LG HOUSEHOLD & HEALTH CARE CASE
ASIAN CASE WORKSHOP
Course : ASIAN CASE WORKSHOP
Group members : 201605029 Suresh Khati
: 201605024 Mehvish Tania
: 201709025 Seka Gerod Chia Strivane
: 201605016 Nayeem Abanty Huque
: 201605026 Bryan Paul Orone
2. PESTEL ANALYSIS
3. KOREA AND China industry analysis
4. LG and competition
5. Company overview
6. SWOT Analysis
LG Household & Health Care LTD was found on April 2001 and it’s headquarter is in SEOUL.
IT manufacture and sale household goods and cosmetic products in South Korea and worldwide.
It’s the second best cosmetic brand after the leader Amore Pacific in Korea.
The company has 3 mains business division in which it operates through beauty, Refreshment
and Health. LG H&H provide a large range of product in beauty is specialized in Anti-aged
cosmetic products, in Healthcare it produces many skincare and household products, finally in
refreshment business division it provides juice, soda, and other beverages.
The company sales its products via duty-free shops as one of its channels, that distribution
Chanel increased its sales due to visitors and tourists growing numbers from abroad. WHOO is
the famous and premium product, consumers (Koreans, worldwide) appreciate the product
because is based on traditional Korean Herbal medicine and a rich history in the royal courts.
Brand as SUM37 has a worldwide good reputation.
This report was conducted with the aim of studying LG H&H current situation on the global and
local market, to be able to understand how the company stands in regards to competitions, we
analyse its strengths and weaknesses in two main country CHINA and KOREA as well as
worldwide in order to identify its opportunity in those market and make some recommendations
based on that with a focus on adding value to the organization as a whole.
Cosmetics Industry Worldwide
Though the smaller, local and regional players still dominate the competitive landscape in Asia
Pacific, Middle East and Africa, a contrasting consolidation trend has been raised between 2011
and 2016 in these regions. In recent years, one of the defining challenges is the increasing
competition that the international players and heritage brands are facing from the local and
regional companies and niche labels and alternative business concepts. (Euromonitor)
Most of the newly integrated brands are running on premium price platforms. Comparatively
small brands extend their consumer base without cannibalizing the earnings of pre-existing
brands. These small brands have revenues under USD 1 billion and they run their business in
limited geographic reach.
Changes in technological, environmental and economic factors and driving demand to more
naturally extracted ingredients. These changes are also adding several new angles to undefined
category of green beauty. Industry players are facing some major challenges such as increased
local competition in the most attractive growing markets. Another challenge is the obstacles with
alternative business models for instance Ecommerce. (Euromonitor)
North and Latin America
The most consolidated regions are North America and Latin America because they are the
domestic and primary target markets for the largest global industry players such as Procter &
Gamble, Johnson & Johnson, Estée Lauder, L’Oréal and Unilever. In these regions, companies
focus on building scale in their core businesses and outgrowing competition by a large number of
Asia Pacific, Middle East and Africa
Asia Pacific is more fragmented, and Africa and the Middle East are more consolidated. Smaller,
local and regional players dominate the competitive landscape in Asia Pacific, Middle East and
The Korean beauty companies have strong share in Asia Pacific. The key trend of the large
international brands is at the expense of being international such as the Amore Pacific and LG
Household and Health while Japanese companies are leading with their long-established
International players in Middle East and Africa focus on their core capabilities by acquisitions
and shore up or divesting weak businesses.
South Korean Beauty Players
Between 2011 and 2016, Amore Pacific Corp and LG Household and Health were in the top 20
global players. Consumers’ choice for rich innovation pipeline that they were able to sustain, and
they made relevant to a global audience helped them to export longer beauty routines and drive
more frequent product usage.
According to the charts, among fast growing brands there are three LG products- Belif, The
History of Whoo and SU:M37. Here, the growth rate of Belif is near 45%, The History of Whoo
is near 35% and SU: M37 is near 30%.
By the help of technology, consumer brands are now more able to directly reach the target
audience by using subscription boxes, social selling models or beauty communities-turned-online
market place. The largest non-store retail channel in beauty industry is the direct selling but
foreseeing to the current growth rates, internet retailing is expected to overtake in the next few
Stronger digital engagement is an increasing focus of the beauty players for reinforcing
transparency especially concerning ingredients, Lg with the Belif brand uses its packaging to
communicate the ingredients in its product offerings, providing customers with opportunities to
know the ingredient and processing information is how Lg has positioned itself through Belif as
a transparent cosmetic Brand. As a result, consumers will be able to know the information
Chart: Fast Growing Brands 2015-2016 (Euromonitor)
instantly during the purchase. So, it will be a matter of pressure to beauty players because they
will have to be transparent about their green claims, ingredients and processes. This is one way
in which LG differentiates itself from the perk. (Euromonitor)
Manufacturers of rinse-off beauty and personal care products will face challenges in developing
regions because of the increase in water scarcity across these regions. But it is expected that in
these regions there is the most potentiality of growth in sales in the future. In these regions a way
to gain a competitive advantage is to develop affordable alternative ingredients and processes
that can be useful in water-scarce conditions. Such as Unilever’s new Lux self-foaming body
wash helps consumers to save up to 11% water used versus a regular body wash, because it does
not need water for lathering. In September 2015 it was launched in China.
Companies seek to meet potential needs of 24-hour care regimes that are becoming part of the
mainstream including morning routines for preparing for the day, midday regimes for top up and
evening routines for removing the traces of the whole day and preparing for sleep. Life stage,
ethnicity and body part are used to segment products. Moisturizers which can be used for the
whole body may be replaced by specialist products for different parts of the body.
At the same time, some people will become frustrated with such complexity, so there is also
likely to be a desire for simplicity. High-end simplicity might involve getting beauty products
tailored to the user – with bespoke formulas and fragrances, perhaps even taking the user’s genes
into account. To make products more convenient may lead to innovation and adding value. In the
cities people will be more time-pressed and they will have higher disposable incomes who are
able to pay for premium products which can be easily moved and are easy to use.
In Unites States, GDP growth have been forecasted at 2.0% in 2017/2018 which is reflecting a
mix of lower expected costs of protectionist policies, combined with skepticism about major
fiscal stimulus. The Eurozone economy is booming after experiencing years of disappointing
growth. In Eurozone, GDP growth has been forecasted to 1.8% in 2017 and 1.7% in 2018. The
exports, consumption and investment in Japan has increased more than it was expected. The
GDP growth in Japan has been forecasted to 1.4% in 2017 and 1.0% in 2018. In the first half of
the year, the economy of China showed resilience, but in the second half, it is expected to slow
down which will lead to 6.6% growth for 2017. In 2018, GDP growth is expected to decline to
6.2%. (Euromonitor, 2017). It is worth noting that these aggregate figures may not have a major
impact on the growth of the industry, a case in point is the beauty and personal care industry
withstanding the shocks of the economic crisis of 2008.
Populism is growing which is leading to increase of trade and immigration restrictions, and a
slowdown in implementation of structural reforms. Labor productivity growth has declined
significantly. Private sector confidence decreased, and consumer spending and investment have
been reduced. In emerging markets long term potential output is lower than it was expected.
Domestic business and consumer confidence have decreased. Increase in capital outflows is
leading to higher financing costs. Geopolitical and EU break-up is increasing which is leading to
uncertainty and reduction of investment. Eurozone credit markets, consumer and business
confidence have weakened. The US has imposed tariffs on imports from Mexico, China and
other Asian countries which is leading to a trade war. Stricter immigration restrictions are
leading to reduction in labor supply. There is a decline in private sector confidence and stock
market values. (Euromonitor, 2017)
Many of the personal care markets are maturing and companies are struggling to find sustainable
growth, so market and retailer consolidation is raising. As a result, there is an increase of
acquisitions and smaller brands being bought by the major multinationals (a case in point is Face
shop being acquired by LG,) have also increased. Strategic alliances and joint ventures are also
increasing where both parties share their risk and rewards to get the marketing and distribution
power for going beyond their home market, small, specialist or artisan brands need to cooperate
with the market leaders. To differentiate brands experiential marketing has become more
important. Differentiates the brand by creating an experience is more appealing opportunity for
the brand owner and for consumers. Consumers have interest in spas and treatments that means
consumers are ready to go beyond products. Consumers are becoming more health conscious and
they want such a product that is easy to use and easily portable. Many consumers are now
interested in herbal products and they inquire more about the ingredients of the product.
(Euromonitor, Beauty Drugs: Consumer Perceptions and Blurring Boundaries in the Global
Cosmetics and Toiletries Market, 2007) LG’s Belif differentiates itself by being transparent
about what it includes and what it doesn’t in its products.
Cosmetics Industry in China
For brands from many market sectors, China is the center of attention. Young people are rapidly
moving to the cities. These young people are very conscious about how they look and what
cosmetics they use. There is an opportunity for the Chinese brands to go global from these rising
interests for cosmetics. Direct selling was banned in china until recently. In spite of the cooling
Chinese economic environment in 2016, the overall beauty and personal care market experienced
strong growth in value sales which was supported by stable demand in highly penetrated
categories, increasing awareness of personal hygiene-consciousness and rising living standards
of Chinese consumers. Mass products had less growth than the Premium-positioned products.
Both international and domestic players witnessed success in setting up online stores in 2016.
The trend of online store has great potential in China. International players have competitive
advantages such as established brand images and high product quality with the support of strong
research and development resources. Effective marketing and sales activities are helping them to
maintain their leading roles in 2016. Domestic players were releasing products at competitive
prices and carrying out strong advertising to catch up with the international players. They also
did innovative marketing campaigns to maintain their strong foothold in second- and third-tier
cities in the Chinese market. Chinese consumers tend to buy those products with special features
and functionalities such as shampoo with features to cure dandruff. The growth of beauty and
personal care in China is driven by baby and child-specific products, color cosmetics,
depilatories (hair removal creams), oral care, skin care and sun care. The implementation of the
second-child by the Chinese government in 2016 is aimed to improve the birth rate, which will
lead to increase in demand of baby and child-specific products. (Euromonitor, BEAUTY AND
PERSONAL CARE IN CHINA, 2017)
According to the table above, the market share of LG household and health in china is 1.2% in
2016 in China. The share has been increasing from 2012 to 2016. The companies with highest
shares are Procter & Gamble, L'Oréal Groupe, Shiseido Co Ltd, Unilever Group and Colgate-
Table: Global Brand Owner Company Shares of Beauty and Personal Care in China 2012-
2016 (Euromonitor, BEAUTY AND PERSONAL CARE IN CHINA, 2017)
Cosmetics Industry in South Korea
In Korea, beauty and personal care’s competitive landscape has become more complex and
dynamic than before. The leading manufacturers are launching noticeable products and new
companies are increasing their market coverage and popularity. The market is growing big both
internally and externally and as a result a single popular product can help a manufacturer to gain
strong revenue and can give the opportunity of additional investment. Such environment is
leading more companies to enter the market and experience great success. The factor that
domestic manufacturers are using consumer feedback and stock management better than
international companies is also positive. As they have headquarters located domestically, local
manufacturers can gather consumer feedback in a timely manner. They can also manage just the
right amount of stock by monitoring real-time sales better than the international companies. For
International players it is time consuming to take the same measurements. For example, when a
certain product gets popularity and sales increase in a short period of time, international
companies require some time to place orders and to import. As sales performance is closely
related to the import situation, international players cannot take immediate action when there is
raise of sales in South Korea takes place. Among different strategies followed by the
manufacturers, one is that they launch some low-cost products in general and they also launch
couple of high end products with premium quality to create higher-class image. Premium brands
do their promotions by collaboration with the celebrities, TV advertisements and advertisements
in printed media. International brands use their own languages in the TV advertisements and put
Korean subtitles to create feeling of being international. Consumers in Korea have high
expectations from the manufacturers as a result, manufacturers are producing high quality
products. The consumers are becoming more expert in cosmetics and they tend to share them by
using mobile apps and blogs. Consumers are influenced by the original design manufacturer of a
product. They are used to not interest in brand name, but they are influenced by the original
design manufacturer. According to them, it differs if the original design manufacturer changes.
According to this table, among the premium brands the market share of LG household and health
care is 24.5% in South Korea. The leading companies are AmorePacific Corp, LG household and
health care, Elca Korea Co Ltd, L’Oreal Korea Co Ltd and Procter & Gamble.
Table: Company Shares of Premium beauty and Personal care 2016 (Euromonitor)
COMPETITIVE POSITIONING: (south Korea)
The company attained the markets leading position in 2015, the company made a strategy to
retain first rank in beauty and personal care in 2016. Between the period 2015 to 2016 the
company slightly increased the share value from 23% to 25% in 2016 (Euromonitor reports). In
2016, LG recorded the fastest growth among the most popular players in color cosmetics with a
11% increase in terms of actual value sales. The most success brands such as SU: M37 and O
HUI recorded Sharpe growth, adding the company’s value in color cosmetics.
In fact, the company has been aggressively expanding the retailing channel for the Schick brands
after acquiring the distribution license. The company will improve the quality internet retailing
channel in 2017. However, it seems to be weaker compared to competitors such as AEkyung
industrial co Ltd. Instead of lowering the unit price to expand its internet retailing channel, the
company will give more effort to enhancing and expanding its online coverage. Meanwhile, the
skin care has been increasing among the Korean markets and high potential market in Korea and
LG Household & Health Care Ltd: Competitive Position 2016
Product type Value Share Rank
Beauty and personal care 24.7% 1
Baby and child-specific
Bath and shower 40.1% 1
Color cosmetic 24.1% 2
Men’s grooming 15.9% 2
Oral care 24.7% 1
Hair care 27.0% 1
Skin care 26.9% 1
Sun care 15.55 2
Competitive positioning in china:
LG Household & health care Ltd played very well role and best performance among bigger
players in last year (2016) due to demand in the cosmetic sector. “Whoo” has been more popular
among the Chinese customer as a queen of cosmetics, its sales increased by 14.4% (Euromonitor
report) and “Sum” also turned over 343.1 billion won after it opened its store in the chinese
market for this first time. Increased by 82% from last year (2015). China Premium cosmetics
market is expected to post a 9.5% compound annual growth rate (CAGR) between 2014 and
2019, higher than the overall beauty and personal care market’s CAGR of 7.6 %. The company
said in January that streamlining its beauty goods business to focus on high-end brands, such as O’hui,
SU:M and The History of Whoo, has helped boost its China sales.
IN global sense, in 2016, skincare products up 36.4 percent of the global cosmetic market.
Geographically, Asia-pacific and North America dominated the market more than 60 percent of
the cosmetic market combined.
2). Value share expansion in global beauty and personal care
According to Euromonitor international LG Household and health care Ltd is ranked amongst
five most dynamic companies in terms of value share expansion in global beauty and personal
care purely through organic growth.
Two key brand such as History of Whoo and face shop raised share value in global beauty
market. Whoo is premium brand that features traditional royal formula with product developed
with natural organic medicine to resolve the skin problem. Meanwhile, face shop is totally
natural product it contains organics ingredients. It has over 1000 outlets and around 19 countries.
In additional, LG House hold and health care listed in Forbes, ranked 19, Forbes listed the
company according to the world’s most innovative companies. That means LG Cosmetic has
great opportunities to developed and export product in global beauty market through the
premium brand such as Whoo.
Differentiation of LG in different segments:
1) Innovation in product, Formula and Ingredients
LG cosmetics brand have reputation for using natural herbals and sometime special
natural ingredients in their product. Especially in Whoo contains traditional herbal
cosmetics with high quality product based on the royal court's unique royal methods.
2) Innovation in processing technology
It has special technology to develop the ingredients, which is metabolic process that
converts sugar to acid and using different herbal ingredients.
3) Innovation in packaging
It has unique shape of bottles, logo and colors full packaging represents admiration,
honor and image of royal family.
4) Innovation in marketing strategies
It is embracing the digital transformation age and riding on the Korean wave
5) Riding on Korean Wave
K-pop has been increasing in Asia and around the world, LG cosmetics using actress and
actor their brand model. Even K-pop has high review in YouTube around the world.
6) Development of in-store technology: beauty mirror and talk station
LG used the technology for customer try to makeup and skin care product using
augmented reality on their smartphone.
LG cosmetics highly target the premium market through some key brand such as History
of Whoo, SU: M37 and Belif. But belif is not high premium brand but differentiates itself
in terms of transparency, its market has been widely increasing in china and around the
world. The two key brand Whoo and SU: M37 performed very well in China, Honkong,
Japan, and USA as premium brand of skin care.
LG H&H is one of the biggest consumer goods company that properly manages the household,
cosmetics and beverages business in South Korea. It was founded in 1947 BY KOOH LH-HWA.
He first established Lucky chemical Industrial Corporation. This industrial corporation launched
“Lucky Cream” as a very first cosmetic brand in Korea in 1954. So Even if LG is well known for
electronics this Chaebol started off with Cosmetics.
The company later on launched a toothpaste brand called Lucky toothpaste in 1955.
In April 2001 the company changed its name to LG Chemical LTD. LG H&H is the offshoot
from LG chemical Ltd. The CEO of LG SUY.Y CHA joined LG in 2005.The LG business grows
very successfully and now a days LG H&H business expanding globally. When LG H&H started
there were only two divisions of business cosmetics and household’s goods. After the acquisition
of COCA COLA in 2009 LG completed its business structure in cosmetics, households and
beverages. LG launched different successful brand” who”, SU: M37, and “BELIEF” IN 2005.
LG H&H acquired cosmetic brand shop “THE FACE SHOP” also. Through the acquisition of
“The Face Shop” company completed cosmetic product portfolio consisting of High end. Mid
end to Low end achieved. In 2012 LG H&H acquire brand “VOILED DREAM” that strengthens
its color cosmetics. In 2014 company acquire local cosmetics firm CNP cosmetics Ltd in order to
expand its business and also creating value of its products. In 1994 LG launches DE BON brand
and now it’s representing households and leading cosmetic manufacturer.
The Moto of LG H&H is clean, healthy and beautiful life. The vision of LG IS “We are leading
company in lifestyle and culture that helps our customer realize their beauty and dreams. We
share our core values, Healthcare and Refreshing with our customers”. Company operates its
business in three segments HEALTH, BEAUTY and REFRESHING according to their visions.
The healthy segment is mainly engaged in household good including oral, body and haircare.
Beauty segment included skin care, makeup product and healthy food. Refreshing segment
engaged in manufacturing carbonated and non-carbonated drink and simple water.
Management Philosophy. LG has its unique management philosophy that LG has passed down
throughout the years between managers to employee. From the beginning of the company’s
focus on its vision. There is great unity between management and employee. LG is like a
foundation of thought that every member of LG observes and practice. Now LG is a global
Premium company due to its strategic vision. The foundation of vision is basically managing
principal of customer value creation and people oriented management. LG is a lasting company
which focus on human prosperity and fulfill social responsibility by delivering sustainable and
differentiated customer value. , LG H&H management principle is customer value creation. In
order to grab the attention of customer LG tries to deliver superior customer value by its quality
Customer value creation is not its primary focus but the reason for existence. There are three
parts of customer value creation, 1. Customer first. By giving top priority to customer on
delivering value. Be the first to find the needs of the customer and provide best product and
service according to the need for customer satisfaction. 2. Innovation driven creation. LG tries
to come up with new ideas and steps in order to satisfy the need of the customer.3.Delivery of
sustainable value. LG tries to find out customer needs and tries to develop best product and
service to fulfill the need and expectation of the customer.
The advancement in a creative customer centric marketing company needs to change its working
culture. This change enabled LG H&H to streamline its decision-making process by reducing
unnecessary tasks. Company helps its staff to balance their career and personal life that helps its
employee to give their best in their tasks. LG H&H cultivated a talent based culture. And LG
understands that its competitive advantage is derived from its human resources. Company select
outstanding workforce and polish them by training. Now LG become a vital part of customer life
and dedicated itself to deliver that kind of products that enhance the beauty and make them
healthy as well. From last 60 years LG is delivering has been delivering quality to its customers..
Beyond the barriers company come up with innovative product to satisfy customer need.
Company is determined to keep expanding its business globally to deliver value added product of
LG H&H all over the world.
SWOT ANALYSIS (CHINA)
STRENGTHS OF LG H&H IN CHINESE MARKET
One of LG's strengths is the variety of its products, ranging from the largest income to the
smallest the brand touches more potential consumers and increases its portfolio as well as its
turnover, the company also benefits from assistance of investment fund from the big company
LG, that allows him to have the financial means necessary to carry out a good market study
regarding the preferences of Chinese consumers in term of cosmetics, it also carries out studies
strategic regarding the locations of its shops (duty free, big cities as Shanghai and Beijing). Also
the company is able to produce quality products by using natural components. That’s really
important because Chinese consumers have growing awareness of products which combine
cosmetic and pharmaceutical features, such as spot lightening cream, acne treatment lotion and
WEAKNESSESES IN CHINESE MARKET
After analyzing Chinese cosmetic market situation we thing that the lack of ability or capabilities
to fight against big international brand can be LG H&H main issue in term of visibility in
Also because Chinese consumers are opened to internationals brands and several international
brands with a good reputation have already established a good distribution strategy and are well-
As we can see from this table which ranks the Top 10 China Cosmetic brands we see that many
international brand are among the top 10. And According to China Food and Drug
Administration (CFDA) statistics, the number of enterprises in China at the end of November
2016 was 4,798, this figure show at least how many competitors LG H&H faced in Chinese
market. However the fact that the brand is still expansion phase is one its weaknesses because it
need time to expand its geographical presence.
OPPORTUNITIES IN CHINESE MARKET
Demand is still high in China the company will expand its footprint in the country by touching
regions that are untapped. Children care products is a potential market in china many companies
as Frog Prince, Haiermian, Mentholatum, and Johnson & Johnson are major players. Also
Johnson & Johnson only owns 50% of the market share, so we think that expanding child care
products and in China, could be a good strategy for LG H & H as they have financial means to
do R&D and have some experiences in healthcare product we think they only need some
additional knowledge, skills concerning child product to perform well. In addition, e-
commerce represents a huge opportunity in China, as customers purchasing habits change
(WeChat effect), young consumers move from stores to online store. LG H & H can seize this
opportunity by creating an application allowing its young consumers to be connected to its
platform and products 24 / 24H, this strategy will also reduce a little the geographical gap of sale
because if they add an option of nationwide distribution all Chinese’s owning a smartphone will
be a potential consumer whatever their geographical situation.
THREATS IN CHINESE MARKET
- The threat remains the international beauty brands
- The preferences of Chinese consumers for its brands
- Increasing of ban Korean cosmetic products in china
According to WWD.com "China banned the imports of several South Korean beauty products.
Nineteen different cosmetics products, ranging from body wash to lotions, masks to shampoo,
were selected from the country. South Korea, and more product embargoes could be on the way.
"This situation may become a threat to LG H & H if Chinese government continue to increase
the figure of ban beauty product.
SWOT ANALYSIS (SOUTH KOREA)
LG CARE STRENGTHS IN KOREA MARKET
- Well-known market: the company has a good knowledge of the Korean market and its
trends, based on consumer’s preferences and their income it is able to create different
kind of products that meet their needs.
- Quality product: LGH & H invest in R & D in order to offer refined quality products to
- Good Market reputation: With the success of its brand WHOO and SUM37, the company
had a good reputation at the local level according to the website businesskorea.co.kr, the
brand Whoo through 1 trillion won (US $ 900 million) sales early this month in the
month of October.
OPPORTUNITY IN KOREAN MARKET
- Male and female are engaged in beauty products ( available demand)
- Quick innovation product adoption tendency (possibility to improve product quality, new
brand creation, etc.
- Skincare market is dynamic as consumers look for new solutions ( opportunity to
innovate and be competitive)
THREATS IN KOREAN MARKET
- Slowing economy
- Declining population
Based on the opportunities, derived from the trends facing the industry we have come up
with a few recommendations that we encourage LG H&H to implement in order to
differentiate themselves from the rest of the players in the market.
Some of the trends and opportunities mentioned in the external environment analysis can
be taken advantage of by the use of technology however this requires data mining
capabilities at the core of the LG H&H operations.
Big Data analytics: We see an opportunity for players in the cosmetic industry to offer a
more personalized solution to customers based on skin type as opposed to tone as is the
norm in this industry.
This is not a walk in the park since skin types just like finger prints are not alike but this
presents an opportunity to offer users a remarkable experience and thus an opportunity
for LG to exceed customer expectations.
Technology that has been used in the past for skin analysis has been used in the medical
field by aesthesians to diagnose skin types for medical purposes, however this presents an
opportunity to collect data that can be mined with the purpose of giving developers of
skin products what to work with. An example of this technology is the Artistry Skin
analyzer. There are companies that can build such technology from scratch to meet the
needs of the R&D departments of organizations they are working with, an example is
Syngenta. Let alone LG electronics’ team can be utilized to design such products and
produce such technology, preferably wearable technology that syncs well with mobile
operating systems that can serve this purpose.
Putting these devices in outlets and point of sale locations is one way to start collecting
this information as it gives feedback immediately using an app, this information is
uploaded to cloud servers and can be mined to give developers the data necessary to
come up with the right products. The more skins analyzed the more powerful this tool can
be, as more data is collected and analyzed more new segments and niches will be created
to target, this is quite powerful as LG and H can discover blue oceans to sail through.
The power of social media is one area we recommend LG&H to tap into, technology in
this industry has been primarily used in terms of customer service and interaction, to give
customers a more fulfilling experience. This presents an opportunity for new ecommerce
channels which have not been successful in this industry majorly due to the challenges
the industry has faced in offering personalized solutions to customers however with the
rise of A.I, LG can come up with a Chatbot that takes up the role of a personal stylists
and recommend cosmetics from the available product mix based on factors like climate,
income level skin tone, skin moisture level i.e. dry or normal etc. This information is
acquired through interactions with customers and recommendations are made by the A.I
with a call to action. This information from customers can be added to the cloud server
and made available for the research and development team to work with.
With time, after lots of data has been collected formulations can be made based on the
existing variables and skin types and therefore customization on a large scale can be
achieved in a shorter time, through the ecommerce channels like Facebook messenger.
This may seem farfetched but an example of an A.I Chat-bot that is doing this in the
cosmetic industry is Headliner, however it recommends products to customers based on
already existing products putting in mind the fact that one size does not fit all this
presents a huge opportunity for LG&H.
Chabot’s can also be used to offer customized online experiences, for consumers who are
comfortable with existing products, the focus here should be on factors such as language,
skin tone, images( Eurocentric beauty standards in the industry leads to monolithic
advertising which lowers self-esteem of non-Europeans, and vice versa). So algorithms
can be used that cut across all personalization experiences and in return the company
acquires much more and richer data to work with. Machine learning can be taken
advantage of for better decision making.
So LG&H with A.I can adapt to unique customer needs and wants instead of fronting a
system that encourages customers to fit industry norms.
Augmented reality is another technological advancement that is being used in the
industry but still in nascent stages, an example is Modiface an app and mirror which
allows customers to try on different types of make up on their faces before purchasing,
the make-up may look good on models but does it look good on me, these are some of the
questions customers are asking themselves.
As seen from the recommendation Big data analytics, cloud computing , social media and
mobile should be used together to create an innovative point of difference as well as give
customers a more personalized experience, more tailored offerings will ensure repeat
purchases, and can even lead to advocacy.
We have looked at the Mega and micro environments that are affecting the industry as
well as trends that are posed to shape the industry in the near future Some of which
cosmetics with a medical touch to it, more personalized experiences based on skin types
and DNA, to mention but a few. We gave recommendations that are in line with LG’s
corporate culture in terms of technological innovation to give them a technological