SGS campus Marketing principles assignment - Lays PDF

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RMIT SGN semmester 2 - 2021 - Ms. Tram Phan...

Description

Table of contents Introduction Company description Company CEO History Missions and Vision Product description Features Design Market share Brand awareness

3 3 3 3 3 3 3 3 4 4 4

Marketing Environment Micro Environment Suppliers Marketing intermediaries Customers Competitors Macro Environment Demographic Economic Technological Cultural

4 4 4 4 5 5 6 6 6 7 7

SWOT Analysis Strengths Weaknesses Opportunities Threats

7 8 8 8 8

Customer-Driven Marketing Strategies Segmentation Targeting Differentiation Product Image Positioning Price versus Brand shares Value proposition

9 9 10 11 11 11 12 12 13

Conclusion

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References

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I. Introduction A. Company description 1. Company Lay's is a potato chip brand established by PepsiCo. PepsiCo was founded in 1965 with the collaboration of two businesses: Pepsi-Cola and Frito-Lay (PepsiCo n.d.a). Lay's potato chip was one of its first products and a foundation to develop its diverse modern-day snack brands. In Vietnam, PepsiCo divides its brand into two segments: beverage and food. Partnering its beverage segment with Suntory Group, a Japanese consumer products company, PepsiCo opened its own company specializing in food named PepsiCo Foods Vietnam. PepsiCo Foods Vietnam currently has more than ten years of experience in production and is one of the leading food manufacturers in Vietnam (Lay's n.d.b). The company has two websites for its distinct segments, Suntory-PepsiCo for beverage sections and Lay's Vietnam for food sections. 2. CEO At the moment, Nguyen Duc Huy is the CEO of PepsiCo Foods Vietnam. In addition, the Agronomy Director of the company is Nguyen Phuc Trai (A.D 2018). Both of them have a significant impact on how the company functions and its sustainability mission in Vietnam. 3. History The following description is about PepsiCo Foods Vietnam: 2005 Launch its first product: Poca brand snack. 2008 First PepsiCo’s food factory was inaugurated in Binh Duong. 2011 Constructed the largest food and beverage factory in Southeast Asia in Bac Ninh. 2013 Establishment of Limited Liability Companies Food PepsiCo Vietnam. (Lay's n.d.b) 4. Missions and Vision a) Mission PepsiCo's mission is to 'Create more smiles with everyday sip and bite' (Pepsico n.d.b). The company expresses its mission to five specific audiences: ● ● ● ● ●

Consumers: delivering refined and qualitative products Customers: being a trustworthy partner Communities: creating jobs and a supported working environment Environment: promoting sustainability development Shareholders: providing the most excellent TSR

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b)

Vision:

Both Vietnam and international PepsiCo shared the same vision: to become the global/national leader in the snack (and beverage) industry (Pepsico n.d.b) (Lay's n.d.b). PepsiCo Foods Vietnam ensures to follow its promise by seeking continuous development opportunities and operating on the basis of integrity and truthfulness (Lay's n.d.b).

B. Product description 1. Features Lay’s snacks are mainly made from selectively harvested potatoes in Vietnam; combined with the automatic production system, PepsiCo can maintain its product quality and satisfy every customer (A.D 2018). 2. Design Every Lay’s potato chip pack has a simple yet catchy appearance. Each flavor has a different color and ingredient illustration on the package, creating a colorful and outstanding visual perception when they are arranged together. 3. Market share Lay’s takes a big bite from the market pie in Vietnam, as much as 7.7 percent of the total market share. One of Lay’s biggest rivals is Oishi with 10.6 percent respectively, which is at the leading position in the savory snack market within the country (Euromonitor International 2021). 4. Brand awareness Poca was Lay’s former name, and it was first introduced to the market in 2005. In 2019, PepsiCo Vietnam decided to change the brand name to Lay’s to uniform with its international brand. Lay’s recently has been stated as ‘The #1 potato chips in the world’ by Euromonitor International, which is the most salient weapon further to enhance its market status (Lay’s n.d.a).

II. Marketing Environment A. Micro Environment 1. Suppliers Being stated as the "#1 potato chip in the world", it is essential for Lay's to maintain sufficient and sustainable suppliers to satisfy the growing demand for savory snacks in Vietnam. Practicing regenerative agriculture and utilizing the latest technology in farming, potatoes are sustainably sourced in twenty-eight countries around the world to ensure continuous and quality production. With the training and technical support from Pepsico Foods Vietnam, the three potato farms in Da Lat, Dak Lak, and Gia Lai have shown potential for efficient and increasing yield and quality crops that meet the global standards (Viet 2020). According to the Agronomy director of PepsiCo Foods Vietnam, Vietnam’s farms can harvest more than 200,000 tons of potatoes per year to satisfy 75 percent of domestic demand (Viet 2020). Therefore, this can substantially impact the farmer's quality of life, economics, and building a sustainable supply chain for the product. 2. Marketing intermediaries a) Resellers:

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Lay’s potato chips are widely distributed throughout Vietnam. Their resellers are diverse from supermarkets such as Vinmart, Aeon, and Megamall, convenient stores like Circle K, and Family Mart to E-commerce platforms: Shopee and Lazada. Not only Lay’s are being sold by these resellers, but also they are sold by a massive amount of traditional grocery stores. However, due to Covid-19 preventing people from going out and practicing social distancing, Lay’s products are now being shipped by various delivery companies such as Grab, Nowship, and Baemin (Figure 1, 2, 3). b) Marketing services agencies: Lay's has been confirmed to become a sponsor for one of the most omnipresent TV shows in 2020, Rap Viet (Lay's Vietnam 2021b). Last year, Rap Viet consecutively conquered the top trending videos on Youtube and was recognized for its phenomenal record of the highest number of viewers watching online in Vietnam (Vie GIẢITRÍ 2020). The show also won the 'TV Show of the Year' award by WeChoice Award 2020, further proving its tremendous impact on the community (Jafar 2021). Since most audiences of this show are young people, which is equivalent to Lay's target consumers, becoming a sponsor of Rap Viet will escalate the image of Lay's even more solid in the market. Furthermore, Lay's Vietnam has restarted the "A million meals 2021" campaign to support those financially suffering from the Covid-19 pandemic (Lay's 2021a). With the motto "A meal, a trust," Lay's has become a respectable figure and brand in Vietnam (Lay's 2021a). These marketing campaigns have been done reliably and raise the awareness of local consumers, which will benefit Lay's in the long term. 3. Customers Besides selling its products to resellers, most Lay’s potato chips consumers are young people with a habit of snacking. The snack is often consumed during parties, schools, gatherings, and short trips. However, as the consumer behaviors change during the Covid19 period, the consumption has shifted to at-home customers (Euromonitor International 2021). In addition, many people are aware of health these days, so PepsiCo has been reformulating its products to reduce added sugar, sodium, and saturated fat (PepsiCo 2021). The change in product portfolio will target the changing consumer preferences and follow the demanding consumption trends. According to the Vietnam Consumer Survey by Deloitte (2021), there have been clear signs of a shift from traditional trade to e-commerce channels, especially in the packaged food category. The main purchasing drivers of packaged food are quality, safety, freshness, price, brand, and expiry date are all satisfied by Lay’s products. Hence, it is forecasted that the consumption of Lay’s products during and after the Covid-19 pandemic will increase. 4. Competitors Social distancing and home seclusion due to the Covid-19 pandemic have boosted the consumption of savory snacks as convenient and affordable treats. The total market size of savory snacks in Vietnam has increased significantly from 4,000 billion VND in 2007 to approximately 18,000 billion VND in 2021 (Euromonitor International 2021). Moreover, as more consumers are getting used to having snacks at home, the market is forecasted to reach 34,000 billion VND in the next five years (Euromonitor International 2021). a) Direct competitors:

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In Vietnam, Lay’s is currently competing with a variety of savory snacks companies that have been in the country for many years and distributed a wide variety of snacks both in types and flavors. First of all, Orion Food Vina Co Ltd upholds the leading position in savory snacks in 2021 with an 18.9 percent retail value share, followed by Mondelez Kinh Do Vietnam JSC with 13 percent and Liwayway Food Industry Co Ltd with 11 percent (Euromonitor International 2021). At the 4th position, Lay’s Vietnam comprises a respectable 9.5 percent of the market (Euromonitor International 2021). Therefore, the direct competitors of Lay’s are O’star, Swing, Slide, and Oishi potato chips, as they have been popular with Vietnamese consumers for many years. On the other hand, Pepsico came to Vietnam in 2006 with Poca potato chips, and later on, they changed it to Lay’s in 2019, which is a global brand but still a new name to Vietnamese. Hence, they need time to gain reliability and popularity in the market. b) Indirect competitors: Besides potato chips, Vietnamese also favors different types of savory snacks like biscuits, crackers, and cookies, making the savory snacks market reasonably competitive. In 2021, Lay’s covered 7.7 percent of brands’ share in savory snacks, only behind Oishi and AFC in the Vietnam market (Euromonitor International 2021). There are a wide variety of snacks that can become substitutes for Lay’s like AFC crackers and Oishi corn puffs (Euromonitor International 2021). However, Lay’s classic potato chips still uphold a reputable position in the market with a propensity to increase brand share.

B. Macro Environment 1. Demographic a) Urbanization: Vietnam's population reached 97.6 million people in 2020, of which 37 percent are urban residents (Thanh 2021). This urban force is forecast to be almost 50 percent of the total population by 2040 (Euromonitor International 2020a). Migration is one of the significant elements that impact urbanization acceleration. From 2009 to 2019, cities' average population growth rate is six times higher than rural areas in the same period (thuyduong 2019). Because of the proliferation in population, large cities are such a juicy market for companies in promoting brands' images to the community. b) Aging population: On the other hand, Vietnam's population has grown with an aging tendency in the past decade. In 2019, people from sixty-five-year-old and above took about 8 percent of the entire population and continued to double in 2040 (Euromonitor International 2020b). The situation worsens in the next twenty years due to a conservative growth rate in the 10-to-19year-old group (Euromonitor International 2020b). This issue concerns Lay's market since young people are its primary consumers. Narrowing down the market can induce harmful impacts on Lay's profit and potential development. 2. Economic Vietnam's Search for Tomorrow (2020) stated that "Vietnam is one of the fastest-growing digital economies in Asia.” According to the e-Conomy SEA 2020 Report, Vietnam ecommerce increased by 16 percent and reached over 14 billion USD in 2020. It is also forecast that this business model will reach 52 billion USD by 2025 (Google, Temasek & Bain & Company n.d.). Within the country, more than half of the population has joined online shopping activity (IDEA 2021a). As a consequence of the pandemic, grocery/food remains Page | 6

the top product people purchase online (IDEA 2021b). In the first quarter of 2021, grocery is the only sector that continued its positive growth despite other decline rates (Nguyen 2021). In addition, Shopee has been dominating the e-commerce industry with 63 million accesses per month, followed by Tiki and Lazada (The Map of E-commerce in Vietnam 2019). In this modern setting, a billion-dollar online commerce market performs a profound impact on a country's economy. Hence, companies should focus on digitizing their business to maximize e-commerce's potential. Lay's has timely adapted to the current market by opening online stores on Shopee and Lazada (Figure 4). Update on date 12/8: PepsiCo has closed its official 'food' store (pepsicofood_official_store) and only remains its 'beverage' store (Suntory PepsiCo Chính Hãng) on Shopee. We did not expect this to happen, so we did not capture any screenshots when the report was written. However, Figure 5 below is the evidence to prove that the shop did open in the previous time. 3. Technological Social media is no longer a want but a need in this modern era. We Are Social & Hootsuite (2021) reported that Facebook is the second most visited website in Vietnam, with Youtube taking the lead. Even so, Facebook has the highest reach out to other platforms with 68 million potential audiences (We Are Social & Hootsuite 2021). Thanks to its penetration, social media's reach and influence have become such a golden egg in the business world. Like other brands, Lay's used Facebook as its essential tool to connect users and Youtube to extend its brand awareness through ads. Presently, one-third of its Youtube videos surpass a million views (Lay’s Vietnam n.d.b). The brand also has reached more than 140 thousand followers on its official site on Facebook (Lay’s Vietnam n.d.a). Further striving to enhance its brand image and collaborating with Saigon Happiness, Lay's Crispy Subtitles has won six shortlists at the renowned Cannes Lions International Festival of Creativity (Anh 2021). This creative campaign turns chip sounds into Youtube subtitles using AI technology as a Google extension. This breakthrough not only made Vietnam proud but also proved that Vietnam's advertising agencies are becoming more and more innovative and advanced, especially in recent years. As mentioned in the previous ‘Suppliers’ section, Lay's also focuses on advancing technology in potato farming in Vietnam. PepsiCo implements technical support and jointly invests in seed and fertilizer applications, land rental, labor, electricity, and water (A.D 2018). The company has also continuously invested in researching potato varieties suitable for Vietnam's climate for the past ten years to deliver international high-quality potato standards in Vietnam (A.D 2018). PepsiCo's hard work has paid off when the Ministry of Agriculture and Rural Development has recognized its dedication to sustainable development and put it into production (PepsiCo Argo 2020). 4. Cultural Snacking is a common habit in contemporary Vietnamese culture, especially among teenagers, as they are constantly exposed to the internet. A survey conducted by Gojek company shows that one-third of respondents in two cities, Ho Chi Minh and Ha Noi, said they snacked on average two to three times per day, and one in ten people has midnight snacks (Gojek 2017). In 2021, at-home snack consumption will elevate as consumers stay home for social distancing, which displays a promising market for savory snack companies like Lay's (Euromonitor International 2021).

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III. SWOT Analysis Strengths ● ● ● ● ● ● ● ● ● ●

Renowned background Experienced company Sustainability Dynamic working environment Best potato chip Wide range of flavors High brand awareness Selling on e-commerce sites Cheap Active promotion

Weaknesses ● ●

Opportunities ● ● ●

Covid-19 quarantine Growth in convenient stores Healthier options

Low nutritional value Plastic packaging

Threats ● ●

Eat-clean movement Intense competitive market

A. Strengths 1. Company ●

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1.

Renowned background: Lay's is a subsidiary of one of the global's leading food and beverage corporations in the world, PepsiCo. Experienced company: PepsiCo Foods Vietnam has been in the industry for more than ten years and is one of the country's biggest food producers (Lay's n.d.b) Sustainability: PepsiCo commits a high dedication to sustainable development through its annual updates, initiatives, and activities. Dynamic working environment: In 2020, PepsiCo Foods ranked 9th in the ‘Best Places To Work in Vietnam’ chart voted by the Anphabe community and market research firm, Intage (Vien Thong 2020). PepsiCo encourages its working environment by organizing internship programs and recruiting young talents, creating opportunities to express themselves and contribute their innovation to the company (Lay's Vietnam 2021d). Product

● Best potato chip: Lay's was stated as ‘The #1 potato chips in the world’ and ‘The #1 potato chip brand in the world’ (Lay's n.d.a). ● Wide range of flavors: In Vietnam, Lay's snacks are currently classified into two lines, Wavy and Classic, and have eight different flavors.

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● High brand awareness: Lay's distributes its products widely and easily accessible. According to Euromonitor International (2021), Lay’s has taken up 7 percent of Vietnam's total savory snack market shares. ● Selling on e-commerce sites: PepsiCo has official stores on Shopee and Lazada, the most famous e-commerce sites in the country. Lay's snacks are one of the bestsellers in the store. ● Cheap: Lay's potato chips are low-priced and easily purchased. ● Active promotion: With almost 850 posts on the Instagram international page and weekly post updates on Vietnam's Facebook, Lay's is proactive in promoting its products.

B. Weaknesses ●

Low nutritional value: Processed foods usually have low nutrients in their nature, including Lay's potato chips.

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Plastic packaging: Lay's uses aluminum foil packets, which fall into the soft plastics category. With the products' low costs, this trade-off is quite understandable.

C. Opportunities ●

Covid-19 quarantine: Targeting at-home consumption should be a driving key of savory snack companies during 2021 since most Vietnamese people stay at home because of the pandemic (Euromonitor International 2021).

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Growth in convenient stores: According to Euromonitor, the convenience stores' social aspect is the core of attracting customers, particularly young consumers such as teenagers and students. Convenience stores expect to grow stronger in 2021 and years after; therefore, they can be a guaranteed market for distributing Lay's snacks (Euromonitor International 2021).

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Healthier options: Since there is a significant rise in organic consumption, Lay's can offer more beneficial snack lines, such as less salty flavor or saturated fat, to satisfy customers' wants.

D. Threats ●

Eat-clean movement: Mindful eating takes a vital role in today's modern healthy lifestyle. Consumers are increasingly looking for natural and clean foods, and 'artificial ingredients' are considered harmful, having detrimental effects on health.

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Intense competitive market: Oishi and AFC are Lay's most prominent competitors because of their large brand shares of snack sectors in Vietnam, along with other brands like O'star, Toonies, or Tuyen Ky (Euromonitor International 2021).

IV. Customer-Driven Marketing Strategies A. Segmentation According to the AMA definition, market segmentation is the process of dividing a market into small groups of different customers with common needs (shuchiagrawal19 2014). Lay's is considered convenient food, so it is suitable for the working class who are often busy. This group of people usually need snacks to satisfy hu...