South Korean Consumer Behavior - Essay Example

? A Taste for Tradition: South Korean Consumer Behavior A Taste for Tradition: South Korean Consumer Behavior Companies have tried to enter the South Korean market only to fail miserably. Billions of dollars have been lost for failure to understand consumer behavior as it occurs in that country. Consumers in Korea are much different that western consumers. South Korea has worked to maintain its culture. They do not like pressure to change from western influences. Any company seeking to do business there will have to adapt to the consumer tastes in order to remain profitable in South Korea. Even world-class businesses have failed to understand South Korean consumer behavior, but their culture has a big influence upon it. Introduction: The Importance of Consumer Behavior Research Understanding consumer behavior is a very important ability for marketers to have. This knowledge helps them plan marketing strategies that are effective for their target audience thereby increasing their ability to produce sufficient profits. Products have to be produced and presented in a manner that is appealing to potential buyers. In order to understand what the definition of appealing is to various consumers studies have to be undertaken that will reveal this information. Consumer behavior can vary greatly based on a wide variety of factors. Failure to understand consumer behavior has lead to the failure of many businesses and resulted in high amounts of monetary loss. To avoid the negative consequences of such ignorance, many companies perform market research before, during, and after the implementation of their plans. South Korea: Consumer Behavior and Culture One of the areas that have presented problems for companies seeking to expand their territories is the South Korean market. This is because consumer behavior is very different than that of those in other developed countries. South Korea has a culture all its own and it has effected consumer tastes. Companies who wish do business in this country and move hastily may find that they experience disastrous results. In order to properly and effectively enter into the South Korean market, companies should make sure that they perform thorough research. Even business giant Wal-Mart that has succeeded in establishing stores in many countries had to close and sell the stores that they opened in South Korea (Gandolfi & Strach 2009). The problem was that Wal-Mart had relied on the formula that had brought them so much success in other markets and failed to tailor their business to better suit the consumers in South Korea. The company, not accustomed to failure, had tried to save their sinking stores only to finally resign. While it is odd to think that a world-class company like Wal-Mart would lapse so greatly on a basic consideration like generation a proper understanding of the consumer behavior of the country in which they seek to practice business, that is exactly what happened. As Yakup (2011) reported, “International marketers believe that consumers would increasingly resemble each other and that they will eat the same food, wear same clothes, and watch the same television programs to an increasing proportion. But the reality is very different”. Somehow Wal-Mart assumed that they could peddle their culture in the South Korean market and be assimilated into it. However, South Korea consumers are not at all interested in adapting to a new culture in their own country. They, while being innovative consumers of products that fit in with their culture, have very traditional tastes. More specifically, the consumer behavior in South Korea reflects a preference to keep in line with what is culturally familiar. And, while it is true that many cultures can be divided into various sub-cultures that can be targeted and that people are subject to their own personal styles and tasted, the culture of South Korea is not individualistic. Rather, people there more or less follow the crowd. South Koreans carry more of a group identity, making it harder to introduce things of other cultures. As Cho (2010) noted, Individualistic cultural values emphasize self—reliance, autonomy, competition, personal control and individual goals. Behavior is governed primarily by personal calculations of gain and loss. In contrast, collectivistic cultural values emphasize filial devotion, harmony, sociability, and a willingness to put aside personal needs for the good of one’s social group. The self is considered to be an aspect of a shares group identity. While the latter, individualistic cultural values, is characteristic of America, where Wal-Mart was founded, the former, collectivistic cultural values are characteristic of South Korea. Being polar opposites, these two types clash. Yet, it is the collectivistic culture of South Korea that drives the consumer behavior that is present in that country. The Korean Consumer: Strong Cultural Ties South Koreans are motivated in maintaining their traditions and cultures. This is so in spite and because of the eroding that the culture has experienced with the invasion of cultural practices from the west (Yim, 2002; p.38).Therefore, there is great resistance to intruding foreign products. In fact, there have been some studies which revealed South Korea’s hostilities to them (Kwak et al, 2006; p. 367). Therefore, for American companies, entering the South Korean market can be quite a challenge. Yet, it is not an impossible goal. For, while there is a resistance to change in most consumers there, the younger populations are open to other cultures. In fact, it has been shown that this part of the population demonstrates shopping habits that are similar to those in the west (Hafstrom, Chae, & Chung, 2005; p. 146). As well, a company can adapt to the consumer behaviors of South Koreans. Typically, within the confines of their culture, they tend to be rather innovative consumers. Unlike western consumers, South Koreans pay no attention to price (Gandolfi & Strach, 2009; p.192). Rather they like luxurious items. South Korean firms tend to produce skimpy products that produce high profits for them simply because they are what is fashionable (Flynn, Goldsmith, & Daekwan, 2005; p. 503). This is because they know that consumers there have high levels of disposable income (Cho, 1996). Also, most consumers shop very frequently (Gandolfi & Strach, 2009; 193). They do not buy in bulk, but usually only get what they need for that day. For this reason, South Korean consumers are not willing to travel very far to do their shopping. Most stores are located near the center of cities. One element that could be the most difficult to overcome for companies who are accustomed to doing business in the west and seek to establish store in South Korea is that consumers there do not complain very often. The collectivistic society in which they live causes them to find voicing complaints very disturbing (Ming, 2010; p.23). Therefore, if a company is having problems being profitable they will get no help from South Koreans in discovering the source of the problem. While they are sticklers for their culture, South Koreans do enjoy taking advantage of technological advancements. This is the one area in which they do not mind change. Rather, their sophisticated tastes and preferences for luxury has served to promote the usage of advanced technology (International Markets Bureau, 2011; p.2). For example, it has been projected that by 2013 South Korea will be the second largest market for mobile broadcast TV, following closely behind the US (Constantiou, 2010; p.127). Advantages of the South Korean Market Informed companies who choose to do business in South Korea may meet with success, if they are careful to ensure that the way they do business there appeals to local tastes. In fact, it may be a relief for some businesses to turn to this market in the face of the global economic struggles. For example, in Australia consumers are very concerned with value (Sands & Ferraro 2010; p.8). This is in direct contrast to the South Korean consumers who do not tend to take price into consideration when choosing a product or service. Presented correctly, an Australian exporter that deals in luxury goods may find higher levels of profit in South Korea than if they were to market goods in their own country. If the exporter can identify products that fit in with the culture of South Koreans they will be able to benefit greatly from the differences in consumer behavior. Conclusion With the information that has been presented about the consumer behavior of South Koreans, possibly Wal-Mart could have avoided the billion dollar loss that they suffered when they had to pull out of the market there. The fact is that South Koreas, as consumers, have unique tastes that should be appreciated. Any company wishing to business there will have to take this as topic for serious consideration. As it has been noted, “Ignoring culture’s influence has led many companies to centralize operations and marketing which, instead of increasing efficiency, has resulted in declining profitability”(Mooji, 2003; p.184). 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