REPORT

PRACTICE MARKETING APPROACH to LAUNCH PRODUCT into VIETNAM

Table of Contents

INTRODUCTION
Milky Products Private Limited (MPPL) Company manufactures sweetened condensed full-cream milk to satisfy the wants and needs of customers. Besides the main product condensed milk, our company also handles lines of other products such as rice, sugar, flour, canned food, etc. MPPL Company wants to become the best supplier of condensed milk in Malaysia and to spread our market into other countries all over the world. We undertake to provide the high quality milk to customers, to be fair in competition and to operate legally. Our goals are holding fast the position of the finest brand by Singaporean household and other groups of customer; maintaining the current customers and attract new customers; creating new brands to diversify the product line; and expanding the market into other countries in the world. MPPL has gone on the way which it chose, and after doing a research about the market in Asian, our company has found out that Vietnam is a fast developing country with the potential customers about eight-six millions people. The Vietnamese market is now matured and in line with the company diversification plan and objectives, so the management has decided to introduce the new product Filled milk, Fresmilk and the secondary brands Dresmilk and CreamyMilk into the Vietnamese markets. I am the new Marketing Manager for Milky Products Private Limited (MPPL) in Vietnam. Researching Vietnamese market to find out the solutions for our company to penetrate Vietnam is the requirement of my job. After a period of time 7 weeks to research Vietnamese market, this is my report to recommend an overall best practice of marketing approach to successfully launch MPPL new product and the product line into Vietnam through Marketing Mix with 4Ps and also the extended marketing mix with additional elements. Besides that, this report also analyzes the products and services market for different market customers and organizations as well as the differences between Vietnamese marketing and International marketing in order to have the deep understanding about the potential market and the promise land of our company.

CONTENT A. Task 1:
The Ansoffs growth matrix as follow gives our company the foundation of our situations. Product Existing Market Existing New Market Penetration Market Development Our company has chosen the existing product line that consists of Fresmilk, Dresmilk and Creamymilk, and the new product called Filled milk to launch into Vietnamese market a new market. We now face to two situations namely Market Development and Diversification that affect the marketing mix of our company. Marketing mix consists of four main elements Product, Place, Price, and Promotion. They influence one another in the process of launching MPPLs products into Vietnam. In this part of the report, every information and analysis is quite general. It is more specific with detailed application in part 4a Task 2. 3a. The ways that products should be chosen and developed to meet Vietnamese customers and MPPL organizational needs: With one company that wants to penetrate a new market, the process of choosing which products will be suitable and fit for the purposes of this markets customers is very important. The question which we concerned is How to develop our products to meet Vietnamese customers and our companys needs? To answer this question, we have to take into account the ways we classify our products, brands, the way to package, and the quality of each kind of products. First, the necessary activity to do is to define and classify our products with an overall view. The nature of our products is sweetened condensed milk. According to the New Product Development Diversification

way to classify called product based classification, our products are non durable products which are purchased and consumed frequently. Consumers buy condensed milk in many purposes such as mixing it with Milo, coffee or even using it with bread, etc. According to the used product way with the B2C (Business to Consumer) market, our products are consumer goods. It is used to distinguish goods that are sold directly to the person who will ultimately use them from goods that are sold to people who will use them to make other products. Milky products are the convenience good that is one of four kinds in consumer goods. Convenience goods are widely distributed and relatively inexpensive goods, which are purchased frequently and with minimum of effort, such as gasoline (petrol), newspaper, most grocery items and the one like our products. Second, for marketing purposes, brand awareness is extremely important in the sector consumer goods. Brand is a name, term, sign, symbol, or design, or a combination of those, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competitor. With MPPLs products, consumers in Vietnam who seem like import products than domestic products will be attracted with the brands which come from Malaysia. Therefore, the products will be outlasted. In addition, MPPL Company wants to create image in Vietnamese customers mind at the first time penetrate to the market, so building brand is the activity that is need to be focused. Third, besides branding, the shape, the design, labeling of MPPLs milky products are also very important which called in short as packaging. There are five functions of packaging. Number one is Protection of contents. Our company does not have a factory in Vietnam in short term, so the way we protect our milky product is very important because it will be transported from Malaysia to Vietnam with a long distance. The second function is Distribution that helps to transfer our products to customers. The third is Selling because the design and labeling serve promotional objectives. The design and label is significant elements that the company has to focus to attract new customers. Imagine that a customer or a consumer goes to a supermarket where displayed our Fresmilk, the factor that attract this customer is the package, the color, the shape of our milky product. It can become a quite difficult exercise for us to find the answer of how to packaging the products to

achieve our objectives in Vietnam market because this is the new market with us. The fourth function of packaging is User Conveniences that focus on the way to make customer feel comfortable such as aerosol cams and handy packs which are the ways to storage and carry. The final function is to conform to Government regulations especially on hygiene or content. Our company has to follow the regulations of Vietnamese government in this category. In addition, the way we package our products should concern about the culture of Vietnamese to make it suitable for our new customers. Inside the package, the content attains the most concern of customers. Quality plays an important role with product because when people pay money for a product, they do not buy the product; they buy what that product does for them. I agree with the statement that When people buy drills, they want holes. When Vietnamese customers pay money for our products, they buy health and delicious taste. It means that they want to use the products that could bring to them satisfaction and maintain or improve their good health. Our company understands the needs and demands of customers and Filled milk is the result of this. The regulations of five Ministries in Vietnam about the hygiene issue are quite strict after WHO warned countries members about the eruption of cholera in September last year. If we introduce the good quality milky products into Vietnamese market, we will achieve good image of the products in particular and the good image of corporation in general. Good image results in the belief and loyalty of our new customers. It is the mission and goals of MPPL Company. Besides concerning about our internal factors as above, we also have to take into account the general information and knowledge about our competitors products such as Do they have the sweetened condensed milk with fat component from palm oil? or What is the competitive advantage of our company and it of our competitors? etc. There are other elements of 4Ps which will be analyzed below. 3b. The best way to organize distribution of product to provide optimum customer convenience in Vietnam for MPPL products:

The second element of marketing mix is Place and it goes with the question that we have to concern is How to transfer our products to customers? Place is also understood as distribution channel. The first thing to understand is the definition of Place. We can also call it as Distribution channel which is the process of getting products to customers. Without this channel, how product can be made available for customers at the right place, right time and right price with right product and right quantity (the Five rights of distribution.) Therefore, it is so important that any company nowadays has to take into account the way to sell their products with convenience to their customers and MPPL is not an exception, especially in the two situations which we face to. The situation called Market Development requires a considerable investment in setting up and developing new distribution networks in Vietnam, which may not only take time and money but also be risky unless the caliber of the distribution outlets can be pre-determined. The second situation which MPPL is in is Diversification; it comes parallel with the highest risk. It requires the development or acquisition of an entirely new product (Filled milk) to enter an entirely new market. Extensive market research is necessary and a large commitment of time, resources and energy to the development of strong customer and distribution relationships. Packaging also helps this process more favorable which is shown above. Between producers and customers in this process, there are few intermediaries which are the ones who buy from one post of the chain and sell to another. Two usual types of them are wholesalers and retailers. In this part, we will know in general which factors can influence the distribution channels or marketing channels of MPPL. In general, Vietnamese market with macro and micro factors can impact the Place deeply. The population of Vietnam is about 86 millions in August 2009; this is a quite big market size for MPPL when the company decides to penetrate in so the process to develop distribution channel will become quite hard, especially for a foreign company. In addition, the living standard of Vietnamese has improved days by days so the demand for the kind of products such as coffee, smoothies with sweetened condensed milk goes up. It is also the advantage for MPPL but also the challenge condition to attract and gain attention of Vietnamese customers.

The statement of World Bank 2008 Vietnam is one of the best performing economies in the world over the last decade illustrates that the living standard of Vietnamese increases. Distribution plays an important role to help this wish become success. It can become true if MPPL follows the political factor of Vietnam with the range of distribution channels. Luckily, the political environment in Vietnam is quite stable so it also becomes a good condition for MPPL Company. MPPL has to take into account the impact of competitors in Vietnam such as Vinamilk, Dutch Lady, Nestle and some other companies. They have operated in Vietnam for a long time so the distribution channels of them are developed. Company itself is also an important part of the micro factor but I want to separate it to understand more clearly. With the objectives as in the introduction about MPPL above, MPPL has to analyze which sides are the strengths, which sides are the weaknesses, which are the opportunities and which are the threats of our company. MPPL should follow SWOT model in order to achieve this analysis. First, we look at the strengths of MPPL. MPPL has about 40 years in operating therefore the company has experience in distributing, selling, promoting, marketing and other activities of the process to get products to customers. Therefore, when we penetrate Vietnam, we can confident about what we gain in Malaysia and Singapore. In addition, we can exert our experience to the environment in Vietnam with adapting for more suitable. Our product which called Fresmilk is still regarded as one of the finest brands by Singaporean households. It can become attractive information to Vietnamese customers because our product is accepted and interested in other countries in the world. Besides that product, our Filled milk is also the proud of us because it is improved step of our process in producing to help customer feel secure. The reason for this is Filled milk with the fat component is palm oil instead of butterfat. Sweetened condensed milk with palm oil does not have cholesterol which is suitable for the old people and the customers who want to keep fit. This is special point of our product Filled milk.

Second, besides strengths, MPPL also has weaknesses. The weakness which we can see clearly is the cost which we have to suffer from launching our products into Vietnam. This is the first time MPPL penetrate Vietnamese market so the investment for researching the market with new customers is quite high. Cost also includes transporting cost and development cost. In addition, although MPPL has experience in operating in Malaysia and Singapore, the company still has to find the way to promote more. This aspect is analyzed more in 3d. Third, with the information about Vietnamese market in particular and Vietnam as a whole in general, we can see that launching products to Vietnam is the big opportunity of our company. In addition, the main competitors of MPPL are Vinamilk, Dutch Lady and Nestle. Sweetened condensed milk is not main product of these companies. Therefore MPPL can step up the way to promote products. After economic crisis in the beginning of 2009, the economic environment of the world has positive change-steps which are the good news for every company. Final, MPPL has to estimate the strategies of competitors while consider the political factor, regulations and the environment in Vietnam. The changes in economy in 6 months at the end of 2009 is positive, however, MPPL also has to have handle risk system to adapt with the change of the world economy. The characteristics of products can also impact to the distribution channels because the nature of MPPLs products is consumer products. It means that the company tries to find out the way to get the products to all its customers. One more factors which can influence the distribution channels is Buying Behaviour. With the situation of MPPL, the company focuses more on individual customers rather than organizational customers. Therefore, understanding the consumers habit and buying behavior of customers is very important. Vietnamese customer seems like go to supermarket to buy goods instead of going to normal market. The reasons for this fact are sale-off programs in supermarket is much more than

market; the issue of hygiene is also a reason and one another is the hot weather, especially in Ho Chi Minh city. The analysis above can be applied for MPPL in the two other elements of marketing mix such as Price or Promotion. I have analyzed the factors which can influence the distribution channels. Now I will go more detail about the level of Place. With two situations of buying behavior Consumer and Organization, there are 4 channel structures. The first one called level 0. Manufacturer Consumer The goods are got directly to consumers from manufacturers. This structure is not suitable for MPPL case because if one manufacturer wants to use this level model, it will have to build showroom or sale at factory. MPPL does not have factory at Vietnam so this level is not accepted. The second level or level 1 is that there is an intermediary between manufacturer and consumer. It is retailer which has representation is supermarket. Manufacturer retailer in Vietnam. The third level or level 2 is Manufacturer Wholesaler Retailer Consumer This level is long supply with requirement of force, money and time. If MPPL want to choose this level of distribution, it will have to choose the suitable and reasonable wholesalers and retailers to transfer MPPLs products to Vietnamese customers. The final level or level 3 is Manufacturer Consumer This level often is exerted to export products. Agent is the representative office of the manufacturer in new market, in case of MPPL, new market is Vietnam. This agent has Agent Wholesaler Retailer Retailer Consumer This level is still not suitable for MPPL because MPPL does not have many contacts of

some advantages. It has knowledge about the local market environment and the buying behavior of the customers in Vietnam. In addition, it has contacts of wholesalers, retailers and even consumers in Vietnam which is very good for MPPL and MPPL can safe time in the process of delivering products. It also has the experience in selling, dealing and it is likely a consultant of MPPL in Vietnam. On the other hand, agent also has some disadvantages. If MPPL has an agent in Vietnam, the company will rely on the agent and the risk is based on the agents ability. MPPL also has to take care of the commitment in long term or short term of the agent. Obviously, agent comes parallel with cost factor. However, after all, we can realize that the intermediaries are very important to MPPL in the case of launching products into Vietnam. 3c. The way to set the price(s) of MPPL products in the light of the organizations objectives and market conditions: The third main and important element of marketing mix is Price. In Vietnam, there is a statement which foreigners consider it as the nature of Vietnamese How much is it? Whenever a person hears about one product which one friend bought, they always ask this question. It is a funny story but there is one truth that customers concern much to the price. Thus, how important is the price? With the changes of the local market and even the global market, every company faces dynamic pricing challenges. The price is set to meet the purpose of company and meet the ability of customers. This is the requirement of setting price of any company in general and MPPL in particular. There are many factors which can affect the price of MPPLs products. The factors consist of both internal factors and external factors. First, I introduce the remarkable internal factors. They are MPPLs objectives, the quality of product and the cost of process launching products into Vietnam. This is the first time MPPL decides to penetrate Vietnam so one of the objectives is to create image in Vietnamese customers. Price goes parallel with Quality of the products of MPPL are two significant factor to

create image. Besides that, the cost for launching products into Vietnam consists of investment to research new market or cost for agent, cost for transporting products, cost for marketing products, and cost for promotion. These costs will affect the price of MPPLs products. We can reference the table below to know how to set price DESIRED PROFIT plus: COSTS Raw materials Machinery Wearing out Production Administration Selling Distribution (Figure 10.1 Cost-price model) The external factors in my opinion consist of the macro environment, resellers and competitors. First, in macro environment, the political factor impacts the price of MPPLs products by tax. For the tax information, the import tax rates on condensed milk and cream (with or without sugar or other sweeteners) is 3 percent, canned condensed milk and cream under the same heading with the weight of 20 kilograms onward has the import tax rate of 5 percent since September 28th 2009. With the rate of tax above, the price of our products will not increase much. The government which protects Vinamilk one big competitor of MPPL in sweetened condensed milk aspect, may control the price of MPPLs milky products. Furthermore, economic factor with the crisis in 2009 and technological factor with the changes and improvement can also impact the price of milky products of MPPL. MPPL Company has to anticipate the reaction to price of resellers such as wholesalers or retailers. The activity help to ensure that when the products is gotten to Equals SELLING PRICE

customers, the price is not too high which customers can not be affordable or do not want to buy. MPPL can investigate and research the price of competitors to reference and decide which price is suitable for our products. The pricing strategy is suitable with MPPL is market penetration pricing. It will set low price to penetrate Vietnamese market and convert as many buyers onto the new product and grab a large market share. This should be a short-term strategy because in this strategy, the price for promotion is quite high. 3d. The promotional activities which are chosen as priorities to achieve MPPL aims for the targeted market: A 3e. Analyze the marketing mix (all 4Ps) and the additional elements of the extended marketing mix, and the effectiveness which it can be applied to MPPL: All the elements of marketing mix and the extended marketing mix require our care about the cost factor.

B. Task 2:
4a. Recommend marketing mixes for two different segments in consumer markets in Vietnam: As I informed above, in this part, I will introduce and recommend marketing mix with 4 main elements in more detail with two particular segments. With the type of sweetened condensed milk, I recommend that MPPL should segment the market into two segments ordinary consumers (first segment) and consumers who want to keep fit and meet problem with cholesterol (second segment). I segmented the market based on Behavioral Segmentation Variables. With this way to divide the consumers, the products also be divided with two correlative group. We

introduce Fresmilk, Dresmilk and Creamy milk to ordinary consumers and introduce Filled milk to the second segment of consumers. The table below will illustrate clearly about my analysis. To understand it more, you should go back to the 3a. Marketing mix Product First segment Ordinary Second segment - Consumers who consumer * Introduce want to keep fit and meet problem with cholesterol Fresmilk, * Introduce Filled milk * Packaging: + Labeling: In the label of this

Dresmilk and Creamy milk * Packaging: + Labeling: In the label of

Fresmilk, it should have the product, it should have the photo of statement to affirm that it is a healthy family with grandparents, one of the finest brands by parents and their children. This Singaporean households. picture will attract customers and remind them to their purpose that they The common thing of two segments: * The color of these product should be bright and may be hot color to attract customers. Place Price Promotion 4b. The different way from consumers of MPPL in marketing products and services to organizations: 4c. The differences between Vietnamese marketing and International marketing and my recommendations for MPPL: are seeking the healthy sweetened condensed milk.

CONCLUSION
A. Summary and Evaluation:

REFERENCE
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2. Internet Source: * (2009) Vietnamese News [online]. [cited 30th December 2009]. http://www.vnnewstime.com/tin-doi-song/vietnam%E2%80%99s-population-hit-858million * (2009) VTC News [online]. [cited 30th December 2009]. http://www.vtc.vn/1-220026/kinh-doanh/nguoi-tieu-dung-den-sieu-thi-ngay-cangnhieu.htm * Business Dictionary (2009). Definition of convenience goods [online]. [cited 29th December 2009]. < http://www.businessdictionary.com/definition/convenience-goods.html> * Tay Son Le (2009) Dat Mui Weekend [online]. [cited 30th December 2009]. http://www.baoanhdatmui.vn/vcms/html/news_detail.php?nid=10437 *