Vietnam’s consumer goods makers unpersuaded that ‘it pays to advertise’

Either Vietnamese makers of consumer products don’t think it’s necessary to spend money on advertising, or they just don’t have the money to spend, or they don’t think it pays to try to ‘sell’ the virtues of their products, reports the market paper Saigon Tiep Thi.

Dai Dong Tien Company makes a plastic refrigerator container using a special ‘nano technology,’ something it doesn’t bother to advertise. The company decided that consumers will buy the boxes just because of the low price and apparent high quality. However, according to Saigon Tiep Thi, very few visitors to a recent ‘High Quality Vietnamese Products Fair’ knew that Dai Dong Tien has such a product and very few of them knew about ‘nano technology.’

To advertise or not?

In many cases, Vietnamese producers cannot decide whether they should advertise their products.

Director Vo Van Tan of Viet Tay Fashion Company has ten Viet Tay shops in HCM City. However, it’s a puzzle to Tan how much he should spend so that more consumers know about the company’s products. “It will cost me billions of dong to advertise,” he says. “A newly established company just doesn’t have that kind of money.”

“We target low and medium income earners,” he continues. “In order to have money for advertisement campaigns, we’d have to raise prices. If we do that, our products will not be competitive any more.”

Then there’s the Duc Phat Company’s ‘linh chi tea,’ which has many good points. In particular, the fungus-based herbal tea does not contain preservatives. However, Le Vy Vy, Business Director of Duc Phat says he can’t afford to advertise. “Our products are selling at low prices and the company’s profit is low. Therefore, the company does not have money to advertise and build recognition of our brand.”

These stories are representative. In marked contrast to foreign retailers or a few big Vietnamese companies, most Vietnamese makers of consumer goods think advertising is an extravagance. By comparison, foreign companies think that it is necessary to invest in advertisement first, because advertising builds sales.

Advertising pays off for those who can afford it

The prevalent attitude seems to be that a good product will sell itself. That may have been true in the past, but not any longer, when the market is flooded by a plethora of similar products.

Housewives interviewed at the High Quality Products Fair said they cannot tell the difference between an ordinary plastic box and one made with nano technology, unless they read or hear about the technology.

The Quang Vinh Company makes a great rain poncho. It costs only half as much as a similar, imported product. It is suitable for use in winter in the north and is available in colors that match many kinds of scooters. However, they have not advertised these things, and so they lose many sales to the competition, which buyers assume ‘must be good because it is imported.’

Bidrico Tea, made from 10 kinds of herbs, and Duc Phat’s fungal tea which is good for health, trail far behind C2, Yinyang or Lipton Ice Tea. The latter brands may be ordinary, but they are widely advertised.

On May 5, the marketing firm CImigo released the results of the survey on 140 advertisements. The ten most successful ads touted Vinamilk, Simply (tissues), Heineken Beer, Omo (detergent), Ajinomoto (MSG), Coca-Cola, Knorr (soups and seasonings), Close Up (cosmetics), and Beeline (mobile phone service).

The survey showed that few Vietnamese brands are successful advertisers. Invariably, the ones that succeed are upscale brands that sell at a premium and use foreign services.

Saigon Tiep Thi concludes that Vietnamese companies with limited budgets will have a hard time finding advertising agencies that can serve them well.

Saigon tiep thi

Tags: Vietnam advertising, Vietnam marketing