Why are Korean cosmetics so successful?

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Different from Western culture, South Korean place heavy emphasis on skincare rather than makeup and use natural and herbal ingredients such as tea, ginseng… for better absorption. Therefore, Korean women take pride in skincare routine in order to have beautiful and healthy skin, and spend lots of money on skincare lines. However, Korean beauty products are pretty cheap because of mass production. According to Fast Company, high-quality moisturizers only cost $10 to $20 in Korean while they are $50-$200 in America due to import taxes. Moreover, the cosmetics industry in Korea is already ahead of US. In 2008, while American beauty products figured out how to put parabens to prevent bacteria growth in products, Korean already experimented, tested, and succeeded with products that contained parabens compound. As a result, Korean government supports cosmetics industry because of its strong export. In 2011, Sephora first introduced Korean BB cream which is a combination between moisturizer and foundation.  In 2014, the BB cream alone was worth $164 million.

The skincare routine steps vary from 8 to 10, including:

Day time:

  • Face wash with only water
  • Toner helps balance pH levels
  • Ampoule/serum contains active ingredients for wrinkes, dark spots…
  • Eye cream helps smooth and hydrated
  • Moisturizer helps all-day hydration
  • Sunscreen (not using for night time).

Night time:

  • Face wash with oil-based cleanser to remove oil makeup
  • Exfoliate twice a week helps remove dead skin cells
  • Toner
  • Essence/Ampoule/Serum
  • Sheet mask helps deliver deeply hydrating and anti-ageing treatment
  • Eye cream
  • MoisturizerHealthy food and good sleep are as important as using skincare products.
  • Jung Saem Mool is a very well-known makeup artist in Korea. She has worked with numerous Korean celebrities since 1990s. In 2015, she launched her first salon and has trained numerous makeup artists worldwide. She has taught her students to skincare products rather than
    foundation to protect facial skin before makeup. Facial care is an art because right methods will make the skin brighter and healthier.Reference
  • https://www.fastcompany.com/3038283/why-korean-skincare-is-booming
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Taco Bell opens a store in São Paulo during one of Brazil’s worst recessions in history- will they survive?

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Taco Bell is growing internationally. They have announced plans to add 1,300 new locations by 2023 globally. Taco Bell states that it will generate about $2 billion in sales. They plan to focus on markets in Europe, Asia, and South America. Taco Bell has been performing well in its’ domestic market due to its savvy digital marketing campaigns. However, can Taco Bell be successful in Brazil? In one of the world’s largest city, São Paulo?

 According to research, 35 million of Brazilians have rose to middle class and their purchasing power is continuing to increase. (Donatelli) However, the average Brazilian consumer has become more financially conscious due to its economic downturn. According to CNN, Brazil’s economy shrank 3.6% in 2016 and is still struggling in one of the country’s longest recessions. Unemployment peaked at 12% in January 2017 and almost 13 million Brazilians are still out of work. A recent survey reveals of 1,000 Brazilian consumers said that they are very concerned about their finances and plan to cut spending.

The Mckinsey Global Consumer Survey Sentiment Survey found 5 attributes of current Brazilian consumer Behavior (Donatelli) :

  1. They found that 3 out of 4 respondents agreed they are looking for ways to cut spending. They also found that more Brazilians are eating at home and are delaying purchases.

2. 35% of Brazilians in the survey claimed they would stay loyal to their brand. However, 14% are waiting until they are on sale.

3. 22% percent of Brazilians claimed they would substitute products to less-expensive brands ad 60% claimed they would not go back to the expensive brand again.

4. Although Brazilians are becoming more financially conscious, they still splurge in select categories, such personal-care products and alcohol.

5. Lastly, Brazilians consumers are increasingly shopping at discount chains.

Although the Brazilian economy is struggling and the average consumer is financially restraint, American chain-restaurants still continue to invest in the Brazilian market. 33% of bars and restaurants, which opened in 2017, reported their operation was a loss. (Galib, Veja São Paulo) Taco Bell recently opened its’ first restaurant in São Paulo on the famous Avenida Paulista and plans to open 6 in total in the city. Mexican-chain restaurant, Mexcla, also invested in the shopping malls in the neighborhood of Morumbi, São Paulo.

Companies can still find opportunities in the world’s 3rd largest city. Before the recession, Brazilian consumers in São Paulo enjoyed spending money and continue to spend their time at the many shopping malls in São Paulo. If Taco Bell successfully localizes their products at the right price point, they have a potential to be successful in Sao Paulo although the economy is performing poorly.

Paulistas (Residents of São Paulo) still enjoy eating out with their friends. Since they are becoming more “financially concerned,” they could substitute an expensive restaurant for a fast-food chain, such as Taco Bell. It is common to eat at shopping mall food courts during lunch breaks and on the weekends. According to a Taco Bell Press Release, the São Paulo location plans to differentiate themselves with a relaxed lounge atmosphere, with complementary wifi and charging stations. They also offer Brazilians beers as well. It is also recommended for Taco Bell to stay in large cities in the south of Brazil. Brazilians in the south have more purchasing power and travel abroad. Therefore most of Brazilians in the south have been exposed to some form of “Mexican food.” Taco Bell should not enter a region within Brazil, which is unfamiliar with the brand and food.

(Popular foodcourt in São Paulo, Shopping Iguatemi)

Taco Bell will have to fight aggressively against rivals already established at the malls in São Paulo. Consumers in the south of Brazil also do not typically enjoy spicy food. Taco Bell will have to localize and differentiate their food offerings at the right price in order to be profitable

Please Enjoy the video below!

https://www.youtube.com/watch?v=TWSOiZrs3oA


Sources:

“Taco Bell Fuels International Expansion with First Restaurant in Brazil.” Business Wire. Taco Bell Press Release, 29 Sept. 2016. Web. 25 Apr. 2017. <http://www.businesswire.com/news/home/20160929005325/en/Taco-Bell-Fuels-International-Expansion-Restaurant-Brazil>.

 Latin America’s Largest Country Is Still Crawling through Its Worst Recession in Its History. “Brazil Is Still in Its Worst Recession in History.” CNNMoney. Cable News Network, n.d. Web. 25 Apr. 2017. <http://money.cnn.com/2017/03/07/news/economy/brazil-gdp-2016/>.

Galib, Fabio. “Fast-foods Mexicanos Ganham Mercado Brasileiro | Fábio Galib.” VEJA SÃO PAULO. VEJA SÃO PAULO, 20 Apr. 2017. Web. 25 Apr. 2017.< http://vejasp.abril.com.br/cidades/fast-foods-mercado-renovado/>

Cruz, Billy. “Taco Bell’s Snapchat Game Is Strong Among Teens, But Does It Sell Tacos?”NPR. NPR, 10 May 2016. Web. 25 Apr. 2017. <http://www.npr.org/sections/thesalt/2016/05/10/477336641/taco-bell-s-snapchat-game-is-strong-among-teens-but-does-it-sell-tacos>.

Donatelli, Fernanda Hoefel, Suzana Resstom, and Fábio Stul, Mariana. “Meet the New Brazilian Consumer.” McKinsey & Company. N.p., n.d. Web. 25 Apr. 2017. <http://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/meet-the-new-brazilian-consumer>.

 

 

 

 

 

 

 

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Will Italian consumers accept Starbucks in Milan?

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Italian consumers value their café culture. A recent report states that Italians drink approximately 600 cups of coffee a year and their consumption will continue to increase. Italy appears to be the perfect market for Starbucks to enter. They are the largest coffee market in the world ($10 billion) and Italians consume 4.6% of the world’s supply of coffee. Coffee also dominates Italians preference for hot drinks and they prefer to drink it black. They are highly educated coffee drinkers and understand what high quality coffee truly is. (Giovanazzi) Although this market appears to be attractive, Starbucks will face many obstacles and challenges with the Italian consumer. Italian consumers mainly drink “espresso” and an occasional cappuccino. However, Starbucks is known for offering many flavored milky drinks such as the Vanilla latte or the iced caramel Frappuccino. The coffee market in Italy is already dominated by large manufacturers such as, Segafredo and Italians are loyal to their coffee brands. Starbucks will have to adapt extreme localization in order to persuade Italian consumers to enter their coffee shop.

Starbucks in other European countries are still lagging behind American and Asian stores. According to an article in the New York Times , Starbucks has never turned a profit in France. While Americans like to drink their vanilla latte on the go, French consumers prefer to sit and drink at the café with their friends. Therefore, Starbucks had to invest a lot of capital into their French stores in order to create more space for seating. For example, in Paris, a Starbucks next to the Paris Opera has grand architecture, a sleek wood coffee bar and a stage for poetry readings. Starbucks localized their stores in order to attract foreign and French consumers. However, not only Europeans are the same. Brits prefer to take their coffee on the go like Americans. (Alderman) Therefore, Starbucks cannot generalize the “European consumer” and must adapt to each country. They should also adapt to each region within a country. For example, Bavaria is much different than the state of Brandenburg in Germany. Localization is critical for Starbucks in Europe since many Europeans view Starbucks as another “evil American corporation” trying to take away business from local European coffee shops.

Starbuck’s CEO announced that Starbucks will open its first location in Italy in Milan late 2018. This Starbucks will be unique because it will be a Roastery. According to NPR, visitors will be able to experience the entire coffee-making process and special drinks will be offered which cannot be found at a regular Starbucks. (Example: “Shakerato, an espresso shaken with ice and a dash of demerara syrup”)(Maffei) The article continued to state that Starbucks will face fierce competition in Italy. There are about 149,300 coffee bars in Italy and there is about one coffee bar per 406 Italian citizens. Starbucks will also have to lower its price. At a local coffee house, one can order an espresso and a croissant under $3 dollars. While one drink at Starbucks is about $4. Additionally, Italian perception of Starbucks is not positive. Cristian Marone, co-manager of Bar dei Bossi in Milan stated, “I’d be more wary of the Italian bars in my neighborhood than of Starbucks’ diluted coffee. If I ever went to Starbucks, I would feel like a number, not a customer. In our bar customer care is crucial.” (Maffei)

Can Starbucks be successful in the homeland of espresso? Although they are the largest coffee market in the world, it will be the most difficult market to enter due to Italian consumer behavior and fierce competition. Starbucks should stay in large touristic cities in Italy since they can still attract tourists who are familiar with Starbucks and do not venture into smaller Italian coffee shops. Starbucks has already ventured into coffee culture cities such as Vienna. However, Starbucks should not expand into smaller cities in Italy or Austria. Italian consumers are educated about high quality coffee and already view Starbucks as “diluted American coffee.” Starbucks could focus on selling non-coffee products, such as pastries and sandwiches in order to generate revenue and be successful.

Sources:

Maffei, Lucia. “Starbucks To Open In Italy, Home Of Espresso, In 2018. Italian Cafes Say Bring It.” NPR. NPR, 28 Feb. 2017. Web. 17 Apr. 2017. <http://www.npr.org/sections/thesalt/2017/02/28/517783805/starbucks-to-open-in-italy-home-of-espresso-in-2018-italian-cafes-say-bring-it>.

Alderman, Liz. “In Europe, Starbucks Adjusts to a Cafe Culture.” The New York Times. The New York Times, 30 Mar. 2012. Web. 17 Apr. 2017. <http://www.nytimes.com/2012/03/31/business/starbucks-tailors-its-experience-to-fit-to-european-tastes.html>.

Giovanazzi, Silvia. “The Italian Cofee Market 2010.” (n.d.): n. pag. USDA Foreign Agricultural Service, 2010. Web. <https://gain.fas.usda.gov/Recent%20GAIN%20Publications/The%20Italian%20Coffee%20Market%202010_Rome_Italy_12-3-2010.pdf>

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Gillette and Nike in Islamic culture

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As a part of Islamic religion, Iran men consider beard as a natural beauty that shows respect and power. Moreover, it is used to differentiate between men and women, “Indeed the benefits of the beard being specifically associated to the male and not the female points to the fact that, respect, male beauty and esteem are required by the male more than the female”(Allamah, “The Islamic Perspective of The Beard”). Furthermore, men with beard are Allah’s believers that differentiate with non-believers who have no beard. Therefore, shaving beard is an unlawful act, “altering the creation of Allah” or “The shaving of the beard is indeed considered an unjust action, may the curse of Allah befall those who are unjust”(Allamah, “The Islamic Perspective of The Beard”) .

Because of this, it seems impossible for Gillette to promote its razors in Iran. However, Gillette promoted its products in a unique way. The company persuaded a newspaper advertising manager and his clergyman with an argument, “shaving is not just for your face…if you have a car accident and someone has to shave your head, Gillette Blue II is the best” (Mueller, 130).

In 1997, Nike expanded its business in Islamic countries but failed to promote its brand. The company used a logo on a line of basketball shoes. Islamic leaders were offended because the logo resembled to the word “Allah”, which is highly inappropriate. Nike had to withdraw 38,000 pairs of shoes and promised to donate a $50,000 playground for an Islamic elementary school in US.

Works Cited:

Allamah, Dino. The Islamic Perspective of The Beard. Al-Islam, n.d., www.al-islam.org/articles/islamic-perspective-of-the-beard. Accessed 4 April 2017.

 

Mueller, Barbara. Dynamics of International Advertising: Theoretical and Practical Perspectives. Peter Lang, 2011. 

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Consumer behavior in the craft beer industry – a threat for Germany?

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In the late 20th century, the beer industry in the US was consolidated with a few macro-breweries dominating the market. The majority of American consumers drank light lagers with little interest in imported beer from Europe due to effective marketing campaigns from large output breweries. However, during the early 21st century, the craft beer segment of the market began to increase as US consumers interest in high quality beer began to rise. Between 2004 and 2008, the craft segment grew by 6% to 12% annually due to the growth of independent and local breweries. 

Today, 4% of US beer sales are from craft breweries, however, it is still tremendous growth. In 2013, there was a recorded 1,500 breweries in development in the US. In 1980 there were only 537. According to Fortune magazine, the “craft beer boom” is not slowing down. The Brewers Association showed that production increased 16% in 2015. Therefore, one can observe that U.S. consumers’ preference is shifting away from light lagers to high quality craft beer. The Beer Institute study also announced that the beer industry has contributed $252.6 billion to the US economy. As for craft brewers, in the first half of 2015, they sold 12.2 million barrels of beer according to Fortune magazine. Even consumers in Europe have shifted their preference toward craft beer. Craft beer is gaining popularity in Scotland, Denmark and Belgium.

One would assume craft beer would also be growing popularity in Germany as well. Germany has a rich history of producing beer over thousands of years and it is deeply rooted in their culture. However, breweries find themselves restricted too old traditions and are unable to create innovative beers. A popular tradition is the Reinheitsgebot or the beer purity law. The beer purity law is 500 years old and specifies which ingredients are allowed to produce beer and this law is holding back Germany’s craft beer scene. A well-known craft beer brewery in southern Germany, Camba Bavaria, has been criticized for brewing outside the limits of the purity law. Additionally, small microbreweries in Berlin call their craft beer Malzgetränke,”Malty Drinks”, in order to experiment and avoid violating the Reinheitsgebot.

German’s strict beer traditions may be a reason why beer sales have been declining in Germany. In 2001, 10.7 billion liters were sold, while in 9.57 were sold in 2015 according to Germany’s Federal Statistics Office. Additionally, according to Euromonitor, beer consumption is expected to continue to decline as regional traditional beer become less popular for consumers. Larger breweries in Germany are now seeking new markets in China and India in order to protect profits, using Germany’s purity law as a marketing tool.

Is consumer preference in Germany shifting towards craft beer as it is in the U.S.? Germany’s purity law might be a very large reason for the decline in beer consumption in Germany due to its strict tradition. As in the wine industry, Germany might have to make adjustments to its 500 year tradition in order to increase the profitability of its’ beer market. In the US, craft brewers produced one out of every 10 beers sold. Additionally, It has been reported that U.S. beers have already been exported to 10 million people worldwide in 2015, according to the Belgian brewers, a trade group. Craft beer already gained popularity in other European countries and foreign beer producers could quickly threaten traditional breweries in Germany as consumer preferences shift

Sources:

http://fortune.com/2015/08/05/beer-industry-craft-beer/

https://www.pri.org/stories/germany-creative-craft-brewers-face-against-medieval-purity-law

http://www.usatoday.com/story/news/world/2016/08/04/american-brewers-hop-into-europes-craft-beer-heartland/87931840/

History of Craft Brewing

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