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
2
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
3
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 foreign-
invested 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.
4
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).
5
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 ill-
designed 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
6
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).
7
Figure 1. Annual Beer Consumption in Selected Countries, 1998
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
0 5 0 1 0 0 1 5 0
H o ng K o ngJ a p a n
S ing a p o reC h i na
T a iw a nP h i li p p in e s
T ha i la ndV ie tna m
F ra n c eG e rm a ny
U S A
Cou
ntry
L i t e r s p e r c a p it a
8
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’
9
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
Quality Packaging Market share
Premium Equal or higher than 9,000 VND
Heineken Tiger Beer Carlsberg San Miguel
High-income class in the society
Premium quality People perceive this segment stands for world class quality Alcohol level: 5% or higher
Can (330 ml) Pint bottle (660 ml) Quart bottle (330 ml)
15%
Mainstream From 4,000 –8,000 VND
Hanoi Halida Saigon 333
Medium-class People who do not have much money but do
Medium quality with alcohol level of 3-5%
Can (330 ml) Bottle (450 ml)
50%
10
BGI Huda Foster La Rue Vida Thanh hoa etc.
not want to drink low quality beers To be used in ceremonies, parties, and feasts
In general, quality of brands in this segment is acceptable and stable
Saving Less than 4,000 VND per glass/bottle
Generic beer and ‘bia hoi’
Low-income class (esp. in the North)
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 up-
market 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
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 behavior.
• 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
Kaiser HP
San Miguel HeinekenCarlsberg
Tiger Beer Larue
BIVINAFoster
SaigonHudaHanoi
333
Halida
Thanh Hoa
"bia hoi"
Low quality
Saving price
Premium quality
Premium price
Bottled local beers
Chinese beer
BGI
Other beersBIVINA Sister brand Direct competitors Others
12
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 high-
priced beers.
13
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- -id-
5,000-5,500 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 foreign-
invested 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).
15
The following figure summarizes the reasons that were used to justify the launching of
this new brand.
Figure 3. The Imperatives of Launching BIVINA
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.
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
Business development strategy • Exploiting the unfilled niches of the
market • Consumers want a cheaper of BVL • Making inroad into the low-income
segment
Company objectives • 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
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Table 3. BIVINA Business Analysis In
tern
al
Strengths
• 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
Weaknesses • 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
Exte
rnal
Opportunities • Most local competitors are weak • High potential to expand market into
the countryside • In the leading position in target market
segment
Threats • 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
Saving Segment
35%
MainstreamSegment
50%
PremiumSegment
15%
Target customers
BIVINA
Saving Segment
35%
17
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.
19
• 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 background.
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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.”
21
The following figure illustrates the distinctive personality of BIVINA that VBL intended
to advertise to the target customers.
Figure 5. BIVINA Brand Anatomy
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
Maximum joy and friendship at an affordable price
The color yellow and
red
The triangle
flag Workers drinking after finishing
work
Simple dark red
bottle
Modern
Sense of relaxation
A ‘made in Vietnam’ product
Smooth and
refresh Good taste
Good qualityLow
alcohol content
Happiness
Brand essence
Brand benefits
Brand attributes
22
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
23
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)
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.
0
2000
4000
6000
8000
10000
12000
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
24
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 according 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)
Source: VBL Report, 1998.
0
5000
10000
15000
20000
25000
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
Actual salesBudget sales
25
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
26
(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 Rank Mean Stand. Dev. Taste Brand name Alcohol level Country of origin Color Price Popular brand Attractive packaging Advertisement Promotion Promotion girl
1 2 3 4 5 6 7 8 9
10 11
4.09 3.64 3.53 3.47 3.44 3.30 3.03 2.87 2.62 2.40 2.34
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’.
27
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
28
• 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 identity.
Table 6. Change of BIVINA Brand Identity
Attributes Old BIVINA New BIVINA Alcohol level Color of the bottle Slogan Logo Get-up
Lower than typical: only 3.8% Dark red shape makes it look like a bottle of fish sauce Focus only on worker audience (suggesting a ‘cheap’ impression) A red flag in a triangle shape with a glass of beer All attributes were not well designed and combined
Equal or higher than 4.5% Lighter, yellow oriented makes one feel fresher and closer to the color of beer Emphasis on friendship and joy Adding a bucket of malt; taking advantage of ‘silver bullet’ golden quality of Tiger Beer More colorful and attractive
29
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.
30
The following pictures draw the distinct features of the old and new BIVINA.
BIVINA’s old getup BIVINA’s new getup
Old BIVINA packaging 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
31
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
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.
VBL Main Competitors •
Hanoi •
Halida •
Saigon •
333 • etc.
Tiger Beer
BIVINA expansion
Intended target market Cannibalization effect
32
• 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
33
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.
34
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
35
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
36
REFERENCES
Aaker, D. (1996). Building Strong Brands. New York etc.: The Free Press.
Arnold, D. (1992). The Handbook of Brand Management. New York etc.: Addison-
Wesley 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: 34-
36.
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.
37
Bio Sketches
Dr. Truong Quang is an associate professor in the School of Management, Asian Institute of Technology (AIT) in Bangkok, Thailand, and visiting professor in the National Institute of Development Administration (NIDA), Thammasat University, and Europa Instituut in Zaarbrucken, Germany. He regularly visits Vietnam to teach courses at the Swiss-AIT Management Development and give seminars in organizational change and marketing subjects. Prior to joining AIT, he worked with IBM Netherlands and Europe for 15 years in the area of business strategy. Dr. Truong received his Ph.D. from the Free University in Amsterdam. Ms. Pham thi Huyen, is a MBA graduate from the School of Management, Asian Institute of Technology in Bangkok, Thailand. She is currently a lecturer in marketing at the Hanoi University of Economics in Hanoi, Vietnam.
Paper10/qt/0699
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