The goal of every corporation is to dominate the worldwide market, and the cosmetics sector is no exception. Being global is an indication that a company's products are well-received across the globe, indicating that the company will profit [1-3] Cosmetic companies are no exception. Despite the fact that competition in the cosmetics industry is tough and the market and potential are shrinking, the increasing awareness of self-care among both men and women will ensure that this industry remains a lucrative one over the next decade. Korea is currently one of the top producers of cosmetics in the world. Since the beginning of the Korean Halyu wave, the care and cosmetics industry has experienced significant growth. Obviously, this is the fundamental cause, but it is also the impetus for people in other areas of the world to become more familiar with Korean cosmetics. [4]

As previously indicated, Korean cosmetics will continue to dominate the business over the next few years. The euphoria around the Korean Halyu may serve as an incentive, but product quality is also essential. Korean cosmetics, according to [5] natural substances and promote prevention over treatment. This advantage is accompanied by strengths from upstream to downstream, particularly in the distribution channel (offline and online), as well as by a strong market penetration. Strong market penetration will determine the company's capacity for global competition. 

These transaction costs include not just the mobility of moving cosmetic products, but also the expense of establishing distribution channels, which is a significant cost component if the company wishes to operate worldwide. Cosmetic enterprises can operate through direct sales, specialist stores, mass merchandisers, and other channels, according to [6] Companies, on the other hand, are well positioned to develop both retail and online distribution channels. Cosmetic firm items are purchased online by 21.7 percent, road shops + multi brands stores 15.8 percent, Health and beauty stores 10.9 percent, Home shopping 9.7 percent, and hypermarket 7.9 percentm [7]

According to [2] companies can choose to make online and offline channels their strengths. The availability of a choice of distribution channels for Korean cosmetics is both a boon and a challenge, as picking a distribution channel, whether online or offline, is a time-consuming process with significant transaction fees. In order for cosmetics to be effective, they must be viewed as of high quality by consumers. The primary component in quality that can last in the minds of customers is the composition of the product. Other aspects, such as regional characteristics or peculiarities, can also be highlighted. The cosmetics market is a global market. The structure of the global market differs, particularly in terms of demographics [8-10] While markets with a high-income population demographic may purchase cosmetics in a variety of price ranges, markets with a Z generation population demographic will emphasize ecologically friendly or green cosmetics. Thus, Halal certification will be preferred in Muslim-dominated markets.

There is some interest in requiring certification for entrance into the Muslim market. Accreditation will become a significant prerequisite for entering the worldwide Muslim market, which is also a substantial market for Korean cosmetic companies, as a result of this need. Is it difficult and expensive to pursue Halal certification? Obtaining Halal certification involves document preparation, verification of documents, and laboratory audits. Despite its simplicity, people have a bad perception of Halal certification because they do not understand what it entails. The business community assumes that Halal certification is adequate to prevent pig contamination.

However, Halal encompasses more than the avoidance of pork. Halal is primarily concerned with Maqasid Al Shariah, which has a broader purpose than its execution. Halal certification, for instance, aims to improve the industrial environment in order to comply with Shari'a and protect consumers. Because the Halal certification requires ethics, fairness, and safety.       

As a result of the misunderstanding surrounding Halal certification, Korean beauty companies have discontinued their efforts to join the Muslim market. It is necessary to do a thorough analysis to determine the requirement and usefulness of Halal certification for Korean businesses. Consequently, this viewpoint will impact the company's market penetration and distribution strategies. Halal certification may be utilized just to enter the market, or it may be used to operationalize production and administration, necessitating a return to an understanding of Maqasid Al-Sharia principles [11]

This article structure as follows; First, we will investigate the distribution techniques employed by Korean cosmetics manufacturers. The article will then cover the market penetration strategies employed by Korean cosmetics companies. Due to differences in market penetration, each Korean cosmetic brand has an own personality and set of features. Thirdly, the study will examine the distinctions, distinctiveness, and peculiarities of Korean cosmetic enterprises in order to ascertain their pursuit of Halal certification. The outcome will be a contextualization of Halal certification for a Korean cosmetics company in preparation for their entry into the worldwide market. 

Market Penetration for Cosmetics Industry

Numerous businesses believe they have done the right thing, such as delivering above-average product quality, optimizing promotions through advertising and social media, and many other things, but their earnings and profits have not reflected this. One of the explanations is that the planned market penetration is erroneous and off-target; the company attempts and seeks broad market penetration, but broad market penetration is not always advantageous due to the fact that it depends on the needs, desires, and interests of the penetration [12-14]

We will address geographic penetration when discussing cosmetics' market penetration. Geographic market penetration is the most prudent objective for cosmetic enterprises, in comparison to penetrating a broad competitive niche, such as income and taste. In the 1990s, the cosmetic industry began to experience a transformation as the following challenges increased: regulatory changes, product safety concerns, product patents, a growing interest in environmental stewardship, the use of natural ingredients, and economic and market channel pressures for product distribution [15-17] In addition to causing firms to be nervous and confused due to a cloudy grasp of their market or consumer group, excessive breadth and depth of penetration can also induce fear.

The aforementioned fact has become the subject of market penetration research, which focuses on the challenges faced by the cosmetics industry and the means to overcome them. Nonetheless, market penetration should help the cosmetics industry overcome the aforementioned challenges. Concerns about product safety, for instance, can be resolved if cosmetic companies enter the market based on quality. Environmental concerns will be resolved if the company focuses on manufacturing ecologically friendly or ethical products [18-22]

Research on market penetration currently focuses on: Internalization theory, evolutionary theory, and eclectic theory are three main approaches that have been used in previous market entry investigations [23,24] Yet, no in-depth research has been undertaken to determine how cosmetic companies penetrate such a homogenous worldwide market. From quality to innovation, market penetration for a homogeneous market should prioritize creating trust.

Unfortunately, this necessitates allocating expensive funds for research and development [25,16,14]. While this substantial investment in research and development rarely results in a high success rate [26-28]

Distribution channel for cosmetics industry

Distribution channels are critical for the growth of both domestic and international markets. The Korean cosmetics market is expanding, owing to its capacity for effective market distribution. Although it is expensive to establish a distribution channel. However, if companies want to become a market leader, it is critical to analyse changes in the distribution structure of cosmetics not only to understand the market and its future prospects, but also to understand the rapidly growing and changing Korean cosmetics market. 

The cosmetics industry is inextricably linked to the growth of distribution channels. Prior research on cosmetic distribution in Korea can be categorized into two categories. The first aspect is a study of cosmetic distribution channels over time and according to their characteristics [29-30].The second aspect is to concentrate on the issue of channel selection as well as on increasing competitiveness through the channel selection process. Korean cosmetic distribution channels, which were previously geared toward manufacturers, have shifted their focus to consumers [31-32].Where the company shifts to distribution, not only by storing large product capacities in warehouses, but also by considering distribution capacity that can meet future consumer demand while providing added value, particularly added value that is characteristic of cosmetic companies [33,34]

When compared year after year, Korean cosmetic companies exhibit a consistent characteristic that reflects their personality. In the 1950s, specialty stores specializing in cosmetics from manufacturers dominated the market, which was dominated by wholesalers and conventional retailers. The 1960s were devoted to defending domestic cosmetics manufacturers against rampant international cosmetics smuggling. This attempt, however, failed due to the ineffective distribution structure of Korean cosmetic companies at the time. The 1980s saw a surge in door-to-door sales as a means of improving distribution channels and combating rampant smuggling in the 1960s. Door to door distribution has increased significantly in recent years as Korea's economy has grown and the number of Korean women who consume has increased. This growth also fuelled the growth of offline stores, which accounted for 55% of the total market between 1990 and 1997 [35]

Discount prices, product configuration, and ease of access all contribute to this growth. Consumers then gain sufficient experience and knowledge to recognize that offline stores employ a high volume of discounts, marked-up prices, and excessive individualization, resulting in a decline in the market share of offline cosmetic stores. By 2005, product distribution had widened significantly due to the entry of large-scale companies and the increased use of technology. Numerous cosmetic companies in Korea have opted for a hybrid distribution model that combines offline and online distribution. These changes have prompted an increase in research focusing on distribution channels, as well as analysis to ascertain the consequences Aof these changes [14,32,24]

Halal Certification

connection to branding and business is still in its infancy, but halal concepts in the cosmetics sector are demanding and present a great deal of opportunity. Traditionally, Muslims utilized cosmetics regardless of whether or not they matched Halal criteria. Muslims and non-Muslims alike tend to lack a comprehensive comprehension of the definition and standards of Halal. People may believe that halal relates exclusively to how Muslims consume animals in general [13,22]

Halal certification in the cosmetics sector is crucial since it may affect the worship and prayers of Muslims. Halal can be understood in numerous ways. In the context of the cosmetics industry, Halal often refers to goods that are free of alcohol and porcine by-products and derivatives. Yet, the scope and application of the term Halal as a whole are far broader. Furthermore, safety is also one of the requirement in the Halal cosmetics context to ensure that the products are not hazardous to the user [2]

The significance of Halal certification for cosmetics is an issue of global significance. Business-to-business (B-to-B) cooperation was previously utilized for Halal certification of imported items. This causes enterprises to have a superficial understanding of Halal certification, and when they wish to join the market by making direct sales in that country, they have challenges because they do not know the particular steps and procedures required to receive a Halal certificate.

Source : Author Development (2022)

Figure 1. Key Points of Interview to Korean Cosmetics Company

Both the interpretive and ethnographic research paradigms are used in this study. The interpretive paradigm holds that reality is a construct that is generated, discovered, and understood, and it may be used to explain how people behave as taxpayers in this study in terms of their wealth and asset [36]. To achieve these goals, the researchers used ethnographic research techniques. With the aid of ethnography, researchers can investigate the culture of groups over a short or long period of time.

The Ethnophenomenon notes are an important phase since they help to establish the Korean cosmetics company pattern based on the company's history, culture, vision, and mission, as well as its overall objectives [37] Allowing the interviewer to design questions that can be broadly classified into three sorts, as shown in Table 1: descriptive questions, structural questions, and contrast questions. Researchers conducted direct interviews with seven Korean cosmetics companies in Seoul. The researcher can then use the information acquired to gain a knowledge of the perception of Korean cosmetics companies toward the Halal Certification environment.

Table 1. Respondent Profile

Research Paradigm

This investigation makes use of interpretive and ethnographic research paradigms. According to the interpretive paradigm, reality is a subjective construct that is generated, discovered, and interpreted [38] As a theoretical and methodological approach, interpretive research is well-suited for producing accurate data because it allows researchers to investigate and gain insight into the specific sociocultural categories (such as gender, nationality, preferences, religion influences, and affirmation) that consumers or producers commonly used to create a sense of self and distinguish themselves from others. It may be claimed that a particular strength of interpretive approaches is that they focus on the everyday circumstances of customer behaviour and assist businesses in understanding the sociocultural dynamics of market behaviour [39] Ethnographic research focuses on the subject’s point of view and how they see the world. This is because the goal of ethnography is not to study a person and their views, but to learn from them [40]

Moreover, interpretive research, particularly ethnographic research, is based on the study of people in their natural environments as active social beings and members of communities and cultures with specific collectively shared understandings, rituals, and social rules that guide and give meaning to actions within the immediate social context of the activity. 

Research Instruments

Interview

In this study, a semi-structured interview was used. Semi-structured interviews are a type of verbal communication in which the interviewer uses open-ended questions to elicit information from the interviewee. Regardless of whether the interviewer has prepared a list of questions, the interviewer has the freedom to inquire about anything related to the research being conducted [41].Researchers used interviews to elicit as much information as possible in order to analyse research problems

Table 2. Types of Questions

Distribution Channel

What Channel does your business employ to deliver cosmetics to consumers?

Channels are points of contact with customers that are crucial to the customer experience. Channels perform a variety of tasks, including increasing consumer awareness of a company's goods and services. assisting clients in assessing a company's value proposition. Establishing a presence in a market with a developed distribution network, such as a local market. But challenges arise when a market is to be entered and it has stringent entry standards and is a worldwide market. The seven cosmetics companies surveyed chose to distribute their products in a hybrid fashion, utilizing both online and offline channels.

Before marketing their products offline, Korean cosmetic enterprises typically utilize online distribution methods including e-commerce platforms. Korean cosmetic enterprises market through B2B and B2C channels. Online stores and marketplaces provide challenges for cosmetics brands, suppliers, and retailers. If online product listings don't reflect this, brands lose sales to competitors with superior displays and details.

For the second question, which focuses on whether your cosmetics company is considering shifting its distribution route to a higher level?

The seven cosmetic companies questioned stated that they had not yet considered directly entering the Muslim country market due to the high cost and stringent Halal certification criteria. They have not mastered this Halal certification criteria because it needs document preparation and these documents are related to certification testing in the laboratory.

How does your organization expand its distribution channel?

Korean cosmetic companies answered that they did distribution partnerships by collaborating with companies in Asia such as China, Malaysia and Indonesia. This partnership system minimizes the risks that may arise if they choose to distribute directly because partner companies in local countries already know local conditions and strategies to deal with them. The seven cosmetic companies are aware that constructing a distribution channel is difficult and expensive, so they seek efficiency and effectiveness.

Meanwhile, for the last question related to the contrast question, namely

How do you obtain, maintain, and grow your company's distribution channel?

To this question, the seven companies in Korea answered that the main challenges in obtaining, maintaining and improving distribution channels from companies are environmental and cultural changes. For the environment changes more to an increasingly competitive environment where there are more and more cosmetic companies out there. Meanwhile, cultural change is more about changing consumer preferences due to the emergence of various cosmetic brands with different qualities, causing changes in tastes. In addition, the growth of a region's topography influences the company's distribution channel because it is tied to the cosmetic product shipments' logistical process.

Market Penetration

Prior to rising demand, there was a limited selection of halal-certified cosmetics; nevertheless, the number of halal-certified cosmetic manufacturers has expanded. If a Korean cosmetics company had significant brand power, would your business enter the competition?

Even though Korean cosmetics are currently quite popular, they must nevertheless adhere to Halal standards in order to be exported. Korean cosmetics are cognizant of this fact and try to meet Halal criteria. Unfortunately, Halal rules are commonly misunderstood and incur substantial expenditures, particularly for laboratory testing of cosmetics. These are the two primary obstacles preventing them from entering the market with the requisite Halal Certification. Korean cosmetic enterprises realize that halal certification is required to reach countries with Muslim populations, and they cannot rely simply on the popularity of their cosmetic goods for future market penetration.

According to the United Nations, Muslims currently constitute more than one-fifth of the world's population, driving the growth of the Halal industry. Muslim consumers are growing more conscientious, which increases their expenditure on halal products. According to you, will it affect the competition and market for cosmetics?

More and more types of cosmetics, both domestic and imported, are circulating on the market, hence increasing the level of competition amongst cosmetics sector markets. This condition impacts consumers' attitudes regarding the purchase and utilization of commodities. Purchases of products are made not simply to satisfy wants, but also to satisfy preferences and clarify self-identity, such that they are regarded as desirable in specific communities.

Halal and haram are applicable to all elements of Islamic life, including food and entertainment. Muslim consumers in multireligious societies are more knowledgeable about halal non-food items, such as cosmetics. Muslims are willing to pay a premium for halal beauty products. Halal cosmetics are able to meet the growing global demand for ethical, vegan, and environmentally friendly products. Clearly, the market for halal cosmetics is a wealthy one with enormous potential.

Companies specializing in cosmetics prepare themselves by understanding the Halal segmentation, including product type, application, distribution channel, and area. The examined cosmetics firms were aware that the demand for halal cosmetics was driven by the increasing number of Muslim consumers eager to combine personal cleanliness with religious observances. Hence, the cosmetic companies examined were aware of the potential possibility to move their focus from simple hygiene goods to personal care products that provide solutions. This tendency is readily seen in body wash, hair care products, traditional soap cakes, and skin care products.

E-commerce and social media platforms are growing faster than traditional outlets. Manufacturers utilize YouTube, Tiktok, and Instagram to influence consumers. Do your company build similar distribution channels?

The seven cosmetic businesses surveyed are aware that several digital channels, such as Facebook, Twitter, Pinterest, Instagram, and TikTok, are available for beauty industry brands to expand their marketing efforts.

Seven cosmetic companies surveyed stated that optimizing social media, particularly Instagram Supermarkets, drugstores, department stores, direct sales, sp, Youtube, and Tiktok, can assist businesses in identifying their specific market. A cosmetics company wants to establish itself as an environmentally friendly cosmetics product, thus it will use Instagram with copywriter placements that emphasize green product and green environment. A cosmetics company wishes to advertise itself as a Vegan product, so it uses YouTube to spread its message.

Non-Muslims appreciate Halal cosmetics because they are safe and cruelty-free. Countries that are not Muslim desire clean Halal cosmetics. Would your company say that this entire procedure is expensive?

Before commencing the process, cosmetic companies recognize the importance of educating shareholders about the financial requirements that must be satisfied when pursuing Halal certification.

Indeed, the seven cosmetic companies surveyed do not mind hefty rates as long as the costs are transparent. If the cost is in the range of $500 USD, that is the amount they must pay; the institution that provides Halal certification should not charge any additional costs or processing expenses.

Halal Certification

Were you worried about competing with another Halal-certified cosmetics manufacturer?

Despite their rapid international expansion, the cosmetics companies we interviewed were aware that they would miss out on a great opportunity to seize the lead in Islamic nations, which were considered as markets with enormous potential and demand for beauty products. 

The passive attitude of Korean firms is largely related to strict halal cosmetics rules. They recognize the market's significance but are cautious to pursue halal certification due to the significant costs associated with altering their manufacturing and marketing operations.

Do your company comprehend the difficulty of entering an international market with a substantial Muslim population?

The popularity of Korean cosmetics across Southeast Asia and the Middle East distinguishes Korea from its competitors. The presence of halal-certified products improves their market competitiveness. Halal-certified items are more competitive in Muslim countries. Soon, foreign cosmetics sold in predominantly Muslim countries will require halal certification. Indonesia, Malaysia, the United Arab Emirates, Turkey, Saudi Arabia, and Iran are all modifying their regulations in this way. For Korean cosmetics companies to compete in Muslim markets, they must be halal-certified.

Nevertheless, leading Korean cosmetics manufacturers are not currently interested. No well-known brands are halal-certified.

There have been no preparations made for halal cosmetics certification or product creation, therefore the work required is minimal.

Is your company seeking guidance from a suitable organization regarding the Halal certification process?

In this sense, the main cosmetics companies in Korea now lack meaningful steps. None of the well-known brands have yet gained halal certification for their products.

We are currently investigating halal cosmetics, including the possibility of certification and new product development, but no concrete plans are in place at this moment. The cosmetic companies that were interviewed realized that they should at least employ the services of an agency or organization that is familiar with Halal management. These labels and agencies must thoroughly comprehend the certification procedures for Halal products.

How has your company developed with respect to the Halal procedure in comparison to other cosmetics companies?

The interviewed cosmetic companies said that they had researched Halal certification matters. However, no further progress has been made. Hence, when compared to other cosmetic enterprises, the seven questioned cosmetic companies exhibited modest development. Yet, each of the seven interviewed cosmetics companies claimed that they are committed to producing vegan cosmetics that are at least comparable to the Halal idea.

Additional cosmetic companies outside the seven interviewed cosmetic companies have Halal certification, or if they do not, they have used agency services to acquire Halal certification.

This study's primary purpose is to examine the context of Halal Certification among Korean cosmetics companies. Previous research has focused on the perspective of the customer; however, we examine the element of Halal certification from the producer's perspective, as their perceptions of Halal certification are crucial to determining their views on this mandatory method for Halal certification.

When a Korean cosmetics company intends to enter a foreign market via offline sales, it will first map consumer preferences via online distribution [42,43] The level of online distribution in a country determines whether a cosmetics company will open a retail store or an offline store in the future. This study focuses on the difficulties cosmetic companies experience when entering a new country.

The Distribution Channel is the central focus of the company's sales activity, where it plays an essential part in the promotion of a product. Without effective distribution, sales-targeted end consumers will not be able to purchase products from producers. Consequently, it is essential for businesses to select effective distribution channels that are suitable for their products. The majority of the interviewed cosmetics companies' distribution channels originated from online distribution channels, specifically the sale of their products via e-commerce platforms. Historically, cosmetic companies have relied on offline, "in-person" retail sales to recruit and retain clients. With the advent of digitization and the growth of digital commerce, however, cosmetics businesses have begun to establish themselves alongside the leading eCommerce industries. 

However, the availability and abundance of cosmetic products, via merchants and others, is also problematic. Customers must have a special reason to return to a particular store, such as a product, purchasing convenience, or an inspirational brand image. Interviewees from the cosmetics industry stated that they will continue to construct offline stores for the purpose of fostering client engagement and fostering relationships that could result in consumer loyalty.[44-46] stated that technology assisting in questioning established notions of value-seeking behavior and indicating that the Internet is a crucial channel for retailer involvement because it has the potential to engage consumers in a way that leads to an increase in in-store spending. Therefore, the most effective method for cosmetic companies to sell their products is to combine online and offline methods. Where is the internet distribution plan to retain consumer involvement given the variety of options available to consumers? In the meantime, the offline distribution strategy aims to generate physical engagement and improve the placement of these cosmetic goods.

In terms of market penetration, cosmetic companies are extremely fragmented due to the global presence of several domestic and foreign competitors. In addition, numerous current cosmetic companies are now concentrating on the development of organic and natural goods that will stimulate market expansion. To attract consumers and gain a solid presence in the market, cosmetics companies are also placing a greater emphasis on appealing packaging, considerable promotional efforts, and the creation of unique goods. Traditionally, the target market for beauty products has been women. With the increasing demand for male grooming products, the market is transitioning toward a more gender-neutral demographic. As the need for beauty goods continues to rise, this sector is anticipated to expand even further in the future years. In order to profit on this increase, firms and marketers must target both men and women [7,27,[28] 

Certification as Halal is vital because it gives buyers peace of mind. It guarantees them that the purity of the goods or food cannot be questioned. It also reassures them that you are committed to offering superior products, which may be a big selling point for many customers [47,48,35] Several cosmetic companies interviewed claimed that the difficulty of the Halal certification process in particular regions discouraged them from pursuing certification. They do not comprehend the complexities of the system, particularly in ASEAN nations with substantial Muslim populations, such as Indonesia and Malaysia. Also, according to the examined cosmetic companies, there are no comparable international standards for getting halal certification. They are aware that halal certification is crucial when entering a country with a Muslim majority, but the absence of standardization in standards for attaining certification discourages these businesses from pursuing certification.

Consequently, based on the results. Halal certification is one among several option to expanding market penetration and distribution channels. In contrast to cosmetic businesses that have not yet acquired halal certification, halal certification can help businesses increase market share due to their distinctness. Halal certification assists businesses in capturing the hearts of both Muslim consumers who are concerned with halal and non-Muslim consumers who are concerned with guaranteed quality products, as cleanliness, quality of ingredients, good packaging, including cosmetic research, ethics, and morals are of the utmost importance.

In this study, an attempt was made to uncover the primary criteria seen by Korean cosmetics companies in order to penetrate the Halal Market. In addition, the study attempted to identify the most significant characteristics that a Korean cosmetics company must consider in order to penetrate the Halal market. In order to answer the study questions, semi-structured in-depth interviews were conducted with seven Korean cosmetics companies. The octagon of requirements was created as a result of the primary findings of the first research question. Distribution Channel, Market Penetration, and Halal Certification are required to combine and implement these needs. Lastly, according to the perceptions of Korean companies regarding the answer to the second research question, the policy of the governmental units to maintain and strengthen good neighborly relations and promote mutual understanding with these countries and others by extending cooperation is crucial. In addition, marketing strategy and human capital development are seen as the most crucial prerequisites for countries seeking to enter the Halal market.

While the business will need to spend in pricey procedures to ensure that formulations, materials, packaging formats, and shipping vessels all adhere to halal rules, halal cosmetics ranges must be affordable for customers. Even though Indonesia is the only market to have adopted this rule, it is interesting that Cosmax and other Korean companies felt the need to move forward and get halal certification

The authors declare that they have no conflict of interest

No funding sources

The study was approved by the Universitas Tanjungpura, Indonesia.

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