Báo cáo cuối kỳ môn Channel Management

16/01/2021

FINAL REPORT OF
CHANNEL MANAGEMENT
(B04E)

CHANNEL STRUCTURE AND
STRATEGIES OF
GOLDEN STAR BALM
LECTURE: NGUYEN THI NGOC DUNG

GROUP 8:
1.
2.
3.
4.
5.

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NGUYỄN THỊ NGỌC MAI
TRẦN THỊ HOÀNG ANH
PHẠM THỊ MỸ LINH
MÃ CÁC TƯỜNG
ĐINH THỊ LINH NHI


TABLE OF CONTENTS:
I.

INTRODUCTION:................................................................................................3

I.1.

Introduction of the Golden Star Balm:...........................................................3

I.2.

4P of the Golden Star Balm:...........................................................................4

II. CUSTOMER ANALYSIS:....................................................................................5
II.1.

Target Market:................................................................................................5

II.2.

Target Customer:............................................................................................5

II.3.

Make or buy:..................................................................................................6

II.4.

End-user segmentation: Service output:.........................................................6

III. PROBLEM:...........................................................................................................7
III.1. Current situation:............................................................................................7
III.2. Problem of product:........................................................................................7
III.3. Problem of distribution:..................................................................................8
III.4. Existing solution:............................................................................................8

IV. SOLUTION:..........................................................................................................8

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I. INTRODUCTION:
I.1. Introduction of the Golden Star Balm:
During the war against the French and the years after 1954, in Vietnam, there was a
popular product called balm oil, of which the most popular was the trademark of Tiger
(Tiger Balm). After 1954, the North of Vietnam rebuilt the medical system,
encouraged and accelerated the production of medicines from domestic herbal
medicines. Researching and putting into production at that time was not easy. By the
year 1968-1969, after a period of research and testing the Golden Star Balm was born.
This is a very compact and smooth that is durable in different weather conditions, and
comes in a small iron box that can be tucked in a pocket.
Since being put into production, Golden Star Balm has become a familiar product in
all families in the North - Vietnam in particular and the country in general. In the
years 1970-1990, Golden Star Balm could be considered as a cult brand and had the
"greatest" brand awareness at that time, indispensable in every Vietnamese family and
also became a symbol. image of Vietnam's pharmaceutical industry many years later.
With the feature of heating the body, Vietnamese people, when traveling on business
or studying in Eastern European countries at that time, often brought the Golden Star
Balm to use. In addition, with its anti-cold and lightweight effect, it is also used as a
gift. Therefore, the Golden Star Balm is known to some Eastern European countries.
After 1975, Vietnam and the Soviet Union stepped up the exchange of goods. Golden
Star Balm is one of the commodities exported to the Soviet Union. Products were
delivered to 5 pharmaceutical manufacturing factories. Particularly, the
pharmaceutical factory in Da Nang has been assigned the annual production target of
10 to 15 million boxes on average. The peak was 1983, with an output of 20 million
boxes, the lowest was in 1986, the last year had a production target of 4 million boxes.

After the export to the Soviet Union ended, the consumption of Golden Star Balm
decreased. Many units registered to produce high quality, but few businesses kept
stable output. But only for a short time, Golden Star Balm faced the competition of
new products in the market such as Singapore green wind oil, Chinese tiger oil,
eucalyptus oil, Nhi Thien wind oil ... When there were no orders from the Soviet
Union and European countries, the Vietnamese's sentiment to choose foreign products
at a higher price than Vietnamese products with a much lower quality made Golden
Star Balm almost disappeared in the market for more than 2 decades.
After a quiet period of time from 2013 to 2014, Golden Star Balm was mentioned
again when it became a best-selling product on the international market. On top online
selling sites like eBay or Amazon, this product has a price that is tens of times higher
than the original price in Vietnam. Currently, Russia is a country with a high import
market for Gold Star Balm the best.
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I.2. 4P of the Golden Star Balm:
 Product:
- Golden Star Balm is a special gelatin and waterproof for various events, and
comes in a pocket that can be tucked into a pocket.
- Ingredients include of prepared from a variety of essential oils, including:
camphor, peppermint essential oil, mint essential oil, cajeput, basil, cinnamon.
- Uses are day massage on acupuncture points, very effective in fire fighting
body, warm head, nose, sadness, stomachache, boil or insect bite.
 Price:
- In Vietnam, Golden Star Balm is 5,000 VND for 3g, 4g for 6,000 VND, 10g
box for 16,000 VND, 20g for 39,000 VND and 30g for 49,000 VND.
- In foreign countries, the prices are very high compared to the prices in
Vietnam. Typically, online sales channels such as Amazon sell for 9 USD, ie
208,000 VND / 10g, Ebay at 10 - 231,000 VND / 10g and Coupang: 21,000

Won - 439,000 VND / 9g, etc. There are some major retail channels. sold at a
very high price. However, the price is high compared to that in Vietnam, but
still in a state of fire.
 Promotion:
Currently, Golden Star Balm does not promote advertising in Vietnam, almost none in
Vietnam. But in Russia, a group (young people) made a video about the Golden Star
Blam and posted it on their YouTube channel as an advertisement for a luxury brand.
 Place:
Currently, Golden Star Balm has two main manufacturers are Central Pharmaceutical
Company 3 and OPC Pharmaceutical Joint Stock Company. Central Pharmaceutical
Company 3 has three branches located in Ho Chi Minh City, Da Nang and Hanoi. Cao
Sao Vang is sold in places like Drug stores (Pharmacity), markets such as Ben Thanh
market, etc and some online retail channels "E-commerce" such as Shoppe, Lazada,
Tiki, Amazon, eBay and some other retail channels.

II.

CUSTOMER ANALYSIS:
II.1.
-

II.2.
-

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Target Market:

Golden Star Balm is present in more than 15 countries
Focusing mainly in the North of Vietnam

Target Customer:

Gender: Male and Female
Age: 25 - 60 years old


-

Most people between the ages of 30 and 60 are those whose lives used to stick
with Golden Star Balm. Those between the ages of 25 and 30 are the ones
being affected by the Golden Star Balm's comeback.
New all income and career because Golden Star Balm is easy to use with low
price.
Golden Star Balm are also very popular in foreign markets, especially Russia.
Channel function has two main routes, one is to sell to retailers, the other is to
sell to their own stores. Channel function is drawn as follows.

Figure 1: Channel function
OPC company has a total of 15 stores nationwide. But OPC stores sell a wide variety
of drugs together. Golden Star Balm's revenue comes mainly from sales to retailers.
With 2 that are General Trade and Modern Trade.
On the General Trade channel there is a clear difference between the North and the
South. In the south the Golden Star Balm appears much less. Only 30% of pharmacies
in the South sell Golden Star Balm and only Ben Thanh market, but it is difficult to
find a booth in Ben Thanh market that sells Golden Star Balm. In the North, the
number of pharmacies selling Golden Star Balm is much higher, accounting for 70%,
accounting for 60% of the hypermarket and 70% of Mom and pop stores.
As for the Modern Trade channel, there are two main branches: domestic and foreign.
There are many foreign websites selling Golden Star Balm products such as Tao Bao

from China, Amazon, Ebay from the United States, Coupang from Korea. In the
country, it is available at sites such as Tiki, Shoppee, Lazada.

II.3.

Make or buy:

OPC's distribution channel is Make because it needs the expertise and strict
management of the product quality of its brand, especially when it is a medical
product, a drug, so customers' trust on the product. Product is a thing to note.
Currently, Golden Star Balm is considered only a small product of OPC
Pharmaceutical joint-stock company, so it has not yet invested much. In addition, at
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the moment, Golden Star Balm's revenue, although increasing, is still considered a not
much profitable product for the company, so Make helps the company to limit funding
before the product actually turns. back to the top like before.
OPC Pharmaceutical joint-stock company has close relationships with retailers,
especially with large drugstore chains such as Pharmacy, Minh Chau drugstore, Long
Chau pharmacy. So it is easier to bring products to retailers.

II.4.

End-user segmentation: Service output:

Bulk breaking:
OPC has divide Golden Star Balm into two main type. Which can be separate by the
container, the first type containers make from tin and the second once it glass. But for
the glass container have been divided event smaller by weight from 3, 4, 9, 10 to 20

gram. For ours opinion this bulk breaking it not really efficient, it can cause a lot of
confusion for buyer with only a single gam different. Changing to small, medium and
large size they will all have the gap from 5 to 7 gram, this will help the customer
choose easier.
Spatial convenience:
Spatial convenience it one of OPC Golden Star challenge. Because being a famous
product back in the old day but Golden Star balm have run out of juice. Making it
really difficult for consumer to find ours product, we only mainly focus in the
Northside of Vietnam and mostly in pharmaceutical shop franchise. We thinking of
contacting local convenience store to get more surface cover.
Product variety:
Like mention OPC Golden Star only have two different type is tin and glass container.
They only have 1 flavor original. This have make the product being out sell by rivalry.
We trying to make the product more diversity when it come to smell like for example
some new smell like fruits, flowers and so on.
Information sharing:
OPC Golden Star Balm focus mainly in pre-purchase information sharing. They print
in the product label, container about the product attribute, usage, side effect for
customer to easily know how to use the balm carefully and in a right way. The
assistance help will be deliver by pharmacist in the store for any more question that
the customer have.
Waiting time, Customer service:
We notice there nothing much to discuss about OPC service output when it come to
waiting time and customer service. There usually no waiting time for the customer
when they come directly to the store. And customer service don’t have much to stand
out to other drugs store.
Channel competition:

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Having a lot of channel competition form from balsam oil from many different
branch. To other rivalry in the same balsam brackets and if that not enough OPC have
to compete with the Golden Star name from Trung Uong 3 and Danapha pharmacist
company. So it really hard to stand out in among ton of other substitution product
without a single chance been make for decade. So to keep OPC Golden Star Balm in
the game we must have a lot to change not just in the distribution system but also in
product and promotion.

III. PROBLEM:
III.1.

Current situation:

Since the Soviet Union and Eastern European countries collapsed, the contract with
the Soviet Union terminated in 1975, output of Golden Star Balm has decreased
significantly. Many pharmaceutical companies registered to produce this product on
the basis of sharing the same logo and brand but few units operated effectively and
kept stable output. Therefore about 2 decades the Golden Star Balm has been almost
absent in the domestic market.

III.2.

Problem of product:

 Currently, consumers are afraid to use oil products because of the unpleasant
odor affecting people around them.
 Users rate the value of a product low because it is mostly used by the working
class.
 Elderly people still remember about the red oil box with a golden star is

extremely difficult to open, sometimes they must throw it on the floor before
released.
 Product are not diversified and can’t meet the needs of customers.
 Currently, with the stiff competition from diversified products Foreign oils
such as Singapore oil, Chinese tiger oil, eucalyptus oil, Nhi Thien Duong oil,
liniment oil, …
The market share of industry is gradually shrinking, this led to Golden Star
Balm to lose market share.
 And with the consumer's mindset, Vietnamese customer enjoy to using
imported products. They are willing to spend lots of money for imported
products, instead of just spending more than 8,000 VND for a high-quality
Vietnam oil.

III.3.

Problem of distribution:

 With the drip communication strategy, the distribution channels in the domestic
market are not operating effectively, Golden Star Balm is not as expected at
home.
 Now Just a little drug store sold it so the product will difficult to approach to
customer.
 Pharmacies and retailer have not unified on selling prices.
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III.4.

Existing solution:

 In recent years, the OPC company has brought the product "re-exported” with
unchanged design. They still mainly use a golden star on a red background, but
they also add the English and Russian on the lid of the box.
 After a period of silence, from 2013 up to now, Golden Star Balm suddenly
"rebelled" back to the international market with the very high price and the
sales volume always in a state of "out of stock" at the big e-commerce website
like eBay or Amazon.
 In Russian they make a very professional advertisement.
 This event has made waves in the country and the domestic customer start renoticed it. This is also help revived this product line.
 Many domestic souvenir shops also bring golden star balm back on the shelves.

IV. SOLUTION:
 The first solution is ensuring the ability to provide products and services with
the best quality to revive customers' trust, especially improving product
packaging due to many opinions that it is difficult to open the lid of the box.
 Beside that, the company should create a variety of products to meet all
customers' needs, for example, changing to roller or patch form. According to
modern trends, people think that oil products have an unpleasant scent,
companies should change the shape and scent of products such as mint, fruit,
cinnamon, fragrance,...
 Change consumer perception of products by including products in home health
product talkshows and health magazine articles to help convince consumers to
return use natural products.
 Create a new trend on TikTok related to Golden Star Balm
 To increase market access, a push and pull strategy is introduced:
- Push: create contests and offer prizes to retail channels
- Pull: creates television advertising campaigns to change consumers' minds
about golden stars
 The company should promote the amount of products sold on foreign website
(Taobao, Amazon, ...) and throughout the network of drugstores in Viet Nam

because the market share of Golden Star Balm is reducing.
 Golden Star Balm is very difficult for customers to find and buy, expending
distribution channels at convenience stores (Family Mart, Circle K, Ministop,
GS25) is one of the most reasonable solution because convenience stores are
appearing in many places, especially in Ho Chi Minh City, customers can find
and buy products easier.
 In addition, they should promote advertising the product on e-commerce
channels which are growing in the present time (Lazada, Shopee, Sendo.vn)
and place advertising banners in front of pharmacies.
 Increasing the number of drugstore in the South of Viet Nam selling Golden
Star Balm to 50% and adding new retailers to diversify channel functions.
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 Introduce a price stabilization policy, if any drugstore is dumped, it will be
fined.

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