Presentation on theme: "Skippy Peanut Butter in South Korea"— Presentation transcript:
1 Skippy Peanut Butter in South Korea Kelli MaxcyEvan GosleeDrue Zehler
2 Main QuestionsCan 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 wonU.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 ProductGreat reputation of U.S. food products allows U.S suppliers a strong position in this import marketSouth Koreans tend to enjoy spicy or salty foods
5 Product: Labeling Korean labeling laws Appeal of current Skippy label in a South Korean market
7 Product: Packaging Plastic Jars vs. Glass Squeezable containers Different sizes
8 Place: Population Distribution South Korea has a total population of 48,598,175Overall, Korea has become highly urbanized ever since the Korean War½ of the population lives in urban agglomerations of close to 1 million people¼ of the population lives in the capital city, SeoulResult 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 expansionHighways: 86,990 km of highwaysAbout 1/80 are considered expressways¼ are unpaved roadwaysRailways: 3,125 km of railwaysA new high-speed, direct railway is currently under construction that will connect Busan and SeoulThis will hopefully remove some of the congestion on the highways between these two major cities
10 Place: Transportation Sea PortsPorts and harbors are possibly South Korea’s most widely used transportation network for tradingGrowth of trade activity and the fact that South Korea is a peninsulaAirportsThere are a total of 102 international and domestic airports in the largest cities69 have paved runways33 have unpaved runways
11 Place: Skippy Production Skippy is produced only in the United StatesThere are 7 distribution centers in the US and 19 in other countriesUnilever is already present in South KoreaIt is ranked 4th among the leading companies in South KoreaSeoul 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 membersTherefore, all companies must appoint a representative director who resides in KoreaSouth Korea has a flat 10% value added tax on all imports SSouth Korea imposes tariff rates in the range of 30% to 40% on most products
13 Place: DistributionSouth Korea is one of the most ethnically homogeneous countries in the worldKoreans account for nearly all of the populationKorean is the official language although some English and Japanese is taught in the schoolsKoreans are loyal to domestic companies rather than foreign companies
14 Place: DistributionLocal 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 tradingSouth Korea is becoming more and more receptive to foreign productsSouth Korea’s leading import partners are Japan (20%), US (14%), China (12%) and Saudi Arabia (5%)
15 Place: RetailersThe Korean culture is quickly evolving into a more fast paced life styleHypermarkets and supermarkets are the most popular retail outletsKoreans prefer one stop shopping, discounted prices and bulk buyingConvenience stores and independent grocers are slowly being taken over by larger retailersThey are now offering new services to bring customers back into their storesOffers 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 declineThe market is forecasted to decrease by 2.6% by 2008Processed foods are rapidly gaining popularityFear of Mad Cow Disease has resulted in much of the population looking for protein in other foods such as soybean paste
17 Place: CompetitionThe butter segment accounted for 81.7% of the South Korean fats and spreads marketsLow 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 Media4 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 governmentAll 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 InternetHuge use of broadband internet, currently11 million internet using households constitutes about 68% of total householdsNearly 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