LIMITATIONS AND DIRECTION FOR FURTHER RESEARCH

This report was written after a market study on the instant coffee mix market niche was carried out in Ho Chi Minh City, Viet Nam by the end of February 1997

4.1 The possibilities of the market study

4.2 Organization of the market study

4.3 Elements of the market study

4.4 The qualitative quantitative dichotomy

4.5 Product positioning and perceptual mapping

4.6 Product diffusion process

4.7 Pricing survey techniques

5 QUALITATIVE PILOT FINDINGS

5.1 Coffee using and buying habits

5.2 Instant coffee mix usage, relative advantages and disadvantages5.3 Brand awareness and attitudes toward brand choice

5.4 Preference on the product features

5.5 Product packages

6.3 Estimated Market Potential

6.4 Where would the product sales volume come from?

6.5 Product positioning

6.6 Pricing points

6.7 Consumer using and buying habits

7 DATA ANALYSIS: TRADE SURVEY

7.1 Brand Awareness

7.2 Popularity

7.3 Profile of channel members

8 CONCLUSIONS AND RECOMMENDATIONS

9 LIMITATIONS AND DIRECTION FOR FURTHER RESEARCH

10 TABULATIONS: CONSUMER SURVEY

11 TABULATIONS: TRADE SURVEY

1. Executive summary

This report was written after a market study on the instant coffee mix market niche wascarried out in Ho Chi Minh City, Viet Nam by the end of February 1997 The overallobjective of this market study was to evaluate the market potential and to determinesuccess factors for our new product, a Nescafe 3 in 1 coffee mix in the niche Ourresearch efforts were therefore be organized to achieve the following sub-objectives:

To get a feedback on the product perception; To get a feedback on the awareness andpopularity; To estimate the market consumption volume; To find out where the productsales volume would come from: cannibalizing the firm’s existing products/brands; thecompeting products; or growing the market; To determine how to best position theproduct to enhance trial purchase; To determine what the price points and theacceptable price range are to gain maximum sales volume

We employed a phase approach to manage this study project The first phase enabled

us to obtain certain qualitative findings about the market through moderating a couple

of focus groups In the second phase, we obtained quantitative findings throughcarrying out two surveys with the consumers of the product field and the distributionchannel members Sample elements were chosen by a systematic approach forwholesalers, retailers and households in Ho Chi Minh City Blind study is a key principlefor this market research where people were not aware that we were conductingresearch on Nescafe 3 in 1 coffee mix Besides, all relevant secondary informationhave continuously been gathered to build up background understanding of the market,especially in the first phase of the project, and to frame the whole picture of the market.With an estimated market consumption volume of 280,000 48-sachet bags per month,instant coffee mix is still a new product concept in the consumers’ perception There arecurrently 8 brands on the market, of which Vinacafe, Mac Coffee, Indocafe and SuperCoffee are in the four top popular brands Nescafe Deluxe, Parrigold, Goldroast andOWL gain a very modest level of awareness in the mind of the consumers and they areobviously not popular at all

To launch a Nescafe instant mix brand, one of the first things the company must do inthis introduction phase of the product life cycle is to build up the product and brandawareness Strong awareness of the brand is really an important lever to boost up trialpurchase, especially to compete against the leading brand Vinacafe

At the present time, cannibalizing is not a crucial problem for launching Nescafe 3 in 1.The consumer usage patterns prove that they drink instant coffee mixes in addition tothe regular coffee they drink, so they drink more Thus, the estimated sales volumewould likely come from growing the market rather than from cannibalizing thecompany’s existing instant coffee products

In the eyes of the consumers, the 4 most important features of an instant coffee mix arearoma, taste, natural coffee essence and convenience (quick and easy to prepare).These features are the key dimensions which marketers must consider in defining their

product positioning strategy The company’s brand has relative advantage as it mightappeal the consumers that “it is a natural taste”.

On the side of promotion, we think that a pull strategy is probably more appropriatethan a push strategy in the current market situation The company’s marketing activitiesshould be concentrated in consumer promotion rather than in trade promotion Thissuggestion is based on the research results for the channel member attitudes towardbrand carry and the consumer attitudes toward brand choice The trade survey showsthat nearly 60% of the channel members are likely to carry brands if they havedemonstrated demand Most of them seem to be promotion insensitive, too The surveydata prove that customers are the most important source of knowledge to the channelmembers In addition, clerks or salespersons could well influence the consumers’decision at stores

About good promotion tools, we find it that the sales promotion tools which rely on pricereduction basis are not very effective Looking at the consumers’ sources of knowledge,

we would see that advertising is likely the most effective way to communicate.Consumers also tend to learn about brands through clerk/salesperson and talking withfriends Thus, to maximize the effectiveness of communications, the company mayspend much of its efforts in enhancing the positive role of demonstrators and usingpoint-of-purchase displays Sponsorship activities and word-of-mouth management aresubstantially needed, too

We suggest that the nature of the promotion should be a product campaign rather than

a brand campaign A product advertising campaign will be sufficient because peopletend to know about the brand Nescafe (Classic) well A point that should be made clear

is the difference between instant coffee and instant coffee mix Awareness of NescafeDeluxe would come along with the product concept itself

The message of the advertising campaign should serve to tell consumers about theproduct’s aroma, its natural taste and its convenience in use such as time saving, quickand easy to prepare Our target audiences are the coffee drinkers who drink coffee athome

In order to support for the pull strategy in communication and promotion, the distributionsystem must be organized well to be ready in providing goods when the consumerscome to demand It should be noted that most common places to buy coffee productsare provision shops and outlets in markets The key role of these salesmen is to come

to appeal the retailers to carry the company’s own brand rather than just come todeliver goods

How to set prices depends on the company pricing objectives We find out with interestthat the consumers would likely accept a relatively wide range of price points Thiswould allow the company easily adopt price levels to best fit with various pricingobjectives

If the company decides to launch its Nescafe Deluxe into this market niche, it would beable to gain some advantages of a market nicher Firstly, the company has requiredskills and strong resources to serve the niche in a superior fashion Secondly, the

company can defend itself against the major attacking competitor (Vinacafe) by thecustomer goodwill it has built up Furthermore, Nestle has been a very famous name inVietnam for many years Thirdly, the niche has growth potential.

Launching decision is still depended on two major considerations The first issue iswhether the company product well satisfy the consumer taste The second issue iswhether the financial analysis come to prove that the product sales volume may gainsound profitability

2. Background, objectives and Scope

2.1 Background

For about 2-3 years, instant coffee mixes consisting of instant coffee, non-dairycreamer and sugar have been present in the Vietnamese market As this seems to be apotential segment in the instant coffee complete mixes, we need to carry out a marketstudy on the instant coffee mixes niche Our major consideration is wether the companyshould, or should not, launch a new product into this market niche

The company’s product is Nescafe 3 in 1 coffee mix which has been successfully

launched in some other Asian countries This brand has also been introduced on trialsales in HCMC market for a few months without much marketing support However, theproduct concept seems not to be appreciated much by Vietnamese consumers,especially the elder generations The company’s target consumers will, therefore, bethe new generation of people whose lifestyle are changing in a more concisely-orienteddirection toward the product’s global concepts

2.2 Objectives

The overall objective of this market study was to evaluate the market potential and todetermine success factors for our new product, a Nescafe 3 in 1 coffee mix in theniche Our research efforts were therefore be organized to achieve the following sub-objectives:

 To get a feedback on the product perception;

 To get a feedback on the awareness and popularity;

 To estimate the market consumption volume;

 Certain efforts would be spent to find out where the product sales volume wouldcome from: cannibalizing the firm’s existing products/brands; the competingproducts; or growing the market;

 To determine how to best position the product to enhance trial purchase;

 To determine what the optimal price point, indifferent price point and theacceptable price range are to gain maximum sales volume

2.3 Information needs

In order to reach at these objectives, the market study must have to gather all theinformation needs described below:

 Estimation of the market potential

 percentage of population who use coffee

 percentage of population who use instant coffee mix

 time of consumption (on daily/weekly basis)

 volume of consumption per time

 What is the price point to gain maximum sales volume?

 optimal price point

 indifferent price point

 acceptable price range

 Where do the estimated sales volume come from?

 cannibalizing the company’s existing products

 competitors products

 growing the market

 Awareness and popularity, unaided and aided asking for

 have heard of

 have ever used

 use most often

 The product diffusion

 What do consumers perceive really relative advantages of the product?

 What do consumers consider difficulties and/or dissatisfaction about using the product?

 How do consumers know about the results of the other people’s use of the product

 Consumer attitude and behavior

 How do consumers rate specific attributes of the product?

 Brand choice brand loyalty, brand switching

 Brand satisfaction which brands do consumers think they would buy next?Which others might they buy? Which brands would they not consider buying and why?

 How would they learn about new brands and come to try the new brands or even other brands not their own?

 Purchasing pattern How often do people buy? How much do they buy at atime? What are on their inventories? Where do they buy?

 People involving the product purchase and use Is the user the same person as the purchaser? If not, who does the purchase? Who decide on brand choice? (users or purchaser)

 Which consumers would likely buy the product?

 By demographics Sex, age, occupation, income (personal and family), geographical residence

2.4 Scope

The scope of the study was in Ho Chi Minh City where is actually a greatest center ofsocio-economic development in the country The changing lifestyle of people in the citylikely promises a potential for the product field Achieving its objectives, the study wouldassist the company marketing managers in pursuing their own strategies by makingthem better-informed about the critical issues which play the role of a survival guide to anew product development In launching new products, if thing can go wrong, it will go

We also hope that the research result would help mangers make less-risky decisions

3. Methodology

3.1 The study approach

We planned to employ a phase approach to manage this study project The first phaseenabled us to obtain certain qualitative findings about the market through moderating acouple of focus groups In the second phase, we obtained quantitative findings throughcarrying out two surveys with the consumers of the product field and the distributionchannel members Sample elements were chosen by a systematic approach forwholesalers, retailers and households in Ho Chi Minh City Blind study is a key principlefor this market study where people were not aware that we were conducting research

on Nescafe 3 in 1 coffee mix Besides, all relevant secondary information havecontinuously been gathered to build up background understanding of the market,especially in the first phase of the project, and to frame the whole picture of the market

3.2 Methodology in focus

3.2.1 Conduction of focus groups

Qualitative measurement was mainly employed in this market study to compensate forits limitations on quantitative side, especially in deriving out key attributes for theproduct positioning

We moderated two focus groups whose attendants were carefully selected among thecurrent users of the product field Attendant choice criteria for the two groups weredefined as follows:

Group 1 Current female users (7 persons)

 Coffee drinkers

 Age range: 18 to 30

 Upper and middle income classes

 Occasionally and/or trial used instant coffee mixes

Group 2 Current male users (6 persons)

 Coffee drinkers

 Age range: 18 to 30

 Upper and middle income classes

 Occasionally and/or trial used instant coffee mixes

The group discussions were conducted in a professional room with one-way mirror andaudio-video recording systems which enabled high level of accuracy in group analysis.All transcripts were done in Vietnamese to minimize the language errors At the end ofthe process, the qualitative report was written in English

3.2.2 Configuration of the perceptual maps

Much of our research efforts were organized to produce as much realistic perceptualmaps as possible This would serve to obtain a picture of competitive products and helpbuild a good positioning strategy

Within the focus groups operation, certain key attributes of the product would be

derived by using Preference method, one of the non-attribute base methods.

Attendants were asked to find out the similarities of all brands which they haveexperienced and/or were shown at site by the moderator In the quantitative phase,respondents were asked to rate on a set of attributes which were already definedthrough qualitative phase The perceptual maps are presented in multiple attributemaps

The rating scores on different attributes for the competent brands were analyzed by

Correspondence Analysis technique Firstly, raw data1 were reduced by Factor Analysis

technique to determine which were key attributes and which were supplementary ones

In figuring the perceptual maps, the key attributes play the role of active attributeswhich contribute to the shape of the map The supplementary attributes play the role ofpassive attribute which feature on the map but not contribute to its shape

3.2.3 Determination of pricing points

We aimed to determine the optimal, indifferent price points and an acceptable pricerange by which the company may obtain maximum sales quantity

Respondents were asked the four following questions2:

 At what price point of this scale do you begin to consider “expensive” aboutthe product?

 At what price point do you begin to consider “too expensive” so that you willnever buy the product?

 At what price point do you begin to consider “cheap” about the product?

 At what price point do you begin to consider “too cheap” so that you candoubt the product’s quality and therefore will not buy it?

Then, price points and an acceptable price range are defined as follows:

Acceptable range: the range of price is from the point of marginal cheapness to

marginal expensiveness where consumers are least antagonistic People would feel theprice is neither too expensive nor too cheap The acceptable range provides anadjacent to the indifferent point.3

Indifferent price point: where the two distribution curves “expensive” and “cheap”

cross each other At which an equal number of people experience the product as cheap

or as expensive It is a less stringent measure than optimal price point and generallyrepresents the median price actually paid by consumers of the product.4

1 See Question 14, Consumer Questionnaire

2 See Question 15, Consumer Questionnaire

3 See Chart i enclosed

4 See Chart i enclosed

Optimal price point: where the two distribution curves “too expensive” and “too cheap”

cross each other At which resistance against the price of the particular product islowest and would alienate the least number of consumers.5

Another question “At what price point do you consider about right?” was also employed

to check the accuracy of the model

Price points for the individual brands were gathered from those who have used thebrands Particularly, Nescafe Deluxe’s price levels were asked to all the peolple.Number of responses to Question 15 are listed below:

NescafeDeluxe Vinacafe Super Coffee IndocafeNumber of

5 See Chart ii enclosed

PricesIndifferent point

(not cheap = 100 - cheap; not expensive = 100 - expensive)

Chart i Acceptable range and indifferent point

50

Optimalpoint

Prices

Chart ii Optimal price point

3.2.4 Estimation of the market potential

Market potential was measured by market consumption volume We planned to employ

the Chain Ratio method to estimate the potential market consumption volume, which

was derived the volume consumed by end users

Market

consumption

volume =

totalpopulation

in the city x

Percentage

of coffeedrinkers x

percentage who drink instant coffee mixes

x number of cups(per day or per week) x

number of weeks for the estimating period

3.2.5 Sampling Plans

For the consumer survey: As to the nature of the research problems, we need to get a

sample that obtains highest representative for the population in the city We thereforeemployed a stratified sampling procedure Age category (from 18 to 30 and from 30 to60) was defined as the stratum for dividing sub-samples Total sample size was dividedinto sub-zones, in the four typical districts, in consistent with the district’s populationdensity The sampling procedure must have to ensure the probability in selectingrespondents to measure the percentage of coffee drinkers In the same time, it is veryessential to get information from the current users of the product field In order to meetboth of the requirements, interviewers were instructed to list all adults in the household

on a grid list (with a table of random numbers) and note down who are coffee drinkersand who are not Then, a respondent was choose randomly among the coffee drinkers

in the household.6 Sample members in each sub-zones would be pre-selected bysystematic procedure through which the households without coffee drinkers would beskipped as non-coffee-drinker households

For the trade survey: Convenience sampling were employed to get about 67 outlets.

Wholesalers and retailers were systematically selected at several central locationmarkets in the city as below:

the trade survey

Note: A list of sample elements is enclosed in the Appendix section of this report.

3.2.6 Characteristics of the sample and how well it works

Since the company’s target consumers seem to be the new generation of peoplewhose lifestyle are changing in a more concisely-oriented direction toward the product’sglobal concepts and coffee is considered the product for adults by a majority, the target

6 See Question 2, Consumer Questionnaire

population of the consumer survey is all adults in the city who aged from 18 to 60 yearsold Age category was therefore used as an important stratum of the stratified samplingprocedure applied in the survey As the total sample size was relatively small, thestratum of sample was divided by disproportionate method to ensure each of the sub-sample is large enough for statistical analysis Field work was controlled to obtain asample with two age category as below7:

Sub-Sample With Stratum By Age Range

From 18 to 30 From 30 to 60 Total Sample Size

The second important feature of the sample was that it should ensure to get informationfrom current users of the product field For this purpose, the sample elements wereactually selected among the coffee drinkers in the households In our survey, a coffeedrinker is defined as the one who drinks at least one cup of coffee a day, or at least 6cups a week

This way of selecting respondents (as described in Sampling Plans above) couldenable us get enough instant mix drinkers into the sample However, we had no choice

to ignore a factor that women are likely to drink instant mix even though they are notcoffee drinkers as particularly defined for this survey As a result, women just randomlytake more than 11% of the sample in compared to nearly 90% for men.8 Through somequalitative observations, we found it that occasional drinkers are likely to drink instantcoffee mixes This point reflects an impediment in the sampling procedure, too

The third important feature of the sample was in the concentration of middle and upperincome people since the price of most instant mix products is likely suitable to thesepeople This requirement was met by choosing the four typical districts whoseresidences are relatively rich in the city9 Sub-zones in each districts were also selected

in the same manner Besides, the sample elements were relative equally distributedamong some representative occupation categories: students, small shop owners, bluecollars, white collars, free-jobs, housewives, officials and retired or unemployedpeople.10 Those people are working in the State-owned and the private sectors11 Wefailed to get into our sample the people who work in the foreign sector These peopleseem to earn high income and to be very busy so they are more likely to drink instantcoffee mixes But, they are too busy to have chances to talk with our interviewers (Theywere not approached by our interviewers)

Last but not least, it is necessary to define who are instant mix users In this survey,non-instant-mix users are those who drink instant mix less than 5% out of the totalcoffee they drink The other people who drink instant mix more than 5% out of the totalcoffee they drink are defined as instant mix users, eventhough they just drank some

7 See Tables 17b and 17c

8 See Table 17a

9 See Table 18.1 and 18.2

10 See Table 17d

11 See Table 17e

instant mix brands for a few times.12 With such a determination, our sample has nearly

a half of non-instant-mix users and more than a half of instant-mix users:

Percent of instant mix Non-user User Total Sample

12 See Table 8.3

4. Literature Review

4.1 The possibilities of the market study

The possibilities for what we can cover in a market study are diverse, and the real issue

is usually not what to include, but what to leave out We must determine what isrelevant now and potentially useful up ahead, rather than ask about everything thateverybody may have a passing interest in at this time Similarly, the real technicalconcern is usually not what statistical techniques to use to analyze the data, but whatnot to use We must apply those techniques that will enlighten and not merelybedazzle Nothing should ever be reduced to mere formula, even in a market trackingstudy where we may have asked the question many times before.13

4.2 Organization of the market study

The organization of the questionnaire for the market study is quite free, but often thesections appear in an order we call “ABC”:

A is for Awareness, followed by Attitude What do people know (cognition) orthink they know (image), to form perception What are their opinions about keythings (importance of various elements to choice, ratings and ranking of brands,satisfactions and dissatisfactions, etc.)

B is for Behavior (purchasing, usage, etc.)

C is for Characteristics (demographic and psychographics)

The order is, of course, suggestive rather than definitive, but the flow is logical: What isthe horizon of consciousness (awareness)? What do respondents think about it all(attitude)? How do they act in the world (behavior)? And what are they(characteristics)?

In the best market studies, these and other elements will interweave, threads from onelogically derive from somewhere and lead somewhere else They will interlock, so thatthey hold together in a cohesive way They will synergize, so that they whole is apowerful instrument, drawing on the parts and, in the end, being more that just a simpleaddition of numerous questions

Finally, the study should deal with every part of the company’s planning process Atleast it should examine every part before we finalize the study, to see what needs to beresearched out in the market Do we need to study the company’s image, perhaps, inaddition to the image of its brands We must decide if we need to research scenarios,(management’s alternative visions for the future); or corporate strategies: or tactics Ofcourse, most marketing studies also cover aspects of the four P’s (product, price, place,promotion) Other parts of the “micromarketing” mix, controllable things, are also

13 Neil Bruce Holbert and Mark W Speece, Practical Marketing Research An Integrated Global Perspective, 1st Edition, Prentice Hall’s Simon & Schuster (Asia) Pte Ltd., 1993 (p

244 )

researched like other P’s: positioning, packaging, personality, premise, promise,proposition, change, culture, etc So are the M’s, executional elements like media,money, message, and all the rest.14

4.3 Elements of the market study

4.3.1 Awareness

Measuring awareness can involve asking respondents a whole host of things Many ofthe questions simply seek to find out if people have heard of the products We askwhich brands they can name unaided We are often particularly interested in “top-of-mind” awareness, the brand named first, which is usually (but not necessarily) their ownbrand We ask which other brands they can recall aided We want to know what newproducts they remember seeing

We are also interested in whether people are getting information about brands fromadvertising We ask which brands they have seen advertising for We want to knowwhere and when they saw it We are usually especially interested in seeing how muchattention people pay to advertising for new products For all advertising, we also want

to know how much information people get from it We ask about what they advertisingsaid and showed

Similarly, we often want to know about promotions What brands do people rememberpromotions for? Do they recall promotions for new products? And, of course, for brand,advertising, and promotions, we always should find out what people think of them Highawareness is no good if everyone know about the product, but they all think it is terrible;

or everyone saw the advertising but it turned them all against buying the brand

4.3.2 Attitude

Measuring attitudes in market studies is no different from measuring them in otherstudies We need to know what the most important product attributes are forrespondents We want to know what their “ideal” brand would look like Key criteria andideal brands can change as lifestyles and values change

We ask about how each brand rates on key attributes These should include physicalattributes such as taste, aroma, or packaging as well as image items like perception ofusers, suitability “for me”, etc The list should be derived from previous work, bothqualitative and quantitative It should include a wide variety of items that have beenshown to impact on choice Such a list can be a centerpiece of a factor analysis touncover which of them go together to form a single construct

We would need to know whether respondents believe that there are real differencesamong brands Also, whether they believe that there could be real differences amongbrands If there are or could be differences, on which attributes? We sometimes need

14 Neil Holbert and Mark Speece, opcit, (p 246-247)

to learn what people think are the specific similarities and differences among brands.

We could have them sort cards containing brands names into piles of the brands thatare “like each other”, and tell why they are alike

We would ask about what people like and dislike in general about brands in the productcategory and about specific key brands That is, we want to know brand satisfactions,and, even more important, their dissatisfactions What would they like to see in themarket that is not there now? Which brand do they think they would buy next? Why?Which others might they buy? Which brands would they not consider buying and why?

4.3.3 Behavior

We may never know everything about “why”, even after extensive analysis of materialsuch as just suggested But it is vital to know all the “what’s” We may choose to go withthe flow or we may decide that the time is right to buck a trend, but, whatever wedecide, we must know what is actually going on!

Typical things we might cover in the study include finding out about brand usage Wecan ask about the respondent’s current brand, and how long it has been used This ispsychologically what people think of as their favorite brand Actual practice may (or maynot always) be the same, so we have to check sometimes

We can also learn something about the depth of brand loyalty by finding out whatrespondents would do if their own brand was not available where they usually buy it.Would they wait until it was in stock again? Would they go to another store to look forit? Would they buy another type or size of the same brands? If they do these things,they are pretty loyal Would they buy a different brand entirely? This would indicate thatthe brand “loyalty” is really just habit

We may need to get an idea about brand switching We might ask questions about theprevious brands they used We would want to know how long they used that brand Wewould certainly need to find out why they switched from the previous brand to thecurrent one We must get information on both that they like more about the currentbrand; and what they did not like as much about the previous brand

How did they learn about the new brand or come to try the new brand or even otherbrands not their own? Was their own brand out-of-stock? Did they respond to somespecial offer or promotion and decided they liked the new one better? Did they get afree sample? Maybe friends or relatives had the brand and they tried it while with them.Purchase patterns are important We may need to know how often people buy theproduct, as well as how much of it they buy at a time Where do they buy it? Whoactually buys it and who made the decision on which brand? We would want to knowabout the likelihood that respondents would buy at a special price This might also berelated to how often, how much, and where they buy

We want to know about people involved in product purchase and usage Is the user thesame person as the purchaser? If not, who does the purchase? Who decides on what

brand, the user or the purchaser? It does not help much to advertise to husbands if thewife makes all the decisions about what car to buy.

4.3.4 Demographics

Demographics should be asked for selectively, based on what we have learned frompreliminary work Some demographics are relevant, some are not There are endlessdemographics, but about the only time we might need lots of demographics is insegmentation studies, not usually in market studies Demographics can be looked atone at a time, and also in meaningful combinations, such as age within sex byeducation Typical items that may be relevant for specific studies include standards onindividuals and/or families such as:

 Geographical location (city, suburb, rural, etc.)

Typically, we may want to know about other things, such as life-cycle stage But some

of the more complex concepts we attach to people can often more easily be estimated

by putting together basic demographic information.15

15 Neil Holbert and Mark Speece, opcit, (p 247-250)

4.4 The qualitative quantitative dichotomy

Once the research issues are settled, the researcher must move on to figuring out how

to get the information This research design, the “how to get” part of the project, can beboardly divided into qualitative and quantitative methods of getting data andinformation

Qualitative and quantitative research are mutually exclusive and complementary at thesame time They are mutually exclusive because they cannot be done at the sametime, and they are not interchangeable But they are also complementary in that theyare for accomplishing different kinds of tasks In many research projects, they have anorder qualitative comes first and then quantitative Quantitative research is madesubstantially easier and more rational by having previously done the qualitative part.Qualitative research involves discussing topics, about which we may not yet know verymuch, in great detail with a few people (representative respondents from our targetpopulation) We cannot even call these topics “questions” yet, but later we can, if wewish, turn these discussions into questions to ask people Such research includesdefining what we do understand well, and groping toward understanding what we donot yet understand but need to know Then we must organize this information and lack

of information into some clearer insight into the topic

Quantitative research cannot proceed before we have this understanding The term

“quantitative” itself suggests that we already understand the concepts, now we justneed to put numbers to them Quantitative research, then, involves numbers, formulas,computers, print-outs, and number-based decisions This means structured ways ofasking questions so that the answers can be coded easily into numbers It means morerespondents The important decisions left before proceeding with this research aremainly “how many and who”, i.e., sample size, target population, and samplingmethodology.16

4.5 Product positioning and perceptual mapping

4.5.1 Product positioning

Positioning is not hard to understand, although achieving good positioning can be quitedifficult Essentially, for each product category we can identify a “map” in theconsumer’s head In the center of this “perceptual map” lies the ideal kind of productthey consumer would like Real products are scattered around the map according tohow they measure up on the key attributes that define the map for the consumer

16 Mark W Speece, Doan T Tuan, Luc T Thu Huong, Practical Marketing Research In Viet Nam An Integrated Marketing Perspective, Asian Institute of Technology, Bangkok,

Thailand, Unpublished 1996, (p.80 /Chapter 5)

The objective of positioning is to put our brand in the dominant position near the center

of this map Skilled product positioning can even drive all the other brands to the edges

of the map, or even off it entirely We want our brand to be seen as the best, thebrightest, the only sensible one

Research on positioning usually involves presenting information about the keyattributes of several brands (including ours) Rating scales are used to measure theconsumer’s perception toward the various attributes of each brand, including our(potential) brand

Remember, in researching positioning at this stage of the new product developmentprocess, we are still dealing with a concept, even though we may have gone as far as

to produce finished advertising It is easy to vary the attributes of the still imaginaryproduct now, but it will be difficult and expensive to vary attributes once the product ismarketed (if it ever is), the images have already been established in consumers’ minds.Now, we can even draw up several alternative finished ads, each one emphasizingsomething different Only one version would be included in the batch of competingproduct ads shown to any respondent Then we could draw up perceptual maps foreach of the variant positionings of our product

This makes it easy to compare how the presentation stressing different things (aroma,sweetness, natural taste, etc.) will affect where our product fits into perceptual maps.Which, if any, of the alternative positionings beats the competition? Which competitorsspecifically does it beat, and which ones has it failed to knock out? The answers tosuch questions are critical in helping the marketing manager decide best version of thenew product After all, the “best” version of the product and of the message is crafted togain wide acceptance in our target market This is not necessarily exactly the same as

“best” in a technical sense.17

4.5.2 Perceptual mapping

One way in which managers can grasp the positioning of their brand versus competingbrands is through the study of perceptual maps In a perceptual map, each product orbrand occupies a specific point Products or brands that are similar lie close together,and those that are different lie far a part Perceptual map provides mangers withmeaningful pictures of how their products and brands compare to other products andbrands

There are several ways by which perceptual maps can be created As shown in thefigure below, they can be created by using nonattribute-based or attribute-basedapproaches:

17 Neil Holbert and Mark Speece, opcit, (p 171-172)

Alternative Approaches To The Development Of Perceptual Maps

SimilarityNonattribute-based

The nonattribute-based approaches different methods in determining how individualsperceive the relationships among objects Instead of asking the subject to rate objects

on the designated attributes, they ask individuals to make some summary judgmentsabout the similarity of objects When making these judgment, individuals are free to usetheir own characteristics An attempt is then made to locate the objects in amultidimensional space in which the number of dimensions corresponds to the number

of characteristics the individuals used in forming the judgments Multidimensionalscaling analysis is the label typically used to describe the nonattribute-basedapproaches that use similarity judgments to develop perceptual maps.18

18 Gilbert A Churchill, Jr., Marketing Research Methodological Foundations, 6th Edition,

The Dryden Press, 1995, (p 490-491)

The advantages of the attribute-based versus the nonattribute-based approaches tomultidimensional scaling analysis are summarized in the table below19:

Comparison Of The Nonattribute- And Attribute-Based Approaches For

Developing Perceptual Maps

Respondent

Nonattribute

-based

judgment

Judged similarity ofvarious products and/or brands

Does not depend on a predefined attribute set

Allows respondents to use their normal criteria when judging objects Allows for condition that perception of the whole may not be simplythe sum of the perceptions

of the parts

Difficult to name dimensions Difficult to determine if, and how, the judgments of individual respondents should be combined Criteria that respondents use depend onthe stimuli being compared Requires special programs Provides oversimplified view

of perceptions when few objects are used

d attributes

Facilitates naming the dimensions Easier to cluster respondents into groups with similar perceptions Easy and inexpensive to use

Computer programs are readily available

Requires a relatively complete set of attributes Rests on assumption that overall perception of a stimulus is made of the individual’s reactions to the attributes making up the stimulus

4.6 Product diffusion process

The diffusion process helps explain how new ideas or cultural practices spread through

a society, as well as how new products are diffused The criticality of new productadoption is clear, but, you might be asking, why should consumer decisions about newproducts be studied any differently from decisions about other products?

The main distinction in traditional analyses of the diffusion of innovations is theemphasis on communications within the social structure rather than individualinformation processing The relational approach analyzes communication networks andhow social-structural variables affect diffusion flows in the system, in contrast to amonodic approach, which focuses on the personal and social characteristics ofindividual consumers

19 Gilbert Churchill, opcit, (p 502)

4.6.1 Diffusion variables

The critical determinants of success for a new product have been identified inthousands of diffusion studies From these studies, the main elements in the diffusion

of innovations include

1 innovation (new product, service, idea, and so on)

2 communication (through certain channels)

3 time (at which certain individuals decide to adopt the product relative toothers)

4 social system (interrelated people, groups, or other systems)

The results of the process show that some members of the social system are adopters people who have made a decision to continue using a new products Other peoplewho have made decision not to adopt may occur for many reasons Some will beexposed to information about the product or will wait until other people have tried theproduct before doing so themselves Some consumers will quickly decide a newproduct is not what they want, perhaps because of brands loyalty and satisfaction withcurrent products Other consumers may want a product but may not buy it for a variety

of reasons.20

4.6.2 Products most likely to succeed

New products most likely to be adopted by consumers have some common basiccharacteristics Innovations include both a hardware and software component.Hardware refers to the physical or tangible aspects of a product Software is theinformation base that accompanies the hardware component A frequent mistake isspending resources on research and development to perfect the physical attributes ofthe product but failing to provide adequate resources for the software necessary forsuccess with the product Understanding consumers’ values and lifestyles in developing

a software may determine success of the new product just as much as the technicalR&D

Total product concept

New products are often rejected because of failure to adopt a total product concept.The total product concept defines the expectations of consumers about tangible andother attributes such as delivery conditions and post-purchase service The augmentedproduct includes what the customer perceives the product to do to provide more thanwhat is expected (and thereby provides extra “value” beyond what would be justified topay the price of the product) All these produce the product potential or everythingpotentially feasible that will attract and hold customers The total product concept isshown graphically in the figure below:

20 James F Engel, Roger D Blackwell and Paul W Miniard, Consumer Behavior, 8th Edition,

The Dryden Press, 1995, (p 875-876)

Total Product Concept

Generic product Expected productAugmented productPotential product

Note: The dots inside each ring represent specific activities or tangible attributes.

Source: Theodore Levitt, The Marketing Imagination (New York: Free Press, 1986), 79.

Why are some winners and some losers? What are some of the attributes orexpectations and augmentations of a total product? There may be five characteristicsthat are associated with success with new products They are: (1) relative advantage;(2) compatibility; (3) complexity; (4) trialability; and (5) observability

Compatibility

Compatibility is an important determinant of new product acceptance Compatibilityrefers to the degree to which the product is consistent with existing values and pastexperiences of the potential adopters

Complexity

Complexity is the degree to which an innovation is perceived as difficult to understandand use The more complex the new product, the more difficult it will be to gainacceptance

New products are more apt to succeed when consumers can experiment with or try theidea on a limited basis Sampling is an effective method of inducing trial of newproducts Enhancing the trialability of new products can be accomplished throughsampling in continuous innovations, especially for low-unit-value, consumer packagedgoods How can marketers do something similar for expensive, complex and high-involvement, discontinuous innovations? The same principles apply, but it takes morecreativity Leasing is a strategy for such products, widely used by manufacturers in the1990s New recipes and products are introduced in supermarkets through programsthat demonstrate how to prepare these products They also offer taste samples

Observability

Observability and communicability reflect the degree to which results from using aproduct are visible to friends and neighbors It influences the acceptance of newproducts Marketers can sometimes use strategies to enhance the visibility of products

by inducing celebrities to use them Thus, the visibility of the celebrity makes the newproduct visible.21

4.7 Pricing survey techniques

Various survey techniques are available to help us make better decisions on pricing.The difficulty is not that they are not sound Rather, the big problem is that they mustalways be continuously reevaluated in the light of the realities of the market place.These realities include competitive retaliation and consumer fickleness More than formost other kinds of research, such market dynamics can render pricing researchirrelevant in a flash

Important techniques include:

What brand would you be most likely to buy in each of these situation?

(1) A at price 1, B at price 2, C at price 3, D at price 4, E at price 5

(2) All the above at prices higher by 20 percent, except A, up by 10 percent

(3) All the above at prices lower by 5 percent, except A, lower by 10 percent

The questions continue in this manner for various situations The respondents answerabout the likelihood they will buy for each situation From such lines of questioning,

21 James F Engel, Roger D Blackwell and Paul W Miniard, opcit, (p 878-884)

current and hypothetical market shares can be estimated Ideas about price elasticity(what might happen to demand if price is changed), and optimum pricing can bestudied.

An example of this type of case might produce results that look something like the tablebelow:

Price Read up (a)

“Too cheap”

Read down(b)

“Too expensive”

(c)(a) - (b)(absolute number)

expensive to be of good value at the price

The table can be read: At $7, at total of 5% of the respondents think the product is socheap that it could not be any good When the price gets down to $6, 20% believe this

At $5, 60% believe the product is priced too low to possibly be of good quality By thetime we get down to $2 (or less) no one thinks the product can be any good The “tooexpensive” column is read in the same way

We could graph this, and where the curves cross (here, between $5 and $6) can bethought of as an ideal price: where people are least antagonistic The point is alsosometimes called the point of “indifference” People neither see the product as toocheap nor too expensive

Obviously, there are many variations of this technique Exactly how to use it depends

on factors relating to marketing realities, and not just statistical procedure and analysis

4.7.4 Appraisal

These three techniques, which are merely representative of many that may be used,can provide clues as to price ranges But by calling attention to pricing, and by placingprice in a non-contextual situation, they risk artificial, rather than market-basedappraisals

But some type of price question can nonetheless be a useful part of the overall picture

of what our price should be Again, though, it only will be useful if we understand price

in general, and these results in particular, as part of the whole puzzle Such techniquecan rarely give a final, definitive answer As noted, the real marketplace is too fluid forthis work to be definitive But it can be helpful

4.7.5 Store Panels

To supplement our knowledge from surveys (above), and to build upon those findings,

we may also do testing in stores If, for example, we wish now to test the price of a newproduct at levels A, B and C, this is one way we can do it In such a quantitative, non-question-asking study, we would find (here) there matched panels of stores, either inone city or in three different, matched markets The panels would be matched as best

as possible geographically, socioeconomically, by purchase habits, by brand shares,etc

In one panel, the product is sold at price A, in the second at price B, and in the third atprice C The we rotate (see schematic below) and count how many have been sold ineach panel Since we know how much we make as net profit at each level, total profit ateach level can readily be calculated This simple test can offer additional clues

The test might look like this:

This will be recognized as an experiment As in all experiments, we must be careful toget it right For example, we must be careful to note what competitive activity went on ineach panel, especially competitive price deals While this is “scientific”, we obviously

cannot shut out our competitors, who may notice our new product even if they do notknow it is being price-tested.

This is not a “laboratory” It is the real world of the market place, so we cannot controleverything that we should control if we want to be quite sure that any differences wesee are certainly due to price Sometimes, there may be appropriate statistical methods

we can use to “correct” for uncontrollable variables Sometimes we just have torecognize that we must accept some uncertainty because of our inability to controleverything An certainly we must insist on “de-aggregative” data, that is, we must looknot only at the panels in total, but each of the stores individually, to sort out “outliers”and “aberrations”.22

22 Neil Holbert and Mark Speece, opcit, (p 206-209)

5. Qualitative pilot findings

These qualitative findings presented in this section are obtained through the two groupdiscussions with instant coffee mix users Findings are hereby organized by thefollowing topics:

5.1 Coffee using and buying habits

The three common points of time to drink coffee are likely early in the morning, early inthe afternoon and in the evening Most of the attendants drink for a certain timeeveryday We noted with interest that most of them drink at home rather than outside(we do not imply that they do not drink outside) The most important reason is to savetime to go out People normally come to drink outside for purpose of entertainment andtalking with friends The talking atmosphere in coffee shops seem to be very uniqueand most people can not have such an atmosphere at home

Typically, there is a large number of family members to drink coffee and people in eachhousehold are likely to drink the same brand Some people show a trend of brandloyalty when they tend to buy the brands that they are familiar in use A majority do notcare much on brand choice and they may let the other people in the household tochoose brands In such cases, the people who choose brands are those who do thepurchase

People normally buy instant coffee mixes in markets and at provision shops.Supermarkets are likely expensive in the eyes of women People tend to purchase alarge volume for use in about 1 or 2 weeks

When recalling the first time to drink coffee, attendants responded that they imitated theother people and they tried using coffee to maintain their ability to work hard (or worklate), especially in brain works

5.2 Instant coffee mix usage, relative advantages and disadvantages

Most of attendants came to try instant coffee mix through clerks/salepersons’introduction After trying a few times, they recognized that it would probably be a niceproduct and they would continuously use it Some drink it to replace most of the regularcoffee as they do not have time to come to drink at coffee shops Many people drink it

in addition the regular coffee they drink because they just use it when they do not haveenough time to have a filtered cup of coffee They always drink ground coffee whenthey come to drink at coffee shops or having time to prepare a filtered one

Almost all of people consider time saving, quick and easy to prepare the most relativeadvantages of the product A few people have also tried to use it with ice Thedifficulties and/or dissatisfaction in use of instant mixes are in the taste as well as thestrength of the coffee substance People feel that instant mixes are not as strong innatural coffee flavor as ground coffee Actually, such a feeling come from consumers’

dissatisfaction for the coffee’s natural taste and aroma These features are probablyvery important to consumers in deciding to use the instant coffee mix product.

People seem not to know much about the results of the other people’s use of theproduct Perhaps, using coffee is not what people tend to deal with in dailyconversations However, we find it important to know if most people are likely to buyand use instant mixes when someone comes to introduce the product

5.3 Brand awareness and attitudes toward brand choice

Most people do not know well about brands Anyway, Vinacafe and “Eagle” (Eagle isthe word consumers use to call Mac Coffee) appear to be the top-of-mind brands.Nescafe is also highly recalled but for Nescafe Classic rather than Nescafe Deluxe

A trend of brand loyalty seems to exist but it is not very strong People tend to buy abrand that they are familiar in use, because they are not aware much about the otherbrands In the same time, people do believe that several brands are good and they mayswitch to buy the brand that they have chance to try and they like its taste People donot care much about price of the product as they perceive that different brands are sold

at the same price levels, to which they see acceptable

5.4 Preference on the product features

Most of the attendants considered the taste the most important criteria to assign thebrands into sub-groups The people who have not used a brand are likely to evaluateits taste by the color of the coffee (printed on the package) The more yellow the coffeesubstance looks, the more sweet it would be The more brown it looks, the less sweet(or much bitter) it would be Dark brown also stands for the natural taste of the coffee Another important criteria are about the product packages People tend to pay theirattentions in the following package features: good looking package, easily recalledpackages, easily handle package, package provides much product information and thedurability of packages

5.5 Product packages

In general, attendants satisfied about the packages of the 8 brands In the eyes of theattendants, Mac Coffee appears with the most good looking package Its packagecreates a strong impression on them with the eagle Vinacafe and Super Coffee havenice packages, too Indocafe is regarded as the package that gives much productinformation (some people could reveal that it is 2 in 1 rather 3 in 1 coffee mix as itsingredients do not include milk and it allows drinkers to add sugar in) People saw thatNescafe package is very differentiated and it looks more likely a chocolate Somepeople imagined that it may have more natural taste Many people perceived that itspackage is easy to handle and recall The most ugly package is voted for Parrigold due

to its bright color background pattern

5.6 Advertising awareness

Many people could recall the advertisings of Nescafe Classic on billboards and on TV.They tend to like it much more than the advertising of Vinacafe

5.7 Taste test

In the two taste tests we used the mix of coffee listed below:

Group 1: Seven ladies Group 2: Six gentlemen

Super

Coffee NescafeDeluxe

Buon MeThuoc(groundcoffee)

Indocafe Nescafe

Deluxe

Buon MeThuoc(groundcoffee)The result of the taste test is presented in Chart G1 below

Nescafe Deluxe obtains the highest level in many features: overall hedonic score,aroma, dark brown and bitterness and natural flavor The other brands get higherscores in the two remaining features: greasy and sweetness The results indicate thatNescafe Deluxe might be the most favorable taste to the consumers However, theother brands also closely follow it in the overall hedonic score and in the importantfeatures as aroma and natural flavor Indocafe is relatively strongest in sweetness andgreasy

It seems to have an underlying indicator for the natural coffee taste behind the threefeatures dark brown, bitterness and natural flavor

Another perceptual brand mapping is also derived from the same data to show howconsumers evaluate the brands in a correspondence analysis view (See Figure 14eenclosed) Basically, the map shows the same results Furthermore, we can find it thatNescafe Deluxe and Buon Me Thuoc (ground coffee) are located in the same right side

of the map which is differentiated by dark brown, bitterness and aroma

Aroma, natural flavor together with the overall hedonic score which are located closely

to the origin of the map may tell us that they are key features of the core product Incontrast, greasy, dark brown and bitterness are the features that come to differentiatethe brands

Chart G1 Consumers' evaluation on coffee taste

(Focus Group Results)

0 10 20 30 40 50 Dark brow n

Aroma

Sw eetness

Bitterness Natural flavor

Overall hedonic score

Greasy

Super Coffee Indocafe Nescafe BMT

Listed below is the table of average scores on 7 features of the brands derived from thetaste tests in the two focus groups:

SUPER COFFEE INDOCAFE NESCAFE DELUXE BMT

Figure 14e PERCEPTUAL MAPPING DERIVED FROM FOCUS GROUPS

FACTOR 1 (62%) HORIZONTAL <> FACTOR 2 (25%) VERTICAL

6. Data analysis: Consumer survey

6.1 Brand Awareness

6.1.1 Unaided awareness

By asking without a showcard, the survey finds it that there is just about one-third of thewhole 105 respondents knowing about brands Among those who know some instantcoffee mix brands, Vinacafe is the top-of-mind brand with more than 70% responded.Just a few people know about Indocafe and Nescafe Deluxe Almost all of the brandsare recalled by instant mix users A few instant mix non-users can recall Vinacafe.23

Chart 12a Unaided Awareness (Among those who know some brands)

13 7 10

71 7

we did not ask for its aided awareness to avoid possible bias responses.24 There is nodifference in levels of awareness among the sub-groups divided by age range andinstant mix user categories

23 See Table 12a

24 See Table 12b1

Chart 12b1 Aided Awareness (Amongthose who know some brands)

52 43 43

For the whole sample, we would summary the level of awareness as belows:

Unaided awareness (%) Aided awareness (%)

Aided

aw areness (%)

More than a half of the sample (57/105) drank instant mix a few times Vinacafe is thetop popular brand with 70% of those people drank a few times The second popularbrand is Super Coffee with more than 36% and the third popular brand is Indocafe withmore than 20% Mac Coffee ends up the list with more than 15% while Nescafe Deluxeseems to be not popular at all.25

There is no difference in the using patterns of the two sub-groups divided by age range

It is also noted that nearly 85% of instant mix users in our sample (48/57) drank instantmixes a few times and the other 15% (9/57) often drink

Chart 12b2 Drank a few times

32 12

8

60

41 31 22

78 3

37 23

16

70 2

6.2.2 Often drink

The percentage of those who often drink instant mixes is relatively high at 9% out of thewhole sample (9/105) To those, Vinacafe and Indocafe seem to be the most popularbrands.26 However, it is not very realiable with only 9 observations

For the whole sample, we would summary the level of popularity as belows:

Drank a few times (%) Often drink (%)

Drank a few times (%) Often drink (%)

6.3 Estimated Market Potential

As our target customers are adults (aged 18 or above) in the city, we first get the totalnumber of adults27

The second step is to estimate the total number of instant mix users in the city Thepercentage of coffee drinkers is manipulated by the mean of coffee drinkers in thehousehold28 divided by the mean of adults in the household29 Since we selectedrespondents among coffee drinkers, the number of instant mix users must be based onthe total coffee drinkers (computed by 57/105)

The third step is to compute how many cups of coffee these instant mix users would beable to drink for a day Total number of cups of coffee to drink per day is computed bythe number of cups (1, 2, 3, 4) multiplied with their probability of occurrence30

However, among the instant mix users defined in our survey, instant mixes do notaccount for 100% out of the total coffee they drink The estimated cups of coffee todrink per day must be computed by the percentage of instant mix to drink multipliedwith their probability of occurrence31

The estimated market consumption volume is calculated for a period of one 4-weekmonth as follows:

27 The figure 62% for percentage of adults in the city is based on the result of the National Population Census carried out by the General Statistical Department in 1989, Volume # 1, Page 20

Total population in the city 7,000,000 persons