1) Is the cosmetics industry an attractive industry to be expanding in globally? Why or why not?
- First off, the global market size of the cosmetics industry is very huge. It says, by 2004, the global personal care market amounted to $150B and among them, cosmetics including skincare, fragrance and make-up accounted for 46%, which is around $70B. (Domestically, AmorePacific had sales of around $1B in cosmetics and toiletries)
- Growth Rate, (worldwide)
→ Though it doesn’t achieve the double digit CAGR(Compound Annual Growth Rate), cosmetics is expected to be in gradual increase rate, growing faster than the global GDP
2) How would you evaluate AmorePacific’s strategy to date? - It has been gradually and successfully expanding from local to global as a cosmetic company
To increase overseas market share and brand equity, AmorePacific has taken some important strategies
1) Masstige & Prestige brand strategy in overseas market 2) High R&D investment
3) Local sales strategy in overseas market
- The head of overseas local corporate of AmorePacific is native women
3) In your opinion, which of the three countries under consideration for expansion (i.e., France, China, and US) offers the highest returns relative to the additional resource and managerial Investment required?
- It is definitely not US. Sales in US is quite low compared with those in France and China. Moreover, AmorePacific invested $6M in US
- So, now France and China
In sales, it shows the highest in France but, AmorePacific invested $20M for the local plant in France, while $5M in Shanghai of China.
And also Premium brand & High Price strategy in China and “Hallyu” marketing with Korean celebrities and idol star are increasing ROI.
And OEM-centric strategy in France, it...