Pest Analysis of Toiletries Industry:

Political Factors:
Toiletries items may become marginally costly for consumers following the 25% fresh duty schemes have
been drawn up on toiletries items, which is expected to push the prices of such items higher. While the
market seems impressive, there are hurdles that impede growth.

The Bangladeshi duty structure on imported products can pose a major deterrent to multinational vendors.
Despite the new value added taxation regime, where the duty has been increase to 25% which will applied
on the total sum of item cost, insurance cost and shipment cost (source: customsdutyfree.com). This in
turn reflects in the pricing of the products. Most vendors add the duty to the product pricing to generate
the right revenue. However, there is no organized toiletries industry body that can take up the issue with
the government.

There are small retailers in the market who directly import from markets such as India, where pricing can
vary from 30–70% from Bangladeshi product pricing. According to foreign trade regulation imported
toiletries items have to be registered. Labeling of any toiletries products from the view point of standards
set by national regulatory agencies, such as Bangladesh Standards and Testing Institution (BSTI).

In Bangladesh there are no authorities and laws to regulate the toiletries product market, so syndicates are
using labels of reputed international and local brands and create fake toiletries products like toothpaste,
soap, lotion, shampoo, face-wash etc.

Economical Factors:
The Bangladesh economy is on a high growth drive, which means that purchasing power and
willingness to spend are on the rise. In recent years Bangladesh is having a stable around 7%
growth in its gross national product. It also means big changes are coming to retail there.

Inflation rate affects the buying nature of consumer. With around 6% inflation rate increasing
annually, people are looking for cheaper and effective substitutes. Since the raw materials for the
manufacturing are from chemical, the factors like fluctuating global economy and currency
fluctuations have significant impact in toiletries industry. Higher tax rates and interest rates
affect the cost of capital, which adversely increasing the manufacturing cost. This also makes the
products costly in the market
Social Factors:
People in Muslim-majority Bangladesh have become more health conscious, brand conscious,
following global trends and want to consume organic products, particularly in toiletries items. The
estimated size of Muslim consumers’ toiletries items spending in Bangladesh was $2.5 billion in
2015. One of the trends taking the Muslim Bangladeshi people by storm is "modest trend" – a
certain way of using toiletries items that incorporates the latest taste, style and trend, but within
the boundaries of Islam. This particular trend opens up the market for toiletries items, those offers
100% natural products. The affordable price also helps them to cover the whole market size.
There are more than 35m households in the country have made Bangladesh one of the most
lucrative consumer markets. Despite being a lower-middle income country, the rising purchasing
power of middle income groups coupled with intense consumerization has allowed this market to
foster and grow, with toiletries items. The increasing market size is the direct result of the
changing socio-economic status of the Bangladeshi consumers, especially women from the
middle-class population; have more disposable income leading to a change in toiletries items
consumption. This actually has fueled a growth in certain product categories in the market that
hardly were experiencing it earlier. Higher paying jobs and increasing awareness of the Western
world and modern trends there have served to change the tastes and customs of the middle class
and higher strata of the society, with the result that peoples from such social strata now is more
conscious of their appearance and is willing to spend extra cash on enhancing it further.
Technological Factors:
Bangladesh is going through a change towards digital era. The main focus of the Government is
to increase quality of products by introducing digital equipment & services. Government has
created favorable climate for R&D work in country. In toiletries industry, existing companies are
developing new products by using R&D facilities. In the toiletries arena it is believed that the
smaller particles are more readily absorbed into the skin and as such repair damage easier and
more efficiently. Nanotechnology is elevating the development of toiletries product to another
level, making them high-tech so as to deliver increased benefits to users. Nanotechnology in the
toiletries industry involves making products with small particles that can work more effectively
to give better results.