The Face Shop Success Factors

Contents 1 Cosmetics Industry

Contents 2

Contents 3

Contents 4

Contents 5

Contents 6Contents 7

Domestic market

Success factors

Global Strategy

Strategic Recommendation

Generally, prefer using cosmetics

Low •Low Price:

Outsourcing in manufacturing.•High Price: R&D, Marketing, Distribution channel.

High & Low

* Low Price : Low Barriers to entry* High Price :compete with global company

High

* Low Price: Buyer’s market.* High Price: Brand Power

High & Low

*Supply of raw materials is generally available

Medium

Price

Three Strategic Groups in Cosmetic Industry

Prestige

Premium

Medium

Economy

Position

Brands

Premium

설화수 , 후 , O Hui, 헤라 , AP, EsteeLauder,

Lancome

MAC, Kiehl, Biotherm

Shiseido TSUBAKI

Medium 수려한 , ISA KNOX,아이오페 ,

라네즈 , 마몽드 , 메이블린THEBODYSHOP

Economy

에뛰드 , 이니스프리 ,

라끄베르 , 미샤,스킨푸드 ,

THEFACESHOPTHEFACESHOP 뷰티크레딧 , 잇츠스킨

* Domestic Cosmetic Market Size* Domestic Cosmetic Market Size: $3.79Billion, CAGR 5%5%

* Market share in domestic.* Market share in domestic.

기타37.8%

에스티로더5.1%

로레알4.1%

더페이스샵5.1%

LG생활건강

12.4%

아모레퍼시픽35.5%

* This source from Amore Pacific(2009)

• Domestic Domestic Brand ShopBrand Shop Market. (Red Ocean Market) Market. (Red Ocean Market)

economic cosmetic is popular because of economic economic cosmetic is popular because of economic slowdown.slowdown.

- 2002 April : Open first shop of - 2002 April : Open first shop of MISSHAMISSHA..

- 2003 December : Open first shop of - 2003 December : Open first shop of The Face The Face ShopShop..

Source from 하나금융경영연구소 (2008)

→ → Simplify the existing distribution structure.Simplify the existing distribution structure.

: 5~6 Steps ⇒ 3 Steps(Factory: 5~6 Steps ⇒ 3 Steps(Factory­­ Brand Shop Brand Shop­­ Consumer)Consumer)

→ → Using high quality outsourcing company.Using high quality outsourcing company.

: COSMAX(Supply to LOREAL, Johnson & Johnson : COSMAX(Supply to LOREAL, Johnson & Johnson etc.)etc.)

→ → R&DR&D

: Own R&D center : Own R&D center

Low price with high Low price with high qualityquality

Differentiated Differentiated marketingmarketing

→ → Naturalism Concept Naturalism Concept

: Naturalism Cosmetic⇒ Luxury Image: Naturalism Cosmetic⇒ Luxury Image

(hiding the image of cheap product)(hiding the image of cheap product)

→ → Luxury product containers, Luxurious interior Luxury product containers, Luxurious interior shopshop

→ → Hanryu Star selected a Model of brand for adsHanryu Star selected a Model of brand for ads

: Extending the Asian market : Extending the Asian market

Contribution to improve brand powerContribution to improve brand power

Wide distribution channelWide distribution channel

→ → Has more than 800 StoresHas more than 800 Stores

: Opened more than 800 stores at home and abroad : Opened more than 800 stores at home and abroad in 2009in 2009

(Domestic:650 Stores, Abroad:210 Stores)(Domestic:650 Stores, Abroad:210 Stores)

→ → Various location types of storeVarious location types of store

: Department, Duty free, Roadside shop, major : Department, Duty free, Roadside shop, major supermarkets,supermarkets,

Transfer station.Transfer station.

Value-based consumption& Well-being Trend Value-based consumption& Well-being Trend (external (external factorsfactors))

→ → Diffusion of value-based consumptionDiffusion of value-based consumption

: Maximized benefits from low costs.: Maximized benefits from low costs.

: Economic cosmetic gain popularity from good : Economic cosmetic gain popularity from good quality.quality.

→ → Diffusion Well-being TrendDiffusion Well-being Trend

: natural plant, medicinal herbs etc.: natural plant, medicinal herbs etc.

Cosmetics gain popularity from emphasizing Cosmetics gain popularity from emphasizing natural source.natural source.

☞ Brand shop market is highly competitive.☞ Low barrier to entry☞ cheap cosmetic are negatively stereotyped☞ Big brand want to entry market

Threat

☞ Well-being Trend☞ Value-based consumption☞ increase cosmetic consumption (male, females in teens and twenties)

Opportunity

☞ a specific class of customer (young females in teens and twenties)

☞ Low priced products☞ Difficult to manage the various distribution channel

Weakness☞ Moderately priced☞ Good quality☞ Good product image☞ Various distribution channel☞ a wide selection.

Strength

Lexus/Toyota StrategyLexus/Toyota Strategy

: Need to complement the Weakness: Need to complement the Weakness

: Especially Low priced product, : Especially Low priced product,

a specific class of customers (young females) a specific class of customers (young females)

→ → Launch the Launch the PREMIUM PREMIUM brand & R&D the brand & R&D the PREMIUMPREMIUM productsproducts

: : TARGET over the age of thirties.TARGET over the age of thirties.

: Independent brand without brand image of The : Independent brand without brand image of The Face Shop.Face Shop.

Thank You!