DIMCHAE :

WINIA MANDO DIMCHAE : Creative Thinking & Technological Innovation

INTRODUCTION COMPANY OVERVIEW TECHNOLOGY OVERVIEW DESCRIPTION & ANALYSIS OF THE CASE SUGGESTION FOR IMPROVEMENT FUTURE EXPANSION

INTRO. CONFIDENCE of ORIGINAL TECHNICAL LEADER The Original “DIMCHAE” CF. • Emphasize their name value “DIMCHAE = Kimchi-fridge” & Technical KNOW-HOW Please show me aDIMCHAE. Madame, don’t you know they are all of the same sort. It’s been years they have been catching up with DIMCHAE~. Catching up? Ah… no, they are just… like friend, FRIEND!

COMPANY OVERVIEW • 1962. 10 Established “HyundaiYangHang” Corporation • 2 Renamed as “Mando Mechanics” • 1990. 3 Released ‘Glacier Package Air conditioner.’ • 1993. 9 Released residential air conditioner brand ‘WINIA’ • 1994. 3 Released Room air conditioner • 1995. 11 Released Kimchi-fridge brand ‘DIMCHAE’ Selected as an eco-friendly enterprises(Ministry of Environment ) • 1998. 9 Won “JangYoungSil” prize ( Kimchi-fridgeIR 52 ) • 1999. 11 Launched “Mandomutual-assistance “ • 2000. 12 Won 1st Prize ( Korean Industrial Design Power ) Produce 1millions of Dimchae • …… • 2003. 4 Changed the name to “Winiamando” • 2004. 8 Sold mechanical air conditioning business • ……. • 2005 ~ 2010 Won 1st Prize in NCSI ( Dimchae ) HISTORY. Early Mover of Kimchi-Fridge Industry & Technology

COMPANY OVERVIEW • Management ideology • Customer First + Humanity • → Quality and safety • Korean Standard Quality Competitiveness Index(KSQI) • International Organization for Standardization(ISO) • Korean Standard㉿ • JangYoungSil Prize Customer-First VISION. Humanity • Toyota Production System → WM Production System • Performance incentives • Proposal Activation Change & Innovation

1. Product Innovation Fermentation Science Creative Thinking Korean Tradition Jar Culture + Western Housing Culture KIMCHI REFRIGERATOR • Kimchi Research Institute succeeded in creating Database of Kimchi fermentation principle • Provides a mechanism of fermentation for Delicious Kimchi, at an optimized temperature that helps maintain its desired taste for a long time • Ideal appliance for keeping other foods like vegetables, fish and meat fresh

2. Radical & Incremental Innovation Incremental Innovation RadicalInnovation Creative Thinking Refrigerator for Kimchi is Radical Wine storage & Refrigerator/ Freezer Is added to Dimchae • Opened a New Kimchi Refrigerator Market • Threat of Rivals Dimchae continuously innovated

3. Architectural Innovation Creative Thinking • 4. Competence-Enhancing Innovation • WINIA is based on automobile climate control. First specialized air condition company in Korea • Accumulated Know-how of refrigeration

1. Overview of the market With market maturity & harsh competition, Dimchae loose a lot of market share & profit Dimchae prosper as an early mover, and the leader of the market

2. Financial Overview of the Company • Accumulated number of Dimchae sold over the years • At first there was a rapid growth of Dimchae sales, • However, after a certain point (year 2003) the slope of the • graph is declining •  Why?

3. Financial Overview of the Company • Number of Dimchae sold each year Phase2 Phase3 Phase4 Phase1 • Phase 1: Market uncertainty, but successful marketing led to early growth of early adopters • Phase 2: Rapid growth of early majority due to Dimchae’s reputation as market leader and its quality • Phase 3: Saturation of Kimchi refrigerator market & strong competition results in poor performance of Dimchae • Phase 4: Life cycle of Kimchi refrigerator: 7 years. Chance for Dimchae to attract customers from 2001 & 2002

4. Kimchi-fridge :EARLY MOVER • Fast growing Market & Slowly evolving Tech • * With limited company resources • : Short-lived advantage only • * With strong resources • : Durable advantages

5. SWOT at Market Entry Strength Weakness Expensive price No experience & Brand image as a electric home appliance High technology Satisfying customer’s need Offensive Strategy! SWOT Analysis a niche market capture customer’s trend Blue ocean market The possibility of increasing supply of apartment The Change of life style Major companies such as Samsung, LG, Daewoo Releasing competitive KimchiRefrigerator Opportunity Threat

6. Early Adopter’s Buzz Marketing (1) • Buzz Marketing relies on individual’s personal recommendations to promote a product, brand or service. It produces good results at very low cost. • Early Adopters well integrated into their system and have the greatest potential leadership. About 13.5% of individuals to adopt an innovation Early adopter Early Adopter’s Buzz Marketing Leading to Early majorityfirmly and quickly Thanks to early adopters recommendations.

6. Early Adopter’s Buzz Marketing (2) Through buzz marketing, booming Dimchae EarlyMover Satisfaction of Early Adopter • First time (1995) Selecting the fifty influential housewives who live in GangNam. After a two-month trial of Dimchae, providing the product at half-price => All members Purchase • Second time (1997) Selecting the two hundred housewives in general. After a three-month trial of Dimchae, providing the product at half-price => All members Purchase • Third time (1998) Selecting the three thousandfemale opinion leaders After a four-month trial of Dimchae, providing the product at half-price => over 90 % of them Purchase

7. Progress over the years • Market during 2001 - 2003 • Kimchi refrigerator market size gets bigger, even to the point of 47% supply rate to targeted customers. • However Dimchae’s market share drops from 90% of late 90s to just a bit over 50% • Market during 2004 - 2006 • Kimchi refrigerator market becomes a red ocean. (60% supply rate to targeted customers) • Dimchae’s market share drops to 23-27%, while competitors’ market share rises to Hauzen(Samsung) 28-34%, Dios(LG) 32-37% • Market during 2007 to now • Because product life cycle is 6-7 yrs, there will be a lot of replacement demand. • NBCI(National Brand Competitiveness Index): Dimchae(78), Hauzen (70), Dios (67) • Market share(2009): Hauzen 36% Dimchae 33%

1. Industry Analysis • Many suppliers due to preexisting conventional refrigerators • Relatively low • Mature market • High Market Concentration Suppliers Rivalry within industry Threat of New Entrants • Samsung (Zipel) • LG (Dios) • Daewoo, etc. Customers Threat of Substitutes • Average family • Low Demand Elasticity • Conventional refrigerator • But, Kimchi fridge is now a specialized domain Porter’s Five Forces • Self-sufficient in R&D and manufacture • Bargaining power: Company > Customer • Low threat of new entrants and substitutes Strategic Intent • Focus on industry competition • Gain competitive advantage: Value & Brand • Gain market share  #1 position

2. Internal/External Analysis Strength Weakness Core Technology Intelligent Fermentation 3G+ Brand Pioneer of kimchi fridge • Still more expensive than rivals • Lower diversification in appliances • Lower overall company revenue • Fewer marketing resources • Market still growing • Customer needs&lifestyle changing • Possibility of demand overseas • Demand from previous owners • Offline market lead lost to Samsung • Total of 250 different new models • Standing-form portion: 27%  36% • Samsung leads in standing-form models Opportunity Threat SWOT Analysis Today Offensive Adjust Strength • Inform customers technological superiority • Reinforce brand position • Diversify Kimchi fridge models • Invest in standing-form models Opportunity Threat Turn-around Defensive • Sell cheaper low-end models • Related diversification into other appliances Weakness

3. Strategy Measurement • Balanced Scorecard • Mission • Focus on industry competition • How • Financial • Customer • Internal Management Processes • Innovation & Learning • Objectives • Market dominance • Maximize returns • Profitable Growth • Manage operating costs • Industry leading customer loyalty • High brand loyalty • Customer service • Effective customer service • Enterprise-wide risk management • Ensure Market-driven skill • Industry leading employee satisfaction • Superior R&D • Measurements • Market share • Return on equity • Revenue growth • Operating costs/customer • Customer Satisfaction Rating • Retention rate • Survey rating • Customer satisfaction rating • Problem resolution cycle time • Product diversification • Strategic skill coverage ratio • Employee satisfaction rating • Number of new innovations

FUTURE EXPANSION OF PRODUCT INNOVATION • Technology-driven • Implant RFID tag in each container to keep track of foods inside fridge • Use Bluetooth to interact with other kitchen appliances and PC • Use barcode scanning and internet for food information retrieval SMART FRIDGE • Market-driven • Include scheduler in user interface for smart food management and to clean the fridge periodically • Contents information retrieval via text message or e-mail

DIMCHAE :

DIMCHAE :

Presentation Transcript