Marketing strategy for herborist
Abstract This paper attempts to investigate the internationalization process of a Chinese domestic cosmetics brand, Herborist by making a comparison of marketing strategies applied for different countries as a case study. In addition, by gaining understanding on the development of a local brand and analyzing the issues, which block the way for business expansion, suggestions are made for the exploration of future potential market.
This case study is mainly based on quantitative research, which was carried out in the form of a questionnaire conducted by 100 local and Malaysian Chinese. Besides from that, secondary data are taken from Internet and based on literatures published in English and Mandarin. The crucial steps for a domestics brand to enter the international arena is by utilizing different or undifferentiated strategy, reinforcing the innovation of Chinese oriental essence and also enhancement on brand awareness.
Keywords- Oriental, Domestic cosmetics, International marketing strategy, Market entry, Brand story, France, International business, Marketing Channels 1. Introduction In recent years, it is obviously seen that there is a thriving and robust tendency in Chinese cosmetics market, which is one of the fastest growing industries in China. Chinese cosmetics industry is prospering with each passing day and China is positioned on the third biggest cosmetics consuming market in the world while Japan and United States are stationed on the top and second.
Observing the Chinese local cosmetics industry in recent years, the sales has grown at a remarkable rate, averaging near to 20% per annum and the speed of growth ever reached to a peak of 41% which is far more exceeding the rate of the average growth of national economy. The full-fledged of Chinese local cosmetics in domestic market, in the mean time, accelerating the pace to open the windows of international market.
By keeping an eye on this remarkable development, more and more Chinese local cosmetics companies have noticed the hidden market of various business chances and proceeded differentiated brand position and applicable marketing strategies to achieve internationalization. Herborist is one of the exemplary examples. As they have already gained favorable outcome in European market, perhaps it is the right time for a deep consideration to focus and improve future brand expansion towards other countries such as Malaysia, Singapore, Thailand and some other countries in South East Asia, which tend to awake in traditional Chinese medical science.
This study analyzed the current status of Chinese local cosmetic industry and the bottlenecks of internalization, which is the advanced stage of domestic brand expansion. By acquainting the oriental characteristics of Herborist, at the same time examine different models imposed in different countries as an example of comparative study.
The aim of this thesis project was to increase brand awareness, strengthen the competitiveness in international cosmetics market by emphasizing the uniqueness of Chinese herbal organic essences and the inheritance Asians beauty, provide valuable marketing strategy for Herborist’s worldwide market expandation and reinforce the strain mode. 2. Background of the brand The first Chinese herbal care brand in China, Herborist, which is a sub brand of the “Jahwa” company, was established in 1998. Jahwa has a history of more than a hundred year as the leader of worldwide herbal medicine personal care brand (Shanghai Jahwa, 2013).
The brand is based on traditional Chinese medicine and herbal science, and has retail sales revenues of over $300m (A. T. Kearney). Herborist is noted for its distinctive with a consolidation of traditional Chinese herbal essence with cutting edge biological cosmetics science to form a natural and balanced ideal state. (Labbrand,2010) The mystical and harmonic of Chinese herbal plants is fully shown by altering all these valuable plants into a new series of natural extracted organic herbal skin care products and thus has become the legendary of herbal beauty care.
Ever since their establishment, Herborist has been encouraging the concept of being environmental-friendly. The company is advocating the natural beauty, which is gifted from the mother earth and proposed their specialization in fusing the elementary inner energy of Chinese medicine into a miracle beauty essence. Herborist has more than 200 star products which include hair and body care, herbal skin care, hands and feet line, acnes treatment, aromatherapy oils and perfume.
The target consumers of Herborist is female from the age of 25 to 35 years old who has a demand for individualized healthy beauty. The first exclusive Herborist store was opened in August 1995 at the HongKong Plaza (Kelvin Zhou, 2011), Shanghai and experienced a great success in Chinese market by introducing the market its brand-new green herbs high-end beauty care products. By setting green, fresh, organic and healthy as its brand image, the company has won a great reputation as well as leading the trends of Chinese cosmetology.
After spending five years in launching the countrywide franchise system, the sales mode was further expanded and established it first and second exclusive store in Hongkong, which is the symbolic of their first step of nationwide operation. Furthermore, Herborist SPA center was established on 28th September 2002 to provide professional and contemporary Chinese herbal care services their VIP customers who tend to be more beauty-conscious. There is no doubt that the total amount of 100 exclusive stores until January 2005 proved to be a triumph of this first full sense of Chinese herbal beauty products. Figure 1: Herborist’s Channel Mode
In February 2006, Herborist was awarded the Chinese most creative products award in consumable field, which was indeed a huge motivation for the company to introduce the oriental traditional culture to the international mainstream cosmetics industry (Oliver, 2013). The company was successfully found the entrance into the cosmetics market of Paris which rose a huge trend of Chinese herbal cosmetics fashion and launched their skin care products formally at the Sephore flagship store, which is located in Avenue des champs Elysees, Paris in September 2008 and surprisingly it became the top 10 best seller in one month time.
Meanwhile, Herborist succeeded in its entry into Holland market in October 2008 and aroused the awareness on Chinese Yin Yang philosophy for European media and the importance of green cultivation. The revenue of Herborist in France exceeded 10 million Yuan in 2009, which leaded the entry of Herborist to Italian, Spanish, Pollish and Turkish market with Sephora. 3. Literatures reviews Still the trend towards internationalization of those ambitious entrepreneurs who attempt to enlarge and extend their business continues in order to raise the brand recognition from worldwide industry.
Therefore, it is necessary for the marketing department to conduct marketing researches for data collection and it is important to utilize a customized marketing plan for different countries. (Kotabe, M. / Helsen, K. 2007) defined customization refers in the context of international marketing to a country-tailored product strategy which focuses on cross-border differences in the needs and wants of target customers, appropriately changing products in order for them to match local market conditions.
Therein, customization follows a market-driven orientation (as supposed to a product-driven orientation) and aims at increasing customer satisfaction by adapting the company’s products to loal needs. The best marketing strategies are those that are simple and easy to understand, complication of the plan will lead to failure. One of the other major dangers of any planning process is that once a plan is produced and implemented, the organization often fails to continue to monitor how well it is performing against that plan.
Very few businesses perform exactly to plan without the need to make small changes all the time(Tim Jackson and David Shaw, 2009). It comes to the conclusion that it is important for the brand leaders to acquire cultural knowledge instead of feeling anxious about the research on the traditional consumers. According to (Ralph et al. 2009), to succeed, cultural brands must reflect an appropriate market and develop a product’s identity. They must also be consistently reinvented when the marketplace changes as a reflection of popular culture.
The marketplace determines the eventual success or failure of any brand. 4. Methodology used The primary research used for this case study is a questionnaire survey conducted by 100 respondents from Malaysia. The objective of the survey is to investigate and carry out deeper market research on Herborist’s potential market in South East Asia since this brand already has a customer base in China, French, Holland, United States and some other western countries. The survey was conducted in November 2013 and it took one-week time for the data collection process via www.
surveymonkey. com. The results of the questionnaire are attached on the appendices with a brief analysis below the charts. There wasn’t any problem in language issue since the majority of Malaysians interviewed are proficient in both Mandarin and English. The first part of the survey is to collect the background information of the respondents and to monitor their buy habits on cosmetics. On the other side, the second part is to figure out their attitudes towards cosmetics, which use the traditional Chinese herbal medicine as ingredients.
The survey aims to suggest a potential market for Herborist for future business expansion by using Malaysia as an instance and it is a reference for the marketing department to customize a specific marketing plan for the South East Asian market. 5. Set of case example Herborist’s marketing strategies in China High-end SPA centre: Besides from setting up cosmetics counters at department stores, Herborist SPA centre was established since September 2002 exclusively for the VIP clients and members to raise brand loyalty and attempts to be influential in the cosmetics market.
Apart from that, the professional and revolutionary beauty care services provided by the well-trained beauticians have successfully built up a high-end luxurious image for the brand, thus increased the brands reputation. Herborist seeks to expand its business model by opening more that 100 Spa centres in these three to five years. Membership and after sales service: Herborist has been really busy with the welfare of the clients. There is no doubt that the membership system is the most efficient way to have a close connection with targeted consumers.
In order to be closely linked with the consumers, the company is running the membership system in China by using e-commerce online websites, postage, related magazines, VIP parties, bonus points gift redemption to keep the consumers up-to-date on their latest released products and maintain brand loyalty. Besides that, Herborist made a full analysis of the questionnaires conducted via the CRM database to get customers’ feedback for further improvement.
Perfect CRM system: Under the circumstances of having a strong capital base, Herborist developed the most detailed marketing department, the most complete CRM system and the finest brand managers. The marketing department is divided into four segments, which are the product development department, the CRM department, media communication department and the brand department. The reason why Herborist in China is having the different operating and marketing system with the other countries is because of China is the main base for the company and the consistency of products resources needs to be guaranteed.
Besides that, the first chef designer for Herborist was borned last year in China and was given the power for interpretion, products orientation, product line design and channel negotiation. Herborist’s marketing strategies in France Cabinets display design: Unlike the other cosmetics department stores in China, the most ideal space for products display at Sephora in France are basically reserved for fragrances and the second advantageous space are for skin care products. However, the amount beauty care products in French market are far more than in China, which is a big threat for Herborist.
In order to stand out itself among all the competitors, the company did a huge investment on the cabinets display and employed a group of well-trained French people as their sales team. The exclusive sales team is responsible to petrol at Sephora every few hours, by explaining the functions and brand concepts to clients face to face in order to shorten the distance with consumers. Expressing cultural advantages: The obvious contrast between the cultures of East and West is one of the obstacles for the company but on the other side, it is actually a decided advantage for the brand itself.
The reason that Herborist seems extraordinary comparing with the other competitors is because of the oriental cultures difference. The efforts need to put on to achieve the mission of raising a trend of Chinese herbal medicine in Europe is not only an empty talk for the oriental cultures, but the effectiveness of the products and the brand images. Till now, Herborist owns more than 200 beauty care products in the company’s rich products line to provide a multiple selection for the French market to meet with every consumer’s needs.
Moreover, the Chinese herbal medicine laboratory and research centre ,which costs more than ten millions Yuan assures to provide unlimited resources for the market needs. Price strategy: Herborist positioned itself as a high-end cosmetics brand during its entry to France. By cooperating with Sephora the well-known cosmetic chain store as a springboard, the selling price of Herborist’s products is maintaining the same as the selling price in Mainland China. The reason to maintain the same price is to wrap up the brand itself as the
cheapest luxury cosmetics brand comparing with the other international brands such as Lancome and Estee Lauder who have successfully gained brand loyalty in the market. However, in order to be distinctive from the company’s main competitors, the company is using the opposite strategy in the United States (Dennis Adcock 2000). To beat down the Herborist’s main competitor The Body Shop and Kiehl’s, which are renowned for using organic ingredients for personal care products as well, the company is selling their products in the same price as Biotherm, Clinique and some other luxury skin care brands to increase their brand values.
6. The SWOT Analysis of Herborist SWOT analysis (alternatively SWOT Matrix is a structured planning method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavorable to achieving that objective (SWOT analysis, 2013). Strengths: S1: The excellent maintenance of customer service and after sales service in China as well as the establishment of Herborist membership to keep a good connection with customers.
S2: The first premium brand of modern Chinese herbal medicine middle to high-end cosmetics into the European market. S3: Reasonable sales channel: exclusive stores + SPA +Shopping malls sale mode, satisfying consumers by all needs. S4: Effective improvement on customer communication and the most professional marketing management. S5: Still undergoing youth period, gains powerful supports from Jahwa’s professional research and development team. S6: Succeed in the expansion to European market by maintaining a close partnership with Sephora. S7: Left a clear brand image to consumer: organic, healthy, natural
Weaknesses: W1: Inadequate experience during the process of internalization. W2: Consumers overseas seems unenthusiastic in accepting a new brand due to the shortage of brand awareness. W3: Undeniably, cooperation with Sephora has its own advantages however being controlled by Sephora since it is the only distributor in Europe. Therefore, it caused various limitations for the brand itself. Opportunities: O1: The brand continues to thrive in European market under Sephora’s leadership. O2: There are not that much of foreign competitors in the cosmetics field who use Chinese herbal medicine as their selling point.
O3: Asia Pacific and Latin America’s growing demands on cosmetics and the prevailing of green and natural products in Europe. O4: The accomplishment of 2008 Olympic in Beijing was extraordinary and successfully absorbed Westerners’ attention on Chinese traditional elements. Threats: T1: Tough competition in this field with lots of well-known international cosmetics brands such as Lancome, Estee Lauder and Christian Dior as competitors. T2: Sephora’s ultimate controls hindered certain brand innovations. T3: Most of the consumers in Europeans have the tendency of having brand loyalty to some brands that are already existed.
It is demanding to seek for foreigners’ attention as herbal products usually take longer time to prove for their good effects. T4: The world financial crisis leads to the downturn in sales, the price factor has became one of the consideration for consumers before purchasing. T5: There is a serious issue that most of the Europeans left a bad impression on any ‘Made in China’ products. Eliminating the bad reputations on Chinese made products in international markets is indeed a decisive step towards the survival in the market. 8. Conclusion & recommendations
The study objective of this case study is to gather and analyze the merits and demerits of Herborist, a Chinese local cosmetics brand and suggested relevant and effective marketing strategy for the further expansion to other countries. Looking from the perspective of economic, internationalization is undeniably a crucial step for the chain of business model. Those entrepreneurs who attempted to achieve a dominant position in the world market need to conduct a detailed and complete research within other countries in order to internationalize successfully.
Due to the similarity and dissimilarity between China and the other countries in cultures, political issues, values, consumers’ behaviors, consumers’ needs, weather, and common beliefs, Herborist is suggested to pay high concerns on their business operation for the sake of adapting to different countries and cultures. Herborist, a China domestic personal care brand that has a heritage of ten years of organic brand images, undoubtedly, has the ability and potential to compete with the other international cosmetics brands even though the brand itself is still in the youth period.
According to the result of the research questionnaire for Herborist, which was conducted by 100 local and Malaysians Chinese, there are 29. 29% showed their interests on trying Chinese herbal medicine cosmetics and the other 56% expressed that they are willing to give it a try if there is an introduction of decent herbal personal care brand in the future. As a result of it, it is strongly proposed that Malaysia should be the first station for Herborist to put down their roots in South East Asians market. The main reason that Malaysia is one of the potential markets for Herborist is because of its multi-ethnic and multi-cultural.
There are approximately 6,960,000 Malaysian Chinese in Malaysia who inherited Chinese cultures from Mainland China and their predilection towards the traditional Chinese herbal medicine (Malaysia,2013). Moreover, local Malaysians who are the majority of the population, have their own preference of using medical herbs on their culinary arts, medications and personal care products such as body soap and facial wash. Besides from that, Thai, Indonesia and Singapore who have the largest Chinese community in the world are doubtlessly should be targeted by Herborist to set off a new wave of Chinese material medical wind in South East Asia.
There are some adjustments should be made by Herborist to consolidate their position as the leader of Chinese Oriental beauty care trend. The development and research team must put more efforts on doing further observations and investigations, which is a boom to develop new products to solve various skin problems and meets all customers’ requirements. Other than that, a risk management system should be built in order to identify, analyze, monitor and respond to risks and issues facing by the company when they run globally. As shown in the statistics, 55.
10% of Malaysians agreed that brand reputation is their main factor for them to consider before making a purchase. It is important for the sales department to explore decent sale channel and provide after sales service in Malaysia to monitor consumer’s attitudes towards their products and services and showing great patience in dealing with all the complaints. Moreover, the marketing department is responsible to customize and modified a different marketing plan for Herborist to enter South East Asian market for example a further approach on social media platform such as instagram, facebook and twitter as 46.
94% of them evinced the desire to know more about Herborist via online advertising. Last but not the least, the HR department is in charge of recruit and cultivate some local employees and bring in some local professional who are experienced in this field to regulate some possible culture shocks. Herborist has to make a consideration in all aspects to operate the brand in a new market, faces all the challenges with open-minded, by learning the lesson from the example of waste and failure and most importantly, is to follow the principle of gradual improvement. References Books Dennis Adcock.
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Available from: < http://www. acrc. hku. hk/case/case_showdetails. asp? ct=fagroup&c=867&cp=1726&pt=1&pn=1 [Accessed 28 November 2013]. Online Images Wei Wang (2011) International Marketing Strategy for Herborist. [online image]. Available at: [Accessed 03 April 2011]. Appendices The research questionnaire for a Chinese herbal medicine cosmetics brand- Herborist Page 1 Background information of the respondent Q1: What is your gender? Female Male Q2: Which category below includes your age? 17 or younger 18-20 21-29 30-39 40-49 50-59 60 or older Q3: Where do you usually buy cosmetics? Online Cosmetics counter at department stores
Supermarket Wholesale market Direct sales Brand outlet store Other (please specify)________________ Q4: On average, how much research do you do before making a purchase on cosmetics? A great deal of research A lot of research A moderate amount of research A little research Not any research at all Q5: When buying cosmetics, which of the following factors is the most important to you? Appearance of products Ingredients Brand reputation Friends’ or family recommendation Price Service Advertising of the brands/products Discount or special offers Research results on cosmetics Other (please specify)_________________
Page 2: Attitude towards Chinese herbal medicine Q6: Have u ever tried on any Chinese herbal medicines or facial products? Often Sometimes Once in a blue moon Never Q7: Is there any possible that you would love to give a try on Chinese herbal medicine cosmetics? Sure Maybe, if there is a good one Not likely Not at all Q8: How well do you know Herborist? Very well Well A little Not at all Q9: Do you think it is important to use natural ingredients for skin care and cosmetics products? Yes No Flexible Q10: Which of the following method(s) would you prefer to engage in in order to get to know more about Herborist?
Online advertising Television advertising Newspaper advertising Related magazine Friends’ and family recommendation Sales promotion By dialing Herborist customers service number Other (please specify) ___________________ Figure 1: The gender of the 100 respondents which female respondents account for 68. 69% while the remaining 31. 31% are male respondents. Figure 2: The age of the respondents. The chart shows that the main age group of the 100 respondents is from 18 to 39 years old who paid more attentions on cosmetics and each age group has different needs and their own expectations on beauty care products.
Figure 3: The preference sales channel of the respondents. As shown in the chart, more than half of the respondents, which is 64. 65%, choose to purchase cosmetics at those cosmetics store at department store. On the other side, 29. 29% prefer to buy it at brand outlet stores and 23% of them started to do online shopping for cosmetics. Figure 4: The chart shows the amount of research on any certain cosmetics brand done by the purchasers.
From the chart it was shown that 39% of the respondents’ stated that there is a moderate amount of research will be done before the investment on any cosmetics brand while there is only 5% of the respondents who put efforts on doing a great deal of research. Figure 5: The factors that affected respondents’ decision making in purchasing cosmetics are as shown in the chart. It is evident that brand reputation, friends’ and family recommendation and the price of the products are the three main factors for their consideration. Figure 6: Respondents’ experiences on Chinese herbal medicine personal care products.
There are only 5. 15% of the respondents are trying on Chinese herbal medicine cosmetics frequently while 44. 33% has no experience on it at all. Figure 7: Probability for respondents to purchase Chinese herbal medicine cosmetics in the future. According to the result of the questionnaire, 29. 29% of the respondents clarified that there is no pretext for them to reject these kind of green personal care and there are 56. 57% of the respondents are willing to have an experience on it provided that the products is good. Figure 8: Herborists’ brand awareness among the respondents.
There are only 3. 06% of the respondents understand this brand well which mean the company should focus more on their marketing strategy in raising their brand awareness among consumers. Figure 9: Respondents’ opinions on using organic ingredients for cosmetics. The chart shows that 71. 72% of the respondents have a sense that natural ingredients have significant impacts on the effects of cosmetics products. Figure 10: Channels preferred by the respondents to have further knowledge about Herborist. 58. 16% of the respondents tend to accept and follow the recommendation from friends and family.