bottled juices and water. Companies have been actively engaged in new product developments in order to counter the growing concerns about negative health impacts of high-fructose drinks, but also to increase the demand in a market where product offerings are quickly maturing. New flavor introductions and health-conscious formulations have been launched in an attempt to offset the decline in carbonated soft drink sales. The soft drink market is expected to show sustained growth and consumer interest in the future years as consumption shifts to trendier, healthier and more sophisticated products.
- Profitability & future growth potential: In 2006, Concentrate Producers earned 29% pretax profits on their sales, while bottlers earned 9% profits on their sales, for a total industry profitability of 14%. While the functional drinks sector only accounts for 3.7% of the total soft drinks sales in 2007, estimates are forecasting a growth of 7.3% in sales and 11.0% in volume consumption by 2010.
2.3 COMPETITOR ANALYSIS
THP Group Co. is the leading player in ranking number one in value for the ready-to-drink tea sector with “Khong Do Green Tea” product in 2006 and won a big market share. The success of THP Group Co. is proven through growth rate of 190% from November 2006 to November 2007. THP Group Co.’s top competitors for ready-to-drink industry are URC (C2 ) and Pepsi & Lipton (Pure Green Lipton) . THP Group Co. is leading with 57% of the total soft drink market. It is anticipated that the following brands could potentially compete with Khong Do Green Tea in the soft drinks market: Lipton Pure Green, 100, Wonderfarm, Anuti, Asao, Hoa Linh, Tribeco, Bribeco, Bidrico…
In spite of the fact that C2 is a later-comer and has a similar product with Khong Do Green Tea (Cool and Clear) and has not highly-appreciated ads when he narrowed his target market – switch to Green Tea C2 from soft drink but with a loudly campaign, fairly stable quality, good distribution system and reasonable price as well as small bottle, C2 has positioned its product on the market.
Being a youngest in the industry but Lipton Pure Green has a huge advantage of a product with a combination of two leading company in tea industry and refresher over the world as well as the combination of two famous brand names – Lipton and Pepsi. With strong potential and smart marketing method, professional endorsement of these two richer, Lipton Pure Green has penetrated into market quickly as well as customer’s mind. Wisely, Lipton Pure Green has created a differentiated product “Product is made of 100% of young and tender leaves and hi-tech process has created a warm tea flavor. The tea trees are planted and controlled according to strict regulations of global Lipton. The best young and tender leaves are selected according to the rules of “2 leaves and 1 bud” and picking in the early morning and brewing freshly for making up at the factory have produced a warm tea flavor of the product”. Along with professional distribution and marketing, the selling price and special flavor of Lipton Pure Green has also produced a competitive advantage on the market – warmer flavor and less sweet.
However, a strong distribution system already exists with THP Group Company, since partnerships and channels are already in place. This will facilitate the product’s reach into its target market. Moreover, Khong Do Green Tea are produced from Vietnam’s typically natural fresh tea in line with the process concluded of 5 sterilizing stages with crystallizing plastic bottle that is heat-resistant of 86oC without being affected, assuring the right process that is good for customer’s health and very convenient everywhere. A strong distribution system already exists with THP Group Company as well as the huge capital – 50 million US dollar, reasonable price, intelligent marketing campaign, and most important, the advantage of the first mover in this industry, Khong Do Green Tea has been leading the market, which facilitates the product’s reach into its target market.
2.4 TARGET MARKET
Segment identification:
RTD (Ready-to-drink) bottled Bubble Tea, to be established within the Functional Drinks sector
Segment needs:
The product will cater to both physiological needs (hydrating and nutritional value) and social needs (perception of a social, fun drink with a sense of belonging within peer consumer groups)
Segment trends:
The current trends include a shift away from junk foods and carbonated drinks, a growing interest for healthier / beneficial products for the “mind and body”, the trend towards the availability of on-the-go products for those with an active lifestyle, as well as the trend for personalization through customization (or for beverages, through variety-seeking in a wide introduction of flavours)
Segment growth potential:
Statistical reports anticipate a segment growth of 1.72% over the next 9 years (2015) for the 10-29 years old subsets
Size of the segment (population):
14,688,300
Positioning strategy:
The only RTD bottled Khong Do Green Tea available. Funky & eye-catching bottle, functional packaging, premium-priced, cool, new and unusual, unique drinking experience, aspects of play (tapioca pearls, oversized colored straw), variety of flavors, sweet, refreshing, for hip & young people, healthier alternative to heavy-sugar drinks.
3.0 SWOT ANALYSIS
CONCLUSION
Based on the above-mentioned analysis, Khong Do Green Tea appears to be a profitable and innovative product with a strong outlook for market share presence and segment growth opportunity. Upon implementation of the marketing plan, the THP Group Company will regain increased market shares and claim its targeted situational position of market leader in the soft drinks segment as well as keeping its long-standing consumer recognition for innovative and successful product launches in diversified markets. Projected profits will be 711,333,530,900VND (see financial projections).
3.1 STRENGHTS.
Brand strength:
The THP Group Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and over the country. Khong Do Green Tea brand is unarguably one of the most recognizable brands in over 50 provinces where it sells its products with a broader product line and outstanding reputation. The strong brand name is one of the basis for the company’s competitive advantage on several of its core markets.
Results of operations:
Khong Do Green Tea is a leading brand of top 10 highest growth rate (17% ) in Vietnam during 2 years: 2007 and 2008 and got the record level of 2 million bottles/day
In 2008, net-operating revenues totaled approximately 10 billion VND, an 8% increase from 2007. Gross profit totaled over 4 billion VND in 2007. The company generated $50 million from its operating activities and re-invests heavily into its business. The ability to generate significant cash flows is one of its key strength.
Smart and Powerful Marketing Campaign:
With a huge capital – 50 million US dollar, THP Group Co. has exploited fully in endorsing its image to the public through (TV channel, Website, Poster, etc…) and it’s not difficult to understand why it has a solid standing on the market.
Strong existing distribution channels:
Khong Do Green Tea has operations nationwide and is well established in its distribution channels (such as store retailers or vending machines). Therefore, a new product launch can typically rely on the existing distribution system in order to reach the majority of its target market while requiring no major supply / delivery developments.
Pioneers in this industry:
The wise and perfect combination of both refreshing and functional drink has created a big competitive advantage for THP Group Co. It has targeted on the customers’ demands and satisfied them absolutely in line with leading in a new brand name and
special product with great flavor.
Apply “focus and differentiation” approach:
- Focus Approach:
+ Customer: Every Marketing activities of the business must aim to customer. The Company has an own department to care customers and deal with everything related to customers.
+ Media: Company doesn’t hesitate to invest a “huge” amount of money in this performance and intend to increase advertising fee in next year.
+ Quality and Availability of Product: Always assuring that there is no out-of-stock case to satisfy customers with the best quality both effectively and efficiently.
+ Deployment of Plan: Have a specific schedule for each activity.
- Differentiation Approach:
+ Product: Believe and perform based on the guideline of the special and original product is more important than imitate other product. Company has spent lots of money on this field in order to produce a very “unique” product.
+ Packaging: Company has used PET plastic bottle – it’s more convenient and profitable than for customers. It has also increased the depth of the product by smaller capacity and more beautiful with multi-color and eye-catching package.
3.2 WEAKNESSES
Relying upon line extensions:
Khong Do Green Tea is relying on brand extensions increase sales in specific lines, particularly its long-time carbonated soft drink products. However, there is a strong risk of cannibalizing existing sales in the long term (for example: Khong Do Green Tea might deter on sales for Number 1- energy drink).
Reliant upon particular carbonated drinks:
The long-time presence of Khong Do Green Tea beverage has established this particular line as a flagship product. While the core Khong Do Green Tea products bring a solid base of sales and loyalty to the company, consumers’ expectations also become more and more anchored and single-lined, taking away freedom in the areas of line diversification and product modifications (taste, packaging, price).
Brand dilution:
The tremendous amount of existing brands and new product being introduced by the company could diminish the value and differentiating strength of each product that is being manufactured.
Saturation of carbonated soft drink segment:
Due to the countless number of brands available on the market, it becomes increasingly difficult in the soft drinks segment to innovate and create new products that genuinely stand out from their competition. And as we have seen, an analysis of the industry has shown that growth in the soft drinks market becomes difficult and challenging when the conditions and consumer trends cause a market demand that stays stagnant.
3.3 OPPORTUNITIES
New product introductions
The soft drinks market is one that particularly allows more innovation opportunities and gives greater freedom for creativity in the design, production, manufacturing, distribution, promotion and retailing choices and processes.
Brand is attractive to global partners
Because of the company’s size (including value, brand name and operating revenues) and wide portfolio base, THP Group Company enjoys a strong purchasing power over its suppliers, and also attracts large partnerships with various levels of consumer reach (e.g. movie studio promotions, sponsorship agreements, etc.). Existing brand awareness also provides an international playing field for powerful marketing strategies.
Focus on most important customer trend - "Convenience"
The Company should focus on this feature of the product to win the market share in this industry while the society is developing quickly and actively as present.
3.4 THREATS
Strong competition:
Khong Do Green Tea is competing in a competitive market that is characterized by an oligopoly between several (but few in numbers) competitors, especially C2 and Lipton Pure Green. The fight for market shares and sales in crowded markets become a complex and thorny one.
Potential health issues: The current trend of consumer and consumers groups’ awareness towards goods and services is both beneficial and threatening for companies in the food and beverages industry. Over the last few years, concerns over health issues have risen in the media through an expanded and ever-growing network of “knowledge outputs” (journals, TV channels, internet, forum and so on). The move of the younger generation towards a healthier lifestyle calls for careful planning and decision-making in new product developments. Large companies can also easily become the target of consumers’ apprehension.
Free trade: In an era of globalization, large international competitors can come out with comparative advantages (the constant fight to remain the first mover and market leader in a long-term spectrum). Issues arise when dealing with price competition and economic growth. Trade organizations are also faced with public pressure which can disrupt operations in one or more areas of the company.
Unstable Economy: Like other company, THP Group Co. has been also facing a lot of difficulties in remaining and reinforcing its image as well as saving its life in this stage. In other words, it needs to attract more customers and enlarge its market share in this industry (refer to Appendix B)
THP Group Co. is blamed for “unidentified object” in Khong Do Green Tea product: This news will effect negatively to the Company reputation. In other words, it has a bad impact on Company’s sales.
4.0 MARKETING OBJECTIVES
Short term objectives:
- Aggressive Marketing Strategy Khong Do Green Tea can take advantage of the positive press on the health benefits of tea to boost the sales of its green tea product line. The company can use recent studies on the health benefits of tea as the basis of its press releases and advertising campaigns.
- Look to differentiate via packaging: PET bottles, Recyclable Glass Bottles, Tetra-packaging and Cans which provide more convenience and better value to our consumers. THP Group Co. can come up with other packaging sizes to ensure that consumers will have other choices and that Khong Do Green Tea will be easily and readily available to consumers.
- Improve Shelf Presence THP Group Co. can make a deal with retailers ensure retail shelf space and prominent positioning for Khong Do Green Tea. Although an average shopper may not notice what brands are positioned in prominent places on shelves or how much room is allotted to each manufacturer, shelf space and positioning as make or
break factors in introducing new products
Long-Term Objectives:
- Product Innovation THP Group Co. must continue its innovative research and development strategy to come up with new flavors and products. THP Group Co. has extensive research facilities on product improvement. The company can use its resources and professional expertise to come up with new flavors that will suit the continuous demand for healthy ready-to-drink green tea. With aggressive marketing strategy and product positioning, 0 Degree Green Tea is ready to take the global lead in green tea industry.
Target market objectives:
- Market share: To gain 80% of the market for bottled green tea industry by June 2009.
- Customers:
+ Attain total 30 millions customers who usually drink Khong Do green tea.
+ 40% of them are new customers.
+ 60% of them are retained customers.
Promotional objectives:
- Increase the awareness of the product on the market.
- Invest more in advertisement.
Objectives for Survival:
- Survive the current market war between competitors.
Financial Objectives
- Decrease customer acquisition costs by 1% a quarter.
- Continue to decrease variable costs through efficiencies gained from experience.
- Increase profit margins by 5% per quarter.
5.0 MARKETING STRATEGY
The marketing strategy will emphasize the strengths of both the company and the products. THP Group Co. will position themselves as an aggressive, innovative company that supplies the market with new, high-quality products. THP Group Co. will position themselves in trade shows, within industry publications, and the Internet, to reinforce this marketing strategy. The brochures, letterhead, and business correspondence will further reinforce these concepts.
THP Group Co. also recognizes that it costs six times more to attract a customer than to retain one. To that end, THP Group Co. will operate under the principle that the best marketing is an exceedingly satisfied customer. While the industries THP Group Co. operates in are large, reputations play an important part.
5.1 Target market.
There are two major target markets for Khong Do Green Tea.
- One group is the consumers on the go. These are the employees, students, and other consumers who lead a busy lifestyle. The urban lifestyle demands for optimize productivity with lesser time-consumption. Thus, there is a need for products that are accessible and readily available. Convenience has dominated the market, particularly the food and beverage industry.
- The other group is made up of health conscious consumers, specifically the younger who demand anything healthy. The positive reviews as well as the studies on the benefits of tea drinking have stirred an interest in tea drinking.
5.2 Marketing mix.
- THP Group Co.’s marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion.
- THP Group Co.’s pricing scheme is designed to be competitive with a fair margin.
- Distribution- All of the products can be distributed within Viet Nam.
- Advertising and Promotion- THP Group Co. will employ several different methods for their advertising and promotion campaign.
5.2.1 Product strategy.
- The core: Khong Do green tea beverage in a pre-bottled, ready-to-drink format.
- The actual product: Khong Do green tea will be a convenience product.
- Packaging and labeling:
+ Twist Cap.
+ Freshness seal.
+ Easy to grab bottle.
+ Flavor.
+ Logo of Khong Do green tea.
+ Ingredients.
+ THP group product.
+ 500 ml bottle.
+ Nutritional Details.
+ Sweetened or Diet.
When mention the capacity each used, most of consumers just drink 1/3 or ½ of 500ml bottle. Average for each drink is 200-250 ml, so the manufacturer should invest more in capacity of product.
Capacity 500ml bottle is appropriate; it should have more capacity of 1.000 ml for subjects.drinking.at.home.
Increasing depth in the capacity: smaller or larger to meet the demands. Free sugar green tea should be on target consumer who drink at home and the communication should be "best use when freeze”. While the lemon green tea (due to slightly sweet) should be "best use when freeze or with ice”
- Branding: Colorful, youthful, aspect of play, round shaped, refresh, logo is unique and attractive.
- Trade name: Khong Do Natural green Tea ™, a THP Group Co. product.
- Brand personality: Energy, funky, cool, original, funny, healthy, etc.
- Brand equity: THP Group Co. provides a quality, consistent, innovative and accessible soft drink reputation.
- Product life cycle:
Khong Do green tea is a low-learning product. With a strong marketing campaign, sales begin immediately and the benefits of the purchase are readily understood. Since Khong Do green tea is prone to product imitation, THP Group Co.’s strategy is to broaden distribution quickly, which is currently feasible thanks to the company’s high manufacturing capacity.
- Product class:
Food & beverage → Soft Drinks, Khong Do green tea follows the practice of product modification THP Group Co. is introducing an existing beverage but redefines the drink with a new, more convenient package. Khong Do green tea will now become a widely available drink in multiple retailing (distribution) channels.
- Performance Quality:
The performance quality of Khong Do green tea will be that it will produce what it functions, and the main function Khong Do green tea is the hot and cool nature of product. Customer can take it as a hot drink by got hot by oven and can take it as cool drink by chilling it in deep freezer it is up to the customer.
- Conformance Quality:
The conformance quality of Khong Do green tea will be that it will be free from any defects; it will deliver its targeted performance and quality
5.2.2 Price strategy
The price strategy that will be undertaken should consider the following aspects:
+ Consumer demand.
+ The product lifecycle.
Customer demand
Customer demand is a crucial factor which is driven by tastes, income and availability of others similar products at a different price (mentioned later in the potential substitutes section). For a lot of consumers, value and price are highly related: “the higher the price, the higher the value”. Consequently, THP Group Co.’s intention to position Khong Do green tea as a unique, innovative and attractive product gives it a certain control over Khong Do green tea price. To be able to implement higher pricing though, the minimization of the non-monetary costs to customers should also be include along with awareness of the product (notably by advertising) and value (benefits).
The product lifecycle
The company should take advantage also to the fact that the newer the product and the earlier in its lifecycle the higher the price can usually be. It ensures a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly and it also brings a certain prestige to the product.
(Source netmba.com)
Pricing strategy
The point here is that THP Group Co. can not set a price of Khong Do green tea that is too high because competitors will be attracted by potential profits and will follow by a lower price. After having taken all the important factors into consideration, there are five price-level fixing approaches seem appropriate.
- Cost Based Pricing:
One of the central objectives of this project being to become the market leader in soft drinks, THP Group Co. is willing to stay among the top competitors, if not becoming the greater, by achieving a certain target profit. This could be obtained by establish a price that will largely cover variable and fixed costs while bringing tremendous profits.
- Value Added Pricing:
Competitors and potential substitute's prices can also be part of the strategy. Having a higher price could make customers aware of the additional benefits and the higher quality of Khong Do green tea.
- Value based pricing:
The company sets its target price based on customer perceptions of the product value. The targeted value and price then drive decisions about product design and what cost can be incurred. As a result pricing begins with analyzing consumer needs and value perceptions, and price is set to match consumer's perceived value.
- Market Penetration Pricing:
The company can set a low price for a new product in order to attract a large number of buyers and a large market share.
- Break-even pricing:
The company has to make some strategies for break-even prices, setting prices to break even on the costs of making and marketing a product; or setting prices to make a target profit.
- Optimal Price:
Consumers evaluate the green tea lemon green tea higher than free sugar green tea. Frame prize optimized for lemon green tea is from 6000-6500 đ / 500ml bottle, the optimal price for free sugar green tea is from 5500 – 6000 đ/ 500ml bottle.
The price proposed for the lemon green tea is 6.5000 VND / 500ml bottle because at this price points the average of the purchasing is quite high.
For free sugar green tea , the price at 5.500 VND / 500ml bottle, at this price, intentioned purchasing is quite high, while increased to 6.000 VND, average points of intentioned purchasing is reduced but still upper average. Therefore, as the strategic value,.we.can:
+ Sell free sugar green tea at 5.500 VND on the majority (mass)…………
+ Sell lemon green tea at 6.500 VND to target customers who like free sugar lemon tea.
5.2.3 Distribution strategy.
The current market for Khong Do green tea is fragmented, since the distribution is restricted to local outlets and selling points such as counters and small Khong Do green tea shops in scattered locations. However, direct competition from these local players is not anticipated, since the marketing roll-out will initially emphasize on product awareness and both sales channels do not reach or serve the same market (retailing vs.
counter/ restoration). A strong distribution system already exists with THP Group Co., since partnerships and channels are already in place. This will facilitate the product’s reach into its target market.
- Retailing.
- Whole selling.
Khong Do green tea will be distributed through these channels: supermarkets, convenience stores, independent food stores, groceries, discount stores, multiple grocers, direct sales, indirect sales.
5.2.4 Promotion strategy
Objectives:
- To initiate strong awareness about the launch of Khong Do green tea throughout 10-39 years old consumers.
- To win market shares over our top soft competitor.
- The promotional activities will convey the clear message that “Khong Do green tea is a healthy drink for sporty and young people who simply enjoy taking care of their body and life.”
Concepts:
- “Think outside the green tea”: Be Bold, Be Original, Be Different, Be Yourself.
- A good spirit in a good body.
- For the out-of-the-ordinary individuals who like to challenge themselves.
Media selection:
Before choosing the appropriate Medias, it is important to note that consumers only give partial attention to media. However, they can be reached through integrated programs. They are typically using more than one communication media at a time; a behavior that is often called “multitasking”. This group of consumers doesn’t give its full attention to one single message, but rather uses continuous partial attention to scan
the media. Marketers can still communicate with consumers by using a variety of targeted promotional tools. Another important tactic to reach our target market is through Khong Do green tea marketing, which THP will heavily use in this campaign (campus, contests).
Advertising media:
Justifications for advertising selections
- Television:
+ Most viewed channel for now a days are geo, VTV and HTV and specially etc are the most viewed channels by consumers.
+ TV communicates with sight, sound and motion, which is needed for Khong Do green tea. It is the only media that can reach 99% of the homes at once. THP has the budget to cover the high costs of this media.
- Magazines:
We should take advantage of the fact that magazines have become a very specialized medium. There are many consumers' magazines in Viet Nam. Good color production is also an advantage that creates strong images which is the purpose of THP with its Khong Do green tea brand. Each magazine’s readers often represent a unique profile.
- Internet:
Online advertising is similar to print advertising in that it offers a visual message. It also has additional advantages; it can also use the audio and video capabilities. As we are targeting our ads to young outgoing people, sound and movement may attract more attention from viewers and has the unique feature of being interactive. Interactive media would offer THP Group Co. the opportunity to reach younger consumers who have developed a preference for online communication.
- Outdoor:
Billboards in specific geographical area would allow us get a good reach and frequency. It is a low cost and flexible alternative. (Campus, malls, Bus and stations)
PROMOTION SCHEDULE
6.0 FINANCIALS
Requirement for success analysis:
C.M. per bottle = 1,118,558,869,000/ 220,000,000 = 5,100 (VND)
Break-even: (332,072,164,100+75,153,173,980) / 5,100 = 79,848,105 (bottles)
Market share: 79,848,105 / 385,000,000 = 20.7%
In one year, if THP Group Co. can sell 79,848,105 bottles of Khong Do, or in other words achieve 20.7% of the soft drink market share, it will break even.
After this point, every bottle Khong Do sells will generate average 5,100 VND towards the profits. The potential profits can up to 1,557,055,500,000 VND based on our target market.
Expected Costs:
COGS: 1,747,748,232,000 (VND) * 36% = 629,189,363,500 (VND)
O/H: 1,747,748,232,000 (VND) * 57% = 996,216,492,200 (VND)
Expected Revenues (total) = 1,747,748,232,000 (VND) (Refer to Appendix A)
7.0 Control.
The purpose of THP Group Co.’s marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance:
- Revenue: monthly and annual.
- Expenses: monthly and annual.
- Repeat business.
- Customer satisfaction.
7.1 Implementation Milestones
The following milestones identify the key marketing programs. It is important to accomplish each one on time and on budget.
Milestone
Table: Milestones
Milestone Plan
Milestone Start date End date Manager
Marketing Plan completion 1/1/2009 30/1/2009 Mrs. Tran Uyen Phuong.
Advertising campaign 1 1/2/2009 30/6/2009 Mr. Tran Dinh Nhan.
Advertising campaign 2 1/7/2009 30/12/2009 Mr. Tran Dinh Nhan.
Development distribution 1/1/2009 30/12/2009 Mrs. Nguyen Thi Thao.
7.2 Contingency Planning
- Price competition: When the competitors focus on green tea industry, price competition increased because now Khong Do green tea’s price is slight higher than other green tea.
- Local competition: Now, THP Group Co. is main competitor in soft drink industry. Other company in this industry will try to compete with THP Group Co. to take market share from them.
- Difficulties and Risks
+ Problems generating visibility.
+ Already established competitor that chooses to compete on quality and flexibility.
+ Low consume at Northern area.
APPENDIX A
CALCULATIONS
Based on THP Group Co.’s previous financial statements, we will see the average COGS/Revenues for year 2006 and 2007 is 36%. Similarly, Operating Costs / Revenues = 57%. Moreover, since our target market are 220,000,000 cans annually assuming Khong Do Green Tea maintains its market share in soft drink 57%, we predict our sales as 385,000,000 * 57% = 220,000,000 bottles.
Expected Revenues:
Note: “Independent stores” include convenience stores, independent food stores, and discount stores. “Others” include multiple grocers, vending machines, & direct sales.
Expected Costs:
COGS: 1,747,748,232,000 VND * 36% = 629,189,363,500 (VND)
O/H: 1,747,748,232,000 VND * 57% = 996,216,492,200 (VND)
APPENDIX B
Source:(ACNielsen)
Group 8 – Class: BaBa3 Page
Generation Y: who born after 1980s.
5,100 VND *(1-20.7%)*385,000,000 = 1,557,055,500,000 VND
