developing distribution strategy for mekostar fresh cut fruitsin ho chi minh citymarket

HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITÉ LIBRE DE BRUXELLES

SOLVAY BRUSSELS SCHOOL OF
ECONOMICS & MANAGEMENT

MMCoM9
NGUYEN MAI VINH QUANG
NGUYEN THI MY CHI

DEVELOPING DISTRIBUTION STRATEGY
FOR MEKOSTAR FRESH-CUT FRUITS
IN HO CHI MINH CITY MARKET
MASTER FINAL PROJECT
MASTER IN MARKETING AND COMMUNICATION MANAGEMENT

Academic Tutor: Prof. NGUYEN MINH HA
Practicing tutor: HUYNH MINH NHUT

Ho Chi Minh City
(2016)
`


ACKNOWLEDGEMENT
First of all, we would like to express our deepest thanks to Management Board of The Fruit
Republic who trusted us to conduct the marketing strategy for Mekostar fresh-cut fruits and
provided us the wealthy information and data which are beneficial for our research and
analysis.
Next, we would like to express our sincere gratitude our advisors to Professor Nguyen Minh

Ha, and Mr. Huynh Minh Nhut. We own you a huge debt of gratitude for the continuous
support of our project. Your guidance is priceless to us.
A very special thanks to all Professors at this programme for their extremely patience and
hard work in teaching and inspiring us with their immense knowledge.
Our gratitude goes out to all those who took the time to complete our questionnaires and
surveys. Without their passion participation and input, the validation survey could not have
been successful conducted.

Nguyen Mai Vinh Quang and Nguyen Thi My Chi

iii


EXECUTIVE SUMMARY

The Fruit Republic is a trading company which specializes in fruits and vegetables for export
and domestic market. It is one of few agriculture companies in Vietnam which can meet the
requirement of EU market for fruits and vegetables with Global GAP certificate for products
and HACCP and BRC certificate for factory. Beside fresh fruit and fresh vegetables, freshcut fruits are an innovative product category of The Fruit Republic which was launched in
domestic market under Mekostar brand and distributed mainly to supermarket chains since
2012. However, the sales of the Mekostar fresh-cut fruits recently has decreased significantly
and it has influenced to the production plan in the factory by changing the working schedule
for workers and inventory planning. Based on the request of The Fruit Republic’s
management board, our team support them to find the solutions for improving the sales
performance of Mekostar fresh-cut fruits in short term and having sustainable growth for
this product in long term.
The first step in our approach is the diagnosis phase where we tried to understand the
situation of Mekostar fresh-cut fruit and identified its problems. We conducted a market
research to get external information for key stakeholders and did some internal interviews
with the sales team of The Fruit Republic to get the internal information about Mekostar

fresh-cut fruit. In our market research, we employed both primary and secondary research to
collect data including desk research, observation, qualitative research and quantitative
research. Beside the market research, we also applied some theories which we have studied
in the master class in marketing and communication management of Solvay Business School
and Open University such as Marketing mix 4Ps model, SWOT and Porter’s five forces to
analyze the competitive environment surrounding Mekostar fresh-cut fruit, its strengths,
weaknesses, threats and opportunities in the current context.
Based on the combination of key findings from the research and results of our analysis, we
figured out some issues of Mekostar fresh-cut fruit in its existing distribution channel and
some opportunities to improve its sales performance. In conclusion, we suggested some
solutions for The Fruit Republic and one of them is the recommendation to consider to
develop a direct sales channel (Business to Customer) to distribute Mekostar fresh-cut fruits
to the office workers in the office buildings in HCMC. It may help to improve the sales
performance Mekostar fresh-cut fruit in short term and also increase the awareness of
Mekostar brand by reaching more customers directly.

iv


Table of Contents
ACKNOWLEDGEMENT ....................................................................................................iii
EXECUTIVE SUMMARY .................................................................................................. iv
LIST OF TABLES, FIGURES AND PICTURES............................................................... vii
1.

GENERAL OVERVIEW .............................................................................................. 1
1.1

1.1.1

Introduction of The Fruit Republic: ................................................................. 1

1.1.2

Introduction of Mekostar fresh-cut fruits: ....................................................... 2

1.2

Project objectives and our approach: ...................................................................... 3

1.3

Research design:...................................................................................................... 3

1.3.1

Research Objectives ......................................................................................... 3

1.3.2

Research methodology ..................................................................................... 4

1.3.3

Sample size ...................................................................................................... 4

1.4
2.

Project limitation: .................................................................................................... 5

LITERATURE REVIEW .............................................................................................. 6
2.1

Porter’s Five Force: ................................................................................................. 6

2.2

Marketing – Mix concept: ....................................................................................... 7

2.2.1

Product strategies: ............................................................................................ 7

2.2.2

Price strategies: ................................................................................................ 8

2.2.3

Place strategies:................................................................................................ 8

2.2.4

Promotion strategies: ....................................................................................... 9

2.3
3.

Background: ............................................................................................................ 1

SWOT analysis: ...................................................................................................... 9

ANALYSIS OF MEKOSTAR FRESH CUT FRUIT.................................................. 10
3.1

Marketing mix analysis of Mekostar fresh cut fruits ............................................ 10

3.1.1

Product analysis ............................................................................................. 10

3.1.2

Price analysis ................................................................................................. 11

3.1.3

Place analysis ................................................................................................. 12

3.1.4

Promotion analysis ......................................................................................... 13

3.2

Porter’s Five Forces analysis of Mekostar fresh-cut fruit ..................................... 15

3.2.1

Intensity of competitive rivalry...................................................................... 15

3.2.2

Threat of new competition: ............................................................................ 16

3.2.2

Threat of substitute products.......................................................................... 16

3.2.3

Bargaining power of suppliers ....................................................................... 17

3.2.4

Bargaining power of customers ..................................................................... 18

3.3

SWOT analysis of Mekostar fresh-cut fruit .......................................................... 18

3.3.1

Strengths ........................................................................................................ 18

3.3.2

Weaknesses .................................................................................................... 19
v

3.3.3

Opportunities ................................................................................................. 19

3.3.4

Threats ........................................................................................................... 19

3.4
4.

Key findings of the market research ..................................................................... 20

CONCLUSION AND RECOMMENDATIONS ........................................................ 23
4.1

Conclusions ........................................................................................................... 23

4.2

Recommendations ................................................................................................. 25

4.2.1

Distribution strategy: direct sales to office buildings in HCMC ................... 25

4.2.2

Diversified product portfolio ......................................................................... 27

4.2.3

Promotional campaign at office buildings in HCMC .................................... 28

REFERENCES .................................................................................................................... 30
APPENDIX 1 - Questionnaire 1– face to face interview .................................................... 31
APPENDIX 2 - Questionnaire 2 – online consumer survey ................................................ 35
APPENDIX 3 – Discussion guide – In-depth interview...................................................... 39

vi


LIST OF TABLES, FIGURES AND PICTURES

TABLES
Table 1: Pricing comparison of Mekostar fresh-cut fruits to its rivals .............................. 12
Table 2: Supermarket are selling Mekostar fresh cut fruits ............................................... 13

FIGURES
Figure 1: The Fruit Republic’s revenue by product groups ............................................... 1
Figure 2: Mekostar fresh-cut fruit sales in supermarket .................................................... 2
Figure 3: Our approach. ...................................................................................................... 3
Figure 4: Research methodology ....................................................................................... 4
Figure 5: Porter Five force ................................................................................................. 6
Figure 6: Marketing mix strategy ....................................................................................... 7
Figure 7: SWOT analysis ................................................................................................... 10
Figure 8: Online survey - Regularity of purchase fresh-cut fruit ....................................... 20
Figure 9: Online survey - Place of purchase fresh-cut fruit ................................................ 20

Figure 10: Offline survey – Reason of not purchase fresh-cut fruit in supermarket .......... 21
Figure 11: Demographic –Respondent’s profession ........................................................... 21
Figure 12: Reasons why consumer don’t buy Mekostar fresh-cut fruits. .......................... 22
Figure 13: Supply chain of Mekostar fresh-cut fruits. ....................................................... 24
Figure 14: Suggested distribution model for TFR ............................................................. 26
Figure 15: Suggested order system for TFR ...................................................................... 26

PICTURES
Picture 1: Mekostar vegetables in supermarket. ................................................................. 1
Picture 2: Mekostar fresh-cut fruits. ................................................................................... 2
Picture 3: Mekostar fresh-cut product lines. ....................................................................... 10
Picture 4: Mekostar’s marketing material. .......................................................................... 13
Picture 5: Price discount programme at BIG C ................................................................. 14
Picture 6: Sale support by promotion girls at Lottle mart................................................... 14
Picture 7: Sampling booth of Mekostar .............................................................................. 14
Picture 8: Fresh-cut fruit of supermarket. ........................................................................... 15
Picture 9: Fresh-cut fruit of other companies supply to supermarket ................................. 15
Picture 10: Fresh-cut fruit from street vendor. .................................................................. 16
Picture 11: The canned fresh-cut fruit in GIANT supermarket. ........................................ 17
vii


Picture 12: Print and online newspapers. ........................................................................... 25
Picture 13: Sample of Mekostar mobile selling truck ........................................................ 27
Picture 14: Existing fresh-cut fruit products of Mekostar. ................................................ 28
Picture 15: Illustrate suggested product portfolio for Mekostar’s fresh-cut lines. ............ 28
Picture 16: Advertising via local new papers to the publicity. .......................................... 29
Picture 17: Advertising on digital frame in office building (elevator and lobby). ............ 29

viii

1. GENERAL OVERVIEW

1.1 Background:
1.1.1 Introduction of The Fruit Republic:
The Fruit Republic is specializing in trading fruit and vegetables in both domestic
and foreign markets. In domestic market, it provides fruits and vegetables which can be
classified in three categories: fresh fruit, fresh vegetable and fresh-cut fruits.
The Fruit Republic’s products are in a wide range of types including iceberg lettuce,
sweet pepper, beef tomato, fresh herbs, button mushrooms, cabbages, red bell pepper, sweet
potato, guava, dragon fruit, mature coconut, pomelo, seedless lime etc. All its fruits and
vegetables are sourced from their own GAP certified contract farmers. The Fruit Republic is
currently collaborating with famers in Mekong Delta and highland city of Dalat.
The Fruit Republic is the only company in the Vietnam that has Global GAP
certification for lime, honey pomelo and pink pomelo. The Fruit Republic supports the
contracted farmers in improving farm management and ensures that the farms comply with
strict international quality standards. They are one of few agriculture companies in Vietnam
which follows the Corporate Social Responsibility and Fair Trade.
12%

Fresh fruits
40%

48%

Fresh vegetables
Fresh-cut fruits

Figure 1: The Fruit Republic’s revenue by product groups. Source: TFR sales department

Among several own brands of The Fruit Republic, Mekostar is a fruits and vegetables
brand of The Fruit Republic in domestic market. With Mekostar, The Fruit Republic aims to
make the Vietnamese consumers proud about their own “home-grown” produce by
supplying the market the fresh fruits and vegetables which are safe, healthy, tasty and good
looking, sourced from their own contract farmers.

Picture 1: Mekostar vegetables in supermarket. Source: TFR sales department

1


1.1.2 Introduction of Mekostar fresh-cut fruits:
The Fruit Republic introduced Mekostar fresh-cut fruits to HCMC market in 2012.
Fresh-cut fruit is an innovative product of The Fruit Republic together with other products
for domestic market where it is a pioneer in producing fresh-cut fruit in a professional way:
HACCP factory, high technology, skilled workers, branded product, etc.

Picture 2: Mekostar fresh-cut fruits. Source: TFR sales department

Products were sold to all big supermarket chains in HCMC such as METRO, LOTTE
Mart, BIG C, COOP Mart, GIANT, Citimart etc.
After 3 years, the sales of Mekostar fresh-cut fruits are not as good as The Fruit Republic’s
expectation. Only two supermarket chains still want to sell Mekostar fresh-cut fruits while
other chains refused to sell this kind of products because they were not attractive to
customers in their stores.
The low sales of Mekostar fresh cuts fruits had a strong impact to the production line
in The Fruit Republic’s factory such as the labour in factory for fresh cut (they don’t have
enough work to do fulltime), sourcing material (stock of fruit for producing fresh cut fruit).
It became a serious problem to The Fruit Republic business.

Million VND
10000.0

9200.0

8500.0

8000.0

6430.0

6000.0
4270.0
4000.0
2000.0
0.0

2012

2013

2014

2015

Figure 2: Mekostar fresh-cut fruit sales in supermarket. Source: TFR sales department

2

1.2 Project objectives and our approach:
The aim of this project is to propose an effective marketing strategy for The Fruit
Republic to improve Mekostar fresh-cut fruits sales performance in 2016 as well as
strengthen its brand in domestic market by reaching more customers.
Our approach is to identify existing issues of Mekostar fresh-cut fruits through the
researches in diagnosis phase. Then, based on the key findings of market research and the
result of our analysis, our team will propose the appropriate strategic plan for The Fruit
Republic.

Figure 3: Our approach

Within the scope of this project, our team will be in charge of the diagnosis phase
and strategic phase to develop the marketing strategy for Mekostar fresh-cut fruit. The
Fruit Republic will take in charge for the third and fourth phase to prepare and implement
this plan.

1.3 Research design:
1.3.1 Research Objectives
This research aims to:
 Understand the demand of fresh-cut fruits in HCMC market and the
purchasing behavior of fresh-cut fruits users.
 Understand the assessments of the stakeholders about Mekostar fresh-cut
fruits.
 Identifying the issues of Mekostar fresh-cut fruits which influence to the sales
performance of Mekostar fresh-cut fruits

3


1.3.2 Research methodology

Desk Research

Observation

Qualitative
research

Quantitative
research

Figure 4: Research methodology

Desk research:
 Analyze available data related to fresh-cut fruit market and Mekostar freshcut fruits from internal and external sources such as scientific papers, market
research reports, news, publications, web based resources, organizations, etc.
Observation:
 Observe the buying behaviors of consumers and their attitudes when they buy
fresh fruits, fresh-cut fruits and Mekostar fresh-cut fruits in supermarkets in
HCMC
Qualitative approach:
 In depth interviews:
 Conduct a long interview (approx. 2 hours) with buyers or purchasing
manager of supermarkets in HCMC to go through all topics which listed
in the discussion guide
Quantitative approach:
 Consumer survey – offline: Conduct face to face interviews with selected
shoppers in supermarkets by using structured questionnaire
 Consumer survey – online: Conduct the online survey by sending out the
questionnaire to our friends and relatives who can qualify our criteria, and
ask them to completely answer it

1.3.3 Sample size
According to the information from The Fruit Republic, only few supermarkets have
Mekostar fresh-cut fruits in their shelves. Among these supermarkets, GIANT, LOTTE Mart
Nam Sai Gon, and METRO An Phu are three supermarkets have the good sales performance
of Mekostar fresh-cut fruits. Hence, we decided to do observation and consumer survey in
GIANT, LOTTE Mart Nam Sai Gon, and METRO An Phu.
In in-depth interviews, we questioned the buyers or purchasing managers at three
supermarket chains in Ho Chi Minh City which are selling Mekostar fresh cut fruits.

4


To determine the sample size for consumer survey, we used the some suggestions
below to make decision for 150 interviews including 50 face-to-face interviews in
supermarkets and 100 online interviews:
- Rule of 100: Gorsuch (1983) and Kline (1979, p. 40) recommended at least 100
(MacCallum, Widaman, Zhang & Hong, 1999). No sample should be less than 100
even though the number of variables is less than 20 (Gorsuch, 1974, p. 333; in
Arrindell & van der Ende, 1985, p. 166);
- Hatcher (1994) recommended that the number of subjects should be the larger of 5
times the number of variables, or 100. Even more subjects are needed when
communalities are low and/or few variables load on each factor (in David Garson,
2008).
In order to ensure that we can get the right information from the right people, we
selected our respondents based on the selection criteria below:






In-depth interview: F&V buyers/purchasing managers of supermarket:
 Making decision to purchase Mekostar fresh-cut fruits for their
supermarket
 Having 2 years experienced in this position
Consumer survey offline: Shoppers at supermarket
 Female/male, 25 – 50 years old
 Like to consume fruits
 Usually shopping in supermarkets which are selling Mekostar freshcut fruits
 Regular buying of whole fruits or fresh-cut fruit in supermarket
Consumer survey online: consumers in HCMC
 Female/male, 25 – 50 years old
 Like to consume fruits
 Having a purchase of fresh-cut fruit within 6 months

1.4 Project limitation:
This project has some limitation as followings:
 The time limit for this project is three months.
 We cannot access to some internal data about Mekostar fresh-cut fruit such as
detail of sales, pricing system…
 The sample size of consumer survey both online and offline is still limit to have
most reliable database from consumer
 We have to accept some limitation of online survey as we assumed that they gave
honest responses (Sparrow 2007)

5


2. LITERATURE REVIEW

This chapter is about to examine key theories such as Marketing Mix 4Ps, Porter’s Five
Forces and SWOT that help to get deeper understanding of important factors that contribute
to the success of a business and the competitive environment.

2.1 Porter’s Five Force:
Porter's five forces analysis (Porter 1986) is a framework that attempts to analyze the
level of competition within an industry and business strategy development. It draws upon
industrial organization (IO) economics to derive five forces that determine the competitive
intensity and therefore attractiveness of an Industry. Attractiveness in this context refers to
the overall industry profitability. An "unattractive" industry is one in which the combination
of these five forces acts to drive down overall profitability. A very unattractive industry
would be one approaching "pure competition", in which available profits for all firms are
driven to normal profit. This analysis is associated with its principal innovator.
Porter’s five forces referred to five forces: Power of Suppliers, Threaten of new
entrants, Threaten of substitutes, Power of Buyers, and Industry rivalry. Four types of
scanning is applying for Porter’s five forces: competition scan, sales scan, technological scan
and environment scan.

Figure 5: Porter’s Five Force

6


2.2 Marketing – Mix concept:
Suggested by Winston (1985), marketing – mix is a set of the variables that the
company can check and manage and it is used to try to cause the desirable resistance from
the target market. “Whenever we define marketing mix, we need to understand the minimum
steps to produce the critical mass in the purchasing process” (Belohlavek 2008).
Marketing – mix is a set of the variables that can be controlled, they are managed to
satisfy the target market and passed the aims of the organization. In marketing – mix there

are a lot of different tools, each tool is a variable that can be controlled and classified
following 4 factors called as 4Ps: Product, Price, Place and Promotion.

Figure 6: Marketing Mix Strategy

2.2.1 Product strategies:
It is suggested by Silk (2006) product strategies are implemented through the
following decisions:

The physical product itself

Brand name

Company reputation

Presale education provided by salespeople

Post sale technical support

Repair service

Financial plans

Convenient available

7





Word-of mouth references from earlier adopters of product
Reputation of the outlet where the product was purchased

2.2.2 Price strategies:
The price is the direct factor in marketing – mix to make the income and which is
one of the most flexible factors of marketing – mix, it can change fast, not to be as same as
the natures of the products and the affidavit of the channel, at the same time for assessment
and price competition are the outstanding matters stipulated for the persons doing the
marketing. The strategy for assessment depends on the aim of marketing of the company.
When defining the price for the product, the company needs to consider the steps of the
period for assessment. Due to the competitive matter and the change of the market to pull
the company for change, adjustment of the price suitably, it can have the strategies for
adjustment later: Assessment as per the geographic principle, negotiation and discount,
assessment of the price for promotion, assessment of the price for discrimination and
assessment of the price for the list of the product. (Winston, 1985:85)
“The price is an element that on the one hand bears a priority relationship (Correlation)
with the value but on the other hand it primordially relates to opportunities” (Belohlavek
2008 , p.15 )

2.2.3 Place strategies:
According to Lamp, 2011 Distribution is also an essential instrument in marketing –
mix, it includes the different activities that the company needs to perform to take the products
to the aimed customers who can contact to buy them.
Most of the producers also supply their products to the market through the marketing
intermediates. Hence, the producer should relate, combine with some organizations, forces
outside to pass their aim for distribution. The marketing channel implements for transfer of
the products from the manufacturer to the consumers, to escape over the separations of the
time, space and possession inserting among the commodity and service with the users of
them.

The basic decisions include:
+ The regulations for design of the channel.
+ The regulations for management of the channel.
Besides, according to Belohlavek (2008), “Distribution has two components
+ The brand, that sustains the negotiating and commercialization freedom based on the
brand attributes
+ The need. Distribution is more efficient and its sales closing better if it satisfies the
clients’ needs

8


2.2.4 Promotion strategies:
It is also suggested by Lamp, 2011 that one of four essential instruments of marketing
– mix and it becomes more effective and important that the company can use to impact into
the aimed market. The nature of the promotion operation is very the communication of the
news for product and the enterprise to the customers to convince them to buy the commodity
of the enterprise.
The mixed promotion policy includes 5 main instruments as:
- Advertisement: including any form introduced indirectly and heightened the
ideologies, product or service implemented as per the demand of entity for
advertisement and the entity should pay the expenses.
- It is suggested by Belohlavek (2008), The Direct Marketing: To use letter, telephone,
and instruments for other indirect communication to communicate the news for the
available customers and the prospective customers or request them to give the
feedback.
- Consumption promotion
- The public relation and propagation: Being the different programs designed for
heightening or protecting the image of the company or its concrete products.
- Direct sales: Being the directly oral introduction about the product or service of the

company through the conversation with one or more potential customers for the
purpose of sale.
Besides, according to Pride (2009), each tool in promotion also has the own features
and its costs, thus when collecting the instruments and combining with the instruments in
the policy for miscellaneous promotion, the marketing maker should catch up the own
features of each instrument when collecting as well as to consider the factors affecting to the
structure of the instrument for miscellaneous promotion such as: the style of market for
product, the pushing and pulling strategy, the ready period for the buyer, the period in the
living circle of the product.

2.3 SWOT analysis:
SWOT analysis is a designed planning scheme used to evaluate the company in its
environment in term of external and internal analysis. SWOT assess the company based on
its strengths, weakness, opportunities and threats. Its result helps to utilize company’s
strengths to grasp market’s opportunities; to understand company’s weakness to prevent the
company grasp opportunities; to reduce the impact from threats; to deal with company’s
weakness that may turn threat into reality.

9


Figure 7: SWOT Analysis. Source: www.marketingteacher.com

3. ANALYSIS OF MEKOSTAR FRESH CUT FRUIT
3.1 Marketing mix analysis of Mekostar fresh cut fruits
3.1.1 Product analysis
Fresh-cut fruit is not a new product in Vietnam market. We can buy fresh-cut fruit
easily in supermarkets, fruit shops and from street vendors. However, most of the suppliers
of fresh-cut fruit is small and private enterprises which are not professional and can produce
a conventional type of fresh-cut fruit. Only The Fruit Republic is the first company which

focus on fresh-cut fruit category with a professional way and big investment.

Picture 3: Mekostar fresh-cut product lines. Source: TFR sales department

The Fruit Republic aims to produce a high quality fresh-cut fruit with a professional
packaging and trusted brand name to satisfy the demand of a target group which are urban
woman, age around 25 to 50 years old, middle social class and upper, care about their health
and their family health, willing to pay for high quality products, modern lifestyle and less
time for household works.

10









Product features: fresh fruit and ready-to-eat. It’s also a convenient solution for
consumer to eat some fruits which are very difficult and cost a lot of time to cut such
as pineapple, pomelo, and jackfruit.
High quality product: processed from a high quality fruits which can meet export
standards. Its factory has HACCP certification.
Have brand name Mekostar.
Need to keep in cool conditions around 12-15oC when selling or storing
Design: Mekostar fresh-cut fruits have a nice packaging with a transparent hard
plastic tray which are safe for food and the nice designed label with brand Mekostar
and nutrition information.

In general, the strength of Mekostar’s fresh-cut is a ready-to-eat brands with high quality
with professional in packaging and caring about food safety as well as food hygiene.
Moreover, the product is managed under high standard processing by the prestigious
international company, The Fruit Republic. It is a key to lead to middle social class an upper
income class.
However, the weakness of this product is the storing condition. It should be keep in cool
condition from 12-15oC but the cool shelves of almost supermarket can keep average around
18oC

3.1.2 Price analysis
Basically, compared to rivals in the market, the retail price of Mekostar fresh-cut
fruits is higher than its competitors in the same product types. Moreover, The Fruit Republic
has revealed to us their prices are also effected by supermarket’s mark-up policy to fresh
fruits which is 35-40% on the top of wholesale price.
Indeed, Mekostar fresh-cut fruit brand is vied by supermarkets’ own brand and other
brands about 30-35% and 15-20% respectively.
And, if we compare retail price of Mekostar fresh-cut fruit in supermarket to its
competitors in traditional trade channel, it is 40-50% higher than street vendor’ price.
However, the pricing of Mekostar fresh-cut packs is 5-10% higher than fresh-cut fruit online.

11


Retail price
(VND/500 gr)
50,000
Mekostar fresh-cut pomelo
35,000
Fresh cut pomelo of supermarket

28,000
Fresh cut pomelo from street vendors
Fresh cut pomelo from other small companies 42,000
49,000
Fresh cut pomelo from online suppliers

% vs
Mekostar

Product

30%
44%
16%
2%

Table 1: Pricing comparison of Mekostar fresh-cut fruits to its rivals. Source: Mekostar

Regarding to the price, due to high mark-up policy of supermarket to fresh fruit
products, we can see the price is a weakness of the Mekostar fresh cut fruit in this channel.
However, when we compare to the retail price of online channel, the gap between Mekostar
fresh-cut fruit and other companies is not much. It can be a place where the weakness of
Mekostar fresh-cut fruit can be lightened.

3.1.3 Place analysis
In the first year, Mekostar fresh-cut fruits were available in most of key supermarket
chains in Ho Chi Minh. However, the number of supermarkets selling Mekostar fresh-cut
fruit reduced significantly to few ones in 2015 because of the slow sales and high risk of
shrinkage. Till March 2016, there are few supermarkets in Ho Chi Minh City still continuing
sale Mekostar fresh-cut fruits.

Mekostar fresh cut fruit availability
2013
2014
2015
Mar-16

No.

Store name

1
2
3
4
5
6
7
8
9

METRO An Phu
METRO Binh Phu
METRO Hiep Phu
BIG C Hoang Van Thu
BIG C Mien Dong
BIG C Go Vap
BIG C An Phu
BIG C An Lac
COOP Mart Dinh Tien Hoang

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes
Yes
Yes
Yes
Yes
Yes
No

Yes
Yes
Yes

Yes
No
Yes
Yes
No

Yes
Yes
Yes
No
No
No
No
No

Yes

Yes

Yes

Yes

No

10
11
12
13
14

15
16
17
18
19
20
21
22

COOP Mart Nguyen Dinh Chieu
COOP Mart Cong Quynh
COOP Mart Nam Sai Gon
COOP Mart Ly Thuong Kiet
LOTTE Mart Nam Sai Gon
LOTTE Mart Phu Tho
LOTTE Mart Tan Binh
GIANT Crescent Mall
Citimart Etown cong hoa
Citimart Nam Long
Citimart New Saigon
Citimart Minh Khai
Vinmart Dist 1

Yes

Yes

Yes

Yes

No

Yes
Yes

No
Yes

No
No

No
No

No
No

Yes

No

No

No

No

Yes
Yes

No
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Yes
Yes

Yes
Yes
Yes
No
No
No
Yes

Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes

2012

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Yes
Yes
Yes
Yes
Yes
23
Select mart the Manor

Yes
Yes
Yes
No
No
24
Organic market
Table 2: Supermarket are selling Mekostar fresh cut fruits. Source: TFR sales department.

In sum, Mekostar had a good start in their founding year by selling and displacing
their products at good traffic supermarkets such as BIG C, Coop Mart, Metro, Citimart, and
etc.,. However, to approach the right customers had required The Fruit Republic a wise
distribution strategy via diversity channels such as online-sales and/or direct sale.

3.1.4 Promotion analysis
Every year, The Fruit Republic invest a good budget for marketing to promote
Mekostar in domestic market but this amount is rather small because of the turnover of
Mekostar in domestic market. Most of their promotional activities focus on supermarket
channel where their product are mainly distributed to.
In order to increase brand awareness, The Fruit Republic has produced many
promotional materials to display in supermarket to get the attention of customer.

Picture 4: Mekostar’s marketing material. Source: TFR’s sales department

To promote Mekostar fresh-cut fruit in supermarket, The Fruit Republic has conducted
some instore promotional campaigns to increase the awareness of their brand and emphasize
the quality of Mekostar fresh-cut fruit. Some promotional activities are such as:
 Sampling
 Product mass display competition
 Sales support by promotional girls

 Price discount

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Picture 5: Price discount programme at BIG C. Source: TFR’s sales department

Picture 6: Sale support by promotion girls at Lottle mart. Source: TFR’s sales department

Picture 7: Sampling booth of Mekostar. Source: TFR’s sales department

Indeed, Mekostar has good promotion strategy thanks to its mother company, The Fruit
Republic. Having strong experience in creating brands for fruit products, The Fruit Republic
has endorsed Mekostar brand based on their current marketing network and back-ground.
Implement sampling booth for Mekostar, using promotion girls to approach shoppers at the
supermarket and running sale at the supermarket are the marketing strategy applied for
Mekostar from The Fruit Republic since 2012. However, the on-going marketing strategy of
Mekostar is not efficient enough to raise awareness of its brands to the public and approach
its target customers.

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3.2 Porter’s Five Forces analysis of Mekostar fresh-cut fruit
3.2.1 Intensity of competitive rivalry
Because Mekostar fresh-cut fruits are mainly distributed through supermarket channel
so that we analyze its competitors in this channel first. The main competitors of Mekostar
fresh-cut fruit in supermarkets are the fresh-cut fruits of supermarket and fresh-cut fruits
from other companies.
 Fresh-cut fruits of supermarket: Most of supermarket produce and sell their fresh

cut fruits in their stores. They usually use the fruits which are difficult to sell
because of the problem with skin or a bit old to make their fresh-cut fruits.
Therefore, the price of fresh cut of supermarket is competitive but they have no
brand and under quality packaging.

Picture 8: Fresh-cut fruit of supermarket.



Fresh-cut fruits from other companies: there are few small fruit trading companies
produce fresh cut fruits to supply to supermarket together with their fresh fruits.
They also use the cheap fruits from wholesales market without quality control to
produce fresh cut fruits. Their products also have label with a brand on the bag
but it doesn’t add value to the product much because their brand is not famous and
they have no quality claims yet. The price of their products are also cheap but it’s
still higher than the fresh-cut fruit of supermarket.

Picture 9: Fresh-cut fruit of other companies supply to supermarket.

Beside the competition in supermarket channel, some other competitors of Mekostar
fresh-cut fruits are fresh-cut fruits from street vendors and fresh-cut fruits from online
suppliers.
 Fresh-cut fruits from street vendor: it’s so easy to find and buy fresh-cut fruits
from the street vendors because they are available everywhere and their price is
very cheap. However, there’s one important point which customer are really worry
is the quality and hygiene of the fresh cut of street vendor. They also use the fruits
from wholesales market without quality control.

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Picture 10: Fresh-cut fruit from street vendor.



Recently, there are many online suppliers of fresh-cut fruits. They target to the
office workers in big cities such as HCMC and Ha Noi. Most of them can produce
fresh-cut fruit in small scale because they don’t have factory. Their price is not
cheap but they provide delivery service and the quality and hygiene of their freshcut fruits are good. Some of them have brand for their products and nice packaging
but it also doesn’t add value much because they don’t have money to invest to
promote the brand.

Compare to existing competitors in the market, especially in HCMC, Mekostar freshcut fruits have many advantages to grow in the segment of customer who have good income
and care about the quality and hygiene of the fresh cut which they consume.

3.2.2 Threat of new competition:
Vietnam is growing steadily and it is one of emerging market in Asia. Vietnam also
open more and more with many new FTAs and economical alliance agreements between
Vietnam and many countries in the world (source: vneconomy.vn). It will open the door for
some big fruit processing companies to enter Vietnam market in the future.
Besides, local fruit companies will join this market if they can see the increase of
fresh-cut fruit demand. They can invest to professionalize their production line for fresh-cut
and improve their capacity.
However, to produce professional fresh-cut fruit in Vietnam is not an easy job
because you have to control well the sourcing of material. Mekostar fresh-cut fruit has an
advantage of using the controlling system and the contract farmers which The Fruit Republic
use for export products.

3.2.2 Threat of substitute products
Recently, Dole started to introduce fresh-cut fruit in can, fresh fruit juice and dried

fruits to HCMC market. They also had some promotional activities to promote their products

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but it was not successful as their expectation. (Source: the information from buyer of
supermarket which Dole run its promotion)

Picture 11: The canned fresh-cut fruit in GIANT supermarket.

Many local companies also have fresh fruit juices and dried fruits but they do not
influence to the demand of fresh-cut fruit much because Vietnamese consumer like to
consumer fresh fruit.
Stronger supply of imported fruits in supermarket such as apple, pear, orange… also have
significant impact to the sales of fresh-cut fruit in supermarket. (Source: the information
from buyer of LOTTE Mart)

3.2.3 Bargaining power of suppliers
To ensure the source of fruits for export, The Fruit Republic has already develop the
strong network of contract farmers in Mekong Delta area, a biggest fruit production area in
Vietnam. They have more than 6 year relationship with their contract farmers so that they
can control them well.
The factory of The Fruit Republic locates in Can Tho province where is near the
sourcing area and labor source.
Regarding the supplier of packing, The Fruit Republic have many choice in the
diversify list of packing suppliers. The packaging of their product is not so complicate so
that they do not depend much on the suppliers.
In general, The Fruit Republic have strong power with almost suppliers which they
use to produce Mekostar fresh-cut fruit.

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3.2.4 Bargaining power of customers
In Vietnam, the number of supermarket is still limit compared to other countries in
the region such as Singapore, Philippines or Thailand (source: www.retailinasia.com).
Hence, the power of supermarket in VN is so strong to deal with their suppliers.
Currently, supermarket channel is the main distribution channel of Mekostar freshcut fruits. Therefore, The Fruit Republic have less power than its customer. They have to
accept the high margin of supermarket for Mekostar fresh-cut fruits and other conditions of
supermarket. This point create many difficulties for The Fruit Republic to grow Mekostar
fresh-cut fruits in supermarket channel.
Moreover, supermarket wants to protect their own fresh-cut fruits so that they try to
control the growth of Mekostar in their stores. This point is a big hurdle for The Fruit
Republic if they want to grow Mekostar fresh-cut fruits in supermarket channel.

3.3 SWOT analysis of Mekostar fresh-cut fruit
As per our analyses in the previous chapter, we can identify the strengths, weakness,
opportunities and threats of Mekostar products as following:

3.3.1 Strengths
Mekostar is the fresh cut fruit products of well-known company in fruit processing
therefore it has certain strengths which its competitors cannot vie:
-

A convenient solution for consumer to eat some fruits which are very difficult and
cost a lot of time to cut.

-

The first in this category in market having professional packaging.

-

Processed from high quality fruits which can meet export standard.

-

Consistent juicy taste because of the consistent source of fresh fruits

-

Reach the high level of hygiene and safety which can proof by HACCP and BRC
certificate for the factory, Global Gap for the sourcing area.

-

Ensure the stability in supply because the company can control the sourcing with
their large network of contract farmers.

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