Rationales of research study
Corn (maize) has been a secondary food crop in Vietnam for a very long time, next to rice
Historically, corn was primarily consumed by humans in Vietnam, particularly in rural and mountainous areas, where sticky or waxy corn was a staple food However, there has been a significant increase in corn cultivation in Vietnam, with 90% of the planting area now dedicated to field corn for the husbandry and animal feed industry The remaining 10% is allocated for waxy and sweet corn, which is still grown for fresh human consumption, previously using OP seeds.
Table 1.1: Corn planting area in Vietnam, 2009
Corn area (ha) Seed demand (ton) Market value ($K)
OP Hybrid OP Hybrid OP Hybrid
Source: Monsanto (Thailand) Co., Ltd, 2009
Waxy corn, traditionally grown from open-pollinated (OP) seeds, faced challenges such as lower yields, inconsistent plant and ear sizes, plant weakness, poor eating quality, and susceptibility to pests In 2006, Syngenta introduced the first hybrid waxy corn, “Wax 44,” to the Vietnamese market, achieving significant success in transitioning from OP to hybrid seeds.
- Growers inherit many good agricultural characteristics such as higher yield, higher uniformity, strong plant, better in pest resistance, more sellable ears …
- End consumers who direct consume product as food had also enjoyed a better taste, more nutrient, and more eatable portion,…
With the benefits above, market trend is rapidly converting from OP variety to hybrid seed
In 2009, the conversion rate for the OP area to hybrid was recorded at 27%, with an annual forecasted decline of 15% By 2015, this conversion rate is expected to reach 50%, resulting in a market value of hybrid waxy corn seed estimated at $8 million.
Numerous companies, including Syngenta, DuPont, East West Seeds Company, Vietnam National Seeds Company, and Southern Seeds Company, are striving to enter the Vietnamese waxy corn market.
In 2006, Monsanto identified waxy corn as a key crop to enhance its seed business in Vietnam Leveraging its advanced corn seed breeding technology, the company initiated a waxy corn breeding program By 2009, Monsanto developed its first hybrid waxy corn, “Milky-36,” which demonstrated adaptability to Vietnam's conditions and market demands, offering high yield, uniform plant and ear size, appealing ear appearance, disease resistance, and exceptional eating quality.
In Vietnam, corn (maize) is recognized as a staple food following rice, as outlined in The National Food Security Assurance Policy Consequently, the introduction of new hybrid corn seeds in the country requires testing by The National Testing Center for Seeds, Plant Products, and Fertilizers, which involves two types of experiments.
The DUS trial typically spans one and a half years and includes three seasonal replications across various locations that represent a wide ecological range throughout the country This process is essential for assessing the differentiation, uniformity, and stability of a new hybrid.
VCU, or Value of Cultivation and Use, involves a large-scale trial designed to assess the performance of new hybrids in DUS testing Conducted with a single replication at optimal locations, this evaluation process takes approximately six months to complete.
To obtain permanent approval for commercializing in Vietnam, all trial data must be submitted to the Scientist Committee of the Agriculture Ministry Milky-36 received permanent approval in June 2010 and is set to launch in April 2011, with a goal of producing 100 tons of seed by 2015, aiming for a 15% market share that could generate USD 1 million in sales revenue As a key product in the waxy corn segment, Milky-36 is expected to contribute significantly to Dekalb Vietnam Co., Ltd., accounting for 5% of sales in 2015.
However, when there are more players come into the market, the market requires a higher quality and creates a new value in competition, such as:
Growers will benefit from an increased variety of options, allowing them to demand higher standards in disease resistance to reduce pest control investments Additionally, there is a need for new hybrids that mature earlier, enabling faster crop rotation Improved agronomic characteristics, such as enhanced uniformity in plant and ear size, will also be essential for achieving a higher sellable ear rate.
Brokers serve as a crucial link between growers and end consumers, facilitating the market entry of ear corn products They help maintain a balanced supply and demand while providing valuable advice to growers on selecting the best hybrids that offer disease and insect resistance, higher yields, and superior eating quality In situations of market oversupply, brokers may recommend varieties with longer shelf life to enhance storage and transportation efficiency.
Ear corn retailers serve as a vital link in the market by maintaining daily contact with end consumers They possess a deep understanding of consumer needs and preferences, which allows them to provide valuable feedback to brokers This feedback helps brokers select the best hybrid varieties that align with consumer demands, ensuring a more tailored product offering in the market.
End consumers are crucial for market feedback, as their specific requirements for eating quality dictate their preferences They seek varieties that deliver superior taste, softness, aromatic flavor, and larger ear shape, making these attributes essential for acceptance in the market.
Obviously, as above mentioned, the role of broker is the most important which influences to the success of new hybrid waxy corn launching, perhaps it is due to:
Purchasing low-quality fresh waxy corn can jeopardize his business, as it may lead to unsellable products If he fails to sell to the wholesale market, he won't be able to repay the grower, especially since he has acquired the corn on credit terms.
Planting low-quality or short-shelf-life varieties can lead to brokers refusing to purchase from growers, as they prioritize protecting their business Consequently, brokers may offer lower prices for these inferior varieties compared to the recommended options.
Problem statement
This research aims to identify the key factors influencing the waxy corn market in Vietnam by examining the role of brokers within the supply chain, which includes seed distributors, seed dealers, growers, wholesalers, and retailers in Ho Chi Minh City Understanding this dynamic is essential for developing an effective strategy to engage brokers and secure their support for the launch of the Milky-36 variety.
Objectives of the research
- To understand the factors influence to the new hybrid waxy corn launching into the market
- To establish an appropriate marketing plan to satisfy influenced factors above for a success launching.
Scopes and limitations
- The marketing plan for launching new hybrid waxy corn seed Milky-36 is applied in 2 geographical regions in the south Vietnam: South East Region and Mekong River Delta
- The mentioned study is conducted on brokers in Ho Chi Minh City, Tay Ninh and Dong Nai province
The results obtained from the survey could be biased because of information collected from the interviewees with different backgrounds.
Managerial implications
The study provides valuable insights for the company to understand the influencing factors in the market, enabling the development of an effective marketing strategy for successfully entering the waxy corn market.
The study highlights competitors' strategies to penetrate the market and assesses their performance Consequently, the company can identify its current market position and determine necessary actions to differentiate itself and enhance its marketing plan.
In today's competitive marketplace, customer satisfaction is a crucial differentiator and a vital component of business strategy Understanding customer insights and behaviors is essential for companies to enhance product development and meet evolving needs.
Research Methodology
Qualitative research is utilized to gather insights and perceptions regarding the strengths and weaknesses of existing hybrid waxy corn varieties in the market This information will be instrumental in identifying the key factors that will inform and enhance the marketing strategy.
In depth interview method is used in this study to interview brokers individually who are defined playing an important role in a supply chain to find out the needed information
Broker: 3 brokers in Ho Chi Minh, Tay Ninh and Dong Nai province
- Using Monsanto annual report, Monsanto trial report, Monsanto market information
- Using The National Testing Center for Seeds, Plant Products and Fertilizers
Introduction
In today's competitive marketplace, having a consistent strategy for delivering products or services is essential to outperform the competition Alongside defining this marketing strategy, it is crucial to establish a clear methodology for the daily implementation of these strategies.
When developing a marketing strategy, it's essential to consider various factors, with some holding greater significance than others Each strategy requires attention to specific unique considerations, making it impractical to pinpoint every important factor universally Nevertheless, many elements are commonly found across all marketing strategies.
This chapter will examine the literature on marketing planning and its processes for effectively entering the marketplace It will also emphasize key factors that significantly influence market dynamics.
Marketing plan
Effective management of sales and marketing involves systematically identifying various options, selecting the most suitable ones, and then planning and budgeting the necessary actions to meet objectives.
Marketing planning is a structured sequence of activities aimed at setting and achieving marketing objectives Companies typically engage in a management process to develop these plans, which can be informal in smaller organizations or more systematic in larger, diversified ones This straightforward process includes reviewing the current situation, formulating assumptions, setting sales objectives, and determining the necessary actions, including scheduling and budgeting for implementation According to Wikipedia, marketing planning involves creating a strategy for a firm's marketing activities, which can apply to specific products or the overall marketing approach This process is aligned with the organization's broader business strategy, as top management integrates intended marketing activities into the firm's strategic direction Different levels of marketing objectives exist within an organization, with senior management defining the general business strategy, which is then interpreted and implemented across various contexts within the firm.
A marketing plan is a comprehensive written document outlining the essential actions required to achieve specific marketing objectives for a product, service, brand, or product line Typically spanning one to five years, it may also be integrated into a broader business plan A robust marketing strategy serves as the cornerstone of an effective marketing plan; without this strategic foundation, the list of actions within the plan may lack significance and effectiveness.
The contents of marketing plan
According to Michael Baker (2008).The main contents of a marketing plan are:
− Industry structure and strategic groupings
• Current Situation - Consumer Analysis (According to Quick MBA – Marketing plan based on consumer and competitor analyses)
− Nature of the buying decision
+ Mission statement and vision statement + Financial objective
+ Marketing objectives + Long term objectives
− Critical success factors in the industry
− Product life cycle management and new product development
− Brand name, brand image, and brand equity
• Marketing Strategy (Quick MBA – Marketing Plan Basics) - segmented marketing actions and market share objectives
− Pricing method (cost plus, demand based, or competitor indexing)
− Pricing strategy (skimming, or penetration)
− Price elasticity and customer sensitivity
− Advertising reach, frequency, flights, theme, and media
− Sales force requirements, techniques, and management
− Pro-forma monthly income statement
− Pictures and specifications of the new product
− Results from research already completed
Problem definition
The fresh vegetable and agricultural products market in Vietnam is currently characterized by limited regulation, leading to instability influenced by various factors.
- The supply is over or less than the demand
- Natural conditions as flooding or drought
Brokers play a crucial role in the agricultural supply chain by facilitating the distribution of farmers' products to wholesale markets and ultimately to consumers They possess a deep understanding of the expectations of farmers, wholesalers, retailers, and end consumers, allowing them to effectively bridge these groups In collaboration with wholesalers, brokers also function as market controllers, making their contribution to fresh food consumption indispensable.
In the waxy corn market, farmers exclusively sell fresh ear corn to brokers, who purchase corn year-round to supply wholesalers, while retailers ultimately sell to consumers Although farmers obtain waxy corn seeds from dealers, they must adhere to brokers' recommendations for specific varieties that meet criteria such as attractive ear shape, taste, and storage capability; failure to comply can result in lower prices or rejection of their corn Additionally, farmers face delayed payment terms from brokers, leading to financial uncertainty; if brokers struggle to sell the corn, farmers may face difficulties in receiving payment or may have to offer discounts Consequently, the entire fresh waxy corn market is dominated by brokers.
Since 2008, Milky-36 has been tested in Vietnam for its adaptability, pest resistance, yield, and eating quality In September 2010, it received approval from the Scientist Committee of the Agriculture Ministry under Decision No: 188/QĐ-TT-CLT To ensure local market acceptance, the company has conducted numerous demonstration fields in targeted geographical areas, leading to recommendations for its prompt market release Consequently, Milky-36 is now eligible for commercial launch in Vietnam.
The company has developed a marketing plan for the launch of Milky-36, emphasizing the broker's critical role as an expert in the field This research aims to validate the company's definition of the broker's role within the Vietnamese waxy corn market, highlighting its significance in the product's successful introduction.
Methodology design
Research objectives focus on analyzing the influencing factors involved in the process where brokers purchase fresh ear corn directly from farmers for sale to wholesale markets or retailers To gather comprehensive and detailed information, employing the in-depth interview method is the most suitable approach.
An in-depth interview is a qualitative research method that facilitates personal discussions, providing deeper insights into individuals' thoughts, feelings, and behaviors regarding significant issues This interview style is typically unstructured, allowing the interviewer to encourage respondents to elaborate extensively on the topic of interest.
The research involved in-depth interviews with the three largest brokers supplying fresh ear corn to the Ho Chi Minh City market, aimed at gathering insights into their needs and perceptions regarding the strengths and weaknesses of current hybrid waxy corn varieties The findings revealed critical insights into the brokers' business practices, attitudes, beliefs, and behaviors related to hybrid waxy corn, as well as essential brand attributes and key drivers influencing their decisions These insights will serve as a foundation for developing a marketing plan to launch the new hybrid waxy corn seed, Milky-36, in the market.
Information need
The study is to deeply analyze and highlight broker’s roles which are influencing to current waxy corn market in Ho Chi Minh City and surrounding provinces, these are:
- The role of “market driver”
The questionnaire will be designed to gather insights about the roles and needs related to the development of key product concepts for current waxy corn varieties It will explore brokers' attitudes, beliefs, and behaviors, as well as identify brand attributes and key drivers influencing the launch of new hybrid waxy corn seeds.
Conduct an in-depth interview
Kvale (1996) outlines seven essential stages for conducting in-depth interviews: thematizing, designing, interviewing, transcribing, analyzing, verifying, and reporting Each of these stages plays a crucial role in the interview process and will be explored further with practical strategies for effective implementation.
Table 3.1: Kvale’s 7 stages of conducting in depth interview
• Asking and probing for broker’s opinion about what they determine evaluate factors which influence to the current waxy corn market
• Using in-depth interview method to deeper analyze the determined factors by interview brokers who are current playing their roles in the waxy corn market
An in-depth interview should gather crucial insights regarding the performance benefits or losses of waxy corn for farmers and brokers, as well as their respective expectations It is essential to understand consumer expectations and the various factors influencing the current waxy corn market to create a comprehensive analysis.
• Design an interview guide which includes questionnaire, actual questions
To effectively plan the interviews, it is essential to design a questionnaire that specifies the time, date, and location of each interview The interviews will take place in Tay Ninh, Ho Chi Minh City, and Dong Nai, as these areas are where the most professional brokers operate to cater to the Ho Chi Minh City market.
• Actual questions include: as in the list of questionnaire Interviewing • Interviewer needs to introduce him/her self to establish a good rapport with the interviewees Asking for audiotape recording
• Guide conversation towards the objectives and goal of the interview
• Then, proceeding to conduct the interview with designed questions
This report organizes the roles of brokers in the waxy corn market, emphasizing the factors that currently influence this sector Utilizing insights from recorded audiotapes and highlighted text, the analysis provides a comprehensive overview of market dynamics and broker responsibilities.
• Determine the meaning of information which regards to the role of broker, gathered in relation to purpose of the study
• Look for theme, commonalities and patterns to try to make sense of the above information
• If more questions arise and needs clarity to serve the purpose of the study then another in-depth interview should be conducted
Verifying Verify credibility and validity of the information gathered which include benefits, losses, inhibitors, drivers that influence the launching
Reporting A formal written report will be written of the findings in in-depth interview.
Sampling and respondents
The article focuses on an in-depth interview with three highly effective brokers in the Ho Chi Minh City waxy corn market, specifically located in Dong Nai, Tay Ninh, and Ho Chi Minh City.
No Respondent name Address Position Business location Experience Contact No
1 Nguyen Van Phoi HCMC Self- employed Tay Ninh, HCMC 6 years 0903973948
2 Nguyen Huu Hieu Dong Nai Self- employed
Dong Nai, Tay Ninh, HCMC 6 years 01663563438
3 Pham Ngoc Vu Tay Ninh Self- employed Tay Ninh, HCMC 3 years 0907539207
Table 3.3: Topics to discuss with respondents in depth (Appendix 3.1: Structured questionnaires)
Market definition
Due to waxy corn is classified a fresh human consumption market, thus,
Co., (Ltd) has identified waxy corn as a key strategic crop for its five-year plan in the vegetable seeds sector in Vietnam, driven by anticipated market growth.
Source: Monsanto – Long Range Planning (FY10
In 2010, the vegetable seed market was valued at approximately $25.9 million, with corn seed dominating the market at 28%, equivalent to $7.3 million The adoption rate of hybrid waxy corn seed is projected to reach 34%, with an annual conversion trend of 10 to 15% anticipated by 2015, leading to a total market value of $10.2 million, as hybrid corn seeds are valued higher than open-pollinated (OP) seeds This lucrative market has attracted significant interest from major companies in the seed industry, particularly in Vietnam's waxy corn sector.
From 2011 to 2015, Dekalb Vietnam focused on five strategic vegetable crops: onion, pepper, cucumber, tomato, and waxy corn Notably, waxy corn experienced remarkable growth, achieving sales of $423,000 in 2015.
Waxy corn is categorized as a fresh produce for human consumption, making it a vital strategic crop within Vietnam's vegetable seeds sector Its significance is underscored by a five-year growth plan that leverages the anticipated market expansion.
(Vietnam)’s strategic crops market growth assumption
Long Range Planning (FY10-FY15) - Market definition, 2009
In 2010, the total vegetable seed market in Vietnam was valued at approximately $25.9 million, with waxy corn seed representing the largest segment at 28%, equivalent to $7.3 million The adoption rate for hybrid waxy corn seed is projected to reach 34%, with an annual growth trend of 10 to 15% By 2015, this conversion rate could rise to 50%, resulting in a market value of $10.2 million, as hybrid seeds are valued higher than open-pollinated (OP) seeds This promising market is attracting significant interest from major companies looking to enter the Vietnamese waxy corn sector.
Dekalb (Vietnam) has identified five strategic vegetable crops for its five-year plan from 2011 to 2015, which includes onion, pepper, cucumber, tomato, and waxy corn Notably, waxy corn has shown remarkable growth, with sales increasing from $423,000 in 2011 to $1,507,000.
Vietnam Vegetable Market Size, 201 Vietnam Vegetable Market Size, 2010
Dekalb Vietnam has identified waxy corn as a key strategic crop for its five-year plan in the vegetable seeds sector, recognizing its significance in the fresh human consumption market This decision is based on positive market growth assumptions for crops in Vietnam.
In 2009, the market for waxy corn seed was valued at $7.3 million, accounting for 28% of the total market The adoption rate of hybrid waxy corn seed is projected to reach 34%, with expectations to increase to 50% by 2015, resulting in a total market value of $10.2 million This growth is driven by the higher value of hybrid corn seeds compared to open-pollinated (OP) seeds, making it an appealing market for major seed companies.
From 2011 to 2015, Dekalb Vietnam focused on five strategic vegetable crops: onion, pepper, cucumber, tomato, and waxy corn Notably, waxy corn achieved impressive sales of $1,507,000 in 2011.
Figure 4.2: Dekalb (Vietnam) - Vegetable Seeds Division – 5 years growth planning
Source: Monsanto – Long Range Planning (FY10-FY15) - Market definition, 2009
Product performance
Dekalb Vietnam is focusing on its product portfolio to develop a five-year plan centered around the promising waxy corn hybrid, Milky-36 This hybrid has successfully passed DUS and VCU testing, as confirmed by the National Center for Variety Evaluation and Seed Certification.
Table 4.1: Yield of Milky-36 in Spring 2008 in Northern provinces (Unit 100kg/ha)
No Location Ha Noi Hai
Phu Tho Nghe An Average Varieties
Source: The National Center for Variety Evaluation and Seed Certification (NCVESC), 2008
FY11 FY12 FY13 FY14 FY15
Other Onion Pepper Cucumber Tomato Waxy Corn
The result showed that Milky-36 has been checked with a leading variety (MX10) and gave a higher yield in every location in Spring season 2008 in northern provinces
Table 4.2: Yield of Milky-36 in Winter 2008 in Northern provinces (Unit 100kg/ha)
No Location Ha Noi Hai
Phu Tho Nghe An Average Varieties
Source: The National Center for Variety Evaluation and Seed Certification (NCVESC), 2008
Again, Milky-36 showed a higher yield than a leading variety MX10 in every location in Winter season 2008
Table 4.3: Yield of Milky-36 vs current hybrids across Vietnam biological regions in Winter-Spring 2008, Spring-Summer 2009 and Summer-Autumn 2009 (Unit: 100 kg/ha)
Yield (100 kg/ha) % vs chech varieties
7 Ba Ria VT Winter-Spring 08-09 0.5 175 - 150 - 16
8 Ba Ria VT Summer-Spring 2009 0.5 150 - 140 - 7
Source: Summary Trial Report from Agricultural Extension Center, Agricultural Department,
Agricultural Cooperatives across the country, 2009
Milky-36 has been conducted a large scale trial in multi locations and seasons across the country during 2008 and 2009 It showed almost higher yield than currently hybrids from 2 to 20 percentages
Milky-36 is an early-maturing hybrid that allows farmers to harvest a week earlier than other varieties, providing quicker financial returns Its shorter plant and ear height contribute to greater stability in the field, making it ideal for rainy seasons and easier to harvest Additionally, Milky-36 boasts excellent storage capabilities, keeping ears fresh for up to three days post-harvest in the wholesale market The attractive cylindrical ear shape maximizes the edible portion, while its high eating quality has earned top ratings from retailers and consumers alike, maintaining a desirable stick texture and milky flavor even after boiling and two days of storage.
Table 4.4: Milky-36 agricultural characteristics and taste compare to current hybrids
3 EW268 68 230 140 2 Long & tender Sticky Sticky Fragrant
4 Milky36 62 200 110 3 Cylin- drical Sticky Sticky Milky
Source: Waxy corn trial result – Monsanto, 2009
Table 4.5: The interested traits vs product performance of current hybrid waxy corns in
Characteristics Trait concerned by Performance of current hybrids
Grower Broker Consumer Wax-44 EW-268 MX-10
Note: 9: Very good 1: very poor
On June 8, 2010, the Department of Crop Plant under the Ministry of Agriculture approved Monsanto's first hybrid waxy corn seed, Milky-36, through Decision No 188/QĐ-TT-CLT, making it eligible for commercialization in Vietnam.
Market research
Market situation and the key success factors
The study aims to assess the brokers' industry experience, revealing that all participants have been in business since the introduction of the OP variety They were pioneers in exploring the hybrid waxy corn market in Ho Chi Minh City, particularly following Syngenta's launch of the first hybrid waxy corn, Wax44, in Vietnam in 2005.
Hybrid waxy corm is cultivated year-round primarily in Tay Ninh province and nearby regions of the Mekong Delta, including Can Tho, Vinh Long, An Giang, Dong Thap, and Dong Nai This crop supplies the fresh consumption wholesale market in Hoc Mon district, Ho Chi Minh City, with an average daily yield of 200 tons of fresh ear corn, increasing to 400 tons during peak season from May to August However, production declines during the bottom season in January, coinciding with the Chinese New Year when many retailers close for celebrations.
The waxy corn market in Ho Chi Minh City is experiencing significant growth, driven by the improved eating quality of hybrid waxy corn, which is increasingly favored for fresh consumption, whether boiled or as peeled kernels A major factor contributing to this market expansion is the migration of the rural labor force to Ho Chi Minh City and nearby provinces like Binh Duong, Dong Nai, Long An, and Ba Ria Vung Tau, creating a substantial demand for ear corn This trend is projected to grow at an annual rate of 15%, leading to a rise in hybrid waxy corn cultivation, particularly in Tay Ninh and the Mekong Delta throughout the year, with additional planting occurring in other provinces during the rainy season, such as Dong Nai.
Ba Ria Vung Tau and Dak Nong
Since the launch of the first hybrid waxy corn by Syngenta in Vietnam, several hybrids like MX-10 and EW-268 have been introduced, with later hybrids generally offering improved quality compared to Wax44 However, these newer varieties have faced challenges such as disease susceptibility, lower yields, late maturity, and smaller ear sizes, while consumer expectations continue to rise Currently, MX-10 stands out as a market leader due to its ability to be grown at higher densities, extended storage capability, and good tip fullness Its competitive market share is largely attributed to its lower price, resulting from local seed production Nonetheless, MX-10's drawbacks include small ear size, medium eating quality, and vulnerability to lodging during the rainy season.
Wax-44 (Syngenta) is experiencing a significant decline in popularity due to its poor eating quality, resulting in hard grains after boiling and limited shelf life in storage Consequently, the market price for Wax-44 is lower than other varieties by 300 to 500 VND per ear, leading growers to abandon this variety despite similar investment costs Additionally, end consumers are rejecting Wax-44 due to its unsatisfactory eating quality.
EW-268 (EWJVC) is recognized for its superior eating quality, but it has a late maturity and is highly susceptible to downy mildew disease Additionally, the joint venture that produced this hybrid has been restructured, leading to its apparent disappearance from the market.
There are 2 new players attempt to penetrate the market with 2 latest hybrids:
East West International Seeds is set to launch its innovative hybrid Violet 926 by the end of 2010 This unique waxy corn hybrid features a bicolor composition of 10-15% purple grain and 85-90% white grain, offering an eating quality comparable to the previously established EW-268.
Monsanto is set to introduce its first hybrid waxy corn, Milky-36, known for its exceptional eating quality and impressive uniformity in both plant and ear size This early-maturing hybrid can be harvested just 60 days after planting, making it a promising option for farmers seeking efficiency and high-quality yields.
The Vietnamese market for fresh human consumption is largely unregulated by the government, with no specific production guidelines for vegetables Instead, farmers rely on their personal experience to guide their cultivation practices While agricultural cooperatives offer a more organized approach to production, they face challenges in effectively managing output, particularly in the complex vegetable sector.
In Vietnam's current agricultural landscape, a contracted production model between farmers and brokers is proving effective, particularly for waxy corn Brokers play a crucial role in controlling the market, and for companies to successfully launch their products, they must align their performance and marketing strategies with the expectations of these brokers.
Product performance is the primary factor driving successful market launches It is essential to address specific agricultural characteristics that benefit brokers while also satisfying the expectations of growers and end consumers Research has effectively identified the underlying needs that must be met to achieve this alignment.
- Eating quality: This is consumer’s first choice, they prefer to a sticky and fragrant waxy corn, eatable after boiling
- Ear size uniformity: This is to provide high percentage of sellable ear and easy to grade and sell
- Ear appearance: A nice ear shape is easy to attract consumer A big ear and full tip filling are preferable
Bulk buying is a purchasing strategy where brokers acquire immature corn directly from growers, allowing them to manage the harvest themselves This method proves advantageous, particularly during periods of oversupply or adverse weather conditions, as it enables brokers to optimize their field holding ability for better management outcomes.
Storage capability is a crucial concern for brokers, as waxy corn is a fresh product with a limited shelf life of just three days Therefore, enhancing storage duration is essential for effective sales management Varieties that feature a longer-lasting green husk cover can significantly extend storage time in the wholesale market, ultimately benefiting brokers' sales strategies.
- Yield: is composed by many elements in which agricultural characteristics of a hybrid are important components, broker prefers to a hybrid which provides higher yield than others to get more profits
A company's marketing strategy plays a crucial role in enhancing the purchasing power of growers, as respondents emphasize the importance of recognizing their central roles within the supply chain, which includes distributors, seed dealers, growers, brokers, wholesalers, retailers, and consumers.
The vegetable seed business operates on a more complex distribution chain compared to other crops, involving distributors, seed dealers, growers, brokers, wholesalers, retailers, and consumers This intricate network not only aims to maximize sales but also ensures sustained growth In contracted production scenarios, growers are often bound to brokers, limiting their ability to sell fresh ear waxy corn elsewhere or leaving them uncertain about potential buyers Consequently, brokers play a crucial role in this chain, as their satisfaction with the company's strategy is essential for successful product launches.
Broker’s role
This study explores the insights of brokers in the waxy corn business, delving into their roles to uncover the underlying needs that drive their operations.
When growers decide to cultivate waxy corn, they often face key questions about which variety to plant and where to sell their produce Brokers play a crucial role in this process, as they typically recommend specific varieties that are currently in demand If growers do not choose the varieties promoted by brokers, they risk either being unable to sell their fresh ear corn or receiving significantly lower prices for their harvest.
Brokers are not a seed seller but they act as a promoter to promote a specific variety So, what is the insight?
To ensure a stable supply of high-quality waxy corn and extend the selling duration of ear corn, growers are advised on the optimal varieties to cultivate This strategic guidance aims to enhance customer retention among wholesalers and retailers, ensuring satisfaction for all stakeholders involved.
Concerns about financial incentives for brokers from seed providers to promote specific products were not substantiated However, findings indicated that companies sought to gain brokers' support by fostering strong relationships through entertainment and incentive trips involving seed dealers.
However, financial benefit is mentioned by respondents as a method to stimulate their activities or covering their expenditures at least if seed provider wants to get their stronger support
The findings reveal the current buying mode employed by brokers to acquire growers' products, specifically through a cash deposit of 10% of the contracted production value for immature corn fields Growers are responsible for maintaining the corn until harvest, receiving the remaining payment in cash only after brokers sell the product to wholesalers or retailers Brokers sell waxy corn to the wholesale market on credit, with payments made bi-weekly However, wholesalers often deduct amounts for unsellable corn due to factors like over-maturity, damage, or market oversupply, which can depress prices Consequently, brokers may request growers to share the losses from unsellable corn, highlighting the growing buyer power in the supply chain of Grower – Broker – Wholesaler, where buyers exert increasing influence over sellers.
The role of “Market driver”
Brokers play a crucial role in driving the market, particularly by setting the buying price of promoted corn varieties higher than others For instance, a price increase of just 500,000 VND per hectare for ear corn can significantly boost the waxy corn seed market Brokers possess in-depth knowledge of current varieties and are willing to invest more in hybrids that offer greater uniformity in ear size This uniformity not only leads to higher selling prices but also reduces labor costs for grading before selling to wholesalers The benefits derived from improved ear size uniformity effectively outweigh the additional costs associated with promoted hybrids.
The innovative waxy corn hybrids, such as Milky-36 from Dekalb, stand out in the market due to their unique characteristics like high ear size uniformity and fragrant flavor, making them ideal for promotion These features can serve as benchmarks for brokers, positioning them as market drivers Additionally, East West International Company's Violet-926 bicolor waxy corn hybrid is also being considered as a future leader in the waxy corn market, highlighting the potential for differentiation in this sector.
In summary, product differentiated point which benefits to broker can be picked up to promote under broker’s role of market driver easily.
Advertising and brand awareness
Respondents indicated a reluctance to allow the company to use traditional advertising methods, such as radio and television, due to the high costs associated with these mediums Instead, they emphasized the effectiveness of engaging directly with growers through farmer meetings and field days to promote the variety Additionally, there is significant interest in the weekly talk show program aired on local television, which further supports their preferred communication strategies.
“Farmer’s Enrichment Program”, in which, they will be presented as one of the important role of broker
Brand awareness for hybrid corn seed appears unclear among respondents, as there is currently no significant distinction between imported and local seeds However, participants acknowledged the importance of fostering a strong relationship with waxy corn growers in the region, which could enhance the company's reputation and establish a valuable, friendly partnership.
Company profile
Dekalb (Vietnam) Co., Ltd received its operating license from Ho Chi Minh City’s People Committee on August 26, 2010, enabling it to function as a direct sales company in Vietnam's seed industry This development follows 15 years of operating as a representative office for Monsanto (Thailand), which focused solely on market surveys and supporting distributors who imported seeds from Thailand The license presents significant opportunities for Dekalb (Vietnam) to actively engage in the corn seed market, which is recognized as a promising GMO sector in Asia, particularly with the Vietnamese government's commitment to launching its first GMO seeds in 2012.
Monsanto is a global leader in biotechnology, particularly in GMO technology, offering a diverse array of products that enhance plant traits for the benefit of growers and consumers worldwide These innovations lead to higher yields, improved taste, increased nutritional value, and greater tolerance to drought, cold, and herbicides.
Dekalb (Vietnam) is the result of the merger between the Monsanto representative office in Thailand, established in 1995, and Seminis Thailand, which began operations in 2003 This collaboration focuses on the corn seed and vegetable seed sectors in Vietnam The merged entity has successfully introduced various field corn and vegetable seed products to the Vietnamese market, establishing strong brand recognition among local growers Dekalb (Vietnam) will carry on the legacy of these representative offices in the Vietnamese seed market.
The Objectives of company
The vision of Dekalb (Vietnam): Modernizing Vietnam agriculture by the up-to-date biotechnology via seed solution
The mission of Dekalb (Vietnam): Being the first seed company launching GMO product in Vietnam by the year 2012
Financial objective: Generating 25 million USD in sales revenue by 2015
• Creating awareness of Dekalb and Seminis among growers in Vietnam
• Building Dekalb and Seminis as an image of seed solution in a modern agriculture
• Positioning Dekalb and Seminis as friendly brands as the mission of the company
• Loyal customers are the ambassadors of Dekalb and Seminis through word of mouth.
Current Situation of Waxy corn market in Vietnam
Market definition
There are 3 segments of corn seed in Vietnam:
Field corn seed market: This segment covers 90% of total corn planting area and serving for husbandry and animal feed industry
Sweet corn seed market: This segment covers only 0.4% of total corn planting area
This segment is to serve mostly the market of human fresh consumption, snack, and canning industry
The waxy corn seed market occupies just 10% of the total corn planting area, primarily catering to human consumption through products like fresh boiling ear corn, dried ear corn, popcorn, and corn powder for snacks and cakes Waxy corn is cultivated year-round across the country, with significant concentrations in the Mekong Delta, Southeast region, Red River Delta, Central Coast, and highlands, strategically located near urban areas to meet the demands of the labor force.
However, waxy corn is also a seasonal market which is different from north to south basing on the natural and social condition
• North region: Waxy corn is unable to grow during summer time (June to August) due to so hot and winter time (December to February) due to so cool
••• Central coast: Waxy corn is unable to grow during typhoon season (September to
November) due to high risk of typhoon
••• South region: Waxy corn is unable to grow during flooding time in Mekong Delta
From August to November, growers should avoid cultivating waxy corn, as harvesting coincides with the Vietnamese New Year from December to January During this festive period, retailers typically return to their homes in the northern or central regions, which can disrupt the market for waxy corn.
Hybrid waxy corn is an emerging segment in Vietnam's corn seed industry, experiencing rapid growth primarily around major industrial cities to meet fresh consumption demands The southern region plays a crucial role due to its favorable natural conditions and larger market size for consumption.
Market size
In 2009, the total planting area for waxy corn was approximately 36,450 hectares, with a demand for 437.4 tons of hybrid corn seed valued at 3.5 million USD This area is projected to grow by 15% annually, reaching 110,000 hectares by 2015, which will require 1,300 tons of hybrid corn seed and generate a value of 12.4 million USD.
Table 5.1: Waxy corn planting area forecast (2009 – 2015)
Market segmentation
Waxy corn is primarily categorized under grain corn, with human fresh consumption representing the largest market segment and a key factor in seed company selection It requires a specific maturity period of 60 to 75 days post-planting Additionally, the ear corn can be stored for extended periods to facilitate transportation, while also offering excellent eating quality, appealing ear shape and size, and resistance to field diseases.
Industry structure and strategic groupings
Porter 5 forces analysis: The Porter’s 5 forces model (Porter, 2008) is used to analyze competitive situation in the seed industry in order to identify the opportunities and the threats of the company
+ Supplier: All waxy corn seed players operate in a model of Research and Development –
In the competitive seed production market, local suppliers leverage their cost advantages for domestic seed production, while foreign players predominantly rely on imports from their Thai entities to meet market demands This proactive approach to seed commercialization underscores the importance of a robust supply chain in the industry.
Buyers hold a powerful position in the seed market, benefiting from a diverse selection that ranges from government-subsidized seeds for family use to premium seeds aimed at commercial applications for urban labor forces and export markets.
The waxy corn seed market presents a new opportunity for companies in the seed industry, attracting interest from various potential entrants Notably, DuPont is a key player looking to penetrate this market by leveraging geneplasm sourced from the Philippines to develop the "conic" snack, which is made from corn powder Additionally, Vinaseeds, a state-owned company, is receiving government subsidies to strengthen its competitive edge in this emerging sector.
In Vietnam, various crops compete for corm planting areas, with cassava, sugar cane, and rice being the most competitive The market demand for these crops fluctuates annually, influencing growers' choices However, many farmers prefer to cultivate waxy corn because it matures earlier than other crops, allowing for quicker crop rotations and increased productivity.
When analyzing competition in the waxy corn seed market, it is essential to differentiate between domestic and foreign suppliers Domestic suppliers primarily focus on production and benefit from government subsidies, whereas foreign entities tend to adopt a marketing-oriented approach.
• Southern Seeds Company (SSC): SSC is a state company was established in
Founded in 1976 and transformed into a Southern Seeds Joint-Stock Company in May 2005, SSC offers a diverse array of seed products, including hybrid rice, hybrid field corn, hybrid waxy corn, and various vegetable seeds With a comprehensive dealer network across the nation, SSC is a key player in the hybrid waxy corn seed market, notably with its leading product, MX10, which has recently captured the highest market share.
Vietnam National Seeds Company (VNSC), established in 1968 and transitioned to a National Seeds Joint-Stock Company in November 2003, offers a diverse array of seed products, including hybrid rice seeds, hybrid field corn seeds, and hybrid waxy corn seeds.
OP Seed offers a diverse range of vegetable seeds, primarily serving the northern region through an extensive dealer network In the competitive hybrid waxy corn seed market, VinaSeeds stands out with its promising product, HN88, which is projected to be a leading hybrid option in northern areas.
The East-West Joint Venture Seed Company (EWJVSC), established in 1995 as a collaboration between Vietnam and East West International from the Netherlands, specializes in seed production and trading, particularly excelling in cucurbit varieties like watermelon, cucumber, and pumpkin In 2008, EWJVSC introduced the hybrid waxy corn EW268, quickly gaining market share in southern Vietnam However, the joint venture collapsed in early 2010 when EWIC altered its strategy and withdrew its breeding programs, leading to a decline in the seed business as the Vietnamese partner took over and restructured the company.
Syngenta pioneered the hybrid waxy corn market in Vietnam in 2006 with the introduction of the hybrid Wax44, quickly capturing significant market share from 2006 to 2008 However, despite launching two additional hybrids, Wax48 and Wax50, in 2009, the company faced challenges with product performance, leading to a serious decline in market share by 2010.
EWI has recently expanded its operations in Vietnam by partnering with a new distributor to launch two innovative hybrid waxy corn varieties, Victory 924 and Violet 926, in the southern region While Victory 924 has not met customer expectations, the introduction of the bi-purple grain variety has been well-received by growers, highlighting EWI's effective differentiated product strategy.
• Dekalb (Vietnam): penetrates Vietnam waxy corn market in 2011 with the first hybrid waxy corn named Milky
Companies recognize the Vietnam waxy corm seed market as a promising opportunity and are making significant efforts to enter it While local producers benefit from lower production costs, they lag behind in seed technology In contrast, foreign companies possess advanced seed technology, positioning them to introduce innovative products and effectively capture market share, despite facing higher initial costs.
Competition and market share
Figure 5.1: The hybrid waxy corn seed market share by company, 2010
West International Company (EWIC): Since the withdraw from the Joint
EWIC is establishing a representative office in Vietnam and has chosen a new partner to distribute its products, including the recently launched hybrid waxy corn varieties, Victory 924 and Violet 926, in the southern region While Victory 924 has not met customer expectations and has been discontinued, Violet 926 stands out as an innovative hybrid with a unique bi-color mix of white and purple grains, gaining quick acceptance among growers due to its distinctiveness.
Dekalb (Vietnam): A Monsanto’s new entity in Vietnam which officially penetrates Vietnam waxy corn market in 2011 with the first hybrid waxy corn named Milky-36
In summary, companies are actively targeting the emerging market for Vietnam waxy corm seeds While local producers benefit from lower production costs, they lag behind in seed technology In contrast, foreign companies leverage advanced seed technology, positioning themselves to dominate the market with innovative products in the future.
The hybrid waxy corn seed market share by company, 2010
SSC 54% the withdraw from the Joint ing up a representative office in
In Vietnam, two new hybrid waxy corn varieties, Victory 924 and Violet 926, have been quickly introduced in the southern region While Victory 924 has struggled to perform effectively, Violet 926, characterized by its unique blend of white and purple grains, has gained rapid acceptance among growers due to its distinctiveness.
Monsanto’s new entity in Vietnam which officially penetrates Vietnam waxy corn market in 2011 with the first hybrid waxy corn
In conclusion, companies are actively targeting the Vietnam waxy corm seed market, recognizing its potential for growth While local producers benefit from lower production costs, they lag behind in seed technology In contrast, foreign competitors possess advanced seed technology, positioning them to introduce innovative products and effectively capture market share in the future.
The hybrid waxy corn seed market share by company, 2010
Competitors' strengths and weaknesses
An in-depth interview revealed that the MX10 (SSC) seed is losing its competitive edge in pricing due to the fresh consumption market's shift towards the Mekong region, where modern bridges have replaced the My Thuan and Can Tho ferries This change has led to a decline in passenger purchases, as retailers now prefer to sell MX10 for its smaller ear size, which yields higher profit margins Despite these challenges, MX10 continues to perform well in An Giang and Dong Thap, particularly near the Vam Cong ferry.
Wax-44 (Syngenta) is experiencing a significant decline in popularity due to its poor eating quality, despite having a robust plant structure and higher yields, making it difficult for growers to sell the fresh product at competitive prices In contrast, EW268 (EWJSC) offers superior eating quality compared to both MX10 and Wax-44, gaining widespread acceptance in the Mekong Delta, although it has a longer maturity period and is susceptible to downy mildew Violet 926 (EWIC), introduced in 2010 as an innovative bicolor waxy corn, features 10% purple grain, with its benefits expected to be validated by end consumers soon.
Table 5.2: Vietnam Waxy Corn Players analysis
1 SSC - Low COGs due to local production
- Product performs well in high density
High plant, small ear, low uniformity of ear size
2 Syngenta - Strong brand name in pesticide and seed
Product performance: Very poor in eating quality
- Very fast in product development
- Product performance: Plant vigor very strong
3 EWJVC - Low COGs due to local seed production
- Well-known brand in vegetable
4 EWIC - Well-known in vegetable seed brand in Asia
- Product performance: eating quality issue
5 VNSC - Low COGs due to local production
- Product performs well in high density
Product performance: High plant/ear, a bit late
Market trends
The rapid conversion to hybrid waxy corn is projected to grow at an annual rate of 15%, driven by the hybrid seeds' higher yield, wider adaptability, improved disease resistance, and superior eating quality These advantages result in increased income and reduced risk for growers Currently, 34% of the waxy corn planting area has transitioned to hybrid seeds, with expectations to reach 75% by 2015, leading to a market size of approximately $10.5 million, as the price of hybrid waxy corn seeds is nearly ten times higher than that of open-pollinated varieties.
Consumer Analysis
Nature of the buying decision
The choice of waxy corn variety ultimately lies with the grower, but the end consumer significantly influences the market by determining the eating quality of these varieties This consumer feedback directly affects brokers, who must adapt to market preferences to remain competitive As a result, brokers serve as crucial advisors to growers, guiding them towards varieties that are likely to be accepted by consumers Without this consultation, growers risk purchasing less desirable varieties at lower prices, which can negatively impact their profitability.
Demographics
Industrialization is drawing younger workers from rural areas to urban centers in search of better job opportunities and stable incomes This shift has led to a significant increase in the demand for fresh waxy corn in cities, as it is a staple food for the labor force in Vietnam However, the migration of labor from rural regions, particularly those where waxy corn is cultivated, has resulted in higher production costs for growers.
Participants
The participants in the waxy corn market can be described by following diagram:
Figure 5.2 : Waxy corn business model in Vietnam
The choice of waxy corn variety ultimately lies with the grower, but the end consumer significantly influences the market by determining the eating quality of the corn, which brokers must consider when advising growers Consumer acceptance directly affects brokers' business decisions, as they will recommend varieties that meet these expectations to avoid purchasing lower-priced, unconsulted options Additionally, the migration of younger labor from rural areas to urban centers, seeking higher and more stable incomes, has spurred a substantial demand for fresh waxy corn in cities, where it is a staple food for the working class However, this shift has resulted in a diminished labor force in rural regions where waxy corn is cultivated, leading to increased production costs for growers.
The participants in the waxy corn market can be described by following diagram:
Waxy corn business model in Vietnam
Source: Monsanto market survey analysis, 2009.
The choice of waxy corn variety for cultivation ultimately lies with the grower; however, the end consumer plays a crucial role in the waxy corn market by influencing brokers based on their preferences for eating quality Brokers must align their orders with consumer expectations to remain competitive, as failing to do so may lead to purchasing lower-quality varieties at reduced prices Additionally, the migration of younger labor from rural areas to urban centers in search of better job opportunities has significantly increased the demand for fresh waxy corn in cities This trend highlights the importance of waxy corn as a staple food in Vietnam, while also presenting challenges for growers in regions where waxy corn is cultivated, as the dwindling labor force raises production costs.
The participants in the waxy corn market can be described by following diagram:
Source: Monsanto market survey analysis, 2009
Buyer motivation and expectations
Waxy corn matures in approximately 60 days and is widely cultivated as a "famine relief plant," allowing farmers to achieve quicker profits compared to other crops As a result, it is often one of the first choices for farmers Additionally, the use of hybrid corn seeds is increasingly prioritized to ensure crop security.
Loyalty segments
Farmers prioritize their practices and experiences when selecting seeds, often opting for varieties that have previously yielded the best results This reliance on past performance makes it challenging for seed providers to persuade them to switch to new, untested varieties.
In case the variety he looks for is in shortage, he is willing to pay more to get a needed variety or even change to other crops.
Dekalb (Vietnam) - Current Situation
Company resources
The company's financial health is robust, having secured a total investment of 1 million USD from the regional headquarters to establish a fully foreign-owned enterprise in Vietnam, which commenced operations on September 1, 2010.
The sales team, comprising 32 members, is transitioning from the Monsanto representative office to Dekalb (Vietnam) and operates nationwide This team has gained valuable experience in the seed business through their work with Monsanto and Seminis since 1995 in Vietnam.
Time: Dekalb (Vietnam) enabled in early September 2010 to continue selling previous products which were launched by Monsanto and Seminis representative office
Monsanto is recognized as a global leader in the seed industry, excelling in research and development, seed production, and trading In Vietnam, the company operates through two specialized teams focused on field corn and vegetable seeds.
Objectives of Milky-36 launching
In April 2011, Dekalb (Vietnam) will debut the country's waxy corn market with its first hybrid, "Milky36," aiming to sell 20 tons of seed and generate 5 billion VND in revenue The initial launch will primarily target the southern regions, including Tay Ninh, Dong Nai, and the Mekong Delta, during the latter half of 2011.
Summary of Situation Analysis
Table 5.3: Summary of the Business Opportunities and Threats
• The conversion from using OP variety to hybrid is occurring rapidly
• There will be more markets to serve (because the movement of mass labor force to urban population in major cities)
• Opportunity to expand the export market to countries where Vietnamese is living such as the US, Australia, Canada, European…
• The expansion of foodstuff processing industry for both domestic and export market which use corn powder as main material
• Entrance of potential local and foreign competitors into the market
• The substitution of other crops: sugar cane, cassava, rice,…
• Government registration limits product development process
• Pressure of Downy Mildew disease in corn spreads out south region
Table 5.4: Summary of the Company’s Strengths and Weaknesses
• The Company’ strength is well known as a leading in biotechnology
• The successful combination of field corn and vegetable seed in Vietnam is well recognized by Vietnam grower widely
• Dekalb and Seminis brand are well known in Vietnam seed business
• Local R&D for local market strategy has strengthened company’ product portfolio
• Defining waxy corn is key driver for business growth in Vietnam
Weaknesses • Sales team needs more time to adapt waxy corn market due to target market is different from field corn market
• FCPA application limits company’s operation
• High cost of goods reduces company’s competitive advantage
Key success factors in the industry Internal elements:
• Product performance that meets customer expectation: wide adaptation, high yield, common disease resistant, early maturity, high uniformity, good eating quality, good storage ability,…
• Clear understanding customer’s needs and defining the problem then selecting and positioning a right product in target market
• Differentiation is a crucial strategy in order to gain more customer satisfaction to increase more royalty and advocacy Especially, gaining broker support will be initial successful for the launching
• Fast conversion creates a big market size of the hybrid corn seed
• Urbanizing of labor force creates more purchase power for waxy corn fresh consumption.