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

Overview of the fast food industry and Lotteria restaurant chains...7 a.. Price strategy for new product of Lotteria - Cheese sauce chicken Facebook Lotteria...17 Figure 10... Our resear

I ABSTRACT 1

II INTRODUCTION 2

III BACKGROUND 4

1 Marketing in general 4

2 Marketing strategy and marketing mix 4

IV TECHNICAL SECTIONS 7

1 Overview of the fast food industry and Lotteria restaurant chains 7

a Overview of the fast food industry in Vietnam 7

b Lotteria 8

2 Makerting mix 4Ps strategy of Lotteria 11

a Product 11

b Price 14

c Place 17

d Promotion 20

3 Lotteria – success by applying the marketing mix 4Ps 24

V CONCLUSION 24

VI REFERENCES 26

Figure Figure 1.The Four Ps of the Marketing Mix (Kotler and Arsmtrong, 2014, p.76) 5

Figure 2 Menu of Lotteria Vietnam (Lotteria.vn) 9

Figure 3 Logo of Lotteria 11

Figure 4 Packaging of Lotteria products (Foody.vn) 12

Figure 5 Brand Development Strategies (The Marketing Study Guide) 13

Figure 6 Ice-cream - The lowest price product 15

Figure 7 The highest price product 15

Figure 8 Lotteria happy lunch poster (Lotteria.vn) 17

Figure 9 Price strategy for new product of Lotteria - Cheese sauce chicken (Facebook Lotteria) 17

Figure 10 Fastfood total demand and market share 2010-2014 (Vinaresearch) 24

I ABSTRACT

II The marketing mix is a foundation model in marketing, it has become the dominantframework for marketing management decisions of any enterprises Our research paperconcentrate on how Lotteria has applied the concept of marketing mix 4Ps from 2004 tonow, and the role of this strategy in the achievement of business in Vietnam fast foodmarket Compared to previous works, our thesis is mainly based on the business practices,rather than the theoretical analysis However, we still use some fundamental theories asthe basis for our research The literature is collected from varieties of economics onlineweb pages concerning the contents of the marketing mix 4Ps: product, price, place,promotion and the secondary data of this study are mainly aggregated from onlinenewspaper articles, as well as the website of Lotteria The combinations of practicalinformation and theoretical contents demonstrated that thanks to putting the marketingmix 4Ps into use appropriately, Lotteria has acquired much success in Vietnam.Nowadays, with an international stature, Lotteria is leading the fast-food industry inVietnam with over 210 restaurants in approximately 30 cities/provinces throughout thecountry and these numbers are increasing incessantly Besides, Lotteria has covered theentire market by diversifying its products, including chicken, burger, drink, rice, anddessert In addition, the prices of Lotteria products are set at suitable levels, helping thecompany improve its competitiveness in the context of Vietnamese consumers are alwaysprice sensitive Moreover, the promotion strategy of Lotteria is also outstanding because ithas taken advantage of the boom of Korea culture in Vietnam

III

IV INTRODUCTION

V The franchising model is popular and well-suited to a developing economy like Vietnam.The culture of entrepreneurship is ideally suited to franchising as it provides investorswith a relatively rapid avenue of entering business with controlled levels of investmentand at a reduced risk In 2016, franchise deals rose 15 to 20 percent compared to 2015 Atpresent, most franchised businesses in Vietnam are focused on fast food and retail Manyfactors lead to the success of franchising in Vietnam, prominent among them ismarketing

VI Marketing is one of the most long-life and important parts of business world A proper

marketing strategy holds a crucial position in the success of any companies Marketingmeans the identification of what people and society need If a product is sold but not meetdemand of customer, it will not have profit Within many marketing strategies for thecompanies to choose, marketing mix 4Ps is a well-known marketing strategy that isapplied widely by many firms

Since Lotteria penetrated Vietnam, it has gain many significant achievements The aim ofthis research is to present the information and knowledge, which our group has obtainedand conducted about the marketing mix 4Ps of Lotteria and also, its effects to the success

of company The main research question is: “How has Lotteria applied the marketing mix4Ps?”

VIII In order to support and supplement the answer for the main research question, the

research is divided 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

IX The research will concentrate on analysing 4Ps: product, price, place, promotion and the

business results: marketshare, revenue, earning before income taxes, compare Lotteriawith their competitor especially KFC and so on

X Because of the purpose of this study and our abilities, we choose to use qualitiative andquantitative research method, combining with descriptive and explanatory In addition,the secondary database is used and taken from reliable sources such as website ofLotteria, marketer Vietnam and other online newspapers

These obstacles are mainly caused by the reason that the research is written in English, wehave limited budget as well time and knowledge Hence, it is not a simple task for us tomanage the research strategies in the most efficient way

XII

XIII BACKGROUND

1 Marketing in general

XIV In the modern life, marketing plays an integral part in the development of organization

More than just selling and advertising, which people usually think of, marketing of todaymust be understood in the new sense of satisfying customer needs (Kotler and Armstrong,2014)

XV Marketing is defined by many ways According to the social definition, marketing is

societal process by which individuals or groups obtain what they need and want throughcreating, offering, exchanging products and services of value freely with others However,there are many other definitions of marketing To get into marketing, it is helpful tounderstand what exactly marketing is So here are some experts’ definitions ofmarketing:

 “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

XVI 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 coversthe company’s value proposition, main marketing messages, information about the targetcustomer, and other factors

XVII Marketing mix is a marketing tools that being used to implement marketing strategy of a

company It includes which a company can do to influence demand for its product It isalso a useful tool to help marketing planning and execution

XVIII Marketing strategy and marketing mix are closely related elements of a complete

marketing plan While marketing strategy is concerned with setting the direction of acompany or product line, the marketing mix is considered in nature and how to carry outthe overall marketing strategy

XIX An effective marketing strategy have the 4Ps of the marketing mix It is composed of four

variables referred to as the 4Ps of Marketing: product, price, place, and promotion(Rafiq and Ahmed, 1995)

XX

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

XXII Product

XXIII A product is goods or service that a business owner brings out for sale to his target

market It means developing a product, including the design, quality, packaging, features,after-sales service, and customer service should be considered

XXIV Price

XXV The price is the amount of money that customers have to pay to purchase products or

avail of services There are several factors that you have to consider when it comes to

price These include discounting, price setting, credit collection, and cash and creditpurchases.

XXVI Place

XXVII This regards to location, distribution, and ways of delivering the product to the customer

The place may include the location of your business, distributors, stores, possible use ofthe Internet, and transports

XXVIII Promotion

XXIX Promotion is all about the act of communicating the values and benefits of your products

to your customers It involves the use of different methods, such as direct marketing, salespromotion, advertising, and personal selling to persuade customers to your business

XXX.

XXXI TECHNICAL SECTIONS

1 Overview of the fast food industry and Lotteria restaurant chains

a Overview of the fast food industry in Vietnam

XXXII 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 inpackages for take-away As a term, “fast food” appeared for the first time in Merriam–Webster dictionary in 1951 but its roots are much, much older

XXXIII The fast-food industry is considered as a nascent industry in Vietnam in the 1990s Today,

the industry is beginning to thrive in Vietnam's two major cities, Hanoi and TP Ho ChiMinh At present, fast food market in Vietnam is experiencing harsh competition KFC,Lotteria, Jollibee, and Gloria Jean's Coffees continuously opened stores in beautifullocations in Ho Chi Minh City and Hanoi Ministry of Industry and Trade showed thattotal sales of Vietnam fast food sector in 2011 was estimated at VND870 billion, up 30%

y / y

8% of consumers use fast food from 1-3 times a month and about 90% of Vietnameseconsumers are not familiar with fast food This figure is too low compared to neighboringcountries such as Thailand, Malaysia, China, India has more than 70% of consumers eatfast food at least once a month Although the number is relatively modest (less than 10%

of Vietnam's population) have a habit of using fast food, but with the pace of economicdevelopment and increased demand in modern life, the demand for food Vietnam fastfood is growing For the majority of the population under 25, Vietnam is also an attractivemarket for food and drink This young generation is considered to be more accepting offoreign products and products International brands such as McDonald's, Haagen Dazs,Burger King will take care and see young people as their main customers Social mediaplays a significant role in bring fast food brands to the youth

chain, Lotte Group, South Korea), in the past two years, the fast food market has beenstalled and is being threatened by many competitors, including F & B (food & beverage)

brands, local restaurants, Japanese and Korean restaurants, coffee chains and conveniencestores (both fast and local) Its revenue is dropping because of many factors, but the mostimportant one is that the market has more competitors Many fast food chains havechanged their strategy, even ready to "wipe out" ineffective stores.

b Lotteria

XXXVI 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, itcurrently has franchises in many Asian coutries It is under the Lotte Group - one of thefive largest conglomerates in Korea For seven years, it was the No.1 "Brand Power,"which was awarded the "Korea Management Association," and was named No.1 BrandCompetitive Brand Branding value 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

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 anabundant life for their customers through creativity exploration and challengeconfrontation

XXXVIII Entering Vietnam market, as the similarity in dining culture as well as Asian taste,

Loterria Vietnam quickly attracts the taste of Vietnamese by the outstanding flavour ofmodern Korean fast-food With the stable development and market share in Vietnam,Lotteria aims to become the 1st choice brand in the near future (Lotteria 2012)

food as their first option in their hectic daily lifestyle Realizing this rising demand, manyfast-food franchises have entered the young Vietnamese market with the hope to offerconsumers with more alternatives to their dining options They provide products forconsumers with suitable prizes and high availability The two biggest fast-food franchises

in Vietnam today are KFC and Lotteria, with the total of more than 250 stores across thecountry (Tuoi Tre News 2012) If KFC locates in its customers' minds with its signaturefried chicken, main focus of Lotteria when entering Vietnam is still hamburger, the forte

of the franchise

XL.

XLI Figure 2 Menu of Lotteria Vietnam (Lotteria.vn)

XLII

XLIII 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

- 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

make Lotteria stand-out; there is fewpromotion for this products Hence, Lotteriashould develop continual long-term

promotion for burger product category

XLVI

- Lotteria keep its high food hygiene and

safety, which create a good image in

customer’s mind as an environment-friendly

service and product

- 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

XLIX

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

L

2 Makerting mix 4Ps strategy of Lotteria

a Product

earlier than them When KFC is famous for fried chicken, Lotteria chooses Hamburger to

be the specific product to attract customers They are products that can replace with eachother so Lotteria could reduce competition from a big competitor Unlike KFC, Lotteriasupply products with many different materials such as beef, meat, fish, shrimp…Products

of Lotteria is very diversified from Hamburger to rice as per sample in Viet Nam

LII Product variety

LIII 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

LIV Quality

LV 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

LVI Brand name & Logo

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

multinational corporation in Japan and South Korea The logo ofLotteria contains three main colors (red, white and yellow), givingthe 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 twoletters in the name LOTTERIA It also makes people easy to think of Hamburger yellowcolor - typical product of Lotteria This is also the exclusive logo of this brand.

LVIII Package & Design

LIX Lotteria chains toward modern, convenient and cozy, hence they use red as the dominant

color in their restaurants Others colors like white, orange, yellow are also used to makepeople hungry and attract attention to customers Lotteria’s products are boxed byrecycled materials because their campaign is to reduce the negative influence ofdisposable packaging to the environment For delivered products, they are wrapped in twolayers 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

LX 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 of products in

consumers

LXII Products of Lotteria include in many sizes: big, medium and small therefore they are in

accordance with ration and income of everyone

LXIII Services

LXIV Lotteria has speedy service Customers don’t take a long time to get their food There is

nothing that is better than having a considerate meal for busy life now Furthermore, when

Figure 4 Packaging of Lotteria products (Foody.vn)