To successfully market Snapple in Vietnam, relevant marketing campaign changes may need to be implemented. Traveling to Vietnam will help Snapple gain a better insight as to the target audience and help make the product more appealing to consumers.

University Degree Business and Administrative studies

Snapple: Made From the Best Stuff in Vietnam

Cara Walker

July 14, 2008

Dr. Cathleen Jones

TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

INTRODUCTION 4

COMPETITIVE ENVIRONMENT 4-7

MARKET POTENTIAL 7-9

Figure 1: Vietnam’s Tea Total Output and Export 9

COMPETITIVE ADVANTAGES 9-11

GREATEST DIFFICULTIES AND PROBLEM AREAS 11-13

RELEVANT FACTORS 13-15

TARGET MARKET 16

INTRODUCING THE PRODUCT 16-19

COSTS 20-23

GO OR NO GO? 24-26

REFERENCES 27-29

Executive Summary

Snapple teas and fruit drinks are a great substitute to sugary, unhealthy drinks. Snapple offers a variety of beverages that are packaged in convenient, single-serving bottles that are great for the mobile, busy consumer. As Snapple is attempting to cross international boundaries, Vietnam’s beverage market is the next challenge for this progressive company. With the slogan, “Made From the Best Stuff on Earth,” Snapple offers a variety of teas and fruity beverages for the Vietnamese people that have a number of valuable qualities. The major competitors which are currently in Vietnam are small, local “Mom and Pop” type establishments. This is due to Vietnam’s favorable attitude toward local loyalty and the need for fresh ingredients. Beverage and food manufacturing is one of the largest industries in Vietnam. Vietnam is one of the major producers of tea in the world. Macro indicators would also include the GDP per capita, which for Vietnam is US$2,600. Vietnam’s GDP, compared to the United States’ US$45,800, is extremely low. Vietnam’s freshwater withdrawal is one helpful micro indicator. In Vietnam the freshwater withdrawal is 71.39 cubic kilometers. Snapple can take advantage of both the rising disposable income and the unhealthy freshwater withdrawal with bottled, pure, healthy beverages that mesh with the culture of the country. Snapple has competitive advantages going into Vietnam, namely their experience in international markets. With over 15 years of experience, Snapple knows how to communicate and connect with foreign markets. Snapple’s biggest challenge will be the current economic conditions in Vietnam. As both GDP and disposable income are growing, they are regrettably low and not comparable to that of the United States. After sending two marketing executives to Vietnam for further research, Snapple must examine the facts and make a great decision.

Snapple is an international beverage producer specializing in specialty tea and fruit juice, which are both major substitutes to sugary soft drinks. Due to their convenient and easy to find, single-serving bottles, Snapple products are great for individuals who are “on-the-go” and need to quench their thirst while still searching for a healthy alternative to sodas. Snapple has been very successful in making their name synonymous with healthy drinks that are readily available and conveniently packaged. The brand is available in multiple continents and has a sound base to continue their global expansion with a product that is easily adapted to virtually any culture. Vietnam is a developing country with a growing economy. Disposable incomes are rising and the Vietnamese government is open to foreign investment. Vietnam’s culture continually becomes more westernized as foreign investors come in to operate in Vietnam. As the country becomes more mobile, Vietnam’s citizens are seeing their schedules grow more demanding and less flexible than in past years. These busy individuals need nourishment in order to cope with taxing schedules; healthy beverage solutions are increasingly important. Vietnam has a true love for tea, and Snapple can surely provide different varieties that could easily be made available to the Vietnamese population. Snapple’s website boasts their international involvement; the company’s best interest could potentially be in gaining market share and increasing demand for their quality products in this developing country.

Current Competitive Environment

There is evident competition in Vietnam, however, the market is not saturated, and seems to present a favorable situation. In Vietnam, the culture is based on drinking many varieties of hot and cold teas including hue, green, creeper, and the originally named Vietnamese tea (Festival & Culture, 2008). As Snapple offers an array of different cold tea drinks, the company would be able to compete in Vietnam’s market based on the cultural trends in this country. Another possibility is selling these various teas in tea bags to support the hot tea drinkers market, as well.

The major competitors which are currently in Vietnam are small, local “Mom and Pop” type establishments. This is due to Vietnam’s favorable attitude toward local loyalty and the need for fresh ingredients. As a result, these small, local shops still control the market share in the soft drink market (Euromonitor International [soft drinks], 2008). Despite the large market for local distributors, there are some major powerhouse companies that have been doing business in this region. Pepsi and Coca-Cola are the two major foreign companies, while Nectar Trio is the largest local company. Pepsi and Coca-Cola are struggling in this market due to a lack of non-carbonated products; they also struggle because the products are not considered one-hundred percent fruit juice. Coca-Cola is currently considering pulling out of the market altogether. The only major products that are keeping these two powerhouse corporations afloat are their respective energy drink brands that are presently popular in Vietnam. Nectar Trio is thriving with their one hundred percent juice brands; they hold the majority of the market just behind the smaller local shops. A large factor that hurt the major foreign competitors, specifically Coca-Cola, is their choice method of packaging. Because of the country’s local loyalty mentality, customers and the government prefer that foreign companies use local packaging plants rather than an outside, foreign plant since they account for a large part of the Vietnam’s economy (Euromonitor International [soft drinks], 2008).

Vietnam is slowly progressing towards westernization. Sales are shifting to convenience stores and hypermarkets in order to satisfy the new “on-the-go” living trends, and to take advantage of increasing disposable income throughout Vietnam. These factors give Snapple a reason to sell their products in convenience store-type locations; Snapple can also take advantage of the country’s desire for fresh ingredients. Past sales figures in Vietnam validate this trend; in 2004, sales of all soft drinks grew in terms of volume and value by seven percent. This figure has steadily grown, reaching a growth rate of twenty percent in 2007. It is estimated that health and fruit drinks—falling into Snapple’s category—accounted for nine of this twenty percent (Euromonitor International [soft drinks], 2008).

Global trends point to Vietnam as a major region of growth. Just in 2007, the global soft drink market grew by 2.5 percent. The global soft drink market is increasing in 2007 at a rate of 2.5 percent, much lower then the twenty percent in Vietnam (Industries, 2007). Experts also believe that future major areas of growth in the next five years include these five areas: Pakistan, India, China, Indonesia, and Vietnam. Vietnam is not only growing currently, but is expected to grow even more in the future. In addition to Vietnam heading the overall growth in the soft drink industry, the soft drink market is suspected to grow globally by five percent in 2008, double the 2.5 percent in 2007 (Soft Drinks Market, 2002).

Based on these figures and by understanding the Vietnamese culture and their current wants and needs within the beverage market, Snapple needs to explore and jump into the market. Snapple provides a product that only one competitor in the area can compete with, Nectar Trio; this company is much smaller with limited resources for adaptation. Major companies like Pepsi and Coca-Cola do not provide a product based on the needs of the Vietnamese public. Snapple can provide the on-the-go product that the population has recently desired with the fresh ingredients that are so important to the culture. With Snapple’s size and capital, the corporation could easily take the lead of the beverage market in Vietnam.

Market Potential

The country of Vietnam absolutely has a high market potential for Snapple. The following are the macro indicators for Snapple entering in Vietnam (Central Intelligence Agency, 2008):

Target Age Demographic: 15-64 years (68.6% of the total population)

US Target Age Demographic: 15-64 years (67.1% of total population)

Population Density: 261.3 people per square kilometer

US Population Density: 30.92 people per square kilometer

Literacy Rate: 90.3% for ages 15+

Because Vietnam is very crowded compared to the United States, Snapple would be able to reach a large number of people in a smaller area. With such a high literacy rate, Snapple can continue to market its product in the humorous way with the “Snapple Real Facts” (Real facts, 2008). The “Snapple Real Facts” are trivia found under the caps of the bottle. Each piece of trivia has a number that the consumer can reference on the Snapple website.

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The official language of Vietnam is Vietnamese, while English still widely spoken throughout the country (CIA, 2008). The US has a trade agreement with Vietnam called US-Vietnam Trade Agreement, which will make trading much between the two countries (CIA, 2008). The climate of Vietnam will also impact Snapple. In warmer climates, people tend to consume more beverages than people in colder climates. Luckily for Snapple, the climate in Vietnam is tropical in the south and monsoonal in north. Vietnam also experiences a hot, rainy season and warm, dry season (CIA, 2008). This type of climate is positive for Snapple’s sales. Macro indicators would also include the GDP per capita, which for Vietnam is US$2,600. Vietnam’s GDP, compared to the United States’ US$45,800, is extremely low (CIA, 2008). This means that many Vietnamese people would not be able to afford the beverage or at least make repeat purchases like Americans do. Snapple could lower the product’s price, which would make the drink more affordable, but may not generate the necessary sales. Another issue is that 14.8% of the population in Vietnam is below the poverty level (CIA, 2008). However, Snapple can adapt to this statistic by modifying the product.

There are also many micro indicators that factor into the market potential for Snapple in Vietnam. Beverage and food manufacturing is one of the largest industries in Vietnam (Vietnam, 2008). Snapple can benefit from this by manufacturing the products in Vietnam. Vietnam is one of the major producers of tea in the world. The people of Vietnam are also major consumers of tea (Tea Marketing Research, 2008). Snapple’s products mainly consist of different flavors and varieties of tea; Snapple’s sales would be positively affected by penetrating the tea market in Vietnam. Tea is a beverage that is commonly consumed around the world. Vietnamese could benefit from Snapple products because the rising competition for an “on-the-go” product is low when it comes to tea.

Vietnam’s freshwater withdrawal is another helpful micro indicator. In Vietnam the freshwater withdrawal is 71.39 cubic kilometers (CIA, 2008). Therefore, Snapple does not have an extreme amount of fresh water at their disposal. The freshwater withdrawal also shows that there is a high level of contamination in Vietnam’s water system. This is an advantage to any corporation offering bottled drinks in the country. The transportation system in Vietnam includes (CIA, 2008):

44 airports
2,600 km of railways
222,179 km of roadways
3 ports and terminals: Da Nang, Hai Phong, and Ho Chi Minh City

Although the Vietnamese are large consumers of tea, the country is also a large exporter of tea as well. The chart below has the output and export totals of Tea in Vietnam (Future Generation Company, 2005).

Figure 1

The chart shows an obvious increasing in trend, with a slight drop from 2004 to 2005 in both the Output and Export categories. Tea is in demand throughout the world and Snapple definitely has the potential to turn a profit in Vietnam.

Competitive Advantages

After a revamping of the ad campaign, Snapple’s advertising budget grew to $65 million. Firms like Unilever and Coca-Cola flood the advertising scene in Vietnam with budgets of US$30 million. This shows that smaller advertising firms and corporations in Vietnam have low budgets; budgets that Snapple is more than able to exceed. In Vietnam, 80% of all advertising is conducted by foreign firms. According to author Vu Long, “only 5 of Vietnam’s 20 top domestic advertising companies are domestically run-- Dat Viet, Goldsun, Vien Minh VMC, Youth and Maivang”. The International Directory of Company Histories (1995) describes Snapple’s entrance into foreign markets with the following:

In addition to its efforts to expand domestic distribution, Snapple also began a push to sell its products in foreign markets in 1992. As a first step in this effort, the company began distributing its drinks to American military bases around the world. By the fall of that year, these moves had started to show fruit, as Snapple pulled ahead of Nestea to become the leader in the ready-to-drink iced tea market, earning 30 percent of all sales for the first eight months of the year.

This shows that Snapple not only has the way of entry into a foreign market, but that they can also be resourceful and creative about market entry. Snapple also has more than 15 years of experience in foreign markets.

Snapple has been in the fruit juice and tea production business for 36 years. This not only has given Snapple the experience in domestic and foreign markets, but has also helped them develop new products and have pricing leverage for existing products. Snapple products are generally single-serving and priced a bit higher than the average single-serving beverage. For instance, in the first ten years of operation, Snapple priced beverages at about US$1.00 per bottle. This has not changed; A Snapple bottle in 2008 costs about US$1.29 per bottle while competitors like Lipton sell for $1.19 (Shaw, 2008). With the rising disposable income in Vietnam, Snapple will be able to take advantage of the “luxury” category for their tea and fruit juice products. Especially in central, urban areas, consumers are now buying products that are convenient and could be considered small luxuries. Because people are buying more, the interest is growing in many different markets, including the soft drink market, which has become much more active in recent years (Euromonitor International [soft drinks], 2008). “Per capita disposable income rose from VND3.7 million to VND5.5 million during 2000-2006” (Euromonitor International [Vietnam], 2008). Snapple’s long-time existence in the market and “luxury” image to some gives Snapple an advantage in Vietnam.

Snapple has many competitive advantages in foreign markets. Not only is Snapple a producer of fruit drinks, but they also produce many types of teas. In Vietnam, the drinking of tea is extremely important. People drink tea at many different gatherings, including business meetings, funerals, weddings, etc. This gives Snapple the perfect entrance into a new foreign market. Similarly, tea drinkers in Vietnam do not use additives such as milk or sugar in tea. Therefore, the tagline, “Made From the Best Stuff on Earth,” which exhibits the purity of the product, will appeal to consumers who do not use or want additives in their tea (Haivenu, 2002). As tea is already a very popular and culturally significant product, Snapple will have no problem appealing to tea drinkers.

Greatest Difficulties and Problem Areas

Some of the greatest difficulties Snapple will face when introducing products in Vietnam deal with the current economy in the country. The per capita GDP is only US$2600.00; even Cuba is higher with a GDP of US$4500.00. Vietnam’s unemployment rate currently stands at 5.3%. As a comparison, China’s unemployment rate is 4%, while the population is over 1.3 billion. Inflation in Vietnam is also very high, comparing unfavorably to Snapple’s other markets such as the U.K. at 2.3%, China at 4.8% and America at 2.9%. Based on these statistics, Snapple will need to adjust the product’s price in Vietnam (CIA, 2008).

Even though Vietnam’s economy is fairly weak on a global scale, Snapple will still be able to be successful in this regional market. Snapple will be able to succeed due to the preexisting popularity of tea in the Vietnamese culture. In fact, green tea is very commonly served at the beginning of every meal in restaurants around Vietnam. To highlight the need for Snapple to enter the Vietnamese market, the country must import over 100,000 tons of tea each year due to their small local supply (Vnn.com, 2008). The variety of tea is very scarce within Vietnam. As green tea is the most commonly consumed and produced, the need for other flavors and varieties is satisfied by outside producers.

This leads to the question of adaptation for the Snapple product: should the company consider adding a few new flavors of tea to the Snapple line for the market or simply advertise the current flavors of Snapple? Americans can choose from a variety of different Snapple flavors, from white to green to black teas, the Vietnamese may have different tastes in teas. They prefer not to use additives, such as sugar, unlike Americans (Haivenu, 2002). They prefer fresh products rather than preservatives and artificial flavorings (Euromonitor International [soft drinks], 2008). One way to test out this market is to offer many teas at first, and cut back when one variety proves unfavorable.

With Vietnam’s increasing westernization, which supports individual freedom and better education, the Vietnamese are more inclined to desire success and wealth (Vietnamese Culture, 2000). This supports the rising disposable income, despite its low ranking on the global scale. While all of these factors work in favor of Vietnam’s economic stance, the difficulty here will be deciding a price scale relative to income, westernization, and inflation.

Although the Vietnamese culture is slowly transitioning to a more westernized culture, people still hold family values as high priority; this is illustrated by the fact that the entire extended family lives under one roof. Daily, there is time set aside for drinking tea together as a family. Should there be an unfortunate death in the family, tea drinking is one ritual that the living family members carry out during the course of the funeral (Haivenu, 2002). Due to the previously discussed issues, Snapple will have to fully incorporate the production of hot tea bags into its product line for this market. Snapple does not currently carry a wide range of hot tea bags; four different kinds of hot tea bags were introduced in 2006 (Weston, 2006).

As Vietnam has a widely popular packaging and labeling industry, both residents and the government oppose outside or foreign production. If we choose to produce outside of the country, it would be to Snapple’s benefit to package and label the products within Vietnam in order to avoid governmental barriers to entry. This would also play favorably towards the Vietnamese consumer, whose economy is greatly influenced by the packaging industry (Euromonitor International [soft drinks], 2008).

Relevant Factors

When marketing Snapple products in Vietnam, there are several important factors to be considered so that the product meets market needs and becomes successful. Identifying current events and problems within the country will lead to a better insight on how to market Snapple in Vietnam. Understanding different cultures and languages within the country is necessary when developing a marketing campaign for Snapple.

One of the major problems in Vietnam is the severe water quality and environmental sanitation problems. All people living in the Delta have to depend totally on water resources, mainly the surface water and for domestic drinking. Every year the water system becomes more polluted with the floods and draughts. The overall health of citizens and exposure to contaminated water is a real concern in Vietnam (CIA, 2008). Four-fifths of all illnesses in Vietnam are caused by environmental sanitation problems causing a purchase increase in bottled drinks. Purchasing bottled drinks in Vietnam has increased over 30% in the last three years (Haivenu, 2002). The impact of the water conditions has helped improve total sales for Coca-Cola and other soft drink companies within the last three years (Coca-Cola Vietnam, 2005). Since the demand for bottled drinks has increased this gives Snapple a market for the product to sell. Due to the inferior freshwater withdrawal, Snapple will have an advantage by offering pure, healthy bottled drinks.

Climate and cultural conditions in Vietnam are very important to consider when marketing a beverage in a different country. From October through March, Vietnam has a warm and a dry season; during this season, Vietnamese people tend to drink their tea either room temperature or chilled. Between the months of May and September, most people enjoy their tea hot. During those five months, the weather is extremely hot and rainy; Vietnamese people are known to drink their tea room temperature or hot because of the cooling effect of the tea (CIA, 2008; Future Generation Company, 2005). Cultural information helps with advertising the tea in a particular way and making the product more appealing to consumers. When creating a television commercial for Snapple during the hot and rainy season in Vietnam, greater marketing success will come if the product is advertised as a room temperature or hot tea.

In 2008, the leading type of advertisement in Vietnam is television advertisement. The majority of all advertisements in Vietnam focus on the age group twenty-five and under, that age group makes up over two thirds of the population in Vietnam. (U.S. Department of Commerce, 2008). Over 78% of all foreign brand managers put a large part of the budget into creating television commercials and campaigns. With the large urban population owning televisions, foreign businesses battle with each other to have their advertisements shown during the peak hours of 6-9 p.m. (U.S. Department of Commerce [Commercial], 2008).

Print advertisements in Vietnam have been steadily increasing in popularity since 2002 because of the high literacy rate. Today, more periodicals and magazines are being read and circulated allowing Snapple to be advertised to a larger group of consumers. Along with print ads website and internet ads are being used by foreign companies. In early 2007, Internet World statistics showed that there are at least 17.87 million internet users in Vietnam. 45% of all households in Vietnam use computers. Focusing on the target age group and developing a Vietnam-specific Snapple website will help consumers become familiar with the product (Vietnam [Asia], 2008).

Radio advertisement is not commonly used in Vietnam by foreign companies; typically, Vietnamese businesses are the only companies that use radio promotion. Radio advertising is slowly increasing because of the increase in radio programming, and popular Vietnamese music being played along with the foreign radio advertisement. This allows the ad to appeal to the appropriate Vietnam consumers (Davies, 2008). As a developing country, Vietnam’s advertisement industry is on a steady rise with a direct correlation to foreign businesses.

Target Market

Snapple has a clear target market in Vietnam. The ideal customers for Snapple are young adults with mobile lifestyles in urban areas of Vietnam. Both the packaging and convenience of Snapple products are valuable to those who are constantly on-the-go. The young adult is being targeted because Snapple already has campaigns geared towards these individuals. The majority (68.6%) of the population in Vietnam is in the young adult age group, age 26 being the median age (CIA, 2008).

The urban areas are the best place to launch a new product because of the easy access to ports and the high population density (United Press International, 2008). Urban areas also provide a variety of venues to sell the product in. Snapple-type beverages are already appealing to the Vietnamese people since they drink tea very frequently and for many different occasions.

Advertising to young adults will also help cut marketing costs. Since Snapple already markets to this age group in the United States, standardizing the campaigns and making small adaptations will help bring down overall marketing expenses. Young adults are also a health conscious population since they have grown up in era of health awareness. This is a major benefit for Snapple because we offer a non-carbonated alternative to the consumers (Chan, 2007). By marketing the tagline, “Made From the Best Stuff on Earth,” Snapple can easily attract health-conscious young adults.

Introducing the Product

The product that could be offered to our new Vietnamese customers, Snapple teas will be distributed in urban areas consisting of working citizens looking for convenient ways to quench their thirsts. Because of the valuable convenience to customers, the price for Snapple teas and fruit drinks should be higher than the average twenty ounce carbonated beverage. These needy individuals would boast the highest disposable incomes in Vietnam since they are most likely living and working in the city as business professionals. Because these people work in the city, their respective disposable incomes are higher compared to those living in rural farmlands. These urbanites are the busiest in Vietnamese culture; they will be willing to pay a higher price for a premium health drink with a variety of flavors in a convenient, to-go bottle (Vietnam [Asia], 2008).

Vietnam holds many growing advertising resources. As the country modernizes, so do its resources for businesses. Business administrators are finding newer, more flexible ways to get products out to demanding customers. Snapple is an international company that has experience in dealing with cultural differences and international affairs. Snapple’s best starting point would be to hire a bilingual advertising agency to produce marketing campaigns for Snapple. This would allow advertising executives of Snapple to meet with this agency and come up with the best possible solution to reach Vietnam’s population. In Vietnam, there are many possible avenues for mass media distribution. Television and radio are popular in Vietnam as they are in the United States. Snapple could also take advantage of the opportunity for billboard advertising. As the country rapidly develops in urban areas, more Vietnamese people are driving and becoming mobile than ever before in the history of Vietnam (Vietnam [Asia], 2008).

Snapple is an international company; the name, “Snapple” has become synonymous with juices and teas conveniently packaged and distributed, and as a superior substitute for all sugar soft drinks. Keeping the name “Snapple” is essential to increasing the company’s brand recognition and global market share. Changing the name would prove few benefits to the company. The world’s many differing cultures are westernizing; the world’s population of youth continues to become more similar. Now, the company can experience long-term growth and brand recognition by making their brand more recognizable to the youth around the world. As they age and start careers, this young population is comfortable with trying new brands and being familiar with the many choices out there. Snapple has no meaning in the Vietnamese language. Having a name that does not carry a specific meaning other than the company’s description is a major advantage for developing brand recognition in a given culture (VDict.com, 2004).

Packaging for the product can be similar to the packaging used in the United Sates. Snapple will be packaged to take advantage of the demand for convenience and ease of purchase. The name on the package will be spelled correctly in the English language and the particular flavor of each bottle will be printed in English and in Vietnamese to help cater to English-speaking residents and foreigners who are living, studying, working, or vacationing in Vietnam. The rest of the print on the package including ingredients and nutritional information will be printed in Vietnamese. The packaging will be trendy and clean cut. The company wants this product to look superior to other beverages that are placed on the shelves near Snapple products. Snapple will incorporate traditional Vietnamese attributes, special events, and occasions to the labels of their products as they become more familiar with the new culture.

Snapple has a well-established brand and with that brand comes a sense of choice and variety. Snapple does not only make one type or flavor but carries a whole line of natural, healthy, great tasting, conveniently packaged drinks for those with demanding schedules. Vietnam is a major world consumer of teas and fresh drinks. Vietnam exports green tea to other countries but lacks the natural resources to produce other flavors of tea. Vietnam imports 100,000 tons of tea of all different flavors each year to satisfy the demand for a great selection of tea flavors (Vnn.com, 2008). It is very common for tea to be served when one begins a meal at a restaurant or other type of café. As it is a part of Vietnam’s society and culture (Vietnam [Asia], 2008). In Vietnam, Snapple’s product line will be no different. Snapple will manufacture and sell a full line of tea that one can drink while traveling or sitting at home or in a café. Some of the most desired flavors of imported teas that Snapple would produce include: Rooibos Tea, Yerba Mate Tea, Tisane Tea, Flavored Tea, White Tea, Oolong Tea (Future Generation Company, 2005).

Snapple recognizes the possible distribution complications due to Vietnam’s current economic status. As a developing country, Vietnam still faces many infrastructure issues and geographical obstacles due to the islands of the country. To manufacture and distribute Snapple products to all different areas of the country—including farmland and rural regions—would take much research and time as to procedure and demand in the more rural areas. Therefore, distributing in these remote locations may not be cost effective in the beginning of the market entrance process. As the country continues to advance and infrastructure is built and enhanced, distribution will likely expand. Within a short number of years, Snapple will be available to all of Vietnam. Snapple would also like to distribute mainly to urban areas because of the higher wealth and disposable incomes that are found in central areas. Snapple must be distributed in areas where Vietnamese citizens and travelers are used to spending more money on certain products and services, not in areas where disposable income is low and only home-grown products are consumed.

Costs

Before introducing Snapple into Vietnam, visiting the country is strongly encouraged. This will help marketing executives cater the marketing campaigns to the Vietnamese culture and trends. To successfully market Snapple in Vietnam, relevant marketing campaign changes may need to be implemented. Traveling to Vietnam will help Snapple gain a better insight as to the target audience and help make the product more appealing to consumers. The cost of traveling from one country to another can be very expensive for both regular consumers and corporations, therefore having only a selected few associates from the Snapple marketing team visit Vietnam will help cut unnecessary expenses. Some travel expenses include:

Obtaining a Passport
Airline Tickets
Food and Entertainment
Lodging
In-country Travel
Return Airline Tickets

Planning ahead can help reduce costs of the trip. The first step in taking a trip overseas is obtaining a current a passport. If a marketing executive has never been overseas before, the company should pick up the cost of the passport. This can cost anywhere between US$100.00 and US$150.00 (U.S. State Department, 2008). Every U.S. resident must have a valid passport when traveling outside of the country. Carrying a passport allows all tourists to have a 30-day entry when traveling to Vietnam. The process usually takes four weeks from the date the application was submitted to receive a passport in the mail (U.S. State Department, 2008).

Purchasing airline tickets is the most costly expenses when traveling to Vietnam. Two adult round-trip coach airline tickets on Expedia.com from Pittsburgh to Vietnam will cost on average $2,100 per person, totaling $4,200 for both tickets. This does not include upcoming charges for overweight bags or fees for extra luggage (Expedia, Inc., 2008).

Eating meals in Vietnam can be very reasonably priced depending on one’s appetite and budget. Vietnam has a great variety of restaurants; local street vendors can be found on every corner cooking cultural cuisine dishes for less than US$1.00. Vietnam also has upscale restaurants where meals can be priced at over $20 a person. Many U.S. fast food chains have opened franchises in Vietnam, as well. Each tourist can expect to spend on average of $25 a day on his or her meals. A small percentage of hotels in Vietnam offer all-inclusive packages in which all meals and drinks are included in the cost of the hotel stay. Many first-time tourists do not get all-inclusive packages because they want to indulge in the different dining and cultural experiences (Vietnam Tours, 2008).

Hotel rooms in Vietnam are priced on a nightly basis between US$35.00-US$280.00 per night for a double-bed hotel room. Price is determined based on the length of stay and whether the hotel is basic or five-star. The average price for a five-star double room hotel is $120 in Vietnam each night for a week. Some of the larger hotels have website advertisements for discounts on room rates (Vietnam Tours, 2008).

Transportation in Vietnam has improved significantly within the last decade (Festival & Culture, 2008). In 2008, highways have become more modern, but the system still lacks good development and maintenance. Many tourists refuse to drive in Vietnam because of the confusing and poorly designed highways. Tourists have many options for getting around in Vietnam. The majority of tourists use Vietnam’s public bus service or taxi service. Bus fares are typically 35,000 VND (US$2.50), depending on the route. Two adults could spend an average of US$30.00 per day travelling by bus and taxi.

Once the trip comes to an end, the company travelers must finally return home. As previously discussed, airline tickets from Vietnam to Pittsburgh would average US$2100.00 per person. This does not include extraneous charges for luggage (Expedia, Inc., 2008).

Total Costs of the trip would accumulate to this approximation:

Obtaining a Passport (2 people): $300.00
Airline Tickets (2 people): $4200.00
Food (7 days): $500.00
Lodging (2 people, 6 nights): $1440.00
In-country Travel: $210.00
Return Airline Tickets: $4200.00

These costs would amount to about US$10,850.00. This amount does not include the cost of entertainment, which ranges from $100.00-$400.00 dollars for the week.

The advertising industry in Vietnam began around eighteen years ago. Every advertisement that is run in Vietnam has to be previously approved by Ministry of Culture and Information. Snapple plans to run a 30-second television commercial on Vietnam’s national broadcaster. Over two-thirds of Vietnam’s population is between the ages of 15 and 64, and people under the age of 25 account for over 60% of the total population. Therefore, Snapple will focus on appealing to consumers under the age of 25. The television campaign will be aired during the peak evening hours of 6:00-9:00 p.m. The average 30-second ad rates are from US$600.00 to $1,200.00, depending on the station and time of the advertisement. Snapple can estimate that having the ad aired during peak times on a popular station will cost approximately US$1100.00 for the television commercial (U.S. Department of Commerce, 2008).

The print advertisements amongst foreign businesses are increasing along with the literacy rates. In 2008, there are more magazines, newspapers and books circulating than ever before. This gives businesses a chance to advertise products and services to a much larger audience. Snapple plans to use print media as a source of advertising to the target market. The Vietnamese government only allows a specific amount of advertisements, so it will be important for Snapple to be one of the few foreign businesses allowed to advertise. As of 2007, costs per print ad are low in Vietnam. Snapple will pay on average $75-$350 per insertion (U.S. Department of Commerce [Commercial], 2008).

Shipping Snapple into Vietnam from Pittsburgh will be done by FedEx sea freight. FedEx offers an international service that deals directly with the international freight forwarder. The freight forwarder handles the transportation of the product to the overseas destination. Snapple is familiar with exporting products and understanding the freight costs, port charges, consular fees, costs of special documentation and insurance costs. After speaking with a FedEx representative, a rough estimate of US$90,000.00 was given for total shipping costs of the product to Vietnam. The cost would include one-time direct distribution and an unlimited total shipment weight (Services/Tools, 2008).

Go or No Go?

Snapple—as an international corporation with a unique product made from high quality ingredients—has potential to increase their international market share and to enter a developing country before the market is saturated. Snapple offers a convenient product and an excellent substitute to sugary, unhealthy drinks. Tea is very popular in Vietnam during all times of the year and serves as an integral part of the Vietnamese culture and history. Strong national ties to tea make this region an immediate candidate for investment (Future Generation Company, 2005).

There are a number of advantages to entering Vietnam, including the steady rise in the country’s overall disposable income. This is important because people will generally have more money to spend on frivolous items, like spontaneous or last-minute drink cravings. Another advantage of entering the market in Vietnam is the lack of clean, sanitary water sources. The level of contamination is very high; this works in the favor of any company bringing in bottled drinks. Snapple has an advantage in their experience with foreign markets. “Knowing the ropes” and being familiar with different processes for international marketing and distribution are both skills that Snapple possesses with over 15 years of international experience.

Disadvantages to entering Vietnam include the slow move from a developing country to a developed country. Although the country is moving towards westernization, the progression is slow. Vietnam has years before it becomes an economic powerhouse of any kind. Because of the high poverty level, finding a remotely large or wealthy middle class will be a difficult task. Vietnam is experiencing high inflation and the government is not as stable compared to countries like the United States or China. The country’s infrastructure is in need of numerous advancements, which affects every aspect of distribution to get this product to market. The country has a robust packaging industry to which citizens and the government are both very loyal. Using Vietnam’s resources in labels and packaging could prove beneficial to the company, but if other alternatives arise, leaving Vietnam’s packaging and labeling plants would be extremely difficult or not possible. Vietnam is currently experiencing a high rate of inflation, 8.3% annually (CIA, 2008). This makes it hard to produce and distribute any product because of fluctuations in price. The country has a high rate of unemployment (5.3%) and disposable incomes are very low compared to global contenders. Many citizens live under the poverty level (approximately 12.7 million citizens). Disadvantages are numerous and plans must be fully analyzed to make the entry smooth and minimize these risks as much as possible.

We chose to enter Vietnam’s beverage market even though the current disadvantages are numerous and risk is daunting. With the correct management and market research the current state of Vietnam is quite lucrative for a company committed to expanding their international market share.

Getting a product into the market and acquainting it with the society, especially young children and young professionals, builds brand loyalty for years to come. It gets the citizens started on using a new product before the market becomes too saturated and newer, comparable products are constantly introduced. Snapple should jump in and get the society of Vietnam hooked on its premium teas and fruit drinks before another company swallows this market.

As power and wealth continue to globally shift from west to east it is essential for companies to be aware of developing nations and possible markets that could yield financial reward as it is a slow, long, and learning process to enter any foreign market. As globalization continues to spread around the world firms that are committed to staying competitive and competent in their industry are have to look at potential for success outside American borders. It could prove beneficial to be a leader in taking over a foreign market that is projected to grow continuously and in a western style.

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To successfully market Snapple in Vietnam, relevant marketing campaign changes may need to be implemented. Traveling to Vietnam will help Snapple gain a better insight as to the target audience and help make the product more appealing to consumers.

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