Overall Strategy of Cosmetic Businesses in Vietnam
Research and Brand Building
Development and Enhancing
(R&D) of Products Advertising Efforts
Leverage the
Optimizing Price
Growth of E-
and Product
commerce and
Quality
Digital Technology
1. Research and Development (R&D) of Products
- Research and Development (R&D): Businesses should invest aggressively in
researching and developing new product lines, particularly those containing
natural, organic, and skin-safe ingredients, to keep up with modern beauty care
trends (e.g., Loreal Paris Elseve Extraordinary Oil Hair Oil, Loreal Paris Elseve
Extraordinary Oil Serum with Rose Extract) [1]
- Personalized Products: To cater to the diverse needs of consumers, businesses can
develop products tailored to different skin types and climate conditions, offering a
high degree of personalization.
- Packaging and Design Innovation: Innovative packaging not only protects the
product but also enhances its aesthetic value, thereby attracting consumers,
especially the youth
2. Brand Building and Enhancing Advertising Efforts
- Brand Development: Invest in building brand image through advertising
campaigns, event sponsorships, or collaborations with influencers and beauty
bloggers to enhance brand recognition (for example, tiktok content creator Vo Ha
Linh, Quynh Nhi Tran, etc.).
- Brand Storytelling: The brand should have its own unique story tied to
Vietnamese culture and traditions or related to sustainable development and
environmental friendliness, creating a point of difference and attracting consumer
interest (S:kin Heritage is a pioneering skincare brand that draws inspiration from
Vietnam's diverse cultural heritage. The products are researched and created by
young Vietnamese individuals with a love for their country and a vision to
showcase their homeland's heritage to the world) [2]
3. Optimizing Price and Product Quality
- Price Competition: The Vietnamese cosmetics market is very price-sensitive.
Therefore, businesses need to find ways to optimize production costs without
compromising product quality to offer reasonable prices.
- Product Segmentation: Develop a diverse range of product lines to cater to
different customer segments, from affordable to premium products. According to
VnEconomy, the price segment below 500,000 VND accounts for 80% of the
cosmetics industry's market share. The most popular price range is 100,000 -
200,000 VND. The highest-selling segment is 200,000 - 500,000 VND, with nearly
8,000 billion VND, accounting for 35% of the industry's market share. Thus,
brands need to have the right strategy when focusing on developing these
important product segments to maximize profits and benefits for the business [3]
4. Leverage the Growth of E-commerce and Digital Technology
- Optimize Online Sales Channels: Leverage the rapid growth of e-commerce
platforms such as Shopee, Lazada, and Tiki to expand sales channels and optimize
costs. Businesses should also build their own e-commerce websites with a user-
friendly experience.
- Utilize AI and Big Data: Businesses can use big data analytics to understand
market trends, consumer behavior, and personalize marketing strategies, thereby
enhancing their ability to reach and engage with potential customers.
- Customer Support Programs: Develop digital loyalty programs to foster long-
term customer relationships and encourage repeat purchases. For example,
Lancôme is a subsidiary of the premium cosmetics brand L'Oreal. It is a French
perfume and cosmetics brand with a global presence. The Elite Rewards program
was launched by Lancôme in 2014 and is currently available on both online and
offline platforms. Customers can upgrade their membership level by meeting
annual purchase targets through a points-based system [4]
Recommend strategy for different types of enterprises
Types of Strategy
enterprises
Market-Leading 1. Optimize the Supply Chain and Production:
Business - Diversify Raw Material Sources: Leverage Vietnam's
abundant natural resources to develop cosmetic products
from natural ingredients. Simultaneously, diversify raw
material sources from international partners to avoid
reliance on a single source.
- Apply Technology in Production: Enhance the
application of modern technology in the production
process to increase productivity, ensure product quality,
and reduce production costs, thereby competing more
effectively with international competitors.
2. Sustainable and Social Responsibility Strategy:
- Sustainable Production: Utilize environmentally
friendly ingredients, minimize plastic packaging usage,
and develop green cosmetic product lines to attract
customers who are conscious of environmentally
friendly products.
- Social Responsibility Assurance: Commit to socially
responsible activities such as environmental protection,
supporting charitable programs, and contributing to
community development, thereby fostering a positive
and responsible corporate image
Highly International Collaboration:
Competitive - Establish collaborative relationships with international
Business suppliers or partners to access new production
technologies or develop products that meet international
standards.
- Export: Develop export-oriented product lines targeting
neighboring markets such as ASEAN and East Asia,
where there is a high demand for natural cosmetics.
- Collaborate with Brands: Inspired by the K-beauty
(Korean beauty) and J-beauty (Japanese beauty) trends,
the Vietnamese cosmetics market can tap into the
popular Asian beauty trends. Promote skincare product
lines that align with the multi-step skincare routine trend
favored by the youth
Niche Product 1. Niche Product Research and Positioning:
Development a. Identify Potential Niche Markets:
Business Niche markets refer to customer groups with specific needs
that are not well-served by mass-market products. In
Vietnam, niche products can include:
- Organic and Natural Cosmetics: An increasing number of
consumers prefer safe products free from harmful
chemicals.
- Cosmetics for Sensitive Skin: Some customers require
gentle cosmetics suitable for sensitive skin.
- Cosmetics for Middle-Aged and Elderly Individuals: This
is a potential market as the demand for skincare at this age
increases.
- Non-Allergenic and Cruelty-Free Cosmetics: In line with
the ethical consumption trend, these products align with
environmental protection.
b. Research Customer Needs:
- Conduct in-depth analysis of the characteristics of niche
market customers (age, gender, consumer behavior,
health concerns).
- Utilize survey tools and data analysis to gain a clear
understanding of the target customer group's needs,
enabling the development of suitable products."
Follow-the- 1. Sustainable Development and Social Responsibility:
Market Implementing programs related to environmental
Business protection and sustainable development can help the
brand gain consumer goodwill. For instance, using
recycled packaging and minimizing environmental
impact during the production process
2. International Collaboration Strategy
- Collaborate with International Brands: Engage in
collaborations or obtain manufacturing licenses from
international cosmetic brands to enhance credibility and
learn advanced technologies. This not only helps
businesses improve quality but also expands export
markets.
- Expand into Neighboring Markets: After achieving success
domestically, businesses can expand into neighboring
markets such as Laos, Cambodia, Myanmar, or Thailand.
These markets have cultural similarities and shared needs
with Vietnam, making market penetration easier.
I. Development Trends in the Vietnamese Cosmetics Industry
1. Trend of Producing Natural Extract Cosmetics
Currently, consumers are genuinely concerned about the prevalence of cosmetics
containing harmful chemicals in the market. Recognizing this common sentiment,
many vegan cosmetic products have emerged as a safe and skin-friendly beauty
trend, gaining immense popularity.
Additionally, besides skincare products, consumers are also interested in beauty
trends for hair, nails, etc., featuring natural extracts. This opens up more
opportunities for businesses operating in the research, production, and distribution
of cosmetic beauty lines with this prominent trend [6]
2. Trend of Producing Premium Cosmetics
High-tech cosmetics are the preferred choice for Vietnamese consumers today.
Customers are becoming more savvy and cautious when selecting products,
prioritizing quality and product origin over price. This production trend will
significantly boost the high-tech and premium cosmetics market. Brands in this
segment typically commit to adhering to stringent quality standards and raw
material sourcing. This has fostered strong consumer trust in Vietnam, with people
willing to pay a premium for quality products in this segment [6]
3. The Rise of Functional Cosmetics
In addition to the growth of functional cosmetics such as serums and anti-aging
creams, this trend is driven by consumers' increasing interest in scientific skincare
and protecting their skin from environmental damage.
These products are highly regarded for their ability to deliver concentrated
nutrients, addressing skin concerns such as aging, wrinkles, and UV damage. The
development of technology has enabled the cosmetics industry to create new
formulas, further enhancing product effectiveness without harming the skin.
Furthermore, 2024 has witnessed the remarkable growth of domestic cosmetics
brands, competing not only on price but also on quality and technology. The
emergence of local brands in this segment enriches the market, contributing to
raising the standards and awareness of the cosmetics industry in Vietnam. [7]
4. Technology and Innovation in the Cosmetics Industry
The Vietnamese cosmetics market in 2024 marks a notable advancement with the
integration of technology and innovation. The combination of advanced technology
and production methods has created a new wave in the cosmetics industry, catering
to the diverse and increasingly high demands of consumers. Techniques such as
molecular biology, nanotechnology, and gene editing have been employed to
develop personalized, safe, and environmentally friendly cosmetic products.
This innovation demonstrates that the cosmetics market is not merely about
producing beauty products but is a field that places a strong emphasis on creativity
and high-tech applications [7]
II. Opportunities for Growth in the Cosmetics Industry [8]
2.1 Market Growth:
The cosmetics industry is experiencing significant growth and is expected to
continue expanding in the future. This creates opportunities for businesses in the
industry to broaden their market reach. Additionally, the growing trends of male
consumers and natural/organic products offer opportunities for businesses to target
new customer segments. [8]
2.2 International Expansion Opportunities:
New technologies such as Artificial Intelligence (AI) and Augmented Reality (AR)
are being applied in the cosmetics industry. These technologies enhance the user
experience and create opportunities to boost sales. For instance, companies can
utilize AR technology to allow users to try products on their faces or use AI to
recommend products tailored to customers' needs. [8]
2.3 International Expansion Opportunities:
Beyond the domestic market, the Vietnamese cosmetics industry also presents
numerous opportunities for international expansion. With many cosmetic brands
being produced in Vietnam and exported to various markets, new opportunities
await businesses in this industry. By participating in free trade agreements like
TPP, EVFTA, and CPTPP, Vietnamese cosmetics businesses will have increased
opportunities to access different markets, enhance product exports, and boost
international trade.
This is particularly true for natural cosmetics products made from Vietnamese
natural ingredients such as coconut oil, beeswax, jasmine, and rose. With these
products, Vietnam can quickly build unique, high-quality cosmetic brands that
meet the growing demand in the international market for natural and organic
products.[8]
2.4 Opportunities for Market Expansion with New Products:
New products such as anti-aging cosmetics and other skincare products have the
potential for significant growth and profitability for businesses in the industry.
With the growing population and consumer awareness of skincare and health,
products with natural and organic ingredients are also gaining consumer interest.
Businesses can capitalize on this opportunity by developing new products and
innovations to create value for customers.
2.5 Environmental Protection:
Environmental protection is an emerging trend in the cosmetics industry.
Businesses are increasingly adopting natural and organic ingredients to minimize
environmental impact. Additionally, businesses are researching and developing
non-polluting and environmentally friendly products. This presents opportunities
for businesses to focus on environmentally friendly products and attract customer
attention.
