Marketing plan for GO CHOCO biscuit

In about April 2011, one of Mayora branch in India launched a new product, has named Go Choco sandwich biscuit and this biscuit has succeeded and continuously develop and increase the ma

MBMM5

NGUYEN THI KIM TINH

Marketing Plan for « GO CHOCO » Biscuit

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Tutor’s Name: Dr Nguyen Minh Ha

Ho Chi Minh City

(2012)

DECLARATION

I hereby declare that all work in my final project was done in accordance with the regulation and project guidance of Solvay Brussels School and HCMC Open University in the course Master in Business and Marketing Management

The project “MARKETING PLAN FOR GO CHOCO BISCUIT” has done by myself

under the guidance of my tutor – Dr Nguyen Minh Ha

I am responsible for all data and information which have been collected and researched via reliable source and authors as mentioned in the references and appendixes

as well as company direction

Secondly, I would like to say thanks to all Professors of MBMM5 program for their knowledge, experience and enthusiasm during two past years The knowledge in this MBMM course make me confident, promoted in my career path

And finally, last but not least, I want to say thank you for my team at MC advertising – Ms Ngoc Yen and Mr Ngoc Khanh have support me in my current job while I was taking the sabbatical leave to do this project And I also owe my closed friends and beloved family for their support in market research as well as invaluable encouragement

TUTOR’S COMMENTS

TABLE OF CONTENTS

DECLARATION……… ……… i

ACKNOWLEDGEMENT……….ii

TUTOR'S COMMENTS ……….iii

TABLE OF CONTENTS ………iv

ABBREVIATIONS……… vii

LIST OF FIGURES AND TABLE……… viii

EXECUTIVE SUMMARY……… ix

CHAPTER I: INTRODUCTION ……… 1

1.1 Problem Statement 1

1.2 Objectives of the Project 1

1.3 Scope and limitation of the Project 2

1.4 Research Method 2

a Research Design 2

b Sample Size 2

c Data Collection 3

1.5 The structure of the Project 3

CHAPTER II: LITERATURE REVIEW 5

2.1 Marketing Plan 5

2.1.1 Situation Analysis 7

a The situational Environment 7

b The competitive Analysis 7

c The internal company environment 7

2.1.2 Marketing Plan 7

a Objectives 7

b STP Process 8

c Marketing Mix 5Ps tool 8

2.1.3 Implementation and Control 9

2.2 Digital Marketing 10

2.3 Trade Sales Promotion 10

2.4 Customer behavior 11

CHAPTER III: INTRODUCTION OF THE COMPANY 12

3.1 Mayora Company and “Go Choco” biscuit brand ASIA overview 12

3.1.1 Mayora company in ASIA 12

a Mayora company at a glance 12

b Mission and Vision in ASIA 13

c Products of Mayora Company 13

3.1.2 Go Choco biscuit in ASIA 13

3.2 Mayora company and “Go Choco” biscuit in Viet Nam 14

3.2.1 Mayora Company in Viet Nam 14

3.2.2 Go Choco biscuit in Viet Nam 14

CHAPTER IV: SITUATION ANALYSIS 16

4.1 Environment 16

4.1.1 Macro economic environmen 16

a Social and cultural environment 16

b Economic 18

c Political and Legal background 20

4.1.2 Micro economic environment 21

a Market size 21

b Consumer Insight and Trend 2011 and 2012 24

4.2 Competitive Analysis 27

4.3 Internal Analysis 37

4.4 SWOT analysis……….39

CHAPTER V: MARKETING PLAN 41

5.1 Marketing Strategy 41

5.1.1 Segmentation, Target and Positioning Go Choco ……… ……….41

a Segmentation: 41

b.Target Audience 41

c Positioning in Viet Nam’s market 41

5.1.2 Marketing Mix 5 Ps tool 42

5.2 Objectives of the Marketing Plan 48

5.3 Budget and Detail of Marketing Plan: IMC Plan 48

5.3.1 Budget 48

5.3.2 Detail of Marketing Plan: IMC Plan 49

a Trade Sales Promotion 50

b Digital Marketing 53

c Sampling or Selling Activation 55

d Event and Sponsorship 58

e CRM 59

5.4 Timeline table 62

CHAPTER VI: CONCLUSION AND SUGGESTION 63

6.1 Conclusion 63

6.2 Suggestion 63

REFERENCES 64

APPENDIX 68

a Sampling and survey questionnaire 68

b Estimation of sales amount and cost for trade sales promotion campaign 72

ABBREVIATIONS

BMI Business Monitor International

CRM Customer Relationship Management

FMCG Fast Moving Consumer Goods

Forex Foreign Exchange

IBA (GHM) Internationale Bauaustellung (Fair, Berlin, Germany)

IMC Integrated Marketing Communication

OOH Out of home advertising, like billboard

P/E rate Relationship between Market Price (P) and Earning per Share (EPS) in

stocks market P/E= P/EPS

PR Public Relationship

R&D Research and Development

STP Segmentation, Targeting and Positioning

LIST OF FIGURES AND TABLE

Figure 2.1: Model of Consumer Behavior………11

Figure 4.1: Confectionary market share in Viet Nam’s market, 2010………22

Figure 4.2: Turnover and profit before tax of Bibica YTD 2010……….………31

Figure 5.1: Huong Thuy sales and distribution model……… …… 47

Figure 5.2: Overview of Go Choco biscuit distribution channel……… … 47

Figure 5.3: The IMC plan for Go Choco biscuit……… …50

Figure 5.4: Buying Go Choco biscuit process when do selling and sampling at GT channel ………56

Figure 5.5: Module of Collaboration CRM……… 60

Table 4.1: Vietnamese population by age 2012 ……….…….17

Table 4.2: Viet Nam Confectionery Sales 2008 to 2015……….…21

Table 4.3: The source of confectionery and cereal for Viet Nam’s market for the first nine months in 2011……….24

Table 4.4: Criteria of consumers expect from Nelsen research 2011………26

Table 4.5: List of top Viet Nam brands 2009……….……….….…35

Table 5.1: Ingredients of Go Choco biscuit……….………44

Table 5.2: Margin scheme proposal for Go Choco distributors…… ……….51

Table 5.3: Trade sales promotion expense for Go Choco biscuit 2012…….……… 53

EXECUTIVE SUMMARY

Since Vietnam has joined APEC and abided by the rules of international trade in the region, many business opportunities and investment come among the members of the organization According to the Ministry of Foreign Affairs of Vietnam, within 10 years from the date of accession, (1998-2008), the members of APEC account for 75 % FDI, 50

% of development aid (ODA), 73 % of exports and 79 % of Vietnam's imports The import and export taxes of confectionery industry reduced significantly by stages, from 50 to 20 % and just 5 % from 01.01.2012 In addition, Vietnam's market is evaluated as one of the safe place and has the most potential for investment in the region Huge population creates a large market size The Vietnamese always welcome new products from countries as long

as quality assurance and great taste Moreover, cheap labor and intellectual staff is working and fast-learning new knowledge

hard-Company Mayora clearly realize the opportunities for business expansion April 2011, a new product, Go Choco biscuit, was launched in India and Thailand The product is the enthusiasm of R&D of Mayora and Inbisco, the arm of company in India Go Choco is the perfect combination between the components to create the difference compared to other product lines, for average income segment Product has succeeded and gained impressive sales Following this success, Mayora strongly continues to grow in doing business in Vietnam’s market

The project aims to research, evaluate and analyze the Viet Nam’s confectionery industry This study has identified where Go Choco brand is in Viet Nam’s market, taken advantage

of all opportunities and strengths and simultaneously found out Mayora and brand’s threats and weaknesses All these results were the valuable data and were considered the most important part to understand thoroughly for the further recommendations on the marketing plan

There are many marketing activities to bring Go Choco biscuit to consumers Which ways

is right direction and shortest to achieve sales target and brand awareness With SWOT analysis, this study proposes the most power tools and activities which provide practical

and effective in accordance with Go Choco’s positioning and Mayora's budget for the first year entering Viet Nam's market Most of them are below the line and directly interaction

to consumers and low cost

If marketing plan and its activities are properly implemented, Go Choco will be bound to win Vietnamese wholesalers and consumers’ trust and love From this first stable stage, Mayora continues to set up a marketing strategy for company and product in Viet Nam for the long term

CHAPTER I: INTRODUCTION

1.1 Problem Statement

Viet Nam has joined the APEC and must comply with the conditions in FTA The import tax for confectionery industry, as well as those to other commodities, has significantly decreased Meanwhile, the Viet Nam confectionery market promise a high profit with near

90 million populations, and so high potential

Mayora’s mission and vision are continuously build strong brands and distribution channels in all fields, being socially and environmentally responsible and to expand their products to ASIA and become a quality manufacturer of food and beverage products that is trusted by the consumers both domestic and international market

In about April 2011, one of Mayora branch in India launched a new product, has named Go Choco sandwich biscuit and this biscuit has succeeded and continuously develop and increase the market share to Thailand and some neighboring countries And Viet Nam is not outside of Mayora’s destination

Vietnamese consumers have rights to enjoy the taste of confectionery from different countries, have rights to choose the best one This is also an opportunity for Viet Nam employees to approach, learn, share and work with a leading confectionery Group of Indonesia

The above mentioned reasons were the basis for the project with theme “Marketing Plan for Go Choco biscuit” in Viet Nam’s market to take shape

Through the Project, following questions will be answered:

 What are the major internal and external factors that may effect to Mayora Company and Go Choco biscuit?

 How big market size and what does Go Choco biscuit has to face?

 From the Marketing Strategy of Mayora, how to build a marketing plan for Go Choco biscuit to reach the sales target and to build and win the consumer trust at the first year entering into Viet Nam’s market?

1.2 Objectives of the Project

There are 2 key objectives the Project to research and solve as below:

- To research information of Viet Nam biscuit market and analyze the external and internal factors that affect to Mayora Company and new brand And based on these factors, find out the opportunities and threats for brand After all, re-positioning Go Choco biscuit

in Viet Nam’s market

- With the above database, through analysis, building marketing plan to get the sales target in the first year company enter into Viet Nam’s market

1.3 Scope and limitation of the Project

Scope of the Project: This study only focuses on the Marketing Plan for the first year Go Choco biscuit entering into Viet Nam’s market And the primary data about consumer comments for Go Choco biscuit were done and surveyed for 90 people in HCMC and 30 consumers in Ha Noi only

Limitation: Through a short meeting with the board of directors of Mayora in Vietnam, there are some advantages in order to do the project such as having a product sample, a company direction, an opportunity to learn about the Viet Nam confectionery industry At the same time, there are certain limits Specifically, detailed information about the company Mayora is just secondary data and stuffed on the internet

b Sample Size The total 120 samples and questionnaires were directly given to consumers

whose ages range from 12 to 60 years old, class B and C There are 90 people in HCMC and 30 people in HN After trying the Go Choco biscuit, the interviewee gave answers in the answer sheet Respond rate is 100%, and the valid rate was 95 % (5 % has given insufficient information) The respondents were chosen as mentioned because Go Choco biscuit is for all consumers, but in marketing plan we just focus on the primary TAs: teenagers and young with age from 13 to 23 years old and moms having kids from 6 to 12 years old, class B and C

c Data Collection: Both Primary and Secondary data

Primary data has been collected from doing the sampling and get consumer feedbacks and in-depth interview 4 shop owners at wet market: 1 at old market (Cho Cu, district 1) and 3 retailers at Ban Co wet market in district 3 in HCMC The questionnaires consult about the consumer insight, which factors influence on their selling, some competitors information

Secondary data includes information related to Mayora Company, Go Choco biscuit, confectionery industry in Viet Nam’s market, and all information about competitors of Go Choco

1.5 The structure of the Project

The Project has been organized including 5 chapters:

Chapter I: Introduction This chapter gives an overview about the problem statement, project objectives, and research method

Chapter II: Literature Review: provide theories related to Marketing Plan It includes definition, structure of Marketing Plan, some kind of promotions and digital marketing, consumer behaviors

Chapter III: Introduction about Mayora Company and Go Choco biscuit in ASIA and Viet Nam This chapter also gives an overview about the Mayora’s history, vision, mission, product category The detail information of Mayora Company and Go Choco biscuit in ASIA and their business status in the Viet Nam’s market

Chapter IV: Situation Analysis: Chapter III includes analysis of the external and internal factors influence to Mayora and its product from macro to micro environments as well as consumer’s insight in confectionery industry It also indentifies the Go Choco biscuit’s strengths, opportunities as well as weaknesses and threats in Viet Nam’s market Besides, this chapter also researches competitors’ information to know Go Choco is facing which rivals and which strengths, weaknesses they are

Chapter V: Marketing Plan: From the relevant literature and analysis, this chapter proposes the Marketing Strategy and Marketing Plan for Go Choco biscuit And chapter IV gives an action plan with detailed activities, timeline and budget for each suggestion to execute the proposed marketing plan

Chapter VI: Conclusion and Suggestion: After researching the subject, the writer gives some conclusions, along with solutions and recommendations proposed about the brand and confectionery industry in Viet Nam

CHAPTER II: LITERATURE REVIEW

The literature review serves as the fundamental for the Marketing Plan in the following chapters

2.1 Marketing Plan

A simple and meaningful definition of Susan Ward (2011) about Marketing “Marketing is all about letting people know about the product or service we offer, and persuading them to buy or use it And for effective marketing we have to let people know about our product or service repeatedly”

To do this, we're going to have to come up with both a marketing strategy and a marketing plan So what's the difference between a marketing strategy and a marketing plan?

Laura Lake (2011) quoted the marketing strategy is shaped by overall business goals It includes a definition of our business, a description of our products or services, a profile of our target users or clients, and defines our company's role in relationship to the competition The marketing strategy is essentially a document that we use to judge the appropriateness and effectiveness of our specific marketing plan

To put it another way, marketing strategy is a summary of company's products and position

in relation to the competition; our sales and marketing plan are the specific actions we're going to undertake to achieve the goals of the marketing strategy

The marketing plan, then, can be thought of as the practical application of the marketing strategy The marketing plan includes details about our business' unique selling proposition, pricing strategy, the sales and distribution plan and our plans for advertising and promotions

So in effect, we can't have a marketing plan without a marketing strategy But a marketing plan without a marketing strategy is a waste of time The marketing strategy provides the goals for marketing plans It tells you where you want to go from here The marketing plan

is the specific roadmap that's going to get you there

A successful formula that can be used to further explain the importance on marketing strategy and marketing planning looks like this:

Marketing Strategy -> Marketing Plan -> Implementation = Success

The marketing strategy consists of the "what" has to be done It informs consumers about

the product or service being offered, inform consumers of differentiation factors

The marketing plan consists of the "how" to do it Construct marketing campaigns and

promotions that will achieve the "what" in our strategy

Olivier Kupferman (2011), in the course “Business and Marketing Plan” cited that

Marketing planning is not filling in a to-do list and a calendar Marketing planning is not financial budgeting Marketing planning is the process of defining the marketing objectives and strategy, defining the underlying actions to reach the objective and translating it into a common communication tool

And when do you do the Marketing Plan? There are 3 marketing planning moments: new business, innovation and recurrent planning

In this Project, we do the marketing plan for new business It is as a part of a business plan, the marketing plan translates business strategy into marketing strategy (eg branding, customer targeting) and into plan (eg promotion) And the mission is developing the marketing plan to put the marketing strategy into action

Source: Olivier Kupferman (2011)

According to William A Cohen (2001), the Content of Marketing Plan are including:

2.1.1 Situation Analysis

The Situation Analysis focused on market definition and the current capability of the company to serve the market

a The situational Environment

This includes macro and micro environment which affect to company and product The macro environments are social and cultural environment, economic and technological level, political and legal background Micro environments are market size, consumer insight and market trend How, when, where, what and why do consumers buy product?

b The competitive Analysis

Describe company’s main competitors, their products, plans, experience, know-how, financial, human, and capital resources, suppliers, and their strategy What marketing channel do the competitors apply? What are their strengths and weaknesses?

c The internal company environment

This section evaluates company’s product, experience, know-how, financial, human, and capital resources, suppliers What are company’s strengths and weaknesses?

Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis

Market trends must be considered as the company develops its marketing strategies

Strengths are internal capabilities that can help the company reach its objectives

Weaknesses are internal elements that may interfere with the company’s ability to achieve

b STP Process

Sara Higley (2011) quoted STP marketing, also called strategic marketing, involves finding a correct segment in which to market your product, identifying the proper target market and positioning the product to create maximum profits The most important part of STP marketing is determining exactly what benefits your product offers and who will benefit most from using it

Segmentation

Markets can be broken down into separated segments, each made up of customers with similar wants, needs and buying habits It's important for marketing managers to identify which segment their products will fit best in Segments can also be broken down into geographic locations Once the segment is identified, a marketing plan should be created to meet its needs

Targeting

Once a segment is identified, the next step in the STP process is to target the market You need to identify the consumers you want to market your product to and determine the growth potential of the product in the market you choose to target Once this is determined you need to use your marketing plan to grab a major part of the market share

Positioning

When positioning a product, it's important to understand and identify the four p's of the marketing mix: product, price, place and promotion You need to make sure you're putting the right product in the correct place, pricing it competitively, and promoting it to the right segment Remember that place can involve both geographic locations and finding the right placement on store shelves

c Marketing Mix 5Ps tool

The marketing mix describes the way you use the primary marketing tools to achieve your

company's objectives Dave Dolak (2011) cited that marketing plan should address the 5

P's of Marketing: People, Price, Product, Promotion, and Place If we do not start by

keeping people foremost in mind we are bound to fail After all, when we talk about markets we are really talking about people and when we create marketing plans we are

designing ways to effectively communicate with people For FMCG industry, the 5 P's are

in an intentional, tactical way to meet the needs of consumers

1 Product: The product is the actual goods or services offered by the company and how it

meets the end-user's needs and wants

2 People: How do people affect the perceived value of the product? People that influence

that value can include employees, management, and consumers

3 Pricing: This includes policies, action program to set initial price and discount price for

wholesalers, retailers and end consumers

4 Place (distribution): the channel by which product is sold (e.g online, direct mail,

retail); which segment: kids, teenagers, moms…

5 Promotion: This includes advertising, trade sales promotion, publicity, and personal

selling

Communications Strategy

Thus far your plan has talked about what you need to do Now your plan must discuss how

you will do it This section will also discuss how you plan to reach and communicate with each of your market segments and how you will treat each differently Discuss how you

will position your company based upon your Unique Selling Proposition Your Unique

Selling Proposition is what you do that is different than anyone else and the single most important reason you are different than any other company Your Unique Selling Proposition is how you will differentiate yourself from your competition

These above mentioned programs should be specific and measurable with a name, a responsible person and checked period, and a budget The marketing plan should be coordinated with the company’s resources and activities of other divisions that contribute

to the creation, delivery and communication of the product

2.1.3 Implementation and Control

Taking action to achieve items identified in marketing strategy and marketing plan

Marketing budget and sales forecast to plan for expenditures, scheduling, result for each activities will be calculated This control helps management to measure results and identify problems to adapt and have the better performances

2.2 Digital Marketing

Digital marketing is the use of digital sources based on electronic signal like Internet, digital display advertising and other digital media such as television, radio, and mobile phones in the promotion of brands and products to consumers Digital marketing may cover the more traditional marketing areas such as direct marketing by providing the same method of communicating with an audience but in a digital fashion

Two different forms of digital marketing exist

Pull digital marketing in which the consumer must actively seek the marketing content, often via web searches, and push digital marketing where the marketer sends the content to the consumer, as in email Websites, blogs and streaming media (audio and video) are examples of pull digital marketing These users have to link to the website to view the content

2.3 Trade Sales Promotion

According to Dave Dolak (2011), Sales promotions are short-term incentives to encourage

the purchase or sale of a product Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates

Sales promotions can be directed at either customer, sales staff, or distribution channel members (such as retailers) Sales promotions targeted at the consumer are called

consumer sales promotions Sales promotions targeted at retailers and wholesale are called trade sales promotions

Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers

to stimulate immediate sales These efforts can attempt to stimulate product interest, trial,

or purchase Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes, trade allowances, dealer loader, trade contest, point of purchase displays, training program

2.4 Customer behavior

Customer behavior is the study of how individuals, groups select, buy, use and dispose of goods to satisfy their needs and wants Besides the marketing and other stimulus, consumers’ psychology and characteristics are the key elements for consumers make decision whether buying the product or not Studying this provides clues for improving or introducing products and services, setting prices, devising channels, crafting communication messages, and developing other marketing activities

Figure 2.1: Model of Consumer Behavior

Source: Philip Kotler (2006)

Research into all these factors can provide marketers with clues to reach and serve

consumer more effectively

CHAPTER III: INTRODUCTION OF THE COMPANY

3.1 Mayora Company and “Go Choco” biscuit brand ASIA overview

3.1.1 Mayora company in ASIA

a Mayora company at a glance

Mayora company was established on 17 Feb 1977 in Jakarta, Indonesia by Jogi Hendra

Atmadja (Na Hong Giok), Drs Darmawan Kunia (Kwa Khing Giok) and Phd Raden

Soedigdo “Over the decades, Mayora Group has grown to become the one of the

recognized names in the FMCG Industry The ability to identify market needs and the

commitment to produce quality products have made MAYORA group currently

well-known brand in the world, such as Kopiko, Danisa, Astor, Energen, Torabika and many

more

From the year of foundation in 1977, Mayora Group has been progressively transformed

from a humble biscuit industry into one of the biggest FMCG companies with 13 factories

and more than 25,000 employees

Mayora Group became a public listed company in 1990, by listing its share on Jakarta Stock Exchange, and through out the following years, Mayora Group continues its

rapid expansion to become an ASEAN based company, by establishing production

facilities and marketing offices in several South East Asia countries

Currently, Mayora Group products are sold in more than 85 countries around the world

Supported not only by modern logistic and warehouse management system, but also by

strong distribution network, Mayora has maintained its products availability in the market

Mayora distributed its products to approximately 150,000 retail outlets in Indonesia, as

well as in Singapore, Malaysia, Thailand, the Philippines, Viet Nam, Hong Kong, Saudi

Arabia, Australia, Africa, the Americas, and Italy

Mayora Group has proven itself as a manufacturer of quality products that gain some

recognition and award such as “Top 100 Exporter Companies in Indonesia” from Swa

magazine, “Top 5 best Managed Companies in Indonesia” conducted by ASIA Money,

“Top 100 public list companies” in 2009 and 2010 as the first position in sector of Food and Beverages conducted by Invest Magazine Indonesia, as well as “Best manufacturer of Halal Products” in 2004 by Majelis Ulama Indonesia

And the two brands Kopico coffee candy and Go Choco - a chocolate-enrobed sandwich biscuit belong to Inbisco This is the Indian arm of the Indonesian based Mayora Group and one of the fastest growing distribution companies in India

Source Mayora website at www.mayora.com

b Mission and Vision in ASIA

To become a quality manufacturer of food and beverage products that is trusted by the consumers both domestic and international market, and control a significant market share

in every category entered

To provide added value to all company stakeholder

To provide a positive contribution to the environment and the country where the company operates

c Products of Mayora Company

Mayora is divided into 6 business divisions:

 Biscuit Category: Sari Gandum, Roma, Better, Danisa, Slai O Lai, Go Choco…

 Candy Category: Kopiko, Kis, Tamarin, Plonk

 Wafer and chocolate Category: Beng Beng, Astor, Roma, Choki Choki…

 Coffee Category: Torabika, Kopiko…

 Mayora Nutrition Category: Energen, Energen Oat Milk…

 Torabika Café and Corner Category: are dedicated for sophisticated coffee lovers who are always on the move

3.1.2 Go Choco biscuit in ASIA

First production in India on 12 April 2011 and Go Choco biscuit has been running very well in Indian market within 4 months And now this product also expands to Thailand and some ASIA countries

August 2011, TBWA\India has been chosen to be the creative agency for Inbisco for the two brands: Tobiko Candy and Go Choco biscuit

Tomas William (2011), Inbisco’s Country Manager, in his speech quoted that two brands are significant for him to consolidate TBWA’s presence in India and they are keen to follow the up with larger portfolio of products TBWA\India’s philosophy of disruption resonated with what they are aiming to achieve The thinking and passion demonstrated by TBWA team was what Inbisco is looking for now

Elated at the win Nirmalya Sen, Managing Director of TBWA\India commented that this is

a chance to work on the world’s number one coffee candy, Tobiko Candy and Go Choco

biscuit assigned to TBWA are from categories that have seen limited success and have to

be created, making them plum strategic challenges

3.2 Mayora company and “Go Choco” biscuit in Viet Nam

3.2.1 Mayora Company in Viet Nam

In Viet Nam’s market, Mayora has been known two famous brands: Danisa biscuit and Kopico Candy through Ugtra, Huong Thuy distributor and some other distributions

With the sales amount through distributors, Mayora is going to set up a representative office in Viet Nam The vision and mission in Viet Nam:

 To continuously expand business and outlet system to Viet Nam

 To build the brand awareness and image of Go Choco in 2012

3.2.2 Go Choco biscuit in Viet Nam

Go choco biscuit is still brand-new in Viet Nam’s market Following the success in India, Thailand, the Board of Management of Inbisco and Mayora believes that it has a great market potential in Viet Nam and they came to Viet Nam at the end of 2011 for market visit and prepare all thing to enter this market

Go Choco biscuit has come to the North of Viet Nam via Lao Bao border gate Lao Bao is the most important economic zone border gate of Viet Nam Lao Bao border gate of Viet Nam is located on the border between Viet Nam and Laos, Huong Hoa district, Quang Tri province Faced with Lao Bao international border gate is Den Savanh gate of Laos Every

day on the route of Dong Ha - Lao Bao, there is frequently about 80 turns of car We can say this is the Viet Nam major node for East-West economic corridor According to 08/2010/TT-BTC of the Ministry of Finance “Tourists visiting non-tariff zone border gate economic zones are allowed to purchase duty-free import into domestic market which is worth less than 500,000 VND / person / day (excluding the value of goods purchased on the list of restricted sales tax exemption) If the value of goods exceeds 500,000, the goods purchasers must pay import tax, VAT (if any) for the excess of the norms prescribed by current law” But Lao Bao border gate has attracted many tourists and small businessmen thanks to Thai’s goods which enjoy the exemption of the import tax, VAT tax and special tax…with the price cheaper than those in Vietnam’s market, the convenient traffic and acceptable quality are the factors attracts the buyers as well

Consumers in HN and some provinces have tasted Go Choco biscuit which have been brought to Vietnam through these small business people It has been bought and sold at their shop and via online at www.sieuthihangthai.com with the retail price of 45,000 VND per package 380g, 24 pieces (this price is two times higher than those sold in Thailand)

CHAPTER IV: SITUATION ANALYSIS

4.1 Environment

Macro and micro environment are the first things to research and understand well before entering a new market and decide to do your business

4.1.1 Macro economic environment: as usual, there are 6 factors of macro economic

environment In this Project, we just focus on 3 keys factors that Mayora and Go Choco brand face and must find ways to adapt and to be able to survive and develop (Big Mac Index relevant to biscuit market)

a Social and cultural environment

0-14 years: 25.2% (male 11,945,354/female 10,868,610); 15-64 years: 69.3% (male

31,301,879/female 31,419,306); 65 years and over: 5.5% (male: 1,921,652/female

3,092,589) (2011 est.)

According to general statistics office in Ha Noi, update to 2009, the population from the age 10 to 24 is the highest

Table 4.1: Vietnamese population by age 2012

Vietnam's population is diverse, with up to 64 different nationalities across the country However, only 30 % of the populations live in the urban areas and most Vietnamese still live in the rural areas And the rate of urbanization 3 % annually, the rate of change (estimated 2010-15) as below: Population growth rate: 1.077% (2011); Urban population: 30% (2010); The rate of urbanization: 3% annual rate of change (estimated 2010-2015)

Unemployment rate: 2.6% (2011) (Source: CIA the world fact of Viet Nam, 2011)

Vietnam is well-known for a hard-working & fast-learning population The World Value Survey confirms the unusual willingness to work hard of Vietnamese workers According

to the survey, many respondents in Vietnam declare that work is an important part of their lives, while only 7 % of Vietnamese respondents see leisure as an important part of their life, a remarkably low percentage even by the standards of other hard-working societies such as Japan (40%) or the United States (43%)

Foreign investors don't see the shortage of skilled labor as an obstacle to their business in

VN as Vietnamese workers are very fast-learning The time & cost needed for worker training in Vietnam is often shorter and lower than some other countries

All above information is a great opportunity for Mayora and Go Choco biscuit to enter into

a new market like Viet Nam

b Economic

 Agriculture’s share of economic output has continued to shrink from about 25 % in

2000 to 20 % in 2010, while industry’s share increased from 36 % to 41 % in the same period Deep poverty has declined significantly, and Viet Nam is working to create jobs

to meet the challenge of a labor force that is growing by more than one million people every year

 Regarding to GSO social – economic statistical data (30/12/2011), Viet Nam 2011’s Gross Domestic Products (GDP) is estimated growing 5.89% from 2010, which rise 5.57% in 1st Quarter, 5.68% in 2nd Quarter, 6.07% in 3rd Quarter and 6.10% in 4th

Quarter

Ho Chi Minh City is one of the most important economic centers of Viet Nam It plays

an important role in contributing to the national economy GDP is estimated achieving 503,227 billion VND, growing 10.3% from 2010

Ha Noi Capital has been considered as the second important position in the Vietnamese economy GDP is estimated achieving 80,952 billion VND, growing 10.1% from 2010

 According to TNS Viet Nam’s shifting consumer landscape (2010), household income

is separated to 7 classes (A1: 15 million +, A: 9 – 15 million, B: 6.5 – 9 million, C: 4.5 – 6.5 million, D: 3-4.5 million, E: 1.5-3 million, F: 1.5- below per month)

Roughly 3.7% of Viet Nam urban population, equivalent to 1 million (A1 wealthy class), can afford to live the luxury life 24.3% of Viet Nam urban population is AB affluent class, equivalent to 6.2 million They work in professional and managerial positions 43.8% of Viet Nam urban population is CD middle class, equivalent to 11.4 million

 According to CIA the world fact of Viet Nam 2011, the global recession has made bad influence on the Vietnam’s export-oriented economy, with GDP in 2009-10 growing less than the 7 % per annum average achieved during the last decade In 2010, exports increased 25%, year-on-year, but the trade deficit remained high, prompting the government to consider the administrative measures to limit the trade deficit In addition

to this, Viet Nam is one of the countries having the region’s highest inflation rates, which reached as highest as 23 % in August 2011 and averaged 18 % for the year And GDP (official exchange rate) is $123.6 billion (2011 est.)

Also regarding the inflation, a recent report by the World Banks has mentioned “this rate is still be in double digits, keeping it the highest in the Pacific – East Asia Region and inflation is a major concern in Viet Nam now” Standard Charter Bank has also released a report on the two-year outlook for Vietnamese economic growth, which predicted that Viet Nam’s inflation will drop to 11.3 % in 2012

The report of quarter 3, 2011 of Nelsen Company cited that the high inflation will surely affect on the purchasing power “spending for necessities only” is now consumer’s motto And consumers are becoming more & more driven by the promotions

 Confectionery industry would not be advantageous in the situation of such high inflation because this is not the essential commodities for consumers Mostly the main materials have been imported such as flour, sugar, milk so the price of the confectionery products of the local companies will be depends heavily on world prices

 This inflation rate will affect the buying power of consumers and influence significantly

to all expenses related to operation cost as well as marketing plan, advertising agency, distribution system building… impact to enterprise’s profit and loss

 Forex Control

As Audit and Advisory Services Limited (2011) cited in its research “Why doing business

in Viet Nam”: Vietnam imposes a strict control over foreign currency Foreign investors who wish to transfer capital in foreign currency into Vietnam must open a specialized foreign currency bank account at a legal bank in Vietnam During the operation, foreign currency remitted into Vietnam by foreign investors must be converted into Vietnamese dong or deposited in a foreign currency bank account Payment made by enterprises in foreign currency can be implemented in certain cases as described by the State Bank of Vietnam (SBV), such as payment for imported goods and services; abroad remittance by foreign investors of invested and reinvested capital, earning profits from undertaking in Vietnam, principals and interests of off-shore loans and credits, and other legal benefits; payment for travel allowances to employees travelling abroad, payments of salaries and other legal incomes of foreigners; personally carried foreign currency are also allowed (but for a limited amount defined by law for different circumstances and in case of excess, the

whole amount will be taxed like forex trading) In all cases above the amount of foreign currency are monitored

Foreign investors who are in need of foreign currency for paying allowed business transactions can buy foreign currency from permitted banks in Vietnam Offshore loans reaped by enterprises are subject to certain conditions as regulated by SBV Medium and long term loans are required to be registered with SBV

The above strict regulations will affect the profits of investors So Mayora should take into account of the selling price of Go Choco sandwich biscuit

c Political and Legal background

 Political

The Communist Party of Viet Nam remains committed to market oriented reforms Political is table and Viet Nam has joined major International Organization such as APEC, ASEAN, WTO…

 Legal and tax

For domestic companies, confectionery industry is not the one to receive the incentive policies from government, no tax and land incentives Besides the price fluctuations of raw materials, food safety is also a regular in the risks that firms face However, the modern machinery and equipment of this industry will be imported with free of import duties under the provisions on encouraging investment about technology

Confectionery industry is facing competition with imported goods of ASEAN, because the products are on the list of AFTA tariff reduction and other products imported by the effects

of Vietnam's WTO accession And with the joining APEC, Viet Nam follows some laws which have impacted on foreign investors A growing number of companies from ASEAN countries are exploring Viet Nam market because tax rate of confectionery filed of ASEAN significantly decreased from 50 % to 20 % and 5 % as of 01st Jan 2012 according

to the Decision No 36/2008/QD-BTC, Ministry of Finance Decision And Mayora takes the above advantages when coming to Viet Nam market Pricing strategy will be more competitive than those of the local enterprises’

Trade, copyright law is not clear and strong in Viet Nam now Moreover, fake, low quality goods are still big issues Mayora needs concern these issues to ensure benefits when making investment into Vietnam Company should ensure the trademark for protection of name, packaging to prevent counterfeit goods or the dumping, lower or higher than the price strategy of the company through illegal import or unclear origin of the small businessmen

4.1.2 Micro economic environment related to market size, diffusion of innovation,

opportunistic vs systematic approach

Table 4.2: Viet Nam Confectionery Sales 2008 - 2015

BMI estimated that confectionery production in Vietnam in 2008 was about 97,000 tons, 99,100 tons in 2009, and 100,400 tons in 2010 Expected growth in sales in 2011 was 10 % higher compared with 5.43 % and 6.12 % in 2009 and 2010 (2 years minimum growth is due global economic crisis)

However, confectionery industry is increasing year by year with a significant amount in

sales

Peter Becker (2009), in other analysis from German Bakers’ Association in Ha Noi cited

that the Vietnamese bakery and confectionery market was among the most attractive

markets in Asia and showed great potential as far as investing According to the association´s data, confectionery retail volume expected to reach 476,000 tones with a total value of 674 million USD in 2009 The figures are estimated to reach 706,000 tones and

1.45 billion USD in 2012

Economic development, higher income of people will lead to the increase of demands for products including confectionery It is expected that in the period 2006-2015, the growth rate of Vietnam's GDP will average at 8 % / year in which the confectionery industry growth rate of 10-20 % (rising faster than GDP growth) People's needs for high-quality biscuits, candies which are nice, nutritious, healthy are increasing year by year

Figure 4.1: Confectionary market share in Viet Nam’s market, 2010

Source: Tri Viet Securities Corporation (2010)

20 % of Viet Nam confectionery comes from foreign source

According to equity research of Thang Long security, the demand for confectionery in the Viet Nam’s market with more than 90 million people and confectionery consumption is still low about 2.0 kg per capita each year, comparing with the world average of 2.8 kg per capita

In today’s fast paced modern world, the desire for quick and tasty foods is increasing This has resulted in a market place with many different snack and biscuit products competing for the consumer’s attention And in the recent years, along with the development of economy, the increase of young populations and the economic recovery after global recession, confectionery though affected is one of the sectors of high growth and stable in Viet Nam While the small manufacturers go bankrupt, the leading corporations still affirm their position and strength with variety of products, high quality, suit the taste of Vietnamese and are competitive with imports

According to the BMI estimation, confectionery production in Vietnam in 2010 reached about 100,400 tons Expected growth in sales in 2011 was 10 % higher compared with 5.43

% and 6.12 % in 2009 and 2010 So the market size for confectionery in Viet Nam is valued approximately to 110,440 tons in annual retail sales and is relatively static with growth occurring as consumers purchase more expensive products rather than through purchasing more packs of biscuit In which, the proportion of local and foreign biscuit is

80 % and 20 % (including both legal and illegal import) And the foreign products were imported from Malaysia, Thailand, Indonesia, Philippine, Hong Kong, China and a small part from USA, Euro Some kind of biscuits, candies the technology in Viet Nam cannot produce

A very important matter of domestic confectionery is most of raw material are imported: wheat (nearly all imported), sugar (imported in part)… There are currently 4 Vietnamese confectionery business (Bibica, Hai Ha, North and South Kinh Do) listed on stock exchange These companies have confirmed the brands associated with their key products, competitive with imported goods However, these enterprises are facing rising production costs while the product sales price increase slowly to balance and keep the market shares, this may affect to enterprises’ profits

Due to the strong impact of inflation, in the Viet Nam Lunar New Year 2012, the confectionery market is witnessing a break-through step of domestic products that occupy

90 % market share in supermarket nationwide According to a Viet Nam news reporter, it

is difficult to find imported confectionery in both MT and GT channel this year Some key accounts at MT channel such as Big C, Maximark, Coopmart, Citimart…most confectionery shelves are full of domestic brands of Bibica, Hai Ha, Kinh Do Foreign candy and cake accounted for from 10 to 20 % of their total volume this Tet Only a small

of these products were imported from Indonesia, Malaysia and Denmark Domestic confectionery products make up the majority of not only in the supermarkets, but also retail shops It is difficult for Vietnamese consumers to distinguish which one is the best quality because local products have eye-catching design and packaching

However, there are some comments in the opposite direction with such comments on such

as Mr Thien, Deputy General Director of Bibica He quoted that consumption of foreign goods last Lunar New Year was good so the foreign enterprises increased quantity this Tet season Furthermore, import tariffs of FTA in ASEAN confectionery are down from 25 %

to 5 % now, applied on 01 Jan 2012 These advantages make imported biscuits full of Viet Nam’s market

Nonetheless, price is key issue The price for local confectionery always increases from 10

% to 20 % at some occasion while the imported goods are always stable Retailers mark selling price up to balance for the domestic confectionery Sellers have more benefits and glad to introduce imported goods to consumers

Table 4.3: The source of confectionery and cereal for Viet Nam’s market for the first nine months in 2011

Source: Ministry of Industry and Trade, 15 Nov 2011

b Consumer Insight and Trend 2011 and 2012

Viet Nam’s consumers prefer domestic products which having significant improvements of design and quality Domestic confectioners have a greater understanding of their consumers’ hobbies and taste and they invested more for R&D, innovation about quality, packaging…and also marketing activities, direct sales support and after sale services

Most foreign companies choose to enter Viet Nam market via distributors and not care much about the brand image As the consequences, whenever the products, distributions have issues, it is difficult for the consumers to feedback and to receive a satisfied solution from distributors because it is not their products The consumers, to ensure safety for their health in the current complicated environment of low quality and fake products, will choose famous and trustable companies Ms Phuong Thao (2012), director of Maximark supermarket, cited that most customers choose to buy locally produced biscuits for a reasonable price, nice design and it is important that manufacturers take responsibility for

quality and reliability of products

According to CIA report (2012), the average of inflation rate in 2011 is 18 % and it is still remain high in 2012 In February 2011, Vietnam shifted its focus away from economic growth to stabilizing its economy and tightened fiscal and monetary policies In 2012 Vietnam is expected to unveil a broad economic reform program Vietnam's economy continues to face challenges from falling foreign exchange reserves, an undercapitalized banking sector, and high borrowing costs And surely consumers’ psychology will consider carefully about the pricing before deciding to buy and weigh the pros and cons between the quality and price

Also in an article bout consumer’s trends 2012 at SG Businessman, the inflation fear will continue through 2012 and inevitably affect the buying decisions of consumers Some stable and well-known companies expand and focus their business and advertising campaign to rural areas where 72 %s of consumers are not familiar with promotion and activation campaign and eager to join and spend

Nielsen's research in 2011 shows sensitivity to promotion of the Vietnamese people is highest among Asian countries More than half of consumers seldom change stores but actively search for promotion Up to 51 % on average-income consumers in Ha Noi and

Ho Chi Minh City said ready to buy several different brands during the promotion, ready to change shop place depending which has the best promotions and benefit

Table 4.4: Criteria of consumers expect from Nielsen research 2011

 In an advertising campaign A-One MSG took place consecutively within 3 days at the wet market at Center - Da Nang, a large number of housewives are attracted to the promotional prizes

 Meanwhile, a direct sampling campaign of Pepsi in front of high-end retail center Indochina Tower is not attracted TAs’ attention Consumers were given chilled Pepsi can

by PGs and PBs After this promotion, if observed in the supermarkets, markets, sold number of this kind of new products did not improve much

 Results from both the promotion of two major brands, we can give a comment for consumer’s trend quite reasonable: Now tight budget and buyers must calculate, consider carefully Maybe, just save a few thousand VND profit they immediately interested, changed to get cheaper one

A small research with scale 50 moms of class B and C having kids from 6 to 12 years old related to “which criteria you choose biscuit for your child” indicated the below result:

Mom will choose the confectionary based on two criteria price and safe for heath

With the above result, the quality of Go Choco biscuit has been proved by sampling with most of people like the taste The input of raw material of Mayora is followed by ISO system And the final consult to meet Viet Nam consumer’s needs is price

And this result is reinforce one comment in an article “Listen to competitors instead of

"God", means consumers” of Bao Chau (2010), at www.bansacthuonghieu.com “In fact,

customers rarely know what they want in addition to wanting more, better, faster and cheaper Mainly, consumers want the balance to be leaning toward them to get the

advantages in the relationship between the sellers – the buyers, in the hope they can save costs

4.2 Competitive Analysis

Mayora is facing a lot of competitor in the market, not only the local companies but also the multinational companies The competitors may vary depends on category itself And biscuit category, Mayora is facing Choco Pie brand, the top of mind of Vietnamese consumer, a product of Orion, Korea And the second one, we must to count Pham Nguyen Company with Phaner Pie And with ingredients and formula, these brands are indirect competitors

And when entering the confectionery industry in Viet Nam, Go Choco biscuit will have a handful of domestic and foreign enterprises have a huge competitive advantage These advantages are large scale production, traditional long-term business, interested in matter

of food safety…And few major rivals in this industry as Lotte Pie of Bibica, Phaner Pie of Pham Nguyen, First Pie of Kinh Do…Each rival has its own strength and specification

Some pictures of competitor brands:

Bibica with Lotte Pie, 2010 ORION with Choco Pie, 2006

18,000 VND/1 package 180g with 6 packs 20,000 VND/180g with 6 packs

Kinh Do with First Pie, 2007-2008 PN with Phaner Pie, 1980s

17,000 VND/1 package 180g with 6 packs 17,000 VND/180g with 6 packs

We go through four key indirect competitors of Go Choco:

CHOCO PIE - ORION

Choco Pie is a South Korean snack cake manufactured by Orion Confectionery which consists of two small round layers of cake with marshmallow filling, with chocolate covering, similar to a Moon Pie Orion supplies the South Korean military with Choco Pies, which are given out to soldiers after their first week of basic training Another simple description of Choco Pie is a biscuit with a layer of cream between two cakes, covered in chocolate The most popular manufacturer in Vietnam is the Korean brand Orion Orion

seeks a share in four major markets - South Korea, Russia, Vietnam and China (Source

http://en.wikipedia.org/wiki/Choco pie)

 ORION FOOD VINA Co., Ltd is a subsidiary of ORION group of Korean, invested confectionery production in Vietnam and 100 % Korean capital This company is leading confectionery with products Orion brand names such as Orion-Choco Pie, Orion-Custas, Orion-Tiramisu, Orion-Goute, O'star, Toonies, Gum Fruit, Fresh-pie

 December 2006 the Group launched ORION FOOD Vina factory in Ben Cat District, Binh Duong Province, the main products are Choco Pie, Custas, O'star, Toonies, Gum Fruit, Fresh-pie

 2008 established two branches in Yen Phong district - Bac Ninh province, with Choco Pie products, Custas, O'star, Toonies, Marion, Tiraminsu, Goute

 As a new company founded by Vietnam and the fluctuation of the market and with the fierce competition of a number of companies in the same industry, similar products: c, Phaner-pie (whole range), Lotte-pie (Bibica) ORION FOOD VINA still develop and maintain sales and production The ORION products are of high quality products, reputation The company is constantly exploring and developing new products to meet the demands of customers

 Choco Pie entered Viet Nam’s market about 1995 – 1996, and this product has become

a top of mind one in Viet Nam consumers and accounted the most market share

 Orion launched 2 commercials TVCs in late 2010 with its message of love that makes Orion successful both product consumption and brand images

 Kyung Jae Lee (2011), “Idea of Advertising - Doping for consumers” quoted that Orion

determined that the object of Choco Pie is children, so that Orion took the children to do the main characters for their advertisements Two ads emphasize the love between people,