The optimization of online & offline marketing in wines & spirits company

ANDREWS UNIVERSITY GRIGGS UNIVERSITY GLOBAL ADVANCED BACHELOR OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT The Optimization of Online & Offline Marketing In Wines & Spi

ANDREWS UNIVERSITY GRIGGS UNIVERSITY

GLOBAL ADVANCED BACHELOR OF BUSINESS

ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

The Optimization of Online & Offline Marketing

In Wines & Spirits Company

TABLE OF CONTENT

ABSTRACT ……… i

ACKNOWLEDGEMENT……… ii

STATEMENT OF AUTHORSHIP……… iii

ORGANIZATIONAL CONTACT INFORMATION……… iv

1 ORGANIZATION DESCRIPTION (1.5 page)

1.1 Vision……… p.8 1.2 Mission……… p.8 1.3 Organizational History……… p.8 1.4 Scope of Work……… p.8 1.5 SWOT analysis……… p.8 1.6 Organization Structure……… p.9

2 MARKET OVERVIEW……… p.10

3 MARKETING DEPARTMENT……… p.11

4 THE OPTIMIZATION OF ONLINE AND OFFLINE MARKETING IN WINES AND SPIRITS COMPANY

4.1 Online Marketing

4.1.1 Advantages of Online Marketing

4.1.1.1 Social media marketing……… p.11

4.1.2 Cons of online marketing

4.1.2.1 Social media marketing……… p.13

4.2 The advantages & disadvantages of offline marketing

4.2.1 Pros of offline marketing……… p.15 4.2.2 Cons of offline marketing……… p.16

5 TACTICS FOR COMBINING THE MAXIMIZATION OF ONLINE AND OFFLINE’S ADVANTAGES AND MINIMIZATION OF ITS DISADVANTAGES

5.1 Wines

5.1.1: Famous global Wines, and famous in VN: San Pedro – 1865 limited edition… p.18 5.1.2: Famous global Wines, but not famous in VN yet: Jaboulet- LaChapelle…… p.20 5.2: Spirits

5.2.1: Famous global Spirits, and famous in VN: Jagermeister……… p.22 5.2.2: Famous global Spirits, but not famous in VN yet: Amarula……… p.26 Reference……… v

Abstract This Capstone project aims to discuss the optimization of digital and offline marketing in wines and spirit company Indeed, a clear understanding about advantages and disadvantages

of these two different types of marketing will be given In conclusion, our group will suggest

a list of effective tactics that maximize the pros and minimize the cons of on-off marketing will be suggested

Acknowledgement

We would like to send my sincere thanks to my teacher, Mr James Lindgren as well as Mr Rob, Tan Khoa Distribution Corporation’s COO who gave us the golden opportunity to do this wonderful project: The optimization of the use of online and offline marketing in wines and spirits company, which also helped us in doing a lot of Research and explored so many new things

We are making this project not only to complete our degree but to also increase our knowledge

Once again, we would like to show our gratitude to those help us on this Capstone

Statement of Authorship

 We have participated in the work to take public responsibility for the content

 We have made substantial contributions to (a) conception and design or analysis and interpretation of the data, and to (b) drafting the article or revising it critically for important intellectual content, and we have read and approved the final version to be published

 This Capstone Project represents original material, has never been published before, and

is not under consideration for publication elsewhere

Organization contact information

Organization Name: Tan Khoa Distribution Corporation

Organization Address:76-78 Street 9A, Trung Son R.A, Binh Hung Ward, BinhChanh

District, HCMC

Organization Website: www.tankhoa.com

Organization email: info@tankhoa.com

Organization Tel: 84 8 54318840

Organization Fax: 84 8 54318841

Project Liaison Name: Kha Kim Tuấn

Project Liaison Title: Marketing Intern

Project Liaison Phone : 090912226

Project Liaison Email: kelvin.tuan09@gmail.com

1 ORGANIZATION DESCRIPTION

1.1 Vision: Tan Khoa Distribution Corporation looks forward to Vietnam’s leading Wine &

Spirits Distributor and supplier of wine & spirits covering 100% nationwide and become a

sole distributor with as more as possible famous brand

1.2 Mission: With their slogan “No smuggling – No fake”, Tan Khoa Distribution

Corporation’s mission is to trade wines and spirits with the premium quality and competitive price, whether with wholesalers or retailers

1.3 Organizational history: Tan Khoa Limited Company founded in 1996 is Vietnam's

leading Wine & Spirits Distributor and supplier of wine & spirits covering 100% nationwide

In April, 2008 Tan Khoa Ltd became joint stock company Tan Khoa Distribution Corporation with charter capital of VND 22.000.000.000

1.4 Scope of work: Tan Khoa is a distribution corporation that trade alcoholic and

non-alcoholic drinks which are wines, spirits and Monin Their customer and consumer are from off-trade (Hypermarkets, supermarket, convenience store …) and on-trade (Premium hotel, restaurant and bar) Also, Tan Khoa Corp is a strong event’s sponsor under each brand’s name

1.5 SWOT Analysis

- Established from 1996

- Strong distribution channel (10

divisions national wide)

- Professional foreign and national

- Strong growth and potential

Vietnam’s beverage market

- High economic growth and

increasing personal income

Vietnamese consumers are becoming less

price conscious, more brand and product

aware

- Strong competitors

- Have to re-design the gift box for Vietnam market => high cost

1.6 Organizational structure

2 BEVERAGE MARKET OVERVIEW

Although the economic and finance of Vietnam have been in crisis recently, Vietnam’s beverage market still remain in a strong growth opportunity Indeed, in 2009, alcoholic consumption was approximately at 28,034 billion VND, which was increased by 4.47 percent annually The figures for wines and spirits were 29.6 million liters (increased by 6.09 percent annually) and 16.5 million liters (increased by 3.77 percent annually), respectively In regional view, there are two largest consumption at Hanoi and the Southeast (HCMC, Binh Duong, BinhPhuoc and Dong Nai) According to General Statistics Office (GSO), about 32 million USD was spent on importing alcoholic product

in 2009 Generally speaking, alcoholic market is divided into 3 segments: high-end, medium-end and low-end With low–end segment, there are two significant producers who are Hanoi Liquor JSC (Halico) and BinhTay Liquor JSC Both of them took 60% market share Imported product still dominate the high-end segment The government levies substantial duties and consumption taxes on all alcoholic product, so there is a substantial market for smuggled and fake product

In industry view, the overview of Vietnam beverage market are very potential thanks to high economic growth (nominal Vietnam GDP in 2009 was 90 billion USD) and increasing personal income (GDP per capita is 1,023 USD) This growth trend is expected to continue thanks to a developing tourism industry and a large young population Under the master plan of the Ministry of Industry and Trade, the country is set to gain a beverage annual growth rate of 13 % during 2011-2015 and 8% during 2016-

2025 Thus, this can be considered to be a huge potential opportunity for Beverage Company

Today’s Vietnamese market is changing a lot In detail, the Vietnamese consumers are becoming less price conscious, more brand and product aware

According to graph 2.1, this graph provide a brief view of how Vietnamese market is promising Indeed, using Thailand as a benchmark, spirit consumption could be 8.4 times greater for similar GDP [the equation is: 1,023 USD (VN GDP per Capita) x 0.86 (Thailand per Capita Spirit Consumption) / 2,608.25 USD (Thailand GDP per Capita)] Besides, international spirit is still limited in the major urban centers In other sub-urban areas, spirit consumption is more like seasonality

According to graph 2.2, we can clearly see that the total volume increased by 1,274 9L cases in imported spirits from LE 10 to F15 In detail, whisky, RTD, white spirits and cognac increased by 452, 419, 336 and 107 9L cases, respectively

In 2009, through the consumption in Hanoi and HCMC Metro, we can see that there are 40% of Scotch Whisky, 30% of premium mass Vodka, 15% of French Cognac or Brandy and 15% of others As a result, the Vietnamese market is taking a shift to foreign brands

3 MARKETING DEPARTMENT

In Tan KhoaCompany, there is no significant Marketing Department In other words, they are tend to do “Branding” than traditional marketing Tan Khoa Corp has approximately 500 wines, 100 spirits and 100 non-alcoholic drinks, and each kinds are taken responsibility by a specific brand managers Indeed, Tan Khoa has brand managers for non-alcoholic brand, Skyy-Sagatiba-Zubrowka brand, Jager-Amarula and wines brand

The purpose of this practice is due to differential nature of each brand that need differential strategy and tactics As a result, more accurate and effective tactics will be fit into each individual brand Thus, Tan Khoa is able to experience higher sales and get more brand awareness in an efficient way

4 THE OPTIMIZATION OF ONLINE AND OFFLINE MARKETING IN WINES AND SPIRITS COMPANY

4.1 Online marketing

4.1.1 Advantage of online marketing

4.1.1.1 Social media marketing

Recently, social media have been developing so quickly that have a huge impact on everyone In order to utilize that, countless digital marketer of Wines and Spirits company have been investing in using content marketing by building fan page in social media like: Facebook, Twitter… Indeed, a content of a fan page can take various form For instance, marketers can create some contest or posting advertisement information on their wall In another use, this company can apply “inbound” marketing by unconsciously encourage their employees who are marketer, accounting manager, IT guys… to post these content on their social network The purpose is to make this fan page have “human

voice” that coming from all levels of Tan Khoa Corp Another use is to observe and sync Tan Khoa’scustomers social media activity with their contact databases Then, marketer will have better segmented target for email marketing and calls-to-action that can lead to higher conversion rates Last but not least, this is resulted in low expense The result of this practice is to reach a huge attention from end-consumer at its lowest cost For distance, with a small online contest for a $3 T-shirts, hundreds accounts could be stored And, the cost of that is only $3

4.1.1.2 Internet marketing

Nowadays, company’s website is more important to any kind of digital marketing In detail, a good – organized and easy-to-use website can prove their company’s trust, size, portfolio… Secondly, it is also easier for a foreign partner or consumer who want to trade with us Next, developing a 3D website allows customers to preview their favorite products in 3 dimensions So, that automatically fits with “A picture worth 1000 words” However, an outstanding website is not able to optimize its best unless it is used with SEO altogether Combining the use of website and SEO not only can save 50%-80% cost effective online marketing, but also result in the best performance For example, if Tan Khoa Corp invests in SEO, their websites will automatically link with search engines likes: Google, Yahoo etc… Indeed, whoever have a need of buying wines or spirits search these relating term into Google, www.tankhoa.com will appear on top By that way, it can increase the views of website quickly Finally, this is one the ways that save cost at their best

4.1.1.3 Content marketing

On these day, content is considered to be the soul of a website In other words, that website has lots of views or not depends on how attractive its contents is So, the content must be updated regularly to give visitors interest Content management system will focus on creating quality content and automate some operations In Tan Khoa Corp.’s case, their site should have these following contents: various category, discount campaign, updated events of both wines and spirits, shots/cocktail/mock tail formulas for spirits and Monin, pairing food for wines Content marketing is one the shortcuts that

lead to high brand awareness Furthermore, it also help reduce operating costs, enhance the quality and quantity of content featured on website

4.1.1.4 Mobile marketing

In 2013, the sale of smart phones is far higher than PCs’ and laptops’ To catch that trend

An mobile app for Tan Khoa must be developed in ordered to be closer, up-to-date and more specialized to each individual customer According to marketing trend in 2013, 9 in

10 global marketers have mobile site or a mobile application Through that information,

we can see the importance of mobile marketing Lastly, if a company apply it well, they can have a good result at its lowest cost

4.1.1.5 Email Marketing

Tan Khoa Corp has a huge database of thousands customers and consumers, and applying email marketing is a smart ways for utilizing that database Great – organized data can help manager reach potential customers, keep in touch with current customers; provide new information about products, services or promotions of the company By analyzing and categorizing customers that have the same characteristics, sending email will be resulted in a more accurate and effect content that suit a specific target group Besides, response rate will be raise as well

4.1.2 Disadvantage of online marketing

4.1.2.1 Social media marketing

In general, social media is just like Word-of-mouth using digital media and it also have both negative and positive side Therefore, if a company have bad control on their fans, this will be resulted in a chaos and misunderstanding Secondly, competitors usually hire anti-fans in order to strike this company’s fan page And, if they do not have any solutions, brand awareness will turn negative and this can lower the sale of the whole company

4.1.2.2 Internet marketing

The only thread of this practice is hacker Today, the technology is developed so quickly that lots of hackers have been appeared If a company do not have any strong firewall to

protect their important files like customer database, it can be lost into hacker Then, hacker will sell it to the competitors, and this company will face customer and consumer loss as well as lose profit

4.1.2.3 Content Marketing

In fact, content marketing has many disadvantages beyond its advantages Firstly, a strong and good content of either fan pages or websites require long-building time and effort Indeed, this administrator has to be the one that search for fresh information every single day and make sure the content up-to-date Furthermore, thousands-fans pages are supposed to have tons of comments feedbacks, and request from its fans, and a guy has to take responsibility for that If the size of these fan pages or website are small which contains around thousands of fans, brand managers can handle it to reduce the cost However, for millions fans’ ones, company should hire a specialist and pay him around 3 million VND per month at cost

4.1.2.4 Mobile Marketing

- Mobile Application

Apps have short lifetimes, 20 days or less; it is limited to phone platforms, with each native app can only run on a specific operating system It is also requires long term investment, updates to an app every few a native app can only run on a specific operating system For each operating system, the programmer must write native code for its own, and that lead to inconsistencies between application versions, high development costs and requires proficiency in many languages programmers Sometimes, it requires programmers to use the proprietary tools and work only on a single environment, such as using x code on Mac OS (if you want to develop applications for iOS) In addition, maintenance or upgrade will take time Another difficulty is that users cannot fix every application on every operating system, so they just put up procedures for the application and wait for approval (sometimes reject as a violation of the Charter of application development market), so the update is not to user manual immediately Moreover, they have to update the application on the market Diversified version of the operating system that impede the use of native application universal These devices running older versions

of the operating system will not be installed over

- Mobile Websites

In term of performance, mobile sites do not run as fast as a native web Application capabilities is limited to web technologies The operation of the mobile website is not as smooth and seamless as that of the App Transitions and effects rely heavily on CSS3 and JavaScript and are limited Besides, mobile sites always run online because it is cannot be developed in offline mode Also, it cannot send push notifications It cannot function without Internet connectivity – something that may be very important if you want your conference attendees to be able to get to their materials in dark and wet basements

4.1.3 Advantage of offline marketing

4.1.3.1 Letter marketing

Direct letter marketing attracts the potential customer’s attention in a very effective way

A personal letter and high segmentation for different target markets helps to maximize the effectiveness It may be pricey in purchase a mailing list that fits the demographic company want to reach (Jay Delahousay, Demand Media, 2013) Especially in wine, sending a well-designed invitation to customers to tasting nights; will attract more target customers

4.1.3.2 Telemarketing

This is the second most common after mail marketing It is easy to determine how many positive responses from consumers It has an amount of flexibility in interacting with the potential customer, and also saves time and money (John Sinit, 2013) A professional telemarketer team with friendliness and wide understanding about Tan Khoa products can help close deals and raise sales more efficiently

4.1.3.3 Sample

Trying, touching, tasting the product can give a real feeling about company’s product, the sense of understanding and experience with an unknown product (Drew Gannon, 2011); and it is easy to gain feedback from customers If people have a positive or neutral response to touching an object, they are willing to pay more for it (University of Chicago

Press Journals (UCPJ, 2009) In other word, through wine tasting days, Tan Khoa can understand their customers and consumers then brainstorm suitable tactics; as well as gain more customers

4.1.4 Disadvantage of offline marketing

4.1.4.2 Telemarketing

Recently, Telemarketing has been negatively associated with various scams and frauds, such as annoyance That is why Tan Khoa needs to create professional training for their current staffs or seeking for another suitable telemarketer However, it will raise the cost higher than their expectation (Telemarketing, 2013)

5 TACTICS FOR COMBINING THE MAXIMIZATION OF ONLINE AND OFFLINE’S ADVANTAGES AND MINIMIZATION OF ITS DISADVANTAGES 5.1 Wines

These days, Vietnam is a country that has seen dramatic increases in the standard of living of its people and the country’s integration with the world market With this globalization the Vietnamese wine market has exploded, with hotels, restaurants and retailers offering a wide variety of wines from around the world Along with this overall progress and increase in economic activity, the wine market in Vietnam is on the rise Consumption, product availability, disposable income, and education are all up However, despite the strength of these indicators, those looking to introduce their product

to Vietnam must do so with a firm understanding of the market dynamics and the potential risk, of entering this emerging market.(JBC International, April 2010) In this study, the case will be specified on two brands: La MaisonJaboulet and Viña San Pedro

5.1.1: Famous global Wines, and famous in VN: San Pedro – 1865 limited edition

(Picture 5.1)

5.1.1.1 The roots

Viña San Pedro is part of the so-called VSPT Wine Group winemaking group and the second largest exporter of Chilean wine It was founded in 1865 Nowadays,Viña San Pedro is one of the largest and oldest exporters of Chilean wine and one of the most important wineries in the country San Pedro’s main vineyard, wine cellar and hundred-year-old underground cava cellar are located in Molina, in Curicó Valley, 200 Km south

of Santiago There, San Pedro has one of the largest stretches of vineyards in Latin America, with 1,200 hectares Meanwhile, San Pedro has over 1,500 planted hectares in Central Valley and in the other main vine-growing valleys in Chile, such as Elqui, Casablanca, San Antonio-Leyda, Maipo, Cachapoal, Maule and Bío-Bío, always in the quest for new and better origins for Its portfolio includes the brands Cabo de Hornos, Kankana del Elqui, TierrasMoradas, 1865 Single Vineyard, 1865 Limited Edition, Castillo de Molina, 35 South and GatoNegro, which enjoy vibrant success in the most

competitive markets Focus on 1865 limited edition, including Limited Edition Syrah Elqui, Limited Edition CS/SY, Limited Edition 2006

5.1.1.2 Tactics

San Pedro has a certain period of time in Vietnam’s market Therefore the tactics should mainly focus on maintaining the customer relationship and brand value, beside wider the brand awareness applying the optimization of online and offline marketing

The Tan Khoa’smarketing trend these days is to expand the influence to other sub-urban provinces and cities, finding new markets, customers and partners

• Helping end-consumer and customer understand more products value

To help end-consumer understand clearly about the product, Tan Khoa Corp can make clip themselves or use clip from supplier about the vinificationprocessto upload on internet (homepage, fan page or youtube) Furthermore, “inbound marketing” can be applied by using internal employees’ network (Facebook, Twitter…) for spreading this material in a natural and effective means It also help create interesting content for uploading on fan page of Tan Khoa that can attract more viewers In fact, San Pedro 1865

is an above-the-line product, so they can public their promotion clips on TV advertisement However, it costs an ineffective expense with more than 10 million VND for a 30 seconds – clip (2013 ads price, TVadcompany) Moreover, company can link with some tourist companies for the purpose of creating a tour for end-consumer to the wine cellar in Chilean Denominations, origin of the brand Brand representatives, famous wine tasters, blogger also will be invited

Celebrate tasting days are good occasions for maintain the relationship and bring out new products, as well as get more B2B customers These days should be hold at luxury hotels/ resorts, go along with delicious dishes match with company’s products In order to make the tasting days more professional, unique and unrepeated, event planner companies could be hired to hold the parties A wood shelveswill be located nearby and display some ingredients of the promoted product, such as cinnamon, blueberries, tobacco, etc It helps customers understand deeper about the product and its flavor

(Pircture 5.2)

While holding the wine tasting, nice-look and professional PG (promotion girl) will help guests try the flavor and answer the related questions In additional, they can ask for visits card to create customer relationships and increase data hub The main theme for wine tasting day is retro style, which will remain the golden days All the places, environment, music and foods will be designed to mix well and coherence with theme.Another smart use of offline marketing is to invite famous food bloggers, wine tasters join the tour as previously stated; or come to wine tasting day Then they could write about the products and the value of company In a word, wine tasting is a brilliant and efficient use of direct marketing

• Expand the brand awareness

B2B is important in increasing sales and maintaining, expanding the awareness: by dealing and having contract with some wine storage, resorts, hotel-restaurant (Sofitel, New World, Rex, Caravelle…) to use Tan Khoa’s products In particular, company can run a special incentive Indeed, for fresh customers, Tan Khoa can apply “buy 12 get 1 free”, support PGs, POSM, and tasting product for wine tasting For usual ones, discount

on each bottle program should be applied such as 10,000 VND discount on each bottle for 2 cases purchase This is so called win – win strategy Indeed, we can increase sale while partners can increase product varieties with competitive cost

• Expand the influence

An effective means of offline marketing to push sale is telemarketing A fact is that telemarketing has been misunderstand as various scams and frauds Therefore, it is essential to build up a professional telemarketing team Actually, Tan Khoa Corp has a huge database of thousands of big customers such as5-stars hotels, bars, restaurants and supermarkets, so a respect and nice call of a professional telemarketer can make a hundred millions VND contract Another mean of increasing the sale is to design an attractive gift box Since most of customers buy product as a present, they want to buy a luxury, elegant gift which showed the respect of for the receiver and high social status of