Consideration (Brief Summary) of Differentiating Strategy of General Products Stores (A company) in Japanese Cosmetics Industry

~From Perspective of Working Women~No.1/3

■ Introduction
Hello, everyone.
I have been to Taiwan for four times on business in this year.
I was very surprised that various kinds of foreign products were sold in Taiwan. Surprisingly, Japanese products were very popular especially in Taiwan.
What I had heard in Taiwan is that “MatsumotoKiyoshi” is very famous for the ladies’ main tour attraction in Japan. They are recognized as providing “high quality” and “competitive price.”　Japanese bags and outfits are evaluated for “its cuteness of design” compared to other countries.
It is the same as Japanese women buying the products from American, British or French luxury brands.
Taiwanese ladies have a fixed image; Japan equals Luxury Brand. We had started the business plan of mail-order sales in Taiwan.
However,
① There are various Japanese products lined up in the Taiwanese market.
② Taiwanese women are buying products without knowing products themselves and Japanese trend.
③ Discount is the only policy that mail-order sales and stores in Taiwan
provide to their costumers.



From these three points, we are going to change the business plan in a direction of information service.
The reasons are because that it is common that a Taiwanese family have double incomes, and total fertility rate in is 1.0; it is the lowest in East Asia.
We would like to operate the business to fulfill the needs of working women from double-income-family, such as “we want to shop accurately in a short time.”
Based of these points of view and the title, I am going to place a “brief summary”. This brief summary was written based on a wide variety of documents and A company which actually exists in Nagoya, with the corporation of a outside staff, a working woman.
I would like to divide it in three parts and post them because it is going to be long.

Currently, not only Japanese products but also imported products come on the market.
The ways of purchasing are different such as over-the-counter sales in department stores or drugstores. There are also mail-order sales and sales over the Internet.
We have investigated the services of department stores or retail stores that provide products in low prices.
We weigh the historical background of cosmetics industry, and introduce a new “progressing business model”, including how we can survive in this competitive society. (The case studies are posted on “case studies-1” on our website.)
Historical consideration in Japanese cosmetics industry

1.1 transition of scale of cosmetic market
The scale of Japanese cosmetics market is 232,090,000,000 JPY. (The graphs are omitted.)
Japanese government introduced 3 percent of consumption tax in 1989, and it raised the tax to 5 percent in 1995.
This graph shows the shipment value includes export and import prices. (The graph is omitted.) In these ten years, the domestic shipment value of cosmetic products has not changed much. However, the values of export and import tend to increase. The market has grown without being affected by the Heisei Recession.
For your information, the top three sources nations of import are France, the United .States. and China in order.
The top three exporting countries are in East Asia such as Taiwan, Korea and Hong Kong.
(The scale of the market in 2008 was cited from YANO Research)

1.2 Expansion of the System of the System Products
Organizing the retail stores (chain stores) which signed contract with manufacturers
Shideido established the system of chain stores.
Shiseido started beauty counseling by beauty experts in 1937.
Pola Cosmetics started door-to-door sales in 1929.
Current Kose began operation in 1946.
Being influenced by wars and economic condition, cosmetics industry has grown to daily needs of Japanese women. Even though the industry shrank during the World War II, it successfully expanded with the post years of recovery.
In 1965, the market scale reached to 100,000,000 JPY.
These are the examples of main Japanese manufacturer.
Expensive brands in Shiseido, Kanebo, and RMK are popular recently in domestic manufacturer. Lancôme which is famous for mascara and Helena Rubinstein are popular among foreign manufacturer.

1.3 Abolishment of resale system
Deflation expanded after the collapse of the asset-inflated economy. Drug stores started discount sales.
●Originally cosmetic products are approved to be sold at fixed prices. (Resale price maintenance system)
↑Because the discount competition became too intense.
In 1997, discount sales rapidly expanded, drug stores like “MatumotoKiyoshi” has come to know more. Consumers recognize drugstores as “stores where we can get cosmetic products at cheap prices.”

For your information, “Sugi Yakkyoku” and “Amano Drug” are the major drug stores in Tokai area in Japan.

1.4 Current situation of counseling sales
Counseling sales are the ways to buy the products from beauty experts who have knowledge and technique. It is different from the discount stores, and the department stores and the specialty stores claim that it is important for cosmetics sales to provide counseling by beauty experts who have special knowledge.
Department stores
They have brought the latest original theory of counseling and equipment. Their levels of counseling are very high because manufacturers mark department stores as “show window of the companies.”
The following services are available for free.
● Isetan provides “Beauté Concierge” who can give clients right advice and introduce recommended products.
●“Cosmetic Advisers” who can check the skin types and conditions of the customers are available at Takashimaya. Based on the scientific data, they advise how to choose cosmetics, the way to wear makeup, the personal colors that match the clients.
● “Beauty Adviser” at Matsuzakaya can assist clients in skin care, makeup, and give solutions to all customers’ skin trouble.
I tried these services, and I was satisfied with the services!
I felt that this is the service of the department store and eventually bought the products from them. At department stores, customers can get new products earlier than the other stores and that is one of the merits of using department stores.
I also felt that personality and experiences of beauty experts are very important.

October, 15th 2009
Tate Business Consulting
Takashi Tate