Chapter 1
Introduction
1.1. Background
Transition from a centrally-planed economy to market-economic structure, the
Vietnamese market becomes more dynamic. All business and production activities are
encouraged investment to contribute into economic growth and stabilization of the nation.
Like other light industries, investment in soft drink production locally is welcomed and
facilitated. The Vietnamese soft drink industry has rapidly developed. Together with rising the
living standard, demand for soft drinks quickly increases and high quality brands are much
preferred.
More and more foreign soft drink producers enter into the Vietnamese market. At
present, all players are facing the fierce competition between local and foreign brands. There
are 25 local producers who produce more than 30 soft drink brands including cola, orange,
soda, sarsi, lemonade lime and other flavors, and plus presence of the giants in soft drinks
market such as Pepsi, Coke and Schweppes.
Most of the producers try to exploit their distinctive competencies to gain competitive
advantages and select the appropriate competitive strategies. They face the need of
designing marketing strategies in order to attract the consumers to buy their products. In this
situation, International Beverage Company (IBC) recognizes that development of effective
marketing strategies have to be considered as a priority in order to protect its leading position
in HoChiMinh city (HCMC) soft drinks market. Through developing marketing strategies help
the company to identify its target markets, position its products in the consumer’s mind and
develop marketing mix strategies in order to achieve its marketing objectives and meet
consumer needs and wants in a better way than its competitors. Thus, the company needs to
identify its strengths and weaknesses as well as find out opportunities and threats in the
marketplace in which it operates.
In such a context, this research study deals with the development of marketing
strategies for International Beverage Company in HCMC. IBC, a joint venture between
Saigon Processing Company (S.P.Co), Macondray and Company Inc., Hong Kong, and
Pepsi Company Inc, Holland produces and distributes well-known soft drink brands such as
Pepsi Cola, 7-Up, Schweppes and Crush.
1.2. Problem Statement
As competition rises, developing effective marketing strategies for a company is the
key to success in its target market. But how can the company develop such a marketing
strategy, identify the target market or proper niches for its products, and consolidate its
position in the target market? Regarding the case of IBC, last year, IBC obtained the highest
market share of 28 percent in total national market and 42 percent of HCMC market. At
present, IBC is facing the intensified competition from Coke, the question is how can IBC
protect its position in Vietnam in general, and HCMC in particular? To answer this question,
1
IBC needs to develop the marketing mix program for each local market to defend its current
market share.
This research study examines how to develop the effective marketing strategies for
International Beverage Company in HoChiMinh city in order to increase the market share,
and protect its leading position in this soft drink market.
1.3. Objectives of the Research Study
The objectives of this research cover the following issues:
1. To analyze the business environment of the Vietnamese soft drinks market including
production and consumption of soft drinks, consumer preference, governmental policies
on the soft drink industry and competitors of IBC.
2. To analyze and assess the current situation of IBC in term of strengths and weaknesses
of its production capacity, market share, and marketing activities including products,
price, distribution and promotion.
3. To develop the marketing strategies for IBC in HCMC which consist of market
segmentation, market targeting, positioning strategy and marketing mix strategies. The
specific marketing mix strategies for products, price, distribution, and promotion will be
developed to implement the selected positioning strategy.
1.4. Scope and Limitation of the Research Study
This research study is conducted at International Beverage Company in HoChiMinh
city, Vietnam. The study has been undertaken purely from a viewpoint of marketing relating
to develop the marketing strategies for IBC in HoChiMinh city.
This research relates to the development of the marketing strategies including market
targeting, positioning strategy and marketing mix for products, price, distribution, and
promotion.
Regarding product strategy, the research does not discuss the development of new
products because IBC has not planned yet for developing new products.
In the area of distribution, the physical distribution channels such as inventory,
logistic, warehouse, and transportation are not included
Data are collected just in HoChiMinh city which is the key soft drink area in the
Vietnamese market.
2
1.5. Organization of the Research Study
This research is organized in six chapters, as follows:

Chapter 1 provides an introduction including background, problem statement, objectives,
scope and limitation of the research study.

Chapter 2 presents the literature review of the study and summarizes the work of
previous studies, it relates to the fundamental ideas on designing marketing strategies
including marketing situation analysis, marketing strategy design, marketing program
development for products, price, distribution and promotion and implementing and
managing marketing strategy.

Chapter 3 discusses research methodology including the framework of research,
information needed, methodology of data collection, sampling size and data analysis.

Chapter 4 analyzes external factors covering the soft drinks market situation and
competitors in order to find out opportunities and threats in the environment in which the
company operates.

Chapter 5 analyzes and assesses the current position of the company regarding
strengths and weaknesses of IBC about production capacity, market share and marketing
activities.

Chapter 6 presents conclusion and recommendations for developing the marketing
strategies for IBC in HCMC including market targeting, positioning strategy and develops
marketing mix strategies.
3
Chapter 2
Literature Review
This chapter discusses the general concepts which relate to the fundamental ideas on
designing marketing strategies including marketing situation analysis, marketing strategy
design, marketing program development for products, price, distribution and promotion, and
implementing and managing marketing strategy.
2.1. Concept of Marketing Strategy
Nowadays, most of companies are increasingly embracing targeting marketing.
Target marketing helps sellers or suppliers identify marketing opportunities better. The
sellers can develop the right offer for each target market. They can adjust their prices,
distribution channels, and advertising to reach the target market effectively. Therefore,
designing the marketing strategy is very important for success. The marketing strategy is
always a determinant constituent of effective competitive strategy. Cravens (1994) defined
that marketing strategy is the analysis, strategy development, and implementation activities
in selecting market target strategies for the product-markets in each business unit, setting
market objectives, and developing, implementing, and managing the marketing program
positioning strategies designed to meet the needs of the customers in each market target.
Strategic marketing is a market-driven process of strategy development, taking
account a constantly changing business environment and the need to achieve high levels of
customer satisfaction. Thus, marketing strategy builds competitive advantage by combining
the customer influencing strategies of the business into integrated array of market-focused
actions. Strategic marketing links the organization with the environment and views marketing
as a responsibility of the entire business rather than a specialized function.
Because of marketing’s boundary orientation between the organization and its
customers, channels members, and competition, it is central to the business strategy
planning process (Day, 1984). Strategic marketing provides the expertise for environmental
monitoring, for deciding what customer groups to serve, for setting product specifications
and for selecting which competitors to position against.
2.2. Link Between Marketing Strategy and Corporate Strategy
Corporate strategic planning involves the activities such as developing a clear sense
of the company’s mission, identifying the company’s strategic business units, allocating
resources to the various strategic business units, and expanding present business and
developing new ones to fill the strategic-planning gap. The corporate strategy is concerned
with what types of business the company as a whole should be in and is therefore
concerned with the scope. Marketing strategy, on the other hand is part of functional strategy
which emerges in each strategic business unit as part of corporate strategy.
According to Guiltinan and Paul (1991), corporate strategy is type of plan which
outlines how a firm should use its resources to produce and market a specific array of
products and services in order to achieve an overall corporate objectives. In essence, the
4
corporate strategy provided a general statement. It defined the products in which the
organization would be involved but left open the details of how each product or product line
would be marketed.
While the corporate strategy presents a plan developed by top management to guide
the total organization, a marketing strategy is usually developed by a middle manager to
guide a firm’s activities for a product or a line of related products. More specially, a marketing
strategy is a plan which indicates how a manager deploys marketing resources on an
individual product or product line in order to achieve a specified product objective (such as
market-share growth or maximizing cash flow).
2.3. Strategic Marketing Planning Process
Various steps in designing strategic marketing planning within an industry can be
found in literature and basically there principles are all similar. An approach for strategic
marketing process consist of marketing situation analysis, designing marketing strategy,
marketing program development, and implementing and managing marketing strategy
(Craven, 1994). It is shown in Figure 2.1. So there is a need to discuss this in more detail.
2.3.1. Marketing Situation Analysis
The marketing situation analysis is the first step in the design of new strategy or
examining an existing strategy. It comprises the external and internal environment analysis.
These analysis guide the choice of marketing strategies.
The marketing environment is a place where the company must start its search for
opportunities and possible threats. It consist of all the actors and forces that affect the
company’s ability to transact effectively with its target market. The external environment can
be divided into macroenvironment and microenvironment.

The macroenvironment includes more general forces which often do influence the long
run activities of the company. It consists of economic, socio-cultural, technological,
political, legal forces in relation to the firm's total environment. Thus, the achievements,
difficulties and challenges of Vietnamese economy and governmental policies will
influence the development of the soft drink industry.

The microenvironment includes the actors in the company’s immediate environment that
affect its ability to serve its markets especially, the company itself, suppliers, market
intermediaries, consumers, competitors and public. One key aspect of external analysis is
evaluation of competitors' strategies, strengths and weaknesses. Competitor analysis
includes defining competitive arena, analyzing the strategic group and describing and
evaluating each key competitor in terms of strengths and weaknesses. At present, the
Vietnamese soft drinks market becomes fiercely competitive. So the analysis of
production, consumption and competition are necessary to identify opportunities and
threats for the company.
5
Market Situation
Analysis
Analyzing markets
Market segmentation
Analyzing competition
Marketing information
systems and research
Implementing and
Managing
Marketing Strategy
Designing
Marketing Strategy
Designing effective
organizations
Marketing strategy
implementation
and control
Market targeting
Positioning strategy
Marketing strategies
for selected situations
Planning for new products
Marketing Program
Development
Product portfolio strategy
Pricing strategy
Distribution strategy
Promotion strategy
Figure 2.1 Strategic marketing process
Source: Cravens, 1994
6
The internal environment analysis is to help the company recognizing itself in terms of
strengths and weaknesses. The internal analysis includes the corporation's structure,
resources, production and business and marketing activities. Corporation resources are the
assets that include people, managerial skills, financial circumstances, facilities, information
technology and the skills and abilities within functional areas.
In general, the situation analysis identifies opportunities and threats in the business
environment and the organization’s strengths and weaknesses. This information helps
companies deciding how, when and where to compete in a given environment.
2.3.2. Marketing Strategy Design
Designing marketing strategy includes market segmentation and targeting, positioning
strategy and the marketing strategy choice.
Market segmentation and targeting
Market segmentation is the act of dividing a market into distinct groups of buyers who
might merit separate products and/or marketing mixes. The marketer tries different variables
to see which reveal the best segmentation opportunities. For each segment, a customersegment profile is developed. The effectiveness of segmentation analysis depends on
arriving at segments that are measurable, substantial, accessible and actionable.
After evaluating market segmentation, the companies have to target the best market
segment(s). Market targeting selects the people or organizations that company wishes to
sever in the product-market. To do this, it must first evaluate profit potential of each segment,
which is a function of segment size and growth, segment structural attractiveness, and
company objectives and resources. Then, company must decides how many segments to
cover. It can ignore segment differences (undifferentiated marketing), develop different
market offers for several segments (Differentiated marketing) or go after one or a few market
segment (concentrated marketing).
Thus, once the company’s product-markets are identified and their relative
importance to the firm determined, it selects the targeting strategy. This decision is the focal
point of marketing strategy, since targeting guides the setting of objectives and developing a
positioning strategy.
Positioning strategy
Regardless of the types of market coverage chosen, the company must develop and
communicate for every market selected. A positioning strategy that will clearly differentiate it
or its products from competitors. Positioning is the act of designing the company’s offer so
that it occupies a distinct and valued place in the target customers’ minds (Kotler, 1991).
7
Positioning strategy should take into account:



The criteria or benefits the buyer considers when purchasing a product, including the
relative importance of the criteria.
How the firm is differentiated from its competition.
The limitations of competing products regarding important buyer needs and wants.
The positioning strategy indicates how the firm or its brands would like to be
perceived in the eyes and minds of the market target customers. Therefore, decisions about
products, distribution channels, price, and promotion should create a cohesive marketing
program aimed at meeting the needs and wants of consumers in the firm’s target market.
The marketing program combines the firm’s marketing capabilities into a package of actions
intended to position the firm against its competitors.
Marketing strategy selection
Selecting a marketing strategy takes into account the factors such as the rate of
growth of product-market, the diversity in the needs and wants of buyers, the structure of
competition, the organization’s competitive advantage in which an organization encounters.
Strategy selection may involves the developing a new marketing strategy or changing an
existing strategy.
As argued by Guiltinan and Paul (1991) to choose the best marketing strategy, a
manager must consider several kinds of information, as follows (Figure 2.2).

Product objectives to help company determine the necessary basic type of strategy. For
example, if market share objectives are important, managers will employ selective
demand strategies to retain or expand market share. Alternatively, the greater the
importance of cash flow and profitability objectives, the more likely a manager will be to
select retention strategies and strategies for increasing repurchase rates. That is, these
strategies will, in general, be less cost than acquisition strategies or strategies aimed at
increasing the number of users.

Nature and size of the market opportunity should be clearly established based on the
market analysis and market measurements.

Managers must have a sense of the success requirements in terms of the kinds of
competitive advantages necessary and the level of marketing expenditures that will be
necessary to meet profitability goals.
Craven (1990) proposed the comprehensive possibility of marketing strategy
alternatives that can be used to achieve marketing objectives. They consist of (1) new
product strategy, (2) market targeting strategy, (3) market program positioning strategy, (4)
productivity improvement
strategy, (5) organizational design, (6) exploiting special
advantage, (7) acquisition/ merger/ strategic alliance and (8) exit from market.
8
Corporate Marketing
Planning
Product Objectives
Market
Analysis
Market
Measurement
Profitability and
Productivity
Analysis
Competitive
Analysis
Needs of
Target
Markets
Size of
Market
Opportunity
Marketing
Budgets
Required
Competitive
Advantages
Market
Opportunity
Market Success
Requirements
Marketing Strategy
Figure 2.2 Selecting a marketing strategy
Source: Guilinan and Paul, 1991
9
Another selections of marketing strategy include entry strategy into new market,
strategies for growth, mature and declining markets and global strategies.
Concerning with this research study, IBC needs to develop a marketing strategy to
protect its leading position in the soft drinks market in HoChiMinh city. A marketing strategy
for market leader faces three challenges: expanding the total market, protecting the market
share and expanding market share. The market leader is interested in expanding total market
because it is the main beneficiary of any increased sale. To expend the market size, the
leader will have to look for new users, new uses or more usage. To protect its existing market
share, the market leader has several defense methods: position defense, flanking defense,
preemptive defense, counteroffensive defense, mobile defense or contraction defense. The
most sophisticated leaders cover themselves by doing everything right, leaving no openings
for competitive attack. Leaders can also try to increase their market share. This makes sense
if profitability increases at higher market share levels and the company’s tactics do not invite
antitrust action.
2.3.3. Marketing Program Development
Market targeting and program positioning strategies for new and existing products
guide designing strategies for each part of the marketing mix. Developing marketing mix
strategies for products, distribution, price and promotion is to implement the positioning
strategy selected and in order to achieve a coordinated combination of its components that
will accomplish the market target objectives in a cost-effective manner.
Product strategy
Product is the first and most important element of the marketing mix. The product
strategy calls for making coordinated decisions on product mixes, product lines, brands,
packaging and labeling.

A product mix (also called product assortment) is the set of all product lines and items
that a particular seller offers for sale to buyers. (Kotler, 1991). The product mix can be
describes as having a certain range (how many different product lines the company
carries), length (total number of items in its product mix), depth (how many variants are
offered of each product in the line) and consistency (how closely related the various
product lines are in end use, production requirements, distribution channels or some
other way).

A product line is a group of products that are closely related because they perform a
similar function are sold to the same customer groups, are marketed through the same
channels or make up a particular price range. Each product line is usually managed by a
different executive. The product line manager should study the sales and profit
contributions of each product item as well as the way the items are positioned against
competitors’items. This provides information needed for making product line decision
such as line stretching, line filling, line modernization, line featuring and line pruning.

Developing brand policies for individual product items in line.

Packing and labeling decisions to protect, economy, convenience and promotion.
10
To select a product strategy, the company needs the following information on current
and anticipated performance of the products in the business unit:

Consumer evaluation of the company’s products, particularly their strengths and
weaknesses vis-à-vis competition (that is, positioning by market segment information)

“Objective” information on actual and anticipated product performance on relevant criteria
such as sales, profits and market share.
This information helps management formulate strategies for each product in the mix
or line. The product strategy includes:

Developing plans for new products, this process consists of eight stages: idea generation,
idea screening, concept development and testing, marketing strategy development,
business analysis, product development, market testing and commercialization.

Managing programs for successful products, and

Selecting strategies for problem products (e.g., to reduce cost or improve the product).
Price strategy
Price is the only element in marketing mix that produces revenue, other elements
produce cost. Pricing is a problem when a firm has to set a price for the first time. This
happens when the firm develops or acquires a new product, when it introduces its regular
product into a new distribution channel or geographical area and when it enters bids on new
contract work. Thus, before setting a price, a firm must identify the role that price will play in
the product’s overall marketing strategy. There are three generic pricing strategies that a firm
might adopt: skim pricing, penetration pricing and neutral pricing (Nagle and Holden, 1995).
Each strategy is defined by the role pricing plays in the product’s marketing strategy.
Skim pricing (or skimming) is designed to capture high margins at the expense of
high sales volume. By definition, skim price are high in relation to what most buyers are
willing to pay. Consequently, this strategy is viable only when the profit from selling to a priceinsensitive segment exceeds that from selling to the large market at a lower price.
Penetration pricing involves setting a price far enough below economic value to
attract and hold a large base of customers. It is a strategy designed to generate sale volume
even at the expense of high margins and, like skim pricing, is favored by a particular
environment. Penetration prices are not necessarily cheap, but are low relative to value.
Neutral pricing involves a strategic decision not to use price to gain market share,
while not allowing price alone to restrict. Neutral pricing minimizes the role of price as a
marketing tool in favor of other tools that management believes are more powerful or costeffective for a product’s market. A firm generally adopts a neutral pricing strategy by default,
because the conditions are not sufficient to support either a skim or penetration strategy. For
example, a marketer may be unable to adopt skim pricing because the products in a
particular market are so generally viewed as substitutable that no significant segment will pay
a premium. That same firm may be unable to adopt a penetration pricing strategy because,
11
as it is a newcomer to the market, customers would be unable to judge its quality before
purchase and would infer low quality from low price, or because competitors would respond
vigorously to any price that undercut the established price structure. Neutral pricing is
especially common in industries where customers are quite value-sensitive, precluding
skimming, but competitors are quite volume-sensitive, precluding penetration.
According to Kotler (1991), when a firm sets price strategy, it has to consider the
following factors in setting its pricing policy:

Selecting the price objectives such as survival, maximum current profit, maximum current
revenue, maximum sales growth, maximum market skimming and product-quality
leadership.

Determining demand schedule, which shows the probable quantity purchased per period
at alternative price level. Because each price that company might charge will lead to a
different level of demand and will therefore have a different impact on its marketing
objectives. The more inelastic the demand, the higher the company can set its price.

Estimating cost: demand largely set a ceiling to the price that the company can charge for
its product, and company costs set the floor. The company wants to charge a price that
covers its cost of producing, distributing, and selling the product, including a fair return for
its effort and risk. The firm therefore, estimates how its costs vary at different output
levels and with different levels of accumulated production experience.

Analyzing competitor’s prices: the firm needs to learn the price and quality of each
competitor’s offer and use them as a basis for positioning its own price.

Selecting one of the following price methods: markup price, target-return price,
perceived-value pricing, going-rate pricing and sealed-bid pricing.

Selecting the final price: the firm select its final price, expressing it in the most effective
psychological way, coordinating it with the other marketing mix elements, checking that it
conforms to company policies and making sure it will find acceptance with distributors
and dealers, company sales force, competitors, suppliers and government.
The point of views of Stanton et al. (1994), the price determination process consists
of selecting price objective, selecting method of determining the base price and designing
appropriate strategies. Figure 2.3 illustrates this process.
Distribution strategy
A distribution channel is a set of organizational units (such as manufacturers,
wholesalers, and retailers) that performs all the functions required from a seller to the final
buyer. The structure of the channel is determined by three elements: the tasks and activities
to be performed by intermediaries, the types of distributors to be used and the number of
each type of distributor.
Channel design objectives derive from strategic market and financial goals. Such
objectives as sales volume, market share, profitability and return on investment must be
supported by the distribution channel. To operate, market coverage and market control
12
objectives must be developed to guide channel design. Market coverage objectives concern
customers expectations and degree of product-availability intensity. Market control objectives
are to ensure product quality, selling effort by channel partners, demand stimulation by
promotional activities and the quality of after-sales-support offered to consumers. Decisions
regarding market control and intensity objectives may be interrelated.
Channel strategy consists of decisions regarding channel organization, definition of
channel structures, development of criteria for evaluating channel structures and the
selection of an appropriate structure
Regarding the level of dependence and commitment among channel members, there
are tree categories of channel organization for managerial purposes: Vertical Marketing
Systems, Free Flow Channels and Single Transaction Channels (Bowersox, 1987). This
classification is accepted by the most of the authors (Boone and Kurtz, 1993)
Channel structures differ based on the number and types of intermediaries involved
and their specified roles. The basic choice is between direct and indirect structures. Kotler
(1991) proposed an approach for using consumer marketing channels. It consists of four
levels of channel of different lengths: zero-level, one-level, two level and three-level channel.
Selecting Channel of Distribution, most of the authors agree that there are basically
five factors for consideration in choosing distribution channels: market products, producers,
competition, availability of intermediaries and consumers characteristics, as follows (Boone
and Kurtz 1993):

Market factors emphasize the need and geographic location of the firm’s market, for
example, whether the product is intended for the consumer or industrial market.

Product factors also play a role in determining optimal distribution channels. In general,
the more standardized the product, the longer channel. Another generalization about
distribution channels is that the lower the product’s unit values, the longer the channel.
13
SELECT PRICING OBJECTIVE
SELECT METHOD OF DETERMINING THE BASE PRICE
Cost-plus
pricing
Price base on
balance between
supply and demand
Price set in
relation only to
market price
DESIGN APPROPRIATE STRATEGIES
Discounts and allowances
Freight payments
Skimming vs. penetration
competition
One price vs. flexible price Leader pricing
Unit pricing
Psychological pricing
Resale price maintenance Price vs. nonprice
Figure 2.3 Price determination process
Source: Stanton et al., 1994
14

Producer factors concern adequate financial, managerial and marketing resources. The
producer’s need of control over product also influences channel section. For example, if
aggressive promotion is desired at the retail level, the producer often chooses the
shortest available channel.

Competitive factors are important when some firm is forced to develop unique distribution
channels because of inadequate promotion of its products by independent marketing
intermediaries. Intermediaries may not always be available, regardless of how desirable
they are from the manufacturers’ point of view.

Wholesalers and retailers independently owned businesses and both have their own
objectives to satisfy. They availability of intermediaries is therefore important to consider.
Consumer characteristic, i.e. where, when and how consumers choose to buy the goods,
is also the indispensable factor to be studied carefully.
Some authors have emphasized the consumer-oriented approach in selection of the
distribution channel (Stern and Strodivant, 1987), (Bowersox, 1987). Another approach using
the key-factor scoring method may be realistic and appropriated. This method requires that
all of those factors deemed critical by the channel selectors be considered. Then the channel
selector will either use “weighted averaging” or “preference ordering” method to rate the
channel alternatives.
Promotion strategy
Promotion mix strategy consists of four major tools: advertising, sales promotion,
personal selling and public relation in which all help the organization to communicate with its
consumers, cooperating organizations, public and the other target audiences. Promotion
strategies perform essential roles in positioning products in the eyes and minds of
consumers. Promotion informs, reminds and persuades buyers and others who influence the
purchasing process. Concerning with consumer goods, especially soft drinks, the company
needs to emphasize on designing the promotion strategy to convince the consumers to buy
its products.
According to Kotler (1991), to develop the promotion program, the companies have to
consider the following steps:



Identifying the target audience and its characteristics, including the image that audience
has of product. The audience could be potential buyers of the company’s products,
current users, deciders, or influencers. They could be individuals, groups, particular
publics or general public. The target audience will critically influence the communicator’
s decisions on what, how, when, where and whom to say it.
Defining the communication objectives, whether it is to create awareness, knowledge,
linking, preference, conviction or purchase.
Designing the message, ideally, the message should gain attention, hold interest, arouse
desire, and elicit attention (AIDA model). Formulating the message will require solving
four problems: what to say (message content), how to say it logically (message
structure), how to say it symbolically (message format) and who should say it (message
source).
15

Selecting
message.

Establishing the total promotion budget.

Deciding on the promotion mix, most of companies face the task of distributing the total
promotion budget over the four promotion tools of advertising, sales promotion, personal
selling, and public relations. Companies are always searching for ways to gain efficiency
by substituting one promotional tool for another as its economics become more
favorable. When deciding on the promotion mix, companies should consider factors
involved such as type of product market, push versus pull strategy and product-life-cycle
stage.

Monitoring to see how much of the market becomes aware of the product, tries it and is
satisfied in the process.

Managing and coordinating the marketing communication process.
the communication channels: personal
and nonpersonal to carry
the
2.3.4. Implementing and Managing Marketing Strategy
Implementing and managing marketing strategy focus on evaluating and improving
organizational effectiveness and marketing strategy implementation and control.
Designing the Marketing Organization
An effective organization design selects people and assigns them work
responsibilities in a way that is best for accomplishing the firm’s marketing strategy. Deciding
how to assemble people into organizational units and assigning responsibility to the various
elements that make up marketing strategy impact strategy performance. Organizational
structures and process must be matched to the different types of business and marketing
strategies that are developed and implemented. The marketing organization has to be
flexible to respond to changing conditions and strategy needs. Organizational design needs
to be evaluated on a regular basis to assess its adequacy and to identify necessary changes.
Implementation and Control
Marketing strategy implementation and control are vital links in a series of strategic
marketing activities. These actions emphasize the continuing process of planning,
implementing, evaluating and adjusting marketing strategies. They include three important
management activities, as follows:
16
1. Marketing plan and budget
The marketing plan typically includes a situation analysis summary; a market target
description and strategic evaluation; overall objectives and specific objectives for each
market target; a marketing program positioning strategy; specific strategies for product, price,
distribution, and promotion; marketing research; coordination with other business functions;
forecasts and budgets and contingency plans.
2. Implementation strategy
The marketing plan should specifically include action guidelines concerning the
activities to be implemented, who does what the dates and location of implementation, and
how implementation will be accomplished. Several factors contribute to implementation
effectiveness, including the implementation skills of people involved, organizational design,
incentives and the effectiveness of communication within the organization and externally.
3. Evaluation of marketing performance
Marketing strategy is a continuing process of making decisions, implementing them
and monitoring their effectiveness over time. Evaluation and control are concerned with
tracking performance and , when necessary, altering plans to keep performance on track.
Strategic evaluation also includes looking for new opportunities and potential threats in the
future. It is the connecting link in the strategic marketing planning process, therefore,
strategic evaluation assures that strategy is an ongoing activities.
In general, marketing strategy is the analysis, planning, implementation and control
process designed to satisfy customer needs and wants. It stars with an understanding of the
corporate mission and objectives and the strategy of each strategic business unit. The
strategic marketing planning process consists of market analysis, deciding marketing
strategies, developing marketing mix strategies and implementing and managing marketing
strategy. Regarding with the case of IBC, to formulate marketing strategy, it is necessary to
analyze the Vietnamese soft drinks market and assess strengths and weaknesses of the
company.
17
Chapter 3
Research Methodology
3.1 Analytical Framework
This research is presented in the form of a case study exposing the complexities of a
real business environment in the Vietnamese soft drinks market. The purpose of this
research is to develop marketing strategies for International Beverage Company in HCMC.
Thus, it is necessary to the analyze market situation and current marketing strategy of IBC in
order to formulate the marketing strategy.
A framework may enable to understand the various linkages and interactions between
the variables and to develop the marketing mix program in order to achieve the marketing
objectives of the company. Figure 3.1 illustrates this analytical framework.
The company mission sets out the reason why the company exits and what it should
be doing and the company’s marketing objectives give a guideline of what it wants to gain
and become. This will serve as a guide for the process of diagnosing both external and
internal factors affected the business performance of IBC.
The objective of external analysis is to identify opportunities and threats in the
business environment in which IBC has to face. Two interrelated environments should be
examined at this stage: the macro environment of the Vietnamese market and the micro
environment referred to the industry in which IBC operates, the Vietnamese soft drink
industry. The analysis of the macro environment focuses on examining the key achievements
and limitation of the Vietnamese economy and HCMC economy and political factors and
government policies on the soft drink industry which strongly affect the soft drink industrial
evolution. The analysis of the micro environment involves an assessment of industrial growth,
production, consumption pattern and the competition between existing soft drink
manufacturers in HCMC in which the analysis the main competitors of IBC is examined in the
terms of strengths and weaknesses about their marketing activities.
The internal analysis is devoted to pinpoint the strengths and weaknesses of IBC.
Therefore, it is necessary to assess the production and business of the company in the terms
of production capacity, market share, sales volume, finance and marketing mix activities.
After having analyzed the internal and external factors, the marketing strategy
alternatives can be developed. To select the best solution, IBC needs to evaluate the
alternatives with respect to the possibility to achieve the marketing objectives. Because of
time constraint, this research cannot cover the implementing and managing the marketing
strategies. Thus, IBC should focus on evaluating and improving organizational effectiveness
and marketing strategy implementation and control. Once the marketing strategies are
implemented, their outcomes are constantly revealed by the company performance which
should be monitored. So feedback is necessary to adjust a part or the whole strategic
management process.
Company’s
Marketing
Objectives
18
3.2. Information Needed
To examine this research, information needed consists of the following issues:

The production of carbonates in last five years, consumption pattern, consumer and
brand preference, flavor share of soft drink consumption, package types used, and
forecast consumption of carbonates in period 1996-2000 in Vietnam are also collected.

Competition in the soft drinks market, which is focused on getting information about main
competitors: Coke and Tribeco, in terms of strengths and weaknesses involved marketing
activities such as product, price, distribution and promotion.

Information about the current situation of IBC that needs to be obtained including the
company profile, marketing objectives, production capacity, market share, marketing
activities.

General information about Vietnamese economic climate, HCMC economic development,
and government policies on the soft drink industry are also collected.
3.3. Data Sources
Data and information needed for conducting the research were basically obtained
from the following main sources:

The descriptive data requirements were extracted from the publication of the government
offices such as the Vietnam General Statistic Bureau, HCMC Statistic Bureau and the
Ministry of Light Industry.

Data and information from books and journals, newspapers, articles related to the
research were collected in AIT library and the Vietnamese national library.

Data and information were also obtained from IBC annual reports, from in-depth
interviews conducted with IBC general director, and functional managers and IBC’s
distributors (wholesalers and retail outlets).

Data and information related to competitors were collected from personal interviews with
sales and marketing managers of Saigon Soft Drink Company, Ltd (Tribeco) and Coca
Cola Chuong Duong Soft Drink Company, Ltd.

In addition, data has to be collected from soft drink consumers based on conducting the
survey on attitudes of consumers toward soft drink brands.
19
3.4. Data Collection Methodology
Data and information needed for conducting the research were obtained by
quantitative research and quantitative research. The qualitative research used here by indepth interviews. The quantitative research with the structure questions were used to conduct
the survey on attitude of the consumers toward soft drinks. These questions focused on
products, prices, distribution and promotion of soft drink brands.
In-depth interview conducted with Mr. Trai, the General Director of IBC, Mr. Vinh, the
Marketing Manager, Mr. Gabby and Mr. Tien, the Sales Managers of IBC.
To obtain information from soft drink distributors, in-depth interview conducted with 18
wholesalers and 18 retail outlets of IBC. These wholesalers and retail outlets were randomly
chosen from name list provided by IBC’s Sales Department. Name list of IBC has 452
wholesalers in which it is divided into 2 sub-list: 125 wholesalers with big sales volume and
327 wholesalers with medium sales. Each sub-list, 9 wholesalers were randomly chosen. To
choose 9 respondents out of the wholesalers population of 115, the following steps were
proceeded:


Take N/n where N: 125 wholesalers with big sales, n: 9. So N/n is 14.
Generate a random number between 1 and 14. Suppose the first respondent came out to
be 12. Then the 12th respondent on the list is in the sample, and every 14th respondent
after that, including 26, 40, and so on.
The same way were used to choose 9 respondents out of the wholesalers population
of 327, and 18 respondents out of the retail outlets of 4238.
Moreover, because most of soft drink wholesalers and retail outlets in HCMC sell
multi soft drinks brands. So conducting personal interviews with IBC’s wholesalers and
outlets, it means that conducted the interview with Coke’s wholesalers and outlets and
Tribeco’s wholesalers and retail outlets.
In-depth interview also conducted with Mr. Rich, the Marketing Manager of Coca Cola
Indochina Company in HCMC, Mr. Chinh, the Sales Manager of Coca Cola Chuong Duong,
Mr. Chuong, the Director of Tribeco and Mr. Bong, the Sales and Marketing Manager of
Tribeco.
Personal interview conducted with soft drink drinkers who were randomly selected in
districts of HCMC. All respondents were soft drink drinker at age range from 10 to 50 years
old. They were asked to fill in questionnaire according to their opinion. A geographical cluster
sampling was employed for the drawing the sample.
Sampling procedure
Sampling size of 100 respondents was drawn from total population of HCMC by
visiting big-size coffee shops and restaurants which have logo of Pepsi or Coke or Tribeco in
the front of the shops. To choose randomly 100 respondents, the following steps were
preceded to draw sample:
20

The map of HCMC was divided into 672 blocks, numbered each block, and 50 blocks
were randomly chosen. Suppose the first selected block is 26, then the second block is
39 (26+672/50 = 39), and so on. If the selected block is located at areas such as rivers,
airport, farm land, it is replaced by the next upward block and so on.

To conduct personal interview, the author went the south-west corner of each block,
walked north and interviewed the respondents in the fist coffee shop or restaurant of the
selected block. For each coffee shop or restaurant in the selected block, two respondents
who sit at first table from entrant were interviewed.
21
Chapter 4
External Analysis
This chapter discusses general the Vietnamese economy, economic condition of
HCMC, production and consumption of soft drinks and competition on the Vietnamese soft
drinks market.
4.1. An Overview of the Vietnamese Economy
Ten years of the implementation of the “open door” policy (Doi Moi) has resulted in
considerable changes of the Vietnamese economy, the basic elements of a market economy
and liberalization of the production forces. These factors, together with the people’s creativity
and initiative, have helped the country to overcome some difficulties and challenges as well
as create the momentum for future development. As a result, the Vietnamese economy has
gained remarkable growth during the period of 1990-1995.
Gross Domestic Product (GDP) growth rate in 1995 reached 9.5 percent, the highest
rise among recent years. The GDP of five year plan 1991-1995 averaged 8.2 percent per
year (Figure 4.1). This is a significant fact that contributed to the improvement of the
livelihood of the Vietnamese people and economic development.
The Vietnamese government is trying to slowdown the sky-rocketing inflation rate in
period of 1990- 1992. The inflation rate was harnessed at 12.3 percent in 1995 (Figure 4.2).
This figure had a positive impact on encouraging foreign and domestic investment, as well as
consumer price.
With the rapid growth rate of the economy and a population of approximate 74 million
people, Vietnam actually is an attractive and potential market for consumer products,
especially in food and drinks. Economic growth at relatively high rates enables to push up
disposable income per capita. Increase in income should lead to increase in purchasing
power. Thus, these factors bring the opportunities to boost the soft drink industry. In fact, soft
drink manufactures have been expanding their production and business and reaping more
profit.
According to an official source from the State Planning Committee, economic growth
rate in 1996 would be targeted at 9.5-10 percent. In 1996, Vietnam continues to enter into the
phase of industrialization and modernization.
Together with economic factors, political and legal factors also have a strong impact
on the level of opportunities and threats in the business environment. Vietnam has expanded
and consolidated its diplomatic relations with many countries in the word. It was remarked by
two big events in 1995. The United States normalized diplomatic relation with Vietnam.
Vietnam officially became a member of Association of Southeast Asian Nations (ASEAN).
These events has positive impacts on Vietnam economic development, especially in
encouraging foreign investment and foreign trade.
22
20
10
8.8
9
8.6
GDP (USD billion)
16
8
8.1
14
7
12
6.0
6
10
5
8
4
6
3
4
2
2
1
0
GDP growth rate (%)
18
9.5
0
1990
1991
1992
1993
1994
1995
GDP(Billions USD)
Year
GDP rate(%)
Figure 4.1 GDP and GDP growth rate in Vietnam during 1990-1995
Source: General Statistics Bureau
70
67
Inflation rate (%)
60
50
40
30
20
14.4
17.5
10
12.3
5.2
0
1991
1992
1993
14(est)
1994
1995
1996
Year
Figure 4.2 Inflation rate in Vietnam during 1991-1995
Source: General Statistics Bureau
23
Besides, to support the economic liberalization process, the government has enacted
a series of economic laws such as the Law on Foreign Investment, the Cooperative Law, the
Business Law, etc. In 1996, Bidding Statute will be submitted to the Nation Assembly for
approval. Other economic policies aimed to encourage private sectors have been passed. All
of them have formed a favorable environment for economic development.
Like other light industries, the soft drink industry is always encouraged to invest
production locally. The government has imposed on import tax on soft drink and beer at high
rate of 80 percent to protect domestic production This is an advantage for the local soft drink
producers and joint ventures in general, and IBC in particular in expanding their production
and distribution.
In general, apart from these achievements, however, there are still many difficulties
and challenges that Vietnam has to face in coming years. Economic efficiency is still low, and
the financial and monetary systems are weak. Vietnam faces strong competition in context of
global economic development, while its level of economic and technological development is
still low because of limited financial capability, poor socio-economic infrastructure, poor legal
system and inadequate skilled labor. Particularly, transportation system is serious degraded.
It cannot meet future demands. This will influence the region pattern of soft drink distribution
and increase costs. There is also a significantly gap in economic development between
regions.
4.2. Some Economic Achievements of HCMC
Since the research study focuses on the development of marketing strategies for IBC
in HCMC, it is relevant to highlight some aspect of the economic factors here.
HCMC is the biggest and the most exciting market in Vietnam. In 1995, HCMC
economy gained the significant economic achievements, especially with the GDP over VND
38,000 billion (equivalent to USD 3.5 billion). The GDP growth rate was 15.3 percent higher
than in 1994. The GDP per capita in the city was USD 912, up from USD 830 per capita in
1994 and much higher than the current national figure of USD 220. In the period 1991-1995,
GDP per capita increased by an average of 12.6 percent. Overall the city’s economy showed
robust growth in all areas.
The population of HCMC in 1995 is about 7 million, with 84.7 percent has stable jobs.
The living standard raised by 10 percent over 1994. According to HCMC Statistics Bureau,
the living stands of HCMC residents has significantly improved in period 1991-1995, the
numbers of destitute and poor households are decreases, while the number of stable
households are rapidly increased (Table 4.1). This proves that the purchasing power of
HCMC inhabitants will increase in coming years. According to HCMC Statistic Bureau, the
spending on food and drinks of HCMC residents has slightly decreased against other needs
(Table 4.2). However, the spending for eating and drinking outside the family increased, from
25 percent in 1992 to 37 percent in 1994 and estimated 46 percent in 1995. This is an
advantage for consumer goods market, especially in food and drinks.
24
Table 4.1 The improvement in living standards of HCMC residents
Destitute
Poor
Average
Stable
Well-off
Total
1991
1992
1993
1994
10.00
36.00
38.00
13.00
3.00
7.00
25.00
36.00
27.00
5.00
4.40
19.50
34.00
33.90
8.20
2.80
12.50
32.10
44.40
8.20
100.00
100.00
100.00
100.00
Source: HCMC Statistics Bureau
Table 4.2 Spending trend of HCMC residents
Items
1992
1993
1994
Food and Drinks
Clothing
Travel
Education
Health care
Recreation
Others
69.90
6.40
4.60
1.81
6.27
2.11
8.91
68.90
6.81
6.80
2.07
7.50
2.70
5.22
67.37
6.24
7.20
3.62
8.40
3.20
3.97
100.00
100.00
100.00
Total
Source: HCMC Statistics Bureau
4.3. Vietnamese Soft Drinks Market
4.3.1. Production
Vietnamese soft drink industry has begun to develop since 1990. The most important
factors encouraging the growth of demand for soft drinks are liberalization of the economy,
improved living standard, changes in distribution pattern, improved quality of products, and
an increase in advertising expenditures on television and on billboards for creating product
awareness. There are many local brands such as Tribeco, SP.Co, Rung Huong, Chuong
Duong, Hoa Binh, Festi, Youki, Thien Nga, etc., in the market. In that time, Tribeco has
continuously obtained the highest market share in the Vietnamese soft drinks market.
Besides, the foreign brands such as Coca Cola, Pepsi and 7-Up are available in Vietnam
which imported from companies based in Singapore, Malaysia and Thailand or smuggled
through the border of Cambodia and China.
25
In more recent years, especially from 1992 up to now, the growth rate of the soft
drinks production and consumption has developed faster than before in both quantity and
quality. There are now 25 soft drink producers in Vietnam. Most of the large producers are
located in HCMC, Ha Noi and Da Nang. Besides some local brands, well-known brands such
as Pepsi, Coca Cola, 7-Up, Sprite are available in big cities as well as in remote towns in
the whole country. The production volume of soft drinks quickly increased from 110 million
litters in 1991 to 250 million litters in 1995. However, it is difficult to measure exactly the
actual production volume of soft drinks due to the following reasons:

The State is unable to control the actual production and sale volume of soft drink
producers and distributors. Because local officials and corporate executives sometime
twist data to meet bureaucratic objectives. In addition the wholesalers and retailers distort
data in order to avoid paying full tax.

It has not been possible to calculate carbonated drinks imported officially under quotas.
Even Ministry of Commerce elicited the response that there were “no recorded imports” of
soft drinks.

It is also difficult to calculate soft drinks unrecorded imported due to unreliable sources of
data on soft drinks smuggled.
According to General Statistic Bureau and combined with some forecast from the
International Marketing and Economic Services (IMES), the consumption in more recent
years is shown in Table 4.3. At present, soft drinks consumption per capita is about 3.3 litters
per year. It is lower than of other countries in the region such as consumption of soft drinks
per capita of Thailand at 17.4 litters per year, 28.2 litters in Philippines and 60 litters in
Singapore.
Table 4.3 Soft drinks production in Vietnam in period 1991-1995
Year
1991
1992
1993
1994
1995
Production volume
(million liters)
110
125
177
200
250
Population
(million)
67.7
69.2
70.8
72.6
74.5
Source: General Statistical Bureau
26
Consumption per
capita (litters)
1.62
1.81
2.50
2.75
3.35
4.3.2. Flavor Split
A few year ago, Vietnamese producers frequently specialized in particular flavors
(some even “made to demand”) and there is little evidence of pronounced “flavor
consciousness”. To this date, soft drink producers face a fight to maintain or increase their
market share throughout concentrating on brand share, flavor share and packaging types.
The Vietnamese soft drink consumption is influenced by the soft drink industry throughout
the world. The consumption of cola flavor is more popular than other flavor. In 1995, the cola
flavor has been consumed at a level of 42 percent. The second was lemonade at 20 percent,
followed by orange at 15 percent. The flavors of soft drinks in Vietnam are shown in Figure
4.3
4.3.3. Packaging Types
According to statistical data, the structure and design of the beverage packaging in
Vietnam consist of many kinds of containers that are more attractive, comfortable, and
diversified. The returnable glass bottles are popular in Vietnam. The plastic bottles accounted
for 86 percent, followed by cans at 13 percent and PET bottles at 1 percent of the total
beverage packaging (Figure 4.4). The plastic bottles and cans are assumed to increase
dramatically in the next years.
The returnable glass bottles currently dominates the local production. There is to be
adequate capacity to meet the current requirements, and tendency to increase because of
the rapid growth rate of soft drink production. Local Vietnamese producers of glass bottles
are Hai Phong Glassware Factory (supplying mainly the northern market) and Khan Hoi
Glassware Factory (supplying mainly the south, but also ship product to north Vietnam).
Before 1994, all the empty cans were imported from other countries. In mid-1994, a
joint venture was established between the Saigon Brewery and the Singapore Asian Metal
Box Ltd to produce aluminum cans with an annual capacity of 460 million cans in Thu Duc
district, HCMC. In addition, the canned production enterprise, Crown-Vinalimex Packaging
Company, a joint venture between Packing Company of Ha Noi, Vinalimex with Us-based
Crown Cork & Seal Co and Swire Pacific Co Ltd in Hong Kong will produce hundreds of
millions of cans and bottles for the domestic market in 1996. Thus, the local supplying source
will replace imported cans.
4.3.4. Forecast Production and Consumption of Soft Drinks to 2000
According to forecast of the population growth rate, the rapid growth rate of economy
and the increase in carbonates consumption the last few years, the soft drink consumption
will continue to increase dramatically, due to:



The introduction of new capacity and better equipment by existing bottlers and new entry.
The commissioning of major new capacity by joint ventures with international companies,
either currently being implemented, or in the planning stages.
Stepping up of promotion and advertising by all producers.
27
CREAM SODA
5%
SARSI
5%
OTHERS
3%
SODA
10%
COLA
42%
ORANGE
15%
LEMONADE
20%
Figure 4.3 Consumption of soft drinks in Vietnam-divided by flavors
Source: General Statistics Bureau
CANS
13%
PET BOTTLES
0%
1%
BOTTLES
86%
Figure 4.4: Structure of Soft Drinks Packaging in Vietnam
Source: General Statistics Bureau
28




Improvements in both quality of products and packaging standards, as well as presence
of new brands and containers.
A improvement in living standards and disposable incomes with accelerated economic
growth.
The anticipated sharp increase in leisure tourism and business arrivals.
The positive impacts of increase in soft drink consumption of the countries in the region
Official predictions provided by General Statistical Bureau combining estimates of
producers, the consumption of soft drink in the period of 1996-2000 will increase at annual
growth rate of 15 percent. This gives a very optimistic prospect for producers and leaving
room for expansion.
4.4. Consumption Pattern and Consumer Preference
4.4.1. Consumption Pattern
Regional consumption
There is a gap in consumption of soft drinks between rural and urban areas in
Vietnam. Most of soft drinks are consumed in urban areas. Only 20 percent are sold in rural
regions where 80 percent of the population is living. Consequently, the rural markets are
huge potential for soft drinks in the forthcoming years once the living standard in those
regions will be upgraded significantly. The consumption will undoubtedly become more
diffuse as the market develops, but it is significant that the official government estimate
suggests that more than 50 percent of the production of carbonates is accounted for by
HCMC. It is probable that HCMC accounts for between 30 and 40 percent of total
consumption, while the South general may count for as much as 59 percent of the total
national market. The markets in the north of Vietnam and in the Central provinces are said to
have only developed significantly from 1993 up to now.
In addition, the consumers in the different region usually have various perceptions of
different brands and disparity in income, thus, there is the difference in brand preference
between region. According to the Survey Research Group (SRG) in Vietnam, research is
shown that the Northern people prefer Coke rather than Pepsi and HCMC people prefer both
Pepsi and Coke. In the South, especially in Mekong Delta provinces, people like to drink
Tribeco, whereas the in Central provinces such as Da Nang, Quang Ngai, Binh Dinh people
seem to prefer Festi.
Seasonal patterns
There are distinct climatic differences between North and South Vietnam, and this
also has direct bearing on regional market patterns. The North is typified by four seasons and
consumption plummets in the winter months peaking strongly in summer.
There are less dramatic variations in the South, where it is relatively warm most of the
year, although consumption here a tendency to fall off in the rainy season, from mid-May to
September. Generally, however, there is much less seasonal variations in the South than in
29
the North, this certainly helps to maintain the overall preponderance of the South in the
Vietnam soft drinks market.
Besides, soft drinks are recorded to be consumed increasingly at home. According to
the survey of SGR in Vietnam, soft drinks consumed at home accounted for more than 40
percent, followed by coffee shops 26 percent, The rest were consumed at restaurants,
hotels, canteens, schools, transportation centers and street stalls. This proved that there is
the fast growth of the take-home market.
Moreover, the soft drink consumption is also strongly affected by age. Most of the soft
drink consumers are young, at range from 10 to 35 years old. This creates opportunities for
the producers to increase production capacity and business because Vietnam’s population is
very young. In the south, 57 percent of population is lees than 25 years old while in the north,
the percentage is 53 percent.
4.4.2. Consumer Preference
By looking at the buying decisions of the consumers, there are notable changes in the
consumer preference. Foreign soft drinks brands are preferred than local ones because of
high quality at the reasonable price. According to survey of SGR, the findings disclosed that
there are the tendency of increase in foreign soft drinks consumption and decrease in local
brands consumption.
4.5. Competition on the Vietnamese Soft Drinks Market
The Vietnamese soft drinks market has become fiercely competitive since the
entering of Pepsi, Coke. There is really the sign of “cola war” in Vietnamese soft drinks
market. By looking at advertising, promotion, merchandising activities of producers and
distributors, we see the noisy war of the beverage industry taking place at every street corner
in Vietnam. Especially from the announcement lifting the US embargo, IBC launched bottles
and cans of Pepsi cola made in Vietnam on the streets. Then, April 1994, Coke launched a
marketing blitz to recapture the market where it once reigned as a king. With billboards and
advertisements announced that Coke is “glad to come back to Vietnam” and Coke was
looking forward to supporting major cultural and sports events and community activities in
Vietnam in order to create the awareness of its products in the market.
When asked about competition in soft drink industry, Mr. Trai, the General Director of
IBC-Pepsi said “the competition between local and foreign manufactures is very intensifying
and interesting. The Vietnamese market, with 72 million people, is an untapped market for
beverage producers. Currently, average consumption of soft drink of each person is low.
Because the Vietnamese people does not yet have the habit of drinking a lot of soft drink.
So IBC needs to persuades consumers to increase their consuming habit. The problem
confronting beverage producers is not “survival” in which they have to select the appropriate
competitive strategies to develop their business. IBC is eager to participate in this interesting
competitive environment”
Mentioning the competition on the Vietnamese soft drinks market, Mr. Nguyen Van
Thach, the Chairman of the Directors Board of Coca Cola Ngoc Hoi Company Ltd said “The
30
competition between Coca Cola and Pepsi is unavoidable, yet sound competition is an
element that encourages development. With its quality, price and experience level, we
believe that Coca Cola will take its position in the Vietnamese market”(Minh Duc, 1995).
Obviously, both Coke and Pepsi launched fierce marketing campaigns in Vietnam in
an effort to win consumers allegiance to their brands. Overall, Vietnamese soft drinks market
is to be harder competition for rival participating in this arena. And the fighting for a share of
the domestic market between soft drink producers becomes harder and harder as most of
large player are very ambitious to expand their market share.
4.6. Analysis of the Main Competitors of IBC in HCMC
The analysis of the main competitors of IBC in HCMC focuses on the existing
producers who are selling soft drinks in the market and also holding a significant market
share, or having the tendency of increasing the market share in the next few years. In
addition they should hold a significant brand awareness. At present, the main competitor of
IBC is Coca Cola Indochina Pte Ltd which has two joint venture companies: Coca Cola Ngoc
Hoi soft drink Co, Ltd, in the north of Vietnam, and Chuong Duong Soft Drink Company, Ltd
in HCMC. And one local soft drink company, the Saigon Soft Drink Company Ltd, also called
Tribeco, is considered as a competitor of IBC regarding the cola flavor.
4.6.1. Coca Cola Indochina Pte Ltd
4.6.1. 1. Profile of Coca Cola Ngoc Hoi Soft Drink Company Ltd
After lifting the US embargo, Coca Cola Indochina Pte Ltd (CCI), a joint venture
between Coca Cola F & N of Singapore and Thai Pure Drink of Thailand, entered the
Vietnamese market. In April, 1994 Coca Cola Ngoc Hoi Soft Drink Co Ltd (Coca NH) the joint
venture between CCI with the Vietnam National Foodstuff Import-Export Corporation
(Vinalimex) under Ministry of Light Industry, was granted a license to produce Coca Cola,
Sprite and Fanta in Ha Tay province, 16 kilometers the south of Ha Noi, with a total
investment capital of USD 20.4 million. After 14 months of construction, Cola NH plant has
started its production. The production capacity is planned to be 25 million liters in first year,
can increase to 50 million liters in the second year and then will stabilize at 70 million liters
per year. All soft drinks produced in the factory are intended for the domestic market. Up to
now, two production lines are in operation with the capacity of 700 cans per minute.
4.6.1.2. Profile of Coca Cola Chuong Duong Soft drink Company Ltd
When the Ngoc Hoi plant was in operation, CCI continued to expand its market in the
South and the Central. In August 1995, the State Committee for Cooperation and Investment
(SCCI) approved the formation Coca Cola Chuong Duong Soft drink Company (Coca CD), a
USD 48.75 million joint venture Coca Cola Indochina Pte LTD and Chuong Duong Company.
Coca Cola Indochina Pte Ltd’s stake in the joint venture is 60 percent, to be contributed in
cash and other assets, Chuong Duong Soft Drink Company has a 40 percent stake, to be
contributed by the land-use rights to a six-hectare lot for a 30-year period. In September, the
SCCI approved CCI’s purchase of Pacific Beverage’s assets, for the purpose of using them
in the joint venture. CCI paid USD 15 million for the Pacific Beverage Company (PBC) plant.
31
The joint venture’s production facility is located in the Tan Phu hamlet of Thu Duc District,
HCMC, at a plant formerly owned by PBC. Thus, Cola CD is a merge of Chuong Duong
Company with Saigon Cola Company. This is an advantage for Cola CD at the first time
because everything necessary for production and marketing is already prepared. Coca CD
plans to produce 136 million liters per year including Coca Cola and Sprite in returnable glass
bottles and cans.
4.6.1.3. Production Capacity and Market Share of CCI in Vietnam
Production capacity
Up to now, two joint ventures of CCI are producing canned and bottled soft drinks
including Coca Cola, Sprite and have plans for bottling Fanta mid 1996. Its current production
capacity is 76 million liters per year .Table 4.4 shows the production capacity of Coca CD and
Coca NH in detail. To capture the market share in canned soft drinks in HCMC, Coca CD has
the plan for assembling one canned production line at Cola CD plant.
Table 4.4 The current production capacity of CCI
Production capacity
(million liters)
Ha Noi: Coca Cola Ngoc Hoi Company
 Bottle line
 Can line
HCMC: Coca Cola Chuong Duong Co
 Bottle line of Chuong Duong Co
 Bottle line of Saigon Cola
Total production capacity
25
20
11
20
76
Source: Report of Coca Cola Indochina Pte Ltd
Market share
Last year, CCI’s sales volume was 28 million liters, and its market share in the whole
country was 12 percent. In HCMC, its sales volume was 16,5 million liters, and CCI gained
market share of 17 percent in total HCMC soft drinks market. CCI’s production plan in 1996
will be 75 million liters and project to obtain the market share at 25 percent in the total
Vietnamese market (CCI’s report). To implement this plan, CCI has prepared to produce
Sprite and Fanta at the Coca Chuong Duong plant and the Saigon Cola plant in 1996. With
strongly financial resources, CCI will continue to expand its production capacity in Central
provinces through establishing a joint venture with Da Nang March 29 Garment Company
and waiting for approval of SCCI.
4.6.1.4. Marketing Activities of Coca CD
Product
32
CCI’s product line consists of Coca Cola, Sprite and Fanta, but at present, Fanta has
been not yet produced anything in Vietnam. The product line of Coca CD consists of Coca
Cola and Sprite. Before 1975, Coke has created its awareness in the Vietnamese
consumer’s mind and Coca Cola was considered as number one in soft drinks market at that
time. Nowadays, to capture its position in Vietnam market, CCI has applied the same formula
as in other countries: availability, affordability and acceptability.
At present, CCI’s products consists of two packaging types: can of 330 ml and
returnable glass bottles including volume of 296 ml and 200 ml. At the first time, Coca Cola
was bottled in bottle 296 ml, but because the volume of this bottle is not suitable to
Vietnamese drinking size. Then, CCI has continued to launch the bottle 200 ml.
Price
By focusing mainly on high and upper middle income class, the prices of Coca CD
products were set higher than the prices of local brands. Table 4.5 shows the prices list of
Cola CD products. The difference between wholesale price and pick-up factory price is profit
margin for its wholesalers.
Table 4.5 Price List of Coca CD products
Items
Coca Cola- Bottle 200 ml
Coca Cola- Bottle 296 ml
Coca Cola- Can 330 ml
Sprite-Bottle 200 ml
Sprite-Can
330 ml
Wholesale price
(VND)
1,250
1,650
4,200
1,250
4,200
Source: Coca CD’s report
33
Pick-up factory
price (VND)
1,200
1,550
4,000
1,200
4,000
Distribution
To increase the sales volume and obtain a higher market share, Coca CD has
established its distribution networks in HCMC and South provinces. At present, Cola CD uses
wholesalers and retail outlets of Saigon Cola and Chuong Duong company to distribute its
products. Its distribution channels consist of direct and indirect channels. Majority of its
products were distributed through indirect channel: the Coca CD plant to wholesalers to retail
outlets and finally to end users. In addition, its direct channel is used to distribute products
from its plant to retail outlets. The Coca CD has been concentrating on opening up both
direct and indirect channels through developing retail outlets and wholesalers. The Coca CD
distributes its products through 136 wholesalers and 460 retail outlets in HCMC.
The Coca CD has applied the incentive policies in delivery, payment, discount and
other incentives for its wholesalers and retail outlets to stimulate them to purchase at big
volume. the quantity discount from 1 percent to 4 percent of the purchased value is often
given to its wholesalers and retail outlets who meet the sales quota pre-set.
Advertising
At the beginning of the production, Cola CD has been launching the aggressive
advertising campaign with its slogan “Coca Cola, The Real Thing” to recall awareness of its
brands. According to a survey of the author, there were over a half of respondents who know
the slogan of Coke. The Coca CD has often used media such as television and newspapers
and supported the point of purchase materials for advertising name and logo of its products.
Coca CD also sponsors the sport activities, especially football to create the awareness of its
products.
In general, Cola CD has large investment capital and strongly financial resource. It
has used modern equipment and advanced technology in soft drink production. Its production
capacity is high. The company has experiences in the marketing activities due to CCI has indepth experience and expertise in marketing such as advertising, distribution and sales
promotion. Coca Cola is much preferred by majority of consumers whereas Sprite is less
preferred. Coca CD has created the awareness of Coca Cola in the Vietnamese market and
good reputation brand. At present, the Coca CD has constantly focused on expanding its
production, distribution channels and emphasizing on advertising in order to convince
consumers to buy its products in order to increase its market share.
4.6.2. Tribeco-Saigon Soft Drink Company Ltd
The Saigon Soft Drink company under the name Tribeco, is a state owned company
under the control of People Committee of District 3, HCMC. Tribeco plant which is located in
Hoc Mon District, near HCMC, with one canned production line and one bottled production
line has production capacity 40 million liters of canned and bottled soft drink a year. Products
of Tribeco were bottled in 200 ml returnable bottles and canned in 330 ml cans. Its brand is
available in 10 flavors in which cola (70 percent), orange (10 percent) and Strawberry (10
percent) account for the bulk of sales.
Before Pepsi and Coke were produced in the Vietnamese market, Tribeco cola was
preferred by most of the Vietnamese consumers, especially in HCMC. Tribeco has planned
34
to hold onto its market share through flexibility and an innovative marketing strategy. Tribeco
obtained 50 percent of HCMC soft drinks market, and 20 percent of total national market at
period of 1992-1993. Its target market consists of low and middle income. During the past
years, Tribeco has secured a good reputation with its target consumer.
Last year, the sales volume of Tribeco was 39 million liters, and Tribeco gained
market share of 17 percent in Vietnamese soft drinks market and 23 percent of HCMC
market. These figures proved that its market share has decreased. However, its sales
volume in 1995 was higher than in 1994 because of increase in demand for soft drinks in low
income consumers. Thus, the Vietnamese soft drinks market is still “open” for local
companies like Tribeco, who have good marketing, understanding of the local consumer
taste and a wide distribution networks.
By targeting low and middle income consumers, Tribeco offers its products at low
price. Ex factory prices are equivalent to VND 800 per unit of 200 ml bottle, and VND 3,200
per unit of 330 ml can. Wholesale prices are VND 850 per unit of 200 ml bottle, and VND
3,400 per unit of 330 ml can. Tribeco distributes its products through 300 wholesalers in
HCMC, 125 wholesalers in provinces, and 2300 retail outlets in HCMC.
Regard to advertising and sales promotion, it can be said that Tribeco lacks attention
to this activities. Last year, Tribeco made an exclusive bottling agreement with Pepsi to
produce Mirinda orange and Mountain Dew soda in order to diversify its products and
maintain existing market share.
4.7. Substitutes
It is very important to analyze substitutes impacted the development of Vietnamese
soft drinks market. Substitutes consist of mineral water, fruit juices, milk, tea and coffee.
Mineral water: in resent years, demand for mineral water has slightly increased. There
are some brands such as La Vie, 333 mineral water, Vinh Hao, Aquapure, Mountoya which
were produced by local producers and joint ventures. Currently consumption per capita is
very low by compared with other countries in the region. The scope for expansion is clearly
enormous. Because Vietnam is abundant in mineral and spring water sources, there is no
doubt that the potential for development is very promising. However, most of the Vietnamese
people less prefer to drink mineral water.
Fruit juice: the fruit juice in Vietnam is underdeveloped. Due to almost Vietnamese
consumers appear to favor either juice freshly squeezed from fruit, or carbonated beverages.
Flavored milk: demand for milk consumption has increased but low level. For
refreshment, most of Vietnamese people prefer carbonated soft drinks rather than milk.
Moreover, the price of milk is high compared carbonates.
Tea: tea is the “national drink” of Vietnam, the market is mature and relatively stable
and is unlikely to growth dramatically. Most of people like to drink tea at age over 35 years
old.
35
Coffee: coffee is much less widely drunk in Vietnam than tea. Coffee is a relatively
minority taste and consumption is concentrated mostly in the south. For refreshment, coffee
is less preferred rather than soft drinks.
From analysis of above substitutes, it can be said that threats of substitutes are low,
therefore, soft drink industry is assumed to develop in the next years.
4.8. Summary of Opportunities and Threats for IBC
Throughout analyzing external environment, the opportunities and threats in business
environment in which IBC operates are drawn out, as follows:

The Vietnamese economic growth rate in the next year will be 9.5%-10% and rapid
growth rate of HCMC economy and rising the living standard, thus purchasing power of
consumers will increase in the forthcoming years. In addition, the government has applied
the preferential policies on the soft drink industry. Thus, soft drink industry will further
develop in the next years. According to General Statistic Bureau, annually average
growth rate of the soft drink industry will be 15 percent in period of 1996-2000

There is the tendency of increasing in demand for foreign soft drinks brands
consumption and decrease in consumption of local brands. This will create opportunities
for IBC to expand its production. Moreover, the Vietnamese young generation proportion
claims big share and increases years, thus Vietnam actually becomes potential market
for developing soft drinks.

The soft drink consumption will be always big in South and fast increase in North and
Central provinces. Soft drinks are consumed increasingly at home. All these factors have
positive impact in the development of soft drink industry. However, beside the
opportunities, IBC are facing intensified competition with Coke in the Vietnamese soft
drinks market.
36
Chapter 5
Internal Analysis
This chapter analyzes IBC’s production and business, marketing activities including
products, price, distribution and promotion. In addition the attitude of soft drink consumers
toward attributes of IBC products compared the competitive brands is also discussed.
5.1. Profile of International Beverage Company
International Beverage Company is the largest soft drink company in Vietnam. IBC
was established in December 1991 based on the investment license numbered 291/GP of
the State Commission for Cooperation and Investment (SCCI) with initially legal capital USD
2,600,000 in which Vietnamese partner, Saigon General Service & Producing Company
(SP.Co) (itself the joint venture between Tribeco Soft Drink Company and Saigon Jewelry
Company) contributed USD 1,300,000 and Macondray Co Inc of Hong Kong contributed USD
1,300,000. After that, both sides agreed to increase the legal capital to USD 5.1 million.
The IBC plant is located in Tan Thoi Hiep village, HocMon district, HCMC. The
physical plant represents the most advantaged soft drink factory in Vietnam, with four
production lines capable of manufacturing 600 bottles and 300 cans per minute. The factory
can produce 60 million liters of canned and bottled soft drink a year. The transfer of
Schweppes production rights allows IBC to use Schweppes trademarks on IBC products,
including Crush orange, Schweppes soda and Schweppes sarsi. The Cadbury Schweppes
Group is considered as giant in soft drinks market in the world following Coke and Pepsi.
In March 1993, IBC signed an exclusive bottling agreement for Pepsi and 7-Up in
Vietnam once the US embargo was lifted and then SCCI approved for Pepsi Co, Holland as a
third partner of IBC. The agreement called for IBC to bottle and can 250 million liters initially
and increasing to 700 million liters at a later stage. Immediately lifting the US embargo in
February 1994, IBC began to produce Pepsi and 7-Up. Up to now, the total capital of IBC is
USD 25.5 million in which SP.Co hold 40 percent stake, Macondray Co Inc of Hong Kong
hold 30 per cent and Pepsi Co hold 30 percent.
In 1993, IBC produced and sold about 5 million liters. In 1994, demand for soft drinks
increased quickly, one-day sales volume of IBC was equal to aggregated 8-10 day sales in
1993 and sales volume soared about 40 million liters. Through the past years, IBC has
constantly expanded its production, distribution and business, and now IBC continues to
further expand its production and distribution in South, Central provinces and Ha Noi.
5.2. Mission of IBC
The mission of IBC states that IBC wants to be the best soft drink company in
Vietnam by recognizing consumer needs, trying to satisfy them and persuading consumers
choose high quality products as well as offering good services. Its marketing, management,
37
production and other strategies have to synchronized with the overall corporate strategy
(IBC’s document).
5.3. Marketing Objective of IBC
“IBC’s marketing objective is to protect its leading position in Vietnamese soft drinks
market and HCMC markets. Its products, price, distribution and promotion strategies have to
coordinate to increase sales volume. Pepsi and 7-Up with high quality at the reasonable
price will be top of mind brands” (IBC’s document)
5.4. Production and Business Results
5.4.1. Production Capacity
Last year, IBC produced over targeted production volume. Its four production lines
were run at manufacturing capacity of 32,000 cases of 24 bottles per day and 8,000 cases of
24 cans per day. Total current production capacity of IBC is 86 million liters per years and will
double in next year (Table 5.1).
Table 5.1 IBC’s total current production capacity
Production capacity
(million liters)
HCMC: IBC plant
 Bottle line No 1
 Bottle line No 2
 Bottle lime No 3
 Can line
Ha Noi: Co-pack in Stim and Lotabo
 Bottle line
Total
26
20
15
15
10
86
(Source: IBC’s report)
IBC’s production plan in 1996 is 100 million liters. To achieve this target, the
expansion of the production capacity is a realistic possibility. IBC has plans for upgrading the
capacity of canned production lines from 300 to 500 cans per minute and assembling two
new bottled production lines at IBC plant. Besides, IBC has also the plan for building
processing networks in Ha Noi, Da Nang and Can Tho as well as opening up distribution
networks in the whole country and upgrading its service styles. Its investment budget is USD
15 million in 1996. An increase in IBC plant’s production volume is to reap benefits from
economics of scale as well as from learning effects to produce soft drinks at cost efficiency.
5.4.2. Market Share and Sales Volume
38
In 1994, IBC’s the production volume was 33 million liters, and its turnover was over
VND 171 billion. Its market share in the whole country was more than 20 percent. In 1995,
due to the fact that the demand for foreign brands continued to increase, IBC doubled its
sales volume and gained a market share of 28 percent of the total Vietnamese soft drinks
market (Figure 5.1) and 42 percent of HCMC market (Figure 5.2).
Last year, IBC’s sales volume was over 71 million liters in which its soft drinks were
sold in HCMC accounted for 58 percent, in Ha Noi 18 percent, the South provinces 14
percent and Central provinces 10 percent (Figure 5.3). Obviously, its key target market is
HCMC market.
By looking at the monthly sales volume of IBC, we can see that its sales was slightly
influenced by seasonal consumption. Figure 5.4 shows the increase and decrease in sales
volume between the different seasons in the year. In July and August are in rainy season,
thus, sales volume felt down.
5.4.3. Financial Results
Strong financial resource is considered as one of the key success factors for rivals in
the soft drinks arena, provided by the success of IBC in 1994. Thanks to healthy financial
position of stockholders and profitability reaping from production and business, IBC invested
for expanding its operation in 1995 and will continue to further invest in the next years. In
1995, IBC reaped high net profit and was one of Vietnamese companies who succeeded in
their business. Some financial results is shown in Table 5.2
Table 5.2 Profit and Loss Statement of IBC in 1995
Items
Net revenue
Production cost
Gross profit
Operating expenses
Operating profit before tax
Operating profit after tax
VND
522,147,173,494
365,880,245,112
165,266,928,382
130,576,421,683
34,690,506,699
28,035,633,378
(Source: IBC’s report)
39
USD
47,467,924
32,443,658
15,024,266
11,870,584
3,153,682
2,548,694
Figure 5.1 Market Share of Soft Drink Manufacturers in Total Vietnam Market
IBC
28%
OTHER LOCAL BRANDS
43%
TRIBECO
17%
COKE
12%
(Source: General Statistics Bureau)
OTHER BRANDS
18%
IBC
42%
COKE
17%
TRIBECO
23%
Figure 5.2 Market Share of Soft Drink Manufacturers in HCMC Market
(Source: HCMC Statistics Bureau)
40
HANOI
18%
SOUTH PROVINCES
14%
HCMC
58%
CENTRAL
PROVINCES
10%
Figure 5.3 IBC’s sales volume, divided by geography.
Source: IBC’s reports
10000
9,482
9000
8,732
THOUSAND LITERS
8000
6,943
7000
6000
5,452
5000
7,549
6,432
6,129 6,122
5,566
6,538
4,641
4,370
4000
3000
2000
1000
0
1
2
3
4
5
6
7
8
9
MONTH
Figure 5.4 IBC’s monthly sales volume in 1995
Source: IBC’s reports
41
10
11
12
5.5. Analysis of IBC’s Marketing Activities
The analysis of the marketing activities of IBC focuses on four P’s: product, price,
distribution and promotion based on in-depth interviews the IBC’s Marketing and Sales
managers.
5.5.1. Product
5.5.1.1. Product Line
IBC’s product line consists of two soft drink brand groups of Pepsi Co Inc and
Cadbury Schweppes Group (CSG). The former consists of Pepsi Cola and 7-Up which have
been produced after lifting the US embargo. The later includes Schweppes soda, Schweppes
sarsi and Crush orange which have been produced since April 1993.
Pepsi
Before 1975, the Vietnamese consumer was familiar to consume Coca Cola. At that
time, Pepsi was not present in Vietnam. But only two years ago, Pepsi was recognized by
most of consumer in big cities, especially in HCMC.
According to Survey Research Group (SRG) in Vietnam, up to now, Pepsi has made
some head starts in creating awareness compared to Coke. The consumers are more
spontaneously aware of Pepsi than Coke, especially in Da Nang where Festi is the dominant
brand. Pepsi is getting more popular there. Pepsi is consumed more than Coke in the last
year both at home and outside. Both Pepsi and Coke have equal share for both “last
occasions” and “most often” consumption. While consumption of local brands such as
Tribeco, Festi, etc., has declined dramatically.
Mentioning the brand awareness, SRG found out when asked for unaided brand
awareness (i.e. a list of brands was not shown) in HCMC that Pepsi was mentioned as first
brand, followed by Coke. When asked for aid brand awareness (i.e. a list of brand was
shown), Pepsi and Coca Cola achieved almost the same level (nearly 100 percent of
respondents in sample size). From this result, it can be said that IBC has created the
awareness of Pepsi in the Vietnamese soft drinks market, especially in HCMC.
7-Up
7-Up was not produced in Vietnam before 1975. It was, however, available in the
Southern markets earlier than Pepsi by imported products. 7-Up has been produced at IBC
plant since February 1994.
Up to now, it can be said that in the lemon lime flavor market, 7-Up is mostly
preferred by most of the Vietnamese consumers. 7-Up has also a high awareness in the
market by advertising itself as Uncola. According to the survey of SRG, of soft drink
consumers, their preference of lemon lime flavor was rated 75 percent voted for 7-Up and 25
percent for Sprite.
Schweppes
42
IBC has produced Schweppes with flavors such as cola, lemonade, soda and sarsi
since April 1993. Until January 1995, Schweppes cola and lemonade was not produced at
the IBC plant. At the first time, when Schweppes was launched, it provided a range of high
quality fruit flavored carbonated drinks and focused on target consumers at 18-45 years old
with middle and high income. Its sales volume increased rapidly in 1993 and the first five
months of 1994, then decreased gradually, especially from the presence of Pepsi, Coke, 7Up and Sprite. Facing the problem of the decline in sales volume, IBC has launched
advertising campaigns to convince its target consumer to drink Schweppes.
Crush
Crush is a unique formula and blend of ingredients which include real orange juice.
Crush was the first international brand available in Vietnam in 1993. Crush is positioned as a
young, international orange brand. At present, Crush is much preferred by majority of soft
drink consumers but Crush is facing the competition from Mirinda and Fanta in which Mirinda
is produced at Tribeco plant under the exclusive bottling agreement of Pepsi and Fanta will
be produced at Cola Ngoc Hoi Soft Drink Co Ltd and Cola Chuong Duong Soft Drink Co Ltd
in mid 1996.
5.5.1.2. IBC’s Product Line Sales
To analyze the product strategy of IBC, it needs to assess the percentage of the total
sales contributed by each item. In total sales volume, Pepsi accounted for 60 percent,
followed 7-Up (29 percent), Schweppes soda (6 percent), Schweppes sarsi (2 percent) and
Crush
(3 percent). Obviously, Pepsi and 7-Up are very successful in achieving high
brand recognition in the Vietnamese market, especially in HCMC. Schweppes soda is
dominant in soda flavor market in Vietnam. While sales volume of Schweppes sarsi and
Crush have rapidly declined.
5.5.1.3. Pack Types
IBC’s products are packed in three types: returnable glass bottles (RGB), cans, and
PET bottles (polyethylene terephthalate). Pepsi and 7-Up are bottled in returnable glass
bottles with volume of 207 ml. Bottles with volume of 285 ml consist of Schweppes and
Crush. For soft drinks cans, Pepsi, 7-Up, Crush and Schweppes Soda are canned with
volume of 330 ml. Besides, Pepsi, 7-Up, and Crush are bottled PET bottles with volume of
1.5 liters.
In IBC’s sales pattern, RGB accounted for 68 percent of total sales, followed cans
(28 percent), PET bottles (4 percent). The PET bottles has consumed increasingly, especially
in consumption at home. According to the survey of IBC, last year, bottle 207 ml is suitable to
Vietnamese drinking size, while bottle 285 ml is a little big for drinking. This is a reason that
Schweppes and Crush are the slow-selling items from IBC product line.
43
5.5.2. Price
5.5.2.1. Pricing Objectives
IBC’ pricing objectives should be set up to accomplish the company’s objectives:
profit goal, return on investment, market share, stabilization, and market penetration. At
present, the first objective of the pricing activities is to increase the market share and
maximum sales growth by providing the products with high quality and at reasonable price.
So price is considered as the crucial device for penetrating and expanding market.
5.5.2.2. Pricing List
To implement the pricing objectives, the IBC’s Board of Directors decided to purse the
pricing stabilization policy for its products during period 1993-1994. Its pricing policies have
been considered as a primary device to encourage on soft drink consumption and persuade
soft drink consumers to switch to its products.
After April 1995, due to an increase in price of imported materials and import tax,
IBC’s pricing list was adjusted to ensure profit for each item (Table 5.3). By looking at IBC’
pricing list the wholesale prices of Pepsi bottles and cans are lower than Coke, the wholesale
prices of 7-Up bottles and cans are lower than Sprite. So the prices of IBC products can meet
the purchasing power of the middle and high income consumers. IBC gives its wholesalers at
margin (difference between price paid: ex-factory and price sold: wholesale price) of 4.67
percent for bottled carbonates and 5.55 percent for canned carbonates. Obviously, IBC gives
margin for wholesalers is higher than margin of Coke offering for its wholesalers (margin of 4
percent for Coca Cola and Sprite bottles and 4.76 percent for Coke and Sprite cans). In
addition IBC has applied the quantity discounts at a range from 1 to 5 percent of purchased
value for its wholesalers and retail outlets who meet the sales quota pre-set.
Table 5.3 Price list of IBC products
Items
Pepsi
7-Up
Schweppes Soda
Schweppes Sarsi
Crush Orange
wholesale price (VND)
Bottle
Can
1.050
3,600
1.050
3,600
1.050
3,600
1.050
3,600
1.050
3,600
(Source: IBC’s report)
44
Ex-factory price (VND)
Bottle
Can
1,000
3,400
1,000
3,400
1,000
3,400
1,000
3,400
1,000
3,400
5.5.2.3. Pricing Structure
The prices of IBC’s products are set up basically relying on cost-based method and
considering the prices of its competitors. IBC has not set a single price for all its products, it
set a pricing structure that covers different products reflecting variations in product costs and
other costs.
The pricing structure of IBC’s bottled and canned soft drinks is shown Table 5.4 and
Table 5.5. By looking at the pricing structure, for bottled soft drinks, Schweppes soda has the
highest net profit (106.56 VND per unit), following Schweppes sarsi (70.4 VND per unit). But
sales volume of these products was very small, so their profit contributed to the total profit of
product line was very small proportion. Pepsi and 7-Up bottles make the lower profit per unit
(48.50 VND and 43.30 VND respectively per unit), these items hold the highest percentage in
total profit over 87 percent (IBC’s report). In canned soft drinks, Pepsi and 7-Up constituted
higher profit margin per unit (256 VND and 247.65 VND respectively per unit). Schweppes
soda both bottles and cans, this item is on the leading position in Vietnamese soda flavor
market and made the highest profit margin per unit, however, because limited consumption
of soda, it accounted for 6 percent of total sales.
Table 5.4 Pricing Structure of IBC’s products-bottles
Brands
Selling price
Discount
Sales Tax
Net Price
Variable product Cost
Manufacturing Cost
Marginal Contribution
General & Administration
Selling & Delivery
Advertising & Marketing
Operating Expenses
Profit Before Tax
Tax Provision
Profit After Tax
Pepsi
1,050.00
50.00
63.00
937.00
447.00
152.90
337.10
54.10
141.80
80.57
276.47
60.63
12.13
48.50
7-Up
Schweppes
Soda
1,050.00
1,050.00
Crush
50.00
63.00
937.00
453.51
152.90
330.59
54.10
141.80
80.57
276.47
54.12
10.82
43.30
1,050.0
0
50.00
63.00
937.00
531.60
102.60
302.8
105.80
129.84
49.64
285.28
17.52
3.50
14.02
(Source: IBC’s report)
45
50.00
63.00
937.00
392.4
122.60
422.36
109.68
129.84
49.64
289.16
133.20
26.64
106.56
Schweppe
s Sarsi
1,050.00
50.00
63.00
937.00
441.12
122.60
373.28
105.80
129.84
49.64
285.28
88.00
17.60
70.4
Table 5.5 Pricing Structure of IBC’s products-cans
Brands
Selling price
Discount
Sales Tax
Net Price
Variable product Cost
Manufacturing Cost
Marginal Contribution
General & Administration
Selling & Delivery
Advertising & Marketing
Operating Expenses
Profit Before Tax
Tax Provision
Profit After Tax
Pepsi
7-Up
3,600.00
200.00
216.00
3,184.00
2,252.98
169.60
761.42
87.00
226.00
128.42
441.42
320.00
64
256
3,600.00
200.00
216.00
3,184.00
2,263.34
169.60
751.06
87.00
226.00
128.42
441.42
309.64
61.99
247.65
Schweppe
sSoda
3,600.00
200.00
216.00
3,184.00
1,699.44
288.56
11.96
282.12
489.44
132.16
903.72
292.28
58.46
233.82
Crush
3,600.00
200.00
216.00
3,184.00
1,879.48
288.56
1,015.96
282.12
529.68
132.16
943.96
72.00
14.4
57.6
Schweppe
sSarsi
3,600.00
200.00
216.00
3,184.00
1,821.72
288.56
1073.72
282.12
529.68
132.16
943.96
129.76
25.95
103.81
(Source: IBC’s report)
5.5.3. IBC’s Distribution Channels System
5.5.3.1. Distribution Objective
IBC’s distribution objective is to coordinate all elements of the marketing-mix and
implement its marketing objectives. To achieve this objective, IBC has improved the existing
distribution networks to distribute its products to its target markets in the best effective way.
5.5.3.2. Distribution Channels
Currently, IBC has been consolidating and upgrading the existing distribution
networks in HCMC and developing channel systems in Ha Noi, Central provinces and
Mekong Delta. IBC’s products are sold throughout the main distribution channels as indicated
in the Figure 5.5. Its distribution channels divide two types, as follows:


Direct channel: Channel 1 and Channel 2
Indirect channel: Channel 3
In IBC’s sale pattern, last year, the indirect channels contributed the remarkable sales
volume at 78 percent, followed direct channels 19 percent and a small proportion of 3
percent in total sales was exported to Cambodia.
46
Channel 1
RETAILER
I
B
C
Channel 2
POSTMIX
Channel 3
WHOLESALER
RETAILER
C
O
N
S
U
M
E
R
S
Figure 5.5 Distribution channels of IBC
Among its distribution networks, the channels in HCMC accounted for 58 percent of
the total sales. IBC has constantly developed and expanded its channels in HCMC including
direct channels (retail outlets, postmix), indirect channels. Among the total sales in HCMC,
indirect channels accounted for 67 percent, followed by direct routes 25 percent, Horeka 7
percent and postmix 1 percent. IBC’s distribution channels in HCMC consist of the following
channels.
IBC to retail outlets to end users
Based on the features of each local market and the capability of the company, IBC
has selected the suitable distribution channels alternatives for each territory. Channel: IBC to
retail outlets to end users also called direct channels which have established since 1993 in
HCMC in order to help the company and the final consumer deal with each other. In fact, up
to now, IBC has offered good services for consumers in this channel and developed 4,238
retail outlets. IBC made the agreements with the retail outlets to sell directly its products to
them. These outlets are divided into 42 direct routes and one salesman is responsible for
managing each route. IBC has the plan for further developing the sales force.
This direct channel can be divided into two sub-channels: direct routes and Horeka.
Direct routes
The direct routes are responsible for distributing IBC’s products to the end users
through retail outlets such as side-street food stores, coffee shops and canteen at schools,
universities, hospitals. IBC’s products sold through the direct routes accounted for 25 percent
of total sales in HCMC. IBC has constantly concentrated on expanding the direct routes to
increase sales and collect information about its products against competitors from the end
users. The direct routes are divide into two territories: inside and outside districts of HCMC.
47
Horeka
“Horeka” is a word combined by hotel, restaurant and karaoke clubs. Stemming from
this “name”, this channel is used to distribute products to target consumers including hotels,
restaurants, cafeteria, dancing clubs, entertainment places, karaoke clubs and supermarkets.
Thus, IBC has used this channel to penetrate the market segments of high income and
entertainment places
To capture and develop this channel, IBC has used the incentive policies for outlets of
Horeka. These policies consist of offering the quantity discounts at a range from 2 to 6
percent of purchased value for its Horeka who meet the sales quota pre-set. IBC’s products
sold through Horeka achieved at 7 percent of the total sales. It can be seen that the success
of IBC in developing Horeka depended on activities of trade promotion.
Postmix machines: IBC to postmix to end users
“Postmix” machines is a system of selling soft drinks by machine. Soft drinks sold
through Postmix machines are not popular in Vietnam. Most of the Vietnamese people like to
drink soft drinks with their friends at coffee shops or street vendors, or with their family at
home. However, to convince the consumers, mainly young people to be familiar to drink soft
drinks from vending machines, IBC has installed Postmix machines as a direct channel to
distribute its products. Up to now, IBC has 62 Postmix machines (vending machines) located
at primary and high schools, universities, stadiums, swimming pool clubs, train stations and
theaters.
To manage the Postmix machines, IBC allows the retail outlets to rent Postmix
machines with rental price at 85,000 VND (equal to 8 USD) per month for each Postmix
machines and the company sells materials including carbonates and flavors at lower price. In
addition, to promote sales throughout this channel, IBC has offered free charge for Postmix
machines achieved 200 liters per month. In fact, however, most of outlets said that this figure
is high and hard to achieve.
Concerning conditions of installing Postmix machines are still the problem in which
IBC is facing such as location, maintenance and security as well as problem of technique. In
addition the power cut-off often occurs in Vietnam and water supplying source is not suitable
to standard stipulated by Pepsi Co for producing soft drinks.
Indirect channel: IBC to wholesaler to retailer to end users
At the beginning of operation, IBC has constantly concentrated on building,
consolidating and upgrading the indirect channels in HCMC and provinces. By looking at the
value of products sold through the indirect channels at each years, it can be said that this
channel is strategic one. Last year, the its products sold through wholesalers accounted for
67 percent of the total sale in HCMC.
The use of wholesalers as intermediaries can help the company to facilitate the
distribution process and offer more attractive services to the buyers. It can be either
exclusive wholesaler of IBC meaning under the contract to sell IBC products solely or
nonexclusive wholesaler is allowed to sell IBC products and other soft drinks brands
simultaneously. However, it is difficult for IBC to control sales of its exclusive wholesalers,
because most of wholesalers are multi-brands distributors.
48
Up to now, IBC has developed 658 wholesalers in which 452 wholesalers are located
in inside and outside districts of HCMC and 145 wholesalers in South and Central provinces,
61 wholesalers in Ha Noi. Although IBC requests all wholesalers to sell at price stipulated,
most of wholesalers sell products at flexible price. They can sell IBC products at high price
any whenever exceeds demand and dumping price to increase sales volume.
To develop the wholesalers network, IBC has applied the following policies:
1. Discount (margin)
IBC adapts the discount price which differs between nonexclusive and exclusive
wholesalers as indicated in the Table 5.6
Table 5.6 Discount list of IBC’s wholesaler
Bottle 207 ml and 285 ml
Can 330 ml
PET bottle 1.5 liters
Discount For
Nonexclusive
Wholesaler (VND)
50
200
600
Discount For
Exclusive
Wholesaler (VND)
60
215
620
Source: IBC’s report
(Note: discount i.e. margin between wholesale price and ex-factory)
2. Delivery
IBC delivers its products to all wholesalers in HCMC and is charge of transportation
expenses. For wholesalers in provinces, IBC subsidies 50 percent of transportation expenses
to encourage them to purchase at large quality.
49
3. Payment
Payment term applied for IBC’s wholesalers is cash on delivery. However, to expand
distribution networks at new markets, IBC will apply the flexible payment term such as credit
or 50 percent cash payment and 50 percent credit term from 1 to 3 months.
5.5.4. Promotion Activities
5.5.4.1. Objectives of Promotion
Last years, IBC has constantly launched advertising campaigns to inform, persuade
the target consumers to buy its products. IBC’s promotion actives has mainly focused on
advertising, sales promotion and public relation. The objectives of IBC’s promotion, as
follows:



Create the image about Pepsi as soft drink for young people and maximize awareness of
IBC products.
Remind the target consumers about the presence of its products.
Persuade the soft drinks consumers to switch to IBC products.
5.5.4.2. Advertising
To convince the soft drink consumers to switch to IBC products, the company has
launched a dynamic advertising campaign with slogan “Pepsi, The Choice of New
Generation” and “7-Up, From Transparent To Wonderful” and “Crush is your Life and Color”
on the commercial programs on television. Obviously, its target consumer is all soft drink
consumers, mainly young people. So the producer, distributors try on diffuse attributes of
Pepsi to its target consumers by words such as “freedom is yourself”, “freshness and
intelligence”, “attraction and reality” and “modern and following the trend”.
It can be said that IBC is very interested in advertising activities. In 1995, its
advertising budget accounted for over 65 percent of total promotional budget and accounted
for 8.6 percent of total sales (IBC’s report). The company has used the media such as
television, radio, newspapers, magazines, billboards and public transportation for advertising
Pepsi and 7-Up, Crush and Schweppes.
Television
Television is one of the effective advertising media compared to others, it can diffuse
the information, picture and shape of product to all the consumers. Based on the advantages
of this media, the company often uses television as the tool to introduce its products. Every
night, Pepsi, 7-Up, and Crush are advertised on Vietnam Television, and local Television
such as HCMC, Can Tho and Da Nang.
50
Radio
To maximize awareness of IBC’s products in the whole country, the company
sometime introduces its products on radio at beginning and last minutes of the programs for
children, traditional music because most of audience like to listen to these programs.
Newspapers and Magazines
Simultaneously, the commercial program on television and radio, IBC also used trade
publication for advertising its products and logo of Pepsi in newspapers, magazines such as
Youth newspaper, Saigon Time weekly and daily, Saigon Liberation, Vietnam Investment
Review, Marketing magazine, Labor newspaper, etc.,
Billboard and public transportation
IBC is also interested in introduction its products throughout using bill board and
public transportation. To attract the consumer’s interest, all most bill boards are located at the
central of HCMC such as Ben Thanh market, Tan Son Nhat airport, and cross roads. The
logo of Pepsi, pictures of 7-Up, Crush bottles and cans are advertised in trucks, buses in
HCMC, especial airport-buses.
5.5.4.3. Sales Promotion
Sales promotion is one of the marketing tools in which IBC is very interested in
promoting its sales. Its sales promotion consists of trade promotion and consumer promotion.
Trade promotion
The company uses trade promotion to stimulate quicker and greater purchase of its
products by its wholesalers and outlets in order to increase the sales volume. IBC’s trade
promotion tools consist of offering free goods, supporting facilities for outlets development
and point of purchase materials.
Free goods are sometime held in special occasion, new year by offering extra
products of purchase to wholesalers and retail outlets who buy a certain fixing quantity, for
example, if IBC’s wholesalers and outlets buy “6 canned soft drink pack” get free “1 can” or
buy “12 PET bottles soft drinks pack” get free “1 PET bottle”
Developing new retail outlets and wholesalers, especially the exclusive outlets and
wholesalers, IBC has supported facilities for retail outlets and wholesalers to decorate and
advertise the logo of Pepsi. The plan for developing outlets is mainly concentrated on hotels,
restaurants, big coffee shops and entertainment places such Dam Sen, Ky Hoa, Van Hoa
parks.
Point of Purchase materials are supported by IBC for its wholesalers and retail outlets
aimed at creating and maximizing the awareness of Pepsi and 7-Up in the consumer’s mind.
Supporting the point of purchase materials consists of shop-sign, light-box, freezes-sign, visicoolers, ice-chest, canopy, parasol, poster, bunting, sticker, banner. Up to now, IBC develops
shop-signs at almost its wholesalers and outlets in HCMC. The shop-signs have the high
effectiveness of advertising the logo of Pepsi. Through the shop-sign, the consumers know
Pepsi more and more, because majority of consumer, especially outside districts of HCMC,
51
they confused Pepsi was beer. Beside shop-sign, IBC has designed more than 620 lightboxes with picture of Pepsi bottle which are located at front of the outlets.
Consumer promotion
The purpose of consumer promotion is to create demand and persuade soft drink
consumers to switch to IBC products. The company used consumer promotion tools such as
lucky draws based on numbers under crow, gifts, wet sampling and product challenges. All
activities of consumer promotion are sometime held at entertainment places and schools.
5.5.4.4. Special Events Sponsorship
IBC’s sponsorship activities aim not only to create awareness of its products but also
improve public goodwill. Throughout sponsorship activities, the company created the good
relation ship with government. Last years, IBC sponsored for cultural and music activities and
sport events and other social activities such as scholarship fund for student at schools and
universities in HCMC, sponsoring for homeless children. Clearly, IBC’s sponsorship activities
can make more memorable impact on public awareness and credibility than advertising.
5.6. Results and Discussion of Consumer Survey
This part discusses the results based on conducting survey on attitude of consumers
toward attributes and prices of IBC’s products compared to the competitive brands and
advertising and sales promotion of IBC. In addition the discussion is also based on in-depth
interviews soft drink wholesalers, retail outlets of IBC in HCMC. Most of these wholesalers
and outlets sell all soft drink brands including products of IBC, Coke and Tribeco.
The sample consists of 100 respondents who were randomly selected in HCMC. The
profile of sampling size is shown in Table 5.7
Table 5.7 Profile of sampling size
Age
Count
(n=100)
Percent
(%)
From 10 to 20
From 21 to 30
From 31 to 40
From 41 to 50
31
36
23
10
31.0
36.0
23.0
10.0
Total
100
100.0
Monthly Income
(VND)
Less than 1
million
From 1 to 2
million
Over 2 million
Total
Count
(n=100)
Percent
(%)
32
37
31
32.0
37.0
31.0
100
100.0
5.6.1. Brand Preference
The majority of consumers would prefer cola flavor to lemon lime flavor. Orange and
other flavors would be less preferred. In addition most of respondents prefer foreign brands
to local ones.
52
Pepsi and Coke are considered as the favorite products. They are much preferred by
most of consumers. There is not significant difference in brand preference between Coke
and Pepsi (Appendix 4, Exhibit 1). Whereas, Tribeco is less preferred. As a result, that
demand for foreign brands increases and demand for local ones decreases. There is the
significantly difference in age groups who very much like to drink Pepsi. The younger people
(from 10 to 20 years old) very much prefer Pepsi rather than the old group (from 31 to 50
years old) (Appendix 6, Exhibit 1). While there is no significant difference in preference of
Coke between age groups (Appendix 6, Exhibit 2).
The survey shows that lemonade lime flavor is less preferred to cola flavor. 7-Up is
rated at fair average level of brand preference, Sprite is much less preferred by most of
respondents.
Regarding orange and sarsi flavor, the findings show that Schweppes and Crush are
the soft drinks with low brand preference. This is a reason why Schweppes and Crush are
the slow-selling items.
Table 5.8 Mean score of brand preference
Brands
Pepsi
7-Up
Coke
Sprite
Schweppes
Tribeco
Crush
Mean
Std dev
6.010
4.290
6.250
2.760
2.480
3.520
2.840
1.010
1.493
.821
1.280
1.210
1.845
1.692
(Note: 1: dislike very much, 7: like very much)
5.6.2. Words of Mouth
The considerable number of the respondents who reveal that their friends say Coke
and Pepsi are very good quality. And there is the difference in attitude of consumers toward
assessment between Pepsi and Coke. Coke is slightly better than Pepsi (Appendix 4, Exhibit
2). Tribeco is rated at fair average by majority of respondents.
Additionally, there also is the difference in groups who say Pepsi is very good. The
10-30 age group say that Pepsi is very good. Both the 21-30 age group and 31-50 age group
rate good for Pepsi. Group of 10-20 years old say that Pepsi is very good (Appendix 6,
Exhibit 3).
7-Up is considered as a very good item and most of respondents indicates that their
friends say 7-Up is very good quality. While Sprite is rated as an average brand. Schweppes
and Crush are assessed as average quality items.
53
Table 5.9 Mean score of words of mouth
Brands
Mean
Pepsi
7-Up
Coke
Sprite
Schweppes
Tribeco
Crush
6.070
6.260
6.450
4.040
3.920
4.330
3.860
Std dev
.795
.812
.672
1.082
1.061
1.092
1.025
(Note: 1: very bad, 7: very good)
5.6.3. How Choose to Buy a Soft Drink
When buying a soft drink, most of consumers like to choose the soft drink with the
best taste. The survey discloses that there is more than half of consumers who prefer to buy
soft drink that tastes best. Over one third said that they buy the same one they usually buy.
Thus, it can be said that the best taste is one of important attributes which can be attracted
the purchase of soft drink consumers (Appendix 3, Exhibit 1).
5.6.4. Attributes of Soft Drink Brands
Pepsi, Coke and Tribeco
When asked for comparing Pepsi and Coke at a few major attributes, most of
consumers who rank highly for Coke in sweetness and gas (carbonation). For taste and
package, both Pepsi and Coke are the same. When compared Pepsi and Tribeco, Pepsi
wins over Tribeco for most of attributes, the almost consumers rank very high for Pepsi in all
attributes, except sweetness. The findings disclose that Pepsi has achieved good reputation
by creating its awareness in the consumer’s mind and Pepsi is available at most of retail
outlets in HCMC.
Taste, it can be said that the most of consumers would like to drink carbonates with
good taste. Recognition of this attribute, Pepsi is always improved its taste to be suitable to
local taste in each country. There are more than one-third of consumers who rank that Pepsi
is much better than Coke and one-fourth respondents who indicate Pepsi is the same as
Coke. Thus, there is not significant difference in taste between Coke and Pepsi. As a result,
consumer preference about Pepsi and Coke are the same proportion. In contrast, there is the
significant difference in taste of Pepsi and Tribeco. So Pepsi is much preferred than Tribeco.
Sweetness, the survey indicates that there is half of respondents who rank Pepsi is
less sweet than both Coke and Tribeco. In addition, when conducted in-depth interviews with
consumers, they say that almost soft drink consumers in HCMC would like to drink sweeter
carbonates. So Pepsi should mention this attributes to attract more users. Assessing the
sweetness of Pepsi, the analysis shows that there is a relation in ranking between sweetness
and age groups. Two fifths of respondents in the 10-20 age group indicate that Pepsi is as
54
sweet as Coke and the same proportion of respondents in the 10-20 age group rank that
Pepsi less sweet than Coke. For the 21-30 age group, there are three fifths of them who rank
Pepsi is much worse than Coke. There are two fifths of consumers in the 31-50 age group
who rank that Pepsi is less sweet than Coke (Appendix 5, Exhibit 1).
Gas (carbonation), Pepsi is evaluated at higher gas than Tribeco. When compared
with Coke, there is over two fifths of consumers who say that Pepsi is much less gas than
Coke. When conducted in-depth interviews, most of young people disclose that they would
like to drink carbonates with stronger gas. Therefore, Pepsi needs to improve this attribute to
convince more young people.
Package, this element is considered as an important attribute to appeal to the interest
of consumer. There are more than three fifths of respondents who mark that Pepsi is same
Coke. Nearly one fourth of consumers rank Pepsi is much better than Coke. Almost
consumers say that Pepsi is much better than Tribeco.
Availability, the findings show that two fifths of respondents indicates Pepsi is more
available than Coke in HCMC. This is an advantage of Pepsi because Pepsi has been
produced in the South earlier than Coke and IBC has developed the wide distribution network
in HCMC. There also were over half of respondents who rank Pepsi is more available than
Tribeco.
Reputation, Pepsi gains good reputation in HCMC market. There are more than half
of consumers who mark Pepsi and Coke are as same as reputation. Over four fifths of
consumers indicate that Pepsi’s reputation is better than Tribeco. Obviously, Pepsi is to
become top of mind brands.
55
Table 5.10 Comparison the attributes of Pepsi with Coke
Attributes
Taste
Sweetness
Gas
Package
Availability
Reputation
Pepsi is much
better than Coke
(%)
35.0
26.0
22.0
18.0
38.0
16.0
Pepsi is the
same as Coke
(%)
26.0
26.0
34.0
67.0
58.0
54.0
Pepsi is much
worse than Coke
(%)
39.0
48.0
44.0
15.0
4.0
30.0
7-Up and Sprite
For lemon lime flavor, the majority of consumers rank very high for 7-Up in all
attributes such as taste, sweetness, gas, package, availability and reputation.
The survey shows that there are more than half of consumers who rank 7-Up is much
better than Sprite in taste, sweetness, gas, availability and reputation. Regarding the
package, half of consumers say that 7-Up is the same as Sprite. Obviously, 7-Up wins over
Sprite for all attributes.
Concerning with taste, all age groups rank that 7-Up is better than Sprite and there is
the relation in ranking between taste and groups. 7-Up is ranked better than Sprite by four
fifths of respondents in the 10-20 age group. More than haft of respondents in the group of
21-50 years old say that 7-Up is better than Sprite( Appendix 5, Exhibit 2).
Discussing gas, all groups rank higher for 7-Up, there are over half of respondents in
group of 21-50 years old who rank higher for 7-Up, whereas one third of respondents in the
10-20 age group rank that 7-Up is better than Sprite( Appendix 5, Exhibit 3).
.
Table 5.11 Comparison the attributes of 7-Up with Sprite
Attributes
Taste
Sweetness
Gas
Package
Availability
Reputation
7-Up is much
better than Sprite
(%)
62.0
57.0
48.0
29.0
59.0
66.0
56
7-Up is the
same as Sprite
(%)
14.0
31.0
36.0
52.0
36.0
31.0
7-Up is much
worse than
Sprite (%)
24.0
12.0
16.0
19.0
5.0
3.0
Schweppes sarsi
Schweppes sarsi is considered as a soft drink with low brand preference because its
attributes are not completely suitable to the Vietnamese consumers’taste. The survey finds
that its taste is rated at average level and its sweetness at below average level. In addition
Schweppes is not much available in the market. And it had not gained yet at good reputation.
So Schweppes lacks of favorite attributes to attract soft drink consumers.
Table 5.12 Mean score of attributes of Schweppes sarsi
Attributes
a. Taste
b. Sweetness
c. Gas
d. Package
e. Availability
g. Reputation
Mean
Sta dev
4.380
3.750
5..500
5.050
3.070
3.140
1.030
.892
.916
1.123
1.008
1.005
(Note: 1: very poor, 7: excellent)
5.6.5. Prices of Soft Drink Brands
Pepsi, Coke and Tribeco
The perception of the consumers about price of Pepsi and Coke is indicated that
Pepsi price is fairly high and Coke price is high. There is the difference in price between
Pepsi and Coke (Appendix 4, Exhibit 3). The high income consumers say that price of Coke
is fairly high in. Whereas, middle and low income consumers indicate that price of Coke is
high (appendix 6, Exhibit 4). For Tribeco, the survey discloses that the its price is rated at
average level by majority of respondents.
7-Up and Sprite
There is the significant difference in rating the price of 7-Up and Sprite, the former is
rated at fairly high, the later is rated at high (Appendix 4, Exhibit 4).
57
5.76
5.61
6
5.2
5.15
5
3.85
Mean
4
3
2
1
0
Pepsi
Coke
Tribeco
Seven-up
Sprite
Figure 5.6 Mean score of the prices of soft drinks
(Note: 1: very low, 7: very high)
Schweppes and Crush
Schweppes and Crush were considered as having a fairly high price (mean 5.310
and 5.220). The findings also shows that high income consumers rate Crush is fairly average
price, whereas low income consumers say that its price is fairly high (Appendix 6, Exhibit 5).
5.6.6. Places of Consumption
The majority of the consumers most often buy soft drinks at coffee shops, followed
retail shops, mainly on street vendors. For consumption at home, most of consumers buy soft
drinks at wholesalers or retail outlets. Only a small proportion of consumers (9 percent of
respondents) often drink carbonates at restaurants.
The survey finds that four fifths of the consumers most often drink soft drinks at
coffee shops and three fifths of consumers often buy soft drinks at retail shops. There are
half of respondents who sometime buy at wholesalers. The respondents who often drink soft
drinks at restaurants counts only for one tenth.
When conducted in-depth interviews with soft drink wholesalers, they say that a large
proportion of soft drinks are sold for retail outlets and most of the consumers buy soft drinks
at wholesalers for “occasion” consumption at home.
About incentives including profit margin and quantity discounts offered by soft drink
companies for wholesalers and retail outlets, most of the respondents disclose that incentives
which are given by IBC are better than Coke and Tribeco. IBC has supported point of
purchase materials and facilities for decorating stores and advertising its logo. They also say
that profit margin is important elements for keeping a particular brand in their stores.
Mentioning prices of soft drinks, most of wholesalers and retail outlets say that the
Pepsi, Coke, 7-Up and Crush have the reasonable prices and suitable to purchasing power
of consumers, while Sprite and Schweppes price is fairly high. In addition they indicate that
58
almost consumers when buying soft drinks they are interested firstly in choosing soft drink
brands with high quality, then price.
5.6.7. Promotion Activities
Advertising
At the beginning of production Pepsi in Vietnam, IBC launched the heavy advertising
campaign with slogan “Pepsi, The Choice of New Generation”. The survey shows that
majority of respondents know this slogan. Look like Pepsi, Coke launched advertising
campaign with slogan “Coke, The Real Thing”. The survey finds that there are half of
respondents who knows this message. Thus, it can be said that Pepsi creates its awareness
in the consumer’s mind.
Assessing the advertising program of IBC on television, most of the consumers
strongly agree about information content at aspects such as very easy to understand, very
informative and very hard to forget. However, the honesty of the commercial program is
disagreed. This may cause the negative impact for its advertising. About the aesthetic
content of advertising, the considerable number of consumer agreed at this aspect.
Table 5.13 Mean of the contents of advertising program of Pepsi
a.
Very
easy
understand
b. Very informative
c. Very hard to forget
d. Very honest
e. Please to see
f. Artistic
g. Intelligent
h. Amusing
to
Mean
Sta dev
5.710
1.183
5.500
5.460
3.220
5.170
4.700
4.560
5.340
.916
1.141
1.315
1.295
1.068
1.149
1.199
(Note: 1: strongly disagree, 7: strongly agree)
Sales promotion gifts
Most of consumers disclose that sales promotion gifts of soft drink brands are not
very attractive. The survey indicates that consumer promotion tools of Pepsi and 7-Up are
not very attractive. Thus, IBC needs to pay more attention to sales promotion activities for
end users in order to create awareness of its products.
Table 5.14 Mean score of sales promotion gifts
Brands
Mean
59
Sta dev
a. Pepsi
b. 7-Up
c. Coke
d. Sprite
e. Schweppes
f. Tribeco
g. Crush
4.510
4.370
4.410
3.860
3.190
3.150
3.270
1.283
1.143
1.296
1.400
1.285
1.336
1.355
(Note: 1: not attractive at all, 7: very attractive)
Suggestion of retailers
When asked the suggestion of retailers to consumers in choosing soft drinks
consumption, the findings indicate that retailers do not suggest to consumers to buy
Schweppes, Crush, Tribeco and Sprite. The retailers sometime suggest to consumers to buy
Pepsi, 7-Up and Coke (Appendix 2, Exhibit 6). The suggestions of retailers to end users can
influence their buying decision. Because the survey finds that there are one fourth of
respondents who switch to brand which is suggested by the retailer. Three fourths of
consumers buy regular brands (Appendix 3, Exhibit 8). So, IBC should pay more attention to
promotion its retail outlets who in turn will promote to end users to buy IBC products.
5.7. Summary of IBC’s Strengths and Weaknesses
By analyzing current position of IBC in terms of production capacity, market share,
financial situation and marketing activities, the strengths and weaknesses of IBC that were
assessed in comparison with its main competitors are drawn out, as follows:
Strengths
IBC has strong financial position of stockholders and the remarkable profitability
reaping from production and business in last years. It continues to further invest for
expanding its production and business in order to increase its production volume. IBC has
used the modern equipment and advanced technology for production soft drink production
IBC has the highest market share in total Vietnam market, as well as HCMC market.
At present, IBC gains the market share of 28 percent in the whole country and 42 percent of
HCMC market.
IBC has the experiences in marketing activities because its partners Pepsi Co and
Cadbury Schweppes Group are giants in soft drinks market in the world. They have the
experiences in marketing activities.
The company has created the awareness of Pepsi and 7-Up in the market and good
reputation brands. Pepsi and 7-Up are much preferred by most of Vietnamese people. 7-Up
is considered as a dominant product in lemonade lime flavor in Vietnamese market. IBC has
also created the image of Pepsi as soft drink for young people through its advertising with
60
slogan “Pepsi, The Choice of New Generation” known by most of consumers in HCMC
market.
The prices of Pepsi and 7-Up are lower than prices of Coke and Sprite. So its prices
can be met the purchasing power of its target consumers. This is a factor to stimulate more
end users to buy IBC products because of high quality products at a reasonable price.
IBC has developed its wide distribution channels system covering all districts of
HCMC including direct and indirect channels. The company has also developed distribution
channels of wholesalers in Ha Noi, Da Nang, the South and Central provinces. In addition,
profit margin for wholesaler of IBC is higher than Coke.
IBC has continuously launched the advertising campaigns to maximize the awareness
of its products in the market and convince soft drink consumers to buy its products. In
addition the company has constantly supported sales promotion for its wholesalers and retail
outlets in order to build good relationship with its distributors.
Weaknesses
Among IBC’s product line, Schweppes sarsi is less preferred because the attributes of
Schweppes are not completely suitable to local taste. The company has not created yet good
reputation brand for Schweppes and Crush. Schweppes is not much available in the market.
Information contents of IBC’s advertising program on television are evaluated lack of
the honest. This can cause negative impact for its advertising.
IBC lacks attention to sales promotion activities for consumers, there is several sales
promotion activities but they are not attractive.
IBC’s sales force is not strong enough in terms of number of salesman to manage its
retail outlets while at present direct routes have continuously developed.
61
Chapter 6
Conclusions and Recommendations
This chapter presents the results of the research and recommendations for
developing the marketing strategies for International Beverage Company in HCMC.
6.1. Conclusions
This research examines how to develop the marketing strategies for International
Beverage Company in HCMC through an analytical process of external and internal factors.
On the basis of the result of this research, the following conclusions are drawn out:
1. The Vietnamese economy has gained a remarkable growth during the period of 19911995. The GDP averaged growth rate was 8.2 percent per year. The government has
issued a series of economic laws to encourage local and foreign investors to invest
production locally and imposed on import tax on soft drinks and beer at high rate. So the
soft drink industry has dramatically developed. There are currently 25 soft drink
producers with more than 30 brands flooded in the market. Some foreign brands such as
Pepsi, 7-Up, Coca Cola, Sprite, Schweppes and Crush are available in cities and small
towns in the whole country.
2. During the last five years, production and consumption of soft drinks has increased
yearly. The average growth rate of the soft drink industry was 17 percent per year. The
consumption per capita is currently lower than other countries in the region. According to
General Statistics Bureau, the forecast consumption of soft drinks will be increased
significantly in the next five years at annual growth rate of 15 percent. And with
population of 74 million people, Vietnam actually becomes an attractive and potential
market for food and drinks. This gives opportunities for players to expand their production
and business.
3. HCMC is the key soft drink market in Vietnam. Together the rapid growth rate of
economy and rising in the living standard, HCMC market becomes an attractive one for
beverage producers.
4. There are currently significantly changes in consumer preference. Most of soft drink
consumers prefer foreign brands rather the local ones. Demand for foreign soft drink
brands increases while demand for local brands decreases. Soft drinks are consumed at
home increasingly, this is a signal of fast growth of the take-home trade.
5. The “cola war” really occurs in the Vietnamese soft drinks market, especially the
competition between Pepsi and Coke. The competitive environment becomes fiercer and
harder. At present, however, the problem facing the players is not survival because the
market is still unsaturated and promising. IBC has been in the growing stage.
6. IBC’s strengths and weaknesses are examined through internal analysis process
including its production capacity, market share, sales and marketing activities. At present,
IBC continues to invest to expand its production and business in HCMC, Ha Noi, the
62
South and Central provinces. IBC has highest market share in Vietnamese markets(28
percent) and HCMC market (42 percent). The company is very interested in marketing
activities, with particular emphasis on advertising and sponsorship activities in order to
convince and remind its target consumers to buy IBC products. IBC pays more attention
to trade promotion, however, it lacks the sales promotion for consumers.
In general, IBC has achieved the success by understanding and meeting the needs of
its customers and consumers. The company has created the awareness of its products,
especially Pepsi and 7-Up in the market. However, Schweppes sarsi and Crush are less
preferred because their attributes are not suitable to the Vietnamese consumers’taste. With a
strong financial position, IBC is able to meet contingencies and to fund its further growth.
Currently, facing the intensified competition, IBC has to develop the effective marketing
strategies based on analyzing threats and opportunities in environment as well as its
strengths and weaknesses in order to protect its leading position.
6.2. Recommendations on Developing the Marketing Strategies for IBC in
HCMC
6.2.1 Market Segmentation
To design and develop the marketing strategies, the starting point is to understand
what kind of groups of consumers the company wants to serve. So the market segmentation
becomes a meaning concept for the players. Regarding the case of IBC, the company need
to decide which and how many segments to serve. According to Kotler (1991), in general, a
company can adopt three basic alternative strategies forward market segmentation:
undifferentiated marketing, differentiated marketing and concentrated marketing.
Undifferentiated marketing, the company may ignore market segment differences and
go after the whole market with one market offer. One advantage of this strategy is production
efficiency. However, there are dangers involved in the strategy of undifferentiated marketing.
The company that attempts to satisfy everyone in the marketplaces faces the threat of
competitors who offer specialized products to smaller markets of total market. Thus, if IBC
follows this strategy, it should have a single marketing mix to offer to the entire market.
However, this strategy rarely succeeds because consumers in different location differ taste
and preference. Consumers wants and needs also differ among age groups, obviously, there
is the significant difference in soft drink consumption between young and old people. In
addition, Vietnamese people are not habit drinking soft drink a lot and soft drink is not the
necessity product and soft drink consumption is still influenced by personal income level.
Therefore, following this strategy means that the company has to cope with a market risk
since it can not minimize the costs and maintain the acceptable price for all the segments at
the same time.
Differentiated marketing, the company may divide total market into different segments
and develop the different marketing mix strategies for each market. Following this strategy,
the company captures consumers from many different market segments by providing
increased satisfaction for each of numerous target markets. This strategy requires large
investment capital because of increase in production costs and promotion costs. So
differentiated marketing leads to both higher sales and higher cost than undifferentiated
63
marketing. At present, IBC has the strongly financial resource and produces canned and
bottled soft drinks with high quality. To appeal to consumers with difference in taste, income
and age groups, IBC should pursue the differentiated marketing for market segmentation.
Concentrated marketing, the company can choose to focus on its efforts on profitably
satisfying a smaller target market or niches. Following this strategy allows the company to
compete in just one segment and develop the marketing mix program to serves that
segment. Regarding the capability of IBC, it is a large-size soft drink company and facing the
intensified competition from Coca Cola Indochina Pte, Ltd. Currently, IBC has plans for
expanding its operation in order to increase market share and protect the leading position in
HCMC. Therefore, IBC can not purse this strategy.
Overall, the differentiated marketing should be strongly recommended for IBC as
regard of the market segmentation. Moreover, because consumption pattern of soft drinks in
Vietnam is strongly affected by regional taste, personal income level, thus, IBC should base
on geographic variable for segmenting Vietnamese soft drinks market such as HCMC, Ha
Noi, Central and Mekong Delta provinces. For HCMC market, the company should base on
income segmentation. The income level of HCMC residents is classified three groups: high,
middle and low income
6.2.2. IBC’s Market Targeting
Together with rapid growth rate of economy, rising in the living standard, the
proportion of high and middle income people in HCMC will significantly increase in the next
years. This points out potential consumption of soft drinks will increase these segments. In
addition the soft drinks consumption is also affected by age. Most of soft drink consumers
are young population at range from 10 to 35 years old. This age group has big share in
population structure and increases yearly. Thus, IBC's target market should be focus on soft
drink consumers with high and middle income, with particular emphasis on young age
people.
At present, IBC should concentrate on selling canned carbonates including Pepsi, 7Up, Crush, Schweppes soda with high quality at a reasonable price in the segment of high
income consumers. The consumption of these items is mainly in hotels, restaurants, snack
bars, dancing clubs, karaoke clubs and entertainment places.
To segment of the middle income people, IBC should focus on selling returnable
glass bottle of soft drinks and PET bottles at the reasonable price.
6.2.3. Positioning Strategy
Positioning strategy is the combination of product, channel of distribution, price and
promotion strategies, the company uses to position itself against its key competitors in
meeting the needs and wants of the market targets. Therefore, IBC needs to link its
marketing activities including the analysis of its products’ attributes, prices compared its
competitive products, developing the distribution channels to make its products more
available to end users and emphasizing on promotion to persuade and remind them to buy its
products.
64
Regarding IBC products, it is necessary for the company to position its products in
order to gain the competitive advantages. IBC is thought of as the largest soft drink company
in Vietnam. At the beginning of operation to now, IBC has continuously created the
awareness of its products: Pepsi, 7-Up, Crush and Schweppes soda in HCMC market. Pepsi
and 7-Up are much preferred by majority of consumers and gain high reputation brands. 7Up is the number-one Uncola in the Vietnamese lemonade flavor market. Therefore, IBC
should position its products as high quality products at the reasonable price to strengthen
their own current position in the consumer’s mind in HCMC market. To implement its
positioning strategy, IBC needs to develop marketing mix strategies for products, price,
distribution and promotion.
6.2.4. Developing Marketing Mix Strategy for IBC in HCMC
At present, IBC’s market share is 28 percent in the whole country and 42 percent of
HCMC market. IBC has the highest market share in Vietnamese soft drinks market and
HCMC market. The company is facing the intensified competition in which Coca Cola
Chuong Duong Soft Drink Company Ltd is main competitor in HCMC. To protect its current
leading position, IBC needs to strengthen it strengths and improve weaknesses. This calls for
action on three fronts: finding ways to expand total market demand, protecting its current
market share through good defensive and offensive actions, trying to increase further its
market share.
To expand the total market, IBC should look for new users, new uses or more usage
of its products. To increase the number of users, the company must either increase
consumer’s willing to buy or their ability to buy products. The willing to buy may be increased
by demonstrating the benefits already offered by products, or developing new products with
benefits that will be more appealing to certain segments, or promote new benefits from its
existing products. The ability to buy can be improved by offering high quality, or lower price,
or by providing greater availability (through having more distributors, more frequent delivery).
In addition to increase rate of purchase (more usage) the company must design advertising
campaigns to convince the target consumers to buy its products more often or in more
volume.
While trying to expand total market size, IBC must retain its current customers and
consumers and continuously defend its current business against rival attacks. Therefore, it
must keep its costs down and its prices must be consonant with the value in which the
consumers recognize in its brands. The company needs to build good relation with its
wholesalers and retail outlets as well as will produce its brands in several sizes and forms to
meet varying consumer preference.
Besides, IBC must increase its market share by improving its products, opening up
distribution networks and launching advertising campaign to persuade the consumers to
switch to its products. In general, IBC should develop the feasible marketing mix strategies to
protect its leading position.
65
6.2.4.1. Product Strategy
Developing IBC's product strategy aims at stimulating soft drink consumers to buy its
products by offering high quality products. To develop its product strategy, IBC should focus
on improving attributes of its products, designing new type of packs.
Improving attributes of product
Pepsi
As analyzed in the previous chapters, most of consumers indicate that Pepsi is less
sweet than Coke and Tribeco. While majority of consumers in HCMC have habit of drinking
the sweeter carbonates. So IBC should pay more attention to improvement its quality in
terms of sweetness in order to attract more consumers.
Moreover, the survey indicates that Pepsi has less gas than Coke. While young
people prefer to drink strong gas carbonates. Thus, it is necessary to improve its gas level to
convince more young people to buy Pepsi.
Schweppes and Crush
Schweppes sarsi is less preferred by a majority of consumers because its taste, gas
and sweetness are not completely suitable to Vietnamese consumer's taste. IBC should
research on manufacturing formula of Schweppes to improve it quality in order to attract soft
drink consumers.
Currently, Schweppes is unavailable at retail outlets in HCMC, thus, IBC should make
Schweppes to be more available to consumers in order to create its awareness in the market.
With the presence of Pepsi, 7-Up, Coke and Sprite in HCMC, sales of Schweppes
has decreased. The purpose of diversifying its products, IBC should do market research,
produce and distribute other flavor of Schweppes such as cream soda, tonic, pineapple and
Schweppes sport plus to attract the new consumers.
Developing new pack types
Soft drinks have been increasingly consumed at home. This proves that there is the
fast growth of the take-home trade. IBC should bottle it products in PET bottles with volume
of 500 ml, 1 liter, 1.25 liters or 1.5 liters to cover this segment.
Beside Schweppes bottle with volume 285 ml, Schweppes ought to bottled with
volume of 207 ml to meet the different drinking size of Vietnamese consumers.
Stemming from strongly financial resource, IBC often supports sport, music as main
sponsor for these activities. Thus, it should design label attached to its products in special
events such as sport, music, or national celebration, new year and so on, in order to enhance
high brand recognition and more attractive.
6.2.4.2. Price Strategy
66
The purpose of IBC’s price strategy is to support its marketing mix strategies. As
analyzed earlier, developing IBC’s marketing strategies is to protect its leading position. Its
price strategy should be developed to increase either numbers of buyers or the rate of
purchase. At present, the prices of IBC products are evaluated at fairly average level and
meet the purchasing power. The company should continue to maintain the stabilized pricing
policy to stimulate demand for soft drink consumption. IBC ought to apply the market
oriented price policy in which the prices of its products are higher than prices of local brands
to affirm high quality products and reap profit. Moreover, the prices of Pepsi and 7-Up are
lower than Coke and Sprite to meet competition and purchasing power of consumers.
Pursuing the lower price policy compared Coke will be an important factor to convince more
consumers to buy IBC products because most of soft drink consumers has a little price
sensitive.
In fact, the selling prices of Schweppes and Crush per unit (bottle) are the same as
the prices of Pepsi and 7-Up. If compared Schweppes with volume of 285 ml and Pepsi 207
ml, Schweppes is lower price than Pepsi but most of consumers are not interested in the
volume difference. Therefore, Schweppes and Crush should bottled with volume 207 ml at
lower prices in order to attract more consumers and can target the segments of middle and
upper low income people.
In addition IBC should use the price-adaptation strategies to varying conditions in the
marketplace such as price discounts and allowances, promotional price and geographical
pricing. To develop new wholesalers and retail outlets and maintain good relationship with its
existing dealers, IBC should use the flexible price discount policy and higher incentives
compared Coke. Moreover, the company should establish the special price as promotional
price in special events such as new years, holidays. To capture the new markets such as
Central and South provinces, at the first time, IBC should charge the same prices to all
consumers regardless of location and apply the subsidized policy for its wholesalers in new
markets, especially in rural areas.
6.2.4.3. Distribution Strategy
IBC’s current distribution channels system in HCMC covers all inside and outside
districts. The company has continuously expanded direct and indirect channels to make its
products to be more available. In the future, its distribution channels will require periodic
modification to meet new conditions in the marketplace. Modification becomes necessary
when consumer buying pattern changes, market expands, competition rises. To distribute its
products to right consumers in right place at right time with cost efficiency, IBC should
continue to follow the intensive and effective distribution strategy to cover in the whole
country. Following this strategy, the company should expand its current distribution channels
region by region, penetrate and develop distribution networks at rural markets effectively by
using more flexible distribution techniques. For HCMC market, IBC should focus on the
following aspects:
Opening up the selling its product by vending machines: at present “postmix” of IBC
faces several problem as mentioned in previous chapter. In the future, however, when
demand for soft drinks increases significantly, competition becomes sharpest, establishing
and developing this channel will be very important for the company to compete with its
competitors. Thus, IBC should invest to install more vending machines (postmix) at
entertainment places, train station, theater, high schools, factories and so on. In addition
launching the advertising campaigns and sales promotion for postmix are necessary to
67
convince more consumers to drink soft drinks. By developing this channel will create high
awareness for the company and its products.
Developing new retail outlets through expanding “direct route” and “Horeka”: as
analyzed in consumer survey, majority of consumers most often buy soft drinks at coffee
shops, retail outlets. Stemming from this characteristic, IBC should focus on developing new
retail outlets including exclusive retail outlets by offering a higher range of incentives and
discount prices. Furthermore, IBC should significantly focus on penetrating and developing
more retail outlets in channel of “Horeka” because Coca Cola Chuong Duong Soft Drink
Company is consolidating and enhancing its channel in this segment. To capture more
outlets of “Horeka”, IBC should often use the offers of free carbonates, discount coupons for
purchase, or holding lucky draw on weekend of each week.
Expanding wholesaler networks: IBC should plan for developing new wholesalers,
especially exclusive wholesalers and offering incentive policies for the wholesalers who gain
higher sales volumes. Moreover, the company has also plan for dropping wholesalers whose
sales are below a certain amount.
Creating good relationship between IBC with its distributors, the relationship is very
important to win and hold customer loyalty. Thus, the relationship can be built if the company
will keep supplying, carry out its promises, provide promotional support, manage and solve
conflict in channels, give adequate incentives and profit margins.
Besides, IBC should mention in developing distribution networks at provinces. For
cities such as Ha Noi, Da Nang and Can Tho, the company may build “Horeka” to penetrate
into segment of high income people and establish sales department at these regions and
control the selling price of wholesalers. Once the plant will be built at these locations, direct
routes can be developed.
6.2.4.4. Promotion Strategy
The promotion strategy that IBC should undertake is aimed at creating the image and
maximizing awareness of its products, especially Pepsi and 7-Up in the consumer’s mind as
well as convince them to buy its products. The company should follow the pull promotion
strategy to communicate existence and value of its products to target market and create
sales. The pull strategy involves marketing activities, mainly advertising and sales promotion
directed at end users to induce them ask distributors (wholesalers and retail outlets) for
product and thus induce the distributors to order the product from the company.
To persuade and remind its target consumers to buy IBC products, the company
should emphasize on the use of promotion tools, as follows:
Advertising: the survey disclosed that the information contents of IBC’s advertising
program on television are lack of honesty. This can cause a negative impact about its
products. Thus, IBC’s advertising program should be adjusted to be suitable local.
Sales promotion: IBC ought to enhance in trade promotion by offering free goods or
promotional price in special events, supporting promotional materials and point of sale
display in order to stimulate their purchase, build brand loyalty of wholesalers and retailers,
maintain good relationship and gain entry into new retail outlets. For consumer promotion,
this activity is not attractive in last time, so IBC should stress on using consumer promotion
68
tools such as discount coupon for purchase, lucky draw and gift to convince consumer to
switch to its products. All activities of consumer promotion should be often held at
entertainment places, schools, dancing clubs, karaoke clubs, etc., to attract young people.
Special events sponsorship: the company should sponsor the local cultural festivals,
international music programs, sport activities, scholarship funds and charity activities.
Personal selling: the company should emphasize on training and developing its sales
force to manage direct routes and build the good relationship with retail outlets, especially
outlets of “Horeka”.
6.3. Recommendations for Further Research
This research of developing marketing strategy for the International Beverage
Company in HCMC, the author just concentrates on developing marketing strategies
including market segmentation, market targeting, positioning strategy and developing
marketing mix strategies. The implementing and managing marketing strategy including
designing the marketing organization, evaluating and controlling marketing performance are
important issues. The research does not discuss, thus, it needs to study in detail in order to
ensure the success of marketing strategies. Regarding the product strategy, new product
development is not discussed. It is necessary to study in detail to ensure the success of
product before producing and launching new product in the market. The physical distribution
channels play a critical role in developing distribution systems. So, the activities such as
inventory, logistic, warehouse and transportation need to study carefully in order to complete
the work on distribution channel.
69