Beer Market Segmentation in Vietnam

PRODUCT EXTENSION: THE CASE OF BIVINA BEER IN VIETNAM

Dr. Truong Quang Associate Professor School of Management Asian Institute of Technology PO Box 4 Klong Luang, Pathum Thani 12120 Thailand Tel: (66-2) 524 6016 Fax: (66-2) 524 5667 E-mail: [email protected]

and Pham thi Huyen National University of Economics Hanoi, Vietnam

Submitted to: Asian Journal of Marketing June 1999, Revised November 1999

PRODUCT EXTENSION: THE CASE OF BIVINA BEER IN VIETNAM

ABSTRACT

There is a strong link between the growth of market share and the profitability of a company with the power of its brand. Like other emerging economies, in Vietnam, the domestic companies have been facing tough competition brought about by multinational corporations (MNCs) with their well-established brands from all over the world. More often than not, the Vietnamese companies seem to neglect the issues of branding in positioning their products. This study analyzes the importance of brands and the process of branding management in a newly opened-up market like Vietnam. To illustrate the issue, we will examine the case of BIVINA –a newly introduced beer brand—of  Vietnam Brewery Limited (VBL). Interviews with managers and a consumer survey are carried out to investigate the competitor’s reaction and consumers’ perception toward this new brand. At the end, some recommendations are proposed for the domestic companies to manage their brands successfully.

INTRODUCTION

Investors should consider Vietnam a potential marketplace for beer consumption. With a population of 78 million people in 1997, Vietnam is one of the most populated countries in the world. The increase in income and improvement in the people’s living standard, brought about by a more liberalized economic policy since 1987, have triggered increased beer demand and consumption. Currently, Vietnamese consumes eight liters of  beer on the average per year. While this is still low in comparison with Asian consumption level of 17 liters per head per year, brewers and distillers consider Vietnam a growing market for beer industry (VIR, June 1997).

According to an estimate,

Vietnam’s beer consumption has grown from 12 to 20 % a year (Chinh, 1997). The main

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PRODUCT EXTENSION: THE CASE OF BIVINA BEER IN VIETNAM

ABSTRACT

There is a strong link between the growth of market share and the profitability of a company with the power of its brand. Like other emerging economies, in Vietnam, the domestic companies have been facing tough competition brought about by multinational corporations (MNCs) with their well-established brands from all over the world. More often than not, the Vietnamese companies seem to neglect the issues of branding in positioning their products. This study analyzes the importance of brands and the process of branding management in a newly opened-up market like Vietnam. To illustrate the issue, we will examine the case of BIVINA –a newly introduced beer brand—of  Vietnam Brewery Limited (VBL). Interviews with managers and a consumer survey are carried out to investigate the competitor’s reaction and consumers’ perception toward this new brand. At the end, some recommendations are proposed for the domestic companies to manage their brands successfully.

INTRODUCTION

Investors should consider Vietnam a potential marketplace for beer consumption. With a population of 78 million people in 1997, Vietnam is one of the most populated countries in the world. The increase in income and improvement in the people’s living standard, brought about by a more liberalized economic policy since 1987, have triggered increased beer demand and consumption. Currently, Vietnamese consumes eight liters of  beer on the average per year. While this is still low in comparison with Asian consumption level of 17 liters per head per year, brewers and distillers consider Vietnam a growing market for beer industry (VIR, June 1997).

According to an estimate,

Vietnam’s beer consumption has grown from 12 to 20 % a year (Chinh, 1997). The main

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drinkers are in the age group between 25 and 45 years old, which are accounted for nearly half of the population. To meet the growing demand, more than 500 million liters of beer are canned or bottled and sold every year in Vietnam (Van Thong, 1998).

BEER SUPPLIERS

The emerging beer market has attracted a large pool of beer suppliers of many sizes and sources. Beer production plays an important role in the domestic food processing industry of Vietnam today. Local Breweries

There is practically a brewery in every city and province in Vietnam. In total, about fifty breweries produce regional specialties with a total capacity of 1,000 liters a day (Hanh Dung, 1998). The Vietnam Beverage and Beer Corporation (VINABECO) has a near total control over the local beer producers, occupying 75% of the total output of the sector (Hanh Dung, 1998). The two biggest state-owned breweries are located in Hanoi (Hanoi Brewery) and Hochiminh City (Saigon Beer Company). Together, they play a key role in the domestic brewing industry, which includes 320 breweries of state-owned, private and foreigninvested companies. Although representing only 24% of the total industry output, the Hanoi Brewery and Saigon Beer produce some 500 million liters a year and enjoy a combined market share of 40-50% (Duc Hung, 1996; Van Thong, 1998). There is tough competition among local brands for survival. In the process, weak brands began to drop out of business or incurred big losses.

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Foreign and Joint Ventures Breweries

So far, twelve foreign beer producers have been licensed to set up joint ventures in Vietnam. They include famous brands in the world such as Heineken, Tiger, San Miguel, and Carlsberg. They are present across the country covering all segments of the beer market in the form of 30 different brands, owning 15 state-of-the-art production lines with a total invested capital of US$595 million. Yet, all together they produce roughly 10 million hectoliters per year, only a half of the designed capacity (Van Thong, 1998). Smuggled Beers

In the early stages, local beer production was not enough to meet the demand in the north. The gap was filled up by such cheap but popular brands as Van luc and  Bang tuong, illegally brought in from China. Although they do not represent a large share of 

the market, the smuggling activities still persist up to the present day, despite the continued efforts from domestic breweries to improve their production and marketing methods. The main reason is that illegally imported beers are not subject to any taxes, and therefore are affordable to low-income beer drinkers. ‘Bia hoi’ –a Local Home-made Beer

Covering the lowest market segment is “bia hoi”, a special type of home made beer in Vietnam. It is a draught or barrel beer that is produced in a less sophisticated and hygienic way. “Bia hoi” is a brandless and cheap beer, which targets the low-income drinkers. It is suggested that this has taken a significant market share from the mainstream beer segment, and could account for 20-25% of all beer consumed in Vietnam (VIR, October 1997).

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COMPETITIVE SITUATION

Beer industry represents one of the toughest markets in Vietnam, and is regarded as a ‘high risk’ business by many existing suppliers (Huyen, 1999). The competition becomes more intense every day, yet new entrants continue to join the market and new brands are introduced. There were, in total, 317 breweries in the country in 1996 with a designed production capacity of 867 million liters a year, but just only 400 million liters were actually produced, due to the under-developed situation of the market. At present, the most popular beer brands in Vietnam can be listed across all segments, in the following order: Tiger (JV), 333 (local), Heineken (JV), Saigon (local), BGI (JV), ‘bia hoi’ (local), San Miguel (JV), Hanoi (local), Carlsberg (JV), and Halida (JV) (Hanh Dung, 1998). It is fair to say that the most important attribute to the success of a beer brand lies with the product quality itself. Many brands such as San Miguel and Carlsberg, which are distributed around the world, do not achieve much in Vietnam, because their products apparently do not suit the Vietnamese specific taste. Other reasons can be their illdesigned advertising campaigns, or the color, the foam and the alcohol content of their beers do not match the consumers’ desires and preferences as will be described later. To cope with increasing competition, brewery companies tend to fill up niches in the mainstream and saving segments. They have introduced new brands at lower prices like the cases of BIVINA of BVL and Foster of BGI. As a usual practice, foreign companies often spend a large sum of money in advertising and promotion (A & P) to get the consumers’ awareness for their products. The most typical A & P activities used by them

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are erecting billboards at crowded crossroads, commissioning foreign ads agency to develop attractive clips to be shown on prime time TV, putting large ads in leading newspapers, sponsoring key sportive and social events, providing free-of-charge name boards to groceries with their logos, and using promotion girls in restaurants and wedding parties. As a typical case, Tiger and Heineken brands had made quick and large impacts on the Vietnamese market by a large scale A & P campaign in their attempt to conquer the market quickly, by using a wide combination of all means mentioned above. This marketing method has subsequently followed by other brands like San Miguel, Carlsberg, BGI, but on a much smaller scale.

Market Potential

For the year 1998, beer consumption of eight liters/year/person in Vietnam is still considered low as compared with other neighboring countries, for instance Thailand (12 liters), China (13 liters), Taiwan (25 liters), the Philippines (25 liters) and Singapore (30 liters) (Duc Hung, 1996). One survey shows that only 10% of Vietnam’s population actually drink beer (Duc Hung, 1996). From this low base, it is projected that at a growth rate of 20%, the beer output of the country will only reach 26 liters/year/person in 2010. This still seems moderate in comparison with such top-of-the-list countries as Japan (62 liters), USA (100 liters), and Germany (140 liters) (Duc Hung, 1996; Van Thong, 1998).

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Figure 1. Annual Beer Consumption in Selected Countries, 1998

USA Germany France Vietnam      y      r       t      n      u      o       C

Thailand P h i li p p i n e s Taiwan C h in a Singapore Japan Hong Kong 0

50

100

150

L i t e r s p e r c a p it a

Indeed, Vietnam’s beer market is still growing, despite the current crisis in the region. In 1998, total sales volume increased by 21.8%, but most of the growth (nearly 29%) came from the low-income segment (VBL Report, 1998). The higher demand for cheaper beers can be seen as a change in consumers’ behavior in a time of crisis. As a result, one witnessed a surge of 8% in ‘bia hoi’ against a comparable fall in demand for premium beers in 1997 (Chinh, 1998). Market Segmentation

The beer market in Vietnam can be divided in three segments, namely premium, mainstream and saving, based on the differences in taste, social classes, and monthly income. While all these factors can influence consumers’ choice, price is often seen as the most important decision criteria. The three segments and their characteristics are presented in Table 1. •

The premium segment.

It represents 15% of the market where drinkers can afford

to pay a premium price for a high quality beer. Players in this segment consist of 

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Heineken, Tiger, Carlsberg, San Miguel, etc. The products in this segment are sold from 9,000 VND (13,850 VND = 1 USD in 1998) and up. The price varies slightly depending on the kind of restaurant or bar where it is sold, and the type of beer and the sale season. With an alcohol content of 5% and higher, most products in this segment are packed in cans or in quart (330 ml) or pint size (660 ml) bottles. VBL is, by far, the biggest producer in this segment with two brands Heineken and Tiger. All together, it occupies more than 85% of the market segment share (Huyen, 1999). Heineken, which serves the top-of-the-market segment, has 22% of the market share; while Tiger is leader in the segment, originally took 71% share for its own in 1997, but was down to 62% in 1998 (VBL Report, 1998). Other brands such as San Miguel, Tuborg, Red Horse and Foster share the remaining 10 to 15% of the segment. However, as the competition has become more intense, many of them have been forced out of the market. •

The mainstream segment. This segment serves the middle income class consumers

representing 50% of the total beer market. Almost all producers in this segment are local Vietnamese brands, selling for a price varying from 4,000 to 9,000 VND a bottle/can. The popular product format is the 45 cl bottle, although the shape of the bottle may differ from one brand to another. The alcohol content in this segment is between 3% and 5%. The major players in this segment are Saigon Beer Company with its long existing Saigon and 333 brands in the South, and Hanoi Brewery with Hanoi brand in the North. Halida brand of Southeast Asia Pacific Company (SEAC) and BGI of Tien Giang Brewery are also present but on a much smaller scale. Some other ‘regional’

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beers have made themselves known in the Southern provinces like Dongthap and Tayninh, but all have failed to move beyond their home ground (Van Thong, 1998). The mainstream brands are mostly consumed during party occasions and middle-class evening celebrations.

The sales volume of this segment reached more than 2.5

million hectoliters in 1997. There is virtually no nationwide beer brand which cover the whole segment which would have been seen as the reason for VBL to introduce BIVINA and BGI to follow suit with Red Horse to fulfill unmet demands. •

The saving segment. This segment covers the bottom of the market and constitutes

35% of the total beer consumption. It consists of many local low-quality brands, brandless beers, and all kinds of ‘bia hoi’. They are low-alcohol beers (from 1.5-2%) that aim mainly at the low-income class in the society. They are produced from small to medium size workshops (sometimes in the home backyard) so that their quality is uncontrollable. The advantage of these beers is their low price and serving convenience.

Table 1. Beer Market Segmentation in Vietnam

Segment

Price range

Brand players

Typical consumer

Premium

Equal or higher than 9,000 VND

Heineken Tiger Beer Carlsberg San Miguel

High-income class in the society

Mainstream

From 4,000 –8,000 VND

Hanoi Halida Saigon 333

Medium-class People who do not have much money but do

Quality

Packaging

Market share

Premium quality People perceive this segment stands for world class quality Alcohol level: 5% or higher Medium quality with alcohol level of 3-5%

Can (330 ml) Pint bottle (660 ml) Quart bottle (330 ml)

15%

Can (330 ml) Bottle (450 ml)

50%

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Saving

Less than 4,000 VND per glass/bottle

BGI Huda Foster La Rue Vida Thanh hoa etc. Generic beer and ‘bia hoi’

not want to drink low quality beers To be used in ceremonies, parties, and feasts Low-income class (esp. in the North)

In general, quality of  brands in this segment is acceptable and stable No quality guaranteed, except for some brands produced by Hanoi Brewery and Halida Can be of  high alcohol content

Bottle (660 ml) or unpacked Usually sold in liter or big can in liter unit to wholesalers and sold in cup or bottle to customers at sidewalk  stands

35%

It should be noted that market share figures are difficult to define as they are often exaggerated in favor of local leading brands, which makes the attempt to divide segments become difficult if not meaningless. Tiger Beer, for instance, positions itself as an upmarket product, but in reality appears in both middle-and upper income segments. Figure 2 highlights the blurred lines between segments according to the consumers’ perceptions as revealed by this research.

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Figure 2. Brand Mapping of Vietnamese Beer Market

Premium price

Carlsberg

Heineken

San Miguel

Larue Foster

BIVINA

Huda Halida Kaiser HP Low quality

Tiger Beer BGI

333 Saigon Hanoi

Thanh Hoa Premium quality

Bottled local beers

"bia hoi" Chinese beer

Other beers

Saving price

BIVINA Sister brand Direct competitors Others

Customer Behavior

The Vietnamese have a very specific manner of drinking beer. They usually drink  in groups and drink it with ice and, and often take the same brand when they sit together. Following are some typical characteristics of Vietnamese beer consumer’s beh avior.

•

Taste.

The Vietnamese favor beer with little foam and sweeter taste. Northerners

prefer stouter beer, whereas the Southerners lean toward lighter beer. According to an analysis, drinkers in the southern part of the country and the Mekong Delta region

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like bottled or canned beer, while their countrymen in the North and in the Center favor ‘bia hoi’ not only because of low alcohol content, but also for financial reasons (Huyen, 1999). This consumption trend has been gradually changed. Beer drinking has become part of the new culture, especially in business environment. Consumers’ taste has changed rapidly in the past few years, particularly among young people. Although people often claim that their choice of brand is based on the taste of beer, it is also seen as status related. •

Price.

At the bottom of the market, customers of the low-income segment are price-

oriented. They mostly choose the cheapest beer brands in exchange for relaxation. At the sub-segments, consumers are more sensitive toward such subtle and trivial attributes such as no hangover the next morning and higher alcohol content. To these categories, the branding factor does not play any role in the selling power of the companies. Consumers at the middle segment are more sophisticated in their choice of beer. They cannot afford a premium brand, but instead make the best trade-off between best quality and reasonable price. In this respect, some locally produced beers such as Hanoi, Halida, 333 and Saigon can be seen as substitutes by charging much lower than premium beers while maintaining an above average quality (Table 2). There is greater potential in rural and remote areas, where people still cannot afford highpriced beers.

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Table 2. Beer Retail Price (street price, December 1998)

Segment

Brand

Content

Price (VND)

Premium

Heineken San Miguel Carlsberg Tiger

In bottle of 660 ml -id-id-id-

16,000 15,000 15,000 14,000

Mainstream

BGI BIVINA Halida Saigon 333 Foster Hanoi Thanhhoa

In bottle of 660 ml -id-id-id-id-id-id-id-

7,000-8,000 6,500-7,500 5,500-6000 -id-id-id5,000-5,500 4,500-6,000

Saving

Generic beer ‘Bia hoi’

In bottle of 660 ml Per glass

less than 4,000 2,000-3,000

•

Convenience.

Domestic breweries usually enjoy advantage by having a wide

distribution system, brand names with long history, and economies of scale. However, they tend to increase their prices when the demand for beer reaches the peak, especially during popular holidays such as the Vietnamese New Year or the Independence Day. This arbitrary business practice is often met with strong reaction from the consumer that could lead to their decision to choose other brands. There is practically no universal brand that covers all segments of the market. Each provincial market has its own preferred brand, which used to be the product of the local brewery, to mention the cases of Hanoi, Hochiminh City, Danang, and Hue. This makes the beer market very fragmented. There is, so far, no attempt made to unify the market by a cross-segment brand for the benefits of both the producer and the consumer at large.

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THE CASE OF BIVINA BEER

With a view to rearrange its product portfolio and consolidate its positioning in all segments in the beer market, Vietnam Brewery Limited (VBL) decided to launch its new beer brand in 1996, next to its well established brands, Tiger Beer and Heineken. VBL is a three-party joint venture established in December 1991 between Asia Pacific Brewery Co. (APB) from Singapore, Heineken from the Netherlands, and Hochiminh City Food Company No. 2 from Vietnam. VBL is one of the first and largest foreigninvested projects in the early period of the economic transition of the country. It possesses a state-of-the-art production line, with a total output capacity of 150 million liters a year. With a more modern production line and effective management, it clearly differentiates itself from local breweries and has been regarded one of Vietnam’s most successful joint ventures. VBL’s two distinctive brands Tiger and Heineken together occupied almost 85% of the premium beer segment in 1998. In total, it has a share of  10% of Vietnam’s beer market (VBL Report, 1998). BIVINA Positioning and Target Consumers

In the long-term,VBL has always planned to produce a local brand to serve the lower income segment. In this respect, BIVINA seemed to be an appropriate solution for VBL in the face of a sudden decrease in sales of Tiger Beer, its flagship in the up-market segment. It also aimed at taking over some parts from domestic companies at the low-end market, which occupied up to 35% of the beer market. An internal market research revealed that there was a growing nationalistic sentiment of “buy local beer” among the Vietnamese consumers in the northern part (Huyen, 1999).

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The following figure summarizes the reasons that were used to justify the launching of  this new brand.

Figure 3. The Imperatives of Launching BIVINA

Business development strategy •

• •

Company objectives

Exploiting the unfilled niches of the market Consumers want a cheaper of BVL Making inroad into the low-income segment

Recovering loss of sales of Tiger Beer Repositioning Tiger brand Be visible and available in all segments Consolidating and expanding distribution network 

•

• •

•

Launching BIVINA

Change of market condition •

•

Faster growth in the mainstream and saving than premium segment Need for a new beer brand with a reasonable price providing optimal refreshment, but no hangover effect after drinking

Change of consumer’s behavior •

•

Many consumers have switched to local brands Dramatic decline in purchasing power of up-market consumers due to economic slowdown

For all these reasons, VBL decided that it was the proper time to appeal to the identified target group by introducing a local brand at a cheaper price. The following analysis provides the justification for the launching of BIVINA.

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Table 3. BIVINA Business Analysis Strengths • •

   l   a   n   r   e    t   n    I

•

•

•

•

   l   a   n   r   e    t   x    E

Weaknesses

Produced by the most famous brewery Produced with most state-of-the-art technology Having a nationwide distribution network  Having experience and knowledge of  local beer industry Enjoying ‘silver bullet’ effect of golden quality from Heineken and Tiger brands A true indigenous product

•

• •

•

Being the minority and junior product of the company Small advertising and promotion budget Can be down-graded in order to avoid cannibalization effect to family brands A little higher price compared with other direct competitive brands

Opportunities • •

•

Threats

Most local competitors are weak  High potential to expand market into the countryside In the leading position in target market segment

•

•

•

Strong reaction from other competitors in their struggle for survival Many potential competitors in the same segment Protectionism of provincial brands

Being baptized BIVINA, the new brand aimed at urban workers and rural residents and cost just as little as 6,500 VND a bottle. This mark-up price is slightly above those of  most local beers and ‘bia hoi’, but substantially less than premium beers such as Heineken, San Miguel and Carlsberg. Figure 4 illustrated BIVINA cross-segment positioning. Figure 4. BIVINA Positioning

Premium Segment 15%

Mainstream Segment 50%

Target customers

BIVINA

Saving Saving Segment Segment 35% 35% 16

The new beer is brewed with international technique aiming to gain the consumers’ acceptance across all social classes in Vietnam.

Branding Strategy

VBL seems to have prepared well for the launching of BIVINA by following systematically all the steps required for a new brand. •

‘Silver bullet’ effect.

VBL was very confident in introducing BIVINA. It was

assumed that the new brand would benefit from the ‘silver bullet’ from its sister brands, Tiger and Heineken, which have been well established and successful in the market. •

Brand personality.

Since there was practically no local brand yet to serve the

whole market, BIVINA intended to be the first to achieve this goal. The BVL effective and active marketing mechanism (aggressive advertising and wide distribution network) would help boost the image and the market acceptance of the new brand. A well design promotion campaign was built up around the theme: BIVINA is an affordable, high quality, mainstream local beer with a smooth and refreshing taste. •

Brand attributes.

VBL’s new product concept was developed to detail description

with all the intended identities that the real product should carry. At the core, it is a Vietnamese-oriented product with a typical Vietnamese name: BIVINA is a acronym of Bia (beer) and Viet Nam. Those attributes are easy for the target consumers to recognize and approve of. This can be considered as the essence of BIVINA brand with its registered logo as seen at page 28.

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•

Core identity. The projected identity of the new brand was reflected in the message

“  BIVINA is the first national brand, which charges under the optimal price and  brings most satisfaction to consumers with warm friendship” (VBL Report, 1998).

The main idea is to impress upon the customers that, for the first time a real national brand is produced locally by a big manufacturer that is committed to ensure the consistency in quality and price of the product. The advertised slogan attached to it was “saving price for consistent quality”. Brand Value Proposition

Following is BIVINA’s selling proposal that highlights the benefits the new brand offers in differentiation of others on the market. •

Functional benefits.

The taste of the new product was on the average level. It was

not very exceptional for everyone to remember, but it was strong enough to give the drinkers an immediate feeling. The alcohol content of 3.8% was stated clearly on the label of each bottle to stress its cross-segment position. This is not a common practice, since it is lower than most premium beer and even lower than that of  mainstream brand like Bia Saigon. The intention was purposely expressed in the slogan on the brand poster: “smooth and fresh”. •

Emotional benefits.

BIVINA’s advertisement tried to convey the happiness that a

group of workers enjoy together at the end of the day. The message was that it is natural to have a relax and joyful moment with buddy colleagues (with a beer in everyone’s hand), as a reward that the team deserves after fulfilling its task.

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•

Self-expressive benefits. This was not clearly defined at the beginning, but became

an important factor afterwards to win the loyalty of the customers. As intended, BIVINA is the first beer brand for the working class. Extended Identities •

Brand name.

The name BIVINA was written in a rare typeface that, for most

people, it is neither aesthetic nor smooth enough at first glance. However, it is clear and easy to be read, recognized and recalled. Probably, the letter font was designed on the belief that the target customers (the working class) would like a simple and familiar name, which is close to their heart and mind. In this sense, the suffix “VINA” is most popular to the Vietnamese, as it has appeared in many brands so far which explicitly associates with a locally made product. Many brand names, which exploited this “made in Vietnam” advantage, have won customer preference, e.g., Vinataba (cigarettes), Vinataxi (transport), Vinabi (bicycles), and Vinabeco (beer). This method of brand naming seems to be typically Vietnamese who are well known for being rather nationalistic. •

Brand logo. BIVINA’ s logo was a triangle flag covering a glass of beer. By using

this symbol, it reminds the consumers of a common sense that celebration should come as a reward for excellent achievement. In this case, the award is a full glass of  beer. By the two sides of the glass are the two letters “B” that recalls the product (Beer) and “V” that recalls the origin (Vietnam). The flag is red and the beer is bright yellow to explicitly refer to the symbolic color of Vietnam as a predominantly agricultural country with a ripe rice field in the ba ckground.

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•

Country of origin. Although the production line was based on technology imported

from the Netherlands as in the case of Heineken and Tiger Beer, VBL intended to make BIVINA a pure Vietnamese product with a high local content (using rice as the main ingredient). By giving BIVINA a Vietnamese identity from the beginning, BVL in fact anticipated the risk of being rejected by the customers for being a foreign product. As many Vietnamese are still sensitive enough not to accept a foreign name, they would feel more comfortable and associated with a ‘made in Vietnam’ product. •

Packaging. In the beginning, the color of the bottle was dark red. The design of the

bottle was also simple, having a shape similar to some other brands in this segment. Traditionally, dark red is regarded as a popular color to be seen in all activities of the working life in Vietnam. This was a departure from the color usually used in the VBL product range, such as Heineken (green bottle) and Tiger (golden yellow). To make itself differentiated from other competitors, BIVINA’s bottleneck was round and smaller than Bia Saigon and Phongdinh. The original volume of the bottle was 45 centiliters, which is the same size with Bia Saigon (Van Thong, 1998). •

Brand imagery. The imagery used in the first advertising poster of BIVINA reflects

the producer’s intention in terms of target audience and product characteristics. In the background, an electricity grid line appears in the dawn. In the front, a group of  workers in their blue uniforms is having a drink together. BIVINA bottles are on the table with some snacks. All the men are raising their glasses for a toast. At a close-up, a bottle and a glass of beer come sharply with a big BIVINA logo at the corner. At the bottom of the poster, an eye-catching slogan is printed: “The work is finished, let’s have a BIVINA.”

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The following figure illustrates the distinctive personality of BIVINA that VBL intended to advertise to the target customers. Figure 5. BIVINA Brand Anatomy

The triangle flag The color yellow and red Happiness A ‘made in Vietnam’ product

 Brand  essence

Workers drinking after finishing work 

Smooth and refresh Maximum joy and friendship at an affordable price

Low alcohol content Sense of  relaxation

Good taste

Simple dark red bottle  Brand   benefits

Good quality Modern

 Brand   attributes

Branding and Advertising Activities

By Vietnamese standard, the introduction of BIVINA was well prepared by related public relations. Several principal business newspapers carried articles on its three-month launching promotion tour in the last quarter of 1997. Through the media, VBL wanted to communicate to its potential customers all the main characteristics of BIVINA, such as the new taste, the average alcohol level, the national brand, and the low price. As an advertising method, BVL tactfully declined to use big poster, neon light, and billboard carrying the new brand in all corners in the big cities as usually done by many. Instead, it chose to advertise BIVINA at all bus stops and in the buses, the transportation means of 

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most targeted customers. It also restrained to promote the new brand on TV or radio, but focused on advertising in sidewalk outlets and restaurants to save the ad-spend budget, a quite opposite approach as compared with the Tiger Beer case. Another type of tactic to get high penetration rate for BIVINA was the incentives applied to the distribution system and a consistent pricing policy. Accordingly, BIVINA was put under the responsibility of a brand manager who is fully in charge of its own promotion policy and a separate scheme to share costs with its distributors. At the same time, BIVINA’s price is centrally set up, which is applied nationwide to all distributors. Except for a commitment for constant supply and fixed price, distributors also enjoy 5% commission on sales if a certain target is achieved. In similar case of Leo Beer in neighboring Thailand, VBL chose occasions such as wedding parties as the typical venue for promoting the new brand. The theme of the promotion campaign, accompanied by free delivery on excess of a certain amount of  crates, was the praise of independent couple knowing how to spend the money wisely. With this A & P approach, BIVINA seems to have done well in the northern part of the country, even without much press coverage (Huyen, 1999). BIVINA’s Initial Performance

BIVINA was first introduced in the city of Nhatrang in August 1997 on which occasion all the available bottles were sold out within hours. In October, it went on sale in Hochiminh City where the result was believed to be in similar fashion. One month later, it went north, targeting some countryside provinces such as Hoabinh, Sonla, and Viettri. There, BIVINA seems to be a new discovery. In just a short time, it became the best

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seller beer in those provinces. Until now, Hoabinh and Sonla and some other provinces are still exclusive markets of BIVINA. The following figure illustrates the sales volume of BIVINA in the first year of  introduction. Figure 6. BIVINA Sales Volume in the Launching Year (in hls)

12000 10000 8000 6000 4000 2000 0 Oct-97 Nov-97 Dec-97 Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98

Jul-98 Aug-98 Sep-98 Oct-98

Source: VBL Report, 1998.

The above figures show distinctive peaks in August, December and January, which coincide with the three most important holiday periods (Independence Day, Christmas and Vietnamese New Year), in which a high volume of beverages are used for celebrations. The initial success of BIVINA is also attributed to its combined advantages as mentioned earlier (silver bullet effect, taste, price). To be sure, the new brand has been accepted by the working class, its targeted audience, especially in the northern part of  Vietnam where most of the low income workers still cannot afford other premium beers and therefore consider BIVINA as the right substitute.

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The achievement in the introduction phase of BIVINA has helped VBL secure a foothold in the targeted segments. The next step of branding management process would be to defend the new brand by transforming aware customers into loyal customers, thereby giving BIVINA a chance to survive in the future. For that purpose, VBL has done several adjustments to reposition launch the brand acc ording to customer’s feedback. Brand Revisited

Fourteen months after its launching, VBL was not satisfied with BIVINA performance. Figure 7 below shows the gaps between actual and budget sales of the new brand in 1998. To deal with the practical problems challenging BIVINA’s viability, the company resorted to market reaction. A complementary market research was undertaken with the aim of measuring consumer’s perceived quality toward BIVINA brand. The findings indicated that the new brand did not really meet the expectations of its target customers. Figure 7. Actual vs Budget Sales of BIVINA (in hls)  A ctual sales Budget sales

25000 20000 15000 10000 5000 0

Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct97 97 97 98 98 98 98 98 98 98 98 98 98 Source: VBL Report, 1998.

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CUSTOMER SURVEY ON BIVINA BRAND

A survey was undertaken to measure consumer’s reaction toward the new brand in both North and South Vietnam. Most of the respondents (N=256) were living in the two big cities of Hanoi and Hochiminh City. Nearly half of them were in the group between 25-35 years of age, who were considered to be the main target of beer consumers. The income distribution of the sample was also very close to the average income earners of  most big cities in Vietnam, which varied between VND 1-4 million a month. As the first outcome, the survey findings shown that a half of the respondents drink beer more than one time per week; only 10% of them consume beer daily. More than 50% of  these regular consumers were in the main age group of 25-35 years old.

Brand Awareness

Consolidated data across the sample concluded that Heineken and Tiger stood at the top of the list as the most popular beer brands recognized by 94% of the respondents; the least recognized brands were Huda and Red Horse. BIVINA, as a late comer, was still ranked 8th (by 70% approval rate) after Saigon, 333, BGI, and Carlsberg. Those brands have been introduced to the market almost 10 years ago or more.

Factors Affecting Consumer’s Brand Choice

A high majority of the respondents agreed that the most important factor affecting their choice in buying beer is taste (4.09 on a 5 scale) which followed by brand name

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(3.64) and the alcohol content (3.53). Despite its popularity, “promotion girl” was only preferred by a few respondents (2.34) (Table 5).

Table 5. Factors Affecting Consumer’s Brand Choice (N=256) Factors Taste Brand name Alcohol level Country of origin Color Price Popular brand Attractive packaging Advertisement Promotion Promotion girl

Rank 1 2 3 4 5 6 7 8 9 10 11

Mean 4.09 3.64 3.53 3.47 3.44 3.30 3.03 2.87 2.62 2.40 2.34

Stand. Dev. 1.07 1.15 1.19 1.19 1.22 1.24 1.22 1.13 1.12 1.14 1.19

Note: 1-5 scale (1=not important at all; 5=very important).

Source of Information on a New Brand

Fifty six percent of the interviewees revealed that they came to know about the new brand from the television (TV). Since almost all city residents own a TV, advertising on this channel seems to be the most effective way to get consumer’s awareness. However, advertising cost on prime time TV is most expensive. One-fifth of the respondents knew a new brand via other media such as poster, billboard, adverts in the newspapers, magazines, or from promotion girls. The remaining 21% heard about it through relatives or friends. This finding validates the choice of VBL not to use the popular channels to advertise BIVINA in the beginning, but instead maximizing the benefits of ‘silver bullet’ effect from its sister brands like Heineken and Tiger, through ‘word-of-mouth’.

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Questions Relating to BIVINA Brand •

On the meaning of BIVINA. More than two-third of the respondents associated

BIVINA with a local product when they heard the name in the first time. Twenty seven per cent of them thought directly that it is a local beer brand. Just only a few could not relate it to any meaning. This result confirms that the intention of VBL to give a local name to its new beer was somehow justified. •

Quality of BIVINA. Nearly a half of the respondents agreed that BIVINA’s quality

is acceptable. Other 40% had no idea since they had not tried the brand yet. The remaining 10% were divided in two opposite opinions: 6% found it ‘very poor’, whilst 5% liked it very much. Understandably, the group that was negative about BIVINA’s quality belongs to the richest category with an average income of VND 4 million/month and is usually targeted consumers of premium beer. •

BIVINA’s advertising campaigns.

More than 57% of the interviewees found

BIVINA’s advertisement ‘very poor’. One quarter of them said that these campaigns were ‘acceptable, only a scant 2% considered the ways it was advertised appealing. From consumer’s opinion, it is fair to say that VBL was not successful in promoting its new brand in the introduction phase. •

BIVINA’s packaging. There were only three respondents (1%) who really liked the

BIVINA’s packaging. The remaining 84% (15% missing value) found its appearance ‘mediocre’ and did not meet the consumer’s expectation. Key Issues from Customer Feedback

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•

The ad poster heavily emphasizes the imagery of workers. A consumer who does not consider himself as a worker may be reluctant to associate with that. This can be related to status-sensitive character of the Vietnamese.

•

The poster lacks a vivid and creative message. It is not seen as projecting a new idea, but just a kind of the usual “me-too” ad.

•

The appearance and packaging of BIVINA are boring and not attractive. The dark red color and the shape of the bottle make people think about a bottle of fish sauce ( nuoc mam, a heavy smelling sauce popularly used in the Vietnamese meal).

•

The alcohol level is low, especially for the workers who often need quick effect of the drink. In fact, the research reconfirms that BIVINA’s target consumers prefer a stronger beer.

Branding adjustments

Based on the customer’s feedback, VBL decided to re-launch the brand by making up the identified ad blunders in the first attempt and giving BIVINA a new look. The following table illustrates the old and the new iden tity. Table 6. Change of BIVINA Brand Identity Attributes Alcohol level

Old BIVINA Lower than typical: only 3.8%

New BIVINA Equal or higher than 4.5%

Color of the bottle

Dark red shape makes it look like a bottle of fish sauce

Lighter, yellow oriented makes one feel fresher and closer to the color of beer

Slogan

Focus only on worker audience (suggesting a ‘cheap’ impression)

Emphasis on friendship and joy

Logo

A red flag in a triangle shape with a glass of beer

Adding a bucket of malt; taking advantage of ‘silver bullet’ golden quality of Tiger Beer

Get-up

All attributes were not well designed and combined

More colorful and attractive

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Many adjustments are based on practical experience. For instance, in the old poster the slogan “Xong viec roi, BIVINA thoi!” can be translated literally into “Work is finished, let’s have a BIVINA!” However, the word “thoi” has some different meanings in the Vietnamese language, one of them is “stop “. By projecting this message, BIVINA could have generated an adverse effect. It may be misunderstood as “stop drinking” instead of  “stop working”. To avoid such a blunder, VBL decided henceforth to change the theme for BIVINA advertising. The new slogan “dam da tinh ban” (warm friendship) emphasized a new promotion theme, which is quite different from the original focus. There is no longer the imagery showing a group workers in the background. The new poster now tries to convey a feeling of close friends drinking beer together for relaxation in a cozy atmosphere. The ultimate message, that VBL wants to get across, through the new slogan, is that BIVINA is a friend to everybody. The design of BIVINA bottle has also been significantly changed to become more colorful and appealing. The added transparent yellow color seems to better embellish BIVINA labels. Like the theme of Tiger Beer advertising, the bright yellow color presents a golden quality of beer (chat luong nhu vang, quality as gold), something that is still cherished in Vietnam. In addition, the decision to increase the alcohol level is to meet the preferred taste of the target consumers. After all, one would expect to quickly have a relaxed feeling after getting behind a hard working day.

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The following pictures draw the distinct features of the old and new BIVINA.

BIVINA’s old getup

Old BIVINA packaging

BIVINA’s new getup

New BIVINA packaging

Cannibalization effect

VBL has two well-established brands that are Heineken and Tiger Beer. Although both brands belong to the premium category, Tiger brand is intentionally positioned to serve a class lower than Heineken. By adding BIVINA to its business portfolio, VBL has hoped that the new brand would be a booster bringing new markets to compensate for the loss incurred by Tiger in recent years, due to increasing competition in this segment. As clearly stated from beginning, the new brand would aim at different target audiences in

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unfilled segments, and should not pose any threats to other existing brands of the company. In reality, there have been several cases of customers switching from Tiger Beer to BIVINA to the extent that, at times, it became serious enough to alarm VBL management. In anticipation of the ‘cannibalization’ effect, VBL has re-designed BIVINA packaging to be different from its sister brands. However, the damage has been done, despite initial prevention, as depicted in the following figure. Figure 8. A Simplified Description of the ‘Cannibalization’ Effect by BIVINA

VBL Main Competitors

•

Hanoi Halida Saigon 333

•

etc.

• • •

Tiger Beer

BIVINA

expansion

Intended target market

Cannibalization effect

BIVINA Prospect

The chance for BIVINA survival is unquestionable, especially after VBL made several adjustments to re-position the new brand. The following arguments will justify the case. •

Being a product of VBL, BIVINA can be ensured of an excellent and consistent quality. It can also take the advantage of the good reputation of its brother brands and enjoy the effective support of the existing marketing organization and distribution network of the joint venture.

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•

BIVINA was VBL’s response to the declining trend in the premium segment of the beer market. Internal market research show that the growth rate in the mainstream and saving segments continue to be high, while that in the premium segment remains moderate.

•

BIVINA was the first mainstream brand launched by a joint venture. Intentionally, it had to compete only with domestic brands of Vietnamese breweries that often lack  financial resources and marketing effectiveness. As a matter of fact, since its birth it has only faced with weak reaction (if any) from local producers.

•

The adjustments, which have been undertaken by VBL so far to make BIVINA better suit market requirements, were based on customer feedback. This has demonstrated several internal deficiencies in the company’s business portfolio management and marketing strategy. In light of this, the chance of BIVINA success lies in the capability of VBL to cope with market conditions.

CONCLUSION AND RECOMMENDATIONS

Strategic branding management is still a very new concept in most economies in transition, especially Vietnam. Regardless of territorial boundaries, branding has become an effective weapon to win consumer’s heart and mind (Aaker, 1996; Arnold, 1992). Due to lack of knowledge and skill, most Vietnamese companies have not paid due attention to branding aspects of their products. For those companies that are equipped with modern marketing facilities such as joint ventures and foreign-owned companies, the success of a

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new brand essentially relies on the company’s capacity to cope with and adjust to market conditions. This imperative is proven in the case of BIVINA as described in this paper. General conclusion •

Our research leads to the conclusion that building a successful brand is not an easy task. Even globally experienced marketing experts of VBL have committed several mistakes in the launching of BIVINA due to their under-estimation of consumer’s perception and the narrow positioning of this new brand.

•

It is noted that a comprehensive market research and competitive analysis should be the starting point for a brand positioning strategy. Moreover, pre-testing is an essential step that is often neglected in the implementation phase. A thorough test helps to avoid costly blunders that could otherwise reduce the chance of success of  the new brand. In the case of a highly segmented market like Vietnam, the success of  a new product/brand lies with the ability of the company to cope with the local, specific segment, but not by means of aggressive and large scale promotion and advertising campaign.

•

An effective branding process requires a meticulous management throughout the whole life of the brand. All brand attributes and associations should be harmonized and matched with customer preference. This is not often done by many companies due to lack of professional skills and knowledge in branding management or improper implementation of the company’s marketing strategy.

•

Brand name is one of the most important factors affecting customer’s choice of  product. It differentiates the company’s product from its competitors and assures customers of its quality.

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Recommendations for Vietnamese companies •

Domestic companies should look at branding in a more strategic way in response to increasing international competition. The importance of building a brand name for a product should be taken seriously by any enterprise attempting to sell its product on the market, domestically or abroad.

•

A brand should be meticulously managed throughout its entire life, but in a consistent manner in order to ensure it original brand value. It should be well integrated into the company’s overall marketing strategy.

•

Brand names should also suit the Vietnamese language and avoid any conflict with local cultural context.

•

Brand identity and image are in constant adaptation to changing market conditions, without changing the fundamental values, which would otherwise create confusion for consumers. Interaction between the producer and the consumers should be emphasized (e.g., customer survey or customer convention) to get timely feedback  for effective response.

•

It is equally important to ensure that the brand be protected in legal terms. At the core of any protection program is the maintenance and protection of registered trademarks. The Vietnamese companies, in particular, should register brand names and brand attributes of their products such as logo, distinctive design, labels and shapes, domestically and abroad where they have businesses.

•

In the decision of adding a new brand, comprehensive considerations should be taken to properly position the newly introduced brand. Appropriate positioning helps the

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company to overcome potential “cannibalization” effect and take full advantage of  “silver bullet” effect from existing family brands (Quang, 1999). •

In building a brand name, companies need to have adequate resources, structures, people, and commitment to communication and cooperation. Companies should develop their capability to listen to the consumers and their desire to act upon what they discover.

Note: The sample profile and findings of the survey are available on request at

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REFERENCES

Aaker, D. (1996). Building Strong Brands. New York etc.: The Free Press. Arnold, D. (1992). The Handbook of Brand Management. New York etc.: AddisonWesley Publishing Co. Chinh, Nguyen Ngoc (1998). Brewers Pour into Thirsty Market. Vietnam Investment   Review. 5: 3.

Duc Hung (1996). State to Investigate Mismanaged Breweries. Vietnam Investment   Review. 10: 21.

Hanh Dung (1997). Hatay Brewery: No Small Beer. Vietnam Investment Review. 2: 3436. Hanh Dung (1998). Drinks All Around. Vietnam Investment Review. 1: 7. Huyen, Pham thi (1999). Strategic Branding Management in Vietnam: A Case Study of  BIVINA. MBA Research Paper. Bangkok: Asian Institute of Technology. Quang, Truong (1999). Nhan hieu: Mot Loi khi Canh tranh Huu hieu” (Branding: an Effective Weapon to Compete). Thoi Bao Kinh te Sai Gon (Saigon Economic Time). 1: 10-11. Van Thong (1998). Beer War. The Saigon Times Weekly. 3: 18. Vietnam Brewery Limited (VBL) Report, October 1998. Vietnam Investment Review, June 16, 1997. Vietnam Investment Review, October 27, 1997.

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