal is the leading firm, holding over 25% of the market share.
An oligopoly is defined as a few dominant firms sharing a market, with high barriers to entry and the ability to set price. The makeup industry is an oligopoly because there a few companies that control almost the entire industry. Skin care is also regulated by the FDA, making it even harder for a new company to join the industry.
Millions of people around the world use cosmetics everyday, whether in the form of makeup or skincare. Having a oligopoly controlling most of these cosmetics means that they more or less control how we think about beauty. They can promote certain beauty ideals and discourage ideas that don't fit their brand. Beauty and what society thinks of as beautiful impacts everyone, not just people who wear makeup.
Overall, while the oligopoly of the beauty industry is likely here to stay, it does have the potential to be harmful.
Work Citied:
https://www.thisisinsider.com/companies-beauty-brands-connected-2017-5
https://www.nasdaq.com/article/specialty-chains-show-the-beauty-of-retail-oligopolies-cm153951
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Very interesting Katie! The makeup industry is indeed an oligopoly. There are just a few large producers who dominate the market, and hence they have considerable control over their prices. Companies will be affected by how other firms set their prices, making them interdependent. Also, firms in this oligopoly sell differentiated products and focus a lot on advertising. Would you say the demand for makeup is elastic or inelastic? I know for sure you can find concealer or foundation in any makeup store, but brand loyalty to high end brands can cause the demand to be inelastic.
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