International Business Strategy in Selling Korean Pop Culture

Case Study on Big Hit Entertainment

When we talk about international business, companies like Coca-Cola, Nike, and
Samsung were names we often see on various study case. Those companies records are easy
to track and measurable. Those companies are able to excel in their operation, shown from
their selling record, and their powerful marketing that leaving a memorable impression.

In this article, I want to challenge myself to analyze something that is personally

meaningful to me. Something that is huge, but rarely discussed. The culture and music
industry that recently steals the global spotlight, Korean Pop.

The Heir of East Pop Culture Wave

Hallyu or Korean Wave is a term for the increase and widespread of Korean pop
culture global popularity. The major part of the wave was driven by the rapid development of
the Korean entertainment industry and also supported by K-drama and K-pop popularity (Lee
2011; Ravina 2010). Jewel in the Palace, Winter Sonata, and Full House are several from
many dramas that represented Korea in early 2000. Each drama brought its own benefit
towards South Korea ever since. Winter Sonata shooting location, the Nami Island, still is
one of Korea’s main attraction throughout the seasons. Dae Jang Geum, the heroine of Jewel
in the Palace, is the icon for Korea traditional cuisine. Meanwhile, the drama Full House,
succeed to introduce Korea’s modern lifestyle and the children’s song, the Three Bears.

A bit different with K-drama, K-pop year to year evolution seems to be more
structured and even divided into several generations. The first generation of K-pop was
pioneered by SM Entertainment with debuted the boy group H.O.T in 1996. This generation
initiated the culture of a girl group, boy group, and fan club. In this era, the agency shaped the
entertainer (also known as Idol) image to be exclusive and focusing limited on the domestic
market. A little while after the first wave passed, changes in Korean entertainment industry
toward foreign market was moved by individual talents like Rain and BoA.

The second generation of idol started when Hallyu able to enter the global market.
The expansion succeeded in Japan, China, and Southeast Asia market. Even with a limited

1​ | ​RY2018
media and technology at that time, boy group TVXQ and BoA from SM Entertainment made
an achievement conquering Japan market. Another group from SM Entertainment with a
mixed nationality member, Super Junior, became a hit in China and Korea. Another famous
group from this era is Bigbang, 2NE1, and After School. The second generation seals the
golden era with the achievement of JYP Entertainment’s girl group named Wonder Girls by
score the rank 76 on Billboard Hot 100 in 2009 and SM Entertainment’s ace, Girls
Generation to be debuted in the U.S on 2012 after their huge popularity in Asia market.

Both Wonder Girls and Girls Generation unable to beat the U.S market competition.
Instead, the world got a big surprise from the singer Psy, managed by YG Entertainment,
with his mega-hit Gangnam Style. This phenomenon was started on YouTube and it got so
big it opened a new stage of Hallyu. The Gangnam Style song ranked 12 on Billboard Hot
100 for several weeks, marking a new achievement in K-pop history. The Gangnam Style
popularity wasn’t only affecting the music industry, but also Korean culture and its tourism.

Unfortunately, the third generation of the idol that was born in the following year
unable to continue moreover surpass the fame of Gangnam Style. Even when SM
Entertainment kicked off another strategy by debut another mixed-nationality boy group
called EXO, the flame and the fame stays on their usual Asia market and unable to break
through the U.S market. As generations rolled by, so does the market. The third generation is
practically on a whole new level of technology that affecting the industry too.

A quick view, so far there are three big companies got mentioned. SM Entertainment,
JYP Entertainment, and YG Entertainment are the big players that were expected to succeed
in the U.S market. The statement is not only looking from its experiences and number of
talents ready to be their ‘weapon’ but also refers to the giant shareholder that stands behind
them, Alibaba for SM Entertainment and LVMH for YG Entertainment. Yet time passed by,
numerous talent and albums launched later, the long-awaited achievement is far to be found.
Many had thought, the K-pop era started and stopped at the Gangnam style.

In 2017, groundbreaking news surprised many. Rank 7 on Billboard 200 was

occupied by an album from someone unknown, a foreign artist. An album with the title Love
Yourself: Her by a boy group called BTS.

2​ | ​RY2018
The Odd Chance in Korean Pop Industry

The Korean entertainment industry is massive, systematic and competitive. Massive

since its income is estimated to be over $50 billion in 2020 (Maeil Business Newspaper in
Kim 2012), systematic because the idol generation been around since the 90s with the
training, idol, and fandom culture built and grown, and competitive for there are at least 59
listed companies and many other small companies with hundreds of trainees under their
management that betting their luck on the industry.

The difference from other industry, handling the Korean entertainment industry needs
more care on calculating cost and profit. It even gets tricky most of the times. The Korean
entertainment industry does gain profit from the selling of product like albums, digital songs,
official merchandises, concerts, product endorsements or fan club related activity. What
differentiates them from other industry is their greatest product; the brand is sticking to a
human capital. They produce the idols.

Producing idols cost at least 1.5 billion won (approximately $1.3 million) or at the
average about 2 billion won (approximately $1.8 billion), from the trainee period until the
album making. On top of that, the company also needs to prepare $1 million for music video
production cost and about $90,000 each month for appearing in a national music program.
Even with the big sums of money, it takes 2-3 years until the group is known in the market
and only 2% they’ll make it big. With so much to sacrifice yet small chance of winning what
makes the company brave to take the risks?

3​ | ​RY2018
 Time Album Title # of Copy Album Sold
August 2014 Dark & Wild ● 257.373 in Korea
● 946,088 in Korea
● 156,693 in China
October 2016 Wings
● 72,512 in Japan
● 13,000 in the US
● 1,824,672 in Korea
● 264,658 in China
May 2018 Love Yourself: Tear
● 192, 217 in Japan
● 132,000 in the US
● 2,033,472 in Korea
● 215,609 in China
August 2018 Love Yourself: Answer
● 224,323 in Japan
● 231,000 in the US
It is because a successful product can benefit the company this much. Because of that
2% of winning chance, a company is able to make a huge leap on their operation that much.
The significant rise seen in the graphic for South Korea sales was an accumulation from the
countries beside China, Japan, and the US. This means worldwide since usually fans from
that countries buy thru their channel directly in South Korea. It marks BTS success in
conquering the global market. Talking about the number, their achievement is extraordinary.
In South Korea, only a few artists in decades that was able to hit the 2 million sell. In Japan,
they were a history maker too for receiving gold, platinum, and double platinum certificate.
Digitally, BTS become the first K-pop artist or even foreign artist who tops their chart.

Album selling is only part of a company source of profit. There still are merchandise,
concert and shows, advertisement and ambassador contracts, and then the list goes down to
the core, the company’s ability to go public thus the rising of the stock price. Generally, BTS
made a huge achievement 6 years after the Gangnam Style. But most importantly, BTS made
a huge change for Big Hit, saving it from the brink of bankruptcy. BTS is a great example of
a phenomenon, the ideal view that’s dreamt by many companies and trainees.

4​ | ​RY2018
Value Creation

Besides the luck, Big Hit and BTS’ success was the result of a clever planned and
executed strategy in globalization and digitalization era. The success is the result of Big Hit’s
consistency in forming and guarding the brand creation and marketing for years. The result is
actually predictable, even though it is exceeding anyone’s expectation. Around the debut time
of BTS, K-pop was already on the third generation idol who aims the global market.
However, most companies still maintain the exclusive and secretive image surround their
idols. The idol’s appearances were only limited on TV shows or offline event, and the
communication channels to their fans are limited to fan café or fan meeting. Those activities
require a domestic access or physical presence, something unaffordable for the international
market to reach.

BTS is one of the earlier third generation idols who break the exclusive image an idol
hold. While the conventional activities such as concert, music show, variety show
appearance, and fan meeting event were done in both Korea and later expand on Japan
market, Big Hit executes a breakthrough, a YouTube and Twitter usage. In order to reach and
serve the global customer; they used social media as a replacement of physical interaction
between fans and their idols (B2C strategy). The strategy was kicked off by using the
platform to introduced BTS member in 2011, long time before they debut in 2013. Big Hit
was also breaking the language barrier by providing an English subtitle for BTS’ music
video. Through this method, Big Hit was forming their most important stakeholder who’s
loyal and solid, the fandom called ARMY (Adorable Representative MC for Youth).

Since joining YouTube on December 16, 2016, the channel BangtanTV has
accumulated around 1,981,145,562 views. On 2018, the success leads BTS to collaborate
with YouTube Red on making their documentary, Burn the Stage, that later became a full
movie airing on 2500 theatre worldwide, selling around $14 million worth of tickets. While at
the same time since joining Twitter in July 2011, BTS currently has about 17.2 million
followers and at the very least they could reach about 5 million engagements in an hour. At
certain times when BTS make their appearance on events or when it’s the member’s birthday,
the amount of engagement easily skyrockets to 20 or 30 million engagements in an hour. This
brought BTS as the only Korean who nominated and won the Top Social Artist award on

5​ | ​RY2018
2018 Billboard Music Award after being only a nomination on 2017. BTS then close 2018
having the most liked tweet on Twitter.

Besides YouTube and Twitter, another media used by BTS is VLive, a streaming
platform accommodating interaction between idol and the fans. On December 5, 2018, with
around 560 videos they accumulated the amount of 1.5 billion views. Not only listed as the
pioneer in VLive, but BTS was also made a distinct feature by plot their program into several
kinds. Run, Bangtan is the program with games activity, Bon Voyage is the program which
documenting their trips, and aside from that each member has the freedom to do an individual
streaming doing their hobbies or simply interact with their fans.

The social media usage isn’t only reached wider customer but also a saving strategy
for a small company like Big Hit. Tweeting or uploading videos cost Big Hit nothing since
the content could be anything. Hire someone to edit the video might be the only cost they
have. Meanwhile, in VLive, they spend more on the production cost of a program like ​Run,
Bangtan and ​Bon Voyage​, but at the same time, they save a lot from the individual member
streaming since it basically cost nothing. Even though Big Hit doesn’t put any advertisement
on their Twitter nor YouTube, it doesn’t mean they didn’t benefit anything from it. In the
business point of view, Big Hit has used social media effectively to increase the group value
while also keep the cost at a minimum.

Another effective strategy by Big Hit is the consistent and relatable theme in BTS
promotion. BTS debuted with a wild and brave teen image that enables the young customer to
match it with their rebellious side especially towards school as a student. After that, BTS
carried the ​HYYH series reflecting the roller coaster moment of youth right before entering
adulthood. The latest theme was ​Love Yourself era which represents the strong message to

6​ | ​RY2018
hold, fighting the confusion being new to adulthood. The entire theme carried an open
interpretation characteristic that enables fans to create their own story, thus connect it on a
personal level which grows a certain fondness and loyalty towards the brand.

International Business Strategy

For an international business, choosing the perfect strategy is considered upon the
pressure for cost reduction and the pressure for local responsiveness. Pressure for cost
reduction requires a firm to lower the cost of value creation, so its price is affordable or
matches to the market condition. Pressure for local responsiveness means the company needs
to customize their product to suit the local preference. Typically there are basic strategies
available for a company to choose. It categorizes each pressure by its high or low intensity.
The four strategies are global standardization, transnational, international, and localization.

BTS was debuted with a strong hip-hop style instead of the typical flower boy image
and with a speak-up song instead of a typical pop romance song. Their name, ​Bangtan
Seonyeondan (​방탄소년단​) - literal meaning Bulletproof Boy Scouts, along with the strange
concept they brought, enough to catch the public’s attention. The recognition has shown from
the rookie award they received. Even though the message in their song and their performance
was good, but it didn’t match the market’s preference for an idol. Their unique characteristics
were soon judged and put them in an unfavorable category. The category of predicted to be
the group that’s going to fail. Soon after, BTS did a comeback that was different from their
previous performance. While still maintaining the school theme, BTS changed and softened
their style with performing a pop romance song.
The transformation in BTS early performances helps us to see the intensity of the
pressure for local responsiveness. They were free to create any brand identity, which in this

7​ | ​RY2018
case they choose to be different, but since the local preference stays the same they have no
choice but tolerate and change while still keeping their particularity. Since their coverage is
limited to Korea and Japan market, the cost reduction considered low because the operation
was a common activity and supported by the already stabilized system. For example, the
physical albums and official merchandise are common products in the industry, so it was easy
to be produced locally within the targeted market. Meanings, even the album sold in Japan
could be produced in Japan and didn’t have to be imported from Korea. With a high pressure
for local responsiveness yet low pressure for cost reduction, Big Hit seems using ​Localization
Strategy​ during the early years.

Succeed at surviving the Korea and Japan market, BTS then surprised the public at
2015 by releasing their new series, ​The Most Beautiful Moment in Life ​or ​HwaYangYeonHwa
(HYYH)​. Through the series, BTS able to balance their distinct feature to suits the market’s
palette. Unlike the previous series that’s being straightforward in conveying the message, this
series title songs, ​I need U, Run, and Save Me​, could be considered filled the terms of a
typical pop romance song but with a twist on the music video and a deep meaning theme.
Rather than focusing on the girl mentioned at the song, the music video rather focusing on the
boys’ connection with each other. BTS was showing their true color on the side track instead,
like ​Fire, Dope and ​Fun Boyz (​흥탄소년단​ – ​Heungtan Seonyondan a​ wordplay from the
group’s name) when they able to perform more like themselves, powerful song with a
straightforward message and cheeky choreography.
The Most Beautiful Moment in Life series slow but sure started off BTS’ journey in
the global market. It is reflected by entering ​Billboard 2​ 00 charts and even topped the
Billboard Top Heatseeker ​and World Albums for 4 weeks, the most by South Korean act.
Soon after, their next album, ​Wings​, debuted at 26 on the ​Billboard ​200, making it the
highest-ranking K-pop album ever on the chart at the time. The strategy used on ​The Most
Beautiful Moment in Life s​ ongs like ​I Need U, Run, Fire, ​and Forever Young, w
​ as focusing
on synchronized choreography and English word repeated on the chorus. Meanwhile on the
song ​Dope ​and on the title song of ​Wings a​ lbum, ​Blood, Sweat and Tears, t​ he strategy used
was equipped the song with a visually appealing music video and simple Korean catchphrase
at the chorus. The strategy of using repeated simple words on certain language in the chorus
made it an attractive and earworm even for a casual listener worldwide.

8​ | ​RY2018
 BTS officially made their entrance at U.S market when they released their next series,
with the first album, ​Love Yourself: Her,​ which also featured music from the Chainsmoker on
the song “Best of Me”. This album’s title song “DNA” was breaking the record for most
viewed K-pop group music video within the first 24 hours and became the highest-charting
​ ot 100 for a K-pop group, beating Wonder Girls’ previous record. A
song on the ​Billboard H
remix by Steve Aoki featuring Desiigner for the song “Mic Drop”, peaking at number 23 in
South Korea and number 28 on the ​Billboard Hot 100, becoming their first top 40 entry for a
K-pop group on the chart. Both “DNA” and “Mic Drop” were then released as a triple-A side
single in Japan with the new song “Crystal Snow” which topped the Oricon Chart, becoming
the highest-selling single from a K-pop artist within a week, and making BTS the first foreign
artist to achieve this. Later that year, BTS became the first K-pop group to perform at the
American Music Awards and ​Dick Clark’s New Year’s Rockin Eve​; they also made their
debut on Japanese TV music show.
BTS started their 2018 by receiving a Double Platinum certification from the RIAJ,
the only single album by a foreign artist in 2017 that did it, became the first artist outside the
“Big Three” to win both Daesang awards at the Golden Disc Awards and the Seoul Music
Awards respectively. Their third Japanese studio album, ​Face Yourself,​ debut at number 43
on the ​Billboard ​200 as the third-highest-charting Japanese album in the history of the chart.
​ usic
The next album, ​Love Yourself: Tear premier the new title song at the 2018 ​Billboard M
Award and was able to top the US ​Billboard 200, becoming the first K-pop album to top the
US albums chart and the highest –charting album by Asian act.
See through the strategy Big Hit used for winning the global market, US specifically,
it seems that they use the ​Transnational Strategy​. It’s shown that they have to face high
pressure for both cost reduction and local responsiveness in order to raise their international
profile. The obstacle became more complicated since they had to conquer the global market,
while still maintaining the local market. So at the same time, they have to keep their identity,
suit various markets, and also fulfill the member’s need, personal desire and capacity.
Pressure for cost reduction arises when battling with digitalization. In order to keep
their customer, the fandom, loyal, they need to maintain their products affordable to their
segmented market, teen and young adult. Because even digitalization benefits Big Hit in
another way, increasing chance of piracy is a real threat towards the selling of their physical
products like albums and official merchandise. They have to plan carefully whether to

9​ | ​RY2018
collaborate with a third party either to produce locally or to transfer their goods in a
wholesale and reducing shipment cost. Not only goods, but they also have to jam-pack the
schedule, as many activities as possible within the period of time outside Korea since a trip
abroad cost them. Talk shows, awards, ambassador events, producing and networking are
roughly the lists of BTS’ back to back activities during the international promotion.
Meanwhile, pressure for local responsiveness stays at the high category, since BTS
has to suit with what the global customers prefer and accustom to. It is shown from the
collaboration with a global artist such as the Chainsmoker for the EDM genre also Steve
Aoki and Desiigner for the Hip-hop genre and even went to the limit of making the English
version for their remix song “Mic Drop”. BTS’ way of responding to local taste was also
shown when they drop the song “Airplane Pt. 2” which taking a Latin-pop genre. Throughout
the ​Love Yourself, era another adjustment was made by the choice of stage outfit. Rather than
a flower boy look, they were striving more to fresh trendy look or chic glamour outfit based
on the event or song concept.
The last album completing the series was ​Love Yourself: Answer. The title song “Idol”
has shown a different respond towards the pressure of local responsiveness. The alternative
version was featuring Nick Minaj yet instead of following the mainstream genre, the whole
song and music video is pretty much showing their entire feature as a boy group from South
Korea. The lyrics describe their experience as an idol, the music is combining the sound of
various Korea traditional authentic instruments, the choice of outfit is a modern and
modification from Korea’s traditional costume and even the music video is filled with Korean
culture reference.
An information worth to be noted, during the period of ​Localization Strategy, Big Hit
worked and hired Korean to produce the albums. During the Japan-Korea promotion, Big Hit
relied heavily on a Korean choreographer, Sun Songdeuk, and also BTS’ member on the
album making. Big Hit worked efficiently, made it one of their way to respond cost reduction
and local responsiveness pressure. When the company shifted to ​Transnational Strategy, they
started work with the global artist, choreographer, and other music industry-related
companies to produce music and products to suit the local responsiveness while maintaining
the reduction cost. To get closer to fans, they increased the utilization of English as a
universal language on songs, interviews and social media.

10​ | ​RY2018
 The shift of collaboration and offer they took also reflected their change of strategy.
During their ​Localization Strategy era, offers that BTS get to be a brand ambassador was
limited to the local brand for local need like collaboration for a magazine, telecommunication
operator (SK telecom), chicken franchise (BBQ Chicken), and high school uniform (Smart).

Meanwhile, going global and using the ​Transnational Strategy enables BTS to work
with an international brand that reaches and connect with a wider range of customer. A work
with Puma on the special basket patent with a flower signature at the heel, with Coca-Cola
for 2018 FIFA World Cup in Russia, and with LG for releasing G7 special edition were the
list of BTS’ international collaboration. The also becoming Lotte Dutty Free ambassador and
Seoul city face for the “I Seoul U” campaign for international marketing purpose.

Another strategy Big Hit used was by making collaboration between BTS and Line
Friend, one of Asia’s popular tech companies, on making characters called BT21 for the
launch of a collection of merchandise and streetwear line. The stickers that launched in Line

11​ | ​RY2018
messenger application hit the success and so does the collection of streetwear and
merchandise that are available in physical Line store that available in several places from
Seoul to New York. BT21 success leads to collaboration with different brands such as in the
release of BT21 ​Puzzle ​Star game, a special edition of All Star x BT21 with ​Converse​, and
BT21 special series by Dunkin Donuts.

The mixture of Big Hit’s smart strategies, BTS member’s talents, ARMY the
powerful fandom, and luck leads all parties to something bigger than anyone imagined.
Becoming UNICEF partner for “Love Myself” campaign on the #ENDviolence agenda which
advocate youth against violence, gave BTS a speech opportunity at “Youth 2030” for the
launch of ​Generations Unlimited by the United Nations. Their huge success and positive
influence on youth worldwide also made them listed in Forbes 30 Under 30 and portrayed for
​ agazine titled the Next Generation Leaders. Last but not least, they put an
the cover of ​Time m
end to 2018 by bringing the unexpected news of a Grammy nomination. Even though the
nomination is for Best Recording Package category, that was done by a branding company
named “HuskyFox”​, i​ t proves the recognition earned as a whole team collectively to not only
bring a high-quality music and a powerful message but also equipped with top-notch visuals
and packaging that coincide with the larger themes represented by the music.
Big Hit’s biggest success wasn’t only making BTS as the group who save the
company from the brink of bankruptcy, but also as the group who save the generation of
youth worldwide by leading an example of hard work, consistency, and enjoying moments in
life as the most beautiful one. The values that differentiate BTS from others, something that
is unbeatable at the present. Either Big Hit able to advance BTS and mainly their company, or
show the industry they count on luck, only time will tell.

12​ | ​RY2018
Reference

Hill, Charles W.L (2013). ​International Business: Competing in the Global Marketplace-9​th
​ ew York, NY: McGraw-Hill/Irwin.
ed. N

https://www.researchgate.net/publication/324446216_International_Business_Strategy_in_Se
lling_Korean_Pop_Music_A_Case_Study_of_SM_Entertainment

https://www.researchgate.net/profile/Ingyu_Oh/publication/289369365_From_B2C_to_B2B_
Selling_Korean_pop_music_in_the_age_of_new_social_media/links/57336a2408ae9ace8407
3a53/From-B2C-to-B2B-Selling-Korean-pop-music-in-the-age-of-new-social-media.pdf

https://en.wikipedia.org/wiki/K-pop

https://en.wikipedia.org/wiki/BTS_(band)

https://en.wikipedia.org/wiki/BTS_albums_discography

https://www.linkedin.com/pulse/k-pop-group-bts-marketing-strategy-successful-use-social-le
%C3%AFla-naslin/

http://time.com/collection-post/5414052/bts-next-generation-leaders/

https://www.bloomberg.com/news/articles/2017-12-17/mogul-behind-world-s-most-tweeted-
about-boy-band-considers-ipo

https://www.forbes.com/sites/tamarherman/2018/03/22/bts-label-big-hit-entertainment-more-
than-doubled-its-revenue-in-2017/

https://www.forbes.com/sites/jamos/2018/11/18/bts-breaks-the-box-office-bank-with-burn-th
e-stage-the-movie/#ed66e9752a9d

https://www.cnbc.com/2018/09/05/why-tickets-for-bts-us-tour-are-more-expensive-than-tayl
or-swifts.html

https://www.smh.com.au/entertainment/music/m01cover-20170323-gv4uiu.html

https://www.billboard.com/articles/columns/k-town/8006877/bts-line-friends-bt21-collab-ne
w-fashion-emojis-k-pop

https://www.usbtsarmy.com/bts-endorsements/

https://www.billboard.com/articles/news/8476923/bts-un-speech-army-fan-reaction

https://www.billboard.com/articles/columns/k-town/8489161/bts-2019-grammy-nomination-
best-album-packaging

13​ | ​RY2018