Future of Amorepacific

AmorePacific has strong brand recognition in China and Korean wave is helping this company to grow rapidly on Chinese market. This wave will however pass. AmorePacific knows it and therefore invest in construction of new R&D facilities to provide better quality products. It has a good position as recent market entrant in low-end and fashion oriented spectre of brand map and from this position it can grow.

AmorePacific should use popularity of Korean culture in China nowadays to prepare for the future without it. Goal during the Korean wave should be to expand and cover more profitable segments and introduce new premium brands. If we assume, that bargaining power of suppliers is high because of current low market share of AmorePacific, after capturing valuable segments and rapid growth AmorePacific should negotiate better agreements with suppliers due to its raising potential and improving bargaining power.

We see positioning of more AmorePacific brands in premium part of cosmetics spectrum in future as growing household income and middle class will create demand for more premium products. Easiest way for AmorePacific is to tap premium-trendy part of cosmetics market. It is however depending on consumer preferences. AmorePacific should do marketing research to assess if positioning of brands in this part of market is preferred by consumers and if it will be profitable.

We believe, thatit would be beneficial for AmorePacific to deploy differentiation strategies and position themselves also as technologically-savvy company due to high investments in R&D and to successfully compete with companies like L’Oreal or Shiseido.