What makes KINTEX be a successful exhibition center? - IAEE

Case Study
Marketing as Strategy:
What makes KINTEX be a successful exhibition
center?
Lee, Hyoung Joo
Manager, Korea Boat Show Team

Executive Summary
This case study shows how KINTEX has achieved its success through marketing activities just for 3 years after its opening.
Traditionally 4p (product, pricing, place and promotion) was regarded as useful tactics for implementing marketing activities.
However, 4p was very limited to short-term based marketing strategies and also it is not focused on customer’s value but
provider’s products and services. Therefore, this case study used Dr. Kumar’s 3 Values management model. Dr. Kumar, a
marketing professor of London Business School, proposed that marketing should be on CEO’s top agenda. So marketing
should focus on strategic segment, providing solution, market-driving, and corporate marketing. This could be achievable
through developing 3 Values – Valued Customers, Value Proposition and Value Network. So the KINTEX case is based on
Dr. Kumar’s 3Vs model.
1. Valued Customer – Who to serve?
Big 7 show organizers
KINTEX did not target every customer because KINTEX knew that it needs different segmentation based on valued
customers. KINTEX targeted exhibitions over 20,000m 2 and discussed with key organizers- Korea Machinery Fair, Korea
Electronics Show, Seoul Food Show, Seoul Motor Show, Seoul International Machine Tool Show, Kyunghyang Housing Fair
and G-Star Game Show.
Governments
KINTEX was invested by 3 national and local Korean governments – KOTRA (Korea Trade & Promotion Agency),
Gyeonggi province and Goyang city. So these 3 investors are stakeholders and customers as well. KOTRA wants KINTEX to
develop international exhibitions also KINTEX needs KOTRA to attract more overseas buyers and investors to tradeshows.
Gyeonggi province is the biggest local government in Korea so it needs to attract many firms to its area, which let tradeshows
and conference be more important. Goyang city provided its land space to KINTEX because it needs international exhibition
center for positioning one of global cities worldwide.
2. Value Proposition – What to offer?
Co-location of similar-purposed exhibitions
The offerings to target customer reveals differences between other competitors. KINTEX could co-locate similar purposed
exhibitions and also gather related exhibitions and conventions for making synergy effects. For example, KINTEX used
co-locating marketing policies for attracting the Seoul Food Show. KINTEX recognized that foods should be related with
packaging technology for saving and selling in markets. Therefore, KINTEX proposed the co-locating exhibition to Food
show organizer and packaging show organizer altogether. The show was great success and it suggested new paradigm of food
and packaging industry.
CMS – Customer Management System
KINTEX created CS (Customer Service) team in 2005. CS management was a new activity that other exhibition centers
never offered to customers. KINTEX received the award from Korea Management Association in 2007 through the activities.

3. Value Network – How to deliver?
Firstly it achieved operations efficiency through strategic alliances with exhibition partners and evaluation system based on
BSC management model. Second, KINTEX has very flexible pricing policies called value pricing based on customers’ value.
For example, it has seasonal package program so that customers can lease space with relatively low prices in summer or
winter season. Third, salesperson meets customers as a consultant. Venue sales and marketing are different compared to other
product sales. Actually sales person should know whole process of customers’ events because it needs very special technical
and exhibition knowledge when supporting customers. It means that marketing person should solve the customer’s problem
from its start to finish. Therefore, customers can get valuable service as shows go on.
4. Conclusion
As exhibition industry grows with valuable customers, it should be related to hospitality industry including exhibitions,
conventions, events, hotel and tourism. These businesses should be integrated in KINTEX business model for the 2 nd phase of
construction. Valuable customers will require much more exhibition services which are different with other venues. KINTEX
should go for hospitality industry, which means that integrated show businesses will be the key competitive advantages and
it can lead KINTEX for the market-driving company, not for the market-driven company. However, if CEO has no will or
intention to go for it, it is impossible and no one gets the advantage. Therefore, marketing strategy should be a CEO’s top
agenda, and CMO should take a role for leading the strategy.
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Table of Contents
I. Introduction........................................................................................................................1
II.
III.
IV.
Marketing as Strategy........................................................................................................3
1. Overview.................................................................................................................................................................. 3
2. Concept and Definition............................................................................................................................................ 4
Case Study: KINTEX.........................................................................................................9
1. History..................................................................................................................................................................... 9
2. KINTEX’s 3Vs...................................................................................................................................................... 11
(1) Valued Customer – Who to serve?.......................................................................................................... 11
(2) Value Proposition – What to offer?......................................................................................................... 14
(3) Value Network – How to deliver?........................................................................................................... 17
3. Strategic and Organizational Challenges............................................................................................................... 19
Conclusions.......................................................................................................................21
References.....................................................................................................................................22
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List of Tables
Table III-1. Exhibition facilities in Asia...................................................................................................................................... 16
List of Figures
Figure II-1. The Four P components of the Marketing Mix.......................................................................................................... 3
Figure II-2. The CEO’s Marketing Manifesto............................................................................................................................... 4
Figure II-3. Firm’s growth move from 3Vs questions................................................................................................................... 6
Figure II-4. Solution-Selling Matrix.............................................................................................................................................. 7
Figure II-5. Types of Strategic Innovation.................................................................................................................................... 8
Figure III-1. KINTEX views......................................................................................................................................................... 9
Figure III-2. Average exhibition spaces....................................................................................................................................... 10
Figure III-3. Conventions in KINTEX........................................................................................................................................ 10
Figure III-4. Big 7 shows in Korea.............................................................................................................................................. 12
Figure III-5. SIMTOS exhibition plan by 2010........................................................................................................................... 12
Figure III-6. KINTEX’s Valued Customer.................................................................................................................................. 13
Figure III-7. Value Proposition – Co-location Strategy............................................................................................................... 14
Figure III-8. KINTEX Customer Management System.............................................................................................................. 15
Figure III-9. KINTEX Floor plan................................................................................................................................................ 16
Figure III-10. KINTEX Strategy Map......................................................................................................................................... 17
Figure III-11. Lease Process for Exhibition Hall........................................................................................................................ 18
Figure III-12. From selling products to providing exhibitions.................................................................................................... 19
Figure III-13. KINTEX’s New Value Proposition....................................................................................................................... 20
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I. Introduction
Korea is one of biggest trading countries ranked 11 th in global market. But the exhibition and convention businesses are
still behind the global players. As an exhibition is a market place for trades and businesses, it is very important to develop
Korean exhibition industry. KINTEX (Korea International Exhibition Center) was originally established for the development
of exhibition industry in Korea by national and local governments. It is the largest exhibition center having 54,000m 2 of
exhibition spaces in Korea, and also it is one of the most cutting-edge exhibition centers in Asia. Furthermore, it will be
doubled in exhibition spaces up to 100,000m 2 by 2011. Since its opening at April 2005, it has been dramatically accomplished
a successful story in the exhibition business. The change occurred by it has not only affected to the exhibition business but
also to the local governments who in charge of destination marketing in terms of hospitality industry.
Therefore, it is very important to analyze how KINTEX made a successful story because there were no case studies for
analyzing exhibition centers in terms of marketing management. So this project would be the first business case study which
is focused on an exhibition industry in Korea. This study will be analyzed based on the Professor Kumar’s 3Vs marketing
management model. Below questions are core topics which used for analyzing this case study.
Research Questions
1. Marketing Strategies and executions in terms of Dr. Kumar’s 3Vs
(1) Today’s marketers face a dire situation. CEOs name marketing challenges such as retaining customers
and avoiding price wars as top priorities, yet they increasingly doubt whether marketers can handle those
challenges. Also marketing is now considered a cost sink. Nirmalya Kumar, a professor of London Business
School, outlines four organization- wide transformation initiatives that will win marketing a prominent
seat at the executive table. Kumar shows how a focus on the “three Vs”-the valued customer, the value
proposition, and the value network-can help marketers lead the shift;
- From tactical market segments to strategic segments that enable deep differentiation
- From selling commodity products to providing customers solutions
- From incremental innovation spawned by market research to market-driving innovation spawned by
radical new ones
- From tactical SBU-level marketing to strategic corporate marketing
Kumar’s 3Vs approach is very clear to define the components of success in marketing management because it shows definite
target and proposition in terms of customer’s value, not provider’s focus.
(2) 3Vs
1) Valued Customer: Who is the target customer?
- Who is the valued customer? In contrast to other exhibition centers, KINTEX’s valued customers are
limited to big 7 show organizers who use it as their show places such as Seoul Motor Show, Food
Show, Housing Fair, etc. Also national and local governments are very valuable customers because
they provide many business opportunities to KINTEX for hosting public and governments-related
exhibitions and conventions.
2) Value Proposition: What to offer?
- Value proposition, or what to offer to the valued customers shows the distinctive differences between
the two segments. KINTEX could just provide exhibition spaces for attracting many trade shows,
convention and other various events. However, it provides valuable offerings such as exhibition
packages; co-location of similar purposed trade shows. So this brings many positive effects to trade
shows and show organizers as well. Buyers or visitors can look around their interested products,

technologies and related exhibitors in one place. Also exhibitors can show their exhibits to much
more expanded potential customers. This result let exhibitors consider these trade shows must-have
marketing activities.
3) Value Network: How to deliver?
- Value network or how to deliver the value proposition to the valued customer compromises the process
of distribution and operation. It reveals some kinds of process including purchasing, operations and
distribution system. For example, KINTEX provides various pricing policies based on customer’s
needs, which includes seasonal packages, multi-year contract discounts, and incentives for co-location
of similar exhibitions. Moreover, it handles BSC performance management system so that marketers
can monitor their marketing activities based on performance related KPIs.
2. Strategic and organizational challenges for the next step of KINTEX
In this question, 3 challenges will be reviewed for the development.
(1) From selling products to providing solutions
(2) From market-driven to market-driving
(3) From strategic business unit marketing to corporate marketing
In order to find an appropriate process for analysis, basic theory would be firstly reviewed, and then KINTEX case study followed.

1. Overview
II. Marketing as Strategy
Marketing’s traditional goal is to get closer to customers. So we usually think that marketing should make a role for
sustaining customers using 4Ps: product, price, place and promotion. The particular marketing variables under each P are
shown in Figure II-1. Marketing-mix decisions must be made for influencing the trade channels as well as final customers.
But in most cases, marketing is regarded as a critical expenditure. Once viewed as cost sink, marketing can not do a
prominent role in their organizations. In the Practice of Management, however, Peter Drucker wrote, “The business enterprise
has two and only two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are
costs.” 1 Nirmalya Kumar, a professor of marketing at London Business School, has been developed the marketing theory
as a corporate strategy for making marketing as a CEO’s top agenda. Actually Kumar introduces a framework for analyzing
and planning marketing strategy in terms of the “three Vs”: valued customer, value proposition, and value network. Kumar
proposes ways to deal with growing commoditization, price pressure, and the increasing market power of global mega
retailers. Also he strives to show how the marketing discipline could “become more strategic, cross-functional, and bottomline
oriented” than ever before.
Figure II-1. The Four P components of the Marketing Mix
Source: Philip Kotler, Marketing Management (Pearson Education, 2007)
1 Drucker Peter F. (1954) The Practice of Management. New York, Harper Collins

2. Concept and Definition
Marketing as a transformational engine
The main stream of Dr. Kumar’s theory is that marketing should be on CEO’s top agenda. For marketers to capture the
imagination of their CEOs, Dr. Kumar reveals that they must break from the tactical four Ps and associate instead with
organization-wide transformational initiatives worthy of the CEO’s agenda. Only initiatives that are strategic, crossfunctional,
and bottom-line oriented will attract the CEO’s attention, and only by leading such initiatives will marketers
elevate their role in the organization. Therefore, transformational marketing efforts should focus on initiatives that
• Profitably deliver value to customers;
• Require high level of marketing expertise;
• Need cross-functional orchestration for successful implementation; and
• Are results-oriented.
So these marketing initiatives must have a substantial, demonstrated, top- or bottom-line effect to excite the CEO.
Figure II-2 divides the CEO’s marketing manifesto into four organization-wide transformational initiatives that marketer could lead.
Figure II-2. The CEO’s Marketing Manifesto
Source: Kumar, Nirmalya (2004) Marketing as a Strategy. Boston: HBS Press 2004

(1) From Market Segments to Strategic Segments
Traditionally, marketing has relied on market segmentation and marketing mix to create differentiation. Market segmentation
is the process of dividing marketing mix into clusters of customers in such a way that each market segment is best reached
through a unique marketing mix of the four 4Ps. However, market segments through 4Ps are too limiting. So the strategic
segments divided by the three Vs are recommended.
1) Valued Customer – Who to Serve?
Valued customers are main targets for companies. Traditionally firms categorized customers into general ways using market
segmentations such as ages, sex, and other related cultures. But valued customers are core targets segmented by corporate
strategy. So firms focus on these customers and their marketing strategy is definitely concentrated on these targets. For
example, the traditional Flag carriers like KLM and Swiss target everyone; however, their most valued customers are
business travelers. In contrast to business travelers who pay from other people’s pockets, easyJet targets those customers
who pay from their own pockets. While these tend to be predominantly leisure travelers, there are business people such as
entrepreneurs and small business owners who also pay from their own pockets. Altogether, this is a large segment in Europe
and one that was unhappy with their industry offering until low-cost airlines such as easyJet and Ryanair emerged. These
two segments are strategic segments because serving them effectively requires distinct value networks, rather than simply a
differentiation of the marketing mix. 2
2) Value Proposition – What to Offer?
Value proposition, or what to offer to the valued customers, reveals stark differences between the two segments – market
segment and strategic segment. Four questions provide a framework for understanding the creation of value proposition.
- Which attributes that our industry takes for granted should be eliminated?
This question forces companies to reflect on whether each of the attributes offered creates value for
their valued customers.
- Which attributes should be reduced to below industry standards?
This question pushes companies to consider whether the industry has over-designed its products and
services for their valued customers.
- Which attributes should be increased to above industry standards?
This question presses companies to understand the compromises that the industry currently forces its
customers to make.
- Which new attributes should be created that the industry has never offered?
This question forces companies to think about what new sources of value creation exist within the
industry.
3) Value Network – How to deliver?
Value network or how to deliver the value proposition to the valued customer compromises the process of distribution and
operation. This process includes purchasing, operations, marketing, and distribution. So companies can cut down costs and
operate with efficiency through value network.
Therefore, marketing innovation can be conceptualized using the three Vs model by asking three questions:
- Are there customers who are either unhappy with all of the industry’s offerings or are not being served
at all?
- Can we offer a value proposition that delivers dramatically higher benefits or lower prices, compared
with others in the industry?
- Can we radically redefine the value network for the industry with much lower costs?
2 Kumar, Nirmalya, (2004) Marketing as a Strategy. Boston: Harvard Business School Publishing, p.33~p.34

The four value proposition questions presented previously and the three questions above help conceptualize opportunities
for marketing innovation in the industry. And using the three Vs to generate innovation clarifies that innovation is not the
exclusive territory of technical R&D and product development people. Rather, marketers and strategists can contribute to
innovation by discovering underserved or unhappy segments, offering new value proposition, and reinventing industry value
networks. Below figure II-3 shows the relationship between Marketing Innovation questions and Strategy/Growth questions.
Figure II-3. Firm’s growth move from 3Vs questions
Source: Kumar, Nirmalya (2004) Marketing as a Strategy. Boston: HBS Press 2004

(2) From Selling Products to Providing Solutions
This contains the transformation necessary within organization that desire to move from selling products to providing
solutions for customers. How can we move the company’s mind-set from developing “better” products to solving customer
problems? How can we obtain company-wide coordination from the different parts of the organization that have traditionally
competed against each other? These questions can be solved by the Solution-Selling Matrix. Figure II-4 shows the matrix
between level of customer knowledge and width of products/services. If customer’s knowledge level is high and company
has many products and services regarding customer’s needs, company should provide solution selling services rather than
just providing products. Such customers want to be managed and informed by company after buying products. So it’s very
important to gain service and product knowledge for a sustainable customer management.
Figure II-4. Solution-Selling Matrix

(3) From Market-Driven to Market-Driving
Market-driven approach always does the things such as market research, customer satisfaction, etc. It is usually results in
incremental product innovation. However, it can not develop truly break-through business concepts. This market-driving
approach need essential questions such as: What processes encourage radical innovation? What marketing strategies do we
need for market-driving innovations? How do we manage simultaneous incremental and radical innovation?
The dilemma with market driving is to strike the proper balance between satisfying current customer needs better through marketdriven
processes and creating new market demand through market-driving processes while not being too far ahead of customers.
Below figure II-5 shows the matrix between value proposition and value network. The success of marketdriving firms stands on
radical innovation in two dimensions – a discontinuous leap in the value proposition and the rapid configuration of a unique value
network. Value proposition, as defined in previous page, refers to the combination of benefits and price offered to customers.
Figure II-5. Types of Strategic Innovation
Source: Kumar, Nirmalya (2004) Marketing as a Strategy. Boston: HBS Press 2004
(4) From SBU Marketing to Corporate Marketing
In many companies marketing is belonged to business unit level so marketers usually try to raise market share and sales
through dubious temporary tactics such as more promotions, greater salesperson effort, and pushing inventory onto
distributors. But it is a short-term approach for achieving numbers in terms of financial performance in a year. So marketing
should be transformed from strategic business unit level to corporate strategy level. Marketers must demonstrate that they can
create value from the corporate center and partner with the CEO while balancing the legitimate local interests of SBUs.
Some CEOs believe that hiring world-class marketers from other companies will turn their company into a market-driving
company. But the success of marketing comes from focusing on customers, not from “great marketers.”

III.
Case Study: KINTEX
1. History
KINTEX is the exhibition and convention center located at Ilsan, which is the biggest exhibition center in
Korea. Also it is the one of the cutting-edge exhibition centers in Asia.
KINTEX has developed a three-story building with exhibition and convention facilities on a 224,800m 2 site; it had a grand
opening on April 29, 2005, after completion of the first phase in a three-phase construction project.
1999~2005 (Before the opening)
The KINTEX project was initiated and co-funded by national and local government to meet a deficiency in the domestic
supply of venues for exhibitions and conventions. The other goal was to achieve the globalization of the domestic exhibition
and convention industry. Actually this project was initiated at 1999 after Goyang city was selected as the building site for
the new exhibition center. And then the master plan was drawn up for the construction of a new exhibition center which
would also serve as an exhibition business backup complex. During the construction period from 2003 to 2005, KINTEX
had developed its corporate operation model. Firstly, the mid-term management strategy and ISP business plan to establish
efficient information system were devised in collaboration with “Accenture,” one of the world’s best consulting firms. It was
a first challenge for KINTEX to make a corporate strategy from operation-level to a corporate-level. The corporate-level
strategy covering the needed organization, marketing, promotion, and exhibition business is incorporated into the mid-term
management strategy.
And the ISP business plan presents an idea of building an information system for a more efficient management of KINTEX.
Especially the 8 IT systems were developed for corporate management including ERP, CRM, FMS (Facility Management
System) etc. It was a great challenge for KINTEX because no other exhibition centers in Korea had ever developed such
systems before. So KINTEX had to develop whole systems with its own studies.
Figure III-1. KINTEX views
2005~2007 (After the opening)
KINTEX has accomplished many successful results for 3 years from 2005~2007. There are four categories related to this successexhibitions,
conventions, attendees and services. Firstly KINTEX has been a No.1 leader in total exhibition spaces. The market
share in exhibition spaces is 28%, and the total used spaces are 10,500,000m 2 for 3 years. That means KINTEX uses every
29,000m 2 a day and it’s very important factor because the average daily exhibition spaces are still below 20,000m 2 in Korea.
Chart III-2 shows the comparison of average daily exhibition spaces between KINTEX and other venues in Korea. It
indicates that KINTEX is very successful in exhibition business in just 3 years of its opening. So it will be analyzed later how
KINTEX makes great success in exhibition industry.

Figure III-2. Average exhibition spaces
Source: 2007 Seoul: Association of Korea Industry
Secondly KINTEX shows the big success in its convention business. Actually KINTEX has no competitive advantage
in convention business because the infrastructure is still behind the other competitors. Convention business needs hotels,
restaurants and other amenities for the attendees’ conveniences. So exhibition & convention centers should be developed with
other hospitality infrastructures when the business starts. However, KINTEX was very unfortunate when it started because
there were no amenities like hotels, restaurants and even taxi or bus stations. These are very significant factors for customers
because they always consider the venue based on the accessibility and convenient facilities near the venue. So KINTEX was
very difficult in its convention business. After 3 years, however, convention business is successful even though there are no
hotels and convenient facilities. KINTEX has been attracted over 370 conventions and totally 956 conventions in 3 years. The
analysis of success of convention business will be also reviews in this case study.
Figure III-3. Conventions in KINTEX
Third, KINTEX has been attracted over 10 million attendees in 3 years. People visit KINTEX to see trade shows, conventions
and public events. Especially international visitors including buyers and exhibitors have been increased as exhibitions
continuously succeed. Over 50,000 international attendees visit KINTEX in 2005, and these numbers increased to 86,000
visitors in 2007.
Service management system is another point that we should analyze the success. KINTEX has been managed its total service
quality based on CMS and BSC performance model. So the service is always be monitored by customers and shareholders,
and these data is analyzed and managed for the continuous improvements. So KINTEX received the award from Korea
Management Association in 2007.
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2. KINTEX’s 3Vs
(1) Valued Customer – Who to serve?
Big 7 show organizers in Korea
KINTEX did not target every customer because KINTEX knew that it needs different segmentation based on valued
customers. KINTEX has biggest exhibition spaces in Korea, while it is far from downtown of Seoul So KINTEX needs
different analysis of its targets. Below questions are firstly reviewed when the targets were selected.
Based on the above questions, KINTEX targeted exhibitions over 20,000m 2 and discussed with key organizers- Korea
Machinery Fair, Korea Electronics Show, Seoul Food Show, Seoul Motor Show, Seoul International Machine Tool Show,
Kyunghyang Housing Fair and G-Star Game Show. As the situation evolved KINTEX could be a new place for the 7
show organizers. Even KINTEX is far from Seoul, it was not a significant issue for them because their shows are based on
professional industrial shows so only business-related people can join the shows. These kind of people should visit the shows
even the place is little far because the shows are related to their own businesses. So KINTEX could be an attractive new
option, and in 2005, KINTEX attracted big 7 trade shows and these shows have gained great success after changing their
venue to KINTEX.
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Below chart shows the big 7 shows in Korea. All these shows are over 30,000m 2 . Seoul Motor Show, for example, was
divided by 2 trade shows, domestic motor show and foreign motor show. However, these 2 shows were integrated and now it
is one of the global famous motor shows.
Figure III-4. Big 7 shows in Korea
Moreover, they need much more spaces even they changed venue to KINTEX because the shows are still growing. For
example, SIMTOS (Seoul International Machinery Tool Show) is the biggest machinery related trade show in Korea and it
still needs much more exhibition spaces.
Figure III-5. SIMTOS exhibition plan by 2010
As we see the above chart, SIMTOS was 19,306m 2 in 2004. But it would be 75,000m 2 including outdoor exhibition spaces
and it needs more spaces because more and more exhibitors want to join the show. By 2010, SIMOTS has a plan for
developing the show to 84,000m 2 .
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Governments (Stakeholders)
KINTEX was invested by 3 national and local Korean governments – KOTRA (Korea Trade & Promotion Agency),
Gyeonggi province and Goyang city. So these 3 investors are stakeholders and customers as well. From the opening,
KINTEX was focusing on these customers because they also want to meet the unmet business items-public trade shows
and events. KOTRA have many international branch offices over 100 countries and exhibition business is one of the most
important businesses. So KOTRA can cowork with KINTEX in attracting international buyers and exhibitors. Also KOTRA
can make conferences and seminars for matchmaking between buyers and sellers. It is very important function because
domestic exhibitors always want to meet and discuss with international buyers in their booths. Therefore, KOTRA is one of
the valued customers.
Secondly, Gyeonggi province is another key customer. Gyeonggi province has planned to grow leisure marine industry for
preparing the next generation of growth engine. So Gyeonggi province proposed KINTEX to develop an international boat
show, which is about 6 billion KRW worth of event. So KINTEX developed the total exhibition plan for boat show in 2008
and it was a great success even it was the first show. Moreover, Gyeonggi province needs many trade shows and conventions
for developing local economies and this can be supported by KINTEX in managing exhibitions.Third, Goyang city is also
a key valued customer. Goyang city has a huge plan for developing KINTEX area as an international exhibition complex.
So they are doing marketing activities for attracting investments from all around the world. These activities have been made
great results like developing China town, department store, hopping mall and hotels etc. Also Goyang city provided the land
of 100,000m2 for building 2nd phase of KINTEX.
Therefore, 3 investors-KOTRA, Gyeonggi province, and Goyang city are valued customers as below.
Figure III-6. KINTEX’s Valued Customer
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(2) Value Proposition – What to offer?
Co-location of similar-purposed exhibitions
Seoul Food Show 2008
The offerings to target customer reveals differences between other competitors. KINTEX
could co-locate similar purposed exhibitions and also gather related exhibitions and
conventions for making synergy effects. For example, Seoul Food Show was originally
held in COEX, when it was only related to Food industry. However, KINTEX used
co-locating marketing policies for attracting the show. KINTEX recognized that foods
should be related with packaging technology for saving and selling in markets. Therefore,
KINTEX proposed the co-locating exhibition to Food show organizer and packaging show
organizer altogether. The show was great success and it suggested new paradigm of food
and packaging industry. Also the show will be expanded to hotel, food-technology, and
food-safety shows. These activities has influenced for attracting international companies.
There were 295 exhibitors in 2006. However, there were 483 international companies in
2008 exhibition.
Another example is the Korea Electronics Show, which is one of the most famous electronics show in Korea. KINTEX used
also same co-location marketing strategy for developing into global trade show. So Korea Electronics Show was held together
with International Semiconductor & Display exhibition in October 2008. It was a first integration between electronics and
semiconductor, also was very impressive because so many buyers and sellers could be met together for their business.
Figure III-7. Value Proposition – Co-location Strategy
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CMS – Customer Management System
KINTEX created CS (Customer Service) team in 2005. CS management was a new activity that other exhibition centers
never offered to customers. Actually many show organizers had few options in selecting exhibition venues because there were
no appropriate facilities which provides efficient and well-equipped spaces. In 2005, the market was dramatically changed
after KINTEX entered the exhibition market. KINTEX asked a question: Which new attributes should be created that the
industry has never offered? This question forced KINTEX to think about what new sources of value creation exist within the
industry. KINTEX had a biggest and cutting-edge hardware in Korea which other venues did not have. But it was not enough
to satisfy customers’ needs. KINTEX needed differentiated value proposition that the industry had never offered. It was a
Customer Service (CS) Management. And also other exhibition companies had never offered CS activities because of the lack
of resources. So CS management was a very significant factor that KINTEX can lead the market. Therefore, KINTEX created
CS team and developed CS management system and manual for satisfying customers’ requirements and needs. The result was
great. KINTEX received the award from Korea Management Association in 2007, and there are 3 reasons for the award. First,
customers’ requirements are processed within 24 hours. Second, CS monitoring system operates and the evaluation results are
related to CS systems. Third, continuous CS education for employees is activated in every working day.
Figure III-8. KINTEX Customer Management System
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Cutting-edge facilities
KINTEX is the leading international exhibition complex in Northeast Asia in size, operational systems and service quality. It
is equipped with facilities and infrastructure superior to other exhibition centers all over the world. In particular, the KINTEX
exhibition hall is a single-floor pillarless structure, while most of the other exhibition centers in Northeast Asia consist of
multiple floors. This unique feature makes it possible for KINTEX to effectively accommodate exhibition organizers’ various
demands and boost its reputation as an advanced international exhibition center.
Table III-1. Exhibition facilities in Asia
Figure III-9. KINTEX Floor plan
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Operations
(3) Value Network – How to deliver?
On the third V-value network, or how to deliver the value proposition to the valued customer-KINTEX has systematically
redefined its operation and other networks for better serving its customers. Firstly it achieved operations efficiency through
strategic alliances with exhibition partners and evaluation system based on BSC management model. BSC model can
analyze corporate activities by defining KPIs (Key Performance Index). KINTEX developed its evaluation system using
BSC model in 2005, when there was no strategic management system so CEO could not make strategic decision followed
by performances. BSC can help CEO manage its corporation based on the strategic map. Actually the primary reason for
managing the strategy map is to align business unit strategy with operations. 3 But KINTEX, as same with other companies,
consist of multiple business and support units, so the management system must also address how strategy is integrated
across these diverse organizational units. In addition to aligning organizational units with the strategy, the system must also
align employees with the strategy. Unless all employees understand the strategy and are motivated to achieve it, successful
execution of the strategy is highly unlikely. Figure 2 shows the KINTEX’s strategic map by defining corporate KPIs.
Figure III-10. KINTEX Strategy Map
Marketing
1) Value-based pricing
KINTEX has very flexible pricing policies based on customers’ value. For example, it has seasonal package program so that
customers can lease space with relatively low prices in summer or winter season. It is called Monthly DC-January, February,
July, August and December- and customers can get 30% off price rather than other months. The other program is discount by
size. KINTEX offers better discount program as customers use more spaces. For example, customer can get 10% off when use
3 Kaplan, Robert S. (2008). The Execution Premium. Boston: Harvard Business School Publishing
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1 hall but 30% discount would be provided when 5 halls are used. Regarding this policy, Phil Chung, manager of marketing
team said, “The important thing that we put into our consideration regarding the pricing policy is our market potential. Though
KINTEX is not at the center of metropolitan but it has strategic location that’s only 30 minutes away from it, which means if
we included the population of this city and Seoul, the whole reachable no. of people within 2 hour travel time reaches over
21 million. Plus, 1 million consumer base, a huge residential area is well-formed and surrounded KINTEX. That was why
as a new center, KINTEX had successfully balanced its pricing well enough between Seoul and other local areas but the
characteristics of market and population around KINTEX had definitely differentiated its pricing from other cities, almost
making it close to its central Seoul-based main competitor and KINTEX finds its competitive advantages on market potential
including population, close business network with local, central governments, and attractiveness of city near from many
tourism attractions which contributes a lot to create customer value.” And also he said, “With its market potential with strategic
location, our customer finds more of their competitive edge in hosting their shows in KINTEX rather than other centers, which
came up with more no. of buyers and exhibitors. The core of the reason is its allowable level of pricing, when surveyed 90%
of respondents said the pricing isn’t a big deal except for the city government who insists they need complimentary services as
they are shareholders (30%). Plus, our flexibility of pricing policy for peak and off-peak season and our strategic administrative
and supportive business approaches to our clients are considered to make appeal to our customers.” 4
Soojin-Myung, manager of marketing team, moreover, said that these programs are not solely remarkable marketing
activities that KINTEX only performs. So she insisted KINTEX should appeal to customers regarding advanced facilities and
complimentary place to save their organizing cost keeping current price policy for the time being. 5
2) Salesperson as consultant
Venue sales and marketing are different compared to other product sales. Actually sales person should know whole process of
customers’ events because it needs very special technical and exhibition knowledge when supporting customers. It means that
marketing person should solve the customer’s problem, not just sell products. For example, Seoul Motor show- one of biggest
trade shows in Korea needs many support from venue provider regarding space, technical support, service and other related
information. So marketing staff joins as a show consultant at Seoul Motor Show organizing committee.
Figure III-11 shows the lease process of exhibition hall. Customers can get valuable service as a show goes on. KINTEX
divides a process by 3 steps-before the show, at the show, after the show- so customer feels that the whole process is goes
well without any problems.
Figure III-11. Lease Process for Exhibition Hall
Source: Lease Information 2008 from http://www.kintex.com/english/facilities/process_ex.jsp
4 E-mail interview with Phil Chung, marketing manager of KINTEX (December 2, 2008)
5 E-mail interview with Soojin Myung, marketing manager of KINTEX (December 2, 2008)
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3. Strategic and Organizational Challenges
KINTEX Marketing: From Selling Products to Providing Solutions
As exhibition centers are rapidly growing in market, competitors struggle to compete in market with low prices and cuttingedge
facilities. However, this tactics are no longer valid for take advantage, because competitors are very easy to copy
new technologies, low price and also very effectively destroy product differentiation. KINTEX was very fortunate to enter
exhibition market in Korea and take a leading position only after 3 years of its opening. We analyzed that KINTEX can
take advantage of its cutting edge facilities and low pricing policy, and this made the result of leader in Korean exhibition
market. But KINTEX’s marketing strategy is facing a commoditization in terms of product provider. As we know, companies
confronting commoditization have few strategic options. They become a low-cost provider in their industries, but that
requires relentless cost-cutting, trading low margins for higher volume, revealing cost structures to customers. In response
to this pressure, many companies instead aspire to become solution providers, by integrating bundles of their products
with services for the customer. Compared to products, solutions include a large service component and therefore are less
comparable. So KINTEX should plan a new marketing strategy which transforms its product seller to solution provider.
Figure III-12 shows how to transform from product seller to solution provider. As we see below, KINTEX only sells its
product-venue with low price and other general ways. However, solution provider is KINTEX’s To-Be model for taking
competitive advantage in this industry. Solution provider is not a product seller but a service consultant to solve customer’s
issues. So KINTEX develop new marketing strategy combining venue and other related exhibition services.
Figure III-12. From selling products to providing exhibitions
From Market-Driven to Market-Driving; who leads the next generation?
Market-driving firms always find the place where nobody can see opportunities to fill latent, unmet needs or to offer an
unprecedented level of customer value. So KINTEX should lead the market by vision rather than by market research.
Exhibition industry is a market place for international buyers and sellers for developing their new business opportunities.
It was, of course, already re-designed by KINTEX after it enters this industrial market. At that time, KINTEX’s strengths
were more focused on its newly designed exhibition facilities and biggest exhibition halls in Korea. However, these strengths
are easily copied by other competitors following new technologies and trends. ‘Song-do Conventia’, for example, is a most
recent convention center in In-cheon, and it is appealing to its customers by using cutting-edge facilities and low prices as
well. Therefore, the important thing is to make differentiation among competitors for driving the market.
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• Create new value propositions to valued customers.
Completing 2 nd phase of KINTEX construction would entirely not only change Korean exhibition industry but also trade
infrastructure in terms of international trade market. So KINTEX needs to redesign its organization for preparing 100,000m 2
of exhibition business. Figure III-13 tells us that new value proposition which KINTEX should make for driving the
market. In 2013, KINTEX complex would be completed with exhibition center, hotels, shopping malls, and other amenities.
Therefore, KINTEX should consider backward integration as shown in this figure. Backward integration could make it
possible to provide one-stop exhibition solution to customers, and it could be a new business strategy for driving future
hospitality industry. The NEC Birmingham group, for example, it is an exhibition center located in Birmingham. This group
integrated 5 businesses such as venue, catering, entertainment, sports and events management. Of course, this integration
gives the group big success and profits.
Figure III-13. KINTEX’s New Value Proposition
From Strategic Business Unit Marketing to Corporate Marketing
In general, marketing strategy focuses on business units and ignores the role of marketing at the corporate level. KINTEX
also focused its marketing planning and strategy on one business unit. It is very clear that KINTEX should change its
marketing functions from business unit to division or CEO level, which means it should enhance the role of marketing at the
corporate level. Actually KINTEX has some valuable marketing activities and it gives much results. However, these activities
were only performed based on business unit level, and also only pricing policy is workable action in terms of capability. If
marketing is to break out of the shackles of the conventional business unit boundaries and play an important role at the CEO
level, then corporate marketing must help the CEO or company the following two questions about corporate strategy:
(1.) Portfolio Choices
KINTEX generally choose its business portfolio by arraying individual business unit level on business committee. But the
business should be selected and invested by balanced portfolio of cash cow, stars, question mark, and so on. If then, new
business model could be easily developed because corporate level marketing needs integrated strategy and this would make
it possible to find niche or unmet business opportunities. So it should name CMO-Chief Marketing Officer and CMO must
control and manage whole business portfolio based on matrix system.
(2.) Portfolio Relationships
What value should our businesses add to each other? Which relationships among the businesses actually create synergies that
benefit an individual unit as part of the whole? KINTEX can search for synergies within its portfolio of exhibition businesses.
For example, customers like governments or public associations sometimes want to use exhibition hall for their own shows
and meetings. However, they can’t manage and plan their events because there are few in-house exhibition and convention
teams. At that time KINTEX can offer to them for event management as KINTEX can provide both halls and exhibition
planning service together. These are synergies between individual units.
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IV.
Conclusions
3 Values for success
Through this case study, we studied how KINTEX has been made success story even in three years after its opening. I
used Dr. Kumar’s marketing theory-3Vs model- to define the reason of success of new exhibition center. Regarding valued
customer, the first V, KINTEX has been focused on limited but biggest 7 show organizers and shareholders. Big 7 show
organizers have changed their venue to KINTEX when it opened in 2005, and since then they’ve been expanding their
exhibition spaces 2 to 3 times bigger than before. Shareholders, of course, are satisfied with KINTEX service because it gives
specific services based on trade infrastructure.
It also delivered value propositions, the second V, to valued customers. Co-location of similar exhibitions and CMS
(Customer Management System) strategy are its most important value propositions. Actually KINTEX has weakness even it
is the biggest exhibition center. It is relatively distant from Seoul so organizers requested lower price. Even though the price
was low, KINTEX needed another marketing strategy to attract potential customers. Co-location strategy was very successful
because it is the most reliable and valuable incentives for customers. KINTEX can combine two or three similar exhibitions
or conventions using 5 exhibition halls, and this appealed to show organizers because it can draw much more attendeesbuyers
and investors- in one place and one day. It was definitely valuable proposition.
Regarding value network or how to deliver, the third V, KINTEX was very fortunate as it can use flexible pricing policies
based on season and size, even on valuable customers as well.
Convergence in Hospitality Industry
As exhibition industry grows with valuable customers, it should be related to hospitality industry including exhibitions,
conventions, events, hotel and tourism. These businesses should be integrated in KINTEX business model for the 2 nd phase of
construction. Valuable customers will require much more exhibition services which are different with other venues. KINTEX
should go for hospitality industry, which means that integrated show businesses will be the key competitive advantages and
it can lead KINTEX for the market-driving company, not for the market-driven company. However, if CEO has no will or
intention to go for it, it is impossible and no one gets the advantage. Therefore, marketing strategy should be a CEO’s top
agenda, and CMO should take a role for leading the strategy.
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References
Charles W.L. Hill. (2007) International Business. New York: McGraw Hill
Czinkota,Ronkainen &Donath (2004) Mastering Global Market. Ohio: Thomson Learning
Barney Jay B. (2007) Gaining and sustaining competitive advantage. New Jersey: Pearson Education
Kumar, Nirmalya (2004) Marketing as Strategy. Boston: Harvard Business School Publishing
Kaplan, Robert S. (2008) The Execution Premium. Boston: Harvard Business School Publishing
Kahney, Leander (2008) Inside Steve’s Brain. London: PORTFOLIO
Drucker Peter F. (1954) The Practice of Management. New York: Harper Collins
Kotler Philip (2007) Marketing Management. New Jersey: Pearson Education
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Show information from http://seoulfood.or.kr/2009_IFIES_Allworld/01_exhibition_info/seoulfood.asp
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