MÔN học ASIAN MARKETING MANAGEMENT MARKETING STRATEGY OF INNISFREE

As living standards in Vietnam grow, Vietnamese consumers arebecoming more aware of personal care and beauty products besides satisfyingbasic needs.. Overview of the cosmetics market Vie

TỔNG LIÊN ĐOÀN LAO ĐỘNG VIỆT NAM TRƯỜNG ĐẠI HỌC TÔN ĐỨC THẮNG KHOA QUẢN TRỊ KINH DOANH

BÁO CÁO GIỮA KỲ HỌC KỲ I / 2022 – 2023 MÔN HỌC: ASIAN MARKETING MANAGEMENT MARKETING STRATEGY OF INNISFREE

Thành phố Hồ Chí Minh, ngày 8 tháng 10 năm 2022

Giảng viên hướng dẫn: Nguyễn Thị Quỳnh Anh Nhóm sinh viên thực hiện: Thổ dân Châu Á

Full Name Student ID Completion Note

Ph m Th Kiềều ạ ị

Nhi

đúng giờ, có tinhthần đóng góp đểsửa lỗi

Nhưng trễ họp

và không tham gia họp nhiều lần

Hà Nguyễn Vân

hạn, nhưng bài hay lạc đề

deadline, không nộp 1 deadline, nhưng bù lại có đóng góp trong các cuộc họp

Bùi Thị Phương

Uyên

làm bài cẩn thận,hay góp ý trong cuộc họp

Võ Nguyễn Ngân

Uyên

trách nhiệm cao, hay bị gọi làm bài đêm

chuẩn hay, nộp bài đúng hạn

I EXECUTIVE SUMMARY

Innisfree is a cosmetic brand[1] established in 2000 under the Korean cosmeticsgroup AmorePacific The name of the brand is inspired by the poem The LakeIsle of Innisfree which means "an island for the skin to rest" This is one of thefew Korean cosmetic brands certified by the French organic certificationorganization ECOCERT Innisfree's brand concept emphasizes nature,especially related to Jeju Island, Korea It is this idea that has given Innisfreemany unique positions in the hearts of consumers in the global market Sincethen, this brand has reported sales of more than 140.5 billion Won (2011)Innisfree was officially present in Vietnam in October 2016, after nearly 5 years

of accompanying the Vietnamese beauty community, Innisfree currently has 21stores in 6 major cities The brand receives support from a large number ofyoung people and cosmetics-loving consumers across the country Innisfreealways works to bring the healthiest and most natural beauty to users They arecommitted to using only all-natural ingredients in Jeju Island to try to preservethe skin as well as the environment to the fullest Innisfree's products are alwaysfamous for the most nutrient-rich lines today

Competitors with innisfree mostly come from foreign brands such as: The FaceShop, The Body Shop, Etude House, Laneige In the future, the market willcontinue to expand and the level of competition the higher the increase It isalso a big challenge for Innisfree when it has to compete with big brands in theindustry and also an opportunity for Innisfree to assert its brand in the cosmeticmarket Innisfree's main and direct competitors in Vietnam currently have twobrands The Face Shop and The Body Shop

Innisfree will still maintain marketing and sales campaigns for the year 2023

to implement this campaign to increase sales and visibility in the media duringTet The campaign includes many activities such as advertising, salespromotion, communication, digital marketing, and e-commerce and will beimplemented from November 22, 2022 to January 21, 2023 Most of theexpenses are focused on advertising with short films during Tet and salespromotion to promote sales activities on multi-distribution channels The centralmessage of the film is that everyone should overcome their fears to feel that Tet

is the most beautiful and meaningful time On difficult days, it is important tochoose the most joyful and meaningful path to take

II.Situation analysis

2.1.Market summary

Vietnam’s cosmetics market is rather young, yet is one of the most dynamic inthe region As living standards in Vietnam grow, Vietnamese consumers arebecoming more aware of personal care and beauty products besides satisfyingbasic needs

Cosmetics products are a big business in Vietnam The industry is boomingthanks to a large number of Vietnamese consumers investing in personal careand beauty products given higher living standards

Vietnam has risen to a middle-income from a low-income country, with anincreasing middle-income class who are allocating more of their income tocosmetics products A middle-class female in Vietnam spends an average ofVND 450,000 – VND 500,000 (US$19 – US$21) monthly on makeup andskincare

Growing disposable income, evolving beauty standards, the spread of socialmedia, and the Korean wave all contribute to the soaring demand for beautyproducts in Vietnam.

South Korea is renowned for its skincare and makeup regime Korean idols andinfluencers add fuel to self-care trends in Vietnam through social media,campaigns, advertisements, and beauty blogs Moreover, greater financialindependence for employed women in Vietnam has driven their demand forbeauty care while evolving beauty standards has led males to pay more attention

to grooming

Since 2018, the percentage of women in Vietnam using cosmetics has climbed

up from 76 percent to 86 percent In the next decade, Vietnam’s cosmeticsmarket is projected to witness a growth of 15-20 percent annually

Vietnam’s skin care product market size totaled in value at US$850 million in

2019 and is anticipated to reach US$1.9 billion by 2027, indicating a CAGR of11.7 percent during the 2021-2027 period

Overview of the cosmetics market

Vietnam is a hotspot for foreign cosmetics brands with up to 93 percent ofpersonal care products imported South Korea is the dominant cosmeticsexporter to Vietnam, followed by Europe, Japan, Thailand, and the US

Source: US Department of Commerce

Other exporters of beauty and personal care include Singapore and China.Meanwhile, domestic brands only represent less than 10 percent of totalconsumption Domestic brands mainly focus on affordable, lower-end productsthat compete on price

Foreign players’ dominance in the market is mainly due to the Vietnamese’spreference for imported products Vietnamese consumers perceive foreignbrands as having higher quality and a wider variety of products that can cater toindividual needs

Vietnam’s importation of beauty products was worth around US$950 million in

2019 The most prominent imports include facial cleansers, facial moisturizers,lipsticks for women, and grooming/shaving products for men

The opening of various retail chains like Watsons, Guardian, and new playerslike Pharmacity and Matsumoto, has increased the reach of imported cosmeticsproducts to middle-class and affluent consumers in Vietnam

Meanwhile, recognizing the potential of the young, yet budding market ofVietnam, major and high-end foreign cosmetics companies have either openedrepresentative offices or sold through agents and distributors such as:

Unilever: constituting up to 12 percent of the market, famous brand: Pond’sBeiersdorf Vietnam: Nivea

LG Vina Cosmetics: Ohui (high-end), The Face Shop

AmorePacific Vietnam: Laneige, Innisfree

L’Oreal Vietnam Co Ltd: L’Oreal

Some domestic brands like Thorakao, Saigon Cosmetic, Lana, Sao Thai Duong,and a new player, Cocoon, have gained some degree of reputation.

Revenue of the cosmetics market in Vietnam has been on a steady rise for allsectors since 2019, with implications for 2023

Opportunities and challenges for new and current players

Vietnamese people are becoming more health-conscious, and are paying closeattention to the ingredients of beauty products in the market This has opened upnew opportunities for cosmetics companies wishing to extend beyond theircurrent scope or newcomers wishing to enter Vietnam’s cosmetics and personalcare market

Investors should look to domestically produce and distribute organic beautyproducts for two main reasons

First, Vietnam has relatively cheap organic and herbal ingredients that can servebeauty products Coconut is one such ingredient that is abundant in Vietnam’sMekong Delta region and is an essential element in many beauty products.This is followed by turmeric, green tea, and aloe vera, three native ingredients

in Vietnam with healing properties for damaged skin Overall Vietnam is native

to a wide range of organic ingredients – a good foundation for businesses thatwant to develop organic products domestically

Secondly, the local consumer mindset is changing, with exceptional concernabout the quality of personal care products, especially for Generation Z Hence,organic and herbal products are likely to see immense growth in the beautymarket Big players are already making the change L’Oreal, the market leader,has launched their popular Inoa hair dye which they claim to be oil-based andammonia-free while Nivea by Beiersdorf has also introduced their naturalskincare line

Yet challenges remain One big hindrance is that the cosmetics market inVietnam is rather young and unstable One big driver behind the high demandfor cosmetics products is the Korean wave However, Korean trends alternateradically from time to time, which has made the cosmetics market in Vietnamvulnerable to instability Besides, the cosmetics market is also significantlyinfluenced by Korean celebrity endorsements Endorsing one product overanother carries weight and influences the sales of products, adding to acompany’s challenges.

Another challenge in the market is that it is highly price sensitive Since a largeproportion of consumers are young people with a lower income, they tend to gofor products of the lower end rather than high-end products To compete, it isimportant that cosmetics and personal care companies set their price range asclose as possible to the buying power of Vietnamese consumers

Vietnam’s cosmetics market also holds challenges for Western brands due toconsumers’ stereotypes Consumers believe Asian-made products are a bettersuit for their skin type than European-made products owing to physicaldifferences

However, the problem can be alleviated as long as Western brands show astrong commitment to quality since Vietnamese consumers are more concernedwith quality ingredients

2.2.SWOT analysis

Strengths

Low and middle price – Innisfree products are in the low to moderate pricerange This range includes a wider range of customers Thus, they attract awider segment by pursuing such a pricing strategy Surely, their pricing strategyhas some drawbacks, but it corresponds to their product offering

Eco-friendly campaigns – The eco-friendly campaigns contribute to building animage of a green company They use the goods of the environment and giveback to the environment They contribute to the community and try to make theenvironment better Tree-planting campaigns and charity programs are livingproof of that.

Organic ingredients – Using ingredients of organic origins adds to theirreputation and the trust of customers When the company uses naturalingredients, they earn the trust of customers as a brand with natural products

Weaknesses

Low brand recognition – Despite their natural products and their unique origin,Innisfree does not enjoy the recognition they deserve If we compare the brandwith others, it is not well recognized This is because they concentrate onspecific markets

Low diversification of markets – Innisfree is now present in Asian and NorthAmerican markets This fact limits their growth opportunities Brandrecognition also suffers because of its limited presence

Opportunities

Territorial expansion – As we already mentioned, Asia and North America arethe only markets in which Innisfree operates If they expand to Europeanmarkets, they will have more opportunities for scaling Their pricing strategywill help them establish their place in new markets quickly

Strengthening brand recognition – Innisfreecan improve its brand by investingmore in marketing and advertising it as a global brand Market expansion canhelp achieve this milestone.

Threats

Substitute products – Substitute products with similar functionality already exist

in the market With the emerging trend of using skincare products of naturalorigins, they have many competitors More recognizable brands also use naturalingredients and capture potential markets of Innisfree

Product development cycles – Innisfree uses unique natural ingredients in itsproduction This results in a longer product development cycle; longercompared to competitors By the time, they are ready to introduce new products;strong competitors enter the market and capture them quicker

2.3.Competition

1 The Face Shop

1.1 SWOT

Strengths - High brand awareness: 15 years of existence and

more than 66 stores in the Vietnam market.Known as a safe, benign and skin-friendlycosmetic brand

- There is a wide range of products to meet thebeauty needs of women from head to toe: bodycare products, skin care products, skin cleansingproducts, makeup products

- Each type of product has many different lines thatspecialize in each problem: whitening,moisturizing, anti-aging…

- There are several skin care products for men

- The ingredients of the product are all derivedfrom nature: rice bran, palm fruit, olives, coal,mud and seaweed and many years old ginseng

- Products of The Face Shop brand always adhere

to the 7 "NO" rule: No Parabens, No Colorants,

No Animal Ingredients, No Paraffin, No TalcPowder, No Polyacrylamide Most of theproducts are extracted and keep the essence fromnatural ingredients that are safe for the skin

Weaknesses

- Distributed in many markets (22 differentcountries), so some small markets are not fullyfocused

- There are few campaigns

- Because it is extracted from natural ingredients,the effectiveness of use is still slow

- There are no special products to treat complexskin problems, not suitable for severelyproblematic skin

- Because there are so many products in manycategories Therefore, the products are not evenlydistributed in terms of quality, there are someproducts that are not outstanding

- Makeup products are not widely known andtrusted, the price is still quite high

- Consumers in the Asian market, especially inVietnam, prefer Korean cosmetics This is a goodopportunity for the brand to expand its business

- People are more and more concerned about theenvironment and health, they tend to usecosmetics derived from nature, which are friendly

to the environment

Threats

- Large number of competitors and substitutes inthe market, typically brands: Innisfree, The BodyShop, Skin Food, Laneige…

- There have been many fake and imitation goods

on the market, affecting the reputation of thebrand

- Many consumers who are impatient with the sloweffectiveness of natural cosmetics have turned to

US and UK products like Estée Lauder, Clinique,Murad… or products with treatments likeRetinol, AHA, BHA, Niacinamide… This is also

a new trend among consumers and isrecommended by dermatologists to promote skinimprovement

1.2 The Face Shop's latest campaign

“Jiku Festival - Make the Earth Healthy”

Time: July 08, 2022 - July 28, 2022 (3 weeks)

Describe: This is a campaign to encourage replacing everyday products

and actions that harm the environment with healthy, environmentally

friendly products and actions, aiming to join hands to protect the earthand make the earth healthier.

Participants completed 3 different missions in 3 weeks

- [Week 1: Eco Bag Mission]

Message: Instead of plastic, make our planet healthier with eco

- [Week 3: Walking Mission]

Time: 22/07/2022 - 28/07/2022

Message: Instead of cars, we make the earth healthier by walking.

III MARKETING STRATEGY

3.1.Objectives

-Increase visitor numbers to the website about 30%

-Improve brand recognition by 25% amongst the 15 – 30 age group

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

-Increase sales of existing products by 20% with 30% profit

-Increase market share from 20% to 2.5%

-increase 10% of new customer

-increase retention rates of customers from 25% to 40%

- Gender: Mostly female

- Education level: Graduated from high school and already had a job

- Marital status: Students and married women

- Who they trust: People whom they know that already use the product,online feedbacks from previous customers, beauty bloggers,

- What they watch: Product reviews on social platforms: Facebook,Instagram, Youtube, TikTok, product advertisements,

Segment:

Women always want to be pretty People in their 16s or older are always in highdemand for beauty, financially affordable since this is not a very expensiveproduct, and have conditions for understanding and awareness of the role ofbeauty in their life

Women in urban areas are more likely to use cosmetics, more diverse and moreoften Therefore, we choose women in the biggest city of Vietnam: Ho ChiMinh city to be our target customer They have higher incomes,their jobsrequire them to meet and communicate with many people, so they have the needand ability to regularly use all kinds of makeup products, including cushion,powder, concealer, etc This is a market segment that has huge potential forInnisfree as well as other cosmetics

Innisfree’s main target customers are young people who come from 16 to 30,which account for 45% in total (United Nation, Department of Economic and

Social Affairs in Vietnam, 2015) More specific, Innisfree divides into 2 maingroups:

- College students from 16 to 20: They prefer low-cost but high-qualitycosmetic products because they have a low income Their shopping habits aresituational or ever-changing They are willing to wait until the last minute,especially during the holiday season, and then rush around frantically tocomplete all of their shopping in one go Furthermore, college students almostnever shop alone

- Young people from 21 to 30: This customer group has a higher expectationthan college

students because their job characteristics always ask them to wear makeupbefore leaving home Besides, with the age from 18 to 30, those are startingtheir career with low and middle income Therefore, they would rather havemid- priced products but high quality Their shopping habit has two maincharacteristics:

+ The Mall Linger: they take time going through a store

+ Scavengers: these shoppers consider shopping as the combination betweenpurchase and entertainment They tend to make numerous unplanned purchases

Competitors:

Small cosmetics stores and online shops that use social media: these shops are opened by individual retailers who import a variety of products and sell them at lower prices The majority of them are low-recognized or hand-carried products from various countries There is no guarantee about the quality of the products sold

in these shops because they are unregistered They can mix fake and branded products, leaving customers perplexed whenever they buy them

● In its 2,500 franchised stores across 61 countries, The Body Shop offers over

1200 products, including cosmetics and make-up

● Laneige: As one of the most luxurious cosmetic brands, Laneige focuses on professional, natural, and strong women

● Etude House: Amore Pacific launched Etude House in 2005 Etude House currently has over 200 branches around the world When entering the Vietnamese market, The Face Shop, The Body Shop, Laneige, and The Etude House positioned themselves as mass and premium brands with target customers in the middle and upper income brackets

Message from Innisfree:

Innisfree is taking action every single day Not only do we strive for your skin, but

we are also taking action to bring sustainable beauty value to the environment Not only are the prices right for the majority of consumers, we are also committed to the quality of the products that have been, are, and will be increasingly improving.

3.3.Consumer Insight

After collecting data about customers, Innisfree identified its target customerfile as young women in the range of 16 to 30 years old The brand has observedcustomer behavior and found that, at that age, women are very interested inbeauty and skin care products and natural ingredients And most of them belong

to sensitive skin types and acne skin and most of them are irritating and causingdiscomfort, harm to the skin when using normal cosmetics They often look toproducts that come from nature But those products make the skin peel and red,natural cosmetics containing ingredients from lemon and tomato will be highlyacidic, making the skin allergic and quite strong They also often listen to advicefrom consultants and when they use quality natural cosmetics with high naturalingredients that are good for their needs, they are often loyal and do not change

to other brands

3.4 Brand positioning model

Hình 10.1: Brand key

3.4.1 Root Strengths

Innisfree is a brand of natural cosmetics Pursue a green life, where freshnature and healthy beauty coexist in harmony The brand's goal is to usenature's purest ingredients to create beauty products that are healthy andharmless, yet maintain the balance of nature

3.4.2 Competitive environment

Currently, the Korean natural cosmetics market segment is extremelylarge and fiercely competitive Innisfree competes directly with manyfamous brands such as: The Face Shop, The Body Shop, Laneige Inaddition, the brand also has some indirect competitors such as: vegan

products, handmade products , or local brands of cosmetics extractedfrom natural ingredients of each country such as Cocoon

3.4.3 Target

Innisfree's target audience is mainly female from 16 to 30 years old.Having occupations as high school students, college students, commuters,office workers Live in urban or big cities and have an average income of

5 million or more People who love mild Korean natural cosmetics andcare about the environment

3.4.4 Insight

Consumers care about the safety of both themselves and the environment.They want a gentle product, extracted from natural ingredients, but theprice must be affordable Above all, it should be a big and reputablebrand, with official stores or websites

3.4.5 Benefits

Innisfree offers a wide range of skin- and environment-friendly cosmeticproducts at reasonable prices The product is gentle and easy to use, thebrand also has many types and product lines that are diverse according tothe needs of consumers The environment is also a factor of concernthroughout the operation of Innisfree Customers feel secure when usingInnisfree's products because of the brand's existing reputation

3.4.6 Values, Beliefs & Personality

With the slogan of “Clean Island, where clean nature and healthy beautycoexist happily", Innisfree is a naturalistic skincare and cosmetics brandthat is a strong advocate for environmental preservation and sustainableresourcing to protect both nature and people

3.4.7 Reasons To Believe

Innisfree is Korea's first natural skin care brand, founded in 2000 Thebrand always fulfills its commitment to the natural ingredients of its

experience from the outside image to the quality inside the product Notonly do they use natural ingredients, they are also committed to reducingtheir carbon footprint They carry out a campaign to recycle bottles anduse environmentally friendly packaging As of 2015, Innisfree hasrecalled 9,723,534 used bottles, in the Korean market only, for recyclingpurposes.

3.4.8 Discriminator

Innisfree's skin care products are formulated with an average of 80%naturally derived ingredients of clear origin on the fresh and protectedJeju Island Jeju is a volcanic island of Korea blessed with fresh air, warmsunshine, fertile soil and clean, pollution-free water This is a UNESCOWorld Heritage Site You will find countless varieties of mandarin,volcanic clay, soybeans, camellia, green barley and green tea and manyother pure and natural ingredients on Jeju Island in Innisfree's products

3.4.9 Essence

Growing from nature, innisfree also repays Mother Nature with thepromise of: Keeping the environment green: contributing to reducingcarbon emissions into the environment

Natural ingredients: an average of 80% is extracted from nature in skincare products

Charity: give at least 1% annual benefit to neighboring countries

3.5.Strategies:

3.5.1.Product:

Innisfree puts a lot of effort into its product diversification strategy Its productsvary in both design and price In Vietnam, each product costs between 200,000and 900,000 VND Innisfree also gets help from the Technology ResearchInstitute of its "parent" company, Amore Pacific, which has led to breakthroughtechnologies like Fresh Green Tea Water 2.0, and Biotechnology- conversion on

ginseng The company has used these technologies in its product lines Thecompany currently has many different product lines, the most popular of whichare: Green Tea Line, Volcanic Line, Line Bija, and Truecare Product Line.

The most noticeable difference is that Innisfree works extremely 'hard' toresearch and invest in technology in order to fill their product lines However,the core ingredients in the products are all inspired by the source of ingredientsthat the company has pursued since the beginning, Only Green Tea Line, whichhave four types, indicating that Innisfree follow the Line filling strategy:

-Line filling: each product line of innisfree will have many different productsthat apply different uses

For example: Green Tea Line products we have: Innisfree Green Tea Fresh,Innisfree Green Tea Balancing, Innisfree Green Tea Moisture, Innisfree TheGreen Tea Seed

With Skin care products, Innisfree focuses on pleasing customers with newmakeup products that can satisfy the needs of many different customer groups

In terms of product packaging, they always maintain the Innisfreecharacteristics, and they are always focused on the brand's 'green' product

Their packaging design will usually follow these rules:

● The dominant green color helps people feel comfortable

● Minimalist design, slightly oriented towards close nature

● Usually emphasizes product or ingredient features

● Plastic bottles are easy to carry around, travel… avoid breakage

market and draw customers away from competitors The idea behind penetrationpricing is to use a low starting price to get more people to buy a new product.The goal of market penetration pricing is to get customers to try new productsand get a bigger share of the market so that when prices go back to normal, thecompany will still have customers This pricing method is used by online newssites that give registered users a free month of service and by banks that givenew customers a free account in half a year.

First, Innisfree's cheapest product line will be advertised to raise people'sawareness of the brand and draw customers' attention to low-priced productsand average in the first 6 months

Innisfree will also set the prices of its products so that they are similar to theaverage prices of products in the market it enters to meet the needs of localpeople All of the items cost between 150,000 VND and 880,000 VND

3.5.3 Place

Concerning Innisfree's marketing strategy for the distribution system, this brandhas built a wide distribution system in supermarkets, trade centers, andauthentic stores

GT channel:

Kios to show people products they can try and give them free samples to trySmall cosmetic shops in the market help to reach almost all customers Retailstores are given enough information to give to customers, which helps productsbecome popular and sell quickly

This is how 20% of the share is thought to come from procurement Because ofthe problem of counterfeiting, people tend to trust official locations or well-known distribution stores more than retail stores in the market

MT Channel:

First, Innisfree uses big shopping malls like Vincom, Aeon Mall, SC Vivocity,etc to reach young people and people interested in natural products, who are its