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Competition Close To Cooperation
By Minh Tam
In the context of the economic downturn, proper brands – the product line made with proper trademarks by distributors – attract more consumers thanks to their low prices. Some retailers forecast one out of every four products sold at supermarkets within the next three years will be a proper brand. It is time producers adopt obvious strategies to deal with these competitors.
It is possible to say proper brands are no longer alien to many consumers, after these kinds of products were launched and promoted years ago by many retailers.
Metro Cash & Carry Vietnam, a foreign distributor setting foot in Vietnam in 2002, started this trend. With its experiences from other markets in the world, Metro has continuously launched a series of its own brands for many product categories, ranging from food items and cosmetics to kitchen utensils and garments. As observed by people in the retail sector, Metro was a pioneer in launching proper brands and it has the largest number of sub-brands.
Similarly, the Co.opMart supermarket chain of Saigon Co.op also launched its proper brands very early. According to Nguyen Thanh Nhan, Saigon Co.op deputy general director, this retailer has as many as 50 supermarkets. The company has created its proper brands since late 2003 and early 2004, with essential commodities such as foods and chemicals. It set up a proper brand research and development section, instead of operating a small division in the sales department. The company also invited experts to help develop these product lines professionally. The company, Nhan said, will focus on developing proper brands in the near future.
The Big C supermarket chain will launch in this month a proper brand carrying its name. Big C earlier launched about 250 proper commodities, processed by its fresh food production center. The retailer has also imported the proper brand Casino from its mother group (also named Casino) to distribute in the Vietnamese market.
Meanwhile, the Vietnam National Textile and Garment Group’s Vinatex Mart supermarket chain has developed its Vinatex Fashion brand for garments for adults and children. Vinatex Mart has workshops to make products, providing its own designs and materials.
Quynh Ny, a Vinatex Mart representative, said it will this year launch four more proper brands for men, women and children. These products will cost 10-20% less than comparable products on the market. “We will invest in these brands professionally to recognize and position them better,” she said. “When our proper brands grow big enough, we will build a separate specialized section instead of incorporating it into other departments, like we do currently.”
Lotte Mart, a newly arrived foreign retailer, has also been launching products with proper brands. Lotte features products with South Korean cultural traits and exploits the strengths of its mother group. Marketing and branding expert Tran Anh Tuan, who is director of The Pathfinder Co., said developing proper brands is a major demand of the retail sector when the supermarket business model develops, as networks spread widely and trademarks have been secured. Creating proper brands is a way for retailers to attract consumers and compete with rivals in terms of price.
According to Tuan, developing proper brands during economic difficulties can further boost retailers’ operations as they meet consumers’ trends of seeking cheaper products. The competition between retailers in launching proper brands is becoming hectic in terms of prices, differences and exclusivity. Distributors are giving priority to developing proper brands and have obvious strategies on commodities.
Retailers’ proper brands have become a possible menace to manufacturers, as they must begin to compete with distributors as well as other rivals. Retailers acquire adequate sales data not available to manufacturers, especially small producers, and therefore know how to create proper brands suitable for consumer tastes and demands.
Luong Van Vinh, director of My Hao Chemical Cosmetics Co., said it is most apparently noticed that retailers will give priorities for their brands when displaying them. They will give them good locations on counters, shelves and large spaces to make them more prominent. Not having to spend big money on product marketing and advertising with good locations and price advantages cause pressures for manufacturers that are selling products via modern distribution channels, according to Vinh.
Pham Thi Xuan Huong, deputy general director of Lam Dong Pharmaceutical Co. (Ladophar), acknowledged sales for the same products manufactured by the company have slipped since distributors had their own brands. Her company previously developed proper brands for distributors. “Even some distributors suggested we cut the products for which they have proper brands,” she said.
Tuan from The Pathfinder said this is actually a menace to manufacturers, especially small enterprises, that cannot secure their trademarks. However, there are many ways to overcome this threat because manufacturers still have more advantages in their field. Manufacturers themselves must understand proper brands clearly, accept them as an inevitable trend and deal with them accordingly.
Tuan said it is possible to see proper brands as a barometer for businesses, as this will show if their products have actually become irreplaceable. To compete, manufacturers should continue to produce innovative goods, improve quality and add new uses to the products to interest consumers. In addition, new products are necessary to support the old products. It is better to create competitiveness with exclusive products and boost investment into product marketing and distribution channel expansion. “The wise thing to do is to boost the traditional sales channel, a distribution channel proper brands of supermarkets still fail to access,” Tuan said.
According to Tuan, manufacturers can also cooperate actively with retailers and undertake producing proper brands if they have not fully exploited their production capacity and have exclusive products of good quality. These factors enable them to claim their interests for products carrying their trademarks, such as the priority for display locations.
Pascal Billaud, Big C general director, said manufacturers should carry out non-stop innovations to maintain top market positions and better meet the demands of clients. They should also optimize research and development activities, adopt good marketing schemes and build corporate images as well as create and maintain the trust of clients. In particular, manufacturers can become partners with distributors to make products with exclusive brands and increase sales, thus developing business.