THEFACESHOP is the new and increasingly popular face of South Korea's cosmetic industry, the seventh largest in the world with per capita consumption of beauty products ranked in the top five in the world. Started in 2003 in Myongdong, THEFACESHOP has captured 7 percent of the US$5 billion beauty market of South Korea and is the third largest cosmetics company in the country. The company has seen a very fast growth since its inception. THEFACESHOP recorded sales of US$162 million in 2005 and operates more than 400 franchised shops in Korea and more than a hundred in 12 countries. This impressive growth of the brand in the highly competitive cosmetic market of South Korea brings to fore the importance of branding in Asia.
THEFACESHOP has an attractive value proposition for the customers. True to its brand slogan 'Inspired by nature', the brand is built on the appeal of nature ingredients from almost 600 varieties of botanical extracts. All products are claimed to have been produced from natural products with no chemicals. Korean people have been fussing about 'Well-Being' and have become much more health conscious in recent years. In the beverage industry, healthier drinks have been more popular in Korea. Before, people drank green tea like water, but now people drink it because it is cool and as part of the trend of being health conscious. THEFACESHOP has recently done a joint marketing campaign with Coca-Cola Korea on Green Tea.
Further, these products are made available at a very affordable price. The receding South Korean economy during the early 2000 forced many consumers to shift from expensive global brands to THEFACESHOP which offered quality products at a good price. This impressive combination has lured customers to the brand even after the economy picked up.
THEFACESHOP is working with two leading Korean celebrities to promote the brand, Kwon Sang-woo and Ko So-Young. Kwon Sang-woo, a very popular South Korean actor, were signed as a brand ambassador to appeal to the core customer segment of teenage girls and young women. Ko So-Young is the real 'top star' in South Korea and has maintained her image very well for the past decade. Many Koreans adore Ko So-Young and most would associate her with a luxurious, chic, and fashionable image. Ko So-Young is the type of model who fits well representing Chanel or Guerlain in the high end luxury market. The combination of the two top stars helped to raise the brand image of THEFACESHOP. By using these two models, the brand was able to convince their customers that their quality is high despite a reasonable low price level.
Before THEFACESHOP and the competing brands like Amore Pacific, Laneige, Missha, Skin Food, Beauty Credit and others, the Korean cosmetic market was segmented into luxury brands (Chanel, Lancome etc), good quality but weaker domestic brands (Taepyungyang, LG etc) and other low-price brands considered of low quality.
THEFACESHOP changed the notion that lower price equals lower quality with the brand's quality products (including perception of quality) and aggressive marketing. These factors along with the ever increasing popularity of the Korean Wave have provided the brand with a great opportunity to gain acceptance in the market place.
Up till now, Korean cosmetics shops that sold relatively cheap products did not really care about interior design. However, THEFACESHOP are spending many resources on making their stores as clean, comfortable, and stylish as possible to ensure customers to maximize their shopping experience with the brand.
The Korean cosmetics market is very competitive, and there are many national and global brands in play. Major Korean competitors to THEFACESHOP are for example Amore Pacific and Missha. Missha provides cosmetics at very reasonable prices with a similar marketing strategy of using top stars like BoA & Chang Dong-Gun.
In the future, THEFACESHOP will have to focus on the core branding aspect. Modern cosmetics brands, like apparel brands, are one of the segments which customers use as much for self expression as they would for mere consumption. Given this aspect, customers over a longer term may be more interested in associating themselves with brands that command an aura in the market place rather than one which is seen as a budget brand. A probable brand extension with specific brands targeting different segments of the market may be a sound strategy for THEFACESHOP.
Time and the market conditions would prove better judges about the success of THEFACESHOP brand in the long term, but Korean cosmetics brands are on the rise and will increasingly challenge the global market and its dominant players looking forward.