Lipton in South Korea

1. Lipton in South Korea Will their ice tea succeed?

2. Overview • Categories: • Product • Price • Place • Promotion • Subcategories for each section further analyze the Korean market

3. Product • The following will affect Lipton’s entrance into the S. Korean market: • Legal Issues • Consumer Behavior • Cultural Issues

4. 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”

5. 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

6. 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

8. 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

9. Pricing • The following will affect Lipton’s entrance into the S. Korean market: • Competition • Economic

10. 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

11. 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

12. Place • The following will affect Lipton’s entrance into the S. Korean market: • Consumer Behavior • Economic • Infrastructure

13. Economic • Population distribution • Seoul: 10,331,000 • Busan: 3,786,000 • Incheon: 2,582,000 • Increase distribution in these areas because of population concentration

14. 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

15. 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

16. 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

17. 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

18. Promotion • The following will affect Lipton’s entrance into the S. Korean market: • Technological • Legal • Competition

19. 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

20. 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

21. 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

22. 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

23. Brought to you by: • Allison Bennett • Nicole Curtner • Ryan Hoban • Jennifer Jacobs • Jennifer Sorin