Unorthodox marketing approach, distinct ideas hit markets
By Jung Sung-ki
Instant noodles in clear soup are enjoying tremendous popularity throughout the country, changing the landscape of the local ramen market that had long been dominated by those in red colored soup.
Being released Aug. 2, “Kokomyun” (Chicken’s ramen) in a soup of chicken, developed by Korea Yakult Corporation based on a recipe created by popular comedian Lee Kyung-kyu on a TV show, has apparently upset the domestic ramen market.
As of Sept. 4, about 10 million packs of the instant noodles were sold, threatening the stronghold that the No.1 ramen maker Nongshim had in the market with the market leader deciding to discontinue the production of its new ramen brand, “Shin Ramyun Black” after months of sluggish sales.
There are a number of analyses on success factors behind the Kokomyun syndrome, such as the promotion of comedian Lee’s popularity and marketing through social networking sites. Nevertheless, market analysts pay attention to a key market strategy for the Kokomyun success: “think outside the box!”
“The domestic ramen market had been obsessed with a red-colored soup made of ox bone to a wonder,” said Choi Yong-min, brand manager of the firm’s food and beverage marketing team. “The success of the Kokomyun comes as we targeted the ‘hidden’ needs of local consumer by refuting stereotypes.”
In fact, public demands for instant noodles in a soup of chicken had been strong potentially, he said, given the first instant noodles made by Japan’s Nissin in 1958 were those with chicken flavor.
“Consumer response to Kokomyun is unprecedented itself in the history of ramen marketing,” he noted. “It’s like we’re in the Industrial Revolution era when products were sold right away after production.”
The 1.8 trillion-won-scale domestic ramen market has long been led by Nongshim, which accounts for about 70 percent of market share with some 1.2 trillion won in sales last year, according to the Fair Trade Commission. Samyang Food was the next with about 12.4 percent, followed by Ottogi with a 9.4 percent share. Yakult was placed fourth at approximately 9 percent.
Yakult sees its sales soar to 19 to 19.5 billion won this year, pushing aside Samyang to become the second place, according to Lee Seung-ki, assistant manager of Yakult’s public relations team.
Yakult is increasing the production of Kokomyun to 450,000 every day and release Kokomyun cup noodles next month to satisfy the market demands.
American cosmetic brand retailer Kiehl’s is a classic example of making success by breaking stereotypes.
In contrast to its market competitors stressing “beauty” issues, Kiehl’s put a priority on “treatment” side of cosmetics. In an effort to make up the image of pharmaceutical effect of its products, the company has its sales personnel wear white doctor’s grown.
Kiehl’s is also distinguished for its unorthodox marketing approach, exceptionally large male clientele base and its products’ simple and straightforward packing.
The American brand first opened in the Galleria Department Store in southern Seoul in 2003. Only four years after location, without advertising or promotional events, the brand rose to the best-selling boutique in the department store’s cosmetics segment.
Kiehl’s opened in the Shinsegye Department Store last year with the largest space of 46.2 square meters among the cosmetics shops.
“Given that the prices of Kiehl’s products are relatively cheaper than other luxury cosmetics brands, its actual sales volume could be almost two times higher than its competitors,” a Shinsegye official said. “Once Kiehl’s opens at a department store, it would be able to become the top three at any time.”
Dairy products maker Namyang is another case of marketing success, shaking up the long-time two-way race in the domestic instant coffee market between Dongsuh and Nestle.
Korean consumers are huge fans of stick-type coffee mix containing coffee powder, creamer and sugar for a single serving. Of the 3 trillion coffee market in Korea, instant coffee makes up almost 1.3 trillion won.
To compete with the two existing players, Namyang chose to focus on improving the quality of creamer by adding fat free milk.
“Based on our knowhow of making dairy products, we were looking to meet the consumer needs for creamer and that made success” said Seong Jang-kyung, an executive director of Namyang.
As a result of the unique marketing method, the company has taken over the second place in the coffee mix market only six months after entering the relevant market last December. It is the first time in 25 years that the traditional rival structure of Dongsuh and Nestle has been broken up.
According to AC Nielsen Korea, Namyang French Cafe had a 11.3-percent market share in June over Nestle’s Taster’s Choice with 9.7 percent. Dongsuh’s Maxim maintained a solid lead by securing 77.1 percent.
A secret of the fast rise of the Seoul-based coffee franchiser Caffe Bene can also be found at the brand’s unique approach to satisfy the local consumer demands.
Started in April 2008, the franchiser now has 668 outlets across the country. The figure outnumbers those of major global coffee brands, including Starbucks and the Coffee Bean & Tea Leaf.
Still, Starbucks stays on top in terms of annual sales revenue, but Caffe Bene’s explosive expansion has made the company a model for local franchises.
“We’re trying to meet consumers’ current demands focused more on the space of coffee drinking than on coffee itself. That’s a key success factor,” a Caffe Bene spokesman said.
Caffe Bene CEO Kim Sun-kwon said in past media interviews that his strategy was to make the homegrown coffee franchise distinct by adopting elements not found at rival overseas chains: a European interior accentuated by Korean touches.
“Coffee culture originated in Europe. Caffe Bene has adopted a vintage European interior to give visitors the feeling that they are at a European sidewalk cafe in the 19th century,” Kim said. “We offer an atmosphere that enables visitors to feel at home.”
Unlike most coffee chains that seek fast customer turnover, Kim said, Caffe Bene strives to create a comfortable environment for visitors who not only drink coffee but also spend time reading books, listening to music and chatting with friends.