Sales volume
The sale amount that instant noodle in all brands sold to retail distribution
2002 sale - 6,538 million baht or 76,087 tons
2003 sale - 6,584 million baht or 77,113 tons
2004 sale - 6,986 million baht or 82,777 tons
But if we include all distributions include retail, the sale volume in 2004 is 9,000 million baht
From the data, it shows that the product has sold to retail distribution 77.62%
Market Share (siam, 2005)
Consumer in each region
Competitor Analysis
Mama has the very strong generic name because it has very strong brand in Tom Yam category only, so Wai Wai has try to destroy the generic name of Mama by two ways. The first one is come up with “Wai Wai Quick” and other one is steal market share in the small or another category rather than Tom Yam.
Wai wai is the main competitor for Mama since it has come up with the new taste of Moo Sum Tom Yam. Mama has the strongest category which is Tom Yam, Mama has market share about 70 percents. The Mama’s Tom Yam has market shared about 43.9 percent. Tom Krom is accounted about 3.5 percent. The value of instant noodle is 8,200 million baths so there are many players in this market that try to complete and gain market share. Wai Wai tries to come with many different favors in another category like pot-stewed duck. This is another way that Wai Wai tries to steal market share from small category. Moreover, Wai Wai uses the strategy of sub brand which is “Wai Wai Quick” to complete with Mama in the Tom Yam category. Wai Wai come up with the new favors which is Moo Sum Tom Yam in order to compete directly with Mama Tom Yam (brandage, 2006).
The main prominent point of Moo Sum tom Yam is the Tom Yam taste that is spicy and smell like real Tom Yam. In additional, this Moo Sum Tome Yam is invented by Mr. Mun Dang (หมึกแดง) who special in food and he is a presenter of this product which emphasize the taste and quality of the product. Wai Wai is very successful in expand their sub brand and come to complete with Mama in Tom Yam category. Wai Wai has the higher market share from 18 percent to 21 percent with one year after launch the product. Wai Wai states that it will invent and create more favors in order to gain more market share and it believes that it increase to 24 percent (brandage, 2006).
While Mama and other brand complete in priceing strategy, Wai Wai does not want to do that because it does not consumer to perceive that its product is low quality. Wai Wai focuses mainly in term of advertising and come up with new favors. Wai Wai has come up with new favors which is “Shrimp and lemon”. Moreover, Wai Wai also re-launches the new packages by using animation cartoons. It uses different design animation cartoons to represent different favors. By re-launches the new packages, Wai Wai can gain more market share about 20 to 21 percent.
Marketing Mix of Mama
Product
Mama provides the product in the pack and the cup for the customers. The different between these two is the package. For the pack, people have to put the noodle in the bowl or boiled in the pot. It is for people to eat at home and have time to cook. The cups are easily to consume because just poring hot water into the cup, the folk are provided inside the cup. It is for people who are traveling and do not have bowl and time to cook. However, mama cup does not have various flavours as much as pack. Mama pack has 17 flavours, and Mama cup has 11 flavours. In the total Mama produces 19 flavours to serve customers.
Place
Mama places their entire product in every corner of the road. Wherever we go, we can Mama everywhere. Mama is sold through out both channel in wholesaler and retailer which are Mom and Pop shop, the mall, convenience store, super market, hypermarket, discount store. Not only had those stores, Mama also sold their product at the hotels, restaurants, hospitals and factors. In additional, Mama places their product all over the country from the city to rural areas. Mama also exports their product through all countries around the world. Then, we can find Mama just around the corner.
Promotion
Since Mama is already one of the most well known and most successful brands for instant noodles in Thailand, it has got quite a high budget for promotion. It chooses to promote its product through various forms of media which include the TVC’s, radio’s, internet, promotional campaigns, billboards, etc. It has also been involve in many Thai television programs such as Ching Loi Ching Larn which has a major impact on the exposure of its brand. It has spent millions of Baht on famous role models. Actually, its most recent promoter of the brand is the former Canadian beauty queen Natalie Glebova. Mama will keep updating its promotional strategies according to the trends of the targeted marke
Price
The price range of instant noodles in Thailand including MAMA, and other brands are quite the same.
For pack – 5 baht
For CUP – 12 baht
Instant noodles business mostly does not compete each other in term of price, but compete with each other by launching new taste of products instead. Therefore, there is always not much price strategy from this group of business.
However, according to the higher price of raw material and oil price, it forces Mama to up the price from 5 to 6 baht for pack, but now it is still on process of asking for permission from the government.
Manufacture Power of Mama
tons per day (capital, 2007)
The main factory in producing Mama Pack is in Sri Racha, and for Mama Cup is in Lumpoon. The warehouse in Sri Racha will keep inventory approximately 1,500,0000 packs and it will be sold out within 3 days which can be informed that Mama packs are sold 5,000,000 packs daily. All of the quantity that Mama has sold is estimated by the consuming rate per person per year.
30-40 packs/person/year
30/365 = 0.0822 (consume 0.0822 per person per day)
0.0822 * 60,000,000 = 4,932,000 packs can be sold per day
Lumpoon Factory Ratchaburi Factory (New one)
Logistics
Raw Material
Thai President Food Company
Grade A Grade B
Sahapatanaphipul
The context below this chart will give a clarification about each step, and the tasks of each one in the chain.
Raw Material
To produce Mama, many ingredients are needed. So, the first step that begins all the process of producing Mama is to receive raw materials from many suppliers around Thailand. The main ingredients are: Wheat flour, Palm Oil, Chilly, Garlic, Lemon Grass, Pepper, Sugar, Chilly Paste, and Kaffir Lime leaves (Bai Magroot), and a lot more. Wheat Flour will be delivered to noodle production part. Chilly, lemon grass, and others will be delivered to seasoning production part which are in the separate building in area of Sri Racha Manufacture.
Mama mainly buys wheat flour from Kurry Flourmilk Company Limited, Chilly from the villagers at Ubonratchtani, and Lemon grass from Kanjanaburi, and so on
- Transportation
Suppliers will deliver raw material to Mama at the Manufacture in Sri
Racha, and Lumpoon by the suppliers’ trucks or containers
- Material Handling
Since the raw materials are the product that can get old easily, the
company has the research and development department to check and control on the quality of the products that the company gets from the supplier and the company also has the evaluation every half year
- Order Processing
Because Mama is the agriculture products so the price is not stable depend on the climate so the company has to reduce risk by store the product more when the price is low. The company has more than 300 suppliers so the managers have to manage the suppliers by sign some contracts with the suppliers on the constant price and minimum quality that the company has to order and the suppliers have to supply. Moreover, the company using information system to check on the changing price of the raw materials so the company can provides the strategic that suitable for the situation.
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Warehouse
For the raw materials, they have to be in the suitable condition but Mama does not keep the raw materials more than 3 days before sent out to produce.
5. Inventory
The company will not keep a lot of the inventory. The company produces in the constant numbers according to forecast of the sale. The extra that produces will be only when ordered by the customers but the company wills not produce more than two ships a day if not necessary because it wants to maintain the machines, reduce cost of producing and make the most efficient of the production.
- Package
Mama packs in the plastic bag. Each bag have 6 and 12 small packs so it is easy to count when put in the boxes to prevent the damage of the products and easy for the transportation. On the package is printing in the color because it is easier to see the flavor of products because mama has many SBU.
(capital, 2007)
Finished Goods
Finished goods) are classified into 3 main grades which are grade B, and Grade A
Grade C
Products in grade C is the worst one. It is the noodle that gets dirty or fall on the floor. This will be sold to the one who feed animal such as pigs
Grade B
Products grade B is the one that is not perfectly completed or has some mistakes. For example,
Noodle: might be underweight, broken, and so on == this will be sold
to road side food shops. It is called “Economy Noodle”.
Grade A
For the grade A finish goods, mama is using the strategy of first in first out according to the problems of overstock in the last 10 years and the product that came in first get old. The building of the warehouse is also using technology of CPAC Monier Cool Roof System so can help the warehouse to be cooler and save of the energy of the electricity. After that these products will be sent to the logistics firm which is Sahapattanaphibul.
Sahapattapibul Company (Reaching end-consumers)
Sahapat is one of the largest public companies in Thailand which distributes various quality consumer products. It is well equipped with advanced manufacturing facilities and technology that enables it produces and markets consumer packaged goods effectively. With professional management capabilities, the company distributes varieties of products on a national-wide coverage
Market Coverage within Thailand
- Over 50,000 retailers and wholesalers
- Super markets
- Discount stores/Super centers
- Convenience stores
- Hotels, restaurants, hospitals and schools
- Factories and industrial outlets
At this stage, Sahapat will distribution the finished products to the distribution center of big retailers, and distribution center of big restaurant. Then the products will reach to the end-consumers. Sahapat has very good system that can support the distribution of Mama (sahapat, 2007).
Sales and Distribution Support System
Sahapat has made major investment aimed at developing systems to better support the sales and distribution task.
ROS (Remote Ordering System) an on-line computer system to send/retrieve purchase orders from sales representatives across the country to the Head quarters.
EDI (Electronic Data Interchange) is used for the modern trade to send-in purchase orders through satellite 24-hours a day, by-passing the manual system and the use of sales representatives to collect orders.
ECR (Efficient Consumer Response) is a system in which suppliers, manufacturers, and retailers closely co-operate to improve efficiency in the demand chain and the supply chain. Efficiency will result in cost saving in the operation. Therefore retailers can sell to consumers at a lower price.
- Palletization
- Electronic fund transfer
- Electronic data interchange
- Digital product catalogue
Space Management/ Category Management are the systems to manage shelf space and to manage product category to maximize sales and profitability (sahapat, 2007).
Logistics and Warehousing System
Sahapat currently has the most advanced warehousing system in Thailand. It has joined with KRS Corporation Japan, and together they have developed logistic and warehousing system aimed to improve the services by making it quicker and timelier. Most of its components are computerized making their services more efficient, effective, and accurate. At the present Sahapat have a number of warehouses in Bangkok and up-countries enabling it to have large market covering nation-wide (sahapat, 2007).
Bench - marked delivery time are:
- Day plus zero refers to delivery on the same day the invoice is issued.
- Day plus one refers to delivery on the following day after the invoice is issued.
How do they reach end-consumer?
- Sell the products to big retailers such as Lotus, Big C, Carrefour, and Tops, and so on by the products are transported by big containers
- Deliver to Mom & Pop Shop who want to buy from the company which will be separated in 2 groups which are
- Credit buyer – big mom & pop shop
- Cash Buyer – small mom & pop shop
SWOT Analysis of Mama’s Distribution Channel
The strength
The strength of Mama’s distribution channel is Mama using the outsource to handle with the transportation which is Sahapatanaphiboon limited company. This transportation company has strength on using technology. They put their investment on the developing system to support the sales and distribution such as ROS EDI and ECR. By using the system in which suppliers, manufacturers, and retailers closely co-operate to improve efficiency in the demand chain and the supply chain. Efficiency will result in cost saving in the operation. Therefore retailers can sell to consumers at a lower price. From using the outsource Mama can distribute to over 50,000 retailers and wholesalers. The product can reach to the hotel, restaurants, hospital and school.
The Space Management or Category Management is the systems to manage shelf space and to manage product category to maximize sales and profitability.
Warehousing is advanced and computerized. Location system and picking system are being employed. At present Sahapat have a number of warehouses in Bangkok and up-countries covering nation-wide.
The weakness
The weakness is Mama rely on only one distributor that will deal with the products of Mama including prepare for the warehouse which is Sahapat. If Mama have conflict with Sahapat, Mama will not be able to run the business and Sahapat will have power over Mama in term of Expert power and cohesive power.
The products can be easily to break so there are many defect products send back to the manufactory.
Since Mama products can be bought by anybody including all the small mom & pops shops, Mama will have no control over its products. For this reason, these mom & pop shops can easily ruin the image that Mama has portrayed by incorrectly displaying or storing the product. For instant, if the Mom & pop store bought Mama products for resale and displayed it in a damp area. Because it is damp, when end-consumers open the pack, the Mama product would be soft and spoiled.
The opportunity
The technology of EDI and ROS can help because they do not have to pay for workers to take order but using the technology can help them save the cost and make the order more accuracy
The threat
The threat of the distribution is the outside factor that the price of gas has been increase lately so the cost of transportation will be high. Since the government had not allowed Mama to increase its price, the manufacturer will have to absorb the cost
Effectiveness of Logistic System
Grade A Distribution Path
Logistics management is that part of the which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods and services in order to meet customers' requirements. Having a 3PL has brought Mama’s Logistic standard up to international levels. Sahapattapibul Company offers Mama many options that results in the effectiveness of its logistic system. This includes:
ROS (Remote Ordering System) allows Sahapat to retrieve data quickly and provide Mama with accurate and timely feedback in regards to their specific products inventory and movements. Hence, results in:
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Accurate Order processing- ROS increases accuracy by eliminating the human error associated with manual entry due to misread labels, keying error, and/or mislabeled items.
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Organized Data Collection- Diverse compliance standards and standardized bar code symbols ensure that bar code information will be universally understood and accepted.
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Feedback- The system will have bar codes that promote timely feedback for data which enables decision making and analysis based on current information.
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Efficient- The system improves operational efficiency, automating tasks, enabling labor resources to be utilized in better ways to drive more efficiencies of scale within an operation.
EDI (Electronic Data Interchange) allows Sahapat to serve Mama in a more efficient and effective manner. It has the ability to send and receive EDI transmissions on an automated basis, which allows Sahapat to inform Mama of changes in inventory and transportation in a timely matter.
ECR (Efficient Consumer Response). Sahapat’s ability to efficiently respond to its customers had resulted in many advantages including order fulfillment. The order fulfillment will include tasks such as delivering the right orders on time. This benefits Mama because its customers, who will be expecting to receive the product they ordered, will be satisfied. Also, if Mama’s customers filed a complaint, Sahapat’s ECR will enable it to respond to the needs quickly, resulting in customer delight.
Advantages & Disadvantages of 3PL
As mentioned earlier, Mama is outsourcing to a third-party logistics provider to deliver its products to the major retailers and wholesaler. Below are some advantages and disadvantages of outsourcing your logistics operations to a third-party logistics provider.
Advantages:
Lowers Complications – Complications such as risk of accidents, tacking customers order, storing your products it appropriate conditions, etc will all be handled by 3PL, allowing Mama to focus on other aspects of its business.
Allow Mama to Focus on its Core Competency - The biggest advantage of using a 3PL is that it allows Mama to focus on its core competency. This way, Mama would be able to focus on product development, engineering and customer satisfaction, etc.
Upgrades of Technology - With the current lightning-speed changes in technology, it will be extremely difficult for Mama to keep up with the latest functionality without having substantial investment in information technology. It is more efficient for Mama to pass on these responsibility to its 3PL to deals with the upgrades, maintenance, risk of accidents, etc.
Geographical Coverage - Transportation costs will increase if you are servicing customers far away from your main distribution center (DC). If the volume is too low in certain areas, Mama will not be able to deliver due to high cost reducing it geographical coverage. Having a 3PL’s that operate in that area are able to consolidate volume from other organizations to keep costs lower.
Disadvantages:
Loss of Control – The certain comfort level, flexibility, control, etc to servicing your customer when logistics is in-house, will be gone when you outsource to a 3PL. Mama will lack control over the way the 3PL operates. But since Mama has been in business with Sahapat for a long period of time, a certain level of trust and reliability has been built reducing Mama’s worries.
Higher Exit Barriers - It is very difficult to reverse the decision to outsource once your organization has signed up with a 3PL provider. Controversy, Mama is in good relationship with Sahapat, hence, are not planning to discontinue its contract.
Grade B Distribution Path
For this path, Mama has chosen to distribute to the small shops by itself. It would be very inefficient for Mama to outsource to its 3PL because of the large quantities of these shops who order in smaller quantities. Also, Mama would be able to generate a higher profit margin by doing some of the distribution task itself because it would not have to share its margin with the 3PL.
Both of these distribution path add up to the effectiveness of Mama’s logistics system.
Channel Design
Objective: To find the channel member who can maintain the product in good quality
until it reaches to the end-consumer
Target Market:
B2C – Children
Teenager Serve to “Home”
Adult
B2B – Restaurant Serve to “Big Restaurant, Mom & Pop”
Mom & Pop
Market Geography:
- Mama’s customers are scatter around Thailand. Also, the distance is varying according to the places.
Market Size:
- Market size can be measured by the sale of Mama in each region
Market Behavior:
Where & How many?
- Home consuming – mostly buy in vary quantity depend on where they buy
- Mom & Pop – 1 to 2 packs per one time
- Big Retailer (Tesco, Big C) – 10 packs size
- Warehouse Club (Makro) - Big box
- Warehouse Club – Big Box (as it will be cheaper and they can gain more profit)
When?
When to buy depend on where customers buy the product.
- Mom & Pop shop – as frequency as they want
- Big retailers & Warehouse Club – on the weekend
Who?
- Housewives will usually buy this product
Task:
- Ability to approach to as many customers as possible
- Be able to reach the target customers
- Delivery
- Keep the product arrive safely
- Avoid the damage (as Mama noodle is crispy and it is easily broken)
- Deliver the products at the right time
- Mama need big trucks or big containers to carry the products
Channel Management
Power
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Reward power
- Sahapat has power in giving promotion or sample gift to big retailers or some small retailers. It uses this power to increase its revenue and profit. When retailers buy a lot, then you get a lot of reward back.
- Legitimate power
- Mama instant noodle and Sahapat Company already have high power in themselves. As you can see, most big and small retailers must sell Mama in their shops. This makes market share of Mama very high. Thus, Mama has power in itself to make people purchase the product.
- Expert power
- As you see the rank and the market share, it makes people believe in Mama that it must be delicious because it has the power to influence people to trust and believe in its brand.
Conflict
Conflict that Mama has with retailer is quite rare according to the interview First we will look at the
Problem that retailers have toward Mama
- Mama does not deliver the product to especially small retailers on time. This is the problems that frequency state and it seems to be the only problems. To solve this problem usually those small mom & pop shop will go to buy at the big retailers store or big mom & pop shop instead.
Problem that Mama face
- Retailers don’t pay money for the products. As in the past, Mama usually gives credit to customers, but many of them do not pay on time, or some do not pay at all. As Mama has power on hands, therefore, they come up with new policy that every retailer shop have to pay in cash except the old customers who have good paying background can extend to use the credit system.
Cooperative Arrangement
Even though Mama is the generic product and it is already well-known in the market, Sahapat still come up with many campaign to promote the products through many IMC tools in order to help the retailers increase sell volume, which in turn help to increase the profit of the company. The thing that Sahapat does to promote Mama is for example;
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Chok Thong Jak Mama (โชคทองจากซองมาม่า) – customers will get the gold I if they return the Mama package and write down the name on it to join the activity, this campaign can increase a lot of sales as Thai people likes to rely on lucky draw.
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The TVC using Natalie Gelbova – This TVC will help to create awareness in other countries, and create better image for Mama
- Mama Tutoring for getting in University- build social responsibility which can create good image and make consumers loyal to the brand
Integration of Channel with other Marketing Mix
Price
The price of Mama per one box which contains 180 packs cost 725 baht to the big retailers and 730 baht to the small retailers. The reason is the big retailers have the power to bargain to have more profit margins. The retailers sell for the whole box is 900 Baht and per one pack is 5 Baht. The cost of producing Mama has been increasing 50%, but Mama still keeps the price the same. The retailers still want the product because Mama need only small operation cost and fast moving products since Mama brand has already done a lot of advertising and marketing campaign so the brand already came into the consumer mind. The company has to make sure that the retailers get profit enough for the operation cost. Mama did not give the discount to the big retailers higher than the small retailers, the difference between the big retailers and small retailers is only 5 Baht, because Mama prevents the problem of the big retailer to resell to the small retailers.
Product
There are two ways that the company develops new products which are:
- The company will corporate with Sahapat Company to survey the need and trend of consumers and come up with the new taste and new products. Then, when they find out the need of consumers, both companies will corporate and develop new taste and product to serve the need of consumers according to the research and survey that they have done. In additional, while they are developing the new taste, they also do the survey and focus group with small sample to make sure that the new taste will success and can be serve the need of consumers.
- The company will study and predict the trend and need of consumers. Then, the company will develop the new taste and product to serve the demand of market according to their prediction. After they have developed new taste, they will do the survey and focus group to get feed back about new taste and try to adapt the best taste in order to satisfies consumers need and want.
Promotion
MAMA mainly use pull strategy to pull come up customers to buy the products. MAMA spends a lot of money on promotion in order to promote and attract customers. It uses many kinds of medias to reach consumers, such as TVC’s, radio, internet, promotional campaigns, billboards and else. For example of TVC’s, MAMA always uses superstars or supermodels in the advertising because it knows that they have power to influence people to buy the products. Also, television and radio are the media that can capture most people, so MAMA has focus on. Moreover, MAMA gives special reward to consumers. For example of the reward, customers who buy MAMA products can send the MAMA instant noodle package for winning the Gold, Car, or other stuff. All the strategies that MAMA uses are usually successful. All the people in the country buy the product, and MAMMA is the best selling in instant noodle. Good promotion will bring people buy the product itself, so MAMA has to keep come up with the new strategies in order to follow the trend and the need of customers.
For sale promotion, MAMA really not emphasize on this, as the sell price will always be the same. However, sometimes there will be price discount for retailers, but not often.
Problems and Recommendation
The first thing is that, since Mama has so many flavors in order to satisfy their customer with different needs and wants. Each different size and flavors count as different SKUs and these different SKUs the company has to pay for the shelf space for each of the SKUs. In most of the convenient stores around Bangkok, there is Mama which has different size and container but they are the same flavor. Also, there are many unpopular flavors that don’t boost up the sales. If any flavor doesn’t boost up the sales which mean that the company has to pay a lot of money for its SKU in order to put the product on the shelf. The company should consider this very carefully because if the firm can reduce this kind of cost, it would be very effective for company to safe and spend it on other area of marketing mix such as promotion. In country side, normally customer would buy the traditional flavors which are “Tom yam Kung” and “Moo Sub”. This is because the company produced bigger size of a package and sell at slightly higher price of these two flavors. Therefore the company should reduced the flavors that available in the market because its waste the cost of SKUs in the retailers.
The second thing is that, as the oil has increased and all raw material and resources increase their price. The cost of raw material that Mama has to use increasing, but the company cannot increase the price that sell to end-consumers because it is the law and regulation that if Mama want to increase their prices, they have to pass the consideration and agree from the government because this kind of product is consuming products and people are sensitive to the price. The consumers of Mama are from the poor people to rich people, so if the Mama increases the price, it will have to effect to all people. Then, Mama has to absorb the price by them until they can make the agreement with the government and the government allows them to increase it. All in all, the increasing the price of Mama is so difficult and has to pass many law and regulation, so it may be the main problem right now that Mama faces. By this problem, if the price of Mama actually increases, the thing that Mama should do is to help the retailers by promoting and push more marketing campaigns in order to help stimulate sales, and make end-customers familiar with the price and consume it the same as usual.
References
Mama. (2007) “Thai President Food Company Limited” Retrieved from [website]
Manager. (2006) “มาม่า" ยักษ์บะหมี่กึ่งสำเร็จรูปหนีตลาดอิ่มตัว สลัดทิ้งภาพ 5 บาทขยับตัวเข้าสู่ตลาดพรีเมี่ยม”
Retrieved from [website]
Brandage. (2006) “Brandage Magazine” Retrieved from [website]
Siam. (2005) “สินค้าขวัญใจคนจน ' บะหมี่กึ่งสำเร็จรูป ' ตลาดที่คุมทุกเซ็กเมนต์” Retrieved from [website]
Thannews.(2007) “'มาม่า'กับเศรษฐกิจ-การเมือง” Retireved from [website]
Sahapat. (2007) “Sahapattanaphibul” Retrieved from [webite]
Capital. (2007) Retrieved from [website]
Easy. (2007) Retrieved from [website]
Matichon. (2007) Retrieved from [website]
Mamalover. (2007) Retrieved from [website]
