Table of Content
I. Product Analysis 3
II. External Environment Analysis 3
1. Industry Attractive Analysis 3
2. Opportunities and Threats
6
Analysis
III. Generic Business Strategy 8
IV. Strategic Positioning Analysis 8
1. Target Customers 8
2. Competitive Advantage 9
3. One-year Marketing Plan 10
V. Value Chain Analysis 12
1. Internal Environment 12
2. Value Chain 13
VI. References 14
I. Product analysis
- Product name: Star Kombucha
- Product description:
+ Trait: Canned kombucha fermented drinks with low calories, low sugar
level, 100% natural ingredients, no preservatives, U.S. production lines, and
U.S. FDA approval mark for quality.
+ Ten flavors: Original, Strawberry Sunshine, Pomegranate Fruity, Pink
Guava, Peach Paradise, Mellow Mango, Golden Ginger, Blueberry Bliss,
Loving Lemongrass, Pure Passion Fruit.
+ Price:
30,000 VND per can
175,000 VND per pack of 6 cans
345,000 VND per box of 12 cans
+ Net weigh: 250ml per can
+ Ingredients: Organic tea (black and green tea), Scoby natural yeast, Sugar
cane, Natural fruits and herb juice.
+ Health benefits: Improved immune and digestive system, quicker weight
loss, better skin beauty, body detoxing, and energy rejuvenation.
- Reasons for choosing this product:
+ Kombucha is popular in developed countries such as America, Canada,
Europe. However, the market selling these drinks is still underexploited in
Vietnam.
+ Some modern Vietnamese prefer products that can be ready-to-use and
healthy simultaneously. Therefore, this product was chosen to meet this
demand.
II. External environment analysis
- Industry boundary: Functional beverages boosting health
1. Industry attractiveness analysis
- Moderate threat of new entrants:
· High capital requirement (weak force)
· High cost of brand development (weak force)
· Capacity of potential new entrants (strong force)
Our potential competitors are firms interested in and have capacities to enter
the health functional beverages industry. As the industry focuses on mass
production and requires tougher prerequisites for hygiene and food safety, the
initial investment to be in the industry is relatively high. Also, spending extra
money for building a trustworthy brand image is essential because health-
conscious consumers are more skeptical about product quality of little-known
brands. These forces make new entrants weak. However, there are firms with
strong cash flows waiting for signs to penetrate this market in Vietnam. In
fact, PepsiCo, a giant multinational corporation, has recently purchased
KeVita, a brand selling kombucha drinks, to deeply establish its position in
the American healthy-drinks market [1]. Therefore, it is a weighty threat for
Star Kombucha to compete with them. Overall, the threat of new entrants is
moderate.
- Weak bargaining power of suppliers:
· Numerous numbers of suppliers (weak force)
· Moderate to high overall supply (weak force)
· Medium switching costs of changing suppliers (moderate force)
Although we will purchase our production lines overseas, our product parts
and ingredients will all be supplied by local firms. There are many domestic
farmers who can supply their agricultural products to Star Kombucha. In fact,
in Vietnam, there are 341 large-scale tea manufacturers listed in Vietnam
Yellow Pages [2], and hundreds of thousands of small tea growers
nationwide. Also, Vietnam reached top 5 largest global tea exporters in 2018
which indicates a high level of supply [3]. These forces, thus, exert little
bargaining power of suppliers. However, there is still some variance in
product quality of different suppliers. For example, strawberries used to add
flavor in kombucha tea can have slightly different tastes depending on types,
geographies, and farming techniques. Thus, this might influence supplier
power for price increase. Overall, bargaining power of suppliers is relatively
weak.
- Weak bargaining power of customers:
· Small purchases of individual buyers (weak force)
· Middle to high-income buyers (weak force)
· High switching cost (weak force)
Customers in this industry are end-users having money to pursue healthy
lifestyles. They have little power to bargain for price because of their small
purchases for consumption use. Also, the majority of consumers in this
market are not price-conscious buyers as they earn enough or more money to
afford their healthful living. In addition, health-conscious consumers tend to
be loyal to one brand if they perceive the brand’s products as useful for them.
As a result, the cost of switching is high. Overall, bargaining power of
customers is weak.
- High threat of substitutes:
· High availability of substitutes (strong force)
· Medium performance of substitutes (moderate force)
· Moderate buyer propensity for substitutes (moderate force)
There are numerous substitutes of kombucha in the health functional beverage
industry such as juices, yogurts, teas, and nut milks. This hindrance is a strong
force threatening Star Kombucha’s business. However, the health benefits of
kombucha, which are mentioned in part 1, are outstanding compared to that of
its substitutes. In addition, since kombucha is still new in Vietnam, buying
other healthy beverages is easier than buying kombucha drinks. Thus, it
indicates a medium tendency for substitutes. Overall, the threat of substitutes
is relatively high.
- Moderate rivalry among competitors:
· Few direct competitors but many indirect competitors (moderate force)
· Low to moderate aggressiveness of firms (moderate force)
· Rapid industry growth (weak force)
Direct competitors of Star Kombucha are mainly small-scale producers selling
kombucha drinks at premium price. They don’t aggressively compete in the
kombucha-drinks market because of little resources and capacities. In this
industry, there are also Star Kombucha’s indirect competitors selling
substitutes such as TH True Milk with its juice products, Cozy with its
various types of herbal teas. Because of promising industry growth brought by
increasing health-consciousness among consumers, these big brands exert
moderate aggressiveness in competing with other brands. Overall, rivalry
among existing competitors is moderate.
To sum up, the industry is relatively attractive based on our Porter’s five
forces evaluation.
2. Opportunities and threats analysis
- Political-legal factors:
+ To facilitate Vietnamese economy’s growth, the government has set up
many policies to increase trade openness such as policy for FDI attraction.
This is a threat to Star Kombucha, domestic firms in this industry might face
stiffer competition because of potential entries of strong multinational
corporations.
- Economic factors:
+ The average GDP growth rate has increased from 6.42% in 2010 to 7.02%
in 2019 [4]. GDP per person peaks at $2,985 in 2017 and adjusts to $2,715 in
2019 [5]. The inflation rate is 9.2% in 2010 and decreases to 3.6% in 2019
[6]. Vietnam consumer spending for 2018 is $165.53B, a 214% increase from
$77.17B in 2010 [7]. With such steady economic growth, higher income
level and lower inflation rate could be inferred as contributing to the rise in
consumer spending. Therefore, this is an opportunity for the whole industry.
- Social-cultural factors:
+ With current population of 96,462,106 [8], an average annual population
growth rate of 1.2% [9], and an increase from 20.1% in 1989 to 34.4% in
2019 in the rate of Vietnamese urbanized population [10], the growing
numbers of urbanized citizens is highly visible in near future. This is an
opportunity for the industry because it ensures the good growth rate brought
by rising future demands of these citizens in coming years.
+ Nearly half of the total population (45.7%) are in the prime working age
group (ranging from 25 to 54) [11]. This population, compared to their
ancestors 20 years ago, receives better education and earns higher income.
Therefore, they, especially those living in urban areas, are willing to spend
more for premium drinks, and consequently, start to look for more choices
of drinks. This is good news to the industry.
+ Facing the effect of the COVID-19 epidemic, Vietnamese consumers
become more health-conscious. As a result, it is an opportunity for the whole
industry.
+ The hustle life of people in cities makes them have less time for family- and
self-care, consequently, many of them opt for a combination of healthiness
and convenience when buying edible products. This trend is an opportunity
for the industry.
+ Vietnamese consumers are more inclined to foreign brands because of the
perception that foreign products are generally of better quality. However, once
Vietnamese consumers form their trust in a brand, they will likely become
loyal consumers. This is a threat to domestic firms in the industry because
more effort is needed in acquiring their loyalty, especially under the pressure
of consumer preference for non-native products.
- Technological factors:
+ With the growing internet and smartphone penetration into daily life,
many Vietnamese engage in buying online more due to its convenience. This
is both threat and opportunity for the industry. Being a threat, consumers
become more price-conscious because they can easily compare products in an
online environment. Being an opportunity, this assists the quick spread of
information to a large number of people economically.
III. Generic business strategy
- Chosen strategy: Focused differentiation strategy
- Reasons:
+ There are potential competitors outside the industry and existing indirect
rivals with strong capacities in the industry that can place lower prices than us
such as Pepsi, TH True Milk. Therefore, following a low-cost leadership
strategy is riskier for us as a new firm.
+ Besides being famous for its health benefits, kombucha is an easy-to-make
drink. Thus, we need to differentiate our kombucha from homemade ones to
earn more sales.
+ Products relating to health need to prove its credibility and prestige in
consumers’ eyes in order for them to buy and become loyal. Hence, going
differentiation is better to meet this perception.
+ As a brand-new company, it is less costly for us to focus our resources and
capacities to serve a narrower part of a broad market which is health-
conscious consumers.
IV. Strategic positioning analysis
1. Target customers
- People who care about their family health (well-educated housewives),
people who care about their personal health (office workers, gym doers).
+ Gender: 90% female and 10% male.
+ Age: 25-44
+ Income level: Middle class to above.
+ Living in: Urban areas of Hanoi and Ho Chi Minh city.
2. Competitive advantage
- Unique values to be used to attract them:
+ To build their impression and trust on us, we will build ourselves as the first
well-established domestic brand producing kombucha drinks in Vietnam.
+ Aiming to provide health and convenience simultaneously to consumers, we
will offer them our drinks at an affordable price and make consumers have
easier access to it.
+ Because kombucha is an easy-to-make drink, we will need to make our
kombucha drink more special than ordinary ones. We will formulate our own
kombucha recipe that adds extra flavors and healthiness suitable to the
Vietnamese tastes.
- To obtain our mentioned unique value, we will do the following things:
+ Well-established brand: We will invest heavily in developing product
quality and marketing. To enhance product quality, we will make our
kombucha drinks with low calories, low sugar level, 100% natural
ingredients, no preservatives, USA-standard production lines, and U.S. FDA
approval mark for quality. We will use marketing to widespread our product
quality, our brand commitment “Star Kombucha is your solution to busy life”
to targeted consumers.
+ Affordable price and easy access: We will reduce product cost through use
of mass production lines and by establishing our close relationship with
certain domestic suppliers. To make our products available more to
consumers, we will collaborate with both offline and online retailers such as
Bach Hoa Xanh, Tiki, Lazada, Shopee, Vinmart, and sell online on our
website as well.
+ Special kombucha formula: To add extra flavors and healthiness, we will
have secret herbs and mixed fruits in our kombucha drinks in addition to basic
ingredients included in homemade kombucha, and offer a variety of flavors
(mentioned in part I) suitable to the Vietnamese tastes.
3. One-year marketing plan
- This part details activities to be used to differentiate us from competitors in
the industry.
a) Objectives
- Business Objective: Reach a sales revenue of 20 billion VND from January
2021 to January 2022.
- Marketing Objectives:
+ Grow Market Share: Reach 5% of the Vietnamese population from January
2021 to January 2022.
+ Grow Digital Presence: Reach 4 million traffic to our website, social media
sites, our products in partners’ online sites from January 2021 to January
2022.
- Communication Goal:
+ To create awareness and stimulate desire to use kombucha among targeted
market segments.
+ To create the perception “Star Kombucha is your solution to busy life” in
the consumer mind.
b) Activities & Budget
[1/2021-3/2021] Hosting the challenge “One-month drinking Star
Kombucha”
- This event will be the first introduction of Star Kombucha to the public. It
focuses on raising awareness and stimulating desire to use kombucha among
our targeted consumers.
- From 1/2021 to 2/2021:
+ We will collaborate with hot youtubers caring about healthy living (Chau
Bui - targeting at millennials segment, Gia Dinh Cam Cam - targeting at
family segment, Hana Giang Anh - targeting at gym doers) to record their
health improvement after one month drinking Star Kombucha.
+ During the challenge, they will post on their social media pages (Facebook,
Instagram, Youtube) their current condition, their feelings about drinking Star
Kombucha.
+ At the end of the challenge, we will make a short series of videos
broadcasting on youtube their experience with Star Kombucha.
- From 2/2021 to 3/2021:
+ Releasing the drinks to the general public, making it available on online and
offline channels (Circle K, Bach Hoa Xanh, Lazada, Tiki, Shopee).
+ Making the public version for the challenge, the general audience can
record their experience drinking Star Kombucha for one month and post on
social media sites their condition with hashtag #StarkombuchaChallenge to be
eligible for getting prizes from us.
- Total budget: 8 billion VND
[4/2021-6/2021] Focusing on social media development
- During this period, we will concentrate on building our presence on social
media (Facebook, Instagram, Youtube). We will regularly post contents
relating to green living, health benefits of kombucha, etc. to increase the
influence level of these sites to our future campaigns.
- Total budget: 1 billion VND
[7/2021-9/2021] Running the project “A solution to your busy life”
- During this period, we will focus on creating the perception “Star Kombucha
is your solution to busy life” in the consumer mind.
- We will make five youtube videos about the life of five office workers with
their busy life problems, and their transformation after drinking Star
Kombucha consistently. After the release of each video, we will use our social
media sites to spread the videos and persuade office workers to voice up and
tell how they deal with their busy lives. 20 people with most inspiration
stories will then receive our voucher “one-year free drinking Star
Kombucha”
- Total budget: 5 billion VND.
[10/2021-1/2022] Running gift giving campaign “Give Star Kombucha to
the ones you care”
- This campaign is to introduce our new service “Gift giving” and to spread
the use of our products to the network of our existing consumers.
- We will make use of our social media sites to spread this news, especially
during Women Day (20/10, Teacher Day (20/11), Christmas (24/12).
- Total budget: 1 billion VND.
V. Value chain analysis
1. Internal environment
a) Resources
- Tangible assets:
+ Labor force
+ Office and office equipment
+ Production plant, assembly line and manufacturing equipment
+ Warehouse and shipping vehicles
- Intangible assets:
+ Brand name and logo
+ Special kombucha formula
+ Relationships with suppliers and retailers
+ Websites, social media pages
b) Capabilities
- Marketing skills
- Research and development skills
- Technical skills
- Managerial skills
c) Core competency
- Marketing skills and product quality are our core competencies.
2. Value chain
- We will apply Porter’s value chain for our model.
a) Primary activities
- Inbound logistics:
+ Purchase periodically all raw materials including product ingredients,
product package from domestic suppliers.
+ Use FOB shipping.
+ Rent land to build a warehouse, use cold storage for perishable items.
- Operations:
+ Rent land to build a production plant.
+ Buy USA production technology and assembly.
+ Have a quality control system.
- Outbound logistics:
+ Outsource a transportation company.
+ Push 50% of finished products to offline retailers, store the remaining in the
warehouse.
- Marketing and Sales:
+ Have in-house marketing department responsible for all marketing
activities.
+ Collaborate with retailers to promote products.
+ In an online environment, sell products through company websites and
partnered retailers’ platforms.
+ In an offline environment, products are owned and sold by retailers.
- Service:
+ Partner with a gift-wrapping company to offer gift giving service to
consumers.
+ Have a refund service.
+ Outsource a customer call center.
b) Supporting activities
- Firm infrastructure:
+ Outsource auditors to check company’s financial situation periodically and
give advice for improving it.
+ Have CEO responsible for strategic planning.
- Human resource management:
+ Focus on training marketing team
- Technology development:
+ Outsource foreign technicians to fix assembly problems if it might occur.
+ Have R&D department responsible for product development.
+ Have evaluation teams responsible for improving the production process.
+ Use technology in marketing and sales.
- Procurement:
+ Establish close relationships with suppliers to get discounts.
VI. References
[1] Food Navigator. (2020). KeVita unveils new look as brand owner PepsiCo seeks to shine in
“crowded” - and slowing - kombucha category. Available at: https://www.foodnavigator-
usa.com/Article/2020/03/10/KeVita-unveils-new-look-as-brand-owner-PepsiCo-seeks-to-shine-in-
crowded-and-slowing-kombucha-category (Accessed 14 December 2020).
[2] Yellow Pages VN. (2020). Tea - Manufacturers and Exporters. Available at:
https://www.yellowpagesvn.com/categories/235360/tea-manufacturers-and-exporters.html
(Accessed 14 December 2020).
[3] Nhan Dan. (2018). Vietnam tea exports ranked fifth worldwide. Available at:
https://en.nhandan.org.vn/business/item/6423302-vietnam-tea-exports-ranked-fifth-
worldwide.html#:~:text=NDO%2FVNA%20%E2%80%93%20Vietnam%20is%20now,biggest
%20exporter%20of%20the%20product (Accessed 14 December 2020).
[4] Macrotrends. (2020). Vietnam GDP Growth Rate 1985-2020. Available at:
https://www.macrotrends.net/countries/VNM/vietnam/gdp-growth-rate#:~:text=Vietnam%20gdp
%20growth%20rate%20for%202018%20was%207.08%25%2C,2016%20was%206.21%25%2C
%20a%200.47%25%20decline%20from%202015 (Accessed 14 December 2020).
[5] CEIC. (2019). Vietnam GPD per Capita. Available at:
https://www.ceicdata.com/en/indicator/vietnam/gdp-per-capita (Accessed 14 December 2020).
[6] Statista. (2020). Vietnam: Inflation rate from 1989-2021. Available at:
https://www.statista.com/statistics/444749/inflation-rate-in-vietnam/ (Accessed 14 December
2020).
[7] Macrotrends. (2020). Vietnam Consumer Spending 1989-2020. Available at:
https://www.macrotrends.net/countries/VNM/vietnam/consumer-spending (Accessed 14 December
2020).
[8] Worldometer. (2019). Vietnam Population. Available at: https://www.worldometers.info/world-
population/vietnam-population/ (Accessed 14 December 2020).
[9] VBCSD. (2018). Vietnam Dairy Industry: Opportunity and Challenge. Available at:
http://en.vbcsd.vn/detail.asp?id=476 (Accessed 14 December 2020).
[10] United Nation Vietnam. (2019). Results of the Population and Housing Census 01/4/2019.
Available at: https://vietnam.un.org/en/28931-results-population-and-housing-census-0142019
(Accessed 14 December 2020).
[11] Theodora. (2020). Vietnam People 2020. Available at:
https://theodora.com/wfbcurrent/vietnam/vietnam_people.html#:~:text=%5Bsee%20also%3A
%20Age%20structure%20-%2025-54%20years%20country,and%20over%3A
%206.91%25%20%28male%202%2C702%2C963%2Ffemale
%204%2C121%2C969%29%20%282020%20est.%29 (Accessed 14 December 2020).
