NATIONAL UNIVERSITY HO CHI MINH CITY

UNIVERSITY OF ECONOMICS AND LAW

ESSAY

Subject: INTERNATIONAL BUSINESS

GRADE: K09402T

SUBJECT TEACHER: PHAM TO MAI

GROUP: 2

Chau Dinh Ngoc Hieu K094020150

Trinh thi Thu Hien K094020286

Hoang Thị Kieu Oanh K094020334

Nguyen Thi Ha Tram K094020374

Ho Chi Minh City, December 2011

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COMMENTS OF TEACHER

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TABLE OF CONTENTS

THE OPENING....................................................................................................................................1

CHAPTER 1: INTRODUCTION OF COMPANY AND PRODUCT................................................2

1.1. Introduction of Vinamilk...........................................................................................................2

1.2. Introduction of product..............................................................................................................2

1.3. SOUTH KOREA - Target market.............................................................................................3

CHAPTER 2: KOREAN MAKET ANALYSIS..................................................................................4

2.1. Assessing the economic-geographic environment.....................................................................4

2.1.1. Geographic environment.....................................................................................................4

2.1.2. Economic environment.......................................................................................................4

2.2. Politics.......................................................................................................................................5

2.3. Korean cultural environment.....................................................................................................6

2.4. Analyzing international competitors..........................................................................................7

2.4.1. Potential competitors...........................................................................................................7

2.4.2. Sypnosis of global business strategies................................................................................8

CHAPTERS 3 : SWOT ANALYSIS...................................................................................................9

CHAPTER 4: PENETRATING THE LOCAL MARKET STRATEGY..........................................12

4.1. Product strategy......................................................................................................................12

4.2. Distribution strategy................................................................................................................13

4.3. Promotion strategy...................................................................................................................15

4.3.1. An overview of promotional goals....................................................................................15

4.3.2. Promotional strategy.........................................................................................................15

4.4. Price strategy...........................................................................................................................16

4.5. Plan implementation................................................................................................................18

4.6. Cost estimation and financing for market-entry plan implementation....................................19

THE CONCLUSION.........................................................................................................................20

REFERENCES...................................................................................................................................21

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TABLE ASSIGNMENT OF DUTIES

Name MSSV Duties

Châu Đình Ngọc Hiếu K094020150- To compile contens: 2.1, 4.4, 4.5, 4.6

parts and chapter 3.- To recapitulate Word and Power Point

Trịnh Thị Thu Hiền K094020286- To compile contens: 2.3, 4.1parts and

chapter 1.- Presentation about chapter 1 and 2.

Hoàng Thị Kiều Oanh K094020334- To compile contens: 2.2, 4.2 parts;

chapter 3, opening and conclusion.- Presentation about chapter 3.

Nguyễn Thị Hà Trâm K094020374- To compile contens: 2.4, 4.3 parts and

chapter 3.- Presentation about chapter 4.

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OPENING

While we are changing forward the market economy, competition is becoming more intense and

more severe. Most of entrepreneurs have to work in the business environment which is very

complex and involves many risks. In this competition, if a businessman wants to survive and

develop, he will have to design a good strategy. Otherwise, a failure is inevitably”. Therefore,

businesses have to take advantage of all sources in production and especially they also have to

devise and pursue many kinds of tactics and strategies.

One of them is that when doing business we should not focus on one market but expand our scale in

many different markets in regional area as well as all over the world.

When penetrating a new market especially the foreign one, however, we have many difficulties in

the micro and macro factors. Thus, we should have a effective exporting strategy to make it easier

to explore the new market and gain a number of great successes in the strange land.

To demonstrate clearly and give more details about the consuming expansion, with the topic “The

strategy to export the Vinamilk milk powder product into Korean market”, my group conducted a

research to help people understand more about the Vinamilk company and more important, about

the clear pace in the exporting strategy of Vinamilk operation

Although there maybe some mistakes in the research, we hope that the teacher and all classmates

will be sympathetic to it. Moreover, we will so pleased if you give us some advice to make the

essay perfectly.

Thank you for your time to read my words!

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CHAPTER 1: INTRODUCTION OF COMPANY AND PRODUCT

1.1. Introduction of Vinamilk:

Vinamilk is a abbreviation of Viet Nam Dairy Products Joint Stock Company, established from

1976, has grown and become the leading enterprises in the field of milk manufacturing, business

and other products relate to milk, currently has 75% market share of milk in Vietnam. Most

products of the company are provided to the market under the brand "Vinamilk", the brand was

voted as a "Famous Brand" and is one of 100 strongest brands voted by the Ministry of Industry and

Trade in 2006. We have also been selected in the "Top 10 Vietnam high quality goods," from 1995

to 2007. According to Euromonitor, the website specializes in researching the market all countries,

Vinamilk is the leading milk producer in Vietnam in 3 years of December 31, 2007. On

18/10/2011, the Vietnam Report Company has officially announced Vinamilk is one of Top 5 bigest

companies in Vietnam in 2011.

Business Registration License No. 4103001932 November 20, 2003 by Department of Planning and

Investment of Ho Chi Minh City.

Chairman of the Board Director and General Manager: Mai Kieu Lien

Headquarters: 184-186-188 Nguyen Dinh Chieu, Ward 6, District 3, HCMC. Ho Chi Minh

Website: www.vinamilk.com.vn

With the variety of products, Vinamilk has 200 items of milk and products relate to milk include:

condensed milk, powdered milk, nutrition powder, fresh milk, cream, yogurt, cheese and other

products such as soy milk, juice, cake, dissolved coffee, bottled water, tea, dissolved chocolate ...

These are leading brands on the market including: Vinamilk fresh milk, condensed milk, Dielac

milk powder, V-juice Fresh fruit, tea of all kinds ...

Vinamilk focused primarily effective business in the Vietnam market, which accounts for about

80% of sales in recent years. Beside strong domestic distribution network with 183 distributors and

nearly 94,000 outlets have covered the whole country, the products of Vinamilk is not only Vietnam

consumers trust but also reputed in markets outside the country. Up to now, Vinamilk milk products

has been exported to markets in many countries around the world: USA, Australia, Canada, France,

Russia, Germany, Czech Republic, Poland, China, Middle East, Asia, Laos, Cambodia, Philippines..

1.2. Introduction of product

Vinamilk Slimming milk is a new product of Vinamilk. Originated from fact that the rate of obesity

and overweight in Asia is increasing, Vinamilk has taken shape the idea and produced products

"Vinamilk Slimming Milk ". With the target is find out the effective solutions to lose weight, safe

and suitable condition for Asians, Vinamilk Slimming milk is a new breakthrough, to help bring

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practical benefits to customers. A expected weight with the healthy body is completely can be

achieved within reach. Unlike other crash loss weight products on the market, Vinamilk Slimming

milk is built with the effective formula and scientific mode, follows the treatment in stages, support

overweight people controls weight sensibly , losses weight effectivly, long-term and stablely, do not

gain weight back after having reached the desired weight through diet, reducing the threshold of full

that still guarantee to maintain nutrition for all study and daily work. Vinamilk Slimming Milk has

been clinically tested on overweight people, the results showed that after 6 weeks of useing, people

drinking this milk has reduced about 5.9% of body weight (about 3.9 kg), waist down 5cm, the rate

of body fat reduces 2%.

1.3. SOUTH KOREA - Target market:

According to the research by the Institute for Development of the Korean Ministry of Health

(KHIDI) said that about 1/3 (31.7%) of Korean over 20 years old are overweight or obese, up 26%

compared to 1998. Eating habits, fast food, at once people has the trend to work more, less do

exercise while life is more stressful. In addition, culture and Korean people are similar with the

culture and people of Vietnam, this also can help companies is more favorable to penetrate Korea

market. Realizing this, our company have decided to promote the export strategic the Vinamilk

Slimming Milk to Korean market. The customer target of Vinamilk Slimming Milk focuses on

women aged from 20 to 40 years old, has average incomes or higher. Because women in this age

often has expressions of overweight, obesity, abdominal fat due to eat habits and activities as well

as the work pressure. Also, this group is mostly people who is working, have social contact with so

many people, so their shape is very focused. So the beauty needs of this group is very large. This is

proven by fact that Korea is a major market for functional foods and bio-functional weight loss

supplements with the food products are manufactured / processed in the form of tablet, capsule,

powder, liquid, granule, pellet, slice , paste, syrup, gel, jelly ... So our company has researched

Vinamilk Slimming Milk product to find a solution to effectively lose weight but to be safe for

users.

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CHAPTER 2: KOREAN MAKET ANALYSIS

2.1. Assessing the economic-geographic environment:

2.1.1. Geographic environment:

South Korea is located in Northeast Asia, the South Korean peninsula. In the north the

Democratic People's Republic of Korea, the three eastern, western and southern borders are the sea,

the blessed many fisheries resources. Terrain classified into two distinct regions: mountains account

for about 70% of the area located east, the coastal plains to the west and south. Korea's climate is

fairly mild with average temperatures from 6°C to 16°C. The heavy rain concentrated in a short

period in summer. Natural resources: South Korea produces coal, tungsten, graphite, molybdenum,

lead, and has potential for hydropower.

2.1.2. Economic environment:

South Korea is a market economy in which the state plays an important role. Korea is one of the

leading economies in Asia - Pacific, is the third largest economy in Asia after Japan and China. In

2010, the Korean economy recovered quickly, the rate of GDP growth reached 6.1%, the highest in

the past 8 years since 2002 and GDP per capita reached $ 20,500, for the first time exceeded 20

thousand dollars in three years ago (KBS World Report 2010).

Per Capita GDP, expenditure and disposable income 2000-2010. (Euromonitor 2008a.)

In addition, Korean consumers are affluent, with their average monthly disposable income

increasing 5.4 percent from US$2,200 (KRW 2.81million) in 2009 to US$2,559 (KRW 2.96million)

in 2010. The inflation rate in South Korea was last reported at 3.9 percent in October of 2011.

South Korea imports mainly machinery, electronics and electronic equipment, oil, steel, transport

equipment, organic chemicals and plastics. Its principal import partners are: China, Japan, United

States, Saudi Arabia, Australia. The most important exports are finished products such electronics,

semiconductors, LCD panel, mobile phone, computers related, television, motor vehicle, steel, ships

and petrochemicals. Main export partners are China, United States, Japan, Hong Kong.

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Infrastructure: South Korea has a modern retail sector that is of a high standard with a strong focus

on customer service. Convenience chains have gradually replaced the family run stores and many

offer 24 hour shopping, a wide variety of merchandise and prepared and fast foods. The

supermarket sector is gradually losing market share to hypermarkets and operators have reacted by

becoming larger and specialising in the areas fresh food products and health food. For example,

Western coffee shop franchises including Starbucks, Coffee Bean Leaf, Java Coffee and many

others have grown rapidly in the past few years as have bakery franchises including such names as

Paris Baguette/Croissant, Crown and Tous les Jours (Planet Retail, 2008). Online retailers have

grown 190% during the past 5 years to almost a tenth of retail sales. In 2004, total sales of food and

agriculture products accounted for approximately 9% of total online shopping sales, about US$660

million. Innovation in technology has developed new types of retailing in South Korea. The smart

card which is equipped with a barcode reader and touch screen on the shopping cart is designed to

assist consumers. Besides the smart card, electronic price tagging has been widely used in grocery

retailing in South Korea in place of paper price tags and a self-payment system has been introduced

by retailers such as Homeplus Lotte Mart and E-Mart to reduce checkout queuing (Euromonitor,

2009a). Korean development level information technology higher, they are the global leaders in the

use of internet and mobile technology. Information leading Korean and communication networks

are powerful tools to influence the opinions of Korean consumers (Paul Budde Communication

2007).

2.2. Politics

South Korean economics and politics have undergone major changes since the birth of the nation.

South Korea today boasts of being a vibrant multi – party democracy for the past two decades.

While politics in South Korea has strived hard to reach its current stability, economic growth has

never stopped here since the 1950’s. Today it stands as the 11th largest economy (in nominal value)

in the world and has emerged as a global leader in electronics, digital displays and mobile phones as

well the largest shipbuilder in the world in terms of tonnage. As can be said that both economics

and politics of South Korea have emerged successful from tumultuous pasts and are topics of

discussion world over.

Enforcement regulations of the food sanitation act (mohw)

Korea is one of the largest nations which import foods in the world. The food industry in Korea

annually meets about 30% of the domestic demand, other 70% is imported. The Ministry of Health

and Wealfare (MHW) and the Korea Food and Drug Administration (KFDA) is the governmental

agency that is in charge of establishing, operating and controlling the implementation of policy

system about food hygiene. KFDA is an agency which deploys and enforces the laws and

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regulations above. As of 1998, however, KFDA almost has taken totally the managemential

function, building the regulatory policy in the food sector of MHW. Nowadays, there is only one

apartment in MHW that plays the role of monitoring the implementation of regulations and laws on

food hygiene and safety.

Food Sanitary Act: Food Sanitation Law was first promulgated in 1986. This law is

constantly revised, adjusted and supplemented several times in 1991, 1994, 1995, 1997, 1998, 1999,

2000, 2001, 2002, 2004, 2005, 2006 to have the completed system of policies today. The objective

of the Act is to enhance the health of the whole citizens by improving the quality of hygienic and

nutritional food for Korean people and prevent effectively from any harmful factors affecting the

consumer goods in the South Korea. This law is applied not only for the domestic goods but also

the imported ones.

The labels of imported food: In the law, all imported productst must be labeled according to

the regulations and guidelines of the food hygiene and safety of the KFDA in Korea. The labels

may not cover all original labels of products and must show the completed basic information about

the products.

Flow charts of Import Procedures

2.3. Korean cultural environment:

Korea has many cultural similarities with Vietnam due to the influence of Chinese culture.

Social: Korean society based on the belief in Confucianism, Confucian culture. To enhance the

collective harmony of the group or community in social activities.

Education: Right from the nursery, the baby was about education and domestic products and

become remind parents when they choose to buy things for them. Use of content has become a

consistent set of consumers of all ages.

Religion: 51% of the population Korea beliefs religions.

Population: According to the Korean population is 50,062,000 people on 1/2010. These years,

Korea's population is growing steadily. On average, Korea's population increased by 200,000

people/year. Korea faces the risk of social aging. But Korea's birth rate has improved.

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Culture of Korean consumers: With increased wealth, population aging, improved education

and income of the Korean people is quite high, so the style of their food consumption is very

important about quality care, high-nutrient composition, safety and health needs beauty as well as

their food quality, packaging and shelf life, product and environmental friendliness are a greater

concern for disease prevention. The model of "green consumers" are increasingly ingrained in the

thinking of the Korean. Consumers prefer products with a national brand and / or have been

recognized and proven in the market. Price isn’t the most important factor in consumption habits,

but also included service, quality, sharing, social responsibility, business ethics ... Korean

consumers prefer to shop at large supermarkets and shopping online rather than buying goods in

retail stores. Koreans prefer domestic consumption and they will be very easy to open their wallets

to pay for an item even though domestic goods are more expensive than imported goods. Korean

food market is divised tightly. Usually, the big distributors do not directly import goods which they

get from the satellite company specializing in importing, selling directly to Korean is very difficult.

2.4. Analyzing international competitors

2.4.1. Potential competitors

There are a number of slimming products in Korea. However, the product that are popular with

Korean people is the following Namyang’s product:

Namyang – Total food Company:

- 17 Tea: 365 days, 0 Calories, No Antiseptic, No Artificial Flavors, No Calories - 17 Tea.

Namyang 17 Tea has 17 all natural and rare ingredients for purification of the body

including L-Carnitine, increasing fatty acid metabolism, and green tea's Catechin. 17 Tea

considers not only your health but also your beauty "Refresh your body and mind" with 17

Tea.

- Healthy Weight Loss Program:

Namyang's <Healthy Weight Loss Program > (New Weight Reduction Strategy Upgrade) is

a dietary food containing balanced essential nutrition such as protein and minerals. With this

product, weight reduction effect has been enhanced through the combination of HCA with

the product's ingredient. The HCA has a body fat dissolution effect. The product contains

diet fiber such as glukomanan that enhances the feeling of being solid and full. One can eat

with convenience and selected time and place, this dietary food. In addition, Namyang's

'Chetonia', another special nutrition food, was specially produced for incurable epileptics.

And this food contains Cheton-generating food with high fat content effectively suppressing

convulsions.

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Competitive advantages of Namyang

- Well-known brandname:Namyang Dairy Products Co., Ltd. was founded on March 13, 1964,

as the first general dairy products business operation in Korea. The operation was established

with the view of expediting the development of the nation's dairy industry and to contribute to

the enhancement of public health through provision of high-quality dairy products, leading the

progress made in the industry. It holds 75 percent of the market share in infant formula. Also

armed with high quality yogurt, milk, cheese, fruit drink and like, it now enjoys the greatest

share in the Korean market... Currently, Namyang is standing at the top of Korean dairy

products companies by virtue of its ceaseless interests in research, development, and bold

investment in terms of scale of net sales or technical level.

- The use of technology for production:In Namyang’s factories, workers have been replaced by

robots. Until 2007, Namyang had 4 production factories, including Chonan with the most

modern production line and equipment. To assure the quality of its products, Namyang has

also applied closed production process.

- Access to raw materials:Namyang owned 874 dairy farmings that provide over 28.900 litter

milk everyday for its factories.

Global business activities:

Namyang’s products for mom & children are specially concerned and their quality is continuously

enhanced. The company’s products have confirmed a position and accounted for 50% marketshare

in Korean market.Besides, these products have also been exported to 12 countries such as US,

Japan, Taiwan, HongKong, Indonesia…Namyang has concentrated on building and consolidating

the trust of its customers in its products’ quality by its real action.It has taken part in a number of

social activities in many countries. Recently, while most of milk companies in the markets have

raised their price of milk because of inflation,…, Namyang has not raised its price yet for over 3

years because the company controlled its raw materials from its dairy farms.

2.4.2. Sypnosis of global business strategies

Stt Strategies Purposes Advantages created

1 Trademark registration To define ownership - avoid being imitated and can be protected by law2 Holding a conference To introduce slimming

milk to distributors- setting up a distribution system in markets- being easier to deliver products to customers

3 Participating in fairs To introduce product to customers

-define potential customers-make the product be similar to customers

4 Promotion (advertising, media…)

To introduce product to customers

-provide customers with knowledge about product- make the product be similar to customers

5 Developing source of Ensure to supply stable -have possibility to create competitive price and

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raw materials volume of milk reliable brand.Aim :to make distributors as well as consumers in Korean market know and accept the product

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CHAPTERS 3 : SWOT ANALYSIS

SWOT CONTENTSStrength Strong and prestigious brandname:Vinamilk is the top milk producer in Vietnam. It was voted “ famous brandname” and

one of the 100 strongest brandname by Ministry of Industry and commerce in 2006 and reached top 5 of the 200 largest private

enterprises in corporate income tax payment in 2011 by Vietnam Report. It was also listed in top 10 of Vietnamese high

quality product.Vinamilk is in the top 450 company voted by Forbes Asian.The market share of Vinamilk is 75 %. Vinamilk

has distribution systems in 64 provinces in Vietnam.

Financial potential and large scale:

- In 2004, the company had the charter capital of 1590 billion VND.

- Advanced assembly line, capability of large production and stable quality:Vinamilk’s products are ensured quality by

using quality control system ISO and HACCP.

- In 1999, Vinamilk has successfully applied the quality management system according to international standards ISO 9002

and now is applying the quality management system according to international standard 9001:2000.

- Moreover, the product has been studied clinically in the National Institute of Nutrition, confirmed good weight loss effect,

safety and suitable for Asian. In addition, packaging are made from paper which cover by silver to preserve friendly

enviroment and type of tin has three classes cover to well preserve..

Source material production quality: Vinamilk is one of the leading milk producer in Viet Nam with Dielac brand name,

Vinamilk always chosse safety materials imported from Europe and the Middle East.

Diversified products

- Vinamilk Corporation provides healthy products which satisfy the international standards of quality, including: Vinamilk

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fresh milk, condensed milk, Dielac powdered milk, tea…

- Vinamilk has sustaintial relations in foreign markets. It is known by foreign consumers through Vietnam Airlines and it

also has shopping online website: www.shop.vinamilk.com.vn .

- Vinamilk’s products are now sold in the supermarkets of foreign retailers: Coopmart, Big C, Lotte Mart, Metro,…and

exported to Australia, Cambodia, Iraq, Kuwait, The Maldives, The Philippines, Suriname, UAE và the U.S,…

Weakness

Vinamilk Slimming milk is new productand Vinamilk has not penetrated the local market yet so that it has not established

relations with Korean retailers yet as well as has no experience in doing business with Koreans.

The company concentrates much on supply domestic consumers with its products; therefore, it does not have any experience

on international market. In particular, Vinamilk exported to 10 countries, accounted forapproximately20% of revenuewhereas

Vinamilk businessesinthe Vietnamese marketaccounted forapproximately80% of revenue in the past three-year period.

Changes in exchange rate may influence the company’s business because 50% of raw materials are imported and 30%

revenues gain from exports.Furthermore , Vinamilk has not had a competitive advantage in price in comparison with other

company.

Opportunity Korean GDP/ person is high and consumers are aware of the benefits of healthy food, so they don’t react much with price

changing.

Korean population is ageing so that there will be a greater focus on the healthy benefits of food (according to the Korean

National Statistic, the avg. life expectancy in 2050 will be 86, with 34.4% of the population over 65). The Korean lifestyle is

becoming busier and more stressful than ever, resulting in more health concerns. The rate of obese kids in korea and the

demand of beautifying of girls and women are increasing significantly.

Korean people prefer using environmentally friendly products. Moreover, the distribution channel in Korean market is short

and focusses on hypermarkets and supermarkets. Korean consumers like shopping at supermarkets and hypermarkets such as

Lotte mart, E-mart, Tesco home plus,…rather than retail stores. Together with the development of technology, shopping

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online also plays an important role in exporting to Korea.

Asean-Korea Free Trade Agreement creates some advantages for Vietnam and the most important one is that exports

originated from Vietnam get preferential tariff.Furthermore, Korean prominent retailers have penetrated Vietnamese market

( Lotte mart with the chain of supermarkets in Ho Chi Minh City and Hanoi). This is a good chance for Vinamilk to be known

as top quality brandname by Korean distributors and consumers.

Threat

Intense competition with other companies in the same market such as the famous brand name originated from South Korea and

America.

Harsh rules of Korean Government in verifying product’s quality create barriers for Vinamilk slimming milk:

- Imported functional products are often 2-3 times more expensive than domestic products for consumers, due to import tax

and KFDA recognition costs.

- The certification process for functional foods is time-consuming, especially if the functional food has not considered as

“generic” by the Korea Food & Drug Administration.

Consumers are hard-to-pleased and their rights are protected effectively; thus, if information about the product is not provided

fully, they will not accept that product. In addition, Korean consumers are more trusting of domestic/natural products than

imported products, and are very conscious of where their food is produced.

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CHAPTER 4: PENETRATING THE LOCAL MARKET STRATEGY

4.1. Product strategy

- Vinamilk slimming milk was produced with efficient formula and scientific mode of treatment

in stages, supports people who are overweight, controls weight through a reasonable diet,

reducing the threshold of fully and completely maintaining nutrition for daily activities, life

and work.

- Formula of milk contains CLA which helps inhibit fat synthesis and L-carnitine which

increases the fat tranformation. Also, the nutritional balance system of protein, vitamins and

essential minerals have low energy, ensuring adequate nutrition for the user during dieting. The

product has been studied clinically in the National Institute of Nutrition, confirmed good

weight loss effect, safe and suitable for Asian, and also tested on overweight subjects, after 6

weeks this product, who drank reduce on average 3.9 kg, waist down 5cm, body fat percentage

decreased 2%. Effective formulation and scientific treatment regime help people who uses this

milk can reduces weight in long-term stability, not to gain weight back after they reach the

desired weight loss.

- Treatment regimens with four phases: adaptation, attack, consolidation and maintenance with each

weight loss goals and specific time help users perform easily. In particular, the milk smells pleasant, is

easy to drink, has no side-effects so that it makes weight loss process more easier.

Nutritional status IBM Index Note

Underweight <18,5 Should not use Weight Loss Milk

Normal 18,5 - 24.9

Pre-obesity 25 - 29.9Should use Weight Loss Milk

Obesity >30

 (*): According to the WHO classification scale for adults over 18

- Characteristics of products: Based on the taste and habits of Korean, our company will

produce the products Vinamilk slimming milk with the following characteristics:

Invest heavily in an advanced management system and a closed production process, and

synchronous with the international standards from planting grass, building cages, preparing

food for cattle, health management, processing and packaging to distribution of products to

the consumers.

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Material: taken from fresh milk and processed according to standard 7028:2002: products

made from material milk and processed at high temperatures, ensuring food hygiene

standards and safety products.

Flavor: delicious, tasty, standard flavors, easy to drink

Net weight: There are two kinds of packaging:

oTin box 300g used to be about 8 times (each time an equivalently 37.5 g)

oBox of paper 525g: 1 box of 14 packets for 14 times using

oBesides, we propose the type of packaging in the form of liquid milk in box of paper, each

box is 220ml capacity. This design is very handy, easy to carry, very suitable for the

consumption habits of Koreans, they need the convenience because they are very busy

(The Koreans have the longest working time the world).

Design on the package: Sample code of Vinamilk slimming milk is expressed with

eye-catching design and suitable for Korean interests. The design of products exported to

Korea market is the same as the one in Vietnam but clearly, the information about the

manufacturer, importer, manufacturing date, expiry date as well as how to preserve a part

includes two common languages: Korean and English to Korean consumers. Morever, the

design must consist of the certification mark of international quality because Koreans are

very interested in product quality.

Improving product quality: To meet the increasing demands of consumers, the listing has

constantly renewed technology, improved management and product quality. Vinamilk is

now applying the quality management system according to international standard

9001:2000. This has dispelled somewhat the quality gap with imported milk and increase

the confidence and prestige of the company in a competitive market.

4.2. Distribution strategy

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The selling and distribution system of Vinamilk spreading everywhere is necessary so as to

lead to the success in the operation, which makes the company gain an enormous quantity of

customers and ensures the effective results of launching the new products and the promotion

strategies not only in the Asian area but also all over the world.

There are many different ways to launch our product into the Korean market such as by means

of the well-known hypermarkets like EMart, Tesco Home Plus, Huyndai Department Store, Lotte

Mart, supermarkets, the outlet chains 24/7, Gmart, or the small outlet stores... In general, the

Korean market is a potential and attractive enviroment for foreign entrepreneurs to export the

products into. Although the distribution network in Korea is very diversified, we choose only one

distributor, Tesco Home Plus. It’s a South Korean/ British chain of discount retail stores jointly

owned by Samsung and Tesco with 113 branches throughout South Korea. Tesco currently holds

94% of the shares in the venture. Home Plus operates both hypermarkets and its express format as

well as home delivery shopping service. Home Plus hypermarkets typically offer home products,

clothing, electronics, and sporting goods. They also usually feature a multi-story car park, large

supermarkets and small “special – purpose” stores such as fast food restaurants, travel agencies,

appliance-rental firms, pharmacies and bookstores. There are also “culture centres” in some of the

stores. Home Plus is the second largest retailer in South Korea, just behind Shinsegae Group.

Why did we choose Tesco Home Plus but not another one? Because of three main reasons:

Firstly, according to recent research, the Korean citizens prefer buying goods and shopping in

hypermarkets, supermarkets rather than in small outlet stores operating outside. Secondly, we

should use one main distributor when we export our goods into the Korean market because the

Korean entrepreneurs do not like the foreign ones using too many distributors to introduce

products in order to ensure the belief in business. As the traditional way of thinking, Vietnamese

businesses like having as many distributors as possible to expand their product network. By

contrast, Koreans like the mutual belief in business. It means that when you want to deliver your

goods to the Korean customers, you should choose only one distributors, not all of them at the

same time. Finally, nowadays, the technology in Korea is developing dramatically and powerfully

and plays an important role in Korean people’s life. Tesco's strategy with Homeplus to overtake E-

mart which is owned by Shinsegae Group, South Korea's leading retailer is to find some methods

to build stores, to use the online world to grow its sales. 

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It's Homeplus online stores or malls that are now the number one e-commerce site for

groceries, general merchandise and consumer goods in the nation, which offers it a solid base in

those strategic efforts. The virtual stores located in the subway stations are an extension of that

online paradigm and strategy. The Homeplus stores in the subway stations consist of virtual

grocery shelves, fresh and perishable food cases, which are designed to look like the inside of a

brick-and-mortar store. Shoppers walk up to the virtual store, choose the items they want to buy,

and then scan the product QR code using their smart phone. Once the product QR code is

scanned, the item goes into a shopper's online grocery cart. When a shopper completes his or her

purchases, they then ask for time for the groceries to be delivered to their home later in the day..

The Homeplus virtual subway station-based stores is one of the most innovative food and grocery

retailing concepts we've seen over the last couple years.

4.3. Promotion strategy

4.3.1. An overview of promotional goals

Identifying the goals of promoting is a very important step because it relates to the goals of

marketing. Despite its purpose is the company’s revenue, promotional goals in different situations

are not the same.

Objectives related to the promotion of product:

- Announce consumer about the slimming milk of Vinamilk;

- Help them understand clearly about the benefits of fresh, natural milk.

- Make the consumers feel that their best choice is to buy our product.

- Stimulate them to buy our product and make them become our loyal consumers.

4.3.2. Promotional strategy

Promotional stratetry includes these steps:

- Identify the target market:women who has to work in office all day, age from 25 to 35.

- Identify promotional goals:

In short-term:

o Announce the presence of Vinamilk slimming milk to Korean consumers by means of

distribution channel.16

o Provide them with the knowlegde about the product

o Emphasize on the special feature of the product

o Create the liking to consumers

In long-term:

o Make the consumers feel that their best choice is to buy our product.

o Stimulate them to buy our product and make them become our loyal consumers.

Define the message of promotion: “ losing weight safe and effectively”

Choose promotion tools:

In short term: we focus on introducing the new product to the distributors (push stratefy).

To do this, we use the tool of advertising on the Internet, on newspapers and magazines. The

company also participates in industrial exhibitions held in Korea as well as Trade Promoting

fairs in order to inform many distributors about its presence in Korean market. This tool

seems to be appropriate in the early stages of the promotion of the product.

In long term: In the late phases, when our product is accepted widely in the market, we will

use the tool of advertising through media such as television, stereo,… followed by the

promotional goals as we want to aim at customers (pull strategy) and to emphasize the

quality of the product.We will also use the tool of public relation that we take part in some

social activities, sponsoring, charities or environmental protecting programs in Korea. We

use pull-push mix strategy because of some reasons: first, our product is a new product and a

kind of consumer goods. Second, our distribution channel is short. And finally, there are

sufficient print and electronic media available to carry the marketing messages.

4.4. Price strategy

The table below provide information about slimming products in Korean market :

Product Name Brand Name Manufacturer Seller Price USD/1L

or 100g17 tea – 2l Namyang Namyang Dairy Tesco home plus, 2250-2500 won 0,9/1L –

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Products Co.,Ltd Lotte Mart và E-mart 1,0 /1L

17 tea – 1.5l Namyang Namyang Dairy Products Co.,Ltd

Tesco home plus, Lotte Mart, E-mart và Mega-mart

2250-2350 won 1,2/1L – 1,3 /1L

17 tea – 500ml Namyang Namyang Dairy Products Co.,Ltd

Tesco home plus và E-mart 1400-1500 won 2,3/1L –

2,4/1L

17 tea – 340ml Namyang Namyang Dairy Products Co.,Ltd

Tesco home plus, Lotte Mart, E-mart và Mega-mart

950 - 1000 won 2,24/1L – 2,36/1L

Chlorophyll Juice (120ml x 60 packs) oxus21 Oxus21 company Tesco home plus $150/ box 20,8/1L

17 tea (paper box)- 1,5gam x 25packs Namyang Namyang Dairy

Products Co.,Ltd Mega-mart 2500 won 5,35/100g

AHC X-Slim diet, HCA AHC HCA E-mart 45000 won(500mg

x 120 Capsules) 60,2/100g

Erom Natural Raw Meal for Women Erom Erom Co.,Ltd.  Tesco home plus,.. FOB $30/box

(40g x30 pouches) 2,5/100g

Erom Natural Raw Meal (Nio) Erom Erom Co.,Ltd.  Tesco home plus,… FOB $10-15/box

(400g)2,5-3,75 / 100g

(http://www.lottemart.com, http://www.megamart.com,http://www.homeplus.co.kr, http://www.emartmall.com)

According to the table, slimming products are the high-priced segment:

For liquid products:

oHigh price from 19,8 USD /1L to 20,8 USD /1L, including brands such as Oxus21, Shalom…

oCompetitive price from 0.9USD/1L to 2.4USD/1L, including brands : Namyang, Maeil,…

For powdered products:

oHigh price from 59,7 USD/100g to 60,2 USD/100g , including brands such as AHC, Shalom…

oCompetitive price from 2,5 USD/100g to 5,35 USD/100g, including brands: Namyang, Erom...

Slimming products in the Korean market are variety of categories, brands, and origins. In

addition, competitive prices and the differences between the same products and capacities

depending on brandname and quality of goods. Most of the famous brandnames originated from

Korea and America are high-quality products and familiar and high- accepted market.

In short , Vinamilk slimming milk will penetrate Korean market at the high-priced segment,

good quality with competitive brands of South Korea and America such as Namyang, Leptin,

Erom, Maeil, Shalom…. The main competitors in the slimming products market are strong brands

of South Korea and America, therefore, Vinamilk choose Penetration pricing. The price will be

lower than that of competitors in the segment of senior products in the early stages in order to

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penetrate easily this market. Vinamilk must contact Tesco home plus to be agreed upon prices

lower than prices of competitors who supply Tesco home plus and find out the differences between

input prices and output prices of Tesco home plus. So, Vinamilk can determine specific prices.

Vinamilk will export Vinamilk slimming milk to Tesco home plus with FOB (Free On Board)

price. This is because Tesco home plus has experiences and relationships in the transport and

import of goods.Therefore the FOB sale price will bring them more beneficial, while Vinamilk has

not an experienced exporter in Korea market. FOB price and penetrating price help Vinamilk

slimming milk compete easily against competitors and be easily distributed by importers.

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4.5. Plan implementation

Plan penetration the Korean market

STT CONTENTS 2011 201211 12 1 2 3 4 5 6 7 8 9 10 11

1 Contact distributor2 Contract agreement3 Certificate from the Food Research Institute of South Korea4 Registered license in South Korea5 Production of export products6 Product promotion7 Exports to the Korean market

Plan assignment of responsibilities

STT CONTENTSResponsibilities

Requirements Implementation Checking

1 Production and business plans RealisticTo achieve high efficiency Business & plan department Business & plan manager

2 Contact distributor Quickly timeSave and efficient cost Marketing & Sales department Business & plan and

Marketing & Sales manager

3 Contract agreement The reasonable terms and Ability to meet Marketing & Sales department Business & plan and

Marketing & Sales manager

4 Certificate from the Food Research Institute of South Korea

VNCTP standards fromSouth Korea

Marketing & Sales department coordinate distributor Marketing & Sales manager

5 Registered license in South Korea Fast and efficient Marketing & Sales department Marketing & Sales manager

6 Production of export products Standards of the factory and meets requirements of the partner Production department, QA Business & plan manager

7 Product promotion Fast, efficient and inexpensive Marketing & Sales department Business & plan manager8 Exports to the Korean market Checking quality and transportation Import and export department Business & plan manager

9 Report production and business results Profit and Product Quality Finance and accounting

departmentFinance and accounting manager

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4.6. Cost estimation and financing for market-entry plan implementation

Stt CONTENTSThe estimated cost

Based on referenceDetails USD

1 Contact distributorTwo Marketing & Sales employees to Korea 37000

Cost of Living in Korea 7000 USD / person(http://www.edu.voffice.vn)

Round-trip plane ticket from Ho Chi Minh City - Vietnam Airlines Seoul 1200USD / 1 person, pay staff for work overseas 100USD/day / person (Vinamilk)

2 Contract agreement Contracting directly 550

3 Certificate from the Food Research Institute of Korea

Application and provide additional information 1950

4 Registered license in South Korea Filing fee 350

Filing fee in the South Kroea 350 USD / brand(http://vietbao.vn/Kinh-te/Lam-the-nao-de-bao-ve-thuong-hieu-tai-My/10762282/87/)

5 Production of export products Production 1 /100g Market price is around 10 USD / 100g (production costs by 10% -15% of original price )

6 Product promotion Carring out strategy 7000 Costs of promotion strategy in Vietnam is around 8000 USD

7 Exports to the Korean market

Packaging costs, transportative goods. 90USD/20 Feet  (Hanjin shipping)

Costs of customs procedures

8 Report production and business results

Transaction costs, payments, exchange rate opportunity cost (interest rates on bank deposits 14%/ year)

HSBC bank

Based on estimated costs, estimated capital costs do not include the production and transport costs to implement plans to bring products to the Korean market is 160 000 USD from the capital's business Vinamilk for penetrating foreign markets.

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CONCLUSION

It is very necessary for an entrepreneur to have a far vision and find next steps in business.

One of the challenges that Vinamilk company has to come over is the exports to Korean market,

which has “hard – to - pleased” customers to break down.

The experience, potential, sources and advantages of Vinamilk conpany in the production

and export to the different markets, however, have been proved through the success that the

company gained since its establishment up to now such as “One of the most ten famous

brandnames in Asia” or “One of the best 200 businesses in Asia – Pacific Award”…This all above

things show us that being the business partner with Korea will be completely carried out in the near

future.

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REFERENCES

1. Charles W.L.Hill , International Business, pulished by McGraw-Hill/ Irwin , In 2011.

2. http://vinamilk.com.vn/ENG/?vnm=product&id=78

3. http://company.namyangi.com/eng/index.html

4. http://www.tradingeconomics.com/south-korea/imports

5. http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-and-

competitiveness/markets/korea/south-korea-food-market-overview-november-2009

6. http://www.emartmall.com

7. http://www.21food.com

8. http://www.megamart.com

9. http://www.alibaba.com

10. http://www.lottemart.com

11. http://www.homeplus.co.kr

12. http://www.fita.org

13. http://www.doingbusiness.org

14. http://www.kotra.or.kr

15. http:// www.etown.edu/vl/intibus.html

16. http://geography.about.com/

17. http://www.bertelsmann-transformation-index.de/132.0.html?L=1

18. http://ebookbrowse.com/functional-food-market-brief-seoul-ato-korea-republic-of-2010-07-

02-pdf-d81030849

19. http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Food-and-

beverage/Pages/Functional-Food-and-Bio-supplements-in-South-Korea.aspx

20. http://ebookbrowse.com/exporter-guide-seoul-ato-korea-republic-of-2010-10-26-pdf-

d39186843

21. http://nchq.org.vn/?Content=CTTT&MDM=5&MCD=30&MT=126

22. http://translate.google.com.vn/translate?hl=vi&langpair=en|vi&u=http://www.naviesl.com/

html/%3Fcode%3DM05%26numid%3D55

23. http://www.vcci.com.vn/dau-tu-tai-chinh/20111009094822550/co-hoi-dua-hang-vao-lotte-

mart-han-quoc.htm

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