People are waiting in lines from early in the morning to get the Ready-Bags.
/Photo courtesy of a reader of The Korea Herald
Competition for “goods marketing” in the retail industry is hot these days. “Goods” generally refers to “limited edition gifts,” which are released by a certain brand or celebrity during event periods, and cannot be bought anytime or anywhere. “Goods marketing” is a combination of “goods” and “marketing,” which refers to marketing techniques using products that enhance the marketing effect of the main product by selling goods or providing them as a free gift. Companies use attractive goods to induce customers to buy their products. Those who are the main targets of goods struggle to purchase products related to their favorite fields. They are recognized for their role as special consumers in special markets and as experts in developing new markets these days.
The era of the “Goods Economy” has arrived
Goods marketing originally started with K-pop star goods. Recently, more and more consumers are looking for products with brand identity that are worthy of collection. Thus goods marketing aimed at them continues, especially in the retail industry. The era of the so-called “goods economy” has arrived, where goods, which used to be a marketing tool, have expanded their scope, generating profits and driving sales as a single product itself. According to the Korea Creative Content Agency (KOCCA) and retail industries, the goods market is expected to grow up to 200 billion won this year. Recently, in the markets, goods offered as gifts or souvenirs are attracting consumers’ attention rather than their original products such as coffee and bread. In particular, the coffee shop market is the place where the competition for goods marketing is the fiercest.
Starbucks goods marketing : Ready-Bag event
Starbucks’ “Summer Ready-Bag” has made the goods marketing issue spark again. Starbucks kicked off a summer promotional event to give limited editions of goods to customers under its “e-frequency” rewards program from May 21st to July 22nd. The event offered the summer limited edition traveling bag named “Ready-Bag” to customers who purchased 17 drinks including three seasonal ones. Starbucks’ summer goods, Ready-Bag and Summer Chair, became an issue due to the lack of stock, causing a long line of customers to buy the goods at each branch.
These are some problems raised by the Starbucks Ready-Bag event
The e-frequency event was widely spread through SNS as soon as it began, and it became a sensation with people posting photos of the goods they received on their SNS. Notably, Chung Yong-jin, Shinsegae Vice Chairman, uploaded the summer chair and the Ready-Bag on his SNS, and it became a hot issue. During the marketing period, long waiting lines continued from dawn, and disputes between customers waiting in line frequently occurred. Starbucks’ season frequency events have always resulted in an out of stock crisis, but this year it seemed to be especially overheated, causing a series of complaints from customers.
The problem began when people used various tricks to get the goods. In late May, one customer purchased 300 cups of coffee at once at a Starbucks branch in Seoul’s financial district of Yeouido. The person took only one cup of coffee, snatching 17 summer bags. It caused an uproar as the 299 cups of coffee left behind that day had to be discarded. The ridiculous purchase of such a large amount of coffee that was consumed only to get the summer bags led to a flurry of criticism toward Starbucks.
Furthermore, not only tips on buying 17 drinks at once at the lowest price were shared on SNS, but also many resellers, selling goods for a higher price on local secondhand marketplace sites and applications, showed up. By collecting all the frequencies, it orginally costs about 70,000 won, but the pink readyBag, which was sold out nationwide on June 29th, was sold at around 100,000 won on secondhand marketplace sites. In response to the criticism, Starbucks decided to limit the number of purchases to one at a time. As such, various abnormal purchase methods often led other people to the failure to receive goods even if the conditions of benefits were met. These problems made some consumers angry, and they filed complaints with the Fair Trade Commission (FTC) and the Korea Consumer Agency (KCA).
Hwang Hyun, a senior of Department of Industrial and Systems Engineering, said, “Companies believe that this kind of marketing approach will stimulate consumers’ desires to buy and lead to an increase in sales.” He added, “However, these marketing approaches are creating some abnormal consumers and many other consumers are suffering from them. Companies must think over these problems and strive to create events where all consumers can participate normally.”
There are various opinions regarding Starbucks goods marketing
Opinions from the consumers are also divided over the phenomenon. Critics said it was a “successful marketing” considering the effect of “increasing coffee sales by holding events that would draw attention,” while others criticized the company for encouraging hoarding and reselling. A customer (woman, 23) who succeeded in getting the Ready-Bag, remarked, “I think Starbucks’ coffee sales have actually gone up a lot because of the Starbucks Ready-Bag event. I went earlier to Starbucks and visited much more often than usual only to get this Ready-Bag. For these reasons, I think the Starbucks’ Ready-Bag event came out to be a successful marketing strategy. I was satisfied with the Ready-Bag I got and I am willing to continously apply for the next upcoming ‘e-frequency’ events.”
Amid this situation, the National Assembly also pointed out that the marketing of Summer Ready-Bag gifts, which caused a short supply, is unfair. At a plenary session of the National Policy Committee of the National Assembly on July 28th, Min Hyung-bae, an assemblyman belonging to the Minju Party, urged the Fair Trade Commission (FTC) to investigate whether Starbucks’ gift-giving event violated the Fair Trade Act, pointing out that there were too many cases where customers who met all the conditions for receiving gifts did not get to receive them. He also mentioned that consumers are suffering from excessive marketings and remarked that the FTC should investigate and correct unfair practices. In response, Cho Sungok, Chairman of the FTC, said that they would monitor how the actual inspection or unfair practices were carried out. According to the FTC’s notice, when offering goods, the event period and the number of people on a first-come, firstserved basis should be specified. The legal profession referred to the event’s possibility of violation of fair trade laws, mentioning that the Starbucks ReadyBag event could correspond to the act of “unfairly enticing or forcing competitors’ customers to do business with them” and that the phrase “can be sold out early on a first-come, first-served basis” could not be an exemption as well.
Meanwhile, experts have pointed out that if supplementary measures are not properly prepared for the sales of free gifts at Starbucks, which has already been repeated for the last several years, these kinds of goods marketings could consequently turn out to be counterproductive.
After the Starbucks’ Ready-Bag event, other coffee shops’ goods marketing such as Hollys Coffee’s “Multi-Folding cart,” Coffee Beans’ “Bare Brick” and Dunkin Donuts’ “Folding Boxes” also caused a huge sensation. The reason why goods gather more attention than the original products in the coffee market is because of their rarity. One motivation that drives people to hoard limited-edition merchandises is the fear that the promotional period is the only time that they can purchase the items. In addition, unlike the goods in the past, which used to be known as “gift equals to low quality,” the latest goods are of high quality just like the ones sold on the market. Furthermore, the investment sentiment that raising the price and reselling it can make more money and the trend of retaliatory consumption due to the prolonged COVID-19 also seem to contribute to it. Goods marketing has an expectation effect that can lead to consumers’ positive attitudes toward the brand as it can enhance consumers’ happiness while providing them with unique enjoyment as well as satisfying their desires to make collections of goods in their favorite fields. However, it can lead to unfair situations such as the Starbucks Ready-Bag incident. A legitimate goods marketing culture that does not violate the Fair Trade Act should be created.
Kwon Min-jeong firstname.lastname@example.org
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