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Case Korea : Opportunities for the Finnish Fashion FINPRO KOREA : Yoonmi Kim, Trade Commissioner / [email protected] KIM, ADVISOR
JANUARY 13, 2016
POTENTIAL MARKET ACTVITIES UNDER DISCUSSION IN KOREA
1. END OF FEB : LOCAL MOVIE RELEASE, “A MANA ND WOMEN”
2. END OF MAY-EARLY JUNE AROUND ANGRY BIRD MOVIE RELEASE :
‘FINLAND WEEK’ WITH LOTTE DEPARTMENT STORE FOR FASHION, HOME FURNISHING, POSSIBLY FOOD
3. AUGUST : NORDIC HOME FURNISHING SELECT SHOP IN LOTTE DEPARTMENT STORE (DIRECT PURCHASE FROM LOTTE)
4. END OF OCTOBER-NOVEMBER : ‘FINLAND OR NORDIC LIFESTYLE WEEK’ WEEK WITH SHINSEGAE DEPARTMENT STORE
5. ‘FINISH DESIGN PAVILION’ WITH ONLINE SHOPPING PLATFORM
6. ‘BUYER MEETING’ IN SEOUL
7. ‘BUYER MEETING IN HELSINKI
8. ‘FINLAND HOUSE’ DURING 2018 WINTER OLYMPIC IN KOREA (2020, JAPAN
AND 2022 BEIJING)
Highly conscious to
how others perceive
one
With the risk of generalization, KOREANS ARE
Family tied Homogeneous
Trend-sensitive
Religion-sensitive
Quick & Hot-
Tempered
Passionate
Appearance
&
Beauty
Sensitive
Voicing out
Complaints
Intolerance to
Inconvenience & bad
services
Quick decision
making
= high return
rate Associate with one’s
“START” via what he/she
uses, wears, eats, goes,
promotes = importance of
Celebrity marketing Severely
competitive
1 Mr. Young – Smart consumers interested in value
2 This age group spends the most time online
3 Sensitive to advertising
- Internet usage is on average 3.3 hours / day
- Online shopping accounts for 74.3%
Korean average 50.4% / items bought 1: clothing, shoes, accessories
- Acquiring information is nearly entirely done through the internet now
- vs having been done through Television
- To succeed, marketing needs to target : Interests > Fun > Branding
- This age group is informed and educated by the advertisement = marketing!!!
▶ Smart companies have to service the lifestyle of a customer not just products
▶ To succeed in Korea a strong online/mobile presence is a MUST
▶ Finnish brands needs to concentrate on fun when advertising
▶Right now in the Korean fashion market the best target or “blue ocean”
would be 30s
TARGET CUSTOMER PROFILE FOR FASHION
55
“KOREA-WAVE” IN ASIA
Korea Wave
China
South-East Asia
JapanKorean cultural and entertainment contents such as soap operas, K-pop, broadcasting
formats, celebrities are super popular in China, with substantial influence to the
Chinese market in the fashion, music, celebrity marketing areas. - In the past, middle-ages Japanese ladies were enthusiastic
about Korean soap operas and actors. Theses days,
Japanese interests expanded to soap operas, K-PoP, food,
cosmetics,
- With the K-pop Wave, Korean language schools, Kpop dance schools
are proliferating.
66
DEMOGRAPHIC CHANGE
• Among the single-person households, people in the 30s account for 29.9%.
• People in age 30s tend to spend more than other age group compared to their income. Their spending in clothes has especially increased.
• The market for 1-2 person households with no kids focus on the esthetical aspect
more than ‘ functional and convenience’ needs and prefer to invest for current life.
OnlineShopping
Smaller appliances &
furniture
Higherpurchase frequency
1-2 personhouseholds
Near distance shopping
<unit: %, The source: Statistics Korea>
The population ratio analysis by household
(Person)
More leisure
time
77
“NORDIC” TREND
Analysis of Nordic boom in Korea
As becoming one of the developed countries, Korea is facing changes turning into a country of welfare
and the Nordic culture with great welfare policies is being spotlighted.
- More free time and greater interest of well-being with the growth of GDP per capita.
: Therefore the eco-friendly aspects of Nordic appeals to Korean customers in may industrial categories.
1) In case of kids’ wear, the simplicity and safety using eco-friendly materials is of high interest.
2) In case of foods, the Finish food ingredients minimizing the use of pesticides and grown in the wilds.
Based on these aspects, the Nordic contents are recently mentioned often among Koreans and actually there are active marketing and product development using this trend
As a result of the huge success of IKEA and H&M, many Korean companies are manufacturing the product in Nordic style but it lacks identity due to copying and pasting.
PC Mobile
Monthly
Total
500,00
0▲
Nordic Homepurnishing seletion shop ‘Scandinavia design house’
Lotte Department Store, the biggest distribution channel in Korea,
is also planning to operate Nordic select shop by the last half of this year
and will import and distribute directly.
88
Nordic Trends in Korea
Nordic
in
Korean
Simple
Better
Design
Eco-
friendly
Nature
Safety
As becoming one of the developed countries, Korea is facing changes
turning into a country of welfare
and the Nordic culture with great welfare policies is being spotlighted.
Therefore the eco-friendly aspects of Nordic appeals to Korean customers
in may industrial categories.
1) In case of kids’ wear, the simplicity and
safety using eco-friendly materials is of high interest.
2) In case of foods, the Finish food ingredients minimizing the use of
pesticides and grown in the wilds.
Healing
99
ATTRACT THE MALE FASHION TREND SETTERS
• Nomu Tribe : Midlle-aged gentlemen living young and stylish lifestyle.
• Grooming Tribe: Men caring their appearance
• Lotte department case :
• Reasons for such growth of mens’ wear : casualization of the work wear (50%
of male fashion sales in department store came from business suits in 2005
while 2015 it is only 33%). Business casual segment in the male fashion
sales in department store in 2005 account for 14% while it grew to 30% in
2015.
2010 (USD) 2015 9USD)
Women’s wear average spending on
one unit of cloth
97 120
Mens’ wear average spending on one
unit of cloth
94 161 (34% growth)
1010
Casual
「H&M」 「Style nanda」
「UNIQLO」
「SYSTEM」
TOMBOY」
「8 seconds」 「LAP」
「Juicycouture」
「Kenzo」
「isabelmarant」「Givenchy」
「Topgear」
「Custom mellow」
「Ziozia」
「Series」
「Lanvin sports」
「Penfield」
「North face White label」
「NZA」
「CHUMS」
「Beams」
「TOPTEN」
「ADIDAS」
「New Blance」
Men’s
Outdoor
Women’s
Luxury
SPA
Sports
「JILLSTUART New York」
CASUALIZATION
- Number of pieces purchase by cloth category on average : 5.6 pieces in Casual, 2.9 pieces in Women’s wear, 2.6 pieces in Mens’ wear.
- Especially the consumers of age 20s and 30s buy cloths often and have high interest in fashion more than anyone in the world.
- Korea is always included in the top rank sales countries of Global fashion brands such as ZARA, H&M, or UNIQLO.
Prefer foreign fashion brands
1111
TREND IN CLOTH
Total clothing market
50 billion USD
Mobile fashion
Shopping
3 billion USD
CASUALIZATION (SPA, Street fashion, smart casual, outdoor)
20s and 30s buy cloths more (Price-sensitive, adaptive to foreign
brands, casual, SPA, online & mobile shopping, social media)
Polarization between low cost SPA and high-end foreign brands
Affordable luxury : one of the biggest luxury maket.
Admiration for the luxury brands.
1212
SPACurrently, many experts predict the SPA accounting for 8% portion in the Korean fashion market will raise its portion up to 30%. It is recently expanding it s area from KIDS line to the home decoration. The brand recording the highest sales among the fashion brands in Korea is Uniqlo.Zara and H&M are also recording high sales.
Casual(Street fashion)
Outdoor
Kids
Young consumer groups who learned the fast fashion through SPA look for more stylish casual fashion and brands. The street fashion market grew up explosively. Especially, young people drastically investing in themselves developed the casual(street) fashion as the hottest category in the Korean fashion market based on a high consumption power with the increase in the single household.
The Korean outdoor market is worth 6 trillion won which is the 2nd biggest market in the world. Although it recorded an explosive growth more than 500% compared to 5 years ago, the growth is slowing down recently. However, it is still an attractive category in Korea, recording double digit growth. Especially while domestic brands are undergoing an intense competition and the declining growth rate, overseas premium outdoor brands are steadily expanding the market growth.
In South Korea in which birthrate is the lowest among OECD members, the children's wear market is in recession with the increase of the single household. The sales of brands pursuing the children's wear style of Northern Europe are rising alone. Actually, to look at the internet search keyword status related to the Nordic, its search quantity is the biggest next to the interior.
WOMENIn case of women’s wear, it is polarized into low price SPA brands and high price overseas premium brands. The brands of new designers in and out of Korea are becoming popular among young ages.
MENIn case of men’s wear, suits were strong before but these days casual wear is getting stronger because of lowered regulation in clothing at companies. Also the increase of single men spending money to oneself is the reason of premium brands becoming popular.
CATEGORY OF CLOTH
1313
Jindo
42.20%
Keun Hwa
16.20%
Kukje
12.90%
Woodan
10.20%
Others18.50%
Market Share
Korean Fur Brands & Market Overview
Market Volume
2010412 billion KRW(source: KOSIS)
2014600~800 billion KR
W(Estimated by PWC)
BIG 5 BrandsJindo Fur (www.jindofur.com/home-
v13/)
Keun Hwa Fur (www.khfur.com)
Kukje Fur (www.kukjefur.com)
Woodan Fur (www.woodanfur.com)
Dong Woo Fur (www.dwmink.co.kr)
Other Main BrandsSung Jin Fur (www.sungjinf.co.kr)
Yoon Jin Fur
Tae Rim Fur (Marie-Helene)
(http://www.taerimfur.com,
http://mariehelene.co.kr/)
Kyoha Fur (DS Fur)
Eun Wha Fur
Road Shop Dae Dong Fur (www.daedongfur.co.kr)
Sammi Fur (www.sammifur.co.kr)
Home Shopping
Sam Yang Fur (www.furkorea.com)
2008 2009 2010 2011 2012 2013 2014 2015
Fur 152,996 170,018 302,798 422,621 347,803 312,770 305,489 263,867
Fur Clothing 58,842 53,085 94,911 125,410 95,818 90,196 94,532 86,984
-
100,000
200,000
300,000
400,000
500,000
Fur imports
Fur Fur Clothing
Unit: 1,000 USD
1414
Imported Fur
Sabatier Employee: 30 persons
Since: 2004
Sales: 7.1 billion KRW (2009)
Number of Store: 14 stores AK Bundang, Galleria Apgujeong, Lotte Head Store, Lotte Daegu, Lotte Busan, Lotte Centum
Lotte Jamsil, Lotte World Tower, Lotte Outlet, Shinsegae Centum, Shinsegae Gangnam
Hyundai Mok-dong, Hyundai Trade Center
Website: http://www.sabatier.co.kr/
Catylang Employee: 10 persons
Since: 2009
Number of Store: 6Cheongdam main shop, Hyundai Apgujeong, Hyundai Trade Center
Hyundai Pangyo, Galleria Apgujeong, Shinsegae Gangnam
Website: http://www.catylang.com/
1515
FUR Market Trend
• Leading brands haven’t been changed for several years but the number of promotion
agencies has increased twice in 3 years.
• Department Store as a retail channel is leading Korean mink market.
• Jindo Fur, Keunhwa Fur, Dongwoo Fur, Kukje Fur and Woodan Fur are top 5
companies.
• Sungjin Fur, Yunjin Fur, Kyoha Fur, Taerim Fur and Eunhwa Fur could be second tier.
• Daedong Fur and Sammi Fur are the leading one among road shops.
• Samyang Fur, Nawon and Sinhee are the main promotion agencies.
• Korean fur companies buy raw fur from Toronto(NAFA), Seattle(American Legend),
Kopenhagen (Kopenhagen fur) and Helsinki(Saga Fur), which are world top 4 auction.
Korean companies tend to buy the finest quality ones.
• While long and luxury style fur coats led the trend in the past, 90~100cm coats and
vests are popular nowadays as winter is getting warm.
• Simple and modern design.
• Fur industry has seen sales increase in vest last year so that vest supplies has been
soared by 30% to even 50% this year.
• December-January is the peak season in fur industry, which 50~60% of sales happens.
July is also busy season with high competition due to the season sale.
•
1616
▶ The shoes market accounts for the third largest portion of the entire fashion market in Korea. (2011)
- It is recording the biggest portion in miscellaneous goods market and recording a high growth rate every year.
- Main customer base of the Korean shoes market is Koreans in their 10~20s, the shoes change cycle is substantially high compared to other ages.
So, running shoes account for the biggest portion in the shoes market.
- On the basis of this growth of shoes market, outdoor and general clothing brands are expanding their lines to include shoes n order to increase sales.
Especially the outdoor brands are focusing on trekking as emphasizing the functionality and fashion brands are releasing stylish general shoes.
- Shoes brand select shops are attracting a big popularity regardless of online/offline channel, which is the feature of the Korean shoes market.
Most sales are coming out of the select shops. Global brands such as Nike/Adidas/New Balance drive sales through their own stand alone shops an these select shops
Multi shop which made one-stop shopping possible of multi brands
SHOES
1717
▶ Goods market survey, bags, belts, etc. (except for shoes that are categorized separately)
• The size of the market for fashion accessories is 3,100 billion won in 2011, showing an annual growth of 18.9%.
• The size of the bags market is 1,400 billion won in 2009 and shows an annual growth of 19.6%.
This represents a growth rate of three times more than the general fashion market’s growth.
• Bags are a very attractive category in the fashion goods market, representing half of the that market
▶ Current state of bags sales per category (man/woman)
BAGS
48%
16%
Rate
Shoulder bag
Tote bag
Category
13%
7%
Back pack
Clutch bag
39.8%
26.1%
Rate
Back pack
Cross bag
Category
13.1%
9.6%
Tote bag
Pouch
Woman Man
Back pack’s market is growing roughly 20% each year, representing 180 billion won in 2000, now represents 350 billion won. Especially due to the culture of carrying backpacks with a suit, very many office worker purchase Back packs, and recently premium Back pack’s market is growing fast..
The growth of Back pack’s market
1818
HOME FURNISHING
▶ Korean furniture market has decreased since 2008, but the home furnishing market is set to double.
▶ IKEA recently arrived in Korea and is targeting the home furnishing market, not the furniture market.▶ The home furnishing market is growing due to younger consumers preferring unique new individual solutions , different from elders who are accustomed to standardization.
▶ In countries where the GDP has risen over 30.000USD the home furnishing market grows rapidly, this is also set to be the case in Korea,as one-person households increase the home furnishing market increases as well.
▶ Thus, the major national groups like Shinsegye, Lotte or E-Land engage in the home furnishing market, and global brands such as H&M, ZARA, MUJI or A-LAND are expanding their influence to the home furnishing market too.
Changing the valueof customer
Increase of smaller households
▶ ‘Eat well and live well’ (well-being principle) -> ‘Live beautifully’ (wellti principle)
▶ Changing consumer trend that gives importance to the arts, such as design or color, not just practicality.
▶ Reduction of family members, and increases singles and two-person households -> Increase of total households
▶Growth of the home furnishing market due to demand by increasing households.
<The source: KOFA><The source: Heungkuk Securities>
Korean Home furnishing
Market size
1919
It is disclosed that ZEBRA, managing stores specializing in middle priced supplies "FLYING
TIGER COPENHAGEN" decided to open shops in Myungdong, Hongdae, Garosugil of Seoul,
after the selection of the partner. The arrival of ZEBRA in Korea, which operates 410 stores in
25 countries worldwide, will create tough competition with existing companies like DAISO or
E-Land.
DAISO which is the market leader in supplies and that is in the same position as FLYING TIGER
COPENHAGEN is a company created by the collaboration between DAISO Industry of Japan
and Hanilmanpower of Korea in 2002, crossed 1 trillion won of turnover in 12 years of
existence, and has over 1,000 stores in Korea, in 2015.
▶ HANSSEM which was categorized as a professional furniture shops has expanded its indoor stores in widening to the home furnishing market .
▶ H&M and ZARA which are very successful in the Korean fashion scene, they have also opened “Home” shops to fit into the home furnishing market.
▶ IKEA, which opened its first store in Korea in Gwangmyoung, crated an explosive reaction and confirmed the opening of its second store in 2017.
▶ Existing companies had anticipated a decrease in turnover by the arrival of IKEA in Korea, but it just created growth in the home furnishingmarket
and HANSEM has even increased by 30% over the previous year, MODERN HOUSE also shows strong growth.
- Furniture: wardrobe, table, couch, bed, dressing table, chair, desk, bookshelf, etc / Bedroom: blanket, cover, pillow, cushion, etc.
- Home deco: curtain, carpet, blind, lights, interior supplies, handcraft, living accessories / Home supplies: kitchen, cleaning, bath supplies, daily utensils, storage goods.
Imminent arrival in Korea of FLYING TIGER COPENHAGEN
HANSSEM EVEZARY Casamia Modern House JAJU IKEA H&M Home ZARA Home MUJI
Furniture
Bedroom
Home deco
Home supplies
Domestic Overseas
HOME FURNISHING : MAJOR CHANNEL AND BRANDS
2020
Distribution Channel
• Online sales growth from 2010 to 2015 by Lotte department store is 36% while its total average sales growth is 5.4%. • Proportion of the online sales to the total sales is 10% as of 2015.• During 1H of 20105, online shopping surpassed Big Mart and Department stores in terms of sales. • Korea is one of the most connected countries in the world in terms of internet / smartphone usage
- 2015 mobile shopping size expected to be: 20 billion USD. (Mobile fashion market 3 billion)- Among growing distribution channels only the online channel is enjoying double digit growth (14.3%)- Smart consumers are using the internet to compare prices.
Expected growth ofeach distribution channel
Channel 2014 2015
Total avarage 2.2% 2.4%
Internet 13.0% 14.3%
Convenient stores 3.1% 4.0%
Big Marts 3.8% 3.8%
Home shopping 3.0% 3.2%
Super market 1.9% 2.3%
Department store 1.0% 1.3%
Traditional markets -4.8% -5.0%
Expected sales volumes of distribution channels
46.8
36.4
30.0
22.2 19.7
12.0 11.1
48.6
37.3
30.4
25.4
18.7
12.5 11.5
Big Mart Super Market Departmentstore
Internet Traditionalmarket
Convenientstore
Homeshopping
2014
2015
Reason for online channels high growth
87.5
82.5
72.5
15.0
<plural response, %>
Mobile shopping growth up
Big offline distributors have established online channel
Smart consumers increasing
Increasing online coupons being created
<unit: Billion USD>
<The source: The Korea chamber of commerce & industry, ‘The prospect of distribution channel in 2015’>
2121
■ Department store
29.1 billionUSD
29.9 billionUSD
31.2 billionUSD
31.6 billionUSD
2.74%
4.34%
1.30%
Growth
Sales
2012 2013 2014 2015
<The source: : Future Policy Research Institute of Shinsegae >
- A low growth of 2-4%.
- 4% in 2014 due to Chinese tourists (Yóukè)
- Department stores is not the ‘must channel’ any more, especially for
small Finnish brands.
- Success in the Online channels can enable the brands to have better
terms and conditions from the department stores these days
■ Outlet / Department store sale growth rate
4.3%
1.3%
Outlet
Department store
2.7%
5.5%
11.3% 11.3%11.4%11%
2012 2013 2014 2015
- Double digit growth
- Outlets sale is 12.7 billion USD
- Commission to Outlet : 18-25%
- Ordinary outlets : 66, Premium Outlet by Department stores: 18
<The source: Statistics Korea>
Department store & Outlet
2222
■ Korea e-commerce market size
32.5
37.2
41.6
46.3billionUSD
0.6
Mobile
PC
2012 2013 2014 2015
1.73.9
7.6
- Online market is expected to reach 48.5 billion USD this year and 65 billion USD by
2018.
- Double digit growth of mobile portion
- Mobile is expected to account for 60% in Online by 2018.
- Demands for fashion, home-decor etc. through online is constantly increasing, but
good contents creation is lacking
19.5%
13.8%
12.8%9.5% 7.5%
Online
SPA
Outlet
Multi Shopping mall
Department Store
Shopping Channel By 25~39 age
- Customers prefer to find low priced goods through the internet.
- Basically all ages tend to use online shopping for clothes purchases
- Among OECD countries, Seoul is the most densely populated capital, meaning that
the sales channels can be focused on Seoul at least in the entry stage.
<unit: billion USD, The source: Korea On-Line Shopping Association>
Online
2323
Duty Free Shop
1/18/2016 © Finpro 23
LOTTE47%
SILLA30%
SHINSEGAE…
OTHERS20%
Market Share in 2014
39,494
26,122
2,372
LOTTE SILLA SHINSEGAE
Sales in 2014Unit: 0.1 billion
KRW
LOTTE
8
SILLA
6
SHINSEG
AE
2
Number of Stores in
Korea
Major Duty Free
ChainsLOTTE
SILLA
SHINSEGAE
The World’s Top Countries
in Duty Free & Travel Retail
ShoppingRAN
KCOUNTRY
MARKET
SHARE
1 South Korea 12.3%
2 China 7.7%
3 USA 5.9%
4United
Kingdom5.3%
RAN
KLOCATION COUNTRY
1SEOUL – Incheon
lnt’l AirportSouth Kor
ea
2DUBAI – Dubai
Internationl AirportUAE
3SINGAPRE –
Changi AirportSingapore
4LONDON –
Heathrow Airport
United King
dom
The World’s Top
Duty Free & Travel Retail Shops
Source: Tax Free World
Association
53,73063,293 68,323
83,077
2011 2012 2013 2014
Market VolumeUnit: 0.1 billion
KRW
19%18%
8%
21%
Sales
Increase rate
2424
VALUE CHAIN OF DUTY FREE SHOP
1/18/2016 © Finpro 24
DOWNTOW
N DUTY
FREE
SHOP
AIRPORT &
HARBOR
DUTY FREE
SHOP
DUTY FREE
SHOP FOR
RESIDENTS
DISTRIBUTO
R
GOVERNMENT
KOREA CUSTOMS SERVICE http://www.customs.go.kr/kcshome/
FAIR TRADE COMMISSION http://www.ftc.go.kr
ASSOCIATION
KDFA, KOREA DUTY FREE ASSOCIATION http://www.kdfa.or.kr/
IMPOTERFOREIGN
APPAREL
MANUFACTUR
ERBRANCH IN
KOREA
DUTY FREE
SHOP
Commission Ra
te
Korean SME brand 50~55%
Conglomerate 40~45%
Imported brand 20~30%
Luxury brand 14~18%
FOREIGN
TOURIST
KOREAN
DOWNTOWN66%
AIRPORT & HARBOR
29%
RESIDENTS SHOP
5%
Sales by store typeFeb 2015
FOREIGN TOURIST
69%
KOREAN31%
Sales by customer typeFeb 2015 Source: KDFA
2525
DFS LOCATIONS
1/18/2016 © Finpro 25
Busa
n
2
Seoul
6→9
Jeju
2→3
Daeg
u
1Ulsan
1
Others
4
Incheo
n
5
Gimha
e
1
Jeju
2
DOWNTWON
SHOP
AIRPORT SHOP
2626
Curation Service : online
- The rise of 'Curation service' due to an increase of interactive communication and smart phones
(recommend desired products and information when the customers want it.)
- The online channel has been changed from product sales approach to Contents sales approach.
= from the lowest price products to professional contents to the customers.
- Predict what the customers will want and present the contents in advance. Educate what the customer should want and personalize the contents.
- Famous curations channels are "Musinsa", "29CM" etc.
Musinsa
- Professional fashion portal (site)
- Ranking Shop (utilizing big data)
- Fashion web magazine
( Making contents together with
the Brand) linked with sales
29cm
- Online select shop
- Incubating the brand through
storytelling
- Develop own applications
- Focused on marketing and PR
through various collaboration.
■ The rise of curation services
Your stylist
- Online curation shop
- Provide customized service with
man to man communication
- 29CM is the curation focusing on
brands while Your-stylist
focuses on customers.
- In Korea googles accounts for only 5% of searches. Amazon / ebay have not yet entered Korea.- Domestic search engines NAVER and online shops dominate the market at about 90% share. - Koreans trust reviews / blogs more than information pages.- If one searches information through Naver, blogs are shown first after the sponsoring sites .- It is essential to have marketing strategies of Social Media channels considering the ages and targets.- However, every sales promotion activity should be done on the brand main site while using the Social Media channels
as complementary reaching out to the customers.
■ Mastering NAVER is mandatory
2727
Curation Service : offline (select shop)
What is Select shop? Select shop is a type of retail channel and is consisted of various brands (especially designer brands) appropriate tothe concept of shop, providing consumers variety of merchandise and value shopping and suggests One-stop Shopping by selling not onlycloths, but merchandises for overall life style.
2828
Curation Service : offline (selection shop)
The most active and powerful Nordic select shop. Scandinavian Design House published Scandinavian lifestyle manazine. (SKANFORM)It has been cooperating with Swedish Embassy and Danish Embassy.
Scandinavian Design House in Garosugil, Korea
2929
Marketing Strategy
1. In case of Koreans, they tend to trust more the user review than the official information.
1) For this reason, Korean companies, regardless of the industry, does blog marketing and viral marketing as an essential marketing.
2) In Korea, the Knowledge In service provided by NAVER is more reliable and popular than Wikipedia.
- What is Knowledge In? It is the method that individuals answer when a user posts a question.
2. Based on the services above, the market share of google in Korea is less than 10%
and on the other hand, NAVER covers 70% and Daum 20%. Thus, to successfully launch the brand in Korea, you must use the Naver channel.
3. Other than the global social network channels such as Facebook or Instagram, you must use Korean SNS channels according to the consumer age.
1) In Korea, more than 95% of smartphone users use Kakaotalk (messenger developed in Korea) as CS channel.
2) In case of people above age of 40, they actively use BAND for community activities.
4. PPL through celebrities and programs is necessary. (Online marketing after PPL is necessary to enhance the impact.)
1) Recently, the broadcasting regulations got relaxed so the PPL broadened.
2) There are a lot of cases that the items that celebrities wore get sold out in Korea.
In the past when only mass media existed as the contact channel with the customers it required a lot of cost for promotion
but these days, in case of Korea, low-cost-and-high-efficiency marketing is possible if you make a good use of online channels.
3030
▶ if your products an be delivered overseas then it might be a good idea to create a Korean web-page to drive sales and start the establishment of your band in Korea.
https://www.scandinaviandesigncenter.com http://blog.naver.com/scand_design
▶ The case of Scandinavian Design Center
- It is an online store of supplies, based in Sweden, offers 8 languages including Korean and global service for international delivery.
- For Korea, it also manages a NAVER Blog, correctly using the characteristics of Korean and offers the service by KakaoTalkwhich is the messenger most used by Koreans (two Koreans are working at the head office in Sweden, a person marketing team and customer service person)
- it uses a Viral Marketing Company to continuously publish posts after use on NAVER for exposure to Korean consumers.
- It promotes by publishing posts after use on community sites to approach thirties women who are the main customers.
Similarly for Finnish supplies companies, if the products are available for an international delivery with prices for easy customs clearance, and Viral Marketing on the Korean online websites, it is quite possible to perform the market test through direct delivery from the country of origin.
Case study : Home Furnishing, Scandinavian design center
3131
Case Study : Outdoor, FJALL RAVEN
- In the past many importers imported Fjall Raven to Korea, so it was already known to the Korean public
- After the potential was seen, Fjall Raven formed a partnership with Alpen International.
- They even went to the extent of changing the size of the products to match Korean customers.They have two lines: Asian fit and Slim fit, slim fit was created just for Korea.
- A new trend in the Korean outdoor market is backpacking so a lot of PPL marketing is used.
◀ Fjall Raven PPL example
As you can see everything in the pictures
are Fjall Raven products.
Fjall Raven directly invested in order
to create this specific case.
In order to succeed in PPL marketing, one
needs to make sure that online marketing
efforts are co-ordinated.
After key words / bloggers having written
about it, search for “Sean’s jacket” -> Fjall
raven is mentioned.
3232
Strategy for SNS
SNSChannel
TotalCharacteristic
Male Female 20s 30s 40s
Blog (Naver) 29.8 29.3 30.3 35.9 35.4 22.1
Facebook 77.4 74.7 80.4 83.8 77.1 73.8
Twitter 8.9 6.1 12.0 9.6 6.6 10.2
Kakao Story 29.5 26.1 33.2 16.0 36.7 32.4
Band 22.0 25.7 17.9 4.7 17.0 35.8
Pinterest 2.2 3.1 1.3 2.1 3.1 1.7
Linked-in 2.0 1.4 2.6 1.5 1.2 2.8
Youtube 15.8 21.0 10.0 21.3 14.1 13.7
Instagram 8.0 6.4 9.8 20.4 6.6 1.7
<The source: DMC media, 2014 Social media present condition, unit: %, plural response>
• Marketing/Sales is done via omni-channel.
• Social media is the integral part of corporate marketing
• “Funness” is the key in the Social media marketing
• Combining the Social media with off-line marketing is the trend
• Companies and institutions’ marketing budget for social media increased by 60% from 2012 to 2013
• Social media is where the “Trend’ is read
• Visible sales growth when integrated with Social media
3333
Strategy for SNS
1
2
2
2
5
No. name Note
6
7
KakaoKorea No.1 Online Messenger. It’s good channel for customer Service. Daum-Kakao is a very innovative mobile service provider that Finnish brands have to
monitor for possible collaboration.
Naver
Youtube
Kakao Story
Band
Overwhelming No.1 Portal and search engine in Korea. Diverse contents are included in:
Blog, smart shopping(Ji-sik shopping), smart information sharing (Ji-sik In).
Many Teenagers and twenties in Korea prefer Instagram over Facebook.
It is frequently used as a second channel to upload video and link to different SNS like Facebook, Blog.
With moving trend ‘text->image->video’, it is considered as one of important channel to target.
Still it has great value as an advertising channel.
The number of users Posting is reducing -> the number of users only Reading is increasing.
In Korea, advertisement through famous page is more effective than Facebook official advertisement.
It is a locally developed SNS channel similar to Instagram.
Their posts are not open to public, only open to their ‘Friends list’.
( A large percentage of people in their Thirties and Forties use it)
A locally developed Mobile SNS channel, usually used as a club or community with a certain topic or purpose. (Especially, Many middle
aged people uses it to host many events like alumni association, hiking, or different club.)
Except for a few celebritie’s tweets, it is not as big as in other countries.
CS
3434
Conclusion & Recommendation
Recommendation: The global companies like ZARA, IKEA, H&M can enter in to the domestic with distribution channels of large companies like Lotte etc.
after establishing branch offices, but if this is impossible, it is necessary to approach the market entry problem a little more strategically.
Of course, luxury lines are mandatory to the large companies and department stores.
Although Nordic culture and products can be popular in Korea, the way the products are exhibited should be reviewed thoroughly in order to consider
whether the contents quality is fit for the brand and if the marketing content appeals to customers. Recently the level of the Nordic themed exhibitions , operated
by the large companies or distribution channels over a certain size are not very effective in growing the brand sustainably.
Therefore, the conclusion below is the advice on the strategy when entering in to the Korean market that the Finnish small and medium sized brands might want to
think about when planning sustainable growth over long periods of time in the Korean market.
It might be hard and costly to start by entering into an Offline Distribution channel without a large amount of capital or support of large companies. Therefore,
gaining traction in the Korean market through online channels is cost-effective and for the offline channels are advised to enter through choosing a select shop
partner. There is no reason to start by setting up offline stores anywhere else than Seoul. The population density in the metropolitan are of Seoul is the highest
among the OECD countries.
1 Enter through the online channel + enter in to a offline select shop
In Korea, there are workers who are able to produce some of the highest quality contents and ideas in the world. Some good examples are 29CM, 1300k site that
have thousands of members. If a company is unable to produce high quality content by itself, it is a good idea to think about utilizing specialized Korean “curation”
sites to help drive sales and brand recognizition. Usually these kinds of companies tae a 30% commission off any generated sales but take care of all marketing and
promotional costs by themselves.
2 Utilize the curation online mall
3535
Conclusion & Recommendation
South Korea is one of countries that has the highest internet penetration rate and mobile shopping utility rate, especially interesting is the overseas direct
purchase market of annually 10 billion dollars. Koreans are used to purchasing foreign brands and items directly from overseas online shops, this characteristic can
help brands conduct some product testing with consumers .
Things to consider when doing this is what kind of items is going to be sold and how do import regulations affect it. Also the company will need a Korean website
and might want to choose the partner in Korea(online marketing agency) and establish a strategy for the brand promotion and sales activation.
For reference, the order of overseas direct purchase item ratio is Clothe/Shoes - Health supplement food – Bags/Goods - Home appliances.
3 If you have an item for direct-purchase, operate a Korean language page in the headquarter in Finland, and utilize an online marketing agency.
In the past, the promotional channels that could reach customers existed only in the mass media like TV, radio, and newspapers, and the channels for companies
to deliver the product information to the public were limited. However, the channels with witch to reach customers increased with the internet/mobile
dissemination and the method that companies provided customers with the product information unilaterally turned to a method that customers find the company
information and products if necessary.
That is, while firms could not record high sales if they could not reach the public through the mass media in the past, at present, they can satisfy only a few
customers(maniac) by a few channels and can spread to the public(mass) through the viral marketing and online channel. Good branding is letting customers
spread the word of the good product through the new existing channels, Korean consumers are the most connected people in the world so this amplifies the effect
and makes it even more important to utilize a strong online strategy.
5 Concentrate marketing efforts on specific targets
Currently, there are many products similar to the products of North European style Koreans are excited about. Therefore, the marketing emphasizing the North
European originality is absolutely necessary when advancing into the Korean market. In this sense, it is a good way to deliver the item through direct-purchase
from North Europe and it may also be good to produce contents using Finnish cultural elements like for example Makia s doing well. Some companies, when they
advance abroad, reprocess contents in accordance with the target country's culture and tendency or change the model to match the target market. Asians still
have the toadyism inclination and prefer and respect the western culture, which needs to be used for marketing.
4 Emphasize the originality.
3636
Initial Concept: Finland House in 2018 Pyeongchang Winter Olympics
in Korea Version 3, July 10, 2015,
Not an Official Document without any legal bindings. This document is for concept development with Finnish companies and
Korean stakeholders before any commitment from Finnish companies or Korean stakeholders.
In order for Finpro to proceed with concept building and budgeting, we need Letter of Intent from
companies indicting that companies are interested in exploring the opportunities around the 2018
Olympics and willing to come up with financing the project at the later stage.
3737
1/17/2016 © Finpro37
Entrance to Alpensia
Estate and golf course
Inter-Continental Hotel
IOC Office
Main
Broadcasting
Center
Finland
House
• Close to the Media & Press Center
• Close to IOC (VIPs) Office
• Close to prestigious Estate
• Close to Alpensia facilities
• Close to Ski Jump, X-country, and Biathlon
Finland House wants to be the Demo and Showroom of
Finnish design & lifestyle, food, 5G and IoT – the
national flagship store before, during, and after the
Olympic. The land owner, the Province is interested in
keeping the House as “Finland House” with Finland
contents.
