Professional Documents
Culture Documents
ABSTRACT
AmorePacific is the market leader in Korean cosmetic industry. The expansion into the global market is known as
a successful case especially in China market. However, in spite of continuous growth, Sulwhasoo seems to be suffering
from low brand recognition. Since Sulwhasoo is a brand that has the highest product margin among other AmorePacifics
brands, successfully carrying Sulwhasoo line in China is crucial in Amore Pacifics further growth. We found that the
company only has 2% of market share in China (Dsbaike, 2011) as whole. Being surprised by the statistic result, Amore
Pacific should have encountered some problematic issues which would boost the AmorePacifics whole business in China
if they are improved. From this point, we will carry out an in-depth analysis will on AmorePacific, mainly on Sulwhasoo.
KEYWORDS: Amore Pacific, Korean Cosmetic Industry, China Market, Encounteredsome Problematic, Dsbaike, 2011
INTRODUCTION
History of Amorepacific
AmorePacific has been famed with re-writing its history of Beauty and Health for over 65 years. Their business
origin was in Korea since 1945. With the continuous success of business in the domestic market, AmorePacific started to
consider their global business expansion in 2002 and launched a design center for more systematic and innovative product
design in 2010.
Brand Introduction
AmorePacifics business unit involves three main aspects, cosmetics, personal care, and health. The cosmetics
area is believed the most successful business aspect where many famous brands occupied and were sold in the market, such
as Etude house, Laneige. Being an international corporation, the company operates their business in both domestic and
overseas market, where Asia is the major business region, such as the market in Korea, Hong Kong, China, and few
overseas markets, like L.A., New York.
Financial Report
AmorePacific performed quite satisfying in these few years. According to the companys financial report in 2011,
the net profit has been increased successively from KW 226 billion in 2009 to KW 327 billion in 2011
www.tjprc.org
editor@tjprc.org
GLOBAL EXPANSION
Since the market size of domestic market is limited and the competition in the market keeps increasing,
AmorePacific faced the necessity of global expansion. By expanding its market, it could extend its product life cycle and it
could accomplish economies of scale by conducting International Strategy. There are several advantages AmorePacific
could get by expanding its market into global market.
www.tjprc.org
editor@tjprc.org
COMPETITOR ANALYSIS
Table 2: Competitor Analysis of SK II and Estelauder
SK II
Distribution
Channel
Number of Stores
78 stores
SKII clearly sets their target customers
group aged at 25-34, concerning their
skin protection, treasure product value
but not the price
Target Customer
Price
Feature
Sales
Users
Comments
Estelauder
Department stores counters (especially some
luxurious d.p.)
Attempting to cooperate with professional
cosmetics retail stores
111 stores
Target group: 30s up with skin protection
concern
On average 1500 RMB (The price of some
products are double than in US)
Origin-- Best seller
-High end product mainly
-Advertising for products with long history
-Sponsorship activities: Chnnel Young,
Shanghai Fashion Week through making up
for celebrities to recognize the product
special feature
1.
Source:
Figure 4: 2011-2012 Top 10 Cosmetics Brands in China Market
SWOT ANALYSIS
www.tjprc.org
editor@tjprc.org
Place
For premium strategy, Sulwhasoo has limited distribution channel (China: 20, Hong-kong: 5) in premium A grade
department. Therefore, customers can receive a high level of customer service.
Promotion
Sulwhasoo doesnt have marketing model and they are only doing magazine advertisement instead of
commercials on TV, for their luxurious brand image (Lee, 2006).
editor@tjprc.org
we compare the number of stores of Sulwhasoo to other global luxury brands in competition, Sulwhasoo has fewer stores.
For example, SK II has 78 stores and EsteLauder has 111 stores at department stores. Therefore, indiscriminative
expansion of stores is improper but a reasonable increase of store is required for high recognition.
RECOMMENDATIONS
Expansion of Door to Door Sales
In 2010, the company got a license to door to door sale in Shanghai and now is about to start the business.
In China, 'Department' and 'door to door sale' distribution channels each accounts for 45% and 25% of the whole cosmetic
market (Han, 2011).Especially, the market size of door to door sale in China is twice as large as that of domestic.
AmorePacific has a great amount of experiences and know-hows in this business. In fact, in Korea, Sulwhasoo grew up
significantly through door to door sales at its early stage. According to the consumer survey, 35.4% of Chinese consumers
make a purchase through recommendation by acquaintances.
Therefore, in consideration of the fact that door to door sales entails word of mouth effect, adapting this new
type of distribution to Sulwhasoo in China is expected to grow not only Sulwhasoo's brand recognition but also its sales.
However, since Chinese consumers have relatively high doubts on products due to prevalent counterfeits, Sulwhasoo
Impact Factor (JCC): 5.3125
more
Pacific
(2011).
Annual
Report.
Retrieved
from
http://en.AmorePacific.com/resources/images/sustain/report/AMOREPACIFIC_SR_2011_English.pdf
2.
AmorePacific.
(2012).
Semi-Annual
Report.
Retrieved
fromhttp://www.AmorePacific.com/invest/data_result_01.jsp
3.
F Consulting Firm. (2012). Even though the market size of China cosmetics industry is large, it's hard to pass
customs clearance. Retrieved from http://blog.daum.net/enervit/384
4.
5.
Funggroup.
(2012).
Chinas
cosmetics
market,
2011.
Retrieved
from
http://www.funggroup.com/eng/knowledge/research/industry_series20.pdf
6.
Han, S.Y. (2011). The luxurious brand Sulhwasoo, expecting increase of sales by entering China market
Retrieved from http://www.thinkpool.com/bbs/pdsRead.jsp?name=s_pub&number=615887
7.
Hyoung, S.K. (2006). An empirical study on the purchasing behavior of 20-30s' women in liao ling province of
china for Korean cosmetics. Gwangwoon University.
8.
Jo,
S.H.
(2012).
Shuuemura-Karl
Lagerfeld,
mongshu
girl
landed
in
Korea.
Retrieved
from
http://frontiertimes.co.kr/news/htmls/2012/10/2012103095348.html9.
Kang,
Y.H.
(2012).
AmorePacificsbrand
extention.Retrived
from
http://news.donga.com/3/all/20120823/48827740/1
10. Kauk, J. (2012). AmorePacifics marketing strategy for success in China market]. Dongui University.
11. Kim, H.S. (2006). Door to door sales cosmetic products Sulhwasoo and Mary Kay recorded the highest sales
in Korea and America. Retrieved from http://news.donga.com/3//20060406/8292716/1
12. Kim,
J.H.
(2011).
AmorePacifics
china
dermatologists
committee
inauguration.
Retrieved
from
http://beautynury.net/news/view.asp?boundary=total&fromdate=2011-0824&idx=45502&keyword=&mode=photo&page=9&ptype=simple&searchcategory=§ion=all&todate=201108-31&whr=
13. KOTRA.
(2010).
Analysis
of
China
market
trend.
Retrieved
fromhttp://retaildb.korcham.net/Service/Report/appl/TreatiseView.asp?nKey=781&area=k
www.tjprc.org
editor@tjprc.org
10
14. Kung,
J.H.
(2012).
AmorePacifics
luxurious
marketing.Retrived
from
http://article.joinsmsn.com/news/article/article.asp?total_id=9131856&cloc=olink%7Carticle%7Cdefault
15. Lee, J.Y (2006).Sulwhasoo Brand Story (17th).The Korean journal of Advertising, 354.
16. Lee,
S.A.
(2011).
The
scent
of
Sulhwasoo
would
cover
China
continent.
Retrieved
from
http://www.etoday.co.kr/news/section/newsview.php?TM=news&SM=0799&idxno=404437
17. Seo, E.H. & Kim, J.D. (2009).A Study on the Korean Cosmetic Purchase Behaviors of the 20s Woman in Beijing,
China.Korean Cosmetic Journal, 581.
18. Son, H.B. (2011). Successful case of AmorePacific's expansion into China market [Retrieved from
http://blog.naver.com/swkang0119?Redirect=Log&logNo=50123413802
19. UK essays. (2011). International business strategy of AmorePacific. Retrieved from
20. http://www.ukessays.com/essays/business/international-business-strategy-of-AmorePacific.php
21. UK
essays.
(2011).
International
business
strategy
of
AmorePacific.
Retrieved
from
http://www.ukessays.com/essays/business/international-business-strategy-of-amorepacific.php
22. Yu,
J.Y
(2011).
AmorePacifics
accelerating
entry
to
the
chinese
market.
Retrieved
from
http://blog.naver.com/pcjinsun?Redirect=Log&logNo=30108427169