This paper analyzes the role of innovation and new product development in the cosmetic industry. According to many researchers who have worked with innovative organizations and innovations, we have come to the realization that organizations that do not apply innovative culture in their business are most likely going to fail. The task was to analyze the importance of innovation, specifically in today's cosmetic market. Theoretical analysis covers the general part of innovation, then innovation in the cosmetic industry and analysis of the cosmetic market in the Republic of Croatia. The experimental part of the paper involves an online survey examining the importance of innovation in the cosmetic industry. Theoretical analysis has shown that innovation in an organization is necessary in order to succeed in a dynamic global market, especially in the cosmetic industry due to the great competition, constant changes and new products that are launching it. Experimentally, it was found that a larger number of respondents notices the advertisements related to new products in the cosmetic industry, follows the trend and decides to buy the new product.