Launching liver product in food supplement market in vietnam master project in business and marketing management

TRƯỜNG ĐẠI HỌC MỞ TP.HCM

UNIVERSITE LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY

SOLVAY BUSSINESS SCHOOL

MBMM4

THIEU THI VY VY

LAUNCHING LIVER PRODUCT IN FOOD
SUPPLEMENT MARKET IN VIETNAM

MASTER PROJECT
MASTER IN BUSINESS & MARKETING MANAGEMENT

Tutor: PhD. HOANG THI PHUONG THAO

Ho Chi Minh City
2010


Thieu Thi Vy Vy

Final project – MBMM4

DECLARATION
I hereby enclose eight hard copies & two soft copies of my final project
“Launching Livica - liver product in food supplement market in Vietnam” to

Solvay Business School and Ho Chi Minh City Open University.
I confirm this final project is my own work. And I certify that all data and
references using in this project are legal.


Thieu Thi Vy Vy

Final project – MBMM4

ACKNOWLEDGEMENTS
Firstly, I would like to express sincere thanks to my tutor - PhD. Hoang Thi
Phuong Thao for her whole-hearted guidance and feedback which I really
appreciate.
In addition, I would like to show my big gratitude to my special colleagues –
Mr Phan Thanh Trung, who accompanies with me the whole course of MBMM4
& Mr Nguyen Phong Phu, who assists me to conduct the quantitative research for
the information of this final project, and other colleagues in United Pharma
Vietnam, who assist me to complete this final project.
Finally, I wish to acknowledge and thank to all professors, coordinators and
my classmates of MBMM4 program who have delivered valuable experiences,
knowledge and assistance to me during the course.



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Final project – MBMM4

TABLE OF CONTENT
LIST OF TABLES

LIST OF CHARTS
LIST OF ABBREVIATIONS

EXECUTIVE SUMMARY ......................................................................................1

Chapter 1: INTRODUCTION
1.1 Background ...........................................................................................................2
1.2 Objectives of launching project ...........................................................................3
1.3 Scope and limitation of launching project ...........................................................4
1.4 Research study method serving for project ........................................................4
1.5 Structure of project report ...................................................................................5

Chapter 2: MARKETING SITUATION ANALYSIS
2.1 EXTERNAL ANALYSIS.....................................................................................7
2.1.1 Hepatic market data analysis (IMS market research agency) .................7
2.1.2 Competitors analysis..................................................................................8
2.1.3 Market & consumer’s attitude toward liver products ...............................9
2.1.3.1 Respondents information ............................................................ 9
2.1.3.2 Market overview......................................................................... 9
2.1.3.3 Evaluation of product concepts ................................................. 12
2.1.3.4 Ideas for pricing ........................................................................ 14
2.2 INTERNAL ANALYSIS....................................................................................15


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2.2.1 Historical business share by regions / provinces in Vietnam of United
Pharma’s products ............................................................................................15

2.2.2 Historical business share by channels of distribution of United Pharma’s
products..............................................................................................................15
2.3 SWOT ANALYSIS.............................................................................................16
2.3.1 Strengths ...................................................................................................16
2.3.2 Weaknesses..............................................................................................16
2.3.3 Opportunities ............................................................................................17
2.3.4 Threats ......................................................................................................17

Chapter 3: MARKETING STRATEGY TO LAUNCH LIVICA
3.1 MARKETING GOALS & OBJECTIVES .........................................................18
3.2 MARKETING STRATEGIES............................................................................19
3.2.1 Target segmentation ................................................................................19
3.2.2 Livica positioning.....................................................................................20
3.2.3 Marketing mix ..........................................................................................20
3.2.3.1 Product strategy ........................................................................ 20
3.2.3.2 Pricing strategy ......................................................................... 22
3.2.3.3 Distribution strategy.................................................................. 24
3.2.3.4 Promotional strategy ................................................................. 25
3.2.4 Action plan for launching Livica .............................................................27
3.2.4.1 Consumers ................................................................................ 27
3.2.4.2 Pharmacy .................................................................................. 29
3.2.4.3 Private clinic ............................................................................. 30


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Chapter 4: FINANCIAL ANALYSIS & CONTROL
4.1 SALES FORECAST FOR 5 YEARS.................................................................33

4.2 MARKETING EXPENSE FORECAST ............................................................33
4.3 BREAKING EVEN ANALYSIS .......................................................................34
4.4 CONTROL .........................................................................................................35

CONCLUSION ........................................................................................................36
REFERENCES
APPENDIX


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LIST OF TABLES
Table 2.1: Market relevant of hepatic market ..........................................................7
Table 2.2: Competitor analysis profile ......................................................................8
Table 2:3: Respondent profile .................................................................................. 9
Table 2.11: Business share among 4 channels of United Pharma .........................16
Table 3.1: Sales forecast of Livica in 5 years .........................................................18
Table 3.3: Price of Livica ........................................................................................23
Table 3.4: Competitor pricing analysis....................................................................24
Table 3.5: Sales share among channels ..................................................................24
Table 3.7: Summary of action plan 2011-2013 ......................................................31
Table 4.1: Livica’s sales forecast in 5 years ..........................................................33
Table 4.2: Marketing expenses for 5 years .............................................................34
Table 4.3: Break-even analysis ..............................................................................35


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LIST OF CHARTS
Chart 2.4: Current hepatic market ..........................................................................10
Chart 2.5: Purpose of taking Hepatic products .......................................................10
Chart 2.6: Consumers’ perception on famous brands .............................................11
Chart 2.7: Influencers of hepatic category ............................................................. 11
Chart 2.8: Evaluation on 2 product concepts ..........................................................13
Chart 2.9: The attractive attributes of concept 2 vs concept 1...............................14
Chart 2.9: Pricing evaluation ...................................................................................14
Chart 2.10: Historical business sales of United Pharma VN ..................................15
Chart 3.2: Novex science study on absorb of Siliphos ...........................................21
Chart 3.6: Delivery system of United Pharma’s Distributor...................................25


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LIST OF ABBREVIATIONS
UPI

:

United Pharma (Vietnam) Inc.

UNILAB

:

United Laboratories, Inc.

OTC

:

Over the Counter

GIT

:

Gastro Intestinal Track

SEC

:

Social Economic Class

WOM

:

Word of Mouth

MD

:

Medical Doctor

PPC

:

Private Pharmacy Company

WS

:

Wholesaler

CBP

:

Consumer Buying Price

CAGR

:

Cumulative Average Growth

OPEX

:

Operating Expenses

ATL

:

Above the Line

BTL

:

Below the Line

BOD

:

Board of Directors


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EXECUTIVE SUMMARY
With the strategy to expand the business of United Pharma VN through
exploring the new & potential market – food supplement market, the project of
launching a liver food supplement product is suggested. The project depicts plan

of launching Livica, which strengthens liver health and protects liver from
diseases. It describes clearly the whole process of how to launch Livica in food
supplement market. Starting with the introduction of the project on how & why
the product is selected. Then it moves to the market situation analysis which
bases on data & information from conducting quantitative market research &
existed internal information of the company. Following that the marketing
strategy is developed to describe how Livica approach its market. It’s the most
important part of the project to present many key concerns of a product launch,
like what is its target segment, what is Livica positioned in consumer’s mind,
what is the marketing mix of Livica. Finally, the finance analysis & control is
suggested to evaluate & manage the success of the project.


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Chapter 1
INTRODUCTION
1.1

BACKGROUND
United Pharma VN is a subsidiary pharmaceutical company of Unilab in

Philippine. It has been established in Viet Nam since 1994 as a representative
office. From 2000, it has been become a limited foreign company with a factory
in Vietnam. At present, United Pharma VN has been one of the biggest OTC
pharmaceutical companies in Vietnam with famous brands like Decolgen,
Alaxan, Enervon, Obimin, etc. It has more than 300 employees with sales

representatives in most of provinces in Vietnam. The average revenue growth in
the past 5 years was about 23% and the operation management has also been
expanded with many new departments like Marketing Information & Services,
Portfolio Medical, Trade Marketing departments. The vision of United Pharma is
the world-class healthcare partner for life. And the mission that United Pharma
provides quality and affordable products and services that promote and enrich life
for all communities.
Inconsistence with the vision & mission of United Pharma, Livica is
suggested to launch. Food supplement with herbal compositions has become the
new trend in the world, and Vietnam has started to follow that trend nowadays.
Consumers have been more aware of side effects of medicines in long term
treatment & move forward to take herbal products for both prevention &
treatment.
The product is chosen about liver protection because of two reasons.


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Firstly, according to IMS data (IMS - a research company supplying data for
pharmaceutical industry in Vietnam) that total hepatic protection category had a
high average growth of 38%, which was faster than the average OTC growth of
17% from 2007 to 2009. Among this category, total food supplement products
achieved a remarkable average growth of 304%. Secondly, because of the
emergence of active life-style, the number of potential sufferers who usually
drink and eat out is probably increasing. In sight of this vitally emerging demand
of hepatic protection, the launch of a liver food supplement product is necessary
to penetrate the potentially lucrative segment.

Livica contents Siliphos & multivitamin, which is better than most of the
existed players in formula & benefits. Siliphos is the combination of Silybin &
complexation with soy. Silybin is the standardized extract (silymarin) obtained
from the fruit of S. Marianum and containing main constituents SILYBIN,
SILYDIANIN and SILYCHRISTIN, is widely used in European medicine in the
treatment of liver diseases. Livica will be imported from Unilab, the mother
company in Philippine. Livica is a pioneer of food supplement product for United
Pharma to explore & test the new attractive market in Vietnam.

1.2

OBJECTIVES OF PROJECT
The project will be gone in depth with three main objectives as follows:
o

To explore & analyze the characteristics of the current market and
competitors to launch Livica in food supplement market.

o

To analyze potential consumers’ attitude & usage to Livica product.

o

To create shape & sound marketing strategy to launch Livica
successfully in Vietnam


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1.3

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SCOPE AND LIMITATION OF PROJECT
This project will be implemented in nation wide of Vietnam from 2011.

However, due to the limited time of preparing the project, the market research on
consumers & market is just conducted in HCMC and the result will be assumed to
nation wide.

1.4

RESEARCH STUDY METHOD SERVING FOR PROJECT
There will be two methods using for this project: desk research and

quantitative research:
o Desk research: the analysis bases on secondary data from internal and
external source:
9

Internal data: The project will get sales value of United Pharma
products through past three years 2007 – 2009 from sales portal
system of United Pharma as the data reference.

9

External data: The project will get market data of hepatic market,
sales volume & value of players through past three years 2007 2009 from the data panel of IMS. The hepatic market in IMS
presents data of both medicine & food supplement products.

These data are collected from the sales of distributors to
pharmacies in 5 key cities, which are HCMC, Hanoi, Cantho,
Danang & Haiphong and are set as representative for the whole
national market.

o Quantitative research: this research is conducted by face to face
interview with 100 respondents in HCMC following list of
questionnaires. The target respondents are set into 3 groups as follows:
- Group 1: (40 respondents)


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• Gender: all
• Age: 20-50
• SEC: ABCD
• Occupations: all
• Past 6 months users of liver products
- Group 2: (30 respondents)
• Gender: all
• Age: 20-50
• SEC: ABCD
• Past 6 months users of liver products
• Users of Boganic, using the brand regularly with or without
intervals
- Group 3: (30 respondents)
• Gender: all

• Age: 20-50
• SEC: ABCD
• Past 6 months users of liver products, length of use at least 3
months
• Users of Bar, using the brand regularly with or without
intervals
In this research the questionnaires of 21 questions is designed to be
asked face to face by interviewers at the consumers’ houses. Please see
the detail of questionnaires & data sheet in the appendix.

1.5

STRUCTURE OF PROJECT REPORT
The project includes four chapters, in which

o Chapter 1, “Introduction”, introduces the where the project comes
from, the objectives, the scope of work and research study methods to
write this project.

o Chapter 2, “Marketing situation analysis”, goes to analyze the
market overview of liver products, the competitors which are about the
top 2 players with their strengths & weaknesses, the historical sales
performance by regions of United Pharma products, and the


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quantitative research result which explores the target segment, the
ideas for pricing & evaluation for winning product concept. Then the
project analyses the SWOT of Livica before moving to do the
marketing strategy for launching it.

o Chapter 3, “Marketing strategy to launch Livica”, presents the key
contents of the launching project which are developed based on the
information & data analysis of chapter 2. In this chapter, the objectives
are set and the marketing strategy is deployed from defining the target,
the product positioning to the marketing mix to for action plan of
launching.
o Chapter 4, “Financial analysis & control”, mentions about the sales
& marketing expenses of the project. As the criteria of launching new
products in United Pharma, the sales target should be forecasted for
first 5 years to see how potential growth of product for investment.
Then the project is calculated the all the expenses from operations to
product marketing expenses to make the project be broken even in 3
years. And the needs to set up criteria the project measurement.

In summary, chapter 1 gives an overview on the reasons of launching
Livica, setting up objectives for project and suggesting study methods to be
applied and the structure which the project will go through. So the 1st step of
launching a new product is to analyze the market it will enter.


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Chapter 2
MARKETING SITUATION ANALYSIS
2.1 EXTERNAL ANALYSIS
2.1.1 Hepatic market data analysis (IMS market research agency)
The IMS research result shows that among players in hepatic market,
the hepatic food supplement products emerged from 2007 and quickly
showed the potential development & trend of liver food supplements in
Vietnam with 304% of average growth from. It’s easy to understand the big
growth of hepatic supplement. It’s the trend of taking food supplement
products to avoid the side effects of medicine in long term treatment. Table
2.1 describes clearly the market trend of liver products.
Table 2.1: Market relevant of hepatic market
HEPATIC MARKET RELEVANT
(medicince + supplement
BRAND

COMPANY

BOGANIC
% GR
% SH

(TRAPHARCO)

BAR
% GR
% SH

(PHARMEDIC)

FORTEC
% GR
% SH

(IC VIETNAM)

ACTUAL SALES
2007

2008

2009

% CAGR
05 - 09

13.17
37%
6%

22.45
71%
8%

35.19
57%
9%

63%

20.99
17%
10%

23.63
13%
8%

23.98
1%
6%

7%

13.79
41%
7%

14.32
4%
5%

17.91
25%
5%

14%

0.92

14.91
237%
4%

304%

0%

4.42
383%
2%

OTHERS
% GR
% SH

154.57
34%
76%

217.44
41%
77%

294.45
35%
76%

38%

TOTAL RELEVANT MKT

203.44

282.26

386.44

HEPAT FOOD SUPPLEMENTS
% GR
% SH

% GR

51%

39%

Source: IMS research in Q2, 2010

37%

MAT
(accumulative of 4Q)
Q2-2009
30.33
9%
24.04
7%
14.96

5%
7.67
2%
251.44

38%

Q2-2010
34.79
15%
8%
24.75
3%
6%
20.10
34%
5%
18.53
141%
4%

77%

314.62
25%
76%

328.44

412.78

26%


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2.1.2 Competitors analysis
In general, the classification of total hepatic market is based on
therapeutic classification, which products have similar ingredients in treating
or protecting liver diseases. And the process of defining competitors of Livica
is based on the ranking of products in hepatic market (mostly leader), product
claims, the advertising claims, and the activeness of marketing activities of
players in same market. Therefore, the competitors of Livica are Boganic &
Bar, who are in top five of rank with big market shares; have the advertising
claims competing with Livica, which is for liver protection & treatment, and
same target customers (consumers, pharmacist and MD). The table 2.2 will
summarize the competitor analysis profile for a general view of readers.
The table 2.2: Competitor analysis profile.
BRAND
Manufacturer

LIVICA

BOGANIC

BAR

United Pharma VN

Trapharco

Pharmedic

9%

6%

Market share 2009

Com pos ition

-

Silybin-Phos 120mg
Vitamin B 1, 2, 6, 12
Niacinamide, 14mg
Vitamin E, 12mg
Calcium, 5.4mg
Zinc, 5mg

Key Indication

- Maintain healthy liver
- help to produce liver
enzymes

-support liver f unction
- detoxif y liver

- prevent & support
treatment of high
cholestorol,biliary tract
disorder

- support liver f unction
- secrete toxicity,
antiallergic
- antherosclerosis

Target Cus tom e rs

_ Consumers
_ Pharmacists
_ MD in private clinic

_ Consumers
_ Pharmacists
_ MD

_ Consumers
_ Pharmacists
_ MD

Buying Price

38,500 vnd / box (100 tab)

35,000 vnd / box (180 tab)

Selling Price

43,000 vnd / box

41,000 vnd / box

Pr ice per day

3 times x 3 tabs / day =
4,000 vnd

3 times x 2 tabs / day =
1,500 vnd

Unique Stre ngth

_
_
_
_

- Heritaged brand
- Low price
- Strong distribution

Unique We aknes s

- Not appealing packaging
- Lack of emotional claims

- Limited promotion activity
- Not appealing packaging

Pos itioning

Herbar remedy f or hepatic
dysf unction

Remedy f or toxicity
secretion

Key prom o
Activitie s

PR program, Conf erences
f or MDs.

-OOH: Billboard in highw ay

- Extractum cynarae, 10mg - Extractum cynarae, 10mg
- Extractum polygoni, 75mg - Extractum polygoni, 75mg
- Extractum lpomoeae
- Extractum lpomoeae

Popular Brand
Low price
Strong distribution
High aw areness

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2.1.3 Market and consumer’s attitude toward liver products.
2.1.3.1 Respondents information:
There is no significant difference between the general and potential
market. Female looks more dominant than male in hepatic category and
the group have more concerns on their liver health is in middle age
from 30 to 50 year olds. And most of them are self-employed and
housewife. See table 2.3
Table 2:3: Respondent profile
General MARKET POTENTIAL MARKET
GENDER
Male
Female

32
68

32
68

15
34
51

13
34

53

16
64
20

17
62
21

5
1

6
1

5

5

Large-scale trader
(excluding business owner)

4

4

Production worker
Self-employed
Student

Housewife
Unemployed
Retired

15
42
2
24
1
1

16
40
1
25

AGE
20 - 29
30 - 39
40 - 50
SOCIAL ECONOMIC CLASS
Class B
Class C
Class D
OCCUPATION
Professional
Technical
Office employee –
Clerical/junior level

1

Base: all respondents (n=100), screening questions

2.1.3.2 Market overview:
Chart 2.4 shows that the hepatic market looks stable with users
sticking to their brand after trial, and Bar is the leader with 91% of
retention, followed by Boganic with 72% of retention.


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Chart 2.4: Current Hepatic Market
BAR

Retention Rate
DEPENDABLES

BOGANIC

91%

72%

44

10

54

13

REPERTOIRE
54

TRIALISTS

P12M

6 60
Ever used

40 12 25 77

AWARE TOM/Other Spont./Aided

135 18
P12M Ever used

95 41

55

TOM/Other Spont./Aided

Base: All respondents (n=100) - Q1, 2

The consumer’s usage of liver products is quite similar to that of

tonic. Some ones use them to treat mild illnesses like fatty liver or
hepatitis, while the others to treat common skin problems like
hives/acnes. And the usage especially differs between genders, in
which males think more about beer or alcohol damage and females
think about the skin beauty. See chart 2.5
Chart 2.5: Purpose of taking Hepatic products


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From that, only Bar & Boganic have gained the clear position in
consumer’s mind as liver tonics. Bar is currently the only product to win
both and enjoys more association with skin benefits, while Boganic is
more likely to be used for protection against beer / alcohol. See chart
2.6
Chart 2.6: Consumers’ perception on famous brands
Bar
POSITIVE PERCEPTION
OF BAR
Base: n=
INDIRECT BENEFITS

TOTAL
80

84

Treat yellowish skin

52

Nourish skin

27

Treat skin allergy

26

Treat acne

23

DIRECT BENEFITS

Remove/Neutralize toxic
in the liver
Treat fatty liver

Don' t know

Base: n=
DIRECT BENEFITS

Remove/Neutralize toxic in
the liver
Treat fatty liver

Treat acute liver
inflammation
Treat common liver
problems

TOTAL
58

55
28
9
9
7

47

INDIRECT BENEFITS

31

31

Treat yellowish skin

25

Treat acne

9

7

OTHERS

Has low price
Has herbal ingredients

Boganic
POSITIVE PERCEPTION
OF BOGANIC

OTHERS

5
3
7

Has low price
Has herbal ingredients
Don' t know

1
10
31

Base: Those who are aware of brand, Q5,6

Besides, this category is influenced by MD, pharmacists and WOM.
Females, particularly, are more influenced by private clinics. See chart
2.7.

Chart 2.7: Influencers of hepatic category


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2.1.3.3 Evaluation of product concepts
The two product concepts are proposed to consumers to check their
perception & evaluation toward the product. And based on consumer’s
feedback, it helps to define the product positioning and ad claims for
advertising activity later. And here’re the 2 concepts tested in the research:
Concept 1: (focus in protecting liver from beer/alcohol for male)
Active life-style like too much eating & drinking habits bring bad
effects on your health. And liver is one of the most affected organs in
your body.
You need to find a way to protect your liver from the harmful effects
of alcoholic drinks and unhealthy eating. Besides improving eating &
drinking habits, taking liver tonics is necessary to remove toxics out of
your liver.
Product A – specially formulated & clinically proven liver protection
tablet composed of Siliphos and multivitamins. Siliphos is extracted from
the native milk thistle which was proven by clinical trials that it protects
the liver from harmful toxins from drugs, alcohol and food. Product A
also has vitamin B complex, vitamin E and zinc which will help keep the
liver healthy and functioning well.
The product is made from herbal extract therefore it is safe to use.
Take the product everyday for healthy liver and you can enjoy life.

Concept 2: (communicate multi-benefits for both male & female)
Industrial living, air pollution, and eating habit bring bad effects on
our health. Liver is affected the most by those factors.


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Besides improving eating habit, taking medication like liver tonic
and liver cleans are another ways to protect your liver against harmful
toxins from alcohol and pollution.
Introducing product B which formulates Artichaut extract, extractum
polygoni avicularis, pulveres ipomoeae helping to protect liver
effectively, treat skin allergic, pimples, jaundice, fullness, detoxification
from the bad impacts.
With product B, you would fully enjoy dining, drinking and do not
have to worry about the pollutions. The product is made from herbal
extraction so you can use it everyday. For this reason, you would enjoy
a beautiful life with your be-lovers.
The research finds out that concept 1 receives quite good ratings in
various indications, meets standards requirements of 75% overall liking
and purchase intent, and it appears more to males. However, concept 2
even generates more positive perception, and potentially draws more
people to try the product. This is the result of multi-benefits
communications and relevance to both genders. See chart 2.8
Chart 2.8: Evaluation on 2 product concepts

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Concept 1 wins a plus with males due to the highlighted protection
against beer / alcohol, while concept 2 speaks to both genders and
gathers more mass support. Therefore concept 2 definitely triggers
more purchase. See chart 2.9
Chart 2.9: The attractive attributes of concept 2 vs concept 1

2.1.3.4 Ideas for pricing
The acceptable price ranges of Vnd 2,200 – 2,900 per tablet is very
narrow, indicating high level of price-consciousness. See chart 2.9
Chart 2.9 Pricing evaluation


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2.2 INTERNAL ANALYSIS
2.2.1 Historical business share by provinces in Vietnam of products in United
Pharma:
The distribution of United Pharma is strong mostly in HCMC & cities
in Mekong area. The top 20 cities contribute 85% of company’s business and
the distribution has covered more than 2,500 pharmacies. See table 2.10.
Chart 2.10: Historical business sales of United Pharm VN

Order

Province

1
Ho Chi Minh City
2
Tien Giang
3
Ha Noi City (Old)
4
Can Tho City
5
An Giang
6
Ben Tre
7
Dong Thap
8
Long An
9
Dong Nai
10
Vinh Long
11
Soc Trang
12
Khanh Hoa
13
Ca Mau

14
Tra Vinh
15
Kien Giang
16
Da Nang City
17
Binh Dinh
18
Ba Ria - Vung Tau
19
Binh Duong
20
Bac Lieu
21
Others
Grand Total

Business
Share
28.6%
9.4%
6.4%
4.8%
4.7%
4.1%
3.1%
3.1%
2.7%
2.5%

2.5%
2.1%
1.8%
1.8%
1.5%
1.5%
1.5%
1.2%
1.1%
1.1%
14.6%
100.0%

No. of Buying
Outlets
732
126
240
166
82
48
30
42
72
58
38
86
70
34
52

102
26
60
40
28
466
2,598

Source: Sales portal system of United Pharma in 2009.

2.2.2 Historical business share by channels of distribution:
United Pharma’s products are distributed through 4 channels. Among
these, retailers are the key channel which company wants to increase the
business share for OTC products to lessen the dependable to wholesalers &
PPC, so the company can control the market more powerful and strictly, and
enhance the direct communications of brands to pharmacists & consumers.
Here’s the table which shows the sales share among channels in 2009. See
table 2.11