Nguyen Thanh Ha – s3325167

Nguyen Thu Giang – s3310197

Hoang Thu Trang – s3325076

Hoang Tuan Duong – s3324115

Pham Minh Chinh – s3325106

31/08/2011

Marketing Plan: Vifon Cup Noodles

Group 2 – Kieran Tierney

Contents1. EXECUTIVE SUMMARY......................................................................................................................................................... 3

2. CURRENT MARKETING SITUATION...............................................................................................................................4

2.1. Introduction...................................................................................................................................................................... 4

2.2. Situation analysis........................................................................................................................................................... 4

2.2.1. Microenvironment................................................................................................................................................ 4

2.2.2. Macroenvironment............................................................................................................................................... 6

3. SWOT ANALYSIS..................................................................................................................................................................... 9

4. OBJECTIVES............................................................................................................................................................................ 10

4.1. Corporate objectives.................................................................................................................................................. 10

4.2. Financial objectives.................................................................................................................................................... 10

4.3. Marketing objectives.................................................................................................................................................. 10

5. SEGMENTING, TARGETING AND POSITIONING....................................................................................................11

5.1. Segmentation table..................................................................................................................................................... 11

5.2. Targeting......................................................................................................................................................................... 11

5.2.1. Evaluating Market Segment........................................................................................................................... 11

5.2.2. Target marketing strategy.............................................................................................................................. 12

5.3. Positioning...................................................................................................................................................................... 12

5.3.1. Positioning map................................................................................................................................................... 12

5.3.2. Possible value different and competitive advantage..........................................................................12

5.3.3. Choosing the right competitive advantages............................................................................................13

5.3.4. Overall positioning strategy...........................................................................................................................13

5.3.5. Positioning statement....................................................................................................................................... 14

6. MARKETING MIX STRATEGIES......................................................................................................................................14

6.1. Product strategy........................................................................................................................................................... 14

6.1.1. Brand Life cycle stage....................................................................................................................................... 14

6.1.2. Levels of Products and Product strategy..................................................................................................15

6.1.3. Brand Development Strategies – Line extension..................................................................................16

6.2. Price Strategy................................................................................................................................................................ 16

6.2.1. Product Mix Pricing Strategies......................................................................................................................16

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6.2.2. Price-Adjustment Strategies..........................................................................................................................17

6.3. Place strategy................................................................................................................................................................ 17

6.3.1. Administered Vertical Marketing System................................................................................................17

6.3.2. Multiple distribution channels......................................................................................................................18

6.3.3. Channel design..................................................................................................................................................... 19

6.4. Promotion....................................................................................................................................................................... 19

6.4.1. Promotion mix strategies................................................................................................................................19

6.4.2. Promotion tools................................................................................................................................................... 20

7. ACTION PROGRAM.............................................................................................................................................................. 23

8. CONTROL PROGRAM.......................................................................................................................................................... 25

REFERENCES.............................................................................................................................................................................. 26

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1. EXECUTIVE SUMMARY

Vifon (Vietnam Food Industries Joinstock Company) seeks to provide a perfect solution for an increasing and changing demand of a targeted market segment through our cup noodle brand Ngon-Ngon. Our demographic is young, busy office workers aged 24 to 34 with middle income ranging from 3 to 5.5 million VND per month who embrace simplicity, convenience and quality products at competitive prices. The purpose of this plan is to illustrate our targeted market segment and outline the strategies, approaches and programs that we use in order to achieve our objectives.

We are not just any instant noodle company. We are one of the pioneers in introducing cup noodle products to the Vietnamese market and our ambition is to attain 100% customer satisfaction and build long-term customer relationships. Thus, to make the most out of this advantage, we aim to perform large scale promotion and distribution to raise our brand awareness and gain a brand share of 8.4% by the end of next year before the market competition becomes too harsh. We also hope to achieve a growth of additional 23% in sales revenue compared to the last year. To accomplish these objectives, Push and Pull Promotion strategies with a carefully blended mix of promotion tools (advertisements, direct marketing, public service activities and sales promotions) will be used to drive up demands from customers at the same time pushing goods down the channels in the most effective way. This will also improve customer awareness of our brand and confirm its position. Beside heavy promotion, our company also plans to intensively expand our distribution network following Multichannel distribution system in order to optimize the availability of products to our customers.

Nonetheless, our objectives can only be accomplished successfully with well-developed marketing mix strategies for our products and their prices as well. In detail, we will apply the Product Line Extension strategy and introduce more varieties of noodle types, flavours and cup sizes to offer more choices and satisfy a wider range of customers. Product-mix pricing and Price-Adjustment strategies are well integrated to create a “more for the same” brand perception as we concentrate on satisfying our targeted segment with the best deals at competitive prices through niche marketing. Our selling prices range from as low as 4900 VND to the highest 8500 VND. Products at lower prices aim at economic customers while products with a lot of extra benefits (extra meat package and sauce, bigger size) at higher prices target consumers who prefer quality over price and they are predicted to be perceived as “good value”. This will grant us another advantage over our competitors in the extremely competitive environment where all market players strive to get a bigger piece of the share market pie and the economic downturn with consecutive financial crisis have seriously affect consumers’ confidence and purchasing behaviour.

These key strategies are the highlights of the plan and play crucial roles in helping us accomplishing our objectives in a one year timeline through building customer satisfaction and brand loyalty. We firmly believe that it is possible for us to deeply and beneficially penetrate this marketing niche.

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2. CURRENT MARKETING SITUATION

2.1. Introduction

Having a high reputation of 47 years of operation in the Vietnamese noodle market, Vifon has been able to achieve certain success and gained a relatively good share in the Vietnamese instant noodle market. Vifon products are distributed across the whole country through extensive distribution channels with 14 exclusive distributors, 500 wholesalers and over 32000 local shops and exported to over 50 countries around the world, bringing over 10% of the total sales revenue for the company every year.

However, with the constant growth in demand, the promising instant noodle market is becoming more and more competitive. From the mid-90s, due to too much concentration on exporting and an inability to compete, Vifon started losing its market share slowly. In 2005, in realising the changing needs of a particular segment of urban office workers, Vifon introduced a new product line of cup noodles to the market under the brand name “Ngon Ngon”. This was a swift and wise decision in the situation where there has been a continuous rising demand for convenient foods and the cup instant noodle market is still underdeveloped due to its “premium-segment” prices and limited number of offers. The brand has since then been proved to be one of Vifon’s best competitive advantages and has been dominating the cup noodle market with a significant brand share of 3.9% and an average growth in sales revenue of 80 billion VND per year, becoming the leader of the domestic cup noodle market.

Recognising this advantage, we aim to use Ngon-Ngon as one of our main focuses to raise our sales, our market share as well as gain back the lead position in the instant noodle market in this coming year.

2.2. Situation analysis

2.2.1. Microenvironment

a. CustomersVifon’s cup noodle products concentrate on 3 types of customer markets:- Consumer Markets: purchase goods from retailers. Our targeted consumers are mainly young office workers with middle to upper middle income living in all areas of the country but mainly those from urban areas that do not have a lot of time or could not be bothered to cook a proper meal, age ranging from 22 to 34. - Reseller Markets: Mainly supermarkets and over 32000 local stores across the whole country. - International Market: the company products have been exported to over 50 countries including Germany, Malaysia, and the USA ...etc. The export sales augment averagely 10% per year (Vifon, N.D.)

Strength  : diverse groups of customers contributing to sales growth Weakness : The domestic market has not been successfully penetrated due to past high

concentration on exportation.

b. Competitors

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The biggest competitor of Vifon at the moment is Vina-Acecook. The Japanese company Acecook penetrated the Vietnamese noodle market in 1995 via a joint venture with Vifon. With the advantages of having 100% foreign investment of 6 million dollars and coming from Japan – the birth place of instant noodles, Acecook dissipated from the incorporation with Vifon in 2004 to become a new company Vina-Acecook and quickly positioned itself to occupy 42% retail value share of the market. Since then, Vifon has lost its market share down to only 11.9% in 2009 (Euromonitor International 2010). Vina-Acecook currently has 2 cup noodle product lines (Modern and 24h) with a total of 10 flavours, providing better chances to satisfy a wider segment of customers while Vifon only has 1 cup product line (Ngon-Ngon) with 4 flavours. Even though Ngon-Ngon has lost 1.7% of the market share since 2006, it still occupies a 3.9% of the market share and is dominating the cup noodle market. Vina-Acecook cup noodle brands have not been able to gain a noticeable market share (Euromonitor International 2010).Vifon has always been in the top 10 of the top 100 “High Quality Vietnamese Products” and has been able to gain various achievements such as the international certificate HACCP, the Honour Flag by Prime Minister, successful application of ISO 9001:2000 quality control. In 2010, one of Vifon brand has received the Global Food Industry Award (Vifon n.d., Baomoi 2010)

Strengths: o Gain customers’ preferences, currently dominating the cup noodles’ market with lower

price compared to the competitor ones.o High quality reputation.

Weaknesses o Limited fund. o Limited product design compared to the competitors.

c. MKT intermediaries

Our company has an extensive distribution channel with 500 retailers across the country including 14 exclusive distributors in 6 big cities (Ha Noi, Hai Phong, Vinh, Da Nang, Dong Nai and Can Tho) and around 32000 local shops (Vifon 2011). Vifon focuses on both modern distribution channels including supermarkets (Citimart, Fivimart, Intimex, Big C, Metro...) and traditional channels (wet markets, local grocery stores) which are still predominant and contributed to 89% of total sales revenue in 2010 (Euromonitor International 2010). However, Vifon still has not been able to develop alternative distribution channels, namely selling directly to businesses through our sales force and to consumers through online channel. The later is particularly important in facilitating customers’ purchases and reaching our consumers effectively in an information technology era.

Strength: Large distribution network Weakness: Inadequate distribution channels (only 1) to fully cover the marketing niche.

2.2.2. Macroenvironment

a. Demographic environment

Vietnam has a young and dynamic population which has grown progressively by 1 million per year since the 90s (post-war). There were approximately 20.15 million people aged between 22 and 34 in 2009 and 88.7% of people this age group participate in the labour force. This group is also our targeted market as most of them have jobs and are busy so they have limited time to prepare and serve meals (Euromonitor 2010, Nielson 2010).

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Figure 1: Adapted from Vietnam Employment Trend 2010

Opportunity : Increasingly large targeted market segment

The rise of Vietnamese economy and the family planning legislation have created young generations who are becoming more westernised, busier and have more freedom to make decisions, which in turn causes a sharp fall in the number of traditional “four-generation” households and a significant rise in the number of small –sized families. This generation with mostly single people and some small families in modern busy society have particular high demand in packaged foods

Opportunity : Increase in demand for fast and simple meals (convenient foods). Noodles were among the most popular packaged foods

Euromonitor report (2010) also reveals that Vietnam is going through rapid urbanisation. From 2004 to 2009, the urban population has grown 9.6 times faster than the suburban population’s. This geographical shift suggests that in 3 years time, 31% of the Vietnamese will live in metropolitan areas, meaning there will be more purchasing power, especially in convenient foods, in the big cities like Ha Noi, Ho Chi Minh, Da Nang, Can Tho and Vinh. The majority of the working population in these big cities that we aim to serve are professionals, namely office workers. They have long working hours with short lunch breaks and limited amount of time to prepare meals.

Opportunity : The urban market can still be potentially deeply penetrated due to the new geo-demographic market.

Threat : The promising unsaturated market means that there will be harsher competition in the industry among businesses

b. Economic environmentIn 2010, the GDP growth rate of the economy in Vietnam was 7% and this promises a growth of minimum 12% by 2013. Average urban household income has also increased significantly by 158% from 2002 to 2008, causing a gradual growth of 44% of the middle class over the period of 7 years (Nielsen 2009, Nielson 2011, TNS 2010). We aim to serve this growing middle class with the income at the lower end of the range (from 3.5 to 5 million VND per month) as although our products cost much less than proper meals in restaurant, they belong to the premium segment of instant noodle with the highest price range. People with income above this range often choose better solutions such as eating out in restaurants

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Opportunities : Increase in purchasing power of the growing affluent consumers group (middle class) will lead to increase in sales of convenient (packaged) food, particularly quality products.

Figure 2: Adapted from Nielson Omnibus (Modern trade and the Retail Business) 2009

Nonetheless, Vietnam has one of the highest inflation rates in the world. Inflation was shockingly high in 2008 (23%). Although the figure has dropped significantly to 7% in 2009, it started to increase dramatically again to 12% in 2010. Sharp increases in electricity, fuel and gas prices have seriously restrained the economic growth (60% reduction in purchasing power) as well as consumers' confidence. 36% of the consumers interviewed look to switch to cheaper groceries or seek more valuable products . (Nielsen 2011)

Opportunity : offer products with more benefits at competitive prices and various selections of economy (value) packs

Threats : insecure economy and financial crisis negatively affect the market and spending patterns

Figure 3: Reproduced from Nielsen Vietnam Grocery Report 2010

c. Cultural environment

Noodles are a staple diet in many Asian cultures. According to the World Instant Noodles Association report, Vietnam is 4th on the list of highest demanding countries for noodles and the demand is still growing at a steady rate, providing a promising market for noodle manufacturers (WINA 2011).Vietnamese people are increasingly concern about health. 95% people interviewed considered health as their top priority, within which 88% of people interviewed said that they are ready to pay a higher price for healthier foods (TNS 2010)

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Opportunity : Promising market for organic, healthy products.

Consumers have changed their perceptions about Vietnamese goods in a positive way. “Vietnamese people use Vietnamese brands” is considered to be a major trend in the purchasing behaviour pattern. 90% of consumers in HCMC and 83% in Hanoi said they will possibly/definitely buy more Vietnamese goods ẻ(Nielsen 2011).

Opportunity : Advantage to position better in people’s mind and increase the market share.

The research of Nielson (2011) shows that advertising has dramatic effects on Vietnamese people (87%) within which 56% are loyal to their brand but actively search for promotions. Especially during this financial crisis, 51% consumers claimed they would buy more products on promotion (Neilsen 2011).

Opportunity : retaining loyal customers as well as attracting new customers by advertising and offering more promotions.

d. Natural environmentVietnam noodle production relies significantly on imported wheat from China. Unfortunately, China’s worst drought has been continuing throughout the spring; threatening Vietnam wheat supply for noodle production. Natural disasters are happening more frequently around the world in recent years, posing risks to the business

Threats : unstable prices and supply due to the shortages of wheat in China.

Electricity supply for the country depends on the hydroelectric power which is the only inadequate source. This in turn produces unavoidable power cuts during the long dry season in Vietnam every year. The incident causes loss to many businesses.

Threats: loss and reduction in production capacity due to power cut without prior warning.

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3. SWOT ANALYSISStrengths

1. Diverse groups of customers 2. High quality reputation3. Current popularity and domination of the cup noodle market.4. Large distribution network

Weaknesses 1. The market has not been successfully penetrated.2. Restricted resources (fund)3. Limited product designs4. Inadequate distribution channels

Opportunities

1. Increase in demand for convenient products from large and growing targeted market from urban areas2. Rise of household income to shop for more quality goods3. Customers are price-sensitive during the financial crisis time4. Significant effects of advertising and promotions during recession5. Promising market for Vietnamese brands and healthy, environmental-friendly products

S-O Strategies

1. Extend the distribution network to increase products’ availability to customers 2. Cut down unnecessary additives and improve the quality of ingredients to produce healthy goods.3. Professional design to create environmental-friendly packages4. Wisely invest in promotion using various efficient advertising media channels (internet, magazines, outdoors) & promotion tools (sample, coupons, premiums, patronage rewards & games) as well as build good relationship with the public to drive up sales and enhance brand position

W-O Strategies

1. Penetration Pricing strategy is integrated with product mix pricing (bundle pricing) and adjustment pricing (discount & psychological pricing) strategies to create “valuable products” thus deeply penetrate the marketing niche and gain more market share.2. Extend the product line by adding more variety of noodles, flavours and cup sizes to cover more shops’ shelves and satisfy various demands to offer more values/benefits.3. Apply multichannel distribution model- create more channels (online, sales force) at the same time extend the existing channel to effectively reach consumers

Threats

1. Extremely competitive market2. Spending pattern change due to financial crisis 3. Shortage of raw material (wheat) supply4. Constant uninformed power cut creating loss and reduced production capacity

S-T Strategies

1. Invest more in R&D by carrying on surveys with free samples for consumers to find out preferences in different geographic areas to make changes2. Heavy promotion and PR (public service activities, press conference etc) to increase customers’ awareness of the brand

W-T Strategies

1. Choose the right brand position (more benefits for the same price) to compete with other brands during this recession time2. Create bundles of products for cheaper prices, this also encourage consumers try different products of our company3. Monitor the environment closely to

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3. Use push strategy to maximize market coverage and cast out weak competitors.

be able to swiftly adapt with its changes

4. OBJECTIVES

4.1. Corporate objectivesTo be the leader in the instant noodle industry in term of percentage market share, value proposition and sales growth.

4.2. Financial objectivesThe average growth rate in sales value of Ngon-Ngon up to this point is 16.25%. This year, we aim to push it up to 23% compared to the last year’s figure and establish more distribution channels.

1st September 2011 – 1st

February 20121st February 2012 – 1st September 2012

Growth in sales revenue(Compared with last year)

15% 23%

Channel

Resellers 87% 77%

Online 1.5% 3%

Sales force 11.5% 20%

Figure 4: Expected sales revenue by February 2012 and August 2012

4.3. Marketing objectivesIncrease in brand share- our current brand share is 3.9% (Euromonitor 2011)

By February 2012: aim to increase by 2% to occupy 5.9% in brand share By August 2012: increase by 4.5% to 8.4% in brand share

Increase in brand awareness – assessed by rank position in top 20 Vietnam’s largest food companies and in top 1000 Vietnamese largest enterprises (Bach Thien Media 2011)

By February 2012: rank the 8th in top 20 and 200 in top 1000

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By August 2012: rank the 3rd in top 20 and 120 in top 1000 Maintaining current rank in top 10 high quality products of Vietnam (Vifon 2011)

5. SEGMENTING, TARGETING AND POSITIONING

5.1. Segmentation table

Variables Fields Content

GeographicCountry Vietnam

RegionsMainly 6 big cities (Ha Noi, Ho Chi Minh, Hai Phong, Da Nang, Vinh, Can Tho)

Demographic

Age 22-34Family life cycle Young, single, some married

Gender Both male and female

Occupation Officials

Income VND 3,500,000- 5,000,000/month

Social class Mainly Middle, some upper Middle

Psychographic Lifestyle Simple, Busy (office working)

Personality Economical, Active

Behavioural

Occasions Regular occasions

Benefits Convenient, affordable, quality

User status Potential, first time, regular, heavy users

User rates Light, medium and heavy users

Loyalty status None, medium, strong, absolute

Readiness stage Unaware, Aware, Interested

5.2. Targeting

5.2.1. Evaluating Market Segment

a. Segment size and growth

According to Vietnam Employment trends 2010 report, the average labour force participation rates from 22 to 34 years old was among the age groups with highest participation rate (88.7%)

In 2009, we had approximately 16.3 million people in jobs with incomes ranging from 3.5 million to 5 million VND, aged from 22 to 34 - a 13.2% increase compared with the figure in 2007 and this young population will continue to grow steadily. These figures show a steady rise in size of our large target market.

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Moreover, cup noodles have seen the fastest growth in instant noodle category (17%) and still have a lot more potential for growth due to the rising demand for packaged/convenient groceries from single people and small-sized families in a busy, modern society (Euromonitor International 2010)b. Segment structural attractivenessLevel of competition

We are in an extremely competitive market with many national and international competitors due to the characteristic of the “super category” (Food-FMCG)

The bar has been raised even higher in time of economical crisis when people are well aware of the recession and take a lot of effort to compare prices versus benefits of similar products prior purchasing

5.2.2. Target marketing strategyAfter evaluating market segment and consider our situation (weaker position) and well as resources (limited fund), concentrated (niche) marketing seems to be the best solution for us. We try to focus on serving and satisfying only 1 segment of customers to increase the number of loyal customers.

Figure 5: Reproduced from: Kotler et al. 2009

5.3. Positioning

5.3.1. Positioning map

Figure 6: Positioning Map

We aim to position our brand as a high quality brand with wide range of varieties (more benefits) at competitive prices.

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5.3.2. Possible value different and competitive advantage

a. Product differentiation Competitive quality based on healthy ingredient manufactured with the strictest quality standards

of Vietnam and of the world such as the HACCP, ISO 9000:2000, ISO 9001:2008 and Global Food Industry Awards

Minimize the use of additives and only the ones that are listed in Ministry of public health’s allowed list

Offer customers wide selections of sizes, ingredients and flavours that suit Vietnamese people’ preferences with competitive prices.

b. Service differentiation Official website with high level of loading information and graphics, food safety and sanitation

column available to update the latest information about current health issues and concerns. Customer can leave the email address to receive latest promotions and offers. Customer can contact the company through email on the website, phone or fax. Hotlines for consultant services available in Hanoi, HCM and Danang

c. Channel differentiation 500 authorized retailers covering 64 provinces of Vietnam with more than 32000 local shops

(Vifon.com.vn) Customers can purchase large orders online through the official company’s website and choose the

delivery options at their own cost.

d. People differentiation Senior staff collaborates with young & enthusiastic employment. Hold training courses frequently.

e. Image differentiation Products for customer health Products are environmentally friendly

Brand value benefits of public and society (doing charity works, creating jobs for the locals, offering award scholarships)

5.3.3. Choosing the right competitive advantagesBased on analysis of the differences between Vifon and its competitors, 3 big competitive advantages that we should consider most are:

Product differentiation Channel differentiation Image differentiation

Vifon is trying to provide a first-choice solution for busy people with quality, healthy and environmental-friendly products that are highly available and affordable.

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5.3.4. Overall positioning strategyBy practicing a "more for the same" value proposition, we hope to become the first-choice solution for busy customers who embrace convenience, healthiness and competitive prices. Our current products' prices are cheaper than the competitors' ones. We will extend the product line to provide premium products with more benefits (more flavours and type choices, more nutritious -extra pack of meat, attractive design and discount for buying in bulk) at a similar price to our competitor's.

5.3.5. Positioning statementTo all young busy professionals who feel time, price and food quality seem to be insolvable problems, Ngon-Ngon is a convenient, economic and healthy solution for consumers with a variety of different flavours and noodle types based on the very traditional Vietnamese cuisine, allowing you to enjoy your meal while at the same time working efficiently. Let Ngon-Ngon inspire and set you free to succeed now!

6. MARKETING MIX STRATEGIES

6.1. Product strategy

6.1.1. Brand Life cycle stage

Figure 7: Reproduced from Euromonitor 2010

Ngon-Ngon cup noodles’ sales have increased progressively by average 77.5 billion VND per year. Between 2005 and 2009, its sales almost doubled from 372.85 billion VND to 683.07 billion VND. This can be explained by the increase in people and brand awareness as well as the rise in consumption of convenient products in busy modern society.

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According to Euromonitor International report (2010), noodles continue to grow strongly and instant cup noodles are seen to have the fastest growth in sales (20%). However, the instant noodle sector in Vietnam has not yet reached the maturity and is experiencing tough competition among companies to fully penetrate the market. This indicates that we are in the growth stage of our brand life cycle with a low market share (3.9%) but high growth rate. It also confirms our brand position in the BCG Grow-Share matrix as a question mark and we will need to invest efficiently to build it into a star.

From the analysis above, we have developed appropriate strategies for our products: Product strategy : Extend the product line with varieties of noodle flavours, noodle types, cup sizes,

produce healthier noodles (plus meat package, minimal use of additives) and improve the packaging design to cover more supermarket shelves and satisfy wider range of target consumers.

Price strategy : Use the Penetration Pricing strategy as our sales increase which in turn reduce the production cost per unit, we could add more benefits to the product and still keep the price at a competitive level compared to our competitors to gain more market share.

Promotion : Use both Push & Pull promotion strategies to create demand as well as more brand interest and awareness. Persuasive advertising will be used intensively to attract more customers.

Place : Expand the distribution network using Multichannel Distribution and Intensive Distribution strategies to reach target consumers effectively

6.1.2. Levels of Products and Product strategy

Level of product

Detail of product Product Improvement

Core benefit

“Simple and quick solution for busy lifestyle” “ Let’s go healthier and tastier”

Actual product

Features

- Convenience- Affordable- Favourable taste

- Focus more on healthiness- Improve taste quality and variability

Design- Noodles made from wheat flour with dry vegetable, oil and seasoning

- Healthier ingredients: 1 more separate package of meat with sauce.- More varieties: rice vermicelli, potato noodles, cellophane noodles- More serving method: with water or stir-fry with sauce- More flavours: Thai hot pot, Vegetable, Seafood

Packaging

- Plastic cup 60g- Separate packages for different ingredients.1 fork included- Different colours for different flavours.

- 3 more different sizes 90g, 120g and 150g- Extra plastic lid to keep noodles warm or for later use- Use paper cup with PE liner (10% biodegradable) to lessen the environmental impact and improve the heat-proofing property.- Important information highlighted (no trans-fat, no food colouring tartrazine or

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MSG, nutrition values)

Quality level

High quality, have achieved - Top 10 of top 100 “High Quality Vietnamese Products” the whole time- HACCP and ISO 9001-2000 certificate- International food standard- VN best quality certificate- Globalfood award 2010

- Improve the quality by adopting more modern technology, using more natural ingredients and minimizing the use of unnecessary additives (especially MSG and gums)

Augmented product

Installation- Instructions on how to prepare and serve the products- Hotline service in HCMC

- Provide more online service and more hotlines for Hanoi, Danang Vinh and Can Tho

After sale service

- Customer consultant service (phone, fax, email)

- Provide more consultant service lines

Warranty- Production date- Expiration date

- Exchange and refund for under-qualified products

Delivery - Not available Provided for large orders within the cities.

6.1.3. Brand Development Strategies – Line extension

Strategy Brand Product DetailLine extension

Existing Line extension

Introducing more variable products in term of size and ingredient, flavour and form: - Cup sizes ranging from 60g – 150g for wider selection. - More natural and healthy ingredients.- 8 different flavours: chicken curry, chicken, pork, beef, tom-yum, Thai hot pot, seafood and vegetables.- 4 variety of noodles wheat noodle, rice vermicelli, potato noodles and cellophane noodles -2 forms of noodles: normal and stir-fry noodles.

6.2. Price Strategy

6.2.1. Product Mix Pricing Strategies

a. Product line pricingAt present, Ngon-ngon cup noodles with 4 different flavours cost around 5000 VND per cup and our company is trying to practice good-value pricing strategy to offer consumers quality products with a wide range of choices at fair prices.

The company should set different prices for the extended products in the product line. Specifically, bigger sizes of the basic noodles - 90g, 120g and 150g cups will cost 5900 VND, 6900 VND and 7500 VND respectively. Noodle cups with extra package of meat or sauce for “stir-fry” flavour will cost 1000 VND extra.

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b. Product bundling pricingIn order to promote the sales of our products as well as encourage customers to experience different products of our company that they might not buy otherwise, we will combine several products and offer the bundle at a lower price to save from 3000 VND to 7000 VND. The basic bundle will contain

A set of 6 cups with one pack of chili sauce, soy sauce or soup powder of different flavours (these products are frequently used when serving noodles)

OR: A combined set of cups with different sizes, flavours or types of noodles.

6.2.2. Price-Adjustment Strategies

a. DiscountsVifon should apply the Discount and Allowance Pricing strategy by:

Giving promotional allowances to reward resellers in participating in advertising and sale support programs. By doing this, our products will be pushed down the channels much more efficiently

Giving customers lower prices (discounts) when they purchase the products in bulk. For example, every purchase of 4 packs of 6 noodle cups will give customers 1 free cup of the same size of any type or any flavour they wish.

b. Psychological PricingIn a competitive market and current financial crisis situation, psychological pricing play an important role in drawing consumers’ attentions. We will price our current basic product (60g) 4900 VND instead of 5000VND. Similarly, the extended products will be priced 5900 VND, 6900 VND and 7500 VND as mentioned above. These will be more likely to be seen as a bargain price compared to our competitors’ prices.

c. Promotional PricingVifon should coordinate well with its retailers to perform this strategy effectively. Our distributors will give chances to customers to purchase our products at lower prices for a short amount of time. The frequency of the promotions will need to be high enough to raise customers’ loyalty level and attract potential buyers but not too often to just raise the numbers of deal-prone customers up. Ideally, we offer discounts once every quarter during the first weekend only in the big supermarkets

6.3. Place strategy

6.3.1. Administered Vertical Marketing System Our company can be considered powerful with regard to the market share. To deliver superior value in the products of Ngon-Ngon to the customers, Vifon needs to maintain a tight relationship with each stage of its channels, particularly its downstream members including wholesalers and retailers who make up the dominant channel that deliver our goods to our proliferating segment of customers. As a result, Administered vertical marketing system will be the optimal solution.

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Figure 8: Reproduced from Kotler et al. 2009

6.3.2. Multiple distribution channels

Besides strengthening our main distribution channel, we also need to apply the concept of “Multichannel distribution system” to efficiently reach our target market.

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Figure 9: Reproduced from Kotler et al. 2009

6.3.3. Channel design

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Figure 10: Adapted from Kotler et al. 2009

6.4. Promotion

6.4.1. Promotion mix strategies Push – Pull strategies: Our brand is in the growth stage of the brand life cycle where promotion plays a crucial role in increasing sales. Since our business relies mainly on the Business-to-Business practice where we distribute our products through a wide network of market intermediaries, we will use Push strategy to maintain and improve the connection with our intermediaries in order to push our goods downstream faster and more efficiently. However, we also need to apply Pull strategy to drive up demand and promote our products to consumers. These 2 strategies when integrated properly will be a powerful promotion tool.

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6.4.2. Promotion toolsa. Advertising

Setting Advertising Objectives We are facing a high level of competition in the domestic market. In order to compete against strong competitors, we have to try to convince consumers that our products deliver superior values and they should purchase our products instead of others’. Therefore, Persuasive Advertising should be the finest choice.

Setting Advertising Budget Objective-and-Task method is used where we estimate the cost based on our set objectives. Our aim is to efficiently utilize the promotion tools to achieve maximal outcomes at lowest possible budget. Thus, promotion strategies will need to be chosen and applied carefully.

Developing advertising strategyCreate Advertising MessageThe image we endeavour to create is young, modern and professional office workers who are busy and happy to use our cup noodle products on a daily basis. Vifon cup noodle products will provide convenience to help you catching up with the hectic lifestyle at the same time offer quality and healthy products at competitive prices.

Selecting Advertising Media

Medium Specific medium channels

Description Reason

Internet

Webtretho.com 1 thread for visitors to discuss about noodle products

-More than 2 million users and about 4.6 million page views each month- Many people have family from 22 to 34 years old

Dantri.com Top banner-all the time Right Banner 1 (180x270 pixels)

-About 62% of people visit -More than 2.5 million users per day.

Facebook.com Create our own page -Target young people well and free

Magazines

Dep(a fashion magazine)

Standard single left hand placement-once/month

-Popular among young professional women

Tiep thi & Gia Dinh (Marketing & Family)

1/2 page (11x27) - once per month

-120000 issues per month-72% readers from Ho Chi Minh city and 18% from Hanoi.-60% readers from 25 to 45 years old

Suc khoe & Doi Song (Health & life)

Twice per month -180000 issues per month-Popular in young official people

Outdoor Banner painted on the buses

On buses number 22 and 32- for the whole year

- two main bus routes that go through the busiest areas in Hanoi with many traffic lights that have long waiting time

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Objective settingPersuasive Advertising

Objective settingPersuasive Advertising

Budget decisionObjective-and-Task

Budget decisionObjective-and-Task

Media DecisionInternet, Magazine, Outdoors

Media DecisionInternet, Magazine, Outdoors

b. Sales PromotionsTools Specific channels Strategies DescriptionSample Offering trials of

products for customers

Pull Giving to each bypassing workers in front of few biggest companies/ office buildings 1 free Vifon cup of noodles size smallest (60g) with different flavours

Coupons Coupons on magazines

Pull Discount 5% of the invoice when customers bring the coupons to the resellers or local shops

Premium Goods offered for free for resellers and customers

Push & Pull

-B2B: Giving free display shelves or patio umbrellas with Vifon logo for every purchase of 500 boxes.- B2C: Giving 1 free bowl for every box of 24 cups

Patronage Rewards

Special customer discounts and trade discounts as loyalty incentives

Push & Pull

-B2B: 1 point for every 1.2 million VND spent. 2% discount for total 10 points- B2C: 1 free cup of the same size for every 4 packs of 6 cups

Games Lucky draw Pull Every noodle cup will have 1 special code. Customers will fill in their details and send back to Vifon.After a period of time, Vifon will draw a lucky number to win prizes:-special prize: 1 motorbike Honda wave alpha -1st prize: 2 tickets for a trip to Singapore-3 2nd prize: TV Sony LCD-10 3rd prize: Samsung Star mobile phone-10000 consolation prize: 1 free cup noodle set of 6.

c. Public RelationsTool Specific channels DescriptionSpecial events - Holding press conference when

launching new products, celebration of the new factory going into operation. - Organise press tours for journalists from popular newspapers, e-newspaper and Vietnam television

Delivering descriptive information about new products and answering all questions of the press and customers by spokeman

Written materials -Articles written by PR / Marketing Manager and sent to editors

Inform public about what and how Vifon is doing. This will also have an impact on our stock price and the media.

Public Service Activities

Scholarship program: Providing a number of scholarships for poor university students.

Each year, proving 50 scholarships for poor university students

Charity program -Helping victims in natural disasters-Taking care of Vietnamese heroic mothers

-Giving free noodle to support victims.-Taking care of 6 Vietnamese heroic mothers Announcement on TV or on the internet through Vifon company website.

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d. Direct marketing

Tools Description ReasonDirect-email/mail Marketing

-Use direct email marketing to target customers (B2C). Customers’ information is collected when they register on our website and fill in the lucky cards in the noodle cups and send back to us. - Use direct mail marketing to target businesses and resellers (B2B). Information is collected through membership registration.-Send catalogue, promotional letters and announcement about new products, events, promotion offers or campaigns

- To build long-term customer relationships in an effective way. + Emails sent to customers as it is cheap + Mails with catalogue used for businesses and resellers as they are more professional, convenient and attractive.

Catalogue Marketing

- Web-based catalogue for customers.- Printed catalogue for businesses and resellers.

- People are likely to shops for more when they have time and can absorb the information from the catalogue at their own pace.- The printed catalogue option seems to be a bit costly but they will only be sent to selected businesses and resellers. The catalogues have all of Vifon products and brands including our cup noodle brand Ngon-Ngon, This will encourage customers to buy more of our company’s products.

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7. ACTION PROGRAM

Tasks Responsibility Timeline (month) Cost (VND)09 10 11 12 01 02 03 04 05 06 07 08

Product

Extend the product line with more flavours and more types of noodles

Top managementR&DPurchasingManufacturingAccounting

09 10 11 12 01 02 03 04 05 06 07 08

20 million/ flavour35 million/ noodle type

Add healthier ingredients and minimize the use of additives

R&DPurchasingManufacturingAccounting

09 10 11 12 01 02 03 04 05 06 07 08

30 million/ 1 million products

Improve the packages’ material, sizes and design

Top managementMarketingPurchasingManufacturing

09 10 11 12 01 02 03 04 05 06 07 08

250 million/ 1 million products

Register customer services hotlines in Hanoi, Danang Vinh,Can Tho

Top managementMarketing 09 10 11 12 01 02 03 04 05 06 07 08

70 million/ year

Price

Create prices for sets of noodles cups/ cups and other products for “Product Bundle Pricing” strategy

MarketingPurchasingDesigning &

Manufacturing09 10 11 12 01 02 03 04 05 06 07 08

50 million/ year

Reset the prices for “Psychological Pricing” and “Discount Pricing” strategies

Top managementMarketing/Sales 09 10 11 12 01 02 03 04 05 06 07 08

15 million/ time

Promotional Pricing (Special low-price weekends)

Marketing/Sales09 10 11 12 01 02 03 04 05 06 07 08

20 million /time

Upgrade the official website with new products and features allowing customers perform purchasing

Top managementITMarketing 09 10 11 12 01 02 03 04 05 06 07 08

48.4 million/year

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Placeactions.Sales staff training Top management

Human resourceMarketingAccounting

09 10 11 12 01 02 03 04 05 06 07 08

30 million/ time/ area

Extend distribution channels to more resellers and local shops

Top managementMarketing/Sales 09 10 11 12 01 02 03 04 05 06 07 08

10 million/ reseller/ year

Promotion

Advertising through media Top managementMarketingPublic RelationsAccounting

09 10 11 12 01 02 03 04 05 06 07 08

145 million /month for magazines

25 million/ month for websites

80 million/ bus route /year

Offer sales promotion tools AccountingMarketing 09 10 11 12 01 02 03 04 05 06 07 08

500,000/ retailer/ month

Open press conference when launching new products

Top managementMarketingPublic Relation 09 10 11 12 01 02 03 04 05 06 07 08

14 million/area/ time

Catalogue design and printingMaintain catalogue on the website

Top managementITMarketing 09 10 11 12 01 02 03 04 05 06 07 08

35 million/ time

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8. CONTROL PROGRAM

Goals Measure Performance Action How to controlGrowth in sales revenue

Sales revenue increasesby - 15% by February 2012- 23% by August 2012

Arrange monthly meeting with accounting department to evaluate sales and profit figures

Review our price and promotion strategies

Growth in market share

- Increase by 2% by February 2012- Increase by 4.5% by August 2012

Look at competitors’ financial reports, Meet the managers of our competitors to share information and assess the market’s situation

Investigate the quality controls for our products, the performance of our promotional activities, market acceptance to our pricing, and market coverage by our distribution network

Raise customer awareness

Our rank position of popularity in the lists of trustworthy agents/organisations

Arrange meetings with marketing department plus carry out surveys to assess brand awareness

Re-consider our promotion strategies

Improve customer relationship management

Customer satisfaction Carry out surveys (email, on street), allow customers to vote on our website.Build company database to be used in complement with Knowledge Management System.Assess ability to push products down the channels.

Examine quality controls and customer services

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