Conscientious Korean consumers demand the full package

Both Campaign Asia-Pacific's just released ranking of the top 100 brands in Korea and comments from in-market experts support the conclusion that brands able to put it all together and deliver a full package of benefits  to consumers won support over the last year—in some cases in spectacular fashion.

"Now more than ever, consumers are evaluating brands across multiple dimensions of functionality, personal relevance and collective contribution," Mali Wuestenhagen, senior media director at Essence Korea, told Campaign Asia-Pacific. "The term ‘meaningful brands’ is gaining increasing importance. Consumers are looking for unique brand experiences, and not just product and service excellence. To connect with consumers on a deeper emotional level, brands’ values need to resonate strongly with consumers. Brand authenticity and brand responsibility are equally important factors in driving positive consumer sentiment."

Needless to say, the pandemic was the driving force. "Some brands became so much more relevant to everyday life, while others struggled to find their place in the new norm," said Michael W.J. Kim, executive director of business development and client services at Interbrand in Seoul.

Taehee Lee, CEO of Cue Korea, agrees. 'V-nomics' and 'Untact' became key words, he said. The first refers to 'virus economics' and the second reflects safety-conscious, 'touchless' consumerism. "The success or failure of brands differed depending on how well they adapted to this new environment," Lee said. "The rapid growth of new distribution channels through the expansion of online consumption and the rise of the 'homeconomy', where the center of consumption is changed to home, are typical examples."

Myongah Sung, executive planning director at Publicis Group Korea, points to the mental underpinnings of how successful brands won consumer favour. "Changes in lifestyle, represented by non-face-to-face and digital due to the pandemic have rapidly changed consumers' emotions and consumption patterns," Sung said. "It minimised the psychological burden of unnecessary face-to-face encounters and developed into an individual-centered lifestyle, which affected brands greatly." 

Use of technology also played a key role, Lee added. "Each brand's success in the market was determined by how well it combined these trends with technology to create a synergistic effect."

Gonwoo Yang, executive account director and head of brand strategy at TBWA South Korea, defines four forces that exerted themselves on consumer sentiment. Brands thrived, he said, by:

• Making health and safety the top priority
• Enhancing customer experience in terms of UX, recommendation and delivery
• "Recognising the gathering force of the ESG imperative" by "reassessing their priorities" and "communicating what efforts they would make to improve ESG"
• Using big data and AI to enhance all of the above efforts.

The pandemic instilled a sense of unity and resilience in the public, according to Wuestenhagen. "As a result, there has been a shift in consumer expectations for brands to focus on value propositions that are centred around helpfulness and inclusivity," she said. "Real-time improvements and updates to products, systems and processes were expected, with the need to be contactless, undisruptive and accessible. Health, security and safety became top priorities for consumers, and these challenged brands to be more transparent."

Impact on the top 100

What brands succeeded in putting all of the above together?

Three of the year's top gainers in the Top 100 list—two of which did not rank at all in last year's data—exemplify the ability to meet the moment.

Biggest gains in the top 100 ranking
Brand	2021	2020	Change
Baedal Minjok	15	NA	NA
Harim	33	NA	NA
Yogiyo	45	NA	NA
Chupa Chup	79	NA	NA
Coupang Eats	84	636	552
Nonghyup	81	443	362
Twosome Place	85	342	257
Ashley	90	261	171
Spam	46	170	124
Hotels.com	62	181	119
S-oil	66	184	118
Dongwon	49	159	110
Netflix	52	127	75
Tommy Hilfiger	100	169	69
Persil	35	97	62

Even before the pandemic, food delivery brands Baedal Minjok, Yogiyo and Coupang Eats were growing in the market thanks to the convenience factor. But the pandemic accelerated their growth and the public's fondness for them as they met the challenges of the times.

"Some experts say that Korea was able to remain calm despite the pandemic thanks to these online/O2O services, which helped maintain a sense of ‘normalcy’ amidst the chaos," Interbrand's Kim said.

Baedal Minjok, which rose from nowhere last year to 15th this year—an extraordinary jump—is a particularly good example of a brand demonstrating deep consumer understanding and agile response, Wuestenhagen said. 

"Amid the pandemic, Baedal Minjok optimised the consumer experience by adding features such as a ‘clean review system’ to distinguish real food reviews from fake reviews, to provide accurate information to consumers, hence building stronger brand trust," she said. "The brand also uses voice ordering for increased convenience and Baemin Pay for seamless payment transactions. Additionally, rewards and benefits are provided to consumers through the Baemin Hyundai Card. To support sellers, Baedal Minjok set up Baemin Academy to educate and assist restaurant owners in building better business strategies that in turn had a positive impact on food offerings and delivery methods." 

Several brands appear to have risen thanks to articulation of and support for ESG principles, including chicken producer Harim, bank Nonghyup, seafood concern Dongwon and convenience store CU.

"Dongwon, Korea's leading marine and fishery brand, put ESG at the forefront of its management this year and went all-in on eco-friendly fisheries," Cue's Lee said. The company is switching to more sustainable sourcing, conducted a marine ecosystem protection campaign and touted its MSC (Marine Stewardship Council) certification.

CU, which rose 29 spots to 38th, helped spearheaded a movement to sell label-free water bottles, which are easier to recycle. The brand saw bottled water sales increase by 80% year on year after introducing the bottles. "This can be said to be an example of the spread of conscious consumption based on the philosophy and ethical consciousness of companies and brands during the consumption process," Lee said. 

Even a fossil-fuel company received a bump by persuading people it wants to be part of the solution. "S-Oil is also leading ESG management centered on eco-friendly this year," Lee said. "It is accelerating its entry into eco-friendly businesses by establishing an investment roadmap to minimize carbon emissions by 2030 and further investing in the next-generation fuel cell business."

Healthier home eating also moved some brands in the ranking. "In the case of Harim, Dongwon, and Ashley, they have been influenced by health and safety factor, as people stay home longer and eat inside more often," TBWA's Yang observed. "Foods like chicken, tuna, and salad give healthier image than former diet."

The impressive rise of Spam to 46th position is at least partly due to a brilliant PR reaction on the company's part. In February, a viral video showed a rice bowl shop using non-Spam meat but calling it Spam. CJ CheilJedang, which makes the product in the market, responded by introducing a "Spam certification mark" that more than 1500 restaurants have chosen to display. 

Spam has long been a popular food in Korea, but perhaps ads with actor Yoo Yeon-Seok also helped push it into the top 100:

Another notable rise: Netflix, which of course benefitted from the pandemic, but more importantly, is seeing a big investment in locally produced content pay dividends. Koreans appreciate that the service not only continues to feed more locally relevant content to its subscribers but also helps to drive the reputation of Korean content creators internationally. 

MZ factor

In Korea, the term 'MZ', referring to a combination of Millennials and Gen Z, has gained currency, with many brands making this cohort the focus of their attention. The group is making it presence felt in the top 100 as well.

"Nostalgic brands that dominated the 1990s, such as Champion, Tommy Hilfiger, and Storm, are recently gaining great popularity among young Korean consumers," Lee said. "This is because the MZ generation, which was passionate about ‘retro style’, is now starting to consume the brand that was popular in the 90s."

Tommy Hilfiger, for example, is seeing its highest growth among consumers in their 20s and 30s, and has recently been working with popular actor Kim Soo-hyun:  

Not keeping up

Sources mainly declined to discuss the reasons specific brands might have dropped in the top 100. 

Some brands fell victim to their inability to bridge an 'expectation gap'. "The pace of keeping up with rapidly evolving consumer needs has been a challenge for many companies," said Essence's Wuestenhagen. "The lack of deep audience understanding easily creates an expectation gap. With an increased expectation in brand purpose, brands should consider supporting causes that are most authentic to their brand and where they truly have a right to share their support. However, corporate social responsibility (CSR), and environmental, social and governance (ESG) activities need to be done thoughtfully, due to a growing sense of scepticism with emerging purpose-washing campaigns that are prevalent in the times we live in."

Biggest drops in the top 100 ranking
Brand	2021	2020	Change
Seoul Milk	94	23	-71
Chilsung Cider	88	22	-66
Dove	99	53	-46
Coca-Cola	44	8	-36
Christian Dior	93	66	-27
Maeil	57	32	-25
Shinhan bank	42	18	-24
Chungjungwon	60	47	-13
Pocari Sweat	71	58	-13
Nongshim	32	21	-11

 In other cases, brands may have struggled to adapt quickly enough to digitisation.

One source pointed out that in contrast to the digital-native companies that thrived in ecommerce, one older company, Lotte, suffered a black eye that may account for its two-position drop in the top 10. The Lotte ON platform failed to meet revenue targets and disappointed users due to various system errors. Moreover, the site failed to articulate a differentiated consumer strategy, and the company, with its offline distribution DNA, appears to be having difficulties adapting to the new distribution and 'untact' environment.