a study on the marketing mix strategy of lotteria in vietnam period 2004 2017

Our research paper concentrate on howLotteria has applied the concept of marketing mix 4Ps from 2004 to now, and the role of thisstrategy in the achievement of business in Vietnam fast f

I ABSTRACT

The marketing mix is a foundation model in marketing, it has become the dominant frameworkfor marketing management decisions of any enterprises Our research paper concentrate on howLotteria has applied the concept of marketing mix 4Ps from 2004 to now, and the role of thisstrategy in the achievement of business in Vietnam fast food market Compared to previousworks, our thesis is mainly based on the business practices, rather than the theoretical analysis.However, we still use some fundamental theories as the basis for our research The literature iscollected from varieties of economics online web pages concerning the contents of the marketingmix 4Ps: product, price, place, promotion and the secondary data of this study are mainlyaggregated from online newspaper articles, as well as the website of Lotteria The combinations

of practical information and theoretical contents demonstrated that thanks to putting themarketing mix 4Ps into use appropriately, Lotteria has acquired much success in Vietnam.Nowadays, with an international stature, Lotteria is leading the fast-food industry in Vietnamwith over 210 restaurants in approximately 30 cities/provinces throughout the country and thesenumbers are increasing incessantly Besides, Lotteria has covered the entire market bydiversifying its products, including chicken, burger, drink, rice, and dessert In addition, theprices of Lotteria products are set at suitable levels, helping the company improve itscompetitiveness in the context of Vietnamese consumers are always price sensitive Moreover,the promotion strategy of Lotteria is also outstanding because it has taken advantage of the boom

of Korea culture in Vietnam

II INTRODUCTION

The franchising model is popular and well-suited to a developing economy like Vietnam Theculture of entrepreneurship is ideally suited to franchising as it provides investors with arelatively rapid avenue of entering business with controlled levels of investment and at a reducedrisk In 2016, franchise deals rose 15 to 20 percent compared to 2015 At present, most franchisedbusinesses in Vietnam are focused on fast food and retail Many factors lead to the success offranchising in Vietnam, prominent among them is marketing

Marketing is one of the most long-life and important parts of business world A proper marketingstrategy holds a crucial position in the success of any companies Marketing means theidentification of what people and society need If a product is sold but not meet demand ofcustomer, it will not have profit Within many marketing strategies for the companies to choose,marketing mix 4Ps is a well-known marketing strategy that is applied widely by many firms

Of the leading food franchise brands in Vietnam, Lotteria is the most common name SinceLotteria penetrated Vietnam, it has gain many significant achievements The aim of this research

is to present the information and knowledge, which our group has obtained and conducted aboutthe marketing mix 4Ps of Lotteria and also, its effects to the success of company The mainresearch question is: “How has Lotteria applied the marketing mix 4Ps?”

In order to support and supplement the answer for the main research question, the research isdivided into three parts:

 The first one is to generalize the fast food market in Vietnam and Lotteria company

 The second one is to deeply analyse about Lotteria marketing mix strategy

 The final one is to demonstrate the success of Loteria thanks to apply 4Ps

The research will concentrate on analysing 4Ps: product, price, place, promotion and the businessresults: marketshare, revenue, earning before income taxes, compare Lotteria with their

secondary database is used and taken from reliable sources such as website of Lotteria, marketerVietnam and other online newspapers

During the process of making this research paper, we have faced several limitations Theseobstacles are mainly caused by the reason that the research is written in English, we have limitedbudget as well time and knowledge Hence, it is not a simple task for us to manage the researchstrategies in the most efficient way

III BACKGROUND

1 Marketing in general

In the modern life, marketing plays an integral part in the development of organization Morethan just selling and advertising, which people usually think of, marketing of today must beunderstood in the new sense of satisfying customer needs (Kotler and Armstrong, 2014)

Marketing is defined by many ways According to the social definition, marketing is societalprocess by which individuals or groups obtain what they need and want through creating,offering, exchanging products and services of value freely with others However, there are manyother definitions of marketing To get into marketing, it is helpful to understand what exactlymarketing is So here are some experts’ definitions of marketing:

 “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society

at large.” — American Marketing Association

 “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” — Philip Kotler

 “Marketing is any contact that your business has with anyone who isn’t a part

of your business Marketing is also the truth made fascinating Marketing is the art of getting people to change their minds Marketing is an opportunity for you to earn profits with your business, a chance to cooperate with other businesses in your community or your industry and a process of building lasting relationships.” — Jay Conrad Levinson

2 Marketing strategy and marketing mix

A marketing strategy is a plan for reaching people and turning them into customers of the product

or service that company provides The marketing strategy of a company covers thecompany’s value proposition, main marketing messages, information about the target customer,and other factors

Marketing strategy and marketing mix are closely related elements of a complete marketing plan.While marketing strategy is concerned with setting the direction of a company or product line,the marketing mix is considered in nature and how to carry out the overall marketing strategy.

An effective marketing strategy have the 4Ps of the marketing mix It is composed of fourvariables referred to as the 4Ps of Marketing: product, price, place, and promotion (Rafiq andAhmed, 1995)

Figure 1.The Four Ps of the Marketing Mix (Kotler and Arsmtrong, 2014, p.76)

Product

A product is goods or service that a business owner brings out for sale to his target market Itmeans developing a product, including the design, quality, packaging, features, after-salesservice, and customer service should be considered

Price

The price is the amount of money that customers have to pay to purchase products or avail ofservices There are several factors that you have to consider when it comes to price Theseinclude discounting, price setting, credit collection, and cash and credit purchases

Place

This regards to location, distribution, and ways of delivering the product to the customer Theplace may include the location of your business, distributors, stores, possible use of the Internet,and transports

Promotion

Promotion is all about the act of communicating the values and benefits of your products to yourcustomers It involves the use of different methods, such as direct marketing, sales promotion,advertising, and personal selling to persuade customers to your business.

IV TECHNICAL SECTIONS

1 Overview of the fast food industry and Lotteria restaurant chains

a Overview of the fast food industry in Vietnam

Fast food is a name for food that is made and presented to costumers in short time It is usually

made with preheated or precooked ingredients, prepared in bulk and sold in packages for away As a term, “fast food” appeared for the first time in Merriam–Webster dictionary in 1951but its roots are much, much older

take-The fast-food industry is considered as a nascent industry in Vietnam in the 1990s Today, theindustry is beginning to thrive in Vietnam's two major cities, Hanoi and TP Ho Chi Minh Atpresent, fast food market in Vietnam is experiencing harsh competition KFC, Lotteria, Jollibee,and Gloria Jean's Coffees continuously opened stores in beautiful locations in Ho Chi MinhCity and Hanoi Ministry of Industry and Trade showed that total sales of Vietnam fast foodsector in 2011 was estimated at VND870 billion, up 30% y / y

According to research by AC Nielsen, Vietnam is a primary fast-food market when about 8% ofconsumers use fast food from 1-3 times a month and about 90% of Vietnamese consumers are notfamiliar with fast food This figure is too low compared to neighboring countries such asThailand, Malaysia, China, India has more than 70% of consumers eat fast food at least once amonth Although the number is relatively modest (less than 10% of Vietnam's population) have ahabit of using fast food, but with the pace of economic development and increased demand inmodern life, the demand for food Vietnam fast food is growing For the majority of thepopulation under 25, Vietnam is also an attractive market for food and drink This younggeneration is considered to be more accepting of foreign products and products Internationalbrands such as McDonald's, Haagen Dazs, Burger King will take care and see young people astheir main customers Social media plays a significant role in bring fast food brands to the youth.However, according to Mr.Truong Vo Ham Liem - Lotteria Marketing Director (Lotteria chain,Lotte Group, South Korea), in the past two years, the fast food market has been stalled and isbeing threatened by many competitors, including F & B (food & beverage) brands, localrestaurants, Japanese and Korean restaurants, coffee chains and convenience stores (both fast andlocal) Its revenue is dropping because of many factors, but the most important one is that the

market has more competitors Many fast food chains have changed their strategy, even ready to

"wipe out" ineffective stores

b Lotteria

Lotteria is a chain of fast-food restaurants in East Asia that grew out of its first shop

in Tokyo, Japan in September 1972 Taking its name from its parent company, Lotte, it currentlyhas franchises in many Asian coutries It is under the Lotte Group - one of the five largestconglomerates in Korea For seven years, it was the No.1 "Brand Power," which was awarded the

"Korea Management Association," and was named No.1 Brand Competitive Brand Brandingvalue brand value

 In 1972, company first appeared in Japan and is named after the parent company ( lotte)

 October 1979 The first restaurant was in Korea with the launch of kimchi sandwich

 By 1990, the 100th outlet was opened in Taehakro - Seoul

 Two years later, revenue reached 1 billion won

 By March 2003, reaching the milestone of 900 stores in Korea

 In January 2004, Lotteria officially entered Vietnam

Lotte entered Vietnam market with their forte – food and beverage In Vietnam, with KFC,

Lotteria is the main player in fast-food franchising business (Tuoi Tre 2012) Lotte’s mission is to

create high – quality services and products contributing to an abundant life for their customersthrough creativity exploration and challenge confrontation

Entering Vietnam market, as the similarity in dining culture as well as Asian taste, LoterriaVietnam quickly attracts the taste of Vietnamese by the outstanding flavour of modern Koreanfast-food With the stable development and market share in Vietnam, Lotteria aims to become the

1st choice brand in the near future (Lotteria 2012)

With strong growth of economy, consumers now prefer the convenient and affordable food astheir first option in their hectic daily lifestyle Realizing this rising demand, many fast-foodfranchises have entered the young Vietnamese market with the hope to offer consumers withmore alternatives to their dining options They provide products for consumers with suitableprizes and high availability The two biggest fast-food franchises in Vietnam today are KFC andLotteria, with the total of more than 250 stores across the country (Tuoi Tre News 2012) If KFClocates in its customers' minds with its signature fried chicken, main focus of Lotteria whenentering Vietnam is still hamburger, the forte of the franchise

Figure 2 Menu of Lotteria Vietnam (Lotteria.vn)

SWOT analysis

- Lotteria’ menu contain similar flavor to the

taste of Vietnamese customers, which cause

the easy adaptability of customers to the

food

- Stores are available in almost every center of

urban areas across the country, which helps

Lotteria maintains the top position in market

share

- Reasonable cost, cheaper than other

competitors, Lotteria attracts the variety of

target segments and owns high market share

- Lotteria keep its high food hygiene and

safety, which create a good image in

customer’s mind as an environment-friendly

service and product

- Although Lotteria is fast-food restaurant butsometime, the customer have to wait a long-time for their orders Therefore, Lotteriashould improve its service more fast andconvenient

- Although hamburgers are main menu whichmake Lotteria stand-out; there is fewpromotion for this products Hence, Lotteriashould develop continual long-term

promotion for burger product category

- Lotteria offers home delivery service, that

offer more convenient service for customers

- Young people in Vietnam are favorable of

Korean lifestyle, varied from food, personal

styles to music, which open chance for

Lotteria to adapt more Korean styles and

tastes in Vietnam with little difficulty

- The income of Vietnamese households are

increasing which maybe lead to the

increasing in buying power

- The dominance of young generation in

Vietnam opens more chance for Lotteria to

extend their market share in the future

- The lack of food hygiene and safety in

Vietnamese traditional snack food stores/

street vendors food will bring customers

more preference of fast-food product like

Lotteria

- Many competitors such as KFC, Jollie Bee,Carls Jr., etc shares the same market in theindustry Hence, Lotteria have to push theirmarketing plan in order to keep loyalcustomers and gain market share

- Fast-food is still considered as unhealthyfood in customers’ perception Therefore,Lotteria should develop more positive imageand feeling about Lotteria’s fast-food product

toward customers

2 Makerting mix 4Ps strategy of Lotteria

a Product

Lotteria has appeared in Viet Nam for many years However, KFC appeared in Viet Nam earlierthan them When KFC is famous for fried chicken, Lotteria chooses Hamburger to be the specificproduct to attract customers They are products that can replace with each other so Lotteria couldreduce competition from a big competitor Unlike KFC, Lotteria supply products with manydifferent materials such as beef, meat, fish, shrimp…Products of Lotteria is very diversified fromHamburger to rice as per sample in Viet Nam

Product variety

Products of Lotteria are classified conveniently so customers can order easily withoutconsideration There are six main product lines are: burger, chicken, combo, dessert, rice anddrink with a lot of alternatives for customers Lotteria strategy is covering all the market bydiversifying its product Even combos are also quite diverse to meet the different needs of themarket If KFC is loyal to chicken products, Lotteria makes it from a variety of ingredients such

as beef, pork, squid, shrimp, and fish Besides that, they also regularly update the hot menu list inthe community, such as cheese, fried squid, etc Through this, Lotteria tries to attract customersranging from high to low This allows Lotteria to compete directly with KFC but does notdiminish its brand in the market, as the Vietnamese market is always price sensitive

Quality

Lotteria core benefit is “Fast food - customers can be satisfied by offering them fast service foodwith tasty meal” All ingredients are fresh, chicken meat Lotteria uses is high quality Thedesserts are also made from the good ingredients consist of Ice Cream Sundaes, Ice Flakes.Customers satisfy with Lotteria’s products due to their freshness, the food is always freshly madeand there are strict health and safety regulation the ingredients

Brand name & Logo

Lotteria uses the name of its parent company that is Lotte - a big

multinational corporation in Japan and South Korea The logo of Lotteria

contains three main colors (red, white and yellow), giving the impression

of warmth, lightness and closeness in the kitchen of a family The logo is

also simple, easy to identify wherever it appears, with the letter L

capitalized and a yellow circle beside, representing the first two letters in Figure 3 Logo of Lotteria

the name LOTTERIA It also makes people easy to think of Hamburger yellow color - typicalproduct of Lotteria This is also the exclusive logo of this brand.

Package & Design

Lotteria chains toward modern, convenient and cozy, hence they use red as the dominant color intheir restaurants Others colors like white, orange, yellow are also used to make people hungryand attract attention to customers Lotteria’s products are boxed by recycled materials becausetheir campaign is to reduce the negative influence of disposable packaging to the environment.For delivered products, they are wrapped in two layers of packaging:

 The first layer is foil paper that keeps the temperature and quality better and longer

 The second layer is recycled paper and recycled PE

with the logo on it

Lotteria also minimizes the use of plastic packaging to

protect the environment Most food and beverages in the

restaurant are in glassware and reusable plastic containers

Trash can be classified by material such as paper cups,

plastic and straws, rigid packaging, napkins Ice is put into a

separate container This helps Lotteria create an

environmentally friendly image and increase the reputation

Lotteria has speedy service Customers don’t take a long time to get their food There is nothing

Figure 4 Packaging of Lotteria products (Foody.vn)

Strategies of developing brand

Figure 5 Brand Development Strategies (The Marketing Study Guide)

Lotteria is using line extension at present, where they can keep developing new products toadjoin into their categories The latest products which Lotteria supply to customers are Dak GangJeong, Tang Su Yuk and Lemonade, catching up with the trend In addition, to make products be

in accordance with Vietnamese customers, Lotteria expanded their menu with Rice and Soup thatuse with the chicken Besides, Rice burger is now adjoined into the menu together with Ricebulgogi and Rice chicken value Lastly, ingredients of Humbuger, double cheese and doublebulgogi are changed to fulfill the demand of customer