At GMA, we’ve been closely monitoring an exciting global phenomenon – the extraordinary growth of Vietnam’s economy. This captivating nation is not only a tourist haven but also a treasure trove of business prospects. As it rides the tide of economic advancement, comprehending the intricacies of market entry strategies becomes crucial.
This blog post serves as a guiding light for those aiming to explore this thriving market. We will unravel Vietnam’s present practical market entry strategies, delve into cultural understanding, and offer valuable tips to navigate your business journey into Vietnam with assurance.
1. UNDERSTAND THE VIETNAMESE MARKET
1) Conduct Market Research
Study the Vietnamese market thoroughly, including demographics, consumer behavior, purchasing power, and cultural preferences. Analyze market trends, emerging opportunities, and potential challenges.
- Demographics: Research the population demographics of Vietnam, such as age groups, income levels, and geographic distribution. Understand the target market segment that aligns with your products.
- Consumer Behavior: Study the purchasing behavior of Vietnamese consumers. Determine their preferences, shopping habits, and factors that influence their buying decisions.
- Local Competition: Identify local and international brands operating in the same industry. Analyze their market presence, product offerings, pricing strategies, and marketing approaches.
- Cultural Nuances: Gain insights into the cultural values, traditions, and customs of Vietnam. Understand how these factors impact consumer preferences and consumption patterns.
- Market Trends: Stay updated on the latest market trends in Vietnam. Identify emerging product categories, popular design aesthetics, and consumer preferences that align with your brand.
2) Identify Your Target Audience
Define your target market in Vietnam based on demographics, interests, and purchasing power. This will help you tailor your marketing messages and product positioning effectively.
For example: Vietnamese women aged 25-40 in urban areas, with an interest in natural and organic skincare products. They prioritize ingredient quality, seek effective solutions for specific skincare concerns, and value brands that align with their sustainability and ethical values.
II. BUILD LOCAL CONNECTIONS – UTILIZE THEIR EXISTING RESOURCES
1) Enter The Market By Partnering With Local Distributors
In the Vietnamese market, various distribution methods have emerged, offering businesses the option to choose between indirect distribution channels through distributors or agents, or direct distribution by establishing their own retail network. Alternatively, distribution can be categorized into three forms: traditional channels (general trade – GT) such as markets, kiosks, and stores; modern channels (modern trade – MT) like supermarkets, shopping centers, and convenience stores; and other channels like Horeca (Hotel/Restaurant/Café) outlets. These are the channels that businesses need to plan and build their distribution strategy around when introducing products to the market.
However, distributors may handle products from our company as well as products from other companies. They possess financial resources, inventory, sales forces, and, most importantly, their own customer base, giving them a certain level of authority. So, what should businesses do to attract such distributors? How can they collaborate with us?
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Some factors for selecting good distributors are as follows:
- Choose reputable distributors: Opt for distributors with a long-standing reputation in the market to ensure issues like returns, genuine products, and timely delivery are handled well. Obtain distributor information directly from the manufacturing company to ensure the quality of the goods.
- Distributors who share information: Brands and manufacturing companies often run advertising, promotional, discount, and reward programs for distributors who achieve specific sales targets. A good distributor is one who is transparent and promptly communicates such information to agents and retailers.
- Transparent promotion and marketing programs: The profits from promotional programs can be significant, especially for large orders. Good distributors need effective ways to inform their consumers about these marketing programs.
- The diverse range of products: Opt for distributors that offer a diverse range of products to have more options for sourcing goods from different brands. Negotiate exclusive supply arrangements to ensure access to goods at the best prices.
2) Attend Trade Shows & Industry Events
- Participate in local trade shows and events related to your industry. This allows you to network with potential distributors, suppliers, and partners in Vietnam.
- Trade shows and industry events offer valuable insights into the current market trends, consumer preferences, and industry developments in Vietnam. Attendees can gain knowledge about new product innovations, market demands, and emerging opportunities.
3) Seek Local Expertise
- Engage with local consultants or market research agencies specializing in the Vietnamese market. They have in-depth knowledge of local consumer behavior, market dynamics, and industry trends.
- These experts can provide customized research reports, market entry strategies, competitor analysis, and recommendations tailored to your specific business needs. They help you understand the nuances of the Vietnamese market and identify growth opportunities.
III. LOCALIZATION IS KEY
1) Translate & Localize
- Translate your website, product descriptions, packaging labels, and marketing materials into Vietnamese. Instead of relying solely on English, provide Vietnamese descriptions
- Ensure the translations are accurate, culturally appropriate, and convey your brand’s message.
2) Localize All Your Marketing Approaches
- Vietnam boasts a unique cultural, linguistic, and societal context that significantly influences consumer behavior and preferences. By tailoring marketing strategies to align with local values, traditions, and language, brands can build a deeper connection with their target audience.
- This personalized approach demonstrates a genuine understanding and appreciation of the Vietnamese culture, fostering trust and loyalty among customers.
- Moreover, localized marketing allows brands to address specific needs and challenges faced by Vietnamese consumers, leading to more relevant and impactful campaigns.
IV. SOCIAL MEDIA MARKETING – LOW COST AND EFFECTIVE
Run integrated marketing campaigns across multiple social media platforms for the greatest effect.
- Facebook: is the most popular social media platform in Vietnam, with a significant user base across different age groups. Create a Facebook Business Page and leverage its features like posts, stories, events, and groups to engage with your audience.
- Instagram: Instagram is also gaining popularity, particularly among younger demographics in urban areas. Utilize visually appealing content, hashtags, and Instagram Stories to showcase your products and connect with potential customers. Suitable most for lifestyle products, cosmetics, fashion…
- Zalo: Zalo is a messaging and social media app widely used in Vietnam. It offers features similar to Facebook, including groups, pages, and advertising options. Consider incorporating Zalo into your social media strategy to reach a broader audience.
- TikTok: Advertising on the TikTok application is a way to introduce products, sell items, and build brand awareness. The user base on TikTok is quite large, but the number of advertisers on the platform is still relatively low due to its relatively new market and relatively low competition. Many young people use TikTok extensively because it is a platform for short and entertaining videos, where anyone can become a video creator. There are impressive video editing functions and an extensive library of sound effects to enhance the content
- Engaging Content: Create visually appealing and culturally relevant content that grabs the attention of Vietnamese users. Use high-quality images, videos, and infographics that resonate with their interests and values.
- Localized Content: Adapt your content to the Vietnamese language, culture, and holidays. Incorporate Vietnamese traditions, festivals, and local references to foster a sense of connection and relatability.
- User-Generated Content: Encourage customers to share their experiences with your products through reviews, testimonials, or user-generated content. This helps build trust and authenticity, as well as encourages engagement and word-of-mouth marketing.
Utilize a mix of organic posts, paid advertisements, and influencer collaborations to increase brand visibility and reach.
Engage with followers, respond to comments, and encourage user-generated content to foster a sense of community and brand loyalty.
Leverage social media analytics to track the performance of your campaigns and make data-driven adjustments as needed.
V. AFFILIATE MARKETING – LET OTHERS SELL FOR YOU, NO UPFRONT COST
1) Finding Affiliates
- Identify potential affiliates who have an online presence and align with your target audience. This can include bloggers, influencers, content creators, or website owners.
- Research affiliate networks or platforms specific to the Vietnamese market, such as InvolveAsia or Admitad, to connect with local affiliates.
- Reach out to potential affiliates individually or through affiliate platforms, outlining the benefits of partnering with your brand and the commission structure.
2) Affiliate Program Setup
- Establish an affiliate program, either by using an affiliate network or setting up an in-house program.
- Determine the commission structure, such as a percentage of each sale or a fixed amount per action (e.g., lead or click).
- Create an affiliate agreement that outlines the terms and conditions of the partnership, including payment terms, promotional guidelines, and brand restrictions.
3) Promotional Materials and Tracking
- Provide affiliates with marketing materials such as banners, text links, product images, or promotional codes that they can use to promote your products or services.
- Ensure that each affiliate has a unique tracking link or code that accurately attributes sales or actions to their efforts.
- Implement an affiliate tracking system to monitor conversions and track the performance of each affiliate, enabling accurate commission calculations.
VI. WORK WITH KEY OPINION LEADERS (KOLs) – A SMART WAY TO “DEBUT”
1) Identify Suitable KOLs
- Conduct thorough research to identify KOLs who have a substantial following and engagement in your target market in Vietnam.
- Consider their expertise, content style, audience demographics, and brand alignment when evaluating potential KOLs.
- Look for KOLs who have a genuine interest in your product category or industry to ensure an authentic partnership.
2) Partnership Opportunities
- Sponsored Content: Collaborate with KOLs to create sponsored content featuring your brand or products. This can include product reviews, tutorials, or lifestyle posts that showcase your offerings.
- Social Media Takeovers: Allow KOLs to take over your social media accounts for a day or a specific campaign, giving them the opportunity to share their experiences and engage with your audience.
- Giveaways and Contests: Collaborate with KOLs to organize giveaways or contests that involve your products, encouraging their followers to participate and engage with your brand.
- Event Collaborations: Invite KOLs to attend or cover your brand events, product launches, or promotional activities, amplifying the reach and exposure of your brand.
VII. FOCUS ON CUSTOMER SERVICE – NEVER LET CUSTOMERS LEAVE YOU
1) Prompt & Responsive Communication
- Respond to customer inquiries, feedback, and complaints in a timely manner. Aim to address customer concerns within 24 hours or less.
- Use multiple communication channels, such as email, phone, and social media, to make it convenient for customers to reach out to you.
- Provide clear and helpful information to assist customers with their inquiries and provide solutions to their problems.
2) Train & Empower Your Customer Service Team:
- Invest in training your customer service team on product knowledge, problem-solving skills, and effective communication techniques.
- Equip them with the necessary tools and resources to handle customer queries and resolve issues efficiently.
- Empower your team to make decisions and provide appropriate compensation or solutions to customers when necessary.
3) Personalize the Customer Experience
- Address customers by their names and tailor your interactions to their specific needs and preferences.
- Make personalized recommendations or offer assistance based on their previous purchase history or browsing behavior.
- Use customer relationship management (CRM) systems to track customer interactions and preferences for more personalized experiences.
VIII. PRICE COMPETITIVE – PRICING DECIDES 60% BUYING DECISION
1) Understand the Market
- Conduct thorough market research to gain insights into pricing trends, competitor pricing strategies, and consumer expectations in Vietnam.
- Identify the price ranges at which similar products or alternatives are offered in the market.
- Analyze the pricing strategies of both local and international competitors to understand how your pricing compares.
2) Determine your Cost Structure
- Calculate your production costs, including raw materials, manufacturing, packaging, transportation, and import duties.
- Consider other business expenses such as marketing, overhead costs, and desired profit margins.
- Determine a pricing strategy that allows you to cover your costs while remaining competitive.
3) Consider Local Factors
- Take into account local factors that may impact pricing decisions in Vietnam, such as the cost of living, average income levels, and purchasing power of the target market.
- Adjust your pricing strategy accordingly to cater to the local market dynamics and consumer affordability.
IX. OFFLINE PRESENCE – ENHANCE YOUR CREDIBILITY
1) Identify Target Locations
Research key cities or areas in Vietnam where there is a strong demand for your products. Consider cities like Hanoi, Ho Chi Minh City, and Da Nang.
2) Find Local Retailers
Look for local retailers, boutiques, or concept stores that align with your brand’s aesthetic and target audience. Visit these stores, speak with the owners or managers, and inquire about the possibility of stocking your products.
3) Develop Relationships
Build relationships with store owners or managers by sharing your brand story, showcasing the uniqueness of your products, and discussing how your products can complement their existing offerings. Offer to provide samples or conduct a trial period to demonstrate the appeal and quality of your products.
X. IF CUSTOMERS CAN’T FIND YOU ON SHOPEE & LAZADA, IT MEANS YOU DON’T EXIST
Reports indicate that Shopee and Lazada are the leading e-commerce platforms in Vietnam, excelling in terms of gross merchandise volume (GMV) and social media presence.
Based on the E-commerce in Southeast Asia 2023 report by Momentum Works, a Singapore-based market researcher, Vietnam’s e-commerce GMV was estimated to have reached $9 billion in 2022.
If you are not aware that over 70% of the population uses the internet in Vietnam to search for and purchase items, even things they may not necessarily need, then you might miss out on a significant customer base. Your customers will expect you to be ready to provide the products they are looking for, and having an online presence with e-commerce capabilities will enable you to keep up with the current competitive demands. Otherwise, consumers will choose your competitors instead.
Benefits of e-commerce platforms for businesses:
- Market Expansion: E-commerce platforms use the internet to connect with users, providing access to a vast customer base without geographical, territorial, or border barriers, and facilitating rapid market expansion.
- Cost Savings: By paying a small commission, businesses can save on sales, marketing, advertising, and distribution, and optimize inventory costs effectively.
- Increased Profitability: Optimized business efficiency and reduced costs can lead to higher profitability for businesses. Additionally, managing transactions and goods on e-commerce platforms can streamline processes and reduce labor costs, further boosting profits.
- Reduced Inventory Costs: Aligning production with customer demand enables businesses to decrease inventory holding costs and simplifies inventory management.
- Lower Transaction Costs: Another advantage of e-commerce platforms is lower transaction costs compared to traditional methods like phone sales, SMS, or direct selling. Businesses can save significantly and experience minimal price fluctuations.
- 24/7 Sales and Customer Support: With chatbot technology and online payment options, businesses can sell products and provide customer support round the clock, without human intervention. This improves the overall buying experience and increases revenue for the business.
XI. IN CONCLUSION
In summary, small brands can thrive in the Vietnamese market with the above-mentioned tips. With a strategic approach and a focus on customer-centricity, small brands have ample opportunities to succeed and make their mark in Vietnam’s dynamic retail landscape.
If you want to sell in Vietnam, don’t hesitate to contact us!