Different Coffee Brands in Seoul

There are 740 different coffee brands in Seoul as of July 2010. Most of the other vertical markets like bakeries, family restaurants, movie theatres have just three or four players. So it is obvious that in case of coffee, entry barriers are few and cost is low. Koreans are loyal to their brands. They do not choose a coffee shop based on proximity but based on their preferred brand. That makes it important for a particular brand to be present at as many locations possible. The fact that the difference in the number of Starbucks and Angel-in-us outlets has reduced from 138 to just 19 in a span of 4 years gives credence to the fact. Loyalty cards are a hit with the people.

That was the main benefit of franchising- the franchisor gave the franchisee a proven model that only required operational execution to be successful. The drawback, though, was that the franchisors were reluctant to allow the franchisee to make large scale changes.

As the market is already overcrowded, going for a brand rather than differentiation seems to be a better option. But differentiation can be created which can turn out to be successful. Differentiation may be in terms of a new menu offered with coffee or making available merchandise like t-shirts, mugs, games and magazines.

This would attract the targeted customers since the average age of Korea's coffee consumers is 32 and even non-coffee drinkers could be brought to the shop.

People came to the coffee shop to enjoy coffee, study, chat with their friends or take a quick nap. It was a place which could make them forget the pressures of life, although temporarily.

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