Developing marketing strategy: A case study of the international beverage company, in hochiminh city, vietnam

. Up to now, IBC has developed 658 wholesalers in which 452 wholesalers are located in inside and outside districts of HCMC and 145 wholesalers in South and Central provinces, 61 wholesalers in Ha Noi. Although IBC requests all wholesalers to sell at price stipulated, most of wholesalers sell products at flexible price. They can sell IBC products at high price any whenever exceeds demand and dumping price to increase sales volume. To develop the wholesalers network, IBC has applied the following policies: 1. Discount (margin) IBC adapts the discount price which differs between nonexclusive and exclusive wholesalers as indicated in the Table 5.6 Table 5.6 Discount list of IBC’s wholesaler Discount For Nonexclusive Wholesaler (VND) Discount For Exclusive Wholesaler (VND) Bottle 207 ml and 285 ml 50 60 Can 330 ml 200 215 PET bottle 1.5 liters 600 620 Source: IBC’s report (Note: discount i.e. margin between wholesale price and ex-factory) 2. Delivery IBC delivers its products to all wholesalers in HCMC and is charge of transportation expenses. For wholesalers in provinces, IBC subsidies 50 percent of transportation expenses to encourage them to purchase at large quality. 3. Payment Payment term applied for IBC’s wholesalers is cash on delivery. However, to expand distribution networks at new markets, IBC will apply the flexible payment term such as credit or 50 percent cash payment and 50 percent credit term from 1 to 3 months. 5.5.4. Promotion Activities 5.5.4.1. Objectives of Promotion Last years, IBC has constantly launched advertising campaigns to inform, persuade the target consumers to buy its products. IBC’s promotion actives has mainly focused on advertising, sales promotion and public relation. The objectives of IBC’s promotion, as follows: Create the image about Pepsi as soft drink for young people and maximize awareness of IBC products. Remind the target consumers about the presence of its products. Persuade the soft drinks consumers to switch to IBC products. 5.5.4.2. Advertising To convince the soft drink consumers to switch to IBC products, the company has launched a dynamic advertising campaign with slogan “Pepsi, The Choice of New Generation” and “7-Up, From Transparent To Wonderful” and “Crush is your Life and Color” on the commercial programs on television. Obviously, its target consumer is all soft drink consumers, mainly young people. So the producer, distributors try on diffuse attributes of Pepsi to its target consumers by words such as “freedom is yourself”, “freshness and intelligence”, “attraction and reality” and “modern and following the trend”. It can be said that IBC is very interested in advertising activities. In 1995, its advertising budget accounted for over 65 percent of total promotional budget and accounted for 8.6 percent of total sales (IBC’s report). The company has used the media such as television, radio, newspapers, magazines, billboards and public transportation for advertising Pepsi and 7-Up, Crush and Schweppes. Television Television is one of the effective advertising media compared to others, it can diffuse the information, picture and shape of product to all the consumers. Based on the advantages of this media, the company often uses television as the tool to introduce its products. Every night, Pepsi, 7-Up, and Crush are advertised on Vietnam Television, and local Television such as HCMC, Can Tho and Da Nang. Radio To maximize awareness of IBC’s products in the whole country, the company sometime introduces its products on radio at beginning and last minutes of the programs for children, traditional music because most of audience like to listen to these programs. Newspapers and Magazines Simultaneously, the commercial program on television and radio, IBC also used trade publication for advertising its products and logo of Pepsi in newspapers, magazines such as Youth newspaper, Saigon Time weekly and daily, Saigon Liberation, Vietnam Investment Review, Marketing magazine, Labor newspaper, etc., Billboard and public transportation IBC is also interested in introduction its products throughout using bill board and public transportation. To attract the consumer’s interest, all most bill boards are located at the central of HCMC such as Ben Thanh market, Tan Son Nhat airport, and cross roads. The logo of Pepsi, pictures of 7-Up, Crush bottles and cans are advertised in trucks, buses in HCMC, especial airport-buses. 5.5.4.3. Sales Promotion Sales promotion is one of the marketing tools in which IBC is very interested in promoting its sales. Its sales promotion consists of trade promotion and consumer promotion. Trade promotion The company uses trade promotion to stimulate quicker and greater purchase of its products by its wholesalers and outlets in order to increase the sales volume. IBC’s trade promotion tools consist of offering free goods, supporting facilities for outlets development and point of purchase materials. Free goods are sometime held in special occasion, new year by offering extra products of purchase to wholesalers and retail outlets who buy a certain fixing quantity, for example, if IBC’s wholesalers and outlets buy “6 canned soft drink pack” get free “1 can” or buy “12 PET bottles soft drinks pack” get free “1 PET bottle” Developing new retail outlets and wholesalers, especially the exclusive outlets and wholesalers, IBC has supported facilities for retail outlets and wholesalers to decorate and advertise the logo of Pepsi. The plan for developing outlets is mainly concentrated on hotels, restaurants, big coffee shops and entertainment places such Dam Sen, Ky Hoa, Van Hoa parks. Point of Purchase materials are supported by IBC for its wholesalers and retail outlets aimed at creating and maximizing the awareness of Pepsi and 7-Up in the consumer’s mind. Supporting the point of purchase materials consists of shop-sign, light-box, freezes-sign, visi-coolers, ice-chest, canopy, parasol, poster, bunting, sticker, banner. Up to now, IBC develops shop-signs at almost its wholesalers and outlets in HCMC. The shop-signs have the high effectiveness of advertising the logo of Pepsi. Through the shop-sign, the consumers know Pepsi more and more, because majority of consumer, especially outside districts of HCMC, they confused Pepsi was beer. Beside shop-sign, IBC has designed more than 620 light-boxes with picture of Pepsi bottle which are located at front of the outlets. Consumer promotion The purpose of consumer promotion is to create demand and persuade soft drink consumers to switch to IBC products. The company used consumer promotion tools such as lucky draws based on numbers under crow, gifts, wet sampling and product challenges. All activities of consumer promotion are sometime held at entertainment places and schools. 5.5.4.4. Special Events Sponsorship IBC’s sponsorship activities aim not only to create awareness of its products but also improve public goodwill. Throughout sponsorship activities, the company created the good relation ship with government. Last years, IBC sponsored for cultural and music activities and sport events and other social activities such as scholarship fund for student at schools and universities in HCMC, sponsoring for homeless children. Clearly, IBC’s sponsorship activities can make more memorable impact on public awareness and credibility than advertising. 5.6. Results and Discussion of Consumer Survey This part discusses the results based on conducting survey on attitude of consumers toward attributes and prices of IBC’s products compared to the competitive brands and advertising and sales promotion of IBC. In addition the discussion is also based on in-depth interviews soft drink wholesalers, retail outlets of IBC in HCMC. Most of these wholesalers and outlets sell all soft drink brands including products of IBC, Coke and Tribeco. The sample consists of 100 respondents who were randomly selected in HCMC. The profile of sampling size is shown in Table 5.7 Table 5.7 Profile of sampling size Age Count (n=100) Percent (%) Monthly Income (VND) Count (n=100) Percent (%) From 10 to 20 From 21 to 30 From 31 to 40 From 41 to 50 31 36 23 10 31.0 36.0 23.0 10.0 Less than 1 million From 1 to 2 million Over 2 million 32 37 31 32.0 37.0 31.0 Total 100 100.0 Total 100 100.0 5.6.1. Brand Preference The majority of consumers would prefer cola flavor to lemon lime flavor. Orange and other flavors would be less preferred. In addition most of respondents prefer foreign brands to local ones. Pepsi and Coke are considered as the favorite products. They are much preferred by most of consumers. There is not significant difference in brand preference between Coke and Pepsi (Appendix 4, Exhibit 1). Whereas, Tribeco is less preferred. As a result, that demand for foreign brands increases and demand for local ones decreases. There is the significantly difference in age groups who very much like to drink Pepsi. The younger people (from 10 to 20 years old) very much prefer Pepsi rather than the old group (from 31 to 50 years old) (Appendix 6, Exhibit 1). While there is no significant difference in preference of Coke between age groups (Appendix 6, Exhibit 2). The survey shows that lemonade lime flavor is less preferred to cola flavor. 7-Up is rated at fair average level of brand preference, Sprite is much less preferred by most of respondents. Regarding orange and sarsi flavor, the findings show that Schweppes and Crush are the soft drinks with low brand preference. This is a reason why Schweppes and Crush are the slow-selling items. Table 5.8 Mean score of brand preference Brands Mean Std dev Pepsi 6.010 1.010 7-Up 4.290 1.493 Coke 6.250 .821 Sprite 2.760 1.280 Schweppes 2.480 1.210 Tribeco 3.520 1.845 Crush 2.840 1.692 (Note: 1: dislike very much, 7: like very much) 5.6.2. Words of Mouth The considerable number of the respondents who reveal that their friends say Coke and Pepsi are very good quality. And there is the difference in attitude of consumers toward assessment between Pepsi and Coke. Coke is slightly better than Pepsi (Appendix 4, Exhibit 2). Tribeco is rated at fair average by majority of respondents. Additionally, there also is the difference in groups who say Pepsi is very good. The 10-30 age group say that Pepsi is very good. Both the 21-30 age group and 31-50 age group rate good for Pepsi. Group of 10-20 years old say that Pepsi is very good (Appendix 6, Exhibit 3). 7-Up is considered as a very good item and most of respondents indicates that their friends say 7-Up is very good quality. While Sprite is rated as an average brand. Schweppes and Crush are assessed as average quality items. Table 5.9 Mean score of words of mouth Brands Mean Std dev Pepsi 6.070 .795 7-Up 6.260 .812 Coke 6.450 .672 Sprite 4.040 1.082 Schweppes 3.920 1.061 Tribeco 4.330 1.092 Crush 3.860 1.025 (Note: 1: very bad, 7: very good) 5.6.3. How Choose to Buy a Soft Drink When buying a soft drink, most of consumers like to choose the soft drink with the best taste. The survey discloses that there is more than half of consumers who prefer to buy soft drink that tastes best. Over one third said that they buy the same one they usually buy. Thus, it can be said that the best taste is one of important attributes which can be attracted the purchase of soft drink consumers (Appendix 3, Exhibit 1). 5.6.4. Attributes of Soft Drink Brands Pepsi, Coke and Tribeco When asked for comparing Pepsi and Coke at a few major attributes, most of consumers who rank highly for Coke in sweetness and gas (carbonation). For taste and package, both Pepsi and Coke are the same. When compared Pepsi and Tribeco, Pepsi wins over Tribeco for most of attributes, the almost consumers rank very high for Pepsi in all attributes, except sweetness. The findings disclose that Pepsi has achieved good reputation by creating its awareness in the consumer’s mind and Pepsi is available at most of retail outlets in HCMC. Taste, it can be said that the most of consumers would like to drink carbonates with good taste. Recognition of this attribute, Pepsi is always improved its taste to be suitable to local taste in each country. There are more than one-third of consumers who rank that Pepsi is much better than Coke and one-fourth respondents who indicate Pepsi is the same as Coke. Thus, there is not significant difference in taste between Coke and Pepsi. As a result, consumer preference about Pepsi and Coke are the same proportion. In contrast, there is the significant difference in taste of Pepsi and Tribeco. So Pepsi is much preferred than Tribeco. Sweetness, the survey indicates that there is half of respondents who rank Pepsi is less sweet than both Coke and Tribeco. In addition, when conducted in-depth interviews with consumers, they say that almost soft drink consumers in HCMC would like to drink sweeter carbonates. So Pepsi should mention this attributes to attract more users. Assessing the sweetness of Pepsi, the analysis shows that there is a relation in ranking between sweetness and age groups. Two fifths of respondents in the 10-20 age group indicate that Pepsi is as sweet as Coke and the same proportion of respondents in the 10-20 age group rank that Pepsi less sweet than Coke. For the 21-30 age group, there are three fifths of them who rank Pepsi is much worse than Coke. There are two fifths of consumers in the 31-50 age group who rank that Pepsi is less sweet than Coke (Appendix 5, Exhibit 1). Gas (carbonation), Pepsi is evaluated at higher gas than Tribeco. When compared with Coke, there is over two fifths of consumers who say that Pepsi is much less gas than Coke. When conducted in-depth interviews, most of young people disclose that they would like to drink carbonates with stronger gas. Therefore, Pepsi needs to improve this attribute to convince more young people. Package, this element is considered as an important attribute to appeal to the interest of consumer. There are more than three fifths of respondents who mark that Pepsi is same Coke. Nearly one fourth of consumers rank Pepsi is much better than Coke. Almost consumers say that Pepsi is much better than Tribeco. Availability, the findings show that two fifths of respondents indicates Pepsi is more available than Coke in HCMC. This is an advantage of Pepsi because Pepsi has been produced in the South earlier than Coke and IBC has developed the wide distribution network in HCMC. There also were over half of respondents who rank Pepsi is more available than Tribeco. Reputation, Pepsi gains good reputation in HCMC market. There are more than half of consumers who mark Pepsi and Coke are as same as reputation. Over four fifths of consumers indicate that Pepsi’s reputation is better than Tribeco. Obviously, Pepsi is to become top of mind brands.  Table 5.10 Comparison the attributes of Pepsi with Coke Attributes Pepsi is much better than Coke (%) Pepsi is the same as Coke (%) Pepsi is much worse than Coke (%) Taste 35.0 26.0 39.0 Sweetness 26.0 26.0 48.0 Gas 22.0 34.0 44.0 Package 18.0 67.0 15.0 Availability 38.0 58.0 4.0 Reputation 16.0 54.0 30.0 7-Up and Sprite For lemon lime flavor, the majority of consumers rank very high for 7-Up in all attributes such as taste, sweetness, gas, package, availability and reputation. The survey shows that there are more than half of consumers who rank 7-Up is much better than Sprite in taste, sweetness, gas, availability and reputation. Regarding the package, half of consumers say that 7-Up is the same as Sprite. Obviously, 7-Up wins over Sprite for all attributes. Concerning with taste, all age groups rank that 7-Up is better than Sprite and there is the relation in ranking between taste and groups. 7-Up is ranked better than Sprite by four fifths of respondents in the 10-20 age group. More than haft of respondents in the group of 21-50 years old say that 7-Up is better than Sprite( Appendix 5, Exhibit 2). Discussing gas, all groups rank higher for 7-Up, there are over half of respondents in group of 21-50 years old who rank higher for 7-Up, whereas one third of respondents in the 10-20 age group rank that 7-Up is better than Sprite( Appendix 5, Exhibit 3). . Table 5.11 Comparison the attributes of 7-Up with Sprite Attributes 7-Up is much better than Sprite (%) 7-Up is the same as Sprite (%) 7-Up is much worse than Sprite (%) Taste 62.0 14.0 24.0 Sweetness 57.0 31.0 12.0 Gas 48.0 36.0 16.0 Package 29.0 52.0 19.0 Availability 59.0 36.0 5.0 Reputation 66.0 31.0 3.0 Schweppes sarsi Schweppes sarsi is considered as a soft drink with low brand preference because its attributes are not completely suitable to the Vietnamese consumers’taste. The survey finds that its taste is rated at average level and its sweetness at below average level. In addition Schweppes is not much available in the market. And it had not gained yet at good reputation. So Schweppes lacks of favorite attributes to attract soft drink consumers. Table 5.12 Mean score of attributes of Schweppes sarsi Attributes Mean Sta dev a. Taste 4.380 1.030 b. Sweetness 3.750 .892 c. Gas 5..500 .916 d. Package 5.050 1.123 e. Availability 3.070 1.008 g. Reputation 3.140 1.005 (Note: 1: very poor, 7: excellent) 5.6.5. Prices of Soft Drink Brands Pepsi, Coke and Tribeco The perception of the consumers about price of Pepsi and Coke is indicated that Pepsi price is fairly high and Coke price is high. There is the difference in price between Pepsi and Coke (Appendix 4, Exhibit 3). The high income consumers say that price of Coke is fairly high in. Whereas, middle and low income consumers indicate that price of Coke is high (appendix 6, Exhibit 4). For Tribeco, the survey discloses that the its price is rated at average level by majority of respondents. 7-Up and Sprite There is the significant difference in rating the price of 7-Up and Sprite, the former is rated at fairly high, the later is rated at high (Appendix 4, Exhibit 4). Figure 5.6 Mean score of the prices of soft drinks (Note: 1: very low, 7: very high) Schweppes and Crush Schweppes and Crush were considered as having a fairly high price (mean 5.310 and 5.220). The findings also shows that high income consumers rate Crush is fairly average price, whereas low income consumers say that its price is fairly high (Appendix 6, Exhibit 5). 5.6.6. Places of Consumption The majority of the consumers most often buy soft drinks at coffee shops, followed retail shops, mainly on street vendors. For consumption at home, most of consumers buy soft drinks at wholesalers or retail outlets. Only a small proportion of consumers (9 percent of respondents) often drink carbonates at restaurants. The survey finds that four fifths of the consumers most often drink soft drinks at coffee shops and three fifths of consumers often buy soft drinks at retail shops. There are half of respondents who sometime buy at wholesalers. The respondents who often drink soft drinks at restaurants counts only for one tenth. When conducted in-depth interviews with soft drink wholesalers, they say that a large proportion of soft drinks are sold for retail outlets and most of the consumers buy soft drinks at wholesalers for “occasion” consumption at home. About incentives including profit margin and quantity discounts offered by soft drink companies for wholesalers and retail outlets, most of the respondents disclose that incentives which are given by IBC are better than Coke and Tribeco. IBC has supported point of purchase materials and facilities for decorating stores and advertising its logo. They also say that profit margin is important elements for keeping a particular brand in their stores. Mentioning prices of soft drinks, most of wholesalers and retail outlets say that the Pepsi, Coke, 7-Up and Crush have the reasonable prices and suitable to purchasing power of consumers, while Sprite and Schweppes price is fairly high. In addition they indicate that almost consumers when buying soft drinks they are interested firstly in choosing soft drink brands with high quality, then price. 5.6.7. Promotion Activities Advertising At the beginning of production Pepsi in Vietnam, IBC launched the heavy advertising campaign with slogan “Pepsi, The Choice of New Generation”. The survey shows that majority of respondents know this slogan. Look like Pepsi, Coke launched advertising campaign with slogan “Coke, The Real Thing”. The survey finds that there are half of respondents who knows this message. Thus, it can be said that Pepsi creates its awareness in the consumer’s mind. Assessing the advertising program of IBC on television, most of the consumers strongly agree about information content at aspects such as very easy to understand, very informative and very hard to forget. However, the honesty of the commercial program is disagreed. This may cause the negative impact for its advertising. About the aesthetic content of advertising, the considerable number of consumer agreed at this aspect. Table 5.13 Mean of the contents of advertising program of Pepsi Mean Sta dev a. Very easy to understand 5.710 1.183 b. Very informative 5.500 .916 c. Very hard to forget 5.460 1.141 d. Very honest 3.220 1.315 e. Please to see 5.170 1.295 f. Artistic 4.700 1.068 g. Intelligent 4.560 1.149 h. Amusing 5.340 1.199 (Note: 1: strongly disagree, 7: strongly agree) Sales promotion gifts Most of consumers disclose that sales promotion gifts of soft drink brands are not very attractive. The survey indicates that consumer promotion tools of Pepsi and 7-Up are not very attractive. Thus, IBC needs to pay more attention to sales promotion activities for end users in order to create awareness of its products. Table 5.14 Mean score of sales promotion gifts Brands Mean Sta dev a. Pepsi 4.510 1.283 b. 7-Up 4.370 1.143 c. Coke 4.410 1.296 d. Sprite 3.860 1.400 e. Schweppes 3.190 1.285 f. Tribeco 3.150 1.336 g. Crush 3.270 1.355 (Note: 1: not attractive at all, 7: very attractive) Suggestion of retailers When asked the suggestion of retailers to consumers in choosing soft drinks consumption, the findings indicate that retailers do not suggest to consumers to buy Schweppes, Crush, Tribeco and Sprite. The retailers sometime suggest to consumers to buy Pepsi, 7-Up and Coke (Appendix 2, Exhibit 6). The suggestions of retailers to end users can influence their buying decision. Because the survey finds that there are one fourth of respondents who switch to brand which is suggested by the retailer. Three fourths of consumers buy regular brands (Appendix 3, Exhibit 8). So, IBC should pay more attention to promotion its retail outlets who in turn will promote to end users to buy IBC products. 5.7. Summary of IBC’s Strengths and Weaknesses By analyzing current position of IBC in terms of production capacity, market share, financial situation and marketing activities, the strengths and weaknesses of IBC that were assessed in comparison with its main competitors are drawn out, as follows: Strengths IBC has strong financial position of stockholders and the remarkable profitability reaping from production and business in last years. It continues to further invest for expanding its production and business in order to increase its production volume. IBC has used the modern equipment and advanced technology for production soft drink production IBC has the highest market share in total Vietnam market, as well as HCMC market. At present, IBC gains the market share of 28 percent in the whole country and 42 percent of HCMC market. IBC has the experiences in marketing activities because its partners Pepsi Co and Cadbury Schweppes Group are giants in soft drinks market in the world. They have the experiences in marketing activities. The company has created the awareness of Pepsi and 7-Up in the market and good reputation brands. Pepsi and 7-Up are much preferred by most of Vietnamese people. 7-Up is considered as a dominant product in lemonade lime flavor in Vietnamese market. IBC has also created the image of Pepsi as soft drink for young people through its advertising with slogan “Pepsi, The Choice of New Generation” known by most of consumers in HCMC market. The prices of Pepsi and 7-Up are lower than prices of Coke and Sprite. So its prices can be met the purchasing power of its target consumers. This is a factor to stimulate more end users to buy IBC products because of high quality products at a reasonable price. IBC has developed its wide distribution channels system covering all districts of HCMC including direct and indirect channels. The company has also developed distribution channels of wholesalers in Ha Noi, Da Nang, the South and Central provinces. In addition, profit margin for wholesaler of IBC is higher than Coke. IBC has continuously launched the advertising campaigns to maximize the awareness of its products in the market and convince soft drink consumers to buy its products. In addition the company has constantly supported sales promotion for its wholesalers and retail outlets in order to build good relationship with its distributors. Weaknesses Among IBC’s product line, Schweppes sarsi is less preferred because the attributes of Schweppes are not completely suitable to local taste. The company has not created yet good reputation brand for Schweppes and Crush. Schweppes is not much available in the market. Information contents of IBC’s advertising program on television are evaluated lack of the honest. This can cause negative impact for its advertising. IBC lacks attention to sales promotion activities for consumers, there is several sales promotion activities but they are not attractive. IBC’s sales force is not strong enough in terms of number of salesman to manage its retail outlets while at present direct routes have continuously developed. Chapter 6 Conclusions and Recommendations This chapter presents the results of the research and recommendations for developing the marketing strategies for International Beverage Company in HCMC. 6.1. Conclusions This research examines how to develop the marketing strategies for International Beverage Company in HCMC through an analytical process of external and internal factors. On the basis of the result of this research, the following conclusions are drawn out: The Vietnamese economy has gained a remarkable growth during the period of 1991-1995. The GDP averaged growth rate was 8.2 percent per year. The government has issued a series of economic laws to encourage local and foreign investors to invest production locally and imposed on import tax on soft drinks and beer at high rate. So the soft drink industry has dramatically developed. There are currently 25 soft drink producers with more than 30 brands flooded in the market. Some foreign brands such as Pepsi, 7-Up, Coca Cola, Sprite, Schweppes and Crush are available in cities and small towns in the whole country. During the last five years, production and consumption of soft drinks has increased yearly. The average growth rate of the soft drink industry was 17 percent per year. The consumption per capita is currently lower than other countries in the region. According to General Statistics Bureau, the forecast consumption of soft drinks will be increased significantly in the next five years at annual growth rate of 15 percent. And with population of 74 million people, Vietnam actually becomes an attractive and potential market for food and drinks. This gives opportunities for players to expand their production and business. HCMC is the key soft drink market in Vietnam. Together the rapid growth rate of economy and rising in the living standard, HCMC market becomes an attractive one for beverage producers. There are currently significantly changes in consumer preference. Most of soft drink consumers prefer foreign brands rather the local ones. Demand for foreign soft drink brands increases while demand for local brands decreases. Soft drinks are consumed at home increasingly, this is a signal of fast growth of the take-home trade. The “cola war” really occurs in the Vietnamese soft drinks market, especially the competition between Pepsi and Coke. The competitive environment becomes fiercer and harder. At present, however, the problem facing the players is not survival because the market is still unsaturated and promising. IBC has been in the growing stage. IBC’s strengths and weaknesses are examined through internal analysis process including its production capacity, market share, sales and marketing activities. At present, IBC continues to invest to expand its production and business in HCMC, Ha Noi, the South and Central provinces. IBC has highest market share in Vietnamese markets(28 percent) and HCMC market (42 percent). The company is very interested in marketing activities, with particular emphasis on advertising and sponsorship activities in order to convince and remind its target consumers to buy IBC products. IBC pays more attention to trade promotion, however, it lacks the sales promotion for consumers. In general, IBC has achieved the success by understanding and meeting the needs of its customers and consumers. The company has created the awareness of its products, especially Pepsi and 7-Up in the market. However, Schweppes sarsi and Crush are less preferred because their attributes are not suitable to the Vietnamese consumers’taste. With a strong financial position, IBC is able to meet contingencies and to fund its further growth. Currently, facing the intensified competition, IBC has to develop the effective marketing strategies based on analyzing threats and opportunities in environment as well as its strengths and weaknesses in order to protect its leading position. 6.2. Recommendations on Developing the Marketing Strategies for IBC in HCMC 6.2.1 Market Segmentation To design and develop the marketing strategies, the starting point is to understand what kind of groups of consumers the company wants to serve. So the market segmentation becomes a meaning concept for the players. Regarding the case of IBC, the company need to decide which and how many segments to serve. According to Kotler (1991), in general, a company can adopt three basic alternative strategies forward market segmentation: undifferentiated marketing, differentiated marketing and concentrated marketing. Undifferentiated marketing, the company may ignore market segment differences and go after the whole market with one market offer. One advantage of this strategy is production efficiency. However, there are dangers involved in the strategy of undifferentiated marketing. The company that attempts to satisfy everyone in the marketplaces faces the threat of competitors who offer specialized products to smaller markets of total market. Thus, if IBC follows this strategy, it should have a single marketing mix to offer to the entire market. However, this strategy rarely succeeds because consumers in different location differ taste and preference. Consumers wants and needs also differ among age groups, obviously, there is the significant difference in soft drink consumption between young and old people. In addition, Vietnamese people are not habit drinking soft drink a lot and soft drink is not the necessity product and soft drink consumption is still influenced by personal income level. Therefore, following this strategy means that the company has to cope with a market risk since it can not minimize the costs and maintain the acceptable price for all the segments at the same time. Differentiated marketing, the company may divide total market into different segments and develop the different marketing mix strategies for each market. Following this strategy, the company captures consumers from many different market segments by providing increased satisfaction for each of numerous target markets. This strategy requires large investment capital because of increase in production costs and promotion costs. So differentiated marketing leads to both higher sales and higher cost than undifferentiated marketing. At present, IBC has the strongly financial resource and produces canned and bottled soft drinks with high quality. To appeal to consumers with difference in taste, income and age groups, IBC should pursue the differentiated marketing for market segmentation. Concentrated marketing, the company can choose to focus on its efforts on profitably satisfying a smaller target market or niches. Following this strategy allows the company to compete in just one segment and develop the marketing mix program to serves that segment. Regarding the capability of IBC, it is a large-size soft drink company and facing the intensified competition from Coca Cola Indochina Pte, Ltd. Currently, IBC has plans for expanding its operation in order to increase market share and protect the leading position in HCMC. Therefore, IBC can not purse this strategy. Overall, the differentiated marketing should be strongly recommended for IBC as regard of the market segmentation. Moreover, because consumption pattern of soft drinks in Vietnam is strongly affected by regional taste, personal income level, thus, IBC should base on geographic variable for segmenting Vietnamese soft drinks market such as HCMC, Ha Noi, Central and Mekong Delta provinces. For HCMC market, the company should base on income segmentation. The income level of HCMC residents is classified three groups: high, middle and low income 6.2.2. IBC’s Market Targeting Together with rapid growth rate of economy, rising in the living standard, the proportion of high and middle income people in HCMC will significantly increase in the next years. This points out potential consumption of soft drinks will increase these segments. In addition the soft drinks consumption is also affected by age. Most of soft drink consumers are young population at range from 10 to 35 years old. This age group has big share in population structure and increases yearly. Thus, IBC's target market should be focus on soft drink consumers with high and middle income, with particular emphasis on young age people. At present, IBC should concentrate on selling canned carbonates including Pepsi, 7-Up, Crush, Schweppes soda with high quality at a reasonable price in the segment of high income consumers. The consumption of these items is mainly in hotels, restaurants, snack bars, dancing clubs, karaoke clubs and entertainment places. To segment of the middle income people, IBC should focus on selling returnable glass bottle of soft drinks and PET bottles at the reasonable price. 6.2.3. Positioning Strategy Positioning strategy is the combination of product, channel of distribution, price and promotion strategies, the company uses to position itself against its key competitors in meeting the needs and wants of the market targets. Therefore, IBC needs to link its marketing activities including the analysis of its products’ attributes, prices compared its competitive products, developing the distribution channels to make its products more available to end users and emphasizing on promotion to persuade and remind them to buy its products. Regarding IBC products, it is necessary for the company to position its products in order to gain the competitive advantages. IBC is thought of as the largest soft drink company in Vietnam. At the beginning of operation to now, IBC has continuously created the awareness of its products: Pepsi, 7-Up, Crush and Schweppes soda in HCMC market. Pepsi and 7-Up are much preferred by majority of consumers and gain high reputation brands. 7-Up is the number-one Uncola in the Vietnamese lemonade flavor market. Therefore, IBC should position its products as high quality products at the reasonable price to strengthen their own current position in the consumer’s mind in HCMC market. To implement its positioning strategy, IBC needs to develop marketing mix strategies for products, price, distribution and promotion. 6.2.4. Developing Marketing Mix Strategy for IBC in HCMC At present, IBC’s market share is 28 percent in the whole country and 42 percent of HCMC market. IBC has the highest market share in Vietnamese soft drinks market and HCMC market. The company is facing the intensified competition in which Coca Cola Chuong Duong Soft Drink Company Ltd is main competitor in HCMC. To protect its current leading position, IBC needs to strengthen it strengths and improve weaknesses. This calls for action on three fronts: finding ways to expand total market demand, protecting its current market share through good defensive and offensive actions, trying to increase further its market share. To expand the total market, IBC should look for new users, new uses or more usage of its products. To increase the number of users, the company must either increase consumer’s willing to buy or their ability to buy products. The willing to buy may be increased by demonstrating the benefits already offered by products, or developing new products with benefits that will be more appealing to certain segments, or promote new benefits from its existing products. The ability to buy can be improved by offering high quality, or lower price, or by providing greater availability (through having more distributors, more frequent delivery). In addition to increase rate of purchase (more usage) the company must design advertising campaigns to convince the target consumers to buy its products more often or in more volume. While trying to expand total market size, IBC must retain its current customers and consumers and continuously defend its current business against rival attacks. Therefore, it must keep its costs down and its prices must be consonant with the value in which the consumers recognize in its brands. The company needs to build good relation with its wholesalers and retail outlets as well as will produce its brands in several sizes and forms to meet varying consumer preference. Besides, IBC must increase its market share by improving its products, opening up distribution networks and launching advertising campaign to persuade the consumers to switch to its products. In general, IBC should develop the feasible marketing mix strategies to protect its leading position. 6.2.4.1. Product Strategy Developing IBC's product strategy aims at stimulating soft drink consumers to buy its products by offering high quality products. To develop its product strategy, IBC should focus on improving attributes of its products, designing new type of packs. Improving attributes of product Pepsi As analyzed in the previous chapters, most of consumers indicate that Pepsi is less sweet than Coke and Tribeco. While majority of consumers in HCMC have habit of drinking the sweeter carbonates. So IBC should pay more attention to improvement its quality in terms of sweetness in order to attract more consumers. Moreover, the survey indicates that Pepsi has less gas than Coke. While young people prefer to drink strong gas carbonates. Thus, it is necessary to improve its gas level to convince more young people to buy Pepsi. Schweppes and Crush Schweppes sarsi is less preferred by a majority of consumers because its taste, gas and sweetness are not completely suitable to Vietnamese consumer's taste. IBC should research on manufacturing formula of Schweppes to improve it quality in order to attract soft drink consumers. Currently, Schweppes is unavailable at retail outlets in HCMC, thus, IBC should make Schweppes to be more available to consumers in order to create its awareness in the market. With the presence of Pepsi, 7-Up, Coke and Sprite in HCMC, sales of Schweppes has decreased. The purpose of diversifying its products, IBC should do market research, produce and distribute other flavor of Schweppes such as cream soda, tonic, pineapple and Schweppes sport plus to attract the new consumers. Developing new pack types Soft drinks have been increasingly consumed at home. This proves that there is the fast growth of the take-home trade. IBC should bottle it products in PET bottles with volume of 500 ml, 1 liter, 1.25 liters or 1.5 liters to cover this segment. Beside Schweppes bottle with volume 285 ml, Schweppes ought to bottled with volume of 207 ml to meet the different drinking size of Vietnamese consumers. Stemming from strongly financial resource, IBC often supports sport, music as main sponsor for these activities. Thus, it should design label attached to its products in special events such as sport, music, or national celebration, new year and so on, in order to enhance high brand recognition and more attractive. 6.2.4.2. Price Strategy The purpose of IBC’s price strategy is to support its marketing mix strategies. As analyzed earlier, developing IBC’s marketing strategies is to protect its leading position. Its price strategy should be developed to increase either numbers of buyers or the rate of purchase. At present, the prices of IBC products are evaluated at fairly average level and meet the purchasing power. The company should continue to maintain the stabilized pricing policy to stimulate demand for soft drink consumption. IBC ought to apply the market oriented price policy in which the prices of its products are higher than prices of local brands to affirm high quality products and reap profit. Moreover, the prices of Pepsi and 7-Up are lower than Coke and Sprite to meet competition and purchasing power of consumers. Pursuing the lower price policy compared Coke will be an important factor to convince more consumers to buy IBC products because most of soft drink consumers has a little price sensitive. In fact, the selling prices of Schweppes and Crush per unit (bottle) are the same as the prices of Pepsi and 7-Up. If compared Schweppes with volume of 285 ml and Pepsi 207 ml, Schweppes is lower price than Pepsi but most of consumers are not interested in the volume difference. Therefore, Schweppes and Crush should bottled with volume 207 ml at lower prices in order to attract more consumers and can target the segments of middle and upper low income people. In addition IBC should use the price-adaptation strategies to varying conditions in the marketplace such as price discounts and allowances, promotional price and geographical pricing. To develop new wholesalers and retail outlets and maintain good relationship with its existing dealers, IBC should use the flexible price discount policy and higher incentives compared Coke. Moreover, the company should establish the special price as promotional price in special events such as new years, holidays. To capture the new markets such as Central and South provinces, at the first time, IBC should charge the same prices to all consumers regardless of location and apply the subsidized policy for its wholesalers in new markets, especially in rural areas. 6.2.4.3. Distribution Strategy IBC’s current distribution channels system in HCMC covers all inside and outside districts. The company has continuously expanded direct and indirect channels to make its products to be more available. In the future, its distribution channels will require periodic modification to meet new conditions in the marketplace. Modification becomes necessary when consumer buying pattern changes, market expands, competition rises. To distribute its products to right consumers in right place at right time with cost efficiency, IBC should continue to follow the intensive and effective distribution strategy to cover in the whole country. Following this strategy, the company should expand its current distribution channels region by region, penetrate and develop distribution networks at rural markets effectively by using more flexible distribution techniques. For HCMC market, IBC should focus on the following aspects: Opening up the selling its product by vending machines: at present “postmix” of IBC faces several problem as mentioned in previous chapter. In the future, however, when demand for soft drinks increases significantly, competition becomes sharpest, establishing and developing this channel will be very important for the company to compete with its competitors. Thus, IBC should invest to install more vending machines (postmix) at entertainment places, train station, theater, high schools, factories and so on. In addition launching the advertising campaigns and sales promotion for postmix are necessary to convince more consumers to drink soft drinks. By developing this channel will create high awareness for the company and its products. Developing new retail outlets through expanding “direct route” and “Horeka”: as analyzed in consumer survey, majority of consumers most often buy soft drinks at coffee shops, retail outlets. Stemming from this characteristic, IBC should focus on developing new retail outlets including exclusive retail outlets by offering a higher range of incentives and discount prices. Furthermore, IBC should significantly focus on penetrating and developing more retail outlets in channel of “Horeka” because Coca Cola Chuong Duong Soft Drink Company is consolidating and enhancing its channel in this segment. To capture more outlets of “Horeka”, IBC should often use the offers of free carbonates, discount coupons for purchase, or holding lucky draw on weekend of each week. Expanding wholesaler networks: IBC should plan for developing new wholesalers, especially exclusive wholesalers and offering incentive policies for the wholesalers who gain higher sales volumes. Moreover, the company has also plan for dropping wholesalers whose sales are below a certain amount. Creating good relationship between IBC with its distributors, the relationship is very important to win and hold customer loyalty. Thus, the relationship can be built if the company will keep supplying, carry out its promises, provide promotional support, manage and solve conflict in channels, give adequate incentives and profit margins. Besides, IBC should mention in developing distribution networks at provinces. For cities such as Ha Noi, Da Nang and Can Tho, the company may build “Horeka” to penetrate into segment of high income people and establish sales department at these regions and control the selling price of wholesalers. Once the plant will be built at these locations, direct routes can be developed. 6.2.4.4. Promotion Strategy The promotion strategy that IBC should undertake is aimed at creating the image and maximizing awareness of its products, especially Pepsi and 7-Up in the consumer’s mind as well as convince them to buy its products. The company should follow the pull promotion strategy to communicate existence and value of its products to target market and create sales. The pull strategy involves marketing activities, mainly advertising and sales promotion directed at end users to induce them ask distributors (wholesalers and retail outlets) for product and thus induce the distributors to order the product from the company. To persuade and remind its target consumers to buy IBC products, the company should emphasize on the use of promotion tools, as follows: Advertising: the survey disclosed that the information contents of IBC’s advertising program on television are lack of honesty. This can cause a negative impact about its products. Thus, IBC’s advertising program should be adjusted to be suitable local. Sales promotion: IBC ought to enhance in trade promotion by offering free goods or promotional price in special events, supporting promotional materials and point of sale display in order to stimulate their purchase, build brand loyalty of wholesalers and retailers, maintain good relationship and gain entry into new retail outlets. For consumer promotion, this activity is not attractive in last time, so IBC should stress on using consumer promotion tools such as discount coupon for purchase, lucky draw and gift to convince consumer to switch to its products. All activities of consumer promotion should be often held at entertainment places, schools, dancing clubs, karaoke clubs, etc., to attract young people. Special events sponsorship: the company should sponsor the local cultural festivals, international music programs, sport activities, scholarship funds and charity activities. Personal selling: the company should emphasize on training and developing its sales force to manage direct routes and build the good relationship with retail outlets, especially outlets of “Horeka”. 6.3. Recommendations for Further Research This research of developing marketing strategy for the International Beverage Company in HCMC, the author just concentrates on developing marketing strategies including market segmentation, market targeting, positioning strategy and developing marketing mix strategies. The implementing and managing marketing strategy including designing the marketing organization, evaluating and controlling marketing performance are important issues. The research does not discuss, thus, it needs to study in detail in order to ensure the success of marketing strategies. Regarding the product strategy, new product development is not discussed. It is necessary to study in detail to ensure the success of product before producing and launching new product in the market. The physical distribution channels play a critical role in developing distribution systems. So, the activities such as inventory, logistic, warehouse and transportation need to study carefully in order to complete the work on distribution channel.