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Amore Pacific’s Successful Cosmetic Brand - sss

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Presentation on theme: "Amore Pacific’s Successful Cosmetic Brand - sss"— Presentation transcript:

1 Amore Pacific’s Successful Cosmetic Brand - sss
KIM Donghwan CHA Myunghun TANG Thierry JANG Hyukmin

2 Contents Company Overview About Sulwhasoo Types of Innovation
Timing of Entry Internal, External Analysis Summarization Suggestion

3 Company Overview Leading Chemical and Cosmetics Company
Revenue 1,531,337 Million KRW (2008) 35% of Korean Cosmetic Market Cosmetics AMOREPACIFIC HERA Sulwhasoo LIRIKOS Laneige IOPE MAMONDE Primera Lolita Lempicka Odyssey MIRAEPA INNISFREE ÉTUDE Espoir Personal care Mise-en-Scène Ryoe Happy Bath Dantrol Median Songyeum Health care O'Sulloc VB Program Ogarden Natural Beauty Food™ Ketotop

4 Company Overview * According to the AmorePacific.com

5 Company Overview * According to the AmorePacific.com

6 Korean Costemics Market
Severe Competition Low Market Barrier 591 Local Company More Global Company Market Size is gradually increasing (About 10% every year) 2011 : 9 thousand billion KRW (9 billion USD) According to the webpage of 식품의약품안전청 According to the newspaper article, 2012년 국내 화장품 시장규모 ‘9조7000억원’ 예측, 고희정, 메디컬투데이

7 Sulwhasoo Cosmetic brand using Korean herb, launched ‘97
Revenue 690 Billion KRW (2010) Total sales over 4 Trillion KRW (2010) Revenue is keep growing (About 9% every year) According to the blog article, 한방화장품 시장 ‘빅뱅’ , 경제플러스리스보아카지노

8 Sulwhasoo Concept of Brand Concepts of Technology Harmony & Balance
Persuasion of oriental Beauty Inner Beauty & Physical Beauty Tradition and Science Interaction between ingredients Balance of Yin and Yang(음과 양) for glowing skin Identify root causes of a single symptom According to the webpage, Sulwhasoo.com

9 Sulwhasoo Various Ingredients Basic Principle : Yin and Yang
They found that the early signs of aging, such as dryness and dullness begins at the age of 35, and the graying of hair and furthers the skin’s aging start from the age of 42, with their research. Oriental medicine says that these symptoms are originated from imbalance of Yin and Yang in the body. Jaeumdan and Jaeunboweedan are the core component of Sulwhasoo, supplementing and protecting Yin energy in skin. Treatment with AmoreParific’s Unique ‘Poje’ Technology Final Product (Sulwhasoo) Core Component Various Ingredients

10 Sulwhasoo Korean herbal cosmetic brand Market Rank Company Brand
Market Share 1 52.20% 2 13.50% 3 10.20% 4 6.80% 5 4.10%

11 Sulwhasoo  First Mover of Korean Herbal Cosmetics?
Rank Company Brand Launching Year 1 1997 2 2003 3 4 2007 5 2004 Earliest Launching + Biggest Market Share  First Mover of Korean Herbal Cosmetics?

12 Types of Innovation Product Innovation vs. Process Innovation
Brand new cosmetics with oriental medicine Product Innovation vs. Process Innovation AMORE PACIFIC researched on oriental medicine for a long time Incremental Innovation vs. Radical Innovation It attempts to share existing market Competence Enhancing vs. Competence Destroying

13 Timing of Entry High Competition of Cosmetic Market

14 No Marketing with Celebrities
Timing of Entry Distribution Channel Long History of R&D Patents Complimentary Goods No Marketing with Celebrities

15 21% 26% 32% Timing of Entry Success Factor 1 : Distribution Channel
Multi-Store Door-to-Door Sales Shop in Department Store 21% 26% 32% of Whole Revenue * According to the Amore Pacific’s Report of 2006

16 Door-to-Door Sales Sales Person Timing of Entry Role History Now
Walking from the door to door Trying to sell a product or services to the general public Role History Now Sales Person Founder of the AmorePacific made this system Since ‘64 20% of whole Korean cosmetics market(‘2008) * According to the Wkiepedia

17 Door-to-Door Sales Timing of Entry
Salespeople offer total services for customers - Example 1 Salesperson A help making kimchi for her VIP customers. Kimjang, kimchi making process, is time and labor consuming activity, so she could make a lot of conversation and make their relationship better. - Example 2 Salesperson B sometimes takes care of her customer’s children. In some cases, she goes their graduation instead of her customers. It means that their customers consider the salesperson as their relatives. Salespeople is a TACIT Resource of AMOREPACIFIC ! * According to the newspaper Article, 이정연, 불황에도 잘나가는 ‘방문판매’의 힘, 2008, 한겨레

18 History of Sulwhasoo  Highly Path Dependent Timing of Entry
Success Factor 2 : Long History of R&D for Korean Herb Starting Research & Development With Korean ginseng - Launching ‘Ginseng SAMMI’ - Export to U.S. - - Starting R&D with 500 Oriental Herb - Launching ‘Sulwha’  Highly Path Dependent * According to the webpage in Sulwhasoo.com

19 Protecting Innovation
Timing of Entry Protecting Innovation Success Factor 3 : A lot of Patents Patents to protect their assets of R&D Patent Searching with ‘WIPS’ - Keyword ((((아모레 or 태평양) and (한방 or 인삼) and (화장표 or 피부)) or 설화수) or 자음단) equivalent to ((((Amore or Pacific) and (herb or ginseng) and (cosmetics or skin)) or sulwhasoo) or Jaeumdan)

20 Protecting Innovation
Timing of Entry Protecting Innovation Success Factor 3 : A lot of Patents

21 Protecting Innovation
Timing of Entry Protecting Innovation Success Factor 4 : Complimentary Goods Sulwhasoo SPA Premium space for VIP Making brand image luxury Promoting new products Place for networking among customers Haircare Line(Ryeo) AmorePacific’s herb technologies are applied Premium Haircare line # 1 in Korean Herb Shampoo * According to the webpage in AmorePacific.com

22 Protecting Innovation
Timing of Entry Protecting Innovation Success Factor 5 : Low level cost of Marketing No Celebrities Reduces Marketing Cost Higher Profit * According to the webpage in AmorePacific.com

23 Relative Position (Market Share) Business Growth (Market Growth)
Internal, External Analysis BCG Matrix Analysis Relative Position (Market Share) Business Growth (Market Growth) The world’s first Korean herbal cosmetic making company The market leader of premium cosmetic market in the world Increasing international interest in Korean herbal cosmetics with the Korean Wave Continuous investments, 170 billion won for new faculties, for the global top 10 Entering the overseas markets (Japan, China, and etc.)

24 Internal, External Analysis
SWOT Strength Weakness High reliability of customers on the brand and the company 98 patents related to oriental medicine (35 international patents), 90 papers (59 international paper) High quality and luxury brand image Korean style design Oriental medicine is not popular among young people Limited product lines Opportunity Threat Increasing number of free international trades Increasing interest in oriental medicine in China Korean Wave - Imitation cosmetic products are prosper - Portion of international cosmetic brands in market is increasing

25 Internal, External Analysis
TOWS Internal Strength 1. High reliability on brand 2. Lots of patents 3. Luxury brand image Internal Weakness 1. Low popularity of oriental medicine for young people 2. Limited product line External Opportunity 1. International trade is increasing 2. Interest interest in oriental medicine in China 3. Korean wave SO 1. Develop and produce cosmetics specialized for Chinese market 2. Put emphasis on high quality and luxury brand image WO 1. Advertise products with idol for young image 2. Develop multiple product lines for each countries External Threats 1. Imitation cosmetics 2. International cosmetic brands ST 1. Put emphasis on especialness of oriental medicine WT 1. Pioneer new market where oriental medicine is unknown

26 Bargaining Power of Suppliers
Internal, External Analysis 5 Forces Analysis 1. Internal Rivalry - Most major companies(in Korea) already produce herbal cosmetics. And Sulwhasoo is competing with international cosmetics brands. 2. New Entrants Many firms including Woongjin, KT&G have prepared for launching new herbal cosmetics. 3. Suppliers - There are many suppliers interchangeable, so the bargaining power of suppliers is relatively weak 4. Buyers - This is customer-driven industry, so they have strong power. However, except personal buyers, there is no threatening buyer. 5. Substitutes - Substitutes for cosmetics is not meaningful. High Threats of New Entrants Rivalry among Existing Competitors Substitutes Bargaining Power of Buyers Bargaining Power of Suppliers Weak Strong Moderate Weak

27 Summarization A successful cosmetic brand using Korean herb.
First Mover of Korean herbal cosmetic market. 5 Factors in being Success First Mover 1. Distribution Channel 2. Long History of R&D 3. Patents 4. Complimentary Goods 5. Low marketing expenses Threat by competitors

28 Suggestion First Mover Advantage in China One More Time!
Cosmetic Market in China First Mover Advantage in China One More Time! Market Size increasing is high (About 20-30% every year) 2010 : 9 billion USD Similar Market Size with Korea! 1.5 billion of population According to the newspaper article, 2012년 국내 화장품 시장규모 ‘9조7000억원’ 예측, 고희정, 메디컬투데이

29 Q&A


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