Consumer lessons from digital Korea

As a nation where boundaries between online and offline are disappearing, what can South Korea, one of the world's most digitalized countries, teach global brands as daily life and technology integrate?

We live in a world where obtaining information and getting products delivered right to your door is possible with just few swipes on your smartphone screen. Lifestyle-oriented offline-to-online (O2O) services are spreading not only to the daily necessities but also to a whole range of routines from calling for a taxi to dealing with used cars or real-estate. Due to the dawning of big data, and a quantum leap in technology, many new avenues are open to business. But the essence of marketing in the big-data era still has to be a solution with high ROI, based on a deep understanding of consumers.

There are three points brands can learn from understanding Korea’s digital consumers.

• First, ‘who they are’ has changed. Target-setting, based on demographics such as ‘women in their 20s and 30s’, has lost meaning. We need to pay attention to different behavior patterns such as consumer’s purchase history, preferred channels and concern attributes in lateral views. This is because just as boundaries between industries are falling away, the boundaries between target consumers are also blurring. For example, when analyzing search data in Korea during the first half of 2015, keywords once considered the territory of women—such as ‘drama’, ‘liquor with low alcohol percentage’ or ‘interior’—show growing interest among men.

• Second, brands need to concentrate on ‘what to say’. In other words, what are consumers’ unmet needs? In order to grasp unmet needs, conducting controlled consumer research, such as surveys and focus-group interviews, is no longer very meaningful. Instead, we should listen carefully to the stories told in social media, pouring out from consumers’ daily lives. Every move consumers make, no matter how trivial, have become raw material for big-data analysis.

• Last but not least, brands need to know ‘where to go’. Where are the touchpoints for consumers to meet brands? Recently, ‘showroomers’—shoppers who go to an offline store to look at a product and then make the purchase online—are the general trend in Korea. To keep pace with these shoppers, brands are focusing on omni-channel tactics, which organically connect all shopping channels. According to The Korea Chamber of Commerce & Industry, ‘omni-channel purchase’ ranked as the number-one term among consumption-related keywords this year. Now that touchpoints between consumers and brands intersect, brands need to go beyond fragmented strategies for online and offline channels, and pivot into providing consistent brand experiences with an omni-channel viewpoint.

In Korea, smartphone penetration is higher than 80 per cent, and four out of 10 Koreans use the devices for shopping. Therefore, mobile is more likely to enable brands to conduct not only communication with customers but also personal interactions.

The purchase funnel, familiar even to those who did not major in marketing (as steps of awareness, preference and purchase), is based on an assumption that consumers narrow down consideration sets as they get closer to a purchase. However, in terms of access to information, the evolution of digital technology has virtually removed space and time constraints. Mobile devices enabled consumers to produce and consume information on a real-time basis across the whole process of search, purchase and sharing of product information. Their brand awareness and preference also tends to change from moment to moment, right up until just before a final purchase.

Busy people are no longer willing to wait in line at shopping centres. They are becoming ‘smart’ as they find products via smartphones, compare quality and price, and then purchase on the spot. Rather than depending only on information from brands, they use information from other consumers and seek to purchase high-quality products and services at the lowest possible price. Consumers use combinations of channels, as they hover between online and offline modes, starting from product recognition up until purchase. In short, the brand perspective on understanding consumers needs to change from the traditional linear and one-way sales funnel to a nonlinear and two-way mobius strip, for an endless loop of search, shop and share.

Hence, personalised marketing (based on a new understanding of who consumers are and where best to deliver messages), has become an important challenge for brands. Integration of a marketing campaign with online digital and offline retail to deliver a consistent and personal brand experience should be viewed as a solution with high ROI.

Big data has been a major buzzword of late but possessing a lot of data is not what guarantees a campaign’s success. Planning and executing based on big-data insights is just the beginning. What’s needed is a hard-headed assessment of achievement at the same time. And while the idea of a scientific approach has gradually become the general trend in marketing, we must not forget that when big data becomes a creative idea, only then is it ‘good data’ for marketers.

Hyun-tak Ji is head of DnA Center at Cheil Worldwide