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 Liptons 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 Liptons 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 Liptons entrance into the S. Korean market: Competition Economic

Competition
Liptons 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 Liptons price will have to be sensitive to their relatively low purchasing power

Place
The following will affect Liptons 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 Liptons 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