Marketing Plan: Vifon Cup Noodles

Group 2 Kieran Tierney

Nguyen Thanh Ha s3325167 Nguyen Thu Giang s3310197 Hoang Thu Trang s3325076 Hoang Tuan Duong s3324115 Pham Minh Chinh s3325106 31/08/2011

Contents
Contents......................................................................................................................2 1. EXECUTIVE SUMMARY..............................................................................................4 2. CURRENT MARKETING SITUATION............................................................................5 2.1. Introduction.......................................................................................................5 2.2. Situation analysis...............................................................................................5 2.2.1. Microenvironment........................................................................................5 2.2.2. Macroenvironment.......................................................................................6 3. SWOT ANALYSIS.....................................................................................................10 4. OBJECTIVES............................................................................................................11 4.1. Corporate objectives........................................................................................11 4.2. Financial objectives..........................................................................................11 ...............................................................................................................................11 4.3. Marketing objectives........................................................................................11 5. SEGMENTING, TARGETING AND POSITIONING........................................................12 5.1. Segmentation table..........................................................................................12 5.2. Targeting.........................................................................................................12 5.2.1. Evaluating Market Segment.......................................................................12 5.2.2. Target marketing strategy.........................................................................13 5.3. Positioning.......................................................................................................13 5.3.1. Positioning map.........................................................................................13 5.3.2. Possible value different and competitive advantage..................................13 5.3.3. Choosing the right competitive advantages...............................................14 5.3.4. Overall positioning strategy.......................................................................14 5.3.5. Positioning statement................................................................................15 6. MARKETING MIX STRATEGIES ................................................................................15 6.1. Product strategy..............................................................................................15 6.1.1. Brand Life cycle stage................................................................................15 6.1.2. Levels of Products and Product strategy....................................................16 6.1.3. Brand Development Strategies Line extension........................................17 2 | Page

6.2. Price Strategy..................................................................................................17 6.2.1. Product Mix Pricing Strategies ...................................................................17 6.2.2. Price-Adjustment Strategies.......................................................................18 6.3. Place strategy..................................................................................................18 6.3.1. Administered Vertical Marketing System ...................................................18 6.3.2. Multiple distribution channels....................................................................19 6.3.3. Channel design..........................................................................................20 6.4. Promotion .......................................................................................................21 6.4.1. Promotion mix strategies ..........................................................................21 6.4.2. Promotion tools..........................................................................................22 7. ACTION PROGRAM..................................................................................................25 8. CONTROL PROGRAM..............................................................................................29 REFERENCES..............................................................................................................30

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1. EXECUTIVE SUMMARY
Vifon (Vietnam Food Industries Joinstock Company) seeks to provide a perfect solution for an increasing and changing demand of a targeted market segment through our cup noodle brand NgonNgon. Our demographic is young, busy office workers aged 24 to 34 with middle income ranging from 3 to 5.5 million VND per month who embrace simplicity, convenience and quality products at competitive prices. The purpose of this plan is to illustrate our targeted market segment and outline the strategies, approaches and programs that we use in order to achieve our objectives.
We are not just any instant noodle company. We are one of the pioneers in introducing cup noodle products to the Vietnamese market and our ambition is to attain 100% customer satisfaction and build long-term customer relationships. Thus, to make the most out of this advantage, we aim to perform large scale promotion and distribution to raise our brand awareness and gain a brand share of 8.4% by the end of next year before the market competition becomes too harsh. We also hope to achieve a growth of additional 23% in sales revenue compared to the last year. To accomplish these objectives, Push and Pull Promotion strategies with a carefully blended mix of promotion tools (advertisements, direct marketing, public service activities and sales promotions) will be used to drive up demands from customers at the same time pushing goods down the channels in the most effective way. This will also improve customer awareness of our brand and confirm its position. Beside heavy promotion, our company also plans to intensively expand our distribution network following Multichannel distribution system in order to optimize the availability of products to our customers. Nonetheless, our objectives can only be accomplished successfully with well-developed marketing mix strategies for our products and their prices as well. In detail, we will apply the Product Line Extension strategy and introduce more varieties of noodle types, flavours and cup sizes to offer more choices and satisfy a wider range of customers. Product-mix pricing and Price-Adjustment strategies are well integrated to create a more for the same brand perception as we concentrate on satisfying our targeted segment with the best deals at competitive prices through niche marketing. Our selling prices range from as low as 4900 VND to the highest 8500 VND. Products at lower prices aim at economic customers while products with a lot of extra benefits (extra meat package and sauce, bigger size) at higher prices target consumers who prefer quality over price and they are predicted to be perceived as good value. This will grant us another advantage over our competitors in the extremely competitive environment where all market players strive to get a bigger piece of the share market pie and the economic downturn with consecutive financial crisis have seriously affect consumers confidence and purchasing behaviour. These key strategies are the highlights of the plan and play crucial roles in helping us accomplishing our objectives in a one year timeline through building customer satisfaction and brand loyalty. We firmly believe that it is possible for us to deeply and beneficially penetrate this marketing niche.

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2. CURRENT MARKETING SITUATION

2.1. Introduction
Having a high reputation of 47 years of operation in the Vietnamese noodle market, Vifon has been able to achieve certain success and gained a relatively good share in the Vietnamese instant noodle market. Vifon products are distributed across the whole country through extensive distribution channels with 14 exclusive distributors, 500 wholesalers and over 32000 local shops and exported to over 50 countries around the world, bringing over 10% of the total sales revenue for the company every year. However, with the constant growth in demand, the promising instant noodle market is becoming more and more competitive. From the mid-90s, due to too much concentration on exporting and an inability to compete, Vifon started losing its market share slowly. In 2005, in realising the changing needs of a particular segment of urban office workers, Vifon introduced a new product line of cup noodles to the market under the brand name Ngon Ngon. This was a swift and wise decision in the situation where there has been a continuous rising demand for convenient foods and the cup instant noodle market is still underdeveloped due to its premium-segment prices and limited number of offers. The brand has since then been proved to be one of Vifons best competitive advantages and has been dominating the cup noodle market with a significant brand share of 3.9% and an average growth in sales revenue of 80 billion VND per year, becoming the leader of the domestic cup noodle market. Recognising this advantage, we aim to use Ngon-Ngon as one of our main focuses to raise our sales, our market share as well as gain back the lead position in the instant noodle market in this coming year.

2.2. Situation analysis

2.2.1. Microenvironment a. Customers Vifons cup noodle products concentrate on 3 types of customer markets: - Consumer Markets: purchase goods from retailers. Our targeted consumers are mainly young office workers with middle to upper middle income living in all areas of the country but mainly those from urban areas that do not have a lot of time or could not be bothered to cook a proper meal, age ranging from 22 to 34. - Reseller Markets: Mainly supermarkets and over 32000 local stores across the whole country. - International Market: the company products have been exported to over 50 countries including Germany, Malaysia, and the USA ...etc. The export sales augment averagely 10% per year (Vifon, N.D.) Strength : diverse groups of customers contributing to sales growth Weakness: The domestic market has not been successfully penetrated due to past high concentration on exportation.

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b. Competitors The biggest competitor of Vifon at the moment is Vina-Acecook. The Japanese company Acecook penetrated the Vietnamese noodle market in 1995 via a joint venture with Vifon. With the advantages of having 100% foreign investment of 6 million dollars and coming from Japan the birth place of instant noodles, Acecook dissipated from the incorporation with Vifon in 2004 to become a new company VinaAcecook and quickly positioned itself to occupy 42% retail value share of the market. Since then, Vifon has lost its market share down to only 11.9% in 2009 (Euromonitor International 2010). Vina-Acecook currently has 2 cup noodle product lines (Modern and 24h) with a total of 10 flavours, providing better chances to satisfy a wider segment of customers while Vifon only has 1 cup product line (Ngon-Ngon) with 4 flavours. Even though Ngon-Ngon has lost 1.7% of the market share since 2006, it still occupies a 3.9% of the market share and is dominating the cup noodle market. Vina-Acecook cup noodle brands have not been able to gain a noticeable market share (Euromonitor International 2010). Vifon has always been in the top 10 of the top 100 High Quality Vietnamese Products and has been able to gain various achievements such as the international certificate HACCP, the Honour Flag by Prime Minister, successful application of ISO 9001:2000 quality control. In 2010, one of Vifon brand has received the Global Food Industry Award (Vifon n.d., Baomoi 2010) Strengths: o Gain customers preferences, currently dominating the cup noodles market with lower price compared to the competitor ones. o High quality reputation. Weaknesses o Limited fund. o Limited product design compared to the competitors. c. MKT intermediaries Our company has an extensive distribution channel with 500 retailers across the country including 14 exclusive distributors in 6 big cities (Ha Noi, Hai Phong, Vinh, Da Nang, Dong Nai and Can Tho) and around 32000 local shops (Vifon 2011). Vifon focuses on both modern distribution channels including supermarkets (Citimart, Fivimart, Intimex, Big C, Metro...) and traditional channels (wet markets, local grocery stores) which are still predominant and contributed to 89% of total sales revenue in 2010 (Euromonitor International 2010). However, Vifon still has not been able to develop alternative distribution channels, namely selling directly to businesses through our sales force and to consumers through online channel. The later is particularly important in facilitating customers purchases and reaching our consumers effectively in an information technology era. Strength: Large distribution network Weakness: Inadequate distribution channels (only 1) to fully cover the marketing niche.

2.2.2. Macroenvironment a. Demographic environment 6 | Page

Vietnam has a young and dynamic population which has grown progressively by 1 million per year since the 90s (post-war). There were approximately 20.15 million people aged between 22 and 34 in 2009 and 88.7% of people this age group participate in the labour force. This group is also our targeted market as most of them have jobs and are busy so they have limited time to prepare and serve meals (Euromonitor 2010, Nielson 2010).

Figure 1: Adapted from Vietnam Employment Trend 2010

Opportunity: Increasingly large targeted market segment

The rise of Vietnamese economy and the family planning legislation have created young generations who are becoming more westernised, busier and have more freedom to make decisions, which in turn causes a sharp fall in the number of traditional four-generation households and a significant rise in the number of small sized families. This generation with mostly single people and some small families in modern busy society have particular high demand in packaged foods Opportunity: Increase in demand for fast and simple meals (convenient foods). Noodles were among the most popular packaged foods

Euromonitor report (2010) also reveals that Vietnam is going through rapid urbanisation. From 2004 to 2009, the urban population has grown 9.6 times faster than the suburban populations. This geographical shift suggests that in 3 years time, 31% of the Vietnamese will live in metropolitan areas, meaning there will be more purchasing power, especially in convenient foods, in the big cities like Ha Noi, Ho Chi Minh, Da Nang, Can Tho and Vinh. The majority of the working population in these big cities that we aim to serve are professionals, namely office workers. They have long working hours with short lunch breaks and limited amount of time to prepare meals.

Opportunity: The urban market can still be potentially deeply penetrated due to the new geodemographic market. Threat: The promising unsaturated market means that there will be harsher competition in the industry among businesses

b. Economic environment 7 | Page

In 2010, the GDP growth rate of the economy in Vietnam was 7% and this promises a growth of minimum 12% by 2013. Average urban household income has also increased significantly by 158% from 2002 to 2008, causing a gradual growth of 44% of the middle class over the period of 7 years (Nielsen 2009, Nielson 2011, TNS 2010). We aim to serve this growing middle class with the income at the lower end of the range (from 3.5 to 5 million VND per month) as although our products cost much less than proper meals in restaurant, they belong to the premium segment of instant noodle with the highest price range. People with income above this range often choose better solutions such as eating out in restaurants Opportunities: Increase in purchasing power of the growing affluent consumers group (middle class) will lead to increase in sales of convenient (packaged) food, particularly quality products.

Figure 2: Adapted from Nielson Omnibus (Modern trade and the Retail Business) 2009 Nonetheless, Vietnam has one of the highest inflation rates in the world. Inflation was shockingly high in 2008 (23%). Although the figure has dropped significantly to 7% in 2009, it started to increase dramatically again to 12% in 2010. Sharp increases in electricity, fuel and gas prices have seriously restrained the economic growth (60% reduction in purchasing power) as well as consumers' confidence. 36% of the consumers interviewed look to switch to cheaper groceries or seek more valuable products. (Nielsen 2011) Opportunity: offer products with more benefits at competitive prices and various selections of economy (value) packs Threats: insecure economy and financial crisis negatively affect the market and spending patterns

Figure 3: Reproduced from Nielsen Vietnam Grocery Report 2010 8 | Page

c. Cultural environment Noodles are a staple diet in many Asian cultures. According to the World Instant Noodles Association report, Vietnam is 4th on the list of highest demanding countries for noodles and the demand is still growing at a steady rate, providing a promising market for noodle manufacturers (WINA 2011). Vietnamese people are increasingly concern about health. 95% people interviewed considered health as their top priority, within which 88% of people interviewed said that they are ready to pay a higher price for healthier foods (TNS 2010) Opportunity: Promising market for organic, healthy products.

Consumers have changed their perceptions about Vietnamese goods in a positive way. Vietnamese people use Vietnamese brands is considered to be a major trend in the purchasing behaviour pattern. 90% of consumers in HCMC and 83% in Hanoi said they will possibly/definitely buy more Vietnamese goods (Nielsen 2011). Opportunity: Advantage to position better in peoples mind and increase the market share.

The research of Nielson (2011) shows that advertising has dramatic effects on Vietnamese people (87%) within which 56% are loyal to their brand but actively search for promotions. Especially during this financial crisis, 51% consumers claimed they would buy more products on promotion (Neilsen 2011). Opportunity: retaining loyal customers as well as attracting new customers by advertising and offering more promotions. d. Natural environment Vietnam noodle production relies significantly on imported wheat from China. Unfortunately, Chinas worst drought has been continuing throughout the spring; threatening Vietnam wheat supply for noodle production. Natural disasters are happening more frequently around the world in recent years, posing risks to the business Threats: unstable prices and supply due to the shortages of wheat in China.

Electricity supply for the country depends on the hydroelectric power which is the only inadequate source. This in turn produces unavoidable power cuts during the long dry season in Vietnam every year. The incident causes loss to many businesses. Threats: loss and reduction in production capacity due to power cut without prior warning.

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3. SWOT ANALYSIS
Strengths 1. Diverse groups of customers 2. High quality reputation 3. Current popularity and domination of the cup noodle market. 4. Large distribution network S-O Strategies 1. Extend the distribution network to increase products availability to customers 2. Cut down unnecessary additives and improve the quality of ingredients to produce healthy goods. 3. Professional design to create environmental-friendly packages 4. Wisely invest in promotion using various efficient advertising media channels (internet, magazines, outdoors) & promotion tools (sample, coupons, premiums, patronage rewards & games) as well as build good relationship with the public to drive up sales and enhance brand position S-T Strategies 1. Invest more in R&D by carrying on surveys with free samples for consumers to find out preferences in different geographic areas to make changes 2. Heavy promotion and PR (public service activities, press conference etc) to increase customers awareness of the brand 3. Use push strategy to maximize Weaknesses 1. The market has not been successfully penetrated. 2. Restricted resources (fund) 3. Limited product designs 4. Inadequate distribution channels W-O Strategies 1. Penetration Pricing strategy is integrated with product mix pricing (bundle pricing) and adjustment pricing (discount & psychological pricing) strategies to create valuable products thus deeply penetrate the marketing niche and gain more market share. 2. Extend the product line by adding more variety of noodles, flavours and cup sizes to cover more shops shelves and satisfy various demands to offer more values/benefits. 3. Apply multichannel distribution model- create more channels (online, sales force) at the same time extend the existing channel to effectively reach consumers W-T Strategies 1. Choose the right brand position (more benefits for the same price) to compete with other brands during this recession time 2. Create bundles of products for cheaper prices, this also encourage consumers try different products of our company 3. Monitor the environment closely to be able to swiftly adapt with its changes 10 | P a g e

Opportunities 1. Increase in demand for convenient products from large and growing targeted market from urban areas 2. Rise of household income to shop for more quality goods 3. Customers are pricesensitive during the financial crisis time 4. Significant effects of advertising and promotions during recession 5. Promising market for Vietnamese brands and healthy, environmentalfriendly products Threats 1. Extremely competitive market 2. Spending pattern change due to financial crisis 3. Shortage of raw material (wheat) supply 4. Constant uninformed power cut creating loss and reduced production capacity

market coverage and cast out weak competitors.

4. OBJECTIVES
4.1. Corporate objectives
To be the leader in the instant noodle industry in term of percentage market share, value proposition and sales growth.

4.2. Financial objectives

The average growth rate in sales value of Ngon-Ngon up to this point is 16.25%. This year, we aim to push it up to 23% compared to the last years figure and establish more distribution channels. 1st September 2011 1st February 2012 1st February 2012 1st September 2012 Growth in sales revenue (Compared with last year) Resellers Chann el Online Sales force 15% 87% 1.5% 11.5% 23% 77% 3% 20%

Figure 4: Expected sales revenue by February 2012 and August 2012

4.3. Marketing objectives

Increase in brand share- our current brand share is 3.9% (Euromonitor 2011) By February 2012: aim to increase by 2% to occupy 5.9% in brand share By August 2012: increase by 4.5% to 8.4% in brand share Increase in brand awareness assessed by rank position in top 20 Vietnams largest food companies and in top 1000 Vietnamese largest enterprises (Bach Thien Media 2011) By February 2012: rank the 8th in top 20 and 200 in top 1000 11 | P a g e

By August 2012: rank the 3rd in top 20 and 120 in top 1000 Maintaining current rank in top 10 high quality products of Vietnam (Vifon 2011)

5. SEGMENTING, TARGETING AND POSITIONING

5.1. Segmentation table
Variables Geographic Regions Age Family life cycle Gender Occupation Income Social class Lifestyle Personality Occasions Benefits Behavioural User status User rates Loyalty status Readiness stage Fields Country Content Vietnam Mainly 6 big cities (Ha Noi, Ho Chi Minh, Hai Phong, Da Nang, Vinh, Can Tho) 22-34 Young, single, some married Both male and female Officials VND 3,500,000- 5,000,000/month Mainly Middle, some upper Middle Simple, Busy (office working) Economical, Active Regular occasions Convenient, affordable, quality Potential, first time, regular, heavy users Light, medium and heavy users None, medium, strong, absolute Unaware, Aware, Interested

Demographic

Psychographic

5.2. Targeting
5.2.1. Evaluating Market Segment a. Segment size and growth According to Vietnam Employment trends 2010 report, the average labour force participation rates from 22 to 34 years old was among the age groups with highest participation rate (88.7%) In 2009, we had approximately 16.3 million people in jobs with incomes ranging from 3.5 million to 5 million VND, aged from 22 to 34 - a 13.2% increase compared with the figure in 2007 and this young population will continue to grow steadily. These figures show a steady rise in size of our large target market. Moreover, cup noodles have seen the fastest growth in instant noodle category (17%) and still have a lot more potential for growth due to the rising demand for packaged/convenient groceries from single people and small-sized families in a busy, modern society (Euromonitor International 2010) b. Segment structural attractiveness 12 | P a g e

Level of competition We are in an extremely competitive market with many national and international competitors due to the characteristic of the super category (Food-FMCG) The bar has been raised even higher in time of economical crisis when people are well aware of the recession and take a lot of effort to compare prices versus benefits of similar products prior purchasing 5.2.2. Target marketing strategy After evaluating market segment and consider our situation (weaker position) and well as resources (limited fund), concentrated (niche) marketing seems to be the best solution for us. We try to focus on serving and satisfying only 1 segment of customers to increase the number of loyal customers.

Figure 5: Reproduced from: Kotler et al. 2009

5.3. Positioning
5.3.1. Positioning map

Figure 6: Positioning Map We aim to position our brand as a high quality brand with wide range of varieties (more benefits) at competitive prices.

5.3.2. Possible value different and competitive advantage a. Product differentiation Competitive quality based on healthy ingredient manufactured with the strictest quality standards of Vietnam and of the world such as the HACCP, ISO 9000:2000, ISO 9001:2008 and Global Food Industry Awards Minimize the use of additives and only the ones that are listed in Ministry of public healths allowed list 13 | P a g e

Offer customers wide selections of sizes, ingredients and flavours that suit Vietnamese people preferences with competitive prices.

b. Service differentiation Official website with high level of loading information and graphics, food safety and sanitation column available to update the latest information about current health issues and concerns. Customer can leave the email address to receive latest promotions and offers. Customer can contact the company through email on the website, phone or fax. Hotlines for consultant services available in Hanoi, HCM and Danang c. Channel differentiation 500 authorized retailers covering 64 provinces of Vietnam with more than 32000 local shops (Vifon.com.vn) Customers can purchase large orders online through the official companys website and choose the delivery options at their own cost. d. People differentiation Senior staff collaborates with young & enthusiastic employment. Hold training courses frequently. e. Image differentiation Products for customer health Products are environmentally friendly Brand value benefits of public and society (doing charity works, creating jobs for the locals, offering award scholarships) 5.3.3. Choosing the right competitive advantages Based on analysis of the differences between Vifon and its competitors, 3 big competitive advantages that we should consider most are: Product differentiation Channel differentiation Image differentiation Vifon is trying to provide a first-choice solution for busy people with quality, healthy and environmentalfriendly products that are highly available and affordable. 5.3.4. Overall positioning strategy By practicing a "more for the same" value proposition, we hope to become the first-choice solution for busy customers who embrace convenience, healthiness and competitive prices. Our current products' prices are cheaper than the competitors' ones. We will extend the product line to provide premium products with more benefits (more flavours and type choices, more nutritious -extra pack of meat, attractive design and discount for buying in bulk) at a similar price to our competitor's.

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5.3.5. Positioning statement To all young busy professionals who feel time, price and food quality seem to be insolvable problems, Ngon-Ngon is a convenient, economic and healthy solution for consumers with a variety of different flavours and noodle types based on the very traditional Vietnamese cuisine, allowing you to enjoy your meal while at the same time working efficiently. Let Ngon-Ngon inspire and set you free to succeed now!

6. MARKETING MIX STRATEGIES

6.1. Product strategy
6.1.1. Brand Life cycle stage

Figure 7: Reproduced from Euromonitor 2010 Ngon-Ngon cup noodles sales have increased progressively by average 77.5 billion VND per year. Between 2005 and 2009, its sales almost doubled from 372.85 billion VND to 683.07 billion VND. This can be explained by the increase in people and brand awareness as well as the rise in consumption of convenient products in busy modern society. According to Euromonitor International report (2010), noodles continue to grow strongly and instant cup noodles are seen to have the fastest growth in sales (20%). However, the instant noodle sector in Vietnam has not yet reached the maturity and is experiencing tough competition among companies to fully penetrate the market. This indicates that we are in the growth stage of our brand life cycle with a low market share (3.9%) but high growth rate. It also confirms our brand position in the BCG Grow-Share matrix as a question mark and we will need to invest efficiently to build it into a star. 15 | P a g e

From the analysis above, we have developed appropriate strategies for our products: Product strategy: Extend the product line with varieties of noodle flavours, noodle types, cup sizes, produce healthier noodles (plus meat package, minimal use of additives) and improve the packaging design to cover more supermarket shelves and satisfy wider range of target consumers. Price strategy: Use the Penetration Pricing strategy as our sales increase which in turn reduce the production cost per unit, we could add more benefits to the product and still keep the price at a competitive level compared to our competitors to gain more market share. Promotion: Use both Push & Pull promotion strategies to create demand as well as more brand interest and awareness. Persuasive advertising will be used intensively to attract more customers. Place: Expand the distribution network using Multichannel Distribution and Intensive Distribution strategies to reach target consumers effectively

6.1.2. Levels of Products and Product strategy Level of Detail of product product Core Simple and quick solution for busy lifestyle benefit - Convenience - Affordable Features - Favourable taste Design Product Improvement Lets go healthier and tastier - Focus more on healthiness - Improve taste quality and variability

Actual product Packaging

Quality level

- Healthier ingredients: 1 more separate - Noodles made from wheat flour package of meat with sauce. with dry vegetable, oil and - More varieties: rice vermicelli, potato seasoning noodles, cellophane noodles - More serving method: with water or stirfry with sauce - More flavours: Thai hot pot, Vegetable, Seafood - 3 more different sizes 90g, 120g and 150g - Plastic cup 60g - Extra plastic lid to keep noodles warm or - Separate packages for different for later use ingredients.1 fork included - Use paper cup with PE liner (10% - Different colours for different biodegradable) to lessen the environmental flavours. impact and improve the heat-proofing property. - Important information highlighted (no trans-fat, no food colouring tartrazine or MSG, nutrition values) High quality, have achieved - Top 10 of top 100 High - Improve the quality by adopting more Quality Vietnamese Products modern technology, using more natural the whole time ingredients and minimizing the use of - HACCP and ISO 9001-2000 unnecessary additives (especially MSG and certificate gums) 16 | P a g e

Installation

- International food standard - VN best quality certificate - Globalfood award 2010 - Instructions on how to prepare - Provide more online service and more and serve the products hotlines for Hanoi, Danang Vinh and Can - Hotline service in HCMC Tho

Augmented product

After sale - Customer consultant service - Provide more consultant service lines service (phone, fax, email) - Production date - Exchange and refund for under-qualified Warranty - Expiration date products Delivery - Not available Provided for large orders within the cities.

6.1.3. Brand Development Strategies Line extension Strategy Brand Line Existing extension Product Detail Line Introducing more variable products in term of size and ingredient, extension flavour and form: - Cup sizes ranging from 60g 150g for wider selection. - More natural and healthy ingredients. - 8 different flavours: chicken curry, chicken, pork, beef, tom-yum, Thai hot pot, seafood and vegetables. - 4 variety of noodles wheat noodle, rice vermicelli, potato noodles and cellophane noodles -2 forms of noodles: normal and stir-fry noodles.

6.2. Price Strategy

6.2.1. Product Mix Pricing Strategies a. Product line pricing At present, Ngon-ngon cup noodles with 4 different flavours cost around 5000 VND per cup and our company is trying to practice good-value pricing strategy to offer consumers quality products with a wide range of choices at fair prices. The company should set different prices for the extended products in the product line. Specifically, bigger sizes of the basic noodles - 90g, 120g and 150g cups will cost 5900 VND, 6900 VND and 7500 VND respectively. Noodle cups with extra package of meat or sauce for stir-fry flavour will cost 1000 VND extra. b. Product bundling pricing In order to promote the sales of our products as well as encourage customers to experience different products of our company that they might not buy otherwise, we will combine several products and offer the bundle at a lower price to save from 3000 VND to 7000 VND. The basic bundle will contain A set of 6 cups with one pack of chili sauce, soy sauce or soup powder of different flavours (these products are frequently used when serving noodles) OR: A combined set of cups with different sizes, flavours or types of noodles. 17 | P a g e

6.2.2. Price-Adjustment Strategies a. Discounts Vifon should apply the Discount and Allowance Pricing strategy by: Giving promotional allowances to reward resellers in participating in advertising and sale support programs. By doing this, our products will be pushed down the channels much more efficiently Giving customers lower prices (discounts) when they purchase the products in bulk. For example, every purchase of 4 packs of 6 noodle cups will give customers 1 free cup of the same size of any type or any flavour they wish.

b. Psychological Pricing In a competitive market and current financial crisis situation, psychological pricing play an important role in drawing consumers attentions. We will price our current basic product (60g) 4900 VND instead of 5000VND. Similarly, the extended products will be priced 5900 VND, 6900 VND and 7500 VND as mentioned above. These will be more likely to be seen as a bargain price compared to our competitors prices. c. Promotional Pricing Vifon should coordinate well with its retailers to perform this strategy effectively. Our distributors will give chances to customers to purchase our products at lower prices for a short amount of time. The frequency of the promotions will need to be high enough to raise customers loyalty level and attract potential buyers but not too often to just raise the numbers of deal-prone customers up. Ideally, we offer discounts once every quarter during the first weekend only in the big supermarkets

6.3. Place strategy

6.3.1. Administered Vertical Marketing System Our company can be considered powerful with regard to the market share. To deliver superior value in the products of Ngon-Ngon to the customers, Vifon needs to maintain a tight relationship with each stage of its channels, particularly its downstream members including wholesalers and retailers who make up the dominant channel that deliver our goods to our proliferating segment of customers. As a result, Administered vertical marketing system will be the optimal solution.

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Figure 8: Reproduced from Kotler et al. 2009 6.3.2. Multiple distribution channels Besides strengthening our main distribution channel, we also need to apply the concept of Multichannel distribution system to efficiently reach our target market.

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Figure 9: Reproduced from Kotler et al. 2009

6.3.3. Channel design

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Figure 10: Adapted from Kotler et al. 2009

6.4. Promotion
6.4.1. Promotion mix strategies Push Pull strategies: Our brand is in the growth stage of the brand life cycle where promotion plays a crucial role in increasing sales. Since our business relies mainly on the Business-to-Business practice where we distribute our products through a wide network of market intermediaries, we will use Push strategy to maintain and improve the connection with our intermediaries in order to push our goods downstream faster and more efficiently. However, we also need to apply Pull strategy to drive up demand and promote our products to consumers. These 2 strategies when integrated properly will be a powerful promotion tool.

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6.4.2. Promotion tools a. Advertising Objective setting Persuasive Advertising Budget decision Objective-andTask Media Decision Internet, Magazine, Outdoors

Setting Advertising Objectives We are facing a high level of competition in the domestic market. In order to compete against strong competitors, we have to try to convince consumers that our products deliver superior values and they should purchase our products instead of others. Therefore, Persuasive Advertising should be the finest choice. Setting Advertising Budget Objective-and-Task method is used where we estimate the cost based on our set objectives. Our aim is to efficiently utilize the promotion tools to achieve maximal outcomes at lowest possible budget. Thus, promotion strategies will need to be chosen and applied carefully. Developing advertising strategy Create Advertising Message The image we endeavour to create is young, modern and professional office workers who are busy and happy to use our cup noodle products on a daily basis. Vifon cup noodle products will provide convenience to help you catching up with the hectic lifestyle at the same time offer quality and healthy products at competitive prices. Selecting Advertising Media Medium Specific medium channels Webtretho.com Internet Dantri.com Facebook.com Dep (a fashion magazine) Tiep thi & Gia Dinh (Marketing & Family) Suc khoe & Doi Song (Health & life) Banner painted on the buses Top banner-all the time Right Banner 1 (180x270 pixels) Create our own page Standard single left hand placement-once/month 1/2 page (11x27) - once per month Twice per month On buses number 22 and 32- for the whole year Description 1 thread for visitors to discuss about noodle products Reason -More than 2 million users and about 4.6 million page views each month - Many people have family from 22 to 34 years old -About 62% of people visit -More than 2.5 million users per day. -Target young people well and free -Popular among young professional women -120000 issues per month -72% readers from Ho Chi Minh city and 18% from Hanoi. -60% readers from 25 to 45 years old -180000 issues per month -Popular in young official people - two main bus routes that go through the busiest areas in Hanoi with many traffic lights that have long waiting time 22 | P a g e

Magazines

Outdoor

b. Sales Promotions Tools Specific channels Sample Offering trials of products for customers Coupons Coupons on magazines Premium Goods offered for free for resellers and customers Patronage Special customer Rewards discounts and trade discounts as loyalty incentives Games Lucky draw

Strategies Pull Pull Push & Pull Push & Pull

Description Giving to each bypassing workers in front of few biggest companies/ office buildings 1 free Vifon cup of noodles size smallest (60g) with different flavours Discount 5% of the invoice when customers bring the coupons to the resellers or local shops -B2B: Giving free display shelves or patio umbrellas with Vifon logo for every purchase of 500 boxes. - B2C: Giving 1 free bowl for every box of 24 cups -B2B: 1 point for every 1.2 million VND spent. 2% discount for total 10 points - B2C: 1 free cup of the same size for every 4 packs of 6 cups Every noodle cup will have 1 special code. Customers will fill in their details and send back to Vifon.After a period of time, Vifon will draw a lucky number to win prizes: -special prize: 1 motorbike Honda wave alpha -1st prize: 2 tickets for a trip to Singapore -3 2nd prize: TV Sony LCD -10 3rd prize: Samsung Star mobile phone -10000 consolation prize: 1 free cup noodle set of 6.

Pull

c. Public Relations Tool Specific channels Special events - Holding press conference when launching new products, celebration of the new factory going into operation. - Organise press tours for journalists from popular newspapers, e-newspaper and Vietnam television Written materials -Articles written by PR / Marketing Manager and sent to editors Scholarship program: Providing a number of scholarships for poor university students. Charity program -Helping victims in natural disasters -Taking care of Vietnamese heroic mothers

Description Delivering descriptive information about new products and answering all questions of the press and customers by spokeman

Inform public about what and how Vifon is doing. This will also have an impact on our stock price and the media. Each year, proving 50 scholarships for poor university students -Giving free noodle to support victims. -Taking care of 6 Vietnamese heroic mothers Announcement on TV or on the internet through Vifon company website.

Public Service Activities

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d. Direct marketing Tools Direct-email/mail Marketing Description -Use direct email marketing to target customers (B2C). Customers information is collected when they register on our website and fill in the lucky cards in the noodle cups and send back to us. - Use direct mail marketing to target businesses and resellers (B2B). Information is collected through membership registration. -Send catalogue, promotional letters and announcement about new products, events, promotion offers or campaigns - Web-based catalogue for customers. - Printed catalogue for businesses and resellers. Reason - To build long-term customer relationships in an effective way. + Emails sent to customers as it is cheap + Mails with catalogue used for businesses and resellers as they are more professional, convenient and attractive.

Catalogue Marketing

- People are likely to shops for more when they have time and can absorb the information from the catalogue at their own pace. - The printed catalogue option seems to be a bit costly but they will only be sent to selected businesses and resellers. The catalogues have all of Vifon products and brands including our cup noodle brand Ngon-Ngon, This will encourage customers to buy more of our companys products.

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7. ACTION PROGRAM
Tasks Extend the product line with more flavours and more types of noodles Responsibility Top management R&D Purchasing Manufactur ing Accounting R&D Purchasing Manufactur ing Accounting Top management Marketing Purchasing Manufactur ing Top management Marketing Marketing Purchasing Designing & Manufacturing Top Timeline (month) Cost (VND) 09 10 11 12 01 02 03 04 05 06 07 08 20 million/ flavour 35 million/ 09 10 11 12 01 02 03 04 05 06 07 08 noodle type

Product

Add healthier ingredients and minimize the use of additives

30 million/ 1 million 09 10 11 12 01 02 03 04 05 06 07 08 products

Improve the packages material, sizes and design

250 million/ 1 million 09 10 11 12 01 02 03 04 05 06 07 08 products

Register customer services hotlines in Hanoi, Danang Vinh,Can Tho Create prices for sets of noodles cups/ cups and other products for Product Bundle Pricing strategy Price Reset the prices for Psychological Pricing and Discount Pricing

70 million/ 09 10 11 12 01 02 03 04 05 06 07 08 year 50 million/ year 09 10 11 12 01 02 03 04 05 06 07 08

15 million/ 09 10 11 12 01 02 03 04 05 06 07 08 time 25 | P a g e

strategies Promotional Pricing (Special lowprice weekends) Upgrade the official website with new products and features allowing customers perform purchasing actions. Sales staff training

management Marketing/ Sales Marketing/ Sales Top management IT Marketing Top management Human resource Marketing Accounting Top management Marketing/ Sales Top management Marketing Public Relations Accounting

20 million 09 10 11 12 01 02 03 04 05 06 07 08 /time 48.4 million/year 09 10 11 12 01 02 03 04 05 06 07 08 30 million/ time/ area 09 10 11 12 01 02 03 04 05 06 07 08

Place

Extend distribution channels to more resellers and local shops

10 million/ 09 10 11 12 01 02 03 04 05 06 07 08 reseller/ year

Advertising through media

145 million /month for magazines 09 10 11 12 01 02 03 04 05 06 07 08 25 million/ month for websites 80 million/ bus route /year 500,000/ 09 10 11 12 01 02 03 04 05 06 07 08 retailer/ month 26 | P a g e

Promotion

Offer sales promotion tools

Accounting Marketing

Open press conference when launching new products

Catalogue design and printing Maintain catalogue on the website

Top management Marketing Public Relation Top management IT Marketing

14 million/area/ 09 10 11 12 01 02 03 04 05 06 07 08 time

35 million/ time 09 10 11 12 01 02 03 04 05 06 07 08

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8. CONTROL PROGRAM
Goals Growth in sales revenue Measure Performance Sales revenue increases by - 15% by February 2012 - 23% by August 2012 - Increase by 2% by February 2012 - Increase by 4.5% by August 2012 Action Arrange monthly meeting with accounting department to evaluate sales and profit figures Look at competitors financial reports, Meet the managers of our competitors to share information and assess the markets situation How to control Review our price and promotion strategies

Growth in market share

Raise customer awareness Improve customer relationship management

Our rank position of popularity in the lists of trustworthy agents/organisations Customer satisfaction

Arrange meetings with marketing department plus carry out surveys to assess brand awareness Carry out surveys (email, on street), allow customers to vote on our website. Build company database to be used in complement with Knowledge Management System. Assess ability to push products down the channels.

Investigate the quality controls for our products, the performance of our promotional activities, market acceptance to our pricing, and market coverage by our distribution network Re-consider our promotion strategies Examine quality controls and customer services

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REFERENCES
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<http://en.baomoi.com/Tag/Vifon.epi> BBC News 2011, China droughts threaten wheat crops, BBC, viewed 15 July 2011,

<http://www.bbc.co.uk/news/world-asia-pacific-12497459> Euromonitor 2010, Noodles in Vietnam, Euromonitor Vietnam, viewed 2 July 2011,

<http://www.euromonitor.com/noodles-in-vietnam/report> Institute of Labour Science and Social Affairs, 2010, Labour and Social Trend in Vietnam 2009/10, International Labour Organization, viewed in August 3, 2011, <http://www.ilo.org/wcmsp5/groups/public/---asia/---ro bangkok/documents/publication/wcms_142174.pdf> Kotler, P, Amstrong, G, Ang, S, Leong, S, Tan, C & Hon-Ming, O 2009, Principles of Marketing: A global perspective, 12th edn, Pearson Education South Asia, Singapore. National Center for Labour Market Forecast and Information Bureau of Employment, Ministry of Labour, Invalids and Social Affairs 2010, Vietnam Employment Trend 2010 , viewed August 3, 2011, <http://www.un.org.vn/en/component/docman/cat_view/126-un-publications-by-agency/93-ilopublications.html?orderby=dmdate_published> Neilsen Vietnam 2009, Vietnam 2009 Modern Trade and the Retail Business, Neilsen Vietnam, viewed 2 July 2011, < http://vn.nielsen.com/site/documents/Modern_Trade.pdf>

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Neilsen Vietnam 2010, Vietnam Grocery Report 2010, Neilsen Vietnam, viewed 2 July 2011, <http://vn.nielsen.com/site/documents/NielsenVietnamGroceryReportAugust2010.pdf> Neilsen Vietnam 2011, Vietnam Grocery Report 2011, Neilsen Vietnam, viewed 27 July 2011, <http://vn.nielsen.com/site/Nielsen_VietnamGroceryReport_2011Update.pptx> TNS Global Market Research 2011, Vietnams shifting consumer landscape, TNS Vietnam, viewed 2 July 2011,< http://www.tnsglobal.com/global/alm/vietnam/847B46F7416E418994742423E1CF431F.aspx> US census Bureau, Vietnam 2007-Population, chart, <http://www.census.gov/population/international/data/idb/country.php> viewed 3 August 2011,

Vietnamnet 2011, Power Cut inevitable-says Electricity of Vietnam, Vietnamnet, viewed 28 July 2011,<http://english.vietnamnet.vn/en/society/5681/power-cut-inevitable--says-electricity-of-vietnam.html> Vifon n.d., Introduction, Vifon Vietnam, viewed 2 July 2011, < http://www.vifon.com.vn/> World Instant Noodles Association, Expanding Market, viewed 2 July 2011, < http://instantnoodles.org/>

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