Relaunch plan for ovantine vietnam to become market leader in tomic food drink market

TRƯỜNG ĐẠI HỌC MỞ TP HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL ECONOMICS & MANAGEMENT MMA6 NGUYEN THI HONG NHUNG Relaunch plan for Ovaltine Vietnam to become market leader in Tonic Food Drink market MASTER PROJECT MASTER IN MARKETING & ADVERTISING Tutor’s Name: SERGE BYWALSKI Ho Chi Minh City (2013) ACKNOWLEDGEMENT This thesis was written as part of our education in Master of Marketing and Advertising course in Solvay Brussels School of Business and Management After finishing this thesis, I have had the chance to review what I have learned during the course and applied the knowledge into this real case of Ovaltine And thanks to this, I’ve gained a deeper understanding about marketing, in theory and practice There are several people who have been instrumental for me and whose contribution I truly appreciate First, I would like to thank my professor Alain and professor Serge for their support and guidance throughout the course I also would like to say thank to my friends, colleguages for the invaluable feedback, suggestions, insights And I would like to express my appreciation to all the customers I had chance to talk to for this project Thank you for your time and generosity This thesis would not have been possible without your all input Finally, herewith I would like to confirm all I have written in this thesis are true and based on real facts and figures Thank you ABSTRACT Dairy industry in general and Tonic Food Drink in particular are now becoming more and more exciting with a lot more brands Joining Vietnam market very early, Ovaltine used to be the market leader in Tonic Food Drink and became a familiar brand in Vietnamese households However, after some years quiet with less activities as well as ineffective communication has made Ovaltine from market leader to the follower with only around 20% The rising market leader is Milo with much investment on media and many effective activities If Ovaltine does not change, the risk of losing Vietnam market is possible esp when Milo and many other milk brands such as Dutch Lady, Vinamilk, TH True Milk and the newest player Love in Farm have become more and more active in this market So this study aims to analysis dairy market in general and tonic food drink in particular, the competition and Ovaltine’s brand performance to find out the solution for Ovaltine to get back their market leader position CONTENTS I MARKET OVERVIEW 1 Dairy industry in Vietnam a) The spending of consumers is increasing b) The booming of dairy products, esp Liquid milk 2 Tonic Food Drink – a promising land II COMPETITION ANALYSIS Direct competitor – Milo Indirect competitors 11 III OVALTINE BRAND PERFORMANCE 15 IV RECOMMENDATION FOR OVALTINE 22 ABBREVIATION CSR Corporate Social Responsibility FAO Food and Agriculture Organization of the United Nations FMCG Fast Moving Consumer Goods GDP Gross Domestic Product MFD Malted Food Drink RTB Reasons To Believe RTD Ready To Drink TFD Tonic Food Drink TOM Top of Mind TVC Television Communication UHT Ultra High Treatment WTO World Trade Organization CHART LIST Page Chart I.1.1 Living Standart Measurement (LSM) in Urban from 2005 to 2012 and projected till 2015……………………………… Chart I.1.2 Consumer Spending in FMCG products 2011 versus 2012 ………… Chart I.1.3 Dairy Industry - Contribution by segments…………………………… Chart I.1.4 Growth rate by categories year on year ……………………………… Chart I.1.5 Price increase affects shopping behaviour …………………………… Chart I.2.1 Volume Sales in TFD category from 2009 to 2012 in Urban ………… Chart II.1.1 Distribution of Milo and Ovaltine from 2010 to 2012 in key cities… 10 Chart II.2.1 Value Share by brands in Urban and Rural in March 2012…………… 12 Chart III.1 Ovaltine’s Distribution in key cities from 2010 to 2012…………… 20 1    I MARKET OVERVIEW Dairy Industry in Vietnam a) The spending of consumers is increasing Many years ago Vietnam used to be one of the world’s poorest countries Today the world is observing the strong development of Vietnam in economy, esp after joining World Trade Organization (WTO) Vietnam’s GDP per capita has more than tripled from $351 in 2000 to $1,156 in 2010 More than one fifth of a population of 87 million people now live in cities like Hanoi, Ho Chi Minh City and Hai Phong The number of consumers – with a monthly household income of at least $300 – in the top six cities has more than doubled from 2.6 million in 2000 to 5.8 million in 2010 [1] Middle Class is growing rapidly, esp in Urban According to a research in 2012 of a famous research company Kantar WorldPanel in 2012, the middle class has been rising from 70% in 2005 to 83% in 2012 and is projected to increase further in the future With more money in their pockets, the Vietnamese are spending like never before, and the consumption of dairy projects has been booming Chart I.1.1 Living Standart Measurement (LSM) in Urban from 2005 to 2012 and projected till 2015 Source: Kantar WorldPanel (2012), Consumer Panel Research Below is a chart showing Share of Wallet – the budget consumers spend for some main categories Consumers have increased their spending from 51 USD per month in 2011 to 57 USD per month in 2012 And the Chilled Food & Dairy has increased its share in consumers’ pocket from 32.6% to 33.1%, gained +0.5% (1) Tetra Pak Dairy Index, Issue 4, July 2011 2    In other words, the total budget for this category has raised from 203 USD per year to 230 USD per year This shows the importance of Chilled Food & Dairy in Vietnam nowadays Chart I.1.2 Consumer Spending in FMCG products 2011 versus 2012 Source: Kantar WorldPanel (2012), Consumer Panel Research b) The booming of dairy products, esp Liquid milk: When the economy is developing, the citizen’s living standard has been improved and the Dairy industry plays an important role in increasing health and longevity Within 20 years since year 1990 to 2012, the dairy consumption in Vietnam has increased more than 30 times: from 0,47 litres in 1990 to 15 litres in 2012 per person per year [2]; [3] The increase in consumer’s income & spending as well as their understanding of the importance & benefits of milk has helped this category become the essential needs for consumers However, according to a Statistics of Food and Agriculture Organization of the United Nations (FAO), the Vietnamese’s milk consumption is 15 litres per person per year is still low compared to Thailand and China (23 and 25 litres per person per year respectively) [4] (2) Milk Report 2012 of Ministry of Industry and Trade: http://htpc.gov.vn/xuatkhau/bao-cao-nganh-hang_74/bao-cao-thi-truong-sua-7-thang-vadu-bao-5-thang-cuoi-nam_1218.htm (3) “Sai Gon Tiep Thi” Magazine, Issue No 13, Dated 30 Jan 2013, Page 23 (4) “Thị trường sữa Việt Nam thay đổi tích cực”, dated 12 Dec 2011: http://vnexpress.net/gl/kinh-doanh/doanh-nghiep-viet/2011/12/thi-truong-sua-viet-nam-vanhung-thay-doi-tich-cuc/ 3    Milk Powder  Liquid Milk  Yogurt  Condensed Milk  Soya Milk  Chart I.1.3 Dairy Industry - Contribution by segments Source: Euromonitor International (2012) • Power milk: 40,7% • Liquid milk: 31,6% • Yogurt: 10,6% • Condensed milk 15,6% • Other- soya milk Moreover, according to a research of Kantar WorldPanel in Urban 2012 below, the Fast Moving Consumer Goods (FMCG) still grew in both value and volume, in which Dairy & Chilled was best performing category with highest volume growth rate It grew 8.1% in volume and 17% in value vs 2011 Particular in Dairy Industry, Liquid Milk was the category with highest growth rate (13.5% in volume and 30% in value) while other Dairy Based Products such as Drinking Yogurt, Sweet Condensed Milk, etc… mainly grew in value due to price increase while volume just grew a little bit or stagnant 4    Chart I.1.4 Growth rate by categories year on year Source: Kantar WorldPanel (2012), Consumer Panel Research One more thing, in recent years, esp after the economic downturn, consumers are very price sensitive when almost all the essential products increase prices year on year and that affect the purchasing power However, as an important category, Dairy category seems to have less impact from price increase According to a research from Nielsen below, majority of consumers claimed that for Dairy (except.Adult Milk) they would not change their shopping behaviour due to price increase Chart I.1.5 Price increase affects shopping behaviour Source: Nielsen Vietnam (2012), Vietnam Pocket Reference Guide 2012 14    quite looked down on this remarkable competitor Besides, in the past years, they have several big campaigns but with inconsistent messages:  2009: Campaign “Thank you moms” in which encouraged Kids to show the appreciation to Moms for taking care of them  2010: Campaign “I love Dutch Lady” emphasized on the emotional benefit to create trustworthy and nutritious element  2011: Campaign “The flying elephant” to communicate about functional benefits “Tall, Healthy, Smart”  2012: Campaign “Milk Plus” to create a new milk generation with benefits “Tall, Strong, Smart” The inconsistent communication in many years diluted the total brand image which made consumers hard to recall “What Dutch Lady stands for?” Also even though “tall, strong, smart” are the important benefits that consumers want for their kids, the ambition of owning so many attributes is also a problem Trying to capture too many benefits resulted in capturing none In order to build an image among consumers’ minds, it takes years to consistently But here the brand image of Dutch Lady is quite blur and not strong That makes Dutch Lady become the second choice in Liquid Milk market Besides, Ba Vi milk – a small brand with only 6% market share, with high ambition to lead RTD milk market has just launched a new brand Love in Farm with the highest budget for media ever has made the liquid milk market become more fierce, more challenging but exciting In conclusion, the TFD category with strong key competitor Milo and liquid milk with the big brands Vinamilk, Dutch Lady, Ba Vi with huge marketing investment is a big challenge for Ovaltine to overcome With small budget, Ovaltine will have to use it smartly and effectively in order to win back the market leader position in TFD market in particular and become one of top brands in liquid milk in general 15    III OVALTINE BRAND PERFORMANCE 6Ps Analysis Proposition  Market Share in TFD: Around 20% in 2012, sometimes fluctuated around 16% to 24% according to each campaign [6]  Brand Awareness: Top of Mind (TOM) 4% among Beverage categories; 12% TOM in TFD market; total Brand awareness 100% [8]  Brand Color: Red  Brand Positioning: Taller and Smarter  Brand Characteristics: smart and fun  Target users: Kids 6-12 years old, ABC Class  Benefits: o Functional benefit: Taller and Smarter But recent activities only focused on Mental development – smartness o Emotional benefit: fun  RTB: Malt Ovaltine and Milo has the same target users and similar product portfolio but quite different positioning and way of communication Ovaltine was the 1st TFD player entering Vietnam market and become familiar with many Vietnamese households But then Ovaltine was almost quiet for a long time that made consumers to forget this brand, leaving Milo to become market leader and a favourite brand for Kids But the positioning direction of Ovaltine is very good because Smartness is a benefit that all moms want for their children So that’s a point of difference vs Milo However, Ovaltine needs to really define what smartness means in order to clearly communicate to the audience There are many definition of smartness and currently Ovaltine’s indirect competitor Dutch Lady also focusing on this benefit as well but much bigger investment Besides, the emotional benefit Ovaltine is currently communicating is the “Fun” element which is very relevant to Kids – the direct users and higher & higher pester power nowadays That helped make Ovaltine’s brand image somehow younger and more dynamic vs Milo (7) (9) Nielsen Vietnam, Retail Audit, Tonic Food Drink, 2012 IPSOS Vietnam, Brand Health Tracking, 2012 16    Promotion Ovaltine before 2010 used to have quite many marketing activities to build on the brand positioning of Smartness such as “Smart Kids summer camp”, TVC…but they are seemed ineffective when not created share gain and consumer support And after that for some years, they were totally off air all the Above the line communication and cut down marketing budget But then, in 2010 they started to come back with several promotion campaigns that delivered to kids many attracting gifts:  2010: Autumn Promotion with the premium “Mighty Bean"  invited Kids to join Super to save the city  2011: Summer Promotion with premium “Finger Skateboard” with many activities for kids to join in website such as “how to magic” 17    And Autumn Promotion with “Disc Launcher”  2012: Promotion with “Paper airplane”  invited Kids to join Super team to save the malt field  And “3D Glasses”  invited Kids to save the earth by joining the adventure in the universe 18    Via shifting the target audience, from communicating to Moms to communicating to Kids with many cool and unique premium (that Kids cannot buy anywhere), Ovaltine seemed to really coming back to ask for its used-to-market leader position They talked to the right audience who directly consuming the products and their pester power is higher and higher Kids 6-12 years old tend to choose the brands for themselves and they ask moms for that And with this return, Ovaltine brings with it a new weapon to fight back Milo: Super 19    Super is a team consisting of characters with different strengths and characteristics And in each campaign, Ovaltine invited Kids to join with Super team to enter exciting adventures such as “Saving the malt field”, “Save the Super leader” And with low budget, the key channels Ovaltine often used are Print Ad in kids’ magazines and Digital And thanks to this, Ovaltine brand to use Digital to has become the very 1st communicate to Kids After more than years team as brand become more and more consistently used Super ambassardor, Super has popular to Kids Place Ovaltine with very small share has quite limit coverage Even though Ovaltine’s distribution is growing quite fast, it still has much room and opportunity to expand Ovaltine is currently operated under FrieslandCampina (Dutch Lady) It’s both the opportunity but also the challenge when this company has many other brands The opportunity is to take use of the coverage of FrieslandCampina to expand Ovaltine’s distribution But the challenge is that the sales team have to sell many other brands such as Dutch Lady, Friso, Fristi, Yomost… a small brand like Ovaltine can easily be forgotten and not focused 20    Chart III.1 Ovaltine’s Distribution in key cities from 2010 to 2012 Source: Nielsen Vietnam (2011-2012), Retail Audit Packaging Ovaltine has a very eye catching packaging with Red color Red is also perceived as Luck by many Vietnamese people However, comparing to Milo with some packaging innovative, Ovaltine seemed to be quite quiet with old packaging selling in the market for many years This created the boring & old feeling among consumers Besides, the Red element is both advantage (as Luck) and disadvantage because it somehow enhances the “Heatiness” element which is one of the key barrier for chocolate drink Price Milo and Ovaltine has a quite on par price for each of their products Product Ovaltine and Milo has quite similar product quality However, in order to become market leader, Ovaltine needs to have better quality and better taste than Milo if they want to convert Milo users to switch to Ovaltine In terms of portfolio, Milo Powder is very strong for 3in1 while Ovaltine 3in1 is still very limited This pie is currently only Milo the key player And still a lot of room for Ovaltine to join 21    SWOT Analysis However, from all the analysis above, the biggest challenge for Ovaltine is weak Positioning of the brand Even though Ovaltine is having some very 1st success in the recent years thanks to wow promotion, Ovaltine’s positioning as well as brand image is still very blur in consumers’ mind They buy Ovaltine just because of the premium and then after the campaign they come back to their favourite brand They don’t have a good reason to buy Ovaltine continuously because they don’t know what are the benefits Ovaltine can bring to them Doing promotion is like a 2-side-weapon with both advantages and disadvantages: Advantages:  Ovaltine can quick boost sales in short period of time  It helps recruiting new trial and expand distribution  Create a bonding with Kids Disadvantages  The sales are unsustainable  Doing promotion a lot is not a real relationship with consumers They buy this brand to get something, and when this brand does not have something cool while the competitors have, they can easily switch 22    because there’s no close relationship Besides, it can cause the “waiting feeling” that as consumers don’t have many reasons to buy Ovaltine, and know Ovaltine will have promotion very often, they may wait until seeing new promotion to buy instead of buying regularly  The challenge for Ovaltine team to always find and have wow promotion gift If a campaign they don’t have wow gift, then the possibility of loss sales is very high Besides, Moms – the very important gate keepers – Kids has high pester power but Moms still the final decision makers for the products their kids consume They can please their Kids for some times to buy a drink, but they will re-consider again whether this product is really good to use for long term So talking to moms is an important thing as well In conclusion, Ovaltine is really coming back with several successful promotion campaigns Given the low budget, Ovaltine was still able to manage and use it wisely via focusing to selective right channels with Super platform and talked to Kids This is really a good start for the return of Ovaltine but in order to win Milo Ovaltine must build a strong positioning and brand image Ovaltine can become one of the brands in top choices of both Moms and Kids 23    IV RECOMMENDATION FOR OVALTINE: From all the analysis above, the solution recommended for Ovaltine is a “Relaunch Campaign” with holistic communication to make consumers clearly understand Ovaltine and love the brand In order to that, we need to understand clearly Ovaltine’s target consumers: Consumer Profile: Target users:  Kids, 6-12 years old, ABC class, living in Urban  Young, dynamic Target buyer:  Moms, with kids 6-12 years old, ABC class  Living in urban, always want the best for their children  Modern, dynamic, like trying new things, often seek for the products with good nutrition Consumer Insight: Target users: Kids Studying well and better than their peers is very important for Kids I want to have more relaxing time besides study hour I like playing games and playing with friends is really cool Target buyers: Moms I wish to play every cool games & toys in the world I want Moms to buy for me milk that can help me smart and have cool toys to play 24    I want to provide my Kids right nutrition so he can become intelligent to study good and success in the future So the strategy should continue talk to Kids with the “Smart” element to attract Moms Concept Ingredients Concept name Consumer Insight Brand Benefit The Point of Difference Ovaltine – Smart Hero Kids! Moms want Kids to be smart to study well Kids want toys and want to become Hero to save the world Smart and Fun Different from Milo, Ovaltine helps you to become smarter Malt is a point of different to distinguish with other brands 25    COMMUNICATION IDEA ALL KIDS ARE HERO! All Kids want to become Hero But they don’t need to have super skills to that They just need to join Ovaltine – Smart Hero Kids team! SUPER 5! In order to this, the 1st ever Kids’ challenge will be created “Super – Talent Hunting” Super will be introduced as Smart Hero kids and they are looking for more members in his team In this time it will consist of kids who are: (1) (2) (3) Smart via studying very well Healthy Be loved and voted by their mates This team will become representatives of kids who have the above abilities and kids will feel proud to be part of this team They will thirst to join this team to feel proud of and can join many other activities We will this every year to connect more Kid talent in Vietnam and become a brand representing for Kids, a best friend of Kids.  26    One of the element that must focus on this campaign is “Malt” – the Reasons To Believe for Moms to believe that Ovaltine is nutritious and can help their children smarter So throughout the campaign, the visual of Super team will always go with the Malt field or the malt in hand as a key gadget for them In Phase 3, when the Super team has been built in each key cities, we will organize meaningful activities for Kids for and have fun toghether:  “Helping buddy” campaign  Encourage Kids in each class to help their class mates study better By this, can also create a contest for “Which class is the best class in your school?”  “Save your school”  Organize Green Day for Kids to some activities (sponsored by Ovaltine) and clean their classes  “Who are the best Super team in the country”  a competition between regions to choose the best Super team via contest “Smart challenge” PACKAGING Ovaltine’s packaging has not changed for many years So Ovaltine should have some packaging 27    innovative to create new news and new & fresh feeling for consumers Kids love cartoon, so we will change our packaging into Cartoon design with Super characters into it The key colour will still Red – the main colour of Ovaltine – also representing for Luck and Winning Spirit PLACE Continue to leverage the wide coverage of FrieslandCampina Vietnam to expand Ovaltine’s distribution Sales Catapult for sales team and trade discount for retailers will be implemented widely Besides, for this campaign, we will explore new channel: School School is a very important place where Kids spend most of their time in a day so penetrating into school channel is a must PRODUCTS As mentioned above, in Food and Beverage categories, product quality and good taste is very important Getting trial is already a hard study, but in order to maintain users is a must study Consumers can try us one, and to keep them stay with the brand, it’s the taste They must love it and so continue using it So recommend to have new Ovaltine’s formular to become superior than Milo In conclusion, in order to become market leader in TFD, the gap is still very much and Ovaltine will need to try very hard So this Relauch campaign with holistic communication, new packaging, better product, distribution expansion and esp exploring new channel Schools will help to enhance Ovaltine brand into consumers’ mind Estimated budget: 30 billions VND REFERENCE International language (1) Tetra Pak Dairy Index, Issue 4, July 2011 Vietnamese (2) Milk Report 2012 of Ministry of Industry and Trade: http://htpc.gov.vn/xuatkhau/bao-cao-nganh-hang_74/bao-cao-thi-truong-sua-7thang-va-du-bao-5-thang-cuoi-nam_1218.htm (3) “SaiGonTiepThi” Magazine, Issue No 13, Dated 30 Jan 2013, Page 23 (4) “ThịtrườngsữaViệt Nam vànhữngthayđổitíchcực”, dated 12 Dec 2011:http://vnexpress.net/gl/kinh-doanh/doanh-nghiep-viet/2011/12/thi-truongsua-viet-nam-va-nhung-thay-doi-tich-cuc/ (5) Nestle Vietnam website, “Thứcuốnglúamạch”: http://www.nestle.com.vn/brands/beverages/thuc-uong-lua-mach (6) Nielsen Vietnam, Retail Audit, Tonic Food Drink, 2012 (7) Kantar WorldPanel, Consumer Panel, Total FMCG – Urban & Rural, 2012 (8) IPSOS Vietnam, Brand Health Tracking, 2012 ... Tonic Food Drink in particular are now becoming more and more exciting with a lot more brands Joining Vietnam market very early, Ovaltine used to be the market leader in Tonic Food Drink and became... years Tonic Food Drink – a promising land Tonic Food Drink (TFD) or also call Malted Food Drink (MFD) is a particular category in healthy beverages There is no official definition for this kind... United Nations FMCG Fast Moving Consumer Goods GDP Gross Domestic Product MFD Malted Food Drink RTB Reasons To Believe RTD Ready To Drink TFD Tonic Food Drink TOM Top of Mind TVC Television Communication