developing distribution strategy for mekostar fresh cut fruitsin ho chi minh citymarket

ACKNOWLEDGEMENT First of all, we would like to express our deepest thanks to Management Board of The Fruit Republic who trusted us to conduct the marketing strategy for Mekostar fresh-cu

IN HO CHI MINH CITY MARKET

MASTER FINAL PROJECT MASTER IN MARKETING AND COMMUNICATION MANAGEMENT

Academic Tutor: Prof NGUYEN MINH HA Practicing tutor: HUYNH MINH NHUT

HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES

SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT

ACKNOWLEDGEMENT

First of all, we would like to express our deepest thanks to Management Board of The Fruit Republic who trusted us to conduct the marketing strategy for Mekostar fresh-cut fruits and provided us the wealthy information and data which are beneficial for our research and analysis

Next, we would like to express our sincere gratitude our advisors to Professor Nguyen Minh

Ha, and Mr Huynh Minh Nhut We own you a huge debt of gratitude for the continuous support of our project Your guidance is priceless to us

A very special thanks to all Professors at this programme for their extremely patience and hard work in teaching and inspiring us with their immense knowledge

Our gratitude goes out to all those who took the time to complete our questionnaires and surveys Without their passion participation and input, the validation survey could not have been successful conducted

Nguyen Mai Vinh Quang and Nguyen Thi My Chi

EXECUTIVE SUMMARY

The Fruit Republic is a trading company which specializes in fruits and vegetables for export and domestic market It is one of few agriculture companies in Vietnam which can meet the requirement of EU market for fruits and vegetables with Global GAP certificate for products and HACCP and BRC certificate for factory Beside fresh fruit and fresh vegetables, fresh-cut fruits are an innovative product category of The Fruit Republic which was launched in domestic market under Mekostar brand and distributed mainly to supermarket chains since

2012 However, the sales of the Mekostar fresh-cut fruits recently has decreased significantly and it has influenced to the production plan in the factory by changing the working schedule for workers and inventory planning Based on the request of The Fruit Republic’s management board, our team support them to find the solutions for improving the sales performance of Mekostar fresh-cut fruits in short term and having sustainable growth for this product in long term

The first step in our approach is the diagnosis phase where we tried to understand the situation of Mekostar fresh-cut fruit and identified its problems We conducted a market research to get external information for key stakeholders and did some internal interviews with the sales team of The Fruit Republic to get the internal information about Mekostar fresh-cut fruit In our market research, we employed both primary and secondary research to collect data including desk research, observation, qualitative research and quantitative research Beside the market research, we also applied some theories which we have studied

in the master class in marketing and communication management of Solvay Business School and Open University such as Marketing mix 4Ps model, SWOT and Porter’s five forces to analyze the competitive environment surrounding Mekostar fresh-cut fruit, its strengths, weaknesses, threats and opportunities in the current context

Based on the combination of key findings from the research and results of our analysis, we figured out some issues of Mekostar fresh-cut fruit in its existing distribution channel and some opportunities to improve its sales performance In conclusion, we suggested some solutions for The Fruit Republic and one of them is the recommendation to consider to develop a direct sales channel (Business to Customer) to distribute Mekostar fresh-cut fruits

to the office workers in the office buildings in HCMC It may help to improve the sales performance Mekostar fresh-cut fruit in short term and also increase the awareness of

Table of Contents

ACKNOWLEDGEMENT iii

EXECUTIVE SUMMARY iv

LIST OF TABLES, FIGURES AND PICTURES vii

1 GENERAL OVERVIEW 1

1.1 Background: 1

1.1.1 Introduction of The Fruit Republic: 1

1.1.2 Introduction of Mekostar fresh-cut fruits: 2

1.2 Project objectives and our approach: 3

1.3 Research design: 3

1.3.1 Research Objectives 3

1.3.2 Research methodology 4

1.3.3 Sample size 4

1.4 Project limitation: 5

2 LITERATURE REVIEW 6

2.1 Porter’s Five Force: 6

2.2 Marketing – Mix concept: 7

2.2.1 Product strategies: 7

2.2.2 Price strategies: 8

2.2.3 Place strategies: 8

2.2.4 Promotion strategies: 9

2.3 SWOT analysis: 9

3 ANALYSIS OF MEKOSTAR FRESH CUT FRUIT 10

3.1 Marketing mix analysis of Mekostar fresh cut fruits 10

3.1.1 Product analysis 10

3.1.2 Price analysis 11

3.1.3 Place analysis 12

3.1.4 Promotion analysis 13

3.2 Porter’s Five Forces analysis of Mekostar fresh-cut fruit 15

3.2.1 Intensity of competitive rivalry 15

3.2.2 Threat of new competition: 16

3.2.2 Threat of substitute products 16

3.2.3 Bargaining power of suppliers 17

3.2.4 Bargaining power of customers 18

3.3 SWOT analysis of Mekostar fresh-cut fruit 18

3.3.1 Strengths 18

3.3.2 Weaknesses 19

3.3.3 Opportunities 19

3.3.4 Threats 19

3.4 Key findings of the market research 20

4 CONCLUSION AND RECOMMENDATIONS 23

4.1 Conclusions 23

4.2 Recommendations 25

4.2.1 Distribution strategy: direct sales to office buildings in HCMC 25

4.2.2 Diversified product portfolio 27

4.2.3 Promotional campaign at office buildings in HCMC 28

REFERENCES 30

APPENDIX 1 - Questionnaire 1– face to face interview 31

APPENDIX 2 - Questionnaire 2 – online consumer survey 35

APPENDIX 3 – Discussion guide – In-depth interview 39

LIST OF TABLES, FIGURES AND PICTURES

TABLES

Table 1: Pricing comparison of Mekostar fresh-cut fruits to its rivals 12

Table 2: Supermarket are selling Mekostar fresh cut fruits 13

FIGURES Figure 1: The Fruit Republic’s revenue by product groups 1

Figure 2: Mekostar fresh-cut fruit sales in supermarket 2

Figure 3: Our approach 3

Figure 4: Research methodology 4

Figure 5: Porter Five force 6

Figure 6: Marketing mix strategy 7

Figure 7: SWOT analysis 10

Figure 8: Online survey - Regularity of purchase fresh-cut fruit 20

Figure 9: Online survey - Place of purchase fresh-cut fruit 20

Figure 10: Offline survey – Reason of not purchase fresh-cut fruit in supermarket 21

Figure 11: Demographic –Respondent’s profession 21

Figure 12: Reasons why consumer don’t buy Mekostar fresh-cut fruits 22

Figure 13: Supply chain of Mekostar fresh-cut fruits 24

Figure 14: Suggested distribution model for TFR 26

Figure 15: Suggested order system for TFR 26

PICTURES Picture 1: Mekostar vegetables in supermarket 1

Picture 2: Mekostar fresh-cut fruits 2

Picture 3: Mekostar fresh-cut product lines 10

Picture 4: Mekostar’s marketing material 13

Picture 5: Price discount programme at BIG C 14

Picture 6: Sale support by promotion girls at Lottle mart 14

Picture 7: Sampling booth of Mekostar 14

Picture 8: Fresh-cut fruit of supermarket 15

Picture 9: Fresh-cut fruit of other companies supply to supermarket 15

Picture 10: Fresh-cut fruit from street vendor 16

Picture 11: The canned fresh-cut fruit in GIANT supermarket 17

Picture 12: Print and online newspapers 25

Picture 13: Sample of Mekostar mobile selling truck 27

Picture 14: Existing fresh-cut fruit products of Mekostar 28

Picture 15: Illustrate suggested product portfolio for Mekostar’s fresh-cut lines 28

Picture 16: Advertising via local new papers to the publicity 29

Picture 17: Advertising on digital frame in office building (elevator and lobby) 29

1 GENERAL OVERVIEW

1.1 Background:

1.1.1 Introduction of The Fruit Republic:

The Fruit Republic is specializing in trading fruit and vegetables in both domestic and foreign markets In domestic market, it provides fruits and vegetables which can be classified in three categories: fresh fruit, fresh vegetable and fresh-cut fruits

The Fruit Republic’s products are in a wide range of types including iceberg lettuce, sweet pepper, beef tomato, fresh herbs, button mushrooms, cabbages, red bell pepper, sweet potato, guava, dragon fruit, mature coconut, pomelo, seedless lime etc All its fruits and vegetables are sourced from their own GAP certified contract farmers The Fruit Republic is currently collaborating with famers in Mekong Delta and highland city of Dalat

The Fruit Republic is the only company in the Vietnam that has Global GAP certification for lime, honey pomelo and pink pomelo The Fruit Republic supports the contracted farmers in improving farm management and ensures that the farms comply with strict international quality standards They are one of few agriculture companies in Vietnam which follows the Corporate Social Responsibility and Fair Trade

Figure 1: The Fruit Republic’s revenue by product groups Source: TFR sales department

Among several own brands of The Fruit Republic, Mekostar is a fruits and vegetables brand of The Fruit Republic in domestic market With Mekostar, The Fruit Republic aims to make the Vietnamese consumers proud about their own “home-grown” produce by supplying the market the fresh fruits and vegetables which are safe, healthy, tasty and good looking, sourced from their own contract farmers

Picture 1: Mekostar vegetables in supermarket Source: TFR sales department

40%

48%

Fresh vegetables Fresh-cut fruits

1.1.2 Introduction of Mekostar fresh-cut fruits:

The Fruit Republic introduced Mekostar fresh-cut fruits to HCMC market in 2012 Fresh-cut fruit is an innovative product of The Fruit Republic together with other products for domestic market where it is a pioneer in producing fresh-cut fruit in a professional way: HACCP factory, high technology, skilled workers, branded product, etc

Picture 2: Mekostar fresh-cut fruits Source: TFR sales department

Products were sold to all big supermarket chains in HCMC such as METRO, LOTTE Mart, BIG C, COOP Mart, GIANT, Citimart etc

After 3 years, the sales of Mekostar fresh-cut fruits are not as good as The Fruit Republic’s expectation Only two supermarket chains still want to sell Mekostar fresh-cut fruits while other chains refused to sell this kind of products because they were not attractive to customers in their stores

The low sales of Mekostar fresh cuts fruits had a strong impact to the production line

in The Fruit Republic’s factory such as the labour in factory for fresh cut (they don’t have enough work to do fulltime), sourcing material (stock of fruit for producing fresh cut fruit)

It became a serious problem to The Fruit Republic business

1.2 Project objectives and our approach:

The aim of this project is to propose an effective marketing strategy for The Fruit Republic to improve Mekostar fresh-cut fruits sales performance in 2016 as well as strengthen its brand in domestic market by reaching more customers

Our approach is to identify existing issues of Mekostar fresh-cut fruits through the researches in diagnosis phase Then, based on the key findings of market research and the result of our analysis, our team will propose the appropriate strategic plan for The Fruit Republic

Figure 3: Our approach

Within the scope of this project, our team will be in charge of the diagnosis phase

and strategic phase to develop the marketing strategy for Mekostar fresh-cut fruit The

Fruit Republic will take in charge for the third and fourth phase to prepare and implement this plan

1.3 Research design:

1.3.1 Research Objectives

This research aims to:

 Understand the demand of fresh-cut fruits in HCMC market and the purchasing behavior of fresh-cut fruits users

 Understand the assessments of the stakeholders about Mekostar fresh-cut fruits

 Identifying the issues of Mekostar fresh-cut fruits which influence to the sales performance of Mekostar fresh-cut fruits

fresh-Observation:

 Observe the buying behaviors of consumers and their attitudes when they buy fresh fruits, fresh-cut fruits and Mekostar fresh-cut fruits in supermarkets in HCMC

1.3.3 Sample size

According to the information from The Fruit Republic, only few supermarkets have Mekostar fresh-cut fruits in their shelves Among these supermarkets, GIANT, LOTTE Mart Nam Sai Gon, and METRO An Phu are three supermarkets have the good sales performance

of Mekostar fresh-cut fruits Hence, we decided to do observation and consumer survey in GIANT, LOTTE Mart Nam Sai Gon, and METRO An Phu

In in-depth interviews, we questioned the buyers or purchasing managers at three supermarket chains in Ho Chi Minh City which are selling Mekostar fresh cut fruits

Desk Research Observation Qualitative research Quantitative research

To determine the sample size for consumer survey, we used the some suggestions below to make decision for 150 interviews including 50 face-to-face interviews in supermarkets and 100 online interviews:

- Rule of 100: Gorsuch (1983) and Kline (1979, p 40) recommended at least 100 (MacCallum, Widaman, Zhang & Hong, 1999) No sample should be less than 100 even though the number of variables is less than 20 (Gorsuch, 1974, p 333; in Arrindell & van der Ende, 1985, p 166);

- Hatcher (1994) recommended that the number of subjects should be the larger of 5 times the number of variables, or 100 Even more subjects are needed when communalities are low and/or few variables load on each factor (in David Garson, 2008)

In order to ensure that we can get the right information from the right people, we selected our respondents based on the selection criteria below:

 In-depth interview: F&V buyers/purchasing managers of supermarket:

 Making decision to purchase Mekostar fresh-cut fruits for their supermarket

 Having 2 years experienced in this position

 Consumer survey offline: Shoppers at supermarket

 Female/male, 25 – 50 years old

 Like to consume fruits

 Usually shopping in supermarkets which are selling Mekostar cut fruits

fresh- Regular buying of whole fruits or fresh-cut fruit in supermarket

 Consumer survey online: consumers in HCMC

 Female/male, 25 – 50 years old

 Like to consume fruits

 Having a purchase of fresh-cut fruit within 6 months

1.4 Project limitation:

This project has some limitation as followings:

 The time limit for this project is three months

 We cannot access to some internal data about Mekostar fresh-cut fruit such as detail of sales, pricing system…

 The sample size of consumer survey both online and offline is still limit to have most reliable database from consumer

 We have to accept some limitation of online survey as we assumed that they gave honest responses (Sparrow 2007)

2 LITERATURE REVIEW

This chapter is about to examine key theories such as Marketing Mix 4Ps, Porter’s Five

Forces and SWOT that help to get deeper understanding of important factors that contribute

to the success of a business and the competitive environment

2.1 Porter’s Five Force:

Porter's five forces analysis (Porter 1986) is a framework that attempts to analyze the

level of competition within an industry and business strategy development It draws upon

industrial organization (IO) economics to derive five forces that determine the competitive

intensity and therefore attractiveness of an Industry Attractiveness in this context refers to

the overall industry profitability An "unattractive" industry is one in which the combination

of these five forces acts to drive down overall profitability A very unattractive industry

would be one approaching "pure competition", in which available profits for all firms are

driven to normal profit This analysis is associated with its principal innovator

Porter’s five forces referred to five forces: Power of Suppliers, Threaten of new

entrants, Threaten of substitutes, Power of Buyers, and Industry rivalry Four types of

scanning is applying for Porter’s five forces: competition scan, sales scan, technological scan

and environment scan

Figure 5: Porter’s Five Force

2.2 Marketing – Mix concept:

Suggested by Winston (1985), marketing – mix is a set of the variables that the company can check and manage and it is used to try to cause the desirable resistance from

the target market “Whenever we define marketing mix, we need to understand the minimum steps to produce the critical mass in the purchasing process” (Belohlavek 2008)

Marketing – mix is a set of the variables that can be controlled, they are managed to satisfy the target market and passed the aims of the organization In marketing – mix there are a lot of different tools, each tool is a variable that can be controlled and classified following 4 factors called as 4Ps: Product, Price, Place and Promotion

Figure 6: Marketing Mix Strategy

 Presale education provided by salespeople

 Post sale technical support

 Repair service

 Financial plans

 Convenient available

 Word-of mouth references from earlier adopters of product

 Reputation of the outlet where the product was purchased

2.2.2 Price strategies:

The price is the direct factor in marketing – mix to make the income and which is one of the most flexible factors of marketing – mix, it can change fast, not to be as same as the natures of the products and the affidavit of the channel, at the same time for assessment and price competition are the outstanding matters stipulated for the persons doing the marketing The strategy for assessment depends on the aim of marketing of the company When defining the price for the product, the company needs to consider the steps of the period for assessment Due to the competitive matter and the change of the market to pull the company for change, adjustment of the price suitably, it can have the strategies for adjustment later: Assessment as per the geographic principle, negotiation and discount, assessment of the price for promotion, assessment of the price for discrimination and assessment of the price for the list of the product (Winston, 1985:85)

“The price is an element that on the one hand bears a priority relationship (Correlation) with the value but on the other hand it primordially relates to opportunities” (Belohlavek

to the aimed customers who can contact to buy them

Most of the producers also supply their products to the market through the marketing intermediates Hence, the producer should relate, combine with some organizations, forces outside to pass their aim for distribution The marketing channel implements for transfer of the products from the manufacturer to the consumers, to escape over the separations of the time, space and possession inserting among the commodity and service with the users of them

The basic decisions include:

+ The regulations for design of the channel

+ The regulations for management of the channel

Besides, according to Belohlavek (2008), “Distribution has two components

+ The brand, that sustains the negotiating and commercialization freedom based on the brand attributes

+ The need Distribution is more efficient and its sales closing better if it satisfies the clients’ needs

2.2.4 Promotion strategies:

It is also suggested by Lamp, 2011 that one of four essential instruments of marketing – mix and it becomes more effective and important that the company can use to impact into the aimed market The nature of the promotion operation is very the communication of the news for product and the enterprise to the customers to convince them to buy the commodity

of the enterprise

The mixed promotion policy includes 5 main instruments as:

- Advertisement: including any form introduced indirectly and heightened the ideologies, product or service implemented as per the demand of entity for advertisement and the entity should pay the expenses

- It is suggested by Belohlavek (2008), The Direct Marketing: To use letter, telephone, and instruments for other indirect communication to communicate the news for the available customers and the prospective customers or request them to give the feedback

Besides, according to Pride (2009), each tool in promotion also has the own features and its costs, thus when collecting the instruments and combining with the instruments in the policy for miscellaneous promotion, the marketing maker should catch up the own features of each instrument when collecting as well as to consider the factors affecting to the structure of the instrument for miscellaneous promotion such as: the style of market for product, the pushing and pulling strategy, the ready period for the buyer, the period in the living circle of the product

2.3 SWOT analysis:

SWOT analysis is a designed planning scheme used to evaluate the company in its environment in term of external and internal analysis SWOT assess the company based on its strengths, weakness, opportunities and threats Its result helps to utilize company’s strengths to grasp market’s opportunities; to understand company’s weakness to prevent the company grasp opportunities; to reduce the impact from threats; to deal with company’s weakness that may turn threat into reality

Figure 7: SWOT Analysis Source: www.marketingteacher.com

3 ANALYSIS OF MEKOSTAR FRESH CUT FRUIT

3.1 Marketing mix analysis of Mekostar fresh cut fruits

3.1.1 Product analysis

Fresh-cut fruit is not a new product in Vietnam market We can buy fresh-cut fruit easily in supermarkets, fruit shops and from street vendors However, most of the suppliers

of fresh-cut fruit is small and private enterprises which are not professional and can produce

a conventional type of fresh-cut fruit Only The Fruit Republic is the first company which focus on fresh-cut fruit category with a professional way and big investment

Picture 3: Mekostar fresh-cut product lines Source: TFR sales department

The Fruit Republic aims to produce a high quality fresh-cut fruit with a professional packaging and trusted brand name to satisfy the demand of a target group which are urban woman, age around 25 to 50 years old, middle social class and upper, care about their health and their family health, willing to pay for high quality products, modern lifestyle and less

 Product features: fresh fruit and ready-to-eat It’s also a convenient solution for consumer to eat some fruits which are very difficult and cost a lot of time to cut such

as pineapple, pomelo, and jackfruit

 High quality product: processed from a high quality fruits which can meet export standards Its factory has HACCP certification

 Have brand name Mekostar

 Need to keep in cool conditions around 12-15oC when selling or storing

 Design: Mekostar fresh-cut fruits have a nice packaging with a transparent hard plastic tray which are safe for food and the nice designed label with brand Mekostar and nutrition information

In general, the strength of Mekostar’s fresh-cut is a ready-to-eat brands with high quality with professional in packaging and caring about food safety as well as food hygiene Moreover, the product is managed under high standard processing by the prestigious international company, The Fruit Republic It is a key to lead to middle social class an upper income class

However, the weakness of this product is the storing condition It should be keep in cool condition from 12-15oC but the cool shelves of almost supermarket can keep average around

18oC

3.1.2 Price analysis

Basically, compared to rivals in the market, the retail price of Mekostar fresh-cut fruits is higher than its competitors in the same product types Moreover, The Fruit Republic has revealed to us their prices are also effected by supermarket’s mark-up policy to fresh fruits which is 35-40% on the top of wholesale price

Indeed, Mekostar fresh-cut fruit brand is vied by supermarkets’ own brand and other brands about 30-35% and 15-20% respectively

And, if we compare retail price of Mekostar fresh-cut fruit in supermarket to its competitors in traditional trade channel, it is 40-50% higher than street vendor’ price However, the pricing of Mekostar fresh-cut packs is 5-10% higher than fresh-cut fruit online

Product Retail price

(VND/500 gr)

% vs Mekostar

Fresh cut pomelo from street vendors 28,000 44%

Fresh cut pomelo from other small companies 42,000 16%

Fresh cut pomelo from online suppliers 49,000 2%

Table 1: Pricing comparison of Mekostar fresh-cut fruits to its rivals Source: Mekostar

Regarding to the price, due to high mark-up policy of supermarket to fresh fruit products, we can see the price is a weakness of the Mekostar fresh cut fruit in this channel However, when we compare to the retail price of online channel, the gap between Mekostar fresh-cut fruit and other companies is not much It can be a place where the weakness of Mekostar fresh-cut fruit can be lightened

3.1.3 Place analysis

In the first year, Mekostar fresh-cut fruits were available in most of key supermarket chains in Ho Chi Minh However, the number of supermarkets selling Mekostar fresh-cut fruit reduced significantly to few ones in 2015 because of the slow sales and high risk of shrinkage Till March 2016, there are few supermarkets in Ho Chi Minh City still continuing sale Mekostar fresh-cut fruits

No Store name Mekostar fresh cut fruit availability

2012 2013 2014 2015 Mar-16

9 COOP Mart Dinh Tien Hoang Yes Yes Yes Yes No

10 COOP Mart Nguyen Dinh Chieu Yes Yes Yes Yes No

14 LOTTE Mart Nam Sai Gon Yes Yes Yes Yes Yes

18 Citimart Etown cong hoa Yes Yes Yes Yes Yes

23 Select mart the Manor Yes Yes Yes Yes Yes

Table 2: Supermarket are selling Mekostar fresh cut fruits Source: TFR sales department

In sum, Mekostar had a good start in their founding year by selling and displacing their products at good traffic supermarkets such as BIG C, Coop Mart, Metro, Citimart, and etc., However, to approach the right customers had required The Fruit Republic a wise distribution strategy via diversity channels such as online-sales and/or direct sale

3.1.4 Promotion analysis

Every year, The Fruit Republic invest a good budget for marketing to promote Mekostar in domestic market but this amount is rather small because of the turnover of Mekostar in domestic market Most of their promotional activities focus on supermarket channel where their product are mainly distributed to

In order to increase brand awareness, The Fruit Republic has produced many promotional materials to display in supermarket to get the attention of customer

Picture 4: Mekostar’s marketing material Source: TFR’s sales department

To promote Mekostar fresh-cut fruit in supermarket, The Fruit Republic has conducted some instore promotional campaigns to increase the awareness of their brand and emphasize the quality of Mekostar fresh-cut fruit Some promotional activities are such as:

 Sampling

 Product mass display competition

 Sales support by promotional girls

 Price discount

Picture 5: Price discount programme at BIG C Source: TFR’s sales department

Picture 6: Sale support by promotion girls at Lottle mart Source: TFR’s sales department

Picture 7: Sampling booth of Mekostar Source: TFR’s sales department

Indeed, Mekostar has good promotion strategy thanks to its mother company, The Fruit Republic Having strong experience in creating brands for fruit products, The Fruit Republic has endorsed Mekostar brand based on their current marketing network and back-ground Implement sampling booth for Mekostar, using promotion girls to approach shoppers at the supermarket and running sale at the supermarket are the marketing strategy applied for Mekostar from The Fruit Republic since 2012 However, the on-going marketing strategy of Mekostar is not efficient enough to raise awareness of its brands to the public and approach its target customers

3.2 Porter’s Five Forces analysis of Mekostar fresh-cut fruit

3.2.1 Intensity of competitive rivalry

Because Mekostar fresh-cut fruits are mainly distributed through supermarket channel

so that we analyze its competitors in this channel first The main competitors of Mekostar fresh-cut fruit in supermarkets are the fresh-cut fruits of supermarket and fresh-cut fruits from other companies

 Fresh-cut fruits of supermarket: Most of supermarket produce and sell their fresh cut fruits in their stores They usually use the fruits which are difficult to sell because of the problem with skin or a bit old to make their fresh-cut fruits Therefore, the price of fresh cut of supermarket is competitive but they have no brand and under quality packaging

Picture 8: Fresh-cut fruit of supermarket

 Fresh-cut fruits from other companies: there are few small fruit trading companies produce fresh cut fruits to supply to supermarket together with their fresh fruits They also use the cheap fruits from wholesales market without quality control to produce fresh cut fruits Their products also have label with a brand on the bag but it doesn’t add value to the product much because their brand is not famous and they have no quality claims yet The price of their products are also cheap but it’s still higher than the fresh-cut fruit of supermarket

Picture 9: Fresh-cut fruit of other companies supply to supermarket

Beside the competition in supermarket channel, some other competitors of Mekostar fresh-cut fruits are fresh-cut fruits from street vendors and fresh-cut fruits from online suppliers

 Fresh-cut fruits from street vendor: it’s so easy to find and buy fresh-cut fruits from the street vendors because they are available everywhere and their price is very cheap However, there’s one important point which customer are really worry

is the quality and hygiene of the fresh cut of street vendor They also use the fruits from wholesales market without quality control

Picture 10: Fresh-cut fruit from street vendor

 Recently, there are many online suppliers of fresh-cut fruits They target to the office workers in big cities such as HCMC and Ha Noi Most of them can produce fresh-cut fruit in small scale because they don’t have factory Their price is not cheap but they provide delivery service and the quality and hygiene of their fresh-cut fruits are good Some of them have brand for their products and nice packaging but it also doesn’t add value much because they don’t have money to invest to promote the brand

Compare to existing competitors in the market, especially in HCMC, Mekostar cut fruits have many advantages to grow in the segment of customer who have good income and care about the quality and hygiene of the fresh cut which they consume

fresh-3.2.2 Threat of new competition:

Vietnam is growing steadily and it is one of emerging market in Asia Vietnam also open more and more with many new FTAs and economical alliance agreements between Vietnam and many countries in the world (source: vneconomy.vn) It will open the door for some big fruit processing companies to enter Vietnam market in the future

Besides, local fruit companies will join this market if they can see the increase of fresh-cut fruit demand They can invest to professionalize their production line for fresh-cut and improve their capacity

However, to produce professional fresh-cut fruit in Vietnam is not an easy job because you have to control well the sourcing of material Mekostar fresh-cut fruit has an advantage of using the controlling system and the contract farmers which The Fruit Republic use for export products

3.2.2 Threat of substitute products

Recently, Dole started to introduce fresh-cut fruit in can, fresh fruit juice and dried