Skippy Peanut Skippy Peanut Butter in Butter in South KoreaSouth KoreaKelli MaxcyKelli Maxcy

Evan GosleeEvan Goslee

Drue ZehlerDrue Zehler

Main QuestionsMain Questions

Can Skippy effectively move into South Can Skippy effectively move into South Korea with a standardized approach?Korea with a standardized approach?

Could Skippy make changes to better Could Skippy make changes to better meets the needs of the South Korean meets the needs of the South Korean market?market?

Could changes be made cost effectively?Could changes be made cost effectively?

PricePrice

Korea per-capita income of 15.07 million Korea per-capita income of 15.07 million won ($12,646)won ($12,646)

$3 jar of peanut butter would cost about $3 jar of peanut butter would cost about 3500 won 3500 won

U.S goods have reputation of being very U.S goods have reputation of being very high quality however, Koreans are high quality however, Koreans are classified as very “price conscious” and classified as very “price conscious” and are willing to sacrifice quality for low are willing to sacrifice quality for low prices.prices.

ProductProduct

Great reputation of U.S. food products Great reputation of U.S. food products allows U.S suppliers a strong position in allows U.S suppliers a strong position in this import marketthis import market

South Koreans tend to enjoy spicy or South Koreans tend to enjoy spicy or salty foodssalty foods

Product: LabelingProduct: Labeling

Korean labeling lawsKorean labeling laws

Appeal of current Skippy label in a South Appeal of current Skippy label in a South Korean marketKorean market

Product: CompetitionProduct: Competition

Newell Korea-Newell Korea- Creamy and Crunchy Creamy and Crunchy Peanut ButterPeanut Butter

Packing- 340g, 375g, 510g, 10kg,20kg,Packing- 340g, 375g, 510g, 10kg,20kg,200kg200kg

China(Shangdong Area) China(Shangdong Area)

Product: PackagingProduct: Packaging

Plastic Jars vs. GlassPlastic Jars vs. Glass

Squeezable containersSqueezable containers

Different sizesDifferent sizes

Place: Population Place: Population DistributionDistribution

South Korea has a total population of South Korea has a total population of 48,598,175 48,598,175 Overall, Korea has become highly urbanized Overall, Korea has become highly urbanized

ever since the Korean Warever since the Korean War ½ of the population lives in urban agglomerations ½ of the population lives in urban agglomerations

of close to 1 million peopleof close to 1 million people ¼ of the population lives in the capital city, Seoul ¼ of the population lives in the capital city, Seoul Result of the government trying to get people to Result of the government trying to get people to

live in urban areas outside of Seoul (Busan, live in urban areas outside of Seoul (Busan, Ulsan and Pohang)Ulsan and Pohang)

Place: TransportationPlace: Transportation

Korea's transportation network is in desperate Korea's transportation network is in desperate need of expansionneed of expansion Highways: 86,990 km of highwaysHighways: 86,990 km of highways

About 1/80 are considered expresswaysAbout 1/80 are considered expressways ¼ are unpaved roadways¼ are unpaved roadways

Railways: 3,125 km of railwaysRailways: 3,125 km of railways A new high-speed, direct railway is currently under A new high-speed, direct railway is currently under

construction that will connect Busan and Seoulconstruction that will connect Busan and Seoul This will hopefully remove some of the congestion on the This will hopefully remove some of the congestion on the

highways between these two major citieshighways between these two major cities

Place: TransportationPlace: Transportation

Sea PortsSea Ports Ports and harbors are possibly South Korea’s Ports and harbors are possibly South Korea’s

most widely used transportation network for most widely used transportation network for tradingtrading

Growth of trade activity and the fact that South Growth of trade activity and the fact that South Korea is a peninsulaKorea is a peninsula

AirportsAirports There are a total of 102 international and There are a total of 102 international and

domestic airports in the largest citiesdomestic airports in the largest cities 69 have paved runways69 have paved runways 33 have unpaved runways33 have unpaved runways

Place: Skippy ProductionPlace: Skippy Production

Skippy is produced only in the United Skippy is produced only in the United StatesStates There are 7 distribution centers in the US and There are 7 distribution centers in the US and

19 in other countries19 in other countries Unilever is already present in South KoreaUnilever is already present in South Korea

It is ranked 4It is ranked 4thth among the leading companies among the leading companies in South Koreain South Korea

Seoul Dairy, Haitai Dairy Company and Lotte Seoul Dairy, Haitai Dairy Company and Lotte Group all ranked higherGroup all ranked higher

Place: ProductionPlace: Production

Legal regulations Legal regulations Legally, Korean board meetings require the Legally, Korean board meetings require the

physical presence of all membersphysical presence of all members Therefore, all companies must Therefore, all companies must appoint a appoint a

representative director who resides in Korearepresentative director who resides in Korea South Korea has a flat 10% value added tax South Korea has a flat 10% value added tax

on all importson all imports SS South Korea imposes tariff rates in the range South Korea imposes tariff rates in the range

of 30%of 30% to 40% on most products to 40% on most products

Place: DistributionPlace: Distribution

South Korea is one of the most ethnically South Korea is one of the most ethnically homogeneous countries in the worldhomogeneous countries in the world Koreans account for nearly all of the Koreans account for nearly all of the

populationpopulation Korean is the official language although Korean is the official language although

some English and Japanese is taught in the some English and Japanese is taught in the schoolsschools

Koreans are loyal to domestic companies Koreans are loyal to domestic companies rather than foreign companiesrather than foreign companies

Place: DistributionPlace: Distribution

Local representation is essential for the success Local representation is essential for the success of foreign firms in the Korean market.of foreign firms in the Korean market. In the past, nationality was considered membership of In the past, nationality was considered membership of

the “Korean race”the “Korean race” President Roh Moo-hyun has started pushing the President Roh Moo-hyun has started pushing the

importance of foreign involvement in tradingimportance of foreign involvement in trading South Korea is becoming more and more receptive to South Korea is becoming more and more receptive to

foreign productsforeign products South Korea’s leading import partners are Japan South Korea’s leading import partners are Japan

(20%), US (14%), China (12%) and Saudi Arabia (5%)(20%), US (14%), China (12%) and Saudi Arabia (5%)

Place: RetailersPlace: Retailers

The Korean culture is quickly evolving into a The Korean culture is quickly evolving into a more fast paced life stylemore fast paced life style Hypermarkets and supermarkets are the most Hypermarkets and supermarkets are the most

popular retail outlets popular retail outlets Koreans prefer one stop shopping, discounted prices and Koreans prefer one stop shopping, discounted prices and

bulk buyingbulk buying Convenience stores and independent grocers are Convenience stores and independent grocers are

slowly being taken over by larger retailersslowly being taken over by larger retailers They are now offering new services to bring customers They are now offering new services to bring customers

back into their storesback into their stores Offers many different imported food brandsOffers many different imported food brands

Place: CompetitionPlace: Competition

Peanut butter has a small presence in South Peanut butter has a small presence in South KoreaKorea

The fats and spreads market is, as whole on The fats and spreads market is, as whole on the declinethe decline The market is forecasted to decrease by 2.6% by The market is forecasted to decrease by 2.6% by

20082008 Processed foods are rapidly gaining popularity Processed foods are rapidly gaining popularity

Fear of Mad Cow Disease has resulted in much of Fear of Mad Cow Disease has resulted in much of the population looking for protein in other foods such the population looking for protein in other foods such as soybean pasteas soybean paste

Place: CompetitionPlace: Competition

The butter segment accounted for 81.7% The butter segment accounted for 81.7% of the South Korean fats and spreads of the South Korean fats and spreads marketsmarkets Low fat spreads held the smallest share with Low fat spreads held the smallest share with

1.7%1.7%

Staple spreads include kimchi (a sweet Staple spreads include kimchi (a sweet sticky rice), soybean paste and soybean sticky rice), soybean paste and soybean curdcurd

PromotionPromotion

Blonde Skippy mascot is an American Blonde Skippy mascot is an American charactercharacter

Current promotional efforts emphasize Current promotional efforts emphasize “fun and family”“fun and family”

Younger Koreans are more open and Younger Koreans are more open and willing to abandon traditional willing to abandon traditional consumption patternsconsumption patterns

MediaMedia

4 major broadcasting networks KBS I, 4 major broadcasting networks KBS I, KBS II, MBC, and SBS. KBS I and II are KBS II, MBC, and SBS. KBS I and II are government owned.government owned.

MBC and SBS are independently MBC and SBS are independently operated but still strongly influenced by operated but still strongly influenced by Korean governmentKorean government

All advertising slots must be purchased All advertising slots must be purchased through the government.through the government.

MediaMedia

KOBACO, censors all advertising KOBACO, censors all advertising (television and radio)(television and radio)

Korean television only has an audience Korean television only has an audience of 8 million but expected to increase to of 8 million but expected to increase to 11 million.11 million.

InternetInternet

Huge use of broadband internet, Huge use of broadband internet, currently11 million internet using currently11 million internet using households constitutes about 68% of households constitutes about 68% of total householdstotal households

Nearly all cellular phones in South Korea Nearly all cellular phones in South Korea have internet access have internet access

Intellectual Property Intellectual Property

S. Korea has property laws but are not S. Korea has property laws but are not enforced strictly like in the U.S.enforced strictly like in the U.S.

Essential to get copyrights, trademarks, Essential to get copyrights, trademarks, etc. registered with Korean government.etc. registered with Korean government.

Local Korean attorney must be hired to Local Korean attorney must be hired to handle the registration processhandle the registration process