Marketing Strategy Analysis of Etude House: South Korean Market

This report provides a comprehensive marketing analysis of Etude House, a prominent player in the South Korean cosmetic industry. The analysis begins with an executive summary and introduction, followed by a company analysis that highlights Etude House's market position and financial performance, including its relationship with its parent company, Amorepacific. A competitor analysis identifies key rivals in the market. The report then delves into STP (Segmentation, Targeting, and Positioning) strategies, along with dominant economic features and key success factors. The core of the report is a detailed examination of both the macro-environment (political, economic, social, technological, legal, and environmental factors) and the micro-environment (strengths, weaknesses, opportunities, and threats). A Porter's Five Forces analysis further assesses the competitive landscape. The report concludes with a summary of findings and references.

Running Head: MARKETING STRATEGY
Marketing Strategy
Name of the Student:
Name of University:
Author Note:

1
MARKETING STRATEGY
Executive summary
Etude House is well known in the South Korean market due to its quality cosmetic products and
service mechanism. However, due to huge competition in the market it becomes problematic for
Etude House to retain its successful market holding effectively. Based on this, the purpose of this
essay is to carry out a market analysis on the basis of both the macro and micro environmental
factors. Moreover. The SWOT analysis is also implemented in order to figure out the strength,
weakness, Opportunity and threats. The report also takes care of the South Korean cosmetic
market in order to track down the position of Etude House into the market.

2
MARKETING STRATEGY
Table of Contents
Introduction......................................................................................................................................3
Company analysis........................................................................................................................3
Competitor analysis.....................................................................................................................4
STP..............................................................................................................................................4
Dominant economic features.......................................................................................................4
Key success factors......................................................................................................................5
Macro environment......................................................................................................................5
Political....................................................................................................................................5
Economic.................................................................................................................................6
Social.......................................................................................................................................6
Technological..........................................................................................................................7
Legal........................................................................................................................................7
Environmental..........................................................................................................................7
Micro environment......................................................................................................................7
Strengths..................................................................................................................................7
Weaknesses..............................................................................................................................8
Opportunities...........................................................................................................................8
Threats.....................................................................................................................................9
Porter’s five forces.......................................................................................................................9

3
MARKETING STRATEGY
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

4
MARKETING STRATEGY
Introduction
As far as the cosmetic industry of South Korea is concerned, it is very lucrative and still
growing due to immense demand from the customers. The government statistics shows that
while in 2014 the market size was 7,759 in 2017 it was escalated drastically up to 9,668 (Hill
2017). Based on this it can be argued that the South Korean cosmetic market is the 8th largest in
the world with an annual growth rate of 7.4% (Hill 2017). However, for a concrete discussion,
the essay is going to choose Etude House as the main company and conducted an in-depth
research on its macro and micro environmental analysis. Moreover, the other factors like the
segmentation, targeting and positioning are also discussed in the light to get an insight of the
whole business analysis of Etude House.
Company analysis
It can be argued that the South Korean cosmetic industry is highly volatile due to a
number of beauty product manufacturers. In fact, large variety of products is available in the
South Korean market that facilitates a better alternative for the customers. Therefore, quality and
price are considered to be the most important aspect the circled around the South Korean
cosmetic industry (Solomon et al. 2014). In addition to this, the brand identity, packaging,
unique formulation and ingredients also play pivotal role to maximise the customers.
From this point of view, it is highly important for Etude House to make a great market
capitalisation because those companies are directly competing with each other. In this regard, the
Etude House is a subsidiary of the parent organisation Amorepacific. As per the financial
statistics of the company is concerned, it can be stated that the company is facing heavy
competition in the South Korean market where the sales of the company is down to 10% (Nagle

5
MARKETING STRATEGY
and Müller 2017). However, the total revenue of the parent organisation is 110.00 billion which
is quite impressive. Starting in 2005 the Etude House has almost 231 outlets all over the country
(Etudehouse.com. 2018). Countries like Taiwan, Singapore and Philippines are the main
overseas consumer of the Etude House products (Armstrong et al. 2015).
Competitor analysis
According to the government database, it can be stated that high competitiveness is a key feature
in the South Korean Cosmetic manufacturing industry. Big cosmetic houses like LG Household
and Health Care is the main competitor of Etude House. However, other companies like the
Banila Co., The Face Shop are also established their market very effectively (Baker 2014).
STP
The customer segmentation of the Edute House is mainly focused on the female
customers with an age specification of 23 to 37. However, for the children and the teen agers
also the company produces lots of cosmetic products. In this regard, the young and adult women
are the target customers for Edute House and the position of the company is strategically
resembled with the practice of existing market trend of South Korean cosmetic market.
Dominant economic features
The dominant economic features of Etude house include popular and established brand
name and image, because of the products and services that are inspired by the creations of well-
known composer named Frederic Chopin from Poland. The great quality cosmetic products have
attracted the young generation girls due to the great impacts created such as freshness and
prolonged youth (Hill 2017). The company’s focus has been on enabling makeup as playful; and

6
MARKETING STRATEGY
beautiful rather than being boring, which has been represented as “Wanna Be Sweet? Play
Etude”.
Key success factors
The key success factors include meeting the basic requirements such as accessibility of
products, maintaining the highest quality standards, maintaining an attractive design and making
a wide range of options available for catering to the varied needs and preferences of people. The
company has also actively been involved in the "Wildlife Protection Fund" program for
protecting the environment and the animals present there (Lusch and Vargo 2014). Etude House
is known for its excellence in delivering good quality products and services along with great
packaging and sustainable activities that have reduced the operational costs and have contributed
to the economic wellbeing of the country too. The Korean cosmetics company has gone global,
which enhances its scopes and opportunities to maintain a strong brand portfolio engaged in
delivering the products and services ranging from herbal cosmetics to cutting edge biotechnology
cosmetics included within the high-end luxury, premium as well as mass market categories
(Leonidou et al. 2013).
Macro environment
The beauty and cosmetics industry is diverse and complex, which needs compromising
on more than just the skin care and makeup products. There are perfumes and other make up kit
that are needed to be sold for creating a better individual.
Political
The safety of cosmetics products is important because these are designed for skin to skin
contact. The Personal Care Product Safety Act is enabled to maintain the safety of products and

7
MARKETING STRATEGY
also the quality for ensuring that the products do not cause any harm to the skin after usage.
Edute House should follow strict guidelines and regulations by reporting the statements about the
ingredients imported from other countries along with register manufacturers and recalling them
as well (Peattie and Belz 2013). The trends of rules and regulations and timescale of legislative
change also influence the management of changes in business while the property rights, import
laws and political instability also can affect the business functioning (Hunt 2014).
Economic
The customers of South Korea are often price sensitive and thus their buying behaviours
are based on whether their needs and preferences will be fulfilled or not. The cosmetics comprise
a huge amount of market share and the cosmetics companies have also created huge employment
scopes and opportunities for people all, especially for people who are interested in hairdressing,
manicurists, skin care specialists and therapists (Christopher, Payneand Ballantyne 2013). This
has not only improved the business performance, but also has improved the ability to generate
higher revenue in business and contribute to the growth in economy and increase in market share
too (Solomon et al. 2014).
Social
The company has spread awareness among people regarding healthy and skin friendly
ingredients used for the cosmetic items, which has not only influenced the buying behaviours of
most of the people, but has also improved the brand image and reputation largely. The
competition in the industry is high and to differentiate the products from other company
products, Edute House has undertaken various approaches to innovate its products consistently
and made sure to keep those available at reasonable prices for influencing the buying behaviours
of the consumers (Van Wormer and Besthorn 2017). The company manages sustainable

8
MARKETING STRATEGY
packaging along with maintenance of proper size of containers for attracting more customers and
ensuring that awareness is spread though considering the acceptance of local culture to meet the
clients’ needs and expectations.
Technological
The technological advancements also have improved the production costs and kept the
operational costs under control to prevent any additional expenses (Zimmerman and Blythe
2013). The cosmetics brand manages website and has also sold the products and services through
Amazon, which has increased the chances of maintaining a consistent customer base.
Legal
The Federal Food, Drug and Cosmetic Act and the Fair Packaging and Labelling Act
have been followed by the organisation to monitor the ingredients used for manufacturing the
products. The legal laws and rules also are managed to manage import activities, furthermore
prevent any illegal import activities, which may lead to degrading the brand reputation. In case
the ingredients are not based on the Codes and does not meet the quality standards, it could be
banned as well (Kliewe, Baaken and Kesting 2013).
Environmental
The beauty products offered by Edute House are manufactured keeping in mind the
greener approaches along with focus on environment friendly packaging to prevent any
imbalance caused to nature. The environment friendly options are considered to create positive
mind sets among clients and at the same time, prioritise on the environment protection largely
(Etudehouse.com 2018).

9
MARKETING STRATEGY
Micro environment
Strengths
 The prices of products are reasonable, which enables affordability for each of the market
segments (Armstrong et al. 2014).
 The company has maintained a strong and focused brand portfolio and with the presence
of highly skilled and knowledgeable personnel.
 Few other strengths of the company include brand’s extensive prioritising strategy and
making the products and services available at reasonable prices, which has further
contributed to becoming one of the major cosmetic company (Etudehouse.com 2018).
Weaknesses
 Nowadays, clients are more concerned about healthy and skin friendly products, because
of which, they are often scared to taking risks and letting go off the traditional beauty
items that were used previously (Kliewe, Baaken and Kesting 2013).
 There had also been lack of proper advertising and promotional techniques, which
affected the brand image and reputation and lead to poor business functioning as well.
 This has also created poor brand exposure, which further created negative impact on the
business by not being able to draw enough clients as expected (Nagle and Müller 2017).
Opportunities
 The major scopes and opportunities include the emerging markets of cosmetic industry
and need for global expansion to draw in more clients and generate higher revenue in
business.

10
MARKETING STRATEGY
 The innovation perspectives have also allowed the company to manage greener
approaches and at the same time facilitate the packaging and distribution processes.
 Edute House has provided products and services for meeting the needs of female
individuals from all ages and social classes too.
Threats
 The major threats include high competition within the market and availability of
substitute products available in the market. The price wars between the various
companies within the cosmetic industry have also resulted in affecting the sales revenue
(Armstrong et al. 2015).
 Moreover, due to adequate alternative products it will be a problem, for the Edute House
to maintain stability in the South Korean market.
 In fact, high quality of products is considered to be an important aspect in the South
Korean market. However, it has a negative impact on the standard of setting product
prices. Therefore, Edute House faces the same problem.
Porter’s five forces
The five forces affecting the business are threats of new entrants, threats of substitute
products, buying power of consumers, supplier power and competitive rivalries in business.
The threat of new entrants is low, considering the fact that Edute House has made
cosmetic products and services available at reasonable prices, which can compete with the new
entrants in the market quite easily. With a strong brand portfolio, the company can easily stay
ahead of its competitors and survive during the emergence of new entrants in the market.

11
MARKETING STRATEGY
The threat of substitute products is medium, because there are other companies that offer
similar kinds of products too, though due to the creative and innovative products offered by the
company, the threat is moderate. Plastic surgeries and laser surgeries act as substitutes to skin
care items as well (Lusch and Vargo 2014).
The buyer power is low, because the company offers good quality items at reasonable
prices and with the extensive brand portfolio, the customers have gained trust about the brand.
The supplier power is high, because with the opening of new branches, raw materials are
needed and suppliers might not be available. The suppliers may also move from the company
and supply raw materials and resources to other cosmetic company, which can also affect the
trading activities (Peattie and Belz 2013).
The threat of competitive rivalries is low, because the company has already hold a good
positioning within the marketplace and clients are inclined with the brand, which ensures
consistency of brand image and reputation. This has also enhanced the ability to attract more
customers and generate higher revenue in business (Etudehouse.com 2018).
Conclusion
The essay demonstrated features include string band portfolio and good quality products
available at reasonable prices further contributed to the marketing efficiency. The macro
environment was assessed with the use of PESTLE analysis while the micro environment had
been analysed with the use of SWOT analysis and also identifying the major factors that
contributed to the business functioning for Edute House, Korea. With the implementation of a
proper marketing strategy, it could be beneficial to draw in more clients, strengthen brand name