Coca-Cola and Pepsi slash
selling prices to knock down domestic rivals
Coca Cola and Pepsi are dominating the
fizzy soft drink market, while Tan Hiep Phat controls the still drink market,
thus creating a balance in the playing field. However, the product price
reductions and the announcements by both Pepsi and Coca Cola are likely to
make big changes to the market.
“Pushing up the investments to regain the lost market
shares” was the commitment made by the President of a soft drink company when
he took the office.
The company is believed to be the oldest soft drink
manufacturer in the Vietnamese market. However, the mismanagement, plus the
limited resources, the brand has been lost into oblivion. It has been
operating at a moderate level, targeting the rural market with low cost
products and accepting low profits.
However, just two months later, the president changed
his mind, temporarily putting aside the dream of bringing the company back to
the golden age.
What made the president change his mind was the market
report his business workers sent to him two weeks after he took the office.
The report said that Coca Cola and Pepsi both have
slashed the selling prices of many products; including the 330 ml glass
bottled products, which were the advantageous product of his company.
A box of 24 Pepsi bottles has seen the price drop from
VND66,000 to VND46,000. Meanwhile, Coca Cola has promised to give six free
bottles to those who buy one box of products.
The price reductions vary, depending on the regions and
the product lines. However, the sharper price reductions have been applied in
the areas near
Pham Viet Anh, Chair of Left Brain Connectors, a
consultancy firm, said this could be just a short term strategy applied by
the two big drink manufacturers which aims to quickly clear the inventories
or help sales agents boost sales. However, he also thinks that the two big
guys are following a long business strategy of eliminating glass bottled
products.
Anh seemed to give a reasonable explanation. Since
glass bottled products just amount to a small proportion in the total
turnover of both Pepsi and Coca Cola, they might think of stopping making the
products.
Do Thanh Nam, CEO of Win-Win, also a consultancy firm,
glass bottled products have big disadvantages for the transportation, while
the low selling price leads to the low profit margin.
However, no matter what Pepsi and Coca Cola target when
taking such steps, their move has made a strong collision to the domestic
market, which is now seething.
Nguyen Dang Hien, General Director of Tan Quang Minh,
the company which owns Bidrico soft drink brand, has also noted that slashing
the selling prices for the glass bottled products could be seen as the blows
on the Vietnamese brands like Bidrico or Chuong Duong.
The fizzy glass bottled soft drink mostly develops in
rural areas thanks to the low prices. The market has been dominated by the
Vietnamese companies, which can offer cheap products.
In the past, the foreign big guys once tried to conquer
the rural market by slashing the selling prices for plastic bottled products.
However, they did not succeed, because their products, despite the sharp
price reductions, were still more expensive than glass bottled products.
Source: NCDT
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Thứ Ba, 11 tháng 6, 2013
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