Marketing strategy for asia food ingredient company in launching non dairy creamer 20112015 master project in business administration phan bao thuy tran ; nguyen thi mai trang advisor ho chi minh city ho chi minh

TRƯỜNG ĐẠI HỌC MỞ TP.HCM UNIVERSITÉ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLWAYS BRUSSELS SCHOOL MBAVB3 PHAN BẢO THỦY TRÂN MARKETING STRATEGY FOR ASIA FOOD INGREDIENT COMPANY IN LAUNCHING NON-DAIRY CREAMER 2011-2015 MASTER PROJECT MASTER OF BUSINESS ADMINISTRATION HO CHI MINH CITY 2010 i COMMITMENT I’d like to confirm for my thesis and the content was written by myself with information studied and obtained from reliable sources I undertake this is my own research project, all information, data and survey results are true and never announce in any other research projects HoChiMinh City, 11 December 2010 Phan Bao Thuy Tran iii ACKNOWLEDGEMENTS First of all, I would like to express my gratitude to the support and guidance from my tutor, Dr Nguyen Thi Mai Trang I appreciate her dedicated guidance and encouragement to fulfill this final project Without her, my project would not have been completed My grateful acknowledge is extending to Professors from the Solvay Business School and Open University of HCMC for all support throughout the whole program Thanks to Dr Tran Anh Tuan, Mrs Bui Phan Bao Tran, Co-director and Co-ordinator of VietnamBelgium program for organizing the program My thanks are also to Mr Serge Bywaski, the enthusiastic co-ordinator, who has been together with us throughout the MBAVB3 course I would like to express my sincere thanks to Mr Nguyen Thien Truc, General Director of Asia Food Ingredient, for his advices for my thesis I also would like to extend my gratitude to colleagues, Mr Huynh Thanh Lam – Sales Manager in ACC Joint Stock Company, Ms Dang Ngoc Thuy – Sales Executive in ACC, Mr Le Nguyen Doan Khoi, Mr Le Duy and many customer of different companies who have spent time answering the questionnaires to understand the food market Last but not least, I wish to express my love and gratitude to my friends in Group 1, my family for supporting me during past years of the course Also, my honest gratitude is conveyed to my best classmate Le Phong Dinh for his encouragement to me and invaluable assistance in whole process of final project iv EXECUTIVE SUMMARY AFI is a new start up factory in Vietnam as the pioneer in NDC production, was given business license in 2008 and located at My Phuoc industrial park in Binh Duong Province The company is the joint-venture of ACC and Vinamilk, the first NDC producer in Vietnam to invest modern technologies from Europe Giving the fact that there are huge opportunities in Vietnam for NDC products especially in instant coffee segmentation, it is the right time for AFI to make an investment in building the factory to meet the local market demand on NDC which is imported from oversea so far As the pioneer in NDC, it is always difficult to penetrate into the market to build up the brand name and can gain market share from existing imported NDC competitors The thesis then goes deeply into analyzing the internal and external environment of the company to find the best marketing strategies for the company The thesis conducts an external environment assessment to figure out the opportunities and threats Following the external assessment, an internal environment analysis is conducted to illustrate the strengths and weakness of the company The 4Ps strategy is chosen to build up marketing strategies for AFI based on the assessment of the company‘s SWOT Making the thesis more realistic and result-oriented, a customer survey and a depth interview of top management, salesperson in AFI and ACC have been conducted The results of the surveys and information collected are consolidated and refer to the company SWOT’s analysis to figure out 4Ps strategies and some recommendations have been suggested to build up marketing strategies for the company v TABLE OF CONTENT COMMITMENT i  ACKNOWLEDGEMENTS iv  EXECUTIVE SUMMARY v  TABLE OF CONTENT vi  LIST OF ABBREVIATIONS ix  LIST OF FIGURES x  LIST OF TABLES xi  INTRODUCTION 1  RATIONALE OF THE PROJECT 1  PROBLEM STATEMENT 2  PROJECT OBJECTIVE 2  PROJECT QUESTION 2  SCOPE AND LIMITATION OF PROJECT 3  SIGNIFICANT OF THE PROJECT 3  STUDY METHODOLOGY 3  CONCEPTUAL FRAMEWORK 3  SAMPLING 4  STRUCTURE OF THE PROJECT 5  CHAPTER 1: LITERATURE REVIEW 6  1.1  Marketing definition 6  1.2  Role and function of marketing 6  1.3  Target consumer, market segmentation and positioning 7  1.4  Customer buying behavior 8  1.5  Marketing Mix 10  1.6  SWOT analysis 11  1.7  External environment analysis .11  1.8  Internal environment analysis 11  1.9  Strategy Formulation 12  CHAPTER 2: ANALYSIS OF AFI’S EXTERNAL ENVIRONMENT 13  2.1.  Introduction of Non-dairy creamer (NDC) 13  vi 2.1.1  Non-dairy creamer definition .13  2.1.2  Non-dairy creamer characteristic and its component 13  2.1.3  Non-dairy creamer’s benefits and applications .14  2.2.  Macro environment analysis 15  2.2.1  Economic factors 15  2.2.2  Demographic and income 16  2.2.3  Social-cultural 16  2.2.4  Food industry overview 17  2.2.5  Beverage and drinking overview 17  2.2.6  Coffee outlook .18  2.2.7  SWOT analysis of beverage industry in Vietnam 18  2.3.  Micro environment analysis .20  2.3.1  Non-dairy creamer market overview in Vietnam 20  2.3.2  Competitors analysis 21  2.3.3  Customer analysis 25  2.3.4  Buying behavior 27  2.3.5  Supplier analysis 28  CHAPTER 3: ANALYSIS OF AFI’S INTERNAL ENVIRONMENT 29  3.1.  Introduction of AFI 29  3.1.1  AFI history 29  3.1.2  Stakeholder analysis 29  3.1.3  Organization structure 29  3.1.4  Vision & Mission 31  3.1.5  Competitive advantages .31  3.1.6  Technology 32  3.1.7  SWOT analysis 33  CHAPTER 4: MARKETING S TRATEGY FOR AFI’S NDC PRODUCT 36  4.1  Company Goal 36  4.2  Marketing objectives .36  4.2.1  Break-even point 36  4.2.2  Short-term 36  4.2.3  Long-term 36  vii 4.3  Marketing strategy formulation 37  4.3.1  Cost leadership .37  4.3.2  Brand strategy 38  4.3.3  Market segment 38  4.3.4  Target market strategy 39  4.3.5  Positioning strategy 39  4.4  Marketing program 40  4.4.1  Product strategy .40  4.4.2  Price strategy 40  4.4.3  Distribution strategy 42  4.4.4  Promotion strategy .43  4.5  Budget and Implementation plan 46  REFERENCES 49  APPENDIX 50  viii LIST OF ABBREVIATIONS NDC Non-dairy creamer AFI Asia Food Ingredient ACC Asia Corporation Chemical BMI Business Monitor International VNM Vinamilk Company GDP Gross Domestic Product MT Metric tons R&D Research and Development UNCTAD United Nation Conference on Trade and Development WTO World Trade Organization USDA United States Department of Agriculture SME Small and Medium Enterprise GSO General Statistics Office ix LIST OF FIGURES Figure A: Thesis model 4  Figure B: Project research process .4  Figure 1.1: A model of business buyer behaviour .9  Figure 1.2: The four P components of the marketing mix .11  Figure 2.1: The relation of GDP and inflation in Vietnam (2004-2010) 15  Figure 2.2: The quantity of NDC were imported from 2005-2010 21  Figure 2.3: Lanscape of main competitors’market share, 24  Figure 2.4: The marketshare of using NDC from end-consumers 26 Figure 2.5: The evaluation result of NDC suppliers from customers 28 Figure 3.1: Organization chart of AFI .30  Figure 3.2: The process of producing NDC .33  Figure 4.1: The marketshare of NDC consumption by application 39  x LIST OF TABLES Table 1.1: Steps in a business buying decision 10  Table 2.1: Ingredients constitute non-dairy creamer 14  Table 2.2: Food consumption indicators - Data & Forecasts 17  Table 2.3: Food and Beverage commercial indicators - Data & Forecasts 17  Table 2.4: Production and consumption of coffee in Vietnam 18  Table 2.5: Total demand of NDC was imported monthly in 2010 23  Table 2.6: The total demand of NDC from end-customers 26  Table 3.1: Summary of SWOT analysis 35  Table 4.1: Break-event point 36  Table 4.2: Segmentation of NDC market by product application 38  Table 4.3: Net cost price for NDC production 41  Table 4.4: The selling price from some NDC suppliers in Vietnam 42  Table 4.5: Implementation plan 47  xi e □ Indonesia f □ Others Which kind of NDC’s vegetable fat content does your company usually choose to buy? You can stick more than one option a □ 28 % c □ 33% b □ 30% d □ 35% Which are the THREE most important criteria when you decide to buy NDC product ? Please stick options a □ Product quality d □ Delivery time b □ Price e □ Relationship c □ Service f □ Others How much quantity of NDC does your company consume per month? a □ 10-50MT d □ 150-200MT b □ 50-100MT e □ >200MT c □ 100-150MT Which each of the following departments affect the buying decision of new materials in your company? On a scale of to 5, where is not important at all and is very important please circle the number that most fits your rating on each of the following criteria Buyer’s decision a R&D department b Purchasing department c Production department d Accounting department 10 Which channel you usually get to know new NDC’s supplier ? 53 a □ Direct sales person d □ Magazine b □ Exhibition e □ Website c □ Friends f □ Others 11 Your company usually buy NDC from which channel: a □ Vietnam distributor b □ Import direct from foreign manufacturer c □ Import via Representative office in Vietnam d □ Others 12 When buying NDC product, your company often: a □ Buy immediately when you find a suitable NDC b □ Compare the quality between several alternatives then buy one c □ Request for sample test and production trial d □ Request for co-fund support for the first products to launch to market to test the quality 13 What you often when buying new NDC product ? You often: a □ Call for competitive quotation b □ Call for tender c □ Appoint supplier d □ Others 14 In your opinion, which factors are the important influences on the purchasing decision? On a scale of to 5, where is not important at all and is very important, please circle the number that most fits your rating on each of the following criteria 54 Purchasing decision a NDC’s color ( white or ivory-white) b Flavour c Fat level (mouthfeel) d Particle size e Payment term f Min order, leadtime g Brand name reputation h Country of orgin i Name of manufaturer in packaging j Advertising k Close relationship 15 Would you like to change to new NDC supplier which is produced in local, guaranteed good quality with competitive price? Yes □ No□ Please specify your answer in detail: …………………………………………………………………………………………………… …………………………………………………………………………………………………… Personal information The name of your company: Your name: Position: Many thanks for your time 55 Appendix 3: Results of customer’s survey Table 1: Kind of end-product application Application field Frequency Coffee in Percentage (%) 12 40 Milk tea, Cereal powder 20 Milk powder 13 Bakery& confectionary 17 Instant noodle, soup Others Total 30 100 Table 2: Buying NDC from supplier or many suppliers Number of suppliers Frequency supplier Percentage (%) 13 many suppliers 26 87 Total 30 100 Table 3: Buying NDC from brand name suppliers Brand name supplier Frequency Percentage (%) Yes 21 70 No 30 30 100 Total 56 Table 4: Some reliable brand name NDC supplier customer usually buy in market Competitor Frequency Percentage (%) Kerry 20 45 Kievit 10 23 Yearrakarn 12 27 44 100 Preserve Total Table 5: The origin of NDC customer usually buy Orgin Frequency Percentage (%) Thailand 24 42 Malaysia 20 35 Singapore China 12 Vietnam Others 0 Total 57 100 Table 6: Kind of NDC’s vegetable fat content NDC fat level Total Frequency Percentage (%) 28% 12 30% 10 33% 18 31 35% 27 47 58 100 57 Table 7: THREE most important criteria when deciding to buy NDC Criteria Frequency Percentage (%) Quality 30 33 Price 29 32 Service 14 16 Delivery time 12 13 Relationship Other 0 Total 90 100 Table 8: Quantity of NDC consumed per month Consuming NDC quantity Frequency Percentage (%) 10-50 MT 16 53 50-100 MT 17 100-150 MT 10 150-200 MT 10 >200 MT Other Total 30 100 Table 9a: R&D Department Frequency Not at all important Percentage (%) 0 A little important 10 Important 13 Fairly important 30 Strongly important 14 47 Total 30 100 important 58 Table 9b: Purchasing Department Frequency Not important at all Percentage (%) 0 A little important Important 20 14 47 27 30 100 Fairly important Strongly important Total Table 9c: Production Department Frequency Percentage (%) Not important at all 17 A little important 27 Important 30 Fairly important 13 Strongly important 13 30 100 Total Table 9d: Accounting Department Frequency Not important at all Percentage (%) 15 50 A little important 27 Important 20 Fairly important 0 Strongly important 30 100 Total Table 10: Popular channel to know NDC’s supplier 59 Frequency Percentage (%) Direct sales person 25 30 Exhibition 20 24 Friends 10 12 Magazine 15 18 Webside 14 17 Other 0 Total 84 100 Table 11: Channel to buy NDC Frequency Percentage (%) Vietnam distributor 25 53 Import direct from foreign manufacturer 18 38 Import via Representative office in Vietnam Other 0 Total 47 100 Table 12: The way to buy NDC Percentage Frequency Buy immediately when you find a suitable NDC (%) 20 51 13 33 Other Total 39 100 Compare the quality between several alternatives then buy one Request for sample test and production trial Request for co-fund support for the first products to launch to market to test the quality 60 Table 13: When buying new NDC product, method dealing price Percentage Frequency Call for competitive quotation (%) 22 73 Call for tender 10 Appoint supplier 13 Other Total 30 100 Table 14: Factors have influence on purchasing decision Fat Particle Payment Min order, Brand level size term leadtime name Color Flavour 0% 0% 0% 0% 0% 10% 0% 0% 4% 0% 0% 10% 33% 24% Important 19% 5% 5% 19% 38% 29% 14% Fairly important 52% 29% 29% 48% 33% 18% 48% 29% 62% 66% 33% 19% 10% 14% 100% 100% 100% 100% 100% 100% 100% Not important at all A little important Strongly important Total 61 Table 14: Factors have influence on purchasing decision Name of Origin manufaturer in Advertising packaging Not important Close relationship 0% 19% 33% 14% 24% 33% 24% 19% Important 14% 19% 29% 38% Fairly important 48% 24% 14% 15% 14% 5% 0% 14% 100% 100% 100% 100% at all A little important Strongly important Total Table 15: Possibility to change new NDC supplier which guarantee good quality, cheaper price Frequency Percentage (%) Yes 28 93 No 30 100 Total 62 Appendix 4: Break-even point analysis Table 1: The calculation for NDC selling price Flexible expenses for 01 ton of Non Dairy Cremer Fixed expenses for 01 month operating 32,344,612 VND 2,827,355,411 VND Production line Capacity 1.7 tons/h Production time: 01 day = 03 shifts 24 hrs/ day Total quantity will be produced 01 day 40 tons/day Selling price of 01 ton of Non Dairy Creamer 63 39,500,000 VND/ton Table 2: Total unit cost by date of operating: Unit: VND1,000 Date of operating 10 12 14 16 18 20 22 24 320 400 480 560 640 720 800 880 960 Sales 12,480,000 15,600,000 18,720,000 21,840,000 24,960,000 28,080,000 31,200,000 34,320,000 37,440,000 40,560,000 Flexible expenses 10,350,276 12,937,845 15,525,414 18,112,983 20,700,552 23,288,121 25,875,690 28,463,259 31,050,828 33,638,397 Fixed expenses 2,827,355 2,827,355 2,827,355 2,827,355 2,827,355 2,827,355 2,827,355 2,827,355 2,827,355 Total expenses 13,177,631 15,765,200 18,352,769 20,940,338 26,115,476 28,703,045 31,290,614 33,878,183 36,465,752 tax (697,631) (165,200) 367,231 899,662 1,964,524 2,496,955 3,029,386 3,561,817 4,094,248 Total Unit cost 41,180 39,413 38,235 37,393 Tons of Finished Goods 2,827,355 23,527,907 26 1,040 Profit before interest and 1,432,093 36,762 Break-even point = Total fix cost/ (Unit price-Variable cost per unit) 64 36,271 35,879 35,558 35,290 35,063 Breakeven point (01 month) Product Sales Time quatity (MT) (‘000 VND) (month) 425 16,787,500 BREAK-EVEN POINT ANALYSIS 65 Appendix 5: NDC prodution process 66 Appendix 6: NDC’s packaging pictures from importing sources 67 ... assessing the firm''s potential to take advantage of them Finally, within individual business units, marketing designs strategies for reaching the unit''s objectives Within each business unit, marketing. .. on average in 2011-2015 Growth over the past years has boosted household incomes in Hochiminh City and Ha noi and established a middle income group in these two city Joined the WTO in 01/2007,... According to Kolter et al (2001, p.31), goals indicate what a business unit wants to achieve; strategy describes the game plan for achieving those goals Every business strategy consists of a marketing