Marketing plan for launching a new hybrid waxy corn seed milky 36 in vietnam market

TR ƯỜNG ĐẠI HỌC MỞ TP.HCM UNIVERSITÉ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBMM4 TRAN CAO DAI MARKETING PLAN FOR LAUNCHING A NEW HYBRID WAXY CORN

TR ƯỜNG ĐẠI HỌC MỞ TP.HCM UNIVERSITÉ LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

MBMM4

TRAN CAO DAI

MARKETING PLAN FOR LAUNCHING A NEW HYBRID WAXY CORN SEED MILKY-36 IN VIETNAM MARKET

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Tutor’s name: Dr Vu The Dung

Ho Chi Minh City

(2010)

COMMITMENT

This thesis contains no material that has been accepted for the award of any other degree of diploma in any university or other institution and to the best of my knowledge contains no material previously published or written by another person, except where due reference is made in the text

of this thesis

In this study, the in depth interview is conducted by myself, the interviewees are listed out in the thesis their address and contact number and with a voice tape recording Thus, it has high level of trust, confidence and agreement

This information source is strictly warned by Dekalb (Vietnam) Co., Ltd to use for internal business purpose and not allowed to be spread out excepting for the jury of Solvay Business School and some marketing professionals including the MBMM tutor

ACKNOWLEDGEMENTS

I wish to express my profound gratitude and great appreciation to my advisor Dr Vu The Dung for his valuable guidance, advice and encouragement throughout the research study.Special thanks are extended to my colleagues at Monsanto (Thailand) Representative Office for taking interest and giving valuable suggestions to improve the content of this study as well

as providing me the materials needed for the research

Taking this opportunity, I would also like to thank all lecturers, mentors, HCMC Open University staffs and my classmates for their assistance and co-operation during my two-year’s time at the MBMM program of Solvay Brussels School

I remain indebted to my beloved family, friends for their valuable encouragement and

unceasing supports in my academic pursuits

TUTOR’S COMMENTS

Student name: TRAN CAO DAI

Attitude: hard working

Content: well designed and structured

Method and technique: appropriate

Data analysis: good and reliable data sources and analysis

Recommendation: Provide some good recommendations

Overall comments: The project has been successfully completed and met all the objectives Very good

Tutor

Dr Vu The Dung

LIST OF ABBREVIATIONS

DUS Differentiation, Uniformity, Stability tesing

NCVESC National Center for Variety Evaluation and Seed Certification

TABLE OF CONTENTS

Title Page i

Commitment ii

Acknowledgements iii

Tutor’s comments iv

Abbreviations v

Table of Contents vi

Appendices ix

References ix

List of Figures and Tables x

1 INTRODUCTION 1

1.1 Rationales of research study 2

1.2 Problem statement 5

1.3 Objectives of the research 5

1.4 Scopes and limitations 5

1.5 Managerial implications 6

1.6 Research Methodology 6

2 LITERATURE REVIEW 7

2.1 Introduction 7

2.2 Marketing plan 7

2.3 The contents of marketing plan 8

3 RESEARCH DESIGN 12

3.1 Problem definition 12

3.2 Methodology design 13

3.3 Information need 13

3.4 Conduct an in-depth interview 14

3.5 Sampling and respondents 15

4 FINDINGS AND ANALYSIS 16

4.1 Market definition 16

4.2 Product performance 17

4.3 Market research 20

4.3.1 Market situation and the key success factors 21

4.3.2 Broker’s role 24

4.3.3 Advertising and brand awareness 25

5 MARKETING PLAN 27

5.1 Company profile 27

5.2 The Objectives of company 27

5.3 Current Situation of Waxy corn market in Vietnam 28

5.3.1 Market definition 28

5.3.2 Market size 29

5.3.3 Market segmentation 29

5.3.4 Industry structure and strategic groupings 29

5.3.5 Competition and market share 32

5.3.6 Competitors' strengths and weaknesses 33

5.3.7 Market trends 34

5.4 Consumer Analysis 34

5.4.1 Nature of the buying decision 34

5.4.2 Demographics 35

5.4.3 Participants 35

5.4.4 Buyer motivation and expectations 36

5.4.5 Loyalty segments 36

5.5 Dekalb (Vietnam) - Current Situation 36

5.5.1 Company resources 36

5.5.2 Objectives of Milky-36 launching 36

5.6 Summary of Situation Analysis 37

5.7 Marketing Plan for launching Milky-36 in Vietnam Market 39

5.7.1 Product – Waxy corn Milky-36 39

5.7.2 Price 40

5.7.3 Promotion 41

5.7.4 Distribution 42

5.8 Implementation 43

5.8.1 Sales forecast 43

5.8.2 5 years sales forecast of Milky-36 43

5.8.3 Marketing activities support the launching 2011 44

5.8.4 Promotion equipments 44

5.9 Financial Summary 45

6 CONCLUSION AND RECOMMENDATION 46

6.1 Conclusions 46

6.2 Recommendations 46

Appendix 5.1: Milky-36 leaflet

Appendix 5.2: Milky-36 poster

REFERENCES

LIST OF FIGURES AND TABLES

Figure 4.1: Dekalb (Vietnam)’s strategic crops market growth assumption 16

Figure 4.2: Dekalb (Vietnam) - Vegetable Seeds Division – 5 years growth planning 17

Figure 5.1: The hybrid waxy corn seed market share by company, 2010 32

Figure 5.2: Waxy corn business model in Vietnam 35

TABLES PAGE Table 1.1: Corn planting area in Vietnam, 2009 2

Table 3.1: Kvale’s 7 stages of conducting in depth interview 14

Table 3.2: Respondent’s profile 15

Table 3.3: Topics to discuss with respondents in depth 15

Table 4.1: Yield of Milky-36 in Spring 2008 in Northern provinces 17

Table 4.2: Yield of Milky-36 in Winter 2008 in Northern provinces 18

Table 4.3: Yield of Milky-36 vs current hybrids across Vietnam biological regions in

Winter-Spring 2008, Spring-Summer 2009 and Summer-Autumn 2009 18

Table 4.4: Milky-36 agricultural characteristics and taste compare to current hybrids 19

Table 4.5: The interested traits vs product performance of current hybrid waxy corns in 2008 20

Table 5.1: Waxy corn planting area forecast (2009 – 2015) 29

Table 5.2: Vietnam Waxy Corn Players analysis 33

Table 5.3: Summary of the Business Opportunities and Threats 37

Table 5.4: Summary of the Company’s Strengths and Weaknesses 37

Table 5.5: Milky-36- Monthly sales forecast in 2011 43

Table 5.6: Milky-36- Long Range Planning (FY11-FY15) 43

Table 5.7: Marketing activities support launching plan in 2011 44

Table 5.8: Profit and Loss (P&L) analysis in 5 years 45

CHAPTER 1: INTRODUCTION

Monsanto was found in 1901 and located in St Louis, Missouri, USA It now is a multinational corporation in agricultural biotechnology and being a big seed supplier to farmers

around the world with seeds for field corn, soybean, and cotton under brand of Dekalb With an

effective investment in Research and Development, Monsanto has applied high technology, innovation into agricultural products that increased productivity help farmers earning more benefits, allowing them to reinvest in their farms Monsanto also aims at reducing agricultural impaction given by environmental conditions that are often changing such as drought and low water supplying, therefore, seed and traits are among the key drivers for business growth onward for the company

Concerning daily food, people want their food to be more nutrient, healthier, and being planted in friendly environment such as less pesticide, fungicide spraying… Monsanto has made significant efforts to play a vital role in vegetable seeds breeding, producing and trading In March 2005, Monsanto acquired Seminis Vegetable Seeds, a largest vegetable seed company in the world, which leads Monsanto to become the largest seed supplier in the world for both row crop (field corn, soybean, cotton) and vegetable

Monsanto’s representative office in Vietnam was set up in 1995 under Monsanto (Thailand) Co., Ltd which is successfully providing field corn seed to growers in Vietnam market Nowadays, Monsanto is providing both row crop seed which is main corn seed and many kind of vegetable seeds in Vietnam market In 2010, Monsanto is also the first company testing GMO corn seed in Vietnam

Monsanto (Thailand) Co., Ltd has been converted to be a 100% foreign capital company in Vietnam, with the new entity of Dekalb (Vietnam Co)., Ltd on 26th August 2010 (Appendix 1.1)

with a mission of modernizing Vietnam agriculture by the up-to-date biotechnology via seed solution which will be generating a 25 million USD in sales revenue by the year 2015

1.1 Rationales of research study:

Corn (maize) has been a secondary food crop in Vietnam for a very long time, next to rice

In the past, most of corn is for human consumption, Vietnamese consumed as a daily food, especially people in rural areas and mountainous regions, that was while corn (also called sticky

or waxy corn) Recently, corn area in Vietnam is increasing rapidly to serve the husbandry and animal feed industry in Vietnam, 90% of corn planting area is to plant field corn to serve the industry The rest of 10% is planted waxy corn and sweet corn for human fresh consumption which was used to use OP seed previously

Table 1.1: Corn planting area in Vietnam, 2009

No Kind of

corn

Corn area (ha) Seed demand (ton) Market value ($K)

Source: Monsanto (Thailand) Co., Ltd, 2009

Waxy corn was previously grown from OP seed which gives lower yield, low uniformity in plants and ear size, plant weakness, poor eating quality and susceptible to many kinds of pest damage In 2006, Syngenta Company launched the first hybrid waxy corn “Wax 44” into Vietnam market and obtained a very successful conversion from OP to hybrid seed due to:

- Growers inherit many good agricultural characteristics such as higher yield, higher uniformity, strong plant, better in pest resistance, more sellable ears …

- End consumers who direct consume product as food had also enjoyed a better taste, more nutrient, and more eatable portion,…

With the benefits above, market trend is rapidly converting from OP variety to hybrid seed

In 2009, the conversion rate has been recorded at 27% and the forecast for this conversion is at 15% each year on the current OP area to hybrid, therefore, in next five year 2015 the conversion would be at 50 percentages, the market value of hybrid waxy corn seed would be at 8 millions

USD That is why there are many companies are attempting to penetrate Vietnam waxy corn market such as Syngenta, DuPont, East West Seeds Company, Vietnam National Seeds Company, Southern Seeds Company,…

In 2006, Monsanto has defined waxy corn is an additional key crop which will drive Monsanto seed business in Vietnam for long term Thus, with the advantage technology in breeding corn seed, Monsanto has started to invest into waxy corn breeding program In 2009, the first hybrid waxy corn named “Milky-36” has been developed by Monsanto which is initial evaluated can adapt in Vietnam condition and the market needs in term of high yield, high uniformity of plant and ear size, attractive ear appearance, resistant to common disease on corn and especially, it is evaluated as the best eating quality at this moment

According to Vietnam regulation, corn (maize) is considered as a main food after rice, which is listed in The National Food Security Assurance Policy For this reason, in order to launch a new hybrid corn seed in Vietnam, it must be tested by The National Testing Center for Seeds, Plant Products and Fertilizers with 2 kinds of experiments:

- DUS: This trial normally takes 1 and a half year with 3 seasonal replications in locations

which indicate for a large scale of ecology in all country to evaluate the differentiation, the uniformity and the stability of a new hybrid Then,

- VCU: This is to evaluate the Value of Cultivation and Use, this is a large scale trial

conducted with 1 replication only in the best locations which demonstrate a high performance of new hybrid in DUS trial It takes 6 months to complete the testing

Finally, all trial data must be collected and presented to the Scientist Committee of Agriculture Ministry to get their permanent approval for official commercializing in Vietnam Milky-36 has already been permanent approved in June 2010 for official commercializing

in Vietnam (Appendix 1.2) and it is ready for launching in April 2011, it is targeted to reach 100

ton of seed in 2015 takes 15% market share which will generates USD 1 million in sales revenue Thus, Milky-36 will be a key product for waxy corn segment and contributes a significant sales figure at 5% in 2015 of Dekalb Vietnam Co., Ltd

However, when there are more players come into the market, the market requires a higher quality and creates a new value in competition, such as:

- There will be more options for growers, they can ask for higher standard in common disease resistance because they need to minimize their investments in pest control, they may need a new hybrid with earlier maturity for a faster rotation of cultivation, they also may need a new hybrid with a better agronomic characteristics such as higher uniformity of plant and ear size to get higher sellable ear rate,…

- The brokers play the most important bridge role between grower and end consumer through ear corn retailer, they bring grower’s product to the market, they are somehow acting as a market control, keeping an balanced supply and demand, they can advise growers to use the best hybrid which is good in disease and insect resistance, higher yield, earlier maturity, good eating quality …Alternatively, they may take risk when the market is over supply therefore, they will advise grower to grow a variety which provides a longer self life in order to keep longer in storage or transportation,…

- Ear corn retailers also play a bridge in market feedback because they are daily direct contact with end consumer, they know well what are end consumer needs and wants, then feedback to the broker how to select the best hybrid in order to fit the end consumer needs

- The end consumers play an important role in market feedback, their need is a very specific requirement for eating quality, they can only accept a variety which provides the best taste, softness, aromatic flavor, bigger ear shape, …

Obviously, as above mentioned, the role of broker is the most important which influences

to the success of new hybrid waxy corn launching, perhaps it is due to:

- His business will get trouble if he buys a poor eating quality of fresh waxy corn that makes him unable to sell If he cannot sell product to wholesales market he will also be unable to return money to the grower, due to he buys from grower in credit term

- If grower plants a poor eating quality variety or a variety with short self life, broker will not buy from grower in order to protect his business or buy with a lower price compare to other variety which he advises grower to use

- In fresh consumption market, the storage ability is evaluated as the key driver leads to a broker’s success, in case of unexpected circumstance, fresh product is unable to sell out in

1 or 2 days, the fresh quality is vanished

Therefore, the first successful launching of Syngenta for hybrid Wax 44 was decline due to its too poor eating quality, end consumer has eliminated Wax 44 and replaced by others which provided a better eating quality Syngenta even then launched 2 new hybrids but also failed Following by several players also failed to launch their new hybrids, they are almost focused on distribution channel how to provide a distributors a margin as high as possible, spending much in advertising to growers, setting up as many as demonstration fields to show up product performance in the field to attract growers They did not pay much attention to the broker’s role Then, they are hard to re enter the market as a result of failure to focus on broker role in fresh product business

1.2 Problem statement:

To define the key factors influence to the waxy corn market in Vietnam, this research is to study deeper the role of waxy corn broker in the chain of Seed Distributor – Seed Dealer – Grower – Broker – Wholesaler – Retailer in Ho Chi Minh City waxy corn market, in order to obtain an appropriate strategy to approach broker and gain his support in the Milky-36 launching

1.3 Objectives of the research:

- To understand the factors influence to the new hybrid waxy corn launching into the market

- To establish an appropriate marketing plan to satisfy influenced factors above for a success launching

1.4 Scopes and limitations:

- The marketing plan for launching new hybrid waxy corn seed Milky-36 is applied in 2 geographical regions in the south Vietnam: South East Region and Mekong River Delta

- The mentioned study is conducted on brokers in Ho Chi Minh City, Tay Ninh and Dong Nai province

The results obtained from the survey could be biased because of information collected from the interviewees with different backgrounds

1.5 Managerial implications:

- The study is beneficial to the company to better understanding the influenced factors Therefore, company will be able to establish an appropriate marketing plan to penetrate the waxy corn market successfully

- The study also reflects what competitions are attempting to do to penetrate the market and how are they performing Therefore, company will determine where it is now in the market and what should do differentiate and better in the marketing plan

- In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of

business strategy (Gitman, Lawrence J and Carl D McDaniel -2005) Therefore, the study

is to provide company the insights and needs of customers, their behaviors for the further product development

1.6 Research Methodology

Qualitative research is applied to collect the insights, needs, key perceptions in terms of strength and weaknesses of current hybrid waxy corn varieties in the market … these dimensions will help to define the influenced factors which are to support to the marketing plan

- Using Monsanto annual report, Monsanto trial report, Monsanto market information

- Using The National Testing Center for Seeds, Plant Products and Fertilizers

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction:

Nowadays, in a very competitive marketplace a strategy that insures a consistent approach

to offering a product or service in a way that will outsell the competition is critical However, in concert with defining the marketing strategy we must also have a well defined methodology for the day to day process of implementing it

In the process of creating a marketing strategy we must consider many factors Of those many factors, some are more important than others Because each strategy must address some unique considerations, it is not reasonable to identify 'every' important factor at a generic level However, many are common to all marketing strategies

Therefore, this chapter will review the literature involving marketing planning and its process to approach the market place It is also highlight the important factors in the process which maybe much more influence to the marketplace

2.2 Marketing Plan

Any manager will readily agree that a sensible way to manage the sales and marketing function is to find a systematic way of identifying a range of options, to choose one or more of them, then to schedule and cost out what has to be done to achieve the objectives

Marketing planning, then, is simply a logical sequence and a series of activities leading to the setting of marketing objectives and the formulation of plans for achieving them Companies generally go through some kind of management process in developing marketing plans In small, undiversified companies, this process is usually informal In larger, more diversified organizations, the process is often systematized Conceptually this process is very simple, and involves a situation review, the formulation of some basic assumptions, setting objectives for what is being sold and to whom, deciding on how the objectives are to be achieved and

scheduling and costing out the action necessary for implementation (Malcolm McDonald, 2007)

Further definition by Wikipedia, 2009, the area of marketing planning involves forging a

plan for a firm's marketing activities A marketing plan can also pertain to a specific product, as well as to an organization's overall marketing strategy Generally speaking, an organization's marketing planning process is derived from its overall business strategy Thus, when top

management is devising the firm's strategic direction or mission, the intended marketing activities are incorporated into this plan There are several levels of marketing objectives within an organization The senior management of a firm would formulate a general business strategy for a firm However, this general business strategy would be interpreted and implemented in different contexts throughout the firm

A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives It can be for a product or service, a brand, or a product line Marketing plans cover between one and five years A marketing plan may be part of an overall business plan Solid marketing strategy is the foundation of a well-written marketing plan While

a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation

is of little use

2.3 The contents of marketing plan

According to Michael Baker (2008).The main contents of a marketing plan are:

− Industry structure and strategic groupings

− Competition and market share

− Competitors' strengths and weaknesses

− Market trends

• Current Situation - Consumer Analysis (According to Quick MBA – Marketing plan

based on consumer and competitor analyses)

− Nature of the buying decision

• Summary of Situation Analysis

− External threats

− External opportunities

− Internal strengths

− Internal weaknesses

− Critical success factors in the industry

− Our sustainable competitive advantage

• Marketing research

− Information requirements

− Research methodology

− Research results

• Marketing Strategy - Product

− Product mix

− Product strengths and weaknesses

− Product life cycle management and new product development

− Brand name, brand image, and brand equity

− Product portfolio analysis

• Marketing Strategy (Quick MBA – Marketing Plan Basics) - segmented marketing

actions and market share objectives

− Pricing method (cost plus, demand based, or competitor indexing)

− Pricing strategy (skimming, or penetration)

− Discounts and allowances

− Price elasticity and customer sensitivity

− Price zoning

• Marketing Strategy - promotion

− Promotional goals

− Promotional mix

− Advertising reach, frequency, flights, theme, and media

− Sales force requirements, techniques, and management

− Sales promotion

• Marketing Strategy - Distribution

− Geographical coverage

− Distribution channels

− Physical distribution and logistics

• Implementation

− Personnel requirements

+ Assign responsibilities + Give incentives

+ Training on selling methods

− Pro-forma monthly income statement

− Contribution margin analysis

− Breakeven analysis

• Appendix

− Pictures and specifications of the new product

− Results from research already completed

CHAPTER 3: RESEARCH DESIGN

3.1 Problem definition

Vegetable or fresh human consumption market currently in Vietnam is being an opened or less controlled markets, therefore, the market of fresh agricultural products are always unstable due to many factors influence to this market, such as:

- The supply is over or less than the demand

- Natural conditions as flooding or drought

- Unexpected troubles as transportation

In this case, broker plays very important roles to release or guarantee farmer’s products, they bring farmer’s products to wholesales market, to end consumer Thus, they understand very well the expectation of farmer, wholesaler, retailer and end consumer Together with wholesaler, broker acts somehow as a market controller Therefore, their role is undeniable in the fresh human consumption

In waxy corn market, farmer sells fresh ear corn to broker only, broker buys corn from farmer all year round to supply to the wholesale market, and wholesaler sells to retailer, retailer sell to end consumer Although farmer buys waxy corn from seed dealer, but has to follow broker’s advice a specific variety which meets their expectation in attractive ear shape, good taste, long storage ability,… otherwise, broker will not buy or buy fresh ear corn from farmer with a low price than a variety which he or she has mentioned Alternately, due to only sell to brokers, farmer has to accept a late payment term from broker, thus, if broker sells fresh ear easily, farmer will receive their money smoothly, otherwise, farmer will be hard to receive their money or has to discount to broker,… Therefore, all waxy corn fresh ear market is being controlled by broker

Milky-36 has been trialed in Vietnam since 2008 to test its performance in term of adaptability, pest resistant, yield and eating quality and approved by the Scientist Committee of Agriculture Ministry in September 2010 as the Decision No: 188/QĐ-TT-CLT Meanwhile, in order to obtain a solid acceptance by market locally, company has conducted many

demonstration fields in many geographical target markets and it was suggested locally to release

to the market in the soonest time It means that Milky-36 is eligible for commercial launching in Vietnam rightly

Company set up the marketing plan for launching Milky-36, in which broker is defined as the expert in this field and his roles are the most important factors which influence to the launching This research is to provide a chance to verify company definition of broker’s role in Vietnam waxy corn market

to encourage a respondent to talk at length about the topic of interest

The research is conducted by in depth interviewing 3 biggest brokers individually who currently supply fresh ear corn to Ho Chi Minh City market in order to collect the insights, needs, key perceptions in terms of strength and weaknesses of current hybrid waxy corn varieties in the market The result of this research helped to discover Insights & Needs when brokers are carry out their business, to discover their attitudes, beliefs and related behavior with a hybrid waxy corn variety, to discover the brand attributes, to discover key drivers, influencing elements The findings will be a foundation to set up a marketing plan for launching a new hybrid waxy corn seed Milky-36 in the market

3.3 Information need:

The study is to deeply analyze and highlight broker’s roles which are influencing to current waxy corn market in Ho Chi Minh City and surrounding provinces, these are:

- The role of “promoter”

- The role of “buyer”

- The role of “market driver”

Therefore, information which regards to these roles to discover insights and needs, to develop the key product concept of current waxy corn varieties in the market, to discover the attitudes, beliefs or related behavior of broker, to discover the brand attributes and key drivers,…will be structured in the questionnaire and asking during the interview to find out the influenced factors of the launching new hybrid waxy corn seed

3.4 Conduct an in-depth interview

Kvale (1996) details seven stages of conducting in-depth interviews They include thematizing, designing, interviewing, transcribing, analyzing, verifying, and reporting Each step will be briefly examined below with strategies for implementation

Table 3.1: Kvale’s 7 stages of conducting in depth interview

• Key information necessary from in depth interview include: product performance benefits or losses to farmer or broker, farmer expectation, broker’s expectation, consumer’s expectation, factors influence to the current waxy corm market

• Actual questions include: as in the list of questionnaire Interviewing • Interviewer needs to introduce him/her self to establish a good

rapport with the interviewees Asking for audiotape recording

• Guide conversation towards the objectives and goal of the interview

• Then, proceeding to conduct the interview with designed questions

Transcribing

Write a report which will organize broker’s roles to highlight the factors influence to the current waxy corn market, followed by the answers with the help of recorded audiotape, and typically highlighted text

Analyzing

• Determine the meaning of information which regards to the role of broker, gathered in relation to purpose of the study

• Look for theme, commonalities and patterns to try to make sense

of the above information

• If more questions arise and needs clarity to serve the purpose of the study then another in-depth interview should be conducted

Verifying Verify credibility and validity of the information gathered which

include benefits, losses, inhibitors, drivers that influence the launching Reporting A formal written report will be written of the findings in in-depth

interview

3.5 Sampling and respondents:

The interview aims to in depth interview three brokers who are defined as the most effective strength of Ho Chi Minh City waxy corn market They are located in Dong Nai, Tay Ninh and Ho Chi Minh City

Table 3.2: Respondent’s profile

No Respondent name Address Position Business location Experience Contact No

1 Nguyen Van Phoi HCMC Self-

employed Tay Ninh, HCMC 6 years 0903973948

2 Nguyen Huu Hieu Dong Nai Self-

employed

Dong Nai, Tay Ninh, HCMC 6 years 01663563438

3 Pham Ngoc Vu Tay Ninh Self-

employed Tay Ninh, HCMC 3 years 0907539207

Table 3.3: Topics to discuss with respondents in depth (Appendix 3.1: Structured questionnaires)

CHAPTER

4.1 Market definition

Due to waxy corn is classified a fresh human consumption market, thus,

Co., (Ltd) has defined waxy corn as one of the most important strategic crop for its 5 years planning in vegetable seeds business in Vietnam, basing on the market growth assumption:

Figure 4.1: Dekalb (Vietnam)

Source: Monsanto – Long Range Planning (FY10

In 2010, total vegetable seed market value is estimated about 25.9 $

corn seed is the biggest market taking 28 percentage with 7.3 $ million in value Currently, the adoption rate of hybrid waxy corn seed using is forecasted at 34 percentage, the trend of conversion is assuming at 10 to 15% yearly in

conversion in 2015 with total market value of 10.2 $ million due to hybrid corn seed value is higher than OP seed value This is an attractive market that lures many big companies in the seed industry penetrating into Vietnam waxy corn market

There are 5 vegetable strategic crops in 5 years planning of Dekalb (Vietnam) from fiscal year 2011 to 2015: Onion, pepper, cucumber, tomato and waxy corn, in which waxy corn indicates a significant growth with 423,000 USD in

sales in 2015

Cabbage , 0.5, 2%

Cucumb

er, 4.8, 19%

Pepper, 1.8, 7%

Waxy Corn, 7.3, 28%

Vietnam Vegetable Market Size, 2010

25.9 $M

CHAPTER 4: FINDING AND ANALYSIS

Due to waxy corn is classified a fresh human consumption market, thus,

waxy corn as one of the most important strategic crop for its 5 years planning in vegetable seeds business in Vietnam, basing on the market growth assumption:

(Vietnam)’s strategic crops market growth assumption

Long Range Planning (FY10-FY15) - Market definition, 2009

In 2010, total vegetable seed market value is estimated about 25.9 $ million, in which waxy corn seed is the biggest market taking 28 percentage with 7.3 $ million in value Currently, the adoption rate of hybrid waxy corn seed using is forecasted at 34 percentage, the trend of conversion is assuming at 10 to 15% yearly increasing it may reach to 50 percentage of conversion in 2015 with total market value of 10.2 $ million due to hybrid corn seed value is higher than OP seed value This is an attractive market that lures many big companies in the seed

nto Vietnam waxy corn market

There are 5 vegetable strategic crops in 5 years planning of Dekalb (Vietnam) from fiscal year 2011 to 2015: Onion, pepper, cucumber, tomato and waxy corn, in which waxy corn indicates a significant growth with 423,000 USD in sales in 2011 and up to 1,507,000 USD in

Cabbage , 0.5, 2%

Cucumb

er, 4.8, 19%

Onion, 0.5, 2%

Pepper, 1.8, 7%

Cabbage, 0.6, 2%

Cucumbe

r, 5.5, 17%

Waxy Corn, 10.2, 31%

Tomato, 1.9, 6%

Waterme lon, 6.7, 21%

Others, 4.5, 14%

Vietnam Vegetable Market Size, 201 Vietnam Vegetable Market Size, 2010

32.3 $M

: FINDING AND ANALYSIS

Due to waxy corn is classified a fresh human consumption market, thus, Dekalb Vietnam

waxy corn as one of the most important strategic crop for its 5 years planning in vegetable seeds business in Vietnam, basing on the market growth assumption:

crops market growth assumption

creasing it may reach to 50 percentage of conversion in 2015 with total market value of 10.2 $ million due to hybrid corn seed value is higher than OP seed value This is an attractive market that lures many big companies in the seed

There are 5 vegetable strategic crops in 5 years planning of Dekalb (Vietnam) from fiscal year 2011 to 2015: Onion, pepper, cucumber, tomato and waxy corn, in which waxy corn

sales in 2011 and up to 1,507,000 USD in

Cabbage, 0.6, 2%

Cucumbe

r, 5.5, 17% Onion, 1,

3%

Pepper, 1.9, 6%

10.2, 31%

arket Size, 2015

Figure 4.2: Dekalb (Vietnam) - Vegetable Seeds Division – 5 years growth planning

(Unit: USD, thousand)

Source: Monsanto – Long Range Planning (FY10-FY15) - Market definition, 2009

4.2 Product performance

Evidently, Dekalb Vietnam has to base on its product portfolio to build the 5 years planning which indicates a very promising waxy corn hybrid Milky-36 According to the National Center for Variety Evaluation and Seed Certification, Milky-36 has been trialed and evaluated to pass the DUS and VCU testing

Table 4.1: Yield of Milky-36 in Spring 2008 in Northern provinces (Unit 100kg/ha)

Duong

Vinh Phuc

Phu Tho Nghe An Average Varieties

CV(%) 4.3 3.4 2.5 4.8 6.8 LSD (0.05) 8.5 4.4 3.7 8.1 11.2 Source: The National Center for Variety Evaluation and Seed Certification (NCVESC), 2008

-2,000

3,000

4,000

The result showed that Milky-36 has been checked with a leading variety (MX10) and gave

a higher yield in every location in Spring season 2008 in northern provinces

Table 4.2: Yield of Milky-36 in Winter 2008 in Northern provinces (Unit 100kg/ha)

Duong

Vinh Phuc

Phu Tho Nghe An Average Varieties

CV(%) 4.6 6.0 5.0 5.0 5.6 LSD (0.05) 6.45 6.34 7.09 7.08 9.86 Source: The National Center for Variety Evaluation and Seed Certification (NCVESC), 2008

Again, Milky-36 showed a higher yield than a leading variety MX10 in every location in Winter season 2008

Table 4.3: Yield of Milky-36 vs current hybrids across Vietnam biological regions in Winter-Spring 2008, Spring-Summer 2009 and Summer-Autumn 2009 (Unit: 100 kg/ha)

(ha)

chech varieties

Source: Summary Trial Report from Agricultural Extension Center, Agricultural Department,

Agricultural Cooperatives across the country, 2009

Milky-36 has been conducted a large scale trial in multi locations and seasons across the country during 2008 and 2009 It showed almost higher yield than currently hybrids from 2 to 20 percentages

Milky-36 obtains a very early maturity which helps farmer can harvest earlier than other current hybrids about 1 week, farmer can get money earlier Milky-36 also obtains a shorter plant height and ear height which keeps Milky-36 plant stands longer and stronger in the field, it is good for growing in rainy season when usually has heavy rain or typhoon, in the same time, it helps grower easy to harvest due to fit to farmer’s arm reach Moreover, Milky-36 has a very good storage ability which helps broker can keep fresh ear in the wholesale market for 3 days after harvesting Its ear shape looks very attractive in cylindrical shape with more eatable portion Regarding to eating quality, Milky-36 is widely tested by retailers and consumers, most of them graded a very high score for Milky-36 in term of eating quality, it provides a stick texture even after boiling and kept in 2 days still remain the same texture and milky flavor

Table 4.4: Milky-36 agricultural characteristics and taste compare to current hybrids

No Hybrid

Days to harvest

Plant height (cm)

Ear height (cm)

Storage ability (day)

Ear shape

Texture Texture

after boiling

tender Sticky Sticky Fragrant

Cylin-drical Sticky Sticky Milky

Source: Waxy corn trial result – Monsanto, 2009

Table 4.5: The interested traits vs product performance of current hybrid waxy corns in

2008

Grower Broker Consumer Wax-44 EW-268 MX-10

Corn northern leaf blight

Source: Market survey - Monsanto, 2008

Therefore, on 8th Jun 2010, the first hybrid waxy corn seed of Monsanto - Milky-36 has been approved by the Department of Crop Plant of Agriculture Ministry by the Decision No 188/QĐ-TT-CLT It is eligible to commercialize in Vietnam now

4.3 Market research

An in depth interview has been conducted to interview 3 brokers who are acknowledged as the most affected brokers to the waxy corm market in Ho Chi Minh City recently The findings are categorized into 3 main parts:

- The first part is to review the market situation and the key success factors in the industry

- The second part is to deeply analyze broker’s roles influence to the market of waxy corn in

Ho Chi Minh City

- The third part is to find the best fit of advertising means and brand awareness

4.3.1 Market situation and the key success factors

 Broker’s experience:

The findings is to verify broker’s experience in the industry, all respondents have started their business since the market were supplied the OP variety, they are the firsts who explore the hybrid waxy corn market in Ho Chi Minh City when Syngenta launched the first hybrid waxy corn in Vietnam market Wax44 in 2005

Hybrid waxy corm is planted year round mostly in Tay Ninh province and surrounding provinces in Mekong Delta such as Can Tho, Vinh Long, An Giang, Dong Thap and Dong Nai to serve the fresh consumption wholesale market in Hoc Mon district, Ho Chi Minh City with an average of 200 tons of fresh ear corn a day in normal and 400 tons in peak season during May to Aug while bottom season is during Chinese new year (January) due to most of retailer going home for new year celebration

 Market situation:

The waxy corm market in Ho Chi Minh City is rapidly developing in recent years due to hybrid waxy corn has improved much in eating quality, people likes to eat more fresh corn boiling or pealed grain corn But a key element drives waxy corn market growing is the movement of labor force in rural side to Ho Chi Minh City and surrounding provinces such as Binh Duong, Dong Nai, Long An and Ba Ria Vung Tau to get a better job, it creates a huge demand of ear corn consumption The trend of the waxy corn market growing is forecasted at 15% increasing yearly Therefore, hybrid waxy corn is planting more and more and concentrated

in Tay Ninh and Mekong Delta year round and other provinces in rainy season such Dong Nai,

Ba Ria Vung Tau and Dak Nong

After Syngenta launched the first hybrid waxy corn in Vietnam market, there were several hybrids launched such as MX-10 (SSC), EW-268 (EWJVC), generally the later launched hybrids obtained a better quality in compare with Wax44 but seemed to not success due to many inhibited factors such disease infection, lower yield, late maturity, small ear size,… and end consumer’s requirement is higher day after day Currently MX-10 is known as a leading market due to can be grown in high density than other, long storage ability, good full tip,… but the main reason for this variety takes a good market share may be being sold in cheapest price compare to other due to

local seed production The weakness point of MX-10 is too small ear size, eating quality graded

at the medium and lodging disease in rainy season

Wax-44 (Syngenta) is being extremely declined due to so poor eating quality, it comes too hard grain after boiling and unable to keep long at broker storage Therefore, it ear price is lower than other from 300 – 500 VND/ear, grower does not want to plant this variety any more due to the same investment but lower income and end consumer refuses to consume this variety due to its poor eating quality

EW-268 (EWJVC) is currently considered as the best eating quality, however, this is a late maturity and downy mildew disease is the most serious effected to this hybrid Last but not least, the joint venture was restructured and this hybrid seems to be not appeared in the market any more

There are 2 new players attempt to penetrate the market with 2 latest hybrids:

- East West International Seeds going to launch a new hybrid Violet 926 by end of 2010 This is an innovative hybrid waxy corn which is a bicolor mixed between 10-15% purple grain with 85-90% while grain, eating quality is evaluated same as EW-268 previously

- Monsanto is also going to launch its first hybrid waxy corm Milky-36 which is evaluated the best eating quality and very high uniformity of plant and ear size, an earliness hybrid can be harvested at 60 days after planting

 Key success factors:

Vietnam human fresh consumption market is less controlled by government In fact, there

is no oriented production from government for vegetable or human fresh consumption market, it

is a unprompted production by farmer basing on their experience A higher organized production

is an agricultural cooperative but seems to be not a perfect method in agricultural production due

to find the out put for vegetable production is really inextricable

A contracted production between farmer and broker seems to be an appropriate method for

a rag agricultural production in Vietnam at this moment Thus, the waxy corn market is being controlled by broker, in order to obtain a success launching product performance and marketing strategy of company have to meet broker’s expectation

Product performance is always the first key success factor leads to a success of the product launching in the market, specific requirements include agricultural characteristics which beneficial prior to broker but also meet grower and end consumer expectation, the findings have

accurately defined “a need behind the need”, those are:

- Eating quality: This is consumer’s first choice, they prefer to a sticky and fragrant waxy

corn, eatable after boiling

- Ear size uniformity: This is to provide high percentage of sellable ear and easy to grade and

sell

- Ear appearance: A nice ear shape is easy to attract consumer A big ear and full tip filling

are preferable

- Field holding ability: A bulk buying is a purchase method that broker applies in buying

corn from grower widely, they buy all the field corn when it is still immature and the harvesting will be conducted themselves Obviously, the longer holding in the field is the better management for broker, especially in a condition of over supply or inconvenient natural condition

- Storage ability: This is one of the most broker’s concern due to waxy corn is a fresh

product which is sellable within 3 days, thus, a longer storage is the better sales management for broker A variety which provides a stay green longer husk cover can be storage longer in wholesale market

- Yield: is composed by many elements in which agricultural characteristics of a hybrid are

important components, broker prefers to a hybrid which provides higher yield than others to get more profits

Marketing strategy of a company is considered as an important factor to impulse the purchase power of grower, in which respondents want to dignify their central roles in the chain:

distributor – seed dealer – grower – broker – wholesaler – retailer – consumer

Different from other crops seed business which is normally focusing on the chain of distributor – seed dealer – grower in order to generate the sales, the vegetable seed business is

more complicated to focus on a longer chain: distributor – seed dealer – grower – broker –

wholesaler – retailer – consumer, it is not only maximize the sales but also secure the sales

growth Especially, in the term of contracted production which firmly ties grower to broker, grower is unable to sell their fresh ear waxy corn to other, and/or they do not know who to sell Thus, broker is defined to play a most important role in the chain, he needs to be satisfied by a company strategy in order to obtain a success launching

4.3.2 Broker’s role

The finding discovers and analyzes the insights of broker when they carry out the waxy

corn business, it is a deeper analyzing their roles to find out “a need behind the need”:

 The role of “Promoter”

When grower decides to grow waxy corm, he will places the question which variety can be sown? Who to sell? And of course, brokers will be the buyer and the following answer will be also given by them that should select a variety which they are promoting to the market, otherwise they will not buy fresh ear corn from grower or buy with the very lower price

Brokers are not a seed seller but they act as a promoter to promote a specific variety So, what is the insight?

- First, actually they want to protect their stable supply in term of waxy corn eating quality, ear corn selling duration,… by that they advise which variety should be selected for grower

cultivation The insight is to obtain customer retention (wholesaler or retailer) that all

respondents have to satisfy

- Secondly, the concern which regards to any financial benefit that brokers may receive from seed provider to promote a specific product does not found but the findings showed that in order to gain broker’s support in promoting a product, company has tried to build up the good relation with brokers by the entertainments or incentive trips combined with seed dealer

However, financial benefit is mentioned by respondents as a method to stimulate their activities

or covering their expenditures at least if seed provider wants to get their stronger support

 The role of “Buyer”

The interested thing of the findings is to discover the buying mode that broker is currently applied to buy grower’s product In order to secure the supply, the immature corn field is deposited by cash with an amount of 10% of the contracted production value Grower has to take care of the corn field until broker harvest it and receive the rest amount also by cash until broker

sell out all product to wholesaler or retailer Broker sell waxy corn to wholesale market is also in credit and they will be paid periodically 2 weeks a time The wholesaler will deduct the amount

of unsellable ear due to over mature or damaged in storage or even over supply makes the market price getting down Broker again will ask grower for a deduction or sharing with them the

unsellable ear Grower seems to be incurred the losses Thus, the buyer power is getting stronger

in the supply chain: Grower – Broker – Wholesaler They buyer can applies the rule on the seller

 The role of “Market driver”

The findings show that broker is playing a very important role in market driver Indeed, the most effective way is to set the buying price of the promoted variety higher than other, just only 500,000 VND/hectare of ear corn that can drive the waxy corn seed market effectively The insight is that broker know very well the performance of the current varieties in the market, they willing to pay more for a promoted hybrid which obtains a higher uniformity of ear size because the higher uniformity of ear size is the higher selling price and the less labor force fee for grading the ear size before selling to wholesale market, the benefit they get from the higher uniformity of ear size is rather high to compensate the extra payment for a promoted hybrid

Alternatively, the innovative product can be easy to promote due to its differentiation, it will be a benchmark for broker drives the market Any prominent agricultural characteristic of a waxy corn hybrid which benefits to broker can be picked up in order to promote to be market driver Currently, Milky-36 (Dekalb) with a very high percentage of ear size uniformity and fragrant flavor can be a key point to differentiate the market or East West International Company with Violet-926 bicolor waxy corn hybrid is considering a waxy corn market driver in future

In summary, product differentiated point which benefits to broker can be picked up to promote under broker’s role of market driver easily

4.3.3 Advertising and brand awareness

The findings show that respondents tried to inhibit company to conduct a common advertising modes via the public media such as radio or television The reason was explained that

is an expensive advertising mode although approaching grower in region widely while the most effective way is their roles They stimulate company to apply the farmer meeting or field day with their appearance in order to encourage grower to use the promoted variety But they are