CI on Vietnam 2006

8/3/2019 CI on Vietnam 2006

1/52


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2

Yout h Trans late Consum er Wor ld t o Parent s

Two thirds of Vietnamspopulation are under 35 .

Toy Shop

Changing attitudes leavevast generation gapswhere children are far

more consumer savvythan their parents.


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3

Ex ponent ia l Grow t h o f Midd le Class in Met ropo l i tan V ie t nam

Getting your brands onthe shelf is no easy taskonce you move awayfrom key cities. In fact,your definition of shelf

may need changing!

The middle to upper class acrossVietnams key cities has grown 26%points over the year 2000.

With that comes an onslaught of

advertising, a new world of brandchoices and the outlets to shop forthose brands; retail environments thatwere distant dreams just four years

ago.


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Wide Dispar i t ies in Ec onom ic Oppor t un i t ies

With an annual GDP averaging 7% in recent yearsVietnam is grow ing rapidly, but the rate variesdramatically by city and province.

Six key cities account for 40% of the urban population.Yet urban V ietnam represents just over a quarter ofVietnams 81 mi llion people. Reaching the Vietnameseconsumer is not always easy.


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Ec onomic and Dem ograph ic Perspect ives


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6

North Mountains and Midlands

Red River Delta

North Central Coast

South Central Coast

South East

Mekong Delta

Central Highlands

81 Mi l l io n People

54 ethnic groupsKinh account for 88%

Surface area:

330,000 km2

GDP/capita:

US$532 (2005)

Inflation 8.2% (2005)

Unemployment 5.1%(2005)

GDP 2005 GrowthTotal : 8.4%

Construction : 10.8%Manufacturing : 13.1%

Agriculture : 4%Services : 8.5%


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7

Shaped by

Years Major Events

111BC-939AD Chinese occupation

1535 European Jesuits/Traders

1802 French Given Trading Concessions

1858 France invades Vietnam

1860 - 1945 French occupation

1945 Ho Chi Minh declares the formation of the Democratic Republic of Vietnam

1945 - 1954 French reoccupation finally defeated in battle of Dien Bien Phu in 1954

1954 Geneva Convention 17th Parallel division of Vietnam

1959 US Military Advisors in the South

1965 US Marine Corps Lands in Da Nang

1973 Signing of Paris Peace Accord (US / North Vietnam)

1975 Fall of Saigon - Reunification of Vietnam

1976 - 1979 Implementation of an unified socialist society

1979 Vietnam defeats Khmer Rouge, eradicating incursions inside its borders and liberates Cambodia

China invades Vietnam and is quickly repelled


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8

Great Progress

Years Major Events

1986 Doi Moi (renovation) Congress - Open Door Policy Reforms

1987 Foreign Investment Law liberalises market access

1988 Decree 10/CP Extensive Agricultural Reform

1990 Vietnam is the world's 3rd largest exporter of rice1991 Ban on TV Advertising lifted

1994 US Embargo lifted

1995 Vietnam joins ASEAN

1997 Vietnam becomes world's second largest exporter of rice

1999 VAT introduced. Foreign investors allowed to pay wages in local currency

2000 Private Enterprise Law

2001 US Bilateral Trade Agreement

2002 Tourism booms - Vietnam A Safe Destination

2003 Net Foreign Direct Investment Reaches US$1.5 billon

2004 Boosts Trade & FDI ASEAN Trade Fair, Vietnam Expo

2005 Exports grow 22%

2006 Signif icant investments from Intel and Microsoft. WTO Accession?


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44 Bi l l ion US$ Ec onom y in 2004

Vietnam Per Capita GDP

$532

$496$469

$443$403

$418

6.1%5.8%

6.4%

6.9%

7.8%

8.4%

$0

$100

$200

$300

$400

$500

$600

2000 2001 2002 2003 2004 2005

US$

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%Per Capita GDP (USD)

GDP Growth (%)


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10

Ex c i t ing ly Young

Young Population(Millions)

22 21 21 21 20 20 20 19 19 19 19 18 18 1818 17

24 24 24 24 24 24 24 24 24 23 23 23 22 22 22 22

35 36 37 38 39 40 41 42 43 44 45 47 48 49 50 50

57% 57% 56% 55% 54% 53% 52%50% 49%

57% 56% 55% 54% 52%51% 50%

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0-14 15-29

30+ % Under 30

81

898988888787868585848383

81 82

90

Source: Asian Demographics www.asiandemographics.com


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11

But Not H igh ly Concent ra ted

Urban Concentration

9%

3%3%

3%2%2%2%

2%2%2%2%

2%2%

45%

23%

0%

20%

40%

60%

80%

100%Other Urban

Rach Gia Comm.Vung Tau City

Qui Nhon City

Buon Ma Thuot City

Nha Trang City

Dalat City

Can Tho CityLong Xuyen Comm.

Ha Long City

Da Nang City

Hai Phong City

Bien Hoa City

Ha Noi City

HCMC

Source: General Department of Statistics

23%

32%

55%

100%

42%

% Urban

Population

6%

8%

10%

25%

14%

% Total

Population


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12

Urban Weal t h Cont inues To Grow St rongly

Source: CI Economic Mon itor

Increasing Wealth - Urban Economic Class(N=5,000 6 Key Cities)

5 7 8 8119

13 14

16 17

2418

1920

22 20

1832

30

3231 30

29

4034

27 24 2418

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005

E (~ Less than US$150)

D (~ US$150 - US$299)

C (~ US$300 - US$499)

B (~ US$500 - US$999)

A (~ US$1,000+)

(Monthly HouseholdIncome Equivalents)

% Urban Households


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13

17% Rec eive Mone y From Overseas

30%Have Relatives Overseas

51%

(HCMC 67%

Hanoi 23%)

14%

10%

10%

(HCMC 4%

Hanoi 31%)

17% Receive Money

(more in HCMC than in Hanoi)

Quarterly or more often 26%

1 or 2 times/ year 37%

Less often 37%

Around 1/ 5 of households receive supplementaryincome from overseas increasing their spending power

substantially; Estimate: more 3 bil l ion USD annually

Source: CI Shopper


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14

Dem ographic Prof i les and Ec onom ic Developm entBehind Trends in V iet nam

Young population profile

ABC economic class experienced a 26% point hike over 2000

2 million households are now middle class and above

Highest concentration in key cities

Economic development visible in GDP growth, infrastructure development andresidential property boom

Increasing affluence leads to changes in consumption

Increasing affluence leads to changes in lifestyles

Increasing affluence leads to changes in marketing scope

Disposable income and time increasing desire to experience new opportunities


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Consum er Perspec t ives


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16

Af f luence Impac t ing L i fest y les

Increase Health awarenessGreater focus on diet

Increasing focus on healthier beverages

Increasing focus on mental development over physical development

Annual check upsFitness and gym use

Better nutrition

Demand for improved private healthcare

Awareness assisted by bird flu and SARS

Increase in Education demands

Enrolment of dependents in foreign language schools

Demand for private kindergarten, secondary schools and universities

Increased propensity to send children overseas for University education

Increased International Awareness

Increased travel demand largely within SEA region


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17

Trends Im pac t ing Techno logy And Finance

Consumers are increasingly tech savvyInternet penetration and speed

PC penetration rapid increase

Frequent use of SMS

Consumers begin planning finances

Finances move beyond living expenditure to investments

Savings and plans evolve around own home property demands

Banking, private insurance, ATM services escalate


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18

Ex t remely Opt im is t i c

I Believe...(N=1,000 Aged 15-64 in HCMC and Hanoi)

68

30

22

61

10

9

0% 20% 40% 60% 80% 100%

business conditions in

the next 6 months will

my total family income in

the next 6 months will...

Improve Stay the same Worsen

% Aged 15-64Source: CI Express


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19

Inc reas ing ly Tech Savvy

I Enjoy (N=1,000 Aged 15-64 in HCMC and Hanoi)

38

23

7

6

1

11

24

8

14

12

12

22

1

6

3

5

6

2

37

9

25

7

8

8

4

31

40

22

61

63

67

76

10

21

9

Exercise

Watch video at home

Send SMS

Suffing the Internet

Send e-mails

Plays sport

Go to a supermarket

Everyday Weekly Monthly Less often Never

Source: CI Express


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20

Modern Convenie nc es Prevai l


Durables Owned - HCMC and Hanoi

86

56

34

26

47

2

98

89

59

65

86

13

98

81

4642

74

1

95

67

34

26

57

0

86

39

25

10

25

0

45

13 13

2 2 00

20

40

60

80

100

120

Refrigerator Washing machine Mobile phone Air conditioner Computer Car

Total A B C D E


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Financ ia l Serv ic es Poised for Grow t h


Financial Services Used - HCMC and Hanoi

15

9

7

2423

1718

14

10

15

8

6

11

5

3

9

2 1

0

5

10

15

20

25

30

Insurance plans Bank Account Credit/Debit Card

Total A B C D E

Suc c ess Def ined by Job and Netw ork ed Cr i t i c a l


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22

Suc c ess Def ined by Job and Netw ork ed Cr i t i c a lInc reas ing ly Open Minded

I Think(N=1,000 Aged 15-64 in HCMC and Hanoi)

53

54

54

67

77

93

98

45 38

33

29

33

26

20

6

2

17

14

17

13

7

3

I enjoy getting attention from the opposite sex

I want to be one of the first to have the latest newbrand

Newly weds should live independently from parents

I would rather be out enjoying life than relaxing at

home

Men should be the sole money provider for the family

My success is defined by my job

Having a wide circle of friends is important to me

Having fun and laughing is very important to me

Agree Neutral Disagree

Source: CI Express


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24

Changing At t i t udes Am ongst V ie tnam ese Wom en

Prefers to livewith parents when

married

Prefers to livewith parents when

married

Enjoys relaxing at home

rather than going out

Enjoys relaxing at home

rather than going out

Waits for others to try newproducts first; will buy later ifaffordable

Waits for others to try newproducts first; will buy later ifaffordable

Traditional and

Conservative

Modern

and Adventurous

Prefers to liveindependently

when married

Prefers to liveindependently

when married

Enjoys being the first to own thelatest brands / pampers herself withluxuries

Enjoys being the first to own thelatest brands / pampers herself withluxuries

Loves going out rather

than staying at home

Loves going out rather

than staying at home

Enjoys learning new dishes to cook for her familyEnjoys having fun & laughingEnjoys a w ide circle of friends

Success is defined by job

Enjoys learning new dishes to cook for her familyEnjoys having fun & laughingEnjoys a w ide circle of friends

Success is defined by job

N=503 N=618

55%45%


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25

H h ld P h N t Y t M d B t H di Th t W


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26

Household Purc hasers Not Yet Modern But Heading That Way

Traditional-Modern Continuum

6.9

5.9

5.25.1

4.8

4.0

3.5

2.4

4.7

1 2 3 4 5 6 7 8 9 10

Family roles

International aspirations

Interest in being activePublic behaviour

Purchasing adventurism

Cooking

Personal presentation

Family focus

Overall

Traditional Modern

Source: CI Shopper - Household Category Managers

6 I 10 A W k i


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27

6 In 10 Are Work ing

Housewife(32%)

25%

Small Trader/ Shop Owner

Self-employed (Not trading)

Factory/ retail/domestic worker

Professional (teachers/doctors)

SELF-EMPLOYED (41%) EMPLOYEE (22%)

22%

5%

11%

NOT WORKING (37%)WORKING (63%)



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Your Target Household Cat egory Manager (HCM)

76% of Household Category Managers are sole purchasers / decisionmakers for the household and she ALSO controls the monthly budget.

76%

She Lives Through The Eyes Of Her Children -Who Have A New World Of Opportunities


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A Look Ahead K ids Are Very Savvy Consumers


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30

A Look Ahead - K ids Are Very Savvy Consumers

Kids (0-14) accounting for more than 20% of the population.

Kids are brand and ad savvy often more so than their parents. They are bringingconsumer news to the family.

First generation born in a true market economy exposed to brands and advertising sincethey were born

In many aspects kids are recognised as knowing more than their parents (e.g. brands,technology, ads)

Due to the broader exposure as kids, they are quicker in decoding subtle messages and areamongst the highest group on the ad savvy continuum.

Kids exhibit considerable pester power in many categories beyond those targeting kids

K ids Pest er Pow er


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K ids Pest er Pow er

1/3 ask parents to buy

adult categories

(> among girls 44%)

Shampoo

Toothpaste

Shower Cream

Drink for the family

Electronics

Softener

Source: CI Kids Talk

Trends Impac t on Consumpt ion


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Trends Impac t on Consumpt ion

The Vietnamese are extraordinarily optimistic!

Few have experienced a step back and the majority grew up post war

Metro consumers increasingly technology and financial savvy

Conspicuous consumption visible and acceptable

Success is imbued in pride which has to be visual or verbalised to be recognised;

For example housewives focusing on self development to enable better care of family isnow acceptable

Individual expression through brand badges now accepted

The brands I wear reflect who I am is now a prevalent attitude

Youth translate the consumer world for their parents - they are more consumer and adsavvy

And parents increasingly brand conscious

Pester power from kids increasing beyond kids brands


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Reac hing Consum ers

Mass Media Main Sourc e For New Trends


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34

Mass Media Main Sourc e For New Trends

I Learn About New Trends and Brands From...(N=1,000 Aged 15-64 in HCMC and Hanoi)

711

15

22

29

32

35

43

45

47

51

54

70

86

3Ask overseas Vietnamese

1080 CentreRadio

Surf the internet

From sales people direct at my door

Ask store owners

See other people with a new brand

From direct mail received at home

From an in store promotion

From members of family

Billboard

From chatting with friends

Browsing at shopping centre

Advertising on TV

Read about it in magazines

Source: CI Express

Trends Impac t ing Media and Mediums


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Trends Impac t ing Media and Mediums

The media environment continues to be reshaped;DVD replaces VCR

Cable TV set top boxes provide access to international channels

Movie rental heavily impacts viewing

Blatant branding of game showsIncrease number of interactive game shows

Increase number of slice of life drama series depicting reality as opposed to fantasy

Increased cinema going

Electronic games dominate youth activity

Media Perspec t ive TV Stations 65


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36

p

No private TV channels/radio stations

Digital trials under way and expanding fragmentation.

Expenditure in key TV channels (83%) andpublications (27%) was US$280 million in 2005.

US$100 buts you approximately 1 GRP.

VTV3 (national) US$110 prime

HTV7 (HCMC) US$60 prime

Programming barter arrangements. Productioncompanies own as much as 50% of available spots.

BHD

Lasta

VAC

Imported programming accounts for 25% of air time;HK, Korea, China and Taiwan.

Channels 110

National Channels 4

Regional Channels 106

Digital Channels 12

Share of Ad Ex 2 channels: 66%

HTV7 (HCMC) 34%

VTV3 (National) 33%

Literacy 96%Publications % of Print Ad Ex

20 Publications 85%

4 Publications 54%

Tuoi Tre 19%

Tiep Thi & Gia Dinh 14%Thanh Nien 11%

The Gioi Phu Nu 10%

Web Sites

VN Express

Tuoi Tre

Cinemas 57

Radio Stations 62

National Channels 1

Regional Channels 61

Personal Care Produc t s Have The Max im um Share


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37

Others accountfor the remaining

50% of

expenditure

Source: Andi http:/ / andi.com.vn/

2005 TV Ad Expeniture - Category

10

5

4

3

3

2

2

2

2

21

1

1

1

1

8

1

1

0 2 4 6 8 10

SHAMPOO & HAIR SETTING PRODUCT

MILK (Nett)

SKINCARE PRODUCT

DETERGENT POWDER

BEER

MOBILE PHONE NETWORK

TOOTHPASTE

FABRIC SOFTENER

MOTOR CYCLE

MOBILE PHONE

SANITARY PROTECTIONSOFT DRINKS

COSMETIC

ORIENTAL MEDICINE

CHEWING GUM

FRUIT JUICES

INSTANT NOODLE

SOUP

Ke

yCategory

% Share of Expenditure

Uni lever Dw ar f Ot her Adver t isers On Ex pendi t ure


38/52

38

p

Source: Andi http:/ / andi.com.vn/

Others accountfor the remaining

56% of

expenditure

2005 TV Ad Expeniture - Advertiser

16

2

2

2

21

1

1

1

1

11

1

1

1

7

1

1

1

1

0 2 4 6 8 10 12 14 16

UNILEVER

PROCTER & GAMBLE

VINAMILK

DUTCH LADY

VIETNAM BREWERY COMPANY

NESTLEIBC - PEPSI

HONDA

MEAD JOHNSON NUTRITIONALS

COLGATE-PALMOLIVE VIETNAM COMPANY

NOKIA

LG GROUPVIETTEL-CTY DIEN TU VIEN THONG QUAN DOI

MOBIFONE-VMS

KC-KIMBERLY CLARK

WRIGLEY'S CHEWING GUM

SAMSUNG

COCA COLA

DIATCO

ROHTO PHARMACEUTICAL CO., LTD.

Advertisier

% Share of Expenditure

Trends in Com m unicat ions


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Advertising now dominated with lifestyle advertising

Consumer testimonials in advertising replace international superstar endorsements

Local brands matching international brands on price (or vice versa!) and close behind interms of marketing savvy

Cutting through the clutter is extremely hard leading to significant waste in advertisingexpenditures;

Which 50% (US$ 140 million) of your ad spend works?

7 St ages o f Adver t is ing L i t e racy (Mary Goodyear)


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Sellersstage

Stage 1

Time

Sophistication

Marketing101

Stage 2

ClassicBrand

Marketing

Stage 3CustomerDriven

BrandMarketing

Stage 4

PostModernBrand

Marketing

Stage 5

1 Straight Sell

Product Attributes

2 Hard SellComparative Attributes

3 Endorsement

Functional Benefits

4 Metaphor

Consumer Benefits

5 Lifestyle

Functional + Psychological benefits

6 SymbolicAbstract Values

7 Deconstructed

Advertising itself

Vietnamese consumerisation is nowentrenched in Classic Brand Marketing

stage of the continuum.

Vietnam ese Advert is ing L i te rac y


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1 Straight SellProduct Attributes

Super Consumers

Rural/Blue Collar HousewivesBlue Collar Adult Male

Urban/Rural Female Teen

-

White Collar Adult Male

Nave Consumer

Low competition

High competition

Rural Male Teens

-Urban/White Collar Housewives

Metro Male Teens

Teens, kids andwhite-collars are themost literate in terms

of ad savvy

2 Hard SellComparative Attributes

3 EndorsementFunctional Benefits

4 MetaphorConsumer Benefits

5 LifestyleFunctional + Psychosocial

Benefits

6 SymbolicAbstract Values

7 Deconstructed

Advertising Itself

Metro Kids

Metro Male Trendsetters


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Market Perspect ives

Market Perspec t ives


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43

Superm ark et Wet Mark et

Convenienc e St ore Spec ia l ised St ore

The Wom an Of The Ho use Shops Mos t Oft en At (HCMC)


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44

94

35

12

26

26

34

25

30

36

9

16

17

15

7

10

9

7

3

28

3

3

3

13

10

15

14

Perishable Food

Non-Perishable

Food

Beverages

Household

Products

Personal Care

Products

Wet market (inside) Supermarket Neighbourhood store

Grocery store Beverage agent Others

30

5

7

4

3

Supermarket: higheramong ABC and Younger

# TimesPurchase Per

Month

Fresh product. Competitiveprice. Enjoy bargaining

Trust in product quality.

Clean / hygienic. Good price.

Good range of products

Reasons for Purchasing

Most Often At The Outlets

Others include department store, stall/ kiosk aroundmarket, superstore, wholesale store, hawk er

trolley, pharmacy


The Wom an Of The Hou se Shops Most Of t en At (Hanoi)


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Reasons for PurchasingMost Often At The Outlets

Fresh product. Competitive price.

Trust in product quality.

Safe Environment.

Trust in product quality. Offers goodprice.

Trust in product quality. Offers good

range of products.

Offers good range of products.

Offers good price.

89

16

5

6

3

25

11

17

23

5

23

31

25

24

23

16

33

37

0

5

32

10

7

3

8

4

8

7

Perishable Food

Non-Perishable

Food

Beverages

Household

Products

Personal Care

Products

Wet market (inside) Supermarket Neighbourhood store

Grocery store Beverage agent Others

35

4

8

2

2

# TimesPurchase Per

Month

Others include department store, stall/ kiosk aroundmarket, superstore, wholesale store, hawk ertrolley, pharmacy


The Deat h Of The Wet Mark et ?


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46

Future behaviour

65

20

14

14

9

40

46

38

10

17

15

16

3

23

14

12

9

9

10

9

6

49

27 3

4

10

4

0 20 40 60 80 100

% of Household Category Managers

Current behaviour

93

30

21

19

10

26

32

21

13

19

18

20

4

29

16

15

12

12

13

12

8

2

32

2

5

11

3

0 20 40 60 80 100

% of Household Category Managers

Perishable FoodPerishable Food

Non-perishable FoodNon-perishable Food

Household ProductsHousehold Products

Personal Care ProductsPersonal Care Products

BeveragesBeverages

Wet marketSupermarket

Neighbourhood store

Beverage agent

Grocery storeOthers

Superm ark et s Are The Fut ure


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47

With wet markets still a part of daily life, presence in this outlet is essential for salience.

Shoppers typically visits the market in the morning before work and as such has limited timefor involved marketing activities such as sampling and detailed product explanations.

Consumers mindset favours supermarkets as the outlet of the future. Despite the fact thatthey currently account for approximately 20% of grocery sales today they require more

attention. Small in numbers but modern trade (self service) outlets have grown in number;47 Supermarket / Hypermarket

6 Cash and carry wholesalers

150 Smaller self service outlets

Shoppers visit the supermarket less often than other channels, however, they have moretime when shopping here. This extended shopping time means more opportunities toattract her attention.

She uses SupermarketsAs a source of information (1/3 claim they source information on new trends from thischannel); and

As a source of entertainment (2/3 visit shopping centres as a form of entertainment)

Trends Im pac t on Ret a i l Env i ronm ent


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Supermarkets now significant sales contributorModern trade contributions growing exponentially

Clearly the shopping environment of choice

Department stores, cash and carry, fast food environments proliferate

Consumer increasingly entertain out of homeOutlets steadily increase to meet demand for up-scale premium environments


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K ey Consum er Trends

K ey Consum er Trends


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50

Disposable income and time increasing desire to experience new opportunities

The Vietnamese are extraordinarily optimistic!

Few have experienced a step back and the majority grew up post war

Success is imbued in pride which has to be visual or verbalised to be recognised

Youth translate the consumer world for their parents - they are more consumer and adsavvy

Metro consumers increasingly technology and financial savvy

Modern trade FMCG contributions growing exponentially

Marketers increasingly seek to access rural markets

Marketers increasingly fragment markets

Plethora of brand extensions to satisfy different consumer needs


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Quest ions

More information at w ww.customerinsights.com


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For More In form at ion Cont ac t

Customer Insights7 Nguyen Trung Truc Street, District 1, Ho Chi Minh City, Vietnam

Telephone: (84 8) 822 7727 Fax: (84 8) 822 7728

Email: [email protected] Website: www.customerinsights.com

Documents

CI on Vietnam 2006