Amore Parcific Case Analysis
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AmorePacific Case Analysis
1. Amore Pacific makes most of its money in cosmetics and toiletries. These two parts generated 4/5 of total sales. Amore Pacific held a share of more than 30% of the Korean market share.
The reason Amore Pacific dominated the Korean market is they keep doing research and development for new products. They developed many new products for different groups of customer depend on their different needs. It helps Amore Pacific to satisfied more customers and dominated the Korean market. Amore Pacific also built its dominance in the door to door channel in the post crisis period by taking advantage of the much larger pool of potential saleswomen to expand the door to door distribution of its new products. Another reason is advertising, Amore Pacific focused a lot on it. They spent 7% of domestic sales on advertising in 2004. They advertising for new brand, products sold in specialty and discount store, which let more people to know about their products. They also post these ADS on some new medias like websites to reach more potential consumers. Furthermore, Amore Pacific improved their hire and train program in order to support their salesforce.
2. The top five foreign competitors all offered extensive products lines to mass market in Korea. They also followed the similar strategies built around brand extensive, new products launches, acquisitions, brand marketing, and global expansion. MNCs sector’s average R&D levels of 2% of sales placed in the middle of manufacturing industries and some MNCs started to spend more in order to take advantage in the competition with local firms. They targeted narrower segments such as particular gender, age, minorities to attract more customers. Furthermore, MNCs improved their retail distribution channels to increase product availability and raise consumer awareness about affordable cosmetics.
Amore Pacific outperforming MNCs in five aspects. First is operation, Amore Pacific held domestic selling rights, they manufactured all their products by themselves, which lower the manufacturing cost. AMore Pacific embarked on a Total Cost Reduction and followed by Total Creative Revolution program to reduce the cost and create more new products. The second is R&D, AMore Pacific keep developing new products that fit the Korean market. They created three new products before 2000 and were still the three largest in the market in 2004. These new products targeted higher price that increase their revenue. The third is marketing, Amore Pacific emphasis on marketing for a long time. Company had pioneered mass-media advertising in their sector in 1955, had launched Korea’s first beauty magazine in 1958 and had co hosted the first Miss Korea pageant in 1976. These marketing strategies help Amore Pacific to be known by more customers. And also company focused on their distribution and firm infrastructure in order to outperforming the MNCs in Korean market.
3. I think China is the most promising market.