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Product Marketing Strategies of the Northern Branch 1 of
Vietnam Pesticides JSC (Vipesco)
1. Formation and development process of the Northern Branch 1
Vietnam Pesticides JSC (Vipesco)
The Northern Branch 1 Vipesco was established under the Decision No.
95/QĐTCTHC dated Jan. 31st, 1990 issued by Vietnam National Chemical
Group (Vinachem). In January 1991, Research Center for Science &
Agricultural Drug production belonging to Chemical Industry Institute merged
into the Branch, and in December 1997, Material Company of Plant
Protection located in Nam Dinh city also merged into the Branch. At present,
the Branch headquartered at No. 2 Trieu Quoc Dat St. Hoan Kiem Ward,
Hanoi. In addition, it has manufacturing facilities in Duc Giang Agricultural
Drug Factory, stores in Xuan Phuong, Tu Liem, Hanoi, and showrooms in Loc
Hoa, Nam Dinh city and in Vinh city, Nghe An Province.
The branch is a subsidiary, being responsible for production and business,
supplying weed pesticides used in agriculture, production of household
antiseptics, disinfectants and construction investment in offices and
apartments, warehouses for rent. Business areas assigned are the North from
Ha Tinh.
Since the North Branch 1set up, it has got great progress. Instead of being
small factory with on site – product sold professional departments. The
branch has a large scale which is as equivalent as its of mediumsized
company with full of professional departments and distribution system
covering the northern provinces from Ha Tinh. Especially, because of
1
increased revenue and profit, it ensures to create employment and quality of
life of staffs.
2. The organisational structure of the Northern Branch 1 Vietnam
Pesticides JSC
Functions and duties of the Northern Branch 1
• Functions:
Produce and supply fully and in time weed pesticides for agricultural
development in the northern. Besides, it produces and sells household
products such as flies and mosquitoes, cockroaches, ants, fleas, termites,
disinfection. It also invests in offices and apartments construction for rent, and
rent warehouse ... in the assigned area.
• Duties:
Business registered sectors in assigned areas; produce standard products
which are registered in the list of the Ministry of Agriculture and Rural
Development. The Branch creates employment revenue of staffs by itselt.
Also, it is responsible for the results of its business activities
Implement strictly professional management on property, accounting,
investment, capital preservation and other regulations which are controlled by
the Company, Vietnam National Chemical Group and the State.
Implement taxpayment obligations and other obligations to contribute under
the provisions.
Strictly comply with the provisions of the Labor Code to ensure the rights of
workers.
Implement strictly sanitation, wastewater, and waste gas to ensure
environmental standards such as licensed, PCCN
2
Constantly expand the scope of business to meet the development
requirements of the Company and the Vietnam National Chemical Group.
Functions and duties of Staffs
Administrative and Organisation Department: Plan, manage, arrange
workforce, implement staff training and policies for employees.
Finance and Accounting Department: Plan, organise, monitor, guide
reporting implementation and account under the provisions.
Engineering Plan Department: Develop plans for ensuring adequate timely
supply for materials and production packaging. Manage technical and
economic norms, product quality, give the Director advice about technics and
technical innovation to enhance productivity, improve working conditions.
Sales Department: Plan, consultation, professional management, and
implementation of the business activities such as strategic construction,
business planning, advertising, and customer care, promotion or discount
policies of the branch to dealers and timely assessment to evolution of the
market about customer information, products, epidemics in assigned areas.
The network of stores:
+ Duc Giang showrooms and stores in Long Bien District, Hanoi.
+ Cau Dien showrooms and stores in Tu Liem District, Hanoi.
+ Nam Dinh showrooms and stores in Nam Dinh
+ Vinh showrooms and stores in Vinh city, Nghe An province
Vinh store distributes to maximum of 7 retailers and wholesalers in Ha Tinh,
Nghe An, Thanh Hoa. Nam Dinh store distributes to Ninh Binh, Nam Dinh,
Ha Nam, Thai Binh. Cau Dien stores specialise retailing and introducing
products. Duc Giang store invoices, this invoices is issued by Sale
Department.
3
The network of dealers in the provinces
Order
Country/District
number
The number of
Note
Dealers
1
Sơn la
04
2
Điện biên
02
3
Lai châu
01
4
Hà giang
01
5
Lào cai
01
6
Yên bái
03
7
Tuyên Quang
01
8
Cao bằng
9
Bắc cạn
01
10
Thái nguyên
03
11
Lạng sơn
03
12
Quảng ninh
01
13
Hải phòng
03
14
Hải dương
05
15
Hưng yên
05
16
Hà nội
05
17
Hoà bình
01
18
Bắc ninh
03
19
Bắc giang
03
20
Vĩnh phúc
02
21
Phú thọ
01
22
Thái bình
05
23
Hà nam
03
24
Nam định
05
02
4
25
Ninh Bình
03
26
Thanh hoá
03
27
Nghệ an
05
28
Hà tĩnh
03
Total
78
Led by the Party, our country is increasingly developed, performance of
both the countryside and the city are changing day by day, and per capita
income in 2010 exceeded 1100 USD. Together with that development,
Agriculture industry grows constantly. Instead of importing foods due to
,property, Vietnam agriculture can not only supply fully for domestic market,
but also export, ranking 2nd in the world. That achieved is because of
Vipesco’s large contribution.
In terms of Legislation: The State highly appreciates plant protection
Sector, and encourages to produce and business highly efficient pesticides as
well as environment – friendly products. The most important document is
Ordinance on the Protection and Quarantine. In addition, there are Decrees
and Circulars guiding detail implementations as well as Regulations on
manufacturing, bottling, packaging, waste disposal, toxic emissions, and toxic
transportation. The regulations on hazardous waste management and toxic
disposal, including pesticides are controlled strictly from collection to
transportation which we have to use specialised and globally positioned
vehicles. This is barrier of new companies to enter into the market. However,
the North Branch 1 Vietnam Pesticides JSC is enough such conditions as
production, circulation and distribution of goods, environmental standards
under the provisions the State issued.
5
In terms of sociocultural, in conditions of globalisation along with the
rushing development of the internet, full and timely updates contribute to
improve sociocultural life, not only transmit environmental information, but
promote plant protection pesticides. At present, advertising channels the
Branch is applying are diversity, including TV and radio in each local.
Technology: Pesticides are harmful goods. Therefore, the State manages
very strictly. Every year, toxic drugs gradually are excluded from the list of
drugs registered for usage in Vietnam. At the same time, the government
allows to register new products which are effective, advanced and
environment – friendly. So the investment in new technology based on the
scientific and technical progress is necessary requirement for manufacturers
in Vietnam. Recently, Vietnam pesticide JSC has led in the study of modern
machinery and equipment to produce high quality products which are less
toxic to the environment. Whereas other companies couldn’t do anything, the
North Branch 1 has applied technics for producing granular, highly soluble
and low order pesticides, etc.
Economic: Economic development makes the people’s life and income
improved. Because of enhanced standard of living, the people think about not
only delicious foods, nice cloting, but fresh foods as well (fresh vegetables,
fresh food without pesticides). That impacts strongly pesticide production to
provide such less toxic and environmentfriendly products as ones derived
from plant and microbiology. It also facilitates for the Branch to develop those
biological products, for example, ViBT is biological pesticides for vegetable,
not only efficient but nontoxic; fungicide, Vivadamy, and other ones.
Natural environment: Increasingly, the environment is seriously polluted.
One of the reasons is to excessively use toxic substances, regardless
allowance, causing natural environment pollution. So it is needed to manage
6
strictly pesticide importing operations, check periodically and irregularly
production facilities, sale and transportation, warehouse and storage.
Pesticide products derived from petrochemicals, while oil reserves are
scarce. As a result, increase of products price requires companies to have
alternative products from other sources such as herbs, microbial which is like
Vipesco doing now.
3. Business Environment Analysis
Weeds pesticides for agricultural are harmful goods. The State regulates
business conditions of items, the object to serve farmers with low standard of
living and low awareness in society.
Pesticide industry is affected by the macro environment as above
analyzed; in addition, it is greatly influenced by elements of the business
environment.
Traditionally, in the Subsidy Mechanism, there is only the Center for
Agricultural Research & pharmaceutical production and Vipesco, producing
this item. After that, the Center merged with the Company to become
VIPESCO, and it is responsible for researching weed pesticides
manufacturing and business. After eliminating the Subsidy Mechanism, series
of smallsized enterprises launched. There are now nearly 300 enterprises
dealing in weeds pesticides across the country. In addition, worldwide famous
firms doing business in Vietnam cause intense competition in this area.
Production of weed pesticides depends on many factors. The first factor is
the exchange rate; the next is the world price, this price is affected by oil
prices. In recent times, due to rising world oil prices, price of pesticides also
fluctuates. At some time, world price rises quickly, but also goes down as fast
as in 2008, causing great demage for most companies, especially largesized
companies.
7
Output price of pesticides not only depends on abovementioned factors, but
also is influenced by price of agricultural products, product quality and
reputation of the brand. The price split into the following segments: Firstly,
price of high quality is of worldwide famous pesticide companies in such
many countries as Japan, America, Germany, Switzerland, etc. The 2nd
segment is such large companies as Vipesco which is the top of domestic
companies with product quality and brand reputation. The remaining segment
is the product of small enterprises and private firms.
Due to increasing environmental pollution, people's enhanced awareness,
the companies in this area have to change business of environment friendly
products and microbial products. This is main business way of the Branch.
4. SWOT analysis
Strength:
VIPESCO brand appears in the market for a long time, farmers across the
country are known. Dealer network of the Branch spread across all provinces
in the northern area, but now due to fierce competition and many other
reasons, its market share is only about 20% in the region.
Because of dominance of Vietnam National Chemical Group, along with
aims of business, the Branch is also responsible for adequate insecticide
supply when epidemics occur. Besides, it complies with regulations on the
business management, tax and other regulations for state enterprises.
As the Branch is a unit of Vietnam Pesticides JSC, this company directly
supports it in raw materials, technology, capital, marketing, promotion
policies, etc, particularly in technics. Because the company is the only unit in
the industry, having room to check the quality of national standards, quality
testing of the company is in high validity all over the country. Relied on that,
the quality control of inputs and outputs is more convenient than its other
8
companies which have no condition to check the quality during and after the
sale of products to market.
The branch operates in a large area, including large Red river Delta to plant
rice, vegetables, midland and highland to plant highly valued crops, industrial
plants such as corn, sugarcane, tea, rubber, coffee, orange, longan, litchi, etc.
This facilitates to product diversity of the Branch.
It has experienced and skilled staffs who meet the requirements of complex
technical tasks. It also has a modern factory which accommodates lotions and
powders, meeting all requirements of processing, as well as completed
environment treatment systems, gas handling system for competent.
Currently, there is no branch meeting these standards.
Most established dealers have based on cooperation with its branches for
development, so they are very loyal to their branchs.
VIPESCO has very strong potential of modern infrastructure and machinery
equipment which no sector has. More important thing is that staffs are highly
qualified, experienced. That is foundation for the development of new
products and high quality products.
With more than 100 high quality, prestigious products in the market which
are enough form such as liquid, powder, dispersal seed, spreader seed, etc.
Especially, in the North, product lines derived from biology are preferred and
encouraged by the State.
The Branch is also believed and approved by agencies such as the
Department of Plant Protection from the state to local and local dealers.
Weakness:
After equitizing, management apparatus is cumbersome; efficiency of using
labor force is low. The cost of a product unit is high due to nonproduction
9
costs remain high. Other reasons are that production of harmful goods is
sensitive to high environmental costs and administrative costs several.
Promotion and Marketing Department is still weak and less effective.
Discount, commissions, sale promotion are low because profits are not high
leading the low sale quantity of the agent distribution channel.
Governed by stateowned enterprises, price mechanisms isn’t as flexible as
those of the competitors. Specially, the general price mechanism is
sometimes counterproductive when large dealers in the southern sell large
amounts with cheap prices in order to conducting commodity exchange
between the North and the South, causing price interference in the market.
Compared with average standard of society, standard of living of employees
is still low. Therefore, they are not interested in devoting most of their ability,
even change their job.
Due to inconsistencies in assigning operation area, some stores can’t obtain
revenue as planned. That is responsibility of store, but not individual’s.
In short, based on the analysis of macro environment factors, industrial
environment we can realize that the Branch has modern equipment, skilled
and long experienced staff, engineers and workers in manufacturing and
business, Besides, it is the branch of Vipesco – the leading organization, so it
has very basic strengths for the future development.
Opportunity
A part from above – analyzed factors, strict managerment of the
government with demanding regulations on environmental protection also
strongly affects to small enterprises. Because these small enterprises don’t
have enough condition such as production sites, warehouses and capital to
meet the requirements of environmental protection, they are compelled to
10
change their way of business or dissolve. The fact is that this is opportunity
for development of the Branch. Moreover, under the direction of the Prime
Minister on the opening day of Vietnam National Chemical Group or
VIPESCO in 2009, VIPESCO has to build the sector strategy in 2020, The
strategy is about production of petrochemical originated pesticides,
replacing current imports that Vietnam is closely dependent on foreign
countries, especially Chinese. This really is a good opportunity for the Branch.
Currently, the Company starts to build the sector strategy, submitting the
authority.
Threats
The foreign pesticide production enterprise gradually expanding their
operations in Vietnam are the biggest threat to the company. The quality of
those companies’ products is very high and effective and their marketing
strategies are professional. Attractive incentives really threaten to domestic
companies.
Famers’ awareness and qualification are limited and habital. Therefore, they
are abused because competitors prefer selling profitable products to selling
good products with higher price but less profit.
Pesticides are made from petrochemical; however, oil reserves aren’t
unlimited. That strongly threatens to this sector.
5. Analysis of business environment and competition
Plant protection drugs, specificly pesticides are a highly profittable industry.
Because of the government demanding requirements of environmental
protection, the establishment of new pesticides enterprises is now very
difficult. That is in fact a big obstacle to enter into the sector. In the 2000s,
there were a few suppliers, so the Branch sold their products on site or in
accordance with letters of recomemdation from the People's Committees of
11
provinces and districts. Nowaday, with nearly 300 production enterprises, the
Branch have to use effective marketing strategy, attractive discounts and
incentives and delivering services so that it can be easy to sell. However, due
to its reputation and brand, rate of sale and profit of the Branch have
increased steadily for the years.
Pesticide suppliers now are from China, India, America, Japan and Britain.
Germany, Switzerland, Korea, etc. Chinese suppliers account for nearly 50%
of the total value of imported goods. Products of Western Europe and Japan,
the U.S. have high quality but high price; so customers’ choice is Chinese
products with acceptable price in spite of low quality. Therefore, Chinese
firms often have more opportunities to control market price which is good for
them.
Since the majority of imported goods is made in China, the fluctuations in
this country affects the import price of raw materials and products of domestic
companies. For example, in 2008, when China held the Olympics, it has
restricted chemical production to protect environment for helding of the
Olympic. As a result, for Glyfosat 480DD products, import price was
increased from 2 USD / kg to $ 6.2 USD / kg in Oct 2008. Also, in 2008, the
companies importing a large amount of these items lost nearly 100 billion
because the price decrease by 2 USD / kg compared with average one.
For long time, substitues or reducing the amount of pesticides in agriculture
depend on the program of fresh vegetable, the IPM programs, chương trình 3
giảm 3 tăng, and nonpesticide program in agriculture.
The current competitors in the north are foreign firms. The price of their
product is very expensive, influencing their quantity.
Cheap price product segment of the private companies in the longterm
will be difficult to smaintain because of the short product life cycle, low
12
repuptation. They just take some main dealer into care with after sale
service. In this segment, tax evasion occurs regularly, leading to unfair
business and unfair. So if the government strictly manages, the development
will be difficult.
Such wellknown companies as Plant Protection JSC 1, NICOTEX,
Application Develpoment JSC, HAI, An Giang Plant Protection JSC, and Viet
Thang company, Sai Gon Plant Protection JSC, etc. have been using many
forms of promotion, customer care. Especially for agents and dealers, they
have many benefits and trips to the U.S, France, and Australia. Therefore,
there are increasingly intense competitions which firms want to gain market
share for their own
Customers of the Branch 1 are northern farmers. They have been familiar
with it for a lone time. So the brand of VIPESCO with hexagonal logo, which
has 3 green leaves on brown ground, has become a familiar symbol of every
famer from the delta and midland to the mountains around the northern
mountainous provinces. Branch products still keep reputation and market
share, but relatively modest. It has currently distributed through direct sales
channels in its stores in the Northern provinces. Products are diverse,
espsecially ViDOC including medicines. Fujione, Vimonyl, pesticides is
Vibasa, vimatox, etc.
6. The business result of the Branch
The business result in 2007, 2008, 2009
Unit: 1000 dong
ON
Indicators
2007
2008
2009
1
Yield (ton)
300
350
400
2
Revenue (billion)
25
27
30
13
3
Total cost (billion)
24
25,7
28,5
4
Profit (billion)
1
1,3
1,5
5
State budget (billion)
2
2,3
2,7
6
The number of
60
65
70
3
3,5
4,5
employees (people)
Per capita income (tr/ng)
7
The sale result through products
Unit: 1000 dong
Products
2007
Revenue
2008
Ratio
2009
Revenue
Ratio
Revenue
Ratio
Pesticides
10
40,00
10
37,00
11
36,60
Fungicides
11
44,00
12
44,40
13
43,40
Weed
3
12,00
4
14,80
4,5
15,00
Gia dụng
1
4,00
1
3,80
1,5
5,00
Total
25
pesticides
100,00 27
100,00 30
100,00
The sale result through dealers
Unit: 1000
dong
ON
Area
2007
2008
2009
1
Sơn la
0.6
0.7
0.8
14
2
Điện biên
0.4
0.4
0.4
3
Lai châu
0.3
0.4
0.4
4
Hà giang
0.2
0.3
0.3
5
Lào cai
0.2
0.3
0.4
6
Yên bái
0.2
0.5
0.3
7
Tuyên Quang
0.3
0.5
0.4
8
Cao bằng
9
Bắc cạn
0.2
0.3
0.3
10
Thái nguyên
0.7
1
1
11
Lạng sơn
0.6
1
1
12
Quảng ninh
0.2
0.3
0.4
13
Hải phòng
1
1
1.2
14
Hải dương
1
1
1.4
15
Hưng yên
1
1
1.2
16
Hà nội
2.5
3
3.5
17
Hoà bình
0.5
0.5
0.5
18
Bắc ninh
1
1
1
19
Bắc giang
1.5
1.5
1.6
20
Vĩnh phúc
1
1
1
21
Phú thọ
1
1
1
22
Thái bình
3
3
3.2
23
Hà nam
1
1
1
24
Nam định
1.5
2
2
25
Ninh Bình
1
1
1
26
Thanh hoá
1
1
1
27
Nghệ an
1.5
2
2.2
28
Hà tĩnh
0.5
0.5
0.6
0.1
0.3
0.4
15
29
Khác
1
0.5
0.5
Total
25
27
30
For 3 years, the branch has developed steadily, its revenue, profit and
state budget has increased over years. As a result, employments and
standard of living of employees have been enhanced. It is important that the
market has expanded and promotions, client conferences, awards for sales
have been clearly effective. Yet development is not met with the potential of
the branch, requiring appropriate marketing strategies in new development
stage.
In addition to the environmental problems within the enterprises such as
improving. the organisation of working, arranging workforce k, investment
research and investing in equipment and modern techniques to produce
productoriented, quality products, it is needed to build suitable product
marketing strategies, basing on market segments of highcost products in the
country.
The reason to choose this segment is that its products are high quality
ones, being commensurate with the market price. Otherwise, its brand and
reputation have been confirmed.
Recommendation
Product strategies
Derived from competitive advantage in the market, pesticides are named
VIDOC 30BHN by preferred branches. At present, Viet Thang Company and
My Duc Company all produce these items, but their quality isn’t steadyband
16
not attending the goals. Therefore, need of these products is increasingly
grown up.
The production should be focused on supporting to winter crops. It will be
potential if the production is oriented to supporting to fruit trees. Nevertheless,
producing requires techniques and specialised equiptments. Currently, the
biggest difficulty of the Branch is that product drying process depends very
much on the weather when it is rainy, windy and not sunny in the winter to
sale. Therefore, to be active in production and keep necessary stability, it has
to build proper kilns or firewood using kilns, which are available and cheap, as
Vietnam Chemical Industry Institute established before.
The products originated from biology are encouraged and preferred by the
government such as BT Vi 16000, Vimatox, ViBamec, etc. Yet it is
neccessary to improve the quality of packaging and workshop promotion and
a number of other policies to boost sales.
Because area is wide and subjects are farmers, who live in the delta,
midland and mountain, the branch has to build massive distribution system to
be convenient for farmers. Currently, the Company is engaging the major
agents in the provinces by forms of care, huge postservices. But for the long
term strategy, the decision is in product quality and reputation of new brand.
In short, recommendations focus on the following thing:
Enhance product promotion by setting up provincial workshops in the key
provinces of rice and industrial plants. These workshops have representatives
of the local plant protection and agriculture sector and authorities and
agricultural organizations and other agents in the areas, promote products
and help local units to sell.
The next one is the conference on the fields. The Branch must choose some
main cooperatives to introduce and try to use products immediately in the
17
field of farmers so that farmers can master the technical characteristics of the
drug as well as their usage. In addition, the aim is to answer the questions of
famers. It is also workshop for that the famers to see the results of product
performance.
For agents, the Branch should have suitable policies. Benefits accompany
with responsibilities, also, the number of sales attaches discount, promotion
such as, product promotion, cash discount (be minus 5%), and lateseason
discounts, sales bonus, and travel
Pricing strategy
The objective is to orient to the market, then determine the price based on
the market. Flexible price policy depends on location and time, but is applied
in a high price segment of the domestic enterprises. At present, the market
price is often difficult to identify accurately; however, because of being import
unit and production, the Branch can also determine the reasonable price.
Besides, it always check and review carefully to manage inputs, reduce
product price to facilitate the business.
Distribution strategy
Building and expanding distribution channels across the province but not
competing, it must study regions. The direct sale is at the branch, if the price
mechanism is not considered carefully, it will cause bad influence in the area.
So there must be proper attention. Wholesale price is common price of all
northern areas (except monopoly distribution).
Service strategy
The objective of service strategy is to create favorable conditions for
customers, so the Branch needs to be responsible for transportation of goods
to everywhere.
18
Provide timely brochures, especially new product poster, technical
documentation, chemical agricultural handbooks.
Marketing communication
Marketing communication must be particularly emphasized. Athough the
Branch is prestigious and branded, it has to advertise and introduce products
regularly because of fierce competitions. Advertisement on TV can be
transfered to all regions. In addition, it can use advertisements in local media.
Workshop at all levels of provinces, districts, communes and field seminars
are also concerned, but cost of these types is about 57% of product sales.
In order to get information directly from customers, the Branch has opened
four stores for selling directly to users. This is very important information
channel and also basis of sale adjustment.
Promotion policies are applied to products which are difficult to sell in
order to stimulate customers to buy large quantities. For example, for ViBT
16.000 promotion rate can reach to nearly 30%.
Conclusion: Marketing strategies the Branch has used are very effective.
They facilitate the Branch’s development, including steady revenue and profit,
employments, improved life of employees, increased state budget.
19
