Introduction and Literature Review

Chapter 1

Introduction
1.1. Background
Transition from a centrally-planed economy to market-economic structure, the
Vietnamese market becomes more dynamic. All business and production activities are
encouraged investment to contribute into economic growth and stabilization of the nation.
Like other light industries, investment in soft drink production locally is welcomed and
facilitated. The Vietnamese soft drink industry has rapidly developed. Together with rising the
living standard, demand for soft drinks quickly increases and high quality brands are much
preferred.
More and more foreign soft drink producers enter into the Vietnamese market. At
present, all players are facing the fierce competition between local and foreign brands. There
are 25 local producers who produce more than 30 soft drink brands including cola, orange,
soda, sarsi, lemonade lime and other flavors, and plus presence of the giants in soft drinks
market such as Pepsi, Coke and Schweppes.
Most of the producers try to exploit their distinctive competencies to gain competitive
advantages and select the appropriate competitive strategies. They face the need of designing
marketing strategies in order to attract the consumers to buy their products. In this situation,
International Beverage Company (IBC) recognizes that development of effective marketing
strategies have to be considered as a priority in order to protect its leading position in
HoChiMinh city (HCMC) soft drinks market. Through developing marketing strategies help the
company to identify its target markets, position its products in the consumer’s mind and
develop marketing mix strategies in order to achieve its marketing objectives and meet
consumer needs and wants in a better way than its competitors. Thus, the company needs to
identify its strengths and weaknesses as well as find out opportunities and threats in the
marketplace in which it operates.
In such a context, this research study deals with the development of marketing
strategies for International Beverage Company in HCMC. IBC, a joint venture between Saigon
Processing Company (S.P.Co), Macondray and Company Inc., Hong Kong, and Pepsi
Company Inc, Holland produces and distributes well-known soft drink brands such as Pepsi

Cola, 7-Up, Schweppes and Crush.

1.2. Problem Statement
As competition rises, developing effective marketing strategies for a company is the
key to success in its target market. But how can the company develop such a marketing
strategy, identify the target market or proper niches for its products, and consolidate its
position in the target market? Regarding the case of IBC, last year, IBC obtained the highest
market share of 28 percent in total national market and 42 percent of HCMC market. At
present, IBC is facing the intensified competition from Coke, the question is how can IBC
protect its position in Vietnam in general, and HCMC in particular? To answer this question,

1


IBC needs to develop the marketing mix program for each local market to defend its current
market share.
This research study examines how to develop the effective marketing strategies for
International Beverage Company in HoChiMinh city in order to increase the market share,
and protect its leading position in this soft drink market.

1.3. Objectives of the Research Study
The objectives of this research cover the following issues:
1. To analyze the business environment of the Vietnamese soft drinks market including
production and consumption of soft drinks, consumer preference, governmental policies on
the soft drink industry and competitors of IBC.
2. To analyze and assess the current situation of IBC in term of strengths and weaknesses of
its production capacity, market share, and marketing activities including products, price,
distribution and promotion.
3. To develop the marketing strategies for IBC in HCMC which consist of market
segmentation, market targeting, positioning strategy and marketing mix strategies. The

specific marketing mix strategies for products, price, distribution, and promotion will be
developed to implement the selected positioning strategy.

1.4. Scope and Limitation of the Research Study
This research study is conducted at International Beverage Company in HoChiMinh
city, Vietnam. The study has been undertaken purely from a viewpoint of marketing relating to
develop the marketing strategies for IBC in HoChiMinh city.
This research relates to the development of the marketing strategies including market
targeting, positioning strategy and marketing mix for products, price, distribution, and
promotion.
Regarding product strategy, the research does not discuss the development of new
products because IBC has not planned yet for developing new products.
In the area of distribution, the physical distribution channels such as inventory, logistic,
warehouse, and transportation are not included
Data are collected just in HoChiMinh city which is the key soft drink area in the
Vietnamese market.

2


1.5. Organization of the Research Study
This research is organized in six chapters, as follows:
•

Chapter 1 provides an introduction including background, problem statement, objectives,
scope and limitation of the research study.

•

Chapter 2 presents the literature review of the study and summarizes the work of previous

studies, it relates to the fundamental ideas on designing marketing strategies including
marketing situation analysis, marketing strategy design, marketing program development
for products, price, distribution and promotion and implementing and managing marketing
strategy.

•

Chapter 3 discusses research methodology including the framework of research,
information needed, methodology of data collection, sampling size and data analysis.

•

Chapter 4 analyzes external factors covering the soft drinks market situation and
competitors in order to find out opportunities and threats in the environment in which the
company operates.

•

Chapter 5 analyzes and assesses the current position of the company regarding strengths
and weaknesses of IBC about production capacity, market share and marketing activities.

•

Chapter 6 presents conclusion and recommendations for developing the marketing
strategies for IBC in HCMC including market targeting, positioning strategy and develops
marketing mix strategies.

3

Chapter 2

Literature Review
This chapter discusses the general concepts which relate to the fundamental ideas on
designing marketing strategies including marketing situation analysis, marketing strategy
design, marketing program development for products, price, distribution and promotion, and
implementing and managing marketing strategy.

2.1. Concept of Marketing Strategy
Nowadays, most of companies are increasingly embracing targeting marketing. Target
marketing helps sellers or suppliers identify marketing opportunities better. The sellers can
develop the right offer for each target market. They can adjust their prices, distribution
channels, and advertising to reach the target market effectively. Therefore, designing the
marketing strategy is very important for success. The marketing strategy is always a
determinant constituent of effective competitive strategy. Cravens (1994) defined that
marketing strategy is the analysis, strategy development, and implementation activities in
selecting market target strategies for the product-markets in each business unit, setting
market objectives, and developing, implementing, and managing the marketing program
positioning strategies designed to meet the needs of the customers in each market target.
Strategic marketing is a market-driven process of strategy development, taking
account a constantly changing business environment and the need to achieve high levels of
customer satisfaction. Thus, marketing strategy builds competitive advantage by combining
the customer influencing strategies of the business into integrated array of market-focused
actions. Strategic marketing links the organization with the environment and views marketing
as a responsibility of the entire business rather than a specialized function.
Because of marketing’s boundary orientation between the organization and its
customers, channels members, and competition, it is central to the business strategy planning
process (Day, 1984). Strategic marketing provides the expertise for environmental monitoring,
for deciding what customer groups to serve, for setting product specifications and for
selecting which competitors to position against.

2.2. Link Between Marketing Strategy and Corporate Strategy
Corporate strategic planning involves the activities such as developing a clear sense of
the company’s mission, identifying the company’s strategic business units, allocating
resources to the various strategic business units, and expanding present business and
developing new ones to fill the strategic-planning gap. The corporate strategy is concerned
with what types of business the company as a whole should be in and is therefore concerned
with the scope. Marketing strategy, on the other hand is part of functional strategy which
emerges in each strategic business unit as part of corporate strategy.
According to Guiltinan and Paul (1991), corporate strategy is type of plan which
outlines how a firm should use its resources to produce and market a specific array of
products and services in order to achieve an overall corporate objectives. In essence, the
corporate strategy provided a general statement. It defined the products in which the

4


organization would be involved but left open the details of how each product or product line
would be marketed.
While the corporate strategy presents a plan developed by top management to guide
the total organization, a marketing strategy is usually developed by a middle manager to
guide a firm’s activities for a product or a line of related products. More specially, a marketing
strategy is a plan which indicates how a manager deploys marketing resources on an
individual product or product line in order to achieve a specified product objective (such as
market-share growth or maximizing cash flow).

2.3. Strategic Marketing Planning Process
Various steps in designing strategic marketing planning within an industry can be
found in literature and basically there principles are all similar. An approach for strategic
marketing process consist of marketing situation analysis, designing marketing strategy,

marketing program development, and implementing and managing marketing strategy
(Craven, 1994). It is shown in Figure 2.1. So there is a need to discuss this in more detail.

2.3.1. Marketing Situation Analysis
The marketing situation analysis is the first step in the design of new strategy or
examining an existing strategy. It comprises the external and internal environment analysis.
These analysis guide the choice of marketing strategies.
The marketing environment is a place where the company must start its search for
opportunities and possible threats. It consist of all the actors and forces that affect the
company’s ability to transact effectively with its target market. The external environment can
be divided into macroenvironment and microenvironment.
•

The macroenvironment includes more general forces which often do influence the long run
activities of the company. It consists of economic, socio-cultural, technological, political,
legal forces in relation to the firm's total environment. Thus, the achievements, difficulties
and challenges of Vietnamese economy and governmental policies will influence the
development of the soft drink industry.

•

The microenvironment includes the actors in the company’s immediate environment that
affect its ability to serve its markets especially, the company itself, suppliers, market
intermediaries, consumers, competitors and public. One key aspect of external analysis is
evaluation of competitors' strategies, strengths and weaknesses. Competitor analysis
includes defining competitive arena, analyzing the strategic group and describing and
evaluating each key competitor in terms of strengths and weaknesses. At present, the
Vietnamese soft drinks market becomes fiercely competitive. So the analysis of
production, consumption and competition are necessary to identify opportunities and
threats for the company.

5


Market Situation
Analysis
Analyzing markets
Market segmentation
Analyzing competition
Marketing information
systems and research

Implementing and
Managing
Marketing Strategy

Designing
Marketing Strategy

Designing effective
organizations
Marketing strategy
implementation
and control

Market targeting
Positioning strategy
Marketing strategies
for selected situations
Planning for new products

Marketing Program
Development
Product portfolio strategy
Pricing strategy
Distribution strategy
Promotion strategy

Figure 2.1 Strategic marketing process
Source: Cravens, 1994

6


The internal environment analysis is to help the company recognizing itself in terms of
strengths and weaknesses. The internal analysis includes the corporation's structure,
resources, production and business and marketing activities. Corporation resources are the
assets that include people, managerial skills, financial circumstances, facilities, information
technology and the skills and abilities within functional areas.
In general, the situation analysis identifies opportunities and threats in the business
environment and the organization’s strengths and weaknesses. This information helps
companies deciding how, when and where to compete in a given environment.

2.3.2. Marketing Strategy Design
Designing marketing strategy includes market segmentation and targeting, positioning
strategy and the marketing strategy choice.
Market segmentation and targeting
Market segmentation is the act of dividing a market into distinct groups of buyers who
might merit separate products and/or marketing mixes. The marketer tries different variables
to see which reveal the best segmentation opportunities. For each segment, a customersegment profile is developed. The effectiveness of segmentation analysis depends on arriving

at segments that are measurable, substantial, accessible and actionable.
After evaluating market segmentation, the companies have to target the best market
segment(s). Market targeting selects the people or organizations that company wishes to
sever in the product-market. To do this, it must first evaluate profit potential of each segment,
which is a function of segment size and growth, segment structural attractiveness, and
company objectives and resources. Then, company must decides how many segments to
cover. It can ignore segment differences (undifferentiated marketing), develop different market
offers for several segments (Differentiated marketing) or go after one or a few market segment
(concentrated marketing).
Thus, once the company’s product-markets are identified and their relative importance
to the firm determined, it selects the targeting strategy. This decision is the focal point of
marketing strategy, since targeting guides the setting of objectives and developing a
positioning strategy.
Positioning strategy
Regardless of the types of market coverage chosen, the company must develop and
communicate for every market selected. A positioning strategy that will clearly differentiate it
or its products from competitors. Positioning is the act of designing the company’s offer so that
it occupies a distinct and valued place in the target customers’ minds (Kotler, 1991).

7


Positioning strategy should take into account:
•
•
•

The criteria or benefits the buyer considers when purchasing a product, including the
relative importance of the criteria.
How the firm is differentiated from its competition.

The limitations of competing products regarding important buyer needs and wants.

The positioning strategy indicates how the firm or its brands would like to be perceived
in the eyes and minds of the market target customers. Therefore, decisions about products,
distribution channels, price, and promotion should create a cohesive marketing program
aimed at meeting the needs and wants of consumers in the firm’s target market. The
marketing program combines the firm’s marketing capabilities into a package of actions
intended to position the firm against its competitors.
Marketing strategy selection
Selecting a marketing strategy takes into account the factors such as the rate of
growth of product-market, the diversity in the needs and wants of buyers, the structure of
competition, the organization’s competitive advantage in which an organization encounters.
Strategy selection may involves the developing a new marketing strategy or changing an
existing strategy.
As argued by Guiltinan and Paul (1991) to choose the best marketing strategy, a
manager must consider several kinds of information, as follows (Figure 2.2).
•

Product objectives to help company determine the necessary basic type of strategy. For
example, if market share objectives are important, managers will employ selective demand
strategies to retain or expand market share. Alternatively, the greater the importance of
cash flow and profitability objectives, the more likely a manager will be to select retention
strategies and strategies for increasing repurchase rates. That is, these strategies will, in
general, be less cost than acquisition strategies or strategies aimed at increasing the
number of users.

•

Nature and size of the market opportunity should be clearly established based on the
market analysis and market measurements.

•

Managers must have a sense of the success requirements in terms of the kinds of
competitive advantages necessary and the level of marketing expenditures that will be
necessary to meet profitability goals.

Craven (1990) proposed the comprehensive possibility of marketing strategy
alternatives that can be used to achieve marketing objectives. They consist of (1) new product
strategy, (2) market targeting strategy, (3) market program positioning strategy, (4)
productivity improvement
strategy, (5) organizational design, (6) exploiting special
advantage, (7) acquisition/ merger/ strategic alliance and (8) exit from market.

8


Corporate Marketing
Planning

Product Objectives

Market
Analysis

Market
Measurement

Profitability and
Productivity

Analysis

Competitive
Analysis

Needs of
Target
Markets

Size of
Market
Opportunity

Marketing
Budgets
Required

Competitive
Advantages

Market
Opportunity

Market Success
Requirements

Marketing Strategy

Figure 2.2 Selecting a marketing strategy
Source: Guilinan and Paul, 1991

9


Another selections of marketing strategy include entry strategy into new market,
strategies for growth, mature and declining markets and global strategies.
Concerning with this research study, IBC needs to develop a marketing strategy to
protect its leading position in the soft drinks market in HoChiMinh city. A marketing strategy for
market leader faces three challenges: expanding the total market, protecting the market share
and expanding market share. The market leader is interested in expanding total market
because it is the main beneficiary of any increased sale. To expend the market size, the
leader will have to look for new users, new uses or more usage. To protect its existing market
share, the market leader has several defense methods: position defense, flanking defense,
preemptive defense, counteroffensive defense, mobile defense or contraction defense. The
most sophisticated leaders cover themselves by doing everything right, leaving no openings
for competitive attack. Leaders can also try to increase their market share. This makes sense
if profitability increases at higher market share levels and the company’s tactics do not invite
antitrust action.

2.3.3. Marketing Program Development
Market targeting and program positioning strategies for new and existing products
guide designing strategies for each part of the marketing mix. Developing marketing mix
strategies for products, distribution, price and promotion is to implement the positioning
strategy selected and in order to achieve a coordinated combination of its components that will
accomplish the market target objectives in a cost-effective manner.
Product strategy
Product is the first and most important element of the marketing mix. The product
strategy calls for making coordinated decisions on product mixes, product lines, brands,
packaging and labeling.
•

A product mix (also called product assortment) is the set of all product lines and items that
a particular seller offers for sale to buyers. (Kotler, 1991). The product mix can be
describes as having a certain range (how many different product lines the company
carries), length (total number of items in its product mix), depth (how many variants are
offered of each product in the line) and consistency (how closely related the various
product lines are in end use, production requirements, distribution channels or some other
way).

•

A product line is a group of products that are closely related because they perform a
similar function are sold to the same customer groups, are marketed through the same
channels or make up a particular price range. Each product line is usually managed by a
different executive. The product line manager should study the sales and profit
contributions of each product item as well as the way the items are positioned against
competitors’items. This provides information needed for making product line decision such
as line stretching, line filling, line modernization, line featuring and line pruning.

•

Developing brand policies for individual product items in line.

•

Packing and labeling decisions to protect, economy, convenience and promotion.

10

To select a product strategy, the company needs the following information on current
and anticipated performance of the products in the business unit:
•

Consumer evaluation of the company’s products, particularly their strengths and
weaknesses vis-à-vis competition (that is, positioning by market segment information)

•

“Objective” information on actual and anticipated product performance on relevant criteria
such as sales, profits and market share.

This information helps management formulate strategies for each product in the mix
or line. The product strategy includes:
•

Developing plans for new products, this process consists of eight stages: idea generation,
idea screening, concept development and testing, marketing strategy development,
business analysis, product development, market testing and commercialization.

•

Managing programs for successful products, and

•

Selecting strategies for problem products (e.g., to reduce cost or improve the product).

Price strategy
Price is the only element in marketing mix that produces revenue, other elements

produce cost. Pricing is a problem when a firm has to set a price for the first time. This
happens when the firm develops or acquires a new product, when it introduces its regular
product into a new distribution channel or geographical area and when it enters bids on new
contract work. Thus, before setting a price, a firm must identify the role that price will play in
the product’s overall marketing strategy. There are three generic pricing strategies that a firm
might adopt: skim pricing, penetration pricing and neutral pricing (Nagle and Holden, 1995).
Each strategy is defined by the role pricing plays in the product’s marketing strategy.
Skim pricing (or skimming) is designed to capture high margins at the expense of
high sales volume. By definition, skim price are high in relation to what most buyers are willing
to pay. Consequently, this strategy is viable only when the profit from selling to a priceinsensitive segment exceeds that from selling to the large market at a lower price.
Penetration pricing involves setting a price far enough below economic value to
attract and hold a large base of customers. It is a strategy designed to generate sale volume
even at the expense of high margins and, like skim pricing, is favored by a particular
environment. Penetration prices are not necessarily cheap, but are low relative to value.
Neutral pricing involves a strategic decision not to use price to gain market share,
while not allowing price alone to restrict. Neutral pricing minimizes the role of price as a
marketing tool in favor of other tools that management believes are more powerful or costeffective for a product’s market. A firm generally adopts a neutral pricing strategy by default,
because the conditions are not sufficient to support either a skim or penetration strategy. For
example, a marketer may be unable to adopt skim pricing because the products in a particular
market are so generally viewed as substitutable that no significant segment will pay a
premium. That same firm may be unable to adopt a penetration pricing strategy because, as it
is a newcomer to the market, customers would be unable to judge its quality before purchase
and would infer low quality from low price, or because competitors would respond vigorously

11


to any price that undercut the established price structure. Neutral pricing is especially common
in industries where customers are quite value-sensitive, precluding skimming, but competitors
are quite volume-sensitive, precluding penetration.

According to Kotler (1991), when a firm sets price strategy, it has to consider the
following factors in setting its pricing policy:
•

Selecting the price objectives such as survival, maximum current profit, maximum current
revenue, maximum sales growth, maximum market skimming and product-quality
leadership.

•

Determining demand schedule, which shows the probable quantity purchased per period
at alternative price level. Because each price that company might charge will lead to a
different level of demand and will therefore have a different impact on its marketing
objectives. The more inelastic the demand, the higher the company can set its price.

•

Estimating cost: demand largely set a ceiling to the price that the company can charge for
its product, and company costs set the floor. The company wants to charge a price that
covers its cost of producing, distributing, and selling the product, including a fair return for
its effort and risk. The firm therefore, estimates how its costs vary at different output levels
and with different levels of accumulated production experience.

•

Analyzing competitor’s prices: the firm needs to learn the price and quality of each
competitor’s offer and use them as a basis for positioning its own price.

•

Selecting one of the following price methods: markup price, target-return price, perceivedvalue pricing, going-rate pricing and sealed-bid pricing.

•

Selecting the final price: the firm select its final price, expressing it in the most effective
psychological way, coordinating it with the other marketing mix elements, checking that it
conforms to company policies and making sure it will find acceptance with distributors and
dealers, company sales force, competitors, suppliers and government.

The point of views of Stanton et al. (1994), the price determination process consists of
selecting price objective, selecting method of determining the base price and designing
appropriate strategies. Figure 2.3 illustrates this process.
Distribution strategy
A distribution channel is a set of organizational units (such as manufacturers,
wholesalers, and retailers) that performs all the functions required from a seller to the final
buyer. The structure of the channel is determined by three elements: the tasks and activities
to be performed by intermediaries, the types of distributors to be used and the number of each
type of distributor.
Channel design objectives derive from strategic market and financial goals. Such
objectives as sales volume, market share, profitability and return on investment must be
supported by the distribution channel. To operate, market coverage and market control
objectives must be developed to guide channel design. Market coverage objectives concern
customers expectations and degree of product-availability intensity. Market control objectives
are to ensure product quality, selling effort by channel partners, demand stimulation by

12


promotional activities and the quality of after-sales-support offered to consumers. Decisions
regarding market control and intensity objectives may be interrelated.

Channel strategy consists of decisions regarding channel organization, definition of
channel structures, development of criteria for evaluating channel structures and the selection
of an appropriate structure
Regarding the level of dependence and commitment among channel members, there
are tree categories of channel organization for managerial purposes: Vertical Marketing
Systems, Free Flow Channels and Single Transaction Channels (Bowersox, 1987). This
classification is accepted by the most of the authors (Boone and Kurtz, 1993)
Channel structures differ based on the number and types of intermediaries involved
and their specified roles. The basic choice is between direct and indirect structures. Kotler
(1991) proposed an approach for using consumer marketing channels. It consists of four
levels of channel of different lengths: zero-level, one-level, two level and three-level channel.
Selecting Channel of Distribution, most of the authors agree that there are basically
five factors for consideration in choosing distribution channels: market products, producers,
competition, availability of intermediaries and consumers characteristics, as follows (Boone
and Kurtz 1993):
•

Market factors emphasize the need and geographic location of the firm’s market, for
example, whether the product is intended for the consumer or industrial market.

•

Product factors also play a role in determining optimal distribution channels. In general, the
more standardized the product, the longer channel. Another generalization about
distribution channels is that the lower the product’s unit values, the longer the channel.

13


SELECT PRICING OBJECTIVE

SELECT METHOD OF DETERMINING THE BASE PRICE

Cost-plus
pricing

Price base on
balance between
supply and demand

Price set in
relation only to
market price

DESIGN APPROPRIATE STRATEGIES

Discounts and allowances
Freight payments
Skimming vs. penetration

One price vs. flexible price Leader pricing
Unit pricing
Psychological pricing
Resale price maintenance Price vs. nonprice competition

Figure 2.3 Price determination process
Source: Stanton et al., 1994

14

•

Producer factors concern adequate financial, managerial and marketing resources. The
producer’s need of control over product also influences channel section. For example, if
aggressive promotion is desired at the retail level, the producer often chooses the shortest
available channel.

•

Competitive factors are important when some firm is forced to develop unique distribution
channels because of inadequate promotion of its products by independent marketing
intermediaries. Intermediaries may not always be available, regardless of how desirable
they are from the manufacturers’ point of view.

•

Wholesalers and retailers independently owned businesses and both have their own
objectives to satisfy. They availability of intermediaries is therefore important to consider.
Consumer characteristic, i.e. where, when and how consumers choose to buy the goods,
is also the indispensable factor to be studied carefully.

Some authors have emphasized the consumer-oriented approach in selection of the
distribution channel (Stern and Strodivant, 1987), (Bowersox, 1987). Another approach using
the key-factor scoring method may be realistic and appropriated. This method requires that all
of those factors deemed critical by the channel selectors be considered. Then the channel
selector will either use “weighted averaging” or “preference ordering” method to rate the
channel alternatives.
Promotion strategy
Promotion mix strategy consists of four major tools: advertising, sales promotion,

personal selling and public relation in which all help the organization to communicate with its
consumers, cooperating organizations, public and the other target audiences. Promotion
strategies perform essential roles in positioning products in the eyes and minds of consumers.
Promotion informs, reminds and persuades buyers and others who influence the purchasing
process. Concerning with consumer goods, especially soft drinks, the company needs to
emphasize on designing the promotion strategy to convince the consumers to buy its
products.
According to Kotler (1991), to develop the promotion program, the companies have to
consider the following steps:
•

•

Identifying the target audience and its characteristics, including the image that audience
has of product. The audience could be potential buyers of the company’s products, current
users, deciders, or influencers. They could be individuals, groups, particular publics or
general public. The target audience will critically influence the communicator’ s decisions
on what, how, when, where and whom to say it.
Defining the communication objectives, whether it is to create awareness, knowledge,
linking, preference, conviction or purchase.

•

Designing the message, ideally, the message should gain attention, hold interest, arouse
desire, and elicit attention (AIDA model). Formulating the message will require solving four
problems: what to say (message content), how to say it logically (message structure), how
to say it symbolically (message format) and who should say it (message source).

•

Selecting the communication channels: personal and nonpersonal to carry the message.

15


•

Establishing the total promotion budget.

•

Deciding on the promotion mix, most of companies face the task of distributing the total
promotion budget over the four promotion tools of advertising, sales promotion, personal
selling, and public relations. Companies are always searching for ways to gain efficiency
by substituting one promotional tool for another as its economics become more favorable.
When deciding on the promotion mix, companies should consider factors involved such as
type of product market, push versus pull strategy and product-life-cycle stage.

•

Monitoring to see how much of the market becomes aware of the product, tries it and is
satisfied in the process.

•

Managing and coordinating the marketing communication process.

2.3.4. Implementing and Managing Marketing Strategy
Implementing and managing marketing strategy focus on evaluating and improving
organizational effectiveness and marketing strategy implementation and control.

Designing the Marketing Organization
An effective organization design selects people and assigns them work responsibilities
in a way that is best for accomplishing the firm’s marketing strategy. Deciding how to
assemble people into organizational units and assigning responsibility to the various elements
that make up marketing strategy impact strategy performance. Organizational structures and
process must be matched to the different types of business and marketing strategies that are
developed and implemented. The marketing organization has to be flexible to respond to
changing conditions and strategy needs. Organizational design needs to be evaluated on a
regular basis to assess its adequacy and to identify necessary changes.
Implementation and Control
Marketing strategy implementation and control are vital links in a series of strategic
marketing activities. These actions emphasize the continuing process of planning,
implementing, evaluating and adjusting marketing strategies. They include three important
management activities, as follows:

16


1. Marketing plan and budget
The marketing plan typically includes a situation analysis summary; a market target
description and strategic evaluation; overall objectives and specific objectives for each market
target; a marketing program positioning strategy; specific strategies for product, price,
distribution, and promotion; marketing research; coordination with other business functions;
forecasts and budgets and contingency plans.
2. Implementation strategy
The marketing plan should specifically include action guidelines concerning the
activities to be implemented, who does what the dates and location of implementation, and
how implementation will be accomplished. Several factors contribute to implementation
effectiveness, including the implementation skills of people involved, organizational design,
incentives and the effectiveness of communication within the organization and externally.

3. Evaluation of marketing performance
Marketing strategy is a continuing process of making decisions, implementing them
and monitoring their effectiveness over time. Evaluation and control are concerned with
tracking performance and , when necessary, altering plans to keep performance on track.
Strategic evaluation also includes looking for new opportunities and potential threats in the
future. It is the connecting link in the strategic marketing planning process, therefore, strategic
evaluation assures that strategy is an ongoing activities.
In general, marketing strategy is the analysis, planning, implementation and control
process designed to satisfy customer needs and wants. It stars with an understanding of the
corporate mission and objectives and the strategy of each strategic business unit. The
strategic marketing planning process consists of market analysis, deciding marketing
strategies, developing marketing mix strategies and implementing and managing marketing
strategy. Regarding with the case of IBC, to formulate marketing strategy, it is necessary to
analyze the Vietnamese soft drinks market and assess strengths and weaknesses of the
company.

17


Chapter 3

Research Methodology
3.1 Analytical Framework
This research is presented in the form of a case study exposing the complexities of a
real business environment in the Vietnamese soft drinks market. The purpose of this research
is to develop marketing strategies for International Beverage Company in HCMC. Thus, it is
necessary to the analyze market situation and current marketing strategy of IBC in order to
formulate the marketing strategy.
A framework may enable to understand the various linkages and interactions between
the variables and to develop the marketing mix program in order to achieve the marketing

objectives of the company. Figure 3.1 illustrates this analytical framework.
The company mission sets out the reason why the company exits and what it should
be doing and the company’s marketing objectives give a guideline of what it wants to gain and
become. This will serve as a guide for the process of diagnosing both external and internal
factors affected the business performance of IBC.
The objective of external analysis is to identify opportunities and threats in the
business environment in which IBC has to face. Two interrelated environments should be
examined at this stage: the macro environment of the Vietnamese market and the micro
environment referred to the industry in which IBC operates, the Vietnamese soft drink industry.
The analysis of the macro environment focuses on examining the key achievements and
limitation of the Vietnamese economy and HCMC economy and political factors and
government policies on the soft drink industry which strongly affect the soft drink industrial
evolution. The analysis of the micro environment involves an assessment of industrial growth,
production, consumption pattern and the competition between existing soft drink
manufacturers in HCMC in which the analysis the main competitors of IBC is examined in the
terms of strengths and weaknesses about their marketing activities.
The internal analysis is devoted to pinpoint the strengths and weaknesses of IBC.
Therefore, it is necessary to assess the production and business of the company in the terms
of production capacity, market share, sales volume, finance and marketing mix activities.
After having analyzed the internal and external factors, the marketing strategy
alternatives can be developed. To select the best solution, IBC needs to evaluate the
alternatives with respect to the possibility to achieve the marketing objectives. Because of time
constraint, this research cannot cover the implementing and managing the marketing
strategies. Thus, IBC should focus on evaluating and improving organizational effectiveness
and marketing strategy implementation and control. Once the marketing strategies are
implemented, their outcomes are constantly revealed by the company performance which
should be monitored. So feedback is necessary to adjust a part or the whole strategic
management process.
Designing

External Analysis

•
•
•
•

Internal Analysis
Marketing Strategy

Overview of Vietnamese
• Product capacity,
Market Targeting
economy
market share, sales
Positioning Strategy
Company’sDeveloping Marketing Mix
Production volume &
• Marketing activities
Marketing
•
Product
consumption of soft
• Opinion of consumers,
Objectives distributors toward
•
Price
drinks in last yearsFigure 3.1 Framework of the research
• 18Distribution
Major competitors

attributes of IBC’s
Opportunities
Marketing Strategy Promotion &
Strengths
•
products
Substitutes

& Threats

FEEDBACK

Alternatives Gap Analysis
Weaknesses

Existing
Marketing
study
Strategy of
IBC


3.2. Information Needed
To examine this research, information needed consists of the following issues:
•

The production of carbonates in last five years, consumption pattern, consumer and brand
preference, flavor share of soft drink consumption, package types used, and forecast
consumption of carbonates in period 1996-2000 in Vietnam are also collected.

•

Competition in the soft drinks market, which is focused on getting information about main
competitors: Coke and Tribeco, in terms of strengths and weaknesses involved marketing
activities such as product, price, distribution and promotion.

•

Information about the current situation of IBC that needs to be obtained including the
company profile, marketing objectives, production capacity, market share, marketing
activities.

•

General information about Vietnamese economic climate, HCMC economic development,
and government policies on the soft drink industry are also collected.

3.3. Data Sources
Data and information needed for conducting the research were basically obtained from
the following main sources:
•

The descriptive data requirements were extracted from the publication of the government
offices such as the Vietnam General Statistic Bureau, HCMC Statistic Bureau and the
Ministry of Light Industry.

•

Data and information from books and journals, newspapers, articles related to the
research were collected in AIT library and the Vietnamese national library.

•

Data and information were also obtained from IBC annual reports, from in-depth interviews
conducted with IBC general director, and functional managers and IBC’s distributors
(wholesalers and retail outlets).

•

Data and information related to competitors were collected from personal interviews with
sales and marketing managers of Saigon Soft Drink Company, Ltd (Tribeco) and Coca
Cola Chuong Duong Soft Drink Company, Ltd.

•

In addition, data has to be collected from soft drink consumers based on conducting the
survey on attitudes of consumers toward soft drink brands.

19


3.4. Data Collection Methodology
Data and information needed for conducting the research were obtained by
quantitative research and quantitative research. The qualitative research used here by indepth interviews. The quantitative research with the structure questions were used to conduct
the survey on attitude of the consumers toward soft drinks. These questions focused on
products, prices, distribution and promotion of soft drink brands.
In-depth interview conducted with Mr. Trai, the General Director of IBC, Mr. Vinh, the
Marketing Manager, Mr. Gabby and Mr. Tien, the Sales Managers of IBC.
To obtain information from soft drink distributors, in-depth interview conducted with 18
wholesalers and 18 retail outlets of IBC. These wholesalers and retail outlets were randomly

chosen from name list provided by IBC’s Sales Department. Name list of IBC has 452
wholesalers in which it is divided into 2 sub-list: 125 wholesalers with big sales volume and
327 wholesalers with medium sales. Each sub-list, 9 wholesalers were randomly chosen. To
choose 9 respondents out of the wholesalers population of 115, the following steps were
proceeded:
•
•

Take N/n where N: 125 wholesalers with big sales, n: 9. So N/n is 14.
Generate a random number between 1 and 14. Suppose the first respondent came out to
be 12. Then the 12th respondent on the list is in the sample, and every 14th respondent
after that, including 26, 40, and so on.

The same way were used to choose 9 respondents out of the wholesalers population
of 327, and 18 respondents out of the retail outlets of 4238.
Moreover, because most of soft drink wholesalers and retail outlets in HCMC sell multi
soft drinks brands. So conducting personal interviews with IBC’s wholesalers and outlets, it
means that conducted the interview with Coke’s wholesalers and outlets and Tribeco’s
wholesalers and retail outlets.
In-depth interview also conducted with Mr. Rich, the Marketing Manager of Coca Cola
Indochina Company in HCMC, Mr. Chinh, the Sales Manager of Coca Cola Chuong Duong,
Mr. Chuong, the Director of Tribeco and Mr. Bong, the Sales and Marketing Manager of
Tribeco.
Personal interview conducted with soft drink drinkers who were randomly selected in
districts of HCMC. All respondents were soft drink drinker at age range from 10 to 50 years
old. They were asked to fill in questionnaire according to their opinion. A geographical cluster
sampling was employed for the drawing the sample.
Sampling procedure
Sampling size of 100 respondents was drawn from total population of HCMC by visiting
big-size coffee shops and restaurants which have logo of Pepsi or Coke or Tribeco in the front

of the shops. To choose randomly 100 respondents, the following steps were preceded to
draw sample:
•

The map of HCMC was divided into 672 blocks, numbered each block, and 50 blocks were
randomly chosen. Suppose the first selected block is 26, then the second block is 39

20


(26+672/50 = 39), and so on. If the selected block is located at areas such as rivers,
airport, farm land, it is replaced by the next upward block and so on.
•

To conduct personal interview, the author went the south-west corner of each block,
walked north and interviewed the respondents in the fist coffee shop or restaurant of the
selected block. For each coffee shop or restaurant in the selected block, two respondents
who sit at first table from entrant were interviewed.

21


Chapter 4

External Analysis
This chapter discusses general the Vietnamese economy, economic condition of
HCMC, production and consumption of soft drinks and competition on the Vietnamese soft
drinks market.

4.1. An Overview of the Vietnamese Economy

Ten years of the implementation of the “open door” policy (Doi Moi) has resulted in
considerable changes of the Vietnamese economy, the basic elements of a market economy
and liberalization of the production forces. These factors, together with the people’s creativity
and initiative, have helped the country to overcome some difficulties and challenges as well as
create the momentum for future development. As a result, the Vietnamese economy has
gained remarkable growth during the period of 1990-1995.
Gross Domestic Product (GDP) growth rate in 1995 reached 9.5 percent, the highest
rise among recent years. The GDP of five year plan 1991-1995 averaged 8.2 percent per year
(Figure 4.1). This is a significant fact that contributed to the improvement of the livelihood of
the Vietnamese people and economic development.
The Vietnamese government is trying to slowdown the sky-rocketing inflation rate in
period of 1990- 1992. The inflation rate was harnessed at 12.3 percent in 1995 (Figure 4.2).
This figure had a positive impact on encouraging foreign and domestic investment, as well as
consumer price.
With the rapid growth rate of the economy and a population of approximate 74 million
people, Vietnam actually is an attractive and potential market for consumer products,
especially in food and drinks. Economic growth at relatively high rates enables to push up
disposable income per capita. Increase in income should lead to increase in purchasing
power. Thus, these factors bring the opportunities to boost the soft drink industry. In fact, soft
drink manufactures have been expanding their production and business and reaping more
profit.
According to an official source from the State Planning Committee, economic growth
rate in 1996 would be targeted at 9.5-10 percent. In 1996, Vietnam continues to enter into the
phase of industrialization and modernization.
Together with economic factors, political and legal factors also have a strong impact on
the level of opportunities and threats in the business environment. Vietnam has expanded and
consolidated its diplomatic relations with many countries in the word. It was remarked by two
big events in 1995. The United States normalized diplomatic relation with Vietnam. Vietnam
officially became a member of Association of Southeast Asian Nations (ASEAN). These events
has positive impacts on Vietnam economic development, especially in encouraging foreign

investment and foreign trade.

22


20
8.8
8.6

GDP (USD billion)

16

10
9
8

8.1

14

7

12

6.0

6

10

5

8

4

6

3

4

2

2

GDP growth rate (%)

18

9.5

1

0

0
1990

1991

1992

1993

1994

1995
GDP(Billions USD)

Year

GDP rate(%)

Figure 4.1 GDP and GDP growth rate in Vietnam during 1990-1995
Source: General Statistics Bureau

70

67

Inflation rate (%)

60
50
40
30
20

14.4

17.5

10

12.3

5.2
0
1991

1992

1993

14(est)

1994

1995

1996

Year

Figure 4.2 Inflation rate in Vietnam during 1991-1995
Source: General Statistics Bureau

23

Besides, to support the economic liberalization process, the government has enacted a
series of economic laws such as the Law on Foreign Investment, the Cooperative Law, the
Business Law, etc. In 1996, Bidding Statute will be submitted to the Nation Assembly for
approval. Other economic policies aimed to encourage private sectors have been passed. All
of them have formed a favorable environment for economic development.
Like other light industries, the soft drink industry is always encouraged to invest
production locally. The government has imposed on import tax on soft drink and beer at high
rate of 80 percent to protect domestic production This is an advantage for the local soft drink
producers and joint ventures in general, and IBC in particular in expanding their production
and distribution.
In general, apart from these achievements, however, there are still many difficulties
and challenges that Vietnam has to face in coming years. Economic efficiency is still low, and
the financial and monetary systems are weak. Vietnam faces strong competition in context of
global economic development, while its level of economic and technological development is
still low because of limited financial capability, poor socio-economic infrastructure, poor legal
system and inadequate skilled labor. Particularly, transportation system is serious degraded. It
cannot meet future demands. This will influence the region pattern of soft drink distribution and
increase costs. There is also a significantly gap in economic development between regions.

4.2. Some Economic Achievements of HCMC
Since the research study focuses on the development of marketing strategies for IBC
in HCMC, it is relevant to highlight some aspect of the economic factors here.
HCMC is the biggest and the most exciting market in Vietnam. In 1995, HCMC
economy gained the significant economic achievements, especially with the GDP over VND
38,000 billion (equivalent to USD 3.5 billion). The GDP growth rate was 15.3 percent higher
than in 1994. The GDP per capita in the city was USD 912, up from USD 830 per capita in
1994 and much higher than the current national figure of USD 220. In the period 1991-1995,
GDP per capita increased by an average of 12.6 percent. Overall the city’s economy showed

robust growth in all areas.
The population of HCMC in 1995 is about 7 million, with 84.7 percent has stable jobs.
The living standard raised by 10 percent over 1994. According to HCMC Statistics Bureau, the
living stands of HCMC residents has significantly improved in period 1991-1995, the numbers
of destitute and poor households are decreases, while the number of stable households are
rapidly increased (Table 4.1). This proves that the purchasing power of HCMC inhabitants will
increase in coming years. According to HCMC Statistic Bureau, the spending on food and
drinks of HCMC residents has slightly decreased against other needs (Table 4.2). However,
the spending for eating and drinking outside the family increased, from 25 percent in 1992 to
37 percent in 1994 and estimated 46 percent in 1995. This is an advantage for consumer
goods market, especially in food and drinks.

24


Table 4.1 The improvement in living standards of HCMC residents
1991

Total

1993

1994

10.00
36.00
38.00
13.00
3.00

7.00
25.00
36.00
27.00
5.00

4.40
19.50
34.00
33.90
8.20

2.80
12.50
32.10
44.40
8.20

100.00

Destitute
Poor
Average
Stable
Well-off

1992

100.00

100.00

100.00

Source: HCMC Statistics Bureau

Table 4.2 Spending trend of HCMC residents
Items

1992

1993

1994

Food and Drinks
Clothing
Travel
Education
Health care
Recreation
Others

69.90
6.40
4.60
1.81
6.27
2.11
8.91

68.90
6.81
6.80
2.07
7.50
2.70
5.22

67.37
6.24
7.20
3.62
8.40
3.20
3.97

100.00

100.00

100.00

Total

Source: HCMC Statistics Bureau

4.3. Vietnamese Soft Drinks Market
4.3.1. Production
Vietnamese soft drink industry has begun to develop since 1990. The most important

factors encouraging the growth of demand for soft drinks are liberalization of the economy,
improved living standard, changes in distribution pattern, improved quality of products, and an
increase in advertising expenditures on television and on billboards for creating product
awareness. There are many local brands such as Tribeco, SP.Co, Rung Huong, Chuong
Duong, Hoa Binh, Festi, Youki, Thien Nga, etc., in the market. In that time, Tribeco has
continuously obtained the highest market share in the Vietnamese soft drinks market. Besides,
the foreign brands such as Coca Cola, Pepsi and 7-Up are available in Vietnam which
imported from companies based in Singapore, Malaysia and Thailand or smuggled through the
border of Cambodia and China.
In more recent years, especially from 1992 up to now, the growth rate of the soft drinks
production and consumption has developed faster than before in both quantity and quality.
25