Northern businesses marching towards the south

While many southern brands have become very popular in the North, northern businesses still find it hard to penetrate the southern market which they believe are very promising.

Marching towards the south

In the last five years, many enterprises in the north have been eyeing the southern market in their plan to expand the market share. According to FTA, a market survey firm, about 20 well known brands in the north have been quietly trying to penetrate the southern market. Some northern brands such as Ba Vi dairy products, IVY fashion, Song Duong paper, Micoem instant noodle, Traphaco medicine and Hai Ha confectionary have become more well known in the south.

According to FTA’s General Director Tran Ngoc Dung, the brands which have been leading in the trend are the ones in the fields of finance, real estate and especially, consumer goods.

“The enterprises in this field have to compete fiercely to survive, which has prompted them to seek new markets,” Dung explained.

According to Dung, despite the advantages in financial capability, northern enterprises are still weak in marketing and sale, and they still cannot well understand and satisfy the taste of southern consumer. Especially, the principle of prioritizing using local products has been the biggest obstacle for northern producers to sell their products in the south.

Nguyen Tuan Dung, Deputy General Director of IDP, a dairy producer, said that over the last two years, IDP has been trying to distribute Ba Vi brand yoghurt in the southern market, but the company still cannot penetrate retail points here. To date, the company’s products still have been distributed through supermarkets and schools.

“The southern market is always the target market for IDP. At present, the sales in the south just amount to 10 percent of the company’s total turnover, which is a modest proportion, but this is really an encouraging result,” Dung said, explaining that two years ago, the company still could not sell its products here.

According to Dung, the big hindrance for northern companies is the competition from existing brands on the southern market. He believes that in order to boost sale, companies need to have good workforce. However, the problem has arisen that the business management culture is quite different in the north and south.

Dung went on to say that it is not difficult to find staff for high positions, but it is difficult to retain them and drive them to the common goals of the company.

The differences in the consumption culture have also existed as big obstacles. “We can set up sale points everywhere in HCM City within six months, but it is really not easy to maintain the purchasing power and the faith of consumers,” Tuan has admitted.

Dang Kim Nam, a senior executive of A Chau Food Technology Company, the owner of Micoem brand, has also said that it is very difficult to conquer the southern market, and that the sales of Micoem products on the market are still “below expectations”.

Renovating themselves to become better

Of the obstacles, the consumption culture still has been cited as biggest problem. Northern consumers have high faith to brands. They do not accept risks and they only use familiar products. Meanwhile, southern consumers prove to be more open. They are always ready to use new products. However, as they have many choices, they always set high requirements on products. Therefore, in order to attract southern customers, the products need to have high quality, good designs and good marketing method as well.

“Advertisement methods are also different in the north and south. The products targeting northern consumers should focus on the contents of products, while the ones targeting southerners should show images, sales promotion programs and encourage the trial use,” Dung said.

Especially, food producers apply different recipes for the products for different customers. For example, the food for distribution in the north would have both salt and sweet, while southerners want more sweet. – TBKTSG

Tags: Vietnam business