Clothing and Footwear-Diesel Fashion Company-Premium Report

7 June, 2009 VNMARKETRESEARCH

Author: Huynh Anh Thu

Tang Thi Thanh Ha

Nguyen Manh Luan

Diesel Fashion Company

Executive Summary

Since the economics growing, the demands of customers are also higher; for instance,

customer in the past they only need foods and clothes, but now, they require cuisine and

couture. That is why many services along with products in high quality were born. And

Diesel is among of those new brands, a strictly high fashion label for designing and

manufacturing jeans. Today, Diesel has also expanded its design in bags, watches, footwear,

sunglasses, fragrances, a special fashion channel for kid, brings more options to the

customers.

Late of year 2007, DAFC Group chose Diesel to be a new branch of it distribution channel

for luxury goods in Vietnam, and locate in Diamond Plaza. It has been almost two years since

Diesel has came to Vietnam, but the sales volume in this market is not as much as the

expectation. However the reason is not because consumers saturated with luxury brands or

foreign brands regardless its reputation, it is due to the inefficient marketing strategy. Take a

look at other competitors of Diesel such as CK jeans, Guess, or Levi‟s who target the same

market with Diesel, they are still expanding their branches simultaneously with building close

relationship with customers, Diesel seems to be quiet and stay outside this severse

marketplace.

Although Diesel is one of the worlds‟ most well-known design and fashion companies, it also

need a marketing plan to raise people awareness about it reputation, as well as its style and its

design. This marketing plan therefore made to meet the need of Diesel company, it includes

three main parts:

- Situation analysis: Using Porter‟s Five Forces theory to point out the threats of new

entrants, buyers, substitutes, suppliers and industry competitors. Besides that, it also

has a SWOT analysis to figure out strengths and weakness of this business.

- Marketing strategy: describe some strategies such as product strategy, pricing strategy,

or promotional strategy which can approve to Diesel Company.


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- Financial Analysis: which provide more details about the marketing plan for

implementing.

In comparing to other high label brands who are present in Vietnam longer than Diesel, the

amount of money that Diesel spend for marketing investment are just modest. The financial

statement supports a positive view for this business through the net profit, ROI figures, and

the cash flow.

With the marketing plan, the business needs only three months to achieve positive cash flow.

And after six months, the cumulative cash will also out of negative. Especially, the ROI after

one year is 21%, this is accepted number when operating a business.

Despite the founder of Diesel brand – Renzo Rosso said that “It‟s really not that important to

me to make a big sales”, it in fact has brought 3 million Euro in 1985 to 1 billion Euro in

2007 (Grosvenor, C. 2008). Surprisingly, the founder of this brand whose knew little about

advertising and business still can make Diesel become one of the most influential and

fashionable clothing manufacturers that its reputation widespread all over the word.

Here we have a specific marketing plan, combine with the Diesel fame, perhaps it enhance

the development of this business faster than any one can.


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Table of Contents I. Introduction ........................................................................................................................ 4

II. Management Team ............................................................................................................. 4

III. Situation Analysis .............................................................................................................. 5

Threat of New Entry: ............................................................................................................. 5

Threats of Substitute Products: .............................................................................................. 6

Power of Customers ............................................................................................................... 6

Power of Suppliers ................................................................................................................. 7

The intensity of competitive rivalry....................................................................................... 7

IV. SWOT Analysis.................................................................................................................. 9

V. Marketing Strategy........................................................................................................... 10

Product Strategy ................................................................................................................... 10

Pricing Strategy.................................................................................................................... 11

Promotion Strategy .............................................................................................................. 13

Customer Strategy................................................................................................................ 16

Distribution Strategy ............................................................................................................ 18

VI. Financial analysis ............................................................................................................. 19

Sales Forecast:...................................................................................................................... 19

Net profit prediction:............................................................................................................ 19

Financial Implementation: ................................................................................................... 21


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VII. CONCLUSION ................................................................................................................ 22

VIII.References ........................................................................................................................ 23

IX. Appendices....................................................................................................................... 24

I. Introduction

The aim of this marketing plan is to indicate the current situation of Diesel Company in the

Vietnam apparel market through industry overview, competitors, substitute products,

customers and suppliers. Besides that, it also provides some probable strategies which will

help the company to gain market share as well as increase the number of customers. The last

part is financial analysis which shows in detail the implementation of this plan.

II. Management Team

Mission:

Enhance the reputation of Diesel among the Vietnamese consumers as well as

increase the sales volume of Diesel Company by the end of year 2010.

Goals & Objectives:

- Lead Diesel to become a premier of jeans and fashion brand in Ho Chi Minh city, and

Hanoi.

- Expand the market share to 15% among the luxury brands such as CK jeans, Guess,

or Levi‟s.

- Increase the sales volume to 20% compare to the last year.

- Retain at least 90% of first time customer to be back, along with improve the loyal

customers‟ satisfaction.

Roles & Responsibilities:

- Choose appropriate communication tools such as magazines, website or hold events in

order to raise awareness about Diesel brand in consumers as well as spread out the

Diesel reputation through the market.

- Maintain close relationship with current customers along with attract new ones by the

promotion strategy. In addition, conducting a customer satisfaction surveys to

improve in service quality.

- Follow the marketing plan but being flexible to operate it in a proper way.

- Manage not only advertising and promotion campaign but also customer information.


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Communication:

- Mobile phone is a primary tool to contact among team members.

- Any official document is sent by email throughout the team.

- Conference is held at least twice a month to update information from every single

department.

Key Performance Indicators

- Percentage of new customers come to the store

- Percentage of customer loyalty

- Brand awareness in market as well as in customers‟ perception.

- The number of complaints.

III. Situation Analysis

By using the Porter‟s five forces, we will analyse this business contrast in a competitive

environment.

Threat of New Entry:

Barrier to entry: Due to the numerous of stores along with fashion company opening, Diesel

are currently in monopolistic market structure which is low concentration and low barrier to

entry.

Economics of scale: As long as Diesel belongs to DAFC group, its imported products

therefore are always bulk purchased and charged at lower tax rate, it is an advantage of

Source: Porter, M. E. 1979, „How competitive forces shape strategy‟, Harvard Business Review


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authentic Diesel products sold in Diesel Store which are diversified in style, and variety in

size compare to the small retail shops.

Distribution channel: Although choosing the same distribution channel with our competitors

such as CK jeans, Levi‟s, or Guess will increase our disadvantages, yet this is the shortest

way to communicate with our target customers. Therefore, we will distribute the products

only in huge plaza or central street such as Dong Khoi or Nguyen Hue due to the reason that

it is first place where people come to find a luxury brands, and the potential of customer

willing to spend money is higher than any other places.

Differentiation: Always fresh and creative, Diesel promise to bring new air to the fashion

industry in Vietnam through its products including jeans and casual clothing as well as

accessories.

Threats of Substitute Products:

Indeed, there are may be a thousand substitute products for casual clothing or accessories,

and may be nothing is substitute for it. For instances, people can pay millions VND for a

meal instead of buying a pair of jeans, so meals become substitute for clothing. However,

when you do need something to dress, you must buy clothing, not a meal anymore, and it

seems like nothing can replace clothing.

To simplify the confusedness, we look at the price of Diesel products which is usually cost

around two to three millions VND for a pair, thus there are a thousand of substitutes for it.

Hence, we have to convince customers that they are not buying just a jeans or an accessories,

but they are joining the group of stylish worldwide, and they are unique in that.

Power of Customers

Look at the figure from Consumer Confidence Survey conducted by Nielsen Company (

October 2009) stated that Vietnam is the fourth most confident country in the world which

confidence index jumped from 85 in April to 109 in October, while the global average just

raised 9 points and stands at 86. Especially, from the General Statistics Office of Vietnam,

they reported that textile, hats, footgear increase by 0.32%, rank number 5 among consumer

price index.

The most shocking news is from Ben Stocking (2007), the article concluded that “Vietnam

develops taste for Luxury goods” and it describes the Vietnam consumers spent a thousand of

dollar for their favourite things which is usually foreign brands. “Member s of the new


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generation want to enjoy life and pamper themselves with luxurious things”, said Van, who

has purchased five $ 1000 handbags at Louis Vuitton.

These all are perfect indicators to believe that Vietnam is a potential market for developing

luxurious brands like Diesel Company.

Another aspect is the power of customers in this business is strong due to the numerous of

suppliers existing. They have a variety of brands to choose, and it becomes a disadvantage for

the company to compete with others. However, the advantage of Diesel is that jeans is

general fashion for all ages and genders, it seems like the first choice of casual dress from

children to adult, sometime in middle-ages and elders. Like Cameron Diaz – famous actress

said “I‟m like every other woman: a closet full of clothes, but nothing to wear. So I wear

jeans”. Therefore, people still buy a pair of jeans even when they have dozen of it. As the

result, the demands for this kind of clothes are huge and uncountable.

Power of Suppliers

Because most of Diesel products are imported from overseas through an intermediaries

DAFC group, a company which has responsibility for importing and distributing for majority

of high-standard products like Burberry, or Diesel. Therefore, the suppliers of our company

are from overseas such as China, Hong Kong, Italia, or the U.S. In short, this company does

not have any supplier who takes the most powerful.

The intensity of competitive rivalry

This is the key factor of the competiveness of the industry, therefore, it is always place in the

center of the diagram. Take a general view at Vietnam market, sumptuous fashion brands

such as Louis Vuitton, Gucci, or CK jeans already have an official store in Vietnam, and

some other famous brands like Salvatore Ferragamo, Roberto Cavalli are present in luxurious

plaza, Diamond, Parkson for example. Those brands are direct rival to Diesel due to the same

target market that they attract. As a market research and market development (2008) cited that

in order to capture that attention of Vietnam‟s nouveux riche, the luxury brands almost spent

millions of marketing dollar (billions of VND) on this promising market. And there are still a

lot of foreign manufacturers tend to expand their market in Vietnam due to its recovery

economics and the power of consumer here.

Besides that, some Vietnam high quality brands like N&M, Gosto, An Phuoc, Vietten are also

indirect competitor of Diesel. Although their target customers are a little bit different from


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Diesel, these are potential consumer who easily switch to the foreign brands when their

income higher.

This table below will provide a broad of view to the fashion brands in Vietnam from the

domestic brands to the foreign one.

Brands Target customer

Price Ages Income

18 – 50 Low

Medium

100,000 – 300,000

VND

13 – 25 Medium

200,000 – 500,000

VND

25 - 50 Medium

High

600,000 – 1,000,000

VND

22 - 40 Medium

High

600, 000 – 1,500, 000

VND

18 – 35 Medium - High 500,000 – 5,000,000

VND

18 – 35 Medium – High

1,000,000 – 5,000,000

VND

18 – 35 Medium – High

High 1,000,000 – 5,000,000

30 -50 Medium – High

High

2,000,000 –

10,000,000 VND


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Above 25 High

Above 10,000,000

VND

Above 30 High Above 15,000,000

VND

IV. SWOT Analysis

SWOT Matrix

STRENGTHS

WEAKNESSES

OPPORTUNITIES

SO strategies:

Reinforce the strong brand

image among consumers.

Expanding outlet to meet the

demands of customers.

WO strategies:

Flexible with the marketing plan

Quickly respond to the changes

of environment as well as

customers‟ behaviors.

SFamous brand

name

Well-located

Professional management team

Close relationship with mass

communication tools

WLack of marketing

plan

High cost of structure

No factory in Vietnam

Slow respond to customer behavior

OFashion industry in

Vietnam is growing fast

Vietnam consumers are willing to spend

money prove their class

Jeans is demands for unlimited ages

and genders

TCompetitive

environment with a numberous of

rival

Counterfeit products in

Vietnam market

Tax on imported products is still

high

Brand loyalty of customers


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Raise people brand awareness.

THREATS

ST strategies:

Using mass media to raise

people loyalty.

Keep fresh and creative to

attract customer.

WT strategies:

Analyse the problem from inside

to outside.

Following but be flexible with

the marketing plan.

V. Marketing Strategy

Product Strategy

- Product attributes:

o Quality: Diesel is famous for its high fashion label in manufacturing jeans as well as

accessories. Although being born after Levi‟s, it quickly became one of the world‟s most

well-known design and fashion companies, indeed, it outsold Levi‟s in the U.S for the

“couture jeans” section of fashion in recent years (eSsortment 2007)

o Differentiation: “We don‟t sell clothes, we sell life style”, said Renzo Rosso. It usually

releases a striking though with its ad campaigns which is creative, mischievous, and

sometime controversial. Due to the reason that Diesel want to capture people attention,

curious and then desire for the products.

o Design: Unique style, distinction, creativity, and functionality are features that make

Diesel bold and daring besides practical and versatile

- Branding: Short and memorable, the name Diesel was chosen very carefully by Ranzo Rosso

– the CEO, and also the founder, because it is pronounced the same in every language.

- Product level:

o Core benefit: Meet a demand of dressing.

o Basic Product: jeans and casual clothes

o Expected product: Fashionable and high quality

o Augmented product: Free repairing services, free gift on birthday, or discount for regular

consumers.

o Potential Product: Create an unpredictable design is Diesel‟s forte. Maybe an astronautical

costume in the near future.


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- Product life cycle: Although Diesel are present in Vietnam long time ago in many retail

stores, it official store just opened for less than two years. Hence, we can conclude that Diesel

Vietnam is on the growth stage.

- Product diversification:

o Jeans and Casual wear: Including Diesel for Men, Diesel for Woman and Diesel for Kid.,

mainly focus on these products because these are the core products to attract consumer.

Especially, Diesel Black Gold, the new type of couture jeans from Diesel which makes it

differentiated from other casual fashion brands such as Gucci or CK jeans.

o Accessories: Also concentrate on these products because it is complimentary goods of

Diesel which also contribute to the sales volume of the store.

- Product classification: Currently, Diesel belongs to shopping product category which is

infrequently purchased and usually compared in price, quality, and style. The most intensive

rivals place in same category with Diesel are Gucci and CK jeans which charge the same

price and target the same type of customers.

- Packaging: Paper is encouraged to use rather than plastic, because most of customers are

from high- income and well-educated, therefore they will concentrate on every social aspect,

particularly on environment protection, the hot topic recently. In addition, free wrapping gift

service should be implemented, due to its small effort but unimaginably enhance customer

loyalty.

Pricing Strategy

There are two factor need to consider when setting price:

Source: Kotler et al 2005, „Pricing

Considerations and Approaches‟,

Principles of Marketing an Asia

perspective, Prentice Hall,

Singapore


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Internal Factors :

- Marketing Objectives:

o Become a leading of high fashion jeans brands particularly in Ho Chi Minh,

and Hanoi, and generally in Vietnam.

o High quality products with the high price

o Not only sell clothes, but sell life style.

- Marketing Mix Strategy:

Product: Besides provide tangible products to the customer, Diesel also provide

intangible product such as Fashion shows, Music Concerts, and some other branding

activities through year in order to keep close relationship with current customer as well as

expand Diesel reputation to the new one.

Price: Diesel already chose to develop in the high fashion label zone since the beginning

of opening. However, there will be some sale-off seasons for those whose has smaller

pocketbook to have the opportunity to experience the world coveted denim.

Place: Diesel will place only in luxury plazas such as Diamond, Parkson, or Paragon, and

central streets like Dong Khoi, Nguyen Hue where most of people from high-class usually

come to show off their wealthy.

Promotion: Using as much as mass communication to spread out Diesel reputation such

as advertising on newspapers, magazines, or websites, or public relations (Fashion show,

Music Concerts, Sponsors, Events). More details will be discussed later in the next part.

- Cost-based pricing: This tool will help Diesel calculate the number of units needs to sell

in order to cover all the cost.

For example:

Fixed Cost: 50,000,000 VND

Price per unit: 2,000,000 VND Break-Even Point = 50,000,000

= 33.33 units

Variable cost: 500,000 VND 2,000,000 – 500,000

External Factors:

- Competition-based pricing:

According to Kotler et all (2005), even the company set price to make profit, it must

consider the price elasticity and competitor‟s price. Therefore, the prices of Diesel


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product have to base on the common price of general high fashion brands. If the price set

too high, it is hard to attract customers. On the other hand, if the price set too low, Diesel

will lose its value in customer‟s mind. In short, price setting depends not only on the cost

of goods sold, but also on the competitor‟s price.

- Position map of Price level and Customer segmentation:

Based on the customer segmentation and the different price charge on customer from

variety competitors, currently Diesel place in fashion market as the graph shows below.

Promotion Strategy

- Personal Selling:

o Training course for shop-assistants to enhance their knowledge in dealing and

communicating with customers.

“First rule: Customer is never wrong

Second rule: If customer is wrong, look at the first rule.”

o Minimize complaints from customers in purchase as well as postpurchase.

Ages

Middle - ages

Price

Medium high

High

Teenagers


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o Assure the diversification in designs, and variety in size.

o Be a friendly and wise advisor for customers.

o Shop-assistants is also the representative for Diesel Company, keep good company

image in customer‟s mind, protect the reputation of company.

o Keep smiling and being friendly with customer all the time.

- Packaging:

o Professional design, simple but style.

o Using paper instead of plastic.

o Display appropriate information about the brand, the products as well as the branches

on it.

- Advertising:

This determinant is very important to be successful in the competitive environment. As

the report in Asia Market research conducted that luxury brands such as designer jewelry,

designer luggage, and other world class fashion brand are spending millions of marketing

dollars in Vietnam market to capture attention of nouveux riche. Fortunately, there are a

plentiful of ways to send a message to customer such as Newspapers, magazines, or

Internet (see more detail in an Appendix)

- Sales Promotion tools:

o Coupons:

Give a coupon to customer for the first time purchase at store in order

to encourage they come back.

Cooperating with magazines such as Stylish, Beauty, WomanWorld to

distribute coupons to further customers.

o Point-of-purchase promotions: is an effective way to keep customer loyal to the

brand. The customer‟s spending will be recorded in the computer system and they will

receive a V.I.P card when their score reach two 30 million VND, and Gold V.I.P card

when they reach to 50 million VND

o Contest: An approach to retain the customer relationship. In the contest, the sales

manager will have a communication with regular customer, listen to their opinion to

improve customer‟s services better simultaneously decrease the number of

complaints. Moreover, the contest is not only a chance to meet among company and

customers but also the opportunity for customer to have a new relationship with each

others such as sharing their product experience.


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o Advertising specialties: take a picture of celebrities using Diesel brand to convince the

customers that they are using the same brand as famous people do. Furthermore, using

striking ad campaigns to impress customer such as “How sexy you are?”, “Dare you

to do it”, or “Are you ready rock your life”.

o Premium: Give customer a small souvenir in addition to their main purchase, valuable

present depends on the amount of customer‟s spending.

Voucher for two persons at Sheraton buffet

Voucher for skin care at Shiseido Spa

Little ear-rings

Glass souvenirs, ect.

- Public Relations tools:

o Special events: In order to spread out brand awareness among customer in a short but

effective way is hold an event such as Fashion show, Music Contest. (See more detail

in Appendix)

o Mobile marketing: Inform customers when new items arrive or any event held in the

next month.

o Public service activities: such as sponsor for a charity program.

- Budget for Promotion: (see more detail in Appendix)

Promotional Mix Unit Cost Units/year Total Cost

Print Advertising (thousand VND)

(Thousand VND)

Beauty Magazine 40,000 2 80,000

Stylish Magazine 35,000 2 70,000

Saigon Entrepreneur Weekend 15,000 6 90,000

Heriatage Fashion 30,000 4 120,000

Total Print Advertising

360,000

Promotional Campaign

Coupons Distribution 500 200 100,000

V.I.P Card 10 100 1,000

Contest helding 5,000 12 60,000

Premiums 1,000 100 100,000

Total Promotional Campaign

261,000

Public Relation

Fashion show 300,000 2 600,000


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Music Contest 800,000 1 800,000

Sponsor 200,000 2 400,000

Total Samples

1,800,000

Other

mobile marketing 0.50 20,000 10,000

Total Promotional Costs 2,431,000

Customer Strategy

- Customer Behavior

Diesel target market is for young people included Vietnamese, foreigner and tourists.

Understanding the customers‟ needs is very important to provide them the best service

and the final result is sales volume will increase. There are four factor affect the customer

behavior such as culture, society, personal and psychological.

Factors Effect customers’ behavior

Culture: Vietnam is still a traditional country where many people have not accepted the

Diesel design – especially street style. However, the new generation, the target customers

are more open-minded to the new fashion trend, and easy to adopt it.

Society: this factor has important impact on the sales, especially in the group. People in

the group or in a family usually influence each other. Besides that, celebrities also has a

deep influence on the fashion, some people love to imitate the same as their idol or try to

look similar to someone. Understanding about this, Diesel asks some celebrities to

endorse their products.


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Personal: The fashionable people mostly purchase clothes depends on their life style and

characteristic; this is the reason why every Diesel products has different designs and

colors. Actually, everyone has different taste of fashion, some like simple design while

the other like colourful with special feature designs. Diesel‟s design has both line of the

product, simple but different, classical but fashionable.

On the other hand, people have good occupation with high salary will be able to spend

more money for satisfying themselves. They do not care much about the price but the

service is required in perfectly.

Psychological: When walking into a store, being treated as a Very Important Person, the

customers find hard to leave without buying any stuff. Realizing this fact, the sale-

assistants should have some skills to convince people that they are important to the shop,

and they are truly important if they become a consumer of this brand. Besides that, with

some type of customers, who seek for a free gift or high brand product with a cheaper

price, the sale-assistant have to introduce a suitable one for them. Because selling

something is better than selling nothing. By understanding the customers‟ psychology,

customer‟s service will be improve much.

- Customer’s buying decision process

Need Recognition Information Search Evaluation of Alternatives Purchase

Decision Post Purchase Evaluation (Adopted from Kotler et al 2005)

Step 1: Need Recognition: Fashion is a huge topic and there is always a need for clothes.

The most important is how the brand can get the most attention from the customer and

build up a good image in the customers‟ mind. Diesel focus on advertising to get the

customer‟s attention and maintaining the quality to get the customers‟ loyalty after using

the product to assure that they will come back. On another hand, Diesel has already built

a strong reputation in the fashion industry, people come to Diesel‟s shop not just because

the product but also because the Diesel Brand.

Step 2: Information Search : Diesel is very popular and famous on over the world, and

the information is available in internet, magazines, therefore customers can easy search

for the product that they want. Moreover, they can ask experience from friends, colleges,

or shop assistant before buying items.

- Step 3: Evaluation of Alternatives: There are many fashion brands available in the

market, so the customers have many choices to purchase what they want. We build up our

image in the customer‟s mind as the high quality product, fashionable and high special


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feature design. Diesel provides variety products in order to satisfy the customer‟s

demands.

- Step 4: Purchase decision: There are other factors can affect customer‟s decision, beside

the brand and the products, is the service. Diesel will provide the best service during the

customer‟s purchasing to make the customer feel the most comfortable.

- Step 5: Post Purchase Evaluation: In case of the product and service of Diesel do not

meet the customer‟s needs and expectations. This may cause a negative effect to the sale

of Diesel and the brand. Diesel keep doing survey and market search to minimize this risk

and maintaining the quality and service.

Distribution Strategy

- Distribution Channel

According to the chart above, Diesel‟s products are imported from Hongkong and Italy

usually by ship and plane. In Vietnam, transportation is mostly by truck from port to the

warehouse, and then from warehouse, it distribute to the department stores and outlets. Diesel

Company has two warehouse located in Hanoi and Ho Chi Minh city.

- Warehouse

In HCMC: 143 Tran Nao, Dict 2, HCMC, Vietnam

Customer

Distributon

Department Stores Diesel outlets

Warehouse

Hanoi Warehouse Ho Chi Minh Warehouse

Imported products

Diesel factory in HongKong Diesel factory in Italy


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In Hanoi: 49 Quang Trung, Ba Dinh, Hanoi

Diesel Company currently has 6 stores in the main area in Ho Chi Minh city and Ha Noi.

o Ho Chi Minh is included Diamond Department Store, Parkson Saigon Tourist Plaza,

Parkson Hung Vuong Plaza

o Ha Noi such as Parkson Viet Tower, Trang Tien Plaza, Vincom Tower. In addtion,

Diesel should hire a store in main streets such as Dong Khoi, Nguyen Hue, or Le Loi. In fact,

location is one of the most important element and difficulty for every brand now because the

renting cost in the centre is very expensive and sacred to find.

VI. Financial analysis

Sales Forecast:

According to the figures in my

survey, we conclude that time most

time people go to shopping is the

end of the year, from October to

December, especially December,

due to the most holidays gather in

this time (Halloween, Christmas,

and New years).

Because January and

February are the first time

we launch this marketing

plan, thus, the effective of

it cannot be seen

immediately. But, for the

following months, the

number of customers will

be positive growth.

Net profit prediction:

Although we spent a

(500.000)

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

1 2 3 4 5 6 7 8 9 10 11 12 13

Net profit compare to Marketing Investment

Advertising Sales promotion Net prof it

60 60 90

120 120 150 150 150

180 180 180 210

1 2 3 4 5 6 7 8 9 10 11 12

Sales forcast

Customers per month


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billion of VND for marketing investment, this is just a modest compare to the profit we earn

later. Except month 8, when we held a fashion show, it takes a large amount of money, the

rest spending are normally in this industry.


Financial Implementation:

Before Mon 1 Mon 2 Mon 3 Mon 4 Mon 5 Mon 6 Mon 7 Mon 8 Mon 9 Mon 10 Mon 11 Mon 12 Total

Customer /day

2

2

3

4

4

5

5

5

6

6

6

7

7

1,860

Clothes 3,000

3,000

4,000

5,000

5,000

6,000

7,000

8,000

9,000

9,000

9,000

9,000

10,000

Accessories

2,000

4,000

4,000

4,000

5,000

5,000

6,500

7,000

8,000

8,500

9,000

9,000

9,000

Sales/customer

5,000

7,000

8,000

9,000

10,000

11,000

13,500

15,000

17,000

17,500

18,000

18,000

19,000

Total income/month

300,000

420,000

720,000

1,080,000

1,200,000

1,650,000

2,025,000

2,250,000

3,060,000

3,150,000

3,240,000

3,780,000

3,990,000

805,950,000

COGS

-

Clothes (40%)

1,200

1,200

1,600

2,000

2,000

2,400

2,800

3,200

3,600

3,600

3,600

3,600

4,000

Accessories (30%)

600

1,200

1,200

1,200

1,500

1,500

1,950

2,100

2,400

2,550

2,700

2,700

2,700

Total COGS

108,000

144,000

252,000

384,000

420,000

585,000

712,500

795,000

1,080,000

1,107,000

1,134,000

1,323,000

1,407,000

283,545,000

Gross Profit

192,000

276,000

468,000

696,000

780,000

1,065,000

1,312,500

1,455,000

1,980,000

2,043,000

2,106,000

2,457,000

2,583,000

522,405,000

Expense

-

Advertising 30,000

30,000

15,000

30,000

55,000

35,000

15,000

30,000

15,000

30,000

55,000

35,000

15,000

11,700,000

Sales promotion

16,100

47,200

310,550

230,550

10,600

30,550

810,600

10,550

531,050

11,050

16,100

46,100

62,130,000

Renting

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

78,000,000

Franchise fee (5%)

15,000

21,000

36,000

54,000

60,000

82,500

101,250

112,500

153,000

157,500

162,000

189,000

199,500

40,297,500

Market research

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

1,950,000

Office expense 10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

3,900,000

Warehouse

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

1,950,000

Salary

100,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

39,000,000


22

Telephone

2,000

3,000

4,000

2,500

2,500

2,500

2,500

2,500

2,500

3,000

3,000

3,000

3,000

1,080,000

Utilities (7%) 21,000

29,400

50,400

75,600

84,000

115,500

141,750

157,500

214,200

220,500

226,800

264,600

279,300

56,416,500

Miscellaneous (10%)

30,000

42,000

72,000

108,000

120,000

165,000

202,500

225,000

306,000

315,000

324,000

378,000

399,000

80,595,000

Insurance

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

7,800,000

Total Expense

438,000

481,500

564,600

920,650

892,050

751,100

833,550

1,678,100

1,041,250

1,597,050

1,121,850

1,225,700

1,281,900

384,819,000

Profit before Tax

(138,000)

(61,500)

155,400

159,350

307,950

898,900

1,191,450

571,900

2,018,750

1,552,950

2,118,150

2,554,300

2,708,100

421,131,000

Income Tax (10%) - - 15,540

15,935

30,795

89,890

119,145

57,190

201,875

155,295

211,815

255,430

270,810

42,711,600

Net profit

(138,000)

(61,500)

139,860

143,415

277,155

809,010

1,072,305

514,710

1,816,875

1,397,655

1,906,335

2,298,870

2,437,290

378,419,400

Marketing Investment

2,431,000

Cash Flow

(2,431,000)

(61,500)

139,860

143,415

277,155

809,010

1,072,305

514,710

1,816,875

1,397,655

1,906,335

2,298,870

2,437,290

ROI 21%

Culmulative

(2,431,000)

(2,492,500)

(2,352,640)

(2,209,225)

(1,932,070)

(1,123,060)

(50,755)

463,955

2,280,830

3,678,485

5,584,820

7,883,690

10,320,980

VII. CONCLUSION

To sum up, we have a material is high quality products from a luxury brand, and now we have a process to make it become leading brand of

fashion clothes in Vietnam. The final step is starting, implementing this marketing plan into real, and waiting for its results.


VIII. References

1. Business Source Premier 2008, „Vietnam‟s luxury goods market‟, Market:Asia

Pacific, EBSCOhost.

2. General Statistics Office of Vietnam, Social-economic situation in 11 months of

2009, viewed on 20 December 2009.

<http://www.gso.gov.vn/default.aspx?tabid=622&ItemID=9383 >

3. Grosvenor, C. 2008, „Denim from Italy: Diesel‟, Diesel Italy, viewed on 27

December 2009 < http://www.lifeinitaly.com/fashion/diesel.asp>

4. Kotler, P., Armstrong, G., Ang, S.H., Leong, S.M., Tan, C.T. & Tse, D.K.,

2005, Principles of Marketing an Asian perspective, Prentice Hall, Singapore

5. Nielsen Company 2009, Consumer Confidence Survey, viewed on 20 December

2009. <http://vn.nielsen.com/site/index.shtml>

6. Stocking, B 2007, „Vietnam Develops Taste Luxury Goods‟, The Washington

Post, viewed on 24 December 2009 <http://www.washingtonpost.com/wp-

dyn/content/article/2007/09/23/AR2007092300319_2.html>

http://www.gso.gov.vn/default.aspx?tabid=622&ItemID=9383

http://www.lifeinitaly.com/fashion/diesel.asp

http://vn.nielsen.com/site/index.shtml

http://www.washingtonpost.com/wp-dyn/content/article/2007/09/23/AR2007092300319_2.html

http://www.washingtonpost.com/wp-dyn/content/article/2007/09/23/AR2007092300319_2.html


24

IX. Appendices

1. Advertisement:

• Objective: Advertisment is very import to launch new products, build and maintain

the brand image in Vietnam. On another hand this is the fastest way to approach to the

customers and to boost business and grow market share.

• Magazines: Focus on premium fashion magazines such as Dep, Phong Cach, Doanh

Nhan Sai Gon Cuoi Tuan, Her World, Heritage

Magazine Information

DEP MAGAZINE (Beauty)

• The most popular magazine in Vietnam (over 10 years)

• Circulation: 49,000 copies/ Monthly

• Target readers: Urban middle- and upper-class, aged from 18 to 45.

• Civil servant & office staff: 55%. Housewife: 25%. Overseas: 10%. Student & others:

10%. Single female aged 20-34, well educated with high income.

• Content: Nice pictures and design with in-depth feature stories, focusing on fashion,

women‟s issues, beauty, etc…

• Dep Fashion Show is organized every year in both Hanoi and Ho Chi Minh City to

build the image for this magazine from 2003.

• Current advertisers: Estee Lauder, Lancôme, Shiseido, Louis Vuitton, Hermès,

Salvatore Ferragamo, Bally, Gucci, Burberry, …

PHONG CACH MAGAZINE (Stylish)

• Circulation: 40,000 copies/Monthly

• Target readers: Vietnam‟s trendy and successful women.

Age Group of 25-45

• Content: in-depth women‟s lifestyle topics, more dynamic and up-market design and

more lifestyle information for an even more trendy target market with high income

and education. It features high fashion, beauty, celebrities, entertainment news,…

• Phong Cach Night is organized every year to build this magazine‟s image from 2007.

• Current advertisers: Lancôme, Shiseido, Louis Vuitton, Hermès, Salvatore Ferragamo,

Bally, Gucci, Burberry, Omega, Menard, OHUI,…

PHONG CACH MAGAZINE (Stylish)

• Circulation: 40,000 copies/Monthly

• Target readers: Vietnam‟s trendy and successful women.


25

Age Group of 25-45

• Content: in-depth women‟s lifestyle topics, more dynamic and up-market design and

more lifestyle information for an even more trendy target market with high income

and education. It features high fashion, beauty, celebrities, ente rtainment news,…

• Phong Cach Night is organized every year to build this magazine‟s image from 2007.

• Current advertisers: Lancôme, Shiseido, Louis Vuitton, Hermès, Salvatore Ferragamo,

Bally, Gucci, Burberry, Omega, Menard, OHUI,…

DOANH NHAN SAI GON CUOI TUAN MAGAZINE

(Weekend Saigon Entrepreneur)

• The most popular magazine for businesspersons in Ho Chi Minh City.

• Circulation: 40,000 copies/Weekly (every Friday)

• Target readers: businesspersons, senior officers.

• Content: Economic & Social Panorama, case studies, premium tours, fashion &

accessories, spa, beauty, health, entertainment, car, etc…

• Current advertisers: Louis Vuitton, Hermès, Salvatore Ferragamo, Bally, Gucci,

Burberry, Omega, Menard, OHUI, …

HERITAGE FASHION MAGAZINE

• Circulation: 72,000 copies/every two months (odd month)

• Target readers: High income Vietnamese and foreign travelers, professional, active,

trendy persons. This is in- flight magazine of Vietnam Airlines.

• Content: Vietnamese & international lifestyle, culture, fashion trend, beauty.

• Golf Tournament is organized to build this magazine‟s image.

• Current advertisers: Gucci, Bally, Louis Vuitton, Menard, OHUI…

SANH DIEU MAGAZINE (Gourmet)

• Circulation: 40,000 copies/ monthly

• Target readers: Civil servant & office staff, well educated with high income. Active

and trendy persons.

• Content: Vietnamese & international lifestyle, culture, fashion trend, cars, tourism,

beauty, art, what‟s hot.

• Current advertisers: Louis Vuitton, Bally, Hermes, Burberry, Cloé, Pinko, Nine West,

Menard, Salvatore Ferragamo, Tudor, Rolex, Lacoste…

TUOI TRE NEWSPAPER (The Youth)

• Circulation: 500,000 copies / everyday

• Target readers: Almost all groups of readers


26

• Content: Current news, Government programs, market news, Health, World news,

Economic news (business, finance, investment stock market, property market, etc),

the young‟s life, culture, art, entertainment, book, sport, law and life, etc.

• Current advertisers: Fashion, FMCG, Telecommunication

2. Marketing activities:

Promotion and Event

Event :

New shop opening event and event introduce new season collection with jeans,

clothing and accessories.

Inviting potential customers, Model, celebrities and media, TV crew, reporter.. to new

shop opening and to the in house show. Diesel will sponsor for the celebrities their clothes to

wear in the event. Every guests come to the events will be given a sticke r with Disel logo.

This is the way to make the goos relationship and get closer to the customer.

Sales Promotion:

Sales promotion during special days ( such as Gift With Purchase program on Woman

Day, Year-end sales…)

Press Conference:

- Model and celebrities to introduce new season collection, join in party..

- Cooperating with other activities and sponsors for fashion shows and talk shows.

Example: Dep Fahion show, Phong cach va cuoc song ( Talk show “Style and Life”),

Thoi Trang va cuoc song (Fashion and life).

- Find co-sponsor for the event that they are also have the same target customer.


27

Banner, show window :

Banner will be placed in The department store, out side department store and in front of

the shops of Diesel. The pictures will be change every season or month following the new

collection of Diesel in other to draw the customers‟ attention.

Loyalty Program:

- Offer a loyalty program.

- Special occasions for VIP customers: (i.e.) Christmas card, Gift with purchase, Gala

dinner for VIP customers.

- VIP card 10% discount for loyal customer and celebrites.

- Private sale before the sale season or clearance for the loyalty customers.

3. Public Relation Plan

- New collection and press release on magazine, photo shooting activities, Diesel with

celebrities…to make target customers know more about this brand.

- Target 60 free pages per year on Dep, Phong Cach, Her World, Doanh Nhan Sai Gon

Cuoi Tuan.

- Sponsorship Music Gala

- Personal stylist for loyal customers, keep updating the new fashion trends and new

collection of Diesel, mostly for the celebrities and business people who don‟t have

much time to shop and care about their style. Every sale person in Diesel will

responsible for a group of customer to update them the news of fashion and give them

a special treatment when they shop in our stores in other to make the customer feel the

most comfortable.


4. Promotion schedule:

Mon 1 Mon 2 Mon 3 Mon 4 Mon 5 Mon 6 Mon 7 Mon 8 Mon 9

Mon

10

Mon

11

Mon

12

Beauty Magazine 40,000 40,000

Stylish Magazine 35,000 35,000 Saigon Entrepreneur

Weekend 15,000 15,000 15,000 15,000 15,000 15,000

Heriatage Fashion 30,000 30,000 30,000 30,000 Coupons distribution 10,000 20,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 10,000 20,000 V.I.P Card 100 200 50 50 100 50 100 50 50 50 100 100

Contest Helding 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Premiums Expense 20,000 20000 20,000 20,000 20,000 Fashion Show 300,000 300,000

Music Contest 800,000 Sponsor Event 200,000 200,000 Mobile Marketing 1,000 2,000 500 500 500 500 500 500 1,000 1,000 1,000 1,000

Advertising 30,000 15,000 30,000 55,000 35,000 15,000 30,000 15,000 30,000 55,000 35,000 15,000 360,000

Sales promotion 16,100 47,200 310,550 230,550 10,600 30,550 810,600 10,550 531,050 11,050 16,100 46,100 2,071,000

Total 46,100 62,200 340,550 285,550 45,600 45,550 840,600 25,550 561,050 66,050 51,100 61,100 2,431,000


5. Survey form:

Dear friends,

This survey is going to be used for my personal research only, all the information about you

will be confidential. Please answer it honestly. Thank for your help!

1. How old are you?

2. How often do you go for shopping?

Frequently Sometime Occasionally

3. How much do you spend for shopping a month?

Under 5 million VND

Above 5 million VND

4. Which brand do you prefer?

Vietnamese brand Foreign brand

5. Where is the first place you go for shopping?

Retail shops

Department stores (Diamond, Parkson, etc.)

Oulets

6. Which time of year you usually go shopping?

Jan – April

May – Sep

Oct - Dec

Documents

Clothing and Footwear-Diesel Fashion Company-Premium Report