2. 2
Table of Contents
Introduction ................................................................................................................................3
Organisation...........................................................................................................................3
Chosen Country .....................................................................................................................3
1. Cross-Cultural Analysis ......................................................................................................4
1.1 Introduction..................................................................................................................4
1.2 CCA Rationale.............................................................................................................4
1.3 Hofstede Model ...........................................................................................................5
1.4 Applying Hofstede’s model to UK and South Korea...................................................6
1.5 Summary..........................................................................................................................8
2. Social & Cultural factors and the Marketing Mix ................................................................9
2.1 Introduction..................................................................................................................9
2.2 Culture Defined ...........................................................................................................9
2.3 The Cultural Framework..............................................................................................9
2.4 Applying Cultural Framework to UK and South Korea .............................................10
2.5 Ocado’s Marketing Mix..............................................................................................11
2.6 Summary...................................................................................................................12
3. Market Entry Strategy.......................................................................................................12
3.1 Introduction................................................................................................................12
3.2 MES options and characteristics ..............................................................................12
3.3 Chosen MES Strategy – Strategic Alliance ..............................................................13
3.4 SWOT........................................................................................................................14
3.5 PESTLE.....................................................................................................................15
3.6 Competitors Analysis – The Positioning Map...........................................................15
3.7 Product, Brading & Communication Strategies ........................................................16
3.8 Chosen Market Entry Strategy – Strategic Alliance . Error! Bookmark not defined.
3.9 Conclusions & Recommendations............................................................................16
References...............................................................................................................................18
3. 3
Introduction
As an international marketing consultant, this report has been created for Ocado’s marketing
director. The aim of this report is to suggest a market entry strategy for Ocado in a chosen
country. This report will critically examine and evaluate how social and cultural factors can
influence consumer behaviour towards a product or a brand in a foreign country. In part 1 of
this report, the report will delve into cross-cultural theories in order to apply them to United
Kingdom, that is a country where Ocado originates from and will move to South Korea. The
cross-cultural analysis will help to gather insights into the ways Korean people operate in
daily life and how different they are from British. In part 2, the next step would be to define
the cultural framework which will help to create marketing mix for the new market Ocado will
move into. Finally, in part 3 of this report, a market entry strategy will be suggested, justified
by the analysis theories such as PESTLE, SWOT and Porters 5 Forces. The report will also
recommend product, branding and communication strategy that Ocado should adopt.
Organisation
Ocado was founded in 2000 and started trading as a business in partnership with Waitrose
in January 2002 (Ocado, 2018). Ocado is a British online supermarket and it’s delivery areas
cover 70% of the UK household (Which?, 2018). It has no chain of stores and does all home
deliveries from its warehouses, which sets Ocado apart from their competitors (Mintel,
2017). Ocado’s products include groceries from the Waitrose supermarket chain as well as
their own Ocado brand. Ocado sells other items including flowers, toys and magazines. A
range of French supermarket firm Carrefour's products are also sold via Ocado (Market line,
2018).
Chosen Country
The home country for this report is United Kingdom and the new market which Ocado will
enter is South Korea. There is huge difference between cultures of UK and South Korea but
there is ample opportunity for British businesses to enter Korean retail market. This report will
discuss about cultural differences between both countries in depth and also look at the case
studies of TESCO and Walmart. Walmart failed in South Korea whereas TESCO was
successfully able to trade in South Korea (Kim, 2008), this report will consider factors where
Walmart went wrong and what did Tesco do to stay and do well in Korean retail market.
South Korea is the 11th largest economy in the world with a national GDP of $1.53 trillion and
a per capita GNI of almost $30,000 as of 2017. It has a population of 51 million. South Korea
has the third largest retail market in APAC (Asia- Pacific). The overall retail sector in Korea
generated £267 billion of cash sales in 2016, up 5.2% from the previous year.
According to a GAIN report by USDA (2018), in 2017 Korean food products were accounted
for 23% of the overall retail sectors sales. Korean retail market is growing at a faster pace and
there is an expected rise in the online retail sector. In 2017, E-commerce in South Korea was
accounted for 19.97% of total grocery sales (Armstrong, 2017), beating UK and Japan with
12.2% and showed 40% increase in online grocery shopping compared to 2016 (Armstrong,
2017). The is because South Korea has the fastest internet in the world and South Korea
ranks as the most connected online market (Statista, 2017). According to Statista’s report,
92.4% of the population uses internet in South Korea and Koreans prefer online purchases
because it helps them see clearly where the deals are.
South Korea main imports include agri-food and seafood products. South Korean agriculture
sectors employs only 4.9% of the total population and the food such as meat and fruits are
really expensive to grow in South Korea. South Korea's agri-food and seafood imports
increased by 3.0% from the previous year, and by a compound annual growth rate (CAGR) of
4. 4
7.8% between 2012 and 2016 (Agriculture and Agri-Food Canada (AAFC), 2017). There is
increase in the demand of food in South Korea and Korean people regards British food as
good quality (MarketLine, 2016). One of the main importers for food in South Korea in United
States. Since most of the women are working now in South Korea, there is high demand for
Frozen and ready to cook food (Kim, 2008). The packaged food segment was the retail
industry’s mostprofitable in 2015, generating total revenue of £51.3 billion equivalent to 47.6%
of the overall industry’s value (MarketLine, 2016).
Another factor that could help Ocado enter Korean market is the obesity rates in South Korea.
According to Organisation for Economic Co-operation and Development (OECD, 2018),
obesity rates in South Korea have been increasing rapidly and there is huge demand for
healthy and nutritious food suchas energy bars, energy drinks and other supplements. Ocado
is known as a provider of healthy and organic food and this could work well in their favour.
These are the main reason that make South Korean market attractive to enter.
1. Cross-Cultural Analysis
1.1 Introduction
This section will identify the social and cultural difference between UK and South Korea;
countries that are completely different to each other from cultural perspective. This section
will talk about why cross-cultural analysis is important and how it can be used for market
analysis. This section will compare different cultures of United Kingdom and South Korea
using Hofstede’s (1984) 6 cultural dimensions. It will allow understanding of the South
Korean culture for market entry and will help in designing marketing mix for the target
audience.
1.2 CCA Rationale
Solomon (2004, 526) defines culture as a society personality. Similarly, Armstrong (2013,
158) summaries culture as a set of values, perceptions, desires and behaviours learned by
society. In other words, culture can be defined as the heart of every society, that has impact
on people’s needs, wants and behaviour. Consumer behaviour varies from country to
country because every country has their own unique culture. This means that consumers
from different cultures have different tastes when it comes to shopping. For example,
something that is highly preferred in UK may not be in South Korea.
Because cultures have huge impact on consumer buying behaviour, it is crucial to do cross-
cultural analysis before moving into a new market. Cross-cultural analysis is defined as
“methods by which international marketers can compare and contrast consumer, market and
buyer behaviour across cultures and countries” (Doole et al, 2012). It helps to understand
how people from different cultures communicate, speak, and see the world around them
(Rugimbana et al, 2003). It does so by comparing various sociological and psychological
cultural factors to assess the diversities and similarities occurring in two different cultures.
Undertaking CCA is very important because it provides a guide for the businesses to use to
make their product/brand successful in another country with completely different culture. As
it allows deep understanding of the cultural dynamics in another country.
Scholars have suggested various models to be used for Cross-Cultural Analysis. Most
commonly known models are Hall and Hall (1987) low and high context culture, Hofstede
(1984) 6 cultural dimensions, Will et al (1991) Cross Cultural Diffusion/learning Matrix,
Trompenaars (1998) 7 dimensions of Culture and Lewis (1992) Monochromic or Polychromic
characteristics.
5. 5
CCA Model Definition
Wills’ Cross-Cultural Diffusion/learning
Matrix (Doole, 2012)
It looks at the degree to which change, and
innovation is accepted in regard to cultural
beliefs and social activities.
Hall’s high/low context approach (Doole,
2012)
It talks about how people from different
communicate and understand what is being
said in different ways.
Hofstede’s Cultural Dimensions (Doole,
2012)
It talks about the effects of a society’s
culture on the value of its member and
these values effect behaviour.
Lewis Monochromic or Polychromic cultures
(Doole, 2012)
It describes how different cultures perceives
time. Monochronic cultures like to do just
one thing at a time whereas Polychronic
cultures like to do multiple things at the
same time.
Trompenaars 7 dimensions of Culture
(Trompenaars, 1998)
This model deals with how people deal with
each other, time and their environment.
The chosen Cross-Cultural Analysis method for this report to analysis the cultural differences
between UK and South Korea is Hofstede (1984) 6 Cultural Dimensions.
1.3 Hofstede Model
Hofstede’s (1984) cultural dimensions is internationally recognised model to understand
cultural differences between different countries. The dimensions are as follow:
Dimension Definition
Power Distance How human inequality is dealt with in a society.
Individualism/Collectivism It describes the relationship between an individual and his
fellow individual in a society.
Uncertainty Avoidance How society deals with uncertainty about the future and
follow certain beliefs to try to avoid these.
Feminine/Masculine it is about how society deals with behaviour towards
stereotypes related with males and females.
Time Orientation How society links to its past when dealing with the present
and futures challenges.
Indulgent/Restrained The extent to which people try to control their desires and
impulses based on their upbringings.
Advantages Disadvantages
The model provides knowledge
which supports production cross
cultural communication and helps
to understand behaviour of
consumers.
It provides an understanding of the
culture, which you may know little
to nothing about and compare it to
your own culture with concrete set
of value (Soares et al. 20017).
As a marketer, you can design a
marketing strategy and marketing
mix keeping the cultural analysis in
mind.
Hofstede’s study is based on
individual assessment, but the
findings are applied to the whole
community.
His research was based on IBM
employees, but the sample size is
small and biased to describe the
behaviour of a whole nation.
The other criticism is that the 6
dimensions are not enough to
describe the cultural differences
(Baskerville, 2003).
Table 1: CCA rationale
Table 2: Hofstede model definitions
6. 6
1.4 Applying Hofstede’s model to UK and South Korea
Power distance – UK: 35, SK: 60
According to Hofstede’s cultural analysis, UK has demonstrated lower power distance in its
society with a score of 35. This implies that UK has fairly flat structure in society and people
are considered equally. The high importance is given to the teamwork among individuals in
early stages of their life. For example, employees and supervisors are considered equally in
organisation and everyone is given the same rights (Hofstede Insights, 2018). However,
there is still a conception of social class (upper and middle working class) among British
people which impacts power distance.
South Korea is scored 60 on the cultural scale of Hofstede’s analysis. This means that there
is a gap between rich and poor people. It also means that the Korean cultures has hierarchal
structure to its society. The Korean culture is shaped by dependence relationships and you
are taught to respect your elders, teachers and parents (Breen, 2014). An example would
be, in Korea not bowing to your elders is considered very rude and very much disliked by
others (Cho, 2001).
Impact on Ocado: As South Korea has higher power distance, it will affect organisational
communication and decision making (Khatri, 2009). Ocado’s marketing in South Korea will
have to appeal to the family leader by emphasizing how Ocado’s products create benefits for
the whole family. For example, Ocado marketing message should include how their products
have health benefits as it is all natural and organic.
Individualism/Collectivism – UK: 89, SK: 18
Table 3: Hofstede pros and cons
Chart 1: CCA comparison
7. 7
UK is a highly individualistic society with a scoring of 89 on Hofstede’s cultural analysis. This
means that the British people are likely to take care of themselves rather than thinking about
the wellbeing of their society and community.
Korea is scored 18, which makes it a collectivism society where bonding and relationship
between individuals is very important. The Korean culture is characterized by the concept of
jeong “a bond that exists between people and gives them a sense of mutual destiny” (Tudor
2014, 10).
Impact on Ocado: South Korea is a low individualism markets with strong community ties
(Breen, 2014), Ocado will have to market their products to the whole community and
explains how the product could benefit the whole community. As long as people addressed
in the campaign feel part of the same group, Ocado and its products are more likely to be
understood and well received. As discussed earlier in the report, obesity rates in South
Korea are increasing, if Ocado market their product as a solution to this problem, people are
going to feel connected to the brand as a group.
Uncertainty avoidance – UK: 35, SK: 85
UK scored 35 for this dimension, which justifies their decision to leave the EU in 2016. 48%
of the population voted to remain in the EU whilst 58% voted to leave (BBC News, 2016).
This shows that British people are comfortable not knowing what will happen in the future. In
business terms, they focus on long term strategy rather than thinking about what is
happening on daily basis. British people are encouraged to discover their own beliefs and
there are very few rules.
On the other hand, with score of 85, South Korea is considered a society with high
uncertainty rate. South Korea is a very structured country with rigid set of rules, beliefs and
norms. Korean people feel highly uncomfortable with risks and changes. Korean people
comply with norms and feel the need to be punctual and work hard (Buja, 2016). They will do
whatever they do to eliminate risks and avoid any uncertainty about the future. Therefore, to
reduce uncertainty strict laws, regulations and policies are implemented in the society.
Impact on Ocado: Ocado should be conveying a clear message in their promotional
campaigns as well as their product packaging. Because Korean people prefer to have
product characteristic spelled out with specific features and guaranteed advantages.
Feminine/Masculine – UK: 66, SK: 39
UK is a masculine society with a score of 66, who value money, success and materials. This
could well link to UK being an individualistic society who only think about themselves. In UK,
there is a well-defined distinction between woman’s work and man’s work. UK is considered
to be in the middle of the scale, because women and men are offered equal opportunities in
the UK and the government has assured this by implementing the equality laws (Hofstede
Insights, 2018).
On the contrary, South Korea is considered a Feminine society, scoring 39 on the scale. For
a country with higher power distance rate, Korean dislike the grand show of wealth by
wearing expensive clothes or jewellery. They emphasize on well being and promote sexual
equality. In Korea, relationships, cooperation and encouragement are highly valued and in
workplace, negotiations and compromise are key to settle a conflict.
Impact on Ocado: For Korean market, a neutral approach should be used to target the
product to both male and female. Since Ocado is a food retailer, they won’t have a problem
targeting their products to both genders.
8. 8
Time Orientation – UK: 51, SK: 100
UK is considered a neutral society with a score of 51, meaning British people tend to link
back to their past when dealing with issues but take a very pragmatic approach (Hofstede
Insights, 2018).
South Korea is one of the most pragmatic and long-term oriented society with a score of
100. Korean people display a mindset that is focused on the future and highly value
persistency and hierarchy.
Impact on Ocado: The marketing should take time orientation into account by fitting
promotions into structure suitable for Korean market.
Indulgent/Restrained – UK: 69, SK: 29
UK scored 69 on this scale, making it an indulgent society. British people consider leisure
time very important and they like to spend their time and money as they please.
Whereas on the other hand, South Korea is a restrained society with a score of 29. This
means Korean people don’t put emphasis on leisure time and spending money. They tend to
control their desires.
Impact on Ocado: South Koreans want to buy products that offer them value. This is where
Walmart failed in South Korea. They used their ‘low price’ strategy in Korea but Korean
people have different preference to their usual target market. As suggested by Kim (2008),
Korean people want value for their money. They want a free product or offer with their
purchase. Ocado should consider these factors and implement it into their marketing
strategy.
1.5 Summary
The main findings of this sections are:
UK and South Korea are very different to each other in cultural perspective.
Based on Hofstede analysis, Ocado will have to change their current marketing mix and
localise it according to Korean people’s preferences.
One of the main issues that came forward from the Hofstede analysis is the low
indulgence rate of Korean people. It could be a problem if people feel restrained while
spending their money.
9. 9
2. Social & Cultural factors and the Marketing Mix
2.1 Introduction
This section will identify the social and cultural factors that can influence consumer
behaviour in the new market. This will be done by using concept of Terpstra and Sarathy
(2000) Cultural Framework, highlighting the different between UK and South Korea. This
section will also examine and evaluate Ocado’s current marketing mix and suggest a
marketing mix adapted to Korean people preferences.
2.2 Culture Defined
Taylor (1871, 1) defined culture as
“complex whole which includes knowledge, belief, art, morals, law, custom, and any other
capabilities and habits acquired by man as a member of society”.
Whereas Matsumoto (1996,16) defines it as
“the set of attitudes, values, beliefs, and behaviours shared by a group of people, but
different for each individual, communicated from one generation to the next”.
But later it was redefined by Spencer-Oatey (2008, 3)
“Culture is a fuzzy set of basic assumptions and values, orientations to life, beliefs, policies,
procedures and behavioural conventions that are shared by a group of people, and that
influence (but do not determine) each member’s behaviour and his/her interpretations of the
‘meaning’ of other people’s behaviour”.
Later on, in 2000, Terpstra and Sarathy introduced the concept of Cultural Framework. The
framework centralises culture and has eight layers that give an in-depth analysis of
consumer behaviour (Terpstra et al. 2000). It is very useful as a marketing tool because it
allows marketers to adapt their marketing strategies after taking consideration of different
components of cultures.
2.3 The Cultural Framework
Table 4: The Cultural Framework defined
11. 11
2.5 Ocado’s Marketing Mix
Ocado in UK Adapted to South Korea
Product Groceries (Food & beverages)
Toiletries
Pets
Baby food
Kitchenware
Homeware & Garden
Health & Beauty
Magazines
The products will be standardised in
order to not loose western appeal. And
also, South Korean highly respect
British food and there is huge demand
(GOV.UK, 2018).
Ocado already sells Korean food,
which is very likely to target Koreans.
This way
Price Price varies depending on the
type of product.
In UK, Ocado’s frozen food’s
price range is £0.67 - £40.
The frozen food is South Korea is
expensive compared to UK. i.e.
beef is UK is £15.00 whereas in SK
it’s £21 per kg, which is highest in
the world (Usmef.org, 2018).
The products will be targeted at
middle class, so pricing will remain
the same.
Place Ocado is an online supermarket
and has no brick and mortar
store.
The placement for products will be
adapted.
Along with online supermarket,
Ocado will sell snacks, beverages
and ready to eat food in duty free
stores as part of strategic alliance.
This will help to build awareness.
The products will only be sold in
major cities such as Seoul, Incheon
and Busan.
Promotion Online and social media
Free coupons sent to
customers through other
retailers. i.e. if customer order
something from
Debenhams/ASOS, a coupon
of ££off and free delivery for a
year over certain amount of
shopping.
The promotions will be adapted.
Along with using standard
promotion methods such as free
coupon and social media
marketing, Ocado will do
sponsorships, Press release and
media coverage in the newspaper.
Ocado will have global website that
is in Korean language to adapt to
Korean people.
They will also use LOTTE
marketing strategy, which is to
introduce and spread new
products/service’s information
through K-POP idols. K-POP idols
have huge influence on Korean
people lives. Korean are very loyal
to their favourite star/idol and they
will buy whatever they are involved
in (Jang and Paik, 2012, 1).
Table 7: Marketing Mix
12. 12
2.6 Summary
The South Korea frozen food market is forecasted to have a value of £8,625.1 million, an
increase of 40.2% since 2014 (MarketLine, 2016). In South Korea, frozen meat products are
the largest segment of the frozen food market, accounting for 37.2% of the market's total
value (MarketLine, 2016). South Korea imported £25 billion worth of food from USA in 2017
(USDA, 2018). Therefore, it is proposed hat Ocado use similar entrees as USDA (2018)
suggest that frozen and ready to eat food segment is likely to dominate the South Korean
retail market.
From the in-depth social and cultural framework analysis, some issues will implement
Ocado’s current marketing mix.
Ocado’s global brand image will be standardised, as the brand colour green is
positively viewed in South Korea.
There is a language barrier between both countries, thus that area needs adopting to
make communication easier.
To sell products in SK, labelling must have all ingredients and should be written in
Korean.
Different regulations and product Standards are accepted in South Korea.
3. Market Entry Strategy
3.1 Introduction
This part of the report will talk about market entry strategies. After evaluating all types of
market entry strategies this report will suggest an optimal market entry strategy, with the
decisions being justified. To help with the MES, SWOT and PESTLE analysis will be
provided to analyse the market environment whilst giving a brief overview on the
competitors. This report will also look at product, branding and communication strategies.
3.2 MES options and characteristics
Each Market Entry Strategy has it’s own advantages and disadvantages. Different MES
might be adopted by different businesses entering the same market or the same business
entering different markets. As Doole and Lowe (2012) suggested that major determinants of
market entry strategy are level of involvement, risks associated. It depends on firm’s
financial resources, willingness to accept risk and level of involvement, to choose how to
enter an emerging market. However, it is very important for firms to understand the new
market, otherwise they may face threats in the future (Doole and Lowe, 2012).
13. 13
3.3 Chosen MES Strategy – Strategic Alliance
A strategic alliance is an agreement formed between two companies to undertake a mutually
beneficial project, both companies combine their capabilities, resources and business
objectives. It is to cooperate in the development, manufacturing or products sale. One of the
main reasons to choose strategic alliance, as suggested by Doole and Lowe (2012) is
because it offers the advantage of achieving higher level of control and lower level of risk
and cost, because there is a high degree of cooperation between companies.
Korean managers prefer strategic alliance as a market entry strategy as they feel trust is an
important factor to consider for success. As suggested by Kim (2008), strategic alliance can
be useful to enter Korean retail market as done by Tesco, because you can share risks and
leverage on knowledge and expertise of local market. For Ocado, strategic alliance is the
only mean to enter south Korean market as they don’t have enough financial resources and
capabilities to go alone on their own. Another reason to choose strategic alliance is due to
Brexit, after 2019, South Korea has declared that Free Trade Agreement would apply to UK
(GOV.UK, 2018). For export, companies will have to pay 10% Value added Tax (VAT).
Korea’s corporate tax rates are:
10% on the first KRW 200 million
20% for the tax base between KRW 200 million and 20 billion (GOV.UK, 2018).
This said, it is proposed for South Korea to use South Korean online supermarket “Lotte
Duty Free” as their strategic alliance partner. Lotte Duty Free is a leading global company in
duty free industry. They offer best quality products in retail locations such as airports. They
have variety of retail channels such as department stores, hypermarkets, consumer
electronics retail stores, supermarkets, home shopping, cinemas, and health and beauty
stores.
Diagram 1: MES options
14. 14
They recently withdrew from Incheon airport (South Korea’s biggest airport) due to tough
competition and moved their business online. For this purpose, they created ‘YUM’
campaign in collaboration with K-POP idols (Korean singers/bands) and was received very
well. Lotte is a well-known brand is South Korea because of its heavy promotions and
marketing campaign. LOTTE Online Duty Free has created celebrity marketing plans with
the greatest K-stars around including Lee Min-ho, Lee Jong-seok, BTS, EXO, Super Junior,
TWICE. They communicate with over 500,000 customers domestically and internationally
through concerts and meet-and-greets (LOTTE Duty Free, 2018).
In LDF’s annual report of 2017, they stated they are considering to expand their business to
food retailing sector by creating grocery market. Currently on their website they don’t have
enough products stocked, hence collaborating with Ocado is wise option. Ocado can offer
their expertise to LDF as Ocado has experience in online retailing and LDF can share their
knowledge and experience of Korean culture and consumer behaviour.
Ocado will form long term alliance with LDF and will import food from UK to South Korea,
which will lower the risks when entering the new market. Once the market entry strategy is
finalised, the acquisition should take place on 10/09/2019 during Homecoming holidays.
Ocado will develop Customer Fulfilment Centres (CFC) with LDF in Seoul. These centres
are automated warehouses where Ocado products are stored, picked and dispatched using
automation and robotics systems (Ocado Engineering, 2018). LOTTE could use these
centres and since LOTTE already use automation and robotics system into their stores, it will
be mutually beneficial project. After evaluation of success over 3- 4 years, Ocado might
consider buying own subsidiary post BREXIT.
3.4 SWOT
STRENGTHS WEAKNESSES
Huge interest in technology – 94%
population uses internet.
19.97% of total grocery shopping was
done online in 2017 and is expected to
increase.
High income, similar to UK
No experience selling products to
Korean Market as this is Ocado’s first
global venture.
As shown through Hofstede and
Cultural Framework analysis, UK and
SK are culturally very different.
OPPORTUNITIES THREATS
Opportunity to expand globally
Contribution towards SK’s economic
growth
Target consumers in specific cities
May choose wrong market entry
strategy to enter Korean Market.
Loss of money
Market leader
Risk Control Involvement Cost
High level of risk High sense of
control
Although degree of
involvement is
considered high,
LDF will have some
involvement in
marketing and costs
plans.
As Doole and Lowe
(2012) suggested
start up costs can be
high when entering
new marketing.
Ocado will invest
£30 million as said
by Ocado’s CEO in
Trading Statement
(Ocado group,
2018).
Table 8: MES risk,control and involvement
Table 9: SWOT
15. 15
3.5 PESTLE
3.6 Competitors Analysis
Ocado’s main competitors in South Korea
will be Gmarket and 11Street. Gmarket is
owned by eBay and had 11.1 million online
visitors followed by 11Street with 10.9
million. Both of the retailers sell everything
from groceries, technology, clothes,
stationary, baby food and a lot more. Both of
these retailers have the biggest market
share in the retail industry. Instead of
mapping out brands on the positing map
and comparing them based on price and
quality, the report will analyse competitors
based on Lovemarks. The Lovemark is
based on love/respect axis (Roberts, 2005).
as Ocado is a new brand moving into new
market, they will have low love and respect,
but the aim is for Ocado to move up as
LOVEMARKS in 2-3 years.
Table 10: PESTLE
P
Political
E
Environmental
S
Social
T
Technological
L
Legal
E
Economic
Political
stable
democratic
state
Post Brexit
FTA - Korea
has warned
UK that FTA
will not
apply to UK
after 2019. if
finished
each
business
will have to
pay £500
million every
year.
Different
taxes apply
– company
tax and
income tax
Employment
policies
(GOV.UK,
2018).
Domestic law
that enforce
environmental
safety such
as plastic &
waste
disposal
The focus of
business –
big/small
cities
Language
barrier
Certification
processes
for labelling
foods as
‘organic’
High wages
and high
literacy rate
Use of Internet
for Online
campaigns
Communication
Between
Ocado,
employees and
customers.
International
laws such
as World
Trade
Organisation
treaties,
Domestics
laws such
as Food and
Agricultural
Import
Regulations
and
Standards
(FAIRS)
The Food
and Drug
regulations
Tax policies
Employs
only 4.9%
of active
population
for
agriculture
Powerful
export
sectors
and low
level of
imports
Diagram 2: LOVEMARKS
16. 16
3.7 Standardisation vs Adoption
Pricing
Distribution
Sales Force
Sales Promotion
Product
Image
Objectives
Strategy
3.8 Product Strategy
Mesdag (1985) created the following product strategies:
SWYG – Sell What You Have Got
SWAB – Sell What people Actually Buy
GLOB – Sell the same thing GLOBally disregarding national frontiers
As a product strategy GLOB (sell the same thing globally disregarding national frontiers) will
be used.
3.9 Communication Strategy
PUSH PULL PROFILE
Ocado will be doing
B2B business as they
will be distributing
their products through
LOTTE, hence they
will use this strategy.
This will be done to
acquire customers
because there will be
low brand loyalty and
there are acceptable
substitutes in the
market.
This strategy will be directly
targeted at customers and
promotional offers such as free
coupon, free delivery over certain
amount of money and free sample
will be given to customers to
support the campaign. This will
build the brand awareness and
loyalty. This strategy will be given
special attention because as
discussed by Kim (2009), Korean
people prefer to have free
products/delivery rather than
cheaper prices.
This strategy will be used to
build awareness,
perception, attitudes and
reputation using
sponsorships of K-POP
idols, as discussed earlier.
This will be done after
discussing with LOTTE.
Standardisation
Adoption
Pricing will remain same.
The MES will involve B2B, so the distribution will be adopted, and
some products will be sold in store.
Promotion will be adopted to raise awareness of the brand and its
products.
Other than the packaging and labelling, the product will stay the
same.
Brand Image will be same as it will give Ocado an competitive
advantage being a wester/British brand.
Objective and strategy will stay true to brand’s initial mission of
‘creating value for customers’.
Table 11: Push,Pull and Profile
17. 17
3.10 Conclusions
In conclusion, after analysing and evaluating UK and South Korea cultures using Hofstede
and the cultural Framework, it is clearly demonstrated that they are culturally very different.
Considering the cultural differences, consumer behaviour and Ocado’s resources and
capabilities, Strategic Alliance is proposed as MES as it is the safest option for Ocado. By
doing so both Ocado and LOTTE will have mutual benefits.
18. 18
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