[비즈한국] The chicken industry is pouring effort into ‘star marketing’ to open the tightly shut wallets of consumers. Since last year, brands have been racing to hire top stars as advertising models to compete. Some experts raise concerns that as the consumption environment has changed significantly from the past, when star marketing was a guaranteed recipe for success, it may not be as effective in boosting sales.
Polarization of the Chicken Market, Fiercer Advertising Competition Among ‘Second-Tier’ Brands
Puradak Chicken recently appointed singer IU as its brand model. The company plans to release a new advertising campaign featuring IU sometime in February. Previously, Puradak Chicken had signed actress Go Youn-jung as its brand model in January of last year.
Although the new campaign has yet to be released, anticipation regarding the "model effect" is already growing among franchise owners. One franchisee stated, "Although we haven't started the advertising yet, so it hasn't directly led to sales, there is a strong expectation that the model will boost revenue. These days, as franchisees are going through such a difficult time, isn't the head office putting effort into star marketing to promote sales?"
A representative from Idus F&B, which operates Puradak Chicken, explained, "The appointment of IU as a model is part of our marketing activities to promote franchise sales in celebration of the brand's 10th anniversary."
Competition in the chicken market is becoming increasingly intense. In particular, the competition is intensifying among the so-called ‘second-tier market’—brands with annual sales between 100 billion and 200 billion won—rather than the top-tier brands like bhc, Kyochon Chicken, and BBQ. Puradak Chicken, 60-Chicken, Goobne Chicken, Norang Tongdak, and Cheogajip Seasoned Chicken were found to have higher advertising expenses relative to sales compared to the top-tier brands.
As of 2023, brands that generated over 400 billion won in annual sales were bhc (535.6 billion won), BBQ (476.5 billion won), and Kyochon Chicken (444.9 billion won). bhc spent 7.3 billion won on annual advertising, BBQ spent 14.1 billion won, and Kyochon Chicken spent 8.8 billion won. The ratio of advertising expenses to sales remained at the 1–2% level, with bhc at 1.36%, BBQ at 2.96%, and Kyochon Chicken at 1.98%.
On the other hand, the advertising-to-sales ratio for second-tier brands spikes up to 7%. Goobne Chicken (GN Food) recorded 282.4 billion won in annual sales in 2023 and spent 12.2 billion won on advertising, reaching 4.32%. Cheogajip Seasoned Chicken (Korea 153) also generated 223.8 billion won in sales during the same period and spent 8.6 billion won (3.84%) on advertising.
Jang's Food, which operates 60-Chicken, recorded 150.1 billion won in sales in 2023 and spent 11.1 billion won on advertising. Their advertising-to-sales ratio reached a staggering 7.4%. Idus F&B, which operates Puradak Chicken, also saw its ratio reach 5.85%, with 140.1 billion won in annual sales and 8.2 billion won in advertising expenses during the same period.
Seo Yong-gu, a professor of business administration at Sookmyung Women's University, explained, "As the chicken market polarizes, the gap between the first-tier and second-tier markets is widening. Companies in the second-tier market have no choice but to pour larger amounts into advertising and marketing for survival."
The Deeper the Recession, the More Focus on ‘Star Marketing’… May Burden Franchisees and Consumers
Marketing competition in the chicken industry is expected to intensify further. Last year, bhc and BBQ both changed their advertising models. bhc replaced actress Jun Ji-hyun with actor Hwang Jung-min after 10 years and also hired national table tennis player Shin Yu-bin as a new model. BBQ hired actor Byun Yo-han. After the contract with actress Kim Yoo-jung ended in December 2023, they did not hire a new model for about a year before selecting a new one.
Norang Tongdak appointed actor Cha Eun-woo as its model last October. Previously, they had used actors Yoo Hae-jin and Ma Dong-seok as models. Kyochon Chicken made headlines by hiring a celebrity advertising model for the first time in 9 years. Kyochon Chicken appointed actor Byeon Woo-seok last October. This is the first time they have hired a celebrity model since 2015 (actor Lee Min-ho).
Lee Eun-hee, a professor of consumer science at Inha University, analyzed, "In a situation where market competition is intensifying and the recession is becoming prolonged, consumers are keeping their wallets shut even tighter. A company's aggressive approach to star marketing is one way to increase consumer attention in a competitive market. As advertising costs increase due to star marketing, there is a possibility of rising sales, so everyone is jumping into the fray of spending on ads."
However, there are also doubts about the effectiveness of star marketing. Professor Seo Yong-gu pointed out, "As the economic downturn continues, companies have brought back star marketing, which has had success stories in the past. However, the overall social atmosphere is not good right now. It is unclear whether the old formula for success will still work today."
There is also criticism that overheated star marketing could inadvertently shift the burden onto franchisees and consumers. Since the chicken industry typically has a structure where advertising and marketing costs are shared between the franchisees and the head office, the burden of multi-billion won advertising costs can fall on store owners. This is why franchisees worry that their advertising cost burden grows every time the model changes. There are also concerns that franchise headquarters might incorporate these marketing costs into product prices, ultimately only increasing the burden on consumers.
Professor Lee Eun-hee remarked, "If a company’s advertising cost burden increases, it inevitably leads to price hikes for products. This is a time when consumers need to make smarter consumption choices. They should avoid purchasing products without careful comparison simply because there is a prominent product or model."