Moisturizing The World
Manufacturers Vie For Lucrative Worldwide Lotion Market
by Scott Hoover
However, when it comes to the international lotion market, many salons throughout Europe, Latin America, South America and Japan still are searching for the retail balance that has made selling indoor tanning lotions such a lucrative market in the United States.
Untapped Market
As indoor tanning marches toward the 21st century, its appeal worldwide has never been stronger. Today, tanning has made inroads in Canada, South America, Latin America, Australia, New Zealand as well as Japan and other Asian countries. Tanning salons continue to pop up around the world in such countries as Chile, Brazil and Mexico.
What is the criteria for a country to embrace indoor tanning? According to Glen Roche, international marketing manager for Indianapolis-based Australian Gold, indoor tanning seems to be most popular in Western Hemisphere countries with large gross national products, or in simpler terms, countries with the strongest economies.
Of the international market, by far the biggest, and largely untapped, region is Europe. If there is one area of indoor tanning where Europe is not considered the foremost expert it is in the manufacturing and selling of lotions. However, this doesn't mean that European tanning salon customers are not willing to experiment.
"The European lotion market is growing at an approximate 5-percent to 10-percent clip per year," says Roche. "Europe is considered a new market when it comes to retailing indoor tanning lotions because up until a few years ago, a lot of European tanners had never used tanning lotions. Even today, with our expanded marketing efforts, there is only a core group of Europeans that have even tried tanning lotions."
There are a number of reasons that indoor tanning lotions have taken longer to take hold and thus have not realized the same success in salons in Europe as their American counterparts. One of the biggest reasons is the way indoor tanning has evolved in Europe. Although more sophisticated in many regards, many European salons are small, four- to six-bed locations with very little retail display space.
The European salon customer also is different. In the U.S., many indoor tanning customers are looking for the darkest tan possible in the least amount of time. Conversely, many European customers are looking for just a splash of color a couple times a week. Even in salons where operators are present to retail lotion, the European customer sees tanning more as a social exercise than a means to a dark, rich tan.
"In many European countries salons are smaller, which means the retail area also is smaller or in some salons even nonexistent," says Ken Dion, president and CEO of Scottsdale, Ariz.-based Power Tan Corp., which currently is marketing its lotions to 28 countries worldwide. "In addition, many salons have juice or coffee bars located right in the salon. Indoor tanning is seen as more of a social event than a means to an end."
Inge Glees, marketing manager for Scottsdale, Ariz.-based John Abat International, adds that the international market is very diverse and the salons extremely different. "One of the most interesting markets is Germany, where a number of the 'salons' are self-serve," she says. "In other words, the beds are token- or coin-operated, much like a laundromat. The lotions are dispensed from a vending machine, just like customers buy small packages of detergent at the laundromat. In smaller suburban areas, there are a number of athletic clubs or spas that have solarium beds on the premises. In these cases, there usually is a very select number of tanning products. In larger metropolitan areas, you'll find a number of tanning units in the larger athletic club/spa venues, which will sell a greater variety of spa and solarium products."
Another difference between the European tanning customer and the U.S. tanning customer that has slowed lotion sales is that Europeans don't tend to buy gimmicks as easily as Americans do. Leonard C. Keller, Ph.D., president of Health & Fitness Concepts, Int'l., Inc. based in Leonardo, N.J., says for this reason European tanning customers have been very slow to embrace indoor tanning lotions.
However, even though the European market has evolved differently than its U.S. counterpart, the same aspects that drive lotion sales in the United States. have spurned lotion sales across the Atlantic--the need for increased profits. "In much the same way as lotions have become a second profit source for many American tanning salons, likewise, many of their European brethren also are looking for additional ways to add to their bottom line," Keller notes. "This has spurned the growth in lotion sales across the Atlantic."
Additionally, because of the large number of tanning salons per capita in Europe, the competition for customers is very intense. Therefore, if one salon offers indoor tanning lotions, the competitor down the street also has to offer tanning lotions. This law of supply and demand is helping to force-feed the market and is stimulating lotion sales in Europe.
Questions Remain
Even though the European and international lotion markets as a whole continue to grow, there are a number of questions that only time will answer. One of the questions facing the European lotion market is who is going to win the right to supply indoor tanning lotion? Can the much more experienced American lotion companies market and sell to Europe as well as stay price-competitive? Or will small European lotion companies be able to carve out their own niche in the market by offering lower prices and knowing their clients better?
Power Tan's Dion, who has seen his international sales grow by more than 120 percent over the past 12 months, thinks it will be a combination of both.
"I think there can be a happy medium," he notes. "What Power Tan has tried to do is research and understand the market and then manufacture products to fit that market. For example, we might be distributing a product in Europe that is not distributed in the United States. In addition, we have found that Europeans tend to buy smaller packages of lotion so whereas the standard size might be 8 ounces in the United States, the standard size might be 200 milliliters or 6.5 ounces in Europe."
Abat's Glees says the difference in tanning salon customers is not as culturally diverse as one might imagine. "The international market is diverse when one considers the various continents; however, the various cultures/nationalities across regions actually are quite similar," she says. "For example, the various psychographic stereotypical personalities are very similar across both western and eastern European nations. In the most significant marketing terms, this is a pan-European market. Our company has always taken an international marketing objective when developing products, choosing product names, creating ad campaigns, etc."
Even with the international market growing, American manufacturers still face a number of hurdles in order to continue their success. Dion says the South American market is growing very rapidly, especially in Brazil; however, the biggest problem is dealing with stricter governmental regulations. "The three largest problems we deal with internationally are the language barrier, time change and governmental regulations."
Other industry veterans say international obstacles such as political unrest and the devaluation of currency are the most complicated problems they deal with when trying to market to the international community.
Another problem U.S. lotion manufacturers have selling internationally is getting product in a country. A number of manufacturers stated that finding distributors and dealing with the added costs of exporting products tend to make it harder to stay price-competitive.
When looking at the European lotion market, Keller agrees it is going to be difficult for U.S. lotion manufacturers to keep their prices affordable. "Due to the fact that tanning in Europe is much more expensive than it is in the United States, the question remains whether European tanning customers are willing to pay for lotions, and how much?" he asks. "In the United States, salons charge a lower price for tanning and a higher price for lotion. In Europe, where tanning is so much more expensive, logic would say the price of lotion cannot be as high."
Additionally, European tastes in lotions--such as scents--also are different than their U.S. counterparts. Furthermore, due to the fact that Europe is extremely regional, those tastes can and will change depending on the part of Europe where the lotion is sold. "A scent may be very popular in the Romantic nations; however, the Germanic nations may not like the scent at all," says Keller. "A company may be selling a wonderful lotion; however, if the scent is not appealing the lotion will be hard to sell."
European salon owners also aren't as aggressive in their approach to selling lotions as are salon owners in the United States. In Europe, most of the lotions are placed behind the counter and customers have to ask to purchase a lotion if they are interested. "We are still in the process of educating salon owners that they need to be asking each customer what type of lotion they want to use," says Roche. "Europeans just are not as marketing-inclined as Americans."
Finally, the method of selling lotion also is different worldwide. "Americans try to sell items quickly whereas Europeans take more time explaining the technical aspects of a product and the buyer takes more time investigating the ingredients to decide whether the product is worth purchasing," says Keller. "Thus, it is harder and takes longer to sell lotions in Europe than it does in the United States."
Despite all the potential setbacks, most lotion manufacturers are very encouraged by the potential the international market holds.
"During the first four months of 1999, Power Tan more than doubled its export business," says Dion. "One of the reasons we expect to continue to see our international sales grow is that our product and packaging have been very well received worldwide. In addition, our domestic penetration is very high whereas our international penetration still is maturing so there is room for growth."
Abat's Glees agrees: "Our international sales are very strong and we expect that to be a growth area in the future." With millions of potential lotion customers worldwide and billions of dollars worth of revenue up for grabs, watching how the international lotion market shakes out should be very interesting indeed.
