MKTG 1270 Product Innovation Management

Assignment 1: Target Consumer Analysis and Persona

LF02 - Group 8

Lecturer: Ms Meng Lee LIM

Group members:

Phua Mei Hui Tracey (Group Leader) S3834432

Lilyn Low S3809174

Loh Hui Yen S3809237

Dickson Chua S3808877

Ng Jia Ren, Angus S3809339

Word count: 2191

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 3
1.0 INTRODUCTION 4
2.0 DETERMINATION AND JUSTIFICATION OF THE COUNTRY/CITY TO ENTER 5
2.1 PESTLE Analysis 5
2.2 Implications of PESTLE analysis 10
3.0 SELECTION AND JUSTIFICATION OF AN ATTRACTIVE PRODUCT CATEGORY 11
3.1 Consumer trend 11
3.2 Product Category 12
3.3 Category growth analysis 14
3.4 Product trend 15
3.5 Competitors analysis 16
3.6 Technological trends 18
3.7 Technological trend implications 20
4.0 SELECTION AND JUSTIFICATION OF THE PRIMARY CONSUMER SEGMENT 21
4.1 Consumer Segment Analysis 21
4.2 Primary Consumer Segment 22
5.0 INNOVATION PERSONA 23
6.0 CONCLUSION 24
REFERENCES 25

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EXECUTIVE SUMMARY

This proposal outlines a coordinated plan crafted with the intent of venturing Besbes into the
Korea market. Since its founding in 2018, Besbes has successfully entered into Asia, USA and
Australia market. From a consumer standpoint, Besbes tries to cater to local audiences while
maintaining its global appeal by keeping the cost low and offering different variations in their
products. This strategy is extremely successful in both domestic and Asia markets.

Besbes promotional efforts have been successful in creating a cohesive brand image, however
the company currently faces a dilemma with the idea of expanding into a new market.

The decision to enter Korea market comes after a comprehensive PESTLE analysis, which
determined the high potential of Korea market due to the government’s relaxation on import
tariffs. The new consumer market was chosen after a careful deliberation between the different
age groups. In particular, female teens aged between 15 and 19 are highly impressionable,
making them the most receptive to marketing efforts.

Focusing on the consumer segment, Korea consumers generally look for products that can satisfy
their instant gratification. After an in-depth analysis of consumer trends, the female handbags
category was selected as the targeted entrance category for the Korea market. The handbags
category shows positive growth as compared to the rest of the categories, further highlighting the
potential of Korea market.

Besbes faces 3 main competitors in the niche market of female handbags; Marhen J, Alice
Martha and Fibreno. These 3 brands enjoy favourable positions in the Korea market due to their
popularity among female consumers. As these 3 brands are priced on the higher side, it is
recommended for Besbes to tap on the low price strategy to attract price-conscious consumers.

To end off the report, global expansion is one of Besbes greatest opportunities for streamlining
and improving their business strategy. Compared to other countries, South Korea holds immense
opportunities for Besbes to venture into due its prosperous and open economy, which proved to
be economically lucrative.

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1.0 INTRODUCTION

There are many opportunities for Besbes to open their market to the rest of the world. Between
establishing a fresh customer base in a new market and becoming familiar with the local
customs, the road to global expansion is difficult to navigate. However, online retail businesses
such as Besbes can be a fulfilling and lucrative option.

The aim is for Besbes to expand into Seoul, South Korea over the next 2 to 5 years through
developing new products to appeal to Korea consumers.

Since Besbes’ original targeted audience are females, ages between 20-40s, the intention is to
expand their scope to other consumer segments to diversify their consumers. The appeal of
fashionable products in South Korea has opened up new opportunities for Besbes to tap into.

Aligned with Besbes’s goals, the new market strategy for South Korea will focus on being
sustainable, unique and functional, while keeping up with the quality standards of Besbes.

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2.0 DETERMINATION AND JUSTIFICATION OF THE COUNTRY/CITY TO ENTER

2.1 PESTLE Analysis

Seoul, South Korea is selected as the new market. As of 1 st quarter of 2020, the population in
South Korea is 51.26 million and Seoul is accounted for 10 million population with 3.83 million
households (Seoul Solution 2020).

Factors Elements Description  

President Moon sought to deepen ties with South-east

Asian nations and diversify the country’s diplomacy
including Singapore by envisioning New Southern
Policy (Seow, 2018).

P Through the Korea-Singapore Free Trade Agreement

Political (KSFTA), tariffs on most of Singapore’s exports into
 
Korea will be substantively removed (Enterprise
  Political Issues Singapore, n.d.).
 

An immediate tariff elimination on almost 75% of

Singapore’s domestic exports to Korea provides them
a cost advantage and first mover advantage into
Korea’s market. 

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 Due to favourable tax policies and regulatory
incentives, South Korea attracts foreign investment. 

L
Legal Tax Policies In addition to exemptions of income tax for foreign
 
investors, the Free Economic Zones are committed to
creating an international business and living
environment (MarketLine 2019).

E According to Statistic Korea, the average monthly

Economic
household income in South Korea amounted to 5.358
Million Won (SGD$6171), which rose by 3.7% from
the first quarter of 2019. 

Clothing, footwear and accessories amounted for

119000 won (SGD137) for the average monthly
household consumption expenditure (Statistic Korea
Spendi 2020).
ng Power

Seoul continues to remain the country’s leading

region by household spending levels (Passport 2019).

South Korea is one of the most economically

advanced countries in Asia (Forbes 2018). 
Econo
mic Development
However, due to the COVID-19 outbreak,
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 implementation of social distancing measures has
resulted in lower consumption expenditure and the
overall GDP is forecasted to contract by 1.0% in
2020 (Passport 2019).

The unemployment rate for young adults, those aged

between 15-29 has increased nearly 21% from
December 2019 (Stangorone 2020).

The government aims to create 1.9 million jobs to

tackle unemployment challenges and ensure income
stability for South Koreans (The Straits Times 2020).

Unemployment
Rate

Lower priced personal accessories are increasingly

S popular among young South Koreans as they are
Sociocultural under pressure to present themselves with an
attractive and fashionable personal image (Passport

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 2020).

They are increasingly attracted to foreign brands and

products for better price and usage (Santander Trade
Buying Habits 2020). 
 
  With increasing demand in e-commerce, the online
shopping transaction in South Korea increased by
17.3% in October 2019 which reached a peak of 11.8
trillion won (SGD13.6 billion) (Lee 2019).

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 The augmented reality (AR) and virtual reality (VR)
was developed to enable virtual fitting for consumers
without having to physically try out the items, thus
enhancing the shopping experience (PR Newswire
2019).

To increase environmental consciousness among

consumers, the South Korean government introduced
eco labels which provide eco-information on

T products (Hwang, Park & Kim 2016).

Technologica
l A mandatory programme, Energy Efficiency Grade
Technological
Application Label indicates energy consumption and products
that fail to meet the requirements are banned from
sale.

According to Ipsos Survey 2020, air pollution was

the leading environmental concern with 70%
followed by dealing with waste at 51%, while 56% of
South Korean respondents said they changed their
recycling habits out of concerns about climate
change.

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 There is a growing number among South Korean
consumers for environmentally friendly businesses as
they are interested in zero waste products (Park &
E Kwon 2020).
Environment
Attitudes to the
Environment Furthermore, sustainable fashion brands are gaining
popularity in South Korea as consumers are seeking
alternative eco friendly consumption (Park 2019).

2.2 Implications of PESTLE analysis

Given South Korea’s business-friendly policies, foreign businesses find themselves in a
constructive and supportive position. Major drawbacks of South Korea will include lower
consumption expenditure and increasing unemployment rate, which may affect businesses’
growth. However, the government aims to create more job opportunities, helping to increase
disposable income and spending power.

Aligning with Besbes goals, South Korea’s commitment to sustainability in the fashion industry
proved to be attractive. Besbes will be able to benefit from South Korea’s shopping habits from
increasing interest in foreign goods with better price and usage (Santander Trade 2020).

Lastly, South Koreans are gaining interest in transparent businesses as they shift towards
sustainable shopping habits. This makes Besbes’ sustainable practices attractive in the South
Korea market.

3.0 SELECTION AND JUSTIFICATION OF AN ATTRACTIVE PRODUCT

CATEGORY

3.1 Consumer trend

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 Figure 1: Shopping attitudes and preferences (Euromonitor, 2020)

Figure 1 reflects that South Koreans prefer buying higher quality items and do not mind
splurging on them (Euromonitor 2020). Due to the high cost of living in South Korea, the
younger generation are spending more on personal satisfaction to present themselves in a
positive light (Euromonitor 2020).

Being a tech-savvy country, South Koreans spend a significant amount of time researching
online about a product to make well-informed decisions (Info Cubic 2019). They are also heavily
influenced by celebrities such as K-pop idols, creating high demand for products used by such
idols (Info Cubic 2019).

3.2 Product Category

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 Figure 2: Perceptual map of bags

The product category that we decided on is bags. Under this broad category, there are various
types of bags in the market that suit different individual needs. As seen from Figure 2, there are
various white spaces that can be tapped into such as the top left space which is bags of unique
designs for specific users.

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 Figure 3: Shopping frequency by age (Euromonitor 2020)

In addition, as seen from Figure 3, the e-commerce market demand has been growing. Statistics
show that across all ages, the personal accessories category has been receiving increasing
demand, coming in second after essential items (Euromonitor 2020). Bags fall under personal
accessories and reflect successful prospects of our new product as we aim to market it through
online platforms.

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3.3 Category growth analysis

Figure 4: Sales of bag category (Euromonitor 2020)

As seen in Figure 4, the bag market gained a significant amount of sales in South Korea. This
shows that the bag category is being well-received by South Koreans and has further growth
potential in creating better bags to retain and gain more demand for this category.

In light of the current Covid-19 pandemic, as South Korea gains more control of the pandemic
situation, the bag category will gradually pick up as people begin to explore new shopping
habits.

For market competitiveness, the majority of the market share is still held by luxury brands such
as Louis Vuitton and Chanel (Euromonitor 2020). However, the market share of non-luxury
brands have been decreasing (Euromonitor 2020). This could mean that there is less competition
in the non-luxury bag market.

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3.4 Product trend

Figure 5: Product life cycle of bags

As seen from Figure 5, bags are positioned at the growth stage of the product life cycle. Bags are
constantly improving their design with better innovations that are attracting more customers. It is
projected to increase over the upcoming years with an estimated sales value of 8,141,930 KRW
(Euromonitor 2020). In addition, South Korean consumer base is mainly made up of the young
which are displaying increasing interest in bags (Euromonitor 2020).

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3.5 Competitors analysis
Strategic Group Map

Figure 6: Strategic group map on competitors

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 Marhen J Alice Martha Fibreno

Niche market Female handbags and accessories

18-25 years old 18-25 years old 18-45 years old

Target market
Female Female Female

Price $$ $$ $$$

Strong presence in Strong presence in Strong presence in

Korea market Korea market Korea market

Popular among female Wide range of products Wide range of product

Strengths
consumers categories categories

Successful brand Successful brand image High quality products

image

Dependent on female Dependent on Weak presence in

consumers celebrities sales international market

Easily to imitate Slow brand growth Higher priced products

Weakness
Lack presence in male Lack of brand loyalty Rely heavily on online
market customers sales

Narrow product range

Expand to other Invest in marketing Invest in marketing

product categories
Opportunities International expansion International expansion
International
expansion

Established fashion Tough competition Tough competition from

culture from big brands other brands

Threats Local competitors Many substitutes to Copycats in the market

contend with
Many substitutes to
contend with

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3.6 Technological trends

Pacsafe Anti-theft bag

Figure 7: Pacsafe anti-theft bag functions

Pacsafe© Vibe 325 Anti-Theft Sling Pack has innovative anti-theft features that protects the
user’s valuables. The bag is made of a cut-resistant strap and internal pockets to stay organised.
The RFID pockets protect credit cards and passports against unwanted scans. Other than its anti-
theft properties, the bag is fitted with internal pockets, attachment point for keys and a pen loop
for easy storage. The bag is priced at USD$89.95.

Ampere wireless charging bag

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 Figure 8: Ampere wireless charging bag

Created by Ampere©, Side Pocket is a game-changing smart fanny pack that can wirelessly
charge smartphones. Made specially for travel, Side Pocket allows users to charge their devices
hands and cord free, while keeping valuables secure with an internal RFID blocking sleeve.
Furthermore, it is made from a waterproof material. Prices start from USD$84.

Modobag
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 Figure 9: Different functions of Modobag

Featured on major news channels such as CNN, Forbes and CNBC, Modobag is the world's first
motorized, rideable luggage. Modobag combines the convenience of a standard suitcase with the
innovation of personal transportability, GPRS-GSM tracking, and dual USB charging ports to
create the world’s only motorized, smart and connected carry-on. Modobag is priced at
SGD$1,495.00.

3.7 Technological trend implications

Looking at current technological trends of bags market, it is evident that brands are incorporating
smart features into their products in order to bring their products in front of customers. For a
highly advanced country like South Korea, it is important for Besbes to understand current trends
affecting consumer decisions. Fashion accessories such as smart handbags could serve as a
gateway into the Korea market.

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 4.0 SELECTION AND JUSTIFICATION OF THE PRIMARY CONSUMER SEGMENT

4.1 Consumer Segment Analysis

Female Consumer Profile of Korea 2020

Demographic

Market segment Children Teens Young Adults Adults

Gender Females

Age 6-14 15-19 20-25 26-30

Estimated segment
2,950 3,350 3,875 4,125
population (000)

Part-time working
Occupation Students Employed Working professionals
students

Little to no
Disposable income Small income Moderate income High income
income

Psychographic

School
School Work Work
Extracurricular
Extracurricular Spending time Spending time with
Lifestyle/Activities activities
activities with family and family
Going out with
Stay at home friends. Entertainment
friends

Aesthetically Durable and

Functional and Quality and exclusive
Interests pleasing multi-functional
affordable products products
products products

Appearance Price tags and Durability and

Pain points Parents’ reliance
conscious appearance appearance

Behavioral

Status and
Benefit Sought Fun Follow trends Status and security
security

Influences (social
Light users Heavy users Medium users Medium users
media)

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 Loyalty Status Low Medium Medium High

Reliability Product
Purchase criteria and Product design Brand reputation
Product design Performance
motivation Ease of use Comfort
Value Quality

New product
High High Medium Low
exploration

4.2 Primary Consumer Segment

South Korea is a consumer society and purchases not only serve functional needs but also image
and status. Consumption is often used to make a statement and teens like to pursue trends to
portray a popular image in order to fit in. While Koreans are not typically loyal to brands, teens
are more willing to explore new products. Additionally, they are heavily engaged and influenced
by social media.

Females are specifically targeted as Besbes brand image is most in line with female consumers.
Therefore, female teens between age 15 to 19 is the primary consumer segment because they are
most willing to adopt a new product and most receptive to marketing efforts.

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5.0 INNOVATION PERSONA

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6.0 CONCLUSION

When working on global expansion strategy, businesses can gain a competitive advantage by
targeting the right international markets and adapting their products and strategies to appeal to
local customers.

South Korea’s developed democracy offers a less risky business environment for Besbes. The
unique characteristics of the country offers interesting learning opportunities and a gateway to
the rest of Asia.

In conclusion, the rapid growth in e-commerce in South Korea has a positive impact over
Besbes’s online business due to its convenience and high usability. The demand for personal
accessories has been increasing among female teenagers aged 15-19 who like trendy and
functional products. Besbes’s continuous innovative capacities will allow it to keep on
developing new product choices in response to volatile trends and tastes.

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Ampere 2020, ‘The World’s first fanny pack that wirelessly charges your devices’, Flex it
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