- Early stages of Korea’s coffee industry growth showed a strong preference for instant and mix coffees.
- In fact, research shows that Asian countries and countries in which tea was traditionally the drink of choice usually prefer instant coffee drinks.
- Instant coffees are no more just fast making and drinking coffees.
- As the consistent growth of the instant coffee market in Korea, instant coffees are becoming more premium and diverse.
- Korea’s coffee market has risen incredibly sharply over the past seven years.
- In fact, Korea’s coffee consumption and number of coffee shops has more than doubled since 2005. The size of Korea’s coffee industry has grown more than 2.6 times in 5 years. And along with the increase of the size, the coffee franchise industry is getter bigger as well.
- Young urban professionals seen as key to coffee industry success.
- In South Korea, consumption trends among younger coffee
drinkers, and a ‘coffee shop culture’ are driving the market economy.
- In South Korea, making a themeis important to survive in the coffee market.(themed cafés are famous in South Korea)
- Making a good cup of coffee takes time and dedication; art, if you will. It just isn’t economical for a place devoted to serving quality coffee to also have to deal with the hassle of setting up beer taps, uncorking wine bottles and checking whatever red bean/donut hybrid is cooking in the oven. A coffee shop that tries to be more than a coffee shop is spreading itself too thin.
The Rise of South Korea's Coffee Industry
With big companies such as Starbucks growing quickly in South Korea, it has developed to be a menace to native coffeehouse products, stimulating for calls for directive to safeguard the indigenous brand and preserve range in the coffeehouse business in Korea (THE KOREA TIMES March 2016). Korea’s coffee business has doubled over the previous five years, sighting an upsurge in both imports and exports consumption, pushing the country to its11th position as leading coffee marketplace in the globe. South Koreans are currently amid the top international users of coffee products, and the land is home to above 12,300 coffee produce outlets (Joyce and Hooyeon 2016).
By 2020, the emerging markets are projected to range to 50% of international consumption (Lee and Oh 2018, pp.72). Evolving coffee intake markets will exemplify half of the globe total within the seven years. However, numerous marketplaces are situated in Asia. Fresh invention and request for higher-quality goods is anticipated to initiate value development. As the coffee products sold are projected to grow gradually, an upsurge in preference for premium merchandises also increase which will subsequently enhance value progression (THE KOREA TIMES March 2016).
Korea market growth in initial periods of coffee trade progress displayed a strong inclination for instant and mix coffees. The study demonstrates that Asian nations in which tea was traditional, the drink of choice desired instant coffee drinks (THE KOREA TIMES March 2016). Due to the steady advancement of the instant coffee market in Korea, the products are becoming more diverse and premium. The coffee markets have increased extremely sharp over the earlier seven years. In fact, Korea’s coffee intake and total of coffee outlets have more than doubled up as from 2005 (THE KOREA TIMES March 2016). Young city specialists are understood as important to coffee sector’s accomplishment. In South Korea, drinking fashion among younger people, and a coffee shops philosophy are motivating the market economy.
South Korea coffee industry remains to grow at a quick spend, with 50% sales progress centers in all joined coffee parts in three years ending in 2014 (Coffee exposes Seoul 2018). In fashionable retailer of southern Seoul, approximately two in every four houses brags to have coffee outlets. But, nowadays the market is becoming even more packed as accessible stores surges (Coffee exposes Seoul 2018). According to the coffee organization, South Korea’s per capita coffee consumption has closely doubled up since the 1990 to 2.3 kg per individuals, still half the 4.5 kg of what American consumers (Kang 2014). Returns improvement at coffee chain in the nations reduced to approximately 8% in 2014, but, from 2008 to 2012, the income increased to more than 20% (Coffee exposes Seoul 2018).
Growing Demand for Premium Coffee Products
In the early 2016 and start of 2015, it was a vibrant periods for international expertise coffee outlets, with continuous increasing call for the modernized coffee shop experiences, motivating quick novelty and progressing rivalry in the class world-widely (Lee and Oh 2018). With the unveiling of Euro monitor’s New 2016 editions of user foodservice facts from 54 international marketplaces, here are three comprehensions from operatives seeing to remain forward of the worldwide coffee shop market (EUROMONITOR INTERNATIONAL April 2016). According to the Euro monitor International data, in 2016, expertise coffee shops were the wildest developing key restaurants class in terms of the worldwide transactions, growing by a margin of 9.1% from 2014 to 2015 (EUROMONITOR INTERNATIONAL April 2016). This surpasses the global eatery's industry as general, which propagated at 5.7% and was resilient even than that of international fast food at 5.8%, in spite of traditionally being one of the major motivators of chain cafeteria development universally (EUROMONITOR INTERNATIONAL Feb 2018). Conceivably, it is the fact that the progress was constant throughout all the nations in globe counting those reflected as evolving markets segments as well as greatly mature ones.
While all the republics see robust advance in the group, Asia Pacific will be home-based to the biggest sales rise in coffee shops, totalling over the US. $3 billion in fresh value progress from 2016-2020; matched to North America which recorded $3.3 billion in development as well as the $2.2 billion from the Western Europe over same period (THE KOREA TIMES March 2016). Thus, the rivalry is rising rapidly leading to swift product modification. The change towards a vastly varied playing arena is a universal occurrence as well.
Competitions dynamic in the coffee restaurants are varying at the native level as well. In the developing marketplaces segments, this has denoted a gradually large amount of products to distinguish them. In South Korea, this has been revealed in the kind of a massive range of themed cafes, from cookie to mango while in Western Europe numerous coffees outlets have been testing with addition of liquor offering to bring in dusk traffic (Stanley 2018, pp. 47). Developed market rivalry has been rising too, though in a slight diverse form.
The division examines the condition encountered by small companies in the Korean market through applying planned practices as follows
Marketing analysis (PESTLE analysis): Examination of the Korea coffee market shows that it is actively aided by the government which is obviously apparent from the fact that their import of the coffee has improved enormously over the years. Apart from the economic aspect, it displays that Korean coffee markets has doubled over the previous five years and has occupied the position of the 11th major coffee markets across the globe. The Korea customer’s public styles have been motivating, as they are a higher general favorite among them with respect to the varying kinds of coffee, which is furthered by the portion of the coffee sector across Korea. The key aim for the triumph of Korean coffee business is the greater preferences amid the young urban expertise from the coffee. The technology trends imply that skill assist the coffee service suppliers to offer their merchandises to their users and attending them in an efficient way (Citlin 2018). The surrounding trepidations affect the Korea coffee sector in the sense that the coffee operatives are needed to check the sway of their does on the surrounding, and lawfully abide by the laws and policies asset by the regime.
Competition from International Coffee Chains
The products life cycles illustrate that every produce passes through particular points which comprises introduction, growth, maturity and decline (Baker 2014, pp. 12).
Customer investigation: an evaluation of the Korean market with demands for the coffee yields shows that it has been improving as there has been a greater level of preferences for coffee produces among the users. But, a significant transformation with regard to the Korean consumer likings for the coffee produces over the decades specifies that earlier they choose an instant and mix coffee. However, it transformed over the ages in the direction of instant mix coffee to expresso centered and specialty drinks (Nick 2016). The young waged urban expertise in specific have displayed increasing request for the merchandises across.
Rival’s analysis: the coffee through Korea encounters a considerable level of rivalry, as there is a great number of players functioning within the Korean coffee industry. And key ones being caffebene (which has been a local competitor); hollus (domestics); coffee bean (US); Starbucks, and Tom&Toms (local) (Chung 2016). The existences of large competitors have improved the whole market effectiveness level within coffee sector and this illustrates highly competitive markets (Choi 2017). However, the large competitors pose a great threat to existence of the local coffee restaurants.
Assessment: in terms of the threats and opportunities in the Korean coffee marketplace, it is analyzed that the primary chance is mostly in terms of extremely improving inclinations in the last few years for the coffee produces, and the mounting level of likings among young employed Koreans (Pulka et al. 2018, pp. 1). This offer considerable prospect to the prevailing coffee players advancing the market segments by attending as many users as possible. In regard to the threats, the primary threats are a mainly higher level of rivalry to local players, particularly from the foreign players such as Starbucks (Choi 2017).
The investigation of the condition of the local players in southern Korea and its prevailing performance ranks leads to the growth of fresh marking goals as specified below: to generate a unique image in the thoughts of Korea individuals by bringing the premium class providers of the coffee services and products. Secondly, to advertise its coffee produces aiming the young Korean individuals in cognizance. Thirdly, stimulate itself as the world leading product in terms of coffee offerings to its users.
The marketing goals as mentioned above necessitate achievement and it needs novel effective marketing approaches that require to be created so that they can be certainly be attained from the efforts of all workers within the company (Johnson 2016, pp. 54). An active marketing approach needs the contemplation of numerous crucial features and choices necessity to be taken regarding the importance of marketing mix linked to tactics such as products, pricing, promotions and place (Johnson 2016, pp. 56). The decision requirement requires to be undertaken with reference to the choice of a suitable target market and the positioning tactics that should be embarked on in placing the goods and services.
Future Prospects for the South Korean Coffee Market
Target market selections: a study of the Korean marketplaces with respect to the coffee and drinks shows that there has been an upper level of demands on the part of young urban salaried persons. The target market selected across Korea includes professionals through the regions and young children for the kid’s drink. The target buyer for the coffee linked products would comprise a young professional aged between 21 to 40 years (Reuters 2016). The working environment requires some kind of coffee and beverages refreshment and by targeting group; it could likely realize a higher level of transactions and advance by the firm. In the regard to the kid’s beverage, the target group would be particularly the youngsters aged between 5 years to 18years (Reuter 2016). In respect to the psychographic aiming, the target market would primarily contain clients that prefer expresso coffee products and services.
Positioning tactics: a suitable positioning approach is crucial with respect to targeting users to these precise coffee merchandises of the firm. Positioning approaches are concerned with playing with the thoughts of the target users whereby tactics are targeted with a viewpoint to create a distinction between them. The local can use positioning strategy as the first-rate class supplier of the coffee products so as to be able to compete with big brands such as Starbucks.
Products strategy: the approach of products should be a way that it is capable to fulfill the targeted users (Grant 2016, pp. 10). As in the regard to the coffee business in South Korea, it has been evaluated that there is a greater prominence among the users with respect to the expresso instant coffee and specialty products (Nick 2016). As such, the products approach in the local outlets should be able to offer expresso coffee with a wide variety of alternatives such as hot coffee, cold coffee and varying flavours comprising the fruity, sweet and chocolate. Therefore, the wide variants alongside linking of the first-class label would permit the firm to competently target its consumers and thus gain market share. Further, there has been demand in the heated coffee within Korea, and so, the product policy in the above case, would be to contain the roasted coffee services as well.
Pricing strategy: the pricing tactic for the coffee through Korea indicated that it is rated in between $1.5 to $7 per coffee and it is costly in hotels whereby the charges can go up to $30 per coffee (Reuters 2016). The local companies can change the strategy of premium price as it would build feelings among the targeted users that the coffee produces offered by the firms are of high class (THE KOREA TIMES May 2014).
Promotion strategy: an approach in connection to the advertising of products and services is also significant because it creates sufficient level of cognizance within its target users for the goods and services (Grant 2016, pp. 10). Marketing promotions policies in the form of vouchers would be distributed to the guests for the first time whereby rebates would be offered on the next stopover by 10-15% (Ariffin et al. 2018, pp. 21). Also, the marketing campaigns in the form of celeb ratification would validate the coffee offering and it will display in the style of TV advertisement and big posters in the newsprint. The online style of supporting the products and services would also be accomplished where the brand symbol counting the variations will be included (Ariffin et al. 2018, pp. 21). In promoting new coffee produces, logic of brilliance will be deliberated so that younger group can be effectively targeted. These are the crucial marketing approaches that would be deliberated to protect the wants and expectation of Korean consumers from the local coffee service providers. The approaches are primarily concentrated towards providing the present call for the coffee associated products and services within the targeted clients, so as to accomplish an advanced level of improvement in its trade segments and positively accomplish its marketing aims (Macarthy 2018, pp. 14).
Anoff matrix: the framework is a vital planned model that illustrates numerous probable products and market situations whereby a company can choose approaches that would ensure higher progress (Baker 2014, pp. 14). In relation to this, the vital parts that could be reflected by the marketers comprise utilizing the existing merchandises and market, developments in few products and markets. In relation to the local coffee providers, the marketing tactic as per Anoff model would be that of novel product improvement and target in current market (West et al. 2015, pp. 33).
The whole analysis leads to a conclusion that the local coffee providers can accomplish additional level of development in its present level of operators within the Korean market; concentrating on the innovative form of drinks. There has been a move in regard to the patterns and demands of the coffee goods amongst young Korean specialists, and this has led to focusing more on such products to realize greater market segment. Grounded on the above study, the following are key commendations that are deliberated as important: The premium and unique aspects should be considered while promoting it services and products, as it would result in an effective target of its offering to users and higher development. Secondly, promotion of new attachment of products should be done at a wide level to contain all the Korean individuals. Lastly, it is recommended that marketing approaches should consider all the implementation of numerous styles of marketing mix such as online media, paper, and print mass media which would guarantee higher level of users’ coverage.
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