Introduction
The trend of "Good for health" is increasingly influencing consumer behavior, particularly in the food sector Companies like Tan Hiep Phat with its "Doctor Thanh" drinking water and Unilever with "Sunlight" dish soap promoting skincare have successfully capitalized on this trend In the chewing gum market, Lotte's launch of the sugarless XYLITOL gum faced competition from Wrigley's Extra, yet both brands only captured a combined market share of 15.2%, with Lotte holding 8.6% and Extra 6.6%, while traditional sugar gum remains dominant This presents an opportunity for Orion to strategically position itself in the market with a focus on "Provide nutrition for teeth," backed by sufficient investment and a solid business plan.
Objectives of the study
Orion XYLITOL, a popular gum brand from Orion Corporation, is looking to expand into the promising Vietnamese market, which has a growing population and economy, particularly among children and youth However, Vietnam's logistics and market conditions are less developed than those in Korea and China, presenting unique challenges Additionally, consumer insights differ significantly, and the Vietnamese gum market is highly competitive, featuring numerous major global brands.
To successfully introduce and cultivate XYLITOL gum in the Vietnamese market, it is essential to implement innovative strategies and unique approaches, as achieving significant success in this endeavor poses considerable challenges.
- To reach 3% value shares in the first year
- To mark a milestone the candy category at Orion Vietnam company.
Scope of work
To approach and to convince the Orion board members buy concept “XYLITOL brand – Provide nutrition for teeth” to launch out the market, this project will be explored information from
Primary data research will be conducted through focus groups comprising 20 participants, targeting both men and women in office settings in Ho Chi Minh City and Hanoi The study aims to identify key factors influencing consumer perceptions of imported products such as Orion XYLITON, Lotte XYLITOL, and Extra Wrigley's This research will assess which product resonates best with the target audience and evaluate the potential for Orion XYLITOL to succeed in the Vietnamese market by applying localized formulations.
Secondary data research – the sources are taken from Research agency, website as well as consulting from internal Orion members.
Final project structure
The problem statement is presented to express the target why this business plans to be prepared
This chapter briefs shortly about Orion Company
This chapter draws overview market in chewing-gum segment to take the chance and the reason why Orion has to jump into this segment
Chapter 4: Business Plan for Orion’s gum
This chapter brief shortly about Orion
This chapter is to summarize of the key findings and give some recommendations
History
Founded in 1956, Orion Corporation has evolved from a confectionery company into a diversified business conglomerate in South Korea, with interests spanning the entertainment industry, film, media, foreign investment, and food sectors As a leading manufacturer, Orion is renowned for its popular products, including "Chocopie," "Custas," "Goute," "O'star," and "Toonies," which have become favorites among customers worldwide.
Orion aims to share its winning experiences with Vietnamese consumers by offering high-quality products that enhance their enjoyment of life By choosing Orion, consumers can look forward to a cheerful lifestyle and the opportunity for successful careers, fostering growth and prosperity together.
By the end of 2005, Orion Group's sales revenue reached 1.7 trillion won, marking a remarkable growth of nearly 1,000 times since its inception Over the past 50 years, the company's trust and pride have flourished despite numerous challenges, demonstrating that success is driven by the spirit of Orion With a 40% share of the confectionery market in cakes, Orion has established itself as a key player in foreign confectionery investments in Vietnam The corporation's strategy focuses on expanding manufacturing in Vietnam, where it has established its main production plant to enhance its presence in the global cake market.
In the future, Vietnam will become a developed country in Asia, the production of Orion strategy of Vietnam is 50% of exports and 50% of domestic consumption.
Mission statement
To be number 1 in the foreign investment confectionaries company in Vietnam with full range of Pie, Biscuit, Snacks and Gum categories.
Vision statement
The meaning of three key words in vision statement
- Taste: bringing Korea original and delicious taste
- Happiness: enjoying and sharing the happy and best momentum
- Innovation: getting new innovation to discover life with sweeties.
Company structure
This structure facilitates comprehensive horizontal management across all levels, particularly in sales By segmenting the market into four regions—North, South, Central, and Modern Trade—each area is overseen by a dedicated Korean manager responsible for the entire team and their respective market dynamics.
Operation objectives for the year of 2013
- Re-enforcing positioning leader of Pie
- Taking back Snack leader category in fresh Potato chip from PEPSI Company
- Continuously diversifying & building Biscuit to compete directly with other local (Kinh Do, Hai Ha) and foreign (Lotte…) competitors to win the second place in total Biscuit category
- Launching successfully new Orion XYLITOL product with Top 2 rank in XYLITOL segment in Gum category to meet demand consumers and company mission
Vietnam retail industry market
Since joining the World Trade Organization (WTO) four years ago, Vietnam's retail market has rapidly integrated into the international landscape, reflecting significant evolution and adaptation The country's commitments upon entering the WTO have driven this transformation, facilitating deeper engagement with global markets.
The retail market is continuously developing at high speed from 20% to 25% size, total retail sales of goods and services reaching from 750,000 to 800,000 billion years 2006-
From 2008 to 2010, the economy faced significant challenges, and by 2011, despite a slight downturn, higher consumer prices impacted purchasing power Statistics indicate that the goods and services sector contributed approximately 15% to GDP, while retail sales accounted for 60-70% of GDP, playing a crucial role in recent economic growth.
According to the latest Global Retail Development Index (GRDI) report by AT Kearney, Vietnam has fallen to 23rd place among 30 emerging economies in 2011 Despite high consumer confidence, challenges such as inadequate infrastructure and high rental costs hinder foreign retailers' entry into the Vietnamese market Traditional distribution channels remain dominant, although new retail models are increasingly gaining traction Nonetheless, Vietnam continues to be an attractive market, projected to reach a size of $113 billion by 2012, supported by a growing population of 88.9 million.
Between 2007 and 2008, the number of supermarkets and shopping centers in the country grew from 200-250 to nearly 620 by the end of 2010 The wholesale and retail market systems expanded significantly, resulting in approximately 8,500 to 9,000 markets employing modern business methods This rapid development accounted for 20% to 23% of the goods flow, with major retailers such as Saigon Coop, Nguyen Kim, Nhat Nam Joint Stock Company, and Phu Thai Corporation leading the way.
The challenge of maintaining quality in retail goods, particularly in the sanitary ware and food sectors, has led to ongoing concerns about safety and the prevalence of counterfeit and substandard products As consumers seek assurance in their purchases, many companies are leveraging innovative technologies and strategic campaigns to enhance their market presence For instance, Coop-mart supermarket is actively adapting its approach to better connect with consumers and address these quality concerns.
Figure: 1.a: Numbers of shop in Traditional Trade compared 2009 with 2008 –
In 2010, the number of supermarkets began to shift towards sustainability, as evidenced by the increasing adoption of recycled nylon bags Additionally, Coca-Cola made strides in environmental responsibility by launching a campaign in 2011 that introduced recyclable drink-water bottles, marking a significant step in their "Green" initiative.
Table 1: “Green” campaign launch in the market in 2011 – Source CAN
General information of Chewing-gum market
Introduction
The candy industry offers a wide variety of products to cater to the diverse preferences of consumers across different age groups Similarly, the chewing gum sector employs this strategy by providing options such as fruit, mint, and coffee-flavored gums With such a vast selection available, it can be challenging for consumers to find the right product to meet their needs The gum market can be categorized based on four key criteria: brand, packaging, consumer needs, and flavor.
Lotte and Wrigley have introduced a new line of sugar-free products featuring xylitol, addressing consumer concerns about tooth decay and obesity while providing a refreshing experience This innovative approach meets the growing demand for healthier options that align with consumer expectations.
XYLITOL is a natural sugar alcohol sweetener found in the fibers of various fruits and vegetables, as well as in sources like berries, oats, mushrooms, corn husks, sugar cane bagasse, and birch It offers sweetness comparable to sucrose but with only two-thirds of the caloric content, making it an appealing sugar substitute for those seeking healthier alternatives.
At the moment, most consumer do not spontaneously get the right benefit of XYLITOL yet: XYLITOL still has positive associations and perceived benefits with “new”, “powerful”,
“effective”, “pharmaceutical” (positive) and “generally better for teeth and health”
The sugar-free segment shows significant potential, as indicated by the upward trend in health-conscious preferences, despite only capturing an 8.8% volume share in the gum category across six key cities.
Cool Air is rapidly gaining market traction, while Double Mint continues to lead in consumer awareness within the sugar gum segment Additionally, xylitol gum brands are experiencing a rise in popularity, reflecting a growing trend towards sugar-free options, with Extra and Lotte Xylitol making significant strides in this category.
Total 6 cities of Gum segment – Source ACN)
Figure 2.1.b: Volume & Value Share-Total 6 cities – Gum category – Source ACN
Figure 2.1.a: Product clarification map – Source Orion Internal
According to ACN research, the value and volume sales of gum are experiencing significant growth across six key cities, with Ho Chi Minh City (HCMC) leading the market and demonstrating the highest growth rate.
The gum market is currently facing significant challenges due to unexpected inflation trends since 2011, primarily driven by rising food and fuel prices Unfavorable weather conditions have led to a shortage in food supply, contributing to substantial price increases Additional factors exacerbating food price instability include natural disasters in Japan, political unrest in various countries, and fluctuations in oil prices, all of which are influenced by an unstable financial system These elements have particularly impacted two key areas, highlighting the intricate relationship between inflation and fuel prices in the market.
Figure 2.1.d: The estimated value, volume growth of Gum market – Source ACN
2.1.c: Value Share - Total 6 cities of Gum segment – Source ACN prices for agricultural products will be in Africa and Southeast Asia, especially Vietnam country
Economic challenges, including rising input prices and high interest rates, have led to a contraction in agricultural production, resulting in decreased food supply and increased prices Specifically, rice prices have surged by 20-30%, pork prices have risen by 10-20%, and other food products have also seen price increases of 10-20% Notably, the gum category has experienced growth despite these economic pressures.
Market demand
Vietnamese consumers primarily seek basic benefits from chewing gum, such as refreshing sensations and breath freshening for enhanced social confidence While oral care advantages like teeth whitening and cavity prevention are not currently top priorities, growing awareness of these benefits suggests a potential shift in consumer expectations for chewing gum in the future.
However, the confusion of consumers between XYLITOL as a brand name with Lotte and Extra as different variants provide opportunities for new brand Most people think that
Figure 2.1.e: Unit price of Top items contributing category value and existing over last 13 periods in 6 cities – Source ACN
Lotte and Extra share the brand name XYLITOL, but consumers tend to associate XYLITOL more with Lotte than with Extra While Extra XYLITOL offers a variety of fruit flavors, the primary connection for many remains with the Lotte brand.
Orion faces the challenge of distinguishing itself from merely being seen as another variant while leveraging the benefits of XYLITOL Effective labeling and packaging will be vital in this impulse-driven market, with a prominent display of the word XYLITOL on the label Additionally, a credible and unique Orion brand identity, along with a sub-label, will be essential for differentiation and impact.
In the recent research of ACN (Figure 2.2.a: the most factors consumers concern), the most of interviewees confirmed those factors they consider in their life that are “Health” and
Orion has the opportunity to capitalize on the growing preference among Vietnamese consumers for low-priced, individually packed confectionery items This trend has led to a demand for smaller, neater product presentations that serve as convenient snacks Additionally, consumers in Vietnam are increasingly favoring softer and less sweet products over hard, sugary alternatives Insights from Vietnamese retail sales data highlight these evolving consumer preferences.
Effective communication is crucial for maintaining a strong brand image, as poor execution can lead to consumer concerns about quality By analyzing competitors' activities and communication strategies, it becomes evident that they typically excel in one area, highlighting the importance of balancing skills in both aspects to avoid negative outcomes.
Figure 2.2.a: the most factors consumers concern – Source ACN
Key drivers for using current XYLITOL: its position was combination of basic drivers plus a more pharmaceutical/treating benefit This is a general direction for a new brand of XYLITOL
Orion XYLITOL has significant potential to capitalize on the market by combining essential drivers with dentist-recommended factors To successfully enter the market, Orion must invest in educating consumers about the oral care benefits of its product Without proper consumer education, the credibility of the claimed benefits may be undermined.
Orion new brand has to utilize this opportunity by leveraging XYLITOL and connecting it with Orion.
Competitor analysis
According to AC Nielsen's 2009 market share research, the gum segment featured numerous investment opportunities, with Lotte, Wrigley, and Perfetti emerging as the three dominant leaders, holding value shares of 10.3%, 81%, and 8.3%, respectively.
That is the total overview pictures of sugar market but sugarless segment, there are just 2 companies exploited with Lotte XYLITOL & Extra (Figure 2.3: Market share in Gum –
Figure 2.2.b: Chewing-gum functional benefits – Source ACN
When Lotte & Extra tried to deliver the key XYLITOL communication with target consumers who are differentiated level:
Figure 2.3: Market share in chew-gum – Source ACN
Some advantages and disadvantages that taken from:
Consumer have positive thinking about XYLITOL, especially about pharmaceutical Consumers not yet get the right benefit of Xylitol
PKG: Company and brand name:
Catch eyes of consumers because it’s bright, glossy, well contrasted and big Xylitol word.
The confusion of consumers between Xylitol as a brand name with Lotte as a different variant
Have medium mint, less sweet than Wrighley’s and gumbase last longer Gumbase turn “powder” after a long time tasting
Aggressive in the first launch year
Bill-board in the following year to remind consumer Weak in GT channel
Corporated with Finnish Dental Association (Hiệp Hội
High brand awarness in Sugar segment with Double mint
So sweet in taste Elasticity is not smooth Gumbase turn “powder” after a long time tasting
Good network in both channel: GT & MT "Sugar free" is quite small in bottle while "Extra" big and dominant in the first look
Corporated with FDI (Federation Dentist International)
Lotte XYLITOL implemented a more aggressive marketing strategy compared to its competitor, utilizing both ATL and BTL activities to effectively communicate the benefits of XYLITOL to consumers Their messaging was prominently displayed in key urban areas such as Ho Chi Minh City and Hanoi, through various channels including television commercials, bus stations, supermarkets, and even street vendors with cigarette kiosks.
Consumer behavior
The young population account for 56% under 34 years old that means an increase in purchasing power as well as joining more the workforce (Figure 2.4.a: Vietnam population
According to the U.S Central Bureau's International Database, Orion XYLITOL targets consumers aged 25 to 35, who represent approximately 17% of the total population This demographic is crucial as it encompasses a significant portion of potential customers and constitutes the primary income earners within families.
This is the number statistics from government’s research when divided population level based on the income and property
Figure 2.4.a: Vietnam population – Source U.S Central Bureau, International Database
Figure 2.4.c reaffirms the importance of targeting young working adults with stable incomes, highlighting that while both men and women are heavy users, women are responsible for a greater number of actual purchases.
Regardless of this segment, there are a lot of factors that they concern, especially in health sector
Between 2009 and 2011, Vietnamese consumers began to significantly change their shopping behaviors, with promotions becoming a key factor in their purchasing decisions In response to inflation in 2011, consumers started to allocate more of their salaries towards savings and adopted strategic spending habits They reduced their shopping frequency and sought cost-saving alternatives, such as purchasing from nearby stores and opting for local brands that offered similar benefits to foreign ones Additionally, consumers became more price-conscious, comparing prices across different shops and showing a strong preference for promotional offers.
Figure 2.4.b: Vietnam Workforce Income – Source U.S Central Bureau,
Figure 2.4.c: Consumer behaviors – Gum category – Source ACN
Consumers exhibit varied perceptions towards international and domestic products across different categories In the clothing and electronics sectors, there is a clear preference for imported items Conversely, in the Food & Drinks category, domestic products are favored primarily for their taste.
Figure 2.4.e: Regional Differentiation Behavior - Source ANC Figure 2.4.d: Promotion trend in Vietnam – Source ACN
Figure 2.4.f: Vietnamese perception rating – Source ACN
BUSINESS PLAN FOR ORION XYLITOL
Orion Business Plan
Sales Plan
Sales forecast based on the strategy of the first year launching to focus on 6 key cities:
In the first week of launch, the pipeline volume accounted for nearly 50% of the monthly target Following this initial week, the team continued to supply Orion XYLITOL to stores, taking into consideration feedback from consumers and retailers.
The strategy emphasizes targeting six key cities, which collectively account for 70% of the total annual sales goal, while the remaining 30 cities contribute the remaining 30% of the sales target.
To achieve the targeted sales volume within one year, we will base our monthly sales estimates on historical data from PIE and SNACK product launches, alongside expectations from board members and seasonal trends This approach is detailed in the Sales Forecast Table (see Appendix 2) Our sales plan is strategically designed for a short-term investment period of three years.
FY 2013 FY 2014 FY 2015 Unit Sales
Orion XYLITOL Zipper bag 145,000 174,000 217,500 Orion XYLITOL 31gr 90,500 108,600 135,750 Orion XYLITOL 61g 91,500 109,800 137,250
Orion XYLITOL Zipper bag $20.00 $22.00 $26.40 Orion XYLITOL 31gr $23.00 $25.30 $30.36 Orion XYLITOL 61g $21.00 $23.10 $27.72
Orion XYLITOL Zipper bag $2,900,000 $3,828,000 $5,742,000 Orion XYLITOL 31gr $2,081,500 $2,747,580 $4,121,370 Orion XYLITOL 61g $1,921,500 $2,536,380 $3,804,570
Orion XYLITOL Zipper bag $9.00 $9.90 $11.88 Orion XYLITOL 31gr $9.20 $10.12 $12.14
Orion XYLITOL Zipper bag $1,305,000 $1,722,600 $2,583,900 Orion XYLITOL 31gr $832,600 $1,099,032 $1,648,548 Orion XYLITOL 61g $672,525 $887,733 $1,331,600
Subtotal Direct Cost of Sales $2,810,125 $3,709,365 $5,564,048
Let’s achieve these volumes Orion should get one right following of Personnel Plan as well as Marketing Strategy.
Personnel Plan
Orion, venturing into a new business, plans to leverage its existing white-collar resources, including Board members and the Sales & Development team The payroll allocation for this new venture will account for nearly 10% of total sales In the first year, the company aims to recruit 30 employees, consisting of 2 team leaders and 26 production staff focused on stirring, mixing, and packing, along with 2 management positions in marketing: a Brand Manager and an Assistant Brand Manager.
The new team structure could enhance management efficiency by having two team leaders oversee production staff, who will report directly to the Planning Manager Additionally, the Gum marketing team will report to the Marketing Manager, ensuring clear communication and streamlined operations.
With this solution, Orion could save more budgets in recruiting and payment
General & Administration (G&A) $49,000 $53,900 $61,985 Sales & Development (S&D) $75,000 $82,500 $94,875 Advertising & Marketing (A&M) $32,000 $35,200 $40,480
Operation plan with these people:
Orion's standard working hours on a typical day are set, but if demand does not meet the supplied volume, the company may implement overtime production by adding an additional night shift from 11:30 PM to 6:30 AM.
- Production stage: there are 14 people in each shift to be divided into 2 groups with 1 one leader and 13 members
Stirring stage: 4 Mixing stage: 5 Packing stage: 4
Marketing Strategy
To enhance their credibility in the market, Orion XYLITOL aims to partner with a reputable dental association recognized by Vietnamese consumers, similar to competitors like Lotte, which collaborates with the Finnish Dental Association, and Extra, which works with the Federation Dentist International After evaluating potential associations, Orion will focus on those not already affiliated with Lotte to establish a unique partnership that showcases the quality of their products.
& Extra Wrighley’s, Orion Company only has one choice:
- Initiative and Co-operate with Vietnam Odonto Stomatology Association (VOSA) (Viện Răng Hàm Mặt Trung Ương) Based on the template of VOSA in each activity that is connected communities
- Claim the name of VOSA into “XYLITOL” products
The sugar segment is currently saturated with various products, including imports To establish a strong market presence, Orion should initially focus on the emerging "sugarless" segment, capitalizing on the growing consumer trend towards healthier choices This strategy will help Orion capture market share and enhance its brand image in the chewing gum category In the second year, Orion plans to simultaneously develop its "sugarless" roadmap while entering the traditional "sugar" market to further increase its market share.
Orion gum stands out with a notable 70% xylitol content, appealing to consumers who don't view high levels of xylitol as unnatural However, a more cautious and safer claim would be to emphasize a 50% xylitol content, which still highlights its benefits without raising concerns.
Before officially launching in the market, Orion should conduct one final research on product taste to better align with Vietnamese preferences The initial research conducted by the writer was a quick assessment aimed at gathering information to define the details for the product launch.
After evaluating three private products, it is evident that Korea's Orion XYLITOL has significant potential to capture the Vietnamese market By considering consumer feedback, Orion can enhance its product appeal, as it currently ranks second in "Like" ratings, just behind Lotte XYLITOL.
Primary Research – Overview “Like” product rating)
- Quality: stability of sweetness, higher mint, more chewy gum and not turn powder after a long time of tasting
The Lotte shape is favored over the Extra shape due to its perception as larger and more endearing Orion could benefit from adopting a universal design, such as a rectangle with rounded corners, while introducing slight variations that lean towards a square shape This neat rectangular design enhances the overall appeal.
In primary research, consumers indicated that the "Like" product rating aligns with their perception of the gum's ease of chewing While the shape of the gum is not a critical factor in their purchasing decisions, a rectangular shape is preferred over a square shape, as it creates the illusion of a larger product.
- Color: should be made in alignment with flavor ie green for mint, purple for grape, orange for orange, lime for lemon…
Based on the primary search of private Orion XYLITOL product (Appendix: Product
Answer Test) – in overall, the repeat usage of Xylitol would largely depend on “sweetness”
For a premium Xylitol gum product, it is essential to achieve a balance between a chewy gum base that is not overly harsh and a mint flavor intensity that surpasses existing brands The top priorities for ensuring high-quality Xylitol gum include maximizing chewiness and enhancing the mint level to provide a refreshing experience that lasts longer than competitors.
- Must not be so sweet like Lotte XYLITOL
- Mint must last long until the last chew
- Gum must remain chewy towards the end, not become “powder”
- Must give cool, minty taste
Effective packing is crucial for product success Observations at retailers, including wet markets, street vendors, and supermarkets, reveal that shop owners agree on the three best-selling pack sizes for Zipper/Blister and Bottle: 14g, 31g, and 61g Orion should consider launching these pack sizes to align with consumer convenience and purchasing habits.
Extra Wrighley’s Lotte XYLITOL Orion XYLITOL
Each of packing not only gets the owned usages for driving consumers but also effected to brand image:
- 14gr: to penetrate in the first launching year This pack could use in a short-time and not keep consumers long time with brand
- 31gr: to upgrade consumers one more level of loyalty It could be easy kept in the bag and brought more conveniences
- 61gr: to keep consumers more loyalty with brand.
Whatever products Orion is to bring into the market, there is a need to ensure that it has to satisfy 4 Rights:
- Right softness and right elastic texture
Orion should focus on introducing new flavors that are light, natural, and fruity to deliver a refreshing effect, which is a fundamental expectation for chewing gum.
- Highly available at street vendors & grocery store
- A little bit difficult in display at grocery stores
When launching a new brand label, it's essential to leverage the established familiarity of Lotte while maintaining a focus on XYLITOL Differentiating the product with unique and impressive features can enhance its appeal Orion XYLITOL is particularly recommended for consumers, as the brand is widely recognized and associated with credibility and quality in the confectionery industry.
There are significant opportunities for a new XYLLITOL brand, as Lotte has not established a distinct market position beyond the "general pharmaceutical" category Orion XYLITOL could enhance consumer loyalty by exploring two key benefit streams.
Prevent tooth decay/make teeth strong/good smile/feel confident
Less sugar/keep healthy/ keep slim/look beautiful/attractive to others
XYLITOL is most commonly used after meals, especially following breakfast, and this timing is closely linked to its dental benefits Current XYLITOL brands may not fully emphasize this, but Orion XYLITOL could enhance its messaging by highlighting that using the product after all three meals daily can significantly improve dental health and boost consumer confidence.
- Zipper/Blister 14g: 4boxes/case (30 blister/box)
- Bottle 31g: 4 boxes/case (12 bottles/box)
- Bottle 61g: 4 boxes/case (6 bottles/box)
- The main communication is “Provide nutrition for teeth” – Good for health by cleaning and making strong teeth, fresh breath
The mint and lemon flavor currently leads the market, but there is a growing demand among teenagers for a variety of flavors, including apple, grape, strawberry, and mixed fruit Once the XYLITOL mint and lemon flavor establishes its presence, introducing these unique flavors could provide Orion with a significant competitive advantage.
- Target users: Female and male from 25 - 35 years old They are the most will be working
At the launching moment, Orion should give the prices between Wrigley & Lotte XYLITOL
Besides that, Orion could offer more benefit to dealer the rank from 5% to 9% to be more competitive in the market:
Value (VND) Percentage (%) Value (VND) Percentage (%) Value (VND) Percentage (%)
Orion must address the ongoing issue of conflicting consumer prices in the Pie & Snack categories by implementing a unified pricing strategy across all channels To safeguard their brand reputation and market image, it is essential for Orion to adhere to a single price point for both Modern Trade (MT) and General Trade (GT) channels in their business plan.
Financial Plan
The business plan is primarily anchored in the headquarters' budget, which does not necessitate additional investment This budget is strategically designed around the existing production line and resources of Pie & Snack, ensuring efficient use of funds A significant portion of the budget is allocated for the acquisition of machinery and enhancements to the production line.
There are two kinds of production machinery line: mixing + forming and coating:
- Mixing & Forming machinery: 1,200kg/hour 9.6 tons/8 hours
After completing the task, all materials should be stored in a private cooling room for three days Subsequently, they will be returned to the initial coating process using machinery that operates at a production capacity of 450 kg over a 12-hour period Thus, enhancing production capabilities by increasing the number of coating machines is crucial during this phase.
Start-up Expenses to Fund $54,000
Start-up Assets to Fund $1,146,000
Non-cash Assets from Start-up $546,000
Cash Requirements from Start-up $600,000
Cash Balance on Starting Date $600,000
Other Current Liabilities (interest-free) $0
Loss at Start-up (Start-up Expenses) ($54,000)
Sales team has to sell on average 10.742 cartons with 226,769USD revenue per month to get break-event point At this point, there is no net profit
Average Per-Unit Variable Cost $8.59
In accordance with the company's headquarters' guidelines for investing in a new industry sector, the Net Promoter Score (NPS) must achieve a minimum ranking of 10% With this business plan, Sing-gum successfully reached the required NPS level in its first year.
Net profit margins are projected to grow by approximately 5% annually, rising from 11.14% in the first year to 15.94% in the second year, and reaching 22.16% by the third year This growth is based on the assumption that sales targets and other production-related indicators will align with a 20% tolerance level, considering factors such as inflation rates, production efficiency, and the mitigation of unnecessary management costs.
Pro Forma Profit and Loss
Direct Cost of Sales $2,810,125 $3,709,365 $5,564,048 Other Costs of Sales $1,380,600 $1,518,660 $1,640,153
Profit Before Interest and Taxes $1,098,825 $2,128,540 $4,645,119
With the estimated plan, the investor could re-call the funding budget that they invest into Orion XYLITOL on August, 2014 after one year launching out the market (see Appendix 6:
Risk management
Orion XYLITOL aims to achieve net profit as it implements its market launch plan However, experts predict increased volatility in the food sector, particularly within the confectionery industry, throughout 2013 To address potential uncertainties and ensure maximum sales targets are met, the company has developed a contingency plan for managing inventory and handling market returns.
Orion Vietnam is exploring the possibility of negotiating with its headquarters for direct exports to Laos, Cambodia, and African markets This decision comes in response to the supply chain challenges faced due to insufficient product volumes from China, which are unable to meet the increasing demand in Africa.
Africa without the need for China to install additional production lines and factory expansion
- Participate in co-promotions with local products selling
The general manager should reevaluate investment losses by prioritizing brand awareness and product presence in the first year In the second year, it’s essential to accept lower profit targets to prepare for a stronger market position By the third year, the product is expected to achieve the desired profit margins as it solidifies its place in the market.
Conclusion
The analysis indicates that the sugarless gum market in Vietnam presents significant potential and attractiveness for investors Engaging in this market could yield substantial profits for Orion while offering consumers a wider range of choices.
A crucial element in developing Orion's competitive edge is its comprehensive 4P strategy (Product, Price, Place, Promotion), whereas many manufacturers primarily concentrate their marketing and advertising efforts at retail locations to attract and retain consumers.
Orion's ownership of advanced technologies and deep understanding of Vietnamese consumer habits positions the company to quickly meet market demands, especially in light of competitors' stagnation in product innovation.
Besides, with proposed strategic plan about distribution, pricing, marketing and business, it is certainly that Orion is able to get success in investment in this market
Recommendation
- Make a research product by professional research company to find out the reasons how to match between Orion XYLITOL original from Korea/China with Vietnamese taste
To develop a strategic marketing and advertising plan that leaves a lasting positive impression on consumers, it's essential to leverage relatable imagery and experiences For instance, when Vietnamese consumers associate "cool air," they often visualize "vapour release," creating a refreshing mental image Additionally, promoting products like gum, which can enhance fresh breath before social interactions, boosts consumer confidence and reinforces brand appeal.
To expand market share and attract new consumers, it is essential to develop a wider range of products, including innovative fruit flavors tailored for various age groups beyond the current focus on 25 to 35-year-olds This strategy not only retains existing customers but also engages new ones, fostering excitement and interest in the brand.
Educating consumers about the benefits of chewing gum can enhance their oral health and overall well-being By promoting the correct usage of gum, we can introduce a fresh approach to dental care Additionally, targeting dental professionals as indirect consumers presents a valuable investment opportunity, allowing them to recommend gum as a beneficial tool for their patients.
- Invest enough impact to POSM to build and to reinforce “premium products” although Orion offers the cheaper than other competitors about consumer prices
- Educate the internal team, especially sales force to be more belief on new consumer trend insight and the reason launch out Orion XYLITOL
- PROBISPLAN – How to plan a business by software – BOM Education
- Vietnam Food & Drink Report – Business Monitor International Ltd
- Shopper Marketing – Markus Stahlberg and Ville Maila
- AC Nielsen Vietnam, 2009 Pocket Reference Book
- AC Nielsen Vietnam, 2010 Pocket Reference Book
- AC Nielsen Vietnam, 2011 Pocket Reference Book
- AC Nielsen Vietnam – Vietnam Grocery Report 2011 Report
- AC Nielsen Vietnam – Vietnam Goods Trend 2011 Report
- www.socongthuong.thaibinh.gov.vn
Appendix 1: Start-up funding table
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
General & Administration (G&A) $5,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 Sales & Development (S&D) $7,000 $7,000 $7,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 Advertising & Marketing (A&M) $3,500 $3,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Pro Forma Profit and Loss
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Direct Cost of Sales $214,750 $214,750 $214,750 $214,750 $232,125 $232,125 $236,725 $241,225 $244,900 $249,500 $249,500 $265,025 Other Costs of Sales 20% $105,300 $105,300 $105,300 $105,300 $114,000 $114,000 $116,300 $118,300 $120,400 $122,700 $122,700 $131,000 Total Cost of Sales $320,050 $320,050 $320,050 $320,050 $346,125 $346,125 $353,025 $359,525 $365,300 $372,200 $372,200 $396,025
Profit Before Interest and Taxes $76,808 $77,808 $78,808 $79,808 $90,708 $90,708 $93,583 $95,583 $98,733 $101,608 $101,608 $113,062
Sales Tax, VAT, HST/GST Received $690,300 $911,196 $1,366,794
New Other Liabilities (interest-free) $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
Sales Tax, VAT, HST/GST Paid Out $690,300 $911,196 $1,366,794 Principal Repayment of Current
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Cash Sales $526,500 $526,500 $526,500 $526,500 $570,000 $570,000 $581,500 $591,500 $602,000 $613,500 $613,500 $655,000 Subtotal Cash from Operations $526,500 $526,500 $526,500 $526,500 $570,000 $570,000 $581,500 $591,500 $602,000 $613,500 $613,500 $655,000
Sales Tax, VAT, HST/GST Received 10.00% $52,650 $52,650 $52,650 $52,650 $57,000 $57,000 $58,150 $59,150 $60,200 $61,350 $61,350 $65,500
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenditures Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Sales Tax, VAT, HST/GST Paid Out $52,650 $52,650 $52,650 $52,650 $57,000 $57,000 $58,150 $59,150 $60,200 $61,350 $61,350 $65,500
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $100,000
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Earnings $0 $43,187 $86,375 $129,562 $172,749 $215,936 $264,846 $313,756 $365,756 $417,755 $469,755 $570,953 $623,894 Total Capital $646,000 $689,187 $732,375 $775,562 $818,749 $861,936 $910,846 $959,756 $1,011,756 $1,063,755 $1,115,755 $1,216,953 $1,269,894 Total Liabilities and Capital
Profit Before Interest and Taxes 15.92% 23.36% 33.99%
Total Debt to Total Assets 22.04% 6.59% 0.00%
Pre-tax Return on Net Worth 72.45% 73.12% 79.51%
Pre-tax Return on Assets 56.48% 68.31% 79.51%
Additional Ratios FY 2013 FY 2014 FY 2015
PHẦN ĐÁNH GIÁ SẢN PHẨM THỬ
Hello! Thank you for taking the time to participate in this survey You will be invited to test three products, and after each product, you will answer a series of questions related to your experience.
DÀNH CHO Phỏng Vấn Viên: Thứ tự của từng cặp sản phẩm thử sẽ được đánh dấu :
Sản phẩm 1 (Orion Food Manufacture) - Product 1 (OFM) 1
Sản phẩm 2 (Wrigley Manufacture) - Product 2 (WEM) 2
Product 3, Lotte XYLITOL Manufacture, invites you to evaluate three distinct products Please examine and smell each one carefully, then respond to the questions by comparing the three products directly.
Q1: Về mặt hình dạng bên ngoài (hình dáng, màu sắc…) , bạn thích sản phẩm nào hơn? -
Sản phẩm thứ nhất - The first one 1
Sản phẩm thứ hai - The second one 2
Sản phẩm thứ ba - The third one 3
Không thích sản phẩm nào - Neither 5
Q2 Xét về mặt MÙI VỊ, bạn thích sản phẩm nào hơn? - AROMA
Sản phẩm thứ nhất - The first one 1
Sản phẩm thứ hai - The second one 2
Sản phẩm thứ ba - The third one 3
Không thích sản phẩm nào - Neither 5
Bây giờ xin mời bạn dùng thử sản phẩm và lần lượt trả lời các câu hỏi sau đây
Q1 Về tổng thể, câu nào sau đây mô tả đúng nhất mức độ thích hay không thích của bạn về sản phẩm này? - Your overall liking
Không thích chút nào - Do not like it at all 1
Không thích - Do not like it 2
Bình thường - Neither like it nor dislike it 3
Rất thích - Like very much 5
If the product is available at a price you find acceptable, how likely are you to purchase it after trying it for yourself?
Chắc chắn sẽ không mua - Definitely not buy 1
Có thể sẽ không mua - Probably not buy 2
Có thể sẽ mua mà cũng có thể không - Might or might not buy
Có thể sẽ mua - Probably buy 4
Chắc chắn sẽ mua - Definitely buy 5
Mức độ thích hay không thích của bạn về vị của sản phẩm mà bạn vừa dùng thử là một yếu tố quan trọng để đánh giá sự hài lòng chung Hãy chia sẻ cảm nhận của bạn về hương vị của sản phẩm này.
Không thích chút nào - Do not like it at all 1
Không thích - Do not like it 2
Bình thường - Neither I like it nor I dislike it 3
Rất thích - Like very much 5
Q4 Vui lòng cho biết nhận xét của bạn về HƯƠNG VỊ sản phẩm? - The FLAVOR
Quá mạnh - Very strong 1 Hơi quá mạnh - Somewhat too strong 2 Độ đậm đà đúng với ý tôi - Just right to what I like 3
Quá nhạt nhẽo - Very bland 5
Khi nhai sản phẩm này, cảm giác của tôi về độ cứng và độ mềm rất rõ ràng Sản phẩm không quá cứng, mang lại sự dễ chịu khi nhai, nhưng cũng không quá mềm khiến cho việc thưởng thức trở nên kém hấp dẫn Ngoài ra, sản phẩm không dính vào răng, giúp tôi dễ dàng thưởng thức mà không lo lắng về việc làm sạch sau khi ăn.
Không thích chút nào - Do not like it at all 1
Không thích - Do not like it 2
Bình thường - Neither I like it nor I dislike it 3
Rất thích - like very much 5
Q6 Bạn hãy cho biết nhận xét của bạn về vị cay the của sản phẩm? - The FRESHMINT TASTE
Quá cay the - Too mentholated 1
The menthol intensity is just right for my taste, providing a perfect balance of flavor It's not overly mentholated, offering a mild experience that isn't too strong For those who prefer a completely smooth sensation, there are options available that are not mentholated at all.
Q7 Bạn hãy cho biết nhận xét của bạn về độ dẻo/dai của sản phẩm? - The ELASTICITY
Quá dẻo/dai - Too elastic 1
The texture can be described in various ways: it can be somewhat too elastic, which may not suit everyone's preference For those who seek the perfect balance, the ideal texture is just right to what they like On the other hand, some may find it somewhat not very elastic, while others might feel it is not elastic at all.
Q8 Bạn hãy cho biết nhận xét của bạn về hậu vị của sản phẩm? - Your overall liking about the after taste
Không thích chút nào - I do not like it at all 1
Không thích - I do not like it 2
Bình thường - Neither I like it nor I dislike it 3
Rất thích - I like it very much 5
Q9 Xin vui lòng cho biết ý kiến chung của bạn về chất lượng (nói chung) của sản phẩm vừa được thử - The overall quality
Neither poor or good - Không tốt cũng không tệ 3
Q10 Xin bạn cho biết bất cứ ý kiến về sản phẩm bạn vừa thử (thích và không thích) - Your comment - LIKE - DISLIKE -
Bảng Câu Hỏi này được sử dụng cho sản phẩm 2 & sản phẩm 3 để có sự so sánh trực tiếp –
This questionnaires are used for Product 2 and Product 3
C PHẦN SO SÁNH 3 SẢN PHẨM VỪA ĐƯỢC THỬ - COMPARISON
After evaluating all aspects of the three products you recently tested, which one do you prefer?
Thích sản phẩm 1 hơn - Like Product 1 than 1 Thích sản phẩm 2 hơn - Like Product 2 than 2 Thích sản phẩm 3 hơn – Like Product 3 than 3
Có nhiều yếu tố ảnh hưởng đến sở thích của bạn đối với các sản phẩm thử nghiệm Một số yếu tố quan trọng bao gồm chất lượng sản phẩm, giá cả, thương hiệu, và trải nghiệm sử dụng Hãy cho biết những yếu tố nào trong số này có tác động lớn nhất đến quyết định lựa chọn sản phẩm của bạn.
Thích Sản phẩm 1- Prefer first product
Thích Sản phẩm 2 - Prefer second product
Thích Sản phẩm 3 - Prefer third product
Như nhau - The same Hương vị -
Thank you for your attendant into our interview! – Cám ơn bạn đã tham gia buổi phỏng vấn của chúng tôi!
