Sulwhasoo
Case # .
Cosmetic’s Marketing Strategy to Rise to the Top of the
World: Sulhwasoo Case Study
Choi Yun-Jung, Dongguk University
Cho Byung-Woo, Dongguk University
Wang Hong-Jin, Dongguk University
Contents
1. Executive summary
2. ‘Sulhwasoo’ and its current status
3. Brand history of ‘Sulhwasoo’
4. The birth of ‘Sulhwasoo’ and its domestic market advance
5. Foreign market entry of ‘Sulhwasoo’ brand
6. The key to success
7. Marketing suggestions
8. Conclusion and Lesson
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HOW KOREAN BRANDS SOAR
Executive Summary – Sulwhasoo Case
Reason for selecting Sulwhasoo
Since Sulwhasoo did combine elements of Oriental Medicine and Culture
Marketing, it was able to create a new market, which allowed the product to lead
the market share.
This brand differentiated distribution channel by selling products only in the
department stores, duty-free shops, and door-to-door sales. Also, it succeeded in
pursuing consumers that Sulwhasoo is quality product.
Unlike existing Korean brands, Sulwhasoo made a huge success both in the
USA and China which is one of the largest markets in the world.
How Sulwhasoo became world famous brand?
When the national market started to face slowdown of growth in the market,
Sulwhasoo chose to grow in the international market.(2004-Hong Kong,
2010~2011-the USA, China)
Competitors targeting niche markets prevented Amore from growing rapidly.
However, Amore's wide customer base and technology helped get over the
situation.
Amore sought solutions to overcome the economic crisis occurred in 2008.
Keys to became No.1 brand
-Differentiation strategy that created a new market.
-Technology-based products.
-Attracted customers through culture marketing.
-Kept pace with the trend in the market.
Future marketing suggestions
-Combination of oriental medicine and inner beauty.
-Putting out cosmetics for men in China to keep up with the latest trend.
-With the help of Big Data, provide individual based services.
Conclusion
-Make profits from overseas markets that can maximize profit in the long run.
-Shift a viewpoint and benchmark a successful case of a leading overseas
company in order to grow continuously.
-Use Big Data to manage and analyze information properly.
Sulwhasoo
1. Sulwhasoo and its current status
1.1. Reason to choose Sulwhasoo
①By combining oriental medicine and culture marketing, Sulwhasoo
ranked 1st in domestic market.
Sulwhasoo was able to create a new market in Korea with the idea of
combining oriental medicine and culture marketing. This helped the
company to have a no.1 market share in domestic market. We are going
to find out the difficulties that Sulwhasoo faced and how they overcame
these hardships.
②Door-to-door sales, premium policy improved image of corporation
. Sulwhasoo sold a variety of products through door-to-door sales, the
department stores, and duty-free shops which boosted image of
corporation. This also made consumers feel that they are the special
people. Social climate is putting an emphasis on individuality and
consumers care about this too. Consumers feel satisfactory when using
trendy products. Therefore, end-users purchase not only products
companies sell but also satisfaction. We will now shed light on the
strategy that kept pace with the new trend.
③Sulwhasoo has a huge potential
Sulwhasoo first tried to break into HongKong market and made a
success. After that, Sulwhasoo tapped into the biggest economic markets
such as the United States and China. As did in Korea, Sulwhasoo could
survive in the highly competitive markets by targeting the people of the
upper class in those countries. This shows that Sulwhasoo has an
enormous potential to be successful in any markets.
1.2. Stock price and present value of Amorepacific, Sulwhasoo
① Present value of Amorepacific
Amorepacific is a listed company that has a product range from
Sulwhasoo to Hera, Primera, Innisfree etc. The company has international
competitive power with high technology.
Total amount of market price is 534,900,000kw and stock price is
approximately 900,000kw. Stocks of Amorepacific are known to be
profitable whenever and whoever purchase it. In particular, the company
is planning on reaching 1,200,000,000,000kr in 2015 and
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HOW KOREAN BRANDS SOAR
5,000,000,000,000 in 2020 with overseas sales. The number of
employees in other countries is roughly 5,800 which exceeded the
number in Korea 4,700 last year. Amorepacific started to focus on
recruiting global talents and employed a large number of local employees.
②Present value of Sulwhasoo
Sulwhasoo based on oriental medicine and prestigious image, it leaded
the market in the cosmetics industry. Particularly, Sulwhasoo showed
record-high sales in the department stores. Also, it not only captured eyes
of consumers in the United States and China but also raised brand
awareness in the international level. Sulwhasoo has been targeting people
of the upper class and being able to sell products in large cities in China
which in return brought the company a huge revenue. Even, in the United
States, the renowned department store, Neiman Marcus asked if they can
sell Sulwhasoo in there. Sulwhasoo was offered space in the Bergdorf
Goodman department store in june, 2010. The Bergdorf Goodman
department store is famous for its strict regulations about interior design,
but it exceptionally acknowledged Sulwhasoo with flower patterns and
allowed the product to be sold in a large volume .
1.3. What adversities it overcame to become international brand?
①Slowdown of grow in the domestic market
Sulwhasoo had been growing by the end of 2002 and it saw a slowdown
of growth after that. With this in mind, Sulwhasoo first tried to step into
Hong Kong market hoping overseas markets would bring them a greater
success. Hong Kong market attracted a lot of attention from the company
because it had a huge number of travelers with the purchasing power.
Another reason was that Hong Kong was not anymore under colonial
control by the Britain but China. Therefore, Hong Kong market can be a
stepping stone for the larger market such as China. Trying to penetrate
the foreign market as a strategy to overcome the low sales did help the
company to get over the situation they faced. We will discuss more in
detail about this and provide ideas for a new market creation.
②Competitors' market advance
Sulwhasoo used to be the sole oriental medicine based cosmetics which
dominated market without being interrupted by competitors by 2005.
However, its one of the competitors, 'lgcare', made an analysis of the
oriental medicine based cosmetics and was able to research the pros and
Sulwhasoo
cons of the product. After 'lgcare' starting to sell similar type of product
in the market, Amorepacific lost a significant amount of market share.
We will
③Financial crisis in 2008
Financial crisis in 2008 had a huge impact on the cosmetics industry as a
whole. It seems that profits Amorepacific was making was on the
increase between in 2008 and in 2010, the figure turned out to be slower
than that of before. We will go over the precise date and find out what we
can do about it.
2. Brand history of ‘Sulwhasoo’
1967
1972
1973
1975
1981
1987
1990~1996
1997
2002~2004
2004
History of Sulwhasoo
starting to research ‘Chinese medicine treatment with
ginseng’
obtain a patent on an extraction of ginseng ingredients
the first ginseng cosmestics ‘Jinsaengsammi’
new release of ‘Sammi’ in domestic market and exports
of 22 items in international market
exports and overseas release of ‘Sammijin’
the birth of Sulwha that integrated skin physiology into
oriental medicine
decision on production of differentiated products as a
response to the imports of foreign luxury cosmetics
release of Sulwha, co-developed by Kyung Hee
University Korean Medicine
Success in domestic market and no.1 brand power
making headway into the overseas market.
Sulwhasoo‘s market advance in Hong Kong and first
renewal
market advance of the second mover 'LG care' which
decreased sales of Amorepacific
2005
change of company name from ‘Pacific’ to
‘AMOREPACIFIC’ and its efforts to become a global
brand
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HOW KOREAN BRANDS SOAR
2009
‘Sulwhasoo spa', second renewal
2010
Sulwhasoo's market advance in the United States
2011
Sulwhasoo's market advance in China
2012
Sulwhasoo's market advance in Singapore
Table 1. Brand history of Sulwhasoo
3. The birth of ‘Sulwhasoo’ and its domestic market advance
3.1. Market situation around the birth of ‘Sulwhasoo’
① A crisis Amorepacific faced due to imports of foreign cosmetics in
1990s
In the middle 1990s, as the number of imported foreign cosmetics
increased, it accounted for larger and larger amount of market share in
Korean market. In order for Amorepacific to get over the situation, they
made a decision to produce products that have different features from
foreign cosmetics, which was ‘Sulwhasoo’.
For the moment, Amorepacific mainly concentrated on door-to-door
sales. However, with the introduction of Sulwhasoo in the department
stores, it put more of emphasis on the premium image of its product.
Moreover, according to the survey, while it turned out that oriental
medicine products were high in demand, the popular oriental medicine
product ‘Baekoksaeng’ was not produced owing to management issues in
the company. Likewise, the need for oriental medicine products by a
great number of consumers expedited the new introduction of Sulwhasoo
in the market.
3. 2. SWOT analysis of domestic market
Strength
Weakness
- Sulwhasoo’s technology and
quality
- leader in domestic market
- limited clientele
- premium brand image
- Differentiated culture marketing
Opportunity
Threats
Sulwhasoo
- Well-being trend, higher demand
- Increased share of
for oriental medicine products
foreign premium brands
- Stopped production of
- More competitors
‘baekoksaeng’
Table 2. SWOT analysis of domestic market
imported
3. 3. STP Analysis
Ⅰ. Clasificasion by age
Segmentation
Teens
-seek products that can improve their troubled skin
-prefer products with not strong stimulus
The twenties
-seek for individuality, demand for products with good
design
The thirties, The forties
-start to think about skin aging, prefers wrinkle-care
products
-prefer premium brand
Ⅱ. Classificaion by price
Low-price
-students focus on price rather than quality.
Middle-price
-those who choose substance over appearance.
High-price
-those in their thirties or forties who has purchasing
power
-those women who hope to express their confidence
-those who pursue well-being trend, trust oriental
medicine and of good social position
Targeting
-middle-aged women who has a sense of financial
security
-focus on effectiveness of oriental medicine and oriental
sensitivity
Positioning
-try to spread oriental medicine products hoping to
express Korean beauty
Table 3. STP Analysis of domestic market
3. 4. Target consumers
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HOW KOREAN BRANDS SOAR
Sulwhasoo brand targets those consumers who are in pursuit of Wellbeing trend as well as who place full confidence in oriental medicine
products. That is, not only those who are older than 35-year-old women
but also who have purchasing power at the same time.
According to ‘7-year cycle’, women tend to experience a change inside
and outside the body. At the age of 35, they will notice skin aging. At the
age of 42, they will have gray hair and skin aging may speed up more
than ever before. Sulwhasoo brand can be a solution for those women
experiencing these rapid changes in their body. Therefore, Sulwhasoo
tries to come up with strategies that can seek profits in the long run.
3. 5. Concept of Sulwhasoo brand : ‘Premium cosmetics’
Cosmetics used to be a means for women to express themselves in a
delicate way. That is why premium image of products highly affects the
number of purchases made by consumers. Sulwhasoo took this into
consideration and attracted the large pool of targeted consumers.
① Brand philosophy of Sulwhasoo
Brand philosophy of Sulwhasoo started from the proverb ‘A beautiful
face is a silent commendation’. This derived from our thoughts that
looking good is as important as being a good person. The brand
philosophy tried to show its national beauty to the people in the world.
With effectiveness of its oriental medicine features and oriental
sensitivity combined together, Sulwhasoo captured the attentions of
potential consumers.
② Sulwhasoo’s exclusive design
1)Container design
Figure 1. Sulwhasoo Container
Sulwhasoo introduced classy
product designs. The design
shows
oriental
sensitivity.
Sulwhasoo
expressed
its
confidence through the design of
it. Consumers Sulwhasoo gained
consumers confidence with the
help of its design. The design
contains distinctive curves and it
even took its usages into consider
ation.
Sulwhasoo
2)Colors
Including Korean traditional
color ‘Traditional Five colors’, it
has a variety of colors. Each color
represents each product line. The
color gold conveys premium
brand image.
Figure 2. Sulwhasoo color
3)Patterns
Shape of a Japanese apricot
flower is Sulwhasoo's pattern that
it was inspried by shape of flower
at Buddhist temple and it looks
like wall a full of flowers guarded
home of kingdom women. he
shape of
hexagon similalr
turtle's back means good health
and long life. It is simply
embodied flower petal of 6 pieces
Figure 3. Sulwhasoo Patterns
and looks like beautiful and ideal
space. The shape of modernly reinterpreted Sulwhasoo give consumer
premium image..
3 .6. 4P analysis of domestic market
PRODUCT
PRICE
- ingredients’ differentiation
· use of oriental ingredients ·- high-price strategy
-target those who has the purchasing
extract with water
power
- design seeking Korean beauty
- premium brand image
PLACE
PROMOTION
- sales channel : department stores,-premium marketing, VIP marketing
duty-free shops
- blueocean strategy
- 45% of profits through door-to--culture marketing, culture directing
door sales
marketing, culduct marketing
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HOW KOREAN BRANDS SOAR
- win-win marketing, marketing with
public interest
- PR strategy
Table 4. 4P Analysis of domestic market
3. 7. Marketing strategy in domestic market
①High price strategy
High price strategy : High price strategy turned out to be a best choice
for Amorepacific because they could make a considerable profit.
Moreover, high quality image of products was stamped on consumers’
memory, which allowed Amorepacific to make more profits. The design
of Sulwhasoo containers was based on technologies targeting to be
recognized as classy oriental medicine products. Sulwhasoo expressed its
confidence with the design and built trust with consumers.
Premium marketing : Amorepacific guarantees the high quality of
products produced in accordance with its concept which is ‘luxurious
culture brand’ so that it set a relatively higher price for all products.
Limited edition, special edition could be seen as a premium marketing
strategy.
②Differentiation strategy
To attain higher brand image, the company was in need of a new brand
strategy. To be able to do this, Amorepacific had to come up with new
marketing strategies.
Differentiation of distribution channels : Sulwhasoo differentiated
distribution channels by selling Sulwhasoo products only through the
department stores and door-to-door sales. As a result, Amorepacific gets
to dominate the high price cosmetics market and Sulwhasoo became the
main item for the company.
Blueocean strategy : In the early days of market advance, Amorepacific
showed its true qualities with the design of products as well as marketing
strategies. Advertisement with celebrities, distributing samples, a cutprice sale can be classified as differentiated blueocean strategies.
③Culture marketing strategy
Sulwhasoo
Culture marketing : Amorepacific provided a differentiated culture
marketing strategy by using selected materials and advertising products
with master craftsman who were designated as intangible cultural asset.
Also, the company insisted distributing products only through the
department stores, door-to-door sales and tax-free sales on board.
Culture directing strategy : Products are expressive of its culture.
Design of the containers shows it the most in particular that it has Korean
beauty and it built up confidence by letting consumers know
effectiveness of oriental medicine products.
Culduct(Culture+Product) marketing : This speaks for a certain group .
Figure 4. ‘Sulhwa’s Culture event with ten artists
④The stream of consciousness strategy
Coexistence / Win-win marketing : Amorepacific supported the
creation of Sulwha club run by 35 important figures and with the help of
those members of the club the company promoted products with various
marketing strategies.
Marketing with public interest : By allowing the public to be included
in the profit-making process of the company, the company kills two birds
with one stone. Sulwha Maven club let members of the club accumulate
points based on their performances. Accumulated points with proceeds
from the sales of products were used to support the cultural activities.
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HOW KOREAN BRANDS SOAR
Figure 5. Maven Club Logo
⑤PR strategy
Promotion targeting customers of affiliated companies : Those in their
20s and 30s who joined the Hera membership are expected to get samples
hoping this might lead them to purchase Sulwhasoo products.
Price
Differentiation
Culture
Marketing
Culture
marketing
Differentiation of
High price
strategy,
distribution
strategy,
Culture
channels,
Premium
directing
Blueocean
marketing
strategy,
strategy
Culduct
strategy
Table 5. PR strategy of Sulwhasoo
The stream of
consciousness PR strategy
strategy
Coexistence /Promotion
Win-win
targeting
marketing,
customers of
Marketing withaffiliated
public interest companies
3. 8. Marketing performance and consumer reaction
Sulwhasoo established high-price strategies by combining traditional
Korean beauty and effectiveness of oriental medicine into products.
Ceaseless product development, design research, and differentiation of
the distribution channel are the steps Amorepacific took. Sulwhasoo’s
marketing strategy had a huge influence on the consumers’ purchases.
Sulwhasoo increased sales by considering purchasing disposition.
Also, Amorepacific tried many different things such as ‘Sulhwa Maven
Club’, ‘Sulhwa Club’ to raise the level of satisfaction. Among them,
‘Sulhwa Maven Club’ let members of the club accumulate points based
on their performances. Accumulated points with proceeds from the sales
of products were used to support the cultural activities.
Sulwhasoo became number one brand power in 2002, in 2003, and in
2004. Sulwhasoo is now thought to be a good product for middle-aged
women and a premium brand.
-Sulwhasoo Sales Graph (unit : one hundred million)
Sulwhasoo
Table 6. Sulwhasoo Sales Graph
97-08‘ Maeil Kyungje(2009,02) / 09‘ Hankuk Kyungje(2010,06) / 10’
E-Daily(2011,02) / 11‘ Kyunghyang Shinmun(2012,10)
4. Foreign market entry of ‘Sulwhasoo’ brand
4. 1. Foreign market situation
There are two fundamental reasons why Amorepacific decided to
advance in foreign markets. First of all, Amorepacific faced deepening
market competition in Korea. Second reason was the increased number of
imported cosmetics. In the early 1990s, when Amorepacific made a
decision to see the bigger market, more than 30 percent of domestic
market was dominated by global cosmetics brands who had brand power
and implemented aggressive marketing strategies. Added to that, labor
dispute also made Amorepacific break into foreign market even quicker
and it was Sulwhasoo product that they sold in international markets.
①Deepening market competition in Korea
In the 1990s, cosmetics industry was not thought to be a profitable field
of business. The rate of growth in the cosmetics industry was slowing
down. In addition, intensifying competition in domestic market was in
progress. To overcome this situation, Amorepacific needed to develop
high quality brand as well as capital for marketing. Therefore, it was too
risky to do more business in Korean market.
②A rapid increase of imported cosmetics
Export(1000,US$)
Import(1000US$)
Trade
Year Total
Total
deficit
Cosmetics Ratio
Cosmetics Ratio
export
import
990
0% 26,192,221
67
0% -923
1993 24,445,054
1990 65,015,731 13,115 0.02% 69,1843,678 15,800 0.02% 2,705
2000 172,267,510 64,010 0.04% 160,481,018 331,060 0.21% 267,050
Table 7. The number of imports and exports
We can see from the above table that the number of imported cosmetics
is on the increase and Korea records a trade deficit. In this market
situation, Amorepacific had no other choices but to look around the
bigger markets instead of being more involved in Korean market.
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HOW KOREAN BRANDS SOAR
③Slower sale growth in 2003 and the start of global management in 2004
We can see from the below graph that sales have been down in 2003
compared from in 2001 and in 2002. Based on this fact we can conclude
that the company needed to advance in foreign markets. Thereafter,
Amorepacific left their first footprints in Hong Kong
Table 8. Sulhwasoo annual sales graph
④ The fall of a growth rate and making global image because of market
expansion of LGcare
Sales
Gross margin
Net profit
Closing Year
12.03(2011
2,293,407,080,572 1,560,676,322,021 318,809,138,452
closing)
11.03(2010
2,058,513,891,222 1,502,572,718,596 284,481,232,361
closing)
10.03(2009
1,769,009,924,840 1,261,070,759,035 225,877,685,980
closing)
09.03(2008
1,531,336,361,462 1,066,277,605,204 170,235,475,978
closing)
08.03(2007
1,357,005,812,763 953,890,915,439 177,855,983,786
closing)
07.03(2006
711,491,637,979 489,773,714,311 56,103,757,242 the second
half year)
Table 9. Reorganization of Amorepacific financial statement
Sulwhasoo showed record-high sales growth for a few years due to
international market advance. However, sales were down again between
in 2005 and in 2006. This is mainly because LGcare started to do
business in the cosmetics industry. Sale growth rate of Sulwhasoo was
approximately 7%, while O-hui&Whoo the main product of its
Sulwhasoo
competitor LGcare showed 23% growth rate. Amorepacific responded
this by changing its name from Pacific to Amorepacific to be able to take
a bigger share in the market.
4. 2. Sulwhasoo’s international market advance
Figure 6. Time of Sulhwasoo’s international market advance
Sulwhasoo’s international market advance - Hong Kong in 2004, the
United States in 2010, China in 2011, and Singapore in 2012
After extending its business in Hong Kong in 2004, Amorepacific
limited its distribution channel only to the fancy department stores and
exclusive shopping area. For the first half of year in 2011, having 40% of
market share in Hong Kong, it could establish premium brand image.
Also, apparently, there was a reason for the market advance in Hong
Kong rather than any other countries. When succeeding in making profits
in Hong Kong, Amorepacific would link the know-how to nearby
countries including China, Singapore, and the rest countries of Southeast
Asia. In addition, Amorepacific chose Hong Kong, and the United States,
because these are the countries that have the most potential and power in
the world.
Accounting for a larger market share would be great for exporters.
However, from the perspective of the importers, it would not be a good
news owing to the intensifying competition. An era of
internationalization would mean that companies are bound to analyze
various market situations.
Generally, nations in the northern hemisphere are important agents of
economic activity. Therefore, we will focus on China in Asia, and the
United States in North America
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HOW KOREAN BRANDS SOAR
4. 3. Entering Chinese market
① Market situation
1)Market potential in China
China showed unprecedented GDP growth between in 2010 and in 2011.
Growth of economy led urbanization. This let the rural population move
to a metropolis, naturally making them more interested in cosmetics
products.
In China, people coined a new word called “Beauty Economy” which
shows the popularity of beauty products. According to a survey in 2010,
scale of the cosmetics market is estimated to be 9,500,000,000,000kw
which is 1.5 times larger than that of in Korea.
Moreover, the metropolis in China such as Beijing, Shanghai,
Guangzhou has a population of up to 20,000,000 respectively. The rest of
the 35 cities has a population of 7,500,000 each. That is, market in China
is enormous and has a lot of potential. Sulwhasoo, therefore, found the
Chinese market to be very attractive market to go into.
2)The increase of high-income bracket in China
The number of high-income bracket surged followed by the rapid GDP
growth in 2010. According to the report by China Market Institute, the
number of high-income group increases 16% per year and the half of the
people in this group was formed between in 2006 and 2010. This group
apparently has the purchasing power and tends to prefer to buy quality
products that have great brand image.
This number increase of high-income people and their preference for
premium brand are the main reasons why Sulwhasoo tried to enter the
Chinese market.
3)A sense of intimacy toward Korean products
From the late 1990s to the present time, Korean wave gained popularity
throughout this period. This trend played an integral role for Chinese
people to be interested in Korean products. Furthermore, Korean
companies in China did provide the best follow-up services so far.
Therefore, this largely improved Chinese customer satisfaction. This
familiarity that existing companies established is one of the major
backgrounds for Sulwhasoo’s market advance.
Sulwhasoo
②SWOT anaylysis of Chinese market
Strength
Weakness
- Premium brand image
- Marketing expenses
- Accumulated marketing know-how
- Last-mover disadvantage
based on earlier success
Opportunity
Threats
- Expectation of an uplift in sales
- Rapid growth of Chinese
- Reduction of customs duties
cosmetics market
- Increased interest in cosmestics
- China joins WTO=>more
- Favorable toward Korean products
competitors
due to Korean wave
Table 10. SWOT anaylysis of Chinese market
③Culture in China
1)Woman’s high status in society
Unlike any other countries in Asia, woman’s social status in China
shows relatively similar to that of man’s. Woman and man are thought to
have the same right to make a decision at home. 49% of the population in
China is women and 300,000,000 women are participating in the
economic activities which is 30 times more than that of the number of
women in Korea. Chinese women enjoy 4 times more shopping than
Chinese men. Also, they not only have a tendency to use products shorter
period than that of the usage of men but also enjoy letting other people
know the features of products that they are in use.
2)Saving one’s face
Sulwhasoo is targeting those women living in metropolis who always
try to keep their face. They, therefore, prefer buying imported brands and
extremely rely on brand assessing the quality of products based on that.
Not to mention the fact that they are not at all sensitive to any discounts,
promotions, or public relations.
3)More and more people get sick due to air polution
China is known to have bad air pollution mainly owing to yellow dust.
More and more people have to see a dermatologist for skin diseases. This
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HOW KOREAN BRANDS SOAR
mainly resulted from air pollutions. This brought people to pay attention
to natural skin care cosmetics products.
4)Well-being trend
Well-being trend which is focusing on everything that is healthier such
as organic food, working out regularly, using quality products etc. People
now are interested in the materials and sources of any products that they
are using. Since this means that they are affordable to buy items more
than ever before, we can conclude that their income has risen so that they
turned their eyes to eco-friendly or healthier products.
5)Korean beauty resulting from Korean wave
Pop culture such as Korean dramas and K-Pop is now going on to
Korean beauty wave. Specifically, organic cosmetics Sulwhasoo is
getting a lot of attention from consumers. This became more famous
through word-of-mouth.
6)More premium cosmetics stores in big cities
China is now offering spaces for premium cosmetics stores. For instance,
cities such as Shanghai, Beijing where commercial development is on the
progress, are occupied by premium cosmetics stores. More than 52% of
the upper class who turned out to have the purchasing power reside in
those cities mainly because they can afford those products.
7)Chinese women enjoy shopping and rely on the word of mouth
According to a report by LG Economic Research Institute, Chinese
women tend to do shopping 4 times more than Chinese men. While
shopping, Chinese women normally spend 12.9% of their shopping
expenses in beauty treatment products. Marriage age has increased in the
nation and we can see a rapid rise in the number of single woman. Single
woman usually shows high consumption level and so-called ‘highpaying white collar women’ who thought to earn more than 8,000yuan
per month are now emerging rapidly. This top 1% of consumers believe
that the virtue of life is to consume products and very consumptionoriented. Chinese women are likely to hear from the experience of others,
and this largely affects their consumption of products.
8)Value of Sulwhasoo
Sulwhasoo obtained technology based on oriental medicine science for
40 years and succeeded in establishing a premium brand image. Also, by
Sulwhasoo
being able to keep up with hot trends such as Well-being, Korean wave,
the company now is putting more value on its Sulwhasoo brand.
④Marketing strategies in China
Marketing strategies in Chinese market
-High-price marketing : Sulwhasoo targets those
higher-income group in China. Amorepacific opened
The same
marketing as two stores in the department stores after one month of
its launch. They had eight stores in 2001.
domestic
marketing -VIP marketing : Specialized staff were designated to
provide quality service to VIP customers.
-Oriental medicine : In China, it used to be very
difficult to find skin care products that was filled with
The same but
the scent of oriental medicine. Along with this,
differentiated
consumers tend to think that oriental medicine
marketing
products are beneficial for their skin so that Sulwhasoo
with the scent of ginseng became very popular.
-target Hallyu fans in China : Japanese people look up
Korean celebrities’ skin so that they have much interest
in Korean cosmetics. Korean cosmetics usually target
Differentiated
those teens and the twenties. However, since
marketing
Sulwhasoo targeted those in their thirties and forties, it
met the needs of Hallyu fans. Also, Sulwhasoo shows
more than 70% of repurchase rate.
Table 11. Marketing strategies in China
⑤Success story
1)Targeting upper class and understanding of regional characteristics
Sulwhasoo
2)Appeal to those high-paying white collar women
Sulwhasoo made its target to those high-paying white collar women
who are thought to be the top 1% of the population. Those older than 35year-old women are the essential target because they are the most
affordable and apt to purchase items more than any other groups of the
population. Sulwhasoo could make money out of selling products to this
group.
3)Word-of-mouth marketing
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HOW KOREAN BRANDS SOAR
Amorepacific researched to find out the purchasing patterns of their
consumers. The company made its conclusion that word-of-mouth plays a
significant role for their consumption. Therefore, word-of-mouth
marketing became a main source of marketing strategies.
By taking advantage of this word-of-mouth strategy, Sulwhasoo became
popular even before its launch in China. It could be sold in a large scale
even though it was sold 5 years later than LGcare products. After entering
Chinese market, Sulwhasoo firmly established its brand image through
the word-of-mouth marketing strategy, showing 70% of repurchase rate.
4)Marketing with the help of Korean wave
Chinese people often look up to the skin of Korean celebrities. That is,
they are often favorable to Korean cosmetics products. Knowing that
existing Korean cosmetics products aimed at those teenagers and in their
20s, Sulwhasoo made its decision to concentrate on those in their 30s,
and in their 40s. Sulwhasoo could appeal to those targeted groups since
Sulwhasoo is made of oriental medicine products. This group also
showed more than 70% of repurchase rate.
5)Oriental medicine products
There used to be no oriental medicine products in China. Therefore,
Sulwhasoo’s moisture cream with ginseng smell was a huge surprise in
Chinese market. Also, ginseng ingredient often thought to be good for
skin grasped Chinese consumers attention. One thing that Amorepacific
made its commitment was to let them be accustomed to those oriental
medicine products by explaining pros and cons of the products in detail.
6)Analysis of population
1,100,000,000 people out of 1,300,000,000 live in big cities which
shows higher density in cities. Women are likely to be involved in
economic activities. Women have almost the same social status as men.
To be able to figure this out, Amorepacific surveyed 3000 local
consumers before making its launch in China.
7)Trendy product, Sulwhasoo
Using quality ingredients and oriental medicine as a source of their
products, Sulwhasoo laid the foundation in Chinese market. The fact that
Chinese people were not repulsed by the oriental medicine products was
one of the reasons of its success too. Luckily, Sulwhasoo products did not
need to go through any legal process or customs at that moment.
Sulwhasoo
Moreover, Chinese people were favorable to Korean products with the
help of K-Pop and the Korean wave. Those who experienced Korean
Beauty showed high repurchase rate with brand loyalty. By instantly
responding to trends in China, helped make sale accelerated as a whole.
⑥Sales performance
The total sales in China after Sulwhasoo’s launch
Table 12. China market sales results(2011)
China market sales results(the first
quarter of 2012)
Sulwhasoo’s Chinese market advance. Sulwhasoo raised
The fourth
its brand awareness through VIP marketing in Beijing
quarter in 2011
and Shanghai.
The first
VIP promotion in Beijing and Shanghai to raise
quarter in 2012 Sulwhasoo’s brand awareness.
4. 4. American market advance
①Market situation
1)Continuous cosmetics market growth in the U.S.
Cosmetics and beauty treatment industries in the United States are
estimated to be the largest market in the world. Except when sales scale
went down 0.1% in 2009, sales in cosmetics industry is on the rise.
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HOW KOREAN BRANDS SOAR
Sulwhasoo turned to see a bigger market fearing from the saturated
Korean market situation.
Sales scale of anti-aging cosmetics exceeded that of skin care market by
2% between in 2006 and in 2008. Aiming the same group of consumers,
the increase of the sales scale of anti-aging cosmetics market became an
essential reason for Amorepacific’s market advance in the U.S.
2)Oriental medicine products were of interest to Americans
From the early 2000 to today, Americans were becoming more and
more interested in oriental medicine products. One thing and the last
thing they can do to overcome the western medicine was turn to oriental
medicine. Oriental medicine and acupuncture is being used to relieve pain
in reality. Also, people multinational pharmaceutical companies read a lot
of oriental medical volumes for their reference.
②SWOT analysis
Strength
Weakness
- eco-friendly product by using
- those who have no purchasing power
natural ingredients
are not willing to buy Sulwhasoo
- profit maximization by selling
products
high-price products
- not enough brand recognition
- classy design
Opportunity
Threats
- Americans have a good feeling
toward oriental beauty
- high entry barrier due to global
- the increase of the number of
brands
consumers
- classy design
Table 13. SWOT analysis of American market
③Culture and trends in the U.S.
1)Americans value brand image
Sulwhasoo
Brand image is assessed in terms of its technology, design, and
freshness. Brand image is not something that can be built within a short
period of time. Therefore, to meet the needs of American consumers, it is
recommended to avoid low price strategy and a short-term policy.
2)Americans value design
Design of Sulwhasoo products is highly recognized because it captured
the oriental beauty in a modern way.
Wrapping design is also an important factor. Consumers not aware of
any features of the product have to make choices by looking at its cover.
Visual factors expressed by its wrapping design have to be a great means
to promote sales. Wrapping design, thus, does its part of alluring
consumers.
3)Organic as well as eco-friendly trends
Eco-friendly way of life is becoming a new lifestyle trend these days
making natural beauty product popular. More recently, natural cosmetics
products including beauty treatment market and make-up products are
popular. This is because carcinogens are detected in the mercury
cosmetics products as well as in the premium cosmetics products many
times. People now are in pursuit of organic cosmetics products.
4)Brand value of Sulwhasoo
Sulwhasoo has a oriental medicine based technology, a premium design,
and uses organic natural materials for cosmetics products. Sulwhasoo
also has freshness that Americans value the most.
④Marketing strategies in the U.S.
Marketing strategies in the U.S.
-Premium marketing : Amorepacific mainly focused on
the fact that Americans generally find the Oriental to be
mysteriously attractive. With this bearing in mind, in
The same 2010, Amorapacific could be part of the Bergdorf
marketing as Goodman by turning oriental beauty in a modern style.
domestic Bergdorf Goodman also chose Sulwhasoo as an optimal
marketing brand that can satisfy New Yorkers’ interests in Asian
culture.
-High price strategy : Sulwhasoo set the price higher than
the price set in Korea to provide high quality products.
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HOW KOREAN BRANDS SOAR
-Interior showing oriental beauty : Sulwhasoo showed its
oriental beauty by engraving interiors with flowery
patterns and Chinese characters. Even though there used
to be a strict restriction on interior design, Bergdorf
Goodman exceptionally allowed Amorepacific to design
interior their own way.
※This is not even originally a differentiated way of
marketing strategy from the one being used in Korea, but
a great strategy that can appeal to those in other
countries. Which is why this is not exactly the same but
The same but differentiated marketing strategy.
differentiated
marketing
Figure 7. The design of Sulwhasoo store
with traditional patterns
-Experience based marketing : Sulwhasoo built-up its
image by letting customers to experience ‘Oriental
Beauty’ in ‘Spa Salon’
Differentiated
marketing
Figure 8. Sulwhasoo ‘Spa Salon’
Table 14. Marketing strategies in the U.S.
Sulwhasoo
⑤Reasons of success
1)Analysis of the skin of white people
White people account for more than 80% of their population, while
African Americans account for 15% of the whole population. Therefore,
cosmetics market targets those white people. White people face skin
aging more rapidly than other people, which is why they are interested in
quality cosmetics products. Consumers, nowadays, shows interests in
skin care products that is functional as well as good for health.
2)Introduction of Korean culture to the U.S.
Amorepacific tried to raise awareness of its brand by introducing beauty
gallery and spa. With globalization, Americans are also paying a lot of
attention to Korean culture.
3)Brand positioning by focusing on high class people
Along with high price strategy, Amorepacific sold products solely in the
department stores. Every brand has to go through complex processes to
be able to get into the Bergdorf Goodman, which is known to be the best
department store in the United States.
4)Attracted Americans who value design
Neiman Marcus, as a global department store, is famous for its unique
items such as universe travel ticket, exorbitant price chicken coop. Once,
Sulwhasoo was invited to Neiman Marcus department store for products’
oriental beauty. After Sulwhasoo being chosen as a present item by
Neiman Marcus, it could occupy 27 stores and sell products in the
Neiman Marcus department stores.
5) Sulwhasoo dig into characteristic of Americans
Sulwhasoo products formed a social consensus by knowing Americans’
skin type, cultural characterization, their personal preference.
Neiman Marcus department store promoted cosmetics products from the
late February in 2013 to early march in 2013. During this time,
Sulwhasoo showed sales increase by 80% while other brands showing
increase in sales by up to 10%. This demonstrates how Sulwhasoo
products are competitive in the U.S. market.
By now, Korean cosmetics products had trouble getting into American
market. Selling products only to those Korean resident abroad have
limitations. When trying to break into American market with same
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HOW KOREAN BRANDS SOAR
strategy devised in Korea did not work well. This is because this
domestically devised strategy has not considered Americans’ tastes on
products. Realizing the weakness Sulwhasoo, surely not to repeat this
failure, came up with differentiated idea resulting in great success.
⑥Sales performance
.
121
157
188
Table 15. US market sales result
newspaper, Korean beauty worked in the U.S. market. 2012, 11
We have analyzed what differences it has depending on the types of
marketing strategies. According to ‘Um Kyung-hee’(2002), products of
global brand are not usually assessed by its quality but by the company’s
history and brand image. Sulwhasoo, therefore, has prerequisites to be a
global brand.
It is now time for Sulwhasoo to be sensitive to consumer participation.
Consumer participation is a community or individual involvement in the
decision-making process. Also, major reasons that have an influence on
the consumer’s decision-making process can be classified as cultural,
societal, individual, psychological factors. Thus, Amorepacific need to be
aware of consumer participation as well as 4 factors that affect
consumers’ decision.
5. The key to success
The key to success can be summarized with five points.
5. 1. Oriental medicine brand identity
Sulwhasoo
Sulwhasoo’s oriental medicine philosophy melted into visual factors
such as the color and package. Pottery shaped container with traditional
‘Oh-bang’ color showed products’ unique characteristics. Additional
gold color showed its noble image. Oriental medicine brand identity was
more than these colors. Amorepacific even added more. Especially,
‘Sulwhasoo spa’ helped establish oriental medicine brand image by
providing oriental type of skin care solutions. ‘Sulwhasoo spa’ plays an
integral role not only in Korea but also other countries including Hong
Kong. With these various activities are the main factors contributing to
the highly recognized brand identity. Sulwhasoo, in conclusion , is a
optimized cosmetics those looking for oriental medicine products.
5. 2. Technological features
Quality of Sulwhasoo products was a driving force for the success.
Sulwhasoo products go through a certain process for a better quality.
First of all, every oriental medicine material for a finished good is
domestically produced. 200 different types of Chinese herbs are being
cultivated. Scientific product research is underway as well. Amorepacific
formed a task force studying more about Sulwhasoo products. 500 people
in the KyungHee University, KangWon University, and Ewha Women’s
University are participating in the process of the product development. As
am outcome, Sulwhasoo has 200 patents, and 300 research papers. This
effort allows Sulwhasoo products to survive in the competitive markets.
5. 3. Culture marketing
Selected materials, emotional design are the concepts for theSulwhasoo
products. Craftsmen designated as intangible cultural asset showed up in
the TV advertisement, differentiating itself from the competitors who hire
models for the advertisement. Also, for the concept of culture brand,
Amorepacific distributed products only through the department stores,
door-to-door sales, and tax-free goods on board. They tried to combine
Korean culture and oriental beauty in the design of the containers.
Besides, in connection with corporate social responsibilities,
Amorepacific is using culture marketing strategy. Corporate social
responsibility is a form of corporate self-regulation integrated into a
business model. Corporate social responsibility is a process with the aim
to embrace responsibility for the company’s actions and encourage a
positive impact through its activities on the environment, consumers,
employees, communities, stakeholders and all other members of the
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HOW KOREAN BRANDS SOAR
public sphere. For instance, by creating ‘Sulwha maven club’, it allows
members to accumulate point that can be used later to experience
traditional culture.
Being connected to various cultures, Sulwhasoo conveys its color very
well. Culture marketing, thus, basically plays an essential role drawing
consumer’s attention.
5. 4. Premium strategy
For women, they can express their image through the cosmetics
products. Sulwhasoo took purchasing disposition into consideration and
set premium image at the head of their strategies. People can sense a
feeling of exclusivity in the package design of Sulwhasoo.
Sulwhasoo even differentiated its distribution channel. From the
moment when it launched Sulwhasoo products, it was only available
either in the department stores or door-to-door sales. By doing this,
Sulwhasoo accounted for more and more market share, resultingly
becoming a main brand. Unlike any usual marketing strategies such as
handing out sample, a cut-price sale, Amorepacific even differentiated its
advertisement. Also, they try to meet the needs of high class people by
providing them with limited edition, special edition etc.
5. 5. Driving force of international market advance
Sulwhasoo made an eye-opening progress in the international markets
with the help of the premium strategies. First step was in Hong Kong. In
Hong Kong, Sulwhasoo had the support of most of the upper class people.
Plus, premium strategy was also a critical success factor.
In China, upper class people take into account brand and quality when
purchasing cosmetics products. Sulwhasoo gratified their desires by being
equipped with premium brand, high-price, and great quality. Also,
Amorepacific came up with local marketing strategies for the local
consumers and tried to meet the needs of white collar women. Word-ofmouth marketing strategy turned out to be effective as well.
Premium marketing was used in the U.S. as well. Even high-price
strategy helped boosting sales. Amorepacific proved its value by being
part of the best bergdorf goodman department store in 2010. Oriental
medicine brand identity, premium strategy, and so on are the main cause
for Sulwhasoo’s success in the United States.
Sulwhasoo holds a special place in consumers’ heart from the Hong
Kong market advance in 2004, the U.S. in 2010, the China in 2011, and
Sulwhasoo
Singapore in 2013. Now, Amorepacific is ready for another challenge in
Southeast Asia.
6. Marketing suggestions
6. 1. ‘Inner beauty’ as a Sulwhasoo’s new breakthrough
①One example that made profit with Inner beauty products
1)’collagen beverage’ as a source of profit in Japanese cosmetics market
’Collagen beverage’ came up as a new source of profit in the Japanese
cosmetics market. ‘Collagen beverage’ is one of ‘Inner beauty’
products that promote skin elasticity. At that time, ‘collagen beverage’
became a new profit source using distribution channels such as pharmacy,
supermarket.
2)Success story : Shiseido ‘Shiseido the collagen EX’
Figure 9. the collagen EX
Sales of Shiseido’ collagen
products have increased and it
exceeded
10,000,000,000yen
when in 2008. To raise brand
awareness,
the
company
unified different brands into
‘Shiseido the collagen EX’.
Shiseido the collagen products
maintained 20 to 30 percent more
sales record than of the year
before.
3)Success story : Kanebo ‘Collagen Deep in’
Kanebo cosmetics were sold as
of 2009 targeting people in their
30s. It has been known that the
secretion of growth hormone is
rapid when one is in sleep.
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HOW KOREAN BRANDS SOAR
Therefore, the company persuaded consumers to drink
Figure 10. Collagen deep in
‘Collagen Deep in’ just before going to bed. Even though this was very
exceptional, it succeeded in catching the public eye.
②Current situation : the boundary between cosmetics and Inner beauty
products is disappearing
People used to apply cosmetics that contain collagen or hyaluronic acid
in the past. However, the trend is changing. People now are getting
accustomed to taking in these ingredients spreading Inner beauty trend.
Ingredients of Inner beauty products are becoming more and more
diverse including collagen, hyaluronic acid, and red ginseng. Food
company and pharmaceutical company are introducing this trend.
Amorepacific and LGcare are also extending its business.
③The reason why Sulwhasoo has to launch Inner beauty products
1)Sulwhasoo’s consumers trust oriental medicine.
Inner beauty is not just improving skin by applying cosmetics on the
surface of the skin but reforming fundamental skin problem by changing
eating habits or life habits. This is similar to the theory of oriental
medicine that everything is closely linked to each other. Oriental
medicine often refers treatment with Chinese herb medicines. Sulwhasoo
is also a product made from Chinese herb medicines. Those consumers
who have trust in oriental medicine are likely to rely on Inner beauty
products. Therefore, extending business to Inner beauty products will
open a new field for profit.
2)Introduction of Inner beauty brand with the concept of premium
cosmetics concept
Sulwhasoo combines the effectiveness of oriental medicine and oriental
sensitivity to be able to recognized as a premium brand. Also, high-price
strategy worked out perfectly resulting in higher sales. If this kind of
premium brand concept is applied in Inner beauty products pertinently,
the company would be able to introduce another successful brand into
market.
④Expected effect
Sulwhasoo
Overall expected effect
-Profit creation from new business(Inner beauty)
-Image promotion by using natural oriental materials.
-Premium image
Promotion expected effect
-Promotion through mobile phones and applications in order to diversify
its customers.
-Additional profit resulting by running tea shop
-Premium image with the help of magazines/newspapers advertisements.
Table 16. Expected effect
6. 2. Sulwhasoo’s men’s cosmetics market advance
①Background : an explosion of interest in men’s cosmetics
Sales of men’s cosmetics market is on the rise even though the market is
very competitive. According to KOTRA, sales of men’s cosmetics market
increases at a very rapid pace. Even the skin protectants showed 40
percent increase in sales in 2010. Men’s cosmetics market has a great
potential for business because sales of this market is estimated to be
higher than 8,000,000,000yuan.
Men in the present era actively try to express themselves seeking for
individuality. The change in lifestyle transformed the way men live and
opened a lot of new possibilities. Men in cities where economic level is
high such as Beijing and Shanghai tend to be more interested in their look,
leading to more purchase of men’s cosmetics. This shows there is a huge
market opportunity in China.
②market condition of Sulwhasoo’s men’s cosmetics
Even though Sulwhasoo has 18 different product lines, it only has one
product for men. This business is in its infancy.
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HOW KOREAN BRANDS SOAR
Figure 11. Sulwhasoo man's cosmetics
③Suggesting an alternative : marketing strategy for men’s cosmetics in
China
1)Make use of Sulwhasoo’s premium brand
Nowadays, Chinese men put an emphasis not only on the effectiveness
of cosmetics but also on its brand. Therefore, taking advantage of
Sulwhasoo brand would make it easier for the company to take one step
closer to the consumers.
2)Development of various product lines
Owing to the sharp economic growth, men in their 30s and 40s have a
different view on self management. This is especially true for those
successful men in society. They value their face. Since they have money
saved they are able to make purchase of expensive items. Thus,
Sulwhasoo’s high-price brand strategy suits best in this market.
6. 3. What Sulwhasoo came up with is ‘Big Data’
①Definition and features of ‘Big data’
In the early days of the advent of Big data, it just meant a lot of data.
However, now, big data is the term for a collection of data sets so large
and complex that it becomes difficult to process using on-hand database
management tools or traditional data processing applications.
Big data is difficult to work with using most relational database
management systems and desktop statistics and visualization packages,
requiring instead “massively parallel software running on tens, hundreds,
or even thousands of servers. What is considered big data varies
depending on the capabilities of the organization managing the set, and
Sulwhasoo
on the capabilities of the applications that are traditionally used to process
and analyze the data set in its domain. “For some organizations, facing
hundreds of gigabytes of data for the first time may trigger a need to
reconsider data management options. For others, it may take tens or
hundreds of terabytes before data size becomes a significant
consideration.
②Big data’s prospect
To be able to have comparative advantage over other competitors,
companies need to understand customers in depth and have to provide
differentiated services so that they can survive. In regard to that, big data
will be a next-generation growth power. Semi-structured data contains
market trends, client attitude, one’s feelings and everything. By installing
a software that manages big data, companies will be able to customized
services.
Individual consumers can take advantage of big data in many different
ways. Consumers can save time and money by making a data-centered
decisions that otherwise would have been wasteful.
③Present status of Big data use by Korean companies
Even though Korea has laudable IT infrastructure, not many are taking
advantage of it. This is because we were not able to systematize database
and analyze information to make use of it for ourselves. Korean
companies are now aware of the products that consumers buy the most
and are interested in. Shops have data accumulated in their computers.
However, headquarters have no capability to do it. Therefore, for
Amorepacific to become
a global company, it should be able to
accumulate, manage, and analyze information so that they can meet
customers’ needs.
④Accumulating information with SNS
Nowadays, we can even accumulate necessary data by using SNS.
According to J.H. Kim(2912), customer information profiling would help
the company figure out potential customers’ characteristics. With the
help of SNS, companies can have better targeting of promotions.
Sulwhasoo’s main target consumers are in their mid thirties whiles SNS’s
target consumers are in their twenties to thirties. Thus, this will promote
insurance of customers in the long run.
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HOW KOREAN BRANDS SOAR
⑤Proposal of alternative : Beyond chasm
Tim O'Reilly said “Winners in our future generations will be those who
secure a lot more users and turn this clientele into a system.
Countless products are produced every single day, however, most of
them disappear not being able to go beyond chasm. Thus, to be able to
secure many users, it is essential to know customers’ characteristics. In
this sense, Big Data can be a great alternative. With the big help of Big
Data, companies would know what customers needs and effectively
invest and manage.
Figure 12. Consumer distribution ratio
With this in mind, we defined Sulwhasoo’s foreign market advance as
an early adopters stage. To go to the next stage, which is late adopters
stage, companies need to capture customers’ hearts. Earlier we
mentioned that it is essential to consider factors that have influence on
consumers’ purchasing intention. The most effective way to boost
consumer participation is to arouse customers’ desire. Big Data surely
can play a huge role in doing this. Therefore, it is highly likely that Big
Data would help companies to success in breaking in new markets.
7. Conclusion
We have researched how Sulwhasoo succeeded in both national and
international market, and proposed some ideas. Three times of crises that
Sulwhasoo faced were due to saturation of domestic market, economic
downturn and not enough market research. By knowing this, we proposed
Sulwhasoo
alternatives for these crises. From now on, we will come to a conclusion
in terms of economy as well as marketing.
①Making profits
Amorepacific made profits targeting a niche market. According to
National Statistical Office, the whole number of population is 51,047,880
people in 2013. When Sulwhasoo first tapped international markets the
population of Korea was 48,423,799 people in 2004. Economists argue
that a nation should at least have 100,000,000 population for domestic
market activation. However, Korea is not reaching that figure yet.
Therefore, it was necessary to look around for more profits.
②Changing one’s way of thinking and benchmarking
Subprime mortgage forced the world into a financial crisis in 2008.
Sulwhasoo who used high price and premium marketing strategy showed
relatively slower growth due to the economic recession. This allowed
customers seek for cheaper price products. However, it did not make
sense to change their marketing strategies. If that happens, those who
favored Sulwhasoo products are likely to turn their face away. In this case,
it was important to benchmark those similar cases which made us take a
closer look at Japans’ situation. Even though they faced same
circumstances, they captures customers’ hearts with inner beauty
products. By changing one’s way of thinking that we can we cosmetics
products, they approached customers in a more friendly way.
Any companies are dependent on external stimulus. When thinking
differently in these situations, companies can survive. In this sense, we
propose edible cosmetics products which combined characteristics of
oriental medicine and inner beauty.
③Trend
It is common sense that companies take the role of product production
and consumers purchase them. The 20th century is the time of
4C(Consumer, Cost, Convenience, Communication). Consumers do not
make a purchase only if products are good enough. Consumers do make a
purchase to be able to be happy with the use of them. To capture
consumers’ heart, companies need to establish brand image, provide
convenience to customers and communicate with them.
When competitors stepped in the market where Sulwhasoo was leading,
Amorepacific took that into account. It turned out that Amorepacific was
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HOW KOREAN BRANDS SOAR
not doing enough research for consumer behavior because they were
monopolizing the market. From this experience, Sulwhasoo paved the
new way for reform. They analyzed consumers’ behavior to be able to
provide them with best service and proposed Big data as an alternative.
Foreign companies are making use of Big data. However, Korean
companies are not necessarily taking advantage of it. Analysis of Big data
would help companies lead the market.
Especially, localization strategy, premium marketing strategy and Big
data acquisition would allow Amorepacific to be successful in foreign
markets.
With this marketing contest, we learned how companies make decisions
when it comes to marketing. Amorepacific dominated domestic market
by selling oriental medicine product ‘Sulwhasoo’ which has different
characteristics from those foreign cosmetics. Surprisingly, it remains
number one oriental medicine brands in the international level with
various differentiated marketing strategies. Sulwhasoo could make it by
overcoming a couple of difficulties that they faced and judging market
situations coolly.
Secondly, with Sulwhasoo’s case analysis, we studied the field of
international marketing and the need for it. Amorepacific started global
management to overcome intensifying competition in domestic market
and the increase of imported foreign cosmetics. Now, Sulwhasoo went
into a lot of Asian countries, and the United States. Sulwhasoo’s case let
us realize the importance of market research, demographic as well as
regional features. And we have to have different international marketing
strategies depending on countries.
This marketing contest helped me grow in three different ways. First of
all, it broadened my perspective. I happened to put myself into
consumers’ shoes and thought a lot from their view. Secondly, I realized
the significance of group work. For example, we assigned different works
to individuals and solved problems by communication and compromise.
Lastly, it was a whole new different experience for us. This was because
we were able to met experts in the marketing field and learned a lot from
them.
Sulwhasoo succeeded in differentiating its product by making people
understand that Sulwhasoo is an authentic oriental medicine brand. Not
only did it make use of traditional five colors on the pottery, but also it
used high quality oriental medicine materials. This did help Amorepacific
have a brand identification. In short, the very Korean styled beauty
Sulwhasoo
become competitive enough to open entry barrier of global brands. Based
on domestic culture and characteristics, Amorepacific could find out an
item originative and became an example to everyone who would like to
jump up to be the global brands in the world.
Individual comments
Name : Choi Yun-Ju
School : Dongguk University
A school subject : International trade
Cell Phone : 010-4303-0188
E-mail : jiojy66@naver.com
I learn many things from this contest. Amorepacific find chance from
fail. After all, they success at world market. Amorepacific products face
stiffer competition from other company items in the global market. We
research number 1 cosmetics brand in Korea. It is very good experience.
Based on these things, I dream forward to grow further one step.
Name : Cho Byung-Woo
School : Dongguk University
A school subject : Journalism and Mass communication
Cell Phone : 010-4199-0419
E-mail : safeco61@hanmail.net
This project was a great opportunity making me foresee my future
through past experiences. Analysis of a company in a detailed way let me
comprehend how the company could obtain no.1 brand power in the
international market. By looking at this process, I felt that I could always
control myself whenever I face any hardships.
Name : Wang Hong-Jin
School : Dongguk University
A school subject : Journalism and Mass communication
Cell Phone : 010-3174-8327
E-mail : sangsangwang@naver.com
There exists a great number of markets and numerous products come out
as well. This contest let us know more about the stories of those products.
The most important thing for us to elaborate stories of the products is
marketing strategies. Marketing strategies of Sulwhasoo would act as a
huge stimulus in making my own story.
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References
Dissertations
1. Ko, Yeon-Jin(2006) , “A Study on the Successful Cultural Marketing Strategy
in Developing Cosmetic Brand” , Graduate School of Design, Ewha Woman’s
University
2. Um, Kyoung-Hee(2002), “A Study on Brand Image Evaluation to Products of
Overseas Famous Fashion Brand” , Graduate School of Hanyang University
3. Lee, Myung-hee(2005), “A Study on Customer’s Behavior on Purchasing
Oriental Herb Cosmetics”, Graduate School of Food & Drug Administration,
Chung-Ang University
4. Zhong, Jia-Yi(2011), “A Study on the Marketing Strategy of AMORE
PACIFIC Cosmetics to Penetrate China Market”, Graduate School of Business
Administration, Dongeui University
5. Seo, Myoung-Sun(2006), “The Marketing Strategy toward Consumption
Polarization Trends : The case of cosmetic industry”, Graduate School of Techno
Business, Sookmyung Woman’s University
6. Park, Woon-Sang(2013), “Future Society Through Big Data”, National
Assembly Library, Article 50, No. 2
7. Chae, Seung-Byeong, Jeon Sang-In and Ahn, Shin-Hyun(2012), “Big Data :
Industry Cataclysm epicenter”, CEO information, Samsung Economic Research
Institute, No. 851
8. Kim Jong-hyun(2012), “An Empirical Study of SNS Customer Targeting
Profiling Model Based on Big Data Analysis”, Graduate School of IT Policy and
Management, Soongsil University
9. Yoon, Gak and Seo, Sang-Hee(2012), “A Study on Corporate Social
Responsibility and Corporate Advertising Affect Corporate Image and Brand
Attitude Formation”, Korea Broadcasting Advertising Corporation, Advertising
Research, No.61
10. Kim Yu-jin(2012), “Sustainable and Socially Responsible Management on
Film Value”, The Graduate School of Accounting, Hanyang University
11. You Sung-shin(2012), “Research on Effectiveness on Advertising Impact of
Representation Method from Corporate Advertisement : Focus on Corporate
Social Responsibility(CSR) Advertisement”, Graduate School of Industry,
Hongik University
12. Jeon, So-Young(2007), “A Case Study on the Effect of VIP Marketing Seen
through the Prestigious Cosmetic Industry”, The Graduate School of Mass
Communication, Sogang University
13. Jung, Seung-mi(2011), “The Effect of Overseas Luxury Cosmetics Pre-tester
Reviews on Consumer Purchase Behavior”, The Graduate School of Clothing
and Textiles, Sookmyung Woman’s University
Sulwhasoo
14. Korea Health Industry Development Institute(2009)“Cosmetic & Beauty
Industry Data Bank”, Korea Health Industry Development Institute
15. Oh, Dong-Eun(2011), “A Study on the US Consumer’s Purchasing Behavior
in Cosmetics”, The Graduate School of Distance Learning, Sookmyung
Women’s University
16. Gwak, Sa-Yo(2003), “A Study on Purchasing Properties of Men in China
and the Development of Future Selling Market”, The Graduate of Management,
Joongbu University
Books
1. Han, sang-man(2007), "Global Strategy of Sulwhasoo", Korean Journal of
Marketing, October 3week, 187-208
2. Korea University institute for business research & education and The
Federation of Korean Industries(2012), "Corporate management way", FKI
media
3. Song Young-hee and Heo, Won-moo(2008), “A Case Study of Marketing
Communication Strategy of Premium Brand, 'Whoo'”, The Korean Journal of
Advertising, Vol. 19, No.2, pp203 - 220
4. Wally Olins(2006), "On board", Thamas& Hudson
5. Choe, yun-hee(2008), "Modern Public Relations theory", Nanam
6. Shin, yu-keun(1988), "Corporation and Society", Kyungmoon
7. Paul R Gamble, Alan Tapp, Anthony Marsella and Merlin Stone(2007),
"Marketing Revolution : The Radical New Approach to Transforming the
Business, the Brand, and the Bottom Line", Kogan Page
8. Peter Kreuz(2006), “The Law of Future Business”, Book Planner
9. Monthly Magazine “Marketing”(2006), Korea Marketing Association
10. National IT Industry Promotion Agency(2013), “Big Data Will Bring
Innovative Changes in the Consumer and Small Business”, Weekly Economic
Trends, No. 1584
11. Kim, Dong-han (13, February, 2013), "Core platform of BiG Data and
Corporate Hadoop trends", Weekly technology trends
Articles
1. Lee, Seong-Hee reporter (02, March, 2009), “Why Chinese tourist find
Sulwhasoo cosmetics?” , Han kook Daily News
2. Lim, Chi-Hyun(01, November, 2011), “Hong kong’s luxury Hallyu
represent.,Kotra Hong kong Trade Center
3. Seo, Hyun-Sun (the Pacific Marketing part director) (2009), “Success
strategies of the Overseas Pacific and Global marketing strategies analysis –
France, China” / “Global brand strategies and core competencies of cosmetics
market - 「Sulwhasoo」 of Pacific”
4. Kim, Li-Kyung (Osaka Trade Center) (09, November, 2009), “Notice collagen
craze blowing to JAPAN.”, Korea Trade-Investment Promotion Agency
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HOW KOREAN BRANDS SOAR
5. Rural Development green future strategy team (03, January, 2011), “Weekly
Green growth trends”
6. Sim, Hee-Jung, Lee and Su-Min reporter (17, February, 2013), “Increase
eating ‘inner beauty’ products”, Seoul economy
7. Jung, Hyun-Hye reporter (10, January, 2013), “Seo, Kyung-Bae Amorepacific
owner, look over health food market”, etoday.
8. Yoon, Ji-Won reporter (01, June, 2012), “Warring Statesera
ofinnerbeautymarket” , Beauty Han kook
9. Heraldcorporation (25, May, 2011), “Amorepacific ‘Sulwhasoo’ VS LG care
‘whoo’, Who is final winner of China War?”
10. Jung, Goo-Hyun (2008), “Global management of Korean corporation”,
Wisdomhouse.
11. Yu, Ju-Yeon reporter (29, February, 2012), “Being treated Sulwhasoo in
Duty-free shop… Sales doubled every year”, Maeil Business Newspaper
12. Lee, Hong-Pyo reporter (23, May, 2012), “Paradigm to change the world,
‘Big Data’ Hardware vendors ‘promising’”, Han Kook economy
13. Cha, Yoon-Tak reporter (22, March, 2013), “If your company doesn’t want
bankrupt, stand Big Data in SNS”,Maeil Business Newspaper
14. Go, Byeong-Su reporter (28, November, 2012), “’Beauty of
Korea’Sulwhasoo makes sense in USA.,Naeil newspaper.