Opportunity for domestic enterprises to occupy domestic market
The muggy weather in the recent summer days made old couple Nguyen Thi Khe in Thanh Xuan district (Hanoi city) decide to buy one more electric fan for their family, and the fan manufactured by the Dien Co Thong Nhat Company (the Reunification Electric Motor Company) was the one they bought without hesitation because all the fans they had been using thus far were the products by the Dien Co Thong Nhat Company and have been used for many years without any hitches.
They came to the PICO electrical and machinery supermarket on the Nguyen Trai road to buy a fan, but it was a surprise that there were not any such a fan as required. Most of the fans on sale there were imported or produced by some join venture companies. In the end of the day, they bought a Thailand-made fan advertised as to have the same quality and price as those of the Dien Co Thong Nhat fans.
The above-said story is cited here to mean that even though many domestic products have good household brand names, it is still difficult for the domestic consumers to buy the product they want, because the distribution systems is yet be seen mostly in the market.
This is one of the enterprises’ weaknesses in occupying the domestic market.
According to economic expert Pham Chi Lan, it is necessary for the domestic enterprises to pay attention to the changing trend in the distribution system to make appropriate adjustment.
Currently, in Vietnam, the modern commercial system including supermarkets and trade centres has accounted for 18% of the retail system while the traditional commercial system (markets, shops and so on) has made up 82%.
According to the General Statistics Office, in 2005, there were only 10 supermarkets and two trade centres nationwide, but today, the figure has gone up to 400 supermarkets, 60 trade centres and nearly 2,000 convenient shops.
The number of supermarkets and trade centres is expected to be up 62.5% and 150% respectively by 2010.
She stressed that the state-of-the-art trade system in Vietnam will see very fast development. The people’s income rises, creating a driving force for the development of the system. For this reason, it is necessary for enterprises to be fully aware of the role of the distribution system, in which special importance is attached to the modern trade system because this is also a development trend of regional countries when the system accounts for 55 – 65% of the retail system while the traditional commercial system makes up 40 – 45%.
By basing themselves on the items of goods and the business sectors, enterprises need choose the appropriate trade systems in order to build and develop their own distribution systems. For example, for fresh foodstuffs products, the Vietnamese consumers are in the habit of buying them in markets, while they mainly buy the processed foodstuffs products in supermarkets.
It is possible for enterprises to learn experience of the development of the distribution system by the world’s leading groups such as Metro, Big C and so on, and to have access to these groups so that these enterprises can sell their goods in the groups’ modern distributive systems. Developing an effective distribution system is the very way for enterprises to expand and create their firm footholds in the domestic market.
Deputy General Director of the Vietnam Pepsico Company Lam Van Hai said that to maintain an effective distribution system, one of the important solutions is to build up a contingent of professional sellers. In doing so, enterprises need to invest and train their own salespeople not only with basic skills (such as knowledge of products, basic selling skills, customer management, planning, data analysis), but also with ‘soft’ skills such as the use of computers and the project management.
The recent shift in consumption habit by Vietnamese people is also an important thing to be followed by enterprises.
According to economic expert Pham Chi Lan, the results of a lot of studies and surveys in the country on the top concern given by consumers when buying goods show that if in the past price was the most important element, but now only 13% of the number of the Vietnamese consumers consider the price as their top priority. on the contrary, the quality of products has now become the consumers’ number one priority, followed by the prestige and brand names of products.
The shift in consumption habit has forced enterprises to be fully aware that if they want the Vietnamese people give priority to consuming Vietnam-made goods, they should take the quality of the products as a top priority. In case of poor quality of products, it will be difficult for them to conquer consumers. Now it is urgent to improve the product quality so that the domestic enterprises can occupy the domestic market in a quick and easy way.
In addition, it is necessary for the enterprises to maintain their product quality to create prestige as well as to build up brand names for their products.
Director of the Enterprises Support and Business Research Centre Vu Kim Hanh emphasised that it is essential for the enterprise to pay more attention to introducing and publicising their products. Currently, some Vietnamese enterprises are introducing several products with brand names in English to markets so as to penetrate into the high-grade market segmentation.
So, the enterprises must enhance introducing and publicising these products so that consumers can identify these products as Vietnam-made ones, so as to be able to take advantage of and effectively exploit the campaign called ‘Vietnamese people give priority to consuming Vietnam-made goods’.
In addition, it is necessary to strengthen the market management to help consumers avoid buying fake ‘made in Vietnam’ goods.
