1.

Introduction of Vinamilk

Vietnam Dairy Products Joint Stock Company is a company that manufactures and trades in
milk and milk-based products. It was established in 1976 as the predecessor of the Southern
Coffee and Milk Company and took over three dairy factories including Thong Nhat dairy
factory, Truong Tho dairy factory, and Dielac powdered milk factory. As a pioneering
enterprise in the dairy industry in Vietnam, Vinamilk gradually captured a huge market
share in the dairy sector in Vietnam. Over time, this has led the company to be referred to
as the "national product" by producers across the country. (Vinamilk, 2023)

Source: Internet

1.1. Product

Throughout its existence, Vinamilk has introduced numerous products including milk, milk-
based products, and dairy-based beverages to meet the practical needs of customers. Some
of Vinamilk's products include fresh milk Vinamilk, Grow Plus powdered milk, Vfresh fruit
juices, etc. In addition to diversifying its product range, Vinamilk has invested in modern
production lines with MEGA DAIRY PLANTS, one of the three super milk factories in the
world with advanced technology ensuring the production of high-quality milk at the best
standards (Vinamilk, n.d.). This is also reflected in Vinamilk's product market share with a
55% share of the milk market in Vietnam (TheLEADER.VN, 2022). Vinamilk's products leave a
lasting impression with their brand design and distinctive product features. Each product
launched by Vinamilk leaves a long-lasting impression on customers. Recently, Vinamilk has
also changed its brand identity, making its products stand out more compared to other milk
products in the current market.

Vinamilk's product range is extremely diverse, catering to the needs of all customers,
including:

Milk and dairy products: Fresh milk Vinamilk, yogurt, powdered milk, condensed milk, etc.

Beverages: Vfresh fruit juices, coconut water Coco Fresh, etc.

Sugar: Vietsugar sugarcane sugar

 Source: Vinamilk (n.d.). Nhãn hiệu | Vinamilk Việt Nam - Vinamilk. [online]
www.vinamilk.com.vn.

1.2. Price

With a diverse range of products, Vinamilk employs different pricing strategies suitable for
each product to compete in the market. Firstly, Vinamilk's products have more affordable
prices compared to imported milk products while maintaining comparable quality, and in
some cases, even better. This strategy solidifies Vinamilk's position in the milk market and
related dairy product segments. Furthermore, Vinamilk offers products tailored to different
customer segments at various price points, catering to the diverse needs of each customer.
Vinamilk has applied the following pricing strategies:

Maximum Pricing Strategy (Premium Pricing)

Vinamilk has implemented this strategy for its premium products like UHT fresh milk (Ultra
High Temperature) and butter. Generally, the prices of these products are higher compared
to similar products from competing brands.

For instance, Vinamilk's UHT fresh milk is usually priced between 25,000 to 30,000
Vietnamese Dong per liter, whereas similar products from competitors like Dutch Lady, TH
True Milk, and FrieslandCampina tend to have lower prices, around 5,000-10,000
Vietnamese Dong less per liter.

Applying this strategy can create an impression of higher quality and value for the product
or service. Implementing maximum pricing can help build a high-end image and reputation
for Vinamilk.

Competitive Pricing Strategy

To compete with rivals in the powdered milk market, Vinamilk has employed a competitive
pricing strategy by reducing product prices and introducing promotional campaigns to
attract customers. For instance, the Grow Plus+ powdered milk product from Vinamilk often
comes with complimentary gifts such as suitcase, neck pillows, or other items depending on
the period. This is a widely used and popular pricing strategy in competitive markets.
Competitors such as Dutch Lady, TH True Milk, and FrieslandCampina also frequently
employ similar promotional programs to entice customers. Crafting value bundles and
offering gifts can help companies attract customers, increase sales figures, and establish a
competitive advantage in the powdered milk market.

Mid-Range Pricing Strategy

Vinamilk applies a mid-range pricing strategy for average-priced products like low-fat fresh
milk and flavored yogurt. With this strategy, the prices are set at an average level within the
segment among similar products in the market.

This strategy aims to diversify customer segments and compete effectively in this product
segment.
Gradual Reduction Pricing Strategy

Vinamilk uses the skimming pricing strategy for newly introduced products. Initially, the
products are priced higher compared to similar products from competitors to leverage
customers willing to pay more for novelty. Subsequently, the prices are gradually reduced as
the product becomes more popular.

For example, Vinamilk's Ông Thọ condensed milk product was introduced at around 35,000
Vietnamese Dong per 360g can in 2013, and now it is adjusted to approximately 27,000
Vietnamese Dong per can.

Low Pricing Strategy

In its pricing strategy, Vinamilk's products, while meeting international standards, are priced
significantly lower than imported milk lines. For instance, Vinamilk's powdered milk for
children is only one-third the price of other milk brands in the market.

Given the high competitiveness in the milk market, if Vinamilk were to increase its prices to
half that of other brands, it would adversely affect the company's market share. Vinamilk is
cautious about raising product prices because it significantly impacts the purchasing power
of Vietnamese consumers, whose income levels are lower compared to many countries
worldwide. By reducing controllable costs, restructuring branding, and effectively managing
retail points to reduce dependency on wholesale points, the company has managed to save
numerous promotional expenses. Issues like stockpiling, clearance sales, price competition,
geographical competition, leveraging the promotional advantages of major distributors have
all been addressed.

Bundle Pricing Strategy

This is a pricing strategy where products are bundled together at a more reasonable price
than selling each item individually. For instance, when purchasing two packs of milk,
customers may receive an additional box of milk at a more favorable price compared to
buying each separately.
To illustrate, an example of Vinamilk's diversified pricing strategy is its collection of high-
quality fresh milk. This collection comprises three different types of fresh milk: pure fresh
milk, sugar-free fresh milk, and fresh milk with sugar. The individual retail prices for each
product in Vinamilk's high-quality fresh milk collection are as follows: Pure fresh milk:
19,000 VND/bottle (180ml), Sugar-free fresh milk: 18,000 VND/bottle (180ml), Fresh milk
with sugar: 18,000 VND/bottle (180ml). The bundled price for this collection is 49,000
VND/bottle, saving around 6,000 VND compared to purchasing each item separately.

Instead of retailing each product type individually, Vinamilk creates a package comprising
these three types of fresh milk at a more reasonable price compared to buying each
separately.

Flexible Pricing Strategy

Flexible pricing strategy is a versatile pricing approach that allows companies to adjust
product prices based on market demand and conditions. With this strategy, companies can
alter product prices depending on various factors such as location, timing, target customers,
and more.

An explicit example of Vinamilk's flexible pricing strategy is the customized pricing of its
fresh milk product in different markets. For instance, Vinamilk's fresh milk product is priced
at 15,000 VND per box in Vietnam, whereas in Thailand, it is priced at 20,000 VND per box,
which is 33% higher than the price in Vietnam. Nevertheless, the pricing of Vinamilk's
product in Thailand is still considered reasonable when compared to other competitive
brands in the same product category.
Below are the prices of some products:

Product Price
A pack containing 4 milk boxes
Vinamilk ADM sugary
nutritious milk
180ml:30.000VND

A pack containing 4 milk boxes

Vinamilk 100% Fresh
Pasteurized Milk 180ml Fresh
Milk: 32,500VND

Dielac Grow Plus No. 1+ large

red milk powder 900g:
379.000VND

A pack containing 4 milk boxes

Vinamilk fresh soy milk 180ml:
22.000VND
1.3. Place

Vinamilk promotes cooperation with management companies of online platforms such as

Vuivui.com, Lazada.com, Tiki.vn, to have its products available on various e-commerce
websites. These retail websites function similarly to traditional agents for Vinamilk, placing
orders from Vinamilk and distributing them to customers who have made online purchases.

Regarding offline channels, level 1 and level 2: Level 1, also known as modern channels, are
divided into two smaller types: type 1 includes major supermarkets like Big C, Metro, while
type 2 includes smaller convenience stores like Circle K, Family Mart, Ministop, among
others. These supermarkets place orders directly with Vinamilk's branch representatives in
the region. This channel is pivotal in promoting Vinamilk's image and products to end
consumers. Vinamilk's advertising, communication, and promotions often target customers
who purchase products through this channel. It's also the channel that significantly
influences market research on customer preferences, feedback on products, and the
company's sales policies.

Level 2 channels, a strategic type of channel according to Vinamilk, is the media channel.
The essence of this type of channel is Vinamilk's distribution network, where Vinamilk
manages its distributors through contractual agreements binding both parties'
responsibilities, rights, and obligations. Distributors are placed throughout the country,
following the market map established by Vinamilk. Vietnam's market is divided into 3
regions: Northern, Coastal, and Southern. The number of distributors varies in each region
depending on customer scale and geographical location. Each distributor operates within
their specific area, distributing Vinamilk's products to retailers and acting as showrooms to
display Vinamilk's product range.

1.4. Promotion

Advertising:

Vinamilk places great emphasis on continuous creativity in its advertising efforts to increase
its sales revenue. The company has successfully reached customers' subconscious through
its advertising messages. Specifically:
As a company specializing in dairy products with its primary source being from cows,
images of cows are considered distinctive and core in each Vinamilk advertisement.
Examples include ads like "100% Pure Fresh Milk," "3 glasses of milk a day," "dancing herd of
cows," "eyeglasses and shoe lifts," etc., all featuring lively and unique images of cows.

Vinamilk has turned its disadvantage into an advantage. When the media reported loudly
about high wheat flour content in fresh milk products, negatively affecting consumers'
perceptions of fresh milk, Vinamilk responded with the message "100% Pure Fresh Milk,"
which regained customers' trust.

Regarding advertising media:

- Advertising on traditional channels: TV, newspapers, etc.

- E-commerce channels:

- Advertising on major websites with high daily traffic.

- Creating a dedicated page for the company to update information and receive feedback
from consumers.

Trade fairs and promotional sales programs:

- Participation in trade fairs to promote the company's image.

- Trial programs at major supermarkets.

Community programs:

- Participation in charity programs.

- Sponsorship for educational and humanitarian funds.

- Free milk distribution at schools or events.

- Sponsorship for television and sports programs.

Promotions:

Consumer promotions:

- Offering additional products (e.g., Buy 2 packs of 100% Sterilized Milk 180ml, get 1 free
pack).

- Bundling products for mothers and babies.

 - Organizing lucky draw programs.

- Promotions for loyal customers: special policies such as birthday gifts, shopping
vouchers, loyalty cards, etc.

Intermediary promotions:

- Increasing commission rates for intermediaries on large quantity purchases or exclusive

sales of Vinamilk's milk types.

- Providing discounts, display shelves for intermediaries.

- Collaborating on advertising and offering product trials at intermediary retail points.

Corporate Social Responsibility (CSR):

In addition to advertising to maintain consumer perception, big brands must demonstrate

social responsibility through community-oriented activities. Vinamilk engages in programs
such as "6 million cups of milk for poor Vietnamese children," "Rising Vietnam Milk Fund,"
and the "Uplifting Young Talent Scholarship Fund." These programs aim to reduce
malnutrition rates and increase children's height through daily milk consumption.

Additionally, the "1 million trees fund for Vietnam" is a collaborative effort between the
Environmental General Department (VEA) and Vinamilk, focusing on environmental
sustainability by encouraging community participation in planting more trees for Vietnam's
greenery.

Personal Selling:

Vinamilk has a large team of well-trained sales staff who possess solid knowledge about
Vinamilk, understand customer psychology, and work professionally with excellent
communication skills. They are enthusiastic about their work and ready to share information
with customers.
1.5. People

Vinamilk firmly believes that its employees are the key to its success and long-term growth.
As the market continues to evolve, Vinamilk strives to preserve its existing strengths while
embracing innovation. It recognizes the importance of staying current and innovative, even
in traditional sectors. As such, Vinamilk is committed to enhancing its work environment to
stimulate innovation and inspiration. The company acknowledges the crucial role of its
employees in implementing strategic plans. It offers a range of benefits to its staff, including
a well-equipped physical infrastructure, personal welfare, and a conducive work
environment. These efforts help create a positive ambiance that encourages creativity and
innovation, and fosters strong interpersonal relationships among the workforce. By focusing
on creating a supportive environment for its employees, Vinamilk not only fosters creativity
and innovation but also cultivates a positive organizational culture. This approach
significantly contributes to the company's ongoing growth and prosperity.

1.6. Process

Vinamilk's dairy products adhere strictly to Vietnamese standards as well as Codex

standards, which are international food trade standards. Vinamilk continuously innovates
and invests in modern, advanced production lines, equipment, and technologies that are
among the most advanced globally. This includes technology and equipment from G7
countries such as Sweden, the United States, Denmark, the Netherlands, France, Germany,
and Switzerland, aimed at producing high-quality products, minimizing energy consumption,
and ensuring absolute safety for consumers. These efforts contribute to delivering the best
quality products to consumers.

1.7 Physical evidence

In terms of infrastructure, Vinamilk has heavily invested in a modern manufacturing plant

system that meets international standards and caters to the increasing demands of the
market. This allows Vinamilk to ensure product quality, from the input materials to the final
packaged product. Furthermore, Vinamilk has established a nationwide network of stores,
agents, and supermarkets to ensure that customers can easily access the company’s
products. Vinamilk’s stores and sales points are beautifully decorated, creating a friendly
and professional shopping environment. The company also focuses on product packaging
design, aiming to differentiate and attract customer attention. Vinamilk’s packaging design
typically features white and green colors, conveying a fresh and clean feeling. The products
are securely packaged, ensuring better preservation and easy transportation.

 Thanks to strategies tailored to local consumers, Vinamilk has successfully built trust
and affection among consumers. By focusing on improving product quality,
employing effective pricing strategies, creative advertising, and engaging in social
activities, Vinamilk has managed to establish a strong connection with consumers.
Vinamilk's products have stood resilient against competition from international
brands such as Nestle, Dutch Lady, FrieslandCampina, as well as domestic milk
products like TH True Milk and Mộc Châu. The diversification and development of
their product range, combined with Vinamilk's understanding of the market and its
implementation of suitable strategies, have allowed the company to assert its
position not only in Vietnam but also in the international market.
2. The company has successfully achieved its business goals from the 7P model

Vinamilk's marketing strategy has brought significant success to the brand. By analyzing and
understanding specific segments, demographics, psychology, behaviors, and geographic
aspects of customers, Vinamilk successfully applied focused marketing campaigns to
effectively dominate target segments. In 2014, Vinamilk primarily targeted children aged 5
to 14. Subsequently, in 2016, the focus shifted to enhancing physical health for children,
aiming to nurture young talents to become future pillars of the nation. Vinamilk also
emphasized positioning regarding price and calcium content in its products, understanding
brand perception and market share, and the value of each product. The value proposition of
Vinamilk in the dairy industry is "Same quality, less cost." Despite having lower calcium
content in fresh milk compared to other brands, Vinamilk offers a more suitable price.
Above all, Vinamilk has self-identified as the largest company in Vietnam's dairy industry
(Kỳ, 2021).

Compare two companies Nestle and Vinamilk in the same competitive

Company Strategy Strength Weakness

Nestle The strategy of The company has a The distribution
covering the well-known global network has not
market with a brand with many been distributed to
variety of products brands, Nestle also remote areas, there
and goods serving has a large are not many
the essential needs distribution distribution agents
of the product with network, strong compared to
low product pricing advertising competitors and
investment there is fierce price
competition in the
market
Vinamilk Vinamilk creates Famous brand, Incontinence of raw
many products to effective marketing materials
serve many different strategy and wide
layers and targets of distribution network
customers with the
best quality
products
Overall, the greatest success of both companies lies in establishing their own brand images.
In the nutrition and beverage market, Vietnamese consumers often think of Nestlé with
quality products like Milo, Nescafé, La Vie, among others. Nestlé has gained significant favor
among customers in Vietnam in the nutrition and beverage industry. However, a bold
competitor, Vinamilk, is equally formidable. Since its inception, Vinamilk has been a pioneer
in providing and distributing dairy products, acquiring a massive customer base. Currently,
Vinamilk operates modern, automated production lines and boasts one of the most
advanced dairy plants - the MEGA DAIRY PLANTS - along with 13 plants spread across
Vietnam. This stands in contrast to Nestlé, which has only six factories and a smaller scale
compared to Vinamilk. Vinamilk also has an extensive distribution network with distributors
spread nationwide, reaching remote areas. This becomes a weakness for Nestlé in terms of
product distribution. However, Nestlé compensates by emphasizing research and
development to serve its customer base. With its mission "good food, good life," Nestlé
continually improves product quality, aiming to offer the best quality to consumers. In
summary, when it comes to nutritional products, two strong contenders emerge, each with
its own strengths and high-quality offerings, making it difficult to determine a clear winner.
Both brands are beloved and widely used by Vietnamese consumers