Marketing plan for liquid milk of vinamilk company

International School Viet Nam National University  MARKETING PLAN FOR LIQUID MILK OF VINAMILK COMPANY GROUP 4 Member of group Nguyễn Thùy Linh 19071410 Nguyễn Xuân Tùng 19071553 Lê Thảo Hương 190.

International School Viet Nam National University - - MARKETING PLAN FOR LIQUID MILK OF VINAMILK COMPANY GROUP Member of group: Nguyễn Thùy Linh 19071410 Nguyễn Xuân Tùng 19071553 Lê Thảo Hương 19071171 Trần Thị Hà 19071345 TABLE OF CONTENT PART : CURRENT MARKETING SITUATIONAL ANALYSIS Company Profile Vietnam's liquid milk market Competitive analysis Current marketing strategy and marketing mix of Vinamilk 4.1 Current marketing strategy of Vinamilk 4.2 Marketing mix of Vinamilk 5.Macro environment 3 7 11 PART : SWOT ANALYSIS AND OBJECT SWOT Analysis Object and Goals 13 13 16 PART 3: NEW MARKETING STRATEGIES AND MARKETING MIX 18 Marketing strategy 18 Marketing Mix (4P) 20 Projected marketing budget 23 Action program 23 REFERENCES 29 PART : CURRENT MARKETING SITUATIONAL ANALYSIS Company Profile 1.1 Development history Thong Nhat dairy factory, Truong Tho dairy factory, and Dielac powdered milk factory were inaugurated and put into operation 1976 1994 Hanoi Dairy Factory was established Inaugurated Binh Dinh Dairy Factory and Sai Gon Dairy Factory 2003 Inaugurated the world’s most morden factory, 100% automation Buiding the first cow farm in Tuyen Quang 2005 2007 Inaugurated Tien Son Dairy Factory and Nghe An Dairy Factory Completed the acquisition of 75% share capital of GTNFoods JSC, thus controlling Moc Chau Milk JSC whose total head cows are 25,000 2009 Cow farm in Nghe An was opened with the size of 3000 cows 2013 2016 Inaugurated Angkormilk Dairy Factory in Combodia 1.2 Vision, mision and core value To become a world grade brand in food and beverage industry, where people put all their trust in nutrient and health products Vinamilk commits to bring best-quality nutrition to communities that reflects their respect, love and responsibility 2019 INTEGRITY FAIRNESS Integrity and transparency in actions and transactions To be fair with employees, customers, suppliers and other parties COMPLIANCE RESPECT To have self-respect, to respect colleagues To respect the Company and partners To cooperate with respect Core values To comply with legal regulations, the Company’s Code of Conduct and the Company’s procedures and policies ETHICS To respect the established ethical standards and act accordingly (Vinamilk.com) Vietnam's liquid milk market For the period from 2010 - 2015, fresh milk production capacity increased by an average of 16% per annual from 520,6 million liters in 2010 to 1.093 million liters in 2015 According to the General Department of Statistics, in 2015 the dairy sector in Vietnam has recorded the highest milk production capacity so far, mainly focusing on names such as Vinamilk, TH Dairy Food Joint Stock Company, etc In 2016, output and consumption of dairy products continued to flourish In June 2016, fresh milk production capacity was estimated at 99.1 million liters, increasing by 1.3% compared to the previous month In general, for the first months of 2016, fresh milk production capacity was estimated at 553.1 million liters increasing by 4% over the same period in 2015 In the first half of this year, production capacity of these two dairy products was also higher than the same period last year, signaling a continued year of output growth The liquid milk market in 2018 revenue reached 48.9 trillion, with a steady growth rate of 10% CAGR is expected to decrease but still reach nearly 7% to reach 66 trillion by 2023 Due to limited income and distribution conditions, dairy products are skewed towards urban residents in terms of sales as well such as the variety of items The forecast of growth in milk production in Vietnam from 2015 to 2045 is as follows: - Period 2015 - 2025: Growth 12.0%/year - Period 2026 - 2035: Growth rate of 5%/year - Period 2036 - 2045: Growth of 3.0%/year Competitive analysis  TH True milk TH milk is a new milk brand entering the market Fresh milk market with clean fresh milk products TH True milk at the end of December 2011 Originated from thirst hopes for a great stature of Vietnam and wishes that all Vietnamese people, especially the younger generation, can enjoy high-class dairy products with high nutritional value TH true milk is applied the modern ESL technology of Germany - The processing technology that combines the right temperature and time allows almost absolute elimination of bacteria Competitive strategy: on product quality Natural quality is what this company aims to help them increase market share Objective: Expand market, increase market share Strengths: Owning TH clean fresh milk production and processing factory with a capacity of more than 5000 tons/year (in Nghia Binh commune, Nghia Dan district, Nghe An province) This is the largest modern clean milk production and processing factory in Asia in terms of both scale and technology Weaknesses: The price is higher than other fresh milk products in the market  Dutch Lady Dutch Lady Fresh Milk: Friesland Campina Vietnam is a joint venture company established in 1995 in Vietnam between Binh Duong Import-Export Company (Protrade) and Royal Friesland Campina - a leading dairy group in the Netherlands with 140 years of experience operating worldwide In 2002, the name was changed to Dutch Lady Vietnam 100% pure fresh milk produced according to Dutch standards with more than 140 years of experience in the dairy industry, Dutch Lady pasteurized fresh milk with delicate taste and full of nutrients, is the freshest and most suitable choice for the whole family Competitive strategy: Expanding the market Objective: Due to the specificity of Vietnam, all Dutch Lady's products are traditionally family-oriented, ie Dutch Lady's dairy products are intended for all audiences and all ages In fact, Dutch Lady's TVCs are all community-oriented with the slogan "Drink Ducth lady milk to express love to your mother" Strengths : Stable market share , reputable brand name , advanced and modern production technology , high product quality , reasonable prices , wide distribution system Weaknesses : Market share is not large enough , slow response to market changes , lack of autonomy in the supply of raw materials , products are not diversified , mainly focusing on children  Ba Vi Established on 5/5/2009, with the main task of developing cows, purchasing milk from farmers, processing dairy products, the company always focuses on developing raw material areas Business Strategy: Lower prices than competitors Objective: Building a brand associated with quality Strengths: Produced in one of the most modern dairy factories in the North, with Tetra Pak technology of Sweden and APV of Europe, Ba Vi fresh milk product wishes to bring consumers the best High quality and nutritious natural products Weaknesses: Products are not diversified, vision is limited, distribution system is still narrow Current marketing strategy and marketing mix of Vinamilk 4.1 Current marketing strategy of Vinamilk Market segmentation Dairy milk cows  Fresh milk: 84%  Pasteurized milk: 4% The liquid milk market is less competitive than the powdered milk segment because local firms have the advantage of supply Vinamilk is the enterprise that holds the No market share in this segment The liquid milk segment accounts for about 42% of the company's revenue and 42% of the company's gross profit in 2017 Other Milk Substances (Soy Milk, Nut Milk): 12% This is the segment that is forecasting to have the highest CAGR in the coming year at 18% due to the trend of gradually replacing cow's milk to nut milk of some consumers Target market Liquid milk segment of Vinamilk includes a lot of product lines that have ability to meet needs and requirements of various and large number of consumers, such as: UHT 100% non-fat fresh milk, especially aims at people who are on diet or want to avoid fat, Twin Cows 100% UHT milk imported targets customer segment that loves imported products, fresh milk plus canxi low fat for lack of canxi or overweight people Huge demand for liquid milk results in high competition in this industry Applying business - to - business sale form, we choose supermarkets and schools as main customers to deal with To supermarket, Vinamilk decides to corporate with Metro Con because we want to expand our distributors Metro is one of the biggest wholesale traders in the world By 2002, Metro decided to enter Vietnam market by establishing Metro Cash and Carry Vietnam Company with the first center located in Ho Chi Minh City Up to now, Metro is the only wholesaler in Vietnam with 19 branches located in big cities and provinces throughout Vietnam To schools, we aim at boarding school syytems throughout Vietnam by demonstrate to these venues and facilities mulk demonstraths to students "meals at schools, showing the influence of milk to students health care and height growth that attracts participants Target group In the context of the region’s rapid growth, companies that not have at least a third of their revenues coming from Asia cannot hope to remain sustainable global players Companies wanting to sell to Asia should not look at Asia city by city; they should look at Asia as market centers In approach, they should not differ one from another But selling to urban and rural within the ten-same country can be very different (Naisbitt, 1997) Although Vinamilk offers a wide product range, from for children to the elder generation, the group of under 14-years-old is considered as the target market for the company At this moment, Vinamilk has strong position and distribution channels in all the big cities and urban areas However, the brand awareness in the rural is relatively weak, therefore, this is one of the target group for Vinamilk in the future (Vinamilk, 2016) 4.2 Marketing mix of Vinamilk 4.2.1 Product Vinamilk's products are very diverse in types with over 200 dairy products and dairy products: condensed milk, powdered milk, nutritional powder, fresh milk, ice cream, yogurt, cheese And other products such as: soy milk, fruit juice, cake, Instant coffee, bottled water, tea, instant chocolate With a wide range of products, Vinamilk has fully met the consumption needs of customers and contributed to spreading risks for the company However, there are also difficulties such as management, product preservation, product distribution The solution that needs to be given here is to focus on products that are being consumed a lot, and remove those products unpopular products, improve product quality Some products that bring high revenue to the company that need to be focused are:  Condensed milk (accounting for 34% of sales) Condensed milk is the product line that accounts for the highest proportion in the company's domestic revenue structure In 2007, this product line achieved a growth rate of 38% and accounted for 79% of the market share  Fresh milk (accounting for 26% of sales) In 2007, fresh milk achieved a growth rate of 18%, accounting for about 26% of the company's total revenue and the second highest contribution to revenue compared to all product lines of the company Vinamilk fresh milk accounts for 35% of the market share This is a highly diversified product line with many brands However, Vinamilk had to cede the leading position in this market segment to Dutch Lady because the company has stronger public relations and better marketing strategy  Milk powder and instant cereal (24% of sales) Powdered milk accounted for 24% of Vinamilk's 2007 sales Vinamilk (along with Abbott and Dutch Lady) is one of the three leading companies in the Vietnamese market in terms of powdered milk sales, in which Vinamilk holds 14% market share  Yoghurt (accounting for 10% of sales) Vinamilk drinking yogurt accounted for 26% of the market share and eating yogurt accounted for 96% of the market share In 2007, this product line achieved a growth rate of 10% compared to 2006 Dairy materials are always a matter of special concern to dairy companies because the current raw materials are mainly imported, the prices are very high and the supply is passive Some strategies have been launched and considered quite successful, such as controlling the quality of fresh milk such as re-signing contracts with mandatory terms, absolutely not accepting milk from hired milkers… In addition, the company also combined with Campia Joint Venture Company to build a dairy cow farming technical training center in Lam Dong To be proactive in the source of raw materials for milk processing factories, to ensure stable and long-term production, leadership Vinamilk has a policy of developing domestic raw materials, gradually reducing imported materials The company decided to invest in developing forms of closed industrial-scale dairy farms with modern technology It is expected that Vinamilk will build high-tech dairy farms in the provinces of Nghe An, Vinh Phuc, Lam Dong, Binh Dinh, Binh Duong, Soc Trang , with a scale of 2,000 cows each provides an average of 30 million liters of milk per year As a result, the problem of milk materials has been solved for Vinamilk 4.2.2 Price Wholesale and retail pricing policy for agents and distributors: Vinamilk pasteurized fresh milk 200ml 900ml 100% Organic fresh milk pack of boxes x180ml 1L paper box Vinamilk pasteurized fresh milk pack of boxes x 110ml pack of boxes x 180ml 1L paper box 4.2.3 Place Retail Agency 8.602đ 35.409đ 7.154đ 29.161đ 44.000đ 53.900đ 40.04đ 47.86đ 18.000đ 30.140đ 31.449đ 14.85đ 23.69đ 27.675đ During the past few years, the distribution network of Vinamilk has continued to be consolidated and strongly grown in both domestic and international market Due to the research scale, the author only focuses on the domestic distribution system in this part Nationwide distribution systems In Vietnam’s dairy industry, there are two major distribution channels, which are traditional trade (distributors - wholesalers - retailers consumers) and modern trade (distributors - supermarkets - consumers) (Vietnam Research Team, 2014) Currently, the domestic distribution system of Vinamilk follows these two models with over 250 exclusive distributors and more than 250 000 retailers nationwide.(Vinamilk Annual Report 2019) 4.2.4 Promotion  Highly investing in advertisements Vinamilk topped the list of aggressively spending money on advertising In the first months of 2019, Vinamilk spent more than VND 901 billion on advertising and market research, an increase of more than 11% over the same period in 2018 As General Director Mai Kieu Lien once shared at the annual general meeting of shareholders in April, in order to gain market share, Vinamilk had to spend money on advertising Despite the largest amount of money spent on advertising, the profit that Vinamilk brings to shareholders is also commensurate when it reached VND 5,689 billion in the first six months, up nearly 6% over the same period in 2018 That is not to mention other expenses, which are the cost of Vinamilk's product promotion, display and introduction services in the past months, which amounted to VND 4,088 billion Thus, the total budget for advertising and marketing of Vinamilk in the first months of 2019 is VND 4,989 billion, an increase of VND 430 billion compared to the same period in 2018  Brand attached to the community Besides focusing on the advertising strategies, Vinamilk also perceives the importance of actions that bring sustainable values to the society and the community For that reason, many meaningful social activities have been proceeded, the most typical ones are: the Scholarship Fund “Vinamilk - Nurturing Vietnamese young talent”, the “Stand tall Vietnam milk” Fund, and the “One million green trees for Vietnam” fun  Vinamilk's main export markets include countries in Asia, especially Southeast Asia Therefore, there is still a long way for Vinamilk to penetrate into the European or American market 1.3 Opportunities:  The Government has introduced many preferential policies, reducing the burden on Vietnamese dairy enterprises in order to promote the development of the domestic dairy market Strengthen price competition with imported goods  The number of potential customers is high and there is a great demand On average, milk consumption per person is 14 liters per year This is considered a great opportunity and potential for Vinamilk to reach out in the dairy industry  Diversify supply and domestic distribution network: Vinamilk is planning to open more retail points and stores to introduce Vinamilk's products in the country In addition, Vinamilk also plans to develop the domestic supply of dairy cows, helping to reduce the financial burden of imported raw materials  Domestic dairy farms with international certification play a very important role for Vinamilk, helping the company reduce its dependence on international supply, thus being less susceptible to fluctuations in exchange rates  The dominance over domestic supply gives Vinamilk great power in pricing, allowing the company to offer products at very affordable prices 1.4 Threats: -  Competing with domestic dairy brands Vinamilk is the leading brand in Vietnam's dairy industry, with 48.7% market share However, this brand is also facing more and more different competitors from the domestic dairy market The two biggest and direct competitors, Dutch Lady and TH True Milk, hold 25.7% and 7.7% market share, respectively -  Competition with international brands Vinamilk is still facing many challenges from increasingly fierce competition in the dairy market, especially for famous dairy companies in the world such as Meadow Fresh or Table Cove -  The source of raw materials is not stable Although investing in many dairy farms according to international standards, the company's main source of raw materials still has to be imported from abroad Not to mention, dairy farmers are no longer interested in their current work due to low profits, being forced by buyers of raw dairy cows, causing a significant decrease in the domestic source of dairy materials  - Currency exchange rate change As the weakness has also shown, the difference between foreign exchange rates between countries is also a threat to Vinamilk in the future With 50% of raw materials imported and 30% of the company's revenue from exports, fluctuations in foreign exchange rates have a huge impact on the company's production Object and Goals -  During the past 40 years, Vinamilk has always achieved an impressive growth rate Especially, in the last 10 years, since the equitization, the average sales increased by over 20%/year; profits increase by 15%/year; average payment of over 3,000 billion VND/year to the state budget The total value of payment to the state budget since the equitization in 2003 has reached over VND 22,000 billion, equivalent to USD 1.1 billion  The company rose to Top 100 most valuable companies in Southeast Asia, Top 300 enterprises in Asia (Top 100 ASEAN and Top 300 ASIA) and Top 50 best listed companies in Vietnam At the same time, combined with the world's leading advanced technology has brought Vinamilk's output to the No position in Vietnam  In order to achieve the goal of always being the leading dairy production and trading company in Vietnam, Vinamilk focuses on expanding the market share of products with low market share such as powdered milk: the target is 50% of the market portion, liquid milk: target to take 60% market share; continue to dominate the Vietnamese market in key products; at the same time consider expanding multi-industry business activities in the next 2-3 years  In 2019, Vinamilk launched new products to meet the increasing demands of customers: Organic Gold Powder and Milk Powder, Yoko Gold Milk Powder and Optinum Gold Powder Besides traditional milk, the demand for plantbased milk tends to increase Vinamilk has grasped the new trend with plantbased milk products such as VNM soy milk, walnut - red bean - almond, Zori roasted rice milk  International market penetration Not only dominating the domestic market, Vinamilk also expands to the world market The company invested 22.8% of shares in Miraka Factory (New Zealand), invested 70% of shares in Driftwood Factory (USA), held 51% shares of Factory Investment in Cambodia, opened a company children in Poland act as the gateway for Vinamilk's commercial activities in Europe The Company's products are present in more than 40 countries and regions Expected average export growth of 10-15%/year Towards a global brand - With the goal of sustainable development and reaching out to the international market, Vinamilk sets a long-term development strategy associated with emulation movements to become one of the 50 largest dairy companies in the world by 2017 with sales of billion USD At the same time, Vinamilk also invested more than VND 6,500 billion from its own capital to modernize machinery, equipment and production technology Many modern refining lines originating from advanced industrial countries such as the US, Denmark, Italy, Germany, the Netherlands were installed, together with the world's leading experts guiding the operation and Technology transfer PART 3: NEW MARKETING STRATEGIES AND MARKETING MIX Marketing strategy 1.1.Target market 1.1.1 Market segmentation criteria Criteria Classification Under 15 years old Age From 15- under 25 years old Over 25 Years old Less than million VND From 6-12 million VND Income 12 million VND or more Urban Geography, Rural area Characteristic Age of children and teenagers As the age of development, it is necessary to supplement many essential nutrients from milk to develop height and brain Adolescent age This age is in the late stage of development, requiring additional nutrients from milk but less For adults, less use of fresh milk but switch to other nutritional products (such as functional foods) Low economic condition Can only afford to pay for real needs Having better income, able to pay for higher nutritional needs, but not regularly and continuously, at the same time there is consideration of product price The income level is relatively good, able to pay for the needs of regular and continuous use, with less consideration of price, but more attention to quality and nutritional value People's living standards are high, care about essential health and nutrition, and are willing to spend money for high needs in life Living conditions and living standards of the people are still relatively difficult, paying less attention to health and essential nutrition, and unable to pay for high-level needs 1.1.2 Evaluate and select target market Attraction of the market (Note: to scale, = less attractive, = most attractive) No No No Criteria Market size Market growth Accessibility to customers Competitiveness Total Criteria Market size Market growth Accessibility to customers Competitiveness Total Under 15 years old 5 19 From 15-25 years old 4 14 Over 25 years old 2 Less than million VND 3 11 From 6- 12 million VND 4 17 12 million VND or more 5 19 Criteria Market size Market growth Accessibility to customers Competitiveness Total Urban 5 5 20 Rural 4 14 Evaluate the strength of Vinamilk in the market No No Criteria Financial capability R&D ability Production cost Distribution channel Staff Total Criteria Financial capability R&D ability Production cost Distribution channel Staff Total No Criteria Financial capability Under 15 years old 5 19 From 15-25 years old 3 3 15 Over 25 years old 2 13 Less than million VND 2 3 13 From 6-12 million VND 5 21 12 million VND or more 4 4 21 Urban Rural 3 R&D ability Production cost Distribution channel Staff Total 4 22 3 13  The target market segment : Vinamilk's products are diverse, can be used for all ages and all market segments, but the market segment that Vinamilk focuses most on is the market segment with medium to high income The age that Vinamilk aims at is the one under 15 years old, because it is a developing age, fresh milk products are essential in this period for physical and intellectual development 1.2 Positioning strategy With the position of a big brand in 40 years of development, Vinamilk has always affirmed its leading position and role in the dairy industry in Vietnam “Sologan: Clean milk - no - raise the dream” The slogan of Vinamilk company is "Clean milk - no - raise the dream", firstly showing the ability to provide consumers with products that are not only safe but also ensure nutrition and high quality At Vinamilk's dairy farm system stretching across Vietnam, the cows are cared for in a natural environment with a strict "3 NO" process: No growth hormones, no antibiotic residues, no pesticides With a system of international standard factories stretching throughout Vietnam, Vinamilk's 100% fresh milk products are always guaranteed to source fresh milk from the farms, which are transported quickly to the processing plants, ensuring optimal taste and nutrients from milk are preserved in the products ''Elevate the dream'' is a message aimed at parents when giving their children vinamilk milk can help improve children's physical health.In addition, it also has a deeper meaning, the stature of vinamilk associated with vinamilk with the corner of the country Marketing Mix (4P) 2.1 Product - Vinamilk fresh milk is a product that not only brings convenience to consumers, but also keeps the natural delicious taste, preserves all the essence and natural nutrients of clean fresh milk, contributing to improving and enhancing intelligence intellectual and physical for Vietnamese people The company aims to provide customers with a convenient, delicious and nutritious product.”  Currently the company is focusing on developing sugar-free and sugar-free Thanh Trung bark products for customers to choose depending on their taste ... Current marketing strategy and marketing mix of Vinamilk 4.1 Current marketing strategy of Vinamilk Market segmentation Dairy milk cows  Fresh milk: 84%  Pasteurized milk: 4% The liquid milk market... rural is relatively weak, therefore, this is one of the target group for Vinamilk in the future (Vinamilk, 2016) 4.2 Marketing mix of Vinamilk 4.2.1 Product Vinamilk'' s products are very diverse...TABLE OF CONTENT PART : CURRENT MARKETING SITUATIONAL ANALYSIS Company Profile Vietnam''s liquid milk market Competitive analysis Current marketing strategy and marketing mix of Vinamilk 4.1