Tongrentang cross-border "medicine"

In 2010, attentive consumers discovered that a "cosmetics" counter appeared in Tongrentang pharmacy. There are many domestic trend-setters for pharmaceutical companies to enter the daily chemical industry. Yunnan Baiyao continued to launch multiple categories such as shampoo and bath after the development of Band-Aid, toothpaste and other related products. And Guangyao Jingxiutang entered the traditional Chinese medicine beauty cosmetics market as early as 2005, attracting consumers with green and fashionable appeal points. The reason why these traditional Chinese pharmaceutical companies have crossed borders one after another is that the market boundary in the original field of survival has been relatively narrow, and it has become necessary to find a new living space.

As a well-known time-honored brand in the traditional Chinese medicine industry, Beijing Tongrentang Group, with a history of more than 300 years, established Tongrentang Cosmetics Co., Ltd., a joint venture with Hong Kong Tongxing Group, in December 2005, with Tongrentang holding 51%. Although it is not too late to put forward the concept of "drug cosmetics", Tongrentang is relatively low-key in terms of publicity and actual actions. It was not until 2009 that the company actually implemented the production of "cosmetics" as a strategic focus. From 2006 to 2009, the "cosmetics" developed were sold as auxiliary products for medicines. In 2010, Tongrentang Cosmetics Co., Ltd. successively launched three series of cosmetics, including Liyanfang, Tongren Herbal and Yizhuang, as well as some bathing and daily chemical products, which are free of hormones, pigments, preservatives, and alcohol, and have undergone allergy testing as the standard. , the real force of "cosmeceutical".

Topical medicines become "cosmeceuticals"

Guo Ping is the director of Tongrentang Cosmetics Co., Ltd. and the main trader of Tongrentang's cross-border cosmetics. Before taking over the cosmetics company, Guo Ping, who was the director of Tongrentang Min'an Pharmaceutical Co., Ltd., had more than ten years of experience in pharmaceutical business. When Tongrentang made the strategic decision to enter the cosmeceutical industry, she had multi-department management experience and was familiar with the cosmetics market, and she became the best choice for the new company boss. "Using the Tongrentang brand into cosmeceuticals and realizing brand extension is a good opportunity for Tongrentang Cosmetics." Guo Ping saw the huge business opportunities in the cosmeceutical market and her own resource advantages, and was determined to break out into a new world.

Tongrentang's entry into cosmeceuticals is a kind of homeopathy. In 2000, the state started to rectify the work of traditional Chinese medicine health care drugs. Since 2004, "Jianzihao" drugs are not allowed to be circulated in the market, and some of the original "Jianzihao" Chinese medicines will re-apply for the "Zun" character number. Therefore, Tongrentang Pharmaceutical's original internal and external "drugs" for the treatment of acne, pimples and chloasma are facing the situation of being discontinued due to the problem of "premium drug size". However, sales over the years have shown that these topical medicines have remarkable curative effects and are more popular with the general public, so discarding them is undoubtedly a loss. To this end, Tongrentang Cosmetics Co., Ltd. came into being. Oral use is still sold as a drug, and external use is converted into a "makeup brand". At that time, the external products of these "makeup brands" were only sold in conjunction with medicines and were in a subordinate position.

Through four years of market exploration, Guo Ping found that under the steady sales performance, distributors and consumers continued to ask if there were more categories of cosmeceutical products. On the one hand, seeing the development space of the cosmeceutical market, on the other hand, it received the signal of market demand. Therefore, in 2009, Tongrentang Cosmetics Co., Ltd. adjusted its strategy, operating the "cosmetics" products that were originally "supporting roles" independently, and entered the "cosmeceutical" market.

Cosmeceuticals, which are cosmetics in pharmacies, are concepts introduced from Japan, France and other countries. Its definition includes three aspects: first, safety; second, scientific identification of skin; third, sales in pharmacies. It is estimated that in 2010, the domestic cosmeceutical market capacity was 48 billion yuan, and foreign brands such as Vichy, Avène, and La Roche-Posay accounted for a large share.

The brand inherits the time-honored brand with a sub-brand

Tongrentang was founded in Beijing in the 8th year of Emperor Kangxi of the Qing Dynasty. In the course of more than 300 years, it has always adhered to the principle of "do not dare to save labor even if the processing is complicated, and dare not reduce material resources although the taste is expensive". The ancient motto of "Heaven and man see, and intentions have knowledge" is self-discipline, and the pharmaceutical technology keeps improving, and the curative effect is remarkable, which is recognized by consumers at home and abroad.

Tongrentang Cosmetics is based on this big brand, and in product packaging and counter design, it also uses the "Beijing Tongrentang" LOGO as the main brand, and sets up Liyanfang, Yizhuang, Tongren Materia Medica and other main brands. The sub-brand realizes the purpose of bringing the big with the small and the old with the new. "Selling medicines instead of selling cosmetics, if you directly use sub-brands and do not graft with the advantages of the original brands, on the one hand, it will be difficult for consumers to accept them, and on the other hand, it will be a waste of time-honored brand resources." Guo Ping said, " For example, if we put on makeup first, consumers will definitely feel that it is far-fetched." Therefore, relying on the advantages of big brands, adopting a strategy of progressively expanding the market gradually has become the first choice for the development of Tongrentang's cosmetics. In 2011, Tongrentang will launch color cosmetics products.

Leveraging the Group's resource advantages

In such a relatively unfamiliar industry. In the face of new competitors, Tongrentang Cosmetics' another strength comes from the Group's resource advantages.

Tongrentang Cosmetics Co., Ltd. can share the parent company's medicinal material suppliers. These long-term supply chains are unmatched by other daily chemical companies. In addition, for some non-seasonal raw materials, Tongrentang Group also has its own medicinal material base, which provides superior materials for cosmetic research and development and ensures the quality and efficacy of products.

Compared to the pharmaceutical industry, the barrier to entry in the daily chemical industry is relatively low. There is no uniform standard in terms of hardware equipment and plant requirements, including personnel and inspection levels. But the medicines are different. The national GMP management standards have detailed regulations on each link of the production line. For example, cosmeceutical products must be produced in an environment of 100,000-level purification (the content of dust bacteria in the air), that is, in a vacuum state. Therefore, this inherently rigorous process allows Tongrentang to have a high starting point advantage when entering the cosmetics industry.

The original Chinese medicine R&D team of Tongrentang Group can also provide support to cosmetic companies. Including some excellent pharmacists can not only quickly identify the origin and efficacy of medicinal materials, but also have many years of operating experience. In terms of new product experiments, Tongrentang Cosmetics Co., Ltd. has established long-term contacts with the Dermatology Department of the Air Force General Hospital and the Hospital of Traditional Chinese Medicine, etc., and has cooperated in product allergy testing and clinical application, so that the products meet the safety and scientific requirements of cosmeceuticals. standard.

In addition, the hundreds of chain drugstores owned by Tongrentang across the country have become the "natural" sales channels of Tongrentang's cosmetics. Do not underestimate the advantages of channels. Without channels, products will not be able to reach final consumers smoothly.

Growing up from the mother's body

Although it has the unique nourishment of the mother's body, Tongrentang Cosmetics is also cultivating the ability to grow up alone. For example, they are also creating their own independent channel system.

"Tongrentang pharmacy chain is part of our terminal sales channels, but not all. Our sales system across the country is taking shape." Guo Ping attributed the contribution of Tongrentang's cosmetics sales growth to the cosmetics distribution system across the country. At present, Tongrentang cosmetics distributors have covered almost all second-tier cities in the country. Even a large part of sales come from these cities, and the future goal is to deeply cultivate this part of the market and expand to third- and fourth-tier cities.

In addition, in 2011, Tongrentang Cosmetics will also establish its own specialty store, focusing on skin care products and health products.

In terms of product positioning, basic skin care products are divided into supermarket and counter products. Supermarket products are represented by Yizhuang series, which compete with Dabao, Longrich and other brands in the market; counter products include shopping mall counters and drugstore counters, represented by Tongren's Materia Medica and Liyanfang series, targeting women aged 25 and over 30 years old crowd. The prices of these product lines range from seventy to eighty yuan to two hundred yuan, and are basically aimed at low- and middle-income groups. This avoids the high-end market occupied by strong foreign brands.

When talking about the cross-border expansion of enterprises, Lu Moudu, a partner of Zhenglue Junce, once analyzed that when the market capacity and increment are missing one of the two aspects, enterprises can consider cross-border development. In order to ensure the rationality of the cross-border economy, when looking for market opportunities, it is advisable to cut in from the correlation between upstream and downstream of the industry, either channel-related or product-related, and links outside the supply chain should be entered cautiously. However, in any case, how to find the right positioning, how to increase market share, and how to carry out brand building, etc. are all problems that enterprises have to face when they cross into a new industry. In this regard, Tongrentang is no exception.

Interactive questions:

1. Should Tongrentang, a cross-border cosmetics company, rebrand?

2. The efficacy of "cosmeceuticals" is the key. Should China's "pharmaceuticals" focus on marketing and quality?

3. Should Tongrentang stick to the "pharmacy" route like Vichy, or should it be walking on multiple legs such as supermarkets, counters, and specialty stores?