Comprehensive Plan For Etude House: Situation Analysis, Objectives, Strategies, And Tactics

Etude House: A South Korean cosmetic brand

The aim of the report is to prepare a comprehensive plan for a brand of Etude House which is a South Korea cosmetic brand. The company deals with the issues which are faced by the company related to the products and services. The paper includes the situation analysis which is supported by the company internal and market analysis. In addition, the objective of the company has discussed which they won’t achieve in the market. Further, the strategies of the company are discussed which help them to effectively manage the operations. Moreover, the tactics related to the marketing of the company are discussed with the budgeting and implementation of the plan.

Etude house is well known South Korean makeup colour cosmetic brand which is owned by the Amore Pacific. In the year 1985, the company came into the existence and the corporate name to the Oscar Corporation in 1985. Further, in the year 1990, it was incorporated by the Amore Pacific group. Finally, in the year 1997, the name of the firm changes to the Etude (Etude House, 2018). The company offer a wide and diverse range of cosmetic products which include products for eyes, lips, hair care, skin care, lips and many others. The cosmetic industry is booming with this the increase in the competition is one of the major issues which is faced by the company.  

Situational analysis is referred to as the collection of methods that are used by the managers with the motive to analyse the organisations internal and external environment to understand the organisation capabilities, customers and business environment (Chernev, 2018). Thus, etude house internal and external analysis has been discussed which helps them in understanding the threats and to make the strategies to eliminate the same.

The internal analysis helps in analysing the internal factors that can affect the working of internal operations. The below given is etude house internal analysis: –

Etude House products are based on the high quality, affordability, lovely design and diverse colour range which helps them in becoming the leading brand in the market. The company efforts have offered a strong position in the market as it is considered in the Top 5 Korean cosmetic market. Etude house is spreading its vision of makeup play as an evangelist of K-Beauty.

Etude house offers the diverse range and products which majorly include the BB cream that depends on the skin type of customers and colour for them. All the products of Etude Company offer a neutral shade, simple and fresh look to the customers. The product of the company is affordable in terms of price with easy to use that can improve the quality of the skin.  

Situation analysis: Internal and external analysis

A PESTLE analysis is a framework which helps in analysing the external factors that can affect the working of the company (David, 2011). Below given is the analysis of external factors that impact etude house: –

Factors	Description
Political factors	The political factors include the rules and regulations that affect the working of the company. The government has strict regulations for the safety due to which the company recalled its one of the product that is Etude House AC clean-up Mild Concealer because of the safety issues. The company said that there were excessive traces of antimony in them and this is the reason due to which the company has done voluntarily reporting to Korean Ministry of food and drugs safety (Heng, 2018).
Economic factors	The economic factors that can affect include GDP of the country include 1530.75 billion US dollars in 2017 (Trading Economics, 2018). Moreover, the rise in GDP leads to the rise in purchasing power which leads to an increase in sales and demand of products of etude house. This will help the company in improving the market share, profit and opportunity for expanding the business.
Social factors	Etude house finds most of the people are aware of the use of the healthy and skin-friendly products that can influence the buying behaviour (Dawson, 2014). Thus, the company has different approaches related to the products which help them in offering the innovative product at low prices. Etude House has a positive response from the people of the country which is an opportunity for them.
Technological factors	Technology has brought the numerous changes in the beauty and cosmetic industry. The customers are able to access and make the purchase of products with the help of technology (Frynas & Mellahi, 2015). Moreover, the advancement in technology is a threat also because the change in technology brings the change in operations for which the company need huge funds.
Legal factors	Etude house implements all the legal obligations which include Federal Food, Drug and Cosmetic Act and the Fair Packaging and Labelling Act while manufacturing and offering the products to the customers. Moreover, if they found guilty they voluntary themselves.
Environmental factors	Etude house offers the beauty products and also a concern for the environment due to which they conduct the environmentally friendly packing of the products which helps them to abide by all the rules and laws related to the environmental safety and protection (Ho, 2014).

The value chain is a strategic tool which is used with the motive to analyse the internal firm activities. The goals of the company are to identify the activities that are most valuable for the company. The value chain helps in understanding the value that the etude house offers to the customers with the help of primary and support activities. The image reflects the activities that are included in the activities (Chernev, 2018). 

In the primary activities, it majorly include the inbound logistics of etude house include the cosmetic product supply management of the flow of goods at different places. In addition, the operations of the company include the offering quality cosmetic services easily to the customers at different places. Along with this, the etude house offers the products at affordable prices to their customers. Outbound logistics include the operations related to the transport of the products to the stores of etude house and at the departmental stores. Marketing and sales is essential element which include the promoting the cosmetic products in the market (Etude House, 2018). This helps them in managing the operations and to increase the sales. In the end, the service of the products is one of the major elements which show the service that is offered by the etude house to their customers. The etude house ensures that they offer delight services to their customers and after sale support 24/7 (Etude House, 2018).

The support activities offer the assistance to the primary activities, the major support activity include technology. In the present era, the change in the technology leads to the change in the operations of the company. The effective use of technology helps the company in making their products easily available through online mode. Further, the technology helps in tracking the distribution of products (Chernev, 2018). Moreover, the procurement of the goods will be done effectively. Procurement is one of the effective support activities that help the company in procuring the goods and services to deliver the goods on time. In addition, the human resource management is another important determinant which supports the services that are offered by the etude house. At stores, the experience and friendly staff helps in forming the relationship with the customers that work as additional services for the company (Etude House, 2018). Further, the firm infrastructure includes the system of the etude house which supports the operations. The company ensure the effective system with the different departments that perform the work in which they are specialist.

Objectives of the company

VRIO is the tool which is used by the company to evaluate the organisation’s resources which offers the competitive advantage. VRIO framework stands for Value, Rareness, Imitability and Organization (David, 2011). The image given below show how the resources are more on the resources in the organisation are rare and valuable for the etude house which shows the strength and weakness of the company.

Is Valuable?	Is Rare?	Is difficult to Imitate?	Is Organization Organized around?	What is the result?
NO				Competitive Disadvantage
YES	NO			Competitive Equality
YES	YES	NO		Temporary Competitive Advantage
YES	YES	YES	NO	Unused Competitive Advantage
YES	YES	YES	YES	Long-Term Competitive Advantage

The objectives of the company have been prepared on the basis of the current operations and future needs of the market for the etude house. The below given are the objectives of the company: –  

• Increase the visitor’s number by 40% during the next 3 years.
• Increase the sales of new and existing products by 20%.
• The objective of the etude house is to increase the brand awareness in the market which is must to attain the higher position. This can be done by introducing the new products on the market in next 2 years.
• The company short-term objective is to attract the customers in the market with the help of different discounts and promotional activities in the next 6 months. This objective can be measured with the positioning of the company.
• Etude house needs to form the strong brand identity which is possible with the use of the influences celebrity as the spokesperson and model (Wilson & Gilligan, 2012).
• Etude House has the opportunity of expanding the business in the foreign markets as this will enhance the visibility of the company.
• The objective of the company is to implement the market diversification strategy in which they can come with the new product in the market in next 2 year.

SWOT analysis is a tool which is used to evaluate the effective strategy in the market. The below given is the SWOT analysis of the etude house: –

STRENGTH	WEAKNESSES
– High quality products – Diversified products	– Less number of stores – Weak exposure to public
OPPORTUNITIES	THREATS
– Expansion in abroad and domestic – Targets the young generation	– High substitute products – Counterfeit products

Etude house is taking the advantage of the advance technology with the help of which they are able to sell the high quality products which are made up of the natural ingredients. In addition to this, Etude house offer the variety of product that range from the make-up to other different products.

The major weakness of etude house is that they have the limited number of stores in UK market. Further, the brand is not able to effectively promote their products in the market due to which it has weak exposure to public (Etude House, 2018).

In the UK market, this has been found that etude house can expand their business operations in the near future which will help them to meet their business objectives. Further, the rise in the youth offers an opportunity because they make use of the products as it is the part of their lifestyle (Etude House, 2018).

Threats

The substitutes of the cosmetic products are increasing in the market which is the emerging threats for the company. Further, the counterfeit products are increasing the threats for the etude house in the market.

This section of the report includes the strategy that is formed by the company with the support of the STP, branding and value proposition (Baker, 2014).

Market segmentation includes the division or group of customers on the different interest and behaviours. The market segmentation of etude house is given below: –

• Demographic: – The demographic element includes age, gender, income, education and other factors. The company segment the group majorly with the age group of 10-25, 25-45, and above with the high and medium income group people. Most of the people who are targeted are youth and women who make the purchase of cosmetic products on priority.
• Psychographics: – This segmentation includes the personality, emotions that are based on the behaviour of the customer’s towards the product (Armstrong, Adam, Denize & Kotler, 2014). There are numerous customers who treat these products as their lifestyle due to which they make the use of the products on the regular basis. Moreover, people have a positive attitude towards the cosmetic products which they make use on a frequent basis.
• Behaviour: – This segmentation includes the behaviour of customers in terms of the purchase, brand loyalty, benefits of using it and many others. Etude House segment this market with the motive to get a positive response from the customers. Along with this, customers who are loyal towards the brand are offered with these services.

Targeting is focusing on the group to whom the Etude House wants to offer the services. Etude house makes use of the differentiation targeting strategy in which they target the different segments. The major target customers are the young people who fall under the age of 10 to 25 years because this helps the company in attaining more than 40% of the sales. These customers majorly include the college student who keeps themselves up-to-date and makes frequent changes according to fashion. In addition, young people are also part of this that makes use of the cosmetic products on a frequent basis and they are one who remains loyal with the company. Further, these customers keep a positive attitude towards the product.

Strategies for effective management of operations

The positioning reflects the image of the brand in the mind of customers. The positioning of the company reflects the high-quality products with the affordable prices of products. On the other hand, the competitors of the company like Innisfree, Cosmopolitan and Instant Beauty Fix has positioning with high quality and high price, moderate quality with moderate prices and moderate quality with low prices respectively. This shows that the company is able to make their effective positioning in the market.

The value proposition that is offered by the company to their customers is the innovative products with the effective experience with the brand. In addition, they want to form the princess dream for the magical experience.

The marketing mix is the set of tools that are used by the company for performing the work effectively (Rothaermel, 2015). Etude House marketing mix strategy is discussed below which include the strategy related to the product, price, place and promotion. (Refer Appendix)

The company consider the product for achieving the success as they offer a wide range of products which include skin care, makeup, body care and many others for all types of skins which include sensitive skin, oily skin and combination skin. All these are core products of a company with this the company offer its products through online mode. In addition to this, the company provides after sale services to their customers in the market which helps them to receive feedback for their products. Further, the new products of the company will enhance the

Price is the amount of the product on which the customers make the purchase of the product (Grant, 2016). Etude House keep the affordable prices of the company and to maintain the same in the market they make use of the competitive marketing strategy which helps them to keep the prices effectively with the best quality of products. Along with this, the company also offers the discount to their customers on occasion.

The place is the element of the marketing mixes which reflects the location where the product is available and the way through which the company can make the product available to the end-users (Hollensen, 2015). The customers in the market prefer to purchase the products either from the brand store or from the malls. The rise in technology has offered an easy access to products through online stores. Thus, effective distribution of the products has been done by the company which helps them in making the products available through all the modes from where they can purchase the products.

Tactics related to the marketing of the company

Promotion strategy is the way through which Etude house can generate awareness for their products and services that are available in the market (Išorait?, 2016). The company promote the products with the help of different online and offline strategies. In offline strategies, the company promote the products with the help of advertisement and print media. Though, online promotion is done with the help of social media sites (Luca & Suggs, 2010).  

This has been found that generally, company include offers and coupons to promote the products in the market which help them in grabbing the attention of customers.

The budgeting reflects the profit and loss that might be faced by the company if the marketing plan of the company will be implemented.

Etude House
Profit & Loss Statement
	Amount ($)
	2019	2020	2021
Sales	$199,000	$297,500	$395,500
Miscellaneous income	$0	$15,000	$25,000
A. Total	$199,000	$312,500	$420,500
B. Cost of Sales	$109,450	$163,625	$257,075
C. Gross Profit (A-B)	$89,550	$148,875	$163,425
D. Operating Expenses
Salary	$74,000	$77,700	$81,585
Rent	$6,000	$6,300	$6,615
Utilities	$5,000	$5,250	$5,513
Insurance	$125	$131	$138
Depreciation	$7,500	$7,875	$8,269
Marketing	$7,500	$7,875	$8,269
Maintenance & Repairs	$1,500	$1,575	$1,654
Other	$0	$400	$420
Total	$101,625	$107,106	$112,462
Operating profit	-$12,075	$41,769	$50,963
Less: Interest	$9,500	$11,500	$10,000
Profit before tax	-$21,575	$30,269	$40,963
Less: Tax @ 25%	-$5,394	$7,567	$10,241
Net Profit AT	-$16,181	$22,702	$30,723

Break-even analysis	Amount
Estimated fixed cost	200,000.00
Estimated variable cost	45%
Break-even point	363,636.36

The implementation plan of the company reflects the activities that are essential to accomplishing the strategy and tactics. The below given is the discussion of same: –

Etude house needs to implement the divisional structure in which the work is divided among the different departments. This will help in accomplishing the marketing plan effectively and will offer the opportunity to the company to grow in the market (Kotler, 2015).

This section of control helps in understanding the analysing the opportunity and threats that can affect the working of the company. The opportunities for the company that are available include rise in sales, rise in response towards the social and consumer behaviour, development of technology that helps in marketing. Further, the major threat of the company that is rising in the competition which can’t be controlled which can affect the objectives of the company.   

Conclusion 

In the end, it can be concluded that Etude House is a leading company who have vast opportunities and minimum threat in the market. This helps the company to grow their market position in the market and motivates the company to accomplish the objectives. Further, the company need to form the strategies which include STP and value proposition. In addition, the tactics are formed which include the marketing strategy related to the product, price, place and promotion related to their business operations. In addition, the forecast related to the expenses and cost has been done which shows that in the coming year the company might face the loss but sooner they are going to attain the profit. Along with this, the breakeven point has been identified which shows the situation of the no profit and no loss attain by the company. In the end, there is an implementation plan which shows the steps that are required to be followed for implementing the activities. 

References 

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Atria, W. (2018). 5-31 Jan 2018: Etude House Chinese New Year Promotion. Retrieved from: https://sg.everydayonsales.com/5-31-jan-2018-etude-house-chinese-new-year-promotion/ 

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Etude House. (2018). About Etude. Retrieved from: https://www.etudehouse.com/int/en/index.php/etudestory#

Etude House. (2018). Etude House. Retrieved from: https://www.adventigroup.com/en/etude-house/ 

Frynas, J.G. & Mellahi, K. (2015) Global strategic management. USA: Oxford University Press.

Grant, R.M. (2016) Contemporary strategy analysis: Text and cases edition. New Jersey: John Wiley & Sons.

Heng, M. (2018) Beauty label Etude House recalls one item in Singapore after excessive metal traces found. Retrieve from: https://www.straitstimes.com/lifestyle/beauty-label-etude-house-recalls-one-item-in-singapore-after-excessive-metal-traces-found 

Ho, J.K.K. (2014) Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), pp.6478-6492.

Hollensen, S. (2015) Marketing management: A relationship approach. India: Pearson Education Limited.

Išorait?, M. (2016) Marketing Mix Theoretical Aspects. International Journal Of Research – Granthaalayah, 4(6), 25-37.

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Luca, N.R. & Suggs, L.S. (2010) Strategies for the social marketing mix: A systematic review. Social Marketing Quarterly, 16(4), pp.122-149.

Rothaermel, F.T. (2015) Strategic management. UK: McGraw-Hill Education,

Trading Economics. (2018). South Korea GDP. Retrieved from: https://tradingeconomics.com/south-korea/gdp 

Wilson, R.M. & Gilligan, C. (2012) Strategic marketing management. New York: Routledge.