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There are many companies right now that are entering the cosmetics and toiletries industry. There are new competitors constantly entering any industry and with that, they also bring the need to gain more market share leading to more intense competition. One of the forces that affect an industry’s attractiveness is the threat of new entrants. In relation to the cosmetics and toiletries industry, Porter’s 5 Forces can be applied in the following ways… With the mix of these forces, it can be used to explain why some industries are more profitable (attractive) than others. As suggested in the name, there are 5 forces that determine an industry’s attractiveness: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and rivalry among existing competitors. This was where good old Michael Porter’s 5 Forces come in to play. With their marketing offices located right here in New York City, I began to think about how competitive the cosmetics and toiletries industry was. They have over 750 stores in 21 countries and they launched their online site in 1999, available in 9 countries.
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For those unaware of what Sephora is, Sephora is one of the fastest growing retail chains best known for carrying makeup, fragrance, hair care, skin care and beauty accessories as well. Last Saturday, while strolling in Soho with my mom and sister, we stopped by Sephora to pick up some lip gloss and perfume.