Regional Branding Issues and Successful Strategic Guidelines

1. Regional Branding Issues and Successful Strategic Guidelines 25, April, 2013 Korea Productivity Center Director Sang Min Baek E-mail: smbaek@kpc.or.kr

2. Introduction of Presenter • Working at Korea Productivity Center • <One Village One Brand> Project - 2010 year: Indonesia - 2011 year : China, Chile - 2012 year : Cambodia • <Regional Branding Strategy Development>Project - 56 localgovernmentsin Korea (including Jeju Island) • Regional Brand Expert Lecture

3. Ⅰ. Overview : Regional Brand

4. 1. Definition of Regional Brand • Regional Brand [RB] : Brand that carries images of particular region • Product Brand [PB] : Brand with applied local equity of particular region • Local Brand, City Brand, City Marketing etc. expressed in several terms Regional BrandStructure Relation between RB& PB Co-existing Relation to promote Regional Awareness Regional Brand [RB] Regional Product Regional Brand Application Product Brand [PB] Development

5. RB PB Regional Image (Region Brand) Regional Product Image (Products Brand) Overall and Strategic Management Activities in terms of Competitiveness of An-dong City from Internal/External Consumers’ Perspectives Apply Regional Brand of An-dong City 2. Componentof Regional Brand Relation between Regional Brand and An-dong City Synergy

6. 3. Goal of Regional Brand • Due to limited development focused on Centralization of Government, region must develop differentiated regional feature on their own • Necessity of Added-value Creation due to Changing Era (Industrial Society  Knowledge-oriented Society) B R A N D I N G Competitiveness Improvement of Regional Industry Respond to Opening-Market Protect Regional Feature and improve Inflow Environmental Improvement of the Region Growth Potential Development  Produce Profit Maintenance and Management of Traditional Culture and Resource of the Region • Consumer Needs (Safety, Health) • Economic Globalization • Distributional Evolution (Parcel Service) • Information and Communicational Evolution(Internet)

7. 4. Statusof Regional Brand in Korea Individual Agricultural Product Brand Status * Impossible to monitor the status of individual agricultural product brand status

8. 4. Statusof Regional Brand in Korea Individual Agricultural Product Brand Status * Impossible to monitor the status of individual agricultural product brand status

9. 4. Statusof Regional Brand in Korea Co-Brand Status * 1,500 Regional Co-brands found in 2012

10. 4. Statusof Regional Brand in Korea Regional Festival Brand Status * 900 Regional Festivals found in 2012

11. Ⅱ. Agricultural Product Co-Brand Status

12. 1. <Zespri> Case Study • Quality as Competitiveness • Strict Organic Policy : Natural Nutrient instead of Chemical Fertilizer • Harvest at 0 Level of Pesticide Residue • Export through Exclusive Export Vessel • - Low Temperature System : Maintains at -0.5 Degree Celcius • Drastic Investment on R&D • Hort Research Institute, located in the center of Kiwi Production • Invest App. 5 million dollars Annually, 20% of the Marketing Budget • - Developed Gold Kiwi, Jumbo Kiwi, Organic Kiwi • Export to Worldwide • 25% of Global Market Share • Recorded 80% Market Share at Kiwi Sales Season(May~October) in New Zealand

13. 1. <Zespri> Case Study • Efficient Management • Reasonable Decision-making and Transparency in Accounting Management • Regular Meeting with Producer Union and Packaging Facility Management • Accounting Report and Opinion Gathering through 3 times of Annual Meeting • Contracted Harvest • Contracted with Northern Hemisphere in order to supply Kiwi throughout the year • In Korea, Contracted with Korea Kiwi Production Association “Chamdarae Association” to Cooperate • Marketing Budget • Expensed 19% of Profit into Marketing

14. 2. Reason why Co-Brands Succeeded Why, did they succeed? Because they had survived Kept promise with Consumers Strategically Managed Keep Consumers Informed

15. 3. Co-Brand vs. Certification Brand • Co-Brand • Certification Brand

16. 3. Co-Brand vs. Certification Brand

17. LocalGovernment Efficient Management Issues Distribution / Marketing Corporate Organization Producer or Producer Organization 4. Co-brand MGT Issues and Overview [1]

18. Vision 4. Co-brand MGT Issues and Overview [2]

19. 5. Cause of Co-brand MGT Issues • Job Rotation • Less likely to Understand Definition of Brand • Lacks Cooperative Capabilities among Producers and Marketing Cooperative Body • Communication Budget Local Government Efficient Management Issues Distribution / Marketing Corporate Organization Producer • Stick with Existing Production Method • Not Following Manuals from Government • Lacks Understanding Definition of Brand • Less likely to participate in Training • Lacking Professional Knowledge • Limited Budget to manage Necessary Human Resource • Communication Budget • Lacking Human Resource in Planning, Sales, and Marketing

20. Ⅲ. Strategic Guideline for Agricultural Product Brand to be Succeeded

21. 1. To be loved by your Consumers.. What do you need to be loved by Consumer? Quality Marketing Design

22. Step 1.Strategy on Co-Brand Selection Decide what items should be included in Co-Brand that will be developed later Step 2. Strategy on Co-Brand Organization Building an organization who will carry on the vitalization of Co-Brand Step 3. Strategy on Co-Brand Advantage Decide the distinction between other existing Co-Brands Step 4. Strategy on Co-Brand Manufacturing Manufacture products while keeping its advantages Step 6. Co-Brand Communication Advertise the products and their supremacy, and PR Activities Step 8. Co-Brand Management Keep track of the strength on creating brand value Step 5. Co-Brand Channel Spreading out the manufactured goods to selling place Step 7. Co-Brand Customer Management Understand how customers think about the brand and consider where to aim Market Status Consumer Evaluation Market Status Consumer Evaluation Build Unique Evaluation of the Brand in Consumers’ Mind 2. Roadmap

23. Step 1. Strategy on Co-Brand Selection • ‘Branding the existing goods in a purpose of promoting the selected region’ or‘Branding specialty goods brings a result that the region is promoted’ • What is more important is to select ‘right’ goods for branding to prevent from prospective conflicts regarding PB regional brand business. S 1-1 Consider ‘activation of the region’ as a final goal & be aware S 1-2 Select the competitive goods in the market Key Factors S 1-3 Select the goods that influence the region the most S 1-4 Read the trend & externally re-evaluate

24. Primary Selection Standard Basic Category A Product B Product C Product D Product E Product F Product G Product H Product I Product J Product K Product L Product M Product N Product Specialized Category Factor Consumer Sales Category Production And Quality (Eco-friendly) Constant Supply Measure

25. Secondary Selection Standard A Product C Product F Product H Product I Product K Product L Product Differentiation Opportunity Relation with Regional Image 3-5 Selection Recommended Premium Image Relation with Consumer Perceived Image PR (Issue) Application Small Packaging Possibility

26. Step 2. Strategy on Co-Brand Organization • Establish management organization to carry out the marketing plans and activities • Related local government official takes charge of quality control, education, and PR support. • Following is an example of successful key factors. S 2-1 Strong leadership S 2-2 Establish management system & approach from long-term perspective Key Factors S 2-3 Define clear Roles & Responsibilities S 2-4 Motivate residents to participate

27. Step 3. Strategy on Co-Brand Advantage • Find out key advantages of the selected items through cooperation • with internal or external professionals. • Establish brand concept how to appeal prospective customers. • Brand advantages should be able to create concepts that differentiate from other regional brands. Excellence Strategy Process S 3-1 Create clear ‘difference’ from another region’s brand External Environmental Analysis Ensure brand concept that every related stakeholder agrees on S 3-2 Internal (Organizational) Capability Analysis Key Factors SWOT and CSF S 3-3 Reflect its specialty S-T-P Strategy S 3-4 ‘Brand registration’ as a strategic competency Brand Concept

28. Step 4. Production Strategy • Prior to production, production vision must be settled. • (High quality vs. Premium luxury) • Successful brands keep their promises with customers, • based on the brand concepts with analysis of successful regional brand cases. S 4-1 Keep the ‘Brand Promise’ S 4-2 Ensure stable production and steady supply Key Factors S 4-3 Enhance R&D capabilities to improve product competitiveness S 4-4 Co-work with enterprise, university, and research institution

29. Gap Analysis Y Is current distribution efficient Enhance Distribution N What needs to be improved? Improvement Cost? Low Medium High Enhance Distribution Control? Not Important Important External Partner Establish New Corporate Body Step 5. Distribution and Sales Strategy • Few regional brands have set their target customers and sales strategies or plans. • ‘Selling an existing brands to any where’ will never get us anywhere. S 5-1 Select brand target (who & where) S 5-2 Be steady (not influenced by price reduction) Key Factors S 5-3 Keep trying to develop new sales channels S 5-4 Use internet shopping mall as much as possible

30. Step 6. Communication Strategy • Try diverse communication activities in order to promote the brand’s existence, differentiating characters, and advantageous factors • Communication must match to the concept and the purpose of the goods (Not only using leaflets) • Select right communication tools (mass media or non-mass media), according to following procedures Communication Strategy Process S 6-1 Send information through combination of methodologies Communication Goal Apply & utilize know-how of professionals (professional institutes) Product Selection S 6-2 Key Factors Develop Communication Message S 6-3 Use PR as a strategic competency Select Communication Tool Plan Communication Budget S 6-4 Use the Internet as much as possible

31. Step 7. Consumer Management Strategy • Must carry out activities to motivate customers to re-purchase & measure brand status • Needs to review how the brand is being evaluated by customers & • find out what needs to be mutually pursued • Find and ensure of the loyal customers Consumer Management Process S 7-1 Perceive that actual customers are ‘end-users’ Early Stage Purchasing Consumer List S 7-2 Motivate them to be our ‘fan’ Purchasing Satisfaction Survey Key Factors Find Alternatives to resolve Issues S 7-3 Keep track of customer satisfaction Communication to motivate Re-purchase S 7-4 Pay attention to customers and reflect their voices into evaluation Customer Satisfaction – Brand Competitiveness

32. Brand Management Process S 8-1 • Factors that decrease performance caused by PB Regional Brand Management • Not keeping brand promise • No strict policy (price discount) • No motivation to increase brand value Customer Evaluation Enhance Weakness S 8-2 • GI Registration and hire own patent attorney • Strict packaging management Constant Quality Management Brand Product Extension vs. Management Review Government – Regional Representatives Meeting to make Decision Making Step 8. Brand Management Strategy • Review the competitiveness/advantages in terms of brand value creation • Check the status of brand concept from the 2nd step, and feedback on evaluation • of the customer research from the 7th step in order to be aware of its competitiveness • Production management check-up (if farmers are following the regulations and policies) Exclude internal factors that might decrease brand value Key Factors Exclude external factors that might decrease brand value S 8-3 Keep the brand management on track S 8-4 Review brand extension

33. 3. So, Regional Brand… Regional Brand… Lacks Human Resource and Budget unlike Private Enterprises We need to wait at least 3 years to produce noticeable results 1 B Big Great, Famous Action Plans to develop Big Names using Design 2 R Rear Build, Educate 3 A Action Plan, Activities, Know-how 4 N Name Reputation 5 D Design Plan, Objective

34. Q & A Q & A