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Skippy Peanut Butter in South Korea

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1 Skippy Peanut Butter in South Korea
Kelli Maxcy Evan Goslee Drue Zehler

2 Main Questions Can Skippy effectively move into South Korea with a standardized approach? Could Skippy make changes to better meets the needs of the South Korean market? Could changes be made cost effectively?

3 Price Korea per-capita income of 15.07 million won ($12,646)
$3 jar of peanut butter would cost about 3500 won U.S goods have reputation of being very high quality however, Koreans are classified as very “price conscious” and are willing to sacrifice quality for low prices.

4 Product Great reputation of U.S. food products allows U.S suppliers a strong position in this import market South Koreans tend to enjoy spicy or salty foods

5 Product: Labeling Korean labeling laws
Appeal of current Skippy label in a South Korean market

6 Product: Competition Newell Korea- Creamy and Crunchy Peanut Butter
Packing- 340g, 375g, 510g, 10kg,20kg, 200kg China(Shangdong Area)

7 Product: Packaging Plastic Jars vs. Glass Squeezable containers
Different sizes

8 Place: Population Distribution
South Korea has a total population of 48,598,175 Overall, Korea has become highly urbanized ever since the Korean War ½ of the population lives in urban agglomerations of close to 1 million people ¼ of the population lives in the capital city, Seoul Result of the government trying to get people to live in urban areas outside of Seoul (Busan, Ulsan and Pohang)

9 Place: Transportation
Korea's transportation network is in desperate need of expansion Highways: 86,990 km of highways About 1/80 are considered expressways ¼ are unpaved roadways Railways: 3,125 km of railways A new high-speed, direct railway is currently under construction that will connect Busan and Seoul This will hopefully remove some of the congestion on the highways between these two major cities

10 Place: Transportation
Sea Ports Ports and harbors are possibly South Korea’s most widely used transportation network for trading Growth of trade activity and the fact that South Korea is a peninsula Airports There are a total of 102 international and domestic airports in the largest cities 69 have paved runways 33 have unpaved runways

11 Place: Skippy Production
Skippy is produced only in the United States There are 7 distribution centers in the US and 19 in other countries Unilever is already present in South Korea It is ranked 4th among the leading companies in South Korea Seoul Dairy, Haitai Dairy Company and Lotte Group all ranked higher

12 Place: Production Legal regulations
Legally, Korean board meetings require the physical presence of all members Therefore, all companies must appoint a representative director who resides in Korea South Korea has a flat 10% value added tax on all imports S South Korea imposes tariff rates in the range of 30% to 40% on most products

13 Place: Distribution South Korea is one of the most ethnically homogeneous countries in the world Koreans account for nearly all of the population Korean is the official language although some English and Japanese is taught in the schools Koreans are loyal to domestic companies rather than foreign companies

14 Place: Distribution Local representation is essential for the success of foreign firms in the Korean market. In the past, nationality was considered membership of the “Korean race” President Roh Moo-hyun has started pushing the importance of foreign involvement in trading South Korea is becoming more and more receptive to foreign products South Korea’s leading import partners are Japan (20%), US (14%), China (12%) and Saudi Arabia (5%)

15 Place: Retailers The Korean culture is quickly evolving into a more fast paced life style Hypermarkets and supermarkets are the most popular retail outlets Koreans prefer one stop shopping, discounted prices and bulk buying Convenience stores and independent grocers are slowly being taken over by larger retailers They are now offering new services to bring customers back into their stores Offers many different imported food brands

16 Place: Competition Peanut butter has a small presence in South Korea
The fats and spreads market is, as whole on the decline The market is forecasted to decrease by 2.6% by 2008 Processed foods are rapidly gaining popularity Fear of Mad Cow Disease has resulted in much of the population looking for protein in other foods such as soybean paste

17 Place: Competition The butter segment accounted for 81.7% of the South Korean fats and spreads markets Low fat spreads held the smallest share with 1.7% Staple spreads include kimchi (a sweet sticky rice), soybean paste and soybean curd

18 Promotion Blonde Skippy mascot is an American character
Current promotional efforts emphasize “fun and family” Younger Koreans are more open and willing to abandon traditional consumption patterns

19 Media 4 major broadcasting networks KBS I, KBS II, MBC, and SBS. KBS I and II are government owned. MBC and SBS are independently operated but still strongly influenced by Korean government All advertising slots must be purchased through the government.

20 Media KOBACO, censors all advertising (television and radio)
Korean television only has an audience of 8 million but expected to increase to 11 million.

21 Internet Huge use of broadband internet, currently11 million internet using households constitutes about 68% of total households Nearly all cellular phones in South Korea have internet access

22 Intellectual Property
S. Korea has property laws but are not enforced strictly like in the U.S. Essential to get copyrights, trademarks, etc. registered with Korean government. Local Korean attorney must be hired to handle the registration process

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