the recommendation for cholimex the marketing plan marketing strategy current company new product new service

According to a market research study, the Masan Group currently holds the largest market share about 43% of the markets for chili sauce and ketchup.. Especially, in the chili sauce indus

FINAL REPORT

THE RECOMMENDATION FOR CHOLIMEX

THE MARKETING PLAN & MARKETING STRATEGY - CURRENT

COMPANY & NEW PRODUCT/ NEW SERVICE

MEMBER INFORMATION SHEET

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TABLE OF CONTENT

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COMPANY OVERVIEW

FOODS

General introduction : Cholimex Food aims to be a major food producer, processor, and distributor with a broad and varied product chain that complies fully with national and international food safety and hygiene regulations rising consumer preferences in both domestic and international markets The use of resources, know-how, and knowledge

from all economic sectors, both locally and abroad, through various forms of

collaboration to grow synchronously and establish a closed supply chain, starting with raw material areas and ending with supply chains Providing the best possible quality in healthy food while ensuring the monitoring and traceability processes.Increase production capacity, process export commodities, and expand distribution networks relating training

in human resource development to the requirements for Cholimex food development for the years 2018-2025

The history of formation : The "District 5 specialized and specialized import-export private joint venture company," also known as the "Cholimex Company," was established

in 1981 with approval from the People's Committee of Ho Chi Minh City in accordance

with Decision No 73/QD-UB of April 15, 1981, and under the control of the District 5

People's Committee With the involvement of both public and private finance, a ground- breaking experimental joint stock company operating model for the city was created One

of the earliest direct import-export trading firms to be created in Ho Chi Minh City was Cholimex

« Mission: Add some life's spices to every beautiful meal Cholimexfood consistently

"seasons" love and happiness with quality, accountability, commitment to labor, and ongoing inventiveness for the community and society

¢ Vision: Offering consumers scrumptious, fully-flavored meals with high-quality ingredients while consistently innovating for the community and society is what Cholimex Food means by "bringing the spice of life to every delightful meal.”

The organizational management of Generel Mentinec `

General Meeting of Shareholders: \s the highest authority of the Company,

including all shareholders with voting rights The General Meeting of Shareholders decides on issues within its authority in accordance with the law and the Company's Charter

Board of Directors: As the management agency of the Company, has full authority

on behalf of the Company to decide and exercise the rights and obligations of the Company which are not under the authority of the General Meeting of

Shareholders

Supervisory Board: |s an agency elected by the General Meeting of Shareholders, responsible for checking the reasonableness,lawfully operating the Company's business activities The Supervisory Board operates independently from the Board

of Directors and the Board of General Directors

Board of Directors: The General Director is the executive, has the highest

decision-making authority on all issues related to the Company's daily operations and is responsible before the Board of Directors for the implementation of the assigned rights and duties The Deputy General Directors are assistants to the General Director and are responsible to the General Director for the assigned tasks

Business Performance of Company: During the period of social estrangement, the corporation continued to operate a distribution system for goods in both the domestic and export markets while also providing basic necessities to residents of Ho Chi Minh City and the entire nation The company has also adapted the product structure to concentrate

on practical and compact product lines for families, pushing e-commerce by building real stores on online shopping portals electrical, in keeping with the current epidemic season

conditions As a result, overall revenue in 2021 was VND 2,513 billion, up 111% from the

previous year, and profit was VND 232 billion, up 104% from the year before

Additionally, Cholimex Food Company announced a 20% growth goal for

2022,implementing programs to improve processes and working methods, especially promoting the application of technology in human resource management and production; developing human resources to meet the demand; quickly deploying the project in Ben Luc - Long An, which is expected to start construction in June 2022 and complete and put into operation at the latest in the fourth quarter of 2023

Marketing Strategy

PART 1: PREVIOUS MARKETING STRATEGY

1 SUMMARY EXCUTIVE

Cholimex's sauce and seasoning factory has a 500 million bottle annual manufacturing capacity At the end of the previous year, the company was providing coverage for 5,000 supermarkets, 4,000 restaurants, and fast food franchises According to Statista, Cholimex will rank among the top six FMCG brands in 2020 with a 14,7% CRP-based growth rate

Picture 1: Statista FMCG report (2020)

Cholimex is using a very successful distribution and product approach The fact that Cholimex goods are widely available and accessible is evidence of this The business, however, has not prioritized promotion and advertising In particular, Cholimex recently promoted a new chili sauce product only through press channels rather than using TVC and sponsoring TV shows

According to a market research study, the Masan Group currently holds the largest market share about 43% of the markets for chili sauce and ketchup Second place is held by

Cholimex Food, which holds more than 37% of the market

It is projected that chili sauce's growth rate would increase due to the rising demand for it in applications other than dipping and seasoning meals When the growth rate is higher than the national average, the volume increases in rural areas grew by 38%, of which the average household outlay increased by 9%

Also Cholimex has some competitive advantages to copy with other brands, For example: The product is reasonably priced, even less expensive than similar products, and it is distributed throughout the entire country in 63 provinces and cities Using a single price policy when selling goods: The delivery process is efficient and dependable quicker dissemination of product and brand information to consumers

Marketing Strategy

Finally, we would like to create a new product for Cholimex with the aim to boost even more the brand awareness, also expand their market share and reach new customers, especially Gen

Z

2, SITUATION ANALYSIS

With increasing consumption demand, in the past few years, the domestic processed and preliminarily processed food industry has developed rapidly at a rate of 150-200%/year According to Nielsen forecasts, the Vietnamese spice market will achieve an average annual growth of 25-32% in the period 2016 - 2022 According to a report by Euromonitor, the spice

industry has a market size of about 33.5 trillion VND, with 64% contribution from sauce In

which, the chili sauce industry ranks third with a total scale of 2.6 trillion VND

With nearly 100 million people, owning a large area of land for growing pepper, ginger, chili, garlic, Vietnam is not only a place of production and consumption but also has great potential for exporting spices This also helps many businesses do well Currently, the spice market is considered as a fierce competition "battlefield" for Vietnamese manufacturers and foreign manufacturers as more and more "big players" enter the market such as Unilever, Masan , Especially, in the chili sauce industry, Masan is a formidable competitor when leading the industry with 60% market share for Chinsu chili sauce products

In addition to fierce competitive pressure, Cholimex also faces the challenge of scarce human resources and high raw material prices However, thanks to effective development

orientations coupled with good adaptability in the market, Cholimex has maintained an

"upward" revenue growth circuit for the past 7 years The company's revenue in 2021 increased by 11% compared to 2020 Accordingly, the domestic market accounted for nearly 73% of the revenue structure, the rest came from export As of the end of last year, the

company is covering about 80,000 retail counters, 4,000 restaurants, fast food chains and

(supermarkets, convenience stores) is estimated to increase by 150%/year According to Nielsen, the Vietnamese spice market will achieve an average annual growth of 25-32% in the period 2016 - 2022 Vietnamese families have a high demand for spices in their meals According to a market research report, Masan Consumer of Masan Group currently holds the

largest market share, more than 70% of the fish sauce market, 71% of the soy sauce market

and 43% of the chili sauce and ketchup market; In second place is Cholimex Food with more than 37% market share

Marketing Strategy

It is forecasted that the growth rate of chili sauce will also increase due to the expansion of demand, not only for dipping, but also for seasoning food In rural areas, the growth rate is higher than the general growth rate, the volume increases increased by 38%, of which the average consumption per household increased by 9%

The target customer segment that Cholimex towards is household customers with good income and above The person who makes the buying decision is a married woman in a family

+ Prefer: use products with flavors that suit the taste of their self and their family, and they prefer convenient and affordable product

+ Wants: using quality products and a variety of dipping sauces to make the meal more delicious

+ Attention: Price, origin, quality (brand, origin) because there are many types of unsanitary products on the market that affect consumers’ health

2.2, Competition Market

In Vietnam, Cholimex's biggest competitor is Chinsu with a leading market share of 60% of

the domestic market (2022) Meanwhile, Cholimex chili sauce ranked second, accounting for

37% of the market share, Nam Duong chili sauce with a lower market share was only behind

the two big guys, Chin-Su and Cholimex, besides, there were also Heinz chili sauce,

Gochuyjang chili sauce was ranked second Made in Korea

In general, all three leading brands in this chili sauce industry have one thing in common:

affordable prices and variety of sizes, but each brand has different and diverse market

strategies And all 3 are present in all stores from small to large

In second place, Cholimex chili sauce is proving its attractiveness in the market as the chili sauce segment contributes good revenue In recent years, Cholimex Foods has achieved a growth rate of revenue and pre-tax profit recorded a remarkable growth at an average of 33% per year Besides, Cholimex's market share is still quite stable when it is chosen by fast food restaurants such as Pizza Hut Vietnam as the supplier of chili sauce and ketchup for the store system Although Cholimex is behind Chin-su in terms of market share, in terms of product diversification, Cholimex is considered the leader in the Vietnamese market with many types suitable for all ages from adults to children such as Cholimex Hot Chili Sauce, Hot Chili

Sauce, Sweet and Sour Chili Sauce, Pho Chili Sauce, Sriracha Chili Sauce each type of

chili sauce is suitable for different family meals and the price ranges only from 10,000 VND

to 21,000 VND

Nam Duong Chili Sauce: With a market share just behind the two big guys, Chin-Su and Cholimex, Nam Duong is also said to have great potential for development Although currently Nam Duong is also focusing on Marketing to promote products, it does not focus on diversifying products to suit different ages (mainly targeting young people's love of spicy food) and the market has not been expanded by the other two big brands, so it is still not

considered a strong competitor of Cholimex After many years of being overwhelmed by big names like Cholimex, Masan, at the end of 2015, Saigon Co.op also shook hands with Wilmar International Limited (Wilmar) to establish a joint venture Nam Duong International Food Co., Ltd Nam Duong branded sauces and spices aim to regain market position for Nam Duong sauce after a long time falling into the hands of Cholimex Food and Masan If Masan's advantage is understanding the market, knowing how to do PR, branding and a large retail system, the cooperation between Saigon Co.op and Wilmar is also expected to combine the advantages of the two sides to improve strength competition and coverage of the Nam Duong brand Wilmar has a distribution system in many countries, so Nam Duong's market share will be more open, not to mention the extensive retail system of Saigon Co.op also contributes to marketing products to consumers

Heinz chili sauce from the US is also a popular item in many countries around the world with more than 50 production factories in many countries That shows that Heinz chili sauce is also a potential future competitor of Cholimex

Marketing Strategy

2.43 Marketing Mix 4P

A, Product:

Cholimex's marketing strategy has successfully applied the strategy of creating differentiation

in products Surely anyone who uses chili sauce has an uncomfortable feeling when reaching the end of the jar, it is difficult to pour because they stick to the surface of the jar But the manufacturer Cholimex did differently by turning the mouth of the bottle down This is not new abroad but how many chili sauce brands in Vietnam have taken care of such a small

demand over the years? Similar to the cans of condensed milk, when the manufacturer

created a type with a snap-on lid to help customers not need to use can openers This difference increases the customer's love and will definitely be the preferred choice when displayed on the shelf, because of the convenience and clarity that saves even the last drop of deliciousness

B Pricing The company sets prices based on three basic options including:

¢ Cholimex uses a cost-based pricing model

j1 Os Ũ II: yi

Figure 2: Pricing model for chili sauce products Cholimex

® Low prices, suitable for Vietnamese consumers

¢ Cholimex holds 40% market share of chili sauce in the domestic market (according to the system 2011)

Table 1: Cholimex previous marketing mix - Price

Cholimex chili sauce

-Attracting the attention - Revenue and profit are not

Lowest price Distributors large and

4,800 VND reputable - Product quality is not

- Increased competitiveness | high

Highest price - Positioning high product ma

10,800 VND quality -Lost a large number of

target customers

C Distribution - The company is divided very clearly:

“+ SUPERMARKET (accounting for 50%)

o For customers who want to buy at the right price, get comfortable service,and ensure quality

o Hours of operation: 8am - 10pm

o Selling characteristics: Fixed, service staff, stable price

o Selling characteristics: Fixed, with service staff, stable price

“+ MARKET (accounting for 9%)

o For customers who want to buy quickly, conveniently, without having to go far

o Operating time: depending on product type

o Selling characteristics: Fixed, crowded places, prices are not fixed

“* GROCERY (25%)

o For convenience-oriented customers

© Operating time: 6am-22pm

o Selling characteristics: fixed location, price is not fixed

11

Cholimex's quality management system is the foundation of its power In order to offer reliable goods and services to its consumers, Cholimex significantly enhanced its

management systems by implementing international standards including ISO 9001:2008, ISO

22000, BRC, HACCP, GMP, SSOP, Halal, and Kosher (Cholimex Foods n.d.)

Cholimex made an attempt to reach domestic and international quality standards like ISO

22000 in contrast to other chili sauce brands like Chin-Su from Masan Consumer Corporation and Heinz from Heinz-Kraft Group The consumer now has confidence in the chili sauce's quality because of this effort Additionally, Cholimex chili sauce is accredited as Halal and Kosher for Jewish and Muslims

& Weakness

Product quality is not much different from competitors, costs for activities such as advertising and trade promotion are still quite low in the digital 4.0 era, not as high investment as competitors, such as Masan Besides, there haven't been many innovations in the

international market

% Opportunities

Iner in lation 1 generation

Cholimex opportunity is based on its population of Vietnam and its size As the demographics

of Vietnam shows, the population focused on 20-30s which is beneficial to the chili sauce industry Younger generation will have a higher percentage of having western foods such as burgers, fries, and fried chicken These foods require the need of chili sauce as well, maybe the chili sauce industry in Vietnam will likely grow higher in the future

Partnership with fast food chains

Fast food companies like McDonald's, Popeye's Chicken, and others are continuing to grow

in the Vietnamese market These will make chili sauce more necessary Because they

differentiated chili sauce based on sizes, Cholimex was able to negotiate with the fast food

Vietnamese branch in Vietnam and supply their little packet of chili sauce The Cholimex has

a huge possibility to increase their market share by partnering with fast food chains like

"McDonalds" and "Popeyes Chicken."

*% Threaten

As for cholimex, they are still not the market leader but there is still a big competitor that is always fiercely competitive Recently, The Masan Consumer Group, which is likely to lose its contract with the fast food chain, is supported by Cholimex Or lose market share to other growing potential competitors Cholimex must alter its strategy to combat these risks, such as growing in size, lowering the cost of its goods, or focusing on high-end markets

so the shift from middle-aged to younger users is a big and sustainable shift for Cholimex, in many cases showing that established brands have changed positioning or expanding

customers from the people of the previous generation to the current young generation and has succeeded in gaining more awareness and having a strong influence on young consumers

who have consumption habits and different behaviors, such as Biti's Hunter, Viettel, etc So

the question is, is the gradual change to young customers for Cholimex really the night step at this time? For Cholimex today, they still hold a large share of the market and expanding to young customers at this time is just the right move and a step-by-step change to catch the current young generation, they will be the main generation of Cholimex consumers in the future But that does not mean that it loses the brand's ethos of "bringing spice to life in every delicious meal"

3.1 Strategy For Product

The products that move from middle-aged people who do housework, office workers, to young people who are either a family member or living separately tend to live healthy and cook healthy food for themselves and their family members without taking too long The fact that this product is aimed at a healthy meal and accompanied by a family image is important

in connection with the brand identification of Cholimex as the company's product is oriented toward delicious meals in the family and thus the love of happiness is clearly shown

Because of that, the new product is a condiment related to the trend of healthy eating, because today's young generation is more concerned about health problems due to the negative impact

of work, a rushed lifestyle

Table 2: New product description

1 Sweet and | Ingredient products are vegetables Generation Z, aged from 22 to 27, just sour avocado | commonly used in healthy eating graduated and working, living kiwi salad lifestyles, making it easy for alone/with family Live and work in sauce consumers to use and suitable for big cities in Vietnam and neighboring

Marketing Strategy