Consequently, it is working out the Professional Marketing Plan to help the business achieve its objectives more efficiently and effectively, and inevitably regain their iron first reign on the soft drink industry as Number 1 had performed well as before. “Khong Do Green Tea” will be marketed as a unique ready-to-drink product while striving to reinforce the company’s status as the leader in innovation and successful product launches. The marketing strategies will enable to reach a market size of an estimated 8,688,300 people (targeted) with a forecasted sales growth prospect of 7. % over the next 4 years (711,333,530,900VND profits), while satisfying the needs of the still-unserved market for ready-to-drink Khong Do Green Tea. Success will be reflected by a sizeable capture of market shares within this market, while strategically carrying the company up to the top spot as the market leader in the ready-to-drink products segment of soft drinks. The Company will increase its market share through targeted advertising to increase the number customers who want convenience and are looking to have a rink of unique nature which will give them taste, energy and the nutritional benefits of tea.
Company Description
Brief description of the company The THP Group Company’s core undertaking is to benefit and refresh everyone it reaches. Founded in 1994, we are the Vietnam’s leading manufacturer, marketer, and distributor of alcohol, beer and beverage concentrates and we have produced about 20 beverage brands that make up for our portfolio so far. Our corporate headquarters are established in Binh Duong Province, Vietnam and we are holding local operations in over 50 provinces over the country.
Our activities cover all sectors of the beverage industry. We are the leading player in ranking number one in value for the ready-to-drink tea sector. Brief description of the new product, & strategic role in the future position of the company “Khong Do Green Tea” will be a bottled beverage and will be positioned as the only ready-to-drink Khong Do Green Tea product available on the market. The beverage will have a green tea base with enhanced fruit flavors (lime). It will bring an entirely unique drinking experience to its consumers.
It will present itself as a funky and unusual alternative to traditional tea while providing the great taste of authentic fruit juice in an attractive and convenient packaging. The strategic role of Khong Do Green Tea for THP Group Company is centered on three objectives: – To stay at the forefront as the market leader in innovative product introductions and successful product launches; – To strengthen and satisfy the needs of the more adventurous Generation Y[1] consumers with a new eye-catching and soft drink product. – To become the market leader in the soft drinks segment with increased market shares. .
Situaltion Analysis
Customer Analysis
Due to her active and quick-pace life, Trinh wakes up at 6:30AM every morning. Today, she puts on her trendy Lacoste Polo and Diesel Jeans, and of course, she always has her Nike shoes on. After having called her friends with her new Samsung camera phone, she leaves her apartment and goes to her gym by motorbike, while listening to her favorite music that she downloaded to her iPod. Trinh usually likes to work out before she has to head to University. On her way to school, Trinh knows she is thirsty and she feels the need for something very refreshing.
She stops at a convenience store next to the gym. Standing in front of all the choices in the beverages aisle, one particular bottle catches her sight. And she instantly recognizes the brand. She knows that this is a bottle of Khong Do Green Tea, because not only does her other friend often drink it, but she also heard them talk about this brand new product that THP Group Co. just launched. She also previously saw Khong Do Green Tea ads when she surfed on her favorite websites and on TV as well. She grabs a bottle, and takes a closer look at the nutritive information label.
She is very pleased to see that the new drink is more nutritive and definitely healthier than the other soft drinks that were available on the shelves next to it. The higher price of the product doesn’t bother him, since she perceives “Khong Do Green Tea” as a high-quality, functional product, which is manufactured by a well-known company. Plus, she did not feel like simply buying bottled water, or carbonated soft drinks. Because of her inclination towards more sophisticated tastes, and because she likes to try new products on her own, she thinks this bottle is worth the price.
Because of her busy schedule, Trinh prefers to save time as much as she can. Thus, she decides to buy two bottles. One to quench her immediate thirst, and another one that she wants to save for later in the day. She sees that the packaging is so convenient and easy to carry, and so when she exits the store, she puts the second bottle in her backpack. She attends all of her classes. During her break, she always hangs out with her friends. A lot of them are drinking from different “Khong Do Green Tea” flavors. She opens her second bottle, since she had such a great experience with the first one.
She liked that the beverage was so unusual, yet refreshing. The drink surpassed many of her expectations. She has no doubt about it. Trinh will continue to buy Khong Do Green Tea for its good taste, and also because at her age, she sees it is the coolest trend right now.
Market Analysis
Consumption: The sales volume for the ready-to-drink products segment in Vietnam has reached 1,200 billions VND in 2007 for a volume of 125. 9 million liters. This product segment has shown a steady growth since 2006: an increase of 13. 5% over a period of 3 years. The consumption rate per capita in 2007 has reached 3. 4 liters, which represents a 4. 0% increase compared to 2006. The growth of this particular market is largely due to a slow shift in consumer trends. – Trends: Through the early 1960s, soft drinks were synonymous with “colas” in the mind of consumers. In 2000, however, other beverages (from bottled water to tea) became more popular. THP Group Co. responded by focusing efforts on portfolio diversification. Today, while the soft drink industry’s value has increased in 2004, the volume sales of carbonated soft drinks has declined due to a large proportion of onsumers who are opting for the trend towards healthier alternatives in the functional drink segment (energy drinks, smoothies, milk & juice drinks, sports drinks) as well as 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. % in sales and 11. 0% in volume consumption by 2010.
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.
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. |Segmentation variables and breakdowns for Vietnamese consumer market of Khong Do green tea.
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).
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.
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.
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.
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.
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. an 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.
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.
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
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 d / 500ml bottle, the optimal price for free sugar green tea is from 5500 – 6000 d/ 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.
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.
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.
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 [2] 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.
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.
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.
