MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS AND FINANCE

COUNTRY NOTEBOOK
EXPORT MAC COSMETICS NAIL LACQUER TO
SOUTH KOREA
LECTURER: DR. LE NGUYEN HOANG

Members: Ly Hong Ngoc

Mai Tram Anh
Huynh Kim Loc
Hoang Thi Yen Nhi
Nguyen Pham Thanh Truc
Nguyen Thi Linh Thu

Ho Chi Minh City, 2022

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 PHIẾU THEO DÕI VÀ ĐÁNH GIÁ LÀM VIỆC NHÓM
Học phần: .......1B..............................
Nhóm:....... Sixty nine...........

ĐÁNH GIÁ TỪNG CÔNG VIỆC THAM GIA (*)

THÀNH VIÊN Xây Sưu Trực Đóng Chỉnh Biên Thuyết Tham Tổ
VAI dựng tầm tiếp góp ý sửa, soạn trình, gia chức,
ĐIỂM
TRÒ đề tài viết kiến hoàn slides, tham gia phản điều
cương liệu bài cho thiện biên clip, trả biện hành
ST bài bài kịch, lời phản trên lớp nhóm
Họ Tên viết viết …. biện viết
T

1 Lý Hồng Ngọc Leader T T T T T T T T T 100%

2 Hoàng Thị Yến Nhi Member T T T T T T T T T 100%

3 Huỳnh Kim Lộc Member T T T T T T T T T 100%

4 Nguyễn Thị Linh Thu Member T T T T T T T T T 100%

5 Mai Trâm Anh Member T T T T T T T T T 100%

Nguyễn Phạm 100%
T T T T T T T T T
6 Thanh Trúc Member
(*): Đánh giá phần này theo quy ước sau:
- Tốt :T
- Khá :K
- Trung bình : TB
- Yếu :Y
- Không tham gia :Æ

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 TABLE OF CONTENTS
1. Introduction about the company and the products 4
1.1. Introduction of MAC Cosmetics 4
1.2. Introduction of the product 4
1.3. South Korea - Target market 4

2. Cultural Analysis 5
2.1. The country’s background information 5
2.1.1 Brief discussion of the country’s history 5
2.1.2 Geographical setting 5
2.1.4. Religion and aesthetics 5
2.1.5. Living conditions 6
2.1.6. Language 7
2.2. How does the cultural information helpful in understanding the effect on the market? 7

3. Economic Analysis 8
3.1. General economic data 8
3.1.1. Population 8
3.1.2. Economic statistics and activity 9
3.1.3. Developments in science and technology 10
3.2. Information on channels of distribution and media 11
3.2.1. Channels of distribution (macro analysis) 11
3.2.2. Media 12

4. Market audit and competitive market analysis 13

4.1. Evaluation of the product by the intended market 13
4.2. Evaluation of the target market in which the product is to be sold 14
4.2.1. Describe the market(s) in which the product is to be sold 14
4.2.2. Compare and contrast your product and the competition’s product(s) 15
4.2.3. Market size 17
4.2.4. Government participation in the marketplace 17

5. Preliminary marketing plan 17

5.1. The proposed marketing plan 18

5.1.1. Marketing objectives 18
5.1.2. SWOT Analysis 18
5.1.3. Product adaptation or modification 19
5.1.4. Promotion mix 19
5.1.5. Distribution: From origin to destination 20
5.1.6. Channels of distribution (microanalysis). 20
5.2. Pro formula financial statements and budgets 21
5.3. Resource requirements 22

REFERENCES 23

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 1. INTRODUCTION ABOUT THE COMPANY AND THE PRODUCTS

1.1. Introduction of MAC Cosmetics

Established in Toronto in 1984 by Frank Toskan and Frank Angelo, MAC Cosmetics is a
cosmetics company with a trendy, contemporary aesthetic. Estée Lauder Companies purchased the
business in 1996, moving it to New York City. In 2020, the Vietnamese color cosmetics industry
was worth about 3.5 trillion VND. Compared to other competitors, MAC is thriving in recent years
to become one of the market’s leading brands (Euromonitor 2020). While MAC's rivals are
experiencing decreased market share between 2015 and 2020, MAC is doing the opposite, with an
increased market share.
MAC aims to inspire beauty inside everyone regardless of age, race, and gender which
make themselves the global symbol of beauty and crazily attracts millions of people worldwide.
Additionally, with the massive distribution all over 105 countries, the brand awareness of MAC is
extremely high and this is the base for the success of future products.

1.2. Introduction of the product

Nail polish is a product line of Mac and is popular in many countries around the world
because of its beautiful, trendy colors, good quality, and safe ingredients for nails. The basic
components include film-forming agents, resins and plasticizers, solvents, and coloring agents.
Additionally, as chemicals and other elements become accepted or discredited for some uses,
adjustments are made. MAC nail color strengthens and improves the quality of nails with a range
of vibrant shades. The long-wearing formula offers a high-shine look and perfectly even
application.

1.3. South Korea - Target market

South Korea is easily considered the beauty capital of the world. Appearance is incredibly
important to those who live in South Korea. The culture is obsessed with taking care of oneself,
and looking the best way possible. “Sunscreen and avoiding the sun is one of the most important
things in Korean skincare - it’s extremely common to see women with parasols and desperately
seeking shade.” This is according to Katherine Spowart, a businesswoman who runs a dedicated
beauty blog called SkinfullofSeoul (Squier, Chemmie). It’s not uncommon to come across three
of the same beauty stores on the same street when out shopping in South Korea. Needless to say,
South Korea has great potential for a beauty product to do well. However, there is also the
possibility a new product fails due to the sheer volume of competition in the market.

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 2. CULTURAL ANALYSIS

2.1. The country’s background information

2.1.1 Brief discussion of the country’s history

After Japan’s defeat in 1945, the United States and the Soviet Union divided control over
the Korean Peninsula. South Korea was then established in the capital city. Their declaration of
independence in 1950 led North Korea, China, and the Soviet Union to invade its neighbor in an
effort to regain control of the entire peninsula. Backed by the United States, the Korean War caused
2 million casualties but eventually settled by creating a divided demilitarized zone. Following the
Korean War, South Korea continued to have close ties with the United States, including military,
economic, and political support. Throughout the 1960s and 1970s, South Korea experienced rapid
industrial development and economic growth. Today, South Korea is one of East Asia’s most
affluent countries, ranking just behind Japan and China. With a large portion of the country
covered by mountains, a majority of the population lives in urban areas. The capital of South Korea
is Seoul, home to more than 25 million people, or over 50% of the country’s population.

2.1.2 Geographical setting

South Korea is located in East Asia, on the southern portion of the Korean Peninsula
located out from the far east of the Asian landmass. The only country with a land border to South
Korea is North Korea, lying to the north with 238 kilometers of the border running along the
Korean Demilitarized Zone. With its geographical positioning in the middle latitudes, Korea
experiences four distinct seasons and has both temperate and subarctic climates. South Korea's
topography consists mainly of hills and mountains, but large coastal plains are prevalent in the
western and southern parts of the country.
2.1.3. Social institutions
Korean attitudes towards marriage, family, and gender roles have loosened in recent
decades, moving away from the strict system of mutual responsibilities and obligations. Young
Koreans, in particular, are putting less weight on marriage and parenthood than in previous years,
with more and more people seeing both as a choice rather than an obligation. Koreans also
increasingly oppose a strict gender division of labor and the “male breadwinner” family model.
Korean women today are actively engaged in a wide variety of fields, including education,
medicine, engineering, scholarship, the arts, law, literature, and sports. Women are thus making
significant contributions to society.

2.1.4. Religion and aesthetics

- Religion and other belief systems
Religion in South Korea is diverse. A slight majority of South Koreans have no religion.
Buddhism and Christianity are the dominant confessions among those who affiliate with formal

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religion. Buddhism and Confucianism are the most influential religions in the lives of the South
Korean people. Buddhism, which arrived in Korea in 372 AD, has tens of thousands of temples
built across the country.
- Aesthetics
Physical appearance and a self-assured relationship are the biggest characteristics of
aesthetics in South Korea. Women are the number one consumers of cosmetic items in the world,
spending six times longer performing beauty routines as French women. Because of this
infatuation with physical appearances, plastic surgery has risen to popularity in recent years.
Changing one’s physical appearance is like a simple act of societal initiation in South Korea. With
a love of luxury and appearance, one's relationship with their own body is significant. Their
infatuation with aesthetics has continued to grow, and it is not slowing down anytime soon.

2.1.5. Living conditions

- Diet and nutrition
In South Korea, the level and rate of increase in fat intake have remained very low, whereas
vegetable intake has been high and fruit intake has increased greatly. South Korea also has a
relatively low prevalence of obesity compared with other Asian countries. The traditional Korean
diet is a low-fat and high-vegetable diet. Therefore, the government and nutrition specialists have
been initiating numerous efforts to advertise and teach the public that the traditional diet is a
healthy diet.
- Clothing
Korea’s traditional clothing, hanbok, has maintained its basic traditional features
throughout Korea’s 5,000-year history. In contrast, its styles and forms have evolved in various
ways based on the lifestyle, social conditions, and aesthetic taste of the times. Korean people today
seem to prefer clothes inspired by modern Western styles to their traditional clothes although some
people still insist on wearing the latter on traditional holidays or special family occasions such as
weddings.
- Kpop
K-pop (Korean: 케이팝; RR: keipap), short for Korean popular music, is a genre of music
originating in South Korea as part of South Korean culture.It is influenced by styles and genres
from around the world, such as pop, gospel, hip hop, R&B, and classical on top of its traditional
Korean music roots. Modern K-pop "idol" culture began in the 1990s, as K-pop idol music grew
into a subculture that amassed enormous fandoms of teenagers and young adults. Over the course
of 30 years, K-pop has grown tremendously. Professor Kim Seiwan from Ewha Woman's
University says that based on official estimation, K-Pop generates about $10 billion for the country
each year.
- Healthcare
Healthcare in South Korea is universal and funded through a combination of government
subsidies, outside contributions, and tobacco surcharges. Hospitals and clinics are modern and

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efficient, and ex-pats will find a variety of both Western and Eastern treatment options. Life
expectancy in the country has been increasing over the years. Recently, the life expectancy age
has increased to nearly 90.

2.1.6. Language
Korean is the formal language in South Korea. With a number of dialects in South Korea,
Hanguk is the most commonly used. Other dialects include Yongseo, Jeju, Seoul, Jeolla,
Gyeongsang, and Chungcheong. By the 19th century, the Hangul alphabet gained popularity and
replaced the Chinese influences. Korean has three major speech stages linked to politeness: plain,
politeness, and deferential. English is considered the second language of South Korea, but the
majority of people do not speak it fluently.

2.2. How does the cultural information helpful in understanding the effect on the
market?
South Korea is one of the top 10 beauty markets in the world, and it is constantly growing.
The South Korean beauty and personal care products market is projected to grow at a CAGR of
5.22% during the forecast period (2021-2026). The COVID-19 outbreak in South Korea has had
varying impacts across the beauty and personal care market. Mass beauty and personal care have
benefited, with consumers trading down from more upmarket offerings as they spend more time
at home. Another notable trend is the rise of do-it-yourself (DIY) beauty care. Many beauty salons
have been closed, and even in places where they have not, consumers are forgoing services because
of concerns about close physical contact. As a result, DIY hair coloring, nail care, and care in other
beauty categories are finding new customers in the country. In South Korea, there is immense
societal pressure to conform to the community and societal expectations placed on the individual.
This is evident in the theorization of what influences both Korean men and women to want to strive
to achieve a strict beauty standard.The result from this particular study supports the previous
evidence from Keong Ja Woo, who analyzed how beauty standards in Korea, in regard to one’s
height, weight, and facial preference, body impacted their chances of employment. Appearance is
often seen as a means for socioeconomic success in the rapidly modernized post-war economy of
South Korea, which has seen a sluggish job growth rate after its economic boom. Some Koreans
view investments in beauty, such as cosmetic products and medical beauty treatments, such as
plastic surgery, dermatology, and cosmetic dentistry, as a means of cultural capital to get an edge
over peers for social and economic advancement. Other cultural factors such as the hardened
Confucianism in Korean society have been quoted as a prominent factor. Majority of the
Confucius's philosophy created the gender roles and norms in Korea, which some of his teachings
have been sustained even through modern Korea. Women are more likely to examine and make
changes to their bodies and face in order to adhere to the beauty standards projected by the
objectification theory that views women as “objects”. This raises the observation that impractical
beauty standards could be caused by highly patriarchal societies that only promote unbending
gender roles, which is then reflected by the influence of Confucianism in Korean history.

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 The customer target of MAC nail lacquer focuses on women aged from 16 to 30 years old,
with average incomes or higher. Because women at this age often care a lot about their appearance
due to the high pressure to find a job. Also, this group is mostly people who are studying, working,
have social contact with many people, which leads to the fact that the beauty needs of this group
is also substantial. All of the favorable conditions above have proven that Korea is a potential
market for nail care products. As a result, our company decided to export MAC nail polish to this
country.

3. ECONOMIC ANALYSIS

3.1. General economic data

3.1.1. Population
- Total
The current population of the Republic of Korea is 51,335,014 as of Thursday, December
30, 2021, based on Worldometer elaboration of the latest United Nations data. South Korea's
population is equivalent to 0.66% of the total world population. South Korea ranks number 28 in
the list of countries (and dependencies) by the current population of the Republic of Korea is
51,335,014 as of Thursday, December 30, 2021, based on Worldometer elaboration of the latest
United Nations data.

In 2020, the number of births in South Korea was estimated to stand at around 272
thousand, recording the lowest figure during the last 20 years. This was less than half of the birth
number in 2000.

- Distribution of population

4.7% of the population is under 5; 11.5% is between the ages of 6 and 14, 13.6% falls
between ages 16 and 24, 62.9% falls between ages 25 and 69, and 7.3% of the population is over
70 years old. Men make up 50.03% of the population, while females make up the remaining
49.97% of the population.
Moreover, South Korea covers 99,720 sq km, 18.1% of which is used for agriculture, and
63.9% is forest. The remaining area is used for other purposes and is generally urbanized. About
70% of the country is covered with hills and mountains, meaning that the majority of the
population lives on the lowlands, which make up just 30% of the area. South Korea is made up of
eight provinces and one autonomous territory, the island of Jeju. The northwestern province of
Gyeonggi, containing Seoul, is the most densely populated region of the country. By comparison,
the northeastern province of Gangwon is the least densely populated region of South Korea.

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 3.1.2. Economic statistics and activity
- Gross national product (GNP or GDP)
The Gross Domestic Product (GDP) in South Korea was worth 1630.53 billion US dollars
in 2020, according to official daThe Gross Domestic Product (GDP) in South Korea was worth
1630.53 billion US dollars in 2020, according to official data from the World Bank. The GDP
value of South Korea represents 1.44 percent of the world economy from the World Bank.
Meanwhile, South Korea Gross National Product (GNP) was reported at 457.323 USD billion in
Sep 2021. This records a decrease from the previous number of 461.301 USD billion for Jun 2021.
- Income classes
South Korea’s middle class accounted for 65.7% of the population, a 1.7 percent decrease
compared to the previous year. Korea’s National Statistical Office defines the middle class as 50-
150 percent of the country’s median income. As a declining trend has been seen in the middle
class, it is largely attributed to the deterioration in the country’s income disparity, as the gap
between the rich and poor is widening. The distorted distribution is also being attributed to the
growing competition in self-employment, leading to lower earnings and a spike in low-income
earners.
- Surface transportation
Railways are one of the primary methods of transportation in South Korea. There are
multiple railway providers, but the sole passenger provider is KORAIL. Railway systems run
throughout the country, linking cities for easy, affordable, and efficient travel. In April of 2004,
the Korean Train Express was put into service, reaching a top speed of 300 km/hr on a fitted high-
speed track. It utilizes two lines: the Gyeongbu and the Honam lines. Subway systems have also
been heavily utilized in South Korea since their introduction in 1968. Subways are fully
operational in 4 cities, including Seoul, Busan, Daegu, and Incheon. Korean bus services are
offered regionally and locally. Almost every town is served by the regional bus service. Apart from
those, there are also ferries and taxis in South Korea.
- Communication systems
South Korea offers five main types of communication: Telephone, Postal, Internet, Radio,
and Television. In the 1980s, telecommunication services greatly improved in South Korea due to
the assistance of foreign partners and the development of the electronics industry.
+ Radio and T.V: The radio is a popular form of communication used by many residents of
South Korea. It is a source of free music, current events, and celebrity news with over 200
current broadcasting stations. South Korea currently ranks 46th in the world by the number
of television broadcast stations. The three largest networks are KBS, MBC, and SBS, with
major studios located in Yeouido and Sangam-dong. There are approximately 14 million
cable TV subscribers nationwide. Radio and television now reach virtually every resident
in South Korea.
+ Phone: The three main cell phone service providers in South Korea are SK Telecom, KT,
and LG Uplus. South Korea does not have a GSM network, which means roaming

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 opportunities are limited. The overall telephone network in South Korea has excellent
domestic and international services.
+ Postage: Korea Post is the national postal service of South Korea, providing fast and
reliable postal services and any additional postal services for residents.
+ Internet: As one of the world’s most wired countries, there are many Internet cafes
ubiquitous throughout the country. There are about 19 million households, and 99.2% of
them have internet access, deeming South Korea to have the highest number of broadband
users. The rapid growth is a result of a combination of government subsidies and market
factors. On average, South Koreans spend 14.3 hours a week on the internet.
- Foreign investment
South Korea’s rapid economic growth over the last decade, in addition to the constant
innovation of information technologies, makes South Korea a desirable place to invest for other
nations. Some of the foreign nations that most heavily invest in South Korea include the United
States, China, Ireland, Japan, Luxembourg, Singapore, the UK, and Vietnam. The lack of
transparency with South Korea’s trade regulations is something to be cautious of.
The most popular industries for foreign investment in South Korea include shipbuilding,
automobiles, electronics, cosmetics, textiles, and the production of TV and music.
- Exchange rates
South Korea has a single free-floating exchange rate that is determined by supply and
demand, similar to the United States. (The Bank of Korea). Currently, the South Korean Won is
worth 0.000892% of the U.S. dollar. The South Korean Won is fairly stable, and there isn’t a lot
of fluctuation between it and the U.S. Dollar.
- Trade restrictions
Embargoes, quotas, and import taxes are expected to be eliminated between the United
States and South Korea due to the Asia-Pacific Economic Cooperation (APEC). Tariffs on U.S.
cosmetics that are exported to South Korea have been significantly reduced by the passage of the
KORUS FTA and will be eliminated over the next 10 years.

3.1.3. Developments in science and technology

Current innovative technology includes water absorption technology, which can be used to
save energy regarding heating and cooling systems. This new technology can absorb four times
the amount of regular absorbents; Kevlar Textile Coating Technology is another innovation that
can increase performance by applying zinc-oxide to Kevlar fiber. This technology can be used for
many projects, such as a protective coating on automobiles. Another innovation includes Medical
Robotics Technology, which can be used as support for a patient's recovery and rehabilitation by
assisting the ailing or injured part of the body. Topix is another innovative technology that can
analyze big data quickly through an algorithm.
Percentage of GNP invested in research and development: The South Korean government
and the private sector's total R&D spending in 2019 amounted to 89.05 trillion won, up 3.9 percent

10
from the previous year, according to the Ministry of Science and ICT. The total R&D spending
translates to 4.64 percent of South Korea's gross domestic product (GDP) last year.
The labor force and the general population of South Korea have a substantial understanding
of technology, as most of the country's exports are technology-based.

3.2. Information on channels of distribution and media

3.2.1. Channels of distribution (macro analysis)

- Retailers
There are many types of retailers in South Korea ‘Stores may range from online shops and
hypermarkets, convenience stores, duty-free shops, or department stores. In a chain store, the
efficiency of individual stores must be well managed to improve the efficiency of the entire
enterprise.
Retail prices for imported perfume and women’s swimwear are being marked up by as
much as eight times the original import price. Other items that are being marked up are face powder
(6.4 times), leather belts (3.8 times), dog food (3.8 times), chocolate (3.5 times), sunglasses (3.5
times), women’s jeans (3.4 times), leather wallets (3.4 times), wristwatches (3.3 times), sleeping
bags (3.2 times), hairdryers (3.1 times), leather handbags (3.1 times), beer (2.7 times), and digital
cameras (2.1 times)
The most common way to pay in South Korea is by card. Koreans think that carrying cash
is cumbersome, and they simply don't have anywhere to put it. Carrying a debit card around makes
it easier to manage their money. The abundance of small and medium companies in South Korea
demonstrates the important role of small businesses during the entire course of dynamic growth.
- Wholesale middlemen
In South Korea, Dongdaemun Market is known as the world's extraordinarily large
shopping town. Dongdaemun market in South Korea is widely popular with locals and tourists
alike. This market has over 30 shopping centers and 30,000 stores with more than 50,000
manufacturing companies all in one spot. The markups between wholesalers and retailers are very
similar. For example, a wholesale item at $5 could be marked up to $10. By 1997, about two dozen
foreign stores had been approved by the central government to conduct business in South Korea.
However, hundreds of foreign retailers and wholesalers had already established themselves in
South Korean cities, have sought approval from the provincial or municipal governments.
- Import/export agents
For small and medium-sized companies, the best way to enter the Korean market is through
a reputable or well-known agent or distributor. These companies are located regionally and
typically have a large sales network. Thus they will have a better understanding of the Korean
market and can provide assistance in developing distribution strategies in the region. In this way,
new products can be launched easier into the market, and distribution networks can be set up
without any issues regarding distribution rights and licensing.
- Warehousing

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 Retail warehouse and logistics properties are attracting new interest from overseas
companies despite lower demand among other industrial spaces during the financial downturn.
Korea has the world’s fastest-growing consumer market for perishable foods and pharmaceutical
products, but its per capita refrigerated warehouse space is less than one-tenth of most developed
countries.
- Penetration of urban and rural markets
A greater number of items are vying for limited retail space in both urban and rural areas.
Consumers are being bombarded with products and promotions by an abundance of domestic and
multinational companies. Statistics will highlight the product and purchasing frenzy most
efficiently.

3.2.2. Media
- Availability of media
South Korea is, by all measures, a media rich-country. Television is ubiquitous too, with
two national networks, over forty cable channels, and a digital satellite broadcasting service
offering seventy-four channels. Koreans are avid users of new technologies as well. The
availability and adoption of new communication devices in South Korea are on a par with the
world's most industrialized countries.
- Costs
Television advertising expenditures were a total of $2.48 billion in 2017. Total media
advertising expenditures grew by 4.3% to $6.2 billion in 2017. Advertisers dedicated $2.27 billion
towards mobile advertising last year, and in 2021, advertising expenditures exceed $10 billion.
- Agency assistance
Development cooperation efforts were focused mainly on meeting the basic human needs
of developing countries and on fostering their human resources development. The focus has now
broadened to promoting sustainable development, strengthening partnerships with developing
partners, and enhancing the local ownership of beneficiaries.
- Coverage of various media
+ Newspapers: there are 116 daily newspapers in South Korea.
+ Magazines: there are 11 national fashion magazines in South Korea.
+ Radio: there are 47,500,000 radio receivers and 209 radio stations in South Korea.
+ Television: there are 15,900,000 television sets and 121 television channels in South Korea.
- Percentage of population reached by each medium
+ Newspapers - 28% of South Koreans read newspapers regularly. Newspapers have been
consumed an average of 35 minutes per day in South Korea.
+ Magazines - The average South Korean looks at a magazine for 10 minutes per day.
+ Radio - 99% of the South Korean population has access to radio, but only 12% listen
regularly. Radio is consumed 61 minutes per day.

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 + Television - Roughly every household in South Korea has access to television, and it is
consumed 174 minutes per day. Television has the biggest impact on South Koreans, as
nearly 80% watch television regularly.
+ Internet - 99.2% of South Korean households have internet access and use it frequently.
South Korea is one of the countries with the fastest internet connection in the world, and
will likely be the first nation to have access to 5G speeds. (Ramirez, 2017)
+ Social Media - 84% of South Koreans considered themselves active social media users.

4. MARKET AUDIT AND COMPETITIVE MARKET ANALYSIS

South Korea is one of the largest beauty markets in the world, making the country a prime
target for our Chrome Lacquer nail polish. This nail polish will change colors with the temperature,
and it will have ingredients that strengthen the nail when applied. In order to reach our target
market of women between the ages of 16 and 30, the product will be advertised in fashion
magazines, on television, and on social media. The product will be sold in MAC stores, as well as
other department stores across South Korea.

4.1. Evaluation of the product by the intended market

- Relative Advantage - This nail polish will be MAC’s first color-changing nail polish
around the globe, and it is based on temperature. In addition, Canadian cosmetic brands
are viewed as safer, more reliable products in South Korea. The product will also have
healthier ingredients that are designed to strengthen the nail as it is applied. Koreans favor
multi-functional products, which also gives the color-changing and strengthening nail
polish an advantage (Export.gov).
- Compatibility - The product is not compatible with any other products, thus it will be sold
by itself.
- Complexity - The color-changing nail polish is no more complex than any other nail polish
in South Korea. It is applied and removed in the same manner as other nail polishes.
- Trialability - Testers will be available at department stores and MAC locations. Individuals
can use a disposable brush supplied at multiple displays inside the store. Observability -
Chrome Lacquer nail polish will be highly observable, as it will be worn visibly to the
general public.
On top of that, South Koreans often prefer Canadian-made products, as they are known for
quality and safety. Koreans also like multi-use products, so they should be accepting of a
product that changes color and strengthens the nail. Because of this, there should be no
major problems with product acceptance. (Export.gov)

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 4.2. Evaluation of the target market in which the product is to be sold

4.2.1. Describe the market(s) in which the product is to be sold

- Geographical Region(s)
There are currently 41 MAC Cosmetics stores located in the country of South Korea. 22 of
those stores are located in Seoul, Korea, the country’s capital. The majority of the other locations
are in big cities, including Busan, Daegu, Pusan, and Incheon.
- Forms of transportation and communication available
In all locations that MAC is located, bus and taxi systems are available as forms of
transportation. Subway systems are also fully operating in Seoul, Busan, Daegu, and Incheon.
MAC has strategically placed their store locations in areas where transportation is accessible.
- Consumer Buying Habits
South Korea was one of the top 10 global beauty markets, estimated at over $13 billion.
Purchases not only serve the primary needs but also for image and status reasons. In general,
purchases are made in department stores, shopping centers.
+ Product Use Patterns
Due to fast-paced innovations and highly engaged consumers, the Korean beauty market
remains buoyant without any hesitation in adopting new products. In 2021, patterns seen within
facial skincare revolved around extreme segmentation. Products were increasingly multi-
functional as the South Korean beauty routines consist of up to 10 steps. These steps include
moisturizing, brightening, whitening, toning, anti-aging, among others. Products have recently
become more versatile to appeal to these multiple functions. According to a study done by Mintel,
“Lines are blurring in every possible way to deliver new experiences and create continuous
excitement around skincare.” In 2021, the makeup industry saw a sharp focus on lips and
complexion, utilizing the variety of colors and contouring techniques that exist. Nail polish has
seen a huge rise in demand as nail art continues blowing up on social media. In 2021, South Korea
saw popular trends arise, such as nail art, and tends to lean towards unique creations. These include
diamond nails, cuticle nails, high heel nails, and tattoo nails.
+ Shopping Habits
South Korea is the world’s top credit card user who often practices efficient spending habits
with the middle to upper class is especially connected. With over 97% of 18-24-year-olds actively
on their mobile phones, much time is spent using online resources to browse and read reviews of
products in order to make an online purchase. South Koreans are well-informed shoppers with
special interests in luxury goods. Celebrities also have significant influence over the shopping
habits of South Koreans, as many bases their shopping habits on what these stars are doing.
- Distribution of the product
+ Typical Retail Outlets
We will use MAC stores and high-end department stores such as Shinsegae, Hyundai, and
Lotte to sell our product.
+ Product Sales by Other Middlemen

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 We will not use other middlemen to sell the product.
- Advertising and Promotion:
+ Advertising Media Usually Used to Reach Target Market
We will usually use magazines, television, the internet, or social media to promote our
product. We will not use newspaper, as the product is very color-oriented and is being marketed
to the high end. The product is also very visual, so the radio is not going to be effective, especially
given its low reach of only 12% of the population.
+ Sales Promotions Customarily Used (sampling, coupons, etc.):
Coupons - Potential customers are often incentivized to buy a product through coupons.
Premiums - Premiums are fairly common in South Korea and are usually sent through the mail
with the intention of gaining consumer interest.
- Pricing Strategy
MAC Chrome Lacquer will be priced at the higher end of the market. Specifically, it will
start at $10.75/ bottle (412,036.34). Our product is a differentiator and offers many health benefits,
and we believe it is worth more than the industry average. Upon the launch of the product, MAC
will offer a 15% discount for the first month. Additional promotions may apply in the future.

4.2.2. Compare and contrast your product and the competition’s product(s)
- Competitors’ products
+ Etude House - Etude House offers various shades, ranging from metallics, glitters, solids,
and neon colors.
+ TonyMoly - Like Etude House, TonyMoly also offers a wide variety of shades, ranging
from metallics, glitters, solids, and neon colors.
+ Innisfree - Consumers that are looking for an eco-friendly option can turn to Innisfree, as
they promise that only natural and organic ingredients are used in their product. Innisfree
also offers a wide range of colors to choose from.
+ Peripera offers a more pigmented polish that boasts about its “one coat only” strategy. Nail
polish bottles are typically 8ml, but Peripera chooses to use a 15ml bottle designed to make
their polishes last longer.
+ Skinfood - Skinfood offers a line of topcoats and base coats along with their regular
polishes in order to attract consumers to the idea of keeping your nails healthy and strong.
- Our brand name - MAC Chrome Lacquer
- Our features - We will offer primary and secondary colors that turn dark shade when it’s
warm, and a light shade when it’s cold. For example, if someone were to purchase the red
polish, it would turn a maroon/burgundy the warmer it gets. The red would then turn pink
as the temperature cools down.
- Our package - MAC Chrome Lacquer will be displayed and sold in the bottle itself. The
polish bottle will be clear glass, with an iridescent cap.
- Competitors’ prices
+ Etude House - $3.95 or ₩4,422.50

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 + TonyMoly - $2.82 or ₩3,157.33
+ Innisfree - $4.42 or ₩4,948.72
+ Peripera - $11.29 or ₩12,640.51
- Competitors’ promotion and advertising methods
+ Etude House
Etude House promotes themselves in commercials, often portraying young women going
through their cosmetics items and ending with Etude in their hands. Their slogan,“Wanna be
sweet? Play Etude”, appears at the end of the advertisement. The company also uses pop-up
advertising windows, as well as outdoor ads found on transportation.
+ TonyMoly
There was a huge increase in demand when they began putting a whimsical spin on their
packaging, such as containers shaped like peaches, eggs, tomatoes, or tangerines. Along with this,
they use unique ingredients like snail mucin and vegetable extracts. Their key communication
strategy has been viral marketing, specifically utilizing make-up artists and power bloggers to
share their products. The company does not choose television as the central piece of their
advertisings, as the company only advertises on TV in a very concentrated manner. TonyMoly
typically runs one TV campaign a year, and it almost always features an identified celebrity within
the beauty community.
+ Innisfree
Innisfree advertises heavily for the emotional appeal. They often feature Jeju Island to
emphasize the relationship the island has with South Korea. Jeju is the main source of Innisfree’s
ingredients, so they acknowledge Jeju Island and its natural state, promising to keep to solve skin
problems as a leader of nature-based beauty products.
+ Peripera
Peripera utilizes many popular South Korean influencers to speak highly of their brand.
They also use vibrant colors on their packaging to catch the attention of consumers. In the past,
Peripera has collaborated with famous TV characters like the Powerpuff Girls to offer limited
edition products showcasing the characters on the packaging.
- Competitors’ distribution channels
+ Etude House - Much of Etude House’s sales come through their website and their 10+ brick
and mortar stores located throughout the country.
+ TonyMoly - TonyMoly has many stores located throughout South Korea, as well as an
online store that contributes to a lot of their sales.
+ Innisfree - Innisfree has their own stores, boasting over 18 locations across South Korea.
Many of their stores can be found roadside, designed so consumers can avoid going to a
department store to find the products. Like their competition, Innisfree also sells their
product on their website.
+ Peripera - Products are sold at Clio, a Korean beauty company with locations throughout
the bigger cities. Products can also be purchased on their online store.

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 4.2.3. Market size
- Estimated industry sales for the planning year
Retail Sales in South Korea are expected to be 8.00 percent by the end of this quarter,
according to Trading Economics global macro models and analyst’s expectations. In the long-
term, the South Korea Retail Sales YoY is projected to trend around 5.00 percent in 2022 and 6.00
percent in 2023, according to our econometric models.
- Estimated sales for your company for the planning year
With the anticipation of gaining 3% of the market in the first year, sales are estimated to
be around US $61.9 million based on the US $2.063 billion in the 2022 South Korean nail polish
market.

4.2.4. Government participation in the marketplace

- Agencies that can help
DGFEZ, Kim & Chang, Marketing Entry Services, and Sungjee Accounting are dedicated
to serving new businesses that need an extra hand.
- Regulations that must follow
The Act on Prohibition of Improper Solicitation and the Provision/Receipt of Money and
Valuables is now in place. Foreign investment is restricted in certain industries such as nuclear
fuel processing, electricity generation, meat wholesale, food crop cultivation, and radio and
terrestrial television broadcasting. Investment in other forms of broadcasting is partially permitted.
Telecommunications, publication of newspapers, magazines, and periodicals, passenger
transportation, and carriage of goods are all partially permitted. Foreign investment must be
reported under the Foreign Investment Promotion Act. These investments need to acquire at least
10% of voting shares from a Korean company, or establish a business relationship with a Korean
company, in addition to investing at least ₩4100 million. The South Korean government has
imposed heavy restrictions on doing business with North Korea under the National Security Act.
In addition, there were restrictions on engaging in financial transactions with Iran under the
Foreign Exchange Transaction Act. The South Korean government recently lifted most of those
restrictions, but some of the restrictions will remain for a certain period of time. The Foreign
Exchange Transaction Act regulates transactions and includes provisions on regulatory measures,
registration requirements, and reporting requirements. A company must have at least three
directors, including one representative director and an in-house statutory auditor unless the
company has a total capital of less than ₩1 billion, in which case there only needs to be one or
two directors.

5. PRELIMINARY MARKETING PLAN

Our product will be a differentiator in the market, and our target market will be females
from the ages of 16-30. We hope to increase our market share by 1% every year for the first five
years. When looking at our strengths and weaknesses, we determined the best promotion strategy

17
and identified future opportunities. We plan to spend 10%, or $6.2 million of our revenues on
annual promotion. Distribution of our product will be done with ocean and motor carriers,
eventually making its way to the retail stores.

5.1. The proposed marketing plan

5.1.1. Marketing objectives

Marketing Objectives: Chrome Lacquer is intended to offer consumers a differentiated
product that is unique to its market. We will increase and enhance awareness of the new product
through a variety of methods in order to boost sales and obtain a higher market share.
- Target Market (specific description of the market):
Our target market is anyone who wears or wishes to purchase nail polish. Specifically, we
will place a heavy emphasis on targeting females from the ages of 16-30, as they take great pride
in their appearance in South Korea. These women will mainly live closer to the big cities, as they
can typically afford to purchase products that are priced on the higher end.
- Sales Forecast Years 1-5
With the anticipation of gaining 3% of the market in the first year, and a percent of the
market in each of the following years, sales forecasts based on 2022 total market capital are as
follows:
+ Year 1 - US $61.9 million (3%)
+ Year 2 - US $82.5 million (4%)
+ Year 3 - US $103.2 million (5%)
+ Year 4 - US $123.8 million (6%)
+ Year 5 - US $144.4 million (7%)
- Market Penetration and Coverage
We would like to have 7% of the nail polish market in South Korea over the next 5 years.

5.1.2. SWOT Analysis

Strengths Weaknesses

- There are over 40 MAC cosmetics
stores located in South Korea.
- No other top competitor in the nail
polish industry sells color-changing
polish based on temperature.
- Strong brand reputation among South
Koreans.
- The product is priced on the higher end
of the market.
- There are more MAC locations inside
large department stores than there are
free-standing MAC stores.
- There is an inability to adapt to new
demands as the market is very
saturated.

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Opportunities Threats

- The country is the beauty capital of the
world, making it a great market for our
product to enter.
- Consumer values and change of
perception of beauty
- K-beauty’s popularity increased due to
the growth of Korean Wave culture
- Intense competition with other
companies in the same market such as
the famous brand name originated from
South Korea.
- Consumers are hard-to-pleased and
their rights are protected effectively;
thus, if information about the product is
not provided fully, they will not accept
that product.

5.1.3. Product adaptation or modification

- Core component: The core components of the product do not need to be adapted because
it is a brand new product designed for the Korean market.
- Packaging component: Packaging does not need to be modified, as the product is brand
new, and is designed for the Korean market.
- Support services component: There is no need to adapt the support services on the product
as it is no more complex in terms of application than any other nail polish. If there happen
to be questioned, further information can be found at www.maccosmetics.com

5.1.4. Promotion mix

- Advertising
+ Objectives - Our advertisements are intended to attract our target audience, and grow their
interest in our product. We hope that this interest will lead to a growth of loyal customers.
+ Media Mix - We will use magazines, television, the internet, and social media to promote
our product. We won’t use newspapers, as the product is very color-oriented, and is being
marketed to the high end. Radio is not going to be effective either, given that the product
is very visual and radio has a low reach of only 12% of the population.
+ Message - Our message will be focused on the phrase “Color-morphing, Nail-
strengthening, Long-lasting” This phrase draws attention to the product’s relative
advantages, including color-changing pigment and nail-strengthening ingredients.
+ Cost - With our desire to capture 3% of the market by the end of the year, and an estimate
of $61.9 million in sales, we would like to spend 10%, or $6.2 million of our revenues on
annual promotion.
- Sales promotions
+ Objectives - Our sales promotions are intended to attract our target audience, and get them
to try our product, We hope that these trials will lead to a growth of loyal customers

19
 + Coupons - Potential customers will be incentivized to buy our product through coupons
that offer 15% off the original price. We will distribute these coupons in fashion magazines
and on the internet where we are most likely to reach our target market.
+ Premiums - Sample bottles can be placed in the mail for consumers to try, and information
and locations on where to find Chrome Lacquer will be provided.
+ Costs - We will lose 15%, or $1.61 on each bottle sold from the coupons. We will also lose
the full cost of each sample bottle placed in the mail. The desired increase in the volume
of sales should account for this.
- Personal Selling - The Dongdaemun market has a lot of shopping centers that attract
millions of customers and tourists daily. We can personally sell our products in this market
where there are many potential customers.
- Other Promotional Methods - Testers will be available at department stores and MAC
locations. Individuals can use a disposable brush supplied at multiple displays inside the
store.

5.1.5. Distribution: From origin to destination

The majority of MAC products are manufactured in Canada, and our product will be
manufactured in Toronto. We will use a truck to transport the products to Vancouver, where they
will be shipped via ocean carrier to Incheon, South Korea.
- Port selection
+ Origin Port - Vancouver, Canada
+ Destination Port- Incheon, South Korea
- Mode selection:
+ Ocean Carriers - We will use ocean carriers to move the product from the port at Vancouver
to the port at Incheon, because our products have long-expired date so there is no pressure
to deliver quickly. Sea transport advantages include a possibility to ship large volumes at
low costs and having various options in carriers, vast network in the world, and affordable
transport price.
+ Motor carriers will be used from Toronto to Vancouver and from Incheon to MAC stores
and department stores across South Korea because they offer a good balance of cost vs.
transit time compared to Air and Sea freight. Road transport offers door to door services
and flexibility to adapt by changing routes means delays are more easily avoided

5.1.6. Channels of distribution (microanalysis).

- Retailers
+ Type of Retail Stores - There are many kinds of retail stores available in South Korea, but
the retailers we will primarily use are department stores. According to Nielsen (2016),
department stores take up 10% of the market share, and convenience stores take up 7% of
the market share.
+ Methods of Operation For Each Type (cash/credit)

20
 Convenience Stores - Convenience stores offer the option to pay with both cash and card.
Department Stores - Department stores offer the option to pay with both cash and card.
+ Scale of Operation For Each Type (small/large)
Convenience Stores - Small scale of operation
Department Stores - Large scale of operation
- Wholesale middlemen
+ Type and Number of Wholesale Middlemen - There are many wholesale outlets in South
Korea, we are focused on using retail outlets, such as department stores.
- Warehousing
+ Location - We will have a warehouse in Toronto, where Chrome Lacquer is manufactured,
and a warehouse in Incheon to store bottles that need to be distributed to retailers across
South Korea.
- Price determination
+ Cost of the shipment of goods - It costs $805 for 20 square feet of space, and $1,202 for 40
square feet of space on an ocean carrier from Canada to South Korea.
+ Retail price - The nail polish will sell towards the high end of the market. We believe that
Chrome Lacquer has enough competitive advantage that it can go for $10.75 or
₩12,036.34 a bottle at MAC stores, and a little more at other department stores because
of additional costs.
- Methods of Payment:
+ Cash - We will allow customers to pay with cash at each location.
+ Credit/Debit - Customers can use their cards at any of our stores as well, including online,
given that it is the most popular way to pay in South Korea.

5.2. Pro formula financial statements and budgets

+ Advertising/Promotion Expense - We plan to spend 10%, or $6.2 million of our revenues
on annual promotion.
+ Distribution Expense - To start, it will cost C$612.32 or US $480, to ship 150 pounds of
our product from Toronto to the port in Vancouver. Once there, we can pack roughly 100
bottles in a 12”x12”x12” crate. We can fit 20 of these crates on the ocean carrier if we
purchase the 20 square foot area mentioned above. This means our overseas distribution
expense will be $800 for 2,000 bottles, or 40 cents per bottle.
+ Product Cost – The cost of a bottle is 5 to 20 cents, which can rise to 30 cents for special
features. The price of a brush is 2 to 3 cents. A filler, which funnels the polish into the
bottle, charges from 50 cents to $1 per bottle. Its contents cost between 2 and 30 cents.
This means, at most, it will cost $1.63 to produce a single bottle of Chrome Lacquer.
TYPE QUANTITY PROJECTED COST PROJECTED
ADVERTISING/ PER UNIT SUBTOTAL
PROMOTION Magazines 8 times 200,000 USD 1,600,000 USD
EXPENSE
Television 7 times 350,000 USD 2,450,000 USD

21
 Internet 12 months 75,000 USD 900,000 USD
Social Media 12 months 85,000 USD 1,008,500 USD
Coupons 150 pieces 1,61 USD/ bottle 241,500 USD
Shipment from 150 pounds 3,2 USD 480 USD
Toronto to Vancouver
DISTRIBUTION
EXPENSE Shipment from 2000 bottles 0,4 USD 800 USD
Canada to South
Korea
Bottle 2000 bottles 0,3 USD 600 USD
Brush 2000 brushes 0,03 USD 60 USD
PRODUCT COST
Filler 2000 bottles 1 USD 2000 USD
Contents 2000 bottles 0,3 USD 600 USD
TOTAL 10,740,000 USD

5.3. Resource requirements

+ Finances: the wages of the employees, the marketing cost through media, magazines, and
transportation costs,... will all need financial resources
+ Personnel: Employees at all retailer locations, warehouse locations, freight road, and sea
contractors, and administrative and management staff at a centralized headquarters.
+ Production capacity: maximum amount of work that our organization is capable of
completing in a given period due to constraints such as quality problems, delays,
ingredients handler etc. We will use the lead strategy in order to perform at max capacity
efficiently and effectively.

Executive Summary

When deciding how to market MAC Cosmetics nail lacquer, there are several factors that
we must consider. When it comes to sales in exporting goods, we must determine the economic
and cultural factors in the country where we decide to export the product. South Korea is one of
the most developed countries in Asia, with a preference for beauty products stemming from its
culture. The second point is which payment method will the company use? In the case of MAC
nail polish, the best payment method would be a credit card. In marketing budgets, we may
determine that future revenue projections will exceed our future costs and expenditures.

Target market, promotion mix and sale promotion are the keys for MAC nail lacquer to
penetrate the Korean market, with the fact that nail art is growing and K-pop culture is increasingly
having a substantial on Koreans. Our combination of promotion and sales are the leading factors
to our success. If our promotions are lacking and do not affect the market, our entry to South Korea
is a bad investment.

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