Refinement and Beauty in Herborist Cosmetic Brand - Essay Example

HERBORIST COSMETIC BRAND: VENTURE ENTRY INTO THAILAND By Introduction A subsidiary of the famous Jiahwa group, a distinguished market leader in Chinese traditional medicine(s), the Herborist is a leader in high-end Chinese personal care. Through a steady expansion of global share-market, the brand has and continues engaging in commercial activities in various national entities. Since the year 2008, the brand has distinguished itself through its unique competitive advantage. It is through ingenious integration of medicinal ingredients and core principals of traditional Chinese medicine into their various products, that the entity gains ground. Its core market is the mainland China, as the Chinese people are already familiar with the concept and associated benefits. It is however the question of expanding outside the local market, which is in focus. Pertinent to this is how, and in what ways can it competitively market itself against established and known brands. The Asian Establishment is already in knowledge of the varying established Japanese brands i.e. SK-II and Shiseido; in addition to Western brands such as Sisley and Lauder. In 2001, the brand entered the Hong Kong market, off the mainland, in a test-attempt for its product (Global Times, 2014). This market was already very competitive, having major western and Japanese cosmetic brands in the arena. The competition proved too great, forcing the eventual closure of two Herborist-branded stores, in major shopping districts. Bad results, in terms of sales and product market penetration, necessitated a rethink of strategic market entry. This hence, will be core to its venture entry into the lucrative Thailand market. Buoyed by not only local Thai population presence, but also a huge tourist population segment, the brand-entity is focused on market introduction, here and elsewhere the tourist populations visit. The host populace, having Asian links, is more familiar and hence adaptable to the concept of traditional medicine, than the tourist segment, hence presenting the need for a – two-fold strategy. One will focus on the link present, between Thai culture, beliefs and heritage and environmental concern, with the product’s natural herbal/ medicinal qualities. The second will target tourist populations through enhanced target marketing and promotional measures (Olivier, 2013). The Brand: Competitive Advantage The Herborist, as a brand, is influential through its core utility of traditional Chinese knowledge. Through this, it continues to create its unique brand products, by way of a delicate encounter between state-of-the-art cosmetic science and traditional herbal/medicinal knowledge. In disclosing its key massage methodology and techniques, Herborist continues to lead the way to greater wellbeing and unique beauty experiences. The brand draws upon mysterious powers and abilities found within Chinese plants, in an effort to reach new levels of harmony and well-being. It has transformed over time, these plant species in to products essential in today’s skin-care industry. In addition, has been the major role-play, of natural extracts and beneficial teas, to this goal. Through plant natural utility and medical extraction, the Chinese have learnt how to utilize the plants’ primary inner force. This is towards the balancing and circulation of energies, crucial in attaining the very essence of human beauty. This is the driving force behind the brand’s success within mainland China, and is expected to aid its entry into other key markets. As a further step in the brand’s expansion, Asia seems the best logical region, informed by key factors/ aspects (Herborist, 2013). Aforementioned, is the strong bond between nature/ the environment and the Asian cultures. Most, being tied to socio-religious aspects, are widespread and strictly adhered to by the populations present. Regional Uniqueness: A Comparative Advantage The Asian region is mostly made up of Asian races and societies, each founded on strong religion-cultural and social beliefs, traditions and social codes of conduct. In addition is the existing statistical data, which displays a great belief and reliance on personal care products within this market. In terms of American dollars per peninsula, Japan is the market leader at $ 390.83, followed by Singapore and South Korea at $ 270.07 and $176.02 respectively, with Thailand at fourth place, with a ratio of $54.45. From the data above, both Korea and Japan are already saturated with their own recognizable brands. This is due to having become rather advanced, with regard to the personal care industry (Baidu Baike, 2011). In the two peninsulas, both having higher expenditure on personal care products, the market can have access and afford other successful markets such as Luxury and Chanel. In addition are local brands such as NaturaPurify, which have a great domestic following. The choice of Thailand is informed by a number of reasons, all of which add to the advantages to be gained, through setup of brand stores. First, Thailand is one of the emerging economies, under the Tiger cub branding. A well developing nation, it currently has a growing market demand for personal care products. The Asian Tigers also follow in the footsteps of Japan and Singapore, with regard to health and personal care, utilizing natural plant medicinal properties (Global Times, 2014). Thailand: Existing Comparative Advantages The reason behind Thailand as the best choice in terms of venture entry is its continued growth and economic development. Though having experienced a coup, its GDP has gradually grown, through government initiatives towards a free-enterprise economy. The main avenue for expansion has been through the retailing Unit, as was showcased by Sephora’s recently announced entry into the market. Furtherance is the burgeoning tourism sector, riding in the highly successful SPA and Therapeutic aspects. There is also the aspect market size, in terms of retailing value, with Thailand having a greater potential capacity than other Asian states such as Indonesia and Malaysia (Kotler, 2000:47, 56). In terms of socio-cultural factors, the nation’s medial wealth gap enables a more robust market sector to access products, which are medium-priced. Furtherance is the presence of a large Chinese populace in the country, further enhancing the brand products’ entry venture. This is due to the acceptability of Chinese herbal medicinal products within the nation. In the presence of the famous Thai-Spa product, both herbal products and massaging techniques are hence a richly viable option. The spa products are a potentially successful venture avenue for Herborist products, which would go well with spa therapy choices. As the country’s economy grows, so too does its purchasing power, thereby providing a greater market for personal care products. Venture Entry Options While the nation shares such wonderful and fruitful links, the direct entry of the brand products into this market ought to be strategically managed. This is informed by the prior Hong Kong failure, because of market venture misevaluation. Instead of concentrating on solo venture penetration, the management office ought to think of a joint venture or franchising strategy (Czinkota & Ronkainen, 2009:78). The former would be quite productive, in terms of venture entry and marketing potential. In addition would be the aspect of logistical capabilities provided through joint venture, as two entities would better handle such factors. A good choice would be through Sephora, which has a greater resource capacity within the region. This would affect positively to the brand products entry, as Thailand would eventually be a lower cost market. This is further achievable through future contractual arrangements with Thai-SPA. This move is enhanced by the presence of various advantages abate the potential disadvantages present. These advantages include a greater direct access to the local market, a reduction of political and marketing risks, and a potentially lucrative established partnership with Sephora in both Thailand and France (in the future). There is also the presence a shared risk of failure, and the improved capacity of overcoming existing government bureaucracy and restrictions. There is also the aspect of low risk market entry, with regard to the product brands in market; cost advantages and a stable income from the contract in hand. Further still is the enhanced control over existing R & D prospects and the sales and marketing service angle (Fill, 2009:34, 47). All these are great variables, crucial in a successful market venture strategy, and can hence work for the brand products’ entry into Thailand. However, management should also be aware of existing disadvantages brought about by such joint ventures also. These include a loss of existing optimal flexibility, the transfer of pricing issues and problems, as well as the difficulty of exerting individual control. This is further complicated by the prevailing cultural differences, as well as organizational cultures, which may result in difficulties of management. The two entities are quite diverse, in terms of management and organizational culture, which ultimately reflects on their prevailing strategic placement. There is also the aspect of reduced chances of finding possible limitations, with regard to supply capabilities. In addition is the potential of not being able to find a reliable manufacturer. While such disadvantages exist, every marketing opportunity, and venture entry ought to be considered in terms of the existing potential for success (Czinkota & Ronkainen, 2009:112-114). Thus, if the advantages outweigh the prevailing disadvantages, I am in support of such a joint venture. To be noted is that there exists no venture opportunity that does not have issues or problems, which are established under disadvantages. However, if such are less impactful, I am optimistic of the brand products’ successful entry into the Thai market. As a potential lucrative regional market, the brand should not only concentrate on top-range products, but also avail products that are medium-priced. The latter are more targeted at the growing middle-class, which is riding on the successes of the nation’s growing GDP. A Joint Venture: Entry and Establishment into the Thai Market The brand’s entry into the market is best carried out through the joint venture as aforementioned. This is buoyed by the existing and potential advantages, especially as a result of Sephora’s presence within the region and also in European markets. This provides the management team future goals on which to focus, in terms of a partnership targeting European market arenas. The entry mode would significant to the brand’s future growth potential (Kotler, 2000:98). An ideal strategy would be through collaborative marketing, logistical capacity building, cost reduction measures and market re-education. The previously Hong Kong-based entity is currently rooted in Shanghai and continues to ride high on the burgeoning middle- and upper-class market. Growth and marketing strategies are interrelated in differing ways. First, is that the target population is also represented by a 12% Chinese population representation, which enables easier market targeting and establishment. The second is the shared respect and care for the environment, as presented in the target population’s socio-cultural and religious beliefs and traditions. Through the Thai-SPA concept, the brand would be able to better market itself, not only to existing clientele, but also to potential tourist populations, mainly from the Western world. In tandem with the Thai-SPA therapy procedures/ techniques, the growth of the brand, as a natural medicinal concept, would be further enhanced. There is potential uptake in major Western markets, shifting to traditional healing and care methodology (EENI, 2011). In conclusion, strategic implementation is critical for the brand’s overall joint-venture entry into the growing Thai market. Based on prevailing similarities, in terms of socio-cultural and religious observance, I am of the view that the product’s natural medicinal basis would be a boost to its market penetration and eventual product uptake. Adding to this is the potential opportunity for further market growth, especially riding on the numerous tourist volumes, which visit the Thai nation. Through a joint venture, as well as contractual arrangements with Thai SPA, I am optimistic of the brand’s successful entry and establishment within the market arena present. Reference List Baidu Baike, 2011, Current Situation of Chinese Cosmetic Market. Baidu Baike. Retrieved from: http://baike.baidu.com/view/2267713.htm Czinkota, M. R. & Ronkainen, IA 2009, Principles of International Marketing, (9th Ed.). Cengage, UK: South-Western Cengage Learning. EENI 2011, International market segmentation. EENI, Global brand strategy: Positioning. Retrieved from: http://en.reingex.com/Segmentation-Brand-Positioning.shtml Fill, C 2009, Marketing Communication: Interactivity, Communities and Content, (5th Ed.). Edinburgh, UK: Person Education Limited. Global Times 2014, Jan. 22, Herborist Growing Global. Global Times: China. Retrieved from: http://www.globaltimes.cn/content/838830.shtml#.UxxKJPsTe4o Herborist 2013, A Tradition of Refinement and Beauty. HERBORIST [The Chinese Beauty Remedy]. Retrieved from: http://www.herborist-international.com/brand/herborist Kotler, P 2000, Marketing Management: Millennium Edition. UK: Prentice Hall, International Inc. Olivier, S 2013, March 13, Herborist: The Chinese Premium Brand of Cosmetic. Gentlemen Marketing Agency: Marketing China. Retrieved from: http://marketingtochina.com/herborist-the-chinese-premium-brand-of-cosmetic/ Read More