Catch me if you can

Me-too products inundate market

By Bahk Eun-ji

Kim Ji-in, a 30-year-old office worker in Seoul, felt confused last week when she dropped by a convenience store nearby her office to buy a bottle of Vitamin Water, one of her favorite beverages.

Two different vitamin drinks were in the fridge ― “Glaceau Vitamin Water” from global brand Coca-cola and “Daily-C Vitamin Water” from domestic company Lotte Chilsung.

“The two drinks looked practically alike with similar designs and bottles. It took almost a minute before I eventually noticed they are different products with different labels,” Kim said.

Daily-C Vitamin Water is a “me-too” product, a trend seen in many different industries such as food, beverages and cosmetics.

However, in the food and beverages market, rival companies making and selling copycat products is nothing new.

Economics of copycats

When a company comes up with an innovative idea to succeed commercially and it makes a strong impression on consumers its rivals do not sit idly around ― they jump onto the bandwagon with similar products to carve out a niche in the newly found market.

A Me-too product is somewhat different to replica goods or fake goods that pirate trademark items without obtaining legal permission. It is a tactic adopted by late-entrants to a market, in which they adopt the concepts or designs of popular products that already exist.

“One of the good points of me-too products is that it can prevent a few companies from monopolizing the market, and above all. It can also end up boosting the overall market size because of the advent of new players,” professor Kim Do-kyun at Kyung Hee University said.

However, from the perspective of companies that invent innovative items, it is not a pleasant situation because it usually takes a couple of years and huge investment to complete research and development (R&D) of a new product.

They view imitators as being allowed to tap into the market easily at far less cost, because they can ride in the commercial slipstream of established originals.

Office worker Kim eventually selected Glaceau Vitamin Water after close examination but not everybody would do so ― the chances are many customers would not pay much attention to the tiny differences between originals and copycats.

New trend?

Glaceau Vitamin Water and Daily-C Vitamin Water are not the only examples.

A healthy tea drink, made from Oriental raisin trees called “Heotgae” tea, believed to help people recover from hangovers, has been popular among salespeople who are more often than not forced to network through drinking binges.

Kwang Dong Pharmaceutical initially launched the drink, and many food and beverage companies have been scrambling to make similar drinks and me-too product makers seem to be reaping the larger fruits.

Condition Heotgae tea from CJ CheilJedang (CJ) showed the most outstanding sales. Its market share during the first two months of this year reached 50 percent, up from 42.2 percent during 2011.

In comparison, that of Kwang Dong was 34.1 percent during the January-February period, down from 48.9 percent last year.

“It took three years for us to develop the Heotgae tree drink. It is hard for us to compete with products from leading conglomerates, because they can spend much more money on marketing than us,” said a source related to Kwang Dong Pharmaceutical.

Kwang Dong is a local pharmaceutical company while CJ is a conglomerate with many subsidiaries under its roof.

“Our drink shares just one thing in common with that of Kwang Dong’s _ both use heotgae. Other than that, the two have different concepts and different types of target customers,’’ a CJ Group spokesman said.

``Kwang Dong’s product is aimed only at male clients, as you can see the package design and TV commercial. Unlike Kwang Dong, our drink targets both men and women of all ages. And yes, we have a larger budget for marketing as a bigger company but we mainly advertised through SNS, which costs less than TV commercials, in order to better reach young consumers,” a CJ group spokesman said.

Cosmetics

The cosmetic market is another commercial sector flooded with me-too products.

Korean cosmetic company Missha launched The First Treatment Essence last October, and Night Repair Science Activator Ampoule this January. Each of these is an obvious me-too product of SK-Ⅱ Facial Treatment Essence and Estee Lauder’s Advanced Night Repair Serum, according to some experts.

Missha even came under accusations that it hi-jacked these two products from SK-Ⅱ and Estee Lauder into its advertisement and suggested comparisons, while stressing its low price and good quality.

Missha’s product similar to Estee Lauder’s Advanced Night Repair serum, Night Repair Science Activator Ampoule is sold at 42,000 won while the Estee Lauder’s is sold at 155,000 won in department stores. Missha’s two products became instantly popular, and sales were over ten billion won.

A consumer who regularly buys Estee Lauder’s serum, Bae Su-jin, a fund manager working in Seoul, said that she definitely wants to try the local brand one, provided that its quality is as good because the locally produced one is considerably cheaper.

Latecomers also have some grounds for their products ― followers tend to stimulate healthy rivalry in markets. With increasing followers, the market can also get bigger.

Kim Jai-hoon, a senior manager of product operating group at Accenture, a global management consulting group, also pointed out that there are both pluses and minuses.

“Consumers can purchase high quality products at low prices through market competition. However, there is the possibility of being reluctant to invest in R&D to invent new products for leading companies and to pay no attention to product differentiation for followers.” Kim said.