1. Strengths Long history and strong foundation is the first and foremost strength to make Vinamilk become a leader in dairymarket of Viet Nam. Thanks to the completely qualified products, competitive with the market existing goods, throughout about 34 years operating history, Vinamilk has undoubtedly become a familiar and trusted trademark in the mind of domestic clients. Moreover, it has gained a great customer satisfaction and understanding as well as the knowledge of the local market. Another remarkable factor that has actually strengthened the Vinamilk’s leading position is that it established wide and deep distribution system located nationwide and being expanded over time. The distribution network is not only the essence for long-term period strategy but also the decisive factor for the success of a consumer goods producer. It allows Vinamilk to bring its core products to consumers in a fast and effective way. To be more specific, today the company has more than 1500 distributors, over 90000 retail outlets in the entire country. Along with the solid distribution, in order to do well Vinamilk always pay attention to investing in modern equipment and factories. At the present, a range of modern factories located along Viet Nam that helps to reduce transportation expenses and a system of advanced equipment that helps to ensure the output products meeting the international standards. One more aspects should be highlighted in the strength of Vinamilk is that its loyal and cooperative relationships with both local and ove rsee suppliers allow the company to have a stable material sources at the reasonable price. Today, around 60% of all cow milk produced in Viet Nam is consumed by Vinamilk. Last but not least, a professtional experienced management team in dairy business and production, a transparent internal management system and tight and detailed management procedures are other keys to success making Vinamilk a top business of the Viet Nam milk industry branch. 2. Weaknesses The low-income majority rural population is the first weakness having influence on the operation of Vinamilk. In case the economy slowing growth in the coming period, as lower income people will restrict the consumption of output in the country, reduce profits and sales revenue of the company. In addition, reducing the duties for dairy products will be favorable conditions for imported dairy products. With 50% of raw material to the company’s import and 30% of the company’s revenues are from exports, ex ports, the fluctuations in exchange rates affect the operation of the Company. Finally, Viet Nam’s WTO accession will create conditions for foreign company to take part in the domestic market. It will increase competition competition among companies in the industry as a result.
II Price Along with price, place, promotion, pricing is one of the four elements of the marketing mix also. Pricing strategy is important for companies who wish to a chieve success by finding the price point where they can maximize sales and profits. It is considered to be a competitive factor in attracting customers of all businesses. Therefore, putting reasonable policies keep particularly important role in helping Vinamilk having effective business strategies. 1. Factors 1.1. Production expenses
Expenses for technology and production line Vinamilk is currently using facilities and equipment with modern and advanced technology provided by the leading suppliers to keep Vinamilk’s products at best quality, sustainable and competitive with other competitors. Nowadays, Vinamilk is one of a fewer producers owning Lactenso Asetic Technology, combi 124-36, A3 speed . Most of such technologies are imported from well- known dairy equipment vendors in the world. In addition, Vinamilk also considerably invest in information technology. •
Expenses for inputs Cost of materials (mainly liquid milk and powered milk) used for production account for significant proportion in the total cost of sales of Vinamilk (approximately 89% production expense). In the present, around 60-70% Vinamilk’s inputs are imported (powered milk), the rest purchased in domestic market is liquid milk. •
Now, the rate of consuming amount of milk in domestic market is about 44.5% (equivalent to 30-40% inputs used for production). Tha nks to the benefit of extensive distribution network and procurement policy, Vinamilk has the advantage of regulating certain price as making purchasing fresh milk. Cost of sales Cost of sales are the second highest rate in milk price which make up from 5%-7% of cost. Meanwhile, fees for advertising, promotion account for from 1%-19.2%. Vinamilk having advertising costs higher than the limits(10%) is capable of driving up the prices. •
1.2. Reputation and product quality Product line owning high quality and creating the trust in mind of domestic consumers allows Vinamilk to put a higher price without response. 1.3. Demand and psychology in using dairy products Health care issue has increasingly become topic of people today concern so dairy products are favorite choice of almost households (especially powered milk, liquid
milk and yogurt). In common perception of buyers, the exceptional qualified goods often go along with expensive price and exceptional reputation thus they intend to buy the products with high price. This trend at the same time contributes to increase the milk price. 1.4. Competitive price In common opinion of consumers, as shopping they often compare the price of the company having the same product to make the best decision. Therfore, Vinamilk conducts to study about expense, cost, price and quality of competitor’s products. 2. Business goals and pricing strategies Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives and Vinamilk is not exception. For each target in different circumstances and period, Vinamilk will apply different pricing policies.
Over the years, the company has built a reputable brand name for its major products. Its highly- popular brand, “Vinamilk”, is viewed by many domestic consumers as the most trusted trademark for nutritional dairy products thanks to its international quality, security of food safety and hygiene and diversity of products and services with long-term competitive strategies. To express their outstanding products, Vinamilk apply the premium pricing strategy which is the practice of keeping the price higher than the competitors so as to encourage favorable perceptions among buyers. This method is intended to exploit the tendency for buyers to assume that expensive items enjoy an exceptional reputation, are more reliable or desirable or present exceptional quality. When it comes to another goal, in order to attract customers and capture market share, penetration pricing strategy is designed by entering with lower price as compared with the competitors. Thanks to this idea, the business will be able to raise awareness and get people to try the product, generate word-of-mouth and make a crowded market category as a result. In terms of maintaining profit in difficult times while prices of many raw materials strongly increased, Vinamilk has been following a policy of controlling and tightening costs and expenses. To be more specific, all monthly cost items were well planned in detail at the end of the pervious year. At the end of each month, actual cost was compared with the approved cost to understand causes of divergence and to fix the problem immediately. In conclusion, Vinamilk’s pricing is quite reasonable. Outstanding competitive advantage as compared with the same products is absolute advantage in meeting most of the needs of consumers everywhere, the entire world and all walks.
