Running head: DISTRIBUTION INDUSTRY SYSTEM
The evolution of the Distribution Industry system in domestic competitive market : A case
study of LG Household & Health Care and AMORE PACIFIC
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Thesis
KAC International Business
Keimyung University
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DISTRIBUTION INDUSTRY SYSTEM
Table of Contents
Abstract
1. Introduction
Explanation of purpose and background information
Explanation of thesis statement
2. Literature Review
- Development in Distribution industry in domestic market (History)
- Distribution system development in off-line markets
- Distribution system development in on-line markets
3. Methodological Approach
- Case 1 : Distribution system Development in LG Household & Healthcare
- short history
- overall development
- off-line markets
- on-line markets
- Case 2 : Distribution system Developemtn in AMORE PACIFIC
- short history
- overall development
- off-line markets
- on-line markets
4. Analysis
- Comparison between Case 1 & Case 2
- Answering the success factors of both Case 1 & Case 2 and comparison
5. Conclusions
6. References
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DISTRIBUTION INDUSTRY SYSTEM
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Abstract
This study examines the development of distribution industry system in domestic market and
compares the success factor of renewal distribution system between LG Household & Health
Care and AMORE PACIFIC. In broad way, we analyze the evolution of distribution system
More specific, we empirically focus on how the current development in distribution system
had led to make success in business between LG Household & Health Care and AMORE
PACIFIC. (I will finish up later…maybe at the last.)
Keywords : distribution industry, distribution system, LG Household & Health Care,
AMORE PACIFIC
Introduction
After the domestic distribution industry opened distribution market in 1996, the overall
structure of several markets, department stores, traditional markets, developed to the other
various form of markets for example, super supermarkets, and non-store retailing. In addition,
Lim noted that “the financial crisis, happened in 1997, accelerated the development of
distribution industry structure, and finally it affected a lot to advance domestic market’s
distribution systems” (2009, p 155). In case of super supermarkets, they are extremely
emerging markets as growing annually with 18.1% from 1999 to 2009, and currently the
famous and big 3 competitive markets, such as Homeplus, E-mart, and Lotte mart, they own
their market share overwhelmingly. Also, the non-store retailing growing up fast annually
with 30.4% from 1999 to 2009, especially, TV home-shopping, internet shopping, and open
markets’ growth were sky-rocketed. Relative to these on-line markets, off-line markets, for
example, department stores, traditional markets, and even super supermarkets, are in
DISTRIBUTION INDUSTRY SYSTEM
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downstream because they became saturated markets, changed household structure in society,
consumer’s confidence shrank by inflations, and development of business model by IT
technology.
Some major off-line markets’ growth rate has been fallen; otherwise, the on-line markets’
growth rate has been sky-rocketed. Not only just the on-line markets but also, small-sized
convenient stores, drugstores, and medium-priced outlets are in upstream.
There are two main good examples for achieved and still having success through changing
their distribution system for the same reason, LG Household & Health Care and AMORE
PACIFIC.
Literature Review
The modern distribution system firstly emerged in Korea in the era of economic development
plan (1962~1973). Throughout the plan, the economic scale and the amount of suppliers
enlarged, and the quality and quantity level of consumption developed therefore the
distribution industry could be matured. However, the concept of distribution system were not
settled well because lack of knowledge and related laws, and social awareness problem
among consumers. Fortunately, the domestic economic structure started to change in the early
1980s, and the 24th Olympic Games (88 Olympic Games) hold, the perception of distribution
industry system had changed positively. In 1990s, the distribution industry fully matured in
domestic market, and especially the super supermarkets emerged therefore the whole process
of distribution channel well-circulated. Not only the super supermarket the newly emerged
distribution channel, but also there were other off-line and on-line markets emerged such as
DISTRIBUTION INDUSTRY SYSTEM
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small-sized convenient stores, medium-priced outlets, open-markets, TV home-shopping,
internet shopping. Different from the original department stores, supermarkets, and
traditional markets, new emerged markets were successful for consumers because of using
STP strategy to differentiate and to develop the distribution system.
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Off-line markets
Explanation of changes of off-line distribution channels with reasons
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On-line markets
Explanation of changes of on-line distribution channels with reasons
Methodological Approach
Analysis
Conclusions
References