expanding retail beauty products of neyu corporation in thailand market marketing challenges and solutions

Acknowledgements I would like to express my sincere gratitude and appreciation to all those who have contributed to the completion of this research paper on the topic "Expanding Retail B

UNIVERSITE COTE D’AZUR Institut d’Administration des Entreprises

THANG LONG UNIVERSITY

Thailand market: Marketing challenges and solutions

Student’s name Do Quynh Hoa Class AMI13A Academic instructor Ms Nguyen Thi Phuong Company instructor Mr Dang Minh Quang Internship period June to Sep, 2023

Acknowledgements

I would like to express my sincere gratitude and appreciation to all those who have contributed to the completion of this research paper on the topic "Expanding Retail Beauty Products of Neyu Corporation in the Thailand Market: Marketing Challenges and Solutions."

First and foremost, I extend my deepest appreciation to Neyu Corporation for granting me the opportunity to undertake this research and allowing me to explore the marketing challenges and solutions related to their expansion into the Thailand beauty product market

I am indebted to my academic advisor, PhD Nguyen Thi Phuong, for her invaluable guidance, support, and encouragement throughout the research process expertise and insights have been instrumental in shaping the direction and quality of this research

I would like to acknowledge the assistance and cooperation of the Neyu Corporation team, particularly those involved in marketing and market expansion strategies Their insights and information were vital in understanding the company's operations and strategies

Lastly, I would like to thank my family and friends for their unwavering support, encouragement, and understanding throughout the process of completing this research Their motivation and belief in me kept me going during challenging times

This research would not have been possible without the collective support and collaboration of all those mentioned above Thank you for being an integral part of this academic endeavour

ii

Abstract

This research paper delves into the intricate landscape of expanding retail beauty products of Neyu Corporation within the vibrant and competitive market of Thailand The objective is to comprehensively analyse the challenges that Neyu Corporation is likely to face during its market expansion endeavours and propose effective marketing solutions to overcome these obstacles By examining the nuances of the Thailand beauty product market and delving into Neyu Corporation’s operational capabilities, marketing strategies, and technological integration, this study seeks to provide actionable insights that can aid in the successful expansion of Neyu Corporation's beauty products in Thailand

The research is structured to facilitate a detailed understanding of the market dynamics, consumer behaviours, regulatory considerations, and strategic marketing approaches necessary for Neyu Corporation to establish a strong foothold and flourish in the Thai beauty product market

Introduction

The beauty and skincare industry is a dynamic and ever-evolving sector, driven by evolving consumer preferences, technological advancements, and globalisation Neyu Corporation, a prominent entity in the realm of beauty products, is poised to expand its retail operations into the thriving market of Thailand This strategic move necessitates a comprehensive understanding of the unique challenges and intricacies inherent to the Thai beauty product market Effective market expansion requires a meticulous analysis of consumer behaviours, regulatory landscapes, competitive dynamics, and technological advancements shaping the beauty industry in Thailand

This research endeavours to delve into the marketing challenges that Neu Corporation is likely to encounter during its foray into the Thai beauty market Furthermore, it aims to propose effective marketing solutions based on a thorough examination of the market's demands and Ney Corporation's strengths By exploring these facets, this study seeks to equip nehu Corporation with invaluable insights that can guide strategic decision-making, ensuring a successful and sustainable expansion of their beauty product offerings in Thailand from June 2023 to June 2024

The report provides empirical evidence of the effective amalgamation of theoretical constructs and empirical data, showcasing my adeptness in the practical application of knowledge acquired from the AMI Curriculum within the purview of an Advertiser team member

The report is divided into five chapters as follows: Chapter 1: Company background

Chapter 2: Company structure and organisation chart Chapter 3: The mission: Assigned tasks and goals Chapter 4: Marketing strategy to expand retail beauty products in Thailand market Chapter 5: Conclusion

3.3 CONTRIBUTION TO THE COMPANY 123.4 THEORETICAL KNOWLEDGE TO BE PUT INTO PRACTICE 12CHAPTER 4: MARKETING STRATEGY TO EXPAND RETAIL BEAUTY

PRODUCTS IN THAILAND MARKET 134.1 EXTERNAL ANALYSIS 134.2 INDUSTRY ENVIRONMENT ANALYSIS 194.3 INTERNAL ENVIRONMENT ANALYSIS 234.4 PROPOSED MARKETING STRATEGY 26CHAPTER 5: CONCLUSION 375.1 ACHIEVEMENTS IN THE INTERNSHIP 375.2 FURTHER RECOMMENDATIONS TO THE COMPANY 37

List of Tables 41

CHAPTER 1: COMPANY BACKGROUND 1.1 GENERAL INTRODUCTION

1.1.1 Company Overview

Neyu Corporation Limited is one of the most reputable names in the expanding Mar-Tech industry, recognizing the opportunities that can release the untapped potential within this field With innovation, leading digital systems and the latest approaches to marketing technology, Neyu is listening to your needs and delivering on your expectations

\ Registered company name: NEYU COMPANY LIMITED Abbreviated name: NEYU/ Neyu

Vietnam head office: 17 - 19, 5th Floor, Ha Phan Building, Ton That Tung street, Pham Ngu Lao Di Ward, District 1, Ho Chi Minh city, 710000

Number of representative offices: 5 (Vietnam, Thailand, Indonesia, Malaysia, Philippines Website: https://neyu.co/

Phone: 089 8113 679

1.1.2 Core Values:

- Innovation: Neyu fosters a culture of continuous innovation, where creativity and curiosity thrive, enabling us to pioneer new marketing technologies and stay ahead of the curve

- Integrity: Neyu company upholds the highest ethical standards in all interactions, ensuring transparency, trust, and honesty in our relationships with clients, partners, and employees

- Customer-Centricity: Neyu customers are at the heart of everything Neyu strives to understand their unique needs, challenges, and goals, and tailor their solutions to exceed customers' expectations

- Collaboration: Neyu believes in the power of teamwork and collaboration By working together internally and with the clients, the company achieves excellence and delivers comprehensive marketing solutions

- Data-Driven Approach: Data is the cornerstone of Neyu's strategies They leverage cutting-edge data analytics tools to extract valuable insights, enabling the clients to make informed and strategic marketing decisions

1.2 HISTORY

In 2019, Neyu Corporation was founded and registered in Singapore, marking its inception In the same year, the company initiated its global expansion strategy by opening its first office in Vietnam, where it also established a factory and call centre

In 2021, Building on its initial success and presence in Vietnam, Neyu Company expanded its operations by opening new offices in Malaysia and Indonesia This expansion indicated the company's ambition to establish a broader regional footprint and cater to diverse consumer bases across Southeast Asia

In 2022, Neyu continued its expansion trajectory by opening new offices in the Philippines, further solidifying its presence in the Southeast Asian region This strategic move indicated the company's focus on penetrating key markets and strengthening its brand visibility and market share in the beauty and skincare industry

In 2023, building on the success and momentum from its expansions in previous years, the company expanded its regional operations by opening new offices in Thailand in 2023 In Thailand, the company not only established offices but also opened a factory and a call centre, showcasing a commitment to local production and customer service

The company's strategic approach of establishing offices and production facilities in multiple Southeast Asian countries reflects its vision for international growth and its dedication to meeting the diverse skincare and beauty needs of consumers across the region Through these expansions, Neyu has positioned itself as a key player in the beauty product market, continuously striving to provide innovative and effective solutions to its customers

1.3 PRODUCT HIGHLIGHTS

Neyu Corporation is engaged in the design and manufacturing of an extensive range of 300+ products which they call as “offers” Neyu offers device by 2 main category Beuty and Health care These offers are catered for 5 countries: Thailand, Vietnam, Indonesia, Malaysia, and Philippines

Table 1: Neyu offers

Beauty

Anti-aging Cream Cellarin

Beauty

Anti-aging Cream Everlift Cream

Hair Care Serum Keravits

Health care

Diabetes Glucoactive

Health care

Eye Vision

Respiratory Activcare

Beauty

Anti-aging Serum Lavite New Malaysia

Beard and Hair Growth

Beauty

Anti-aging Cream Everlift Cream Collagen Support Collawhite Anti-aging Serum Lavite

Health care

Diabetes Insinol

Diabetes Glucoactive Hemorrhoids Hamovis

Eye Vision Support Eyecaps

Hemorrhoids Hemolab Beauty Anti-aging Cream Everlift Cream -vn Hypertension Tensimin

Health care

Source: Neyu company

The company uses affiliate marketing which promotes offers through a third-party advertiser network in exchange for paying commission partners when an action is taken Commissions are often paid on sales as cost per approved (CPA model) To support this model, Neyu company has 2 main products which are AffScale and TMS

1.3.1 AFFSCALE

AffScale is a system that works with partners to advertise our products This system is integrating many features to help partners run and track each advertising campaign in the most convenient and effective way Our partners will set up online advertising campaigns, utilising paid ads, email marketing, and social media to drive traffic (leads - information such as name, phone number which customer registration for sign up to buy an offer) back to the AffScale

database through API integration

1.3.2 TMS

All leads will come to TMS Telesales Platform, which is a cloud-based customer relationship management (CRM) system It's a centralised platform that allows to store, organise, and manage customer-related data, including contact information, communication history and logistics

1.4 KEY FINANCIAL FIGURES Table 2: Key financial figures of the company in the period 2020-2022 (VND)

2020

(Thousand VND)

2021

(Thousand VND)

2022

(Thousand VND)

2021 compare to 20202022 compare to 2021

Thousand VND%Thousand

1 Gross sales 109,849,590 93,799,650 239,789,865 (16,049,940) (14.61%) 145,990,215 155.64%

2 Net Revenue 102,188,340 93,799,650 239,789,865 (8,388,690) (8.21%) 145,990,215 155.64%

3 Cost of Goods Sold 97,101,647 78,258,647 206,569,421 (18,843,000) (19.41%) 128,310,774 163.96%

4 Gross Profit from Sales and Service 5,086,692 15,541,002 33,220,444 10,454,310 205,52% 17,679,442 113.76%5 Net Profit (7,457,288) 7,725,889 17,953,683 15,183,177 (20.360%) 10,227,794 132.38%

6 Profit before taxes (7,486,827) 7,722,553 17,953,683 15,209,380 (203.15%) 10,231,130 132.48%

7 Profit After Tax (7,524,656) 7,705,882 14,729,800 15,230,538 (202.41%) 7,023,918 91.15%

Source: Neyu company

The gross sales of the company in 2021 was 93,799,650 million VND, which was decreased by 16,049,940 million VND, equivalent 14.61% compared to 2020 due to difficulties of the COVID-19 pandemic causing for health and beauty industry in 2021 The gross sales of the company in 2022 was 239,789,865 million VND, which was increased by 145,990,215 million VND, equivalent 155.64 % compared to 2020 due to the recovery of health and beauty industry and the market expansion of Neyu company into Indonesia and Malaysia

Net revenue was 102,188,340 VND in 2020, which was decreased by 8,388,690 VND, equivalent to 8.21% in 2021 However, net revenue recovered to 239,789,865 VND in 2022, which was increased 145,990,215 VND compared to 2021 The growth in net revenue in 2022 was 155.64% In both 2021 and 2022, net revenue was equivalent to total revenue

The company's cost of goods sold in 2021 was decreased by 19.41% compared to 2020 from 97,101,647,440 VND to 78,258,647,080 VND But this index suddenly increased sharply in 2022 In particular, this index was increased by 128,310,774,290 compared to 2021, growing by 163.96% due to the recovery and expansion of the market along with seizing opportunities for production growth to supply to the market

During three years from 2020-2022, the company's gross profit from sales and service activities was highest in 2022 up to 33,220,444,400 VND Compared to 2021, the value in 2022 was increased by 113.76% from 15,541,002,920 VND to 33,220,444 VND The growth rate of profits from sales and service activities was increased sharply in 2021 from 5,086,692,560 in

2020 to 15,541,002,920 VND in 2021, equivalent to 205.52% This shows that the development of service activities in the field of health and beauty has been proactive in bringing to the market and meeting market needs

In 2020, the company's net profit was negative The net profit of 2020 was negative 7,457,288.640 VND but by 2021, this number reached 7,725,889,230 VND By 2022, net profit had growth in the market, which was increased by 10,227,794,160 VND (equivalent to 132.38%) compared to 2021

Similarly, the company's pre-tax and after-tax profits was negative in 2020 However, However, pre- and after-tax profits in 2021 and 2022 was increased significantly was increased significantly Pre-tax profit reached 7,722,553 VND in 2021, which was increased to 17,953,683 VND, equivalent to 132.48% in 2022 Profit after tax in 2021 increased by 15,230,538 VND compared to 2020 Compared to 2021, the profit after tax in 2022 was increased by 7,023,918,120, equivalent to 91.15% It shows that the company's business performance becomes much better since difficults of COVID-19 epidemic

CHAPTER 2: COMPANY STRUCTURE AND ORGANISATION CHART 2.1 ORGANISATION CHART OF THE COMPANY

Figure 1: Neyu organisation chart

Source: Neyu company

2.2 ROLES AND RESPONSIBILITIES

In Neyu corporation, each department plays a vital role in contributing to the overall success and functioning of the business Here's a breakdown of the functions and duties for each department within this context:

2.2.1 Factory

The Factory at Neyu Company plays a pivotal role in both innovation and production, aligning its functions with market dynamics and quality imperatives Central to this department's activities is the critical function of Product Research and Development This involves a comprehensive exploration of market trends, consumer preferences, and technological advancements to drive the conception and creation of new beauty products Rigorous testing and continual refinement of existing products are also essential components of this function, ensuring that the efficacy, safety, and market competitiveness of the product line are continually enhanced

Simultaneously, the Manufacturing function within the Factory department is indispensable for ensuring the seamless and punctual production of beauty products This entails diligent oversight of the entire production process to maintain efficiency and timeliness Furthermore, the implementation of stringent quality control measures is a crucial aspect of manufacturing responsibilities, aimed at preserving high product standards that align with regulatory requirements The strategic integration of both these functions underscores the Factory department's commitment to delivering superior beauty products while adhering to the rigorous standards of the market and regulatory frameworks

2.2.2 Callcentre

The Call Centre department at Neyu Company, operating across Thailand, Vietnam, Indonesia, Malaysia, and the Philippines, is pivotal in ensuring effective customer service and streamlined logistical operations The department encompasses two primary functions: Customer Support and Logistics

In the domain of Customer Support, the department shoulders the responsibility of addressing customer inquiries, complaints, and product-related questions This includes furnishing customers with comprehensive product information, guiding them through the order processing system, and providing adept after-sales support By doing so, the team aims to offer exceptional customer service, reinforcing positive client experiences and fostering customer loyalty

Concomitantly, the Logistics function within the Call Centre department is fundamental for seamless order fulfilment, shipping, and delivery processes The team diligently oversees the entire logistics spectrum, coordinating with shipping partners and meticulously optimizing logistics processes This optimization is directed towards achieving efficient and cost-effective distribution, ultimately contributing to enhanced operational efficiency and heightened customer satisfaction levels The integration of these vital functions underscores the Call Centre department's dedication to ensuring customer-centric operations and proficient logistical management across multiple countries of operation

2.2.3 Marketing

The Marketing Department at Neyu Company operates through specialized teams, each playing a pivotal role in the strategic marketing and brand development endeavours of the organization

The Content and Design Team is tasked with crafting captivating marketing content and designing materials essential for various promotional campaigns, product packaging, and a range of marketing collateral By doing so, this team significantly contributes to creating a strong brand identity and engaging with target audiences in an impactful manner

The Business Development Team takes on the responsibility of identifying and pursuing fresh business opportunities, establishing partnerships, and fostering collaborations Utilizing the sophisticated Affscale system, this team supports partners and extends the company's market reach and customer base, thereby contributing to the organization's sustainable growth and market expansion

The Advertiser Team carries out comprehensive market research, closely collaborating with the call centre to gain in-depth insights into consumer preferences, emerging trends, and the competitive landscape These insights are utilized to finely tailor marketing strategies and product offerings, ensuring that Neyu Company remains agile and responsive to the evolving market dynamics

2.2.4 Finance and Accounting

Financial Management involves overseeing financial resources, formulating budgets, and engaging in financial planning to guarantee the company's financial health and facilitate sustainable growth This function continuously monitors financial performance, cash flow, and profitability, generating regular reports to provide insightful data for informed decision-making within the organization

Accounting encompasses the handling of accounts payable and receivable, invoicing, and meticulous financial record-keeping It is imperative for ensuring compliance with relevant accounting standards and regulations, maintaining accuracy and transparency in financial transactions By diligently managing the financial records, this function supports the organization in meeting its legal and financial obligations, ultimately contributing to the company's overall financial stability and accountability

2.2.5 Admin and Human Resources

Administration governs the seamless orchestration of daily administrative tasks, facilities, and office operations This encompasses ensuring a conducive work environment, coordinating logistical needs, and efficiently managing essential administrative aspects vital for an effective workplace

Human Resources (HR) undertakes multifaceted responsibilities involving the entire spectrum of the employee lifecycle This includes recruitment processes, comprehensive

employee onboarding, performance management, training initiatives, and employee engagement programs HR functions are pivotal in cultivating a motivated workforce and promoting a positive workplace culture that aligns with the organizational goals

Legal functions involve navigating the legal landscape and ensuring compliance with laws and regulations relevant to Neyu Company This entails managing contracts, agreements, and legal aspects integral to business operations The legal team also provides crucial legal advice and support, aiding in informed decision-making regarding business strategies and regulatory adherence

2.2.6 Technology Innovation

Software Development stands as a core responsibility, encompassing the development and maintenance of software solutions, specifically leveraging AffScale and TMS systems These systems are vital for optimizing crucial business processes, ranging from inventory management to order processing and customer relationship management, ensuring operational efficiency

Product Innovation is central to the department's functions, involving continuous enhancement and innovation of existing products Leveraging AffScale and TMS systems, the department incorporates technological advancements and gathers insights from customer feedback to improve the quality and relevance of Neyu's product offerings

Intelligent Transportation System (ITS) is a critical domain within the department, involving the implementation and management of systems to optimize transportation and logistics By utilizing ITS, the company enhances the efficiency of product distribution and delivery, a vital aspect of ensuring timely and accurate service to customers

CHAPTER 3: THE MISSION: ASSIGNED TASKS AND GOALS 3.1 INTERNSHIP ASSIGNMENTS

As an intern within the Advertiser team at Neyu company, my primary assignments revolve around collaborating with the call centre department to provide actionable insights that optimise performance and guide marketing strategies for Neyu Corporation's retail beauty products in the Thailand market My specialty is to focus on 2 main offers of Beauty - Anti-aging Cream: Cellarin and Anti-aging Serum: Lavite

a Offer name: Cellarin

Categories: Anti-aging, Cream, Thailand Description:

- Diminishing wrinkles - Restores less firm skin - Reduce the dark spots

Sale price: 990 Baht

b Offer name: Lavite

Categories: Anti-aging, Serum, Thailand Description:

- Helps Lifts the cheeks - Smoothes out crow's feet wrinkles - Tightens the sagging neck skin

Sale price: 990 Baht

In this capacity, I am tasked with analysing call centre data, customer feedback, and inquiries to extract valuable information regarding customer behaviour, preferences, and challenges about Cellarin and Lavite products By understanding customer needs and preferences, I assist center department in enhancing customer satisfaction, and contributing to the successful expansion of Neyu Corporation's beauty products in the Thailand market

- Provide actionable insights to the call centre and marketing teams that optimise customer interactions, enhance customer satisfaction, and inform marketing strategies about Cellarin and Lavite products

- Collaborate with cross-functional teams to develop targeted marketing campaigns that align with customer preferences and market demands for Cellarin and Lavite products - Contribute to the development of innovative solutions and product enhancements based

on customer feedback and research insights

3.3 CONTRIBUTION TO THE COMPANY

Through my internship assignments, I aim to make a valuable contribution to Neyu Corporation by:

- Enhancing the call centre's performance and customer service through data-driven insights

- Guiding the marketing team in developing effective strategies that resonate with the target audience

- Identifying key market trends and customer preferences to inform product development and marketing decisions

- Providing valuable insights that support Neyu Corporation's successful expansion in the competitive beauty products market in Thailand

3.4 THEORETICAL KNOWLEDGE TO BE PUT INTO PRACTICE

During my internship, I will have the opportunity to apply theoretical knowledge gained through academic studies, including:

- Data analysis techniques and research methodologies to extract meaningful insights from call centre data and customer feedback

- Marketing principles and strategies to develop targeted marketing campaigns that address customer preferences and market challenges

- International collaborative and communication skills to effectively work with cultural teams and present research findings in a clear and concise manner

cross-By integrating theoretical knowledge with practical experience, I am confident in contributing to the success of Neyu Corporation's retail beauty products expansion in the Thailand market and gaining valuable professional skills during my internship

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CHAPTER 4: MARKETING STRATEGY TO EXPAND RETAIL BEAUTY PRODUCTS IN THAILAND MARKET

4.1 EXTERNAL ANALYSIS 4.1.1 Market overview

Thailand is positioned to ascend as the central beauty hub within the ASEAN region, as projected by a market valuation surpassing USD 7.3 billion in 2022 This trajectory is substantiated by the alignment of regulatory frameworks with ASEAN standards, facilitated by the AHCRS (ASEAN Harmonized Cosmetic Regulatory Scheme), thereby augmenting business prospects across the entirety of the value chain

a Size of market and growth

According to Euromonitor International (2020), the cosmetics market valuation in Thailand was $6.8 billion, constituting nearly a quarter (approximately 25%) of the cumulative ASEAN countries’ sales, which aggregated to $27.7 billion Such an outcome is to be expected considering Thailand's stature as one of the largest economies within the ASEAN region Furthermore, Thailand has exhibited a notable acceleration in its cosmetics market growth, surpassing the growth rate of the broader economic region Specifically, the compound annual growth rate for Thailand's cosmetics market during the period of 2014-2019 ranged between 7.2% and 7.9% It is one of the most rapidly advancing segments within the sector This growth outpaced the average for the ASEAN region, which was recorded at 6%

The Hong Kong Trade Development Council (HKTDC) 2021 research also found that 41% of respondents expressed their intention to maintain or increase their expenditures on cosmetics The results of the survey also underscore a discernible alteration in consumer preferences, veering towards a comprehensive perspective on health and environmental concerns There is a notable increase in the desire for specialized and natural skincare and cosmetics Brands possess the ability to charge elevated prices by focusing on the premium and specialty segment, providing offerings in the realm of natural and organic skincare, makeup, and haircare

b Consumer Profiles

Allied Market Research in 2020 found that within Thailand's skin care product market valuing $2,568.2 million in 2019, and is projected reach $4,391.4 million by 2027 Skin care products encompass a range of formulations designed to maintain skin health, address skin

conditions, and improve its aesthetic qualities Various iterations of these products are accessible in the market, such as creams, lotions, masks, and serums The production of skin care products involves the utilization of diverse components, including chemical compounds, medicinal herbs, and natural ingredients

Furthermore, Thailand's ageing demographic, currently constituting 10% of the population and anticipated to ascend to 20% by 2031, reinforces the emphasis on skin care and anti-aging products While the skincare consumer focus has historically inclined towards skin whiteners, there is a perceptible shift in preferences attributed to increasing awareness regarding detrimental ingredients Consumers are progressively gravitating towards natural and organic skincare alternatives, even at premium and specialty price points This trend is distinctly reflected in the projected growth rates, notably in sun care products, forecasted at an impressive 11.2% for the year 2022, representing the highest growth sub-sector

Also, the research from Euromonitor International (2020), affirming its sustained influence on emerging trends in the forthcoming years, also found that the domain of men's grooming in Thailand is witnessing a discernible growth trajectory, attributed to the burgeoning societal acceptance, particularly pertaining to skincare aspects such as facial cleansers and moisturisers, as well as haircare, primarily within urban locales

c Distribution Channels

Beauty products are distributed through various channels, including department stores, specialty stores, beauty salons, pharmacies, supermarkets, and online platforms E-commerce has been rapidly growing, and many consumers prefer to shop online due to convenience and a wide range of product choices

Source: Globaldata

Figure 2: Key distribution channels in the skincare market in Thailand

15 Based on Globaldata report on 2021, the key distribution channels in the skincare market in Thailand are 34% from hypermarkets & supermarkets, 22% from health & beauty stores and chemists/pharmacies, 19% from department stores, 14% from convenience stores, and 11% direct sellers Hypermarkets & supermarkets was the leading distribution channel in the Thai skincare sector

d Local and International Brands:

Thailand's cosmetic market is a melting pot of local and international brands, offering a diverse range of products to consumers Local brands like Gino McCray, Srichand, and SnailWhite have grown in popularity due to their low prices, innovative formulations, and emphasis on natural ingredients These brands cater to Thai consumers' preferences and have a strong market following

International brands, on the other hand, such as L'Oreal, Estée Lauder, and Shiseido, have established a strong presence in Thailand These companies take advantage of their global reputation to offer a wide range of high-end products The coexistence of local and international brands provides consumers with a diverse range of options and promotes healthy competition in the industry

e Regulations and Compliance:

The Thai FDA (Food and Drug Administration) regulates the import, manufacture, sale, and advertising of cosmetic products in Thailand Compliance with safety and quality standards is essential for product entry into the market

4.1.2 PESTEL ANALYSIS

A PESTEL analysis is a framework for analysing the macro-environmental factors that affect an industry or market It stands for Political, Economic, Social, Technological, Environmental, and Legal factors Here's a PESTEL analysis applied to the beauty product market in Thailand:

a Political:

The government has proactively endeavoured to extend support to the cosmetics manufacturing sector in recent years For instance, the Food and Drug Administration (FDA) has initiated training sessions focusing on Good Manufacturing Processes (GMP) for Small and Medium Enterprises (SMEs)

Additionally, the Ministry of Agriculture and Cooperatives has facilitated grants targeting SMEs to encourage investments in technology within the cosmetics industry These initiatives

have predominantly been disseminated through the auspices of the Thai Cosmetics Associations, elucidating the concerted governmental efforts to bolster this sector

Additionally, they serve as the issuing authority for GMP and COA certificates However, it is pertinent to clarify that these certifications are not obligatory for the acquisition of manufacturing and importing licences

c Economic Factors

The economic stability and average income levels of Thai consumers influence their purchasing power for beauty products Thailand Annual Household Income per Capita reached 3,728.753 USD in Dec 2021, compared with the previous value of 3,707.218 USD in Dec 2019

Figure 3: Thailand’s household income per Capita from 1981 to 2021

Source: CEIC Data

17 In the most recent report, according to World Bank 2023, Thailand's economic growth experienced a resurgence of 4.5 percent in the first quarter of 2023, primarily attributed to robust domestic demand and the reinvigoration of the tourism sector However, it remained slightly behind comparable economies due to external challenges The recovery from COVID-19 was bolstered by a combination of economic reopening and strategic measures implemented by the authorities to alleviate cost-of-living pressures

d Social Factors

Thai culture places a strong emphasis on appearance and grooming The desire for fair and clear skin is deeply ingrained in Thai society, driving a consistent demand for skincare and fairness products Beauty products related to personal care and grooming align with cultural norms and preferences

Social media, influencers, and celebrity endorsements have a significant impact on shaping beauty trends and product preferences among Thai consumers Platforms like Instagram, Facebook, and YouTube are popular for beauty-related content Thai influencers and celebrities often collaborate with beauty brands, influencing consumer choices and preferences

Mintel's research in 2022 revealed a divergence in beauty perceptions between different age groups Older consumers tend to adhere to conventional beauty standards, while the younger demographic is progressively moving away from these traditional norms, embracing more expressive modes of self-expression Influenced by various sources such as news, international films, and television, the younger generation places significant emphasis on social and environmental values They exhibit a willingness to challenge established social norms and actively express their viewpoints on social media platforms

e Technological Factors:

Advancements in technology, especially in formulation and packaging, drive product innovation within the beauty industry Companies investing in research and development to create efficient, safe, and eco-friendly products gain a competitive advantage

According to the Electronic Transactions Development Agency (ETDA) 2021, Thailand's e-commerce value growth of 6.1%, projecting a value of 4 trillion THB (approximately 120 billion USD) in 2021 This growth is significantly propelled by businesses prioritizing the business-to-customer (B2C) model, particularly in response to the impacts of the pandemic The expansion of e-commerce and the increasing utilization of digital platforms for the

procurement of beauty products have instigated a shift in distribution and marketing strategies within the industry

Figure 4: Main Channels for online brand research in Thailand

Source: AJ Marketing

In a research study conducted by AJ Marketing in 2022, the findings highlighted the prominent utilization of various digital platforms among consumers These platforms encompass search engines, social networks, mobile apps, comparison sites, and review websites The significance of this information lies in the fact that many of the prevailing advertising trends are closely associated with these platforms For instance, influencer marketing and video content marketing frequently manifest on social media platforms such as Instagram, YouTube, and TikTok However, the evolving landscape of digital marketing extends beyond this realm Emerging trends such as K-pop culture, affiliate marketing, and the rise of collectivist culture are steadily gaining prominence, potentially conferring a competitive advantage to brands operating in the market

f Environmental Factors

There is an increasing focus on sustainability and environmentally friendly products in the beauty industry The National Economic and Social Development Plan (NESDP) 2017-2021, following in the footsteps of the 9th-11th NESDP and guided by His Majesty's "Sufficiency Economy" philosophy, articulates a policy framework aimed at delineating strategic pathways