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