TABLE OF CONTENT
1.0 INTRODUCTION.....................................................................................................................1
2.0 PRODUCT DESCRIPTION......................................................................................................2
3.0 PRODUCT MARKETING MIX (4Ps) – VALUE & SATISFACTION..................................5
3.1 PRODUCT........................................................................................................................8
3.2 PRICE.............................................................................................................................12
3.3 PLACE............................................................................................................................13
3.4 PROMOTION.................................................................................................................15
4.0 CONCLUSION........................................................................................................................17
REFERENCES..............................................................................................................................18
1.0 INTRODUCTION
Marketing needs to be consider as a critical issue of companies whether they’re big or
small, for –profit or not-for-profit, domestic or global. Marketing mix which is an important
concept of the company’s marketing process includes four factors: Product, Price, Place and
Promotion (well-known as 4Ps). It is always a difficult problem with the questions “How to
create right product, sell at righ price, in the right place and use the suitable promotion” for the
firm to implement successfully its performance.
To have a deep understand of this marketing concept, the essay will concentrate on
analizing 4Ps in the Tan Hiep Phat Beverage Group’s marketing campaign of Zero Degree Green
Tea during launching and developing period in Vietnam. With the huge potential ready to drink
(RTD) tea market and high consistent growing (more than 34%), we believe that this case will be
typical for getting more knowledge about marketing mix strategies.
2.0 PRODUCT DESCRIPTION
Official website of Tan Hiep Phat shows that:
Tea is a traditional raw material made into a typical and popular drink in the whole world
especially in Asia. Positioning in the part of refreshment need and paying attention to the
health benefit of the people, in early 2006, Tan Hiep Phat launched ready to drink tea
trade mark named Zero Degree Green Tea to the market, a breakthrough introducing a
convenient drink in 500ml PET bottle with green colour and trade mark logo (two circles)
to the dynamic pace of life, and successfully sent the message “an outstanding drink
compared with ordinary refreshment drinks on account of its nutritious value and health
benefit. Green Tea bears the strong trend of the modern time and is a wise choice in the
taste of enjoying tea of the Vietnamese people”.
The picture of Zero Degree Green Tea
In 2007, Zero Degree Green Tea immediately became one of the fastest growing brands
in Vietnam. The research of Neilsen company in 2007 indicated that its Brand Equity Index is
6.4, one of highest in Vietnam (only 8% of all Fast Moving Comsumer Good brands have scores
of 5.5% and above). In 2008, Zero Degree Green Tea achieved year 5 sales target of US$16
million in year 3. The Economist (April 26th – May 2nd 2008) stated that Zero Degree Green Tea
is thought to be the country’s fastest growing brand, with sales almost doubling last year. It also
maintained market leadership and an average share 51.5% in the last 3 years (from 2007 to
2009). In 2010, Zero Degree Green Tea received the Vietnam National Brand award.
Thanks to huge success of Zero Degree Green Tea and green tea products of other
competitors, RTD tea consistently recorded the fastest total volume growth in soft drinks in 2009
and 2010 in Vietnam. RTD tea sales increased by 34% in total volume sales in 2010.
According to the report titled Soft Drinks in Vietnam (2011), Tan Hiep Phat (THP)
Group was formerly known as Ben Thanh Beer & Beverages Co Ltd, and founded on 15 October
1994. At the beginning, it focused on producing and trading beer and alcoholic drinks. The
company has continued to improve its product quality by upgrading to new manufacturing
technology and applying ISO standards. “It is one of few local producers willing to invest in
Rearch and Development (R&D) and branding activities to increase volume and value sales” the
report stated.
In 2004, Ben Thanh Beer & Beverages Co Ltd changed its name to Tan Hiep Phat
Manufacturing and Trading Co Ltd. The “Soft drinks in Vietnam” report (2011) also shows that:
Tan Hiep Phat’s head office and factory are located in Thuan An district (Binh Duong
Province), spanning over 110,000 sq m. The factory exploits a chain of fully automatic
production systems to ensure hygiene and product quality. In particular, Tan Hiep Phat
invested heavily in launching the Enterprise Resource Planning system from SAP in
April 2010. This step expressed the ambition of the company to boost its production rate
and to reduce waste in order to enhance efficiency and product quality.
The company offers a wide product portfolio of non-alcoholic drinks in Vietnam,
including bottled water, RTD tea, and sports and energy drinks. Zero Degree, Dr Thanh
and Number 1 are the manufacturer’s most popular brands. Tan Hiep Phat appears to be
most active in RTD tea. It offers many RTD tea flavours, such as: sugared or sugar-free
green tea, herbal tea, and winter melon tea. The leading player’s products are aimed at
more health conscious consumers, for example, females and the elderly.
The segmentation of Zero Degree Green Tea is consumers that has already drunk
carbonates, mineral water and even purified water because of its superior healthy, cooling
benefits with the previous essences of green tea. Zero Degree Green Tea target market is
vietnamese young adults who’re suffering the negative impact of fast-paced lifestyle such as
pollution, great pressure at school and work, etc and raise awareness of healthy drinks use (Best
Sustained Success, 2011). We can see obviously that young Vietnamese people under 30 years
old account for 56% in total 86 millions (Statistical handbook of Vietnam 2009, 2009), which
becomes wide potential market for Zero Degree Green Tea.
3.0 PRODUCT MARKETING MIX (4Ps) – VALUE & SATISFACTION
Marketing mix which is third four steps of creating value for customers and building
customer relationchips consists of a blend of the four marketing mix elements (Product, Price,
Place, Promotion) that transforms the marketing strategy into real value for customers.
Marketing mix is ‘the set of controllale, tactical marketing tools that the firm blends to produce
the response it wants in the target market’ (Armstrong & Kotler, 2010). Figure 3.2 shows the
marketing tools under each P.
Figure 3.1. An Expanded Model of the Marketing Process
Figure 3.2. The Four Ps of Marketing Mix
Amongst the other marketing mix models have been developed over the years is Boom
and Bitner's 7Ps, sometimes called the extended marketing mix, which include the first 4 Ps, plus
people, processes and physical layout decisions.
Another marketing mix approach is Lauterborn's 4Cs, which presents the elements of the
marketing mix from the buyer's, rather than the seller's, perspective. It is made up of Customer
needs and wants (the equivalent of product), Cost (price), Convenience (place) and
Communication (promotion).
Figure 3.3. Four Ps versus Four Cs
Product Customer solution
Price
Place
Promotion
Customer cost
Convenience
Communication
‘Customers see themselves as buying value or solutions to their problems’ (Armstrong &
Kotler, 2010). They see themselves as capturing value when total benefits received are more than
total costs of searching, buying, using, maintaining & disposing the product. They want to be
satisfied through getting the product value that helps them to solve their needs & wants as
efficiently, effectively and competitively as possible. ‘The twofold goal of marketing is to attract
new customers by promising superior value and to keep and grow current customers by
delivering satisfaction’ (Armstrong & Kotler, 2010). Therefore, ‘marketers would do well to
think through the four Cs first and then build the four Ps on that platform’ (Armstrong & Kotler,
2010).
3.1 PRODUCT
Official website of Tan Hiep Phat shows that:
Produced on modern Japanese technological production line with selected verdant leaves
plucked out of tea plants on plains, green tea is able to keep its natural and pure flavor.
Green tea is mad through hot extraction process in order to insure food safety and
hygiene standard and to detain precious essences of green tea. With the use of heat-
resisting 500ml PET bottle, the choice of trade mark logo (two circles), and the shape in
green color friendly to the eyes which creates a feeling of becoming attached to nature,
green tea bears high aesthetic value under the sponsorship of Number One trademark.
Zero Degree Green Tea has two original flavors: sugar-free green and green tea with
lemon flavor. With nutritious element such as vitamins E, C, and especially EGCG, a
strong anti-dioxide element, green tea helps you reduce stress, reinforce resistance,
prevent skin ageing and cancer in order to cool down your body and spirit after a
hardworking day or after a long trip. It is very convenient to bring along Zero Degree
Green Tea on trips, picnics, or in conferences… and sometimes simply drink it at home
instead of purified water.
Now Tan Hiep Phat also provides a variety of green tea products such as lemon green tea
with honey in PET bottle, honey tea in glass bottle and even prepare to launch green tea in box.
It has divesified the containers of original flavours such as producing lemon green tea in glass
bottle, PET bottle and can to satisfy customer needs and wants.
Various products in green tea product line of Tan Hiep Phat
As we mentioned above, Zero Degree Green Tea success has already been actualized. It
sustained market leadership and an average share 51.5% in the last 3 years (from 2007 to 2009).
In 2010, Zero Degree Green Tea received the Vietnam National Brand award. Thanks to huge
success of Zero Degree Green Tea, Tan Hiep Phat continues to lead RTD tea with a 41% share
of off-trade value sales in 2010. Other competitors such as C2 of URC Vietnam, Green tea 100
of Tribeco (Saigon Beverages), Lipton Pure Green tea of PepsiCo Vietnam, etc account for 59%
share of off-trade value sales in 2010.
“Soft drinks in Vietnam” report (2011) identified:
In Asia, RTD tea is the core product type of most of the leading companies. RTD tea
sales are expected to grow by a 22% off-trade volume Compound Annual Growth Rate
(CAGR) over the forecast period. This is much slower than the review period CAGR as
the category approaches maturity. Nonetheless, the fast rate of innovation in RTD tea
might see stronger growth if players capture the consumers’ attention by launching more
interesting products.
This means green tea has became core product type of the leading beverage companies
and green tea product line is in the ongoing to maturity but it still has strong possibilities to
develop if the producers pay attention to research and development for product diversification. It
also means that green tea product life cycle is at the stage between growth and maturity. In this
stage, companies try to divesify their green tea products with various flavours or containers to
utilize their profitability and defend their market share like the same way Tan Hiep Phat has been
doing.
3.2 PRICE
Tan Hiep Phat enjoyed the advantage of the “first-mover” in RTD tea market in Vietnam.
“Although RTD tea was present in the country long before the 2000s, it only started to develop
fast from 2006 when Tan Hiep Phat launched Zero Degree Green Tea” (Soft Drinks in Vietnam,
2011). Thus, Tan Hiep Phat applied the “new product pricing” strategy to enjoy the advantage of
market-skimming through charging higher price to get more profits. In early 2006, Zero Degree
Green Tea was positioned at the higher price (approximately 20% more than the other beverage)
but it was still preferred because of its health benefit (Hoang, 2007). The evidence is that Zero
Degree Green Tea immediately ranked atop of the fastest growing brands in 2007 in Vietnam.
Its success inspired more than 20 competitors such as C2 of URC Vietnam, Green tea 100
of Tribeco, Lipton Pure Green Tea of PepsiCo Vietnam, Queen Tea, etc and even illegal copycat
competitors (Best Sustained Success, 2011). There’re now not much difference in the price of
RTD tea in terms of retail format (Soft Drinks in Vietnam, 2011). Figure below proves this.
Figure 3.2.1. Retail price comparison of RTD green tea in 2011 in Vietnam
PET
bottle
Zero Degree Green Tea C2 Green Tea 100 Lipton Pure Green Tea
500ml VND 7,500 VND 6,800
360ml VND 5,500
450ml VND 6,000
As we already analized the product level and product life cycle, Tan Hiep Phat applies
the going – rate pricing policy to defend their market share along with insuring their profitability.
3.3 PLACE
Zero Degree Green Tea inherited total distribution channels including 300,000 outlets
with more than 200 distributors in all the 64 provinces and cities that Tan Hiep Phat has built
(Kotler, Kartajaya, & Hooi, 2008). Tan Hiep Phat applied intensive distribution which means
“consumers can easily purchase its products in supermarkets/hypermarkets, food/drink/tobacco
specialists, independent small grocers, and even street vendors” (Soft Drinks in Vietnam, 2011).
By this way, consumers get product value and satisfaction. This distribution power forces small
beverage producers to stop their manufacturing or become copycat companies. The recent
evidence is that the trademark O2 and Omega of Viet My and Quang Minh companies litigated
by Tan Hiep Phat because of trademark infringement.
Zero Degree Green Tea is popular in many supermarkets, hypermarkets…
… and independent small grocers
Both Tan Hiep Phat and Pepsico Vietnam have the strong nationwide distribution
network to establish a presence in the market. Third giant Saigon Beverages is considered
weaker in distribution but now continues to invest in upgrades to machinery and improved
distribution through cooperating with retailers to promote its products within, for example,
supermarkets and hypermarkets, using billboard and in-store posters or discounting.
3.4 PROMOTION
At the beginning, Tan Hiep Phat chose boosting communication solution with advertising
on televisions (high frequent broadcasting spots on TV), in printed and electronic newspapers
and cooperating with the below the line activities (Hoang, 2007). The marketing campaign has
transferred successfully the message: “an outstanding drink compared with ordinary refreshment
drinks on account of its nutritious value and health benefit”. Green Tea bears the strong trend of
the modern time and is a wise choice in the taste of enjoying tea of the Vietnamese people. Its
success is partly advantage of first mover in the market, the first firm offered customers the
choice for nutritious and healthy product in tradditional green tea flavour instead of carbonates
and purified water.
Zero Degree Green Tea’s poster emphasizes natural freshness, cooling body and other
nutritious value
Tan Hiep Phat chose two circle logo for Zero Degree Green Tea which symbolize the
balance of cooling body and soothing mind aimed to raise customer awareness of its major
health benefits. Zero Degree Green Tea was also sponsored by NumberOne, a successful
trademark before according to the assessment of Kotler et al. (2008), which gained customer
reliability. Each advertisement reflected the company’s knowledge of the market and the
behaviour of local consumers. Zero Degree Green Tea’s advertisements during its launch period
focused on the natural freshness of the product on hot days. This advertising quickly captured the
attention of consumers as few other brands offered similar themes. For example, C2 was
launched right after Zero Degree Green Tea but it is rapidly in the passive state because it chose
similar slogan “cool and clean” as Zero Degree Green Tea which couldn’t create the difference
with the product launched before. Although C2 applied penetration pricing policy and strongly
invested in advertisement on TV and other mass media methods, it accidentally restricted its
segmentation because it tried to persuade the consumers who already drunk carbornates (not
wide beverage market) to drink it. Accompanied with its unavailability for sales, the launching of
C2 initially supported the strong growth of Zero Degree Green Tea.
In 2010, the leading player launched a new advertising campaign for Zero Degree Green
Tea, which focused on its relaxation and stress-relieving effects.
4.0 CONCLUSION
In summary, Tan Hiep Phat chose the wise step when it has invested in research and
development to become the first – mover in competitive green tea market with Zero Degree
Green Tea trade mark. The right message “an outstanding drink compared with ordinary
refreshment drinks on account of its nutritious value and health benefit” with suitable logo and
green shape color that create comfort feeling and freshness for customers raise successfully
awareness of nutritious and healthy drink for customers. Lauching Zero Degree Green Tea offers
customers the choice for nutritious and healthy drink instead of carbonates and ordinary purified
water. Along with distribution power, a strong nationwide distribution network, Tan Hiep Phat
makes customers easily purchase the product everywhere and close or restrict the competitive
chance of both small and even multinational competitors. Zero Degree Green Tea has combined
the boosting media communication with advertising on TV, in printed and electronic newspapers
and other below the line activities and therefore, supported effectively the strong trademark
growing and off-trade volume sales. These activities provide customer sastifaction of finding,
purchasing, using and two way communication, which means delivering product value and
satisfaction to the customers.
REFERENCES
Statistical handbook of Vietnam 2009. (2009).
(2011). Best Sustained Success. Zero Degrees Green Tea Campaign, Tan Hiep Phat Beverage
Group.
Soft Drinks in Vietnam. (2011, March). Retrieved June 2011, from Euromonitor International
Web site: http://www.euromonitor.com
Armstrong, G., & Kotler, P. (2010). Marketing: An Introduction Global Edition (10th ed.). New
Jersey: Pearson Higher Education.
Hoai, T. (n.d.). Product & Health: Zero-degree green tea - a shower. Retrieved June 2011, from
Tan Hiep Phat Group Web site: http://thp.com.vn/
Hoang, D. D. (2007, 12). The case of Zero Degree Green Tea and C2. Success Magazine.
Kotler, P., Kartajaya, H., & Hooi, D. H. (2008). Think ASEAN! Havard Business School Press.