Type of paper: Case Study

Topic: Business, Products, Market, China, Brand, Europe, Company, Opportunity

Pages: 7

Words: 1925

Published: 2020/12/22

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The introduction of any new product on the global market can be difficult as many individuals prefer to use the products or brands that offer familiar, formal and informal reviews. Since the late 2000s, the cosmetic industry showed strength in its performance because of its natural components. The high-end personal care products labeled, Herborist, is slowly expanding on the global market as more individuals become aware of the strengths of the product. The cosmetic industry plays an integral role in the lives of many women and the daily introduction of products on the market has mixed results. The following pages seek to build a case study for Herborist based on the Strength, Weaknesses, Opportunities, and Threats to the company.
Jahwa built the brand Herborist and this became “one of the largest personal care companies in Europe,” (Herborist Growng Global, 2104). The products in this line are ideal as they include traditional Chinese herbs as a part of its composition. The creators of Heborist created the line because of their numerous researches and innovations. As a result, sales in Herborist products surpassed the 50 million yuan target and achieved profitability for the first time, (Herborist Growing Global, 2014). Wang Wei suggests that the within the process of the Chinese market economy development, the cosmetics industry has soared to one of the highest levels, (Wei, n.d). Additionally, Wei highlights the increase in the expenditure in the cosmetic industry by over 300 billion Yuan and makes the market ripe for potential competition, (Wei, n.d). Conversely, the domestic Chinese are slowly losing the cosmetic war, (Wei, n.d) because of the many cases and the loss of revenue from the cosmetic industry led to fierce competition in the western and eastern markets. Faced with the increase in competition, Herborist has come to depend on the unique organic features of its product in the differentiated market position, (Wei, n.d). Despite the economic problems, Herborist continues to expand across international borders.
Still, ever since its entrance into the market, Herborist has won a special reputation with its brand positioning and sales channel,” (Wang, 2013). As a result, the company looked into the figures that showed that “China’s population of 1.3 billion people was unconventionally segmented into an urban population of 600 million,” (Deigiton, J. et al., 2010), but lacks the number of women who are routine buyers of cosmetics. Nonetheless, Herborist entered the Hong Kong market and “has now successfully set up its brands image as being fresh, natural, and healthy,” (Wang, 2013).

Critics note that Herborist is a purified brand of cosmetic that combines the “traditional Chinese herbal extracts and the latest modern biotechnical achievements,” (Herborist, the Chinese Herbal Skincare Brand, (2013). The product is strong in its oriental philosophy as one that offers mystery and beauty to the consumers. In Germany, the product is popular as the consumers experience one of the most distinctive cultures of the east. Currently, Herborist boasts a large number of consumers across China as the consumers believe that the product is useful in its desire to add beauty to the consumer and the price is reasonable.
At its inception, the novelty of the use of Chinese products did not stop the Germans from becoming enthusiastic about the brand. The Germans saw the Asian cosmetic line as one of fascination because of the cultural differences and interest in China as a country. The inventive ideas and the superior quality of Herborist was a success in the German market and other European markets. Consumers were particularly fascinated by the Tai Chi mask and became one of the top-five items on the European market soon after its release. Additionally, the product offered the philosophical explanation through the “natural balance, and the syncretism of body and mind,” (Herborist, the Chinese Herbal Skincare Brand, 2013). Conversely, the greatest strength of the company lies in its salute to the Chinese culture.
The use of herbal medicine has always been popular across China and it is no surprise that the manufacturers of Herborist used this to their advantage. The strength in the use of herbal cosmetics adds to the curiosity base of the client and increases the sales of the product. At present, more consumers lean towards natural and organic ingredients in products, and therefore this provide the ideal opportunity for the expansion of Herborist. Additionally, the added features of the product serve as one of the strength in the marketing of the product.
Herborist was the first herbal cosmetics line to come into the Chinese market in 2008, and distinguishes itself as a part of the traditional Chinese market with its primary ingredients grounded in its organic and biotechnological foundations. Herborist emerged on the beauty market in Hong Kong despite the competitions of the dominance of the Japanese and western high end line of beauty products. The Chinese faced serious competition as it would be a challenge to compete against Estee Lauder and Sisley from the western world and Shiseido from the Japanese beauty market. But, the company held firm as they were confident that the natural products in the beauty line would hold against the top cosmetic brands based on the influence of Chinese medicine and Herborist Spas. Herborist offers the advantage of low prices which improves the economies of scale and create better returns on the investments. In addition, the extended lifespan of the product is one of the strengths as consumers do not have to worry much about expiry dates and the negative impact of using an expired product.

Weaknesses

One of the biggest challenges that a marketer faces is to conduct business in a foreign market. The challenges of culture, social norms, prices, regulations, and policies create disruptions in the marketing experience. Marketers must be cognizant of the knowledge of the target market in order to achieve success. Wei suggests that although the Chinese cosmetics market record double digits in its sales annually, the leading international cosmetics brands boast higher return on their products, (Wei, n.d). This reality presents a setback for the Herborist as the international brands expand to tertiary and secondary market system. As such local brands such as Herborist face a survival crisis. Their lack of experience in the cosmetic market also added to the challenges that the company faced as new products are not readily accepted by consumers.
The challenges for Herborist started early when the two branded stores closed after only two years in operation. The poor results in sales led Herborist makers to re-evaluate the product and re-open in 2007 with the new strategy of distributing the product through Manning. The results from the move fluctuated even though Manning represented the one of Hong Kong’s leading personal beauty chains. But, Herborist moved into the French market in Paris in 2008 with the Sephora as its companion. Despite the mixed results that the company faced again, there were signs of improvement in the sales. The company felt encouraged by the slight improvements and moved into the plans to expand on the international markets. Nevertheless, the challenge came with attempting to decide which international markets to enter and the creation of new strategies to improve their presence on the cosmetic market.

Opportunity

Herborist offers the opportunity for consumers to develop a likeness or taste for the organic and biotechnological product with the propensity to increase the prices on the goods. In addition, Herborist marketers seek the opportunity to develop in its growth in the developing markets around the world. Sephora offered the ideal opportunity for Herborist when it partnered with the company to introduce the product in the European market. This opportunity allowed Herborist to surface along with one of the leading brands in the cosmetic world. Jahwa made two requests of Sephora: one was to allow Herborist into the European markets under the Sephora banner; and two, put Herborist in Sephora stores in China. The move came as a result of Sephora previously established connections in these regions.
The opportunity to enter the European and Chinese market under Sephora brand would allow Herborist the opportunity to achieve similar status as Sephora. Additionally, Sephora stores accounted for an estimated 750 outlets in twenty-one countries, (Deighton, 2010). This opportunity would enable Herborist to develop in the international market and gain popularity even though it was a fairly new product. Herborist offered the world an opportunity to make the Chinese culture even more popular. Interestingly, the Tai Chi Mask was most popular and accounted for approximately forty percent of the earnings, (Deighton, 2010).

Threats

Like all new products, Herborist faced a number of threats since its inception. There was a reduction in the growth of the product in the developed markets and Herrorist faced the threat of total demolition. China offered the greatest challenge because of the strong completion for the leading Japanese and Western cosmetics lines. Sephora posed a threat to Herborist as it is one of the leading brands of cosmetics in the Hong Kong market, but the partnership between the two companies changed the impending threat. Another threat to the Herborist comes through the fact that Chinese products are less developed in its technological structure. As a result, it fell short in the markets asit faced a number of competition from the top brands of cosmetics. But, Herborist marketers changed this view of the product and established its own framework in 2007. The company cooperated with five of the university affiliated hospitals and marketed the product as a therapeutically induced treatment. In placing more emphasis on the herbal content of the product, Herborist succeeded in making a distinguished mark among the other leading brands. The knowledge base of the Chinese culture created the ideal opportunity for the company as the marketers knew the needs of the Chinese people and used it as an opportunity to control the market.
Another threat came by way of the previous establishment of well – known brands on the market. It was difficult for the company to establish a framework as it was new. As a result, the company closed its doors a number of times in the early 2000 because it did not meet the targeted revenues in sales. The decline in its usage by the average consumer in the market also led to the decline in sales and the company had to revamp its efforts to resurface and stay afloat. However, the most significant threat to Herborist came through the misconceptions that are associated with goods that are made in China. For the most part, Herborist faced the challenge that China offered inferior quality goods, and therefore, the product would be inferior.

Recommendations

The improvements in modern technology and the social media led to the online marketing of Herborist. Social network websites such as Facebook carries the line of products and consumers can provide feedback on the product. With this in mind, Herborist marketers use the opportunity to improve the product over time, but maintain the organic element in the product. There is no doubt that Herborist will gain strength in the international market as more consumers are leaning towards natural remedies and cosmetics as a part of their daily lives.
In addition, China became a member of the World Trade Organization and enjoys the opportunity lowered custom rates which makes it impossible not to acknowledge that Herborist will become an international product. At the end of 2007, the competition between the Chinese cosmetics line of products and the high end European and Western cosmetics became even fiercer. The future of Herborist is clear, as it will rival all other leading cosmetics lines because of the organic and natural herbs in the product. Herborist marketers can continue to market the product across the social media websites as this will undoubtedly add to the increase in sales.

Conclusion

Herborist came unto the cosmetics scene amidst mistrust of its brand and competition from other leading brands. After years of development, the company formed its roots in the European market with its partnership with the flagship company, Sephora. Sephora’s presence on the European market made it easy for this herbal or organic based brand to attract customers as it placed the products in their stores around Europe. But, although Sephora was instrumental in the development and marketing of the product, Herborist brought with it personal strengths. The major strengths of the brand rest with the curiosity of the Chinese culture, the reasonable prices, and the herbal and organic content in the product. Like all other new products, Herborist faced the challenge of being new on the market and the mistrust that many consumers have of products that are made in China. But, the marketers found the perfect opportunity when they joined with Sephora in the Europe. Despite the threats to the product’s annual revenues, Herborist stepped away from the market twice and redoubled their efforts to create a new strategy.

References

Deighton, John et al (2010) Herborist, Harvard Business School. Web. March 15, 2015
Herborist growing global, Source:Global Times Published: 2014-1-22 19:43:01. Web March 15,
2015
Herborist, the Chinese Herbal Skincare Brand, is Launched in Germany, (2013, July 22)
Wang, Amy, (2013, January 13) Market analysis: Herborist in China. Web. March 15, 2015
Wei, Wang (n.d), International Marketing Strategy For Herborist , Thesis. Web. March 15, 2015

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