Experts suggest that to succeed in a struggling retail industry—where recession-driven consumer hesitancy, high inflation, and rising interest rates pose significant challenges—brands must cultivate a loyal 1% customer base and establish a compelling brand identity that encourages spending.
On Tuesday, at the 39th Retail Committee meeting of the Korean Chamber of Commerce and Industry, Professor Kim Byung Kyu from Yonsei University’s Business School highlighted key strategies for revitalizing consumer spending. During economic downturns, securing a loyal customer base is crucial for brand survival,” he stated.
Over 40 industry leaders attended the meeting, including Jeong Jun Ho, Chair of the Retail Committee, and Park Il Jun, executive vice president of the Chamber. Other attendees included CEOs from major companies such as Park Jin Sun of Sempio Foods Co., Lee Jay Hoon of Yuhan-Kimberly, and Lee Jong Ho of Alpha Co., Ltd.
Professor Kim stressed the importance of “Fan Brands,” stressing that winning over just 1% of customers can lead to winning over the remaining 99%. He argued that targeting a specific group to cultivate a dedicated following is far more effective than broad-based marketing.
He highlighted that the target customer group should be a socially admired elite group, citing Tesla as an example. He noted how the company initially marketed to young, wealthy Silicon Valley residents, creating a devoted following that ultimately established Tesla as an aspirational brand among the general public.
Kim emphasized the significance of strong visual symbols that stimulate identity-driven consumption. He explained that once a brand secures its core 1% fandom and becomes coveted, a distinctive logo helps consumers feel a sense of identity when purchasing that brand.
Apple serves as a prime example of this strategy. Its iconic bitten apple logo has generated consumer enthusiasm for Apple products. This phenomenon aligns with the preference for luxury items that prominently display brand logos.
Analyzing trends in the Korean market, Kim cited a July Deloitte survey that found that Korean consumers spent about 80,000 KRW (approximately $55) per month on identity-driven purchases, compared to American consumers, who spent about 60,000 KRW ($41). This indicates that Korean consumers are more inclined to express their identity through brand purchases.
Kim noted a key difference in branding strategies: “European companies prioritize strong visual elements when creating a brand, while Korean companies tend to focus solely on the brand name.” He advised that brands should strategically utilize logos, colors, and design elements to enhance brand recognition and emotional appeal.