Professional Documents
Culture Documents
• Hypermarkets
• Health & Beauty
• Convenience
• Supermarketsd
The retail food market in Thailand can be divided into four major sub-sectors:
hypermarkets, supermarkets, convenience stores, and traditional markets (wet
markets and "mom and pop" stores). Over 70% of the retail food trade in Thailand is
done through the traditional markets. This is one reason why foreign retailers are so
optimistic about the future growth prospects of the Thai retail food industry. Most
hypermarkets and supermarkets are concentrated within the Bangkok area. Even
though Bangkok has only 20% of the country's population, the area accounts for
over 70% of the supermarkets and superstores.
modern retail trade channels goes through three primary segments: hypermarkets,
supermarkets, and convenience stores. Hypermarkets, such as Tesco Lotus, Big C,
and Carrefour, are similar to Super Wal-marts and Super K-Marts in the U.S. Another
hypermarket, Makro, bears similarities to price clubs in the U.S., such as Sam’s Club.
Tesco Lotus superstores, as of December 2002, total 52 locations nationwide and are
situated in and around Bangkok as well as other major cities in throughout Thailand.
Big C is the second largest hypermarket chain in Thailand currently and has 35
locations in Bangkok and other major cities. Makro and Carrefour have 21 and 17
total stores, respectively.
The main supermarket chains in Thailand are Tops, Food Lion, Foodland, Home Fresh
Mart, and Villa. These supermarkets are usually smaller than those in the U.S. Villa
and Foodland generally cater more to expatriates and higher income Thais.
Therefore, these companies usually carry more premium priced and imported
products than other stores. Villa carries the largest variety of imported products of
any store in Thailand. Some Tops stores, such as the one in Central Chidlom
department store, also cater to the higher-end market. Tops is the largest
supermarket chain in the country, with 48 locations as of December 2002.
Snacks can also be found in convenience stores throughout the country. 7-Eleven is
the largest such chain in the country, with over 2,000 stores in operation
nationwide, making it the fourth largest 7-Eleven distributor worldwide. Stores like
7-Eleven and Family Mart are located in prime points throughout major cities and at
fuel stations along major highways. Other convenience stores, such as Tiger Mart,
Jiffy Mart, and StarMart, are located only at fuel stations.
Only five key players dominate the modern trade channel currently, and with many
recent changes in the industry, largely due to Vietnam’s WTO commitments, the
competition is going to get fiercer.
Based on Nielsen insights, retailers need to examine four key points in order to increase
their competitive advantage in this fast-growing channel:
• Store location
o Depending on the type of retail store, businesses need to consider the
majority socio-economic class (SEC) in the area as well as different
consumer needs
• Supplier management
o Having “just in time” delivery
o Suppliers offering competitive pricing
• Customer experience
o Convenience
o Having the right mix of products for the modern trade channel
o Knowledgeable sales assistants
• New customer development
o Understand what are the purchase triggers for the modern trade channel
or specifically, your store
Before any business activity begins, market research is essential. Without it, you are operating
your business “blindly” with very little chance for success. It helps to have a good grasp of the
business environment in order to make smart choices about how you will compete for sales.
Industry Analysis
• How do you define the industry? Food industry, specialty food, or gourmet food
business?
• Who are the largest and most important players? Do they matter to your business?
How?
• What problems is the industry experiencing: Oil qualities? Supply vs. demand?
Oversaturation of new brand entries? Shrinking competition (attrition) from boutique brands?
• What national and international factors influence the industry? Imported volumes? EU
Marketplace Analysis
• How is it segmented by type of marketplace? Gourmet food stores, health food stores,
Customer Analysis
• Who is your customer? What segment of the market are you targeting? Timid buyers
looking for a bland oil? Adventurous types who want something spicy with a lot of bite?
• What characteristics define your target customers? High income, price sensitive,
• How many types of customers do you have? Distributors, retailers, food brokers, food
• What motivates buying decisions? Is it price, bottle, color of the oil, label, word of
• What evidence do you have that potential customers will want your product?
Competitor Analysis
• What are the five top brands you expect to directly compete with? Are they the big
• What are their size, location, target market, and growth history?
• What are their products? How are they priced? What market position do they use to
differentiate themselves?
• How is your product different/better? Be realistic and specific. We get several calls a
day from people who tell us (and believe) their oil is “the best in the world” or “unique”.
Short-Term Considerations
There are six key areas that determine what kind of approach to take when creating and
retailing a specialty olive oil brand. We have already addressed some of these above, but at
this point, we will focus on the “retail and branded” business scenario.
• Will you grow the olives or buy the fruit or oil in bulk?
product lines (extra virgin olive oil, flavored olive oils, dipping oils…)?
• Will you build your own sales force or use a distributor/reseller to handle sales and
distribution?
• Who is your best target consumer? How will you create awareness and demand for
your product?
Answers to these questions will guide the direction your business takes and identify inherent
costs. Once you’ve assessed the costs, it will be relatively simple to determine profit potential.
Long-Term Considerations
When you start to map out the longer-term plan, you’ll deal with issues like market
• Will you try to transition from specialty food stores to mainstream grocery chains?
• Will you create product line extensions to broaden your brand and expand avenues of
distribution?
• Will you be interested in capitalizing on the inherent value of a successful brand and
So get out a big piece of paper, list the questions above and start creating a decision tree.
Then follow the path and fill in some timetables and costs. At the end of the exercise, you will
have a pretty clear idea of what you are up against. And, if you are seeking outside funding
for your new venture, you’ll already have answers to most questions any investor will ask.
Any marketing strategy is all about finding customers. The best oil is useless if you don't have
buyers for it. In this section you must prove to yourself, and then the reader, that there is an
eager market for your product. In prior sections you have explored the marketplace,
competitors, and unmet needs and opportunities. Here is where you will discuss utilizing those
opportunities. How is your oil different from your competitors? What unique features and
benefits will your products have? Who are your customers? Start with some form of test
marketing. It can be an inexpensive tool to gain invaluable insight into what might work and
what won’t. Some olive oil entrepreneurs will buy oil made from the variety they intend to
plant, bottle it in the proposed container, and sell it at farmer's markets, or do focus groups,
give it to friends, etc. to get feedback. This should all be done before you buy an acre of land
or plant a single tree. You may be able to set up a card table at your local market if you offer
tastings of their other offerings. Try to be objective and don't let your bias toward your
product affect your test subject. This is a learning experience. Why does the customer prefer
the oil they do? Is it a product attribute you hadn't thought about, like the color or bottle
cap/cork?
Once you are confident of a direction, follow the traditional marketing approach of the “four
Ps” and focus on four factors: product, price, packaging, and promotion. A more recent and
critical addition to this list is “place” or distribution strategy. If you can create the right mix for
• Product Strategy
The single most important thing you can do to determine the best product configuration is to
do your homework. If you have a good fix on what is out there (the competition), what is
missing (what consumers may be looking for and not finding), and what your distribution
options are (the best channel to push your product through), you can save a lot of expensive
Be as detailed as possible about defining your product. Will you sell one single blended oil or
will you have a whole line of single varietals? Some producers press oil at different times of
the year to create "early" and "late" versions with different characteristics. While blended oils
have traditionally received the highest ratings and appealed to the broadest market, single
varietals are interesting and can increase sales out of curiosity and appeal to individual
tastes. Some olive oil producers will sell cured olives or olive tapenades. Do you want to sell
the oil in different types of packaging, such as stainless fusti or gift baskets? Will you sell
olive oil accessories such as tasting or dipping bowls and olive motif tablecloths? Will the
• Pricing Strategy
The second area to focus on is the mechanics of determining price. You can approach this
one of two ways: work from a cost-basis (aka zero-based budgeting) and calculate a final
retail price by building in margins after you compile your costs; or research what is already
selling and for how much, and project what you think the final retail cost of your product
could be, then work backwards into what your net sales value is after distribution costs. This
approach will also give you a very quick way to see if you will be cash-positive or cash-
In the specialty food business, most companies try to achieve a 10% net profit margin. So,
don’t get infatuated with the “image” of supermarket shelf placement unless your projections
show that higher volume can offset lower margins. Just remember there is no quicker way to
So, what are the margins you can expect in the course of taking your product from ex-
warehouse (cost when it leaves your warehouse) to a point of purchase? It will vary a little
depending on what channels of distribution you go through, but the following pricing exercise
provides some norms for what each point of distribution expects to get as a cut of the final
price.
_______
_______
_______
_______
The third area to consider is what channels of distribution to use. You may choose to start
out going directly to consumers, selling at farmer’s markets and seasonal fairs. As already
mentioned, it is a great way to go through a low-cost test marketing phase and get direct
consumer feedback without retail chain exposure before you are ready. Best of all, this route
incurs no sales commission margins. Or you might start out as your own sales force, with a
trunkful of product, visiting every local retail outlet that you have already researched and
think you have a high probability of success with, in which case you will only need to
consider their margin. Or use a broker (who will impose a 10% margin instead of 5% if they
don’t sell to a distributor) to get to a retailer. But you get the idea. If it passes hands in the
process of getting to the consumer, you have to factor in a sales cost/commission for each
only represent it, serve as your field sales force, and expect you to manage the store-door
delivery and accounting. Distributors will buy your product, but usually only if they are
confident that it is already “pre-sold” to their customers. If it doesn’t move off the shelf
Finally, remember that you will face many sales costs besides commissions. Discounts for
early payment (e.g. 2% 10 day discount), slotting fees (large scale grocery store only),
“breaking” cases for smaller retailers, product sampling, sales promotion discounts (e.g. buy
ten cases, get eleventh free) are all part of the distribution business that you will probably
In specialty food businesses, marketing almost always makes up the greatest expense. You
have to create awareness of your product at every level of the distribution process and
In order for your product to sell into the distribution chain, you may face the expense of
trade show attendance, mass mailings to a purchased retail list, internet marketing, and
In order for your product to sell at the in-store stage, consumers need a reason to buy it.
Your marketing message gives them that reason. They may have read a positive review in
the local paper (think public relations push), seen a bottle on a friend’s kitchen counter
(happy customers are your very best sales force), received a mail-order catalog featuring
shelf talker at the gourmet food store. They could have even picked your bottle out from
among ten other brands on the shelf simply because they liked the looks of the label. No
marketing message (one of some 7,000 that Americans are exposed to every day).
Product decisions may be the most important of all marketing decisions since these lead
directly to the reasons (i.e., offer benefits that satisfy needs) why customers decide to
make a purchase. But having a strong product does little good if customers are not able
to easily and conveniently obtain it.
Distribution decisions focus on establishing a system that, at its basic level, allows
customers to gain access and purchase a marketer’s product. However, marketers may
find that getting to the point at which a customer can acquire a product is complicated,
time consuming, and expensive. The bottom line is a marketer’s distribution system must
be both effective (i.e., delivers a good or service to the right place, in the right amount, in
the right condition) and efficient (i.e., delivers at the right time and for the right cost).
Distribution decisions are relevant for nearly all types of products. While it is easy to see
how distribution decisions impact physical goods, such as laundry detergent or truck
parts, distribution is equally important for digital goods (e.g., television programming,
downloadable music) and services (e.g., income tax services). In fact, while the Internet
is playing a major role in changing product distribution and is perceived to offer more
opportunities for reaching customers, online marketers still face the same distribution
issues and obstacles as those faced by offline marketers.
In order to facilitate an effective and efficient distribution system many decisions must be
made including (but certainly not limited to):
• For tangible and digital goods, establishing facilities for product storage
� Discounters have the most aggressive expansion plans covering all regions of
the country.
� Hypermarkets are also very dynamic (4 times more outlets in 2007 compared
to 2005) and will become the leading modern trade channel in 2007.