team2 week2 sk_networks_stg_final
TRANSCRIPT
Entry Strategy of SK Networks
in China Market
Team 2
TM : JU Park
Team Member : SY Kim
IH Joe
HP Choi
RA : Pay Kim
2010.03.12.Fri
22
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
3. Strategy and Item selection for success in China Market
4. Explain of item
5. Marketing Strategies
6. Expected effects
33
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
3. Strategy and Item selection for success in China Market
4. Explain of item
5. Marketing Strategies
6. Expected effects
44*SK Networks 2009년 6월 반기보고서**Annual Report Of China Car Industry, 2009, SERI
Last session overview
Because of limits of Biz portfolio of SK Networks in Korea and large
opportunity in china market, we decide to enter China refueling market
Limits in Korea Market*
Yearly sales of car in China
Opportunity in China Market**
We decide to enter China refueling market
++
0
500
1000
1500
05' 06' 07' 08' 09'
0
10
20
30
40
09' 10' 11' 12'
Over 13 million cars are
sold in 2009
World’s largest car
market
21 car per 1,000 people
in China
On average, 4.6 people
per 1,000 will get the car
for next three years.
A number of car per 1,000
people in China
0
10
20
30
40
50
60
05' 06' 07' 08' 09'
SK
GS
S-Oil
HDO
200
400
600
800
05' 06' 07' 08' 09'
M/S fluctuation of last 5 years
Market size change of last 5 years
M/S of 4 major
refueling market
player is almost fixed.
It’s really hard to
increase M/S of SK
Networks.
The entire market size
of refueling industry is
not changed for last 5
years.
55
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
2.1. KSF of refueling market in china
2.2. Fitness analysis between KSF and R&C
3. Strategy and Item selection for success in China Market
4. Explain of item
5. Marketing Strategies
6. Expected effects
66
KSF of refueling market in china
Common KSF of refueling industry and government regulation are the KSF in
China market
KSF of refueling market in china
Specific factor in China
++
How to find KSF in China
Environment Way to find KSF
General KSF of refueling market
Regulation of China government
1. To start gas station business, foreign
company should gain the China
government’s approval.(quarter
regualtion)
2. When foreign companies establish the
company in china, shares of foreign
companies must be under 49%.
Shares of
company
Shares of
Governmet
enterprise
Exxon mobile 48 52
Shell 43 57
Total 49 51
BP 48 52
47%
32%
21%
Others Sinopec CNPC
General KSF
Accessibility
Price
Promotion
Etc(service, quality, …)
KSF (In China)
Accessibility
Price
Promotion
Etc(service, quality, …)
Government Regulation
77
Fitness analysis between KSF and
R&C
Because R&Cs in China market are not satisfied the KSF of refueling industry,
we need to have differentiations compared to other companies
Satisfaction IndexRequired R&C Competitive advantage
R&C Analysis
Capacity of
establishing channel
KSF and R&C in China market
KSF
(In China)
Accessibility
Price
Promotion
Etc(service,
quality, …)
Government
Regulation
Exxon Mobile
Shell
Total
BP
Capacity of networking
with oil country
Operating Capacity
Operating Capacity
Capacity of make good
relationship with China
government
Exxon Mobile
Shell
Total
BP
Exxon Mobile
Shell
Total
BP
Exxon Mobile
Shell
Total
BP
Exxon Mobile
Shell
Total
BP
Standard :
a number of gas
station in China
Standard :
Oil Spot / Location
of oil refinery factory
Standard :
a shares of company
comparing to China
national enterprise
Standard :
Brand awareness.
Standard :
Additional Service
that company can
provide..
Even though SK Networks is not satisfied KSF, so we need to have differentiations to success in
the future
88
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
3. Strategy and Item selection for success in China Market
3.1. Methodology of strategy
3.2. Short term strategy
3.3. Long term strategy
4. Explain of item
5. Marketing Strategies
6. Expected effects
99
Methodology of strategy
Because of characteristics of refueling industry, we need to achieve KSF first
and will find the way to differentiate from competitors
Short term STG
1
12 Point text: Level 0
Level 1
Level 2
Level 3
Long term STG
2
12C
Mission
Reason
Method
ology
Improve R&Cs to satisfy KSF in China Market
Accessibility and price are 80% of key buying
factors of customers in refueling market
So, accessibility and price are essential and
basic factors to enter refueling market
해Present concrete methods that can lead to
get R&Cs
해Find R&Cs that is necessary to satisfy KSF
해Check KSF that SK Networks cannot satisfy
Mission
Reason
Method
ology
Raise revenue and profit through making a biz
item that can satisfy customers’ needs and fit
with SK Networks’ R&C
General refueling concept can’t have a
competitive power
SK Networks need to make a differentiations
from competitors to beat competitors in china
market by using their R&C
해Set marketing strategies that make our long
term strategy operate well
해Select biz item that we can develop and
operate very well
해Consider SK Networks’ R&C
해Set criteria that can make differentiations
from competitors
1010
Short term strategy – Raise R&C to achieve KSF
There were many efforts to satisfy the KSF and these efforts supported to
improve the R&Cs of SK Networks
Efforts that show to improve R&C
SK Networks is improving R&Cs to satisfy KSF in China market
Not satisfied KSF
Accessibility
Price
Promotion
Necessary R&C
Improve accessibility
Minimize distribution cost
Raise brand value
Expand
channels to
meet
customers
1
Petrochemi
cal plant
Acquisition
2
Brand
marketing
3
Increase the number of gas
station slowly
Speedmate cooperated with
SINOPEC that is the
biggest refueling company
SK Networks made an
acquisition of Chinese
petrochemical plant
It will take cover the
capacity of China market
Contract cooperative
marketing with SINOPEC
that will raise brand value of
Speedmate and SK
Networks
1111* Annual customer report 2008 in China Market
Long term strategy – Make differentiations
We set 3 criteria – Synergy with other biz, Find customers’ hidden need, Not
activate in China - to differentiate from competitors for long term STG
Criteria to make differentiations from competitors
To be able to
make synergies
with refueling
1
To be able to be
sufficient hidden
needs of
customers *
2
Model that isn’t
active in China
market
3
Can it share target customers?
Can it share sales channels?
Can it share brand image?
Can it share operating know-how?
Doesn’t it interrupt to support refueling business?
Propensity of the overall Chinese
- Many Chinese people want one-stop service
- Almost Chinese people are lazy
Hidden needs of car owners in China market
- There are not enough repair stores compare with market growth
Find some biz model of SK Networks’ portfolio that doesn’t activate in China
market
Biz model that SK Networks can establish and operate well
1212
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
3. Strategy and Item selection for success in China Market
4. Explain of item
4.1. Item Introduction
4.2. Example of renter car customer
4.3. Example of gas station customer
5. Marketing Strategies
6. Expected effects
1313* Annual customer report 2008 in China Market
Item Introduction
Combining implications from 3 criteria, we were able to select total car service
solution that includes renter car and repair shop
Implications from criteria for long term strategy
To be able to
make synergies
with refueling
1
To be able to be
sufficient hidden
needs of
customers *
2
Model that isn’t
active in China
market
3
Item that we selected
++
해Related with car service
해One stop service
해Service model that can’t be searched
• We are going to manage gas station and car
service center.
• After let all the people know our brand, in long-
term strategy we are going to add car-rental
shop.
Many Chinese people want one-stop
service and almost Chinese people are
lazy
There are not enough repair stores
compare with market growth
There is no convergence solution of car
services
It will be useful to use the space of gas
station channels
It will be good to deliver same image to
targeted customers
Gas station
Car service center Rental car shop
Total car service solution!!
1414
Example of car rental customer
•He is Chinese.
•His name is Ji-Hoon who often use car
rental shop because of business trip.
• He Arrive at Simyang.
• In Simyang airport, he
asked which rental shop is
best . Guide said to him
“SpeedMate is very good
rental shop in Simyang
which connect with their own
gas station and car service
center.
Ji- hoon come by Speed Mate. And
he makes a contract on 4-passenger
car during a week.
They give him a point card which can
use at SK gas station and car service
center. for a week.
Whenever Ji-hoon refuels for a week , he goes to
SK Gas Station because of point card.
1515
Example of gas station customer
a
She is career woman.
Every day she go to work by her car.
Almost every week she goes to refuel at SK Gas station. There is Speed
Mate, car service center, on the side of gas station. And she always saw
speed mate every time she stops by gas station. One day, her car broke
down . But she has a SK Point card so she doesn’t worry about it. Because
she accumulate her point by refueling, she is able to
fix her car for free.
1616
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
3. Strategy and Item selection for success in China Market
4. Explain of item
5. Marketing Strategies
6. Expected effects
1717
Marketing Strategies
Divide customers’ behavior pattern into 4 parts and present marketing
strategies for each part
N/A
Perception
1
Refueling
- Reducing a prime cost
- Reducing a distribution
cost
Renter Car
- Reducing a channel
establishing cost
Purchase
2
N/A
Usage
3
Set price benefits for
loyal customers
Discount the price by
using customers’
mileage
Evaluation
Re-purchase
4
Price
Place
Make a Channel
expansion strategy that
considers locations of
plants and gas stations
Make a layout of gas
station that considers
movement way and
arrangement of
promotion materials
N/A Offer full services in
every channels(ex.
Every gas station can
offer to make a contract
renter car service)
Promotion
N/A Make a exposing
method that can promote
related services
Package service
promotion
Make a connection
between related services
Set point/mileage
linkages that can be
used through all services
N/A
Achieve price rationality
1818
Marketing Strategies :: Perception stage
In perception stage, we expend gas station channel from Symyang because of
accessibility and database of customers
N/A Refueling
- Reducing a prime cost
- Reducing a distribution
cost
Renter Car
- Reducing a channel
establishing cost
Purchase
2
N/A
Usage
3
Set price benefits for
loyal customers
Discount the price by
using customers’
mileage
Evaluation
Re-purchase
4
Price
Place
Make a Channel
expansion strategy that
considers locations of
plants and gas stations
Make a layout of gas
station that considers
movement way and
arrangement of
promotion materials
N/A Offer full services in
every channels(ex.
Every gas station can
offer to make a contract
renter car service)
Promotion
N/A Make a exposing
method that can promote
related services
Package service
promotion
Make a connection
between related services
Set point/mileage
linkages that can be
used through all services
N/A
Achieve price rationality
Channel Expansion strategy
Crowded Location of SK Networks’ gas stations
To consider characteristics of people and crowded location of SK
Networks’ gas stations, we will start expansion from Simyang
SK Networks has a database of Simyang’s people and knows the
characteristics very well because SK Networks operate gas stations
and collect data for 4 years
Perception
1
1919
Marketing Strategies :: Purchase stage
In purchase stage, we can achieve price rationality for gas station and renter
car service and make a connected service program for promotion campaign
N/A
Perception
1
Refueling
- Reducing a prime cost
- Reducing a distribution
cost
Renter Car
- Reducing a channel
establishing cost
N/A
Usage
3
Set price benefits for
loyal customers
Discount the price by
using customers’
mileage
Evaluation
Re-purchase
4
Price
Place
Make a Channel
expansion strategy that
considers locations of
plants and gas stations
Make a layout of gas
station that considers
movement way and
arrangement of
promotion materials
N/A Offer full services in
every channels(ex.
Every gas station can
offer to make a contract
renter car service)
Promotion
N/A Make a exposing
method that can promote
related services
Package service
promotion
Make a connection
between related services
Set point/mileage
linkages that can be
used through all services
N/A
Achieve price rationality
Is it possible to achieve price rationality?Purchase
2
Connected service program
Refueling
Renter Car
A prime cost has competitive power by network
power with oil-producing countries
Acquisition of petrochemical plant can reduce the
distribution cost
Channels’ establishing cost and rent cost of land
is not the problem because SK Networks already
constructed gas station channels
Can achieve price rationality
Gas
station
Repair
shop
Renter car
Provide package service to use all services
together for customers
Promote other services when customers take a
service
2020
Marketing Strategies :: Usage stage
In usage stage, we will make a connection between related services and set
point/mileage linkage
N/A
Perception
1
Refueling
- Reducing a prime cost
- Reducing a distribution
cost
Renter Car
- Reducing a channel
establishing cost
Purchase
2
N/A Set price benefits for
loyal customers
Discount the price by
using customers’
mileage
Evaluation
Re-purchase
4
Price
Place
Make a Channel
expansion strategy that
considers locations of
plants and gas stations
Make a layout of gas
station that considers
movement way and
arrangement of
promotion materials
N/A Offer full services in
every channels(ex.
Every gas station can
offer to make a contract
renter car service)
Promotion
N/A Make a exposing
method that can promote
related services
Package service
promotion
Make a connection
between related services
Set point/mileage
linkages that can be
used through all services
N/A
Achieve price rationality
Total Point / Mileage Service
Gas
station
Repair
shop
Renter
car
All services of SK Networks will share the point or
mileage (Customers can use their points or
mileages anywhere that are operated by SK
Networks)
Lock-in our loyal customers through raising
transition cost
Ex. A customer who accumulated mileage by
using refueling services can use his/her mileage
for repairing his/her car
Usage
3
Money
Point / Mileage
Using point / mileage
해IT Solution that manages total point service
2121
Marketing Strategies :: Evaluation / Re-purchase stage
In evaluation / re-purchase stage, customers can receive the benefits of price
by using their point
N/A
Perception
1
Refueling
- Reducing a prime cost
- Reducing a distribution
cost
Renter Car
- Reducing a channel
establishing cost
Purchase
2
N/A
Usage
3
Set price benefits for
loyal customers
Discount the price by
using customers’
mileage
Evaluation
Re-purchase
4
Price
Place
Make a Channel
expansion strategy that
considers locations of
plants and gas stations
Make a layout of gas
station that considers
movement way and
arrangement of
promotion materials
N/A Offer full services in
every channels(ex.
Every gas station can
offer to make a contract
renter car service)
Promotion
N/A Make a exposing
method that can promote
related services
Package service
promotion
Make a connection
between related services
Set point/mileage
linkages that can be
used through all services
N/A
Achieve price rationality
Price discount
Offer full service everywhere
Gas
station
Repair
shop
Renter
car
Same service everywhere
Loyal customers will receive benefits that discount
prices of SK Networks’ all services that is
operating right now and will operate in the future
Steady buying
Price benefits
Lock-in through customers’ all car life
When customers drop by any SK Networks
channels, they will receive the services that
include renter car, repair and etc..
2222
Agenda
1. Last session overview
2. Analysis of refueling market and SK Networks’ R&C in China
3. Strategy and Item selection for success in China Market
4. Explain of item
5. Marketing Strategies
6. Expected effects
2323
Expected Effects
If long term strategy works very well, we can expect synergy with other biz
group, improvement of profitability and have a base to east Asia marketSynergy with
other biz group
Synergy
with other
biz group
Profitability
improvement
Having a base to
east Asia market
Profitability Improvement
Having a base to east Asia market
Refueling biz is not profitable
but total car solution will give
SK Networks more profitable
biz portfolio
Synergy with SK shipping
- The amount of oil trading
which is transported to China
can realize the scale of
economics
Synergy with SK Energy
- SK Energy’s oil refinery
factory which built in China
can be a bridgehead to east
Asia market
To make channels that is near by other
countries, SK Networks can spread biz area
to east Asia
Entry countries will confirm by considering
the locations of petrochemical plants and
gas stations
End of Document
2525Industry Report of China Oil Refueling Industry, 2009, Kotra
Appendix
KSF and R&C in China market(Accessibility)*
KSF
(In China)
Accessibility
Price
Promotion
Etc(service,
quality, …)
Government
Regulation
A number of gas
station in China
(2009)
A number of gas station
each company plan to
build in near future
Exxon mobile 59 750
Shell 44 500
Total 18 300
BP 41 500
SK Networks 21 40
In terms of accessibility, all the competitors except Total get more accessibility than SKN.
To assess the accessibility, as market is not saturated yet, rather a number
of gas station than location is more effective index.
2626
Appendix
KSF and R&C in China market
KSF
(In China)
Accessibility
Price
Promotion
Etc(service,
quality, …)
Government
Regulation
a number of oil spot
that each company
invests
refinery factory which
located in China
Exxon mobile 131 O
Shell 97 O
Total 76 O
BP 144 O
SK Networks 43 O
A number of oil spot that each company invests is smallest of all. However, SKN also has one
refinery factory in China
To assess the competitive advantage of price, we analysis cost structure of
each company. Among cost structure, relationship with oil country and a
number of refinery factory which located in China is the most important
factors.
2727
Appendix
KSF and R&C in China market
KSF
(In China)
Accessibility
Price
Promotion
Etc(service,
quality, …)
Government
Regulation
The year that each of company enter
China market
Exxon mobile 1990’
Shell 1993’
Total 1993’
BP 1995’
SK Networks 2007’
Enterance year of SKN is latest of all.
In Promotion, as China’s refueling market is not mature yet, we give the
most emphasis to brand awareness.
2828“China’s gas station competition landscape”, www.opinet.com, newspapet script
Appendix
KSF and R&C in China market
KSF
(In China)
Accessibility
Price
Promotion
Etc(service,
quality, …)
Government
Regulation
Welcoming
service
Additional
Gift
Car
Clearning
Service
Quality
Exxon mobile O O O O
Shell O O O O
Total O O O O
BP O O O O
SK Networks O O O O
All the player provide basic service.
Service consists of welcoming sevice, additional gift, and car cleaning
service. In fact, there are no quality difference in quality.
2929
Appendix
KSF and R&C in China market
KSF
(In China)
Accessibility
Price
Promotion
Etc(service,
quality, …)
Government
Regulation
Shares of company Shares of Governmet
enterprise
Exxon mobile 48 52
Shell 43 57
Total 49 51
BP 48 52
SK Networks 100 0
First foreign refueling company who get the 100% shares in China
As shares of company affect the strategy that company trying to excute, to
get the independence of business, shares of company is really important.