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Discovering the Korean Consumer (Part II)
Who Wields the Won? - Housewives
By Tom Coyner
Korea Times
August 16, 2006
This
week, we focus on the reality that not all consumers are purchasers. So,
let's address the ultimate question:
WHO WIELDS THE WON?
To discover who controls the purse strings, one must enter the
Korean housewife's domain. Also, more recently, young single adults and
kids have become significant purchasers as well as consumers.
Housewives
To those familiar with traditional society, it comes as no
surprise that the housewife does most of the purchasing. In the past,
division of labor cast this role upon women. Today, the custom continues in
many industrial societies such as Korea -- even when more and
more women are working full time.
Research has shown that housewives make as many as eighty
percent of supermarket purchase decisions -- in addition to selecting
household durables such as electric rice cookers, microwave ovens and
washing machines. For items such as televisions, PCs and audio equipment,
they split the decision-making with their spouses. Since most Korean
housewives are not in the job market, they have ample time for daily
shopping. in addition, the media bombard them with
vast amounts of commercial information. The result is a consumer alert to
marketplace conditions, and a consumer who determines purchasing by quality
as well as by price.
Children and young adults
Another major influence on Korean housewives' purchasing is
the degree to which they favor their children. It is common in patriarchal
societies for the female to derive considerable power from child upbringing
-- especially of sons. Consequently, children are pampered. Korean families
will make great sacrifices for their offspring's welfare.
In many circumstances, it's the children who dictate the
buying decisions for various consumer products. They are quick to adopt new
and novel products, concepts and styles. One should remember that
approximately nineteen percent of the nation's population is under the age
of fourteen. And for good or evil, minors often get hold of their parents'
credit card information to purchase goods and services over the Internet.
As young people increasingly delay marriage, those singles in
their twenties and early thirties are among the nation's most aggressive
consumers. They live a relatively carefree lifestyle often with substantial
discretionary spending money.
Focusing on young adults, housewives and children
Since a great deal of purchasing power is in the
above-mentioned consumers' hands, they are quite naturally among consumer
marketers' prime targets. This simple fact propels women's magazines'
variety, quality and large circulation -- and now the same is influencing many
Internet web sites and blogs. At the same time, the marketer needs to know
as much as possible about the Korean housewife, her wants, needs and
purchasing motives. Marketing appeals directed at the housewife emphasize
her comfort requirements and her self-image.
It also pays the marketing manager to keep abreast of the
latest mobile phone and Internet trends. Top marketing professionals try to
anticipate which leading edge wireless consumer technologies are likely to
succeed, and how consumer patterns will be impacted. Increasingly, fashions
and tastes are changing literally at Internet speed.
Influencing consumer behavior with caution
By what mechanism does a consumer group come to accept corn
flakes over rice for breakfast? No one knows for sure. The variables are
far too complex to answer this question with anything more than a set of
assumptions.
One fact, however, is certain: Korean society is undergoing a
rapid transformation, accepting many foreign concepts relative to life's
basics, including food, clothing and shelter. Given these conditions, it is
far better to ride the changing currents' tide than to invite disaster by
attempting to divert trends too quickly to one's objectives.
Consider the introduction of sanitary napkins into Korea.
They were virtually unknown here until female U.S. Peace Corps Volunteers
introduced them in the 1960s. Riding the waves of Western fashions and
convenience, they were a huge success. The timing was right.
In contrast, for years, foreign companies have tried to change
Koreans' breakfast menus. Enormous advertising and production investments
have generated disappointing results. Only a minor percentage of Korean
households have adopted simpler Western style breakfasts. It is difficult
to say why most have resisted the change. Perhaps it has been a case of too
much, too soon. On the other hand, how many typical Americans substitute
Japanese instant miso soup for cornflakes each
morning -- or place a helping of kimchi along
side a cup of coffee to start off the day?
Building a good company image
Company image is a major factor in consumers' perception of
quality. A good name goes a long way, especially in the selection of
household durables. In the pharmaceutical industry, many over-the-counter
drug purchases are based on perceived manufacturer reliability. Consumers
develop strong product and brand name loyalties. A strong company image
offers an additional benefit: subsequent products tend to enjoy a favorable
consumer reception as well.
Using a variety of approaches
Given its population and income level, Korea is regarded as a major
market for consumer as well as other products. Accordingly, advertising
billings in Korea are
third largest in Asia. Twenty-five years
ago, to reach consumers nationwide required at least a million-dollar
advertising budget per year. Today, one can spend a quarter of that alone
on a one-week promotional campaign in a major newspaper. This level of
expenditure may be beyond the pale of many smaller companies whose products
have smaller potential markets. In such cases, direct mail advertising --
including via email -- to a selected audience may be considered. Other
options include advertising in specialty publications and with special
campaigns. Targeting selected audiences is not an easy task, especially
when under budgetary constraints. Imaginative marketing managers, however,
will find all the necessary tools at their disposal in Korea.
Adapting your products to consumers taste
History is rich in cases of marketing managers who forgot that
their mission's success depends heavily upon their products' ability to
satisfy local customers' needs. Often they find themselves caught between
the competing demands of the local market and of the distant head office.
Expecting the local market to conform to the dictates of predetermined
policy is, in many cases, a sure path to frustration.
That frustration can often be avoided by simply adapting to
local tastes. A slightly sweeter soft drink or a spicier
tomato ketchup has often saved the day. Such modifications to suit Korean
consumers' tastes and needs in design, color, size and flavor can
contribute to marketing success.
Doing consumer research
Marketing in rapidly changing Korea demands solid market
research. Consumer research is no longer a developing area in Korea.
The number of its practitioners is growing steadily. One economical way to
gather information is to use the omnibus studies from a market research
company. For a minimal investment, one can get a considerable amount of
information on market as well as consumer behavior. In any case, today the
top international market research firms are active in Korea, along with small, local
agencies.
The Tail Now Wags the Dog
Today major retailers demand -- and get -- additional
discounted pricing and promotions from manufacturers. No longer do
suppliers call the shots. About twenty-five years ago, major discount store
and convenience store chains appeared in Korea. Things did not really
change, however, until after the IMF crisis when both groups' sales began
to skyrocket. Today, they dominate the supply chain. The tail is now
wagging the dog. More recently, home television shopping channels and
Internet Cybermalls have also created important, large retail groups
capable of winning special concessions from suppliers.
Korea has
marketplaces that are hundreds if not thousands of years old. Yet in the
past ten years, Korea
has also proven to be a world-class leader in consumer marketing on the
Cyber frontier. Competing in the Korean market is not for the
faint-hearted. But for those marketers willing to address old, traditional
buying habits, but also to use new, leading edge retail channels, Korea
can be one of the most exciting environments in which to compete.
Tom
Coyner is a long-term resident in Korea
and runs a business consultancy Soft Landing Korea. Coyner can be reached at
http://www.softlandingkorea.com .
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