Branding strategy of smirn off vodka in viet nam market 2012 2015

TRƯỜNG ĐẠI HỌC MỞ TP HCM UNIVERSITÉ LIBRE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBMMS Võ Minh Chánh BRANDING STRATEGY IN VIETNAM OF SMIRNOFF MARKET VODKA 2012 — 2015 a 1] T | TRUONG t! OAK HOC Md TP.HeM | fe MASTER MASTER PROJECT IN BUSINESS AND MARKETING Tutor: Ph.D Lé Nguyén Hau Hỗ Chí Minh City 2011 MANAGEMENT Acknowledgement This final project was prepared to complete the postgraduate that lead to the Master degree of Business and Marketing program Firstly, | would like to express my deepest thanks to Professor L6é Nguyên Hau, as my tutor who had guided me a lot for the thesis | would like to thank to all Professors in the program who had given me knowledge, valuable information, and guidance through the course, especially Professor Tran Anh Tuan who had guided me at the beginning the way to study | also want to thank to Ms Méng Thuy, Ms Ngoc Hién, and Serge Bywalski — the Coordinators of the program who helped us so much in corporation during the course about years | much appreciated to all my classmates, my friends and family for their encouragement, especially Phi Long who gave me full of supports from the beginning till the end Last not least, | thanked to Mr Nguyễn Hữu Trí, the Brand Manager of Diageo He is the one | can rely on, to access to information, to get the company supports to fulfill this project Abstract Vietnam, with a strong history of Russian relationship back in 1980s, has a strong vodka drinking habit established especially in Hanoi Vodka consumption is so popular that the product can be found everywhere, even in street side eatery and very informal release occasions in the form of neat drink The category is seen popular but not very clearly defined about image (driven by local vodka Hanoi brand) compared to brown spirits We have seen Smirnoff activating as the next brand choice to trade up at this segment since FY09 with the annual growth rate of 68% However, as the only one imported vodka brand activating in beer gardens and restaurants without back-up communication in other more premium channels, Smirnoff is now perceived not so cool as it’s recognized around the world At the meantime, there is a wide range of local and imported vodka brands with Russian origin available in the market at the price points between vodka Hanoi and Smirnoff which can be the solutions for up-trading trend although it’s just a small volume per brand Despite the booming of social network society in Vietnam, Smirnoff has not utilized digital platform since so far the core consumers of vodka in general and Smirnoff in particular are LS2 and LS3 who are not internet savvy In these years, Smirnoff was positioned as “Affiliation” to the segmentation LS (Leverage Spirit Age 26 — 34 years old) This strategy seemed not fully right to be very successful in the market trend situation And we see it at the result, Smirnoff took a very small market share about 1% in the total consumption more than million liter cases with the time beeing distributed and consumpted in Vietnam more years from 2007 till now In this study, based on the quantitative research implemented by TNS, together with the primary data, we will analyze the main reasons which caused those issues in activating Smirnoff brand in Vietnam, and | also proposed the brand strategy, toghether with the activities in details for the period 2012 till 2015 in Vietnam market SUPERVISOR’S COMMENTS Student name: VO MINH CHANH ON THE FINAL PROJECT Program: MBMMS5 Title: BRANDING STRATEGY OF SMIRNOFF VODKA IN VIETNAM MARKET 2012 - 2015 Comments: This study is a project which develops a marketing strate gy for SMIRNOFF VODKA marketer to achieve its business goals in the next three years The author has exerted a great effort in utilizing the knowledge he has learned in the Master programme, in combination with his own practical experience to fulfill the objectives set forth in the study By this work, the author has shown his deep understanding of the market and product, with rich secondary data collected and analys ized by TNS and other sources Although the proposed strategy deems to be approp riate and feasible, the author’s limited ability to show the logical coherence betwe en external/internal data analysis and the formation of strategy This weakness may undermine the quality and convincingness of this project study Anyway, this work achieves the standard of the program I recommend it to be presented to the examination board a Supervisor: Assoc Prof Le Nguyen Hau Date: March 27th, 2012 Table of contents: Chapter 1: Introduction cecssssssecsssssssssssssssesessesessesessssapereecee eeecececceccee, 1 Background HH Problem statement .- ch Objective and scope n1 HH Structure of the body s1 2212 o S Brand Positioning tr Challenges in Brand building 222222 n o - Chapter 3: AnalySis .ccecscssssssesessssssssssssssssesssseesesesssesseseseeceseee ecececceccc, Internal AnalySis c2 H H External Analysis .0.0.0.0 cc ccccccecccccecetecevececececevevevevetetetec 14 Chapter 4: Brand strategy cccccsssssssssssssesessesssrssssteseeseseeeceseseeeecececce, 17 Brand Strategy HH HH Brand Activities in 2012 - 2015 .- SH Measurement and Evaluation - 22H 17 18 19 Chapter 5: COnclusion cccccssssssssssssesessssesssssssssesseseseesegeceececeseceece cccce, 20 "ò0 ah G0 cclGẠœạŒiisếễ.săšđãa4 TẢ 21 27 Chapter 1: Introduction Background: The vodka consumption in Vietnam market is more than million liter cases per year Leading the market is the local one with the brand Hanoi vodka This brand is dominating the market with the share about 97% in volume Vodka is so popular that we can find everywhere, from street side eatery, and very informal release occasions in the form of neat drink From launching Smirnoff in Vietnam market in the year 2007 till now, Diageo focused to the LS2 with the “Affiliation” as positioned We have seen Smirnoff activating as the next brand choice to trade up at this segment with the annual growth rate of 68% However, as the only one imported vodka brand activating in beer gardens and restaurants without back-up communication in other more premium channels, Smirnoff is now perceived not so cool as it’s recognized around the world In the meantime, there is a wide range of local and imported vodka brands with Russian origin available in the market at the price points between vodka Hanoi and Smirnoff which can be the solutions for up-trading trend although it’s just a small volume per brand " 100% Volume share within category in Vietnam @ Vodka Hanoi, 97% 80% 60% 40% 20% 0% Vodka Hanoi Smirnoff, 1% Absolut, 1% Others, 1% Smirnoff Absolut Others Vodka category grows significantly by 10% in 2009 vs 2008 and it is faster than rest of imported spirit market North region is estimated to contribute 93% of total vodka Local vodka consumption has spread to Central — e.g Danang and Southern provinces — e.g Can Tho, and Vung Tau Two-thirds of vodka volume comes from on-trade with 60% contribution from meal outlet Among imported vodka, Smirnoff is estimated to be the leader, followed by Russian Vodka brands The biggest local vodka is Hanoi Vodka is the giant in the market with volume share about 97% Super deluxe vodka brands like Belvedere and Grey Goose start to activate in status territory through Modern Off Trade channel Diageo came to Vietnam market from 2007 with the distribution nationwide They have 01 Distributor, 25 Wholesalers and over 300 Retailers and over 2000 outlets including Off Trade and On Trade as the route below: VN Distributor Retailers (300) (01) Diaggeo PLC aoe Ane} ue Consumers Outlets (>2000) Problem statement: In the fiscal year 2007 — 2011, Diageo Vietnam applied the positioning locally which is quite different with global strategy They focused in the LS2 (26 — 34) and in Position of “Affiliation” to compete directly with Vodka Hanoi in order to get the consumption rather than building the best image as it is in the global market In 2010 — 2011, they had built the brand awareness with big events, especially sponsored the football team “Manchester United” They set the target 80% for Consumption, and 20% for Image And we also found the Usage in the 4A’s: e se Rejectors: Available: 4% e Acceptors: 63% 19% * e Adopters: Adorers: 8% 6% In these above figures, we see the gap between the “Available” and the “Acceptor” is still very big For the spirit industry, they have many researc h and analysis internally and externally to find out where the contribution could come from by using the 4A’s classification The lesson from this study showed the best consumption come from the group the “Adopters” and the “Adorers” And to be successful this task, the marketing activities should be concentrated not only in these groups, but also need to put the attractiveness in the “Available” and the “Acceptors” where they could increase the number of drinkers in these groups more and more Certainl y the brand’s owner could get effectiveness of the brand awareness from their targeted consumers and the good consumption as well And to underst and more about 4A’s, | also represented it in the next pages In the research reports implemented by TNS, | realized one of the key points for this issue came from the Acceptor with the question: “Why | drink Smirnoff with times in price vs Vodka Hanoi?” (In the same position “Affiliation”) And we see the highest consumption for Smirnoff is in the “Independent” group with the contribution 23% in the mean while the “Affili ation” Only got 10% Smirnoff source of volume Affiliation 10% Contentment 12% Mindependence ™Status ®Discernment Contentment ® Affiliation ™ Release Based on the secondary data to be analyzed together with the internal reports, we found that the positioning Diageo applied for Vietnam market in the last year could not be very successful They focused in “Affiliation — Group’, but the best Motivation in the A’s profile showed in “Independence — Individual’ Objective and Scope: This study is to propose the branding market in the year 2012 — 2015 strategies to be applied for Vietnam Recruiting Legal Spirit Age (18-25) males Smirnoff Available /Acceptors who are international beer drinkers to become Smirnoff Adopters (increasing Acceptors from 19% to 35%; 37,309 totally) drinking glass/month by end of 2015 Increasing LS2 (25-34) males Smirnoff Adopters from 8% - 15% drinking glasses per month and Adorers from 6% - 10% drinking glasses per month by the end of 2015 Build up the Smirnoff community — 10%, and to build up the brand image — 7% also Building Smirnoff as iconic brand with No.1 stature and extraordinary experience is a must to compete competitor for long-term strategy Structure of the body: The structure of this study is arranged as below: The first chapter presented the problem statement of the brand, Structure of the study introduction including the background, objective and scope of work, then the In the second chapter, | would like to present the literature review Brand Positioning and the challenges for that process about Based on the internal reports and the secondary data provided by TNS, the third chapter for the analysis will go deeply in the current situati on of Smirnoff in the market With the literature for branding, together with the analysis from reports, the chapter will have the brand strategies for the period 2012 — 2015 with detail activities Finally, the conclusion chapter will summarize the study ... THE FINAL PROJECT Program: MBMMS5 Title: BRANDING STRATEGY OF SMIRNOFF VODKA IN VIETNAM MARKET 2012 - 2015 Comments: This study is a project which develops a marketing strate gy for SMIRNOFF VODKA. .. booming of social network society in Vietnam, Smirnoff has not utilized digital platform since so far the core consumers of vodka in general and Smirnoff in particular are LS2 and LS3 who are not internet... who are international beer drinkers to become Smirnoff Adopters (increasing Acceptors from 19% to 35%; 37,309 totally) drinking glass/month by end of 2015 Increasing LS2 (25-34) males Smirnoff Adopters