- Introduction
A survey conducted by Euro Monitor Company market survey showed that the ice cream consumption in developed countries is about 20 liters per capita per year, in Thailand and Malaysia about 4 liters per capita per year (Source: Lanta Brand). Compare to Vietnam ice cream market where the ice cream consumption of Vietnamese people just 0.3 liters per capital per year.(source: Agriculture and Agri-Food Canada).
However, the Vietnam ice cream market will strong grow in next few years. This prediction is absolutely reliable because in IMF’s report showed that Vietnam’s economy is growing fast with GPD growth rate 7.8% and average income is 715 USD per capita in 2006 (Source: Vnexpress). Vietnam’s economy still grow but it slow down because Global economic crisis in 2008 with GDP growth rate 6.7% and average income about 1030 USD (source: Vnexpress). Moreover, with more than 80 million of Vietnamese people, Vietnam is a potentially market for any ice cream company.
Vietnam ice cream market is severe competition by famous brands in recent years. There are four famous brands, which have major shares in ice cream market share; they are Kido, Vinamilk, Monte Rosa, and Thuy Ta. Besides, there are some foreign brands such as Carvel from US, Fanny from France, Kiwi from New Zealand or others brands were sold at hotels, restaurants, and cafes.
Before launching new products to Vietnam, John and Evens, who own Camborne Ices, should known Vietnam ice cream market and other factors can affect to new brand in Vietnam. In this report, the chance for Camborne Ices New product development will be analysed in different ways. First, by using 4 components of Marketing Mix and extended marketing mix, John and Evens will have an overview of possible ways of sending products out into market. Second, John and Evens will be recommended to apply marketing mix to different market segment.
- Details:
1. Analyse the individual elements of marketing mix
“Marketing mix is the set of the marketing tools that the firm uses to pursue its marketing objectives in the target market” (Kotler, 1996). In case of Camborne Ices, marketing mix is a tool that helps John and Evens implement their positioning strategy and achieve the Camborne Ices’ objectives.
Adapted from: Kotler (1996)
- Product:
The products were classified into two kinds which were consumer products and business products. Consumer products are products meant for final consumers, business products are products meant for use in producing other products.
Products
Consumer products Business products
Ice cream is one of the convenience products which “consumer needs but is not willing to spend much time or effort shopping for” (Prereault, D.W, p349, 2002). In other words, ice cream is Impulse product that is bought quickly as unplanned purchases. Consumers decide to buy impulse products by on sight when they attracted by brand, packages and tasting.
One of the factors that ice cream attracts consumers is the various flavors. The taste of ice cream is different in different ages, different countries or different culture. If John and Evens want to launch new ice cream flavours called ‘Spice Rack’ to Vietnam, company should research the Vietnamese’ tastes. The taste of Vietnamese is different from the taste of Singaporean because different culture. Singapore is multinational country where the tasting is affected by Mexican, Chinese, and Indian. Singaporean like Spice foods with chili, ginger, and pepper so Camborne Ices can develop for ChilliRED ice cream in this country is easily.
The successful of ChilliRED with three flavours are root ginger, black pepper, and Cassia spice in Singapore not means that it will successful in Vietnam. In general the Vietnamese’ taste is not pungent spice. For this reason, Camborne Ices will face with some obstacles if they intend to launch ChilliRED flavour to Vietnam. The major customers of ice cream are young people who like sweet and colourful ice cream, so Camborne Ices should care more about new flavours. Camborne Ices range have many flavours from popular flavours such as chocolate, Vanilla, Strawberry to fruit flavors are mango, lemon, lime, and orange. Thí is a good chance for company to launch Fruit flavours ice cream to Vietnam. Besides, company can create other Fruit flavours by using some tropical fruits which are available in Vietnam such as melon, star fruit, pineapple, and guava.
A Camborne ice is like others companies because they have objectives are growth and profit. However, the central of the growth of the company is the creation of a range which great tasting high quality organic ice cream.
In order to maximize the profit and growth, company set the objective is to supply best products to customers. In case of Camborne ices, company plan to develop organic ice cream to satisfy customers. In Singapore, they launched ‘Spice rack’ to satisfy customers’ needs who like chili flavour. Camborne Ices should do a research to find Vietnamese’ taste and create new products which satisfy customers’ needs and achieve organisation’s needs. In other words, by bringing to customers high quality organic ice cream, company not only meet the customers’ need but also have retention customers.
- Place( Distribution)
After having new products which are satisfy customers’ need, Camborne ices should have suitable distribution strategy to provide the products to customers. Distribution channel was chosen will affect a lot to pricing strategy. There are four levels of consumer marketing channels
In term of market sectors, Vietnam likes Singapore with three sectors which are impulse, take home and catering in ice cream market. However, the distribution channel is different in each country.
In Singapore, producers sell ice creams from retail outlets such as wine bars, hotels, café and restaurants for catering sector. Companies used wide ranges of these channels to provide products facilities. For Impulse sector, major products are popsicles or cones were sold from the range of retail outlets including kiosks, vans and cafés. The new products of Camborne Ices were launch for the take home market so Camborne Ices sold their products to distributors and retailers. They distribute their products from a range of retail outlets such as supermarkets grocery convenience stores. Company had chosen good way to distribute their product in Singapore market.
Camborne Ices can choose 3 channels to distribute in Vietnam market:
In Vietnam ice cream market, Camborne Ices plan to sell direct their products to consumers. This is a 0 level channel which have some advantages for Camborne Ices. First, company will get more profit because they have not to pay commission to dealers. Second, by selling ice cream direct to customers mean that company has the contact direct to customers’ demand. The demand of customers always change so company will have successful business if they change the products, change flavour which satisfy customer’ demand. Besides, in order to sell direct to customers Company should open chains of stores because each store only supports for small area. In other words, Camborne needs a lot of capital to open chain of stores to distribute their products. However, the 0 level channel is absolutely suit for Impulse sector which sell individual wrapped ice creams.
.0 level channel is not only channel that company can use to distribute their products to customers. Camborne Ices should use others channel to distribute their products. 1 level channel is another channel that company should think about. This channel uses wide range of retail outlets such as supermarkets or grocery stores to distribute ice cream. Vinamilk dairy company is one of companies which have major share in ice cream market; they focus on individual wrapped ice creams and take home products. Vinamilk only distribute their products in supermarkets and grocery stores and 21% of market share showed that this is successful distribution channel. Camborne ices can apply this channel to attribute products in Vietnam for take home sector or Impulse sector. On the other hand, this channel is suitable to use in big cities where the rate of household freezers is much higher than in country side.
In Vietnam, customers have habit to buy products from small groceries where sell many products. Ice creams were sold like this considered as “unnamed ice cream freeze” because grocers can sell any brands of ice cream in their stores if grocers see the high demand of products. This way differs from selling at supermarket where producers have to pay a lot of money to register a pace to sell products. One big advantage of channel is that the wide network of retailers. Camborne ices can sell ice cream to wholesales and then wholesalers distribute products to retailers who have groceries near residential areas. Another retailer in retailers’ network is cafes, restaurants or pubs where Camborne ices sell for 2 to 4 litre tubes or soft ice cream from cooling machine. 2 level channel is a distribution channel for take home sector. Using this channel, Camborne products was known quickly by customers. However, the profit by using 2 level channel was less than 0 level and 1 level channel.
In summaries, if Camborne plan to sell direct to customer, it should be individual hand-held ice creams such as popsicles or cones. Besides, the new products for take home market can be distributed by 1 level channel. Company not only gets profits but also control wide range retailers’ network.
- Pricing:
In general, the price was setting should be between Products cost and Consumer perceptions of product value:
If the price is too low, company can’t get profit and consumer’ behavior will not believe in quality of products. If the price is too high, there will lead to no possible demand to buy products. The price should be somewhere between too low price and too high price.
In Singapore, the price of 500ml tub is about VND 60,800 for retailers. At this price, Camborne get VND 33,800 profit and the rest is cost VND 27,000.At this price, company have profit and retailer usually add 100% mark up to consumer price. However, how the price will be accepted by buyers in Vietnam and how much profits company should have is big problem for Camborne ices when they enter to Vietnam. In order to set the price at Vietnam market, they should follow 5 steps of process setting the price:
Camborne should identify which is an objective of Pricing. It can be maximizing the sales volume, maximizing the profit or stable market. Camborne is new brand in Vietnam and the best way to attract customers is quality leadership objective. Camborne ices supply high quality products but at low price even they get less profit. In other words, company bases on good-value strategies:
PRICE
Higher Lower
Higher Premium Good-value
Strategy Strategy
Lower Overcharging Economy
Strategy strategy
After find out the price’s objective, Company can estimate the demand for ice creams. In general, the demand for ice creams in the South is higher than in the North’s demand because seasonal factors. In the south, the temperature always high, as opposite to the North where the hot weather in 3-4 months a year. It will affect to sales volume of ice creams.
The cost of Camborne Ice cream includes variable cost and fixed cost. Variable cost is the cost of direct material, direct labour, Variable overhead. Fixed cost includes interest, indirect cost.
Next, Camborne ices should consider competitors’ pricing and analyse the ice cream market in Vietnam. There are 4 biggest ice cream company Vinamilk, Kido, Thuy Ta and Monte Rosa in ice cream market. Especially, Monte Rosa focus on Premium and Luxury ice cream and they have many chains of ice cream stores in the South and Middle of Vietnam. Vianmilk and Thuy Ta focus on Standard Ice cream, compare to Kido who have 2 products lines standard and Premium products.
In order to set the price of products in the light of the organisation’s objectives and market conditions, company should consider the market share and the price of competitors.
Source: Saigon Giai Phong
In 2005, the ice cream market share was hold by 4 big companies. Kido have major share with 45% of market share, Vinamilk and Thuy Ta have the same percentage in ice cream market share about 21%. Monte Rosa who focuses on Premium and luxury ice cream also has 8% of market. The rest of market for other companies with 4 %.( source: Saigon Giai Phong)
The price of 4 leader Ice cream Company in Vietnam was showed in detail:
Kido is leader ice cream Company in market. They have two product lines which are Standard ice cream and Premium ice cream. The price of Kido Company for customers was showed below:
Sources: Convenience stores
Vinamilk is dairy company and mainly products are milk and other products made from milk. Although Vinamilk produce major take home products but, Vinamilk hold 21% of ice cream market share. The distribution channel is sell products at supermarket and retailer and the price can compete with any ice cream company.
Sources: Vinamilk website
The price of Vinamilk’ ice cream:
The Thuy Ta ‘s ice creams have individual hand held wrapped ice creams on sticks and cones, take-home ice cream, and fresh ice creams were sold on restaurants.
Sources: Thuy Ta website
Monte Rosa focuses on premium and luxury ice cream. All stores of Monte Rosa was located in big supermarkets, plaza, and shopping building. The products are soft ice cream on cones or ice cream dispensed on glasses. They don’t have take home products.
.
The price of Monte Rosa is quite high, about 15,000 to 25,000 for each kind. They have chains of stores at Ho Chi Minh and Da Nang. They sell direct their products to customers.
Sources: Monte Rosa
<http://www.vnnavi.com/restaurants/monterosadn/>
After analysing the market and refer the compertitors’ price, Camborne Ices can choose pricing strategy. It can be market skimming pricing or market penetration pricing. Company create new ice cream which is high quality and organic products and initially set high prices to skim revenues layer by layer from market, it called market-skimming pricing.
Rather than setting a high initial price to skim off small but profitable market segment, company can use market penetration pricing. Company set low price in order to penetrate the market quickly and deeply. Company can attract a lot of buyers quickly and have a large market share. The high sales volume results in falling cost, company can cut the price even further. However, market penetration pricing is suitable for Camborne Ices in short term strategy and it will meet initial objective of Pricing is selling high quality but lower price.
The price of Camborne Ices in Singapore was based on Cost-based pricing, that mean the price was calculated as follow: Price = Cost + profit
For example, the price of 500ml tubs were sold to retailers at the price 60,800 include the cost is 27,000 and the profit is 30,800
Price = 27,000 + 33,800 = 27,000 + (27,000*mark up)
So the mark up at full cost of company is 33,800/27,000 = 1.14 or 114 percent mark up
However, if Camborne ices sell at the price of Kido is 40,000, the mark up at full cost will be: 40,000=27,000+27,000*mark up
→Mark up = 0.48 or 48 percent mark up.
Company will have less profit but they can sell high sales volume in future. By setting objective is quality leadership and market penetration strategy, Camborne not only compete the price with other competitors but also attract more buyers.
- Promotion:
The marketing budget is used mainly for below the line activities. In the South, especially in Ho Chi Minh city there are various activities for below the line promotion. Camborne ice can sell hand-held wrapped ice cream in exhibition, public events such as Terry Fox marathon race, Flower festival. Moreover, they can open stores at big supermarkets or shopping building where attracts buyers at weekends or in holidays. Camborne Iceas also should sell in vans at Dam Sen Park and Suoi Tien Park which are two biggest entertainment parks in Vietnam, it will a good chance to advertise Camborne Ices brand to public.
In the Middle of Vietnam where the weather always hot a whole year, the sales volume of ice cream will stable. Besides, this area has many beauty spots with many international festivals in tourist season. For example, Nha Trang has many beautiful beaches which located of resorts, hotels, bars for domestic tourist and foreign tourist. Besides, there are some beauty contests, festivals were took place at Nha Trang, Hoi An annual. That is a good condition for below the line activities such as sale direct at festivals, exhibitions.
The North of Vietnam have four seasons and the sales volume of ice cream is lower than the South’ sales volume. The summer begins from May to August, so promotion should focus on these months to attract buyers. Especially, in Hanoi where have famous brand is Trang Tien ice cream, but this company only sell ice cream on stick and cones in only one address. Camborne Ices can use the advantages is using distribution channel at wide range of retail’s outlets to control others location.
Besides below the line activities, Camborne Ices also use Sales Promotion. In this case, some consumer promotion tools can be used such as Advertising specialties or Price packs. In summer or in tourist seasons, Camborne can open ‘Discount season’ operation to attract tourist and buyers at park or entertainment areas. With Price packs promotion, buyers can get 1 small ice cream free when they buy some Camborne products. Patronage rewards is also a promotion tool help company remain their loyalty clients. It can be rewards point for buyers who eat Camborne ices before.
- Extended Marketing mix (7 Ps)
With 4 basic components of marketing mix which are Product, Price, Place and Promotion management make decisions to implement their poisoning strategy and achieve their objectives. Product is anything that is capable of satisfying customer need. Camborne ice creams can satisfy customer by provide high quality products with many flavours were created adapt to new market’s demand. Promotion is marketing communications or promotion activities to supply information about products to customers. Camborne Ices focus on below the line activities which is intended to be subtle enough for consumer to be unaware that promotion is taking place is the major promotion. The Price that company charges will be somewhere between one that is too low to produce a profit and one that is too high to produce any demand. Moreover, company should consider competitors’ price. Place covers distribution channel, location. If company chooses the right distribution channel, company will have large of market share.
Today, marketing mix not only has 4 Ps but also extend to 7 Ps which is 4 Ps plus People, Process and Physical evidence. People who promote and sell products are important element in marketing mix. Services quality is a key source of customer retention. Hence skills, manner and appearance are important in marketing services. All the staffs must be trained to work the systems because people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. Camborne Ices should train the staff to able to handle complaints and deal efficiently with them.
Process is an element of service that sees the customer experiencing an organisation’s offering. In other words, process will describe how customers are handled from first to last point of contact. Process covers procedures so customer buy a product also mean the last point of process. Suppliers produce the products from material, the products was packaged and delivered to wholesalers and retailers. Before that, the products were advertised and promoted by many activities. Customers buy products to satisfy their needs. Ice cream also have a process like this, ice cream was created with many flavours, colors from raw material. Then ice cream were packaged and advertised to public. After advertising, customers accept the products and it were sold from retailers to customers.
Physical evidence includes Packaging, logo, and design. Ice cream is impulse products that mean customers buy quickly as unplanned purchase. For this reason, Ice cream should attract customers at first sight by packaging, design and color. Camborne Ice should have the main color to help customer identify easily and distinguish with other brands. Monte Rosa, for example, has orange is main color. Customers identify this brand name when they see the orange.
7Ps help Camborne Ices identify target market and achieve their own objecties.
- Apply the extended marketing mix to different marketing segments
2.1. Recommend marketing mixes for two different segments in consumer markets
Ice cream is convenience products and the market for products is wide. However, in order to identify the target customers, Vietnam market can be segment into Urban Market and Rural Market.
In Vccietnam, Urban market includes big cities such as Ho Chi Minh, Ha Noi, Da Nang, Hue,Hai Phong, etc. Company can apply below the line activities for urban Market such as sell at exhibitions, festival or public events to attract buyers. Other Promotion is Discount season Campaign at seaside location, entertainment parks. Camborne can sell wide range of products at three sectors. The rate of households with a freeze is higher than the others lead to the sales volume of take home sector is high. In addition, the high average income of urban is a condition to develop premium ice creams or catering sector. The price of organic ice cream may be higher than standard ice cream but it can be accepted by some group of customer. Customer can purchase foreign ice cream at high price. Camborne also has many locations to sell products, many Distribution channels can be apply to deliver products. Big cities are central of shopping buildings, plazas; entertainments which are convenience locations attract a lot of people at weekend or holidays. In summaries, urban market is potential segment for Camborne ice cream to develop.
The rural market where the average income is lower than income in cities is suitable for standard ice cream. The demand for luxury ice creams will decrease. Camborne should focus on hand help wrapped ice creams which sell at vans, ice cram vendors. The products for take home ice cream can be reduced because the rate of household freeze is low. The price at rural market can not higher than urban market. Company should focus on the ice cream which is low price. The promotion in rural is less than in urban market. However, Camborne can use discount tools to attract buyers. The convenience location to sell ice cream in rural is near school, parks or crowed resident. The best distribution channel for rural market is wide range of retailers.
2.2. The differences in marketing products and services to organizations rather than consumers
Camborne ice creams were sold to consumer and organization. Organizations in this case are hotels, restaurants, cafes or supermarkets who buy Camborne to resale. Consumers who buy products from Camborne Ices are final customers. They buy ice cream to satisfy their own demand. The different in marketing products to organizations rather than consumers can be showed as below:
Path1 is the activity Business to Customers (B2C), in other words Camborne Ices sells ice cream to customers. Company will get more profit because they don’t have to pay commission to dealers. Moreover, company direct connect to customers to know how demand of customer change.
Path 2 is the activity Business to Business (B2B). Camborne Ices sells ice cream to organize which are hotels, cafes, restaurants or distributors to resale. The wide range of outlets retailers will help company promote and control wide market.
The different in marketing products to organizations rather than consumers is that B2B sales far exceed B2C sales. The quantity of products that organizations buy is far from the quantity of customers buy. In term of prices, B2B tend to negotiated with the buyer. Compare to B2C, customers rarely bargain with retails. The different also is distribution B2B tends to be more direct. The promotion is also different in that consumer goods are often advertised on TV and media whereas business marketing tends to personal selling
2.3. International marketing differs from domestic marketing:
Most businesses pursue profits. An overseas market or global market offers larger profit. However, international marketing differs from domestic marketing in term of social and cultural factors, economic factors, competitive factors, political legal factors and technological factors.
In term of social and cultural factors, in domestic market, which is Singapore market, people have similar purchasing habit whereas in International market, which is Vietnam market, there are diverse purchasing habit. About economic factors, in Singapore market, the price was set as national price compare to Vietnam market where national prices were diverse. The business environment in domestic market is stable whereas the international market has multiple business environments.
In Domestic market, Camborne and others competitors usually know the plan and cost of competitors, as opposite to international market where many competitors joint to market but they don’t know information about other strategies. The legal and Political in domestic is also differ from international because in domestic market, company have freedom from Government interference. In international market is totally difference because the involvement in national plans.
The technological in Singapore and Vietnam is different, Camborne use standard production in Singapore. But in international market like Vietnam, Camborne have to train local staff to sell products.
The different between domestic and international market can be explained by Cultures environment and social institutions. Singapore is a multinational country where the social was combined many culture such as Indian, Chinese and Mexican. The different in culture lead to the different demand. Singapore is a developed county in Asia whereas Vietnam is developing country. Singaporean willing to pay high price to purchase an ice cream because average income is high. If company wants their products to Vietnam at the same price in Singapore, the demand for products will fall down rapidly.
Camborne‘s objective is export their product to international, however company should do a research about customer’ behavior and customers’ demands because the domestic is different from international market.
- Conclusion:
Marketing mix is the set of the marketing tools that the firm uses to pursue its marketing objectives in the target market. After analyzing individual elements of extended marketing mix , Camborne Ice cream achieves marketing objectives, meets the consumer needs and creates a competitive advantages. Moreover, by applying extended marketing mix to different marketing segments, Company knows the different in marketing products to organizations rather than consumers. In addition, John and Evens was know how and why international marketing differs from domestic marketing. In order to have a successful business in Vietnam they were recommended that do a research to find out the customers’ needs.
REFERENCE
Perreault, D.W and Mc Cathy, J ( 2002) Basic Marketing A global- management approach, 14th ed, New York: Mc Graw-Hill.
Kotler, P. and Armstrong, G. (1996) Marketing an introduction, 4th ed., New Jersey:
Prentice Hall
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Rowley, J.E (2006) Information marketing, 2nd ed. Aldershot, Hands, England: Ashgate Publishing Ltd.
Song Linh (2005) Average income about USD 715, Vnexpress [online] Available: 14 Nov 2006, 07:06 GMT+7 [cited 6 Jan 2009]
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Ngoc Chau (2008) Vietnamese’ average income about USD 1000, Vnexpress[online] Available: 27 Nov 2008 14:33 GMT+7 [cited 3 Jan 2009]
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Convenience store 24 [online] Available 20 Aug 2008[cited 3 Jan 2009]
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Vinamilk Dairy company [online] available 2008 [cited 5 Jan 2009]
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Thuy Ta website [ cited 5 Jan 2009]
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Monte Rosa web site [cited 6Jan 2009]
<http://www.vnnavi.com/restaurants/monterosadn/>
