Marketing strategy for launching slim slim in 2011 a product belongs to the anti obesity market slimming food supplement category

TUTOR’S COMMENTS I am writing to certify that this project entitled: MARKETING STRATEGY FOR LAUNCHING SLIM SLIM IN 2011 A product belongs to the anti-obesity market & slimming food supp

STATEMENT OF ORIGINALITY

This work has not been submitted for a degree or diploma in any university To the best of

my knowledge and belief, the project contains no materials previously published or written

by another person except where due reference is made in the project itself

Pham Thi Thanh Thuy

December 14, 2010

TUTOR’S COMMENTS

I am writing to certify that this project entitled:

MARKETING STRATEGY FOR LAUNCHING SLIM SLIM IN 2011

A product belongs to the anti-obesity market & slimming food supplement category

Prepared by

Ms PHAM THI THANH THUY

meets the requirement for a business project at the master’s level It is recommend that Pham Thi Thanh Thuy present her project to the Committee

Hochiminh City, December 9th, 2010

_

Tutor’s signature

Nguyen Thi Mai Trang

TABLE OF CONTENTS

1  CHAPTER I INTRODUCTION   1 

1.1  VIETNAM BEAUTY INC   1 

1.2  PROJECT BACKGROUND   2 

1.3  SCOPES AND LIMITATIONS   2 

1.4  PROJECT OBJECTIVE   3 

1.5  PROJECT’S METHODOLOGY   3 

1.6  DESCRIPTION OF CHAPTER ORGANIZATION   5 

1.7  SUMMARY   5 

  2  CHAPTER II LITERATURE REVIEW   6 

2.1  MARKETING MIX   6 

2.1.1  The Product   7 

2.1.2  The Price   9 

2.1.3  The Place   10 

2.1.4  The Promotion   10 

2.2  TARGET MARKET   12 

2.3  POSITIONING   12 

2.4  ATTITUDES AND BEHAVIORS OF CONSUMERS   13 

2.4.1  Consumer behaviors   13 

2.4.2  Consumer attitudes   13 

2.4.3  Brand loyalty   14 

2.4.4  Brand equity   14 

2.5  CONSUMER RELATIONSHIP MANAGEMENT   14 

2.5.1  Different types of consumer relationships   14 

2.5.2  Building long term partnerships   15 

2.6  SUMMARY   16 

3  CHAPTER III OVERVIEW OF VIETNAM BEAUTY INC AND   17 

ITS SLIM SLIM PRODUCT   17 

3.1  EXTERNAL FACTORS   17 

3.1.1  Political and legal   17  

3.1.2  Market situation   17

3.1.3  Social-cultural   19 

3.1.4  Technological   20 

3.2  THE CORPORATION   21  

3.3  THE CUSTOMER   21  

3.4  THE COMPETITORS   23  

3.5  SWOT ANALYSIS   24 

3.5.1  Strengths   25 

3.5.2  Weaknesses   25 

3.5.3  Opportunities   25 

3.5.4  Threats   25 

3.6  SLIM SLIM PRODUCT   27 

3.6.1  Product sustainable competitive advantages   28 

3.6.2  Effect of Fiber and Psyllium   28 

3.7  COMPETITIVE LANDSCAPE   29 

3.8  KEY TO SUCCESS   35 

3.9  SUMMARY   35 

  4  CHAPTER IV MARKETING STRATEGY   36 

4.1  MARKETING OBJECTIVES   36 

4.2  FINANCIAL OBJECTIVES   36 

4.3  TARGET MARKET   37 

4.4  POSITIONING   39 

4.5  MARKETING MIX   40 

4.5.1  Product   40 

4.5.2  Price   41 

4.5.3  Advertising and Promotion   42 

4.5.4  Places/ Distribution channels   45 

4.6  BUDGETING   47 

4.7  IMPLEMENTATION MILESTONES   48 

REFERENCE 50

APPENDIX A – QUESTIONNAIRE 51

APPENDIX B – SPSS OUTPUTS 58

Exhibit B1 – Brand awareness 58

Exhibit B2 – The brand was frequently purchased 58

Exhibit B3 – Weight of consumers .59

Exhibit B4 – Status of marriage 59

Exhibit B5 – Reasons to use slimming food supplement products 59

Exhibit B6 – Advertising Activities were aware 60

Exhibit B7 – Quality trustworthy slimming food supplement brand 60

Exhibit B8 – The most trusted source of information to choose a brand 61

Exhibit B9 – Places where to purchase the product 61

ABBREVIATIONS

SPSS Statistical Package for the Social Sciences

LIST OF TABLE

Table 3.1 Sales of Slimming Products by Subsector: Value 2004 – 2009 18 Table 3.2 Sales of Slimming Products by Subsector: % Value Growth 2004 – 2009 18

Table 3.3 Forecast Sales of Slimming Products by Subsector:

Table 3.4 Consumer Expenditure by Product Type – 1995/2000/2005/2010/2015 22

LIST OF FIGURES

Figure 3.3 Psyllium most commonly used all over the world 29

Figure 4.3 Reasons to use slimming food supplement products 39

Figure 4.6 Quality trustworthy slimming food supplement brand 46 Figure 4.7 The most trusted source of information to choose a brand 46

1 CHAPTER I INTRODUCTION

1.1 VIETNAM BEAUTY INC

Vietnam Beauty INC (VBI) is a totally new private company in the beauty industry The company offers the combination of health and beauty The company is solely engaged in promotion and distribution of high quality pharmaceutical products that carry health benefits as well as improving over all appearance from within The basic products are focused on health food items on skin whitening, skin rejuvenation, slimming, strengthening the immune system against diseases, external skin enhancers like organic whitening soaps, whitening scrubs, peeling sets, whitening creams, etc

The company does the marketing and distribution for beauty products which be sourced by the international creditable manufacturer at the Vietnamese market through a strong system of local pharmacies over the country

The mission of VBI is to provide best quality products that meet specific consumer’s requirements The company pledges to provide best service in a timely manner at fair, competitive prices

For the coming five years VBI seeks to achieve the following goals:

a) Non-financial goals

i To be a well-known distributor in health product area in HCM city

ii To add a new product every two years

iii To enter Hanoi market

b) Financial goals

iv To obtain an average growing rate of 20% per year over time

Until this moment, the company has not had any establishment in the market The company

is implementing the exploration to launch their first product in the year 2011

1.2 PROJECT BACKGROUND

Prior to the Business Monitor International Ltd’s Report released in Nov 2010, Vietnam’s emergence is as one of the most promising economies in Asia A bustling market economy has stimulated foreign investment and domestic entrepreneurship, which are now the prime drivers of growth As a result, the escalating emergence of numbers of middle and high income white-collar workers is inevitable Together with their high confidence in their future success and economic status, it results in their incremental in disposable income The demand in work-life balance stimulates them to be appeared as an attractive and good-looking people And obesity is one of their primary emerging concerns With the demand being fuelled by rising obesity levels and increasing consumer disposable incomes, slimming products has been growing rapidly in recent years and expected to achieve a rocket double digit of growth in the next coming years It is accessed as a most lucrative market than ever

Capturing the opportunity of the increasing demand on slimming products, VBI plans to penetrate this segment by building up an effective marketing strategy for launching its first product “SLIM SLIM”

For the time being, there is no evaluation on marketing activities that will help the VBI’s management know how to have a successful launching for its new product of slimming food supplement into community The board of management desires to implement a test market, forecast financial plan, etc in order to establish a marketing strategy for its new product

1.3 SCOPES AND LIMITATIONS

The mentioned project is conducted on end consumer in Ho Chi Minh city where is the first and major market for Slim Slim in Vietnam The quantitative survey will be conducted to

explore the important functional benefits and key indicators which drive targeted consumers to choose a slimming product

The results obtained from the survey could be biased because of information collected from the interviewees with different backgrounds Some executives have provided general answers or requested the author to keep some of their information confidential and served for purpose of statistical calculation only given to the fierce competition in Vietnam

1.4 PROJECT OBJECTIVE

The mentioned project is conducted to explore how the end consumer identify themselves and anti-obesity demand, trend in anti-obesity segment, affordable and acceptable price range, consumers’ perception of current brands in the market, unmet needs and ideal anti-obesity brand for consumers Above all of this exploration, the project is implemented to provide VBI’s management board a marketing strategy for a successful launching Slim Slim product in Hochiminh city market

Figure 1.1- Research design

2 Methodology of collecting data: Quantitative

3 Research tools: Face to face interview

4 Sampling

Irrespective of gender: Female, 22-45 years old Geo Coverage: HCM city

Sample size: 120

5 Analyzing and findings

1 Research Methodology: Descriptive

This project aims to gain a better understanding of all information related to a successful marketing strategy for launching Slim Slim, therefore, descriptive research purpose was applied

For the descriptive studies such as this one, the quantitative method for data collection and analysis are appropriate The primary data is generated by using face to face interview Around 120 respondents with irrespective of gender, age from 22 to 45, overweight and concern on a safe method to lose weight for a good-looking, and who live in Hochiminh city where is the first and major market for Slim Slim in Vietnam, will be interviewed Questions were asked accordingly to an interview guide (available in Appendix A), which was prepared in advance in order to cover all topics connected to research questions of this study The questionnaires will be 20-30 minutes length survey analyzing on characteristic, price and market share of main competitive product in local market After screening interview some members from big sports fit centers and others from beauty care website,

we got a number of 120 consumers using different slimming food supplement products, and several findings resulted The most relevant findings from the survey can be used for the implication of VBI’s marketing strategy

Beside the primary data, the available documents of the company and all the necessary information regarding VBI are also used as the secondary data in order to effectively serve for the study Furthermore, the relevant statistic information and analyze reports from Euromonitor, Vietnam Nutrition Institute, Salas-Salvado J and other sources also have been used to illustrate for the study Based on the secondary data, the current beneficial impact of new slimming product to end consumer can be evaluated and a suitable marketing strategy could be proposed to apply for a successful Slim Slim launching project

1.6 DESCRIPTION OF CHAPTER ORGANIZATION

This study is organized into four chapters

Chapter I – Introduction: This chapter introduces the background and defines the problems

of the project It sets the project objectives and establishes the design of the research It

shows how the workflow of project goes through the chapter organization

Chapter II – Literature review: This chapter discusses the state of knowledge in marketing communications and relevant concepts within the area of consumer behavior and consumer relationship management

Chapter III – Overview of Vietnam Beauty INC and it’s product, Slim Slim: This chapter generally analysis the internal and external factors which influence to operation of company It also discusses the advantages and disadvantage of Slim Slim – the first product which VBI intend to launch into HCMC market

Chapter IV – Marketing Strategy: This chapter discusses project findings and its implication into marketing strategy as well as the necessary control for the new product’s launching project

This chapter provides the foundation and the blueprint for the study The background of the research, the research problem, scopes and limitations of the research, the research objectives, design of the research and research methodology are discussed The discussion helps researcher describe and develop research roadmap for coming consecutive steps The next chapter will proceed with a detail description of literature review which provides

a theoretical foundation before data collection is commenced

2 CHAPTER II LITERATURE REVIEW

Source: Marketing Management, Millennium Edition by Philip Kotler

Figure 2.1 – The Four P components of the Marketing Mix

2.1 MARKETING MIX

Marketing mix is the set of marketing tools that the company uses to pursue its marketing objectives in the target market Basically, marketing mix involves four Ps elements including product, price, place, and promotion The company need to create a successful mix of the right product, sold at the right price, in the right place, and using the most suitable promotion

Promotion

Sales promotion Advertising Sales force Public relation Direct marketing

Place

Channels Coverage Assortments Locations Inventory Transport

Target market

2.1.1 The Product

2.1.1.1 What is Product?

The product is the central point on which marketing energy must focus Finding out how to make the product, setting up the production line, providing the finance and manufacturing the product are not the responsibility of the marketing function However, it is concerned with what the product means to the consumer

In marketing, the term Product is used as a catch-all word to identify solutions a marketer provides to its target market Marketing therefore plays a key role in determining such aspects as the appearance of the product - in line with the requirements of the market, and the function of the product - products must address the needs of consumers as identified through market research

The product range and how it is used is a function of the marketing mix The range may be broadened or a brand may be extended for tactical reasons, such as matching competition

or catering for seasonal fluctuations Alternatively, a product may be repositioned to make

it more acceptable for a new group of consumers as part of a long-term plan

2.1.1.2 Key product decision

The actual product is designed to provide the core benefits sought by the target market The company offers these benefits through a combination of factors making up the actual product There are four keys factors that together help shape the actual product including Consumable Product Feature, Branding, Packaging and Labeling

At this study, the factor of Consumable Product Feature and Branding would be mentioned

2.1.1.2.1 Consumable Product Feature

Features are characteristics of a product that offer benefits to the consumer When it comes

to developing a consumable product, several decisions related to product features will be faced, including:

Feature Set vs Cost: An important decision focuses on the quantity and quality of features (i.e., feature set) to include in a product In most cases the more features included or the higher the quality level for a particular feature, the more expensive the product is to produce and market

Is more better? Even if added cost is not a major concern, the company must determine if more feature help or hurt the target market’s perception of the product A product with too many features could be viewed as too difficult to use

Who should choose the features? Historically the company determined what features to include in a product For instance, companies offering website hosting services allow website owners to choose from a list of service options that best suit their needs

2.1.1.2.2 Branding

Branding involves decisions establishing an identity for a product with the goal of distinguishing it from competitor’s offerings In markets where competition is fierce and where consumers may select from among many competitive products, creating an identity through branding is essential Is is particularly important in helping position the product in the minds of the product’s target market

With competition growing more intense in almost all industries, establishing a strong brand allows an organization’s products to stand out and avoid potential pitfalls A clear understanding of branding is essential in order to build a solid product strategy

Individual Product Branding – with this branding approach new products are assigned new names with no obvious connection to a company’s existing brands Under individual product branding, the company must work hard to establish the brand in the market since it can not ride the coattails of previously introduced brands The chief advantage of this approach is it allows brands to stand on their own This lessens threats that may occur to other brands marketed by the company

2.1.2 The Price

2.1.2.1 What is Price?

Of all the aspects of the marketing mix, price is the one, which creates sales revenue - all the others are costs The price of an item is clearly an important determinant of the value of sales made In theory, price is really determined by the discovery of what consumers perceive is the value of the item on sale Researching consumers' opinions about pricing is important as it indicates how they value what they are looking for as well as what they want to pay A company’s pricing policy will vary according to time and circumstances

2.1.2.2 Importance of pricing

Setting the right price level takes considerable market knowledge and, specially with new products, testing of different pricing options Often times consumers’ perceptions of a product is formed as soon as they learn the price, such as when a product is first seen in a store While the final decision to make a purchase may be based on the value offered by the entire marketing offering, it is possible the consumer will not evaluate a product at all based on price alone Otherwise, pricing may become the most important of all marketing

decisions if it can be shown that consumers are avoiding learning more about the product because of price

2.1.3 The Place

Although figures vary widely from product to product, roughly a fifth of the cost of a product goes on getting it to the consumer 'Place' is concerned with various methods of transporting and storing goods, and then making them available for the consumer Getting the right product to the right place at the right time involves the distribution system The choice of distribution method will depend on a variety of circumstances It will be more convenient for some manufacturers to sell to wholesalers who then sell to retailers, while others will prefer to sell directly to retailers or consumers

2.1.4 The Promotion

2.1.4.1 What is Promotion?

The role of promotion, is also termed as marketing communications, is very important as it builds brand awareness, creates favorable brand attitudes and enhances purchase intention (Belch and Belch 1998; Rossister and Percy 1998)

Promotion is the business of communicating with consumers It will provide information that will assist them in making a decision to purchase a product or service The razzmatazz, pace and creativity of some promotional activities are almost alien to normal business activities

The cost associated with promotion or advertising goods and services often represents a sizeable proportion of the overall cost of producing an item However, successful promotion increases sales so that advertising and other costs are spread over a larger output Though increased promotional activity is often a sign of a response to a problem

such as competitive activity, it enables a company to develop and build up a succession of messages and can be extremely cost-effective

2.1.4.2 Promotion mix

Promotion is also termed as marketing communications The role of marketing communications is very important as it builds brand awareness, creates favorable brand attitudes and enhances purchase intention (Belch and Belch 1998; Rossister and Percy 1998)

Advertising Sales promotion Public relations Personal selling Direct

Press kits Video news releases Speeches Seminars Annual reports Charitable donation Sponsorships Publications Community relation Lobbying Identity media Special events

Sales representation Sales meetings Incentive program Fairs and tradeshows

Catalogue Mailings Telemarketing Electronic shopping

TV shopping Fax

Email Voice mail

Source: Marketing Management, Millennium Edition by Philip Kotler

Table 2.1 – Common Communication platform

2.2 TARGET MARKET

The target market and the marketing mix variables of product, place(distribution), promotion and price are the two elements of a marketing mix strategy that determine the success of a product in the marketplace

A target market or target audience is a group of consumers that the business has decided to aim its marketing efforts and ultimately its merchandise A well-defined target market is the first element to a marketing strategy

Target markets are groups of people separated by distinguishable and noticeable aspects Target markets can be separated into geographic segmentations (their location); demographic/socio-economic segmentation (gender, age, income occupation, education, sexual orientation, household size, and stage in the family life cycle); psychographic segmentation (similar attitudes, values, and lifestyles); behavioral segmentation (occasions, degree of loyalty); and product-related segmentation (relationship to a product) Once these distinct consumers have been defined, a marketing mix strategy of product, distribution, promotion and price can be built by the business to satisfy the target market

2.3 POSITIONING

The most common definition of positioning is identifying a market niche for a brand, product or service utilizing traditional marketing placement strategies (i.e price, promotion, distribution, packaging, and competition)

Positioning is the perception that happens in the minds of the target market It is the aggregate perception the market has of a particular company, product or service in relation

to their perceptions of the competitors in the same category It will happen whether or not a company's management is proactive, reactive or passive about the on-going process of

evolving a position But a company can positively influence the perceptions through enlightened strategic actions

2.4 ATTITUDES AND BEHAVIORS OF CONSUMERS

2.4.1 Consumer behaviors

“Consumer behavior is the mental and physical activities undertaken by household and

business consumers that result in decision and action to pay for, purchase, and use products and services” (Sheth and Mittal 2004)

The term “consumers” refer to both the household and business markets In a market place transaction, a consumer can play three different roles: a buyer, a payer or a user and other roles in the buying decision, such as the initiator, influencer, decider or an approver

If a company applies the principles of the consumer behavior to develop and maintain a consumer orientation, also referred to as market orientation, it will take the best advantage

of them Consumer orientation is defined as a thorough understanding of consumer’s needs and wants, the competitive environment and the nature of the market (Sheth and Mittal 2004)

2.4.2 Consumer attitudes

According to Gordon Allport, “Attitudes are learned predispositions to respond to an object

or class of objects in a consistently favorable or unfavorable way” There are three

components in the attitudes: cognition or beliefs (including three types: descriptive, evaluative and normative), affect (feelings) and conation (actions) Attitude can be used to predict behavior and alternatively behavior can be used to infer the underlying attitudes (Sheth and Mittal 2004)

2.4.3 Brand loyalty

Behavioral brand loyalty is simply a consumer’s consistent repurchase of a brand There is, however, difficulty in determining whether or not the consumer likes the brand more than the other brands because a consumer could repurchase a brand without thinking much about it due to habit or convenience This kind of loyalty is not stable Therefore, there is another way looking at the brand loyalty that is high linking for the brand, termed as attitudinal brand loyalty

Combining these two concepts, brand loyalty can be defined as “brand loyalty is the

consistent repurchase of the same brand based on favorable attitude toward it” (Sheth and

Mittal 2004)

2.4.4 Brand equity

From the consumers’ point of view brand equity is the consumer perception of a product superiority compared with other brands It demonstrates a higher confidence consumers place in the brand than they do in the other brands This confidence can be translated into consumer preference toward the brand and brand loyalty According to marketing professors Walfried Lassar, Banwari Mittal and Arun Sharma, brand equity is described as having five components: performance, social image, value, trustworthiness and identification (Sheth an Mittal 2004)

2.5.1 Different types of consumer relationships

Relationship is made when a transaction occurs between two parties Some involve many transactions that last for year and others may exist for a few minutes These relationships, however, includes three basic types:

ƒ Market exchanges,

ƒ Functional relationships, and

ƒ Strategic partnerships

Market exchange is a short term relationship while the other two are of long term relationships Among these three types of relationships, the functional relationship is the best similar to the relationship between VBI Sales Representatives and their consumers So

it is selected for discussion and defined as follow “Functional relationships are long term

relationships in which the buyer and the salesperson have a close personal relationship that allows them to communicate effectively” (Weitz, et al 1998)

Although both partners are striving to make money in the relationship, they are also trying

to build a working relationship that will last a long time A functional relationship is like a close friendship in which the parties are not concerned with little details because they trust each other and strongly believe that, over the long run, each of them will be rewarded (Weitz, et al 1998)

2.5.2 Building long term partnerships

As above discussed, trust can be considered as an important building block for long term relationships and it is composed of five factors: dependability, competence, consumer orientation, honesty and likeability (Weitz, et al 1998)

ƒ Dependability is how the consumers perceive the salesperson, the product and the

company he or she presents Using third party references is useful in proving dependability and product demonstration and other special types of demonstration can also illustrate dependability Giving product presentation with science based evidence can convince the consumers (Weitz, et al 1998)

ƒ Competence is demonstrated through the salespeople’s knowledge of the

consumers, the products, the industry, the competition and the use of accurate

information Reps are advised not to exaggerate the performance of their products

or to make up a response to a tough question (Wietz, et al 1998) For example, when a VBI medical representative five a specialty product presentation with advanced scientific evidence which can help effectively consumers with the obesity issue and then can satisfactorily handle consumers’ questions in medical terms, the consumers is more likely to believe the medical rep is medically competent

ƒ Consumer orientation was discussed already earlier

ƒ Honesty as discussed earlier, salespeople must be honest in response to consumers’

questions because they can count on salespeople for their honesty Moreover, when

a sales rep makes a claim or a promise or a desire to her or his partner and does not deliver it, then it may cause a breakdown in their relationship (Weitz, et al 1998)

ƒ Likeability “refers to behaving in a friendly manner and finding a common ground

between buyer and seller” The personal communications such as birthday cards, Christmas cards and gifts sent to consumers on the special occasions can influence the likeability Personal touches, however, are still needed for the gesture to be meaningful (Weitz, et al 1998)

This chapter has introduced marketing mix, target market, positioning, behaviors and attitudes of consumers and consumer relationship management by reviewing the extant literature Marketing mix involves four Ps elements including product, price, place, and promotion were discussed initially Then the literature of behaviors and attitudes of consumers and consumer relationship management were reviewed The following chapter will discuss the overview of Vietnam Beauty INC and its Slim Slim product

3 CHAPTER III OVERVIEW OF VIETNAM BEAUTY INC AND

ITS SLIM SLIM PRODUCT

3.1.1 Political and legal

In the previous time, the price, quality and distribution channels of slimming products is only very loosely controlled by the Drug Administration of Vietnam (DAV) The main distribution channels for this kind of products are pharmacies, direct sellers, and non-specialist channels such as supermarkets and groceries Because of the flexible on types of slimming product and its price range is wide enough to attract people of all income levels, the consumers can buy slimming products easily However, there have been reports of consumer misuse, with some medical experts warning that such products can cause damage

to internal organs Therefore, in longer term the DAV will tighten the selling of such products in order to protect consumer health, with many advertisements for slimming products often misleading consumers about brand effectiveness and failing to warn of potential side effects During the last two years of the forecast period, the DAV may require retailers of such products to be certified pharmacists Drugstores will remain the main distribution channel of slimming products over the forecast period

3.1.2 Market situation

As a result of rising living standards and the increasingly hectic pace of modern life, a growing number of Vietnamese consumers have an unhealthy diet comprising fast and oily foods and soft drinks According to the latest statistics of Vietnam Nutrition Institute, 17%

of Vietnamese consumers aged between 25 and 64 are officially obese The research also shows that obesity increases with age, with two thirds of obese people in Vietnam being 45

or older And, the problem is especially serious in urban areas, where the number of overweight people is up to three times as high as that in rural areas Among that, women

with higher income and always feel under pressure to have a curvy and slim shaped body is creating a big demand on slimming products

With the demand being fuelled by rising obesity levels and increasing consumer disposable incomes, slimming products has been growing rapidly in recent years According to the research of Euromonitor International1, weight loss supplements led growth during 2009, with retail value sales rising by 11% to reach VND142 billion – a significant increase upon the VND128 billion recorded in 2008

Weight Loss Supplements 82.1 92.8 103.8 115.7 127.9 142.0

-Slimming Products 220.9 246.2 272.1 299.9 328.7 361.3

Table 3.1 – Sales of Slimming Products by Subsector: Value 2004 - 2009

% current value growth 2008/09 2004-09 CAGR 2004/09 TOTAL

Table 3.2 – Sales of Slimming Products by Subsector: % Value Growth 2004 - 2009

Source: Official statistic, Trade associations, Trade press, Company research, Store check,

Trade interviews, Euromonitor International estimates

Not stopping there, demand for slimming products will increase steadily over the forecast period due to rising consumer concerns over obesity and appearance Slimming products is till in a very early stage of development in Vietnam and consequently has significant scope for future growth Rising obesity levels as a result of unhealthy diets and the increasingly stressful pace of modern life will fuel demand for slimming products over the forecast period, with constant retail value sales expected to increase at an average annual rate of 4%

Source: Official statistic, Trade associations, Trade press, Company research, Store check,

Trade interviews, Euromonitor International estimates

Table 3.3 – Forecast Sales of Slimming Products by Subsector: % Value Growth 2009 - 2014

Concern with appearance is not just an aberration of Modern Western culture Every period

of history has had its own standards of what is and is not beautiful, and every contemporary society has its own distinctive concept of the ideal physical attributes In the 19th Century being beautiful meant wearing a corset – causing breathing and digestive problems Now

we try to diet, use food supplement and exercise ourselves into the fashionable shape – often with even more serious consequences

Most women are judged on their appearance more than men, and standards of female beauty are considerably higher and more inflexible Fat-phobia and prejudice against the overweight in our culture is such that obese people (particularly women) tend to have a very poor body-image – not to mention severe anxiety and depression (studies have shown the mental well-being of obese women to be worse than that of the chronically ill or even severely disabled) These problems are not caused by obesity itself – in cultures without fat-phobia or where fat is admired, obese people show no signs of these effects – but by social pressure and the association of beauty with thinness

3.1.4 Technological

The development of technology in beauty-care area create a fierce competition The change in producing product with many kinds of format (tablets or powder, etc), many flavors and tastes, or using natural ingredients instead of medical ingredients create more choices for consumers as well as more competition in beauty-care area The development

of technology to produce fake products becomes a concern also Besides, the major technological changes in food products over the last decade is being the development of

“lite” food and drinks which have become regular items of purchase and acceptance in UK diet is another point of technology The principal areas of growth in the “lite” market have been in sugar-free drinks and low fat foods Whilst market growth has been stimulated by increased consumer awareness of diet and nutrition, consumers are being influenced by the image message associated with such products rather than a strict health message

3.2 THE CORPORATION

Because VBI runs its operation by importing food supplement products from oversea and distribute via pharmacist channel Therefore, VBI does not invest much on machine and materials, except on the package in order to attract the consumer’s attention

On the other hand, VBI is a totally new company in providing food supplement products Therefore, the company needs to focus to develop and strengthen some key points to winits target audience

In terms of personnel, VBI recruits a team of managers and directors with experience and having in-depth knowledge of beauty-care industry which used to be at high-level management position of sales and marketing department of biotech companies so that the company can take advantage of experienced marketing plan for a success launching In the other side, the company can take the advantage of the good relationship with pharmacies system which will be the major distribution channel from the experienced marketing team Besides, because of the trend that the consumer now more believes in the recommendation

of professional consultants, VBI recruits an excellent and well-trained professional consultants to work as functional sales representative team to implement the professional seminars/ speeches and provide the fitness advices to the consumers

Clearly understand what the company has to use and to do for a success launching of the first product, VBI prepares itself a suitable budget for necessary steps of communication plan that will be presented in next chapter

understand the customer

According to Euromonitor, nowadays, as income increases, the spending on health goods and medical services experienced the highest growth rate in Vietnam, increasing by 348.5% between 1995 and 2007 And when income increases, demand for luxury goods increases as well There has been a small group of Vietnamese consumers spending large sums for luxury goods Although spending for luxury goods accounts for a small proportion

of the country’s expenditure, it has increased significantly Although only a small part of the Vietnamese population has started to spend more money for luxury goods, their spending power is estimated to be very high This number could be a good signal for the beauty-care market

Food and non-alcoholic beverages 187,266.0 241,675.3 272,706.8 294,406.9 375,565.3

Source: National statistical offices, OECD, Eurostat, Euromonitor International

Note: Constant value at 2007 prices

Table 3.4 – Consumer Expenditure by Product Type – 1995/2000/2005/2010/2015

3.4 THE COMPETITORS

The pressure of competitors comes from many sides as presented in figure 3.2 First of all,

in the local market, in line with the increasing demand on slimming food supplement product, many companies with well-performance in last period of time become direct competitors of VBI In addition, the brand of the previous products which the consumers has to use becomes a pressure for VBI first product’s launching The needed analysis information on these competitors will be presented in the following chapter

As presented in figure 3.1, among the brands which well-known in the market, the brands

of Reductil, Hydrotrim, Mega T, Vien giam can BV achieved a very high rate of awareness amongst the target audience, while Slimcare and Hidrolite just achieved a little bit higher rate compared with the remaining brands

Figure 3.1 – Brand awareness – Exhibit B1 page 58

Besides, with the thinking of many Vietnamese consumers that they prefer higher priced foreign brands over cheaper domestic brands due to the fact that they perceive them as being of higher quality Therefore, some international brands dominate slimming products sales in Vietnam, especially within the higher priced weight loss supplements area, is also

a kind of VBI’s competitors In addition to traditional distribution channels such as drugstores, grocery stores, and supermarkets, imported slimming products are available via

a network of direct sellers The widespread availability of fake products based on improving technology and other replacement of “lite” food for dietary meals is also a kind

Widespread availability

of fake products

VBI

In terms of distribution channel, VBI has good relationship with system of local pharmacies over the country

3.5.2 Weaknesses

Because Slim Slim is the first anti-obesity product the company launch, therefore, the company needs to spend a high costs for launching and switching current consumers from a competing products to VBI

3.5.3 Opportunities

As discussed about the market trend above, when participating within a growth industry by the rising prevalence of obesity, which now considered a serious – even life-threatening – disorder, demand for slimming products will increase steadily over the forecast period due

to rising consumer concerns over obesity and appearance With the development of economic, the number of higher-income-consumers increases day after day, and they are willing to pay for a new product Further more, the consumer perception relying on anti-obesity products is increasing, with corresponding gains to the pharmaceutical industry, is also open the opportunity for the company

3.5.4 Threats

Potential threats to forecast period growth within slimming products include tighter regulation and the widespread availability of fake products In response to these threats,

imported brands will be more closely analyzed by the authorities whilst only certified retailers may be allowed to sell such products The fact that slimming products are very easy to copy means that there are a large number of fake brands in this area in Vietnam Besides, international brands dominate slimming products sales in Vietnam, especially within the higher priced weight loss supplements area Many Vietnamese consumers prefer higher priced foreign brands over cheaper domestic brands due to the fact that they perceive them as being of higher quality, is also one of the threat for the company

Management Experience and having

in-depth knowledge of the industry

Personnel Well trained staff,

Functional/ Professional sales representatives

R&D Comprehensive consumer

insight Distribution Good relationship with system

of local pharmacies over the country

first product and switching current consumers from a competing company to VBI