Vietnamese are a progressive, driven and optimistic people who do not dwell on the past but look to a future. Both consumer and business confidence is extremely high. The vast majority of Vietnamese—given the young population—have only seen personal economic circumstances rapidly improve.

 

Disposable incomes create an increasing desire to experience new opportunities. Youths are more brand- and ad-savvy than the older generation, who increasing look to youth to translate the consumer world for them. Fortunately for marketers, success is imbued in pride (commonly referred to as ‘face’), which has to be visual to be recognised. This leads to considerable conspicuous consumption. 

 

In the two metropolitan cities—Hanoi and Ho Chi Minh City—more consumers have a mobile phone and have used the internet than those who have not. Telecommunications, financial services, property, health and education services will grow exponentially over the next decade and as WTO requirements provide for greater access to services—particularly telecommunications and financial services.

 

Getting brands on the shelf is no easy task, once you move away from key cities. While wet markets still dominate household shopping, the consumer brand world has changed rapidly with the influx of modern trade environments: franchised restaurants, retail chains, department stores, supermarkets and hypermarkets. As a channel, the modern trade is growing exponentially in sales and in 2009 accounts for an estimated 20% of retail sales. Cimigo expects it to account for nearly 40% of retail sales in 2010.

 

 

1. Understand your market size. There are five million urban households, 2.7 million of which are in the urban consuming (upper-middle) class, which translates to 12.2 million people, who are widely dispersed.

 

2. Have a long-term perspective. Understand the Vietnamese, their needs and the regional differences.

 

3. Provide products to suit not only the senses but also the pocket. Consider small pack sizes and cheaper pack formats.

 

4. Ensure wide availability and coverage to maximise your opportunities to sell. Successful companies in Vietnam have achieved very strong distribution and channel management.

 

5. Focus resources: do not dilute them across irrelevant line extensions.

 

6. Do not underestimate the local competition; they caught up about three years ago!

 

7. Looking to partner locally? Key local companies do not need your money. Vietnam is awash with money. Expertise, technology and experience count!

Richard Burrage (email richardburrage@cimigo.com) is the Managing Director of market research company Cimigo. He has spent the last 12 years in Vietnam assisting in the development of numerous brands. He lives in Ho Chi Minh City.