Youth Translate Consumer World to Parents

Toy Shop

Two thirds of Vietnam’s population are under 35.

Changing attitudes leave vast generation gaps where children are far more consumer savvy than their parents.

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Exponential Growth of Middle Class in Metropolitan Vietnam

The middle to upper class across Vietnam’s key cities has grown 26% points over the year 2000. With that comes an onslaught of advertising, a new world of brand choices and the outlets to shop for those brands; retail environments that were distant dreams just four years ago. 3

Getting your brands on the shelf is no easy task once you move away from key cities. In fact, your definition of “shelf” may need changing!

Wide Disparities in Economic Opportunities

With an annual GDP averaging 7% in recent years Vietnam is growing rapidly, but the rate varies dramatically by city and province. Six key cities account for 40% of the urban population. Yet urban Vietnam represents just over a quarter of Vietnam’s 81 million people. Reaching the Vietnamese consumer is not always easy. 4

Economic and Demographic Perspectives

1% Agriculture : 4% Services : 8.8% Manufacturing : 13.4% Construction : 10.81 Million People Surface area: 330.5% 6 South Central Coast Central Highlands South East Mekong Delta .000 km2 North Mountains and Midlands Red River Delta North Central Coast 54 ethnic groups Kinh account for 88% GDP/capita: US$532 (2005) Inflation 8.1% (2005) GDP – 2005 Growth Total : 8.2% (2005) Unemployment 5.

1945 1945 1945 .Reunification of Vietnam Implementation of an unified socialist society Vietnam defeats Khmer Rouge.Shaped by… Years 111BC-939AD 1535 1802 1858 1860 .1954 1954 1959 1965 1973 1975 1976 . eradicating incursions inside its borders and liberates Cambodia China invades Vietnam and is quickly repelled 7 .1979 1979 Major Events Chinese occupation European Jesuits/Traders French Given Trading Concessions France invades Vietnam French occupation Ho Chi Minh declares the formation of the Democratic Republic of Vietnam French reoccupation finally defeated in battle of Dien Bien Phu in 1954 Geneva Convention 17th Parallel division of Vietnam US Military Advisors in the South US Marine Corps Lands in Da Nang Signing of Paris Peace Accord (US / North Vietnam) Fall of Saigon .

Foreign investors allowed to pay wages in local currency Private Enterprise Law US Bilateral Trade Agreement Tourism booms .Great Progress Years Major Events 1986 1987 1988 1990 1991 1994 1995 1997 1999 2000 2001 2002 2003 2004 2005 2006 Doi Moi (renovation) Congress .5 billon Boosts Trade & FDI – ASEAN Trade Fair. WTO Accession? 8 . Vietnam Expo Exports grow 22% Significant investments from Intel and Microsoft.Open Door Policy Reforms Foreign Investment Law liberalises market access Decree 10/CP Extensive Agricultural Reform Vietnam is the world's 3rd largest exporter of rice Ban on TV Advertising lifted US Embargo lifted Vietnam joins ASEAN Vietnam becomes world's second largest exporter of rice VAT introduced.Vietnam A Safe Destination Net Foreign Direct Investment Reaches US$1.

8% Per Capita GDP (USD) GDP Growth (%) 6.44 Billion US$ Economy in 2004 Vietnam Per Capita GDP 9.9% 7.1% 6.0% 6.4% $500 $532 $469 $496 $400 US$ $403 $418 $443 $300 $200 9 .0% 3.0% 5.0% 8.0% 4.0% 2000 2001 2002 2003 2004 2005 $0 6.0% $100 1.0% 2.4% 5.8% $600 8.0% 0.0% 7.

com 35 57% 24 36 37 38 39 40 41 42 43 44 45 47 48 49 50 50 57% 57% 56% 56% 55% 55% 54% 54% 53% 52% 24 24 24 24 24 24 24 24 23 23 52% 51% 50% 50% 49% 23 22 22 22 22 22 21 21 21 20 20 20 19 19 19 19 18 18 18 18 17 10 .Excitingly Young 0-14 30+ 100 90 81 81 82 83 83 84 85 85 86 87 87 88 88 89 89 90 15-29 % Under 30 Young Population (Millions) 80 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Asian Demographics www.asiandemographics.

But Not Highly Concentrated % Total Population 100% 25% 80% Urban Concentration % Urban Population 100% 45% 2% 2% 2% 2% 55% 2% 2%2% 2% 2% 3% 3% 42% 3% Other Urban Rach Gia Comm. Vung Tau City Qui Nhon City Buon Ma Thuot City Nha Trang City Dalat City Can Tho City Long Xuyen Comm. Ha Long City Da Nang City Hai Phong City Bien Hoa City Ha Noi City HCMC 60% 14% 40% 10% 8% 20% 6% 0% 23% 9% 32% 23% Source: General Department of Statistics 11 .

Urban Economic Class (N=5.US$499) 29 32 30 18 20 22 20 24 18 13 5 2001 14 7 2002 16 8 2003 17 8 2004 11 2005 31 30 B (~ US$500 .US$999) A (~ US$1.000 6 Key Cities) 100% 90% 80% 70% 60% 50% 32 40% 30% 20% 10% 9 0% 2000 Source: CI Economic Monitor 40 34 27 24 24 18 E (~ Less than US$150) D (~ US$150 .US$299) C (~ US$300 .000+) (Monthly Household Income Equivalents) 19 % Urban Households 12 .Urban Wealth Continues To Grow Strongly Increasing Wealth .

17% Receive Money From Overseas 51% (HCMC 67% Hanoi 23%) 17% Receive Money (more in HCMC than in Hanoi) Quarterly or more often 26% 14% Have Relatives Overseas 30% 1 or 2 times/ year 37% Less often 37% 10% 10% (HCMC 4% Hanoi 31%) Source: CI Shopper Around 1/5 of households receive supplementary income from overseas increasing their spending power substantially. Estimate: more 3 billion USD annually 13 .

infrastructure development and residential property boom Increasing affluence leads to changes in consumption Increasing affluence leads to changes in lifestyles Increasing affluence leads to changes in marketing scope Disposable income and time increasing desire to experience new opportunities 14 .Demographic Profiles and Economic Development Behind Trends in Vietnam Young population profile ABC economic class experienced a 26% point hike over 2000 2 million households are now middle class and above Highest concentration in key cities Economic development visible in GDP growth.

Consumer Perspectives .

Affluence Impacting Lifestyles Increase Health awareness Greater focus on diet Increasing focus on healthier beverages Increasing focus on mental development over physical development Annual check ups Fitness and gym use Better nutrition Demand for improved private healthcare Awareness assisted by bird flu and SARS Increase in Education demands Enrolment of dependents in foreign language schools Demand for private kindergarten. secondary schools and universities Increased propensity to send children overseas for University education Increased International Awareness Increased travel demand largely within SEA region 16 .

Trends Impacting Technology And Finance Consumers are increasingly tech savvy Internet penetration and speed PC penetration rapid increase Frequent use of SMS Consumers begin planning finances Finances move beyond living expenditure to investments Savings and plans evolve around own home property demands Banking. private insurance. ATM services escalate 17 .

.. (N=1.Extremely Optimistic I Believe. 30 61 9 …business conditions in the next 6 months will… 68 22 10 0% Source: CI Express 20% 40% % Aged 15-64 60% 80% 100% 18 .000 Aged 15-64 in HCMC and Hanoi) Improve Stay the same Worsen …my total family income in the next 6 months will...

000 Aged 15-64 in HCMC and Hanoi) Everyday Exercise 38 Weekly Monthly 11 1 9 Less often Never 40 Watch video at home 23 24 6 25 22 Send SMS 21 8 3 7 61 Suffing the Internet 9 14 5 8 63 Send e-mails 7 12 6 8 67 Plays sport 6 12 2 4 76 Go to a supermarket 1 22 37 31 10 Source: CI Express 19 .Increasingly Tech Savvy I Enjoy … (N=1.

Modern Conveniences Prevail Durables Owned .HCMC and Hanoi 120 Total 98 98 86 95 86 89 81 67 A B C D E 100 86 74 65 59 46 39 34 34 25 26 13 26 10 2 2 Computer 2 25 13 1 0 0 0 Car 47 42 57 80 60 45 40 56 20 13 0 Refrigerator Washing machine Mobile phone Air conditioner Source: CI Economic Monitor 20 .

Financial Services Poised for Growth Financial Services Used .HCMC and Hanoi 30 Total 24 A 23 B C D E 25 20 15 18 15 14 11 17 15 10 9 9 8 5 7 10 6 3 2 1 5 0 Insurance plans Bank Account Credit/Debit Card Source: CI Economic Monitor 21 .

000 Aged 15-64 in HCMC and Hanoi) Agree Having fun and laughing is very important to me Having a wide circle of friends is important to me My success is defined by my job Men should be the sole money provider for the family I would rather be out enjoying life than relaxing at home Newly weds should live independently from parents I want to be one of the first to have the latest new brand I enjoy getting attention from the opposite sex Source: CI Express Neutral 98 93 77 Disagree 2 6 20 26 33 29 33 38 7 13 17 14 17 3 67 54 54 53 45 22 .Success Defined by Job and Networked Critical Increasingly Open Minded I Think… (N=1.

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Changing Attitudes Amongst Vietnamese Women Enjoys learning new dishes to cook for her family Enjoys learning new dishes to cook for her family Enjoys having fun & laughing Enjoys having fun & laughing Enjoys a wide circle of friends Enjoys a wide circle of friends Success is defined by job Success is defined by job 45% Prefers to live Prefers to live with parents when with parents when married married 55% Prefers to live Prefers to live independently independently when married when married Traditional and Conservative Modern and Adventurous Enjoys relaxing at home Enjoys relaxing at home rather than going out rather than going out N=503 N=618 Loves going out rather Loves going out rather than staying at home than staying at home Waits for others to try new Waits for others to try new products first. will buy later if 24 affordable affordable Enjoys being the first to own the Enjoys being the first to own the latest brands / pampers herself with latest brands / pampers herself with luxuries luxuries . will buy later if products first.

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2 5.1 5.7 2.9 7 8 9 10 Traditional Source: CI Shopper .9 6.4 3.0 4.Household Purchasers Not Yet Modern But Heading That Way Traditional-Modern Continuum Overall Family focus Personal presentation Cooking Purchasing adventurism Public behaviour Interest in being active International aspirations Family roles 1 2 3 4 5 6 4.5 4.Household Category Managers Modern 26 .8 5.

Household Category Managers 27 .6 In 10 Are Working WORKING (63%) SELF-EMPLOYED (41%) Small Trader/ Shop Owner NOT WORKING (37%) Housewife (32%) EMPLOYEE (22%) Factory/ retail/ domestic worker 25% Self-employed (Not trading) 22% Professional (teachers/doctors…) 11% 5% Source: CI Shopper .

76% She Lives Through The Eyes Of Her Children Who Have A New World Of Opportunities 28 .Your Target – Household Category Manager (HCM) 76% of Household Category Managers are sole purchasers / decision makers for the household and she ALSO controls the monthly budget.

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brands. technology.g. ads) Due to the broader exposure as kids.A Look Ahead . They are bringing consumer news to the family. Kids are brand and ad savvy – often more so than their parents. Kids exhibit considerable pester power in many categories beyond those targeting kids 30 . First generation born in a true market economy – exposed to brands and advertising since they were born In many aspects kids are recognised as knowing more than their parents (e. they are quicker in decoding subtle messages and are amongst the highest group on the ad savvy continuum.Kids Are Very Savvy Consumers Kids (0-14) accounting for more than 20% of the population.

Kids’ Pester Power Shampoo Toothpaste 1/3 ask parents to buy adult categories… (> among girls 44%) Drink for the family Shower Cream Electronics Softener Source: CI Kids Talk 31 .

they are more consumer and ad savvy And parents increasingly brand conscious Pester power from kids increasing beyond kid’s brands 32 .Trends Impact on Consumption The Vietnamese are extraordinarily optimistic! Few have experienced a step back and the majority grew up post war Metro consumers increasingly technology and financial savvy Conspicuous consumption visible and acceptable Success is imbued in pride which has to be visual or verbalised to be recognised. For example housewives focusing on self development to enable better care of family is now acceptable Individual expression through brand ‘badges’ now accepted The brands I wear reflect who I am is now a prevalent attitude Youth translate the consumer world for their parents .

Reaching Consumers .

.Mass Media Main Source For New Trends I Learn About New Trends and Brands From. (N=1.000 Aged 15-64 in HCMC and Hanoi) Read about it in magazines Advertising on TV Browsing at shopping centre From chatting with friends Billboard From members of family From an in store promotion From direct mail received at home See other people with a new brand Ask store owners From sales people direct at my door Surf the internet Radio 1080 Centre Ask overseas Vietnamese Source: CI Express 3 7 11 15 22 29 32 35 47 45 43 54 51 70 86 34 ..

DVD replaces VCR Cable TV set top boxes provide access to international channels Movie rental heavily impacts viewing Blatant branding of game shows Increase number of interactive game shows Increase number of ‘slice of life’ drama series depicting reality as opposed to fantasy Increased cinema going Electronic games dominate youth activity 35 .Trends Impacting Media and Mediums The media environment continues to be reshaped.

Production companies own as much as 50% of available spots. HK.Media Perspective No private TV channels/radio stations Digital trials under way and expanding fragmentation. Korea. Expenditure in key TV channels (83%) and publications (27%) was US$280 million in 2005. China and Taiwan. BHD Lasta VAC Imported programming accounts for 25% of air time. US$100 buts you approximately 1 GRP. VTV3 (national) US$110 prime HTV7 (HCMC) US$60 prime Programming barter arrangements. TV Stations 65 Channels National Channels Regional Channels Digital Channels Share of Ad Ex 110 4 106 12 2 channels: 66% HTV7 (HCMC) VTV3 (National) Literacy Publications 34% 33% 96% % of Print Ad Ex 20 Publications 4 Publications Tuoi Tre Tiep Thi & Gia Dinh Thanh Nien The Gioi Phu Nu Web Sites 85% 54% 19% 14% 11% 10% VN Express Tuoi Tre Cinemas Radio Stations 57 62 National Channels Regional Channels 1 61 36 .

vn/ 37 .Category SHAMPOO & HAIR SETTING PRODUCT MILK (Nett) SKINCARE PRODUCT DETERGENT POWDER BEER MOBILE PHONE NETWORK 3 2 2 2 2 2 1 1 1 1 1 1 1 3 5 4 8 10 Key Category TOOTHPASTE FABRIC SOFTENER MOTOR CYCLE MOBILE PHONE SANITARY PROTECTION SOFT DRINKS COSMETIC ORIENTAL MEDICINE CHEWING GUM FRUIT JUICES INSTANT NOODLE SOUP 0 Others account for the remaining 50% of expenditure 2 4 6 8 10 % Share of Expenditure Source: Andi http://andi.Personal Care Products Have The Maximum Share 2005 TV Ad Expeniture .com.

Advertiser UNILEVER PROCTER & GAMBLE VINAMILK DUTCH LADY VIETNAM BREWERY COMPANY NESTLE IBC .Unilever Dwarf Other Advertisers On Expenditure 2005 TV Ad Expeniture .com. LTD. 16 7 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Advertisier Others account for the remaining 56% of expenditure 0 Source: Andi http://andi..PEPSI HONDA MEAD JOHNSON NUTRITIONALS COLGATE-PALMOLIVE VIETNAM COMPANY NOKIA LG GROUP VIETTEL-CTY DIEN TU VIEN THONG QUAN DOI MOBIFONE-VMS KC-KIMBERLY CLARK WRIGLEY'S CHEWING GUM SAMSUNG COCA COLA DIATCO ROHTO PHARMACEUTICAL CO.vn/ 2 4 6 8 10 12 14 16 % Share of Expenditure 38 .

Which 50% (US$ 140 million) of your ad spend works? 39 .Trends in Communications Advertising now dominated with lifestyle advertising Consumer testimonials in advertising replace international superstar endorsements Local brands matching international brands on price (or vice versa!) and close behind in terms of marketing savvy Cutting through the clutter is extremely hard leading to significant waste in advertising expenditures.

7 Stages of Advertising Literacy (Mary Goodyear) Vietnamese consumerisation is now entrenched in Classic Brand Marketing stage of the continuum. Sophistication 4 Metaphor Consumer Benefits 3 Endorsement Functional Benefits Stage 3 Classic ‘Brand’ Marketing Stage 4 Customer Driven Brand Marketing Stage 5 Post Modern Brand Marketing 7 Deconstructed Advertising itself Stage 2 Stage 1 Sellers stage Marketing ‘101’ 6 Symbolic Abstract Values 5 Lifestyle Functional + Psychological benefits 2 Hard Sell Comparative Attributes 1 Straight Sell Product Attributes Time 40 .

Vietnamese Advertising Literacy Teens. kids and white-collars are the most literate in terms of ad savvy Super Consumers Metro Male Trendsetters 7 Deconstructed Advertising Itself 6 Symbolic Metro Male Teens Abstract Values Metro Kids 5 Lifestyle Rural Male Teens Functional + Psychosocial Benefits Urban/Rural Female Teen Low competition 4 Metaphor White Collar Adult Male Consumer Benefits Urban/White Collar Housewives 3 Endorsement Blue Collar Adult Male Functional Benefits Rural/Blue Collar Housewives 2 Hard Sell Comparative Attributes High competition 1 Straight Sell Product Attributes Naïve Consumer 41 .

Market Perspectives .

Market Perspectives Supermarket Wet Market Convenience Store Specialised Store 43 .

Household Category Managers 44 .The Woman Of The House Shops Most Often At… (HCMC) # Times Purchase Per Month Reasons for Purchasing Most Often At The Outlets Perishable Food Non-Perishable Food Beverages Household Products Personal Care Products 12 94 3 30 Fresh product. Enjoy bargaining 35 34 9 7 3 13 5 25 16 10 28 10 7 26 30 17 9 3 15 4 Trust in product quality. Competitive price. superstore. wholesale store. hawker trolley. stall/kiosk around market. Good price. Clean / hygienic. Good range of products 26 36 15 7 3 14 3 Wet market (inside) Grocery store Supermarket Beverage agent Neighbourhood store Others “Others” include department store. pharmacy Supermarket: higher among ABC and Younger Source: CI Shopper .

Trust in product quality. Offers good price. superstore. pharmacy Source: CI Shopper . stall/kiosk around market.The Woman Of The House Shops Most Often At… (Hanoi) # Times Purchase Per Month Reasons for Purchasing Most Often At The Outlets Perishable Food Non-Perishable Food Beverages Household Products 5 89 5 03 35 Fresh product.Household Category Managers 45 . Safe Environment. Trust in product quality. Trust in product quality. Competitive price. Offers good range of products. wholesale store. 16 25 23 23 5 8 4 11 31 16 32 4 8 6 17 25 33 10 8 2 Personal Care 3 Products 23 24 37 7 7 2 Wet market (inside) Grocery store Supermarket Beverage agent Neighbourhood store Others “Others” include department store. hawker trolley. Offers good price. Offers good range of products.

The Death Of The Wet Market? Current behaviour 93 22 3 Future behaviour Perishable Food Perishable Food Non-perishable Food Non-perishable Food Household Products Household Products Personal Care Products Personal Care Products Beverages Beverages 0 20 65 27 3 4 30 32 13 11 12 49 10 10 9 21 26 19 5 16 13 14 40 17 4 14 10 19 32 18 4 15 12 14 46 15 3 12 9 10 21 20 29 12 8 9 38 16 23 9 6 0 20 40 60 80 % of Household Category Managers 100 20 40 60 80 % of Household Category Managers 100 Wet market Supermarket Neighbourhood store Beverage agent Grocery store 46 Others .

Consumers mindset favours supermarkets as the outlet of the future. 47 Supermarket / Hypermarket 6 Cash and carry wholesalers 150 Smaller self service outlets Shoppers visit the supermarket less often than other channels.Supermarkets Are The Future With wet markets still a part of daily life. This extended shopping time means more opportunities to attract her attention. Small in numbers but modern trade (self service) outlets have grown in number. presence in this outlet is essential for salience. She uses Supermarkets As a source of information (1/3 claim they source information on new trends from this channel). and As a source of entertainment (2/3 visit shopping centres as a form of entertainment) 47 . Shoppers typically visits the market in the morning before work and as such has limited time for involved marketing activities such as sampling and detailed product explanations. Despite the fact that they currently account for approximately 20% of grocery sales today they require more attention. they have more time when shopping here. however.

Trends Impact on Retail Environment Supermarkets now significant sales contributor Modern trade contributions growing exponentially Clearly the shopping environment of choice Department stores. cash and carry. fast food environments proliferate Consumer increasingly entertain out of home Outlets steadily increase to meet demand for up-scale premium environments 48 .

Key Consumer Trends .

Key Consumer Trends Disposable income and time increasing desire to experience new opportunities The Vietnamese are extraordinarily optimistic! Few have experienced a step back and the majority grew up post war Success is imbued in pride which has to be visual or verbalised to be recognised Youth translate the consumer world for their parents .they are more consumer and ad savvy Metro consumers increasingly technology and financial savvy Modern trade FMCG contributions growing exponentially Marketers increasingly seek to access rural markets Marketers increasingly fragment markets Plethora of brand extensions – to satisfy different consumer needs 50 .

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