Marketing Communication strategy for Holcim Vietnam to increase market share in construction crisis

ECONOMICS & MANAGEMENT MMA6 Authors NGO HUNG QUY PHAN MINH HIEP Marketing Communication strategy for Holcim Vietnam to increase market share in construction crisis MASTER PROJECT MAS

ECONOMICS & MANAGEMENT

MMA6

Authors NGO HUNG QUY PHAN MINH HIEP

Marketing Communication strategy for Holcim Vietnam

to increase market share in construction crisis

MASTER PROJECT MASTER IN MARKETING & ADVERTISING

Tutor: SERGE BYWALSKI

HO CHI MINH CITY (2013)

COMMITMENT

We commit that this project is our own study

Information and Data base in the thesis are honest

Candidate:

THANKS

First of all, we would like to thank to Prof Philippe Biltau and Prof Alain Van den Eynde who have saved time to review, approve, and guide scientifically our project during mid-term interview Thanks for your great comments in order to make our project meaningful and highly scientific

Deeply thanks to our tutor - Serge Bywalski who has helped to guide us to finish our project on time

Special thanks to Co-Directors Prof Jean-Pierre Baeyens who has always motivated us during the 2 years of study and this final project

Thanks to members in sales and marketing department in Holcim (Vietnam) Ltd who have enthusiastically helped and provided full information and data to prove the detailed matters studied in the project

Thanks to our colleagues who have shared our daily works and helped us some data

Finally, thanks to our family and our bosses who have given us much time to finish my project on time

Without your helps, it will be more difficult for us to finish our project Once again, thank you very much

NGO HUNG QUY & PHAN MINH HIEP

2 Production and consumption in Vietnam in 2012 10

2 To Distributors Dong Hanh project 16

3 To Contractors Organizing seminars/workshops 17

4 Budget Allocation & Key Performance Indicators 43

INITIAL INDEX

VNCC: Vietnam Cement Corporation

VICEM: Vietnam Cement Industry Corporation

TCVN: Vietnamese standard

Cung Xay To Am: Building sweet home together

Vung Xay Cuoc Song: Building sustainable life

To am uoc mo: Dreaming home

Chia se hanh hanh phuc vung ben: Sharing sustainable happy moments Dong Hanh: Companion, cooperation

FTHO: First Time Homeowner

HCMC: Ho Chi Minh city

TV: Television

BEI: Brand Equity Index

Marcom: Marketing Communication

TVC: Television Commercial

S.E.O: Search engine optimization

LIST OF TABLES/CHARTS

Chart 2: Production and consumption in Vietnam in 2012 10 Chart 3: Market size in 3 geographic areas 2001 - 2011 11

Chart 10: Important Factors in Deciding on Cement Brands 23

Table 12: Market share before and after Cung Xay To Am campaign 27

Chapter I CURRENT SITUATION

A COMPANY BACKGROUND

Holcim (Vietnam) Ltd (Holcim Vietnam) is a member of Holcim Ltd which is a global company employing some 80,000 people with production sites in more than 70 countries Holcim Vietnam is the second biggest supplier of cement and ready-mix in Southern Vietnam

Corporate profile

Holcim Vietnam, formerly known until 2002 as Morning Star Cement Ltd (Xi Mang Sao Mai) was registered in February 1994, is a joint-venture company between Holcim Ltd and Vietnam Cement Corporation (VNCC), now Vietnam Cement Industry Corporation (VICEM) - a state-owned enterprise of Vietnam In August 2008, Holcim Vietnam was re-registered under the new Law on Enterprise as a limited liability company with two members - Vietnam Cement Industry Corporation (VICEM) and Holcim Ltd that respectively contributed in the Company 35% and 65% of its charter capital

Holcim Vietnam currently employs around 1,500 people at its 4 technologically advanced cement production sites and 8 modern ready-mix concrete batching plants in addition to the Ho Chi Minh city office

Product portfolio for housing construction

 Holcim Top Standard (Bag 50kg)

Holcim Top Standard is a high quality Portland Blended

Cement that is so versatile it can be used for foundations,

columns, slab concrete, bricklaying/ plastering and finishing

works A strong foundation requires concrete to have high

strength and consistency while for columns, where the formwork

needs to be removed quickly, concrete must be fast setting and

should have high compressive strength Applications such as

bricklaying/plastering as well as finishing works, require cement

with better plasticity and a smoother finish, along with

dimensional stability and low water absorption Holcim Top Standard

Holcim Top Standard meets the Vietnamese standard TCVN 6260:1997 PCB 40 Holcim top standard has many optimized cement characteristics that benefit customers, whether they work with plaster/mortar or concrete

Plaster/mortar

Holcim top standard has high water retention and plasticity, giving an easier and smoother finish with less water absorption This reduces building time and leads to a reduction in costs, as well as longer lasting buildings Holcim Top Standard has good setting time This reduces the time taken to rework a layer and helps customers lay more layers of brick each day Not only does this save building time and costs but it also limits the risk of fresh wall collapses

Holcim Top Standard has early strength development This leads to higher stability

of masonry wall and reduces the risk of wall collapses

Concrete

Holcim Top Standard has low water demand This helps in building longer lasting and watertight buildings with fewer cracks and shrinkage

Holcim Top Standard has good strength development This helps in faster removal

of formwork and higher final strength Not only do customers get longer lasting buildings but they also save on building time and costs

 Holcim Home Beton: comprises of

o Home Beton Ground

o Home Beton Slab

o Home Beton Column

o Home Beton Roof

o Home Beton Waterproof

o Home Beton Lean

 Service: Free Technical Consultancy to provide the useful knowledge to assist owners

in the supervision of concrete pouring and advice on the proper compaction, curing skills and surface smoothness that will reduce the possibility of cracking and maximize the strength and durability of Holcim Vietnam products

B MARKET OVERVIEW

Vietnam cement market

Strong Vietnamese economic growth had been expected to keep cement demand growth steady in the medium-term and export was expected to rise further But global economic crisis in end of 2008 led Vietnam construction industry dropped rapidly since

2011

1 V arket growth from 2008 2012

Source: Vietnam National Cement Association (Unit: million ton)

2 Production and consumption in Vietnam in 2012

Source: Vietnam National Cement Association

In 2012, the cement industry has a capacity of about 70 million tons, output is expected to reach 60 to 62 million tons, while domestic demand in 2012 is estimated at

40.11 45.44

50.2 49.26 48

0 20 40 60

47 - 48 million tons; striving to export 7-8 million tons, a total of 54 - 56 million tons Therefore, the expected surplus is about 6 million tons

3 Market size in 3 geographic areas 2001 - 2011

Source: Vietnam National Cement Association

4 Key players in Southern Vietnam

Source: Bao Viet Securities Company, (2012)

In southern Vietnam, Ha Tien and Holcim Vietnam lead the market, the followings:

Fico and Tay Do gains significant market shares

North 49.29%

Central 16.49%

South 34.22%

Ha Tien 26.10%

Holcim 24.30%

Fico 9.30%

Tay Do 3.90%

Others 36.40%

C CURRENT MARKETING CAMPAIGNS

Holcim Vietnam is not only target to distributors and contractors same as other cement companies, but the key campaign Cung Xay To Am - aims to end-users, the prospective homebuilders This is the point of different in marketing campaigns of Holcim Vietnam from other cement companies

Current marketing activities

Prospective Homebuilders Cung Xay To Am

Holcim Prize Distributors Dong Hanh

Contractors Seminars/Workshops

1 To Prospective Homebuilders (End-users)

1.1 Cung Xay To Am campaign

Launched in 2008, Cung Xay To Am campaign had been hold yearly at big provinces and cities in Southern Vietnam, the campaign targets to married male who are going to build their own house

o Complimentary booklet to visitors

o Home construction consultancy: materials, costs etc

 Seminars:

o Popular house construction topics such as: fengshui, interior design etc

 Hotline

o Cement: provide all information related to Holcim Top Standard, where they can find Holci

o Home construction advice

o Booklet ordering service

Road map

2008 2009 2010 2011 2012 First Time

FTHO Program conducted in HCMC, Dong Nai, Binh Duong, Long

An

FTHO Program conducted in HCMC, Dong Nai, Binh Duong, Vung Tau, Can Tho

Upgrade to Vung Xay Cuoc Song website with the new brand

positioning:

to become more interactive and bring added values

FTHO Program Seminars / Events / Hotline / Web Site / Booklet

FTHO Program Seminars / Events / Hotline / Web Site / Booklet Consultancy

Centers

Feasibility

study in HCMC

Consultancy Centers Feasibility study

in HCMC

Consultancy Centers Pilot in HCMC

Consultancy Centers Piloted in Semi Urban

Partnership Selection of Key suppliers

Partnership with Other

construction suppliers

Partnership with Other construction suppliers Low Cost Housing

Program Feasibility

Low Cost Housing Program Pilot Align Consultancy

Centers Club in line with FTHO program

Align Consultancy Centers Club in line with FTHO program

Source: Marketing Dept Holcim Vietnam

1.2 Vung Xay Cuoc Song Website The upgrade version of Cung Xay To Am

In early 2012, the company renewed Cung Xay To Am website in the occasion of 100 years ceremony by Vung Xay Cuoc Song website It was re-built to be more interactive site where potential customers, investors and contractors can share their knowledge in housing construction The website includes following figures

- Sample models of beautiful houses

- Interior decoration

- Guidance articles about fengshui

- Live chat and forum to share experiences

- Smaller house design with more information

- Online consultancy

- Material showroom

- Guidance articles about architecture

- Style/decoration

- Cost calculation program

- Guidance articles about materials

Vung Xay Cuoc Song website

Objectives:

- Being the first social network for home builders

- Set up new brand positioning: Proud of 100 years build for life

To motivate the prospective homebuilders to the website, T project was launched from Aug 20th to Sep 20th 2012 All participants need to provide a picture about their dream house and give short explanations (max 200 words) why choosing it The winner will get a LG P TV and lot of valuable gifts

Chia se hanh hanh phuc vung ben banner

Print ads launched in 19th March 2012 on 32 frames and 1077 LCD at major

office/building grade A and B in Ho Chi Minh City

Print ads

The Holcim Prize competition not only rewards innovative ideas but also offers opportunities for real-world application By doing this, students are challenged in

performance and societal contribution

The Holcim Prize will be expanded progressively to other national universities in

2012 forward

Objectives:

- To support students to position themselves among the young researchers

- To promote contributions to sustainable development in Vietnam through applied science researches among the youth

- To honor outstanding initiatives with best applications complimenting to sustainable development

- Develop brand awareness to young people who will be homeowners/contractors

in the future

2 To Distributors Dong Hanh project

Objectives:

- Increase sales volume

- Improve recommendation of Holcim brand to retailers and homebuilders

- Build/Enhance good relationship to distributors

Key activities:

- Monthly, Quarterly , Yearly Incentive (free cement, discounts) for distributors

- Supporting distributors at market & competitor analysis, market trends forecast and sales volume

- Annual Year-End & V.I.P party, free travel tour for distributors who reached sales target

3 To Contractors Organizing seminars/workshops

Objectives:

- Increase Top of Mind and build brand preference

- Improve recommendation of Holcim brand to home builders

- Build / enhance good relationship to contractors

- Improve plastering perception

Key activities:

- Celebrate contractor workshop at Holcim Vietnam s sites (leverage Holcim Vietnam Centennial to strengthen positioning ; apply to test product/technical support Bind test activity)

- Issue technical handbook to contractors (more practical with Holcim Vietnam cement new positioning; Endorsed by a credible source)

- Testimonials by contractors who experienced with Holcim Vietnam

Chapter II CUNG XAY TO AM CAMPAIGN ANALYSIS

Cung Xay To Am campaign is the biggest campaign in cement industry targeting to

the point of different among marketing activities of cement companies Thus, we focus on analyzing this campaign to figure out its success and restriction

Supply and demand of domestic cement output has been unbalanced after supply has rapidly been increasing for many years continuously, and demand has been dropping

in recent two years due to the bad economic crisis led to construction crisis Local cement volume is in big surplus in 2011 & 2012 Struggle for survival by fighting for market share

is the matter of survival in this period In Southern Vietnam, Ha Tien continues to be as a major player in this sector Holcim Vietnam is the second largest cement producer in the South after ten years actively exploring Vietnam market In order to gain a better sales and market share, Holcim Vietnam created totally new and differentiated marketing campaigns to build awareness and compete to its competitors

While all cement companies concentrated on distributors to run push-sales campaigns, in 2008, Holcim Vietnam launched Cung Xay To Am campaign targeting mainly

to prospective homebuilders It is a totally new way to approach and change the purchasing behavior of customers

A Campaign objectives

Cung Xay To Am campaign objectives were not only about raising awareness of the Holcim Top Standard and subsequently corporate Holcim brand in the homebuilder market, but the most important objective of this campaign is to change the behavior of cement purchasing of Vietnamese people

W M right d Holcim Vietnam delivered to prospective homebuilders necessary information to make their consideration in decision stage of purchasing

 Cement is a specific product with technical figures; most of homebuilders do not understand about product specification and do not be able to judge which product is better than others while making purchasing decision To evaluate the durability of cement they need many years to get the result, and the durability of a construction depends on many elements such as geological structure, the foundation, the internal

homebuilders In order to be peace of mind in their decision, homebuilders usually ask advices from others who have experienced with cement such as distributors/retailers,

builders, or friends who have just built thei U information from homebuilders, Holcim Vietnam launched Cung Xay To Am campaign

to transfer all the product information to homebuilders in an understandable way Thus, homebuilders will be confident to make decision on choosing a cement brand for their beloved house

 Cement is a low cost product and has large volume Due to its heavy weight and unclear differentiation between brands, homebuilders often buy the brand which is available On the other hand the distribution cost places an important role in the cost structure of cement The cost will increase significantly corresponding to the availability of cement Moreover, the distributors and retailers are also the key recommenders to homebuilders when choosing cement brands due to their technical knowledge and experience of cement products That is the reason why most of cement companies only focus on distribution campaigns which support distributors and retailers to make a good availability of their cement In addition, cement companies only take care their distributors with full of benefits and forget the homebuilders who are the most important in cement purchase because they are the final decision makers and the payers for the purchase Holcim Vietnam recognized the importance of this target group and approached the market in different direction from others The Cung Xay To Am campaign educates the homebuilders with full knowledge about cement, therefore homebuilders can be confident to make the

T cement brand because of its availability to seeking for their favorite brands

other communication Medias Thanks to Web 2.0, all information is public and easily communicates without geographic obstacle Thus, building a house is not just as simple as in the past when homebuilders based mainly on advices from contractors and/or construction engineers, they are now playing very important role in construction processes They take care about the details of their construction In addition, they have to face with many things such as: budget management,

Tare getting smarter and smarter while dealing with purchasing processes As the trend, homebuilders need to have a platform where they can be consulted and shared knowledge, experience of house building, discussed about fengshui (a part of Vietnamese spiritual life)

Understanding the curiosity and the trend of homebuilders, Holcim Vietnam launched the Cung Xay To Am campaign to satisfy the homebuilders, it was also the first biggest marketing campaign that a cement company held to their end-users in Vietnam Once the homebuilders understand how Holcim Vietnam cares their needs, the image of Holcim brand will be friendlier in their mind

As a fact in the society, while a distributor recommends a cement brand to homebuilders, the distributor would have some benefit from the cement company such

H o recognize the higher price they may have to pay to include those benefits Therefore, they now rely more and more on their own consideration by seeking information on internet as well as from their friends and relatives Most other cement companies concentrate on the distributors will have a bad image of the above benefit But with assistances by specialists, Cung Xay To Am campaign targets and takes care of homebuilders and builds an image of friendliness with homebuilders As a consequence, homebuilders will believe the price they buy Holcim

Holcim Vietnam

As the first cement company training homebuilders about cement specification and other details in construction process, it is a big idea while Holcim Vietnam considered cement a specific product the same as other regular products And this is also an ambition while Holcim Vietnam

cement brand because of its availability or recommended one to seeking for their favorite brands Applying this pull campaign successfully, it is a faster process for Holcim Vietnam

to gain market share compared with expanding distribution network to compete with a large distribution network of its biggest competitor Ha Tien

B Cung Xay To Am target customer profile

1 Geography: Cities and Provinces in South of Vietnam

In the North, cement market is very fragmented with many big competitors that lead to a tough competition In the South, the dynamic economy supports construction market more aggressive, while there are fewer competitors To be more concentrate on its operation, Holcim Vietnam only operates in the South of Vietnam This is also the target market for Cung Xay To Am campaign

2 Demography

2.1 Gender: Married male

The man plays the most important role in big projects He is the key decision maker, especially projects with complicatedly technical requirements because men are interesting on products with complicated technical specification than women This is also

a Vietnamese tradition; women often leave the big projects for the men to make decision Understand the behavior in Vietnamese families, Cung Xay To Am campaign profiles its target group to married males, this is the direct approach to final decision - makers for cement product

2.2 Age group: 30 years old to 60 years old

Understanding customer expenditure cycle, after working for ten years with a serious saving program, the employees can have enough savings to build their first sweet house

2.3 Social Economic Classes: A, B and C

Obviously, building a house is one of biggest project of people life in Vietnam, especially in this high inflation rate period Building a house may cost the whole - life savings of some people People in A, B class can effort to build their house earlier, while class C need longer time for savings The target customers are in the age of working, most

of them are employees in companies, and some of them do their own business

3 Psychographic characteristics

3.1 Interests and habits

The target customers often:

- Work and commute from 7 a.m to about 7 p.m daily

- Some of them will take the kids to schools

- Have coffee with friends in early mornings and evenings

- Drink with friend

- Love brands: Craven A/Jet (Tobacco); Tiger/Saigon Red (Beer); Honda/Yamaha (Motorcycle) Apple, and Mid-ranged Nokia mobile phones

- Discuss about sports, politics, news, money, family

- Go out with family and/or friends (eat, drive around city, ice-cream, go to the park)

3.2 Media usage

The target customers spend plenty of time on media consumption, they update news by reading newspapers, seek information and sharing experiences in social networks, spend time for leisure on television, listen to Radio while driving to offices

The target customers love good brand In cement products, Ha Tien is the first top

of mind as the oldest cement brand in Vietnam In their mind, long-life brand is judged as

a good brand and good quality, because its product has been evaluated buy users for long time It can prove the quality after some generation using it Holcim Vietnam - the new comer compared with Ha Tien - is considered as international brand which care about the environmental issues and good customer services

Source: Nielsen research, (2011)

My friendsExhibitions/fairs

TVCNewspapersMagazinsSeminars/Workshops/Events

Websites Sources of influence

( n = 300**)

Most influence sources All Sources