Running head: innisfree marketing plan1
Innisfree Marketing Plan
Linh Thi Thuy Pham
California International Business University
Marketing course
CIBU 629
Instructor: Prof. Julie Ensign
August 15, 2016
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.
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 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:
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
Low and middle price
Use of Eco-friendly campaigns
Organic ingredients
Recycle containers
Weaknesses
Low recognition of brand
Low and middle price but it is still expensive for low class
Opportunities
-Foreign brand cosmetics account for 90% and the domestic one is only 10%.
-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.
Threats
-High power of substitute products with similar functions
-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.
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.
PricePriceIn 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 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 PricePricestores respectively.
Price
Price
Price
Price
LLHighHighF: The Face ShopB: The Body ShopE: Etude HouseL: LaneigeF: The Face ShopB: The Body ShopE: Etude HouseL: LaneigeFFBB
L
L
High
High
F: The Face Shop
B: The Body Shop
E: Etude House
L: Laneige
F: The Face Shop
B: The Body Shop
E: Etude House
L: Laneige
F
F
B
B
EeeeeeeEeeeeee
Eeeeeee
Eeeeeee
Market share Market shareLowLow
Market share
Market share
Low
Low
As can been seen from the chart, if Innisfree enters Hanoi market, it seems that Innisfree has a little competition with these mass and premium 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
- 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.
+ 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 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
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
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 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)
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
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
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