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MARKETING MIX
CHANNEL STRUCTURE IN GINSENG INDUSTRY
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TABLE OF CONTENTS
GINSENG INDUSTRY
THE LARGEST COMPANY; Á¤°üÀå (KGC)
- FEATURES
- CHANNEL STRUCTURE
- CHANNEL CONFLICTS
ENTRANT COMPANY; ÇÑ»ïÀÎ (NH)
- FEATURES
- CHANNEL STRUCTURE
- THE POINTS IN THE CHANNEL
- PROBLEMS
- POSSIBLE SOLUTIONS
CONCLUSION
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RED GINSENG INDUSTRY
RED GINSENG;
Approved healthy-food
50% of healthy-food market share
1000 billion won sales
Technological improvement- increasing productivity
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Á¤°üÀå È«»ï
1999¡¯ divided from KT&G
520 Billon won sales
more than 600 franchisers
Dominant brand in red ginseng industry;
Early 2000¡¯ 90% of market share->now 70%
But still has the largest market share
due to the growth of red ginseng market
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Á¤°üÀå È«»ï
MONOPOLY STATUS
HIGH BRAND LOYALTY;
PREMIUM STRATEGY;
10-20% higher price than others
High quality ginseng
Stable supply cha¡¦(»ý·«)
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rofit 199 billion won (22.8%)in 2008
2008¡¯ purchase 6005t.(increased 7.8%), 235 billion won
Price per kg 39,000 won; stable (around 40,000won) during 4 years
10 years ago; 29,000 won -> increased 10,000won
KGC; try to reduce purchasing cost
Farms; has to be tied by contract
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CHANNEL CONFLICT IN KGC
Contracted farms cannot complain;
Insurance stable sales
Tied from contraction; much less negotiation power
KGC are using superior power on selecting the price of ginseng
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The Channel of Ginseng Industry
The General Structure: 5 ~ 8 steps
farmer¡æ pre-harvest purchaser¡æ
commission merchant ¡æ wholesaler¡æ retailer¡æ consumer
NH: vertical integration
farmer¡æregional cooperative association¡æNH¡æretailer¡æcustomer
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The Points in the Channel
The Complaints of the Farmers
; margin in the distribution is 4~70%, little for the farmer
KGC takes a lot: channel conflict
the 6 years old ginseng is har