Huggies The strategy to win the strategic newborn segment in Vietnam

Page [1] TRNG I HC M TP. HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITE LIBRE DE BRUXELLES SOLVAYS BRUSSELS SCHOOL ECONOMIC & MANAGEMENT MMA6 PHAM THI THUY HANG LUU THI HANH Master Project of MASTER IN MARKETING AND ADVERTISING Tutor’s Name: SERGE BYWALSKI THE STRATEGY TO WIN THE STRATEGIC NEWBORN SEGMENT IN VIETNAM HO CHI MINH CITY [2013] Page [2] We - the authors Pham Thi Thuy Hang and Luu Thi Hanh – confirm that we worked on this master thesis by ourselves with materials retrieved from either public sources or Huggies’. This paper was exclusively made for the completion of Master of Marketing and Advertising of Solvays Brussels School. No substance was used or would be for any other purpose. Page [3] We would like to express our appreciation to the tutor Serge Bywalski for his guidance on this master final project as well as to all the professors who have taught us in MMA6. [Pham Thi Thuy Hang]: A deep thanks to my parent for their simply unconditional love and supports [Luu Thi Hanh]: Great thanks to Mom & Dad for their encouragement along the way! Page [4] ABSTRACT Entering Vietnam market in 2000, Huggies has been very successful as a market leader in baby diapers category with an extremely strong growth every year. In 2008 while most of the businesses suffered from the global economic crisis, Huggies made an impressive record that grew 100% sales volume and value versus 2007. In 2009, with the launch of Huggies® Dry Pants – convenient and affordable diapers pants – Huggies became the baby diapers brand which had the biggest portfolio offering full of choices for Vietnamese consumers, leaving its competitors far behind with a dominating leadership at more than 40% market volume share in total baby diapers category (TNS Baby Panel Q3 2009). Yet, the situation has changed. In two recent years with the very fierce competition from both international and local competitors such as Bobby (DianaUnicharm) and Pampers (P&G), Huggies has been loosing its leadership to Bobby, 32.4% vs. 44.2% volume share respectively (ACN Retail Audit MAT Sep 2012). One critical fact is that Bobby has been led the market dominantly for years in the newborn segment with 87% volume share (ACN Retail Audit MAT Sep 2012) and its success in this entry segment actually has played a very strategic role in recruiting new users as well as to its current leadership in total diapers category. Huggies also joined the newborn playground after Bobby but after 5 years launching the product, Huggies Nappy actually doesn’t have any big improvement. On the contrary, Bobby Insert, which already has a dominant volume contribution, keeps growing with a very good trend. The purpose of this thesis is to formulate a right strategy for Huggies brand in the newborn segment – the strategic point-of-entry segment of baby diapers category. In order to achieve this, a deep analysis has been invested with the data supports from desk, primary and secondary researches to really understand the internal situation as well as the external (the market, the category, the segment and the target consumer and the competitive scene) before coming to the full situation analysis (SWOT and 6C). Finally a long-term marketing strategy is recommended with the treatments for the basic 4Ps and a detailed actionable plan for the year 2013. Page [5] TABLE OF CONTENT Page LIST OF SYMBOLS & ABBREVIATIONS 7 LIST OF CHARTS & PICTURES 8 PART I: DESCRIPTION 10 1. The Landscape Overview 10 2. Huggies Newborn Case Description 13 PART II: SITUATION REVIEW & ANALYSIS 25 1. Target Customer Analysis 25 2. Huggie Nappy Performance Review 29 3. Competitor Analysis 33 4. Environment & Category Analysis 39 5. SWOT Analysis 44 6. 6C Analysis 44 7. Chapter Conclusion 46 PART III: STRATEGY & ACTION-PLAN RECOMMENDATION 48 1. Brand 5-Year Vision/Mission (2013-2015) 48 2. Short-Term & Long-Term Business Goals 49 3. Marketing Strategy (Strategy Axes & 4P Strategy) 50 4. Action Plan 55 REFERENCES 59 APPENDIX 1 60 APPENDIX 2 61 APPENDIX 3 62 Page [6] LIST OF SYMBOLS & ABBREVIATIONS  DD = Disposable Diaper  NP = Nappy Pad (Insert)  DP = Diaper Pants  MAT = Moving Annual Total  YTD = Year To Date  Q1 = Quarter 1  Q2 = Quarter 2  Q3 = Quarter 3  Q4 = Quarter 4  POSM = Point Of Sales Material  PR = Public Relation  HCMC = Ho Chi Minh City  HN = Hanoi  4 Key Cities = Cantho, Danang, Nha Trang, Hai Phong  GT = General Trade channel  MT = Modern Trade Channel Page [7] LIST OF CHARTS & PICTURES CHART LIST Chart 1 Baby Diaper Volume/Value Contribution By Type Chart 2 Baby Diaper Volume/Value Share By Manufacturer Chart 3 Volume Share By Type By Brand Chart 4 Switching 1 st Brand Rate Chart 5 Huggies Nappy Product Portfolio Chart 6 Nappy Pad/Insert Volume Share 2011 Chart 7 Nappy Pad Volume Trend By Brand Chart 8 Nappy Pad Value Share Trend 2011 Chart 9 Huggies & Bobby Insert Performance HCMC 2011 Chart 10 Huggies & Bobby Insert Performance HANOI 2011 Chart 11 Huggies & Bobby Insert Performance 4 CITIES 2011 Chart 12 Insert Product Packcount Performance Chart 13 Insert Volume Share By Channel June 2012 Chart 14 Insert Numeric Distribution By Brand Chart 15 Hospital Presence Chart 16 Brand Differentiation Profile 2011 Chart 17 FMCG Market Dynamics Q2 2012 Chart 18 FMCG Volume & Value Growth Q2 2012 Chart 19 Baby Categories Growth Q2 2012 Chart 20 Advertising Spending % Change Chart 21 Asia Top Internet Countries Chart 22 Devices Used For Connecting Page [8] Chart 23 Baby Diaper Purchase Channel Chart 24 Huggies Nappy 2013 Investment Recommendation TABLE LIST Table 1 Baby Insert 2011 Price Index PICTURE LIST Picture 1 Huggies Nappy PrintAd 2008 Picture 2 Huggies Nappy Product Transforming Picture 3 Bobby PrintAd 2010 Picture 4 Bobby Loyalty Consumer Promotion Announcement Page [9] PART I: DESCRIPTION 1. THE LANDSCAPE With the population of nearly 88 million people and the average annual birth rate at 1.7% - meaning around 1.5 million new babies are born every year - (Source: Vietnam General Statistics 2011), Vietnam is a really big market for any baby care product. Among baby-care categories, Baby Diaper is the star that has enjoyed the fastest volume and value growth rate in Vietnam in the last 3 years at 28% and 14% respectively. The category now accounts for nearly 20% of moms’ total spending for their babies (Kantar World Panel MAT Q2’12). It also has a very high penetration nearly 90% and greater of usage over the years from 1.8 to 2.2 pieces/day in the period 2007-2012 (Kantar World Panel MAT Q2’12). The Diaper Category in Vietnam currently has 2 segments with 3 types of diaper products for baby as below.  Newborn Segment: the segment of babies from 0 to 3 months old. Due to some skin-health perceptions about newborn babies’ sensitive skin and the hot weather in Vietnam, majority of 65% Vietnamese moms use Nappy Pad (NP) for their 0-6 months babies. Some moms use Disposable Diaper (DD) size NB or S for their newborn babies.  Older Segment: the segment of babies from 4 months and upwards. 2 types of diaper product being used are Disposable Diaper (DD) and Diaper Pants (DP). There are various sizes to choose from M to XXL depending on weight of baby. NEWBORN SEGMENT (0-3 months) NP = Nappy Pads DD = Disposable Diaper DP = Diaper Pants OLDER SEGMENT (4 months upward) Page [10] DD is still contributing the most in both volume and value share of the total category while NP and DP have exchanged the 2 nd and 3 rd ranking when moving from volume to value share (Please refer to Chart 1). [Chart 1 – Baby Diaper Volume/Value Contribution By Type] (Source: AC Nielsen Baby Diaper Retail Audit YTD Sep’12) Baby Diaper category in Vietnam is still very concentrated among the 3 big players which are contributing 95% total volume share of the market: Huggies (Kimberly- Clark), Bobby (DianaUnicharm) and Pampers (Procter & Gamble) (Please refer to Chart 2). Diana with Bobby brand used to be a local company but in November 2011 this company was acquired 95% stakes by Unicharm – the leading company in Japan in Baby & Child Care and Feminine Care categories with the famous brands Sofy and MamyPoko. [Chart 2 – Baby Diaper Volume/Value Share By Manufacturer] (Source: AC Nielsen Baby Diapers Retail Audit MAT Sep’12) 27% 51% 22% BABY DIAPER VOLUME SHARE NAPPY PAD (INSERT) DISPOSABLE DIAPER DIAPER PANTS 11% 55% 34% BABY DIAPER VALUE SHARE NAPPY PAD (INSERT) DISPOSABLE DIAPER DIAPER PANTS 44% 33% 18% 5% VOLUME SHARE BY MANUFACTURER DIANA- UNICHARM KIMBERLY- CLARK P&G OTHERS 38% 36% 19% 7% VALUE SHARE BY MANUFACTURER DIANA- UNICHARM KIMBERLY- CLARK P&G OTHERS [...]... Findings 1.1.2.1 Babycare/Motherhood Experience The young target mothers show a tendency towards becoming more progressive in parenting style They want the baby to grow naturally through touching, exploring, experiencing They express more openness to new things and desire to make different choices from the mothers before them This may be driven by high exposure to online sources (i.e online parenting... looking at the long-term volume trend, Huggies Nappy actually On the contrary, Bobby Insert, which already has a dominant volume contribution, keeps growing with a very good trend (Please refer to Chart 6) now that newborn segment is very strategic and owning this segment Huggies in both recruiting new users to the brand and retaining those users in later stages/segments, which after all can help Huggies. .. 2011 $3.2 Mil HUGGIES, 44% BOBBY, 26% YTD Sep 2012 $4.8Mil ( ) 2 HUGGIES NEWBORN CASE DESCRIPTION Different from other countries, Vietnamese moms have been using nappy pad (insert) like a feminine pad in bigger size for their newborn babies due to the following insights: Skin-health Perception: primary concern about newborn itive skin they believe that DD is too stuffy for a newborn -foran infant has... baby diapering, especially in the newborn segment 1.1 BABYCARE & DIAPERING INSIGHTS EXPLORATION 1.1.1 Research Design 1.1.1.1 Objectives: To define who are the core target audiences To explore their lifestyle and understand their media touch-points To clarify the category drivers and their purchase triggers as well as to understand motivations, unmet needs and barriers towards newborn diapering 1.1.1.2... been the dominant leader in this segment with 87% volume share (Source: ACN Retail Audit MAT Sep 2012) Its success in this entry segment actually has played a very strategic role in recruiting and retaining users for the brand in the older segment Entering Vietnam as an international leader in baby diaper category from 2000, Huggies did not really care about this product prototype at first All the marketing... below -the- line activities, Bobby has only focused on consumer promotions and sampling activities in hospital Invest in presence in hospital to build perception of far According to the data of Brand Health Tracking 2011, 50% of target moms received Bobby Insert samples in hospitals Certainly this figure must be very related to 69% of them using the product after that On the contrary, these figures of Huggies. .. divided into three phases that were turning around the product revolution of Huggies Nappy giving better fit and better leakage protection The integrated campaign happened from September to December 2011 with the module as below This was actually the biggest campaign ever supporting to Huggies Nappy involving both above -the- line and below -the- line activities RE-LAUNCH MODULE Phase 1 Phase 2 Phase 3 INSPIRE... time when they start making a choice of the products Birth delivery Even more criticality From month 3 onwards, falls into this period mothers start getting used when they transition to the job and settle down from just knowing about baby care to actually doing the job 1yo 2yo 3yo 4yo Page [26] Facing increasingly aggressive environment and emerging scandals related to health/hygiene/safety, mothers become... P13'11 HUGGIES NAPPY 24 w/e P6'12 24 w/e P6'12 OTHERS 3 COMPETITOR ANALYSIS In the diaper newborn segment in Vietnam, there are only two players: Bobby and Huggies Bobby is the player who first launched NP nearly ten years ago and has been the dominant leader in this segment with 87% volume share (Please refer to Chart 3 above) More than that, it is becoming a tougher and tougher player having local... done for Bobby Insert so far actually Bobby started investing more agressively in 3 recent years and most of the investment is saved for full diapers segment which is not a strong playground of Bobby at the begginning Taking a look to the communication platfom Bobby built in 2010 for B Bobby did a very good job on the two following points: Differentiated : while most the babycare brands in the market use . AND ADVERTISING Tutor’s Name: SERGE BYWALSKI THE STRATEGY TO WIN THE STRATEGIC NEWBORN SEGMENT IN VIETNAM HO CHI MINH CITY [2013] Page [2] We - the authors. Different from other countries, Vietnamese moms have been using nappy pad (insert) – like a feminine pad in bigger size – for their newborn babies due to the following insights:  Skin-health.  Newborn Segment: the segment of babies from 0 to 3 months old. Due to some skin-health perceptions about newborn babies’ sensitive skin and the hot weather in Vietnam, majority of 65% Vietnamese