Market Analysis for Comvita Manuka Honey Expansion into Vietnam, Papers of Marketing

Download Market Analysis for Comvita Manuka Honey Expansion into Vietnam and more Papers Marketing in PDF only on Docsity!

Table of Contents

• LIST OF FIGURES.....................................................................................................................................
• LIST OF TABLES.......................................................................................................................................
• ABBREVIATIONS.....................................................................................................................................
• INTRODUCTION AND BACKGROUND......................................................................................................
• I. MARKET ANALYSIS..............................................................................................................................
• 1. MARKET SELECTION PROCESS.....................................................................................................................
• 1.1 PRELIMINARY SCREENING.............................................................................................................................
• 1.2 SELECTION COUNTRY...................................................................................................................................
• 1.3 MARKET JUSTIFICATION...............................................................................................................................
• 2. EXAMINATION OF MARKET ENVIRONMENT: PESTLE.......................................................................................
• 2.1 POLITICAL.................................................................................................................................................
• 2.2 ECONOMIC................................................................................................................................................
• 2.3 SOCIO-CULTURAL.....................................................................................................................................
• 2.4 TECHNOLOGICAL.......................................................................................................................................
• 2.5 LEGAL....................................................................................................................................................
• 2.6 ENVIRONMENTAL......................................................................................................................................
• 3. BUYER BEHAVIOR..................................................................................................................................
• II. MARKETING STRATEGY -2252...........................................................................................................
• 1. MARKETING MIX...................................................................................................................................
• 2. 4PS....................................................................................................................................................
• PRODUCT......................................................................................................................................................
• PRICE...........................................................................................................................................................
• PLACE..........................................................................................................................................................
• PROMOTION..................................................................................................................................................
• III. MARKET ENTRY STRATEGY..............................................................................................................
• 1. MODE OF ENTRY...................................................................................................................................
• 2. SOCIAL MEDIA USED..............................................................................................................................
• YOUTUBE.....................................................................................................................................................
• FACEBOOK....................................................................................................................................................
• CONCLUSION AND RECOMMENDATION...............................................................................................

LIST OF FIGURES

Figure 1: GDP compare to pre-pandemic level Figure 2: Monthly income in VND million Figure 3: Marriage status Figure 4: Age distribution Figure 5: Channel preferences in 4 cities in Vietnam Figure 6: Vienamese consumer’s Ecommerce activity overview Figure 7: Preference trade channel of Vietnamese citizens Figure 8: Shopping trend for FMCG in Vietnam Figure 9: Most-used social media platforms in Vietnam as in Jan 2021 Figure 10: Online content activities

LIST OF TABLES

Table 1: Preliminary Screening Table 2: Types of entry mode ABBREVIATIONS. EAP: East Asia and Pacific region FMCG: Fast Moving Consumer Goods MFAT: The Ministry of Foreign Affairs and Trade of New Zealand MPI: Ministry of Primary Industries OECD: Organisation for Economic Cooperation and Development PEST UN DESA: United Nations Department of Economic and Social Affairs UMF: Unique Manuka Factor - a grading system that verifies the quality and unique elements distinguishing New Zealand Manuka Honey from the typical honey.

1.1 Preliminary screening The product is high-quality honey, with prices ranging from $54 to $2,580 per kilogram depending on its UMF level. For the new market, it aims at middle- to upper-class customers, especially women between the ages of 25 and 55 who are more conscious of the need of looking after for their family’s health. Country Lightly hit by Covid Female in working- age Average per Capita Income Health awareness Percent of white collar Score Vietnam 40 22 15 30 28 2895 Philippines 20 34 20 35 17 2625 Malay 15 19 35 25 30 2280 Thailand 25 25 30 10 25 2200 Wages 30 20 15 25 10 Table 1: Preliminary Screening 1.2 Selection country As can be seen from the data screening, Vietnam seems to be the most promising country because it has the best control over the Corona virus and highest percentage of working-age female employed. Although its average per Capita income is lower than that of the other chosen countries, Health awareness of people is more important component that takes greater wages in the decision-making process. 1.3 Market justification There are three major factors that account for 75 percent of the total wages which are Covid impact, Health awareness and Female in working-age employed. Firstly, the profound effect of the pandemic make it become the most critical element to decide whether a country is ready to open for trading or not. Vietnam, thanks to the prompt and precise policies of the Government, is one of a few Asia countries that successfully controlled the outbreak with only 1,465 confirmed cases and 35 deaths due to COVID-19 as of 31 December 2020 (Ritchie et al. 2021). Up to present as of 18 December 2021, after adjusting for

population size, Vietnam reported the third lowest number of total cases per 100,000 people in Southeast Asia (ADB, 2021). Secondly, despite the fact that Vietnam’s health expenditure per capita is low, there is an increasing trend in out-of-pocket spending for healthcare segment indicating that Vietnamese people voluntarily pay more to taking care of their health (OECD iLibrary, 2020). Thirdly, according to a recent research by International Labour Organization (2021), over 70 percent of Vietnamese female in working-age are employed, compared to 47.2 percent globally and 43.9 percent in Asia and the Pacific.

2. Examination of market environment: PESTLE PESTLE (Hollesen, 2020) and SLEPTS (Doole et al., 2019) are similar techniques often used to study and enable readers to understand the complexities of macro-environmental impacts on international marketing. 2.1 Political Vietnam is one of four countries in the world that apply the Socialist Republic government system, such consistent in policy levels from national to provincial government, is the key for its success in term of controlling the Covid-19 pandemic (Le et al., 2021). In the early stage of the first confirmed cases, the Government instantly announce a safe distancing requirements and instructions to stop the virus from spreading to the rest population. After five-month compulsory lock down, Vietnam enjoy a gradual return to the normalcy and is ready for trading in October 2021. Two-way trade between New Zealand and Vietnam currently exceeds NZ $2 billion, which is 300% growth since the ASEAN-Australia-New Zealand Free Trade Area was signed in 2009. On 22 July 2020, Vietnam and New Zealand mark their 45 years of relation by joining the “Strategic Partnership” to recognizing the substantial progress in political, commerce and people-to- people links (MFAT, 2021).

Figure 1: GDP compare to pre-pandemic level 2.3 Socio-Cultural According to a demographic survey conducted by Deloitte (2021) in four major cities, 30 percent household in Vietnam have income above 14 million VND per month, 80 percent of them are in the age between 25-54 and 83 percent are already married (Figure 3 and below). The numbers are a positive news for Comvita as these group are all lying in Comvita’s target market. The most problematic and significant challenge for the marketing department is culture adaption since they must adapt their marketing strategy to the culture with which they are not familiar. However, Comvita company already had global offices in Australia, USA, UK, China, Japan, Hongkong and Korea, and so has a thorough grasp of both Western and Eastern culture. Moreover, thanks to customer’s preferences toward imported products, Comvita will enjoy more competitive point over its local competitors.

Figure 2: Monthly income in VND million Figure 3: Marriage status Figure 4: Age distribution Harris et al. (2020) observe that, along with the growth of national economic, healthy food become more affordable but still unequally available for everyone. In Vietnam, inexpensive or street foods is usually facing a great concern for healthiness, this includes harmful processed foods that change or damages the original nutrition like canned, frozen, cooked meals. On the other hand, less processed and nutrient dense foods are costlier as they are more perishable with shorter shelf life and difficult to ship internationally (Miller et al., 2016). Monteiro et al. (2018) believe that the increase consumption of highly processed foods drives a huge change in health problems related to dietary transition. During the pandemic, Healthy food is on the throne, Vietnameses are more conscious of taking care of their and family’s health. They seek for healthier food that improve their body resistance (Brand Vietnam, 2021); thus, a pure honey with no additives like Comvita product is exactly what fulfill their demand.

2.6 Environmental World Bank (2021d) report that 8.89 million tones of plastic were produced in 2019, contributed US$17.5 billion in total to the economy, which account for 6.7 percent of GDP. In Vietnam, plastic presents in almost everywhere in daily life, and main causes of failure in plastic recycling are shortage of recycling capacity, available capital, and management in place that controls and classify the daily trash. This situation remind that Comvita should ensure that waste reduction is feasible through the product packaging. Specifically, they should change their current plastic jar of honey into more eco-friendly design so that it can leverage the brand value.

3. Buyer behavior In addition, a Vietnamese woman spend about 20 hours per week to do the house works and shopping for their family, whereas man spend only haft of the time or even no time at all (Tuoi Tre News, 2021). In fact, Vietnamese consumers have more leisure time staying at home during the lockdown, resulting in 11.8 billion USD in E-commerce sales in 2020, which is 2.1 billion USD more than previous year. Additionally, the percentage of new internet users who purchase online rises from 77% to 88% for the period of 2019 – 2020, the consumers tends to spend more for online shopping than they did as research shows that the value per item paid online in 2020 is 240 USD, whereas in 2019 the value is only 229 USD (VietnamPlus, 2021). With a similar finding, Deloitte (2021) ‘s survey reveals a noticeable movement in channel preferences from 2018 to 2020: e-Commerce rapidly increases its portion during the last year in four of Vietnam’s biggest cities (Figure 5).

Figure 5: Channel preferences in 4 cities in Vietnam Modern Trade appears to be the main channel across four cities. The preference for such channel is higher in Hanoi and Ho Chi Minh City, where there are more Supermarkets and Convenience Stores, than it is in Can Tho and Da Nang. Around 46 million Vietnamese people, equal to more than 70 percent of internet users have searched and shopped online. Especially, Vietnamese users give priority to purchases on mobile application, with a rate up to 69 percent (Data Reportal, 2021) (Figure 6). In general, Vietnamese buyer adapt quickly to the usage of internet shopping with a variety of e- Commerce platforms such as Shopee, Lazada, Tiki and Sendo.

like. This can be accomplished by delivering global standard product that are creative, practical, reliable and cost-effective. On the contrary, Crinkota and Rokainen advocated another approach that firstly introduced in 1988 but is still applicable in modern environment. The basic fundamental of this approach is that when marketers enter a market, he should take into account all limits and aspects of the destination environment like taste, regulatory, economic, technology, culture and so forth (Crinkota and Rokainen, 2013). Vrontis and Thrassou (2007) highlight that it is vital to adapt the marketing mix to meet the local market demand.

2. 4Ps Product Vitamins, minerals and beneficial elements form the flavonoids and phenolic groups are found in honey. Honey is utilized as a dietary supplement as well as treatment for respiratory and digestive problems (Yap et. al, 2019). Manuka Honey in particular, is named by the Manuka shrub, which is a rare and natural flower that can only be found in New Zealand. It is one-of-a- kind thanks to the health benefits related to digestion, wellness and healing. Moreover, the honey is only harvested at certain periods of the year, usually within 2 to 6 weeks, and extremely susceptible to weather conditions, thereby it requires beekeeper to have a great expertise and preparation to acquire pure honey (Nolan et. al., 2020). Comvita Manuka Honey is UMF grated, which is a quality and purity rating system approved by the New Zealand Government. UMF trade mark complies with the Ministry of Primary Industry’s labeling, it appears only on Manuka Honey which properly tested and confirmed by UMFDA (MPI, 2021). The firm have more than 40,000 hives placed throughout six distinct and most untouched areas of the country, sme of which can be only accessed by helicopters. Such extraordinary locations give every jar of Comvita a signature non-peroxide features and ingredients that cannot be found in any other producers (Comvita, 2021b). The Comvita’s product range is classified bases on its level of ingredients as flow:

UMF™ is a quality recognition for Manuka Honey that is 100% pure and unadulterated and the number represents the level of three distinctive chemicals involving Methylglyoxal (MGO), Leptosperin and Hydroxymethylfurfural (UMF, 2021). Manuka Honey from New Zealand naturally have the right percentage of moisture so it does not need much attempt in the dehydrating process. In fact, after being harvested and carefully inspected to remove dust, the company send raw honey to a specialized extraction process which is completely done automatedly. Every drop of honey is well taking care of with real time data reporting to ensure the special enzymes are preserved. Manuka Honey’s unique characteristics are extensively acknowledged by customers, lead to a steady increase in demand all over the world. Its country of origin and certification are also a key selling points as the taste and quality will differ if it is collected somewhere else. Hence, Comvita should export the product the same as they are selling domestically. Price Levitt (1983) point out that pricing is perhaps the most challenging marketing mix factor to standardize since the firm is selling the identical product under the same brand name in different countries. Pricing is anticipated to be the element that has the highest possibility to change due to the requirement to adjust the price in accordance with the laws and local competitors (Powers and Loyka, 2010)

since many consumers equate high price with high quality. In the case of Comvita, beside the need to adapt their price according to the market environment, they should still set the selling price at premium to maintain the company position, as well as designing more options for product offering to change the perceived preference of the consumers. Place In marketing, the term “Place” relates not only to the geographic location of a store, but also to the placement of items within that store (Keegan and Green, 2020). According to Deloitte (2021), respondents prefer to purchase their daily essentials through Traditional Trade channel as with about 666,736 outlets across Vietnam, urban citizens can almost always find one close by to meet their needs (Figure 7). Figure 7: Preference channel of Vietnamese citizens In addition, a research by Kantar (2021) show that consumers have been shopping less regularly but buying more value of goods per trip in the recent months of 2021, and that the way they shop for Tet 2022 will also vary due to this new behavior.

Figure 8: Shopping trend for FMCG in Vietnam As can be seen from above figure 8, marketers have fewer opportunities to interact with consumers and stimulate their purchases if they passively wait for consumers to visit their outlet or websites. Rather, marketers shall appeal to customers across several channels whether when they are working, relaxing or engaging with others. Taking that into account, Covita shall appear as much as possible to maximize each shopping trip of the potential customers by selling their jars in both Traditional Trade such as home own store or Modern Trade such as 7eleven, Circle K and Ministop. Furthermore, the company need to organize their product in a range where it meets the eye-level of consumers when they walk into a store. Promotion Some experts in the field of marketing such as McCarthy et. al., (1979) and Rossiter and Percy (1984) describe Promotion as a type of influential marketing communication objected to notify target audiences about the product quality, service, brand or problem. Stanton et. al., (1994) and other researchers (Kotler and Turner, 1997) explain promotion as a represented to educate, convince and reminding propective customers about the company. In practice, Promotion is a term used in marketing to describe any activity of exchanging information between the brand and its customer to influence their behaviors and attitudes toward the product or service. It assist brands in building a unique image in the mind of clients,