final report international marketing international marketing of cocoon

This report will develop a comprehensive marketing plan for Cocoon’s pomelo hair tonic in the Korean market to contribute to increasing the opportunity to bring Cocoon's products closer

Table of Contents

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COMPETITIVE ANALYSIS RELATED TO THE INDUSTRY-LEVEL

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PROJECTED MARKETLING BUDGET 19

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CONCLUSION OAR ERR R A 23

INTRODUCTION

With the advancement of society, people tend to pay more attention to health and begin to favour beauty products that are completely plant-based Along with this mindset, vegan cosmetics are also starting to become the favourite trend of many green lifestyle people One

of the leading brands to meet this need in the Vietnamese market is Cocoon However, in order

to increase production efficiency, expand the scale, diversify business activities and limit risks when doing business in a single market, Cocoon needs to take a new step in expanding the market Korea is one of the potential markets - where the cosmetics and beauty industry thrives

in the world, especially famous for products derived from nature This is a market that presents both opportunities and challenges for a business like Cocoon This report will develop a comprehensive marketing plan for Cocoon’s pomelo hair tonic in the Korean market to contribute to increasing the opportunity to bring Cocoon's products closer to Korean consumers, thereby increasing revenue and bringing high profit for the business

Company profile

History of Cocoon

Cocoon is a Vietnamese natural vegan cosmetic brand belonging to Nature Story Cosmetics

Co., Ltd It was established in 2013 The brand name shows that The Cocoon is the common

home for skin, hair and physique of Vietnamese people, helping to honor Vietnamese beauty

with simple ingredients Therefore, Cocoon constantly researches and launches 100% vegan

cosmetic lines that keep Vietnamese botanicals intact, safe and benign, do not use animal

ingredients, and are not tested on animals Cocoon has very succeeded in conquering

Vietnamese consumers in a professional appearance and outstanding quality (Cocoon, 2020)

The vision

To become one of the pioneering and successful domestic brands in the field of producing

vegan beauty products extracted 100% from nature, safe, benign, of clear origin and committed

to not testing on animals (Cocoon, 2020)

The Mission

Cocoon products are created to give customers healthy, youthful and vibrant skin and hair from

the simple and intimate ingredients they eat every day Cocoon always has one mission in

mind: applying the benefits of the foods around us combined with scientific understanding in

the research and thorough testing of recipes, constantly improving and innovating to ensure

that the final products are safe, effective and maximize the use of the customer's skin The

arduous journey to true beauty is not your own task, they will accompany you on that journey

(Cocoon, 2020)

The principle of operation of the cocoon:

e 100% of ingredients are of clear origin, safe for the skin: the ingredients in the product

have certificates of origin and are studied for 12 to 24 months before being put on the

market (Cocoon, 2020)

e 100% vegan: not using ingredients derived from animals, but applying and maximizing

the potential of plant-based active ingredients (Cocoon, 2020)

e 100% never tested on animals: Cocoon cosmetic formulations are researched and tested

on human volunteers Raw material suppliers commit not to test on animals during the

research and production of such materials (Cocoon, 2020)

Main product lines:

e Facial skin care: Pumpkin mask, rose makeup remover oil, moisturizing rose

Jelly (Cocoon, 2020)

e Hair care: Sa-chi serum, grapefruit essential oil, grapefruit shampoo (Cocoon, 2020)

e Bodycare: Pumpkin shower gel, eucalyptus hand soap, Dak Lak coffee scrub (Cocoon,

2020)

e Lip care: Ben Tre coconut oil balm, coffee lip scrub (Cocoon, 2020)

Achievements:

e In September 2020, Cocoon was certified "not tested on animals and vegetarians” by

the global animal welfare organization PETA and certified vegan by The Vegan Society

(Brands Vietnam, 2020)

e In November 2020, Cocoon officially became the first Vietnamese brand to appear on

Leaping Bunny’s list of not tested on animals - Cruelty Free International's commitment program not to test on animals, the “gold standard” has worldwide influence (Brands

Vietnam, 2020)

Current marketing situational analysis

Competitive analysis related to the industry-level

The vegan beauty industry was founded on the principles of animal rights protection and

integrating natural beauty into product value Cocoon shows clearly the value of the vegan

beauty industry from the beginning to the end of the production process Bringing faith and

love with nature, their products’ ingredients are guaranteed to be rich in nutrients, friendly and

safe for customers Cocoon hair treatments are becoming increasingly popular due to their

numerous uses, particularly Pomelo Hair Tonic

However, even when Cocoon is being favoured by customers, the small brand from Vietnam

has encountered many big foreign competitors such as Sukin, LUSH, The Body Shop, (Maneki,

2022) Inthe vegan beauty market, hair care products that aim to grow, provide nutrients, and

give a healthy look are translated into a variety of genres and styles such as: shampoo bars,

hair sprays Hair care products like Cocoon’s Pomelo Hair Tonic are still new on the Korean

market and might attract the interest of the majority of users Cocoon’s Pomelo Hair Tonic will

focus on competition posed by effective uses, including the following:

Sukin: Born in 2007, Sukin, the number 1| natural skincare brand in Australia, has

always been at the forefront of the health & wellness movement One of the first to say

"NO' to artificial additives and harsh ingredients that can cause harm to customers, Sukin offers a wide range of hair care products which are all formulated using only ingredients that can be found in nature Its famous NO list specifies 13 synthetic ingredients that are and will never be used to make the company’s products With a price range of 5$-25$ for each product, customers said the affordability and excellent smell were the primary factors contributing to their buying decision By successfully proving that it is the dominant player in the field of natural hair care products, Sukin

revenue for the fiscal year 2021, reached 95 million Australian Dollar, an increase of

16% compared to 2020’s figure Sukin made its debut to Korea in December 2012 LUSH: Founded in 1995, this British cosmetics retailer uses only vegetarian recipes, 80% of which are vegan In 2017, the brand relaunches its global hit shampoo bar to campaign against animal testing At the time, Lush relaunched this product to over 1.7 billion consumers who supported cruelty-free cosmetics (Lucy, 2017) Shampoo Bars are made from organic materials with non-plastic packaging that sold 12,000 units in just two days The best part is that each bar lasts the equivalent of 3 medium-sized shampoo bottles, or around 80 washes The total sales of Shampoo Bars in 2021 was

about 1.9 million bars only in the UK (Lush, 2021)

The Body Shop: Established in 1976, they are the botanical beauty brand which has been advocating for animal rights since 1989 by not testing on animals The brand has launched new vegan hair care products including shampoo, scalp serum, scalp scrub and other hair care items The Moringa Shine & Protection hair mist which is made with 92% of natural ingredients helping protect hair from daily pollution and giving it a shinier, smoother look The brand sold over 3 million vegan products both

in the US and UK during 2018 which is an increase of 6% in sales for vegan products

in the US and 7% growth in the UK (Vegconomist, 2019) According to a user trial, 90% of them would recommend the Vegan Silk Protein’s hair care products to their

friends (SHEamazing, 2021)

On the other hand, Cocoon has indirect competitors Recently in Korea, spas have become more popular providing products and services that meet the needs of customers In order to see the results of Pomelo Hair Tonic, customers must use the product consistently for weeks or months Instead, some people prefer to have their hair done at hair salons, where they can have long hair within a day

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registration of some functional products that contain certain ingredients or a combination of ingredients This means that in the case ingredients and contents are registered according to the

regulations, these functional products, which include Pomelo Hair Tonic, can be distributed

and sold by submitting data without reviewing Hence, the registration process is now shortened from 60 days to almost immediately (Lim, 2021)

e Economic factors

An ultra-competitive and innovative market

Korea is one of the top 10 beauty markets in the world, and it is constantly growing The market size was estimated to be $9.4 billion in 2019 and has been constantly growing since then Korean domestic brands draw their strength from a particularly dynamic local market, where fierce competition calls for a capacity for innovation and a speed to market to which foreign brands are not used But that doesn’t mean Western cosmetics are powerless If Cocoon decides

to enter this market, it will have to face very intense competition from both Korean and other foreign brands On a country-by-country basis, France ($462 million) was the largest exporter

to Korea in 2019, followed by the U.S ($360 million) and Japan ($207 million)

e Sociocultural factors

"The good-looking wins over half."

In Korean society, attractiveness is considered a priority Many Koreans (especially the younger generation) think that a good appearance plays an important role in success When it

comes to Korean beauty standards, there are a number of conditions: slim body, slender face,

V-shaped face, slim lips, straight eyebrows, smooth skin, big eyes and of course, beautiful hair Korean celebrities usually have long, straight hair, sometimes with a little texture This has become quite a standard and a key component for countless girls and women both in Korea and around the world, especially when Kpop idols are having more and more influence globally By taking advantage of this demand, Cocoon’s Pomelo Hair Tonic can actually make

a spectacular breakthrough in the Korean market with a suitable marketing plan and strategy Cocoon also possesses the first-mover advantage as there is currently little or no brand offering vegan hair tonic to the market

e Technological factors

A huge block to success

The upcoming trends in the Korean market for skincare products lie in organic ingredients, sustainability, personalisation, and the use of technology such as AI and LED With extensive background and infrastructure in technology, a lot of beauty-tech companies are now coming

to the fore as driving forces in the K-beauty industry by highlighting Korea’s strength is not only cosmetic procedures, such as plastic surgeries but also cosmetic products for their advanced innovation and promising results However, with vegan cosmetics, it’s not that easy The vegan category had the perception of not performing as well as its traditional, non-vegan

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counterparts - often legacy beauty brands which had years of history, science and research backing up the products It’s very difficult to effectively mimic the effects of animal-sourced ingredients, meaning that the results seen by the consumer can match/exceed those of a non- vegan formula Therefore, constant research, improvement and evolution will be inevitable if Cocoon’s objective is to penetrate the Korean market

e Ecological factors

Environmental and customer-friendly

Over the last few years, the term ‘Natural’ has been on cosmetic packaging and used by countless brands for marketing purposes when in fact, most of the time they’re not 100% natural The beauty industry has a negative impact on the environment when the toxins and chemicals in the traditional cosmetics and toiletries are being washed down our sinks and end

up in lakes, rivers and even water supplies This is when Cocoon proves itself to be the pioneer

in the market by using 100% natural and vegan ingredients for every product With this feature, Pomelo Hair Tonic is not going to cause any chemical-related issues to customers and it also benefits the environment in the most practical way

e Legal factors

The regulation of the market that is in the top 10 globally

Cosmetic products placed on the Korean market must comply with the Cosmetics Act, with the Cosmetic Regulation as well as with the Cosmetics notice from the Korean government Foreign cosmetics manufacturers, in this case Cocoon, are required to designate an importer or

a distributor within Korea, which has its own storage facility, to secure the quality of the product In the past, the importer had to go through a pre-market registration process but thanks

to the new change in regulation in 2021, this process can now be skipped if Cocoon meets all the conditions that were set out for functional products In the case of functional cosmetics, the manufacturer or importer is required to submit technical documents to the MFDS in order to evaluate the safety and effectiveness of the cosmetic, called the technical document review process According to the Cosmetics Act, cosmetic product labels must conform to the specific requirements for labelling Special attention must be paid to the language, claims and price used on the labels as well The label must be written in Korean However, it may include other languages also

SWOT analysis

Strengths

Affordable price and high quality

Cocoon’s products are extremely affordable (about 35,000-750,000 VND) Grapefruit essential oil is priced at 145,000 VND Cocoon’s pomelo hair tonic price is only 145,000 VND, which is not expensive for a product with a clear origin, a safe and

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environmentally friendly production process, and a high quality Besides, Cocoon also offers a variety of beauty combos at a much lower price compared to the retail price This will allow Cocoon to attract a wide range of customers with different types of income

One of the pioneering brands in the field of vegan cosmetics in Vietnam

Many brands on the market have been pursuing eco-friendly beauty trends, such as

BareSoul (2015), Naunau (2013), Herb n’ Spice However, it was not until the

appearance of Cocoon that the cosmetic industry truly began to bloom and receive a great number of attention and acceptance Referring to Cocoon, consumers will immediately think of the spirit of "humanistic beauty" that the brand is pursuing Cocoon takes the maximum advantage of the benefits of Vietnam’s natural ingredients while rejecting animal testing in order to create safe, non-harmful product lines

Weaknesses

Cocoon is a relatively new brand that is not widely known in other countries

It is undeniable that Cocoon has made a special mark on the Vietnamese cosmetic

market, however this brand is not well-known in the international market Because there

are still many people who are skeptical about the product's effectiveness and are concerned that Cocoon is a Vietnamese cosmetic product At the same time, because Cocoon has not focused on marketing to promote its products in the international market, the company’s market has not grown significantly

Cocoon’s organizational structure is still small and financial potential is not strong enough

Although Cocoon has established a strong reputation in the Vietnamese beauty industry, the company’s structure and financial potential do not allow it to easily enter the international market Entering the international market earlier than other brands in the same industry necessitates Cocoon having a large and stable capital source to cover the pioneering cost This cost includes any failure costs that the company may incur due to a lack of experience

Opportunities

Korea has a developed economy and high GDP per capita

Korea has the fourth largest developed economy in Asia and the tenth largest in the world, thus Koreans have a high standard of living According to The World Bank data, the average GDP per capita of Koreans in 2020 was 31,597 USD (approximately

732,892,415 VND) Because of their high income, Koreans are less concerned with

product price but pay much attention to product quality and origin They highly prefer environmentally friendly and healthy products

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Korean people (both male and female) are very interested in beauty care and especially natural beauty

Beauty care has been a part of Korean culture As a result, both men and women in Korea began taking care of their appearance at a young age South Korean men are now the world's leading group of beauty care product consumers, and the market grew by

44 percent between 2011 and 2017, according to data from Euromonitor As stated by GlobalData, up to 75% of Korean men undertake a beauty or grooming treatment on a weekly basis Therefore, Cocoon's pomelo hair tonic products are appropriate for both male and female gender segments, allowing the company to expand its marketing market

The fear of hair loss, baldness of young Koreans

Currently, the number of Koreans being treated for hair loss is growing, particularly among younger age groups In 2020, over 233 thousand people received hair loss treatment in hospitals, with women accounting for 43 percent and men in their 30s accounting for 25.5 percent, according to Korea's National Health Insurance Service They begin to research and purchase products that have the ability to grow hair or prevent hair loss because they fear of being ridiculed, teased, and suffering a negative impact on their work and life This creates a special interest among young Koreans in

hair care Hence, this is considered to be a potential chance for a natural, safe, and

effective hair growth product such as Cocoon’s pomelo hair tonic

Tax incentives based on the Vietnam - Korea Free Trade Agreement (VKFTA)

Vietnam is enjoying preferential tax reductions for goods exported and imported to South Korea, including consumer goods (cosmetic) due to the signing of the Vietnam -

Korea Free Trade Agreement (VKFTA) in 2015 This will create favourable conditions

for the export of goods to the Korean market, while Cocoon’s products will not be subject to high taxes, resulting in a price that is not significantly different from the original local price

A new wind of change blowing through Korean cosmetic market

Grapefruit essential oil - the same product as Cocoon - is not widely available in Korea

At the same time, because Koreans have not been exposed to many products containing grapefruit essential oil, they are unaware of its beneficial properties Cocoon's entry into the Korean market could create a new wave and trend in the use of grapefruit essential oil for hair care This is a good time for Cocoon to become one of the first brands to distribute pomelo hair tonic to Korea

Threats

Koreans are not accustomed to using Vietnamese cosmetics

Korea is the 4th largest cosmetics exporter in the world in 2018 and is striving to move

up to 3rd position in the following years Meanwhile, in the international market,

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Vietnam has no strength in cosmetic production Therefore, Korean consumers will tend to trust and use Korean domestic products instead of choosing an item from a country that is not famous for exporting cosmetics Accordingly, Cocoon faces a significant challenge in demonstrating the quality of its products in the international market

The Korean market is one of the first foreign markets, so Cocoon might lack of experience in penetrating the market

Becoming the first brand in the vegan cosmetics industry to penetrate the international market requires Cocoon to have extensive experience to be able to come up with reasonable strategies in the international marketing process

Competition from big brands in the industry

In the international market, there are many big famous brands around the world with long experience in the field of vegan products, such as The Body Shop (1976) from the

UK, Sukin (2007) from Australia, Love Beauty & Planet (2017) from the US Cocoon also needs to compete with the leading Korean domestic brands that also offer vegan

products like Melixir, I'm From, Dear Klairs, Whamisa These native brands are more

familiar with and understand well about client’s preferences than multinational brands, and their products are also known and trusted by Koreans customers Then Cocoon should invest in marketing in order to raise brand awareness in the Korean market

Objective & Goals

By evaluating potential opportunities using specific criteria such as GDP, average cost of beauty treatments, Korean cosmetic trends, the major objective of this marketing plan is to expand the export market for Cocoon This brand will make its first international appearance

in Korea This plan will need to achieve the following specific goals for the brand: Increasing the brand awareness for Cocoon in Korea For this objective, the result could

be measured by increasing social media impressions by 15% in comparing the audience

brand awareness before and after Quarter 3

Launching one of the best-seller products of Cocoon in the international market: The Pomelo Hair Tonic Following Cocoon’s brand positioning as well as developing an appropriate messaging strategy after the marketing research Preparing knowledge about the cultural differences

Optimizing the funnel This plan will aim to account for 10% of optimizing conversion funnel and ensure marketing to potential users who become customers of Cocoon by increasing remarketing efforts

The mentioned goals will be closely monitored throughout Cocoon’s foreign marketing plan to ensure the optimal execution of the plan and the establishment of a presence for the brand in

Korea

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Marketing Strategy

Digital marketing strategy

Recognizing the opportunities and potential of Cocoon, we intend to establish a digital marketing strategy to extend the brand to the international market This will be a social media strategy ideal for a small firm like Cocoon that is pretty new to the Korean market - a world of beauty - because it can save money and time when compared to opening an actual store Furthermore, Korea holds the second position in terms of social network usage, with 89.3% which is 1.7 times greater than the global average (53.6 %) According to a research, more than 70% of social media users have online buying habits that is one of the potential prospects in this ratio (WebFX, 2021) Furthermore, according to statistics froma Korean online application called Coupang, more than 34% of customers aged 30-40 shop online at least once a day and 40% shop online 2-3 times per month (Ruche, 2022) Based on this information, our target clients will be:

e Customers tend to range from 20 to 40 years old, with 20-25 generally young people who prefer new experiences and 25-40 are mostly working people who do not have much time to go shopping in person

e The majority are women who are aware about their overall look They live in Seoul, Korea with high aesthetic preference They often change hairstyles and trendy hair colors

e Insight: These customers are not only interested in a natural beauty, but also care about environmental and animal protection issues due to the feature of the brand as a vegan cosmetic They are those who choose natural cosmetics due to its peaceful nature and health benefits

In order to develop more effective set of actions in the strategy, our strategy includes the following goals related to the master plan:

Increasing social media impressions by 15%:

e Increasing Instagram, Naver, Twitter followers to 10,000 for each

e SNS ad reach 40,000 viewers

Optimizing conversion stages by 10%:

e Encouraging users to visit beauty content

e Switching from advertising page to product introduction page by | click

e Adding ‘1-Click Checkout’ option beside the Add to cart option

Partnership with influencers

One of the most characteristic features in Korea is the growth of the entertainment industry, which generates hundreds of millions of celebrities and idols every year Not only that, but with the widespread use of social media, the influence of social media on client decisions is considerable There are many influential Koreans on social media with a huge following, and

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