Chocopie analysis PDF

Preview

Summary

This is the report that analyse Chocopie brand for the report assignment of MKT principles...

Description

Table of Contents 1.

Situation Analysis

2.

Marketing Environments Micro Factors Company Suppliers: Marketing Intermediaries Customers: Competitors Public: Macro Factors Demographic Economic Natural: Technology Politics: Culture:

3.

SWOT Analysis

4.

STDP

5.

Conclusion

6.

References

7.

Appendices

1.



Situation Analysis

a. Orion Confectionery: The company was established in 1956 as Tongyang Confectionery Corp, headquartered in Seoul. It is one of the most famous confectionery company in Korea, is join-venture company with Tong Yang confectionery company and US Pepsi group. In July 1987,it officially changed its name into Orion. Orion has produced many products such as Choco pie, Custas, Fresh Pie, Goute's , snack toonies,..... and manages 3 main confectionery factories in Korea and many small factories in US, Vietnam, Russia and China. The company’s mission statement is: “Enriching people’ lives by providing superior products that customers love and trust.”

People: Chairman of the Board Cheol Gon Dahm (since 2013) CEO, Director Won Gi Kang (since 2013) b. Choco Pie: Orion Corp. first introduced Choco Pie in 1974, it is recorded to be imported into Vietnam in mid 1990s. It is a sweet, instant-use snack consists of 2 round layers of soft cake with a marshmallow fillings in between, the combination is coated in a thin veil of chocolate. Choco Pie is individually packed in tin foil wrappings, there are 2 common paper box sizes in Vietnam: 6 packs (54.000VND) and 12 packs. The single product held 60% (Orion Annual Report, 2010) of market share of local pie market in 2010. Two years later, the market share of Choco Pie exceeded 60% (Orion Annual Report, 2012) . However in 2013, there was a sudden dip in market share, decreasing by more than 20% to 40% (Orion Annual Report 2013). In 2014, market share had doubled and reached 80%, the highest market share Choco Pie had ever recorded so far (Orion Annual Report 2014). The product is in its maturity state as it has reached 80% of market share and is predicted to see a decline in sales in the near future if the product images are not renewed.

2.

Marketing Environments

Micro Factors Company Management structure: To effectively accomplish its goals and further objectives, Orion Corporation has administered its operation by dividing the organizational structure into various management levels; decision makers separate diverse tasks and projects in which they hold subordinates accountable. Besides, there are many supports from functional departments such as Sales & Distribution, Global Marketing, R&D, Management, Manufacturing, Public Relations, Global Strategy Planning, and Global Manufacturing (Orion, 2013). It is because of an appropriate management system that Orion Group supervisors can easily cover and control all subordinates to make them work together successfully and, subsequently, employees could simply engage in the working environment. Management philosophy: Over the course of Orion’s operation years, the company has created a future business direction based on “Only Orion” philosophy of thinking out of the box with two fundamental principles: think “Smart” and act “Strong”. The concept of “Smart” can be summarized as employing brain or methods like concentrating on leading products, etc., to make the corporation meet maximum qualitative influences, whereas Orion’s “Strong” management directs to pleasant work environment, radical challenges, and a healthy company staying ahead of competitions, helping employees enjoy their jobs and be enthusiastic to make new contests (Orionworld.com, n.d.). Thanks to this management spirit, the company has established customer trust about its unique brand value, and continued to become a world-class organization in the future (Orion, 2015). Suppliers: During the development, Orion Vina is always appreciated by customers because of its high quality products and images. According to Thanh NienNews (T.H,2008), all of Orion Vina manufacturing factories are built and operated based on the safety food hygiene standard of AIB - American Institute of Baking, this is a strict producing chain inside the factories.The main ingredients of Chocopie as well as other Orion products are imported materials around the world, the main suppliers of milk are come from Murray Goulburn Company (Australia), Kerrybio –

Science B.V (Netherlands) and Nutribio (France). These are top countries of producing milk in the world. In 2008, Orion Vina was certified that their products has no melamine in the ingredients by EDC Ho Chi Minh and totally safe for customers’ health. Marketing Intermediaries Choco Pie is a common sweet for children and the main targeting object of Choco Pie is parent with little children. Thus, Choco Pie is spread out from supermarket (Aeon Mall, Coopmart, BigC, Maximart) to convenient store (Circle K, Shop&Go, groceries), where the parent can buy the product easily. Supermarkets and A Long Ltd. are two distributors received products directly from Orion’s warehouse. After that, A Long Ltd. will divide by order and transport to subsidiary in regions, cities to deliver to retailers easier. Orion is taking advantage operating asset turnover, reducing the expense, enhancing the operation and reducing the risk of transportation and warehouse (zbook.vn). In 2009, Choco Pie is publicized with the main purpose is win Vietnamese consumers through localization, Orion internal marketing department launched Tinh campaign, which contain the love message through the song sung along the advertising video (businesskorea.co.kr). Through this project, not only the amount of consumption increased by time, but also the reputation of Orion is asserted at Vietnam market. An old client (as a cited in Vietnammarcom.edu.vn) stated that he rarely watch any advertising, however, when he occurrently saw the advertising of Choco Pie, he always looking forward to seeing it again and he also bought the product for his grandchildren. Customers: Main customers: Children, Teenagers, Family Children: According to a research (Erica, L 2014), sweets (such as ice-cream and chocolate) is children’s most favourite food, ranking second is dairy product such as milk and the least favourite is sour tasting foods. Orion’s Choco Pie has a sweet taste that suits a child’s liking. Teenagers/Young adults: This group of customers often spend their income on light snacks, preferably portable. With individually packed serving, Choco Pie is an ideal snack for a short break or amidst a busy school day. Choco Pie is also suitable to be provided as snacks at parties that are held and attended by teens with a reasonable budget. Family: For families, especially ones with young kids, storing a few snacks at home is a common practice. Grandparents and parents can buy snacks as a gift to young kids or they can simply store these sweets as an emergency energy refill for a hectic. Targeting this group of customers provides Orion with many potential marketing and actionable advertising strategies. This group of customer is quite loyal, as long as our products meets their satisfaction, they will keep buying it. Reseller market: As urban areas such as Ho Chi Minh city are blooming with various convenient store chains ( B’s Mart, Circle K, Shop & Go, etc. ), it is a good opportunity to bring our product closer to the consumer’s fingertips. Consumers are switching from traditional wet market, where people seldom sell confectionery goods, to convenient, set-price supermarkets ( such as Co.op Mart, Big C, etc. ). This also increases our chance of sales growth as more consumers are exposed to our products. Competitors Orion's long-running product "Choco Pie" has become the nation's most consumed confectionary product with quarterly sales reaching 100 billion won ($91.7 million dollars). In Vietnam market, there are more than 30 big confectionery companies compete with many

different products. Therefore, Orion has faced many competitors including direct and indirect ones. Direct ones includes Lotte Confectionery, Pham Nguyen Confectionery, Biscafun,etc. Moreover, Orion is also affected by the indirect competition from Kinh Do Confectionery- the biggest confectionery company in Vietnam, Hai Chau Confectionery company, Haihaco,etc. Not only being the first company brought Choco pie to Vietnam, Orion also spent enormous expenditure on sales and advertisements with humanities aspects, in 2014, Orion had highest proportion of market share (60%), while Kinh Do’ s was 12% and Bibica’ s was 6%. Orion also have the harsh competition with Kinh Do in selling biscuit and other pies. Although having highest market share in selling Chocopie( 60%), the market share in selling biscuit is quite low. As a result, in many years, Choco pie still innovates and tries to have unique and delicious taste in products. Branch Lotte Confectionery Direct Competitors

Product

Packaging and Price

Lotte Pie

180 gam - VND 21.000 360 gam - VND 40.000

Pham Nguyen Confectionery

Phaner Pie

180 gam( 6 packs) VND 17.300 360gam( 12 packs) - VND 34.000

Description It was first released in 1979 and joined in Vietnam market in 2003. Lotte pie is one of the most popular products from Lotte Confectionery in Korea and most of Asian countries. Lotte pie has same shape and ingredients like Choco pie from Orion. Was first released in 2003. It is from Pham Nguyen Confectionery Company, one of the most famous confectionery companies in Vietnam. In 2010, Phaner Pie was exported to Malaysia and received relatively significant profit.

HaihaCo Indirect Competitors

Long pie

Was first released in 2009, it is in different shape from choco pie but has main ingredients similar to Choco pie such as Marshmallow and chocolate. 180 gam( 6 packs) VND 20.000 360gam( 12 packs) - VND 30.000

Public: Orion Corporation has diversified distribution channels as well as focuses on advertising Choco Pie brand in Vietnam through social website media and television advertisements. However, there is a unique marketing strategy called “ Pie Road ”, relates to the culture of Orion’s markets, has received positive responses from the customers and is believed the most decisive element making Choco Pie enter to the global market (The Korea Herald, 2011). According to Jin-Young (2015), with the well-known branch, since 2010, Orion Choco Pie has dominated the Vietnamese confectionery market and its sales climbed to 160.4 billion won (US$157.5 million) in 2013 just after China. About the internal management, Orion’s employees who play an important role in the development of a company has been treated well with policies such as short-term benefits which the employees receive from rendering services during accounting period and another is retirement benefits which estimates the amount of future benefit for the workers that they have earned in return for service in the current and prior periods (Orion Annual Report, 2013).

Macro Factors Demographic There are four major markets of Orion: Korea, China, Russia and Vietnam. With 63 Provinces and big cities, Vietnam is one of the biggest market using confectionery products, Ho Chi Minh city and Hanoi are the main target of Orion because of the high population density, it will help increase in the consume on Choco pie. According to Worldometers, population of Vietnam is approximately 93 million people in 2015 and that figure is reported to raise gradually. The fertility rate is 1.77 births per woman and have tendency to raise higher. Therefore, the percentage of children make up most of the population. This fact will be the main advantage for the company as children love sweets. Orion has their own strategy in Vietnam market, they focus on Vietnamese culture that Vietnamese people always respect their family members, especially elderly, that is why Choco pie has been a premium product used to give as a present in many special occasions, such as Tet holiday, Vu Lan festival, etc. Moreover, Choco pie attracts all ages, all genders and occupations, especially students and officers who need snacks in the break time.

Choco pie is also used commonly in family in get-together occasions. The price of Choco pie is relatively not expensive from other confectionery so it attracts people who are in middle to upper class. Economic Change in income: As in a sea of other developing nations, the poverty in Vietnam has existed for a colossal amount of time. Nonetheless, with the help of the government’s commitment and the political and economic reform in 1986, Vietnam has made extraordinary achievements in term of economic growth and poverty decrease (Tuyen, 2015). Apart from a high development rate in the economy that the country has attained, the poverty rate lessened gradually from 58 % in 1993 to 12% in 2011. Moreover, the country’s per capita income about US $100 per year has transformed to middle income with per capita income of US above $2,000 by the end of 2014 (WorldBank.org, 2015). Hence, consumers’ expenditure seems increase, particularly from 37572 VND Billion in 1990 to 2591337 VND. Billion in 2014, partially supporting the sustainability of the company. Changing consumer spending patterns: Thanks to the growth in GDP in the decade ago, the middle class tend to be popular, accounting for nearly 25% of workers (Euromonitor, 2014) and Vietnamese living standards seems to be eventually ameliorated. Thus, people are more careful with their health as well as food safety, but the prices. Foodborne illnesses cause a burden on public health and result significantly in the cost of health care, so that the citizen aims to qualitative food to protect them from health problems. In addition, consumers favor foreign items over domestic products since it is believed that goods manufactured domestically are less quality than imported foods. This is likely to be a positive signal for Orion, as the corporation’s consumption could be advanced. With this insight, promoting the company foreign imported ingredients and its certificate of food safety will be a strategic marketing move. Natural: Vietnam is a country that is rich in natural resources but it is gradually eroded and disappeared because of the limit in the environmental protection awareness of people. Besides, people always have to cope with pollution problems, especially air pollution. Therefore, Orion Food Vina has put their factories in rural districts in Bac Ninh and Binh Duong, which is a way to reduce emissions in large cities. Technology Due to the developing of technology, the number of people using mobile devices and get access to the Internet is continues increasing. Hence, Internet and social medias have become a huge target market for Orion in recently years. Orion cooperates with Echo Integrated Marketing agency to design a 3D campaign, in which each of product packaging will contain on in total twelve different stories of love, friendship and family. A series of user guild videos is design for iOS, Android and PC versions and sharable to Facebook and email. Politics: Vietnam politics have been stable in recent years, encouraging growth for all industries, including food and beverage industry. Culture: In Asian societies, particularly in Vietnam, the spiritual life is always closed to the word “family”. For example, people raise their children most of the lifetime not just until 18 years old and also take care of their parents in the old age. For this reason, in 2009, Orion Corporation conducted “Tinh” campaign, which has been very successful, to emphasize the meaning of affection among family members. Additionally, children who are more coddled after the two-

child policy in Vietnam relish sweet flavors above others. Hence, the safety of confectionery goods are concerned at the high level by the parents to protect their children. Orion realizes that and they has committed to create healthy products with nutritional value and not contained China ingredient or melamine to keep a positive image to the customers.

3.

SWOT Analysis

Strength Popular brand among children and parents, Vietnam is Orion’s third largest market. Good quality and taste. Reasonable price. Youths population takes up a large percentage of Vietnam population, therefore providing a large potential customer base. Attractive working environment that helps company hire good workers and contemporary workers have incentives to work hard. Opportunity Improve more meaningful advertising campaigns. Rural markets could be explored. Cheap cost of production in Vietnam. The opening of convenient store chain leads to better distribution opportunities. Increasing income of population meaning possibly higher sales as the proportion of income spent on snack has become smaller, customers are more willing spend. The change in consumers culture may help promotes more effective advertising and campaigns

4.

n

Bad images to local farmer as the company only uses imported ingredients. Target customers including Children and Teenagers, who are not loyal customers, which means the company needs to spend excessively on advertising to keep kids interested.

Threat Losing market share to other growing competitors. The material of wrappings may harm environment which may cause protests from natural activist group.

STDP

Segmen

Demographic characteristics

Childre

Age: 3 to 12. No income level (usually lives with parents ) Stay at home or

t

Weakness Can become too dependent on redistribution company (A Long).

Psychographic characteristics Like sweet. Curious about surroundings and wants to try new things. Have short

Behavioural characteristics

Geographic characteristics

Dependent on parents (adults). May be indulged by adults when asks for

In suburbs or rural areas.

Teenage rs

students. Can have siblings.

attention and memory span. Like colourful things.

Age: 13 to 19 Very low income level (pocket money, allowance or part-time job wage). Students. Can have siblings

Like adventures and parties. In the developing stage of their psychology and often have conflicts with parents. Might be under pressure from parents and peers.

something. Very active May want to try anything they see their friends have (peer pressure) Act in carefree ways and prefer to personalize everything as much as possible. Enjoy hanging out with peers. Are under peer pressure.

In suburbs or rural areas.

In suburbs or Age: 20 to 25 Still wants to have Can be in rush Moderate fun and adventures. while shopping for rural areas. income May be under stress snacks due to busy schedules. Have various from work. occupations. Can have infant children In suburbs or Parents are busy. Familie Parents: 25 to 45 Parents are rural areas. Stay-at-home s Have 1 to 2 responsible and often children. indulge their children parent can be very critical shopping with snacks. Moderate to May be under stress for food. high income. from work or family Have various issues. occupations. Targeting: Families. They are quite loyal as a consumer and have a moderate income. Parents nowadays adore their children as they have few of them, therefore kids are more frequently satisfied when they ask for something from their parents. Familial bond also provides many possible marketing and advertising strategies partially because Vietnamese culture focuses strongly on family relationships. Differentiation: The most significant difference is the product image: The product is linked with the word “Tinh” (from the marketing campaign) and images of familial bonds. The brand focuses on their targeted costumer group and have a quite high evaluation from consumers comparing to its competi...