Developing Sustainable Competitive Strategies in the Beauty Service Industry: A SWOT-AHP Approach

Abstract

The purpose of this study is to provide concrete growth strategies and practical development methods in the beauty service industry. This study consists of a SWOT (Strength, Weakness, Opportunity, Threat) analysis from the literature review and in-depth interviews with experts of the beauty service industry in South Korea. The Analytic Hierarchy Process (AHP) is applied to the finalized SWOT matrix to incorporate experts’ ideas. The combined high priority factors present four types of strategic alternatives: Strength–Opportunity (SO), Strength–Threat (ST), Weakness–Opportunity (WO), and Weakness–Threat (WT). This study applies an environmental analysis framework from the management strategy field to construct a sophisticated SWOT matrix. Furthermore, this study quantifies the importance of SWOT components through AHP to determine priorities to lay the groundwork for timely and sustainable strategy development in the beauty service industry. Based on the SWOT-AHP analysis, this study suggests that beauty service companies should pay attention to the lack of profitability and employee stress with high turnover rates caused by poor working conditions and emotional labor. In addition, the Korean government should gradually shift away from the lack of an effective legal system to grow the beauty industry.

1. Introduction

Global beauty has become a huge industry that affects the daily lives of almost everyone. As the global beauty business permeates our lives and international markets, demand for trendy goods with innovative and diverse characteristics became prevalent [1]. However, the beauty industry has been on a rapid growth trajectory for years. There are some submarkets that are exceptions, such as the mass beauty markets, but overall the business of beauty continues to defy gravity [2]. Additionally, there is unique consumer behavior in the industry. Consumers, mostly women, are constantly exploring new products, styles, and brands. This is part of a significant generational shift of younger consumers, rejecting large brands that their parents preferred and seeking out locally-made, artisanal, and natural products in all consumer categories [3]. The need to be Instagrammable at all times is also very important to them [4]. The global beauty industry (comprising skincare, color cosmetics, hair care, fragrance, and personal care) has also experienced major disruptions due to the recent COVID-19 pandemic [5].

The beauty industry, which supplies products and services used for appearance management, is rapidly changing as it is further subdivided by customer demand and technological innovations. The key drivers for the changing trends of this industry are digitalization, customization, sustainability, and premiumization. The spread of digital and personalized trends calls for different strategies for marketing and distribution than in the past. The growth of online channels and professional beauty shops has further accelerated the change [6].

Recently, the Korean beauty service industry (K-beauty) is enjoying worldwide attention along with the global Korean Wave [7]. Additionally, significant politically driven efforts have launched Brand K as a national-level Korean brand [8]. Global interest in K-beauty is expected to grow further as “Black Pink” topped the Billboard “Artist 100” chart, which shows the influence of pop stars in 2020, followed by “BTS.” The K-pop fever is not cooling down but actually accelerating. The Korean beauty service industry is emerging as a future growth industry that can create high value-added. It has expanded its scope from hair-care service to skincare, nail care, make-up, and much more. K-beauty is in the beginning stage of promoting its presence worldwide, and it started to create huge synergies by converging cosmetics, tourism, and medical industries [7]. Previous studies explored development strategies for the beauty service industry [9,10,11,12,13,14,15,16], and researched market segmentation and brand equity for the industry [17,18].

The driving force behind the success of K-beauty has been its innovation capabilities. To survive and thrive in the highly competitive global beauty market, the beauty industry needs to develop successful innovation strategies. The literature indicates that although there have been comprehensive theoretical studies about the beauty industry, very limited research has been carried out on practical and rational approaches to strategic planning in this area based on SWOT analysis. More specifically, there is a paucity of empirical research on strategies for growth and development in the beauty service industry.

What are the practical sustainable strategies of beauty service companies? To answer this question, the purpose of this study is set to provide the context for developing growth strategies in the beauty service industry that is not only academically rational but also practical at an operational level. In this study, we focus on the Korean beauty service industry development strategy by developing eight SWOT matrices based on the strategy literature and interviews of experts in the industry. The eight SWOT matrices will be integrated to develop comprehensive growth strategies for the Korean beauty service industry. To assess the importance of different strategy factors, the analytic hierarchy process (AHP) is applied to professional experts’ opinions on those factors. The outcome of the analysis process will be a set of strategic alternatives for the growth of the Korean beauty service industry. The results of the study will shed important insights on the researchers and practitioners of the beauty service industry. Especially, the results would help individual beauty service companies understand common strategic directions required in the industry and establish adapted strategies that suit their specific situations.

This paper is organized as follows. Section 2 presents a comprehensive review of the literature to provide theoretical support to the study. In Section 3 we discuss the methods used to apply SWOT and collect the research data from professional experts in the beauty service industry. Section 4 summarizes the analysis results and proposes strategic alternatives. Finally, Section 5 describes the study’s academic implications and limitations.

2. Beauty Industry and Previous Studies

2.1. Global Beauty Industry and K-Beauty

The global beauty industry generates millions of jobs and 500 billion USD of annual retail sales in the four major product categories (fragrances, color cosmetics, skincare products, and personal care), which were increased by about twice from 2005 to 2019 [5]. The annual U.S. sales of cosmetics, skincare, and hair care products are about 62 billion USD [19]. Especially, those of prestige skincare reached 5.9 billion USD as skincare Google searches increased by 16% in 2019 [20]. The average annual per capita consumptions of beauty products are different over countries. For example, they are 249, 149, 37, and 9 USD in the U.S., Brazil, China, and India, respectively, and the consumption in the emerging economies is expected to be increased significantly [6].

In the 2010s, the beauty industry underwent a rapid change, and there was a diverse character of the business globally [1]. Even before COVID-19 had spread, the meaning of beauty was changing to be more global and connected to a sense of well-being [5]. The global beauty industry was one of those hit by the COVID-19 crisis. While the beauty industry had to do its best to survive, it has responded proactively to the crises. Some brands switched their manufacturing lines to produce cleaning agents and sanitizers and offered free beauty products or services for first response workers [5]. Working from home is driving paradigm shifts in the demand for beauty products and services in that women are putting on less make-up as they telecommuted. Skincare, however, is still important to women as the interest moves to facial skincare for video conferencing, where they believe they can stand out if they have clean facial skin [21]. The beauty industry is fashion-driven and very sensitive to changing customer tastes and trends, so it is indispensable to make constant efforts to respond to various changes even after the pandemic.

The Asia-Pacific market accounts for the largest portion, with 31 percent of the global market [5]. Figure 1 displays the market status of the global beauty industry in 2015, in which the Asia-Pacific market was 10% larger than each market of Western Europe and North America. The Asia-Pacific market is home to Korea and Japan, which can be said to be the beauty industry powers, and is also an area where potential consumer groups such as China, India, and Southeast Asia are concentrated. The Asia-Pacific market is expected to reach about 167 billion USD by 2020 [6].

Because Korea’s beauty industry is rapidly reading these changes and responding to them with agility, it was chosen as the subject for this study. Korea’s beauty service industry was first institutionalized in 1961 with the enactment of the Act on Hairdressers, which followed the first Hairstylist License Examination held in 1949. Since then, the industry has continuously developed in alignment with commercial site requirements. Specifically, the practical qualifications required for performing duties at commercial sites were institutionalized according to the National Competency Standards (NCS).

Due to the consistent progress of aspects of service, the beauty service industry has become a greater part of modern life for people who pursue both beauty and individuality. It has also developed into an attractive industry with consistent purchases [23]. Figure 1 displays the sales of the beauty service industry in 2017 with 6.6025 trillion won where 5.2366 trillion won, 79.31% of the industry total, is hairstyling. This indicates a growth of 57.75% when compared to sales in 2007, which was 4.1853 trillion won. In addition, Table 1 shows constant growth with continuous increases in the number of enterprises and workers related to the beauty service industry.

2.2. Previous Studies on the Beauty Service

Ramli [24] mentioned that a hairdresser is not able to satisfy consumers if there is a lack of functional quality such as communication, consumer relationship management, or complaint handling despite possession of high technical qualities. Thus, it was stated that strategic planning was very important in terms of client services. Additionally, Sharma and Black [25] asserted that the business strategy of beauty salons begins with consumers as interaction is crucial for beauty services. The high turnover rate in beauty service has been a big blow because the service is highly labor-intensive. Gold [26] argued that human resources in the beauty service industry were directly connected to service quality as they provided services at touch points with consumers. Kim [27] pointed out that employees in skincare salons lower turnover intention and feel more satisfied with their jobs, especially when the salons look for ways to reduce the manager’s negative leadership and implement fair regulation and promotion. Kim and Lee [28] found a significant relationship between employee job satisfaction with the employee’s customer orientation and the impact of the relationship on the long-term business performance of beauty shops in South Korea. In addition, Park et al. [29] suggested that active and systematic managerial support for junior workers is needed to achieve sustainability in the beauty service industry. Therefore, establishing effective organization management systems and planning distinctive strategies would secure competitive advantages.

Witz et al. [30] claimed that there is an increase in the number of women entering public affairs and the number of men interested in beauty. As social values change, the beauty service industry has rapidly enhanced, fragmented, and specialized. On the other hand, Kumar et al. [31] argued that the domestic beauty industry had limited global competitiveness due to low international awareness, a lack of brand globalization, a small industry structure, and an absence of an overseas support system. Additionally, there is a lack of support from policy-makers for fostering competitive improvement in the beauty industry due to an unrealistic and irrational legal system. Pettinger [32] suggested that the beauty industry should make efforts to provide high-quality service and academia should research improvements in quality with conferences, exhibitions, and competitions. In addition, the research stated that the government needed to adjust standards of hygiene-related laws to clarify the scope of qualifications and better align with the unique characteristics of each field.

Rosenthal [33] concluded that the government should remove legal obstacles with policy. It also recommended the government should support the beauty industry’s corporate environment and assume a core role in drawing development measures for economic growth. Scanlon [34] mentioned business threatening factors such as increases in the minimum wage and the urgent task of leading efficiency management of the beauty industry. It also remarked that satisfying the consumers’ desire to change with key service factors would be the path that increases consumer loyalty. Lindsay [35] mentioned the enhancement of industrial systems and the promotion of globalization as support system improvements for increased beauty industry competitiveness. In short, it was stated that the system in which the industry operates should be reformed to resolve factors that hinder the revision and improvement of beauty-related laws.

Kumar [3] claimed that applying a platform in the beauty industry had the possibility of positively changing the overall business ecosystem. It also stated that the study of an efficient platform’s effect was necessary since there was a lack of existing research on platform application in the beauty industry. An [36] affirmed that Korea, as a country with advanced information technology, showed youthful, fast, new, warm, and beautiful images, so these could be integrated into beauty service to form the image of K-beauty. In addition, the results of previous SWOT analysis studies for the establishment of a Korean beauty service industry development strategy were summarized presented. A representative study by Won et al. [16] asserted the importance of a mid- to long-term plan to advance the beauty industry with a national research institute.

3. Research Design and Methodology

3.1. Concept for Applying AHP in SWOT Analysis

AHP is a decision-making method that mirrors the insight and experiences of respondents through comparisons of factors that form hierarchical decision-making structures. It uses an eigenvalue method from a pairwise matrix to estimate a priority vector per hierarchy. A major advantage of AHP is the flexibility by making qualitative and quantitative attributes commensurable. Objective information, subjective perceptions, and expert insight can be consolidated in the analysis. To make decisions, the AHP analysis proceeds through a 4-step process: (1) development of a hierarchical model with factors, (2) pairwise comparison among factors, (3) calculation of relative weighted values of factors, and (4) factor evaluation by integrating the values. In the first step, a matrix is established with pairwise compared sub-hierarchy factors related to the ultimate goal and with the use of nine scales. If the number of components in the hierarchy is $n$, the number of pairs occurring in the pairwise comparison is $n\left(n-1\right)/2$. If importance is defined as $v_{\mathrm{a}}$ by pairwise comparison of $n$ factors composed in one hierarchy, $r_{ab}$ and $v_{\mathrm{a}}$ in the pairwise comparison matrix are calculated as $r_{ab}=v_a/v_b \left(a, b=1, 2, 3, \cdots , n\right)$. For greater detail on AHP analysis, see Saaty [37,38].

Essentially, the results of an AHP analyze the overall priorities of decision alternatives. AHP utilization within a SWOT analysis helps evaluate SWOT factors and their commensurate intensities. An additional value from SWOT analysis can be achieved by performing pairwise comparisons between SWOT factors to analyze them with the eigenvalue technique as applied in AHP. This offers a thorough basis to examine present situations and new strategic alternatives in a more comprehensive manner. After implementing the comparisons, new quantitative information about the decision-making environment can be retrieved.

3.2. Pairwise Comparison and Consistency Ratio

The survey consists of a total of 5 matrices with 30 pairwise comparison questions to include complexity, especially Stage 3 with four 4 × 4 matrices. Each factor $\left(S, W, O, T\right)$ has 4 components $\left(S_1,S_2,S_3,S_4\cdots T_1,T_2,T_3,T_4\right)$ with 6 vector values $\left(r\right)$ of comparison pairs which consist of five 4 × 4 matrices. The following Equation (1) shows the example matrix of $M1$ and $M2$ in a pairwise comparison matrix from the second and third stages.

The weights for importance analysis were calculated by dividing the L (Local)-weight, which represents the component of the independent node in the SWOT analysis, by the G (Global)-weight, which represents the component’s importance by reflecting the weight of the upper layer in entire layering model.

(1)$M1=\left[\begin{array}{c}1 r_{SW} r_{SO} r_{ST}\\ r_{WS} 1 r_{WO} r_{WT}\\ r_{OS} r_{OW} 1 r_{OT}\\ r_{TS} r_{TW} r_{TO} 1\end{array}\right], M2=\left[\begin{array}{c}1 r_{S_1{S}_2} r_{S_1{S}_3} r_{S_1{S}_4}\\ r_{S_2{S}_1} 1 r_{S_2{S}_3} r_{S_2{S}_4}\\ r_{S_3{S}_1} r_{S_3{S}_2} 1 r_{S_3{S}_4}\\ r_{S_4{S}_1} r_{S_4{S}_2} r_{S_4{S}_3} 1\end{array}\right]$

The AHP’s definition of consistency is the logic of the respondents, which is measured by reliability. For example, if the evaluating factor has 3 factor versions of $r_1, r_2, r_3$, and the respondent evaluates them as $r_1>r_2, r_2>r_3$ and $r_3>r_1,$ then the response to this assessment shows logical inconsistency. So, the response of $r_1>r_3$ is kept only with consistent logic. Saaty [37,38] proposes that the consistency ratio should be 0.1 or less to be logically reliable.

3.3. SWOT Matrix Composition

SWOT analysis, the basic frame of this research, has a perspective of the external environment based on the five forces model by Porter [39,40]. From a perspective of the internal environment, it is based on the resource-based theory by Prahalad and Hamel [41] and Barney [42], and the theory of competitive advantage by Porter [43]. The external environment is divided by an analytical perspective into a general macro environment and an industrial structural microenvironment. The internal environment is approached from the perspective of management resources. Figure 2 displays the environmental analysis model applied to this study.

The SWOT matrix of this research is based on the SWOT Matrix of Policy Report by Won et al. [16]. In addition, the SWOT matrix is formed through individual in-depth interviews with seven experts. Table 2 shows a list of expert interview candidates. The summary of previous studies of Won et al. [16] and eight SWOT analysis results followed by individual in-depth interviews is presented in Table A1, Table A2, Table A3, Table A4, Table A5, Table A6, Table A7 and Table A8 (Appendix A). The SWOT analysis procedure consisted of (1) identifying opportunities and threats in the external environment, (2) identifying strengths and weaknesses in the internal environment, and (3) creating a SWOT matrix by classifying the factors of opportunities, threats, strengths, and weaknesses in the external and internal environments. The SWOT matrix for analysis of the Korean beauty service industry was created by extracting SWOT factors for each SWOT group from previous studies and expert in-depth interviews, and factors are summarized in Table A1, Table A2, Table A3, Table A4, Table A5, Table A6, Table A7 and Table A8 (Appendix A). As aggregated, integrated, and classified from Table A1, Table A2, Table A3, Table A4, Table A5, Table A6, Table A7 and Table A8 (Appendix A), the SWOT factors are summarized in Table A9 (Appendix B). In that table, the SWOT factors that had appeared three or more times were classified and determined the final factors in this study. The final factors are applied to three rounds of expert discussions, adjustment processes, and a derived SWOT matrix that is shown in Table 3.

3.4. AHP Hierarchy Model

For AHP analysis, a three-stage hierarchy SWOT-AHP model was composed and is detailed in Figure 3. The first stage is the ultimate goal of establishing development strategies for the Korean beauty service industry. The second stage is composed of the four factors of the SWOT matrix: strengths, weaknesses, opportunities, and threats. The third stage is composed of 16 components, which are four components per SWOT factor.

3.5. Data Collection

The survey was distributed with a total of 40 copies targeted to experts in the beauty service field. Most respondents were top experts with more than 20 years of experience (see Table 4). The AHP survey has characteristics that made it difficult for even experts to maintain logical consistency. Therefore, to overcome these difficulties, all 40 surveys were accepted with face-to-face field visits.

4. AHP Analysis and Development Strategy

4.1. Results of Verified Consistency Ratio

The questionnaire-based survey, which consisted of 30 pairwise comparison questions, was conducted for the SWOT-AHP analysis. To maintain the consistency of survey results, we distributed 40 questionnaires to experts from 2 September to 29 November of 2019. Most of the survey respondents had more than 20 years of experience in the beauty service industry.

If we a apply consistency ratio under 0.1, 40 responses from the collected questionnaires were treated as logically consistent. Therefore, 31 copies were used to analyze the result. Table A10 (Appendix C) shows the consistency ratio status results of the questionnaires. The consistency test results are summarized in Table 5.

4.2. Results of Importance and Priority

After the relative importance of the SWOT factors was evaluated, experts in the Korean beauty service industry evaluated the importance of strength and weakness factors in the internal environment as 0.343 and 0.265, respectively. The importance of opportunity and threat factors in the external environment are attributed as 0.219 and 0.173, respectively. Both are shown in Table 6. In short, we can acknowledge that Korean beauty service industry experts evaluated the importance of SWOT factors in the following order: First, to strengthen and use internal strengths; Second, to complement or reduce internal environmental weaknesses; Third, to take advantage of external environmental opportunities; Fourth, to mitigate or eliminate threats.

In the priority analyses result for the relative importance (G-weights) of SWOT components, the $S_2$ (management and training system that educates professionals) component of the strength factor had the highest importance at 0.138, and the $W_4$ (poor working conditions, emotional labor, and the high turnover rate for employees) component of the weakness factor had the second-highest importance at 0.132. The $T_2$ (a lack of an effective legal system for the growth of the beauty industry) component of the threat factor had the third-highest importance at 0.078, while the $W_3$ (the lack of profitability as a service business model) component of the weakness factor and the $O_4$ (improving industrial value and status as a professional service industry) component of the opportunity factor simultaneously had the fourth-highest importance at 0.077. Finally, the $S_1$ (excellent technical skills in the beauty service industry) component of the strength factor had the sixth-highest importance. To summarize, there were two components in the weakness factor, two components in the strength factor, one component in the opportunity factor, and one component in the threat factor among the top six components with a significance level greater than 0.07. In the results of the analyses of the L-weights for the SWOT components, $S_2$, $W_4$, $O_4$ and $T_2$ were the most important components in each SWOT factor at 40%, 50%, 35%, and 45%, respectively. Table 6 and Figure 4 summarize the L-weights (component priority within a factor), G-weights (overall factor priority), and ranking of each SWOT component.

Figure 5 shows the graph of the importance (L-weight) of each converted component based on the weight of a SWOT factor. The strengths and opportunities with positive (+) factors are located in the upper area and the weakness and threats with negative (-) factors are located in the lower area of the graph.

The length of the straight line within the quadrant refers to the importance of a SWOT attribute, indicating the portion that the attribute possesses of the total. The end point of a straight line locates the position of the factor with the highest L-weight. The remainder of the factors indicated on the graph were converted to L’-weights according to Equation (2) [44]. Table 7 displays the L’-weights.

(2)$L^{\prime }=\frac{Gw\times f_L^n}{f_L^1}$

• $L^{\prime }$: Location on graph of components (converted L-weight)

• $Gw$: The importance of SWOT factors

• $f_L^1$: L-weight of the most important component within the SWOT factor

• $f_L^n$: Component L-weight in nth rank within SWOT factor

4.3. Development Strategies of Korea’s Beauty Service Industry by SWOT-AHP Results

The results of the L-weights and G-weights for each component, as listed in Table 6, suggest that it is necessary to complement weaknesses such as $W_4$ and $W_3$, strengthen strengths such as $S_2$ and $S_1$, utilize opportunistic factors such as $O_4,$ and reduce threat factors such as $T_2$. Based on the results of the SWOT-AHP analysis, we could construct sustainable strategies for the development of the beauty service industry in Korea by using the SO strategy to utilize strengths and opportunities, the ST strategy to use strengths and overcome threats, the WO strategy to complement weaknesses and utilize opportunities, and the WT strategy to complement weaknesses and overcome threats, as shown in Table 8.

4.3.1. SO (Strength–Opportunity) Strategy

Among the strengths and opportunities, $S_2, S_1$ and $O_4$ show higher G-weights, respectively. Therefore, the competitive advantage of superior service quality should be drawn from the strength in training and business systems that foster excellent professionals and outstanding technical skills in the beauty service industry. To accomplish this, the external environment should facilitate improving industrial value and enhance the status of the professional beauty service industry. In addition, it is necessary to ensure a consistent inflow of excellent human resources into the beauty service industry. High value-added service products based on technology should also be developed to increase consumer satisfaction.

4.3.2. ST (Strength–Threat) Strategy

Among the strengths and threats, $S_2,S_1$ and $T_2$ show higher G-weights, respectively. Consumer satisfaction and industrial competitiveness should therefore be increased by facilitating strength in training and business systems that foster excellent professionals and outstanding technical skills in the beauty service industry. In addition, the lack of an effective legal system for beauty industry growth, evaluated as an important threat by the experts, should be resolved at an early stage. To resolve this matter, an analysis of both actuality and problems from an institutional beauty service industry perspective should proceed and the outcomes of prescribed legislation should be extensively collected. In addition, a consulting group for the beauty service industry should be formed to systematically propose policies for improvement.

4.3.3. WO (Weakness–Opportunity) Strategy

Among the weaknesses and opportunities, $W_4, W_3$ and $O_4$ show higher G-weights, respectively. The experts analyzed the weakness factors as a poor working environment for employees and a high turnover rate due to emotional labor. In addition, they mentioned that the vulnerable profit model should be reformed to a service business model. The weakness factors evaluated as important should be complemented by priority. These factors are considered the most basic and important with a direct connection to the sustainable growth of the beauty service industry. Therefore, the opportunity factor for the period during which the beauty service industry’s industrial value and status are enhanced toward the specialized service industry should be well facilitated. In addition, the weakness of the beauty service industry should be resolved and the groundwork for growth should be developed.

4.3.4. WT (Weakness–Threat) Strategy

Among weaknesses and threats, $W_4, W_3$ and $T_2$ show higher G-weights, respectively. WT strategy is the most important strategic measure composed of components with relatively high G-weights. It is, therefore, necessary to improve the working environment of beauty service industry employees to offset the intensity of emotional labor. If these are resolved first, the weakness of high turnover rates will also gradually improve. In addition, experts are critically evaluating the necessity of complementation in areas with poor profit structures for business models in the beauty service industry. Although the structural difficulty is expected with attempts at short-term resolution, it will be rational if improvement measures are sought relative to a resolution of the threat factor: the lack of an effective legal system. To accomplish this, an analysis of both actuality and problems from an institutional beauty service industry perspective should proceed and the outcomes of prescribed legislation should be extensively collected. At the same time, a consulting group for the beauty service industry should be formed to discuss revisions and enactments of current and new law, and produce consistent political proposals for systematic improvement.

5. Conclusions

In summary, 6 of 16 SWOT factors were evaluated as relatively important. Facilitation of strengths such as $S_2$ (management and training system that educates professionals) and $S_1$ (excellent technical skills in the beauty service industry), complementation of weaknesses including $W_4$ (poor working conditions, emotional labor and the high turnover rate for employees) and $W_3$ (lack of profit as a service business model), utilization of opportunities such as $O_4$ (improving industrial value and status as a professional service industry), and resolution of threats such as $T_2$ (a lack of an effective legal system for the growth of the beauty industry) are considered to be crucial. In particular, the importance of weakness factor $W_4$ (poor working conditions, emotional labor and the high turnover rate for employees) and $W_3$ (lack of profit as a service business model) and the threat factor $T_2$ (a lack of an effective legal system for the growth of the beauty industry) were relatively very high. This clearly illustrates the reality of Korea’s beauty service industry with an absence of basic conditions for industrial development, such as poor business profit structures and a lack of government policies.

This study conducted a quantitative examination of SWOT and decision-maker preferences when planning and implementing development strategies for Korea’s beauty service industry. Specifically, this research examined the previous SWOT-analysis-based research that broadly examined Korea’s beauty service industry. A SWOT matrix for a Korean beauty service industry development strategy was then established by integrating, classifying, and adjusting SWOT analysis results derived from previous studies and expert in-depth interviews. AHP analysis was used to quantify the priorities and importance of the SWOT analysis components. On this basis, this research provided concrete, effective, and sustainable strategy directions reflective of rational selection and prioritization within a limited resource context. This research could be meaningful for suggesting a basis for the establishment of a viable development strategy for the beauty service industry in Korea.

The results of this study are in line with those of Pettinger [32] that suggests high quality of core service is a crucial factor of successful companies in the beauty service because facilitating excellent technical skills in the beauty service industry ($S_1$) and management and training system that educates professionals ($S_2$) impacts core service quality. However, non-core activities such as customer relationship management and complaint handling didn’t belong to critical SWOT factors for strategic alternatives after SWOT-AHP analysis. Thus, a beauty service company that offers core service with marginal quality may not be very successful despite good relationships with its customers. This result is not aligned with Ramli [24] that stresses the importance of communication and consumer relationship management in hair salon service. Implicit or non-core service activities keeping customers satisfied seem considered a default setting as time goes on. It may become a service qualifier rather than a service winner over time.

Based on the results of the study, it was possible to construct strategies for the development of the Korean beauty service industry from a practical perspective. The overall strategy is comprised of SO strategies to use strengths and opportunities, ST strategies to overcome threats and complement weaknesses, WO strategies to take advantage of opportunities, and WT strategies to overcome weaknesses and avoid threats. Further AHP analysis showed that the WT strategies were the most important, and suggested that priority should accordingly be given to the WT strategies for the development of Korea’s beauty service industry. Based on the SWOT-AHP analysis, this study suggests that beauty service companies should pay attention to the lack of profitability, poor working conditions, emotional labor, employee stress, and the resultant high turnover rates, all of which are major weak points the beauty service industry should overcome. Focusing on subsiding these weaknesses will help secure beauty service sustainability. Results of the SWOT-AHP analysis also suggest governments should shift to supporting the beauty industry by developing an effective legal system to allow the beauty industry to thrive, and this is aligned with Rosenthal [33].

The present study was limited in scope to the Korean beauty industry. Further SWOT-AHP analysis studies on beauty industries in different countries will extend the meaning of the results of this study. Additionally, this study limits the number of components per attribute to four in the AHP analysis. No recommended number of components is found, but if there are five components or more in each factor, the total number of components becomes 20 or more, and then respondents would be overwhelmed and can become careless with their answers. It will be meaningful if future studies can analyze the importance and priorities of AHP and investigate the causal relationships among the key factors impacting the development of the beauty service industry with a structured model.

Author Contributions

All authors contributed equally to this paper. All authors have read and agreed to the published version of the manuscript.

Funding

This research was supported by the MSIT (Ministry of Science and ICT), Korea, under the ITRC (Information Technology Research Center) support program (IITP-2021-2017-0-01628) supervised by the IITP (Institute for Information and Communications Technology Promotion).

Institutional Review Board Statement

Ethical review and approval were waived for this study, because the research does not involve vulnerable populations.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

Restrictions apply to the availability of these data. Data were obtained from in-depth interviews of experts in the beauty service field and are available from the corresponding author with the permission of the interviewees.

Conflicts of Interest

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Figures and Tables

Figure 1. Market size and growth in the beauty service industry. Source: authors’ edition based on Statistics Korea [22].

Figure 2. Environmental analysis model of the beauty service industry.

Figure 3. Hierarchy SWOT-AHP analysis model.

Figure 4. The relative importance of strategic factors.

Figure 5. Graph of the conversion weights.

Table 1

The number of firms and employees in the Korean beauty service industry.

Classification	Number of Firms			Number of Employees
	2007	2017	Growth Rate	2007	2017	Growth Rate
Total	108,095	148,701	37.57%	164,990	225,635	36.76%
Hair Beauty	97,692	115,206	17.93%	144,181	175,992	22.06%
Skin Care	8414	20,150	139.48%	16,097	29,736	84.73%
Nail Service, etc.	1989	13,345	570.94%	4712	19,907	322.47%

Source: authors’ edition based on Statistics Korea [22].

Table 2

Experts’ in-depth interviews.

Industry	Date	Number of Interviewers	Names of Firms
Beauty Treatment	Jun. 2019	2	Park Jun Beauty Lab, Jean Louis David
	Jul. 2019	2	Park Seung Chol Hair Studio, S. Beauterra
	Aug. 2019	1	Beauty Service Consulting
	Sep. 2019	2	Professors of Beauty and Cosmetology

Table 3

Final SWOT matrix.

S (Strengths)	W (Weaknesses)
• Excellent technical skills in beauty service industry• Management and training system that educates professionals• Extending various beauty links and high value-added services• Trend of replacement as a highly educated young manager	• Closure of knowledge, technology, know-how, and information sharing• Lack of K-beauty brand competitiveness and smallness of a company• Lack of profitability as a service business model• Poor working conditions, emotional labor, and high turnover rate for employees
C (Opportunities)	T (Threats)
• Consumer values and change of perception of beauty• K-beauty’s popularity increased due to growth of Korean Wave culture• Improving importance of policy as a growth industry linked to tourism• Improving industrial value and status as a professional service industry	• Competition intensified due to increase in foreign and domestic companies• Lack of effective legal system for growth of the beauty industry• Negative impact of Korea-Japan trade dispute on the supply of materials• Remnants of social stereotypes that belittle beauty industry

Table 4

Selection of respondents for expert surveys.

Division	Number of Respondents (40)	Organizations of Respondents
Company	31	Park Jun Beauty Lab, Jean Louis David, S. Beauterra, Nature Hair, Park Seung Chol Hair Studio, Scissors Story, Maritte Hair, My Hair Salon, Hair Salon Group, Salon de Jogak Hair Studio, The Skin by Ssong, FROM a, Tony & Guy, HASYS, Satin Hair, Jungsaemmool Inspiration, Gaggum Hair Dream, ABECHE
Consulting	2	ABC Consulting, Words Consulting
University	7	Konkuk University, Jangan University, Kookje University, Suwon Women’s University, Seokyeong University, Kyung-In Women’s University, Shin Ansan University

Table 5

Consistency test results for expert surveys.

Division	Returned	C.R. (Consistency Ratio)
		Under 0.1			0.1–0.2	0.2–0.3	Over 0.3
		Total	First	Second
Total	40	31	23	8	5	3	1
Company	31	24	17	7	3	3	1
Consulting	2	1	1	-	1
University	7	6	5	1	1

Table 6

Weights of SWOT factors.

Factor	Weight	Component of Factor		L-Weight	G-Weight
S	0.343	$$S_1$$	Excellent technical skills in the beauty service industry	L = 0.216	G = 0.074
		$$S_2$$	Management and training system that educates professionals	L = 0.402	G = 0.138
		$$S_3$$	Extending various beauty links and high value-added services	L = 0.189	G = 0.065
		$$S_4$$	Trend of replacement as a highly educated young manager	L = 0.194	G = 0.066
W	0.265	$$W_1$$	Closure of knowledge, technology, know-how, and information sharing	L = 0.080	G = 0.021
		$$W_2$$	Lack of K-beauty brand competitiveness and smallness of a company	L = 0.132	G = 0.035
		$$W_3$$	Lack of profitability as a service business model	L = 0.291	G = 0.077
		$$W_4$$	Poor working conditions, emotional, labor, and high turnover rate for employees	L = 0.498	G = 0.132
O	0.219	$$O_1$$	Consumer values and change of perception for beauty	L = 0.193	G = 0.042
		$$O_2$$	K-beauty’s interest increased due to the growth of the Korean Wave culture	L = 0.175	G = 0.038
		$$O_3$$	Improving the importance of policy as a growth industry linked to tourism	L = 0.279	G = 0.061
		$$O_4$$	Improving industrial value and status as a professional service industry	L = 0.353	G = 0.077
T	0.173	$$T_1$$	Competition intensified due to increase in foreign and domestic companies	L = 0.235	G = 0.040
		$$T_2$$	Lack of effective legal system for the growth of the beauty industry	L = 0.452	G = 0.078
		$$T_3$$	Negative impact of the Korea-Japan trade dispute on supply of materials	L = 0.109	G = 0.019
		$$T_4$$	Remnants of social stereotypes that belittle beauty industry	L = 0.204	G = 0.035

Table 7

Results of weighted conversion of components (L’-weight).

Factor	L’-Weight	Factor	L’-Weight	Factor	L’-Weight	Factor	L’-Weight
$$S_1$$	L’ = 0.184	$$W_1$$	L’ = 0.043	$$O_1$$	L’ = 0.120	$$T_1$$	L’ = 0.090
$$S_2$$	L’ = 0.343	$$W_2$$	L’ = 0.070	$$O_2$$	L’ = 0.109	$$T_2$$	L’ = 0.173
$$S_3$$	L’ = 0.161	$$W_3$$	L’ = 0.155	$$O_3$$	L’ = 0.173	$$T_3$$	L’ = 0.042
$$S_4$$	L’ = 0.166	$$W_4$$	L’ = 0.265	$$O_4$$	L’ = 0.219	$$T_4$$	L’ = 0.078

The bolded L’-Weights are the highest in their categories.

Table 8

Strategic alternatives by SWOT-AHP analysis results.

	External Environment	S	W
Internal Environment		$${\mathit{S}}_{\mathbf{1}}$$ (0.074), $${\mathit{S}}_{\mathbf{2}}$$ (0.138)	$$W_1$$ (0.021), $$W_2$$ (0.035)
		$$S_3$$ (0.065),$$S_4$$ (0.066)	$${\mathit{W}}_{\mathbf{3}}$$ (0.077), $${\mathit{W}}_{\mathbf{4}}$$ (0.132)
O	$$O_1$$ (0.042), $$O_2$$ (0.038)	$$S_2, S_1+O_4$$	$$W_4, W_3+O_4$$
	$$O_3$$ (0.061), $${\mathit{O}}_{\mathbf{4}}$$ (0.077)	SO strategy	WO strategy
T	$$T_1$$ (0.040), $${\mathit{T}}_{\mathbf{2}}$$ (0.078)	ST strategy	WT strategy
	$$T_3$$ (0.019), $$T_4$$ (0.035)	$$S_2, S_1+T_2$$	$$W_4, W_3+T_2$$

Top six factors in importance and their G-weights are bolded.

Appendix A

Table A1

SWOT analysis results from Policy Report 2009-53 (KIHASA: Korea Institute for Health and Social Affairs).

S (Strength)	W (Weakness)
Synergy Effect from Large Companies’ Entry into cosmetics sectorThe growth of Korean Wave cultureHandmade techniques	Small beauty industryPoor external recognition due to lack of unique brandsLack of consumer rights and options
O (Opportunity)	T (Threat)
Increasing diverse needs of consumersPotential of Korean Wave IndustrializationDiverse consumer needs	Foreign companies’ entry into domestic marketDomestic market share of foreign materialsGrowth of beauty and health industry in Asian countriesDiverse consumer needs

Table A2

SWOT analysis results from expert interview 1 (Park Jun Beauty Lab).

S (Strength)	W (Weakness)
Trend of replacement as a highly educated young manager	Differences in customer satisfaction between service providersDomestic market share of foreign materialsPoor service process and awareness
O (Opportunity)	T (Threat)
Improving importance of policy as a growth industry linked to tourismAdvances in the professional services sector	Negative impact of the Korea-Japan trade dispute on the supply of materialsRemnants of social stereotypes that belittle beauty industry

Table A3

SWOT analysis results from expert interview 2 (Jean Louis David).

S (Strength)	W (Weakness)
The growth of Korean Wave cultureRising interest in K-beauty around the worldExcellent beauty skillsWorld-class cosmetic surgery and I.T. infrastructureLaunch services linked to weddings and fashion	Need to improve small scale and management abilityInsufficient training of beauty experts to enter global marketRestrictions on scope of institutions and legal systems supporting the beauty industryThe lack of government support systems to foster high value-added industriesThe absence of K-beauty brands
O (Opportunity)	T (Threat)
Increase in online purchases by social commerceExpanding premium beauty marketEmergence of new consumer types such as well-being, aspirational, impulseLaunch services linked to tourism and healthcare	Increased competition in global beauty marketGlobal beauty companies’ localization strategySupport beauty industry in many countriesCompetition for new technologies and online shopping malls

Table A4

SWOT analysis results from expert interview 3 (Park Seung Chol Hair Studio).

S (Strength)	W (Weakness)
Ease of customer acquisitionHigh quality of serviceTimesaving and convenienceOffers a variety of beauty services	Increased fixed costsInternal conflictLack of working conditionsMarketing cost increases
O (Opportunity)	T (Threat)
Diverse consumer needsEstablishment of professional brand	Changes and threats in external environmentRising labor costsMarketing cost increasesDistribution channel limits

Table A5

SWOT analysis results from expert interview 4 (S. Beauterra).

S (Strength)	W (Weakness)
Human resource training through beauty collegeFriendlier image than a foreign franchise brandLocation in center of the area	Growing number of young customers dampens atmosphere of hair salonsDifficulty collecting information due to lack of connection with other beauty salonsLack of national revitalization due to centralization of Seoul metropolitan area
O (Opportunity)	T (Threat)
Increased interest in beauty increases availabilityGrowing demand for diverse hairstylesHigh-quality management by highly educated hairdressers	Decrease in visiting cycle due to economic recessionCustomer decline due to increase in beauty salonsDestruction of prices due to overheated competitionReduced customers due to hair done at home

Table A6

SWOT analysis results from expert interview 5 (Beauty Service Consulting).

S (Strength)	W (Weakness)
Growth of Korean Wave cultureAppearance-oriented social atmosphereHandmade techniques	Small beauty industryPoor external recognition due to lack of unique brandsLack of consumer rights and optionsLack of statistics on beauty industry
O (Opportunity)	T (Threat)
Diverse consumer needsPotential of Korean Wave industrialization	Foreign companies’ entry into domestic marketGrowth of beauty and health industry in Asian countriesDomestic market share of foreign materials

Table A7

SWOT analysis results from expert interview 6 (Professor of Beauty & Cosmetology).

S (Strength)	W (Weakness)
Improving industrial value and status as professional service industryIncreasing importance of beauty in life	Destruction of prices due to overheated competitionBeauty is difficult to improve quality because of reluctance to share technologyHeavy workload on employeesPoor working conditions, including low wages
O (Opportunity)	T (Threat)
Market segmentation enables diverse and professional beauty salons to be operatedHigh-quality management by highly educated hairdressers	Turnover rate of workersU.S. franchises entering Korean marketDecrease in competitiveness and profits

Table A8

SWOT analysis results from expert interview 7 (Professor of Beauty & Cosmetology).

S (Strength)	W (Weakness)
Human resources development based on education systemFriendlier image than foreign franchise brandsLocation in center of the area	Growing number of young customers dampens atmosphere of hair salonsDifficulty collecting information due to lack of connection with other beauty salonsLack of national revitalization due to centralization of Seoul metropolitan area
O (Opportunity)	T (Threat)
Increased interest in beautyDiverse consumer needsChange in brand image to attract young customers	Decrease in visiting cycle due to economic recessionCustomer decline due to increase in beauty salonsCustomer defections to specialized hair salonsReduced customers due to hair done at home

Appendix B

Table A9

Summarized SWOT factors.

Previous Study and Interview: Strength	Final Study Factor
Excellent beauty skills Handmade techniques High quality of service World-class cosmetic surgery and I.T. infrastructure	1. Excellent technical skills in the beauty service industry
Human resources development based on education system Human resource training through beauty college High-quality management by highly educated hairdressers	2. Management and training systems to educates professionals
Offers variety of beauty services Launch services linked to weddings and fashion Launch services linked to tourism and healthcare	3. Extending various beauty links and high value-added services
Trend of replacement as highly educated young managers	4. Trend of replacement as a highly educated young manager
Advances into the professional services sector Establishment of professional brand A friendlier image than a foreign franchise brand A location in center of the area	5. Others
Previous Study and Interview: Weakness	Final Study Factor
Difficulty collecting information due to lack of connection with other beauty salons Beauty is difficult to improve quality because of reluctance to share technology	1. Closure of knowledge, technology, know-how and information sharing
Small beauty industry Need to improve small scale and management ability The lack of working conditions	2. Lack of K-beauty brand competitiveness and smallness of companies
Increased fixed costs Rising labor costs Marketing cost increase	3. Lack of profitability as a service business model
Internal conflict Heavy workload on employees Turnover rate of workers Poor working conditions, including low wages	4. Poor working conditions, emotional labor and high turnover rate for employees
Growing number of young customers dampens atmospheres of hair salons Lack of national revitalization due to centralization of Seoul metropolitan area The lack of physical environment Poor service process and awareness	5. Others
Previous Study and Interview: Opportunity	Final Study Factor
Increasing importance of beauty in life Appearance-oriented social atmosphere Increased interest in beauty increases availability	1. Consumer values and change of perception for beauty
The growth of Korean Wave culture Potential of Korean Wave industrialization Rising interest in K-beauty around the world Change in brand image to attract young customers Emergence of new consumer types such as well-being, aspirational, impulse Increasing the diverse needs of consumers Growing demand for diverse hairstyles Expanding premium beauty market	2. K-beauty’s interest increased due to the growth of the Korean Wave culture
Improving importance of policy as a growth industry linked to tourism	3. Improving importance of policy as a growth industry linked to tourism
Improving industrial value and status as professional service industry	4. Improving industrial value and status as a professional service industry
Increase in online purchases by social commerce Market segmentation enables diverse and professional beauty salons to be operated	※ Others
Previous Study and Interview: Threat	Final Study Factor
Foreign companies’ entry into domestic market Increased competition in global beauty market Domestic market share of foreign materials Support beauty industry in many countries Global beauty companies’ localization strategy U.S. franchises entering Korean market Growth of beauty and health industry in Asian countries Poor external recognition due to lack of unique brands Decrease in visiting cycle due to economic recession Changes and threats in the external environment	1. Competition intensified due to increase in foreign and domestic companies
Lack of government support systems to foster high value-added industries Restrictions on scope of institutions and legal systems supporting the beauty industry Lack of consumer rights and options	2. Lack of effective legal system for the growth of beauty industry
Negative impact of the Korea-Japan trade dispute on supply of materials	3. Negative impact of the Korea-Japan trade dispute on supply of materials
Remnants of social stereotypes that belittle beauty sector	4. Remnants of social stereotypes that belittle beauty sector
Customer decline due to increases in beauty salons Destruction of prices due to overheated competition Decrease in competitiveness and profits Reduced customers due to hair done at home Diverse consumer needs Marketing cost increases and distribution channel limits Customer defections to specialized hair salons Insufficient training of beauty experts to enter global market Competition for new technologies and online shopping malls	※ Others

Appendix C

Table A10

Consistency test results by experts.

No.	Respondents	Overall (Seconds)	Stage 2	Stage 3
			M1	M2	M3	M4	M5
1	Jean Louis David 1	0.07	0.04	0.04	0.04	0.15	0.09
2	Jean Louis David 2	0.06	0.02	0.14	0.05	0.04	0.04
3	Jean Louis David 3	0.07	0.06	0.05	0.10	0.01	0.05
4	Jean Louis David 4	0.04	0.03	0.01	0.08	0.17	0.01
5	Jean Louis David 5	0.08	0.05	0.12	0.14	0.12	0.09
6	Jean Louis David 6	0.04	0.04	0.04	0.03	0.02	0.05
7	Park Jun Beauty Lab 1	0.07	0.06	0.04	0.09	0.01	0.16
8	Park Jun Beauty Lab 2	0.24	0.26	0.15	0.29	0.33	0.15
9	Park Jun Beauty Lab 3	0.09	0.05	0.14	0.03	0.11	0.16
10	Park Jun Beauty Lab 4	0.01	0.01	0.02	0.02	0.01	0.01
11	Park Jun Beauty Lab 5	0.07	0.11	0.03	0.08	0.02	0.03
12	PNJ 1	0.06	0.04	0.09	0.05	0.05	0.02
13	PNJ 2	0.05	0.03	0.05	0.04	0.04	0.16
14	Park Seung Chol Hair St.	0.20	0.15	0.14	0.19	0.11	0.28
15	Nature Hair	0.04	0.07	0.01	0.00	0.02	0.05
16	Maritte Hair	0.03	0.03	0.01	0.03	0.01	0.10
17	My Hair	0.04	0.05	0.00	0.03	0.08	0.05
18	Hair Salon Group	0.03	0.04	0.04	0.00	0.02	0.01
19	The Skin by Ssong	0.22	0.26	0.18	0.02	0.03	0.23
20	FROM ‘a’	0.07	0.04	0.08	0.10	0.33	0.08
21	Tony & Guy	0.16	0.18	0.20	0.08	0.14	0.14
22	JUNGSAEMMOOL	0.10	0.07	0.09	0.19	0.02	0.04
23	S.Beauterra	0.17	0.16	0.12	0.19	0.30	0.18
24	Salon de Jogak Hair St.	0.07	0.09	0.02	0.12	0.06	0.22
25	Soon Soo Family	0.18	0.18	0.90	0.16	0.15	0.18
26	JLDK	0.07	0.07	0.03	0.07	0.14	0.19
27	Satin Hair	0.32	0.29	0.31	0.30	0.42	0.35
28	Gaggum Hair Dream	0.09	0.04	0.17	0.11	0.07	0.06
29	ABECHE	0.03	0.01	0.04	0.03	0.04	0.07
30	Scissors Story	0.06	0.05	0.07	0.01	0.05	0.44
31	HASYS	0.04	0.02	0.06	0.02	0.07	0.07
32	ABC Consulting	0.07	0.01	0.12	0.20	0.22	0.06
33	Words Consulting	0.18	0.25	0.08	0.13	0.20	0.06
34	Seokyeong University	0.02	0.02	0.02	0.05	0.04	0.01
35	Shin Ansan University	0.04	0.01	0.07	0.17	0.00	0.08
36	Kyung-In Women’s University	0.05	0.04	0.06	0.03	0.09	0.08
37	Konkuk University	0.09	0.03	0.17	0.07	0.12	0.24
38	Suwon Women’s University	0.06	0.06	0.05	0.10	0.03	0.04
39	Jangan University	0.05	0.02	0.04	0.10	0.05	0.05
40	Kookje University	0.18	0.24	0.11	0.11	0.31	0.03

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