This report is performed to bring a professional approach to marketing activities and, in particular, successfully launch these exciting new products in Vietnam (both SELPHY ES3 & ES30 and Laser Printer).

University Degree Business and Administrative studies

MARKETING

Introduction

A global leader in imaging technologies, Canon is a developer and manufacturer of photographic equipment, business machines, optical and other products. Canon’s origin dates back to 1937 as a camera and optical company with a passion to develop the world’s best camera. A world-renowned camera maker, Canon has, over the last 60 years ventured into new grounds of product development. With its commitment in Research and Technology, Canon products today include personal products, business equipment and industrial products. Canon products are aimed at improving the lives of people at work and at play.

This report is performed to bring a professional approach to marketing activities and, in particular, successfully launch these exciting new products in Vietnam (both “SELPHY ES3 & ES30” and “Laser Printer”).

Canon SELPHY ES3 Canon SELPHYES30

Canon LBP3250 Canon LBP5050

What is Marketing?

“Marketing’’ appeared a long time ago, but it has been really defined and developed since 20th century by many professors and organisations. There are some definitions of Marketing:

Definition of the Chartered Institute of Marketing:

Marketing is the management process which identifies, anticipates and supplies customer requirements efficiently and profitably.

This definition emphasises the importance of customer requirements and focuses on the profitable exchange being for the supplier.

Definition of the American Marketing Association:

Marketing is the process of planning and executing the orientation, pricing, promotion, and distribution of goods, services, and ideas to create exchanges that satisfy customer and organizational goals.

This definition focuses on goods, services, and ideas to create exchanges that satisfy both customer and organizitonal goals.

Definition by Philip Kotler & Kevin Lane Keller (2006):

Marketing is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

This definition focuses on choosing target markets and getting, keeping, and growing customers.

Although there are a few differences between the definitions, all of them describe a same thing: a management process with many steps (planning, analysis, control, etc...) to create an exchange between customer and company, it must satisfy customer needs and maximize company’s profits. So, how to satisfy customer needs and maximize company’s profits is exactly a good definition for marketing.

The main characteristics of a marketing orientated organization for Canon

Based on the definitions of Marketing, it leads to five types of organization: : the sales orientated, the marketing orientated, the production orientated, the product orientated and the societal marketing orientated. marketing orientation and sales orientation are contrast. According to Theodore Levitt, selling focuses on the needs of seller; marketing focused on the needs of buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing preoccupied with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.

Figure 1.2 Selling and marketing concepts contrasted

(BPP Professional Education‘s Marketing course book p.13)

From the above figure, we can see that marketing orientated organization must focus on the customer. A market orientated organization will have:

A commitment to meeting the needs of customer more successfully than the competition. (BPP Professional Education‘s Marketing course book p.12) Canon has met the printing needs of SOHO (Small Office/Home office) users and family users when they decided to lauch the new products (both “SELPHY ES3 & ES30” and “Laser Printer”) in Vietnam. Canon made a true decision.
A structure and processes of operation which are designed to achieve this aim. All the company’s activities must be co-ordinated around the needs of the customer when making decisions about what to produce and, subsequently, how and where the product or service is to be made available. (BPP Professional Education‘s Marketing course book p.12) . In order to achieve successful launching the new products (both “SELPHY ES3 & ES30” and “Laser Printer”) in Vietnam, Canon set up a bubble jet production facility in Hanoi and two representative offices in Ho Chi Minh City and Hanoi. The two representative offices operate under the guidance and support of Canon Singapore Pte. Ltd., which is the regional marketing headquarter for Canon’s South & Southeast Asia region. Based on researching the needs of the market, Canon introduced the new products to Vietnam market, especially in Ha Noi and Ho Chi Minh city, which are the two biggest and most developed cities. Canon knows what to produce, how and where the product or service is to be made available in Vietnam.

So, we can see that Canon is a marketing orientated organization.

The various elements of the marketing concept

In the marketing concept, there are three elements: customer orientation, co-ordination of market led activities and profit orientation.

In customer orientation, customer’s needs and satisfaction are on the top priority of the company. Customer is placed in the centre of the company’ activities. The way leads to company’s success is satisfying customer’s needs. For example, understanding the needs of the latest, greatest and fastest equipment for printing need of the SOHO users and the amazingly intelligent functions, attractive looking figures, convenience, quality, versatility, unique lifestyle photo printers of the family users, Canon Vietnam decides to launch launch the new products (“SELPHY ES3 & ES30” premium compact photo printers, Laser Printer LBP3250 and colour laser printer LBP5050).

In co-ordination of market led activities, achieving company’s goals is not the task of any single departments. The whole company must work together to get the final success.

As we can see the picture above, Marketing department must co-operate with other departments like R&D, Finance, Accounting... etc. The task will be done in the most effective way with co-operation between departments in the company. In Canon, marketing department will research the market for the information. Then, R&D department will use the information to research and develop a new model of products and this project will be continued by manufacturing department…etc. This strong conection between the departments makes Canon become the world leading image solution provider.

Besides that, profit is one of the key objectives of organizations, if not in the short term then in the longer term. The strong conection between the departments and the company’s success in satisfying customer’s needs will be meaningless if they can’t make profits for the company. This is profit orientation. For example,Canon continued to step up sales promotions in countries and regions recording strong growth, such as China, India and Vietnam. In Asia and Oceania, sales climbed 4.5% year on year to ¥729.9 billion, accounting for 17.8% of consolidated net sales. So, Canon made profit from its marketing.

The benefits and costs of using a marketing approach to doing business in Vietnam

When entering Vietnam market, the first thing Canon Vietnam has to do is learn about this market. The company needs to pay a huge amount of money and time to do research on culture, interests and behaviours of the customers. The company also must pay production costs, delivering costs, advertising costs...etc. These cost are increasing annually in order to ensure the success of company’s goal. According to Canon Annual Report 2007, advertising expenses were ¥132,429 million ($1,161,658 thousand), ¥116,809 million and ¥106,250 million for ...

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The benefits and costs of using a marketing approach to doing business in Vietnam

In order to achieve success in each market, the company needs to identify the customer. The company must know who the customers are and what they need. The only way to long-term competitive advantage is satisfying the customers. If customers are satisfied, they may:

Buy again from the same supplier

Buy more of the same item, or more expensive item

Advise their friend to buy from the supplier

According to research, converting new customers can cost up to 5 times more than retaining current customers.On the other hand, the customer profit rate increases over the life of a retained customer. The longer you keep the customer, the more profits you make. Based on consultant Frederick Reichheld and Harvard professor W. Earl Sasser, Jr., in a 1990 Harvard Business Review article, 5% of reducing customer defection can enhance the profits by 25% to 85%. A method to reduce customer defection rate is gather customer feedback to find out what’s the problem with the company’s product or services by opening service centers. When these customers feel satisfied, they’ll become the loyal customers. Loyal customers are profitable because:

They do not have to be acquired.

They buy a broader range of products.

They cost less to service as they are familiar with the company’s ways of doing business.

They can recommend by word of mouth.

They may introduce the company’s products to their friends. It’s a way to reduce the advertising cost. And the reduction in costs brings more profits to the company. Canon launched two service centers in Vietnam, one in Ha Noi and the the other in Ho Chi Minh city. “Our objective when establishing the two service centers is supporting consumers in a consistent way that adds value to their products. It is of primary importance to us that we are able to handle the broad scope of demands from our users at their convenience.”, commented Mr. Mike Asao, Chief Representative of Canon Singapore in Vietnam.

We can see that Canon knows how to attract the new customers, keep, improve the loyal customers and satisfy them in order to gain benefits.

The macro and micro environmental factors in Vietnam which might influence Canon’s marketing decisions

Company’s making decision will be influenced by macro and micro environmental factors such as political, social, economic, technical enviroment; customers, employees, suppliers...

Macro environmental factors can be categorized by using the PEST model. PEST stands for political, economical, social and technological. When Canon came to Vietnam, the company had to pay attention to these factors.

Political enviroment: Vietnam is a socialism country. Government policies control, support and encourage foreign companies’ investment. This is an opportunity for Canon to penetrate to the Vietnam market. The Government knows that political stability is considered one of the most important factors that attracts the investors. According to a survey by Japan Bank for International Cooperation in 2008, Vietnam has advantages in low labor cost, market growth potential and political stability. The political stability brings a safe to any Canon’s business decisions in Vietnam. Besides that, tax policy, employment laws, environmental regulations, trade restrictions and tariffs in Vietnam are advantageous to Canon business affairs. For examples, The corporate income tax rate regulated in the Corporate Income Tax Law 2008 will reduce the general corporate income tax rate to 25% from the current 28%. This reducing will help Canon to get more profit.

Economic environment: In the 2006-2010 period, the country “basically stabilized the macro economy and maintained growth,” the ministry of planning and investment said, according to the statement. According to a statement on the government’s website that cited draft measures from the ministry of planning and investment, Vietnam’s economy may grow between 7 percent and 8 percent annually from 2011 to 2015. The economic growth makes sure that Vietnamese living standard’ will be improved faster and they will be willing to buy Canon’s products. This is a chance for the company to maximize the profit and increase the market share.

Social environment: Vietnam’s population is the 13th largest in the world, about 85.2 millions people. The annual average growth rate of the Vietnam's population is 2.23 per cent. The high population makes Vietnam become an ideal place to sell Canon products. Besides that, the working-age population has a bulge between the ages of 18 and 27 (see graph, below).

Estimates from 1999 census

Most of these individuals have benefited from the extensive improvements in the educational system that occurred during the 1990s. The national literacy rate is around 90 percent and 96 percent of the population has completed primary school. The young and educated people in Vietnam are eager and get accquainted with high - tech products such as computer, digital camera, compact photo printers, laser printers... So, Canon can introduce and sell high-tech products easily in Vietnam.

Technological environment: Canon is one of the world leading image solution providers. In Vietnam, Canon faces competition from HP, Brother, Epson, Lexmark etc. Vietnamese consumers always pay attention to high-tech product with latest and useful technology. In order not to lose the market share to the competitor companies, Canon must to pay a lot of money for R&D activity. The Company increases R&D expenditure annualy. Canon’s consolidated R&D expenditures were ¥368,261 million (U.S.$3,230 million) in fiscal 2007, ¥308,307 million in fiscal 2006 and ¥286,476 million in fiscal 2005. The ratios of fiscal 2006 and ¥286,476 million in fiscal 2005. The ratios of R&D expenditure to the consolidated total net sales for fiscal 2007, 2006 and 2005 were 8.2%, 7.4% and 7.6%, respectively (Canon Annual Report 2007). This expenditure will help Canon to to sustain Canon’s leading position in its current fields of business, and to explore possibilities in other markets. Canon believes such investments will be the basis for future success in its business and operations. Therefore, the company always develops new technologies to reduce the cost of products but still maintain or improve the

quality in order to satisfy customer demand. Technology is a key to succeed in Vietnam market.

Besides the macro environment, Micro environment also influences Company’s making decision. It includes stakeholders and the competitive environment.

Employees are a factor that influences the company directly. A company can’t achieve its goals with lazy, old, unskillful, uncreative employees. Vietnamese workers are young, easy to train and keen to consume (see appendix 1). They help Canon Vietnam contributes 25 percent of Canon’s total global production of Bubble Jet Printers and is currently the largest* exporter in Hanoi with exports representing 53 percent of all exports by the capital’s foreign sector, and earnings more than US$200 million. ( from scenario)

Distributive network is also an important factor that influences the company. You produce a good product but you don’t have a distributive network, so how can you bring your product to the customer? Canon products have been available in Vietnam since the 1980s through its authorized distributors. The authorized distributor, LE BAO MINH Joint Stock Corporation, and hundred of authorized dealers have made great distribution to the success of Canon as well as enhanced Canon’s brand identity in Vietnam’s market.

In Vietnam, Canon faces competition from HP, Brother, Epson, Lexmark etc. They also have strong brand names with good products and competitive price. If Canon doesn’t want to lose their market and get more profit, Canon must pay attention to the competitors. So, Competitions are also a big factor that influences the company. This has been a big challenge for Canon since the company entered the Vietnam market.

Some factors I mentioned above directly affect the company’s strategy as well as performance. There are not only many advantages but also a lot of disadvantages in Vietnam market. Canon Vietnam has to analyze these factors to identify the opportunities and risks for the company when entering the Vietnam market.

How the markets for the products (SELPHY ES3 & ES30 and Laser Printer) may be segmented in Vietnam

In order to achieve the marketing objectives, Canon focuses on some particular group of customers who have similar needs. In term of marketing, it is called market segmentation. With market segmentation, company can easily capture and satisfy customers’ needs. The customers can be segmented by Geographic, Demographic, Psychographic, Behavioural area. In Vietnam, Canon uses differentiated marketing to segment customers for the products (SELPHY ES3 & ES30 and Laser Printers), by Geographic and Demographic area.

In Geographic area, Canon segments customers into 2 markets: Northern (Ha Noi) and Southern (Ho Chi Minh city) market. Ha Noi and Ho Chi Minh city are the two biggest and most developed cities. According to General Statistics Office of Vietnam, the population of Ho Chi Minh city is 5,929,479 people and the population of Ha Noi is 2,632,087 people on 2009-04-01. Besides, Hanoi and Ho Chi Minh city – will lead the world as the fastest-growing cities in terms of real gross domestic product (GDP) in the 2008-2025 period.(see appendix 2) By doing this segmentation, Canon gets some benefits. Canon has two representative offices in Ho Chi Minh City and Hanoi, they will support the selling and customer care in the most effective way. On the other hand, the high GDP and population in these cities will ensure for the success of selling the products (SELPHY ES3 & ES30 and Laser Printers). The infrastructure and transport system in the two cities are good and advantageous for the distributive network. Canon can save the transport costs and get more profit in the two cities. So, Ha Noi and Ho Chi Minh city are the ideal places to lauch the new products in Vietnam. But this method also has limitation. The products are just popular on their market (the northern and southern Vietnam). Canon forgets the Middle of Vietnam – a profitable market.

In Demographic area, Canon bases on the socio-economic status to segment their products. According to the Ministry of Planning & Investment Portal, there are 200,000 small and medium business and 3,000,000 individual business households in Vietnam. So, the printing needs are really huge. Perfect for home and small offices, Canon introduced the Laser Printer LBP3250 and the colour laser printer LBP5050. With the latest technology , they will satisfy the printing needs. Based on age, Canon introduced SELPHY ES3 & ES30, premium compact, attractive looking figures, amazingly intelligent functions photo printers. The young people in Vietnam are eager and willing to accept high-tech products. They want to show their own style in each picture so with the latest technology and carrying handle, SELPHY ES3 & ES30 photo printers can help them satisfy their needs. By doing this segmentation, Canon will improve customer relations (the businessmen and the youth). But this segmentation also has limitation. It doens’t focus on the big company and the old people – the profitable markets.

The factors which will influence the choice of the targeting strategies for the company’s products

In order to make a successful marketing strategy, a lot of factors must be analyzed carefully. There are some factors that will influence the choice of the targeting strategies for the company’s products:

The size of the segment: The size of the segment must be measured. That segment must be large enough to make profits. . If the company wants a very large volume, it has to think of the popular segment. For examples, Canon factory can produce 100 printers per month to provide in this segment. But the consumers in this segment only buy about 50 printers per month. So Canon can sell more printers and make profit from this segment. It will be a wastage of company’s resources.

The company’s resources: They must not be over extended by differentiated marketing. For some companies, the popular segment may be the natural choice and for others, the premium segment. And, for some other choosing both. The premium segment is a highly competitive segment. Only companies endowed with strong resources and an aggressive marketing strategy/culture can fight and survive in the market. The company therefore has to assess whether the particular segments are compatible with its resources and capabilities. If the company doesn’t have enough resources or employees to produce and distribute the products in a big market like Ho Chi Minh city, it will fail. So, small companies may succeed better by concentrating on one segment only.

The profit of the product: the product must be sufficiently advanced in its life cylcle to have attracted a substantial total market. If the cost for research and develop is too much and the profit gains from the product is too small, it will be a fail product and it will leads to the bankruptcy of the company. Otherwise segmentation and target marketing is unlikely to be profitable, because each segment would be too small in size.

Canon chooses the differentiated marketing to lauch the new products, SELPHY ES3 & ES30 for home users, Laser Printer LBP3250 for home users and LBP5050 for home office users.

How buyer behavior for the products might affect the Canon’s marketing activities in the two different markets

Customer behaviour is also a main factor that affects the company’s marketing activities. When entering Vietnam market, Canon has to do researches about the customer behavior. The company has to know about the culture, personality as well as psychology of the two groups of customers (one in Ho Chi Minh City and the other in Hanoi). Based on the difference between cultural factor, social factor, personal factor and psychology factor, the buying behaviour is different between Ha Noi and Ho Chi Minh city consumers.

Cultural factor consists of culture, subcultures, social class...etc. Culture affects the customers’ thinking, belief, and attitude toward the company’s products. Some product’s features which are suitable with Vietnamese culture could create a good image in the customers’ mind. Both Hanoians and Saigonese like beauty so product with attractive looking figures like SELPHY printer can attract them efficiently more than other products.

Social factor includes social roles and status, influencer, buyer, reference groups. People are easy to be influence by the surrounding environment. If the product is bought and used by most of their friends, their relatives, they will be willing to buy the same product. According to a survey made by Nielsen Vietnam, Hanoians are significantly influenced by other people’s opinions, and perceptions – much more so than Saigonese. Hanoians are critical in their decision-making and seek out as much information they can to make an informed decision. The opinions and recommendations of family members and neighbors as well as what is reported through the media – newspapers, advertising, brand websites and blogs/forums – are crucial when it comes to making an informed decision. 94% of Hanoians surveyed said recommendations from neighbors are very important in their decision-making process. By contrast Saigonese care little about others’ opinions and don’t follow the crowd – Saigonese still listen to other’s opinions, but classify their neighbors opinions as least important. And when it comes to making a decision, they will make it based on what they want and need. So, mass marketing will be more effective in Ha Noi than in Ho Chi Minh city to attract the customers.

Personal factors are age, life cycles, occupation, personality & lifestyle, characteristic…. According to a survey made by Nielsen Vietnam,Hanoians love premium goods (71% claim they love premium products) and they are more inclined to buy premium particularly when it comes to big-ticket items such as mobile phones and cosmetics. As a result, they are willing to spend more to purchase premium products; and due to the fact that they tend to be savers and long-term thinkers, Hanoians have the ability to afford these premium goods when they want them. Saigonese are impulse buyers – they buy what they need at the time they need it. They still like premium products, but 48% of those surveyed say they believe premium products are for people who want to “show off”; and they would rather spend their money on necessary items. So it will be better for Canon to present their premium products in Ha Noi than in Ho Chi Minh city.

Motivation, perception, beliefs and attitudes are categorized as psychology factor. According to Nielsen’s Personal Finance Monitor 2008, consumers in Saigon are more willing to take out loans from the bank or other financial institutions; while more than half (57%) of Hanoians are not willing to borrow. This can be attributed to the collective spirit in Hanoi, whereby consumers are more conscious of and influenced by what other people think of them – and in the eyes of Hanoians, having to rely on an institution to take out a loan to purchase something may result in losing face. So Canon should focus on and develop their marketing activities in Ho Chi Minh city first to study and evaluate the success of the products before selling the products in Ha Noi market. For example, after 4 months inaugurating its first service center in Vietnam at Ho Chi Minh city, Canon inaugurates its second service center in inaugurating its first service center at Hanoi on 6 August 2009.

Conclusion

Vietnam market is an ideal place for Canon’s products. But there are some disadvantages Canon must face to grown up and maximize the profits. It requires Canon to prepare suitable plans and strategies for the future.

APPENDIX

Appendix 1: Vietnamese workers are young, easy to train and keen to consume. The preponderance of young people in the workforce means Vietnam is on the cusp of a “youth boost”, with a falling dependency ratio and less pressure on the state to provide social services for the elderly. That said, state education is basic, and foreign investors are increasingly turning to supplemental training to help ensure workers have the necessary skills. However, studies by investors have shown Vietnamese workers are amongst the easiest to train in the world.

Appendix 2: PwC: Hanoi, HCMC to lead world in growth in 2008-25

By Mong Binh and Thuy Trieu - The Saigon Times Daily Thursday, November 12,2009,00:17 (GMT+7)

HCMC – PricewaterhouseCoopers (PwC) has released the results of a study predicting Vietnam’s two biggest cities – Hanoi and HCMC – will lead the world as the fastest-growing cities in terms of real gross domestic product (GDP) in the 2008-2025 period.

The research by macroeconomists of the industry-focused assurance, tax and advisory services provider covers 151 cities around the world and ranks GDP growth by taking into account the impact of the current economic downturn and the impact of a potential de-globalization scenario.

Hanoi and HCMC would come first and second on the list of the top 30 fastest growing cities in terms of economic growth, with an average real GDP growth rate of 7% during the period.

PricewaterhouseCoopers macroeconomists placed Changchun and Guangzhou as the subsequent two runners-up at the 3rd and the 4th positions, with average GDP growth of 6.9% and 6.8%. These are two of the nine cities of China on the list, and India has 12 cities, but there are no developed cities on this list.

PricewaterhouseCoopers said in a statement that no advanced city economies on the list clearly showed a shift in global economic weight towards emerging markets.

“Tellingly, we expect the largest emerging market cities such as Hanoi and HCMC to grow at a faster rate than the cities in advanced economies leading to cumulative growth of up to almost 200% for the period under investigation 2008-2025. This is in contrast to advanced economy cities whose cumulative growth will be only around 35%,” said Ian S. Lydall, general director of PricewaterhouseCoopers Vietnam.

Lydall said the mega-cities of the major developed economies continued to lead the global GDP rankings at the time being but things would change for emerging cities. “Only seven emerging economy cities are currently in the top 30 but our illustrative projections suggest that they will all move up the GDP rankings by 2025 and be joined in the top 30.”

According to PricewaterhouseCoopers, Hanoi and HCMC will be “two of the notable ‘climbers’ on the 2025 list. While HCMC makes a leap into the 64th from the 95th, Hanoi also races from the 116th in 2008 to the 82nd in 2025.”

The company’s projections envisage the largest five urban economies in 2025 would remain the same as in 2008 although London overtakes Chicago to move into the 4th place. The largest ‘climbers’ within the top 30 are Shanghai which is forecast to move to top 10 from the 25th in 2008 to the 9th in 2025 and India’s Mumbai from the 29th last year to the 11th in 2025 as written in a special article in the November 2009 issue of UK Economic Outlook.

PricewaterhouseCoopers macroeconomists produce the UK Economic Outlook three times a year. In addition to the usual review of UK and global economic prospects, this issue also includes the article looking at the ranking of 150 leading city economies by GDP in 2008 with illustrative projections to 2025.

The article, themed “Which are the largest city economies in the world and how might this change by 2025,” ranks the GDP growth of the world’s major city economies from 2008 to 2025 by taking into account the impact of the current economic downturn and the impact of a potential de-globalization scenario.

The research covered 151 urban agglomeration cities around the world, including Hanoi and HCMC. The company’s GDP estimates suggest that the largest 100 cities accounted for some 30% of global GDP at Purchasing Power Parity in 2008, while the top 30 cities alone accounted for around 18% of world GDP. Tokyo, New York, Los Angeles, Chicago and London were found to have the largest GDP within the ranked list in the year.

Appendix 3: HCMC v Hanoi: Regional Consumer Differences Study (http://vn.nielsen.com/news/HCMCvHanoiPressrelease.shtml)

Half the June 26, 2009, Ho Chi Minh City: Vietnam – one country; diverse consumers. What are the regional differences between Hanoians in the north and Saigonese in the south? We all know the old adages and stereotypes about each region and its people, but what are the true differences between consumers in Hanoi and Saigon and what does this mean for brands in Vietnam?

Rooted in historical, cultural and economic diversity, consumers across Vietnam hold different attitudes and values in life. These differences are manifested in their brand choice, decision-making, shopping habits and confidence levels. The Nielsen Company Vietnam’s HCMC v Hanoi: Regional Differences study found these differences are vast and translate to varied behaviors and attitudes particularly when it comes to consumers’ decision-making process and how they cope with tougher economic times.

INDIVIDUALISM v COLLECTIVISM: ME v WE.

Nielsen’s intensive cross-region study carried out in April and May 2009, found that the key driver of these differences between Northerners and Southerners is their disposition: we vs. me. Me: In Saigon, individualism is dominant. People care less about other’s opinions and when it comes to making purchasing decisions; their own desires and needs are the biggest influence. Saigonese are more open to change and like to try new things and as a result they are a mixed consumer group.

We: In Hanoi, there is homogeneity of consumers and a collective spirit. Hanoians listen to their peers and are influenced by their opinions and recommendations, with social conformity a high priority. But they are complex consumers: saying they want to be noticed and impress their friends, but want to do so without breaking what is socially acceptable.

WHAT INFLUENCES CONSUMERS’ PURCHASING BEHAVIORS?

Hanoians are significantly influenced by other people’s opinions, and perceptions – much more so than Saigonese. Hanoians are critical in their decision-making and seek out as much information they can to make an informed decision. The opinions and recommendations of family members and neighbors as well as what is reported through the media – newspapers, advertising, brand websites and blogs/forums – are crucial when it comes to making an informed decision. 94% of Hanoians surveyed said recommendations from neighbors are very important in their decision-making process. One respondent from Nielsen’s focus groups exemplified this by saying, “I want to buy a new TV and if some of my neighbors tell me that the TV is not high quality, then I would be turned off that TV right away.”

By contrast Saigonese care little about others’ opinions and don’t follow the crowd – Saigonese still listen to other’s opinions, but classify their neighbors opinions as least important. And when it comes to making a decision, they will make it based on what they want and need.

Saigonese live for the moment. Compared to Hanoians, Saigonese plan little for the future. The old adage: Hanoians earn 10 dong and spend 1; Saigonese earn 10 and spend 11 is true in this respect. Hanoians save their dong for the future, while Saigonese will spend to get what they need today and worry about tomorrow later. According to Nielsen’s Personal Finance Monitor 2008, consumers in Saigon are more willing to take out loans from the bank or other financial institutions; while more than half (57%) of Hanoians are not willing to borrow. This can be attributed to the collective spirit in Hanoi, whereby consumers are more conscious of and influenced by what other people think of them – and in the eyes of Hanoians, having to rely on an institution to take out a loan to purchase something may result in losing face.

PREMIUM PRODUCTS

Somewhat contradictorily, Hanoians love premium goods (71% claim they love premium products) and they are more inclined to buy premium particularly when it comes to big-ticket items such as mobile phones and cosmetics. As a result, they are willing to spend more to purchase premium products; and due to the fact that they tend to be savers and long-term thinkers, Hanoians have the ability to afford these premium goods when they want them. “Despite a tougher economy, Hanoians are keen on keeping up with the latest trends and are still willing to spend on what some would classify as ‘nice to have’ or ‘luxury’ products,” said Aaron Cross, Managing Director, The Nielsen Company Vietnam.

Saigonese are impulse buyers – they buy what they need at the time they need it. They still like premium products, but 48% of those surveyed say they believe premium products are for people who want to “show off”; and they would rather spend their money on necessary items.

A TOUGHER ECONOMY

Awareness of the current economic downturn was high, not surprisingly. Northerners are more positive about the future than their Southern counterparts but they still claim to be impacted by the crisis.

According to Nielsen’s Global Online Survey (March 2009), consumer confidence in Vietnam is wavering but it’s not all doom and gloom. “History tells us that the Vietnamese people are resilient and today they still remain relatively positive when compared to the rest of the world,” said Cross. Vietnamese are the 6th most optimistic about future job prospects globally; and the most confident about their country getting out of the economic recession within the next 12 months.

According to Nielsen Vietnam’s Omnibus survey (May 2009), the top consumer concerns for HCMC and Hanoi residents are:

Hanoi:

Increasing Food Prices
Job Security
Increasing Cost of Bills
Petrol Price Increases
Children’s welfare

HCMC:

Health
Increasing Cost of Bills
Job Security
Work Life Balance
Debt

Hanoi and Saigon consumers alike cite rising concern for the future and are tightening their belts. Both groups say they are cutting down on luxury items, eating out less, and calculating their purchases more closely even to the extent of trying to save on electricity and gas bills.

To cut costs, Hanoians say they are buying less in quantity but are staying loyal to their chosen brand; while Saigonese are willing to switch to a cheaper brand in order to afford consuming the same amount.

WHAT DOES THIS MEAN FOR BRANDS IN VIETNAM?

Understanding these differences is crucial. Promotion and marketing strategies need to cater to different consumer preferences.

“Brands in Vietnam need to adopt different product concepts and marketing strategies for the two cities: one size will not fit all across Vietnam,” said Cross.

And within Ho Chi Minh City, where individualism is present, consumers are open to try new things and are less loyal to brands. Cross continued, “This means even within the Ho Chi Minh City market, brands need to diversify their marketing strategy because again, one size will not fit all.”

Reference

Edexcel HNC and HND Business, 2004. Marketing-Supporting Foundation Degree, London: BPP professional Education

Canon Annual Report 2007

Factors behind Vietnam’s economic success [online] [Accessed 8 Dec 2009]

PwC: Hanoi, HCMC to lead world in growth in 2008-2025 [online] http://english.thesaigontimes.vn/Home/business/vietnam-economy/7391/ [Accessed 8 Dec 2009]