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FROM PRODUCT TO CATEGORY: HOW AN INNOVATIVE PRODUCT TYPE COULD GROW INTO A DOMINANT PRODUCT CATEGORY
In early 2015, L’Oréal’s luxury cosmetics brand LANCÔME launched a product called Miracle Cushion™, a sponge soaked in liquid foundation. By integrating a cosmetic formula with a sponge in a compact case, it distinguished itself from other conventional makeup products, e.g., liquid foundation in a glass bottle or pressed powder in a portable compact. On Lancôme’s website, Miracle Cushion™ is described as follows: “a foundation revolution has arrived – liquid makeup in a cushion.”
LANCÔME’s “revolution” actually originated from AMOREPACIFIC, Korea’s number one beauty group which had a sales revenue of KRW 4.7 trillion (USD 3.9 billion) in 2014. By launching Air Cushion® in March 2008, AMOREPACIFIC created a new makeup product category called “cushion.” By July 2015, the total cumulative number of AMOREPACIFIC’s cushion products sold in 13 countries was 63 million units. In 2014 alone, more than 26 million units were sold – one every 1.2 seconds. The sales revenue was KRW 641 billion (USD 542 million), which accounted for more than 13% of AMOREPACIFIC’s total revenue.
AMOREPACIFIC launched Air Cushion® under IOPE, one of its premium brands. The company initially positioned Air Cushion® as sunscreen. Equipped with mass production facilities, AMOREPACIFIC sold 517,000 units of cushions in 2010, which accounted for KRW 14.5 billion (USD 12.2 million). Furthermore, the company started to automate the entire manufacturing process for cushions. With this automation, the sales revenue of Air Cushion® in 2011 reached KRW 33.6 billion (USD 28.4 million) - more than doubled compared to 2010. Obviously, it was a huge success for sunscreens under a single brand.
From 2012, AMOREPACIFIC began to expand cushions for other in-house brands besides IOPE. Simultaneously, AMOREPACIFIC started to reposition cushion as makeup “foundation,” not “sunscreen.” HERA, AMOREPACIFIC’s luxury brand with a strong heritage in color makeup, took the initiative in repositioning cushion. This was also a strategic decision to diversify distribution channels: the main distribution channels of premium brands such as IOPE were Sephora-like specialty stores and discount stores whereas the primary distribution channels of luxury brands such as HERA were department stores and door-to-door networks.
With HERA focused on domestic market expansion, LANEIGE, the most globalized brand of all in AMOREPACIFIC, pioneered the global market for
cushions. Starting from its entry into Hong Kong and China in 2002, LANEIGE
had already expanded its presence in more than 10 countries including Singapore,
Malaysia, and Vietnam. Specifically, LANEIGE was perceived in most Asian
countries as a cosmetics brand spearheading “K-Beauty” trends, part of the
“Korean Wave” phenomenon. Thus, LANEIGE capitalized on its brand reputation
accumulated over the years in the Asian market to expand cushions.
LANEIGE designed a brand concept for its cushion as BB Cushion to make the
most of the popularity of BB creams across Asia. In 2012, LANEIGE BB cushion
was first launched in Singapore in January, followed by Malaysia, Thailand, and
Vietnam in March, and finally Taiwan in April, all prior to its release in Korea in
May. Initially, it emphasized the brightening function to fulfill the demand for
whitening products already popular throughout Asia. From 2013, LANEIGE started
to offer a variety of product lines customized to different consumer needs from
each country. For example, LANEIGE launched BB Cushion Pore Control for
consumers in hot, humid areas of Southeast Asia and BB Cushion Anti-aging for
consumers in extremely cold and dry areas of China.
Starting with HERA and LANEIGE in 2012, AMOREPACIFIC continue to release
cushions under other brands by stages - SULWHASOO, ETUDE HOUSE in 2013,
and INNISFREE, MAMONDE in 2014, etc. Every cushion product launched under
different brands was named “cushion.” For example, HERA UV Mist Cushion,
LANEIGE BB Cushion, SULWHASOO Perfecting Cushion, ETUDE HOUSE
Precious Mineral Any Cushion, INNISFREE Water Glow Cushion, MOMONDE
Cover Powder Cushion, etc. With the consistent labeling, AMOREPACIFIC
succeeded in categorical differentiation.
Stimulated by the widespread popularity of AMOREPACIFIC’s cushion
foundations, competitors followed. Among local companies, LG Household and
Healthcare was the first to enter into the cushion market in August 2012. Among
the foreign brands, it was Lancôme.
This paper is trying to understand how to achieve breakthrough innovation and
create a new product category in the mature market such as cosmetics by analyzing
the case of AMOREPACIFIC’s cushion.
