It all began in a humble beauty shop in Gaeseong, Korea. A young boy would cycle for miles between the city and Seoul to run errands for his mother’s camellia oil business, setting the wheels in motion for his vision of a business that would extend beyond the region to the Pacific.
It wasn’t a frivolous dream. In fact, the boy had a mind ahead of his time. Suh Sungwhan would go on to establish Taepyeongyang (Pacific) Chemical Industries, later renamed as Amorepacific—South Korea’s largest beauty conglomerate and one of the world’s most innovative companies.
With more than 20 brands under its belt, including its five global champion brands Sulwhasoo, Laneige, Mamonde, Etude House and Innisfree, the beauty behemoth has effectively penetrated into each distinctive niche in the consumer market. While Amorepacific has benefited from the Korean wave—endorsements in hit dramas My Love from Another Star and Descendants of the Sun led to a craze for IOPE and Laneige products respectively—its beauty brand is anything but a passing fancy. In fact, the beauty giant has spearheaded many firsts in the Korean cosmetics industry and subsequently, the global beauty landscape.
Korea’s first branded beauty product was Melody Cream, launched by Amorepacific’s predecessor in 1948. Then came the industry’s first cosmetics research laboratory, which paved the way for the beauty giant’s breakthrough innovations in the later years—sleeping masks that transformed evening beauty routines; boosting essences as the extra step to getting the most out of our skincare; and cushions, which have since revolutionised foundation compacts on a global scale.
Almost 10 years since that revolutionary launch, Amorepacific has sold more than 100 million cushion compacts, with European brands such as L’Oréal and Parfums Christian Dior following in quick succession to release their own versions of this cult product.
Sulwhasoo has been developed based on a unique marketing strategy of commercializing the underlying power and beauty of the Korean culture, which has allowed it to surpass many globally competitive foreign brands armed with mass production systems. Also key to its success is the idea of providing specialized cosmetics based on Eastern philosophies and medicine.
After years of ongoing research to shed light on the ingredients of oriental medicine based on the notion that “the body and the earth are one,” the company finally succeeded in scientifically capturing the pharmacological essence of the ingredients used in oriental medicine and created value out of uniquely Korean traditional beauty. Thanks to its supreme quality, Sulwhasoo has become a leader in the oriental cosmetics sector in Korea both in door-to-door sales outlets and nationwide department stores, where the fiercest battles are fought between domestic and import cosmetics.
Based on the recognition that cultural contexts and backgrounds can have a greater impact than technological capabilities, Sulwhasoo has sought a new theme word from Korean culture to overcome the blind trust of Korean consumers in the brands of culturally influential countries such as France, the U.S., and Japan. The result is Sulwhasoo, which has cultivated an aura of prestige that is comparable to imported designer brands in terms of content and design. This has been accomplished by scientific formulas that capture the essence of Eastern medicine and philosophies, and elegantly designed containers inspired by the contours and image of traditional Korean skirts, with exquisite calligraphy.
Despite standing at the forefront of beauty innovations and trends, heritage is at the heart of the global conglomerate, which has its roots in all-natural beauty products. Amorepacific develops its products around three heritage ingredients—green tea, ginseng and beans.
Amorepacific is constantly researching for new cultivation methods to develop a variety of green tea that has a higher concentration of properties beneficial for skin health. The corporation created the industry’s first green tea farm on the fallow lands of Jeju Island in 1979.
From a brand portfolio management perspective, AmorePacific’s portfolio can be described as a “house of brands”, where a company manufactures and markets a range of brands. A close match of AmorePacific’s brand management philosophy can be seen in how Procter & Gamble manages its brands. In this model of brand portfolio management, each brand competes in a specific segment of a specific category. The markets in which the brand competes can be local, regional or global. AmorePacific’s brands, initially local, are now competing with other personal care and skincare brands at a regional or global level.
AmorePacific has a strong brand management philosophy that believes in developing and establishing individual brands. The company has not shown any signs of deviation from this philosophy over the years. All new brands that have been launched have company branding support and have been developed and nurtured individually.
The fact that the South Korean beauty consumer, and now the broader Asian consumer knows about AmorePacific, helps lend credibility and prestige to any brand coming out of the AmorePacific portfolio. But even then there is no direct use of the company’s name in individual advertising and communication strategies for the brands.
As it positions for growth in major overseas markets, especially China and South East Asia, AmorePacific is taking a similar approach. While standard practice in Asia Pacific is to open shops under individual brand names as AmorePacific has done with each of its brands, the strategy in the United States is different. American luxury shoppers prefer high-end department stores for convenience.
Today, AmorePacific brands are sold in almost 200 specialty stores, including Bergdorf Goodman, Holt Renfrew, Neiman Marcus and Nordstrom and Sephora. The luxury Sulwhasoo brand recently made its American debut at Bergdorf Goodman in New York City. As a soft-entry strategy in to the United States, AmorePacific also launched a Beauty Gallery & Spa in SoHo, New York, to create a high-end footprint in the lucrative market and serve as a creative centre to understand American consumers. The spa blends AmorePacific’s cultural and scientific philosophies, promoting Korea’s unique oriental sensibility with cutting-edge technology. More recently, the company has also announced that Sulwhasoo will open its first store in Paris at the Galeries Lafayette in September 2017 – a progressive step towards AmorePacific’s long-term vision to expand into France, one of the world’s leading centres of beauty.
Overall, AmorePacific is well poised for growth as it expands into markets outside China and Korea. To sustain this growth and to remain competitive in the segments it operates in, the company needs to combine an aggressive innovation driven marketing model with a global mindset and deep consumer understanding. Going beyond the shores of its home country will be challenging for AmorePacific, but with its credentials and past successes in foreign markets, it can be reasonably assumed that the company has the right compass to map a course through new, uncharted waters.
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