Building Global Branding Strategy - Vu Hoang Minh

Module Title: Global Marketing Management Module number: UMKD6Q-15-3 Student number: 21078366 Word counts: 2386

RECOMMENDED MARKET ENTRY STRATEGY FOR GRAZE INTO THE SOUTH KOREAN MARKET

TABLE OF CONTENTS 1

Entry mode and distributions

2

Segmenting, Targeting and Positioning

3

Promotional strategy

4

References

5

Appendices 2

1. ENTRY MODE FOR GRAZE ENTER SOUTH KOREA AND DISTRIBUTION CHANNELS

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Figure 1: “Factors affecting foreign market entry mode decision”

Internal Factors

Entry Mode Decision

External Factors

Desired Mode Characteristics Source: Hollensen (2014) Internal Factors Company size and international experience: •

Graze is a subsidiary of Unilever – one of the world’s largest multinational firms with operations in numerous countries. Unilever owns all market expertise, which provides Graze a competitive advantage. Furthermore, Graze used to expand into the US market so they could assess the safety, risks and problems that they may face when entering a new market like South Korea.

• Despite Graze’s limited human resources (about 185 employees), the expertise of how to create snacks can be transferred.

The know-how Graze snacks: • The way to make Graze’s snack is a “mystery weapon” to gain a competitive advantage. Similarly, the supporting technology system during operation and production, which makes Graze different, maybe leak.

Networks: • Graze has no relationship with local partners. South Korea’s geography and environment make Graze import raw materials from international countries such as the UK and Vietnam (Appendix 1).

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Figure 2: Product Life Cycle of savoury snacks in South Korea

Sales

Savoury healthy snacks in South Korea is entering growth stage

Introduction

Growth

Maturity time

Saturation

Decline

Source: Adapted from Ghauri and Cateora (2010)

External Factors Cultural factor: There is no considerable differences distance the UK and South Korea in terms of preferences and beliefs: + South Korean consumers give priority to healthy snack + Graze is committed to protecting the environment by reducing its carbon footprint by 2030, using packaging which is made from recyclable products. South Korean consumers align with this trend Market potential: • Savoury snack market witnessed a recovery and is expected to increase slightly in terms of market size and growth (Appendix 4).

• After the COVID-19, due to serious health concerns, South Korean people have a preference for healthy snacks like Graze (Appendix 3).

Country risk: • The Korean government encourages the investment of foreign companies via financial support packages, Free Economic Zone (Appendix 1).

• Korea is one of the safest countries in the world, including politics and ease of entry (Appendix 1).

Market barriers: • Although the FTA agreement between South Korea and the EU has been established to reduce tariff barriers, most foreign food companies must stick to the rules when running a business in South Korea (Appendix 1).

Intensity of competition: 5 • The savoury snack in south korean market is highly competitive because many international companies hold a high market share. However, Graze still has many competitive opportunities when targeting the healthy snack market (Appendix 3 and 6).

Desired Mode Characteristics

Risk Adverse: While the materials to make Graze’s snack is not exceptional, the recipe and technology are the assets of Graze. Hence, the risk of losing is high.

Control: The main ingredients to prepare Graze’s snack are trail, nuts,… which is difficult to grow in South Korea.

Moreover, Graze has many relationships with different suppliers by establishing school of farming and training for the farmer.

Flexibility: According to Hollensen (2008), high control and high risk go hand in hand with low flexibility. It is essential to protect the way to produce Graze snacks and fully control the suppliers because the South Korean government is very strict with the law when it comes to food safety.

RECOMMENDED ENTRY FOR GRAZE Graze should go for the wholly-owned subsidiary, which means that it builds new offices and production places in South Korea like the company did in the US. Owning market advantage and financial resources from parent company (Unilever), Graze can minimalize the threats of losing market share and the risk of know-how recipes and technology.

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DISTRIBUTION DISTRIBUTIONCHANNELS CHANNELS Both online and offline distribution should be used as primary distribution channels.

Offline: GS25 is one of the leading convenience stores in South Korea. It had the highest retail share (accounted for 25%), which surpassed the amount of market share of CU and 7-Eleven (Euromonitor International, 2021). The vision of GS25 is to provide high-quality foods and bring great joy to customers (GS25, n.d.).

Furthermore, GS25 aims to expand the number of fresh and vegetarian foods on the menu until the end of 2022 (Park, 2022).

The snack products from Graze are suitable for GS25’s criteria and vision because they are healthy and fun whether eating alone or in a group.

Brick-and-mortar GS25 store in South Korea

Since Korean people are more willing to order online post-covid-19, GS25 places emphasis on developing online order services like KakaoTalk (Euromonitor International, 2022). This is an opportunity for Graze to adopt the new behaviour of Korean customers and support its online store.

Number of GS25 stores in South Korea (Statista, 2022)

Allocate distribution channels to large cities with high population concentrations (over 1 million people): Seoul, Busan, Incheon, Daegu, Daejeon, Gwangju, Suwon, Goyang-si, Seongnam-si.

(World Population Review, 2022)

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“South Korean Population Density Map”

DISTRIBUTIONCHANNELS CHANNELS DISTRIBUTION However, Graze should concentrate more on the online distribution because a variety of reasons: • This is the first time entering Asian culture (South Korean market) to reduce the risk • Online shopping is a new trend after the Covid-19 pandemic Online:

Graze ought to build its own website and partner with Lotte Global Logistics to take advantage of quick – commerce by providing the snacks within hours.

Advantage of Graze when joining with Lotte Global Logistics _ Lotte Global Logistics allows businesses to deliver and distribute their products to the door of customers => Graze meets the satisfaction of customers thanks to its fast and accurate delivery service _ Lotte Global Logistics has a global shipping network, including the UK and Vietnam, where raw materials are imported to prepare snacks. Ingredients like maize, trails, cashews are very hard to grow in South Korea _ Graze can create a subscription business model to stay ahead of the trend. _ Graze can fully control the CRM systems to provide the best in-house marketing, WOM marketing as the company has done in the UK. AI algorithms like Darwin can be applied to evaluate and select the best snacks that are suitable for customers’ tastes.

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Based on Lotte Global Logistic (n.d.)

2. SEGMENTING – TARGETING AND POSITIONING

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1. Market Segmentation For Savoury Snacks The savoury snack market can be classified based on age according to the below model:

Savoury Snack

Children and Adolescents

Adults

The elderly

Athletes and highly active individuals

Figure 3: Snacking at different ages in life (Marangoni et al., 2019) Demographic

Psychographic

Behavioural

Benefit

Geograph ic

Children and Adolescents (619 years old) Male and female Low budget

Eager to learn Creativity Go outside with their friends

Purchase frequency: Every day

Prevent boredom Develop a healthy eating habit Meet nutritional recommendations (OhriVachaspati, Turner and Chaloupka, 2012)

South Korea

Adults (20-50 years old) Male and female Not price sensitive Live alone or with family

Busy with study and work Do not want ti gain weight Healthy lifestyle

Purchase frequency: Every day Potential customer

Replace meals (St-Onge et al., 2017) Good for health and metabolic (Fábry et al., 1964) Prevent boredom Trigger eating healthy foods (Kong et al., 2011)

South Korea

The elderly (50+ years old) Male and female Middle or Upper class Live alone or with family

Health-conscious Family – oriented lifestyle More likely to follow vegetarian

Purchase frequency: Often

Supply nutritional requirements Good for health Improve appetite and food intake.

South Korea

Athletes and highly active individuals (1840 years old) Male or female

Normally take part in competitions Follow healthy recipe

Purchase frequency: Often

Provide energy before and after competitions (Rodriguez, DiMarco and Langley, 2009) Carbohydrates and vitamins are essential (Marangoni et al., 2019)

South Korea

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2. Targeting Customer Graze should focus on a target audience is adults as it did in the UK because of the tendency to care about health and spend more money on healthy snacks.

Background:

What are they looking for?

• • • • • • •

• • • • • •

20—50 years old Married or non-married Live in densely populated cities in South Korea Live with family or alone Willing to pay high price Conscious of healthy lifestyle University students, full-time workers, retired people

Influence: • Relatives, friends, social media • E-Commerce broadcast, Video • KOL, KOC

Moments with family and loved ones Healthy food Reduce stress and boredom Curious about new things Care for the environment Replace the main meals but still adequate nutrients

have

Worries and Fears: • • • •

Gain weight Not enough time to eat with family and friends Not enough time to prepare meals Damage to environment and animals 11

3. Positioning Positioning map: The positioning map is made up of 2 axes (the amount of sugar and safety food) shown in the picture below to help Graze understand customers’ visual perceptions and where they are targeting.

Contain of sugar

Food safety

Figure 4: The positioning map of Graze when penetrating the South Korean market

Based on the above brand positioning, Graze’s brand positioning statement should be:

For people who are always engrossed in the whirlwind of life. At the forefront of providing low-sugar snacks, Graze delivers fantastic moments and irresistible deliciousness on demand.

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POSITIONINGSTRATEGIES STRATEGIES POSITIONING RECOMMENDED POSITIONING STRATEGIES FOR GRAZE

Minimize sugar in snacks Although sweet tastes are still preferred, many Koreans are gradually switching to less sweet savoury snacks as they become more concerned about their health after the pandemic (Euromonitor International, 2021a). This is an opportunity for Graze to gain market via giving customers what are they looking for but making them keep in shape.

Snacks suits customer’s preferences According to Euromonitor International 2021b, Koreans seek products designed with their style and preferences. Since Darwin technology is transferable, Graze takes advantage of it can make distinct from competitors and delivers wonderful brand awareness.

Enjoy with any situations The products in Graze’s portfolio can be enjoyed anywhere and anyone. Regardless of the circumstances, Graze’s objective is to provide the most relaxing moments. By choosing the snack, customers can be confident that they are part of a healthy community committed to environmental protection without worring about being judged.

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WOW melt-in-your-mouth Graze moments 14

GLOBAL BRANDING

Brand essence: innovation, feel-good, taste meets health, care planet

Personality: The young dare to change, environmentally-conscious, well-being

Values of user: convenient, tasty, healthy, quality

Emotional benefits: enjoy with relatives and friends, a sense of pride, exploration, fun

Functional benefits: No gain weight, live healthier, reduce overeating at main meals, improve metabolism

Attributes: high quality, different flavours, crispy, attractive

Figure 5: Brand pyramid of Graze Adapted from Kapferer (1992)

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3. PROMOTIONAL STRATEGY

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3C – Truth Consumer Insight In order to get a broad overview of the savoury snack market, customers, brands, the 3C customer insight is applied.

Brand Truth

Consumer Truth

Category Truth

Reduce the sugar content while maintaining the appealing flavour

Brand Truth

Consumer Truth

Work is hectic, I find it challenging to keep fit and stay healthy

Category Truth

Having a snack reduces appetite before main meals and relieves sadness

Customer Insight:

In the middle of life’s problems and difficulties, I not only require a healthy source of nutrition to keep my health but also want to experience the deliciousness in every moment of relaxation 17

Product Role The first product to launch in the South Korean market should be snacks in “variety packs”.

Description: Combos are available for purchase. Each combo contains six separate packs from which users can select and enjoy the various flavour. What is more, they share the following features in particular: the goods do not totally eliminate sugar (to guarantee that users are still familiar with the taste of their daily snack), are suitable for vegetarians, do not include preservatives, and have a source of protein.

Functional benefit: _ “May prevent an overconsumption of food during the following hours” _ Avoid weight gain _ Upgrade eating habits _ “Positively impact metabolism compared to fewer larger meals throughout the day”

Emotional benefit: _ Balanced life through eating activities with relatives and friends

Graze Inherit Graze has a heritage in creating snack products: Product quality enhancement pioneered thanks to recipes developed in Graze’s kitchen, innovative sorting technology, and assured quality that protect health and the environment.

The Insight: In the middle of life’s problems and difficulties, I not only require a healthy source of nutrition to keep my health but also want to experience the deliciousness in every moment of relaxation

Product Role: Balanced life through eating activities with relatives and friends

Brand Idea Enjoy “variety packs” to break the boundaries and have fun

The Brand Inherit: Graze has a heritage in creating snack products: Product quality enhancement pioneered thanks to recipes developed in Graze’s kitchen, innovative sorting technology, 18 and assured quality that protect health and the environment.

LAUNCHING STRATEGY

Figure 6: Model drawn from market stage development of Johansson (2009) As mentioned before, the market for healthy savoury snacks is still unsaturated and is in the new growth. Therefore, the promotional strategy should be implemented with activities such as awareness and trial.

Objectives: • Increase the brand awareness of Graze • Encourage consumers to trial snacks in “Variety Packs”

BIG IDEA Enjoy “variety packs” to break the boundaries and have fun.

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LAUNCHING STRATEGY Recognize

Ready

Objectives

Create brand awareness of Graze Provide information

Get customers to trial snacks in “variety packs”

Campaign Execution Time

2 months

3 months

Big Idea

Enjoy “variety packs” to break the boundaries and have fun

Key Message

Good taste does not come from sugar

Key Hook

Image of fresh ingredients with Graze’s package

Combo of six snacks with different flavours in one ”variety packs”

Advertising

• Direct mail from Unilever • Television • Advertising theme: informative

• Newspaper, magazines, television, contest, discounts • Advertising mood: fun, humorous

Idea Brief

• Showcase attractive pictures of Graze’s snack ingredients that are fresh, plant-based, and sugar-free.

• Weight gain, unhealthy snacks are raised but when enjoying Graze, everyone confidently overcomes those problems

• Bring a funny story to a group of people • Eat snacks comfortably • Packaging must be compact, charming and environmentally friendly

Supporting Tactics

• Social media platforms: Facebook, Kakao Story.

• Digital OOH at the office

• Social media platforms: Instagram, Facebook, Kakao Story.

• Graze Korea website • Offline: GS25 stores are distributing Graze products • Digital OOH at the office

Instagram,

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LAUNCHING STRATEGY Images of fresh ingredients with Graze’s package are shown like this:

Enjoy “variety packs” with fun and comfort:

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LAUNCHING STRATEGY Packages and boxes are beautifully decorated and changed according to seasons and events:

Contest, give-away both online and offline:

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ADAPTATION OR STANDARDIZATION Standardization Branding

Packaging

Product Advertising

Distribution

POS

Labelling

Adaptation

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REFERENCES Euromonitor International (2021a) Savoury Snacks in South Korea. Available from: https://www.euromonitor.com/savoury-snacks-in-south-korea/report [Accessed 23 April 2022].

Euromonitor International (2021b) Consumer Values and Behaviour in South Korea. Available from: https://www.euromonitor.com/consumer-values-and-behaviour-in-south-korea/report [Accessed 23 April 2022].

Euromonitor International (2022) Convenience Stores in South Korea. Available from: https://www.euromonitor.com/convenience-stores-in-south-korea/report [Accessed 23 April 2022].

Fábry, P., Hejl, Z., Fodor, J., Braun, T. and Zvolanková, K. (1964) The Frequency of Meals Its Relation to Overweight, Hypercholesterolaemia, and Decreased Glucose-tolerance. Lancet [online].

284 (7360), pp. 614-615. [Accessed 23 April 2022].

GS25 (n.d.) GS Retail Vision. Available from: http://gs25.gsretail.com/gscvs/en/global/vision [Accessed 23 April 2022].

Hollensen, S. (2008) Essentials of Global Marketing. Financial Times Prentice Hall: Harlow.

Kong, A., Beresford, S.A.A., Alfano, C.M., Foster-Schubert, K.E., Neuhouser, Marian L., Johnson, D.B., Duggan, C., Wang, C., Xiao, L., Bain, C.E., and McTiernan, A. (2011) Associations Between Snacking and Weight Loss and Nutrient Intake Among Postmenopausal Overweight to Obese Women in a Dietary Weight-loss Intervention. Journal of the American Dietetic Association [online].

111 (12), pp. 1898-1903. [Accessed 23 April 2022].

Lotte Global Logistics (n.d.) Company Overview. Available from: https://www.lotteglogis.com/english/company/info/overview [Accessed 23 April 2022].

Marangoni, F., Martini, D., Scaglioni, S., Sculati, M., Donini, L.M., Leonardi, F., Agostoni, C., Castelnuovo, G., Ferrara, N., Ghiselli, A., Giampietro, M., Maffeis, C., Porrini, M., Barbi, B. and Poli, A (2019) Snacking in Nutrition and Health. International Journal of Food Sciences and Nutrition [online]. 70 (8), pp. 909-923. [Accessed 23 April 2022].

Ohri-vachaspati, P., Turner, L. and Chaloupka, F.J. (2012) Fresh Fruit and Vegetable Program Participation in Elementary Schools in the United States and Availability of Fruits and Vegetables in School Lunch Meals. Journal of the Academy of Nutrition and Dietetics [online]. 112 (6), pp. 921-926.

[Accessed 23 April 2022].

Park S. (2022) GS25 partners with major food material maker to beef up vegan product lineup. Aju Business Daily [online] 11 Feburary. Available from: https://www.ajudaily.com/view/20220211091652171 [Accessed 23 April 2022].

Rodriguez, N.R., DiMarco, N.M., Langley, S., (2009) Position of the American Dietetic Association, Dietitians of Canada, and the American College of Sports Medicine: Nutrition and Athletic Performance. Journal of the American Dietetic Association [online]. 109 (3), pp. 509-527. [Accessed 23 April 2022].

Statista (2022) Number of GS25 stores in South Korea from 2015 to 2020. Available from: https://www.statista.com/statistics/740625/south-korea-number-of-gs25/ [Accessed 23 April 2022].

World Population Review (2022) South Korea Population 2022. Available from: 24 https://worldpopulationreview.com/countries/south-korea-population [Accessed 23 April 2022].

APPENDICES Appendix 1

Appendix 2

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APPENDICES Appendix 3

Appendix 4

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APPENDICES Appendix 5

Appendix 6

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APPENDICES Appendix 7

Appendix 8

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APPENDICES Appendix 9

Appendix 10

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