※ Introduce team members

Haen-nim Na : Gyeongsang National University, Business administration, the sophomore year, 010-4445-6645, heyjudelaw@hanmail.net[ Kids have a lot of dreams. Also, I had many dreams. And president of hotel was always on the list of dreams. When I say I want to have my own business as a head of hotel, people used to laugh a lot. But who knows? I will begin my business from small guest house. The world is still big enough to build hotels. ]

Ho-seong Ryu : Gyeongsang National University, Business administration, the sophomore year, 010-5152-5313, hosung4229@hanmail.net[I will deeply participate in contest world on this occasion, I want make a ad that filled culture and values of various country. Then in the future,when making major step for advertising world, I want to be a person who join part of that.]

Su-jeong Em : Gyeongsang National University, Business administration, the sophomore year, 010-4474-0117, god9307@hanmail.net[•Acceptance Speech I could have learn a lot of things from contest that alone remain on my memory. Though I was awarded for lack of abilities, I will think that this prize means to develop myself hard. Thank you.•A Career Development Plan I am interested in the connection of cultural contents and marketing, managements. Especially, I am skilled in the photograph because I have pictured photo for 8 years. So I want to make my special abilities. Ultimately I hope to be a marketer who majoring in a market about the contents such as protection of intellectual property rights, photo copyrights and so on.]

Ho-jin Jeong : Gyeongsang National University, Business administration, the sophomore year, 010-6589-2156, myjung2156@naver.com[I Think that management is give a happiness for people. So I will try my best to educate refugees. And I will distribute happiness evenly every people in the world.]

Bo-na Huh : Gyeongsang National University, Business administration, the sophomore year, 010-2874-0507, bbbnhuh@hanmail.net[I plan to participate contest until I graduate university. I will gain experience and see more of the world through contest. And I will be intern at company. ]

※ Contents1. Introduction.............................................................................................6

1-1. What is Kakao Talk?......................................................................61-2 .No.1 Brand KakaoTalk..................................................................7

2. Main Subject............................................................................................92-1. KakaoTalk is Show Up!.................................................................9

(1) The Market State Of At the Time Of Release......................................9(2) KakaoTalk's Marketing Strategy.......................................................13(3) The results of the initial Marketing...................................................15

2-2. What makes KakaoTalk as the No.1.......................................16(1)Crisis and Weathering the Storms.....................................................16(2) Strategy of cemented first................................................................22(3) Summary of a key for first................................................................23

3. Conclusion...............................................................................................243-1 KakaoTalk’s present situation...................................................24

(1)The current mobile market effects to KakaoTalk...............................24(2)Strategy being prepared by KakaoTalk.............................................25(3) A New Threat to KaKaoTalk..............................................................26

3-2. Marketing Strategies Suggested by LM.................................28(1) Do Cause-Related Marketing............................................................28(2) Generating Concrete Revenue Models.............................................28(3) Consumers participating ad..............................................................29(4) Launching Kakao Talk PC version.....................................................30(5) Partial payment system is service....................................................30

4. Total Summary and Conclusions............................................314-1. KakaoTalk’s secret of no.1........................................................314-2. The lesson of study case...........................................................32

5. Appendix...................................................................................................33※ Impression of team................................................................................33※ Impressions...........................................................................................33※ Reference documents............................................................................34

1. Introduction1-1. What is Kakao Talk?

KakaoTalk is a global mobile messaging service provided by Kakao Co. Ltd

KakaoTalk was launched after a 3-month-development period on May 18, 2010 by Kim Bumsoo, chief of Kakao Co. Ltd , and 4 other developers. It is a Killer application, having tens of millions users. You can use it through iOS of Apple and Android devices. It provides several languages including Korean, English, Japanese and Spanish. This application can be downloaded free of charge from the Android Market or the Apple store. Kakao Co. Ltd, requested KakaoTalk for Blackberry, launched on Aug 12 2011 as Open beta.KakaoTalk reached 10 million users on Aril 1, earning the a badge of “The Nation’s top App”. It hit the jackpot a year after it was released.

After considering the growth rate, theyestimated they would have over 40 million users by the end of 2011. Currently KakaoTalk is popular through all over the world. It already has about 4 million foreign users among 20 million total counts.

<Picture 1> KakaoTalk Official Logo.

1-2 . No.1 Brand KakaoTalk.

Under the special feature of SNS service, direct communication, you might know it is popular or not through the number of users.

SNS service has a special feature direct communication. So, through a number of users you can determine if an application is popular or not.

Domestic smartphone users numbered over the 15 million in July 11 2011. Excluding about 4 million overseas users, 20% of KakaoTak’s ones, rougly 16 million KakaoTalk users are in South Korea. 15 million Koreans have got smart phones nowdays, which means that almost all the users use the application.

This evident number says that KakaoTalk is the No.1 mobile message service application.A service should become apart of the culture to guarantee

sustained popularity. It means that the service should be felt and seen in our daily life easily. That is, The No.1 brand means parts of our lives.

Koreans, as a nationality dislike outdated technology. The public interest in IT creats a boom in smartphone use and the boom makes new life styles. KakaoTalk is always mentioned on new trends list.

These are some examples which show that KakaoTalk has become the No.1 Brand and new culture.Young people used to say "Text me!" when they say goodbye but now they say "Send me KaTalk!" Also, they communicate through KakaoTalk instead of SMS service. In addition to young people, guide books for smartphones consider KakaoTalk as an essential application.

Now we can say that the kakaoTalk which appears in our daily life, changed from trend to culture.

<Graph 1>Growth Of Domestic Smartphone Users. <Graph 2>Estimated Number of domestic users

<Picture 2> KakaoTalk in the guide book for smartphones

The main reason that we choose KakaoTalk as a topic for the Made in Korea No.1 Brand is an appearance of new business model which has an infinite potential. The reason why KakaoTalk can be a new business model is that it has so many users. A large number of users will grow rapidly with growing smartphone market.Therefore, we can say definitely that KakaoTalk is the new business model and the 'KillerApp' which reorganizes the market.

2. Main Subject

2-1. KakaoTalk is Show Up!

(1) The Market State Of At the Time Of Release

1) Domestic and Foreign Smart Phone Market in 2010

‘Smart Phone’ has been regarded as a buzzword of the global IT market since 2009. Smart phone is optimized device to connect wireless internet & App Store. As time goes by, Smart phone has shown tremendous growth. In 2010, Worldwide sales of Smart phone are 285,500,000. And It is estimated that 507,770,000 in 2013.

The Domestic Smart phone market has begun in earnest when Apple’s iPhone was introduced in November 2009. 787,000 users were counted in January 2010. Considering the overall percentage of the M/S(Mobile Service) thanks to iPhone, KT’s users are much more than the others. (Because KT exclusively imported the iPhone)

<Graph #3> Worldwide Smart Phone Sales Trends (unit : ten thousand)

According to Coda Research Consultancy’s data which was announced in May 13, Smart phone sales are expected to reach 250,000,000 between 2010 to 2015.

As refer to above, Smart phone Sales are exponentially increased. So it was the best timing to KakaoTalk entering at the new market.

From now on, the application market will be bigger than before and it’s obvious that a hit of KakaoTalk’s was already expected.

2) Chances of Domestic Application Market

According to the Survey (that is about how to use the smart phone actual conditions) at that time, the functions that lots of smart phone user’s mainly used was internet (mobile web). Follwing ranks are listening the music, watching the video, using the GPS service.

According to above chart, When using the internet, people usually connected the optimized website in their smart phone. Mobile application was only 36%. It means there’s no working activitly in Korea as compare with apple’s marketing strategy. Because it was the beginning of smart phone’s introduction, many people are accustomed with using the PC internet.

However, If you notice those below charts (Frequency of Downloaded Mobile Applications), it shows many people downloaded mobile applications. Also, If there were useful applications, users said they would use more applications which are more comfortable and faster to access. But there are no useful applications, they just use mobile web.

<Graph #4> The State of Domestic Smart Phone users.(unit : ten thousand), (source : 3 Domestic major tele-communication firms, re-quote Hankook Ilbo.)

<Graph #5> The Route of Internet connecting via Smart Phone(source : 'Research about uses of smart phone' Korea Internet & Security Agency)

Whatever if there were lots of application or not, users just using web because they couldn’t find those applications well. Furthermore, spreads of the smart phone was getting faster, private operators, existing tele-communication firms, manufacturers and platform workers and so on are kicked off the competition of the App Store.

In this point, KakaoTalk found the competitive power. The smart phone users are increasing in numbers on the other hand, there were no enough applications that are favoring users.

KakaoTalk supposed to be the best application which is offering the most suitable functions to users.

3) A Propensity of Domestic Smart Phone Users.

Before check up on smart phone users’ propensity, We want to check up on which functions are mostly used by domestic mobile users. According to Trend Monitor who is specialty in marketing research, about 81.9% of domestic mobile users are utilizing message services. Because they thought the message is more convenience than to speak over the telephone.

<Graph #6> Frequency of Downloading Mobile Applications & Most Favored App Store.

These kind of propensities are not changed even they changed the mobile device to smart phone.

Examining the report announced by Pew Internet in 2010, Using of SMS is still heavy on total. This report searched all of the activities by cell phone except speech telephony the result is as follows table.

Through both reports, a result analyzed and adopted by KakaoTalk is as follows.

<Graph #7> Main Functions Used by Domestic Mobile Users

<Graph #8> Non-Voice Cell Phone Activities

KakaoTalk focused on SMS. And we have to fix our eyes on a red marked box in above [Non-Voice Cell Phone activities] Charts. The use of SMS reaches up to 72% by the way the use of App reaches only 29%. KakaoTalk started from this gap. Exchange SMS by using application, that is a KakaoTalk’s present feature.

(2) KakaoTalk's Marketing Strategy1) Get down to Marketing

Kim beom-su known developed Hangame and NHN takes over Iwilab with his junior Lee je-beom. They change company’s name into Kakao and start a new business in earnest. Kim beom-su transfers the represent and company’s management to Lee je-beom and become chairmen that invest 10 billion.

Then app store market has charm because smart phone market’s growth and internal iPhone’s introduction start in earnest but app which mobile-optimized was a small quantity. Lee je-beom thinks it was a successful timing, so targets mobile app market. Besides He knows that marketing isn’t everything. So he thinks that consumers want to get through smart phone. If he had not find consumer’s wants, he would be failed despite successful timing.

In those days, consumers’ –more used to PC rather than mobile- needs is ‘Information’. But mobile is different with PC so he think mobile’s needs. Then he reasoned that mobile’s meeds is ‘Communication’. And he divides ‘communication’ into three classes and makes a three app.

First, KakaoTalk for conversation with a friend. Second, KakaoChatter for conversation with the public. Third, KakaoHideout(combined wire-wireless service group communication app) for group communication.

KakaoTalk notices Twitter’s openness that central SNS fever. Twitter’s strong point is openness conversely Twitter’s weak point is openness, too. Deeper communication is hard. KakaoTalk focuses deeper communication. Mobile’s message that differs PC message is replaced by SMS. Kakao thinks that SMS is suitable for friend.

<Picture 3> KakaoHideout, KakaoChatter, KakaoTalk

2) National first KakaoTalk differentiated

Actually, free message is idea that focuses communication. But mobile messenger-What’s app- already exist in foreign app store. Now KakaoTalk’s feature is phone number connecting. But what’s app is already used phone number connecting. Then what’s app has many users by communication app and app user’s satisfaction is high level.

So, Kakao judges that KakaoTalk should provide a differentiated service. As a result, Kakao makes ‘Group Chatting’ function.(when Group chatting is the world’s first function, KakaoTalk released) Group chatting is possible when user is On-line state. But KakaoTalk thinks that smart phone user is always On-line state. It is used KakaoTalk. Consequently KakaoTalk can use anytime, anywhere.

And KakaoTalk receives attention as what’s app be a charge. When what’s app be a charge, internal smart phone users use KakaoTalk because KakaoTalk is free. KakaoTalk positioned user’s memory. As a result, KakaoTalk imprints consumer as the first internal free mobile messenger and leader. Recognition that KakaoTalk is first free mobile messenger serves as a momentum despite late starter’s appearance.

Many people should use app to the nature of communication app. KakaoTalk spread quickly dwing to communication app’s charater and free.

Besides, KakaoTalk quickly remedies a user’s grievance ‘hundred improvement project’ since market entry listens grievance and receives improvement, suggestion into service about 30000 opinions received for a month. One hundred opinion from users’ opinion reflect service.

A notable example is ’40 second voicemail’. “I went on a blind date. He catches my heart. But good night don’t contain my heart. Make method to tell my voice.” On a this request, KakaoTalk adds ’40 second voicemail’ function.

Then KakaoTalk adds function to letter size control for user who has bad sight propose. Also users that use free call function through different app demand free call. Kakao prepares free call service. This substance will handle 3-2 in detail.

KakaoTalk improves quality to user’s opinion reflect. Specially Kakao works hard user’s satisfaction. Through Kakao shows idea under consideration, proved developed function, released function to users. In other words, user’s think prosumer that participate production and consumption their selves. If Kakao should try, Kakao will develop prositively.

(3) The results of the initial Marketing

KakaoTalk’s users increase rapidly while KakaoTalk make an appearance in internal mobile market. That is unbelievable ripple effect. simply free and appropriate timing are difficult to explain. Internal smart phone users increase, KakaoTalk users increase too. In other words, smart phone sales is KakaoTalk’s new user.

KakaoTalk retains 10 million user after a year for iPhone from March 18, 2010. Kakao surprises that KakaoTalk is rapid growth.

In addition, KakaoTalk is not only install but that 80% of users used daily. In cace of news app, 30% of users who installed daily use. Rate of KakaoTalk rense is high. Lee je-beom management explained “because People always carry smart phone, and KakaoTalk is mobile messenger.” At that time a new member is about 50000 people per day, message number is about 200 million piece per day.

<Picture 4> hundred improvement project with users

2-2. What makes KakaoTalk as the No.1

(1)Crisis and Weathering the Storms

1) Internal Problems

① Does KakaoTalk Have Weak Security System?

The friends list of KakaoTalk is address book-based and shows everyone saved in the directory without exception. It gives personal information to everyone even if you do not intend to share that information. It's uncomfortable to think that the delivery man can access your private information.

Recently, the function "People you may know" has been showing its continuous harmful effects. One of them is Spam messages. Spammers add phone numbers randomly. Then they talk to people, sending spam messages. Even though KakaoTalk warned them of spam, you can see a lot people who have suffered from spam. Also, your information can leak because of this function. Although you can disable this

function, people concerned with privacy issues insist that showing phone number is an invasion of privacy, since phone number can be a key of leak.KakaoTalk announced that they are struggling to enhance its security system. They are

invested a great deal of money in a private security. They hope they will be able to help them set up a new surveillance team.

Also, People are worried about the data saving system, trait of text message, kept text

<Graph #9> Increasing number of subscribers graphs

messages when mobile phone was turned off. At this point, KakoTalk says that they are trying to cut the saving time.

② No Specific Profit Model.

Until now, KakaoTalk has provided its service. To survive in the market, KakaoTalk should make specific profit models. It can’t continue to be profitable unless it begins charging for its services or increasing its advertising revenue.

In mobile service area, Google’s mobile business profit model is good for Case-Study is organized as followed.Google intends to increase its users and sponsor advertisements for drawing the profits, providing its core sources for free to expand its platform instead of selling products: software and applications.

In other words, the key to the Google's mobile Business profit model is 'Advertising

revenue'. Usual mobile operators have made a profit by selling their products such as ringtones, games and applications at closed markets. But Google, which has struggled to expand its mobile advertising revenue, has taken a different direction that offers its core sources for free.

That is entirely different from ordinary mobile operators. Table 10 explains how much Google earned by taking their own way. It paved the way for Google's success. Now Google is trying to expand its business to Mobile Application Advertisement.

<Google’s Earning Structure> (단위: Million)

/year 2004 2005 2006 2007 2008Advertising Revenue

3,143.3(99%)

6,065.0(99%)

10,492.6(99%)

16,412.6(99%)

21,128.5(97%)

Other Revenue

45.9(1%)

73.6(1%)

112.3(1%)

181.4(1%)

667.1(3%)

Total Revenue

3,189.2(100%)

6,138.6(100%)

10,604.9(100%)

16,594.0(100%)

21,795.6(100%)

<Table #1>Google’s Earning Structure.

Like Google, KakaoTalk also provides its services for free. But there are weak points in KakaoTalk, like the absence of a specific sponsor advertisements and a profit model. Developers and a large number of people have made these points.

KakaoTalk is handling the problems for selling Gificon, a kind of gificons which is consigned by KT. It is the consignor, not in whole commission, and KT controls and manages all services. KaKaoTalk only takes few percent of revenue from Gifishow but it generates about 2 billion won per month.

Of course, though, 2 billion won per month is not super hit compared with its users, it is a

positive result that KakaoTalk,simple messenger application which is just a consignor, was able to make money.KakoTalk,made 2 billion won with simple interface without any banner, leads people to

expect that it will produce similar results.KakaoTalk also earns money through the ‘KakaoLink’ which links one application to another. Kakaolink divides profit through sharing results from a specific application and sending message to Kakaotalk.Though the profitability is low than KT Gifishow, KakaoTalk's users are growing more and more, considered that the user are attached to the messenger. Utilization of this service may be continue to increase infinitely.

2) Changes In The External Environment Around the KakaoTalk.

① -1The Advent of Competitive Latecomers,

Now everyone agrees that KakaoTalk is the No.1 application in the Mobile messenger service area.

So latecomers are coming out to become a post-kakaotalk or to beat the KakaoTalk. It means that for applications providers, which want to be the top of mobile service, KakaoTalk is the formidable foe.In Mobile Service market, dozens of applications appear and disappear but there are some applications which have a potential, providing a differentiated service. Among them, we are going to introduce simply promising applications: Mypeople from Daum and Navertalk from Naver.

<Picture 5>KakoTalk and Competitors

Daum introduced 'My people' to the market which has m-Volp function, a free phone call service, for the first time in South Korea. Daum guessed exactly what is was that people wanted. Daum also expressed confidence in m-Volp by advertising aimed at the competitor, KakaoTalk, as "Cacao can't talk". And it can help increase its users rapidly. (Though KakaoTalk

provides 40 seconds voice notes, it has no m-Volp function yet)And, it has the optimum condition to connect mobile and portal site. That advantage makes

an indefatigable growth in mobile market. After “Mypeople” launched in May 2010, it was noticed as a competitive application which secured 10 million users in July 2011.Naver Talk of Naver is an application that we can look forward to. We can expect growth of

Naver Talk from the fact that about 70% of national internet users. Though it is assumed that Naver Talk has about 4million in August, 2011, which is less than KakaoTalk and Mypeople, it is impressive that they are trying to bring users, such as offering free 50 messages each month to make people send messages to non-smartphone users. Growth of mobile messenger service depends on the number of users, so it is necessary to focus on these efforts. As the data transfer problem, which is caused by lack of KakaoTalk server occurs frequently,

and alternative application newcomer, KakaoTalk and Mypeople is getting more attention, it becomes difficult for KakaoTalk to ignore the newcomers. One may well say so but, it is not true that these competitors are copying KakaoTalk thoughtlessly. It is more likely that 'smart' users, who uses smartphones, only uses other applications according to their tastes because these competitors are competing fairly, arming with functions, which are distinct from other applications. Of course, comparing with KakaoTalk now, it is lacking in many respects, but it is possible

that large portal, such as Daum and Naver surpass KakaoTalk through vast amount of capital and technical efforts.

① -2 competitiveness of KakaoTalk against new competitors.

As mentioned above, newcomers of free messenger app are waging all-out war in order to catch up with KakaoTalk. Comparing with the early What's app, the advantage of group chatting, and the fact that it is free, which has been own competitive edge of KakaoTalk, is not its' own merit any more. This is because that all new free message app is offering these two services. However, few days ago, Cinet, a professional IT medium of the US, chose KakaoTalk as the top. What is the competitive edge about this? : more than 2500millions of users and the 100

improvement project The competitive edge through more than 25million users all over the world is network effect. The communication medium like messenger doesn't have much functions to differentiate. The important thing is how many friends you have. This is the biggest competitiveness of KakaoTalk, which has more than 25milllion users all over the world. Though this network effect is now competitiveness of KakaoTalk, it can be a deathtrap in the

future at the same time. As you can see from competitors such as Naver Talk or Facebook, these competitive services are new services, released using their existing users. Therefore, KakaoTalk should be prepared for this.

Also, another own competitiveness of KakaoTalk is close communication with the consumers. This means the 100 users' improvement project. 'Lamborghini project', which will bring advances in KakaoTalk, is an example of this.To put it briefly, this 'lamborghini project' is weight lightening of packet size, optimization of

push system, and performance improvement of back end system. Also, we can feel 20times higher speed than now. Rather than being too proud as number one and keeping status quo, staying a jump ahead

through feedback from consumers is differentiated competitiveness.

②-1 Conflict with Tele-Communication Firms over data and traffic problem.

As more than one hundred millions of messages a day, which are sent by KakaoTalk, Tele-Communication Firms are disputing with KakaoTalk over net neutrality, net overload problem, accusing KakaoTalk of encroaching mobile traffic. We first need to understand net neutrality.Actually, there is no need to talk about complex things about net neutrality because net is

neutral at first. Net businessmen has taken fees as a business or a consumer uses regardless of the kinds of service until now. Nevertheless, why do we need the term 'net neutrality'? This is the Charge system for Wireless Internet.

Net businessman A charges a service fee per second from user A. He also receives fee per bit over network traffic, which Internet server uses to provide the service. We also pay the difference over the usage of network between net businessmen. At large, we pay for the

<Picture 6> Charge structure of wireless internet

usage of network between countries. In all the areas that can be charged, the Tele-Communication Firms are getting making money compactly. Tele-Communication Firms are blaming services which cause net overload, but are not

suggesting reasonable alternatives. Looking closely at reports about net neutrality, no mention that Tele-Communication Firms are calling for additional charge to KakaoTalk. It is impossible to make sources over additional charges because they are already charging all the chargable fees from users and service companies. It is also impossible for a net businessman to charge a more net usage fee than other

companies only to KakaoTalk with partiality over the kinds of data. This is because it is impossible to distinguish the kinds of data and differentiate fees. Therefore, Tele-Communication Firms can't help but block the service to messenger service companies, such as KakaoTalk, or call for additional fees through urging them to help fund. KakaoTalk is being checked from huge net businessmen, such as Tele-Communication Firms.

② -2 A change in behavior of Tele-Communication Firms and overcoming crisis.

As mentioned above, early Tele-Communication Firms were moving to make a diversion of KakaoTalk, saying that KakaoTalk causes net overload and according to that, profit structure collapses through messages. For KakaoTalk, which exchage messages using the net of Tele-Communication Firms, it is a big crisis. However, the crisis has been overcome by a change in behavior of Tele-Communication

Firms rather than the change of KakaoTalk. The Tele-Communication Firm, which considered early regulation, released the commercial of

SKT saying "4G loves KakaoTalk, as they upgraded 3G to 4G. It seems that the Tele-Communication Firm accepted the user's need over free messages. Seeing the payment system of 4G in the part that the profit structure collapses due to the

free message, it seems that Tele-Communication Firms are now trying to make money through data, not texting. We can identify this through the article of payment system involving 4G a few days ago

saying "Besides LTE payment system, we released LTE data optional payment system considering various needs of consumers who would use LTE smart phone with priority given to data service." Also, it seems that they held consumers' hands as they releases free message app which is

called Olleh Talk a few days ago.

(2) Strategy of cemented first

KakaoTalk has maintained its top place since it was launched. It has become famous thanks to differentiated services from the competition's such as a group chatting that was introduced for the first time in the world and the function that enables to make a friend even though the

only one knows the other's phone number. It has started to dominate the commodity markets even if the company did not engage in promotional activities and advertise extensively. Ultimately, differentiation was the strategy that promoted the new product to customers. Then, KakaoTalk accepted the needs of users through 100 improvement projects continually. Also, people have been able to make and talk with friends anywhere in the world because the function of putting friends’ phone number through the phone dictionary has been applied to foreign friends

KakaoTalk has get ready to keep 2500 million users by succeeding speed improvement project called “ really fast bull project” that solves problems of connecting large network. The Blackberry version of KakaoTalk is the one among various strategies that make it keep the first grade. Now, the users of Blackberry version are left alone because most of mobile messengers are introducing I-phone and Android version. However, KakaoTalk that is in the first place are trying to establish a solid foothold by embracing the neglected users.

(3) Summary of a key for first

1) Understanding the needs of users correctly

It is natural that successful service satisfies the needs of customers, and KakaoTalk succeeded too through this strategy. KakaoTalk produced the function called group chatting as a countermeasure to resolve inconvenience that the existing users of smart phone had. Also, KakaoTalk has carried out various projects to improve services that users find uncomfortable. Not only this but it continually tries to understand the new needs of customers, and this is the secret of success.

2) Appropriate timing

If a baseball bat misses the timing to hit a baseball, it is difficult to hit a homerun. In addition, between man and woman, it is possible to become a couple when the timing to have a good feeling is timely. Like this, it is the timing that makes everything succeeds. When KakaoTalk was introduced at first, the mobile content market was undergoing a complete change and the only product, smart phone, was leaving. The service of KakaoTalk was very

<Picture 7> Add to friends for foreign country

similar to smart phone, and this means that smart phone and KakaoTalk cannot help sharing their growth. Thus, with the smart phone market is large and the number of new member increases, the users of KakaoTalk is growing.

3) Changes in consumer types

Consumer type has changed with network development. Consumers no longer rely on advertisements and do not buy stuff.

Get a primary source through the ad, secondary collect detailed information themselves. After that, they determine whether the product is really necessary for themselves. Even if not through the advertising, they sort beneficial information for themselves. They were peeled off out of the appearance of a passive consumer of the past.

Viral marketing is using this. It is the main reason to gain many users like this. Kakao Talk doesn’t do advertising. Nevertheless Kakao Talk started riding word of mouth by the internet community and various SNS. Then Kakao Talk was secure many users, this users are the foundation for latent users and was continued explosive growth.

So we know through this, Kakao Talk's technology is a great marketing strategy.

3. Conclusion

3-1 KakaoTalk’s present situation

(1)The current mobile market effects to KakaoTalk

KakaoTalk has the number one ranking in internal mobile messeger despite late starter’s -mypeople, navertalk- threat. But the present state of things are uneasy despite KakaoTalk’s user is 20 million. KakaoTalk don’t actively handle despite late starter’s new function. Meanwhile, SK Communications releases new mobile messenger “nateontalk”. nateontalk is late starter too. But if nateontalk and nateon-be known national online messenger – are connected, nateontalk would threaten KakaoTalk. But SK Communications’ online service is hacked into and personal information of 35million pill. Nateon users disappoint in spite of large site. And they feel uneasy. They think that mobile service will be hacked into. SK Communications said leaked numbers are encrypted, but they lose confidence. Nateon users prepare lawsuit, express their anger.

This situation is chance to KakaoTalk. KakaoTalk learn a good lesson form Nateontalk that potential competitors are likely to grow. KakaoTalk should check as aforementioned KakaoTalk’s security problem as aforementioned. In spite of SK Communications is hacked into people use nateon. There is no substitute. If KakaoTalk penetrates this point, KakaoTalk will attract users. Failure to same type of business will be chance, but same type of business will be sink into a swamp of stagnation. At this point of time if KakaoTalk develop substitution, this point will be a chance.

(2)Strategy being prepared by KakaoTalk

1) Overseas expansion

Kakao pay attention to foreign user. KakaoTalk that 4 billion people-20% of the user- attract without public relation, marketing expects great accomplishment to verseas expension in earnest First, Kakao establish KakaoJapan incorporated in Japan. Kakao said “Japan users are active. They make KakaoTalk friend search website and Kakao profile app. Kakao judge Japan that messenger market is formation process. So KakaoJapan’s goal is expanding lacal customer.” Really before KakaoJapan is made, KakaoTalk accomplish the role of emergency communications when earthquake hit and all wired and wireless networks went dead in March. So KakaoTalk is introduced America daily Wall Street Journal. Then the Spanish version of website and QNA services are opened for Latin America market that 3G communications network spread. Kakao expect international user increase through Spanish version KakaoTalk.

2) No charge call

KakaoTalk never introduce no charge call when first no charge call appear. But Kakao announces no charge call to develop lately. “It is KakaoTalk user desired function to announce no charge call develop. KakaoTalk adds 100 kinds of features. M-VoIP is one of them.” Kakao explained. But, Kakao said “no charge call doesn’t add at KakaoTalk. When no charge call adds KakaoTalk to KakaoTalk is heavy. KakaoCall- separate voice call app- to creat or exist free voice call connect KakaoTalk.” Kakao seems to develop no charge call that Kakao and consumers satisfy

(3) A New Threat to KaKaoTalk

Facebook, Expands its business to messenger service

Facebook bought a new-born company Beluga in early 2011. Beluga is a company which provides group chatting service, using Facebook account through iphone. Beluga announced officially that they are going to make a new mobile group message service application as a part of Facebook. It is easy to expect that Facebook will provide messeage service on smart phone. And it launched mobile text message application 'Facebook Messenger'.

<Graph #11> KakaoTalk regional percentage of users

<Graph #12> KakaoTalk foreign country the percentage of users

Facebook Messenger application is not connected with Facebook Application. It is only focus on text message service. When you open the application, it brings previous messages.

The special feature of the application is that it has not address list on it. And the best point is the connection between mobile and website. Therefore, when you send messages by phone, the other can answer on the website.

Also, it can send messages from smart-phones to feature phones. The user of feature phone will receive messages as text messages.

Lee Je-Beom, head of Kakao Co, already said that " Facebook is the rival of KakaoTalk"He wants to make kakaoTalk as a social hub and he thinks that Facebook is going to go on

the race. Now the real competition will begin. And what are we going to see? The biggest difference between KakaoTalk and Facebook messenger is accessibility. KaKaoTalk can talk with people who have smart-phone only. But Facebook messenger can

talk with everyone from Facebook. So we can say that Facebook has more accessible than KakaoTalk

And KakaoTalk is the biggest free message application, which 20 million is using in South Korea. A communication occurs from person-to-person. In Korea they have enough users to keep its service. Also, they do not seem to move to Facebook messenger.But the fact that KakaoTalk worried is the affect, which Facebook has in the world. In Korea,

KakoTalk already has many users but overseas markets are still unstable.We can imagine that Facebook, used by billion users, will make a big network effect. It

means that it can be a obstacle to KakoTalk, which trying to expand its business to the world. Thus, KakaoTalk should deal with it.3-2. Marketing Strategies Suggested by LM

(1) Do Cause-Related Marketing

<Picture 8> Facebook messenger

“Constructing ‘Kind’ Brand Images by Cause-Related Marketing”

We want to suggest a ‘kind’ marketing way according to modern marketing trends and that way is pointed from the application’s name ‘Kakao’. KakaoTalk’s the biggest competitive power is an exorbitant amount of users. Repeatedly saying, KakaoTalk is planning to attract more than 10 million users up to 1 billion. In this point We thought that ‘Reserving 1 KRW per 1 new member’ System would be good to construct ‘kind’ brand images. If the reserve is saved up to 1,000,000 KRW, then donate it to Ghana’s kakao farm in the name of KakaoTalk. Donating the reserve saved from ad expenses, KakaoTalk would construct brand images such a not commercial but moral and humanistic. Then Finally, It would be helpful for KakaoTalk to get positive effects in the world market.

(2) Generating Concrete Revenue Models

“Have Relation with Game Industry”

To survive as a free application, KakaoTalk have to make a concrete revenue model. Because it spends high cost to keep this application. Even this application market being more bigger and bigger. (We already told that KakaoTalk bringing in 100 servers every months. It also needs many expenses.) Kim Beom-Su, a chairman of KakaoTalk, had been worked as a representative of ‘HanGame’ before founded KakaoTalk. ‘HanGame’ was a pioneer who leads the game trends on PC On-line. So Nexon and NCSoft who are a.k.a. game companies promised Kim to support KakaoTalk in financial because Kim has career in these. So LM expect to it would be great and safe revenue model. The Union that is composed of Kim, who has know-how in web based game, and the Nexon and NCSoft, two typical PC game companies are really expected. For example, play games with friends who are added in my KakaoTalk. KakaoTalk is a beginner as a messenger application who has a highly skilled group chat. If not staying at one to one games (cf. one to one game is regarded as mobile game’s limit), develop such games that could be played by many to many it will be great competitive revenue model. At the time of release, offer the game free like Beta service of PC On-line game and charges gradually, it will be much more acceptable to users of course.

(3) Consumers participating ad

<Graph #13> SNS advertising market worldwide sales forecast

SNS advertising market worldwide sales forecast

One of the most attractive SNS service's revenue models is advertising. Most SNS company make profits through the ad. We can see to the Facebook case. Facebook earned $ 1.86 billion in 2010, with advertising. Facebook attached importance to the number of members, they entered into advertising business, when it reached a stable number of members.

KakaoTalk has established same strategy. Chairman of Kakao said that don’t make revenue model like advertising business for a while. Securing a number of members is important first.

After that, Facebook launched a consumer-oriented participative advertising. So, if KakaoTalk is start advertising business in the future, we think that consumers participating ad would be nice like Facebook case.

But PC and mobile environment is different. To propose especially appropriate environment for KakaoTalk, KakaoTalk creates an account to the companies which want advertising and then Kakao Talk receives the corresponding value for the account.

Then the companies which have an account on it would be promoted and run a variety of event, like the Twitter currently being used on a lot of publicity. For more detail example, to promote their companies, the prize is paid by lot to some of the people who add companies account to a friend for a certain period of time, or there will be an random quiz event,But there is one problem. If events proceed in this way, the companies have many users

who add the company to friends, this users can create chat room to company. This might be a good point, but this can occur to traffic problems. In addition, companies

can not treat users one by one. Then ad. impact doesn’t work on the companies which paid on the ad. These problems can be resolved by the way KakaoTalk blocks users from applying chat

toward company or create an account for a period of time available,. There may arise one wonder. Why the companies bother to buy the account and pay to the

advertisers? It is free that companies hire people to promote, using his or her account. This can be solved by the way KakaoTalk handle the accounts directly, and pop up the company in the friend recommendation, or if they provide special services unlike a regular user's account, the reason for the existence of advertising rate would have validity. Literally providing account for advertisement.

Consumers participating advertising is beneficial forms of advertising to both consumer and company. If KakaoTalk has introduced these systems, we are sure that it will be helpful to its revenue structure.

<Picture 9> Example of participating ad

(4) Launching Kakao Talk PC version

Kakao Talk PC version does not currently provide services. However, the interest is hot in the PC version of Kakao Talk. In fact, a phishing site impersonates Kakao Talk PC version has even appeared. Phishing

sites, "Kakao Talk PC version has been released to celebrate launch of cultural vouchers will be paid 11,000 won" and using this has to enter phone number, social security number, certification number from users, then they steal 11,000won as retail payment. For about this immediately Kakao Talk had announcements through the home page. "Currently Kakao Talk is only available in the form of an application. In addition, applications in the 'Gift' feature, do not take advantage of payment is otherwise. However, already many people have been found to be a phishing victim. I'm sorry to those

who suffered the damage, but through this event many people waiting for the KakaoTalk PC version you can see that. And as noted above, when this hack on Nate shaken by events KakaoTalk PC version will be

able to consolidate this position in the mobile as well as the PC.

(5) Partial payment system is service

Most of the Internet games or portal sites were conducted partial payment system. Because the easiest, simplest way to make money. It is true that tempting to KakaoTalk without revenue model. Therefore, the rumors occurred constantly about KakaoTalk adopted payment system. But one of the reasons of popularity of KakaoTalk is because it’s free app unlike WhatsApp. Therefore, to adopt sudden payment system is maybe users feel much of the antipathy. So, partial payment system must be progressed with the addition of new service. The

simplest way is to sell the ring, font of message. These can be obtained through the little revenue. Many modern people are investing to differentiate themselves with others. And people think to itself their own smartphone, they are always in hand, smartphone into the KakaoTalk. We expect that little drops of water make the mighty ocean.

4. Total Summary and Conclusions

4-1. KakaoTalk’s secret of no.1

Strength

Preoccupancy of market Support various multi-functional Partnerships with various

companies

Weakness

Lack of revenue mode Continue deficit

Opportunity

Growing smartphone market Appearance of 4G

Threat

Growing traffic overload Opposition between the mobile

carrier and KakaoTalk Appearance of competing apps

Secret of success of Kakaotalk is three. That is speed, flexibility and timing. "We need now what? Speed!"(Famous advertising copy in the Korea), rapidly penetrate the market with to develop an advanced like this copy, and then now KakaoTalk have 25million users. Also If users complain to company or suggest requirements, they respond to most efficient way according to situation. Operation of a flexible organizational structure had made to the user's needs and wants are quickly identified. This is the main reason that they continue to use KakaoTalk and come to a love-mark of users. We cannot deny that the initial success factor of Kakaotalk is 'timing'. Using this, they were positioned as no.1. However, paradoxically, 'timing' may become a failure point. Latecomers were threatening KakaoTalk to characteristic technology and competitive power. Now if KakaoTalk mistimed to change new attitude, KakaoTalk will fall behind in the mobile market which has a sudden change nature. Therefore, KakaoTalk has to constantly contact to users in order to lose their position. And don't neglect that latecomers assert various feature and new strategy, has to push ahead continuous R & D inside the KakaoTalk.

4-2. The lesson of study case

Be person having sense.Base of the base. The sense of checking market trends. If you must be good to base in

every work, you will get more. Easy to say, you must have noticed. KakaoTalk’s these feelings raised in their current position. Kakao don’t speak, but has noticed.

Currently market is fickle and poured a myriad of information. Therefore if you have not noticed, you can be disappeared in the market. Likewise human relationship is too, no matter what do any business, checking the situation sense is very important.

So, when we proceed with any project, we have to sense of timing and to understand exactly the situation of the market, we learned while studying about KakaoTalk.

<Table #2> SWOT analysis of KakaoTalk

In this sense, but they also gifted, we study steadily emerging companies like

KakaoTalk, and many no.1 companies that currently exsist, Someday we will be able to get this feeling, we think.

Thus, the biggest lesson from KakaoTalk is that people who have good sense only will be to survive in the future society.

Communication with consumers constantly, and customers are encouraged to participate.

All products being used by consumers, and consumer feedback is significant role in the continuing evolution of the product. KakaoTalk's 100kinds of project to improve is not a simple review of user, it is included means of be developed together. This project is not developer's unilateral application. This project could be drawing more attention and affection because from that with me. Applications that reflect my opinion, it can be made loyalty for application to users. No

matter what business, go out to listen to the voice of the customer is a more effective way, better than we are sitting in the office and meeting all day.

5. Appendix

※ Impression of team

Actually we did not expect because results is so deficient. When we heard news that we take a prize, it so embarrassed, but feels so good. But after seeing the other team's presentations, we realized once again that we are still lacking. It would be a good lesson clear. It was an opportunity to learn many things and it was a memorable contest. Watching the other teams who did presentation to spread a passion, we reflect that

passion has lacked a little bit more. If we participate other contest, we will be preparing be able to can only feel our passion like other teams we watched.

※ Impressions[Haen- nim Na] This is my first contest in my life. I thought a lot how the No.1 brand be made. Step forward father than others and Thinking of a good idea are the key of the sucess. The simple application changed the nation's trend and now it is trying to chage the world. I was able to see that the small difference made big results. I think I will be able to explain about KakoTalk to others very well.

[Ho-seong Ryu]I'm interested the marketing, then I read various book about marketing. But so

difficult that, try to apply to real-world examples as marketing strategies which I learned in the class and read book. I will practice to connect real-world examples and marketing strategies taking this opportunity.

I am written in my heart challenging and sense that I was learned while studying KakaoTalk.

[Su-jeong Em]If I didn’t participate in this contest, I wouldn’t learn about KakaoTalk’s history,

marketing strategies and their future plans. Maybe that’s all that I was just a user of KakaoTalk. An Application that I use everyday has made by a corporation’s lots of fails and repeated challenge, And Someone’s sparkling idea has became a hit application that used by 10 million. All these facts boggles my mind. Researching the mobile market that is emerged recently, I feel ashamed because of my ignorance about the emerging market. Anyway, researching the beginner, KakaoTalk, I satisfied that I could make my eyes opened to look ahead into the future. Lastly the whole researching process was pleasant and helpful for me. [Ho-jin Jeong]

As mentioned above, we can recognize that high technical skills itself was the best marketing strategy. Through this example, we can feel the greatness and dignity of smart phone. It was surprising that the structure was changed which made items with years of research and made money with marketing. Now, the new structure produces about 1400 million users in a year. Through this, I thought that it is really great and university students who learn about business administration are able to do it. This successful example can give a hope to many unemployed people who are busy cultivating special qualification in today’s worlds when employment though personal connection still exists. Therefore, we hope that many people not only have a job but make their own way in various ways through the example of KakaoTalk.

[Bo-na Huh]

Select the first contest and I thought l’d easily proceed. But I little read in KakaoTalk. Time fairly raced by. I leaf through a book that study Marketing elements. Maybe I will interest KakaoTalk’s acitivity.

※ Reference documents

〔A thesis〕

권기덕, 임태윤, 최우석, 박성배, 오동현(2010), "스마트폰이 열어가는 미래" ,삼성경제연구소

유지은(2008), "차세대 킬러앱 - SNS", 정책연구센터@한국소프트웨어 진흥원

〔Book〕

ATLAS Mobile Index(정기간행물)김병희(2011), “문화산업의 콘텐츠”, 한경사

데이비드 커크패트릭(2010), “페이스북 이펙트”, 에이콘출판주식회사

최재용 외 8 인(2010), “모든길은 SNS 로 통한다”, 비즈콜라(니카)

〔Internet data〕

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Korea creative content agency. www.kocca.kr/Korea internet security agency. http://www.kisa.kr