Line Plus Marketing Management

Copyright by Ou Jialing, Lena Page 1
MARKETING MANAGEMENT
NAME : OU JIALING, LENA
ID: 0030JMMJMM0914 (MBAE)

INDEX
Page
1.0 Executive summary 3
1.1 Introduction
2.0 External Environment 4-6
2.1 Political and Legal
2.2 Economy and Technology
2.3 Social
2.4 Opportunity
2.5 Threats
3.0 Internal Environment 7
3.1 Strength
3.2 Weaknesses
4.0 ANSOFF’S PRODUCT–MARKET MATRIX 8-11
4.1 Market Penetration
4.2 Market Development
4.3 Product development
4.4 Diversification
5.0 3 year’s forecast Profit or Loss for the proposed marketing plan 12-16
5.1 Gap Analysis
6.0 Customer Loyalty Retention Strategy 17-18
7.0 Product Rationalization 19-20
8.0 References 21-23

1.0 Executive Summary
The brief details a marketing proposal for the management of LINE Plus Corporation on the
strategy to achieve growth objective of thirty five percent of business revenue, including its new
revenue streams and profit contribution growth in the next 3 year. A detailed analysis of internal
and external business environment is first discussed. Secondly, the various growth strategies
including market penetration, market development, product development and diversification are
elaborated to achieve the growth objective. Based on the growth strategies outlined, a projected
profit or loss analysis is detailed with a gap analysis. Finally, in order to ensure a sustainable
growth, customer loyalty retention strategy and a justified portfolio of the product rationalization
are presented.
1.1 Introduction
LINE Plus Corporation is established in March 2013 in South Korea as a joint venture between
Japan’s LINE Corporation and South Korea’s Naver Corporation. The primary business focus of
LINE Plus Corporation is to support LINE’s global business development particularly on popular
messaging service. (LINE Corporation, 2014) LINE messaging apps currently has approximately
170 million users. In the first quarter of 2013, the company made USD58 million revenue, with
half being contributed by games, and 30% or approximately USD 17 million from sales of 8,000
different stickers. (Olson, 2013)
This following brief is presented for LINE Plus Corporation with the following objectives:
a. Grow LINE Plus Corporation business revenue by 35%, including revenue streams from
new channels
b. Increase profit contribution to boost shareholders’ dividends
c. Improve customer retention via customer loyalty innovations
Before detailing marketing strategies to achieve the above, an in-depth analysis is done to
understand the company’s current internal and external position.

2.0 External Environment
A good analysis of the external environment where the company operates in is important because
it will allow the company to alter its marketing strategy to suit the changing environment.
(Charles Lamb, 2010) PESTEL analysis is a useful tool which can help to look at the vital factors
that may affect the business. (Linda Doke, 2007)
2.1 Political and Legal
One of the biggest impacts of social media, including messaging services, is its ability to connect
people much closer at a much faster pace than before. The criticality of the role that messaging
services and other social media played in changing the political landscape can be clearly seen in
the uprising that took place in recent years such as in Middle East and Africa. (Safranek, 2012)
Alongside with this, it has also been observed that tighter restrictions have been placed on
messaging apps in some countries such as China which announced control measures in August
2014. (Ned Levin, 2014)
2.2 Economy and Technology
Social messaging apps such as LINE are available in smartphones, and research indicates
growing population of worldwide smartphone usage. In 2014, global smartphone usage grew by
25%. It is projected that above one-third of world population will be using smartphone in 2017
compared to one-quarter currently. (EMarketer, 2014)
Diagram 1: Smartphone Users and Penetration Worldwide 2012 – 2018
Source : (EMarketer, 2014)

Consumers in Asia Pacific accounts for more than half of all smartphone users currently. This is
largely driven by more people embracing the technology of smartphones as well as the gadgets
are becoming increasingly affordable to people.
Diagram 2: Year Select Countries in Asia-Pacific will pass 50% Smartphone Penetration Among
Total Population 2012 – 2018.
Source : (EMarketer, 2014)
2.3 Social
Messaging service apps are becoming increasingly popular globally with more youngsters
shifting to using the services in their communications. (Olson, 2013)
Globally, the use of mobile messaging apps grew 103% in 2014. Some popular messaging apps
such as Viber boasts more than 200 million visitors monthly; LINE with 170 million users; and
WhatsApp being the leading service with more than 700 million regular visitors.
Part of the reason behind the rapid growth in messaging apps is thought to be related to the much
more intimate experience of communicating via messaging apps as opposed to the more public
nature of apps such as Facebook and Twitter. Messaging apps is then able to provide a sense of

control of what is being communicated to the intended recipient, as well as bridging the gap
between smaller audiences. (Mike Isaac, 2015)
2.4 Opportunity
SWOT (Strength, Weakness, Opportunity, and Threat) analysis provides a platform to evaluate
LINE Plus Corporation opportunity which is a favorable situation in the environment and thus
should make use of it. (John Stapleton, 1998)
As more and more of the world’s population embraces social messaging apps, one of the biggest
opportunities lies in the business segment. Research has shown that businesses are looking for
best ways to take advantage of mobile messaging boom. For example, while 20% of US
consumers spend their time on mobile devices, only 4% of US advertising is spend on mobile
apps which clearly shows there is an untapped gap in business segment of mobile messaging.
(Afshar, 2014)
2.5 Threats
One of the biggest threats is the fierce competition amongst the mobile messaging apps players.
Globally, there exist many players such as Whatsapp, Viber, KakaoTalk, WeChat apart from
LINE. While it does seems that the popularity of instant messaging applications varies from
region to region, there is risk that small players may not have many options for survival
especially if the users need to make effort to maintain several profiles and accounts at the same
time. Hence, there is a critical need for LINE to expand the number of users as much as possible
and be able to offer a differentiated value to users which will encourage users to maintain
account with LINE. (Wharton School of the University of Pennsylvania, 2013)
Another potential threat is the increasing legislative restriction in some countries like in China
such as outline in Section 2.1. This may hamper the growth of LINE in these countries and hence
may necessitate it to look for opportunity in other countries.

3.0 Internal Environment
Using SWOT analysis, internal environment that is evaluated include LINE Plus Corporation’s
strength and weakness.
3.1 Strength
One of the main strength of LINE mobile messaging apps is the ability of adding illustrations
and virtual stickers to conversations. LINE by default has more than 250 free virtual stickers to
offer and the number is growing. Apart from that, LINE also has its own unique factor as a social
network because it has a timeline that allow registered users to post message and emotion
stickers. LINE users can also make free calls because it supports VOIP (Voice over Internet
Protocol) technology. (Wharton School of the University of Pennsylvania, 2013)
3.2 Weakness
Despite being relatively strong in Asian countries such as in Japan and Southeast Asia, LINE has
not been able to penetrate strongly in emerging markets such as India and Latin America.
(Dolsenz, 2015) Hence, Whatsapp being one of the pioneer in mobile messaging apps, remains a
much stronger player with more than 700 million regular users.

4.0 ANSOFF’S PRODUCT–MARKET MATRIX
In view of the competitive mobile messaging application nature, it is critical that LINE Plus
Corporation to develop strategies to keep up with competition. In order to do so, the management
need to have a substantial understanding of the business environment in which it operates. Based
on the understanding of the merits and demerits in the business, Ansoff’s product–market matrix
should be adopted. Ansoff’s matrix is one of the most relevant marketing growth strategies
which can assist the entity in promoting revenue growth. The matrix provides strategic
alternatives in order to achieve this goal with four quadrants to be select from. (Mike Meldrum,
2007)
Diagram 3 Ansoff’s Matrix
Source: (Chartered Institute of Marketing, 2015)
4.1 Market penetration
In achieving a market penetration, the management is pursuing to sell higher volumes of existing
products which is the LINE messaging apps into existing markets which is Japan and Korea.
This is a low-risk strategy which will result low organic growth. (Roger Lewis, 2000) This may
involve increasing revenue by, for example, in LINE Plus Corporation promoting the product
which is the mobile messaging apps, LINE to more new users. Existing LINE apps users would
be given free virtual stickers for introducing every 10 successful friends in downloading LINE
messaging apps via selected promotional period. The main concept is based upon ‘pushing more

of the current products to the existing customers’.
Besides that, the advertising business focus on Business to Consumer (BtoC), a platform with
substantial interactivity among users to grow global expansion of official accounts and sponsored
virtual stickers from the countries. A fixed nominal fee will be charged to the sponsors based on
the number or registered users to enhance future marketing platform.
Besides that, LINE messaging apps will be used as a platform by third party businesses to
advertise their products by sponsoring LINE virtual stickers. In return, these sponsors will be
able to incorporate their products in the virtual stickers. Users are allowed to download these
sponsored virtual stickers for free. The Business to Business (B2B) relationship between
sponsors and LINE Plus Corporation allows the sponsors to tap onto the wide connectivity of
LINE messaging apps to advertise their products. LINE Plus Corporation will then charge the
sponsor a fixed fee per every LINE messaging apps user.
Besides Business to Business (B2B), LINE Plus Corporation also engages on Business to
Consumer (B2C) model for the virtual sticker sales. These virtual stickers are designed by LINE
Plus Corporation and are also sold to users as a mean of income. Users will have to pay to
download the stickers.
4.2 Market development
In the aspect of market development strategy, the management focuses on marketing sell current
product range to new segment. In other words, the product remains unchanged but it is targeted
to a new customer base. (Charles Lamb, 2012) In LINE Plus Corporation case, exporting and
marketing the new LINE messaging apps in a new region which is in other countries like in the
the Southeast Asian, Latin American, Middle Eastern, and African markets which is a huge jump
in its expansion plan.

4.3 Product development
In the aspect of product development, new products are targeted to existing customers.
Resources are then allocated to research and development of new product offerings with the
objective to satisfy existing customers’ demands. (Geoff Lancaster, 2007) In this case, LINE
Plus Corporation will launch a new Video Call feature to complement its current voice call and
messaging functions. Users will have access to free video calls on supported operating systems
(iOS, Android and Windows and Mac PCs) and have face-time conversations with their faraway
recipients at any time. Other than that, LINE Manga will be introduced as an application that
enables LINE users to purchase Japanese manga and comics online. LINE Manga is a separate
individual application from LINE Messaging app, with current offering of more than 30,000
comics’ selection to choose from. (Wee, 2015)
Besides that, “LINE MUSIC” will be introduced as music streaming service that allows users to
buy a wide categories of music such as J-pop, K-pop, and Jazz Western music. Purchased songs
can be shared with other users within LINE apps. This becomes a unique product differentiator
which only available in LINE apps compared to other messaging applications. This offering will
be initiated first in Japan. Last but not least, more ranges of LINE games by various developers
will be introduced to the existing customers as per below:
- LINE IRONSLAM (Developer: WeMade Entertainment)
- LINE Let’s Golf!(TBC) (Developer: Gameloft)
- LINE MapleStory Village (Developer: NEXON Co., Ltd.)
- LINE Modoo Marble (Developer: CJ E&M Corp. & N2Play)
- LINE Nutlings Tournament (Developer: Boomlagoon Limited)
- LINE Puzzle Bobble (Developer: Taito Corporation)
- LINE Rainbow Chaser (Developer: NHN&OrangeCrew)
- LINE REVENANT GATE (Developer: NHN PlayArt Corporation)
- LINE Shake Spears! (Developer: Alawar Entertainment)
- LINE SONIC DASH (Developer: SEGA Corporation)

Finally, it is proposed that an online store called LINE Web Store to be introduced. Through this
online platform, the users can buy paid LINE stickers and LINE GAME items from the web
browsers on their computers or mobiles. Many payment methods like App Store and Google
Play transaction systems, credit cards, PayPal, carrier and more are introduced to ease users.
LINE prepaid cards will be available 7-Eleven, FamilyMart and Lawson convenience stores
nationwide in Japan.
4.4 Diversification
In diversification strategy, new products are targeted to new customers. There are two types of
diversification which are related and unrelated diversification. (Kazmi, 2008) Related
diversification means the business remains in a common market or industry, for example a textile
manufacturer can diversify into apparel manufacturing industry. In unrelated diversification, a
company ventures into a total new industry without previous market experience – where the
textiles manufacturer invests in the chocolates industry. However, in this case, LINE Plus
Corporation will not be engaging in diversification as a mean to achieve its revenue growth
objectives as this is a high risk option. (Lynette Ryals, 2008)

5.0 3 year’s forecast Profit or Loss for the proposed marketing plan
Note: All figures in the table is in millions in dollar
Year 1 Year 2 Year 3
Sales Revenue
-New Games
-Stickers(B2C)
-Advertising income(B2B)
-Line Music
-Line Prepaid card
-Line Manga
90
15
150
15
15
15
300
180
30
300
30
30
30
600
270
45
450
45
45
45
900
Cost of sales:-
-30% handling fees of the
game developers from game
revenue
- Database maintenance
fees for registered users
-Cost of development of
stickers
-Royalties fees for Sony
Music
-Commissions paid for
LINE prepaid card sales
27
10
7.5
3
3
(47.5)
54
10
15
3
6
(82)
81
10
22.5
3
9
(125.5)
Gross Profits 252.5 518 774.5
Operating expenses (20) (20) (20)
Interest cost NIL NIL NIL
Profits before interest, taxes 232.5 498 754.5

Taxation (69.75) (149.4) (226.35)
Profit after taxation 162.75 348.6 528.15
Dividends (81.375) (174.3) (264.075)
Retained earnings 81.375 174.3 264.075
Table 1
Assumptions in the projected profit or loss:
a. In the aspect of market development strategy as mentioned in section 4.2, the registered
number of users downloaded LINE messaging apps would be growing at 150 million users at
the first year, 300 million users at the second year and 450 million users at the third year as
LINE now offers its services in 12 languages to promote its market expansion in its new user
locations.
b. In the aspects of LINE game revenues, this will be strongly supported as LINE games are the
top downloaded as LINE leads in top publisher revenue in both Google Play and iOS App
Store in the past (App Annie, 2015) It is forecasted to be assumed that LINE game would
generate 30% of the total sales yearly
c. Net sales are tabulated from revenue of taken from contracted developers from which 30%
handling fees are imposed by app stores such as Google or Apple. This method of calculation
is assumed to be applied in the foreseeable 3 years.
d. Advertising income(B2B) will be come from the sponsors who sponsored the stickers based
on $1 of the downloaded stickers from registered users which will be 50% of the total sales
and revenue from consumers who purchased the stickers(B2C) would be accounted 5% of
the total sales.
e. Data maintenance fees from registered users would be fixed at 10 million per year.
f. Cost of development of stickers in B2C section would be 50% from the sales of the B2C
stickers and the sponsored stickers would be at the expense of the sponsors not LINE Plus
Corporation in promotion of the sponsors’ trademark drama or celebrities’ names.
g. In LINE Music, royalties to be paid to Sony Music would be contracted fixed at 3million per
year.

h. Commissions from LINE prepaid cards would be 20% of the sales revenue of LINE prepaid
cards
i. LINE Music, LINE Manga and LINE Prepaid cards revenue will be assumed to be each new
revenue channels that would be accounted to 5% of the total sales
j. There is no interest costs involved as LINE Plus Corporation get free financing assistance
from the Japan’s LINE Corporation and South Korea’s Naver Corporation
k. Operating expenses would be controlled at 20 million per year
l. Taxation will be assumed at 30%
m. Dividends will be based on 50% payout from the profits after tax
n. No inflation rate is to be assumed in the projected profit or loss.

5.1 Gap Analysis
Strategic planners must take in view of the depth to which new strategies are required to
facilitate the business to meet its goals. (Grundy, 2012) One technique whereby this can be done
is Gap Analysis.
The purpose of the gap analysis in this case would be as per below:
a. Grow LINE Plus Corporation business revenue by 35%, including revenue streams from
new channels based on the proposed Ansoff matrix’s strategies
b. Increase profit contribution
c. Improve customer retention via customer loyalty innovations
As LINE reported the actual revenue of sales of $338 million in year 2013 (The Next Web,
2015)
Diagram 4
Based on the diagram 4 above, in 3 years’ time, the objective of LINE Plus Corporation can be
achieved as the blue planned gap exceeds its actual revenue in year 2013 by a green gap of $562
million, an increase of 166% which means the management is very opportunistic of the future
0
100
200
300
400
500
600
700
800
900
1000
2013 Actual 2014 Forecast 2015 Forecast 2016 Forecast
Revenue,USmillion
2013 Actual and 2014-2016 Forecast Projected Revenue
for LINE Plus Corporation
Gap

revenues from the new channels as mentioned in the Ansoff’s matrix growth strategies that will
be generated by LINE Plus Corporation.
Diagram 5
Based on Diagram 5, as the LINE Plus corporation maintained a generous 50% payout of its
earnings after interest and taxes, the forecast dividends payout will be increasing from 81.375
million in year 2014 to 264.075 million in year 2016 which means an increase of dividends
payout by about 225% which is fantastic boost in maximizing shareholders’ wealth in align with
the goals and objective of LINE Plus Corporation
0
50
100
150
200
250
300
2014 Forecast 2015 Forecast 2016 Forecast
DividentPayout,USmillion
Projected Dividend payout to LINE Plus Corporation
Shareholders

6.0 Customer Loyalty Retention Strategy
Customer loyalty which is a long-term commitment to repurchase and repeated patronage is key
to success of a business because it ensures customers do not switch to competitor offering.
(Canadian Center of Science and Education, 2013)
Among the strategies that can be employed to build upon customer loyalty is increasing product
value. Within the mobile messaging apps application, product value can be built upon by
ensuring the LINE messaging apps has a distinct differentiation compared to other mobile
messaging apps. One of the core differentiations in LINE mobile messaging apps is the virtual
stickers which allow users to express themselves when messaging. LINE virtual stickers has
been proven to be hugely successful and LINE Plus Corporation will need to continuously issue
new virtual stickers to ensure users remains attracted to using LINE messaging app. Some of the
virtual stickers are offered free while others need to be purchased. To increase continuous usage
of LINE messaging apps, users are entitled to download the chargeable virtual sticker without
having to pay after downloading the 10 sets of free virtual stickers and using it in their
messaging. This strategy is two pronged, first to ensure that users will remain active in using
LINE messaging apps; and second to reward loyal users by rewarding them chargeable virtual
stickers for free.
Another loyalty retention strategy is by running lucky draw competition. These lucky draws are
run continuously and virtually via LINE mobile messaging app where questions will be posed to
LINE mobile apps and users who answer the question correctly will stand a chance to win prizes.
Finally, customer loyalty retention is managed via relationship management strategy. Customer
relationship is often the most important business asset as its contribution is multiple-fold. It
builds loyalty and increases profits from current customers because the longer customers are
retained, the more they will be spending. (Katsch, 2001)
Within the LINE messaging apps, relationship management is built via understanding what each
users like based on their purchase habit in LINE e-commerce platform. Based on the users
historical purchase, a database of each users affinity, likes and dislikes can be built. Users who
have purchased up to a certain amount such as USD500 online via LINE e-commerce can then

be rewarded by a free gift that is along the users liking. For example, users who likes photo-
frames because he or she have demonstrated repeated purchase of photo frames will be then
rewarded a free-gift of LINE photo frame based on the historical database of purchase. The
benefit of this customer retention strategy is that it is customer-specific which will build loyalty
and repeated purchase.

7.0 Product Rationalization
Two of the important product rationalization components include product addition (which is
elaborated in Section Product Development) and product deletion. As a product within current
product mix no longer becomes profitable or not sufficient to satisfy the customer needs, product
deletion process may be considered. (William Pride, 2014)
In applying the Boston Consulting Group (BCG) Matrix, LINE Manga would be perceived as the
Dog as it has a low market share and low growth rate which doesn’t generate large amount of
cash which only forecasted to be 5% on the total sales. It is advisable that LINE Manga would be
a cash trap as the money will be tied up in the business that yields little potential growth in only
the Japan market. (Pamela Lewis, 2007)
Within the LINE apps offering, LINE Manga is the offering proposed for product deletion. LINE
Manga is application that enables LINE users to purchase Japanese manga and comics online.
LINE Manga is a separate individual application from LINE Messaging app, with current
offering of more than 30,000 comics’ selection to choose from. (Wee, 2015)
The proposal for LINE Manga to be phased out from offering is due to the following
justifications:
a. LINE Manga is not part of main stream offering of LINE messaging applications.
Because LINE apps is still relatively new in the online messaging applications, it will be
advantageous for LINE to remain focus and create value in LINE messaging apps.
b. Expanding a product line into a segment in which a company will not be able to obtain
competitive advantage over its competitors is not advantageous. (C.Goold, 2006)
With this in mind, offering LINE Manga separate from LINE messaging will not allow
the messaging apps to ride on the popularity of LINE Manga
Hence, it is proposed that to allow the company to focus its strength to develop LINE messaging
applications. This can be done by incorporating LINE Manga into LINE messaging apps as one
of the additional functions of LINE messaging. The reason for doing so is two-fold:

a. LINE Manga functionality within LINE messaging apps will help create a product
differentiator for LINE messaging compared to competitors’ apps.
b. This will allow the company to allocate more focused resources to build the image and
strength of LINE messaging on the long run instead of having multiple product offerings
In terms of the process of LINE Manga product deletion, it is proposed that the company adopts
phase out approach (William M Pride, 2010)
In this approach, no additional new comics or manga editions are added to the LINE Manga
platform and comics that are currently published in LINE Manga are allowed to cease once the
editions run out or ends. Existing users are then migrated to LINE messaging apps where new
comics are published there. In this Phase Out approach, the transitions are made in minimal costs
as there is no need for any change in marketing strategy.
On the other hand, in adopting the BCG Matrix in the proposed marketing strategies, LINE
Games would be the stars that can contribute huge amount of cash in future due to its strong
relative market position. However, high cash flows will be required because of its high growth
rate due to 30% handling fees of the game developers from game revenue (Daft, 2008) More
varieties of LINE games should be introduced and invested than maintain the LINE Manga as it
could only generate revenues within Japan as the manga comic only in Japanese whereas the
LINE games which is available in multiple languages could enhance more revenues in different
new markets in different countries.

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