INTRODUCTION
Problem statement
Private Label (PL) products have gained significant popularity globally, becoming increasingly acceptable to consumers For retailers in the U.S., PL products play a crucial role in boosting business and fostering customer loyalty By offering PL products, retailers can effectively differentiate themselves from competitors, enhancing their market presence.
In today's retail landscape, private label (PL) products are increasingly prevalent, with supermarkets, hypermarkets, drug stores, and discounters widely offering them In the United Kingdom, PL products make up approximately 39% of supermarket sales, significantly higher than the 25% seen in the United States Notably, Wal-Mart features a 40% representation of PL products in its stores, while Safeway boasts an impressive selection of over 2,500 PL items.
Foreign retailers have significant experience in developing private label (PL) products, while Vietnamese retailers like Saigon Co.op have only begun to tap into this potential Currently, Saigon Co.op offers just 111 SKUs of PL products across three categories—Industrial Food, Houseware, and Garment—representing only 0.21% of their total SKUs These PL products contribute a mere 0.68% to the overall sales of the supermarket chain, indicating a substantial opportunity for growth By focusing on the development of PL products, Saigon Co.op can enhance its gross margin percentage and better compete in the market This project aims to explore and implement strategies for expanding Saigon Co.op's private label offerings.
Project objectives
The objective of this proposed project is to meet the following issues
• To analyze the potential of PL products for retailing, specially for Saigon Co.op
• To analyze PL as a tool to increase awareness Co.opMart’s image from customers
• To make difference from competitors when developing PL products
• How to develop PL products for Saigon Co.op better
Scope and limitation
This study focuses on the development of private label (PL) products at Saigon Co.op in Ho Chi Minh City, Vietnam, emphasizing a comprehensive marketing approach Key marketing strategies explored include product development, manufacturing processes, pricing, distribution and display methods, communication tactics, promotional activities, and personnel management.
In this project I did not mention about physical distribution such as inventory, logistic, warehouse and transportation.
Research methodology
• A quantitative survey of 100 customers after shopping at Co.opMarts in Ho Chi Minh city with higher than sixteen years old
• Beside quantitative survey, data helped for this study is collected from Saigon Co.op, other organizations, websites Data of these studies will be analyzed within a comprehensive framework
• In-depth interview persons who is in charge of PL division at Saigon Co.op
THEORETICAL BACKGROUND
Definition and concepts of PL products
Private label products, as defined by the Private Label Manufacturers Association, include all items sold under a retailer's store brand, which may feature the store's name or a unique name created specifically for that store Additionally, some retailers are part of wholesale buying groups that provide access to labels owned by the group, known as controlled labels.
Private label (PL) products span various industries, including food, cosmetics, and web hosting, and are typically marketed as cost-effective alternatives to established regional, national, or international brands These products can be classified into different categories based on their characteristics and market positioning.
• Store brands - The retailers name is very evident on the packaging
• Store sub-brands - Products where the retailers name is low key on the packaging
• Umbrella brands - A generic brand independent from the name of the retailers’ name Umbrella brands are used in different product categories
• Individual brands - Name used in one category
• Exclusive brands - Name used in one category, but to promote “added value” products within the category
Private label (PL) products offer consumers the opportunity to consistently purchase high-quality food and non-food items at lower prices compared to manufacturer brands, eliminating the need to wait for promotional discounts These PL items often contain ingredients that are equal to or superior to those found in branded products With the retailer's name or logo on the packaging, consumers can trust that these products adhere to the retailer's quality standards and specifications.
PL trend in the world, special in the retail industry
Private label (PL) brands now represent one in five products sold daily in U.S supermarkets and drug stores, demonstrating consistent annual growth Traditionally viewed as low-cost and low-quality, PL products have recently evolved as companies leverage them to promote higher-quality offerings.
Private label (PL) brands are perceived by American consumers as equivalent to national brands, with a Gallup Organization study revealing that 75% of respondents recognize PL brands as legitimate, attributing to them positive qualities such as satisfaction guarantees, appealing packaging, value, taste, and performance In Europe, PL sales have reached unprecedented levels, with the market share exceeding 39% in the United Kingdom and accounting for one in three products sold in France and Spain Kroger stands out with over 10,000 PL products and was awarded "Retailer of the Year" by PL Buyer in April 2006 for its outstanding success in the private label sector.
Private label share of sales (%)
Figure 01: Private label is growing around the world Sources: AC Nielsen; Information Resources; Canadian Imperial Bank of Commerce
Europe continues to lead as the most developed private label (PL) region, accounting for 23% of total value sales across 17 European countries Meanwhile, North America, ranking second in PL shares, experienced a notable 7% increase in PL sales, bringing its current share to 16%.
Private label share in the world (%)
Europe North America Asian Pacific Latin America
Figure 02: Private label market Share in the world 2005
The Asian Pacific region presents significant opportunities for private label (PL) products, with Vietnam positioned as a key player Currently, PL market share in the region stands at only 4%, indicating substantial growth potential Notably, Australia leads with a 9% share, while Japan and Hong Kong also maintain a 4% share This gap highlights the promising prospects for expanding PL products in the Asian Pacific market.
Australia Hong Kong Japan Singapore Taiwan Thailand South
Private label share in Asian Pacific (%)
Figure 03: Private label share in Asian Pacific
Growth and success in worldwide, throughout Europe, PL is winning the loyalty of more and more consumers every day PL is achieving unprecedented acceptance with shoppers
2.3 Some retailers and wholesalers in Vietnam
Metro Vietnam stands out in the market with a diverse range of private label (PL) brands, including Aro, Natura Verde, Quality, Steinbach, Buget, Watson, and Four Seasons These brands cater to various product categories: Aro, Natura Verde, and Quality focus on dry and processed foods, while Aro and Steinbach specialize in houseware The Buget brand offers dynamos and electronic generators, and Watson provides houseware and electronic appliances Additionally, Four Seasons is known for its cookies and bread In contrast, competitors such as Maximark, BigC, Citi-Mark, and Vinatex do not offer any PL SKUs.
• Enhance the retailer's image and strengthen its relationship with consumers Retailers know that consumers can buy a national brand anywhere but they can only buy their PL products their stores
• Enhance varying levels of consumer loyalty to retailer Winning the loyalty of more and more consumers every day
• Making difference retailers from competitors
• Enhance perception of overall store pricing
• PL is a means of advertising for the store
• More freedom and flexibility in pricing
• More control over product attributes and quality
• Higher margins or lower selling price due to cut advertising and promotional costs
• Increase profits for retailers and improve value for their customers
• Capturing and maintaining customers at our stores
2.6 Saigon Co.op’s situation of PL products
The current Private Label (PL) Division is part of the Purchasing Department, which is led by one Manager and five Deputy Managers Each Deputy Manager oversees a specific category, as illustrated in Exhibit 1, while Deputy Manager 4 simultaneously manages both the Health and Beauty Care Division and the PL Division This dual responsibility significantly limits her ability to dedicate sufficient time to research and evaluate PL initiatives.
Every month Saigon Co.op has one Co.opMart post with 12 pages in normal month or
The article highlights that special occasions such as April 30th, National Day on September 2nd, New Year, Luna New Year, and the opening of new stores are featured over 16 pages However, the information regarding private label (PL) products occupies only a third of a page, resulting in a limited and unappealing presentation that fails to capture attention effectively.
Co.opMart does not engage in advertorials or advertising for its private label (PL) products across television, radio, newspapers, or other media Additionally, there are no promotional materials such as posters, panels, or flyers displayed inside or outside Co.opMart to inform customers about these PL products.
Saigon Co.op has a plan for developing PL but it is too general, not has a detail developing plan for each category and how many items in every year
2.5.4 Policy or rules of PL developing at Saigon Co.op
When a new private label (PL) product is launched, it undergoes a three-month assessment to determine its sales performance; successful products continue to be developed, while underperformers are discontinued For industrial food products, rigorous testing is conducted prior to launch, followed by evaluations every six months by authorized organizations Saigon Co.op is committed to addressing consumer complaints regarding PL quality, ensuring prompt resolution Additionally, upon receiving products from manufacturers, Saigon Co.op maintains strict control over quality, volume, and expiration dates to uphold product standards.
2.5.5 Quantity of PL products that Saigon Co.op has?
Saigon Co.op currently offers 111 SKUs, representing just 0.21% of its total inventory, which includes 46 SKUs in the Industrial Food category, 8 in Houseware, and 57 in Garments The contribution of private label (PL) products to Co.opMart's overall sales is minimal, accounting for only 0.68% Saigon Co.op features three private label brands: the Co.opMart brand for Industrial Food and Houseware, the Lucky-Co.opMart sub-brand for cookies, and the SGC brand for Garments.
2.6 Advantages of Saigon Co.op when making PL products
2.6.1 A familiar Co.opMart trade-name
Established in 1996, Co.opMart has grown to become the largest retailer in Vietnam, with 21 supermarkets, including 14 in Ho Chi Minh City and 7 in other provinces The brand has gained significant consumer recognition, achieving a remarkable annual turnover growth of 28% Co.opMart's excellence in retail was acknowledged with the Retail Asia Pacific Top 500 awards from Retail Asia Magazine and Euromonitor in 2004, 2005, and 2006.
Co.opMart attracts approximately 80,000 customers daily at its point of sale, highlighting its significant market presence As part of Saigon Co.op's growth strategy, the company plans to expand to 100 Co.opMart supermarkets across the country by 2015, which will enhance its ability to develop private label (PL) products This increase in distribution units will enable Co.opMart to purchase larger volumes from manufacturers, further strengthening its competitive advantage.
Co.opMart is first retailer getting ISO 9001:2000 certificate After getting ISO, Co.opMart has better control on products, service, inventory, displaying and process, getting more belief from customers
2.7 Disadvantages of Saigon Co.op when to make PL products
Employees who work relate to PL products are not trained knowledge on PL
The success of the PL development strategy hinges on the support of Saigon Co.op's Board of Directors, who must acknowledge the significance and advantages of PL products Without a clear policy for PL development, progress will stall Additionally, excessive intervention in the responsibilities of the PL division can hinder development, as processes like brand naming can take up to six months.
Many manufacturers fail to recognize the advantages of collaborating with retailers to produce private label (PL) products, which include increased volume and stable work for their companies As a result, Saigon Co.op faces challenges in sourcing manufacturers willing to produce these PL products.
Saigon Co.op’s situation of PL products
The PL Division operates under the Purchasing Department, led by one Manager and five Deputy Managers Each Deputy Manager oversees a specific category, as shown in Exhibit 1, while Deputy Manager 4 is responsible for both the Health and Beauty Care Division and the PL Division This dual responsibility significantly limits her available time for research and consideration regarding the PL Division.
Every month Saigon Co.op has one Co.opMart post with 12 pages in normal month or
In a special month, such as April 30th for National Day, September 2nd for New Year, or during the Lunar New Year and store openings, only 16 pages are dedicated to promotions However, the information on private label (PL) products occupies merely one-third of a page, resulting in a limited and unappealing presentation that fails to capture attention effectively.
Co.opMart does not engage in traditional advertising for its private label (PL) products, as there are no advertorials or promotions on television, radio, or in newspapers Additionally, both inside and outside Co.opMart, there are no posters, panels, or flyers that provide information about these PL products.
Saigon Co.op has a plan for developing PL but it is too general, not has a detail developing plan for each category and how many items in every year
2.5.4 Policy or rules of PL developing at Saigon Co.op
When a new private label (PL) product is launched, it undergoes a three-month assessment to determine its sales performance; successful products will continue to be developed, while those with poor sales will be discontinued For industrial food products, rigorous testing is conducted prior to launch and re-evaluated every six months by an authorized organization Saigon Co.op is committed to addressing any consumer complaints regarding PL quality, ensuring prompt responses and resolutions Additionally, upon receiving products from manufacturers, Saigon Co.op maintains strict controls over quality, volume, and expiration dates.
2.5.5 Quantity of PL products that Saigon Co.op has?
Saigon Co.op currently offers 111 SKUs, representing 0.21% of its total inventory, which includes 46 SKUs in the Industrial Food category, 8 in Houseware, and 57 in Garments The contribution of private label (PL) products to Co.opMart's total sales is minimal, accounting for just 0.68% The company operates three PL brands: Co.opMart for Industrial Food and Houseware, Lucky-Co.opMart for cookies, and SGC for the Garment category.
Advantages of Saigon Co.op when making PL products
2.6.1 A familiar Co.opMart trade-name
Established in 1996, Co.opMart has grown significantly over the years, now boasting 21 supermarkets—14 located in Ho Chi Minh City and 7 in other provinces As consumers increasingly recognize the Co.opMart brand, the supermarket chain has experienced an impressive annual turnover growth of 28% Co.opMart's prominence in the retail sector was further solidified when it was named the largest retailer in Vietnam, receiving the prestigious Retail Asia Pacific Top 500 awards from Retail Asia Magazine and Euromonitor in 2004, 2005, and 2006.
Co.opMart attracts approximately 80,000 customers daily through its point of sale systems, highlighting its significant market presence As part of Saigon Co.op's development strategy, the company plans to expand to 100 Co.opMart supermarkets nationwide by 2015, which will enhance its ability to develop private label (PL) products The increase in distribution units will enable larger volume purchases from manufacturers, further strengthening the brand's market position.
Co.opMart is first retailer getting ISO 9001:2000 certificate After getting ISO, Co.opMart has better control on products, service, inventory, displaying and process, getting more belief from customers
2.7 Disadvantages of Saigon Co.op when to make PL products
Employees who work relate to PL products are not trained knowledge on PL
The success of the PL development strategy at Saigon Co.op hinges on the support of its Board of Directors, who must acknowledge the significance and advantages of PL products Without a clear policy for PL development, progress will stagnate Additionally, excessive intervention in the responsibilities of the PL division can hinder development, as processes like brand naming can take up to six months.
Many manufacturers fail to recognize the advantages of collaborating with retailers to produce private label (PL) products This partnership can lead to increased order volumes from retailers, providing manufacturers with stable work and revenue As a result, Saigon Co.op faces challenges in finding manufacturers willing to produce PL products.
EXTERNAL AND INTERNAL ANALYSIS
External analysis
Economic conditions deeply influence on consumption Vietnam is successful in organising the APEC Year 2006 Vietnam joining WTO and enable the U.S to approve the permanent normal trade relations with Vietnam
Vietnam’s GDP growth rate during 1990 to 2006 During 2000 to 2006, Vietnam’s GDP stably developed with 7.5% in average Income per capita is increasing, increase in income leads to increase in purchasing power
Figure 04: Period of GDP per capita Source: General Statistics Office
Retail sales value of goods and service in Vietnam is increasing every year It is a good signal, good opportunity for the retail industry
Figure 05: Retail sales value of goods and service in year 1996 - 2005(Unit: VND Billion)
Source: Statistical office of Ho Chi Minh city
Vietnam, with a population of 84.7 million, presents significant consumer potential The Vietnam Commission for Population, Family and Children reports that 45.88% of the population is under 24 years old, and 61.39% is under 34 This demographic indicates a youthful population with strong purchasing power, making Vietnam an attractive market for consumption.
Traditional trade remains dominant in Vietnam, accounting for 88% in 2004 and 87% in 2005 This trend is largely attributed to the concentration of modern retail outlets such as department stores, hypermarkets, supermarkets, and convenience stores in major urban areas like Hanoi, Da Nang, Ho Chi Minh City, and Can Tho, while many other provinces lack access to these modern trading facilities.
Figure 06: Market share between traditional markets and modern distribution
In 2004-2005, TNS reported that 85% of shoppers purchased grocery items through modern trade, while around 70% opted for houseware products in the same channel The retail landscape in Asian countries varies significantly, with modern trade being relatively underdeveloped in Vietnam, accounting for only 12% in 2004 and 13% in 2005 However, this sector shows promising growth potential, particularly in Ho Chi Minh City, where 62% of the population expresses an intention to increase their purchases through modern trade.
3.1.4.1 Consumers’ awareness about PL products
A recent market survey revealed that 69.3% of consumers are unfamiliar with Co.opMart's private label (PL) products, indicating a significant opportunity for brand awareness Additionally, 2% of respondents are aware of these products but have yet to make a purchase Meanwhile, 28.7% of consumers are both familiar with and actively purchasing Co.opMart's PL offerings.
Year buying It means that only 30.7% consumers shopping at Co.opMart to know about Co.opMart’s PL products From this result, communication is important to introduce information to consumers
3.1.4.2 Consumers’ evaluation about PL products
In this survey, 27.7% of consumers buying PL products, 92.9% of them bought Industrial Food, 7.1% bought Garment
A recent survey revealed that 32.3% of consumers consider the pricing of Co.opMart's private label (PL) products to be normal, while a significant 61.3% express satisfaction with the prices, and 6.5% are absolutely satisfied In terms of quality, only 3.2% of consumers reported dissatisfaction, with 19.4% finding the quality to be average Conversely, 54.8% are satisfied, and 22.6% are very satisfied, leading to an impressive total of 77.4% of consumers expressing overall satisfaction with Co.opMart's PL products.
When it comes to the convenience of using private label (PL) products, a significant 80.6% of consumers express satisfaction, with 51.6% feeling satisfied and 29.0% absolutely satisfied Only 3.2% of consumers report dissatisfaction, while 16.1% find the convenience to be average This high level of satisfaction can be attributed to the simplicity and ease of use of most current PL products.
In today's health-conscious market, consumers are increasingly prioritizing food hygiene, with 86.2% expressing satisfaction with the hygiene of private label (PL) products This positive sentiment presents a significant opportunity for the growth of various sectors, including industrial food, fresh food, processed food, and frozen food.
65.4% of consumers does not buy PL products from other retailers because Maxi-Mark, Big C, Citi-Mark have no PL products
83.9% of consumers satisfy with information on PL products, 70% of consumers satisfy with package designing In order to reduce cost, PL products should be a basic designing
Consumers consider prestige of brand when buying products 79.3% of consumers satisfy Co.opMart’s prestige, it means they believe Co.opMart trade-name
3.1.4.3 Which categories customers frequently use
From our market survey, top ten of product groups that consumers usually buy when sopping in modern trade
No Product group % No Product group %
1 Detergent, dishwashing liquid, air freshener
2 Cooking oil, sauce, seasoning 56 7 Fresh food 48
3 Milk and products from milk, nutritious food
4 House-ware 51 9 Cosmetic, health and body care 40
5 Cookies, cakes, candies, sweet 49 10 Garment 39
Figure 07: Top ten of product groups bought by consumers in 2006
Internal analysis
• Distribution: many Co.opMart supermarkets, big chain in Vietnam now
• Well-known brand, image in consumers’ mind
• Many reliable and well-known suppliers, good relationship with them
• Position: low, middle income consumers, suitable to current situation in Vietnam
• Has large number of loyal consumers, more and more increase every year
• Big investment in hi-technology, IT
• Be a first supermarket chain getting ISO 9001:2000 certificates, better control in product, management
• Lower price compared to competitors
• Employees who responsible for PL products are not well trained on PL
• Perception and investment from board of directors on PL is not consistent
• Communication between Co.opMart and consumers about PL is poor, lack information on PL for consumers
• Market share of modern trade is around 13% of nationwide retailing
• Internet users are increasing, it is an opportunity to introduce PL on website
• Many foreign manufacturers coming Saigon Co.op can cooperate with them to produce PL
The integration of the World Trade Organization (WTO) is transforming shopping trends and lifestyles, leading to increased busyness in both work and studies As people find themselves with limited time for shopping, they are increasingly opting for fresh or ready-to-eat meals from supermarkets to save time on their daily purchases.
• Big retailers will come Vietnam such as Wal-Mart, Carrefour, K-Mart, Tesco, etc they have strong finance and ready to put large money into investment
• Cost of product from big players can be lower due to they have good management and buy large volume lead to lower price For instance, Wal-Mart’s slogan is
• Competition will be strict, Co.opMart’s market share can be reduced
• Brain drain to big players due to high salary, high benefit will be happen
• Foreign players had a lot of experience and skill to produce PL
• Foreigner fallacy, Vietnamese think that foreign products are better than local one
3.2.2.1 Comparison GM% between PL and all categories
GM% of all categories in average is 16.36% lower than GM% of PL with 17.68% In the future, if Saigon develop well it will take more profits
Figure 08: GM% of PL and all categories
GM% of each categories in average, Garment category has highest GM% with 19.98%, Fresh food with 19.26%, Housewares with 19.24%, Health and Beauty care with 12.91% and Industrial Food with 10.42% lowest GM%
Figure 09: GM% of each category in average
3.2.2.2 Comparison GM% between PL and specific category
Comparison between GM% and all related categories Co.opMart has five major categories but so far Co.opMart has three PL categories as the following figure
GM% of categories GM% of Private Label
Figure 10: Comparison GM% between PL and related categories
From this figure we can see that gross margin of PL in garment is highest among PL categories and higher than GM% of the garment category
3.2.2.3 Quantity of SKUs of PL products
Until in 2005, Co.opMart had 52 PL SKUs in which has 20 SKUs in Industrial Food, 30
SKUs in Garment and 2 SKUs in Houseware only In 2006, Co.opMart had increased
60 SKUs, the same categories as in 2005 Had no new category developed End of
As of March 2007, Co.opMart expanded its product offerings to include a total of 141 SKUs, with 29 new SKUs added However, 30 SKUs have been discontinued from the private label (PL) list, resulting in a current total of 111 active PL SKUs available for customers.
Category No of SKU in 2005 No of SKU in 2006 No of SKU in 2007 Total
Figure 11: Number of SKUs in 2005, 2006 and end of March 2007
3.2.2.4 Which categories have best GM%
One of five categories that has best GM% is garment with 19.98%, Fresh Food is
19.26%, House-ware is 19.24%, Health and beauty care is 12.91% and Industrial Food is 10.42%
CHAPTER IV: STRATEGY TO DEVELOP PRIVATE LABEL
After conducting a thorough SWOT analysis and evaluating both the external and internal factors, it is evident that Saigon Co.op has the potential to enhance its private label (PL) product offerings By leveraging its strengths and addressing its weaknesses, Saigon Co.op can strategically position itself in the market Therefore, I propose a comprehensive strategy aimed at effectively developing and promoting PL products for Saigon Co.op, ensuring a competitive edge in the retail sector.
In today's retail landscape, hypermarkets, supermarkets, drug stores, and discounters widely offer private label (PL) products across various categories, including fresh and frozen foods, canned goods, ethnic specialties, pet supplies, health and beauty care, cosmetics, garden chemicals, hardware, and stationery To enhance its market presence, Saigon Co.op should adopt a multi-brand portfolio strategy, which I propose to categorize into five distinct groups.
Co.opMart offers a range of essential products, including rice, noodles, oil, sauces, canned food, cookies, paper products, bleach, fabric softener, and detergents, all at competitive prices compared to major brands This focus on quality and affordability meets the regular demands of price-sensitive consumers Leveraging the established reputation of the Co.opMart brand enhances customer trust, making them more likely to believe in the quality of products under this label.
Saigon Co.op offers a diverse selection of fresh and ready-made foods sourced from local and regional farmers This initiative aims to attract customers by providing high-quality products that stand out in the market With an extensive range of offerings, including fresh produce, frozen foods, and seafood, Co.opMart is committed to promoting local agriculture while enhancing its brand identity.
We provide high-quality houseware products and garments that rival major brands, ensuring excellent value for money Our offerings include a variety of garments such as shirts, T-shirts, and trousers, alongside essential housewares like electrical appliances, cleaning aids, garden tools, kitchen tools, and cling wrap To enhance our market presence, we recommend creating a distinct brand specifically for this product line.
We offer a diverse selection of high-quality stationery and office accessories, including paper, pens, clips, files, envelopes, and notebooks, in comparison to leading brands By expanding this category, we can effectively address the office supply needs of Saigon Co.op To enhance our branding, I recommend creating a distinct brand specifically for this product line.
Saigon Co.op exclusively offers private label products that adhere to its specific packaging requirements, ensuring these items are produced solely for their brand and not available to competitors or external markets For example, while Aquafina Pure Water by Pepsi comes in 333ml, 500ml, and 1500ml bottles, Saigon Co.op can request a unique 3-liter bottle format specifically for their stores Importantly, the quality of these private label products matches that of the manufacturers' established brands.
Producing strategy
Saigon Co.op can not produce all products Therefore, the best choice is to cooperate with domestic or foreign manufacturers to produce PL products
4.2.1 Cooperating with foreign manufacturers to make PL products
In order to increase the unique of products and difference from competitors I suggest that Saigon Co.op should cooperate with foreign manufacturers or companies to produce PL products
Saigon Co.op collaborates with international cooperatives to produce private label (PL) products, leveraging their expertise in manufacturing, market dynamics, and export processes In return, Saigon Co.op facilitates partnerships between foreign cooperatives and local Vietnamese manufacturers, enabling efficient production and export of their private label products.
Saigon Co.op specializes in export and import activities, leveraging this advantage to efficiently manage the export and import of PL products for the company.
To mitigate potential disadvantages from manufacturers, Saigon Co.op should consider selecting third or fourth-tier domestic manufacturers These producers, while not major market brands, possess the capability to create private label products that align with Saigon Co.op's specific requirements.
4.2.3 Saigon Co.op makes PL products by themselves
Saigon Co.op plans to establish a Fresh Food Distribution Center, which will significantly enhance its ability to produce private label (PL) products in Group 2 By sourcing fresh food from various farmers and local producers, Saigon Co.op aims to package these products under its stringent quality control standards Successfully implementing this strategy will not only differentiate Co.opMart from competitors but also draw more consumers to shop at their stores.
Vietnam is home to a diverse range of ethnic groups, including Chinese and Cambodian communities, each with their unique cultures and religions This cultural richness influences their food and products, highlighting the importance of collaborating with local manufacturers to create private label (PL) products tailored to these distinct markets.
Saigon Co.op will collaborate with major manufacturers to produce products under Group 5, focusing on both their own brands and private label (PL) offerings, while ensuring that the final products carry the manufacturers' brand names.
Pricing strategy
Offering competitive prices below those of rivals is crucial in this price-sensitive market To enhance consumer trust and recognition, I recommend prominently featuring the Co.opMart brand on packaging, as it is a well-established and reliable name among consumers.
Consumers in Ho Chi Minh City are increasingly prioritizing their health, leading them to seek out hygienic food options for their families Saigon Co.op stands out in this market due to its ISO certification, which enhances its credibility in offering high-quality products In terms of pricing, it is recommended that Saigon Co.op maintains prices that are comparable to or slightly higher than those of its competitors to reflect the quality of its offerings.
This category includes items that consumers purchase infrequently, often leading to unclear price recollection For these products, it is advisable to set prices equal to or higher than those of major brands, as this strategy can yield higher profit margins compared to other product categories.
The price for this group will be affordable than major brands
Group 5 aims to establish a targeted initiative for Co.opMart while ensuring cost savings for consumers They emphasize affordability, exemplified by the pricing of Aquafina pure water, where a 1.5-liter bottle costs 6,000 VND, and purchasing a 3-liter bottle offers an even lower price of under 12,000 VND.
Distribution and displaying
Saigon Co.op currently operates 21 Co.opMart supermarkets, with plans to expand to 100 locations across the country by 2015 as part of its development strategy In addition to Co.opMart, Saigon Co.op maintains strong partnerships with Vietnamese member cooperatives that run Co.op convenience stores, which serve as effective distribution channels for private label (PL) products The company's distribution network for PL products is poised for significant growth.
Effective product display is a crucial aspect of developing private label (PL) products To capture consumer attention, PL products should be strategically placed in high-traffic areas, such as the hot zone and promotional zone, within Co.opMart supermarkets Positioning these products at eye level or within shoulder reach enhances visibility and encourages purchases.
Marketing strategy
In Vietnam, 18% of modern trade value is generated through promotions, as reported by TNS To enhance this channel, manufacturers are offering appealing promotions like extra volume, free gifts, and discounts A successful marketing strategy for Saigon Co.op must include the development of private label (PL) products I propose several marketing approaches to effectively advance this initiative.
In my study, 72.3% of consumers learn about new products through television, with the HTV7 channel accounting for 86.1% of this exposure In contrast, only 9.9% discover new products via newspapers, predominantly the Youth newspaper (68.1%) and Marketing newspapers (14.9%) A mere 6.9% of consumers find out about new products through marketplaces Given the high costs of television advertising, Saigon Co.op cannot sustain long-term advertising for private label (PL) products Therefore, I propose several strategies to effectively communicate information about PL products to consumers.
Advertising on the Co.opMart website, as well as on the Tuoi Tre and Thanh Nien newspaper websites, can significantly enhance brand visibility Research indicates that Tuoi Tre and Thanh Nien newspapers command a substantial share of readership, making them effective platforms for reaching a broad audience.
Advertorials are one of marketing tools very effective Saigon Co.op should write many advertorials to mention about PL products at Co.opMart
Co.opMart supermarkets effectively promote their private label (PL) products by strategically displaying information both inside and outside their stores Inside, eye-catching posters are placed at the top of the floors, while informative flyers are positioned on the shelves to engage customers Externally, panels are prominently displayed at store entrances, ensuring that shoppers are aware of the PL offerings before they even enter the supermarket.
Email advertising is gaining popularity, with Saigon Co.op possessing extensive customer data that includes email addresses Currently, 21.8% of consumers utilize email for this purpose, and it is anticipated that this percentage will continue to rise in the future.
Advertising private label (PL) products through Co.opMart's in-store televisions is an effective strategy to engage customers while they shop With multiple screens showcasing various brands, Co.opMart can leverage this platform to highlight their PL offerings To capture customer interest, Saigon Co.op should invest in high-quality content, including short video clips featuring suggested meals, fashion trends, and the latest news This approach will not only enhance the shopping experience but also draw attention to Co.opMart's unique products.
The grand opening of a new store by Saigon Co.op is a highly anticipated event, drawing significant attention from customers, staff, and media outlets During this occasion, Co.opMart will showcase the new store and offer a variety of promotional products for sale.
It will be better if has two or three pages on this post to introduce PL products
Co.opMart's current advertising panels at bus stops are small and fail to capture customer attention effectively To enhance visibility, Saigon Co.op should collaborate with transportation companies to display advertisements on buses, at bus stations, and on taxis These advertisements should prominently feature the Co.opMart brand and its PL products By pursuing corporate advertising, both Saigon Co.op and transportation companies can enjoy mutual benefits, making it a favored strategy for business promotion.
Every year, Vietnam hosts numerous fairs that serve as significant events for showcasing Co.opMart and private label (PL) products to consumers At these fairs, Saigon Co.op features a mobile supermarket, providing a compact space dedicated to displaying a variety of PL products.
To effectively showcase new private label products, Co.opMart should utilize a full-page advertisement in its monthly publication This strategic approach will enhance visibility and create a strong impression, ensuring that customers are informed about the latest offerings.
A recent survey reveals that 54.2% of consumers prefer purchasing products with free gifts, while 37.5% are attracted to discounts To capitalize on consumer preferences during special occasions like Christmas, New Year, and Lunar New Year, Co.opMart should implement promotional programs for its private label products, such as offering an additional 20% bonus or price reductions.
A significant 36.6% of consumers prefer to test or taste products before making a purchase, while 31.7% rely on previous experiences and another 31.7% are open to buying without prior testing To effectively develop private label (PL) products and attract more consumers, implementing product testing campaigns, tasting trials, and offering sample products is essential During the initial stages of PL development, many consumers at Saigon Co.op are exploring these options.
Saigon Co.op should enhance consumer confidence in its private label (PL) products by implementing a money-back guarantee for dissatisfied customers This initiative can be prominently displayed on their banners to assure shoppers of product quality Additionally, having a dedicated staff member at each Co.opMart to introduce and explain the benefits of PL products will further engage consumers and promote trust in the brand.
Personnel strategy
I propose that the PL Division be structured with one manager overseeing multiple team leaders, each responsible for specific categories such as fresh food, industrial food, health and beauty care, garments, and housewares This organizational model allows the PL manager to focus more effectively on the division's needs, enhancing overall management and productivity.
Training employees on product liability (PL) knowledge is crucial Sweden Cooperative possesses extensive experience in this area, and I recommend that Saigon Co.op seek their support through training courses and consultancy services focused on PL.
Bonus policy
Saigon Co.op needs to establish a comprehensive annual plan for the development of private label (PL) products across various categories It is essential to implement a clear bonus policy for the PL Division, Co.opMarts, and Distribution Centers to incentivize achieving targeted sales on PL products Additionally, an annual assessment of the plan should be conducted to evaluate the performance and achievements of the PL division, allowing for appropriate bonuses to be awarded to the PL Division, Co.opMart, and Distribution Center based on their results.
Exhibit 1 : Current Purchasing Department and Private Label Division
Exhibit 2 : The future Private Label Division
Exhibit 3: Co.opMart television advertising
Exhibit 4: Current promotional information at Co.opMart’s entrance
CO.OPMART’S PRIVATE LABEL PRODUCTS
Hello, my name is [Your Name], and we are conducting research on Co.opMart's Private Label products, which feature the Co.opMart logo or a statement indicating they are Saigon Co.op's Private Label items Your insights will greatly assist us in enhancing these products to better satisfy consumer demands We kindly ask you to take a moment to answer the following questions.
Q1 Which states is the most suitable to yours? ( Showcard), (one answer only)
1 I have not known Co.opMart’s Private Label products yet (Transfer to Q7)
2 I have known Co.opMart’s Private Label products but not bought yet (Transfer to Q2)
3 I have known Co.opMart’s Private Label products and have bought but I stop buying now
4 I have known Co.opMart’s Private Label products and have bought and continue buying
Q2 Why you have known Co.opMart’s Private Label products but not bought? (Transfer to Q7)
Q3 Why do you stop buying Co.opMart’s Private Label? (Transfer to Q7)
Q4 Please evaluate private label that you have bought at Co.opMart as the following factors?
No Factors not absolutely agree
Not agree Neutral Agree Absolutely agree
Q5 What is your evaluation about prestige of Co.opMart trade name and Co.opMart’s PL products? (using 10 point scale)
Co.opMart trade-name Co.opMart’s Private Label Prestige
Q6 Beside Co.opMart’s PL products, have you ever bought PL products from other retailers?
1 No 2 MaxiMark 3 BigC 4 CitiMark 5 Metro 6 Other ………
Q7 Which are information channels that you know about new products?
No Media No 1 Traditional markets
Q8 What news papers or magazines that do you often read?
1 Youth (Tuoồi treỷ) 5 Women’s world 9 Young People (Thanh nieân)
3 Marketing 7 Vietnam economic 11 Saigon liberation
Q9 What television channels do you like? (many answers), what program do you like in that channel?(one answer only) what is time you watch?( one answer only)
Channels Television program Time Television channel
Gender: 1 male, 2 female Age: E-mail:
Q11 Please let us to know your frequency of using e-mail?
1 More than 1 time(s) per day 3 Less than 7 times per week but more than 1 times
2 1 time per day 4 Less than 1 time per week
Q12 Which statement is suitable to you when you buy a product?
1 I would like to buy products without testing or tasting before buying
2 I would like to test or taste products before buying
3 I would like to buy products basing on previous experience
Thank you for your answering!
Exhibit 01: Question 1 - Which states is the most suitable to yours?
I have not known Co.opMart’s
Private Label products but not bought yet
Private Label products and have bought and continue buying 29 28.7 28.7 100.0
Exhibit 02: Question 4 - Please evaluate private label that you have bought at Co.opMart as the following factors?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 03: Question 4_1 - Please evaluate private label that you have bought at Co.opMart as the following factors? Price?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 04: Question 4_2 - Please evaluate private label that you have bought at Co.opMart as the following factors? Product quality?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 05: Question 4_3 - Please evaluate private label that you have bought at Co.opMart as the following factors? Assortment?
Exhibit 06: Question 4_4 - Please evaluate private label that you have bought at Co.opMart as the following factors? Convenience when using PL products?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 07: Question 4_5 - Please evaluate private label that you have bought at Co.opMart as the following factors? Hygiene of PL products?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 08: Question 4_6 - Please evaluate private label that you have bought at Co.opMart as the following factors? Information on package?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 09: Question 4_7 - Please evaluate private label that you have bought at Co.opMart as the following factors? Package designing?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 10: Question 4_8 - Please evaluate private label that you have bought at Co.opMart as the following factors? Package colors?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 11: Question 4_9 - Please evaluate private label that you have bought at Co.opMart as the following factors? Promotion types?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 12: Question 4_10 - Please evaluate private label that you have bought at Co.opMart as the following factors? Brand’s prestige?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 13: Question 4_11 - Please evaluate private label that you have bought at Co.opMart as the following factors? Which promotion types that consumers like?
Frequency Percent Valid Percent Cumulative
Exhibit 14: Question 5_1 - What is your evaluation about prestige of Co.opMart trade-name and Co.opMart’s PL products? (using 10 point scale)
Frequency Percent Valid Percent Cumulative Percent
Exhibit 15: Question 6 - Beside Co.opMart’s private label products, have you ever bought private label products from other retailers
Frequency Percent Valid Percent Cumulative Percent
Exhibit 16: Question 7 – Information channels that consumers know about new products
Frequency Percent Valid Percent Cumulative Percent
Exhibit 17: Question 8 - What newspapers or magazines that do consumers often read?
Exhibit 18: Q9_1 - What television channels do you like (many answers)?
Frequency Percent Valid Percent Cumulative Percent
Exhibit 19: Q9_2 - What program do consumer like in that channel?
Frequency Percent Valid Percent Cumulative Percent
Frequency Percent Valid Percent Cumulative Percent