Companies in Vietnam have experienced fierce competition over the last few years, both qualitative and quantitative. Many have been forced to close down while others are still in business but struggling to move forward. The question is how to make a brand not only sustainable but also grow in value in the context of fierce global competition and rapid digitalization.
There are many approaches to answering this question. Here I note the three key driving forces for brands: digital transformation, globalization, and brand leadership. In my observation, these forces help grow a company’s brand value if implemented successfully.
Customer-centric digital transformation
Unlike in the past, customers now have many brand choices for a particular product in Vietnam. Let’s take bakery goods for example. Customers would have previously mentioned Kinh Do in the south or Hai Ha in the north, but today they may name a long list of bakery brands: Top Cake, Tous Les Jours, ABC, Bibica, and Lotte, to name just a few! You may wonder how a brand can occupy customer minds.
Does it have to have better product quality? Better pricing? More convenient distribution systems? Or simply an impressive brand image? The answer may be either of these or a combination of them all.
Given digitalization, social media can become a brand driver. A customer who is impressed with a social media video that advertises a cake brand, for example, may make a decision to purchase that brand. Burger brands like McDonald’s and KFC use social media videos a great deal to demonstrate the attractiveness of their burgers.
These appealing videos, together with friends’ comment and shares, can make anti-fast-food customers change their minds and try them. This may come from an animated/motion video or 3D image that makes the burger looks much more delicious than in reality.
Vietnamese brands such as Vinamilk and Vietjet Air implement this strategy well. Vinamilk exploited the recent success of Vietnam’s U/23 men’s football team to become associated with the winning spirit, in its corporate PR campaign “Rising Vietnam”.
The brand integrated the team’s image with its corporate social video in a timely and natural manner. The brand, therefore, cultivated public support to enhance and grow its national positioning of “Proud of Vietnam” in the milk category, with which competitors found it hard to compete.
Similarly, Vietjet Air also grows its brand awareness and preference over its direct competitor, Vietnam Airlines, by exploiting social media videos and other media with the football team.
In short, a winning brand today not only creates value but also knows how to effectively communicate and deliver that value to customers. Unlike traditional methods, exploiting digital touch points to attract and enhance customer interest will be a growth challenge for all brands.
This digital trend becomes much more impactful in the context of today’s globalization. Globalization is amplified much faster and is more significant with support from the internet, e-commerce, and digital media tools. Companies’ performance can be influenced immediately in a positive or negative manner, depending on how well they can leverage these trends.
Crowd sourcing is another example of where companies can generate consumer ideas to grow their brand, given the convenience of internet marketing and social media. Vietnamese companies are still behind their international peers in calling for consumer participation in branding with crowd sourcing strategies.
Crowd sourcing can be used in new product development, the R&D process, and customer services, by asking customers questions to test or provide feedback on product quality, methods of promotion, methods of distribution, and even consumer-based pricing.
IKEA is a pioneer in applying digital tools to maximize customer satisfaction. It empowers its customers with 3D virtual techniques, in which a customer can simulate installing IKEA products in their home to see how they fit the space and layout and can trial different products before purchasing. IKEA also generates customers’ ideas on how to design a product that meets their needs. Vietnamese firms that can implement this type of digital-based R&D well will definitely create a point of difference and beat the competition while also winning customers’ hearts and growing their brand value.
Creating differentiation from competitors is a good thing but not enough to sustain and grow a brand in the today’s rapid digital world. Competitors could copy your ideas and market them as fast as you can by using the advantages of digital communications.
Vietnamese firms should therefore digitalize the point of difference, if any, as much as possible by exploiting digital communications platforms to occupy consumers’ perceptions while synergizing it with a brand theme or positioning to lift the brand to a higher level. “Rising Vietnam” from Vinamilk and the “sexy airline” strategy of Vietjet Air are cases other brands could learn from.
Stay local, reach global
In the context of digitalization and globalization, brands must have a global vision. “Globalization” doesn’t mean physical global market coverage as a traditional practice, but may be global cyber market penetration. Companies have to compete with global e-commerce giants like Amazon, Alibaba, eBay, and Booking.com, which consumers can readily access, choose a product, and place an order from anywhere in the world.
Low-priced products, made in China, are available everywhere and can be ordered conveniently with just a click on Alibaba’s platform. In the context of globalization and digitalization, the question is how brands can defend their local market and expand their marketplace internationally.
Digitalizing the business with a global vision is the way to beat the competition and sustain and grow brand value. Companies should also think about how to fit their strengths into global supply chains within an industry, rather than trying to continue their branding effort.
Supply chains play a very important role in branding in today global supply context, particularly online purchasing on digital platforms. Online B2B e-commerce is available in any country for all products with global supply sources and unbeatable prices.
Vietnamese firms shouldn’t depend on local manufacturers to lower costs. It is clear to see how hard it is to get a lower cost from local suppliers just by searching for international supply sources, particularly from China. Brands should therefore broaden their view to search for an optimum supply source and portfolio around the globe.
A dynamic supply mix of insource/outsource with a strategic direction could be operationalized effectively to ensure the lowest cost and best quality.
Local brands need to defend the local market. Companies should not forget that Vietnam has the second-largest population in ASEAN and is among the Top 13 in the world. Furthermore, the CPI and GDP keep rising higher than elsewhere. Vietnamese brands like Vinamilk, Vietjet Air, and Viettel all dominate the local market, which gives them a base to go global.
This doesn’t mean the local market is a must in today global digitalization market. But understanding local consumers and culture and using advantages in physical distance give a clear competitive advantage at low cost compared to international competitors.
Brand leadership is key!
It can be hard for companies to identify where the starting point is and what is an effective implementation process for brand globalization and digitalization. The failures of international companies in digitalization can provide good lessons.
I have studied and observed both successes and failures and concluded that brand leadership is the key to a brand’s growth journey. In the first step, companies should search for the right person with a global vision and capacity to implement digitalization.
The right CEO and leadership team will know how to build a unique strategy that captures digitalization with a global vision in the company’s context, including its strengths and weaknesses. They can also strategize how to smooth the implementation process both in the short term and long term to ensure profitability and brand growth.
The investment strategy is also critical for company leaders in supporting brand growth. An investment decision could direct companies’ efforts and resources to grow or kill a brand. It is quite hard for Vietnamese brands to invest in multiple things at the same time, such as new product R&D, branding, and distribution, given limitations on resources. Most Vietnamese firms are of small or medium-size and are constrained by limits on financial resources and human resources.
This requires the smart allocation and prioritization of capital and assets. An effective investment strategy should be customer-centric to ensure customer satisfaction and company profits both in the short and long terms.
Boards of Directors therefore need to study and work hard on allocating shareholders’ funds in the most effective investment projects. This effective resource allocation strategy would then drive operational performance and grow the brand’s value. In today’s business world, company leaders face many pressures.
They must balance short-term benefits and long-term brand growth to meet shareholders’ expectations, while keeping their eye on the global market and competition.
In summary, Vietnamese brands are behind their global peers regarding digitalization, global vision, and brand leadership. This requires local companies work much harder. However, digitalization can provide hope, as it can empower companies to quickly catch up with their competitors with a smart strategy. Such a strategy should capture a global market vision and digital space.
The only challenge is leadership. Companies with the right leadership team will definitely sustain their brand at the local market and grow it globally, particularly on the digital space.
Nguyen Trung Thang (Chairman of Masso Group)
VN Economic Times
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