Marketing strategies for Romano shampoo in Vietnam

Shampoo for men market in Vietnam 4 2.3.4 Advertising and Promotion competition analysis 16... The research has found out the four key issues that Romano has to solve, those are i packa

MINISTRY OF EDUCATION & TRAINING UNIVERSITEÙ LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL

MBMM PROGRAM

DOAN THI THU THUY

MARKETING STRATEGIES FOR ROMANO SHAMPOO IN VIETNAM

FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Project Mentor: Professor Dang Ngoc Dai, PhD

Ho Chi Minh City

2007

WARRANT STATEMENT

This is my original work Any data result or quote in the work is clearly identified

1.4 Scope of research and data collection 2

Chapter 2 Shampoo for men market in Vietnam 4

2.3.4 Advertising and Promotion competition analysis 16

3.1 Overview of Unza Company 20

4.3 Results of the survey and discussion on findings 26

4.3.3 Key purchase drivers and brand association 28 4.3.4 Consumer assessment upon product performance 29 4.3.5 Consumer general assessments on the two brands 29 4.3.6 Findings on price and purchase intention 30

Chapter 5 Key issues and recommended strategies and tactics to

Reference

Annexes

The research’s objective is to examine the competitive marketing strategies of Romano brand in Vietnam, to identify Romano’s strengths, weaknesses, opportunities and threats and based on the research results to find out the aspects that would help Romano improve its marketing strategies

The research has found out the four key issues that Romano has to solve, those are i) packaging and product portfolio ii) unaffordable price iii) poor distribution

in and iv) low brand awareness in the South of Vietnam The research has proposed an implementation plan to improved marketing strategies of Romano to gain growth for the coming years

Chapter 1 INTRODUCTION 1.1 Rationale of Study

Before 2001, there was no notion of personal care product for men in Vietnam Since Unza Vietnam’s launched Romano personal care brand in May 2001, the market of personal care product for men has developed and grown until today At present, while in the female shampoo market of Vietnam has become saturated with a lot of players, the shampoo for men market has been growing rapidly and still expected to grow in the next five years At present, in Vietnam market, there are 2 main brands presently playing in this sector: Romano of Unza Vietnam Company and X-Men of International Consumer Product Company (ICP) However, it is expected that more players will enter this market in the near future and the competition become fiercer as it has taken place in the female hair-care market

To prepare for the increasingly competition in the near future, Unza Vietnam needs to develop marketing strategy for Romano brand in order to consolidate its position in the market of personal care products for men

The purpose of this study is to analyze Romano’s competitive situation and to propose a marketing strategy for Romano

1.2 Problem statement

Romano was the first brand of shampoo for men in Vietnam market It was launched into Vietnam market in 2001 while the market was still very small and there was no notion of shampoo for men at that time It has gradually built up its name as a premium brand of shampoo for men in the upper mass market Having recognized that the male shampoo market was a very potential market, ICP launched X-Men in 2004 With proper marketing strategies and skillful tactics,

X-Men quickly built up its name and gained market shares from Romano Although the sale of Romano has grown year by year, its market share has declined over the years since 2004 until now It also lost the position of the market leader in this segment It is also foreseen that more competitors will enter this market soon, especially two giants P&G and Unilever Therefore, this research aims at finding out the key issues and recommendation of the marketing strategies to address those issues in order that Romano can achieve its growth objective

1.3 Research objectives

- To examine the competitive marketing strategies of Romano in Vietnam

- To identify the strengths, weaknesses, opportunities, threats of Romano

- To evaluate the consumers’ perception and assessment towards Romano brand

- To find out the aspects that would help Romano improve its marketing strategies

1.4 Scope of research and data collection

Scope of research

- Due to limited time, the research was done in Ho Chi Minh City and Hanoi only Ho Chi Minh City and Hanoi are the two biggest cities of Vietnam which have the biggest consumption of shampoo-for-men Therefore, in this research, HCMC can be used to represent for South Vietnam and Hanoi represents for North Vietnam and sum of HCMC and Hanoi represents for total Vietnam

- The research’s scope is to identify the SWOT, to analyze the current marketing mix situation of Romano brand and to improve marketing mix strategies to achieve the brand’s objectives in the period 2007-2010

1.5 Organization of the research report

The research consists of five chapters and is structured as follows

Chapter 1: Introduction

This chapter explains the rational of study, research background, objectives, problems, scope and limitations, and the methodology

Chapter 2: Overview of Vietnam Male Shampoo Market

This chapter introduces the Vietnam market of shampoo for men by using the PEST (political, economic, social and technology) and Competitive analysis (Five forces framework), withdraws Romano’s opportunities and threats

Chapter 3: Internal analysis

This chapter analyses the internal factors and describes the brand’s strategies

Chapter 4: Result of the market research

The significant survey results are presented along with discussion From the internal analysis and results of the market research, the strengths and weaknesses of the brand are identified

Chapter 5: Key issues and Recommendations

This chapter summarizes the key issues that Romano brand is facing and recommends the strategies to address those issues

Chapter 2 SHAMPOO-FOR-MEN MARKET IN VIETNAM

2.1 PEST Analysis

2.1.1 Political factors

Vietnam is the most politically stable in the region and the country leaders have been younger and higher education than that in the past This new generation of country leader will move country toward the modernization, industrialization speedily and more effectively but less corruption Vietnam political environment

is favorable for investment project in term of capital security and long run business

2.1.2 Economic factors

Vietnam has the population of over 80 million of which half are men with the annual population growth rate of about 1.3% Besides, the GDP of Vietnam has increased over the past years and expected to continue to grow at the rate of 8% until 2010 Therefore, Vietnam is considered as an attractive market for many companies especially personal care products which were in the past considered

as “luxury” products

Chart 2.1, 2.2 and 2.3 show the forecasted population, GDP growth and GDP per capital of Vietnam

Chart 2.1: Population of Vietnam

P o pula tio n o f Vie tna m

0 20

Population (million people)

(Source: The Vietnam Business Forecast Report Q3 2006)

Chart 2.2: GDP growth of Vietnam

Real GDP (growth, % y/y)

(Source: The Vietnam Business Forecast Report Q3 2006)

Chart 2.3: Vietnamese GDP per capital

GDP per capital of Vietnam

0 200

GDP per capita (US$)

(Source: The Vietnam Business Forecast Report Q3 2006)

2.1.3 Social factors

Social environment

In the past, Vietnamese men seemed to use bar soap for shampooing and bathing from top to toe Since 2001, due to improvement in living conditions from economic growth and due to culture exchange between Vietnam and other countries, Vietnamese men pay more attention to their personal appearance by using personal care products

products and they are more and more demanding: they need more sophisticated products The consumption behaviors are also different between the North and the South (chart 2.4)

- The Northern people are more brand conscious, even though their income

is lower than in the South, they tend to buy high image brands as they want to show their status

- In the South: The income and living standard are higher than in the North but the Southern consumers are more focused on price and the product’s functions

Chart 2.4 Differences between North and South Vietnamese

reflective harder working more concentrated ambitious

(Source: TNS world panel, 2006)

2.1.4 Technology

The evolution of internet in Vietnam in the recent years and the increasing numbers of people using mobile phone creates new medium for marketing activities

Chart 2.5 Evolution of internet and mobile phone in Vietnam

(Source: Pyramid Research; Economist Intelligence Unit, a: actual; e: estimated)

2.2 Competitive analysis (five forces)

2.2.1 Threat of new entrants

New entrants in this sector include new product launches of existing domestic companies and new companies set up or new imported products

At present in Vietnam personal care products market, there are about ten players including foreign invested companies such as Unilever, Procter and Gamble (P&G), Colgate Palmolive, Kao Corporation, Unza Vietnam, Johnson & Johnson, ICC and local companies International Consumer Products (ICP), Sai Gon Cosmetic,… Until now, only 2 companies are the main players in the shampoo for men segment (Unza Vietnam and ICP) Therefore, the threat that the other existing companies, especially the two giants P&G and Unilever will launch shampoo for men product is very high when the market becomes attractive enough

1998a 1999a 2000a 2001a 2002a 2003a 2004e 2005e 2006e 2007e 2008e 2009e

Mobile subscribers (per 100 population) Internet users (per 100 population)

Personal computers (stock per 100 population)

As the result of Vietnam’s admission to WTO, more foreign invested companies including personal care companies will enter Vietnam Also abide by WTO; Vietnam has to reduce the tariff rate of some personal care products from 20-40% with effect from Jan 07 With this policy, foreign products will be expected

to enter Vietnam market with lower price and makes the market more crowded From the above analysis, we can conclude that the threat of new entrants is high for this sector

2.2.2 Threat of substitute products

Shampoo is a necessity product, until now there are no products found to be replaced for shampoo However, there can be switches between other shampoo and male perfumed shampoo In general, the threat of substitute can be seen as rather low

2.2.3 Bargaining power of customer

Shampoo is a low-involvement and price-sensitive product Consumers often compare price before they decide to buy, especially when buyers are women As consumers have many products to choose, they can choose not only men’s brand but also unisex brands or even female’s brand or family’s brand for themselves (when buyers are consumers) or for the others (when wives buy for husbands…) The rich consumers tend to buy imported brands, the low income people do not care brand, and they buy the lowest price product The middle income consumers consider a famous brand with value for money

Personal care products are now distributed through 2 main channels: modern trade and general trade At both channels, the bargaining power of the buyers become higher and higher

Thus, the bargaining power of customer is high

2.2.4 Bargaining power of supplier

There are 2 types of suppliers: suppliers of raw materials and suppliers of packaging The most critical differentiator in this category is perfume and the perfume also takes the biggest part in the cost of goods of a shampoo bottle Therefore, the perfume supplier plays the most important role In this category, a supplier can supply perfumes to many manufacturers, but the perfume chosen by one manufacturer is exclusively sold that manufacturer Therefore, the price of the perfume is at the decision of the supplier While the bargaining power of the raw material suppliers as well as packaging supplier are considered as low because there are many suppliers and it does not cost to switch from one supplier

to the other, the bargaining power of the perfume supplier is high due to the fact that the supplier of the chosen perfume is the only one that can provide the chosen perfume In general, we can conclude the bargaining power of supplier is medium

2.2.5 Intensity of rivalry

Since the past 2-3 years, we have seen the hair care war in the sector of hair care for female Most of the players spent a huge budget for advertising and promotion, resulting in less profit Some brands of female shampoo have had to depart the playground In the sector of male shampoo, in 2004 and 2005, there were 4 players: Romano, X-Men, Racing and Komachi But Racing and Komachi had to quit the market not long after it was launched into the market due to lack

of competitiveness Instead, Dermylan and Ramus brand of Vietnam local companies were launched into the market in 2005 and 2006 respectively to target

at the low end consumers These two brands are only consumed in provinces and some distant districts However, it is foreseen that the giant companies in the

household and personal care sectors like P&G and Unilever will not ignore this market when the market size is big enough So the competition is foreseen to be fiercer In general, rivalry among competitors is high

The chart 2.6 summarizes the five-force analysis of shampoo-for-men industry

Chart 2.6: Five forces analysis of the shampoo for men industry in Vietnam

2.3 Major competitor analysis

X-Men

X-Men was the only brand of ICP So the company concentrates all the resources

on this brand X-Men was launched into Vietnam market in 2004 Although it was the later entrant, with the right strategies and wise tactics, X-Men has grown very fast and being the big threat for Romano

We will analyze by comparing the two brands Romano and X-Men in terms of product, price, place, advertising and promotion

Rivalry among Existing firms Power Buyers Bargaining

Bargaining Power

Suppliers

Threat of new entrants

Threat of substitute products

High

Low

2.3.1 Product competition analysis

In term of product, we will analyze some related attributes including product variants (types of fragrance), product offer, product description (function), and overall product quality perceived by consumers, overall fragrance liking perceived by consumers and packaging

Table 2.7 briefly compares the product attributes between the two brands

Table 2.7 Product comparison Product attributes Romano Deluxe shampoo X-Men Perfumed shampoo

Product variants 2 variants: Classic and

6ml sachet 100ml 200ml bottle 450ml bottle 700ml bottle Product description Advanced formulation and

Pro Vitamin B5 brings you soft, shine and healthy hair

The unique premium and long lasting fragrance of Romano makes your feel confident and fresh the whole day

With advanced formulation, X-Men premium perfumed shampoo contains smoothing and moisturizing ingredients

to bring soft, smooth and healthy hair Especially, the premium unique fragrance

of X-Men brings you the lifestyle and characteristics

of a real man

Is liked by majority and perceived as strong, masculine fragrance

Packaging Premium but a bit old, too

dark, not eye catching

Eye-catching packaging (nice, manly, strong)

class!

X-Men – Real man

In term of product portfolio, X-Men is better than Romano as it has four fragrances while Romano has only two fragrances, so consumers have more

choice of the fragrance For product’s functions, the two brands are quite similar:

both brands have unique masculine fragrance and bring soft, smooth and healthy

hair Both brands are perceived as having good quality and own the fragrance

liked by majority However, Romano’s fragrance is perceived as premium,

pleasant, nice and more liked by matured consumers, X-Men is perceived as

strong, masculine and more liked by the younger men The difference is in the

packaging: Romano’s packaging is perceived as premium but too dark, not

eye-catching on the shelf while X-Men’s packaging is perceived as nice, manly and

strong

2.3.2 Price competition analysis

The sticker price is the price recommended by the companies to end consumers

Retail buying price is the price the companies sell to retailers We see that both

companies apply the same rate of margin for retailers at 15% Besides, retailers

can receive extra profit when the companies apply trade promotion However,

due to competition among retailers, retailers often sell to consumers at lower

price The higher the discount they receive from the companies, the lower the

price they sell to consumers Some big retailers even sell to consumer at the

retail buying price when the companies apply attractive trade promotion to them

There are 3 types of bottles 200ml, 450ml (500ml), 700ml, in which the best

selling packaging is 200ml bottle (standard) X-Men’s price is 13%, 21%, 9%

lower than Romano respectively These figures clearly show us the lower price

strategy of X-Men when it penetrated the market

Table 2.8 Price comparison between Romano and X-Men shampoo

Types of bottle Standard Middle bottle Big bottle

Brand Romano X-Men Romano X-Men Romano X-Men

2.3.3 Place (distribution) competition analysis

The following table shows the distribution comparison between Romano and

X-Men The importance of market will be ranked from 1 to 10 (highest importance

- lowest importance) based on the population and economic conditions The

distribution width shows the market coverage of the goods, the distribution depth

shows the quantity of products available in the market (shelf space share)

Distribution width and depth is ranked from 1 to 5 (1: very low, 2: low; 3:

average; 4: high; 5: very high)

Table 2.9 Distribution comparison between Romano and X-Men

Distribution width Distribution depth Areas

Importance

of market Romano XMen Romano XMen

Table 2.9 shows that in term of market coverage (distribution width) as well as

shelf space share (distribution depth); Romano is better than X-Men in the North

but much weaker than X-Men in the South, especially in the most important

market - Ho Chi Minh City In general, X-Men are available nearly in every

type of retailers including modern trade, general trade from big to small outlets

while Romano seems to exist in modern trade and high traffic outlets only This

is one of the main reasons why Romano’s market share declined over the years

Romano should be improved in term of distribution in the South, especially in

HCMC

2.3.4 Advertising and Promotion competition analysis

Table 2.10 Advertising and promotion comparison between Romano and

POSM Mid Very high

Romano – Defines your

Consumer promotion

Trade promotion

Romano entered Vietnam in 2001 with limited above-the-line (ATL) budget and

without TVC Romano began to run TVC in 2004 when Men was launched

X-Men is the later entrant, so it invested a lot in advertising and promotion We can

see the media spending of the two brands in the table 2.10, both brands have

increased media spending, but X-Men’s media budget is higher than Romano

and the media spending gap is larger and larger In term of TVC, Romano TVC

is perceived as premium, for high class people as the main talent which

represents for Romano man always appears as a noble European man admired

by beautiful ladies in luxury locations, however, it is perceived as monotonous

and too far from the life of Vietnamese men This TVC is liked by some high

class consumers whose knowledge is high but disliked by normal consumers

X-Men TVC is more actionable: the X-X-Men man is a hero who saves a lady from

the risk This TVC is liked by almost men as well as women For print ads, both

brands do not spend much on print ads For PR, X-Men often appears on women’s newspapers and magazines with the topic “caring for your husband with X-Men products” while Romano has not used this form of advertising yet For trade promotion, X-Men also applies higher rate of discount compared with Romano This makes its consumer buying price much lower than Romano

2.4 Opportunities and Threats

From the above competition analysis, we can identify some opportunities and threats for Romano in the coming years as follows

- The growing of AB economic class in Vietnam plus the increase of male consumer base due to population growth Consumers are moving “upper market” and preparing to pay for premium brands like Romano

- The revolution of metro sexual in Vietnam Taking their cue from Vietnamese women and the increasing influx of Western marketing campaigns, Vietnamese men are starting to pay attention to their appearance

- from skin and hair to fashion & fitness” Romano has the chance to gain sales growth by launching new products

- Increasing of GDP, CPI, admission to WTO and signing PNTR with the US are Vietnam’s good news that makes Vietnamese more positive towards the

economic growth Thus, consumers are expected to spend more on grocery expenditure (food/ grocery/ personal care)

- Enhance brand awareness through the new medium

2.4.2 Threats

- The direct competitor X-Men has just been invested by US$ 12 million by Mekong Capital This implies that X-Men has the stronger financial resource and it can spend more on brand building and gain more shares from Romano

- Unilever is going to launch shampoo for men in 2007 with high A&P support The competition is getting fiercer resulting in lower share of voice and lower market share of Romano brand

- Counterfeits and perfume copies This can make Romano lose sales and lose consumer trust

- More competitors enter Vietnam due to immediate tax reduction (20%-40% implemented on personal care products from 2007) as a result of Vietnam’s

admission to WTO

Chapter 3 INTERNAL ANALYSIS

3.1 Overview of Unza Company

Unza Vietnam

Unza Vietnam is a 100% foreign-invested company, belongs to Unza International Group Unza Vietnam was set up in 1997; its factory is in Vietnam – Singapore Industrial Park Until now the company has 7 brands including Romano (personal care products for men), Enchanteur (personal care products for women – upper mass), Eversoft (skincare for women), Gervenne (personal care products for women – low income), Izzi (splash de cologne for female teens), Bat and Shinyo (household) in which the two most important brand of the company is Enchanteur and Romano as the sales revenue generated by these two brands account for over 90% of the total company’s sales In the scope of this research, we analyze the brand Romano only

Unza Vietnam’s vision:

“To be the third biggest manufacturer and marketer of personal care products in Vietnam”

Unza Vietnam’s mission statement:

"To attain a position of selective prominence in the household and personal care markets of Vietnam as a marketer of high quality and innovative brands, which enhance the lifestyle of our consumers, provide a good return on investment for our shareholders and allow our employees to realize their personal ambitions."