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Creating demand for foreign brands in a 'home run' market: tobacco company tactics in South Korea following market liberalisation

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JournalTobacco Control
DateE-pub ahead of print - 14 Nov 2012
DatePublished (current) - 2012
Early online date14/11/12
Original languageEnglish

Abstract

Objective: To analyse the tactics transnational tobacco companies (TTCs) used to increase market share in South Korea after market liberalisation in 1988, and the subsequent impact of TTCs’ activities on the domestic industry and ultimately public health. Methods: Internal tobacco industry documents were searched iteratively and analysed by keyword related to strategies for increasing market share in Korea since liberalisation. Results: Following market liberalisation, TTCs faced entrenched cultural and institutional barriers in Korea which hindered increased sales of cigarette imports. TTCs identified population groups more favourably inclined towards imported brands, developed new distribution channels and used promotional activities targeting these groups. The growth in market share by TTCs suggests that these activities were successful at challenging the Korea Tobacco & Ginseng Corporation (KTGC) monopoly. In response, KTGC shifted to a proactive marketing approach and adopted strategies similar to TTCs. This, in turn, made the Korean market highly competitive. Findings show that, after market liberalisation, there was an upward trend in cigarette consumption and smoking prevalence among the targeted population groups, notably youth and young women. Conclusions: Governments engaging in trade negotiations that may lead to the opening of domestic tobacco markets need a fuller understanding of previous industry activities for expanding into emerging markets as well as how the domestic industry can change accordingly. To protect public health, the adoption of comprehensive tobacco control measures, guided by WHO Framework Convention on Tobacco Control, are needed as part of such negotiations.

    Research areas

  • tobacco industry, market liberalisation, South Korea

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