DEVELOPING MARKETING STRATEGY: A CASE STUDY OF THE INTERNATIONAL BEVERAGE COMPANY, IN HOCHIMINH CITY, VIETNAM

by Bui Thanh Trang

A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration.

Examination Committee

Dr. Ellen Hertzberg (Chairman) Dr. Mark Speece Dr. Do Ba Khang

Nationality Previous Degree(s)

Vietnamese Bachelor of Economics HoChiMinh City University of Economics HoChiMinh City, Vietnam Government of Switzerland

Scholarship Donor

Asian Institute of Technology School of Management Bangkok, Thailand April 1996

ACKNOWLEDGMENT I would like to express my sincerest gratitude to my advisor Dr. Ellen Hertzberg for her genuine and valuable guidance for my study. I would also like to express my thanks to my committee members, Dr. Mark Speece and Dr. Do Ba Khang who help me to make my research more appropriate. I would like to thank to Mr. Pham Phu Ngoc Trai, the General Director, Mr. Tien, the Sales Manager, Mr. Vinh, Marketing Manager for their help, support and co-operation to make this research in the International Beverage Company. I would like to extend my sincere gratitude to the Swiss-AIT-Vietnam Management Development Program, the Government of Switzerland for the generous support in providing the scholarship and research grants. I wish to express my thanks to my HoChiMinh University of Economics. I greatly express my timeless love to my parents, my sisters and brothers, for their love, encouragement throughout my two-year study program at SAV and at AIT. I also owe a great deal of thanks and love for my girlfriend, Bich Lien, who has given me boundless inspiration. I would like to thank my friends in Vietnam as well as at AIT.

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ABSTRACT International Beverage Company, a joint venture between Saigon Processing Company, Marcondray and Company Inc, Hong Kong, and Pepsi Company Inc, is the largest soft drink company in Vietnam. The company produces well-known soft drink brands such as Pepsi, 7-Up, Crush and Schweppes. Together economic development, the Vietnamese soft drink industry has developed and the Vietnamese soft drinks market becomes fiercely competitive. The company is facing the question of how to protect its leading position in the market, as well as to increase sales. This study deals with the development of marketing strategies for International Beverage Company in HCMC. Thus, it is necessary to analyze external factors including production and consumption, competition to identify opportunities and threats in environment in which the company operates. Moreover, the analysis and assessment of production and business of IBC need to discuss to find out its strengths and weaknesses. Following the analysis the opportunities threats, as well as strengths and weakness, the marketing strategies also are recommended to achieve the marketing objective of the company.

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Table of Contents
Chapter Title Title Page Acknowledgment Abstract Table of Contents List of Figures List of Tables Abbreviations 1. Introduction 1.1. Background 1.2. Problem Statement 1.3. Objectives of the Research Study 1.4. Scope and Limitations of the Research Study 1.5. Organization of the Research Study Literature Review 2.1. Concept of Marketing Strategy 2.2. Link between Marketing strategy and Corporate Strategy 2.3. Strategic Marketing Planning Process 2.3.1. Market Situation Analysis 2.3.2. Marketing Strategy Design 2.3.3 Marketing Program Development 2.3.4 Implementing and Managing Marketing Strategy Research Methodology 3.1. Analysis Framework 3.2. Information Needed 3.3. Data Sources 3.4. Data Collection Methodology External Analysis 4.1. An Overview of the Vietnamese Economy 4.2. Some Economic Achievements of HCMC 4.3. Vietnamese Soft Drinks Market 4.3.1. Production 4.3.2. Flavor Split 4.3.3. Packaging Types 4.3.4. Forecast Production and Consumption of Soft Drinks to 2000 4.4. Consumption Pattern and Consumer Preference 4.4.1. Consumption Pattern 4.4.2. Consumer Preference 4.5. Competition on the Vietnamese Soft Drinks Market 4.6. Analysis of the Main Competitors of IBC in HCMC 4.6.1 Coca Cola Indochina Pte Ltd 4.6.2. Tribeco-Saigon Soft Drink Company Ltd 4.7. Substitutes Pag e i ii iii iv vi vii viii 1 1 1 2 2 3 4 4 4 5 5 7 10 16 18 18 20 20 21 23 23 25 26 26 28 28 28 30 30 31 31 32 32 35 36

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3.

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4.8. Summary of Opportunities and Threats for IBC 5. Internal Analysis 5.1. Profile of International Beverage Company 5.2. Mission of IBC 5.3. Marketing Objective of IBC 5.4. Production and Business Results 5.4.1. Production Capacity 5.4.2. Market Share and Sales Volume 5.4.3. Financial Results 5.5. Analysis of IBCs Marketing Activities 5.5.1. Product 5.5.2. Price 5.5.3. IBCs Distribution Channels System 5.5.4. Promotion Activities 5.6. Results and Discussions of Consumer Survey 5.6.1. Brand Preference 5.6.2. Words of Mouth 5.6.3. How Choose to Buy a Soft Drink 5.6.4. Attributes of Soft Drink Brands 5.6.5. Prices of Soft Drink Brands 5.6.6. Places of Consumption 5.6.7. Promotion Activities 5.7. Summary of IBCs Strengths and Weaknesses Conclusion and Recommendations 6.1. Conclusion 6.2. Recommendations on Developing the Marketing Strategies for IBC 6.2.1. Market Segmentation 6.2.2. IBCs Market Targeting 6.2.3. Positioning Strategy 6.2.4. Developing Marketing Mix Strategy for IBC in HCMC 6.3. Recommendation for further research References Appendices

37 38 38 38 39 39 39 40 40 43 43 45 47 51 53 54 54 55 55 58 59 60 61 63 63 64 64 65 65 66 70 71 74

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List of Figures
Figure 2.1. 2.2. 2.3. 3.1. 4.1. 4.2. 4.3. 4.4. 5.1 5.2 5.3 5.4 5.5 5.6 Title Strategic marketing process Selecting a marketing strategy Price Determination Process Framework of the research study GDP and GDP growth rate in Vietnam during 1990-1995 Inflation rate in Vietnam during 1991-1995 Consumption of soft drinks in Vietnam, divided by flavors Structure of soft drinks packaging in Vietnam Market share of soft drink manufacturers in Vietnam market Market share of soft drink manufacturers in HCMC market IBCs sales volume, divided by geography IBCs monthly sales volume in 1995 IBCs distribution channels Mean score of the price of soft drink Page 6 9 14 19 24 24 29 29 41 41 42 42 48 59

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List of Tables
Table 4.1. 4.2. 4.3. 4.4. 4.5. 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7. 5.8. 5.9. 5.10. 5.11. 5.12. 5.13. 5.14. Tittle The improvement in living standards of HCMC residents Spending trend of HCMC residents Soft drinks production in Vietnam in period 1991 - 1995 The current production capacity of CCI Price list of Coca CD products IBCs total current production capacity Profits and loss statement of IBC in 1995 Price list of IBC products Pricing structure of IBCs products-bottles Pricing structure of IBCs products-cans Discount list of IBCs wholesaler Profile of sampling size Mean score of brand preference Mean score of words of mouth Comparison of the attributes of Pepsi with Coke Comparison of the attributes of 7-up with Sprite Mean score of attributes of Schweppes sarsi Mean score of the contents of advertising program of Pepsi Mean score of sales promotion gifts Page 26 26 27 33 34 39 40 45 46 47 50 53 54 55 57 57 58 60 61

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Abbreviation
ASEAN CCI Coca CD Coca NH GDP HCMC IBC IMES PBC PET SCCI SP.Co SRG VND Association of Southeast Asian Nations Coca Cola Indochina Pte Ltd Coca Cola Chuong Duong Soft Drink Company Coca Cola Ngoc Hoi Soft Drink Company Gross Domestic Product HoChiMinh City International Beverage Company International Marketing and Economic Services Pacific Beverage Company Polyethylene terephthalate The State Committee for Cooperation and Investment Saigon Processing Company Survey Research Group Vietnam Dong (currency)

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