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TEAM PROJECT
EXECUTIVE SUMMARY
Since its inception in 1995, Acecook Vietnam Joint Stock Company has been
developing dramatically and becomes a leading manufacturer of foodstuffs in
Vietnam. Acecook Vietnam, attained a strong position in the market while providing
instant processed products with high quality and nutritional values. The companys
goal is to become one of the world leading manufacturers of instant noodles and
processed foodstuffs. Over 20 years of growth and development, at present,
Acecook Vietnam operates 10 factories throughout Vietnam. Products of Acecook
Vietnam are sold in over 40 countries throughout Asia, Europe, America, Africa and
Middle East such as pouch, cup, bowl and tray of instant noodles, instant vermicelli,
instant rice noodles, etc. And now the next target is South Africa, which is one of
the most sophisticated and promising emerging markets globally and is also one of
the highest ranking developing economies, surpasses countries such as Hungary,
Italy, Brazil and Thailand. The question is, how VinaAcecook can enter South
African competitive and potential market? With which product? How to compete
against existing competitors?
In the report, through statistics and information obtained from reliable
governmental organizations source and pieces of research about South African
market, we will construct the strategy for MISUP VinaAcecooks instant noodle
brand to attract consumers and play a strategic role in the industry. In the first part
of the report is the overall analysis of South African external environment:
political/legal, economic, competitive, level of technology, structure of distribution,
geography and infrastructure and cultural forces, which will help realize the pros
and cons of the countrys economy and have the matching solutions. In the second
part is the analysis of the strategies chosen based on 4Ps and consumer behavior
theory with consideration about the elements of external environment, especially
the culture. This is the core part of the report, which decide the position of MISUP
and VinaAcecook in the market for long term, which also in some aspects,
determine Vietnamese image globally.
TABLE OF CONTENTS
REVIEW OF THE LECTURER...............................................................................2
EXECUTIVE SUMMARY.......................................................................................3
TABLE OF CONTENTS...........................................................................................4
CHAPTER 1: INTRODUCTION..............................................................................5
1.1.
Purpose........................................................................................................5
1.2.
Scope............................................................................................................ 5
1.3.
Methodology................................................................................................5
1.4.
Limitations...................................................................................................5
Political/Legal..............................................................................................6
2.2.
Economic.....................................................................................................7
2.3.
Cultural forces..............................................................................................9
2.4.
Competitiveness.........................................................................................10
2.5.
Level of technology...................................................................................10
2.6.
Structure of distribution.............................................................................10
2.7.
Product Strategy.........................................................................................13
3.2.
Distribution................................................................................................14
3.3.
Promotion...................................................................................................15
3.4.
Price...........................................................................................................17
CHAPTER 4: CONCLUSION................................................................................18
REFERENCES........................................................................................................19
CHAPTER 1: INTRODUCTION
1.1.
Purpose
The aim of this study is to help VinaAcecook introduce the position of its
new brand MISUP to the South African urban instant noodles market. This
research also intends to gain MISUP a competitive position against Maggi (the most
popular instant noodle brand in South Africa) and other competitors.
1.2.
Scope
The project sought to examine the key issues associated with instant noodle
consumption in South Africa. The results loosely base on data and practice of South
African instant noodle markets and the economic potentiality of South African
market. The research will give an overview of South African external environment
together with the effects of the countrys culture. The object mostly concentrated is
the instant noodle market with overall analysis of competitors, suppliers,
distributorsincluded in the 4Ps strategies.
1.3.
Methodology
The South African market is investigated in three fields: marketing research,
consumer behavior and marketing mix. We base on the theories from the three fields
to facilitate the discussion of our research. Through marketing research, we have an
overall description of South African environment and identify the market target and
the market position for the product. The consumer behavior theory analysis supports
our decision in promotion campaign and in how to approach targeted consumers.
The marketing mix is the core part in our report. We have attempted to build the
strategies for MISUP under the guidance of the 4Ps and provide our
recommendations on the four aspects.
1.4.
Limitations
The foundations of our research are the theories and statistics obtained from
2.1.
government and an independent judiciary. The national, provincial and local levels
of government all have legislative and executive authority in their own spheres, and
are defined in the Constitution as "distinctive, interdependent and interrelated".
The Republic of South Africa held its first universal suffrage elections in
April 1994. The ANC is South Africas most supported political party, and can be
seen to be central to the maintenance of peaceful relations between the differing
racial groups (specifically between the white and black ethnicities), the
unprecedented growth of the national economy, and its many initiatives to develop
previously disadvantaged peoples and communities. ANC holds a majority of 65%
under South Africa's proportional representation system, and governs eight of the
countrys nine provinces. In December 2012, President Zuma was re-elected as the
ANC President and the presidential candidate for the 2014 election.
The leadership of the ANC was, undoubtedly, of key importance in South
Africas transition to the liberal, human rights orientated constitution that South
Africans enjoy today: South Africas constitution has been hailed as the most
progressive and liberal in the world (truly an achievement of which the nation can
be proud).
As for South Africas legislation, they face a few boundaries with their
mixed/ hybrid legal system. It is composed of interweaving a number of distinct
legal traditions such as: civil law of the Dutch, common law of British, and an
indigenous law system from African Natives. With these traditions having a
complex interrelationship, the procedural aspects of the legal system still
prominently prevail to be correlated with the Roman-Dutch legal system. Due to
this, their court system is organized hierarchically, and consists of Magistratess
Court, High Courts, a Supreme Court of Appeal, and a Constitutional Court. The
Constitutional Court has the highest authority in all matter. With a world-class and
progressive legal framework, South African legislation governing commerce, labour
Economic
The economy of South Africa is the largest in Africa, it accounts for 24% of
its gross domestic product in terms of purchasing power parity, and is ranked as an
upper-middle income economy by the World Bank. South Africa is currently
included, along with China, Brazil and India, in group of nations with emerging
economies collectively known as BRICS. In addition, South Africa is the foremost
member of SADC (the Southern African Development Community), an intergovernmental organization formed to further social co-operation and integration
amongst its 15 member states, as well as create political and security co-operation
in the southern African region.
South Africa has a comparative advantage in the production of agriculture,
mining and manufacturing products relating to these sectors. The country's
economy is diversified with key economic sectors including mining, agriculture and
fisheries, vehicle manufacturing and assembly, food processing, clothing and
textiles, telecommunication, energy, financial and business services, real estate,
tourism, transportation, and wholesale and retail trade.
South Africas success in reforming its economic policies is probably best
reflected by its GDP figures, which reflected of uninterrupted economic growth
between 1993 and 2007, when GDP rose by 5.1%. With South Africas increased
integration into the global market, there was no escaping the impact of the 20082009 global economic crisis, and GDP contracted to 3.1%. While the economy
continues to grow, driven largely by domestic consumption, growth is at a slower
rate than previously forecast. It is projected to grow at 2.7% in 2013, 3.5% in 2014
and 3.8% in 2015.
live on less than US $1.25 a day. Unemployment, remains the most challenging of
South Africas hurdles. It is at the top of government priorities and at the heart of its
economic policies.
South Africa is ranked 35th out of 183 countries for ease of doing business
according to Doing Business 2012, a joint publication of the World Bank and the
International Finance Corporation.
2.3.
Cultural forces
With a growing population of above 51 million people and eleven official
languages, South Africa is one of the most diverse countries among the world. They
have a large mass media sector that commonly uses the English language. Many
urban areas in South Africa have a different ethnic group that reflects the whole
population. The population of South Africa includes the original black peoples and
European, Chinese, Indian and many more from rest of the world have migrated
to South Africa. 70% of the populations in South Africa are the black Africans,
whereas the white people make up 11% of the total population, Coloureds are 8%,
more than two percent are Indians, and other minorities come under less than 2% of
the population. The South African culture and etiquettes is much complicated and
not easy describe due to its diversity.
In South Africa a huge differences is seen between the rural and urban areas.
Many rural black people of South Africa are still attached and follow their old
traditions; on the other hand the urban black people are more and more influenced
by the urban environment and international and modern life style that surrounds
them.
South Africans do not believe in long relationships or creating a personal
relation in conducting a business. These people are more of a transactional nature.
In most part of South Africa, the people keep harmonious working relationships
among each other and avoid conflicts. These people often use the metaphors to
demonstrate a point. Most of the South Africans, although ethnic, prefer to meet
face-to-face above common communication means such as telephone email, letter,
etc. It is very important to develop mutual trust and understanding before any
business negotiation.
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2.4.
Competitiveness
South Africa was ranked 52nd out of 144 countries in the World Economic
Forum's Global Competitiveness Index for 2012. It remains the highest ranked
country in sub- Saharan Africa, and claimed third place among the BRICS
countries. Thass because the government policies in manufacturing projects,
industrial innovation, finance and small business development. Also industrial
development zones have been established in close proximity to major ports and
airports, offering world-class infrastructure, dedicated customs support and reduced
taxation.
Their competition legislation follows European Union, US and Canadian
models. The law places various prohibitions on anti-competitive conduct, restrictive
practices (such as price fixing, predatory pricing and collusive tendering) and
"abuses" by "dominant" firms (firms with a market share of 35% or more).
2.5.
Level of technology
South Africa has the prospect to compete internationally, there exists an huge
potential to exploit and leverage selected technologies. South Africa is not a leader
in technologies but rather an adaptor, integrator, assembler and follower, the South
African technology sector does have various competitive advantages. These usually
comprise a well-developed telecommunications industries, established
and
competitive call centers, highly regarded capabilities in software development, elearning and system integration. There is an intense increase of ecommerce
technologies throughout South Africa. However, the integrated implementation of
ecommerce solutions and security-enabling applications is incredibly limited.
2.6.
Structure of distribution
South Africa offers foreign suppliers a variety of methods to distribute and
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2.7.
square kilometres. It is one- eighth the size of the US, about a third the size of the
European Union, twice the size of France and over three times the size of Germany.
South Africa has a long coastline that stretches more than 2,500 km and along two
oceans (the South Atlantic and the Indian).
Climate: South Africa has generally temperate climate. A subtropical
location, moderated by ocean on three sides of the country and the altitude of the
interior plateau, makes South Africa a warm and sunny country. But it's also dry,
with an average annual rainfall of about 450mm, with about 21% of the country
receiving less than 200mm a year.
Topography: The average elevation rising steadily towards the north
(towards the equator) and further inland. Due to this varied topography and oceanic
influence, a great variety of climatic zones exist.
Natural resources: South Africa is rich in a variety of minerals. In addition
to diamonds and gold, the country also contains reserves of chromium, antimony,
coal, iron ore, manganese, nickel, phosphates, tin, uranium, gem diamonds,
platinum, copper, vanadium, salt, natural gas.
The mining sector continues to form the core of the South African economy
as mining-centred holding companies invest in other economic activity. Gold
remains the most important mineralSouth Africa is the worlds largest producer
and reserves are large; however, production is slowly declining
Environmental protection is a most important part of the socio economic
development, and this is one of the most critical problem in South Africa. The
increasing population, high degree of urbanization and unreasonable
rise
in
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Slogan
Feature
emphasized
Price
1 pack - $0.99
5 packs - $4.80 or $4.85
10 packs - $9.00 or $9.25
Target customers
Entry strategy
Competitors
3.1.
Product Strategy
Flavors and types: The biggest competitor of us in South Africa is Maggi,
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Packaging and Packing: MISUP will be sold in packs. Product packing will
be divided into 4 types: single packs, 5 packs in plastic bag, 10 packs in plastic bag
and 30 packs in carton. In addition, 5 packs and 10 packs bag will be launched in
monoflavor and multiflavors bags. For office workers and travelers: we will
produce a foam box line but under an another brand.
3.2.
Distribution
South Africa is a large country, with nine provinces. Lacking the support of
15
line; grocery chain stores; cash and carry wholesale retail outlets; co-operative
stores serving rural area; large-scale supermarkets; hypermarkets located in
suburban shopping malls and sell large quantities of almost all consumer goods.
About 90% of the South African consumer trade instant noodles in these channels.
The distribution channel can be visualized in the
following graph:
First Distributor: Agent
Second Distributor: Wholesalers
Marketing Sites: Retailers
3.3.
Promotion
The purposes of the promotion are to attract and increase market share and
communicate information about product and company (brand) to customer. At the
early stage, we will concentrate our marketing activities in Johahnnesburg only.
After MISUP has been acknowledged by many customers, we will move the
16
campaign to Cape Town, Durban, Pretoria, and Port Elizabeth. Strategies used: both
Pull and Push at Introduction period.
Advertisement: focus on advertising in media. In the introduction stage, we
will screen the trailers of our products on the media seamlessly in the primetime, so
that customers are aware of new products as well as creating value for products. For
agents, we give them MISUP umbrellas to promote products together with
billboards in public places.
TV ADS: Initially VinaAcecook will focus the product to the office workers
and their children, then the entire family with vivid and colorful image, with focus
on phenomenon flavours and low in calory. The commercials will be at breakfast
and dinner time of South African families. VinaAcecook will be a sponsor for "Deal
or No Deal", a popular television show in South Africa. The activities will include
launching FREE VinaAcecook Meals campaign in commensuration of 20 years of
VinaAcecook in the market.
Digital Marketing: We will print MISUP advertisements in Sunday Times
and Rapport, the two most popular newspapers in South Africa. MISUP instant
noodles will also appear in some online newspaper:
www.bdlive.co.za
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Disney today comic. To obtain one gift the member has to send 5 wrappers as
purchase proof. Some special privileges will be given to regular members time to
time like, discount tickets of Appu Ghar. Organized Acecook school quizzes and
sketching.
3.4.
Price
Instant noodle is a product which has high price-elasticity of demand and
South Africa is a big potential market with a world-class and progressive legal
framework. We select the following pricing methods to avoid the dumping, make
products entry market easily and rapidly expand the market.
Penetration Strategy: We use this valuation method to penetrate the market
as this is the first time VinaAcecook introduce instant noodles in South Africa The
price will be low. After MISUP has gained a position in South African market, we
will introduce new product lines: King Chef (with two flavours: Seafood and
Kimchi) and Bean Vermicelli Good with higher price.
Quotation (In United States Dollar) for final users
(Base on http://southafricanfood.ie/store/category/28/404/Maggi/ )
Items
1 pack
5 packs in
Competitors
(Maggi)
1.00
plastic bag 4.85
(mono-flavor)
5 packs in plastic bag -
4.85 (5 + 1)
(multi-flavor)
10 packs in plastic bag
9.50
10 packs in plastic bag -
9.00 (10 + 2)
9.25 (10 + 2)
(multi-flavor)
30 packs in carton
26.00 (30 + 5)
27.00
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CHAPTER 4: CONCLUSION
Through the investigation and research to gain an insight into South African
instant noodle market, we decided that this is a very potential and promising place
for investors to put their footholds into. Firstly, South African economy is exploding
and they are at the moment the best economy in South Africa. The people are
getting more prosperous and have the intention of spending more money to improve
life quality. Secondly, South African government is reforming its economic policies,
the infrastructure and the legal system to attract more investments to the country.
This explains why in the coming years, the flow of investment will land in South
Africa. At the moment, gaining a position in their market will be a smart move since
the competition will get tougher day by day. We consider it is a very strategic
decision of VinaAcecooks attack in South African instant noodle market. Last but
not least, we have to take VinaAcecoook experience and sophistication in the
instant noodle industry. The company has products sold in more than 40 countries
across Europe, America, Australia and Asia. Its their strength to have understanding
about how to succeed in foreign markets, then expertise the knowledge through
adapting the flavors and methods. VinaAcecook high-quality products, excellence
and expertise will be the basis for their success in South African market.
Through thorough investigation, we have figure out the best entry strategy
for VinaAcecook. In the early stage, MISUP will be exported from Vietnam to
South Africa due to the close geographic distance and low production cost of
Vietnam. Products then will be sold to the agents by VinaAcecook Management
company. The product price in South Africa will be determined by VinaAcecook
with sales policy. After 1 year, we intend to build factories in the rural areas of
Johannesburg and Cape Town so that product costs will get lower and more product
lines will be introduced. From South Africa, VinaAcecook can expand their market
to Kenya, Botswana, Angola, DR Congo, Nigeria This entry strategy will help
VinaAcecook reduce the risks, obtain understanding about the market, lower the
costs and gain a competitive position against competitors.
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REFERENCES
1 SAinfo reporter, 2012, South Africa's geography,
http://www.southafrica.info/about/geography/geography.htm#.U2pTAPl_t_p
2 Government Communication and Information System Republic of South
Africa, 2012, South Africa Yearbook
3 SouthAfrica.info reporter, 2012, Distribution and sales in South Africa,
http://www.southafrica.info/business/trade/import/importdistribution.htm#.U2pS-vl_t_p
4 SAinfo reporter, 2013, South Africa: economy overview,
http://www.southafrica.info/business/economy/econoverview.htm#.U2pV__l_t
_p
5 Wikipedia, 2014, Culture of South Africa,
http://en.wikipedia.org/wiki/Culture_of_South_Africa
6 South Africa politics, 2013, http://www.sapolitics.co.za/