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KMID : 1145120200180010065
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Asian Journal of Beauty and Cosmetology
2020 Volume.18 No. 1 p.65 ~ p.77
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A Study on the Influence of Brand Extension Portfolio Strategy on Cannibalization in Low-cost Cosmetics Market
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Song Man-Seok
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Abstract
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Purpose: This study is a cannibalization analysis of a family brand which is extended downward by a brand portfolio expansion strategy in the low-price cosmetics market. Brands such as THE FACE SHOP and BEYOND by LG Household & Health Care, MISSHA and A'pieu by ABLE C & C, and innisfree and ETUDE HOUSE by AMORE PACIFIC were set as the evaluation alternatives. The Bass diffusion model was applied to analyze the cannibalization, and cross analysis was conducted as an additional multiple analysis method. By performing positioning analysis, simultaneous research was performed on cannibalization analysis, market encroachment with competitive brands, and market competitiveness.
Methods: Data collection was conducted from March 20 to April 21, 2018. We collected data from adult women who had used low-price cosmetics more than once, through a convenience sampling method. We received 287 answers from the total of 300 surveys and used these for the final analysis. Thirteen insincere or incomplete answers were excluded. The collected data were cross-analyzed by SPSS statistical package program to identify the purchasing conditions of low-price cosmetics and future brand conversion probability. A positioning map was prepared using biplot analysis. For demographical analysis, frequency analysis was also performed. Additionally, Bass diffusion model analysis was performed using sales time series data of each alternative evaluation brand.
Results: Cannibalization was expected in all brands evaluated by Bass diffusion model analysis. The entry ratio was expected to increase, since the coefficient of imitation is higher in the propagation of new products than that of innovation.
Conclusion: The results of the cannibalization analysis of brands in the low-cost cosmetics market have implications for various fields, such as measuring the performance of an expanded brand portfolio in an intensely competitive structure, launching new products, launching new brands in a new market, analyzing the market competition structure of competitive brands, and devising strategies to defend against cannibalization.
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KEYWORD
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Low-price cosmetics, Brand expansion, Cannibalization, Bass diffusion model, Positioning map
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