Stuck in a dilemma of the marketing competition, what should Laneige do?
As a fast-moving consumer goods, Laneige is a kind of product with the highest degree of fit with people's lives and meet people's most basic needs. It relies on the high frequency and repeated use and consumption of consumers, through the scale of the market obtain profits. With the rapid speed of introducing new products and large number of similar products pouring into the market, it is an urgent problem to be solved that how to maintain dominant position and market share in fierce market competitions.
As a local brand of South Korea, which belongs to Amorepacific company, serving a representative of premium brand of beauty makeup plate, Laneige realized sales volume of 1.83 trillion won (11.024 billion yuan) last year, up 3.6% from a year earlier. While those of mass-market brands, says Etude House and Innisfree witnessed a sales fall, down 11.3% from a year earlier, according to the release of 2018 Q4 financial statements and last year’s sales performance. Financial statements were detailed for each big brand performance. The growth of premium Laneige mainly came from the duty-free store channel and new product line. Among them, the expansion of the main brand sales of duty-free stores has driven the overall sales growth.
The growth of premium brands is driven by marketing input. Growth in overseas markets has been driven by high investment and increased investment costs in developing new global markets. Skincare brand-centric portfolio strengthened Laneige’ s brand image, in this way, Laneige succeeded in growing sales. Laneige sales promotion for Asia area continued to focus on China, actively expanding the sales and was going to expand into southeast Asian countries.
Laneige’ s target segment
Being moisturizing experts and high-end young skin care brand is Laneige’ s brand positioning. Cosmetics is an important part of fast-moving consumer goods.
Differences of values, lifestyle and attitudes compose determinates in psychographic segmentation.Combine the consumer group that has common proposition, individual character, interest, value orientation with their behavior way to differentiate the cosmetic consumer group of different life style---traditional, fashionable, thrifty, luxury and other consumer groups. Laneige combines tradition with modernization to perfectly integrate most types of consumer groups. Its high-end and elegant packaging, promotions and advertisements also successfully achieve satisfaction from all types of groups.
Take occasions, benefits, user status, usage rate, buyer readiness and royalty status into consideration
when talking about behavioral segmentation. The graph above shows the procedure of customer buying behavioral. How to attract first-time users is the core part of behavioral segmentation. Laneige brand’s promise: “water science” gives women especially young girls a watery, beautiful skin and confident vitality. Chinese customers prefer facial, lips and eye products to make a brighter looking. Stars’ effect indeed exerts a positive influence to promote the sales volume and expand product popularity. Young girls are more irrational and viewed as style-goers. It is more possible for them to buy their idols’ endorsing products. In this circumstance, their idols manifest their cargo capacity and therefore get more endorsements. What’s more, the products and makeup used by the protagonists in the TV series especially those romantic dramas are the ones that young girls aspire to imitate.
Laneige’ s market positioning
Brand positioning: Being moisturizing experts, high-end young skin care brand.
Customer loyalty program can help Laneige to win a younger layer and a more densely populated generation. Accelerate the brand growth, E-commerce channel growth and digital channel growth, committed to the public cosmetics, personal skin care field, Laneige double 11 sales in E-commerce channel exceeded 100 million yuan in 1 hour 48 minutes in 2019. Cosmetics consumption still occupies the main market in main Asian countries, middle and high-end consumer groups are relatively limited. Middle and high - grade price high - quality image positioning to the young women in their 20s for a product strategy. In particular, white-collar workers between the ages of 25 and 29 with higher social status who have higher purchasing power carry out commodity strategy and use department stores to maintain an advanced image. To leave consumers with a high-end impression", naturally forming brand recognition similar with Clinique and other high-end products.
Laneige’ s pricing strategies
On one hand, Amorepacific has cultivated a medium to high-level image in Asian countries’ exports. Between the mid-to-high end of the price range, it makes customers feel acceptable in the absurdly high prices of foreign imported brands. In addition, compared with low-end products to compete in product quality, higher prices are endowed with rationality. That is to say, convince customers to believe what it claims: "Even though it is true that price is high, the brand is of high quality and high price performance". Single make-up and skin-care product price of Laneige is average 200 to 300 yuan, compared those brands in the same high-end level brands, such as Sulwhasoo, Innisfree and Mac with the capacity, quality and price, Laneige has the highest price performance. Customers can get a discount when choose the portfolio, usually save 20 to 30 percent of the total price if they purchase them separately.
On the other hand, Laneige uses three C’S for price- setting: costs, competitor price and customers’ willingness to pay. Laneige’ s concept of high-grade reasonable price and in high-end department stores sell at high prices. A new product is introduced at a low price. Prices may be various for different localization. Laneige belongs to medium cosmetics brand in South Korea but in other Asian countries, it is a high-end cosmetics brand, because of the positioning so Lange began to push the high price strategy from the beginning. Amorepacific provides the productivity to Laneige with relative low cost directly to medium and low-price market and those quality production lines prepare for the high-price market. In this way, it is possible for Laneige to take all kinds of price groups into consideration and maximize its profit scale.
Being a fast-moving consumer goods means Laneige is an elastic demand product other than inelastic demand product. From the graph above we can easily find the difference between these two products. Price and quantity demanded is negative correlation. Reducing the cost is the most effective way to improve the sales. Elastic demand product also means easy to find a replacement, customers may turn to homogenous products if the price is too high. Laneige relative medium price and sales promotion indeed capture the customers loyalty.
What should Laneige do
Laneige should overcome shortcomings on investment and fixed cost, professional talents, offensive marketing strategies and competitors in order to dominate the cosmetics market. With the outbreaks of COVID-19, a tendency of citizens’ rising demand of daily necessities while declining in the demand of beauty market results in a more furious market competition. To deal with the dilemmas and make improvements, four aspects could be taken into consideration: ever-modified marketing strategies and plans, maintaining customer relationships and customer loyalty programs, products’ update and independent research and development, appropriate pricing policy and promotion strategies. In order to succeed in the fierce market competition, focusing on its target group and production promotion to satisfy more people and taking advantage of product research and development to reduce selling price is necessary.