NewJeans' Umbrella Costs 120,000 Won... What Is Fandom Marketing? [Heotdari Economy]

(28) Fandom Marketing Causing Excessive Consumption
Beware of Unnecessary Spending

[Image source=Yonhap News]

Editor's NoteMany people thought it was a smart economic activity that could yield better results, but it often turned out to be a misstep. When consumers are deceived by corporate marketing or blinded by momentary gains and make wrong decisions, the ones who ultimately suffer are the consumers. We aim to examine economic activities where misjudgments in everyday life lead to failures.

Fandom marketing, which uses popular singers or actors as advertising models to stimulate fan loyalty, seems to satisfy both consumers who get what they want and companies that increase sales. However, criticism is growing that fandom marketing encourages excessive pricing and unnecessary consumption. Sellers unanimously claim that popular goods inevitably command high prices due to being genuine or sold out.

Consumers Opening Their Wallets for Rare Goods

When singer Lim Young-woong was selected as an advertising model for Hana Bank, online communities were flooded with stories from mothers who switched their main bank accounts. Hana Bank moved fans by holding events that gave customers posters and goods.

From cosmetics, daily necessities, food, to banks, fandom marketing has a significant impact on corporate sales. The Lim Young-woong goods event held by Jeonggwanjang from April 24 to May 2 successfully attracted over 20,000 new customers. Convenience store CU, which released celebrity transportation cards featuring BTS, Seventeen, Blackpink, etc., saw its transportation card sales growth rate increase from 9.7% in 2022 to 30.6% in 2023. This year (January to May) it rose by an astonishing 41.2%.

Fandom marketing also applies to singer albums (CDs). Due to random photo cards and rare photo cards included in albums, some hardcore fans purchase dozens or even hundreds of albums. Buying albums in large quantities increases the chances of participating in fan meetings, fan sign events, and showcases. Some fans buy many albums just to collect event entry tickets and discard the main product.

Entertainment companies’ merchandise sales are increasing. SM Entertainment’s sales in the first quarter of this year reached 220.1 billion KRW, a 7.9% increase compared to the same period last year. The expansion of concert scale and growth in merchandise (MD) sales drove the revenue increase. About 40% of HYBE’s first-quarter sales came from goods, licensing, content, and fan club sectors.

Stimulating Fan Loyalty... Goods Sold at High Prices

Photo by Naver Shopping capture

Goods featuring stars command higher prices than regular products. Blackpink photobooks (limited edition) are sold for 295,000 KRW, and IVE dolls are priced at 80,000 KRW. Sellers cite "limited edition" and "sold out" as reasons for the pricing. An IVE doll seller said, "It’s a Christmas limited edition, and all other places are sold out, so the price is set high." Another seller said, "Since it’s sold out on the official website, the price inevitably rises."

NewJeans umbrellas are sold online for 50,000 to 120,000 KRW, several times the price of a regular three-fold umbrella priced around 10,000 KRW. A seller explained, "These products were obtained from a Japanese pop-up store, so an additional fee was added. All are limited editions," adding, "Prices fluctuate according to market conditions."

Cases of reselling goods through platforms like Danggeun Market and Bungaejangter have also increased. The total transaction amount in the star goods category on Bungaejangter last year exceeded 70 billion KRW, a roughly 20% growth compared to 2022. The number of transactions increased by about 15% during the same period. The most traded items were fancy and photo cards, accounting for 61% of total transactions. Other categories included ▲dolls and figures (19%) ▲albums and videos (7%) ▲posters and photo books (5%) ▲cheering tools (3%) ▲clothing and fashion accessories (3%) ▲others (2%).

What about the fans who purchase these goods?

Regarding the BTS limited edition album sold for 297,000 KRW, Hyun Ji-na (27) said, "The original price is 74,200 KRW, but they include a limited edition title, photo cards, photobooks, etc., and sell it for nearly 300,000 KRW," adding, "I’m a longtime fan, but I think this is excessive." Bo-min Lee (29), who refers to herself as a "deokhu" (enthusiast), said, "Seeing the practice of selling at high prices by exploiting fan loyalty for a long time has made me somewhat resentful," and added, "I can’t understand selling ordinary T-shirts or sweatshirts with members’ names or photos for 100,000 to 200,000 KRW."

Professor Eun-hee Lee of Inha University’s Consumer Studies Department advised that it’s fine to buy and use products endorsed by favorite singers or actors, but caution is needed as it can lead to excessive consumption. Professor Lee said, "Targeting vulnerable consumers (such as teenagers or the elderly) is undesirable," and added, "I hope companies consider 'usefulness' when conducting marketing." Regarding goods sold at high prices, she explained, "It’s an abuse of fan loyalty," and said, "Fans should feel that purchasing goods is reasonable, but pricing them several times higher requires adjustment from the perspective of market order."