Lipton in South Korea
Will their ice tea succeed?
Overview
• Categories:
– Product
– Price
– Place
– Promotion
• Subcategories for each
section further analyze
the Korean market
Product
• 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
Pricing
• 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
Place
• 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
Promotion
• 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