Is the blooming of coffeehouses in South Korea at risk?

Abstract

The number of coffeehouses in South Korea jumped nearly ten-fold to 15000 in year 2014. However, more than 50% of the coffee outlets are multi-national franchise companies. This situation is probably putting all local coffeehouse operators into a fierce competition. As proposed by Kang et al. (2013), it is essential for local coffeehouses operators to evaluate their competitive strategies against foreign players. Hence, this study was carried out to evaluate the competitive strategies that implemented by the independents and local chain in South Korea. Mixed method approach was used to ensure both café strategies and consumers’ response were able to be measured effectively. Observation and criteria audit technique were used in measuring café strategies while survey technique was used in collecting consumers’ attitude pertaining to existing marketing efforts by café around Seoul. Comparative analysis was used to analyse the results between foreign franchised café and local café. Findings suggested that majority of the local cafés implemented Extensive Product Line Strategy whereby Generic and Interactive Strategies were least implemented. In contrast, the international chain cafés are widely implemented Generic and Interactive Strategies. This study suggested that it is essential for Korean local cafés to vary its own competitive strategies to compete with rivalries.

Keywords:

• Coffeehouse
• café
• coffee industry
• competitive strategy