Page | 1 s3259052_NguyenQuangThong RMIT International University Vietnam Master of Business Administration Assignment Cover Page Subject Code: BUSM2412 Subject Name: Marketing for Managers Location & Campus (SGS or HN) where you study: RMIT Vietnam Title of Assignment: (In the form of a question) Assignment 3 Final Report (Individual) File(s) Submitted: BUSM2412_s3259052_NguyenQuangThon g_v1 Team Name Student names: Nguyen Quang Thong Student Numbers: s3259052 Lecturer and Group number: Ian Chaston; Kieran Tierney Assignment due date: 25th April 2016 Date of Submission: 25th April 2016 Late Submission Approval: No Number of pages including this one: 18 Word Count: (Main Content – excluding appendices) 1922 Page | 2 s3259052_NguyenQuangThong TABLE OF CONTENTS i. INTRODUCTION ...................................................................................................3 ii. SWOT ANALYSIS ................................................................................................3 iii. CURRENT STRATEGIES ......................................................................................4 a. Market segmentation ..........................................................................................4 b. Targeting ............................................................................................................5 c. Positioning map .................................................................................................5 d. Marketing mix strategies – 4Ps ..........................................................................5 iv. STRATEGY RECOMMENDATION ....................................................................9 a. Recommendations ...........................................................................................10 b. Impacts .............................................................................................................11 v. CONCLUSION ......................................................................................................15 vi. REFFERENCES ....................................................................................................16 vii. APPENDIX ............................................................................................................17 a. Table 7. Competitor benchmarking analysis ....................................................... Page | 3 s3259052_NguyenQuangThong INTRODUCTION While Unilever supplies three different brand names of detergent which clearly defines the target segmentation including Omo, Viso and Surf, P&G has only supplied Tide for many years. As a matter of fact in Vietnam market, see the table below, 74.3% of the market share were being dominated by Unilever and P&G was being ranked at 2nd (13%) and other competitors (12.7% ) in 2016. Brand Name Key players Brand share (% value) Company shares (% value) Sales (VND billion) Omo Unilever 69.4% 74.3% 12,032 Viso Unilever 2.8% Surf Unilever 2.1% Ariel P&G 7.0% 13.0% 2,105 Tide P&G 6.0% Other brands Other players 12.7% 12.7% 1,943 Table 1. Landry care by brand and key player in Vietnam (2015) Adapted from Euromonitor 2015 To change the situation, P&G had launched new brand Ariel in 2013, which is the direct competition to Omo. At the introduction stage, Ariel had gained positive sales, however, it is required Ariel to shift its strategy in term of marketing mix strategy due to the purpose of shifting the products in different quadrant of BCG matrix. This report is firstly to summarize the key highlighting marketing strategies as applied by the introduction of Ariel in Vietnam market and secondly to recommend the marketing strategies in the long-run. SWOT ANALYSIS The SWOT analysis of Ariel situational analysis in 2016 is adapted from ‘Laundry care in Vietnam’, ‘Consumer lifestyle in Vietnam’ and ‘Home care in Vietnam’ reports (Euromonitor 2015, 2016). Strengths Ariel is well-known for powerful washing strength via the five special enzyme technology Ability to provide full products portfolio Effective promotion mix strategies at the introduction stage Weakness Page | 4 s3259052_NguyenQuangThong Only Tide with small segmentation of middle-high income class Distribution via two primary channel: traditional whole sales/distributors and modern retailers which having less distributors and wholesales than Unilever Limited marketing activities to drive incremental sales activities Opportunities New increasing trend of using liquid detergent Consumers’ shopping habits shifts to modern trade such as convenience store, online shopping Strong growth of washing machines Environmental sustainable awareness of using less water to wash cloth Threats New players into liquid detergents both local and international brands Strong marketing activities from competitors CURRENT STRATEGIES Market segmentation Geographic Urban areas - especially top 6 cities Suburban and rural areas (especially Melkong Delta, Hong River Delta) Demographic: Shopping consumers that are family size 2-5 persons from mid to high-income (>$300 per month), especially family owns washing-machine at home. Psychographic Motives: convenience seekers (time-saving performance), health awareness (skin irritation, non- toxic unbranded detergents) Behavioristic Benefit sought: stain removal, whitening and bleaching, time-saving performance, fabric softeners User status: regular users with monthly usage rate Page | 5 s3259052_NguyenQuangThong Targeting Ariel targets to two group of consumers that - Washing cloth by hands: a large population of 75% - Washing cloth by machines: the rest of 25% population which shows double-digit growth of 25% in 2015 versus 2014. Positioning strategy Positioning map Figure 1. Ariel positioning map versus other competitors Marketing mix strategies 1. Product Products level Description Core benefits To remove many tough stains in one wash Actual product Brand The leading innovation brand in detergents around the globe Feature Two categories: powders, liquids Low High High Price Quality Low Page | 6 s3259052_NguyenQuangThong Different features: color protection, convenience (spot and stain remover), hand washing, water softeners Packaging’s Diversification of package size – bottle and poly bag 0.72KG/0.36KG/2.7KG/4.1KG/5.5KG Augmented product Not applicable at the moment Table 2. Three levels of product 2. Pricing Ariel follows Product-line pricing (Kotler & Armstrong 2003, p. 303) with different price steps across two different product categories (power and gel), three variants (Sunrise fresh/Downy Passion/Color Protection) and five different packaging sizes. Ariel Sunrise fresh Ariel Downy Passion Ariel Color Protection Power 211,000VND (5.5KG); 178,400VND (4.1KG); 115,300VND(2.7KG);34,700VND(0.72KG); 18,00VND (0.36KG) Gel 190,000VND (6KG); 175,000VND (4.1KG); 142,000VND (3.8KG); 120,000VND (2.7KG) Table 3. Ariel product line pricing strategy Page | 7 s3259052_NguyenQuangThong 3. Place Look at the map below, there will be a mixed distribution channel that Ariel focuses on two primary channels: traditional retail store and modern trade (supermarket). According to Nielsen 2012, the traditional retail store still dominates 78% of value sales contribution versus 22% from modern trades. Figure 2. Ariel place and distribution channel Page | 8 s3259052_NguyenQuangThong 4. Promotion Promotion elements Ariel’s practices Advertising 30s television commercials to reach vast of potential consumers. Key message is about ‘ outstanding stain removal in 1 wash’ and ‘#1 recommended brand by more top selling washing machine markers globally’ Sales promotion Sample – give free sample to consumers when they come to buy new washing machine Premiums – to give esteem voucher when consumers buy more than 249,000VND of P&G products Page | 9 s3259052_NguyenQuangThong Table 4. Ariel promotion mix strategies STRATEGY RECOMMENDATIONS Recommendations By conducting the Boston Consulting Group (BCG) Portfolio Matrix to identify the current competitive context of Ariel powder and Ariel Gel as two separate products in the market (see table 5) P&G products Key competitors Relative share to key competitor (2015) Market share of largest competitor (%) Market share % (2015) Value growth % (2015) Ariel powder Omo powder (Unilever) 0.11 48.75 5.25 9 Ariel liquid Omo liquid (Unilever) 0.084 20.65 1.75 25.1 Table 5.Adapted from Boston Consulting Group (BCG) Portfolio Matrix – Proctor and Hassard (1990, p. 14) Data source: Euromonitor (2015) Personal selling In-store personal-consultants, especially in supermarkets, to consult customers about product benefits and help customers in product selection E-marketing Ariel’s website (www.arielvietnam.com/vi-vn) is set up as the place to advertise new Ariel’s variants, its benefits and also the channel for end-users to interact, share feedback and experience Page | 10 s3259052_NguyenQuangThong Market Growth Rate 25% High 15% Low 5% 1.5x HIGH 0.7x LOW 0.1x Relative market share Table 6.Ariel positions in BCG portfolio matrix Ariel Gel Positioned as Question Mark because it is showing the market share 0.11 versus Omo Gel (as the biggest competitor) and relatively growth 25% vis-à-vis other detergent categories which is giving up to 50% of total detergent sales of P&G (Proctor & Hassard 1990; Stern & Deilmer 2006; Hedley 1977). According to Hedley (1977, p.12), Proctor and Hassard (1990, p.7), to enable the product to shift from Question Mark to Star, the Product development (or Product modification and improvement) is needed to gain more market shares and drive sales through the development of product competitive advantages itself. STAR QUESTION MARK DOG CASH COW Page | 11 s3259052_NguyenQuangThong Ariel Powder Positioned as Dog which is showing the market share 0.084 versus Omo Gel (as the biggest competitor) and relatively growth 9% vis-à-vis other detergent categories which are giving up to 30% of total detergent sales of P&G (Proctor & Hassard 1990, p. 16). According to Hedley (1977, p.12), Proctor and Hassard (1990, p.7), although Ariel powder advertised itself to be differentiated from Omo with outstanding washing technology, Ariel powder failed to reach the position of getting more market shares from Omo powder at the early launch phrase. Thus, it is suggested that Ariel powder can harvest and maintain the brand by minimizing and controlling the marketing activity expenses to a point where the sales of Ariel powder can maintain the market share and generate positive cash flow (Barksdale & Harris 1982, p.81). Then the left-over budget coming from Ariel Powder can be effectively allocated to Ariel Gel product development and other incremental marketing activities. Reasons Washing cloth by hands is still dominated 75% of detergent market shares (Euromonitor (2015) and powder is still the 1st choice to be chosen for washing cloth by hands. In term of pricing index, powder category is 20-30% cheaper than the liquid one which can be purchased by lower income group who is living in rural areas. Impacts to Pricing, Place and Promotion Product To make sure that Ariel Gel can execute the recommendation above successfully, the Product development needs to be taken into consideration by structuring the three levels of products as the table below. Page | 12 s3259052_NguyenQuangThong Products level Description Why to change Core benefits To remove many tough stains in one wash Keep as current Actual product Brand Ariel Gel Ariel Powder Ariel 3-in-1 pods Omo liquid portfolio is more about “matic technology” so Ariel already had introduced “3-in-1” washing technology globally but not yet in Vietnam Ariel liquid portfolio is now less than Omo liquid portfolio (table 7) thus if Ariel need to maintain and gain more market share by introducing new products in the portfolio Quality Bring new 3-in-1 technology 3-in-1 technology is well-known for spot and stain removers that give washing ball to put directly to washing machine. To catch the increasing of using washing machine trends, liquid detergent (25% increasing year-on-year and environmental sustainably awareness Feature Bring the ball capsule detergent Provide more wide range of variants (by Improve on feature by extending the product line The growth of fabric softens is also two digits which Downy is offering 9 variants, Page | 13 s3259052_NguyenQuangThong combining between detergents and fabric enhancers) in fact, Ariel had only introduced 2 out-of9 variants so Ariel should launch the rest of fabric enhancer variants Packagin g’s New packaging design (pouch, plastic box, pods) New packaging size To catch potential consumer’s attention towards new product line Diversify the consumer’s needs Augmented product Consulta nts Hotline and Facebook To give real-time consultancy and 2-way communication between consumers and consultancies.. Pricing As a consequence of introducing new product feature, product line and product packaging’s, product bundle pricing is to escalate the new demand on new variants in the same product line so consumer can experience the benefits of other product variants (fabric enhancers) at a reduced price (Kotler & Armstrong 2003, p. 305). Ariel gel big size 4KG with small size Ariel powder Downy 0.36KG, at 10-15% discount Page | 14 s3259052_NguyenQuangThong 3-in-1 Ariel pod big size with small size 0.9 KG Downy pouch , at 10-15% discount. Place The two main channels of modern trade (super market) and traditional retailers which are defined as one of the weakness, taking the opportunity of extending the product development, there will be two new approaches that Ariel can concentrate on. Figure 3. Ariel new place and distribution channel Focus on conveniences store/minimarket as adapted from Nielsen 2012, ‘Vietnam Grocery report 2012’ that the convenience store and mini-market is more and more preferable from consumers (Figure 1) with growth rate of 15% year-on-year. Page | 15 s3259052_NguyenQuangThong Shopping online is gaining momentum with the increasing of 12% quarter-on-quarter (Euromonitor 2016) that Ariel can set up a retailing contact with those Vietnamese online shoppers retailers such as Amazon, eBay Vietnam, as well as local giants such as Lazada, Zalora, Muachung and Chotot.vn. Figure 4.Adapted from Nielsen 2012 ‘Vietnam Grocery report 2012’. CONCLUSION After 03 years of launching the new brand name –Ariel in Vietnam, it is recognized significant market gain of 7% by end of 2015. However, in order to sustain and possibly enhance Ariel’s growth in Viet Nam market, it is proved to follow the Product development by changing three levels of product in Product strategy. This will also result in the change of pricing, place and promotion. In a flash, Product-line pricing strategy and Product bundle-pricing strategy will further support business and drive the net of sales. Next, exploring the new modern trade of mini-market, convenience store and the e-commerce of purchasing online are the two trends, is recommended in Place and distribution, to mesh with consumer’s shopping trends. And lastly, advertising, sales promotion, personal selling and e-marketing can be continuously focused and remained as the selective vehicles to convey and build Ariel’s image and awareness to consumer. Page | 16 s3259052_NguyenQuangThong REFFERENCES Euromonitor 2015, ‘Laundry care in Vietnam’, Passport, Euromonitor, July 2015, Vietnam. Euromonitor 2015, ‘Home care in Vietnam’, Passport, Euromonitor, July 2015, Vietnam. Euromonitor 2016, ‘Consumer lifestyle in Vietnam’, Passport, Euromonitor, February 2016, Vietnam. Pride, WM & Ferrell, OC 2010, Foundations of marketing, 4th edn., South-Western: Cengage Learning, United State of America. Lamb, CW, Hair Jr., JF, & McDaniel, C 2010, Marketing, 11th edn, South-Western: Cengage Learning, Australia Kotler, P & Armstrong, G 2003, Principles of marketing, 10th edn., Pearson Education, United State of America. Nielsen 2012, ‘Vietnam Grocery report 2012’, The Nielsen Company, Vietnam. Proctor, R A & Hassard, J S 1990, ‘Towards a New Model for Product Portfolio Analysis’, Management Decision, Vol. 18, Issue 3, pp. 14-17. Anderson, C R & Zeithaml, C P 1984 ‘Stage of the Product Life Cycle, Business Strategy, and Business Performance’, Academy of Management Journal, Vol. 27, No.1, pp.5-24. Hedley, B 1977 ‘Strategy and the “Business Portfolio”’, Long Range Planning, Vol.10, pp.9-15. Stern, C W & Deilmer, M S 2006 ‘The Boston Consulting Group in Strategy’, The Boston Consulting Group, John Wiley & Sons Inc., New Jersey. Barksdale, H C & Harris C E 1982’ Portfolio Analysis and the Product Life Cycle’, Long Range Planning, Vol.15, No.6, pp.74- 83. Page | 17 s3259052_NguyenQuangThong APPENDIX a. Table 7.Competitor benchmarking analysis Experience performance factors Importance [Omo] [Ariel] Product features Extremely [Good] Color protection Spot and Stain Removers Fast washing [Excellent] Color protection Spot and Stain Removers Fabric softeners Whitening Product portfolio Extremely [Excellent] 02 categories (washing by hand or washing machine), 02 washing machine variants (front and top loader), each categories has 5 variants [Average] 02 categories (liquid/powder), each category has 3 variants Brand reputation Very [Excellent] Number #1 recognized in Vietnam [Good] #1 recommended brand by more top selling washing machine makers globally but new in Vietnam Advertising Very [Excellent] Heavily advertising activities given by strong budget [Average] Limited budget Pricing Very [Good] Competitive pricing by providing different pricing strategy [Good] Product pricing and product bundle pricing are two main strategies Sales Promotion Very [Good] Various promotion mix strategies [Good] Various promotion mix strategies