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Marketing principal assignment...

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Marketing Principle - MKTG1205

Lecturer: Ms. Le Phuong Chi

ASSIGNMENT Situation Analysis Report of Oreo in Vietnam

Vi Dinh

Group 1: Nguyen Dinh Son (s3821008) Le Thi Thao Linh (s3818254) Nguyen Ngoc Minh (s3816081) Dinh Khanh Vi (s3824316) Pham Nguyen Hoang (s3759223) Tran Quoc Viet (s3823616)

Table of Contents Situation Analysis Report of Oreo in Vietnam ...........................................................................................................0 I. SITUATION ANALYSIS ........................................................................................................................................ 2 1) Company description ........................................................................................................................................ 2 2) Product description........................................................................................................................................... 2 A) Features and Design ........................................................................................................................................ 2 B) Brand awareness .............................................................................................................................................. 2 II. MARKETING ENVIRONMENT: ......................................................................................................................... 2 1) Micro environment ........................................................................................................................................... 3 A) The identification of factors ............................................................................................................................. 3 B) Analyzation ...................................................................................................................................................... 3 C) Publics ............................................................................................................................................................. 4 2) Macro Environment ......................................................................................................................................... 4 A) The identification of factors ............................................................................................................................ 4 B) The impact of these factors ............................................................................................................................. 4 III. SWOT ANALYSIS: .............................................................................................................................................. 5 IV. STDP Analyzation ................................................................................................................................................ 6 1) Segmentation ..................................................................................................................................................... 6 2) Targeting............................................................................................................................................................ 7 A) Product ............................................................................................................................................................. 8 B) Price .................................................................................................................................................................. 8 C) Place ................................................................................................................................................................. 8 D) Promotion ........................................................................................................................................................ 8 3) Positioning ......................................................................................................................................................... 8 A) Oreo positioning map with variety.................................................................................................................. 8 B) Oreo positioning map with brand awareness .................................................................................................. 9 4) Differentiation ................................................................................................................................................. 10 A) Product .......................................................................................................................................................... 10 B) Service ........................................................................................................................................................... 10 5) Value proposition ............................................................................................................................................ 10 6) Conclusion…………………………………………………………………………………………………….10 V. REFERENCE ...................................................................................................................................................... 12 VI. APPENDICES ........................................................................................................................................................ 15

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I.

SITUATION ANALYSIS

1) Company description To completely summarize how Oreo infiltrated the Vietnamese market is long and complicated. Figure 1 is a simplified timeline of how Mondelez Kinh Do acquired and distributed the famous cookie in the country’s market. Figure 1

Citation note: (1) Valmas 2019; (2) Strom 2012 ; (3) Umesh 2016 Therefore, the analyzation of the situation the line product ‘Oreo’ will be focused only on analyzing activities of Mondelez International in Vietnam. • Mission Statement: ”To offer the right snack, for the right moment, made the right way” •

Managing Director: Stephane Gripon

2) Product description:

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a) Features and Design: Since its debut in 1912, Oreo has always been a household name, ranked 9th in “America Most Famous Brand” (YouGov 2018). Acquired by Mondelez International in 2000, the multi-national food corporation has made ‘Oreo Chocolate Sandwich Cookie’ worldwide phenomenon as it is today. The cookie itself is a perfect case study of how you can make something so elegant, so simple yet executed perfectly. The combination of 2 worldwide beloved flavors: vanilla and chocolate, Oreo is one of those revolutionary inventions that make people go: ‘Why I have not thought of that sooner?’. b) Brand awareness Being the most famous cookie in the world, appeared in more than 100 countries, with the genius marketing and slogan making, which we will mention more in the latter part of this report, Oreo attaches itself with the ‘sandwich cookie’ image. There are undoubtedly many different sandwich cookie brands, even Oreo itself is made as a copycat of Hydrox cookie, the cookie developed by Nabisco’s competitor Sunshine (Lukas 1999). Despite having a rough start, Oreo bloomed and became America’s most favorite cookie, many people all around the world are and will always associate the ‘sandwich cookie’ image with Oreo, because for them, it’s the first they tried, and for a lot of them, the best.

II.

MARKETING ENVIRONMENT 2

One of the many reasons that made Oreo the worldly favorite is their Marketing Plan. They have successfully infiltrated many markets in different regions, therefore achieve popularity: 1) Micro environment: a) The identification of factors The company’s situation can be analyzed based on 5 main factors: Supplier, Marketing Intermediaries, Customer, Competitors, and Publics. This report only provides and analyze information of which is publicly accessible or accessible with an RMIT account, as most companies kept their sources and number internal. • Marketing Intermediaries: VTV, Son Tung MTP, Kenh 14 •

Customer: Consumer of all demographic national wide

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Competitors: Madura Indah (Owner and Distributor of Danisa Cookies), Kaidu Sari Nabati (Richeese), Orion Food Vina Co. Ltd. (Goute), URC Vietnam (Cream-O)

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Publics:  Financial Publics: Baskin Robbins Vietnam, Blizzard Vietnam, Vinmart. Circle K  Government Publics: Food Safety Department, General Department of Customs, Business Registration Office  Media Publics: Kenh 14, Zing.vn

b) Analyzation: • Marketing Intermediaries: - Marketing agencies: Oreo had teamed up with various Vietnamese celebrities to run their marketing campaign in Vietnam such as Son Tung MTP (Oreo Asia 2018) and promote them through internet news sites such as ‘Kenh 14’. - Reseller: Most of their product is sold nationally through supermarket and retailer. They also are available at almost all traditional grocery stores throughout Vietnam. •

Customer: Mondelez Kinh Do mainly targets 2 profound market segments: reseller and consumer market. Even before the acquisition of Kinh Do, Vietnamese consumers have been exposed to the image of Oreo. However, in order to make the products accessible to a variety of people, Mondelez Kinh Do has to reach out to distribution channels such as wholesalers and retailers. This is where distributors such as VinMarts, CircleK, and other small retailers come in. They are usually the first choices when consumers go shopping for packaged snacks as they boast a huge range of locations, thus makes buying Oreo such a convenient and easy act (Landazuri 2008).

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Competitor: Mondelez Kinh Do has dominated the Sweet Biscuit market segment, ranked themselves first in National Brand Owner (NBO) Shares of Sweet Biscuits and have kept such places for 5 years consecutively (2015-2019). Their competitors have fallen behind as in 2019, shares of Mondelez Kinh Do (22.3%) double that of Kaidu Sari Nabati and Madura Indah at 13.3% and 11.1% respectively and close to quadruple of Orion Food Vina at 6.5%. Oreo took 6th place on Local Brand Name Shares with 4.4% and are the second product of Mondelez Kinh Do on the list, behind Cosy, which took 1st place at 18.7% . While Mondelez Kinh Do has many competitors, it is said safely that Oreo is not in a dangerous position, all products ranked near it have little to none similarities with the character of the cookies itself. None of the brands which has higher market share have chocolate content, and the closest product to Oreo which has similarities (Chocolate

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and Vanilla combination) is Biscafun (Quang Ngai Sugar JSC) and only take up to 2.2% of the market share (Passport 2019). Oreo also has a copycat called ‘Cream-O’ by Universal Robina (URC Vietnam Co. Ltd), together with Imported Oreos which are imported in small quantities and does not have an official distribution representative in Vietnam, the market shares of the Cream-O is practically non-existent compares to the grand schemes of the market so it is safe to say that it does not affect Oreo of Mondelez Kinh Do on any noticeable scales. Imported Oreos otherwise is hard to find statistics of because the products were imported by various distributors throughout Vietnam, Mondelez does import Oreo cookies from Indonesia, apart from them, the information we can access is insufficient, so making a conclusion would be risky, but if Mondelez show such domination in the market, it is safe to say that these companies do not affect Mondelez Kinh Do’s sales numbers. c) Publics: Financial Publics: Apart from being featured in many retail chains like Vinmart and Circle K, Oreo also is the main ingredient for many drinks, beverages, and desserts of various big food chains. Mcdonald Vietnam has adopted and brought the Oreo flavored drink ‘McFlurry’ into the Vietnamese market. It is also the main ingredient for Baskin Robbins Cookies n Cream ice-cream and is also a long-time partner with Blizzard through their famous brand ‘Dairy Queen’. Government Publics: To operate in Vietnam, Mondelez Kinh Do also must follow a strict rule by the government to ensure they follow a strict set of food safety regulations and get a certificate for the production environment. Media Publics: Oreo has been regularly mentioned over the year by various media companies. Their Media Publics consist of mostly internet magazines and news sites such as ‘Kenh 14’, these sites which produce contents aimed at teenagers and younger people, therefore brought Oreo exposure in this demographic segment. Whether or not Oreo has a deal with certain media companies, has not been made unclear, but it is clear that their media strategy is very successful. General Public: Many types of baked goods such as biscuits, cookies and general processed food were accused of using trans fat, a type of fat that was created in the factory by using hydrogenated oils. After 1990, a number of researches started to shed light on the effect that trans fat can have on a human’s body, especially their impact on the human heart. It is linked to heart disease and types 2 diabetes, which in the worst-case scenario can mean death if the consumers use the aforementioned products too frequently (Heart.org 2013).

2) Macro Environment: a) The identification of factors: The company’s situation can be analyzed based on Demographic, Competition, Economic, and Technological

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b) The impact of these factors: Demographic factor refers to the characteristics that define a person or a population such as race, age, income, gender. Currently, Vietnam has one of the largest populations in Southeast Asia, boasting around more than 96 million, making it the 15th most populated country, thus making Vietnam an attractive market. In addition, with the figure below (Vietnam Population 2019), we could see that Vietnam still has a young population, which is usually very prone to eating sweets and sugar. According to Vietnamnews, the average sweet consumption of an average Vietnamese person is 2 kilos, compared to the global average of 2.8 kilos, which means that the potential for the sweet market is very high. (VNS 2017) However, with the availability of information and choices, new generations are not as more likely to seek healthier snacks and are not as confined to brands’ names as the previous generations. (Fromm 2015) Economic factor refers to factors that affect the economy like tax, law, policies, wages, and government activities. The stability of the Vietnamese market has shown foreign investors of the great business possibility (Diep & Pham 2015), in this case, Mondelez's action of 4

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buying Kinh Do has shown how much they are willing to invest into this Southeast Asian market. In addition, the booming potential of foreign confectionery in Vietnam is shown as the nation’s imports reached over $250 million, up to 20 percent of the market share, in 2016. (Vietnam Investment Review - VIR 2017) Competition factors can be the number of sellers, information availability, location and other factors that affect the competitive ability of the organization. With the buying of Kinh Do, Mondelez has enabled Oreo to be distributed easily throughout the country by the established services and intermediaries, as well as bringing out a new exclusive product like the Oreo Mooncake. (Mondelez 2017) Not to mention, Mondelez's act of buying Vocarimex shares enables them to have better control over one of their needed ingredients, vegetable oil. (KIDO Group 2014) Technological factors here refer to the use of new technology and its capabilities in Social Media and its uproar is crucial to the modern advertisement. For example, the Facebook advertising campaign reached 11 million potential customers in 4 weeks (Mondelez Facebook 2019), and the #OreoPeople campaign, that was made popular by celebrity Son Tung MTP, had millions of views on its youtube videos and had fans all over the country imitating the popular singer. (Brands Vietnam 2018) III.

SWOT ANALYSIS

Strength -Available production line: Having already acquired the confection department of Kinh Do, Mondelez International now has full authority over Kinh Do’s domestic production line which could be adapted to Mondelez’s international quality standards. -A Healthier Option: In 2006, Oreo’s manufacturer took into consideration the wellbeing of customers after numerous researchers showed that trans-fat in packaged food increases the risk of death by heart disease by eliminating the use of partially hydrogenated soybean oil and replacing it with canola and palm oil (EastBayTime 2006). -Distribution System: Mondelez Kinh Do inherit Kinh Do’s distribution system which consists of 300 big distributors along with 200.000 wholesalers and retailers all across the country (the leader 2018). -Corporate Ambassador: Executives of Oreo in Viet Nam have chosen to renew their image along with the way people had been doing their signature “lick twist and dunk” by associating the brand with Son Tung MTP and had him creating his own dance moves while eating the cookies.

Weakness -Low production quality: Kinh Do’s production facility was considered to be of the domestic standard only, which means Mondelez Kinh Do had to spend a large sum of money to upgrade the obsolete production line. -Recent Controversy: Soon after the acquisition of Kinh Do’s confectionary department, an inexcusable scandal happened and took a toll on Mondelez Kinh Do’s reputation. Footages of unsanitized working conditions in the making of their signature mooncake started to surface, which brought their quality control ability into question. -Import ingredients and products: Mondelez Kinh Do still need to import different types of ingredients in order to make packaged goods from countries such as China and Thailand, which in turn increases the cost of production with shipment fee and tariff. -A wakeup call: Evidence about Mondelez International’s contribution to deforestation and in turn the impending distinction of orangutan surfaced after a report from Greenpeace was published in 2018 surrounding the sourcing of palm oil, an ingredient in the making of Oreo cookies. The report accused Mondelez

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Son Tung MTP’s appeal together with his new take on the traditional way of enjoying an oreo has drawn in a huge amount of interest from young people. -Long-standing brand: The Oreo brand was established in 1912 and has managed to capture the hearts of many consumers around the world. Furthermore, the acquisition of Kinh Do’s confectionary field creates an advantage for Oreo to penetrate the local market as Kinh Do was a longstanding brand name in Viet Nam. Availability of the products: customers can buy Oreo from almost every retailer place. Opportunity A large, growing and young population: Vietnam has a large and growing young population that would be favorable for sweets. And as the population of Vietnam is huge and not fully tapped, the market would be big also. A bustling and growing market: The growth and stability of the business is making it easier for foreign companies to do their investment in Vietnam. Independence of action: By buying Kinh Đô, Mondelez has paved their way to a steady stream of trusted customers as well as a huge already built distribution service set up by previous owners. Online Campaign: Thanks to great online advertising, such as the newly revised signature slogan “Xoay - liếm - chấm” by singer Son Tung MTP, Oreo has amassed a large number of followers in Vietnam.

International of using palm oil that was illegally sourced from 25,000 hectares forest of orangutan natural habitat despite being a member of the Roundtable on Sustainable Palm Oil (RSPO) during the period from 2015 to 2017 (Greenpeace 2018).

Threats Health awareness: The newly arise culture of eating healthily and non-preservati...