Running head: INNISFREE MARKETING PLAN 1

Innisfree Marketing Plan

Linh Thi Thuy Pham

California International Business University

Marketing course

CIBU 629

Instructor: Prof. Julie Ensign

August 15, 2016

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Executive Summary

Innisfree, the Naturalism No.1 brand launched in 2000 by South Korea's biggest cosmetics

company Amore Pacific Corporation is getting increasingly popular and experience in many

countries such as China, Hong Kong, Singapore and Taiwan, Thailand, Malaysia and India. To

further expand the international markets, Innisfree sees massive opportunities in other emerging

cosmetic markets such as Vietnam. After analyzing Vietnamese market, we realize that Vietnam is

a potential market for foreign companies to run business due to the friendly policies, few barriers

to trade up to 100% with TPP trade pact and higher living standard.

Hanoi, which is the capital of Vietnam and also a shopping paradise with shopping malls

has been chosen to be our next destination. This is because Hanoi is the metropolitan city with

high living standards, a few competitors, high health and beauty consciousness. We are targeting

specific segments of the young consumers from 15 to 30 years old with low and middle income.

Innisfree will strengthen its differentiated naturalism identity, respond to customer and market's

trend quickly as well as satisfy the needs of core customers.

The primary marketing objective is to achieve 5% market share within 12 months and the

priority financial objectives are to get first year sales revenues of $4.5 million and break-even early

in the second year.

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Innisfree Marketing Plan

Situation Analysis

With the aim of being a naturalism-oriented brand representing Korea to enter the global market,

Innisfree is always willing to take all challenges in every potential market. With nearly 100%

natural ingredients from Jeju island which has a famous eco system, Innisfree is confident to

compete in Hanoi which has a significant increase in demands of using organic skin care and

beauty products. In addition, consumers, especially green consumers, will be impressed by

Innisfree because of its donation campaigns for the nature such as Bottle-recycling, Eco-

handkerchief and so on.

Market Summary

According to the research noted in Market of The Future (2016), Vietnam is at the top of Asian’s

fastest growing beauty and personal care markets. This is evidenced by around 90% of imported

cosmetics sold in Vietnam and domestic brands only account for 10% (Vietnam’s Chemical

Cosmetic Association, 2016), which means that nowadays, people’s demand for beauty and

personal care has been significant increasing especially in two main cities such as Ho Chi Minh,

Hanoi where a number of middle class consumers are growing.

In recent years, the demand of using organic products is increasing. This is because consumers

believe that these products not only are safer, better quality but also environmental friendly.

Therefore, some famous brands such as The Face Shop, The Body Shop, Etude House, Shiseido

focus on this demand and perform it well.

However, most of these famous brands in Vietnam are mass and premium with their target

customers are middle and high class while there are few brands for people with middle and low

income especially those from 15 to 30 years old. Therefore, Vietnamese market is still looking for
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organic products coming from a famous brand sold with lower price. That’s why Innisfree decides

to choose Vietnamese market and its target customers are those with middle and low income.

Market needs

Vietnamese cosmetics market is dynamic. There are many cosmetics brands in Vietnam; some of

them come from unregistered businesses and are sold widely on the internet through social media

like Facebook, Instagram or online shops throughout Vietnam. However, because of buying fake

products at unbranded stores, young people nowadays tend to official stores where they can believe

in their quality as well as the origin of products. In addition, apart from quality, consumers also

concern price. Most of the Vietnamese people are price-sensitive. Therefore, they prefer products

with lower price but higher quality. In conclusion, Vietnamese consumers are looking for products

with 4 main characteristics:

- Branded products - Organic ingredients

- Sold in the official stores - Lower price

Market trend

According to a survey conducted by DI Marketing (2015), it is clear that if the sample is 1112

people, most of them have the high evaluation for Korean cosmetics brands with 76%, followed

by USA brands and France (51% and 41%). China brands receive the least concern in all. Korean

products become the most favorite because some following reasons:

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• Hallyu wave: Korean brands always use celebrities who has a huge of Vietnamese fan to

advertise its products in Vietnam. As a result, young generation who are their fan of those

celebrities tends to imitate their idols and gradually absorbs in Korean culture as well as Korean

beauty standards, which leads to an increase in using Korean cosmetic brands.

• Vietnamese people’ skin is quite similar to Korean people’ skin.

According to Asiaplus (2015), 24% people make up every day and 44% those makeup at least once

a week. The proportion of those does only in special occasion is 45% and 17% people make up

from 2 to 5 times per week. This means that more consumers gradually increase awareness about

the importance of beauty and personal care products which make them more successful to make a

good impression on others.

SWOT analysis

Strengths Weaknesses
Low and middle price Low recognition of brand
Use of Eco-friendly campaigns Low and middle price but it is still expensive
Organic ingredients for low class
Recycle containers
Opportunities Threats
-Foreign brand cosmetics account for 90% -High power of substitute products with
and the domestic one is only 10%. similar functions
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-Use of “Korean wave” to increase the brand
awareness and customer motivation.
-New cosmetic trend (well-being and organic
ingredients).
-Vietnamese people's skin is quite similar to
Korean people's skin.
-Diverse distribution channels both online and
offline.
-The number of competitors entering Vietnam
is increasing because Vietnamese's untapped
cosmetic market is so attractive and potential.
-There are more and more individual retailers
selling cosmetics products online with lower
prices.

Competition

- Small cosmetics stores and online shops utilizing social media: these stores are opened by

individual retailers who import a variety of products sold at lower prices. Most of them are the

low-recognized or hand-carried products from different countries. Because they are unregistered

shops, there is no guarantee about the quality of products sold in these shops. They can mix fake

products and branded products; therefore, consumers are so confused whenever they buy them.

After many scandals and warnings about the harmfulness of using fake and cheap personal and

beauty care products through social networks and media, As a result, consumers are willing to

spend more money on buying branded products, especially natural ones at the official stores.

With this current trend, when entering into Hanoi market, Innisfree only competes with Korean

famous brands which have official stores such as Laneige, The Face Shop, The Body Shop and

Etude House.

- The Face Shop is a Korean cosmetic retailer owned by LD household & Healthcare. It was

established in 2007 and until now, it has more than 2,300 stores in 29 countries.

- The Body Shop has a range of more than 1200 products, including cosmetics and make-up

in its 2,500 franchised stores in 61 countries.

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- Laneige: As being well known as one of the most luxury cosmetic brands, Laneige focus

on professional, natural and strong woman.

- Etude House: Etude House was launched in 2005 by Amore Pacific. At present, Etude

House has more than 200 branches in all over the world.

In terms of market segments, when entering into Vietnamese market, The Face Shop, The

Body Shop, Laneige and The Etude House position themselves as mass and premium brands with
Price
target customers are people with middle and high income. Regarding to market share, The Face

Shop has the highest market share (17 stores), followed by The Body Shop (6 stores), Etude House

and Laneige with 5 stores and 3 stores respectively.

Price

High
L F: The Face Shop
B F
E
B: The Body Shop
e
E: Etude House

e L: Laneige

Low e
Market share
e

e
As can been seen from the chart, if Innisfree enters Hanoi market, it seems that Innisfree has a

little competition with these mass and epremium brands because it will position itself as a mid-

range brand.

Marketing Strategy

Objectives

• First-year Objectives:

- Increase visitor numbers to the website about 40% during the first year.

- Improve brand recognition by 35% amongst the 15 – 30 age group

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- Achieve at least 90% excellent customer service rating each month

- Increase sales of existing products by 20%

• Second-year Objectives:

- Increase the proportion of sales bookings from repeat customers to 40% during summer

season

- Increase retention rates of customers online from 25% to 40%

- Achieve a significant growth of 150% in direct sales within 12 months

- Increase market share by 5% within 12 months

Market segmentation

Innisfree’s main target customers are young people who come from 10 to 35, which account for

45% in total (United Nation, Department of Economic and Social Affairs in Vietnam, 2015). More

specific, Innisfree divides into 2 main groups:

- College students from 15 to 18: With low-income level, they prefer low-priced cosmetic products

but good quality. Their shopping styles are situation-specific or constantly changing. They are

willing to wait until the last minute, especially around the holiday season, and then run around

frantically to get all the shopping done in one shot. Besides, college students almost never shop

alone.

- Young people from 18 to 30: This customer group has a higher expectation than college students

because their job characteristics always ask them to wear make-up before leaving home. Besides,

with the age from 18 to 30, those are starting their career with low and middle income. Therefore,

they would rather mid-priced products but high quality. Their shopping habit has two main

characteristics:

+ The Mall Linger: they takes time going through a store.

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+ Scavengers: these shoppers consider shopping as the combination between purchase and

entertainment. They tend to make numerous unplanned purchases

Strategies

 Pricing

First, Innisfree's cheapest product line will be advertised to enhance people’ recognition of low-

and middle priced products during the first 6 months.

Secondly, we will arrange our products prices as same as local middle-priced products to meet

local people's needs

 Products

Innisfree offers skin care, makeup and body care products for all types of skins such as combination

skin, sensitive skin, oil skin and so on. Besides, Innisfree products has some special features:

- Natural ingredients such as Jeju green tea, Jeju sea mustard and gulfweed, Jeju volcano

and so on are taken from Jeju island which is famous for a unique ecosystem.

- Innisfree-branded products use eco-friendly and naturalistic containers.

 Promotion

Advertising

- Making use of Hallyu celebrities as a representative for its products

At present, the company chooses Yoona, a member of popular group SNSD, as its international

celebrity ambassador to spread pure beauty across Asia and the company’s male face is actor Lee
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Min Ho. By doing this, Innisfree can easily access to young customers especially the huge number

of fans of Yoona and Lee Min Ho.

- Taking advantage of different sources: Innisfree will updates about new store openings, product

benefits through our social media platforms. We will also conducts ‘like & share’ product

giveaways to increase brand awareness. Innisfree can create videos how to use skin care products

as well as makeup products like Korean celebrities every month on YouTube.

- Launching Green life campaigns such as INNI Kara Bag, Bottle-Recycling, Eco Handkerchief

and so on which allows people to participate in.

Sales promotion

- Using money off coupon or special offers on special occasion such as Innisfree’s birthday,

Independence Day, Valentine Day and International Women’s Day

- Launching discount programs each month. For example: buy 5 items get 5 items, discount 15%

on customers’ birthday.

- Organize Korean celebrities coming to Vietnam to advertise Innisfree's products

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Customer services

In order to compete with other rivals in a Hanoi competitive market or achieve a large market share

in a short time, Innisfree should put customers at the heart of what it do. Base on customer buying

post-purchase behaviors, Innisfree will do some following activities:

+ Providing detailed knowledge and information about a variety of products anytime

+ Using customer database to identify or reward the valuable customers

+ Launching discount programs for loyalty customers

+ Resolving customer issues at their first point of contact

+ Training employees to treat customers graciously

+ Delivering on Innisfree’s promises, for example, every products will be arrived on time or if

Innisfree is not able to meet its promises, Innisfree will make the apology personal and not just a

form letter

+ Sending a thank-you letter note after a customer makes any purchase or inviting them to contact

you with questions, feedbacks.

 Places
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According to the survey carried out by DI Marketing (2015), most of people prefer buying

cosmetic products at shopping malls (61%) and brand shops on the street with 48%. Taking

advantage of this consumer shopping habit, Innisfree decides to penetrate Hanoi market by

opening its brand shops

- Stores at Vincom shopping malls: Vincom not only has the biggest market share in Hanoi but

also its main customers are young people. Therefore, opening stores at Vincom shopping malls

help Innisfree access to target customers quickly as well as advertise its brand easily.

- Small stores will be opened around university campuses where many 20's come and go. By doing

that way, Innisfree can easily access to a large number of potential customers because more and

more students concern their appearance and they are looking for products suitable for their income

level. Innisfree is exactly their solution and it is better if students can find out their solution right

outside their campuses. Particularly, Innisfree can open a store in Chua Lang street where there

are 5 universities around there.

 Distribution

- Shops: Customers can buy Innisfree products at its stores at Vincom shopping malls and small

shops around university campuses. By contacting directly to customers, the company can update

customers’ needs, customers’ buying behaviors and customers’ post purchase behaviors to attract

new customers and keep customer loyal.

- Innisfree website: According to ComScore (2013), Vietnam has had more than 16 million internet

users, which is the largest number in Southeast Asia. With this significant development, Innisfree

will utilize different online tools through its official website to distribute Innisfree products.

Through its official website, consumers not only get a full description, the price of each product

but also purchase easily with a simple process. Besides, selling products online is the most
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effective and cheapest way because the company not only saves money but also engages actively

in target consumers quickly.

 Strategies

The main objective is to position itself as the No 1 Korean naturalism-oriented brand providing

organic mid-priced products in Hanoi market. Firstly, the marketing strategy focuses on creating

customer awareness concerning our offered products through advertising campaigns or discount

programs and then develop customers base. After getting customer’s awareness, we will

concentrate on expanding our market share as well as implement strategies to compete with other

competitors. Particularly, we will actively offer samples to universities and also participate in

environment campaign as a sponsor. Enable customers to purchase products in good faith by

unveiling green promotions and engage customers to join in the company’s environmental

campaigns to deepen our ties to them and amplify the benefits to the environment. Innisfree will

take advantage of green marketing to enhance its image.

Financials

Total first-year revenue is estimated $4.5 million with a sales volume of 300,000. We anticipate a

first-year loss up to $300,000. Break-even calculations indicate that Innisfree will become

profitable after the sales volume exceeds 25,950 during the second year. Our break-even analysis

assumes sale price of $15 per unit and variable cost of $9 and estimated first-year fixed costs of

$155,700. As a result, we have break-even calculation:

155,700/ (15-9) = 25,950 (units)

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References

Ames 2016 website

http://www.ames.asia/winner/Q-Most-effective-use-of-eco--green-marketing-2012/the-

shortlist

Asiaplus (2015), How big is Vietnam market – Example of cosmetics. Retrieved from

http://greetingvietnam.com/business/how-big-is-vietnam-market-example-of-

cosmetics.html

DI Marketing (2015), Women only trust women in cosmetic. Retrieved from

http://www.slideshare.net/dimvn/dim-022015-cosmetaics-report

Do, A. (2013), Vietnam has the biggest online population in Southeast Asia with 16.1 million

monthly PC users. Retrieved from

https://www.techinasia.com/vietnams-biggest-online-population-southeast-asia-161-

million-monthly-users

Innisfree website

http://www.innisfreeworld.com/main/index.do?source=https://www.google.com

Lam, Y. (2013), Vietnam’s cosmetic industry struggles to revive brands. Retrieved from

http://www.saigon-gpdaily.com.vn/Business/2013/1/104008/

Moore Corporation (2016), Vietnam internet user’s behavior 2016. Retrieved from

http://www.slideshare.net/digitalknowledge/vietnam-internet-users-behavior-

2016?qid=7ff3200d-994b-4350-8868-787dbb89ea60&v=&b=&from_search=53

Pham, T. V. (2015), Vietnamese Cosmetic Sector Demonstrates Clear Growth Potential

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http://economists-pick-research.hktdc.com/business-news/article/International-Market-

News/Vietnamese-Cosmetic-Sector-Demonstrates-Clear-Growth

Potential/imn/en/1/1X000000/1X0A49YB.htm

PRNewswire (2016), Vietnam - The Rising Star in Southeast Asia and the Second-Fastest

Growing Beauty and Personal Care Markets in Asia. Retrieved from

http://finance.yahoo.com/news/vietnam-rising-star-southeast-asia-064200428.html