Vietnam – Novotel, InterContinental Groups and Canon – these are just a few of the brands out of so many who have recently been focusing their marketing energy on the Vietnam market.
And why shouldn’t they? The emerging Southeast Asian market has been experiencing rapid economic growth in recent years, welcoming more and more global brands to its shores.
Despite many of the world’s major economies reporting a slowdown, global retailers such as Giant, Guardian and Metro have been rapidly expanding in the country since the third quarter of 2011, according to research by Nielsen.
Giant has since opened its first hypermarket in the country, while Guardian had grown to 10 stores by May 2012, the global research firm reported.
“Store brands have potential to grow further due to competitive price and value for money,” says Vaughan Ryan, country manager at Nielsen Vietnam.
Matthew Collier, chief executive officer of Young & Rubicam (Y&R) Advertising in Vietnam, agrees, adding brands are now making Vietnam an important part of their marketing plans.
“Competition is definitely heating up, especially in FMCG where the established players have long held market share and brand preference,” he says.
Dubai-owned airline Emirates, for example, entered the market in June this year, and already the carrier is finding it challenging to compete with others who have been successfully established there for several years.
However, the airline still continues to build its presence through advertising its fl ight destinations and introducing products and special fares to potential customers.
“We’ve been investing mainly in press advertisements, but we are also making use of coffee shop internet promotions and screening videos in lifts,” says Terry Flynn, manager of Emirates Airlines in Vietnam.
He also says the airline is looking to venture into outdoor advertising and is looking for “an iconic site” to do so.
Adding on to the country’s maturing economy, the changing mindsets of Vietnamese consumers are also opening up more doors for marketers.
According to Y&R’s Generation Asia survey, two-thirds of the 18-35-year-olds surveyed have shown optimism they will be wealthy in the future, while 83% are confident of achieving great things.
“Born into rapid economic growth, they are a generation filled with optimism about their present and future, and firmly believe their lives are far better than their parents,” Collier says.
He says this changing attitude is allowing consumers, who are looking towards a more affluent future, to open up more to global brands and as consumers become more affluent, there is a growing desire for technology and foreign brand purchases.
Not all beer and skittles
As much as Vietnam has earned the reputation as a fast emerging Southeast Asian economy, opening up to massive consumer spending, it’s not all rainbows and smiles. The recent World Economic Forum’s Annual Global Economic Report saw Vietnam falling 10 places to rank 75th globally, after dropping six positions in 2010.
“GDP may be consistently growing in the 6% to 8% range but that’s been tempered with massive inflation of over 20% for the last few years,” Collier says.
Nielsen also reported inflation is still a key concern for the Vietnamese economy in the past three years.
“The economy is the top concern among nearly one-fifth of Vietnamese respondents while another 70% think Vietnam is still in an economic recession,” Ryan says.
Because of this, consumers in the market are among the most promotion-driven, with 94% being influenced by promotional deals, the global research firm found. More than half of business leaders are expecting consumers to buy more on promotion.
“We can witness the intense competition in the Vietnam retail market when consumers tighten their budget more than ever before, together with the market entrants of Japanese and Korean retailers,” Ryan says.
As such, Collier warns against companies who are jumping on the Vietnam bandwagon without first analysing the market. In order for a brand to establish itself successfully in a new market, it is crucial marketers first understand the market and their target audience.
“Too often companies are coming in all gung-ho and putting massive investments based on a population of over 90 million people.
They don’t know how many of them are urban versus rural nor their spending power,” he says.
“If a client doesn’t know the market, I can’t see how they can drive success within it.”