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Amorepacific: from Local to Global Beauty

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AmorePacific: From Local to Global Beauty

1. Why has AmorePacific (AP) been doing so well in the home market? AmorePacific had already accomplished a leadership position in the Korean market in the mid-1960s. They implemented a door-to-door sales strategy on their own which carved out a dominant position in the sales channel. AmorePacific also led the Korean industry in initiating exports in 1959 and kept retaining export effort to global market. From the mid-1990s, AmorePacific endeavored at comprehensive cost-reduction programs, amplified R&D, restructured brand management as well as its brand portfolio, realigned long-stand distribution relationship. AmorePacific manufactured all its domestic selling products itself. It allowed AmorePacific to have capital intensity. The company also set up a “Total Cost Reduction” program in 1995, “Total Creative Revolution” in 1998 to confirm efficient utilization of this capital. After 2004, AmorePacific’s continued to make an efficient operations which included the consolidation of important affiliated suppliers, a major checkup of production process, the implementation of Enterprise Resource Planning system and a Six Sigma program for Total Quality Management, and a IT outsourcing deal with IBM. It was the most fateful decision that AmorePacific’s quick launch of three new brands: Hera (1995), Iope (1996), and Sulwhasoo (1997). Unlike Mamonde and LaNeige which were Amorepacific’s earlier best seller and mid-priced, these new brands targeted higher prices, but in different ways. Iope was meant to be sold at relatively high prices through mass-market channels, whereas Hera, an upper-to-mid priced prestige brand for young women, and Sulwhasoo, a high-priced, Korean traditional herbal-medicinal, super-prestige brand for older women. Sulwhasoo had been a project taken up early on by the R&D Center. The R&D…...

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