south korea _ lipton
TRANSCRIPT
Lipton in South Korea
Will their ice tea succeed?
OverviewOverview
• Categories:– Product– Price– Place– Promotion
• Subcategories for each section further analyze the Korean market
ProductProduct
• The following will affect Lipton’s entrance into the S. Korean market:– Legal Issues– Consumer Behavior– Cultural Issues
Legal Issues
• Unilever is currently established in S. Korea– They sell mostly personal care products– This is crucial in S. Korea where a communication channel with
the government is key
• Legal standard of requiring Korean labels on all products– Would require Unilever to change their labels– Could possibly lead to misinterpretation of “ice tea”
Consumer Behavior
• Very brand loyal– Consumers are more likely to buy a product if it states
that it was produced in S. Korea– They are more likely to buy a product which has a known
label on it• Lipton would therefore sell under the Lipton brand
name
• Quality Concerns– Emphasis on health benefits of product
• Shy away from additives and preservatives• The added preservatives in Lipton’s ice tea may cause
hesitation among S. Korean consumers
Consumer Behavior• Koreans consider themselves a “tea culture”
– Tea is seen as being a stimulating and healthy beverage– Tea is seen as a tradition in Korea– Might be hesitant to try a “new age” version-ice tea
• The word tea connotates a feeling of respect – Using the word “tea” on packaging could lead to consumer
skepticism
• Also, Korean “new age” beverage market is expected to decrease 30.1% by 2008– Might be considered risky to venture into this market right
now
• Lipton would probably want to bottle their ice tea in smaller cans– Cans tend to be more popular in S. Korea than bottles– Consumer preference leads can sizes to be taller and skinnier
than an American can
Cultural• Refrigerators sizes tend to be the same as standard
American versions– Would influence the size and quantity of product being
bought– Buy packages of beverages in 250ml-330ml units
• A Lipton ice tea out of a vending machine is 591 ml– Buy large units at their supermarkets which are 1.5
liter
PricingPricing• The following will
affect Lipton’s entrance into the S. Korean market:– Competition– Economic
Competition• Lipton’s price should be
based off of similar selling products– According to the
website, ikoreaplaza.com, similar selling new age beverages sell for $.99
– Lipton would need to sell their ice tea at a similar price in order to gain competitive market share
Economic
• The purchasing power parity of Korea is $17,111 as opposed to a purchasing power parity of $39,000 in the U.S.– Less likely to try new
products– Lipton’s price will have
to be sensitive to their relatively low purchasing power
PlacePlace• The following will
affect Lipton’s entrance into the S. Korean market:– Consumer Behavior– Economic– Infrastructure
Economic
• Population distribution– Seoul: 10,331,000– Busan: 3,786,000– Incheon: 2,582,000
• Increase distribution in these areas because of population concentration
Consumer Behavior
• In big cities there is a trend to buy at larger, discount stores– Has been best method for marketing foreign products
• Hypermarkets and supermarkets sell the same amount in total food sales– They are more likely to take or showcase foreign
products
• Traditionally, consumers prefer to shop at a supermarket within their apartment complex, or near their home, rather than travel far distances to a hypermarket– However, there the new trend is to visit a hypermarket
once a week, rather than go to a smaller retail location multiple times a week
Infrastructure• Unilever currently has a production facility in S.
Korea – Daejeon – est. in 1993
– Currently produces:• Personal care items (shampoo, lotion,
toothpaste)– Possible to set up production for ice tea– Would save on costs regarding imports
• Alternate option of production:– Unilever has an existing partnership with PepsiCo – Because PepsiCo is already established in S.
Korea, partnering with them could reduce manufacturing costs
Infrastructure (2)• Transporting Lipton:
– Established distribution methods (roadways, air, etc.)
• CJ-GLS is a distribution service provider– Uses mostly trucking throughout the country– Has means to use air and ocean freight– Also takes part in distribution consultations
• Unilever could partner with CJ-GLS in order to move Lipton throughout Korea efficiently
– CJ-GLS has logistical expertise in Korea– They focus on lowering costs for their
customers– Work individually with customers to
formulate a customized plan
Infrastructure (3)• Retail locations
– Hypermarkets• They are being placed in larger suburban cities because
there is more space• Their daily visitor counts range from 10,000- 300,000• Sold more food than any other retailer in 2001
($13,988,000)– Supermarkets
• They typically carry a wider variety of products than smaller, family owned stores
• Often carry new food and beverage products– Kiosks/Vending Machines
• Convenient for consumers on the run• Ideally located in high-traffic areas
PromotionPromotion• The following will
affect Lipton’s entrance into the S. Korean market:– Technological– Legal– Competition
Technological• Unilever currently uses the following established
advertising agencies in S. Korea:– J. Walter Thompson Adventure– Lintas– McCann Erickson – Ogilvy & Mather
• Unilever uses these four firms no matter the country– Consistent message across countries for one brand
image
Technological (2)• Key media vehicles
– TV is most popular medium• 100% of households own a television• Average adult watches 106 minutes of TV per day• Aligns with current promotional strategy
– Newspapers• They are second most popular form of advertising• Newspaper ads account for 31% of all advertising
expenditures• Would require Lipton to slightly change current strategy
– “Outdoor”• Lipton could be promoted on vending machines • Efficient because product is promoted at the point of
purchase– Sponsorships
Legal• The pre-established advertising firms operating in S. Korea would
help guarantee that Lipton promotions followed the rules and regulations of Korea– Some examples of these restrictions include:
• Advertising should not contain exaggerated statements and visual presentations
• Different or exaggerated presentations of ingredients and content
• Indications or presentations of health improvement, longevity, and youth maintenance capabilities
• Portrayal of product as natural food rather than artificial food• Presentations of food being consumed in an unrefined
manner of being handled
Competition• The following would be direct ice tea competitors:
– Lotte Chilsung Beverage Co, Ltd.• Largest beverage company in S. Korea• Lotte produces carbonates, juices, and health drinks
– Nestle– Other beverage competitors in S. Korea:
• Iced coffee (44.3% market share)• Other (31.10%)• Herb-based (13.20%)• Malt-based (6.0%)
• Knowledge of competition is crucial for product positioning
Brought to you by:• Allison Bennett• Nicole Curtner• Ryan Hoban• Jennifer Jacobs• Jennifer Sorin