Market Potential
South Korea is a newly industrialized country with a GDP of about 897 billion dollars, most of the people in South Korea depend on agriculture for their survival and due to industrialization they have in the recent past started to focus on the use of natural resources i.e. coal iron ore limestone graphite and kaolinite. South Korea actually has now become one of the most industrialized countries in the world.
This is because most of the electronics used in different parts of the world are from South Korea, more especially in Africa, which forms the largest market for South Korea’s electronics. The market of South Korea consists of the agricultural focus where they need to emphasize more on the production of agricultural products like fruits root crops and barley. On the other hand they have also to improve on the production machinery and transportation equipment, steel and also mining. The current market for South Korea is the Republic of China, Saudi Arabia, and Japan. The market potential of South Korea is to focus more on growing economies of Africa and middle east more especially on developing African countries that need their industrial machinery to develop.
Penetration of urban and rural markets
Most companies use different strategies to penetrate markets. We have two types of markets in one given country and those are the rural and urban markets. The two have to be approached differently. Just as international companies have to adapt their marketing strategies to local conditions, the companies should also ensure that urban marketing strategies assist them to penetrate rural markets. South Korea for example produces consumer electronics and many machine tools; they should make these electronics for the rural people. This is called production adaptation – making goods/products that meet rural or urban preferences there are several ways:
- The Company can produce a regional version of a product i.e. a rural utility vehicle (customized).
- They can also produce a country version or a product that is accepted through the country.
That is a country can produce a city version of its product i.e. a beer to meet (Munich tastes or Tokyo tastes) ands another to meet rural tastes. This should not be done to meet only tastes but rural superstitions or beliefs too.
Product uses: Consumer buying habits
The aim of marketing is to meet and satisfy target consumer needs and wants. Consumer buying habits are the ways individuals; groups and organizations select, buy, use and dispose of goods, services ideas, and experiences to satisfy their needs and desires. Companies in newly industrialized Countries like S. Korea need to understand how people purchase goods in order to profit from them.
Studying consumers provide clues for developing new products, product features, prices channels, messages and other marketing mix elements hence in South Korea for example, being a NIC country, the buying behavior can be influenced by:
Cultural factors like social classes reflect the preferences for goods due to income of people, education, and occupation. Markets should design products tailored to meet the needs of people in various social classes.
Other factors that can affect the consumer buying habits are social factors like family, reference groups, role models, friends, neighbors, and workmates. These are those people with whom a person interacts and this also affects the buying habits. For example in families in South Korea, the man is seen as the breadwinner and the wife is the agent for purchase of most goods like food, sundries and clothings. However markets should realize that women are also gaining power in household purchasing power hence it should be realized that there are people who have greater influence in the family on choosing various products. Other factors are personal factors like age, sex, occupation, lifestyle, personality and self-concepts. Psychological factors also affect the consumer’s buying habits like, perception, learning beliefs and attitudes.
Products use Patterns
Product use will naturally determine whether a person is satisfied or not. Satisfaction is if the product matches with the uses. If it doesn’t then the customer is disappointed then he will be delighted and these three will make the customer to be loyal or not.
Product Feature Preferences
Product features are some of the important aspects that customers look for when making purchases. Take for example a customer who wants to purchase a car. He/she must take to considerations features like speed, comfort, and availability of spare parts. Most products are offered at varying features characteristics and functions. Companies should ensure they learn the features that consumers desire and the costs of adding these features to their products. Product features also assist customers in evaluation of alternatives in the purchase decisions.
On the spending and product preferences of South Korea we can say that most people find South Korean electronics and industrial machinery attractive they should hence focus more on trying to retain such consumers. The reason to this type of consumer preference is attributed to the various spare parts and the ease to use such machines from South Korea as opposed to other countries.
Major Problems to Product Acceptance
Customers are either satisfied or dissatisfied with a product. Once a customer is satisfied, then he or she will buy again but if the customer is dissatisfied, then major problems arise. Problems to product acceptance arise due to the product not meeting their needs. Consumers will only accept a product that can solve their needs. Dissatisfied customers can abandon or return the product or can seek public action by complaining to lawyers or other interest groups. If the product is not good they can also resell it or find new uses for the product. Companies should hence be very careful in production or introduction of new products to the market, they should try to overcome such problems that companies face in introduction of new products like, age, consumer spending habits, cultures and subcultures, availability of raw materials, government policies and regulations and tax
Companies Distribution
Company’s distribution channels to sell the distribution of their goods channels include intermediaries who assist to sell goods so that they can reach all the final users. They are a set of interdependent organizations involved in the process of making a product or service available for use to end-users.
Traditionally the only distribution system was physical distribution but today in most countries like South Korea. We have seen the advent of the channels of distribution system where we have different intermediaries. Channels of distribution are better than direct marketing and physical distribution. They perform the most important during of moving goods from the producers to consumers.
Retailers
These are those final intermediaries in the channel of distribution and as involved in selling goods to end-users. There on the most important intermediaries because they are in touch with the final user hence they have vital information about consumers.
Methods of Operation
Retailers received goods from wholesalers and in town sell them to final end-users. Retailers operate in the form of self-service stores, self-collection, and full service. They take the form of specialty stores, department stores, supermarkets, convenience stores, discount stores etc. They have more information about customers than other forms of intermediaries.
Wholesale
These are the intermediaries who buy goods for resale or for the purpose of business and they buy goods from the manufacturers in large quantities. They can also be manufacturers but not retailers.
Methods of Operation
Their deal with business customers and not end-users so they have larger transactions than retailers do. They also cover large areas than retailers. Apart from selling, wholesalers transporting and financing. They also give credit to retailers.
We have three levels of distribution:
- Zero level – manufacturer – consumer
- One level – – wholesaler – consumer
- 2 level – manufacturer – wholesaler – retailer – consumer
The most appropriate distribution channel for South Korea is the two-level distribution channel that involves all the two intermediaries because it will ensure that goods are distributed to all parts of the economy.
Types of competition
There are majorly two types of competition-direct and indirect. The direct competition involves two companies that have similar products in the same market. This type of competition is successful where there is a large market and consumers are enlightened the second type is indirect where two companies have similar products in the same market but they use different approaches to advertising, pricing packaging and distribution.
The success of the second type of competition depends on buyer awareness and loyalty. Competition is good because it brings about fair regulation in terms of taxes and product regulations it also leads to development of strong brand names that have their own unique packaging, patents and copyrights. It also assists to eliminate monopoly.It also makes manufacturers give customers discounts in order to lure them into buying their goods these discounts are like trade discounts, cash discounts, quantity discounts,
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