FROM PRODUCT TO CATEGORY: HOW AN INNOVATIVE PRODUCT TYPE COULD GROW INTO A DOMINANT PRODUCT CATEGORY

In early 2015, L’Oreal’s luxury cosmetics brand LANCOME launched a product called Miracle Cushion™, a sponge soaked in liquid foundation. By integrating a cosmetic formula with a sponge in a compact case, it distinguished itself from other conventional makeup products, e.g., liquid foundation in a glass bottle or pressed powder in a portable compact. On Lancome’s website, Miracle Cushion™ is described as follows: “a foundation revolution has arrived – liquid makeup in a cushion.”LANCOME’s “revolution” actually originated from AMOREPACIFIC, Korea’s number one beauty group which had a sales revenue of KRW 4.7 trillion (USD 3.9 billion) in 2014. By launching Air Cushion® in March 2008, AMOREPACIFIC created a new makeup product category called “cushion.” By July 2015, the total cumulative number of AMOREPACIFIC’s cushion products sold in 13 countries was 63 million units. In 2014 alone, more than 26 million units were sold – one every 1.2 seconds. The sales revenue was KRW 641 billion (USD 542 million), which accounted for more than 13% of AMOREPACIFIC’s total revenue.AMOREPACIFIC launched Air Cushion® under IOPE, one of its premium brands. The company initially positioned Air Cushion® as sunscreen. Equipped with mass production facilities, AMOREPACIFIC sold 517,000 units of cushions in 2010, which accounted for KRW 14.5 billion (USD 12.2 million). Furthermore, the company started to automate the entire manufacturing process for cushions. With this automation, the sales revenue of Air Cushion® in 2011 reached KRW 33.6 billion (USD 28.4 million) - more than doubled compared to 2010. Obviously, it was a huge success for sunscreens under a single brand.From 2012, AMOREPACIFIC began to expand cushions for other in-house brands besides IOPE. Simultaneously, AMOREPACIFIC started to reposition cushion as makeup “foundation,” not “sunscreen.” HERA, AMOREPACIFIC’s luxury brand with a strong heritage in color makeup, took the initiative in repositioning cushion. This was also a strategic decision to diversify distribution channels: the main distribution channels of premium brands such as IOPE were Sephora-like specialty stores and discount stores whereas the primary distribution channels of luxury brands such as HERA were department stores and door-to-door networks.With HERA focused on domestic market expansion, LANEIGE, the most globalized brand of all in AMOREPACIFIC, pioneered the global market forcushions. Starting from its entry into Hong Kong and China in 2002, LANEIGEhad already expanded its presence in more than 10 countries including Singapore,Malaysia, and Vietnam. Specifically, LANEIGE was perceived in most Asiancountries as a cosmetics brand spearheading “K-Beauty” trends, part of the“Korean Wave” phenomenon. Thus, LANEIGE capitalized on its brand reputationaccumulated over the years in the Asian market to expand cushions.LANEIGE designed a brand concept for its cushion as BB Cushion to make themost of the popularity of BB creams across Asia. In 2012, LANEIGE BB cushionwas first launched in Singapore in January, followed by Malaysia, Thailand, andVietnam in March, and finally Taiwan in April, all prior to its release in Korea inMay. Initially, it emphasized the brightening function to fulfill the demand forwhitening products already popular throughout Asia. From 2013, LANEIGE startedto offer a variety of product lines customized to different consumer needs fromeach country. For example, LANEIGE launched BB Cushion Pore Control forconsumers in hot, humid areas of Southeast Asia and BB Cushion Anti-aging forconsumers in extremely cold and dry areas of China.Starting with HERA and LANEIGE in 2012, AMOREPACIFIC continue to releasecushions under other brands by stages - SULWHASOO, ETUDE HOUSE in 2013,and INNISFREE, MAMONDE in 2014, etc. Every cushion product launched underdifferent brands was named “cushion.” For example, HERA UV Mist Cushion,LANEIGE BB Cushion, SULWHASOO Perfecting Cushion, ETUDE HOUSEPrecious Mineral Any Cushion, INNISFREE Water Glow Cushion, MOMONDECover Powder Cushion, etc. With the consistent labeling, AMOREPACIFICsucceeded in categorical differentiation.Stimulated by the widespread popularity of AMOREPACIFIC’s cushionfoundations, competitors followed. Among local companies, LG Household andHealthcare was the first to enter into the cushion market in August 2012. Amongthe foreign brands, it was Lancome.This paper is trying to understand how to achieve breakthrough innovation andcreate a new product category in the mature market such as cosmetics by analyzingthe case of AMOREPACIFIC’s cushion.