Besides quality in our “craftsmanship”, successful PR work is based on the market knowledge of the consultants and agencies, who should always keep eyes and ears on the pulse of the market. Reason enough to ask our partners around the world which industry is booming in their region at the moment and which companies are currently investing into PR.
The GCPR-Blog team talked to John Kim, CEO of Grape PR in Korea and Korean partner of the international GlobalCom PR Network
Chicken crazy? Fast-food chains and international franchises enter Korea
* The series is based on phone or face-to-face interviews and written input, therefore please excuse language mistakes which might reflect foreign language influences.
1. Which industries/markets are booming at the moment in Korea?
What do BBQ Chicken, McDonald’s, Caffe Bene and Starbucks have in common? Aside from being popular food and drink businesses, all are franchises of international and Korean brands. The franchise industry has been growing significantly in the past few years in Korea.
This trend was jumpstarted by fast food restaurants, followed by family restaurants, clothing chains, cleaning services, educational institutions and discount stores. In 1999, the number of franchise businesses in Korea was only around 1,500 with 120,000 outlets. Now, the number has doubled. According to the Ministry of Knowledge Economy’s distribution and logistics division, the franchise industry in Korea is worth an estimated $70.2 billion. Franchises for food services, including fast food chains and family restaurants, account for around 52 percent or $36.5 billion. The retail sector, such as convenience stores and consumer goods, accounts for 36.2 percent or $25.4 billion of the total. The remaining 11.8 percent or $8.2 billion includes education, real estate, cleaning and mailing services.
2. What makes Korea currently so interesting for this industry?
Most of these businesses have an ubiquitous presence in Korea. Experts believe the potential for the franchise industry is bright, especially in the service sector. Additional industries with good prospects are: senior care, party planning and catering, fitness, personal services, frozen yogurt, green growth, pet products and children’s items.
Franchise is easier because the business has already been tried and tested. The only obstacle would be raising the financial assets. Some franchises require large investments and royalty fees, plus the equipment and rental expenses. There’s no doubt international franchises remain prominent, but domestic chains are also becoming popular among local businessmen. Korean franchises do not require much capital or large royalties. Also unlike foreign franchises, the local ones are already attuned to Korean tastes and targeting Korean consumers. Consider the fried chicken craze in recent years. The Korea Franchise Association reported there are about 35,000 fried chicken franchises in the Korean market, as of last year, led by popular brands such as Kyochon Chicken, BBQ Chicken and Two Two Fried Chicken.
3. Why should companies from these industries start doing Public Relations in Korea?
Most of the local franchise, including our client, Kyochon Chicken, look to the oversea markets for future growth. In Korea their rapid growth has been attributed to the use of Korean celebrities – “star marketing.” – to promote their brands which has been very effective in Korea. But at the moment, they have realized the importance of PR activities and differentiated brand power to do the following things to promote their business status in a smarter and more effective way as they are facing a fast growing competition. Important PR practices for fast-food chains and franchises in Korea include:
– To build trust of the brand and provide business confidence to outlet owners and prospects
– To manage and handle negative food issues and business fairness between the brand and outlet owner
– To have a more cost-effective corporate and marketing communication than cost of star marketing
– To communicate business transparency with the government for the beneficial policy and share success stories for maintaining and growing loyalty of outlet owners and prospects
– To strengthen the support of stakeholders and business leadership by a competitive advantageous identity of the brand
Many foreign franchise brands, including our client, Dunkin Donuts and Baskin Robbins are very active to hire more strategic and passionate local PR firms which have proven experience in the food/beverage & franchise PR. The goal of the campaigns is to position the client’s brand as “lovemark” and protect their brand from the negative issues via PR and the media, to gain visibility for businesses, government and consumers and to stand out among competitors. Companies today understand that using the smart local PR firm is the most cost-effective marketing communication solution compared to a much more expensive focus on pure advertising as return on communications investment (ROCI) surveys show.