INTERNATIONAL MARKETING PLAN

By

Lysette Guambo

Rollins College Dr. Marc Fetscherin

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Table of Content

Table of Content............................................................................................................................. 2 Executive Summary........................................................................................................................ 3 1 Company Analysis....................................................................................................................... 4

1.1 The Company................................................................................................................ 4 1.1.1 Brand Image................................................................................................... 4 1.1.2 Human Resource Management...................................................................... 5 1.1.3 Corporate Social Responsibility (CSR)......................................................... 5

1.2 Organizational Structure............................................................................................... 5 1.2.1 Internal Analysis............................................................................................ 5 1.2.2 Production and Product Categories................................................................6

1.2.3 Target Market Profile .................................................................................... 7 1.2.4 International Involvement.............................................................................. 7

1.3 SWOT Analysis............................................................................................................ 8 1.4 Industry Analysis.......................................................................................................... 9

2 Global Market Search.................................................................................................................. 10 2.1 Country Selection ......................................................................................................... 10

2.1.1 Region............................................................................................................ 10 2.1.2 Country Comparison...................................................................................... 10

2.2 Criteria Selection.......................................................................................................... 11 2.3 Country Evaluation....................................................................................................... 12 2.4 Conclusion and Recommendation................................................................................ 12

3 Market Analysis........................................................................................................................... 12 3.1 Pest Analysis................................................................................................................. 12 3.1.1 Netherlands............................................................................................................... 12 3.1.2 France....................................................................................................................... 14 3.1.3 Germany................................................................................................................... 15 3.2 Market Attractiveness and Growth Potential.............................................................. 16 3.3 Competitive Analysis.................................................................................................. 17 3.3.1 Main Competitors..................................................................................................... 17 3.3.2 Market Entry............................................................................................................. 17 3.3.2 Other Competition.................................................................................................... 18 3.4 Country Selection......................................................................................................... 19 3.4.1 Country Side-By-Side Selection............................................................................... 19 3.4.2 Evaluation and Country Selection............................................................................. 20

4 Marketing Plan .......................................................................................................................... 21 4.1 Market Entry Mode....................................................................................................... 21 4.2 Product.......................................................................................................................... 21 4.3 Price...............................................................................................................................22 4.4 Promotion .....................................................................................................................23 4.5 Placement.......................................................................................................................24 4.5 Sales Forecast and Projected Income Statement ...........................................................24

Recommendations...................................................................................................................24 Appendix ...........................................................................................................................26

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Executive Summary This Marketing Plan has been developed for Laneige, a premium Korean based cosmetic company. Laneige means snow in French, which is well suited for the brand because of its patented and widely popular water science technology. Laneige’s philosophy is to provide beauty for its customers through its products and inspire confidence for young women. This analysis will look at the main Western European countries and evaluate the best country Laneige should look into entering next. According to research conducted, the most attractive market is Germany a country with an already existing cosmetic market that’s ready for something new.

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1 Company Analysis 1.1 The Company 1.1.1 Brand Image Since its launch in 1994, Laneige has experienced great success. For example, in 2011, Laneige won the Cosmo Asian Beauty awards and received the Allure Korea Best of Beauty Award. 1 Also, the brand has been listed in various popular magazines domestically and internationally such as Elle Magazine’s “It List,” Women’s weekly featuring the Water Sleeping Pact in Korea 2

and Baazr and L’Officiel in Singapore. 3 Laneige was built upon the basis of “honesty, intellectuality, attractiveness and harmony” to target women in their 20’s. 4 Laneige has become a cosmetic household name in Korea due to its focus on ground breaking research in advance water science technology to achieve “moist and transparent skin.” 4 The company first started to gain popularity in 1995 when it launched its ‘Live Like a Movie’ Campaign where it started to establish “trend-setting makeup” and trade marked certain trends such as the “Hepburn Bronze” and “Sexy No.1” looks that became a big hit. 4 Laneige created a new trend for the “New Millennium” campaign in 2000 where it launched the ‘Everyday New Face’ Campaign, which focused on “creating sophisticated beauty of modern women through advanced science.” 4 Due to Korea’s widely recognized entertainment industry throughout the world (especially in Asia), ambassadors for the brand like Song Hye Kyo, a widely recognized and famous Korean actress and model, add to the brand’s attractiveness domestically and to international markets. 5

1.1.2 Human Resource Management In the beginning of 2013, President and CEO Kyung Bae Suh of Americapacific Corporations, the mother company of Laneige and a few other famous Korean cosmetic brands, announced the corporations new management policy for all the companies under the corporation. The theme was “TEAM Together,” which meant the corporation wanted to focus on growth within “customers, the world, society and employees.” 6 Suh’s plan for the new management policy was to become an Asian Beauty Creator. “Amorepacific Corporation has adopted management techniques that focus on human resources by discovering and nurturing global human resources with excellent observation of the global market and customers.” 6 The plan was separated into 4 steps: First, one goal they needed to succeed in was to focus on “customer-oriented management strategies” to provide innovated products and services to customers. Suh was going to strengthen the company’s R&D capabilities, so he encouraged each brand to develop and innovate products, while improving the makeups quality and continue to promote men’s products, which have shown a recent increase in sales. Logistics were projected to improve so that the delivery time was more efficient. Second, Suh wanted the companies to develop products that meet the needs of global customers in each country by “coping market trends and heightening R&D competitiveness by strengthening the network with global R&D institutions.” 6

1http://travel.cnn.com/korean-cosmetics-shopping-guide-652726 2http://www.laneige.com.sg/whatsnew/product_bestSeller.jsp

3http://www.laneige.com.sg/brand/magazine_clipping_list.jsp 4 http://www.laneige.com.sg/brand/laneige_history.jsp 5 https://ajw.asahi.com/article/economy/business/AJ201308080084 6 http://en.amorepacific.com/about/about_news_list.jsp

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Thirdly, they wanted to improve sustainability management by expanding sustainable purchasing and implementing ‘Beautiful Fair Trade’. This requires the companies to “purchasing raw ingredients with social and environmental responsibilities.” 6 Fourthly, they plan to empower their employees by limiting the amount of micromanaging they do and “implement progress-oriented business practices to improves the way in which employees focus on their tasks.” 6 In efforts to execute this new management plan, 100 global leaders were sent to 15 countries to spread Asian beauty across the world. 6

1.1.3 Corporate Social Responsibilities (CSR) As part of the new sustainability management and Beauty Fair Trade purchasing Amorepacific Corporations will begin to implement to all of its brands, 6 Laneige sponsors the Waterful Sharing Campaign. The Waterful sharing campaign’s mission is to provide clean water to African children. The campaign is inspired by Laneige’s unique water science technology and its appreciation for the resource. Laneige is partnered with Save the Children, and international organization for children’s rights. For the campaign, Laneige constructs water tanks to provide

safe drinking water to children and infants in areas where there are water shortages or diseases and deaths from contaminated water such as Mali. Funding comes from the proceeds from sales in Korea of the Water Bank Essence product. Laneige also spends time educating African people on health and proper hygiene to improve their knowledge and quality of life. Also, they even hold contests for people to submit box designs that represent the meaning of the Waterful sharing campaign and the impacts polluted water can have. 7

1.2 Organizational Structure 1.2.1 Internal Analysis Amorepacific Corporations, the giant of the cosmetics industry in Korea wants to continue to expand globally. Suh, CEO and President, wanted Amorepacific to be within the top 10 internationally ranked beauty lines. With only 10% of sales being international at the time, Suh wanted to expand the company and projected growth in demand for Asian beauty products because of the exotic ingredients and popularity of Asian beauty treatments. For Laneige, this means entering new foreign markets because it is one of the most popular brands under the 7 http://www.laneige.co.kr/en/laneige/en_laneige_campaign.do

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Corporation. Suh, “was is targeting the U.S., Asia and France.” 8. Amorepacific was already in a good position to enter new markets in 2006 with 11% rise in profit and 41% increase in share prices on the Korean exchange. Suh’s plan was to target different global market by segmenting each target by products sold. For example, after a failed attempt in France due to the French women’s dislike of the made in Korea cream product labels, Suh decided to “pull out of the French skin-care business, focus on the fragrance market—94% of the women there wear perfume and dispensed with the Korean labels.” 8 This strategy was successful after a partnership with Dior to create Lolita Lempicka, which was the “fourth-bestselling perfume in the country last year according to U.S. research group Mintel,” 8 so the goal of doubling sales within 2 years was made. Suh segmented the U.S. market by the superluxury customer. Upscale department stores such as Bergdorf Goodman and Niemen Marcus already were on board with the Asian beauty trend by selling Amorepacific brand products. Because of the trends of wellness and natural ingredients were rising, they took Asian “indigenous botanicals and melded them with technology.” 8 Growth in Asia was successful already; for example, when Amorepacific used Laneige to introduce Korean beauty to the Chinese market, the Chinese consumers accepted the brand with great interest/appeal due to the trending Korean culture, and as a result Laneige sold in various high-end shops and department stores targeting young Chinese ladies. One of their main competitors is Shiseido, a Japanese brand company. Amorepacific plans to expand in Japan with two stores challenging their competitor on their home territory. 8 1.2.2 Production and Product Categories From the start, Laneige has always stood out for its innovation and appeal to younger women who follow trends. After the launches of a few trend campaigns in 1995 and 2000, Laneige has expanded to global markets, men’s skin care lines and luxury product lines within the brand always keeping innovation in mind. 8 Laneige offers three product categories: skin care, makeup and homme (men’s skin and trouble care line) as seen in Exhibit 1. Under skin care, Laneige offers various lines of products to meet specific needs such as cleansing, basic car, sun care and even special care. 10 For makeup, they divide the products up by regions of usage: face, eyes, lips and cheeks as well as accessories, which are brushes for application. 11 The Homme line is divided by a need base from shaving care to pore/trouble care specifically designed for men, 12 that was a growing market. 8 Please see Exhibit 1 for a full list of product lines. The top 3 global best sellers for Laneige is the Water Sleeping Pack, the Water Bank Essence and the Perfect Renew Dual Touch Eyes. 13 Amorepacific centralizes production of the brand’s products throughout different production sites. Domestically, in South Korea, they have 4 production sites throughout the country specifically designated by product. They have a skin care production sites, a makeup production site, a household product site and a Sulloc Cha site. 14 It’s an advantage for Laneige to be under Amorepacific because of their economies of scale for production. Internationally, they have sites in America, Europe and Asia. 8 Kitchens, S., & S., K. K. (2006). Pacific Quest. Forbes, 177(11), 1246-126. 9 http://www.laneige.com.sg/brand/laneige_history.jsp 10 http://www.laneige.com.sg/product/group.jsp?brandCd=1172&lineCd=1172&gnbPageCd=020000 11 http://www.laneige.com.sg/product/group.jsp?brandCd=1173&lineCd=1173&gnbPageCd=030000 12 http://www.laneige.com.sg/product/group.jsp?brandCd=1174&lineCd=1174&gnbPageCd=040000 13 http://www.laneige.com.sg/brand/global_content.jsp 14 http://en.amorepacific.com/about/about_bp_factory_01.jsp

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America, sites are located in New Jersey, Los Angeles and New York. 15

Europe sites are located in Chatres and Paris. Asia, sites are spread throughout the continent. They have two sites in China, one in Taiwan, Singapore, Malaysia, Vietnam, Thailand, Indonesia, Japan and Hong Kong. 16

1.2.3 Target Market Profile Within  the  beauty  market,  Laneige  specializes  on  specific  market  segments.  They  offer  skin  care,  makeup  and  a  men’s  line.  Laneige  offers  each  of  these  segments  a  wide  selection  of    Figure 1 Target Market  

focus   products   to   meet   different   needs.   When   they  venture  internationally,  they  usually  have  a  product  or  brand   they   enter   with   to   attract   a   specific   target  market  potential.    

1.2.4 International Involvement Laneige has helped women around the world feel more beautiful through their water science technology skin care. Also, they’ve maintained a great image throughout Korea for their products clean and sophisticated nature that inspires “confidence of youth, energy and beauty.” 17 It’s no wonder why they’re one of the most popular brands in Korea and why Amorepacific chose them to enter the Chinese market first at the start of the century. 18 Attention was shifted to South Korea’s popular culture in the 90’s when the government promoted and exported factors of the entertainment industry. 19 Also, in recent years South Korea has been experiencing a global phenomenon called the Korean Wave, which is the appeal from international audiences to South Korea’s pop culture. 20 It’s not only Chinese women who are falling for the Korean wave but global beauty trends can be seen in the United States. For example, Allure Magazine, a well-known name published an article on Korean beauty trends that were popular and encouraged readers to try. 21 It’s not only Chinese women who are falling for the Korean wave but global beauty trends can be seen in the United States. For example, Allure Magazine, a well-known name published an article on Korean beauty trends that were popular and encouraged readers to try. 21 Aside the image, a lot of foreign customers are actually deeming Laneige products superior to other’s in the market. In China, one woman who was using Estee Lauder, a very popular brand in China, said she liked Laneige better because it was made for Asian skin and she found better results. 22 Laneige is primarily present in most of Asia, Canada and France as part of Amorepacific’s global expansion strategy. 23

15 http://en.amorepacific.com/about/about_bp_foreign_01.jsp 16 http://en.amorepacific.com/about/about_bp_foreign_03.jsp 17http://www.laneige.com.my/brand/intro_laneige.jsp 18 Kitchens, S., & S., K. K. (2006). Pacific Quest. Forbes, 177(11), 1246-126. 19 Fairclough, Gordon. Wall Street Journal, Eastern edition [New York, N.Y] 20 Oct 2005: A.1. 20 http://www.korea.net/Government/Current-Affairs/Korean-Wave 21 http://www.allure.com/beauty-trends/blogs/daily-beauty-reporter/2013/08/korean-beauty-trends.html 22 http://ajw.asahi.com/article/business/AJ201308080084 23 http://www.laneige.com.my/brand/global_content.jsp

Market Specialization S1 S2 S3 P1 P2 P3

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1.3 SWOT Analysis Strengths: Laneige has a strong Brand image with great popularity throughout South Korea with Song Hye Kyo as an ambassador. Amorepacific, holding 2.7% of the global cosmetics market share 24, will be of help to Laneige when they enter new market because of Amorepacfic’s global experience and economies of scale in production. The Waterful Sharing campaign and the Fair Beauty Trade measures, part of the sustainability management, has improved Laneige’s image. The new management policy implemented would help all its brands to expand globally. Figure 2 SWOT Analysis

Opportunities: If Laneige could find a market close to their own, it would limit their adaption efforts when they go abroad and they could promote and sell using similar methods. The U.S. was an example given earlier where Super luxury products were growing in demand and become an opportunity for Laneige’s expansion. A big opportunity came from the growth in popularity of the Korean wave. It increased markets across the world to gain interest in South Korea, so knowing this it’s important to make promotions including famous figures in South Korea. Also, there was a projected increase in the market size for men’s skin care over the next few years, so we can expect an increase in sales. 24 http://en.amorepacific.com/about/about_news_list.jsp

• Global competition • Country’s

perception of Korean products

• Similar markets • Super luxury customers

• Korean wave appeal

• Men’s skin care

• Lack of experience in

non-Asian countries

• Advertisement strategy may

not be applicable

• Brand Image • Amorepacific • Economies of scale

• CSR • Management policy Strength Weakness

Threats Opportunities

Weaknesses: Amongst it various product lines, Laneige has aimed to provide products that meet the standards of Korean women and has not adapted to any foreign countries need. Although they would know Asian beauty wanted the best, they had little to no experience internationally. For example, the advertising efforts would not be as effective in the U.S. if nobody knew who Song Hye Kyo was.  

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1.4 Industry Analysis Skin care Industry: The cosmetics industry is highly volatile and competitive. It’s important to take several factors into consideration before making an entry into any potential market. Figure 3 Porter’s Five Force

Threats of Substitutes: “Even during turbulent times after the global financial crisis, the industry showed its recession-resistance by growing approximately 11%.” 25 This shows an inelastic demand for products in the industry. Skin care especially had 1,500% growth over the past 15 years, so the threats for substitutions are low. Consumers will take quality skin care products with trusted R&D over other substitutes. 26 On the other hand trends vary by season, which is true for color makeup. With this being said, products introduced as the newest and trendiest have a high threat of substitution when new trends roll around. Laneige must maintain its quality in its skin care lines and plan for market trend changes. Bargaining Power of Suppliers: By looking at Exhibit 3, we know that Laneige would be categorized under a large size cosmetic company. From this graph we know that the value-chain operation has the bigger size and broke even. From Exhibit 4 we see the large polarization between small-scaled players supply chains and Amorepacific’s. Also, “distribution channels for cosmetic products in Korea are characterized by an extensive network of street shops or the long-lasting dominance of the three major department stores.” 25 Taking this into consideration, Amorepacific has more distribution options and provides great business for suppliers than small-scaled players giving suppliers low bargaining power. 27 Bargaining Power of Buyers: Because there are so many brands to choose from and competition is high within the industry, the power of the buyer is high. 25 http://www.s-ge.com/schweiz/export/de/filefield-private/files/60272/field_blog_public_files/21985 26 http://www.koreatimes.co.kr/www/news/biz/2014/02/330_149605.html 27 (2010, July 22). Cosmetics. March 31, 2014, from file:///Users/lysetteguambo/Downloads/Cosmetics%20final_100722_eng.pdf

Skin care Industries

Threats of Potential EntrantsHIGH

Bargaining Power of BuyersHIGH

Threats of Subsitutes

LOW / HIGH  

Bargaining Power of SuppliersLOW  

Threats of New Entrants: Looking at Exhibit 2, it’s clear to see that cosmetic industry in South Korea has continuously grown over the past few years. Also, “an annual average increase of more than 10% in total market value of the domestic cosmetics industry was recorded over the last five years.” 25 This number made it very appealing for foreign companies and upcoming domestic SME companies to enter the South Korean beauty market. For example, companies like “Procter & Gamble, L’Oréal and Beiersdorf are widely known and sold.” 25 A recent example was Keihl’s entry to the market. They were able to accomplish a 3-digit growth rate on top of forming a good reputation from word of mouth in South Korea. 25  

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Intensity of Rivalry: In the industry there are three big domestic corporations: Amore Pacific, Able C&C and LG Household & Health Care. They accumulate a combined total of more than 50% of market share for cosmetics sold in South Korea. Other SME companies compete for the remaining market share. It’s important to monitor foreign companies who are gaining popularity in the domestic markets because of their impressive growing sales rates. 25

2 Global Market Search 2.1 Country Selection 2.1.1 Region Western Europe is a great target region because Laneige sounds like a French company name, and it already has a presence in France through fragrance sales. Western Europe is full of urban people who would appreciate the innovation and sophisticated beauty that Laneige stands for. Western Europe has an existing flourishing cosmetic industry with competitors from some of the top ranked global beauty brands around the world. Companies like Lancome, Estee Lauder, Nivea and Shiseido etc., both high-end and drug store brands like Maybelline have proved competitive enough to venture into these countries with great success. If Amorepacific’s corporate goal was to rank within the top 7 beauty brands by 2020 28, Laneige can help them reach that goal by stating its presence by entering the Western European beauty industry and competing with the top brands. It may seem risky to enter a market with small recognition compared to the current competitors but keeping in mind the Korean wave trend has captured the attention of a lot of Europeans who want to emulate the Korean popular culture. 29 Also, Laneige has a different type of science behind its skin care that makes it unique to the market and its competitors. The definition of Western Europe according to United Nations Statistics Division includes the following countries: Austria, Belgium, France, Germany, Liechtenstein, Luxemburg, Monaco, Netherlands and Switzerland. 30 The region of Western Europe according to the definition has been chosen for the first part of the country selection. Laneige will compete with some of the top brands in the region through their products differentiated features and appeal to Korean culture. 2.1.2 Country Comparison In order to narrow down the country Laneige will first enter, a chart will be used to compare the different countries based on market and economic factors. Through this comparison, the three final countries with the most potential will be chosen to do a full comparison. 28 http://en.amorepacific.com/about/about_news_list.jsp?curPage=2 29 http://dx.doi.org/10.4236/aasoci.2012.23026 30 https://unstats.un.org/unsd/methods/m49/m49regin.htm

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Table 1 Country Side-By-Side Comparison Country Austria Belgium France Germany Liechtenstein Luxembourg Monaco Netherlands Switzerland

GDP per capita in US $ (2013 est.) Rank Weighted

$42,600 $37,800 $35,700 $39,500 $89,400 $77,900 $65,500 $41,400 $46,000

3 3 3 3 5 5 5 3 4

45% 1.35 1.35 1.35 1.35 2.25 2.25 2.25 1.35 1.8

Urban Population % in 2012 Rank Weighted

68.00% 98.00% 86.00% 74.00% 14.00% 86.00% 100.00% 84.00% 74.00%

4 5 5 4 1 5 5 5 4

20% 0.8 1 1 0.8 0.2 1 1 1 0.8

Age Structure for Females (15-54 years in millions) Rank Weighted

2.225 2.685 12.556 20.853 .010266 .141874 .006734 4.405 2.212

3 3 5 5 1 1 1 5 3

35% 1.05 1.05 1.75 1.75 0.35 0.35 0.35 1.75 1.05

Overall Rating 100% 3.2 3.4 4.1 3.9 2.8 3.6 3.6 4.1 3.65

Source: CIA WorldFactbook.com 2.2 Criteria Selection In the previous section, the criteria selection displays the rating and weighing of the various factors. The factors that were considered in the model were significant in determining the best countries to enter. Factors like GDP per capita are important to consider because they are a strong indicator of a country’s standard of living and the country’s economic performance. It’s good for comparing different countries. The age structure for females between the ages of 15-54 years was good to consider became they would be the most likely gender to invest in skin care and within those age ranges. Urban population was another important factor to consider because a skin care line from Asia would be a new concept to Western Europeans. More than likely, the people currently buying cosmetic or skin care items live in urban cities because there is a higher concentration of people. Also, it is more likely that an urban population would be willing to be more accepting of foreign brands than non-urban areas due to globalization. To perfect the criteria selection it’ important to note that age population of females between 15-54 years is the most significant factor because they will more than likely be the ones who will be future customers, so we must take extra precaution to target them effectively.

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2.3 Country Evaluation The evaluation was done by ranking the countries on a scale of 1-5 where 5 was the top score and 1 was the lowest score. The weighing process was based on the criteria that was considered most significant for Laneige’s market entry to Western Europe. The weight was calculated for each Western European country and the overall score for attractiveness was ranked as a weighted average for each country. The final results are listed in Figure 4 Country Side-By-Side along with the ranking ranges. Based on the evaluation, the three countries with the highest weighted score are: Netherlands (4.1), France (4.1) and Germany (3.9). 2.4 Conclusion and Recommendation It is recommended for Laneige to select one of the three countries that were ranked within Figure 4 because the countries represent the highest opportunities for GDP per capita consumers, urban population and females within the target age range. Austria and Switzerland had the next highest rank (3.2), and they had similar scoring in every category. After Laneige is experienced throughout Western Europe and establishes a presence, it may be a good idea to target both Austria and Switzerland at the same time because of market similarities for future expansion plans. 3 Market Analysis 3.1 Pest Analysis 3.1.1 Netherlands The Netherlands borders the Northern Sea and neighbors Belgium and Germany. 31 Some of its major cities surprisingly have a low population concentration rate. Taking population size for example, Amsterdam (741,636), Rotterdam (598,199) and The Haque ( 474,292). 32 Some good new about the Dutch beauty market was that skin care was the highest submarket within the market. “In 2012 the cosmetics market realized a growth of 1,1 percent. The main factors contributing to this growth were the success of many product introductions and product innovations.” 33 This is good news for Laneige as a potential market entry because the entry product is a skin care product and it’s new to the country and highly innovative. Political Factors: The Netherlands’ government type is a constitutional monarchy and became independent on January 23, 1579. The Netherlands was one of the first countries to sign and join NATO 31 as well as being a founding member of the European union in 1952. 34 “Political stability makes the Netherlands an excellent place to locate an SSC. Laws and policies in place encourage entrepreneurial activity. The Netherlands is known throughout the world as a solid,

31 https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html 32 http://www.geonames.org/NL/largest-cities-in-netherlands.html

33 http://www.ncv-cosmetica.nl/uk/market-data/ 34 http://www.eucom.mil/mission/the-region/netherlands

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trustworthy business partner.” 35 The Netherlands also has a “Competitive 20% corporate income tax rate over the first 200,000 euros of taxable profit and 25.5% on the excess over that amount.” 34 “Netherlands' strategic location, pro-business government, tax laws and labor force make it easier to launch or expand your operation in Europe.” 35 Economic Factors: “As an open economy, the Netherlands has always given priority to a transparent and stable tax system, flexible enough to anticipate the rapidly changing requirements of international economic flows.” 37 Service accounts for 72% of the Netherlands GDP making it a favorable environment to find a skilled work force. 31 The country’s GDP is in USD $696.3 billion (2013 est.) which was 24th in the world with a slight decrease since 2011 by 3.5%. The inflation rate is 2.8% (2013 est.). 31 The current exchange rate for 1 USD = .72 Euro. 39 A future problem to watch out for it the projected outcome that in 2013, an economic recession in the Netherlands may cause Laneige to be careful in terms of pricing because customers will lose confidence and become more price sensitive. 34 Social Factors: The Netherlands has a population size of 16, 877, 351 (July 2014 est.) with a growth rate of .42%. The age distribution according to a 2014 est. is people aged from 0-14 years old make up 16.9% of the population (males= 1,460,234, females= 1,393,766). Between 15-24 years of age make up 12.2% of the population (males= 1,046,323, females= 1,006,114). Between the ages of 25-54 years of age comprised of 40.4% of the population (male= 3,423,777, female= 3,399,378). Those between the ages of 55-64 years of age made up17.6% (males= 1,088,860, females= 1,094,574). Finally, those 65 years and over made up only 17.1% of the population (males= 1,331,258, females 1,633,067). 40 Technological Factors: The Netherlands rank 2nd in terms of communication technology compare to Portugal. “The Netherlands communication infrastructure is a frontrunner in Europe for overall value, quality and specialized IT services. In today's economy, advanced telecom, web and data transmission systems are vital communication links.” 41 “The Netherlands hosts the largest Internet hub in Europe. The government's stimulation of Internet usage, puts the Netherlands at the top of the list for access among major European countries.” 42 More than 90% of households in the Netherlands have TV or Cable connection not only to domestic channels but

also foreign. There are 7.086 million mainline users (2012 est.). In 2008, it was reported that there were 600 radio stations that covered regional and national news. Also there are 14.872 million Internet users. 43 There is 1 Heliport, 29 airports, 139,295 km roadways and 6,237 km waterways. 44

35 http://europa.eu/about-eu/countries/member-countries/netherlands//index_en.htm 36 http://www.nfia.com/ssc_comparison.html 37 http://www.iamsterdam.com/en-GB/business/setting-up-your-business/Why-Amsterdam/Key-location/Fiscal-advantages

38 http://www.nfia.com/ 39 http://www.xe.com/ucc/convert.cgi 40 https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html 41 http://www.nfia.com/ssc_comparison.html 42 http://www.nfia.com/ms_technologyinfrastructure.html 43 https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html 44 https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html

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3.1.2 France France is a country with a lot of global influence as well as being a modern/leading country in Europe. They have a republic government and a thriving economy. France is known for many of its’ iconic cities with large population concentrations like Paris (2,138,551), Marseille (794,811) and Lyon (472,317). 46 One thing to note about France’s cosmetic market is that there’s a growing trend in firming/anti-cellulite body care in France. “Looking at the forecast period, skin care is expected to remain fairly stable. The two big winners are expected to be mass anti-agers and mass firming/anti-cellulite body care.” 47

Political Factors: Import authorization may be required and they don’t have a MFN tariff policy.48 They have a 20% tax policy. 49 France has a 69.9 rate of freedom from corruption, 48.4 rate of fiscal freedom, 79.9 rate for business freedom and 82.8 rate of trade freedom. 50 France is also a permanent member of the United Nations Security Council, NATO, the G-8, the G-20, the EU and other multilateral organizations, proving it’s important global role. 45 VAT rates for importing items to France are 19.6%. “There are a small number of banks operating in France but it’s primarily government dominated.” 51 Economic Factors: Labor cost in France is projected to continue to increase. 52 They also have a 70-point rating for financial and investment freedom. “The government still dominates major sectors of the economy as a large shareholder, and government spending accounts for over half of GDP. The government has pursued various reform measures to increase the competitiveness and flexibility of the economy, but overall progress has been slow.” 51 In 2013, France’s GDP is 2.273 trillion; the real GDP growth rate is expected to be .2% with an inflation rate 1.1%. 53 The current exchange rate for 1 USD = .72 Euro. 39 Social Factors: France has a population of 66,259, 012 people (2014 est.), with a positive growth rate of .45% (2014 est.). The age distribution according to a 2014 estimate for 0-14 years of age make up 18.7% of the population (males- 6,337,877, females- 6,053,185). For those15-24 years of age made up 11.9% of the population (males- 4,018,044, females- 3,837,191). Those between 25-54 years made up 38.6% of the population (males- 12,851,278, females- 12,719,073). 55-64 years made up 18.3% of the population (males- 4,012,614, females- 4,290,624). For those 65 years and over, they made up 17.9% of the population (males- 5,197,519, females- 6,941,607). 54 45 https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html 46 http://www.geonames.org/FR/largest-cities-in-france.html 47 http://www.euromonitor.com/skin-care-in-france/report 48 http://www.dutycalculator.com/hs-code-duty-rate-import-restrictions/330499/skin-products/3304.99.5000/3304.99.0000/537/ 49 http://france.angloinfo.com/money/general-taxes/value-added-tax/ 50. http://www.heritage.org/index/country/france 51 https://www.dutycalculator.com/country-guides/Import-duty-taxes-when-importing-into-France/ 52 http://www.tradingeconomics.com/france/labour-costs 53 https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html 54 https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html

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Technological Factors: France’s telecommunication systems are highly developed. In 2012, there were 39.29 million mainline users, 62.28 mobile phone users, and they have a mix of privately owned and publically broadcasted TV shows as well as having radio programs that reaches 7 national networks regional and abroad (RFI- Radio France International). There are 45.262 million and 44.625 million metropolitan Internet users. 55 Infrastructure is well establish in France, there are 464 airports, 1 Heliport, 29,640 km railways, 8,501 km waterways and 1,028,446 km roadways in France metropolitan areas. 56

3.1.3 Germany Germany has a highly competitive skin care market. Innovation and new products are some of the main drives behind the market. 57 In Germany, the dominant distribution channel for beauty is through drugstores out of convenience and the “selection of mass-marketed beauty brands” 58

Also, a recent trend in 2012 started when a couple of top brands started to offer “green washed” skin care because of a recent growing trend in “organic and natural beauty products”. 58 Also, the trend for German skin care revolves around anti-aging products and fast penetrating serums. 57 Some of the main cities in terms of population in Germany are Berlin (3,439,100), Hamburg (1,769,117) and Munich (1,330,440). Political Factors: Germany is a Federal Republic type of government.59 Germany joined NATO in 1955 60 and was a founding member of the European Union. 61 As part of the EU-Korea FTA there will be elimination on tariff’s for skin care and cosmetic products. 62 Germany has a standard 19% VAT rate. 63

Economic Factors: In PPP terms, Germany has the highest econmy in Eurpope an the 5th highest in the world. Germany’s GDP in 2013 was estimated at $3.227 trillion dollars. A 2013 estimate found that in terms of GDP real growth rate Germany had a .5% growth.64 Germany’s inflation rate is 1.6%64 and interest rate is .25%. 65 the exchange rate is 1USD = 1.39 Euro. 66

Germany has had a slightly decreasing amount of FDI I 2012at 27,221,322,304 from 42,787,029,626 in 2011. 67

Social Factors: Germany has a population size of 80,996,685 (2014 est.) with a growth rate of (-.18%) (2014 est.) The age distribution according to a 2014 estimate for 0-14 years of age make up 13% of the population (males- 5,386,525, females- 5,107,336). For those15-24 years _____________________________________________________________________________ 55 https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html 56 https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html 57 http://www.euromonitor.com/skin-care-in-germany/report 58 http://www.euromonitor.com/beauty-and-personal-care-in-germany/report 59 https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html 60http://www.nato.int/cps/en/natolive/topics_52044.htm 61 http://europa.eu/about-eu/eu-history/index_en.htm 62http://eeas.europa.eu/delegations/south_korea/documents/eu_south_korea/presenter_1-1_tariff_liberalisation_en.pdf 63 http://www.dutycalculator.com/country-guides/Import-duty-taxes-when-importing-into-Germany/ 64 https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html 65http://www.tradingeconomics.com/germany/interest-rate 66http://www.tradingeconomics.com/germany/currency 67 http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD

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of age made up 10.6% of the population (males- 4,367,713), females- 4,188,566). Those between 25-54 years made up 41.7% of the population (males- 17,116,346), females- 16,664,995). 55-64 years made up 21.1% of the population (males- 5,463,221,) females- 5,574,166). For those 65 years and over, they made up 20.9% of the population (males- 7,468,552, females- 9,659,265). 68 Technological Factors: “Germany has one of the world's most technologically advanced telecommunications systems; as a result of intensive capital expenditures.” 69 They have 50.7 million mainline users, 107.7 million cell users (2012 est.), About 90% of all households have Tv’s and a lot of national, regional an local radio stations. A 2009 statisic showed that Germany had 65.125 million Internet users. 69 As far as infrastructure goes, Germany has a well developed system for transportation that includes:539 aiports, 23 Heliports, 645,000 km roadways, 41,981 km railways and 7,467 km waterways. 70

3.2 Market Attractiveness and Growth Potential Based on the criteria, see exhibit in the appendix, these countries are attractive markets based on population size (growth potential) and GDP per capita (attractiveness). It’s important to enter a market with a lot of opportunity for potential growth in consumers and their ability to purchase our products. When it comes to growth potential, Germany shows the highest ability for both. Figure 3 Market Attractiveness and Growth Potential

Source: Author 68 https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html 69 https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html 70 https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html

0  

1  

2  

3  

4  

5  

0   1   2   3   4   5  

Attr

activ

enes

s

Growth Potential

Market Attractiveness and Growth Potential

Germany France Netherlands

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3.3 Competitive Analysis 3.3.1 Main Competitors In Netherlands, the competition for win is led by “Beiersdorf AG was the largest manufacturer within skin care in the Netherlands in 2012, accounting for a value share close to 20.” 71 They were able to hold on to their market share despite the slight decrease in sales because of the strength of their Nivea brand, which comes from customers’ strong brands value stating “they wouldn’t replace with an alternative brand or a private label product even during the economic crisis.” 71 “The Dutch skincare market was valued at E628.4m in 2011by the end of 2016, the skincare market will be worth E710.7m.”72 “The Dutch skincare market was led by facial care (representing 64.5% of the total market value) followed by body care (representing 15.8%), suncare (representing 12.4%), make-up remover (representing 3.2%), hand care (representing 2.4%), and depilatories, which makes up the remaining 1.8%.” 72 In France, Beiersdorf (France) was also a leading player in skin car with 10% value share, once again with nivea brands.73 Beiersdorf has a strong hold as the value share leader in Germany’s highly competitive market as well with 18% value share due to it’s brand, Nivea, who has a long tradition and popularity in the German market. 73 3.3.2 Market Entry The beauty industry is highly globalized in Western Europe. According to the 2013 reports from the International Trade Centre for the category: Products Product: 33 Essential oils, perfumes, cosmetics and toiletries, France was actually the biggest exporter of beauty with more than $16 million dollars in export compared to its’ more than $5 million dollars of beauty imports. Germany on the other hand had the highest imports and exports for beauty making it the true global leader for the industry. The Netherlands has and equal amount of beauty exports and imports in 2013 but amongst France and Germany it was the lowest. 74 Table 3 Importations and Exportation of Beauty

Imported value for 2013 in USD

Exported value for 2013 in USD

France $5,637,896 $16,682,441 Germany $7,048,858 $11,141,505 Netherlands $3,094,007 $3,308,331

Source: Trademap.org

71 http://www.euromonitor.com/skin-care-in-the-netherlands/report 72 http://www.datamonitor.com/store/product/skincare_in_the_netherlands_to_2016?productid=CM00237-013 73 http://www.euromonitor.com/skin-care-in-france/report 74 http://www.trademap.org/index.aspx?ReturnUrl=%2fCountry_SelProduct_TS.aspx

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3.3.2 Other Competition Skin care is one of many parts of the cosmetics industry. There’s skin care, hair care, makeup, toiletries and fragrances. As you can see in Figure 4, skin care dominates the cosmetics market with a 32% share, after that is hair care with 27%, then make-up with 17%, toiletries 12% and fragrances with 12%. The closest thing in cosmetics to compete to skin care is hair care but they aren’t relevant enough by category to provide a threat of replacement for skin care. Figure 4 Cosmetics Market Categories and Share

Source: Author (info: http://www.loreal-finance.com/_docs/us/rapport-2008/12_marches.pdf) Figure 5 provides general consumption in dollars for products within the cosmetics category in terms of sales. It’s clear again to see that the skin care segment has always had a strong hold on the Industry in terms of shares and sales. Figure 5 Cosmetics Industry Growth from 2008-2013

Source: http://blog.bharatbook.com/europe-a-boom-in-the-cosmetic-market/

Skin  Care,  32%  Hair  Care,  27%  

Toilatries,  12%  

Make-­‐up,  17%  

Fragrance,  12%  0%

10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

Wei

ght o

f Mar

ker

Types of cosmetics

Cosmetics market

By category

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3.4 Country Selection 3.4.1 Country Side-By-Side Selection From the preceding table, the criteria’s shows are the one’s that will be taken into account into make a final selection for Laneige’s market entry. The criteria that was chosen for the final country selection was narrower in terms of characteristics of the markets and only a few factors, from the prior Likert scale was re-applied. The additional factors were taken into consideration to obtain a more precise idea regarding which country would best suit Laneige for a potential market entry. The new criteria added was total population in order to get a better idea of a full potential market size, ease of doing business because it would make entering a country less risky if doing business is easier and internet users as an important source for promotion such as advertisement, allowing consumers to read reviews, share the product through social media sites and be of more convenience to the consumers. Table 4 Country Side-By Side Comparison Country France Germany Netherlands GDP per capita in US $ (2013 est.) $35,700 $39,500 $41,400

Rank 3 3 3 Weighted 20.00% 0.6 0.6 0.6 Urban Population % in 2012 86.00% 74.00% 84.00% Rank 5 4 5 Weighted 15.00% 0.75 0.6 0.75 Age Structure for Females (15-54 years in millions) 12.556 20.853 4.405

Rank 5 5 5 Weighted 20.00% 1 1 1 Total Population (in millions) 66.259 80.996 16.877

Rank 4 5 1 Weighted 15.00% 0.6 0.75 0.15 Ease of doing business index 38 21 28 Rank 2 4 3 Weighted 20.00% 0.4 0.8 0.6 Internet users (in millions) 17.266 65.125 14.872 Rank 2 5 2 Weighted 10.00% 0.2 0.5 0.2 Overall Rating 100% 3.55 4.25 3.3

Source: CIA world Factobook.com. Worldbank.org

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3.4.2 Evaluation and Country Selection The side-by-side comparison of the three preferred countries reveals that Germany would be the best choice of a market for Laneige to enter. One of the most important factors to take away from this market is its potential target group size, our ability to reach that our group and the ease of doing business in the country. Additionally, it’s important to look at which city is most urban and if it’s already predominantly made up of current skin care consumers within large populations. Also, Germany has a strong economy, the largest in Europe and 5th in the world. The European union has been lifting barriers and tariffs on cosmetic imports from S. Korea as part of their new FTA, which makes doing exporting Germany a lot easier. 74 Germany has a 19% VAT rate and compared to the world, Germany ranks 5th in terms of stock foreign direct investment in Germany with $1.335 trillion dollars (2013 est.). 75 The German skin care market is based on innovation, new concepts for anti aging, and the convenience of accessibility of products. Another thing to keep in mind the new trend going around of green washing products or organic skin care has made Germany the best place for Laneige to enter it’s skin care range in Western Europe. 3.4.3 Cultural Analysis I have conducted a Hofstede report to compare the differences between Germany and S. Korea. In terms of skin care, we must note that they both ranked high in pragmatism, so when we do advertising, we must make sure to include quantitative research for the audience. Also, both S. Korea and Germany scored low on indulgence but Germany was higher, so we can take that into consideration for pricing. Figure 6 Hofstede Analysis

Source: http://geert-hofstede.com/south-korea.html 74http://eeas.europa.eu/delegations/south_korea/documents/eu_south_korea/presenter_11_tariff_liberalisation_en.pdf 75https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html

power  distance  

individualism   masculinity   uncertainty  

avoidance  pragmatis

m   indulgence  

S.  Korea   60   18   39   85   100   29  Germany   35   67   66   65   83   40  

0  20  40  60  80  100  120  Hofstede  S.  Korea  vs  Germany  

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4 Marketing Plan 4.1 Market Entry Mode The German skin care market is very competitive and the market entry strategy that should be followed is exporting for the beginning stages until the brand can gain brand recognition, brand loyalty and become better establish against it’s competitors. As the brand and product test out in the market, if Laneige succeeds a joint venture with importing companies and distributors should be considered because of Germany’s efficient logistics systems and companies are good to opportunities to further establish a brand in the market. For the time being, Laneige doesn’t have a lot of brand recognition, so it’s important to establish the brand in the most efficient, profitable and least risky manner possible, so exporting is the best choice. 4.2 Product The German skin care market is slightly versatile, one consumer preference is products like serums that are more potent and quickly penetrating into the sin because of the small particles and higher concentration of active ingredients but this represents a niche market still. 77 “With more than 52% of the population was above 40 years of age as of 2012, the population mix in Germany has been skewed towards the aging population …. country's population looking to age further, the future target for retailers should be the richer, aging "gray" consumer rather than the cash-strapped young consumers.” 76 Another type of consumer prefers natural inspired products and this type of product has seem positive growth within recent years. 78 For example, “As announced at the Natural Cosmetics Conference in Berlin in September, the German market for certified natural cosmetics grew by 10.2 % in the first half of 2013…the market experts expect sales in Germany to rise to over 950 million EUR by the end of the year and top the billion mark next year.” 79 This phenomenon is coming more composed of the younger generation of consumers who are more consciously aware of environmental problems. To meet a good range of the potential market size, I suggest we focus on Laneige’s Water Bank Gel Cream, which is innovative, part of the Beauty fair trade and price conscious. To address the other consumer concerns, I also suggest targeting the market size with Laneige’s Perfect Renew Night Treatment, which is a serum that will address the concerns of those who are worried about aging and want fast acting options. In terms of packaging, I suggest to stay with Laneige’s blue color concept because according to the color theory, blue means luxury and blue, grey, white and black together represent intelligence.

76http://www.sbwire.com/press-releases/just-released-market-focus-trends-and-developments-in-the-skincare-sector-in-germany-460432.htm 77http://www.euromonitor.com/skin-care-in-germany/report 78http://www.euromonitor.com/beauty-and-personal-care-in-germany/report 79http://www.organic-market.info/web/Europe/Germany/Vivaness/220/228/0/15904.html

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4.3 Price Germany has an elastic demand meaning the demand changes when the price changes. On of the characteristics of the German skin care market is the price sensitivity. I suggest that we use an aggressive pricing strategy to stay competitive to the other brands in the market but we also remain with our prestige quality of our products. Our pricing will be slightly premium for our Perfect Renew Night treatment because the quality is high, so the cost is understandable to be expected to be high. Our Water Bank Gel cream will be priced at a price floor to compete with standard moisturizers with competitive pricing. None of our products will be subjected to tariffs. By doing a top down analysis of the price structure we can identify Laneige’s sales price for 3 products from its water bank line and 2 from the perfect renew line. The figures used were adapted from won to USD and a few factors were assumed according to duty calculator because there was not enough information, so we will need to conduct better market research.80

Table 5 Top Down Price Analysis Price in USD

Water Bank Essence

Water Bank Gel Cream

Water Sleeping Pack

Perfect Renew Night Treatment

Perfect Renew Cream

Retail price $39.27 $39.27 $36.89 $69.02 $64.45

Retail price net of VAT $33.00 $33.00 $31.00 $58.00 $55.00 Retailer margin % 30.00% 30.00% 30.00% 30.00% 30.00% Retailer margin $ $9.90 $9.90 $9.30 $17.40 $16.60

Distributor price $23.10 $23.10 $21.70 $40.60 $38.40 Distributor margin % 15.00% 15.00% 15.00% 15.00% 15.00% Distributor margin $ $3.47 $3.47 $3.26 $6.09 $5.76

Importer price $19.64 $19.64 $18.45 $34.51 $32.64 Importer margin % 25.00% 25.00% 25.00% 25.00% 25.00% Importer margin $ $4.91 $4.91 $4.61 $8.63 $8.16

Logistics $0.45 $0.45 $0.45 $0.45 $0.45 Breakage $0.45 $0.45 $0.41 $0.64 $0.58 Warehousing $0.17 $0.17 $0.17 $0.17 $0.17

Tariff 0 0 0 0 0

Producer price $13.66 $13.66 $12.80 $24.62 $23.28 Source: Author 79http://script-thai.eu/wp-content/uploads/2011/06/Cosmetics_Rung.pdf 80http://www.dutycalculator.com/country-guides/Import-duty-taxes-when-importing-into-Germany/

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The pricing strategy is to cover the two main segments of the market, middle and premium skin care. Laneige is known for being a more prestige brand in Korea, so in order to adapt to the German skin care market, the products need to match the consumer segments. An aggressive pricing strategy will be adopted in order to meet the high competition of the market. Pricing the products around the same range and lower if possible compared to its competitors, while delivering value. For our two main products of interest, the perfect renewal night treatment at $69.02 will yield $24.62 and the Water Bank gel cream will be $39.27 with a yield $13.66 for Laneige, this price is in line with the competitors of the German market. Figure 7 Pricing model

4.4 Promotion The way we enter the market through promotions is an essential part of our success in reaching our target audience. We must take into consideration some of Germany’s advertising regulations. For example, newspaper editorials can’t be bought to promote products because it can cause unfairness. Advertisement must not injure the reputation of other brands, comparative advertisement is prohibited and Ad’s can’t be misleading. 81 With this in mind and knowing that 90% of German households have access to cable, I suggest mass marketing through cable, the internet because of their millions of users, advertising through magazine ads, holding radio contest, apply a similar strategy from S. Korea, which is having a famous person as the brand’s ambassador. It’s important that we invest in promoting the brand the first few years to gain it’s establishment. 81http://www.nalsarpro.org/ML/Modules/Module%204/Chapter-5.pdf

Product •  Mid-High

Price •  Mid

Promotion •  High

Placement •  Mid

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4.5 Placement By going with a selective distribution strategy, I think it’s important to be able to sell our products in various locations such as drug stores, malls and beauty stores, and discounted chains. If Laneige proves success in Germany we can move into adding new lines into Supermarkets and hypermarkets. Our locations must be accessible to our target audience. 4.6 Sales Forecast and Projected Income Statement The decision has been made to use distribution channels to link us to stores to sell from into the market. I suggest we use FCA approach if possible to reduce the risk on our part t and leave more to the distributer. The goal for the first two years is to achieve a 0.2% market share in Germany’s highly competitive market by selling a total of 800k skin care units. Perfect renew night treatment (69022462, will be sold in specialty stores, and we will provide/encourage training for advisors to educate the customers of our products. The Perfect Renew Night Treatment will be sold as a premium product; the Water Bank Gel cream will be our price competitive product. To avoid risk in the short term we will export to avoid or minimize risk and hedge if necessary. We are aware of transportation cost and exposure risk but it’s less costly then doing a FDI in a market we aren’t sure about yet. We will assume that the marketing budget will be about 3 million to start off with to support the brand for 2 years. We will use the marketing to introduce, educate, host events, hold press event and hire a spoke person. A team effort from Amorepacific’s marketing division and a German distributor company will work together to figure out a way to increase and improve Laneige’s position in the market. The first year goal is to sell 300,000 units and 500,000 by year two. We hope to increase by 60% of the first year’s goal after people are given time to try the products and their build loyalty. We want to reach as many of the women we can and potentially some of the male segment that’s interests in anti-aging. More quantitative and ethnographic research is required to better understand and forecast consumer preference Recommendations As Laneige enters the Western European skin care markets, they have an advantage by having something new to bring to the table. By penetrating the German skin care market; it will open up brand recognition for the brand if it succeeds. Of all the Western European countries, specifically the three countries in our Likert scale, are all great potential target markets, it’s a good place to establish a brand in a mature market where something new is needed. The countries were all economically exceptional and some were freer for conducting business than others. The German skin care market needs something new, innovative; targeting aging with an organic appeal and Laneige is a great fit. The demand is expected to grow and there are already key players, so by being the brand with the most to offer stands out. It is recommended that Laneige enters the German skin care market targeting two segments with two product lines. A mid ranged product for the consumers who want something new and innovative and one that’s powerful for anti-aging at a more mid-high end price range. The pricing strategy is aggressive because of Germany’s industry environment that’s highly competitive and will be priced similarly while maintaining quality. Laneige should enter the

25    

market using FCA importing to minimize risk and utilize the local importers, distributors to reach our target and other segments and geographies. An initial investment in marketing spending is recommended to spread brand name.

26    

Exhibit 1 Laneige’s Product Range

Skin Care Makeup Homme

Cleansing Base Perfect Shave

Water Bank Lip Active

Water

Special Care Cheek

Pore & Trouble clearing

Sun Care Eyes Pure Brightening

White Plus Renew Sun care

Pore Care     Cooling Trouble Relief    

Perfect Renew

Source:http://www.laneige.com.sg/main.jsp Exhibit 2 Likert Scale Phase two info

Country Austria Belgium France Germany Liechtenstein Luxembourg Monaco Netherlands Switzerland

GDP per capita in US $ (2013 est.)

$42,600 $37,800 $35,700 $39,500 $89,400 $77,900 $65,500 $41,400 $46,000

Urban Population % in 2012

68.00% 98.00% 86.00% 74.00% 14.00% 86.00% 100.00% 84.00% 74.00%

Age Structure for Females (15-54 years in millions)

2.225 2.685 12.556 20.853 0.010266 0.141874 0.006734 4.405 2.212

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Exhibit 2 Phase 2 Likert scale ranking Ranking Scale

1 2 3 4 5

GDP per capita in US $ (2013 est.)

$0 - $15,000

$15,000 - $30,000

$30,000 - $45,000

$45,000 - $60,000 > $60,000

Urban Population %

0% - 20% 20% - 40% 40% - 60% 60% - 80% 80% - 100%

Age Structure for Females (15-54 years in millions) 0 - 1.0 1 - 2.0 2 - 3.0 3 - 4.0 > 4