INTERNAL AND EXTERNAL ANALALYS OF THE COMPANY IN ORDER TO COME UP WITH RELEVANTS OPPORTUNITIES AND RECOMMENDATIONS IN CHINESE AND KOREAN MARKET

1. .EXECUTUVE SUMMARY
2. PESTEL ANALYSIS
3. KOREAAND China industry analysis
4. LG and competition
5. Company overview
6. SWOT Analysis
7. Recommendations
ASIAN CASE WORKSHOP 201605029 Suresh Khati
: W01605024 Mehvish Tania
: 201709025 Seka Gerod Chia Strivane
: 201605016 Nayeem Abanty Huque
: 201605026Bryan Paul Orone

2. Cosmetics Industry Worldwide
• Domination of smaller, local and regional players in Asia Pacific and
Middle East and Africa
• Premium Price Platform
• Changes in technological, environmental and economic factors
• Consolidated Region: North America and Latin America
• Korean beauty companies in Asia-Pacific
• International Players in Middle East and Africa

4. Technological, Social, Environmental and
Economic
• Direct connections with target audiences
• Water scarcity in developing regions
• Life stage, ethnicity and body part are used to
segment products
• Private sector confidence decreased, and
consumer spending and investment have been
reduced
• US has imposed tariffs on imports from Mexico,
China and other Asian countries which is leading
to a trade war

5. Market Drivers
• Increased amount of acquisition
• Increased strategic alliances and joint
ventures
• Experimental marketing
• Health conscious consumers
• Easier products are more popular
• Herbal products

6. Cosmetics Industry in China
• Stable demand
• Awareness of personal hygiene-consciousness
• Rising living standard
• Premium products have higher growth rate
• Increased amount of online stores
• High demand for products with special
features
• The market share of LG household and health
in China is 1.2% in 2016

8. LG H&H AND COMPETITION

9. Competitive Positioning: (South Korea)
Product type Value Share Rank
Beauty and
personal care
24.7% 1
Baby and child-
specific product
5.3% 7
Bath and
shower
40.1% 1
Color cosmetic 24.1% 2
Men’s
grooming
15.9% 2
Oral care 24.7% 1
Hair care 27.0% 1
Skin care 26.9% 1
Sun care 15.55% 2
• Value share slightly
increased from 23% to
24.5%
• Fastest growth in color
cosmetic with 11%
• SU:M37 and OHUI
registered sharp
growth
LG Household & Health Care Ltd: Competitive Position 2016
Source: Euromonitor International from company reports, company research, trade press, trade sources,
trade interviews

10. Competitive Positioning: (China)
• Sales increased by 14.4%
(Whoo)
• SU:M37 turned over 343.1
billion won and increased
by 82% from the last year
• China premium cosmetic
market expected to post
9.5% (CAGR) 2014-2019
• O’HUI, SU:M37 and Whoo
boost its china
sales(company said)
• Market share in china in
2016, 1.2%

11. Value share expansion in global beauty and personal care:
• LG cosmetic ranked five most
dynamic companies
• History of Whoo and face shop
value in global beauty.
• In forbe ranked LG cosmetic in
19th position as a innovative
companies
Overall: LG cosmetic beauty brands have seen strong growth in sales volume as well as growing influence in the global
market in recent years.

12. Differentiate and target segments:
Innovation in product formula and ingredients
Innovation in processing technology
Innovation packaging
Riding on Korean wave
Development of in store technology
• Premium market segment
• Mass market segment
Target Segment

13. COMPANY OVERVIEW

14. COMPANY OVERVIEW
• LG founded in 1947 by KOOH LH-HWA as LUCKY CHEMICAL INDUSTRIAL
CORPORATION
• Name change in April 2001 as LG chemical
• LG H&H is offshoot from LG chemical

15. LAUNCH AND ACQUISITION OF BRANDS
• LG acquire Coca Cola in 2009
• It acquire cosmetic brand shop “The face Shop”
• LG acquire “VOILED DREAM” brand in 2012
• It also acquire CNP local cosmetic company
• LG launches different successful brand” who”, SU:M37, and “BELIEF” IN 2005

16. SEGMENT OF LG H&H
• Healthy
• Beauty
• Refreshing

17. CUSTOMER VALUE CREATION
• Customer first
• Delivery of sustentative value
• Innovation driven creation

18. SWOT ANALYSIS

19. LG H&H CURRENT SITUATION IN CHINA
STRENGTHS
• The variety of its product
• Assistance of investment fund
• Able to produce quality products by using natural components.
SWOT ANALYSIS China

20. LG H&H CURRENT SITUATION IN CHINA
WEAKNESSES
• After analyzing Chinese cosmetic market situation we thing that the lack of
ability or capabilities to fight against big international brand can be LG H&H
main issue in term of visibility in Chinese market.
• Chinese consumers are opened to internationals brands
SWOT ANALYSIS China

21. LG H&H CURRENT SITUATION IN CHINA
OPPORTUNITIES
• Demand is still high
• Children care products is a potential market in china
• e-commerce represents a huge opportunity in China,
SWOT ANALYSIS China

23. LG H&H CURRENT SITUATION IN CHINA
THREATS
• The threat remains the international beauty brands
• The preferences of Chinese consumers for its brands
• Increasing of ban Korean cosmetic products in china
NB: According to WWD.com "China banned the imports of several South Korean beauty products. Nineteen
different cosmetics products, ranging from body wash to lotions, masks to shampoo, were selected from the
country. South Korea, and more product embargoes could be on the way.
SWOT ANALYSIS China

24. LG H&H CURRENT SITUATION IN CHINA
STRENGTHS
- Well-known market:
- Quality product: LGH & H invest in R & D in order to offer refined quality
products to its customers
- Good Market reputation & Geographic presence
SWOT ANALYSIS Korea

25. LG H&H CURRENT SITUATION IN CHINA
OPPORTUNITIES
- Male and female are engaged in beauty products ( available demand)
- Quick innovated product adoption tendency (possibility to improve product quality, new
brand creation, etc.
- Skincare market is dynamic as consumers look for new solutions ( opportunity to innovate
and be competitive)
SWOT ANALYSIS Korea

26. LG H&H CURRENT SITUATION IN CHINA
OPPORTUNITIES
• Slowing economy
• Declining population
• Competitors
SWOT ANALYSIS Korea

27. RECOMMENDATIONS

28.  Based on the opportunities, derived from the trends facing the industry we have
come up with a few recommendations that we encourage LG H&H to implement
in order to differentiate themselves from the rest of the players in the market.
 Some of the trends and opportunities mentioned in the external environment
analysis can be taken advantage of by the use of technology however this
requires data mining capabilities at the core of the LG H&H operations
 Big Data analytics: We see an opportunity for players in the cosmetic industry to
offer a more personalized solution to customers based on skin type as opposed to
tone as is the norm in this industry

29.  Technology that has been used in the past for skin analysis has been used in the
medical field by aesthesians to diagnose skin types for medical purposes
 Putting these devices in outlets and point of sale locations is one way to start
collecting this information
 The power of social media is one area we recommend LG&H to tap into, technology
in this industry has been primarily used in terms of customer service and interaction,
to give customers a more fulfilling experience
 With time, after lots of data has been collected formulations can be made based on
the existing variables and skin types and therefore customization on a large scale can
be achieved in a shorter time, through the ecommerce channels like Facebook
messenger

30.  Chabot’s can also be used to offer customized online experiences, for consumers who
are comfortable with existing products
 Augmented reality is another technological advancement that is being used in the
industry but still in nascent stages
 As seen from the recommendation Big data analytics, cloud computing , social media
and mobile should be used together to create an innovative point of difference as well
as give customers a more personalized experience, more tailored offerings will ensure
repeat purchases, and can even lead to advocacy.