A Study on the Influence of Brand Extension Portfolio Strategy on Cannibalization in Low-cost Cosmetics Market

Abstract

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.

A Study on Brand Extension and Cannibalization of Color Cosmetics

“…그러나 브 랜드 확장으로 인한 효율성은 높으나 (Chu, 2005) 시장 경쟁우위를 위해 시도한 브랜드 확장이 반드시 성공하는 것이 아니라 84%가 실 패하게 되며 (Tait, 2001) 브랜드 확장이 성공적으로 이루어졌더라도 70% 정도는 일이 년 사이에 시장에서 사라지게 되는 실패 가능성도 높기 때문에 확장된 브랜드에 영향을 주는 요인에 대한 연구는 매우 중요하다 (Lee & Chang, 2007 (Buday, 1989;Loken & John, 1993;John et al, 1998). 본 연구는 색조화장품 시장에서 잘못된 브랜드 확장으로 인한 자 사의 기존 브랜드와의 자기시장잠식 및 브랜드 희석효과 (Tauber, 1988;Aaker & Keller, 1990) (Shin, 1997;Lee et al, 1996) 에서 제한적으로 이루어지고 있으나 다른 산업 분야에서는 수행된 연구가 거의 없으며, 화장품 산업 분야에서는 최근에 이르러서야 Song(2020) Table 1, Table 2, Table 3, Table 4, Table 5, Table 6, 그리고 Figure 1과 같다. 측정을 위한 평가영역은 선행연구로부터 4개의 평가영역인 가격 특성 (Kim, 2014;Kim & Lee, 2008;Yu, 2016), 품질 특성 (Kim & Kim, 2004;Jeong et al, 2016;Lee et al, 2016), 디자인 특 성 (Kim, 2014;Lee, 2013;Lee, 2016), 그리고 제품 특성 (Park & Chin, 2010;Kim & Lee, 2008;Park & Kwon, 2017) (Song, 2020).…”

“…본 연구는 색조화장품 시장에서 잘못된 브랜드 확장으로 인한 자 사의 기존 브랜드와의 자기시장잠식 및 브랜드 희석효과 (Tauber, 1988;Aaker & Keller, 1990) (Shin, 1997;Lee et al, 1996) 에서 제한적으로 이루어지고 있으나 다른 산업 분야에서는 수행된 연구가 거의 없으며, 화장품 산업 분야에서는 최근에 이르러서야 Song(2020) Table 1, Table 2, Table 3, Table 4, Table 5, Table 6, 그리고 Figure 1과 같다. 측정을 위한 평가영역은 선행연구로부터 4개의 평가영역인 가격 특성 (Kim, 2014;Kim & Lee, 2008;Yu, 2016), 품질 특성 (Kim & Kim, 2004;Jeong et al, 2016;Lee et al, 2016), 디자인 특 성 (Kim, 2014;Lee, 2013;Lee, 2016), 그리고 제품 특성 (Park & Chin, 2010;Kim & Lee, 2008;Park & Kwon, 2017) (Song, 2020).…”