MA Design Management for Fashion Industries Name: Leone Euro Shining Course: Fashion Brand Marketing Course Leader: Anna Watson Case Study: Chinese Herbal Medicine Cosmetics brand, Herbalist Topic A International Marketing Strategies of Herbalist Abstract This paper attempts to investigate the internationalization process of a Chinese domestic cosmetics brand, Herbalist by making a comparison of marketing strategies applied for different countries as a case study.
In addition, by gaining understanding on the development of a local brand and analyzing the issues, which block the way or business expansion, suggestions are made for the exploration of future potential out in the form of a questionnaire conducted by 100 local and Malaysian Chinese. Besides from that, secondary data are taken from Internet and based on literatures published in English and Mandarin.
The crucial steps for a domestics brand to enter the international arena is by utilizing different or undifferentiated strategy, reinforcing the innovation of Chinese oriental essence and also enhancement on brand awareness. Keywords- Oriental, Domestic cosmetics, International marketing strategy, Market entry, Brand story, France, International business, Marketing Channels 1. Introduction In recent years, it is obviously seen that there is a thriving and robust tendency in Chinese cosmetics market, which is one of the fastest growing industries in China.
Chinese cosmetics industry is prospering with each passing day and China is positioned on the third biggest cosmetics consuming market in the world while Japan and United States are stationed on the top and second. Observing the Chinese local cosmetics industry in recent years, the sales has grown at a remarkable rate, averaging near to 20% per annum and the speed of growth ever reached to a peak of 41% which is far more exceeding the rate of the average growth of national economy.
The full-fledged of Chinese local cosmetics in domestic market, in the mean time, accelerating the pace to open the windows of international market. By keeping an eye on this remarkable development, more and more Chinese local cosmetics companies have noticed the hidden market of various business chances and proceeded differentiated brand position and applicable marketing strategies to achieve internationalization. Herbalist is one of the exemplary examples.
As they eve already gained favorable outcome in European market, perhaps it is the right time for a deep consideration to focus and improve future brand expansion towards other countries such as Malaysia, Singapore, Thailand and some other countries in South East Asia, which tend to awake in traditional Chinese medical science. This study analyzed the current status of Chinese local cosmetic industry and the bottlenecks of initialization, which is the advanced stage of domestic brand expansion.
By acquainting the oriental characteristics of Herbalist, at the same time examine different models imposed in different countries as an example of imperative study. The aim of this thesis project was to increase brand awareness, strengthen the competitiveness in international cosmetics market by emphasizing the uniqueness of Chinese herbal organic essences and the inheritance Asians beauty, provide valuable marketing strategy for Herbalist’s worldwide market expatiation and reinforce the strain mode. 2.
Background of the brand “Jaw” company, was established in 1998. Jaw has a history of more than a hundred year as the leader of worldwide herbal medicine personal care brand (Shanghai Jaw, 2013). The brand is based on traditional Chinese medicine and rebel science, and has retail sales revenues of over $mum (A. T. Carney). Herbalist is noted for its distinctive with a consolidation of traditional Chinese herbal essence with cutting edge biological cosmetics science to form a natural and balanced ideal state. Lapboard,2010) The mystical and harmonic of Chinese herbal plants is fully shown by altering all these valuable plants into a new series of natural extracted organic herbal skin care products and thus has become the legendary of herbal beauty care. Ever since their establishment, Herbalist has been encouraging the concept of being environmental-friendly. The company is advocating the natural beauty, which is gifted from the mother earth and proposed their specialization in fusing the elementary inner energy of Chinese medicine into a miracle beauty essence.
Herbalist has more than 200 star products which include hair and body care, herbal skin care, hands and feet line, acnes treatment, aromatherapy oils and perfume. The target consumers of Herbalist is female from the age of 25 to 35 years old who has a demand for individualized healthy beauty. The first exclusive Herbalist store was opened in August 1995 at the Honking Plaza (Kelvin Chou, 2011), Shanghai and experienced a great success in Chinese market by introducing the market its brand- new green herbs high-end beauty care products.
By setting green, fresh, organic and healthy as its brand image, the company has won a great reputation as well as leading the trends of Chinese cosmetology. After spending five years in launching the countrywide franchise system, the sales mode was further expanded and established it first and second exclusive store in Honking, which is the symbolic of their first step of nationwide operation. Furthermore, Herbalist SPA center was established on 8th September 2002 to provide professional and contemporary Chinese herbal care services their PIP customers who tend to be more beauty-conscious.
There is no doubt that the total amount of 100 exclusive stores until January 2005 proved to be a triumph of this first full sense of Chinese herbal beauty products. Figure 1: Herbalist’s Channel Mode In February 2006, Herbalist was awarded the Chinese most creative products award in consumable field, which was indeed a huge motivation for the company to introduce the oriental traditional culture to the international mainstream cosmetics industry (Oliver, 2013).
The company was successfully found the entrance into the cosmetics market of Paris which rose a huge trend of Chinese herbal cosmetics fashion and launched their skin care products formally at the Sphere flagship store, which is located in Avenue des champs Ulysses, Paris in September 2008 and surprisingly it became the top 10 best seller in one month time. Meanwhile, Herbalist succeeded in its entry into Holland market in October 2008 and aroused the awareness on Chinese Yin Yang philosophy for European media and the importance 2009, which leaded the entry of Herbalist to Italian, Spanish, Polish and Turkish racket with Seaport. . Literatures reviews Still the trend towards internationalization of those ambitious entrepreneurs who attempt to enlarge and extend their business continues in order to raise the brand recognition from worldwide industry. Therefore, it is necessary for the marketing department to conduct marketing researches for data collection and it is important to utilize a customized marketing plan for different countries. (Estate, M. I Helsel, K. 007) defined customization refers in the context of international marketing to a country-tailored product strategy which focuses on cross-border differences in the deeds and wants of target customers, appropriately changing products in order for them to match local market conditions. Therein, customization follows a market- driven orientation (as supposed to a product-driven orientation) and aims at increasing customer satisfaction by adapting the company’s products to Lola needs. The best marketing strategies are those that are simple and easy to understand, complication of the plan will lead to failure.
One of the other major dangers of any planning process is that once a plan is produced and implemented, the organization often fails to continue to monitor how well it is performing against that plan. Very few businesses perform exactly to plan without the need to make small changes all the time(Tim Jackson and David Shaw, 2009). It comes to the conclusion that it is important for the brand leaders to acquire cultural knowledge instead of feeling anxious about the research on the traditional consumers.
According to (Ralph et al. 2009), to succeed, cultural brands must reflect an appropriate market and develop a product’s identity. They must also be consistently reinvented when the marketplace changes as a reflection of popular culture. The marketplace determines the eventual success or failure of any brand. . Methodology used The primary research used for this case study is a questionnaire survey conducted by 100 respondents from Malaysia.
The objective of the survey is to investigate and carry out deeper market research on Herbalist’s potential market in South East Asia since this brand already has a customer base in China, French, Holland, United States and some other western countries. The survey was conducted in November 2013 and it took one-week time for the data collection process via www. Surveying. Com. The results of the questionnaire are attached on the appendices with a brief analysis low the charts.
There wasn’t any problem in language issue since the majority of Malaysian is to collect the background information of the respondents and to monitor their buy habits on cosmetics. On the other side, the second part is to figure out their attitudes towards cosmetics, which use the traditional Chinese herbal medicine as ingredients. The survey aims to suggest a potential market for Herbalist for future business expansion by using Malaysia as an instance and it is a reference for the marketing department to customize a specific marketing plan for the South East Asian market. . Set of case example Herbalist’s marketing strategies in China High-end SPA centre: Besides from setting up cosmetics counters at department stores, Herbalist SPA centre was established since September 2002 exclusively for the PIP clients and members to raise brand loyalty and attempts to be influential in the cosmetics market. Apart from that, the professional and revolutionary beauty care services provided by the well-trained beauticians have successfully built up a high-end luxurious image for the brand, thus increased the brands reputation.
Herbalist seeks to expand its business model by opening more that 100 Spa centre n these three to five years. Membership and after sales service: Herbalist has been really busy with the welfare of the clients. There is no doubt that the membership system is the most efficient way to have a close connection with targeted consumers. In order to be closely linked with the consumers, the company is running the membership system in China by using e-commerce online websites, postage, related magazines, PIP parties, bonus points gift redemption to keep the consumers up-to-date on their latest released products and maintain brand loyalty.
Besides that, Herbalist made a full analysis of he questionnaires conducted via the CRM database to get customers’ feedback for further improvement. Perfect CRM system: Under the circumstances of having a strong capital base, Herbalist developed the most detailed marketing department, the most complete CRM system and the finest brand managers. The marketing department is divided into four segments, which are the product development department, the CRM department, media communication department and the brand department.
The reason why Herbalist in China is having the different operating and marketing system with the other countries is because of China is the main base for the many and the consistency of products resources needs to be guaranteed. Besides that, the first chef designer for Herbalist was Borneo last year in China and was given the power for interpretation, products orientation, product line design and channel negotiation. Herbalist’s marketing strategies in France Cabinets display design: Unlike the other cosmetics department stores in China, the fragrances and the second advantageous space are for skin care products.
However, the amount beauty care products in French market are far more than in China, which is a big threat for Herbalist. In order to stand out itself among all the competitors, the company did a huge investment on the cabinets display and employed a group of well-trained French people as their sales team. The exclusive sales team is responsible to petrol at Seaport every few hours, by explaining the functions and brand concepts to clients face to face in order to shorten the distance with consumers.
Expressing cultural advantages: The obvious contrast between the cultures of East and West is one of the obstacles for the company but on the other side, it is actually a decided advantage for the brand itself. The reason that Herbalist seems extraordinary comparing with the other competitors is because of the oriental cultures difference. The efforts need to put on to achieve the mission of raising a trend of Chinese herbal medicine in Europe is not only an empty talk for the oriental cultures, but the effectiveness of the products and the brand images.
Till now, Herbalist owns more than 200 beauty care products in the company’s rich products line to provide a multiple selection for the French market to meet with every consumer’s needs. Moreover, the Chinese herbal medicine laboratory and research enter ,which costs more than ten millions Yuan assures to provide unlimited resources for the market needs. Price strategy: Herbalist positioned itself as a high-end cosmetics brand during its entry to France.
By cooperating with Seaport the well-known cosmetic chain store as a springboard, the selling price of Herbalist’s products is maintaining the same as the selling price in Mainland China. The reason to maintain the same price is to wrap up the brand itself as the cheapest luxury cosmetics brand comparing with the other international brands such as Lance and Esteem Lauder who have successfully aimed brand loyalty in the market. However, in order to be distinctive from the company’s main competitors, the company is using the opposite strategy in the United States (Dennis Dock 2000).
To beat down the Herbalist’s main competitor The Body Shop and Skill’s, which are renowned for using organic ingredients for personal care products as well, the company is selling their products in the same price as Bothers, Clique and some other luxury skin care brands to increase their brand values. 6. The SOOT Analysis of Herbalist SOOT analysis (alternatively SOOT Matrix is a structured planning method used to valuate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture.
It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective (SOOT analysis, 2013). Strengths: well as the establishment of Herbalist membership to keep a good connection with customers. SO: The first premium brand of modern Chinese herbal medicine middle to high-end cosmetics into the European market. SO: Reasonable sales channel: exclusive stores + SPA *Shopping malls sale mode, satisfying consumers by all needs.
SO: Effective improvement on customer communication and the most professional marketing management. SO: Still undergoing youth period, gains powerful supports from Schwa’s professional research and development team. SO: Succeed in the expansion to European market by maintaining a close partnership with Seaport. SO: Left a clear brand image to consumer: organic, healthy, natural Weaknesses: WI : Inadequate experience during the process of initialization. WWW: Consumers overseas seems unenthusiastic in accepting a new brand due to the shortage of rand awareness.
WWW: Undeniably, cooperation with Seaport has its own advantages however being controlled by Seaport since it is the only distributor in Europe. Therefore, it caused various limitations for the brand itself. Opportunities: 01 : The brand continues to thrive in European market under Seaport’s leadership. 02: There are not that much of foreign competitors in the cosmetics field who use Chinese herbal medicine as their selling point. 03: Asia Pacific and Latin America’s growing demands on cosmetics and the prevailing of green and natural products in Europe. : The accomplishment of 2008 Olympic in Beijing was extraordinary and successfully absorbed Westerners’ attention on Chinese traditional elements. Threats: TTL : Tough competition in this field with lots of well-known international cosmetics brands such as LanaГ¶me, Esteem Lauder and Christian Dior as competitors. TO: Seaport’s ultimate controls hindered certain brand innovations. TO: Most of the consumers in Europeans have the tendency of having brand loyalty to some brands that are already existed.
It is demanding to seek for foreigners’ attention as herbal products usually take longer time to prove for their good effects. TO: The world financial crisis leads to the downturn in sales, the price factor has became one of the consideration for consumers before purchasing. TO: There is a serious issue that most of the Europeans left a bad impression on any ‘Made in China’ products. Eliminating the bad reputations on Chinese made products in international markets is indeed a decisive step towards the survival in the market. . Conclusion & recommendations The study objective of this case study is to gather and analyze the merits and demerits of Herbalist, a Chinese local cosmetics brand and suggested relevant and effective marketing strategy for the further expansion to other countries. Looking from the perspective of economic, internationalization is undeniably a crucial step for dominant position in the world market need to conduct a detailed and complete research within other countries in order to internationalism successfully.
Due to the similarity and dissimilarity between China and the other countries in cultures, political issues, values, consumers’ behaviors, consumers’ needs, weather, and common beliefs, Herbalist is suggested to pay high concerns on their business operation for the sake of adapting to different countries and cultures. Herbalist, a China domestic personal care brand that has a heritage of ten years of organic brand images, undoubtedly, has the ability and potential to compete with the other international cosmetics brands even though the brand itself is still in the youth period.
According to the result of the research questionnaire for Herbalist, which was conducted by 100 local and Malaysian Chinese, there are 29. 29% showed their interests on trying Chinese herbal medicine cosmetics and the other 56% expressed that they are willing to give it a try if there is an introduction of decent herbal personal care brand in the future. As a result of it, it is strongly proposed that Malaysia should be the first station for Herbalist to put down their roots in South East Asians market. The main reason that Malaysia is one of the potential markets for Herbalist is because of its multi-ethnic and multi-cultural.
There are approximately 6,960,000 Malaysian Chinese in Malaysia who inherited Chinese cultures from Mainland China and their predilection towards the traditional Chinese herbal medicine (Malaysia,2013). Moreover, local Malaysian who are the majority of the population, have their own preference of using medical herbs on their culinary arts, dedications and personal care products such as body soap and facial wash. Besides from that, Thai, Indonesia and Singapore who have the largest Chinese community in the world are doubtlessly should be targeted by Herbalist to set Off new wave of Chinese material medical wind in South East Asia.