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Unilever started its operations in Vietnam in 1995 and do business in fast moving consumer goods area. It has developed an extensive local network of distributors and retailers with commit to “make Vietnamese lives better” through the provision of a wide range of international quality and affordable priced products in health, hygiene and nutrition. Unilever Vietnam was developed the wide range of business services and products, with more than 20 brands name, Unilever has become one of the biggest multinational in Vietnam and South-East Asia.
1.1 Review the changing perspective in Unilever marketing planning Nowadays,
when demand and customer satisfaction are foundation of business, there are more companies follow the market – led orientation strategy instead of product orientation. In this task, we will learn about some reason why many companies had changed product orientation to market – led orientation. Product orientation: Few years ago, when product orientation strategy was popular, the companies choose to ignore their customer’s needs and focus only on efficiently building a quality product. This type of company believes that if they can make the best product their customers will come to them. The basic focus of a company with a production orientation is toward maximizing production output. They want to produce as many products as possible to reduce the price without caring about customer needs. Market – led orientation: Currently, product orientation strategy is not popular anymore. It was replaced by market – led orientation strategy which is squarely focused on the consumer. For the company to follow this strategy effectively, they have to approach to customer and approach to advertising. In addition for market led orientation, every employee of all the departments will be responsible for marketing the products. The main purposes of changing product orientation to market – led orientation are: * Making a long term relationship with customers: the product which is satisfy customer needs will belong to them in a long term. Thus, it is important for company to do surveys carefully so that they can know exactly what customer want and start the production. * Building brand awareness and customer‘s loyalty: a market-oriented company carefully cultivates a brand in the minds of potential customers through advertising activities in an attempt to influence them to buy its products instead of a competitor’s products. * Bring customer the value of product: If the company can understand the customer needs and meet their demand, it is easier for company to bring customer not only the quality of product but also the intangible value. For example:
Unilever Vietnam towards market – led orientation strategy by doing surveys about customer needs, produce good quality products and invest on promotional activities. This strategy is the most suitable with the company doing business in fast moving consumer goods in branded home & personal care and food categories. They do surveys on a regular basis to make sure
that the product launch on time and satisfy customer needs. Besides that, Unilever spends a great deal of money on advertising to build awareness of customer about the product and they will come to buy it.
1.2 Evaluate Unilever capability for planning its future market activity. As you know, Unilever is one of the world’s leading suppliers of fast moving consumer goods in branded home & personal care and food categories and its products touch the lives of over 2 billion people every day – whether that’s through feeling great because they’ve got beautiful hair and a radiant smile, take care of their home, or by enjoying a great cup of tea or healthy snack. But whether they can do more than that in the future? This task will evaluate Unilever’s capability for planning its future marketing activities. The product innovation: Look at the selection Unilever’s top brands; we can see the company’s efforts in creating new products over 18 years. They not only create pioneering products but also bring the quality and make their customer’s life better (For example: Sunlight, Cif, Knor, Lifebuoy, etc. That the reason why the most of their brands become popular brand in Vietnam. So we can certain about their capability for producing outstanding products. The vision of leaders and activity oriented: This is one of important factors that affect to Unilever’s capability for planning future marketing activities. The great vision of leader will lead to great future for Unilever. ‘’ We work to create a better future every day” (Unilever, 2013). They recognize that global challenges such as climate change concern us all, so in the future they will not only focus on double the size of their business but also reducing their environmental footprint and increasing their positive social impact. Potential Human resource: Unilever has more than 1600 employees who are carefully selected. Moreover, they offer their employees many ways to take advantage of development opportunities, they encourage creativity with attractive reward, benefits packages and many others so that we can always attract and retain the best talents to work for them. By owning many talents in the company, it is easy for them to make more pioneering products in the future. After analyzing every related aspect, we can see that Unilever has the capacity to develop their products and overtake their competitors. We can know that not only through their current efforts but also their purpose of protecting
environment in the future.
1.3 Examine technique for Unilever auditing and analysis of external factors that affecting the marketing planning in Vietnam Unilever makes a number of different products in Vietnam so it is very important to determining and recognize problem areas, opportunities so that the company can offer solutions and rational decisions for next step. In this task, we will examine 3 techniques for Unilever auditing and analyzing external factors that affect marketing planning including: the product life cycle (PLC), the Porter Five Forces and BCG Matrix. The product life cycle (PLC)
Lifebuoy Royal Disinfectant Soap was launched in 1894 as an affordable new product in the UK and it is one of Unilever’s oldest brands. Lifebuoy witnessed a steady decline in market share at 15% (www.articles.economictimes.indiatimes.com). Because of its long appear on the market with the low market share so Lifebuoy is in Decline stage.
Wall’s Ice cream:
In 1997, Wall’s Ice Cream was a famous brand name (Unilever’s own) in Vietnam with 52% market share and annual turnover of €5 billion (www.webcache.googleusercontent.com). But in 2004, after realizing the economy as well as the situation of that moment is not consistent with the development of Wall’s Ice Cream, Unilever decided to let Kinh Do company to own this brand within 5 years. Then, the brand name Wall’s Ice Cream came back in an unexpected way after 5 years absence in 2009. Since that, Wall’s Ice Cream warmly welcome by customer. In addition, it also expanded distribution network with 130 distributors and 4,000 retail outlets (www.cyvee.com). Wall’s is an international brand of ice cream and is one of the most profitable units of Unilever (www.commerceplus.blogspot.com). Thus, Wall’s Ice Cream could be considered in the stage of Maturity from product life cycle.
Lipton ice tea:
Lipton ice tea has become a famous brand in Vietnam and wants to make a big splash in the global beverages market. They not only produce tea but also help customer to improve vascular function, combat fatigue, reduce cholesterol levels and increase feelings of vitality. Moreover, Lipton is the global market leader in both leaf and ready-to-drink tea, with a global market share nearly three times larger than its nearest rival. Thus, Lipton ice tea is in the stage of Maturity.
Lifebuoy soap is lying in BCG Matrix at Question Mark point. The market share value of Lifebuoy is low at 15% (www.articles.economictimes.indiatimes.com) and its market growth rate is high at 85.03%. Nowadays, there are more kind of soaps come into the market and they are not only protect users to bacteria but also bring intangible value to customers. However, the market that Lifebuoy doing business in is a potential market. At this point, company makes their investment on this product to get the point of cash cow and star in BCG matrix.
Wall’s Ice cream:
Wall’s Ice cream was come back to Vietnam market with an unexpected success. They have a big distribution network with 130 distributors and 4,000 retail outlets (www.cyvee.com) to meet the demand of customer in Vietnam. Moreover, ice cream market is a potential market in Vietnam so it is great opportunities for Wall to expand its market. According to Euromonitor, Vietnam cream industry value will reach $125 million this year. Thus, with high market share and high market growth, Wall is lying in Cash Cow.
Lipton ice tea:
Lipton Ice tea is the world’s leading brand of tea with high market share by
occupying a half of the global market (www.strategy.vn). About the market growth, Mr. Kamimura Yosuke ( NGK Kirin Company’s head of Marketing) said that for 2004-2010, the beverage market Vietnam has very few brand to create explosive opportunities for green tea market. At that time, with the introduction of many new products, green tea seems to have the market saturation point. However, this market has yet to step into the setbacks and has even been considered as a potential market in the future. Thus, Lipton Ice tea is lying in Cash Cow.
Porter Five Forces
Brand / Force| Lifebuoy soap| Wall’s ice cream| Lipton Tea| Bargaining of Buyer| HighAlthough Lifebuoy bringscustomer some benefits to protect their health with the low price, there are many its competitors that not only brings health benefit but also intangible value to customer. Moreover, it does not require the switching cost when customer change using Lifebuoy to another one| HighRecent, there are many café shop that offer ice cream in menu or ice cream specialty shops (ex: Baskin Robbins) indirect compete with Wall. Moreover, the switching cost is low and the young customers have trend to eat ice cream outside in the crowded places with music and their friends instead of staying at home with popsicles. | High The competitor of Lipton such as Nestle and THP seem to have a better marketing strategy than Lipton so these competitors will build the image of brand in customer mind. Besides, customer will find easy to change to Nestle or THP if Lipton can not satisfy their demand with low switching cost.| Bargaining of Supplier| HighLifebuoy focus on accessible hygiene and health solutions for customer on production line that makes its difference.
Thus, it will effect to product’s quality if Lifebuoy change to another supplier. Besides, the leak risk about the way to make product and the switching cost are high. Moreover, the supplier may produce and sale their own product directly to consumer and ignore Lifebuoy. | HighIf Wall change to another supplier, they will not sure about the quality of the new one. It will lead to losing customer if the quality is worst. In addition, risk and switching cost is high. Moreover, the supplier may produce and sale their own product directly to consumer and ignore Wall. | High In order to compete with Nestle and THP, Unilever has decided to use the tea leaf from Europe to produce the Lipton tea so they cannot change to other supplier. Risk and switching cost are high. Moreover, the supplier may produce tea and sale their own product directly to consumer and ignore Lipton. | Rivalry of existing competitor| MediumIt is different than other products in area by protect customer’s health with the low price. Besides, this area is potential, and its market growth rate is high at 85.03%. There are a lot of competitor which provide the same product of Lifebouy.| MediumAlthough Wall has some of direct competitor such as Kido and indirect competitor such as café shop and ice cream specialty shops, this area is very potential because of the demand of customer is higher. Thus, Wall still has opportunities to win the market.| MediumLipton Tea has certain competitors in Vietnam such as Nestea and O Degree.
On the other hand, the soft drink industry is reputation industry so Lipton still has a lot of opportunities to reach to customer.| Threats of new entrants| LowTo compete with Lifebuoy, it requires lots of things like finance, production, human resource and the distribution as well. Government barriers are high for products in soap area. Unilever can apply economic of scales to produce costs and create barriers for new firms. Without these of support above, it seems so hard to join the market and compete with Lifebuoy. | LowTo launch a new brand in this area, the company has to have finance, big distribution network, create new flavor and the reasonable price strategy to compete with Wall. High barriers from existing rivals: Wall’s, Kido are very famous and strong brands for a long time with a large of loyal customer. | LowIf a company wants to come and compete with Unilever in the Tea market, it requires of having the better flavor, better quality of tea-leaf and doing well promotion like Unilever has done. Strong capital is required in investigate and manufacturing. Accessibility to distribution channels is low because it is hard to built good relationship with the consumers like 0 Degree tea and Lipton tea| Threats of substitutes| LowThe customer might use instant sanitizer gel instead of Lifebuoy but it is not very popular. | HighThere are some substitute products such as cocktail, yogurt or soft-drink with the same available and cost to Wall’s. | HighIn current scenario, the Lipton Tea has so many substitute products, such as the soft-drink from Pepsi, Coca-Cola, or even the energize water |
1.4 Carry out Unilever auditing and analysis of external factors that affecting the marketing planning in Vietnam Doing SWOT analysis on Unilever’s business is an essential step in the process of branding and marketing its product or service. It also helps the company come up with business strategies. Moreover, SWOT analyses help the company to identify and capitalize on strengths. In addition, it makes awareness and protects Unilever to avoid the threats.
* Unilever has own a strong financial so they can expand the market in nearly 190 countries in the world. Besides, they also have 270 manufacturing sites worldwide (www.ukessays.com) that is how they can achieve economy of scale easily. It gives competitive advantage to company. * Unilever has own many famous brand name in fast moving consumer goods area such as: Surf, Dove, Ponds, Sunsilk, Knorr, Wall’s ice cream, P/S, Close up, etc (www.unilever.com.vn). All of these brand names known as multinational brands with affordable price and good quality. * Dynamic work environment, staff and intellectuals have responsibility for the company’s overall objective (www.unilever.com.vn). Besides, policies to attract talent of Unilever are effective so they can get more ideas for the company development. * Modern technology inherited from the global Unilever, delivered quickly and remarkably effective.
* Lack of direct connection with final consumers because of dependence on retailers and wholesalers. * There are some technology are not applied to Unilever Vietnam because of high cost. Besides, they have to import the machine from abroad so it is not take advantages of abundant labor resources and capacity in Vietnam. * As a company with European roots, promotional strategy of Unilever products is not suitable for Asian culture. * Unilever have a huge number of product brands (over 1600 brands) but 400 brands make up over 90% of Unilever’s total sales (www.zimbio.com) good. As a consequence, the ineffective brands make them money but not very profitable and become one of their weakness point
* The domestic market (wholesale, retail, goods flow …) has a bigger change compared with several years ago. Besides, politics of Vietnam is considered stable so Unilever will get more opportunities to develop the business. * Vietnam has abundant and cheap human resources (http://www.goinglobal.com) so that the company can reduce the cost. * Vietnam is a country of religious freedom to the distribution; promotional products are not subject to more stringent constraints than many other Asian countries. * Vietnam has a young population structure and popular model extended family. Moreover, the fast moving consumer goods market is the potential market in Vietnam so it will bring Unilever high market growth to develop.
* Unilever has many strong competitors such as: Nestle, P&G, etc. These competitors have their own famous brand name with big market shares, huge product line and millions of customers. * There are a lot of substitutes product in fast moving consumer’s goods markets today is a big threat of company. * Commercial law also has many disadvantages for foreign investors, especially tariff policy and high taxes levied on goods considered “luxury”. * In the context of supply is bigger than demand, many new companies invest on the market and fierce competition with Unilever.
2.1, 2.2 Assess the main barrier in marketing planning and how Unilever may overcome * Confusing marketing tactics and strategy: In fact, ‘tactics and strategy’ is two word that easily make people confuse about them, even some managers in big company, who face with them every day without meaning to, may be Unilever’s managers have the same problem. Because the content of them is abundant, thus sometimes strategies and tactics are discussed as they are the same. The common reasons that people are usually confused, firstly managers may make mistake about the purpose of using of them, such as they are confused between the long-term and short-term of tactics and
strategy when they make plans. Finally, sometimes they may even think they are still able to get their targets if miss one of them. Solution: The manager of Unilever must make sure that they understand clearly about tactics and strategies. For example, in usually strategy is term use for long-term plans (3 – 5 years plans), and tactics is short-term plans (1-2 years plans). Besides that, they must ensure that they can able to make good strategies and tactics to achieve the target of company. To create a good tactic, they have to answer the question “how”: How are you going to get the job done? Who is going to do it? When? To make a good strategy they must answer the “what”: “. (And sometimes the “what not”.) What exactly needs to be done? Moreover, they should communicate the importance of making strategies and tactics to employees, from that employee can have a clear understanding, then they can provide right information or their idea to make best strategies and tactics together to develop Unilever. * Confusing marketing ‘function’ with ‘concept’: In this barrier, it arise when a firm attempts to introduce a marketing orientation but thinks this can be done simply by creating a marketing department. For Unilever, to achieve satisfaction of customers, the company needs to do some changes of their mode of operation. In addition, there are some general misunderstandings about what marketing really is.
Without a corporate driving force centre on customer satisfaction, arguments about where to put marketing are of course pointless. Even when top management of Unilever is joined a realization of the need to take account of the customer, they also take mistake about this. So they usually receive complaints from customers and the company needs to give them a reasonable explains. Solution: To bring the real value to customer, quality must be available in all process. For example, Knorr has advertises that not reflect the product quality so either product quality improvement or they lose their customer. * Lack of Knowledge and Skills: For a company that enters to new market, this barrier is very common. For perennial problems, they have always focused around customer behavior and market segmentation. So this may be difficult concepts to grasp even at the cognitive level. For Unilever, knowledge and skills are very important. The company needs to train a good staffs who can enough knowledge and skills to meet all demands of customers. Because without an understanding of at least some of the basic tools of marketing, the chance of coming up with
strategies based on sustainable competitive advantage for Unilever is small. Solution: To overcome this barrier, Unilever has to ensure all those responsible for marketing in the organisation have the necessary marketing knowledge and skills for the job. In particular, ensure they understand and know how to use the more importance tools of marketing effectively. * Lack of a systematic approach: At times lack of data or information and inappropriate systems may greatly impede marketing plans. For instance, lack of a market survey forces the marketing team to rely on guesswork to determine the best marketing approach for the targeted market. Solution: Before decided to do advertise, Unilever should research information about the culture, behavior or customer needs to make sure that the advertisement is appropriate for each market segment.
Through the analysis of this report, Unilever can have a clear overview about Vietnam market, then analyzing external factors or barriers that affect marketing planning. Based on that, Unilever can identify capability and have solutions for planning its future market activity to make their business more and more developed and become the winner in Vietnam market.
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