Blog 10: Smart Consumer, Good Company

                As countries developing, consumers are becoming wiser. Consumers usually seek cheap price products, but sometimes they look for kind products. Kind products mean products which make consumers to feel that they contribute to social justice when they buy these products. For catching these smart consumers, company should be wiser and kind too. There is popular way to show their kindness, “Fair Trade”. “Fair Trade” has started in America since 1946. One of NGO in America started Fair Trade by buying sewing products from Puerto Rico. Fair Trade means trade between developed country and developing country with good condition to developing country. It helps that trade becomes fair. And the basic purpose of Fair Trade is coexistence between developed country and developing country.
 

 

                  In the United States, there are countless number of Fair Trade products and companies. One example which is near from us is “Lake Champlain CHOCOLATES”. They got “Fair for Life - Social & Fair Trade Certification” in March, 2013. They said that they started to do Fair Trade because of every people in supply chain; from farmers who grow cocoa, people who move this cocoa, people who produce chocolate, package it. They believed that people in this supply chain should be received the rewards and be treated fairly. First, they seek the best and freshest ingredients from local farmers and producers as a way of Fair Trade. Second, they do not use GMO ingredients, in other words, they use organic ingredients. And they foster long term partnerships and socially responsible trading practices. Also, they respect the labor rights, and they make products and do marketing environmentally.

 

                  Fair Trade does not have long history in Korea. In 2003, one company in Korea started to sell Fair Trade items. This shop is “Beautiful Store”, established by NGO (Non-Governmental Organization). They started Fair Trade by selling handicraft items from Asia, but now, they sell various Fair Trade products from chocolate, coffee to cloth. Now they do not only sell Fair Trade items but also they contribute socially a lot. The missions of Beautiful Store are Sharing, Circulation and Civil participation. Although the history of Fair Trade in Korea is short, people are interested in Fair Trade more and more. And people also become to be interested in companies’ social role. As a result, companies that seek social contribution are increasing, and these companies are getting popular.

                  Returning to Fair Trade, it not only promotes coexistence but also protect sweating system. Especially, a child sweating system in the process of producing chocolate was really serious problem. When people started to be concerned to Fair Trade, then this problem started to be released. The development of consumer behavior brought about the change in the world. For one semester, I was thinking deeply about marketing. Which marketing can bring better result, What is the most important aspects of marketing, etc. Now I get to think about what an ethical company is, and why behaving ethical is important to company. In conclusion, increasing profit is very important to company but being ‘kind’ company is more important. 

Photos from : http://www.lakechamplainchocolates.com/
                    http://www.beautifulstore.org/
 

Blog 9: The fever of one snack

In December, 2012, one special team was organized in a Korean snack company. It was ‘the special team of developing potato chip. This company already has had one chip product, but it was not famous. Although they had other famous products, they could not give up large and gradually growing up market, potato chip market. After 1 year and 9 months, they introduced ‘Honey-Butter chip’, and it brought a huge success. It already has experienced shortage of goods phenomenon even the company did not do any advertisement. It sold about 103 hundred million won (about 9,296,029 dollar) without any advertisement for its first 100 days.

The special developing team had eaten over 100 kinds of chips in the world. They found that almost every potato chip was salty, and they decided to make new taste, not salty. They got inspiration from one snack, which was kind of Tteok-bokki snack. It had spicy taste but based in sweet tasty. After countless product tests, they found surprising combination, honey and gourmet butter. They broke the general mold, that is, people usually use oligosaccharide or syrup for sweet tasty but they use honey. And it works! They made samples, and did blind test. 1,000 people participated in the blind test, and 93% of them chose ‘Honey-butter chip’ among various potato chips.

After ‘Honey-butter chip’ released, the company did not have to do marketing. Customers did ‘buzz marketing’ by themselves. People who have eaten it uploaded their opinion about the chip in their SNS, and it became really famous. The factory which makes ‘Honey-butter chip’ became to run 24 hours per one day, but it is still in short supply. Even if people have money to buy, they cannot buy it because there is no product. Nowadays, some people sell ‘Honey-butter chip’ in a second hand market. One of beer company already bought a number of ‘Honey-butter chip’ before it became famous, and nowadays the company sells their product, beer pack with one ‘Honey-butter chip’. And this marketing strategy makes an increasing of profit.

Shifting a view point can be the largest factor of this success; however, the development of Social Network Services can be also another factor. There are some products which became famous because of only ‘buzz marketing’. ‘Merry-Ddalki’ is very famous drink in one café brand, it made by fresh strawberry, yogurt, whipped-cream and yogurt ice cream. It sold one million cups for its first 3 months. The biggest factor of their fame was ‘Instagram’. And another example is ‘MY BOTTLE’, and it is a water bottle made by Japan. Originally it was not released in Korea, but it became famous by Instagram. Through the fever of ‘Honey butter chip’, we can learn two important facts. First, targeting niche market by shifting a view point is important, and second, companies sometimes do not have to marketing as SNS developing. 

Photos from:

 http://www.hani.co.kr/arti/economy/consumer/665185.html

http://www.bulmanzero.com/news/articleView.html?idxno=12290

Blog 8: Global market

As globalization is progressing, companies enter to other countries’ market actively. Entering to another country’s market should be considered deeply. Before entering to other market, many things should be considered, for example, culture, consumer behavior, economics, political environment and so on. Even though a company got succeeds in local country, it can be failed in other country market. There is one Korea company which gets a huge success in not only Korea, but also foreign countries, Hyundai (Hyundai Motor). Hyundai is one of the largest automobile manufacturers in the world. It has manufacturing presence in the US, China, India, Czech Republic, Turkey, Brazil and Russia, besides South Korea. It is reported that the latest revenue is $38,897,862,543. How can Hyundai succeed in foreign countries?

The first reason of Hyundai’s success is the introduction of car production modularization. The modularization in the part of car production means that suppliers make module, and after that, the complete vehicle company assembles that. In the complete vehicle company’s view, they can need less time and less amount of component by simplifying the progress of production. And they also can lower the cost of production. And the second reason is entering an emerging market actively compared to competitive. Hyundai established their factory in India in 1998. Hyundai chose the emerging market where there was no competition instead of ‘Red ocean’ like USA. In the early of 2000s, Goldman Sachs started to use the term ‘BRICs’; Brazil, Russia, India and China. While other competitors were interested only in USA and Japan, Hyundai entered to emerging countries, so they could get stable profit.

The third reason of Hyundai’s success is the developing policy that focuses on designing. From the early of 2000s, Hyundai benchmarked Volkswagen because Volkswagen’s sales were gradually increasing. Volkswagen thought that competing with Japanese car companies in the part of production and quality was not possible. So they decided to keep their strength, quality, and choose ‘blue ocean’, design. Hyundai learned from Volkswagen’s lesson, so they also decided to focus on design. They employed Peter Schreyer, who was Audi’s designer. It was really big issue. Compared to Volkswagen, Hyundai is not enough yet. They should try hard, but it helps global sales.

Hyundai still has some problems, like quality or leadership in their industry. But they are trying hard. They did some online marketing, for example, Hyundai's 2014 FIFA World Cup sponsorship campaign,"#BecauseFutbol," drew more than 7.5 million fans and on Twitter the brand benefited from more short-term chatter than headline sponsor adidas. And also in offline, Hyundai's World Cup Fan Parks have engaged over 5 million potential customers in Europe alone. And in its native Korea, Hyundai opened Hyundai Motor Studio, its first brand experience store-including a showroom, automotive library, café, and a children's play center. As a result of these efforts, brand awareness of Hyundai's product attributes-like its "fluidic sculpture" design-and the kind of brand loyalty that comes from an emotional connection are becoming key drivers over price. 

References: http://web.b.ebscohost.com/bsi/detail/detail?sid=cc5f003e-008b-46b0-89a7-03f71024c242%40sessionmgr111&vid=4&hid=115&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&authdb=cix&AN=2557129&anchor=Industry

http://bestglobalbrands.com/2014/hyundai/

Photos from: http://www.ebay.com/itm/Brand-New-HYUNDAI-3D-Car-Logo-Keyring-Metal-Key-Chain-Santa-Fe-Accent-Sonata-/221130748045

http://press.kia.com/eu/press/corporate/13_01_02_schreyer%20appointed%20president%20of%20kmc/

Blog 7: Disesteem customers

Gaining a person's affection is so difficult. Even there is one saying like “得人心者 得天下” in China, which means a man who get one’s affection is a person who get the world. And also if one thing is loved by people, it can lose its love by one mistake. Nowadays, one company was really famous and popular even before it opens the store in Korea, but it lost its popularity by one mistake. This company is ‘IKEA’, a multinational group of companies that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. IKEA is planning to open the first store in Korea in next month, but already there are some anti-consumers because it disesteemed Korean consumers.

IKEA opened their products’ prices in Korea website. Some of their products have really cheap price, less than 1 US Dollar. But the problem is in products which are more expensive than in other countries. For example, ‘Billy Bookcase’ is 99,900 won (about $91.20) in Korea otherwise it is about 85,200 won (about $77.78) in Japan, 88,000 won ($80.34) in US, and 95,000 won ($86.73) in England. But there are also some items which are cheaper in Korea than in other countries. One marketing manager of IKEA Korea said that IKEA set the price not by comparing with other countries, but by researching the reasonable and popular price in the specific country. But it does not make sense because economics in Japan and USA are better than Korea but the price is more expensive in Korea. IKEA is famous to ‘DIY products’, customers should assemble their furniture after they buy. So if customers want for their furniture to be assembled, they should pay more. Assembling the furniture is 29,000 won ($26.47) and the standard delivery fee is 40,000 won ($36.52), on the other hand, they are all free in Korea furniture stores.

Moreover, the annual report of IKEA in IKEA Korea website uses only ‘Sea of Japan’. It is really important problem to Korean. The sea between Korea and Japan is ‘East Sea’ historically, but the Japan government argues that it is ‘Sea of Japan’ as the part of the distortion of history. Although it is really important and sensitive problems to Korean consumers, IKEA did not use ‘East Sea’ or both of them. And it also happened in their real product which is selling in USA and England. It is not sure whether IKEA Korea will sell the product in Korea store.

The reason why IKEA became famous without any special marketing effort was the buzz marketing. Some Koreans who used IKEA furniture while they were living in abroad liked IKEA because they have good quality compared to the price. But it means there is nothing special except the price. If consumers are not ‘smart consumers’, nothing will be problem. But IKEA’s target market, 20-30’s consumers in Korea are very smart. They search about the product carefully, and compare with other stores and even in other countries. Domestic furniture companies are fully ready for IKEA but actually the thing which gave a punch to IKEA is the ‘smart consumers’.

Photos from: http://www.retailsolutionsonline.com/doc/ikea-s-new-app-creates-omni-channel-shopping-experience-0001

http://news.kmib.co.kr/article/view.asp?arcid=0922848834&code=11141400&cp=du

Blog 6: Road Shops in Korea

There is war in cosmetic market of Korea. Not only expensive foreign brands, but domestic brands are also popular in Korea. Korean called cheap domestic cosmetic brands as ‘Road shop (Roadside shop)’ because almost every cheap brand shops are located easy place to reach. There are many Road shops in Korea and they also entered in foreign market too. Tourists from Japan, China and other countries visit Road shop, and they buy a lot of cosmetic products in there. There was one survey in Korean women who is 20’s or 30’s.(Open Survey. Co.) 95.2% of respondents answered that they have used road shop brands, and 41.6% said that they use road shop brands regularly. It showed road shop brands are very popular in Korea.

41.9% answered that they use road shops because of reasonable price, 33.5% answered that they used that because of brands’ fame, and 12.8% answered that because of accessibility. Road shops have really reasonable price and many sale seasons. Almost every brand has one sale promotion per one month, and they called ‘brand day’. Top 5 brands have had 250 sale days in last year. And not only price promotion, they do product promotion; buy one, get one free (1+1). In this war, one of brands has sticked to non-sale promotion, but they decided to be adapted, so they did sale promotion too.

And also each road shop brands use customer reward system for their customer value. Some brands have reward system which customers who signed up membership can get discount off certain percent. Other brands have reward system which provides differentiated service to their loyal customers. For example, ‘Innisfree (Top 1 road shop brand to 20’s)’ has 3 loyal customer levels, VIP, VVIP and GREEN TEA. VIPs are customers who bought 50,000 won (about $50) for 6 months, VVIPs are customers who bought 10,000 won, and GREEN TEAs are who 300,000 won for 6 months. VIP can get 10% discount in brand membership day, VVIP can get 20%, and 30% to GREEN TEA. Moreover, they provide customer’s birthday gift and special kits 4 times per a year to VVIP and GREEN TEA.

Road shop 'brand days' on September, 2014

Lastly, road shop brands use K-pop idol celebrities as their model. The first reason is that their majority customers are teenager and 20’s women so they can get more loyal customers through idol model. The second reason is that they can enter foreign market easily by using K-pop idol model. For example, ‘Nature Republic’ chose Tae Yeon from Girl’s generation and EXO as their model. They already entered 12 foreign countries’ cosmetic markets by TaeYeon, but they want to maximize synergy effect in Asian market through EXO. ‘Nature Republic’ gives their models’ photo card to customers who buy certain products, and sometimes provide autograph events in Korea or other countries for their customers.

Tae Yeon

EXO

There are more factors in Road shops’ popularity. Road shop brands focus not only on promotion, place and price, they also focus on product. They provide good quality product, so many customers use road shops because they satisfy with their product’s quality. In Korea, the war in cosmetic road shops is ongoing. 

Road shops in Foreign country

Photos from : http://www.dailycosmetic.com/news/articleView.html?idxno=165522

http://cafe.daum.net/ok1221/74fn/222614?q=%B7%CE%B5%E5%BC%A5%20%BC%BC%C0%CF&re=1

http://cafe.daum.net/ok1221/8hHX/11562537?q=%B3%D7%C0%CC%C3%C4%B8%AE%C6%DB%BA%ED%B8%AF&re=1

http://tensionup-gg.tistory.com/1523

Blog 5: Viral Marketing

  

     ‘Buzz Marketing’ is one of Word-of-Marketing, and it is effective marketing that one person who already has used a product recommends the product to his friends, families, or neighbors. As Information Technology is developing, the way of Buzz Marketing became various. Nowadays the most popular way of ‘Buzz Marketing’ is using Social Network Services, and it is called ‘Viral Marketing’. Its purpose is to try to produce increases in brand awareness or to achieve other marketing objectives like profits. ‘Viral’ is derived from the spread of viruses or computer viruses. And also ‘Viral Marketing’ is different from the existing online marketing. The existing online marketing did not have their target, and they just do marketing randomly. However, Viral Marketing has its target market, so it is more effective than the existing online marketing. There are some examples of success by using Viral Marketing.

    McDonald’s Big Mac Song Campaign is one of examples. It already operated in USA, 1970s, but in 2011, it got big succeed in Korea, over 4,000 videos were uploaded for a month. McDonald gave the Big Mac free coupon to everyone who uploaded their Big Mac song videos, and someone who ranked the first won the prize, ₩5,000,000(about $5,000) and McDonald used his video as an advertisement. Over 3 million people visited McDonalds’ website to vote, and through this event McDonalds’ revenue was increased by 36.5% compared to last month. The first reason that they could get big succeed in Korea is that they chose right target market. Korean is very interested in music, songs and dance, and all music programs got succeed at that time. The second reason is that IT technology developed surprisingly, so it was so easy to attract Korean’s interest. McDonalds got not only financial benefits but also positive impression, high credibility and loyal customers.

#1 Famous Comedians : https://www.youtube.com/watch?v=u9cqBsWhPVg

#2 Real McDonald's TV Advertisement : https://www.youtube.com/watch?v=zfYzB66dT5s&list=UUh-PIUDPlZkXnwU5zgX_oAw&index=99

    Red bull is the highest company which spends money to do marketing. Its slogan is “Red bull gives you wings”, and it really fell down from sky. It dropped down from sky at sudden, and people were surprised. People were curious that, and after that they posted in their twitter or Facebook, ‘Today I got FREE DRINKS for sky!’ Red bull applied their energetic impression to their viral marketing method, so they designed Red bull fell down unspecific places at a sudden. Their purposes were not only to test sample drinks but also to use word-of-marketing. Finally over 8 million people could get know about that, and 1 million people posted in Red bull Facebook page. The first reason that they got succeed is that they applied their products’ energetic image to their promotion event. Second is that they could attract people’s interest by creative idea which drinks fell down from sky at a sudden and free drinks.

    Not only Facebook, Twitter, also blog is effective viral marketing. Even a new word came out; ‘Power Blogger’ is the blogger who has the most impact on other consumers. Usually power blogger gather people’s interests by great contents and speedily updating. However, there are some examples that abuse their impact. There are some ‘black consumer’ and ‘black blogger’, and they post negative opinion about a product calculatedly or they threaten companies by their power in online. There are some side-effects of viral marketing, but there is nothing effective marketing as much as viral marketing. So it is expected that viral marketing must be popular to companies as the most effective marketing method. 

Photos from: http://blog.naver.com/PostView.nhn?blogId=blogphoenix&logNo=220069018519&parentCategoryNo=&categoryNo=&viewDate=&isShowPopularPosts=false&from=postView

                  http://blog.naver.com/joappp/220111904891

Blog 4: The importance of Localization

‘Walmart’ is one of high revenue companies, it was $469,162,000,000. There are many Walmart store in USA, Canada, Argentina, Brazil, Chile, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, China, India, Japan, Mexico, the UK and Africa. Walmart became the largest company in part of retail store. However, there are two countries where Walmart failed, Korea and Germany. Especially in Korea, some foreign retail stores wanted to get succeed, but almost every company failed.

                  Walmart entered the Korean market in 1998, when Korea went through the monetary crisis (IMF crisis in 1997). There are three types of Walmart retail stores; discount stores, supercenters, neighborhood markets and other small store formats. Walmart chose ‘supercenters’ in Korea and it was declaration to domestic retail stores. But Walmart left Korea in 2006, and they agreed M&A to ‘EMART’, Korean domestic retail store. Experts pointed out that the biggest reason of Walmart failure was ‘failure of localization’. First problem was that Walmart decreased the number of workers and the quality of service instead of low cost. On the other hand, Korean customers wanted not only low cost but also same quality of service as a department store. And also Walmart overlooked the fact which Korean wanted ‘one-stop service’; shopping, eating, entertaining with their families in one place.

                  Second problem was that accessibility to products and preference to fresh food. While people in foreign countries buy food for one to two weeks and keep this in a freezer, Korean buy small amount of food at many times and they cook soon. So this eating pattern made Korean to prefer retail stores which they can buy fresh food and they can go easily. For example, ‘EMART’ is rare case in the world, it harmonized western retail shop with traditional market in Korea. In Walmart, many items were displayed in high shelves, so housewives had to call clerks every time when they wanted to get their items. Korean neglected Walmart which adhered to layout of stores for western people.

                  Third problem was low brand awareness of ‘Walmart’ in Korea. All Walmart stores in Korea were only 16. Walmart hesitated to invest in Korea, so they could get only 16 stores because of low investment. It shows how making quick decision is so important in administering investment. Besides, some people thought that this came from some prominent companies’ domination. Wall Street Journal said “Walmart exits conglomerate-dominated Korea.” It pointed out that some prominent companies dominated market in Korea so it was so hard for foreign companies to get there.

                  However there is one example of successful foreign retail store in Korea. ‘Costco’ is very popular in Korea, and even Costco in Yangjae(One of Costco in Korea) ranked the highest revenue among all Costco in the world. There are two secret of Costco; does not have much margin, and annual fee& refund policy& PB products (Private Brand products). They stick to the fixed margin rate; the margin rate of general products is 14%, the margin rate of KIRKLAND’s products (PB products) is 15%. Customers paid their annual fee gladly. That is because they satisfy with refund policy and Private Brand products. They can get refund any time (only computers have limit), and the quality of PB products is very good even though the price of these is cheaper than others. Through examples of Walmart and Costco, we can learn that researching and adapting to culture decide company’s fate. 

Pictures from : http://blog.naver.com/jmk654/220137712767

       http://news.naver.com/main/read.nhn?Code=LSD&mid=sec&sid1=101&oid=001&aid=0001433262

       http://terms.naver.com/entry.nhn?docId=1115031