Cleanliness is next to godliness, so it is said, and the companies doing battle for the detergent market in Vietnam are working up missionary zeal.
It is a crusade that should eventually reward the winner handsomely – Vietnam’s 76 million people each use only a third the amount of washing powder as people in the Philippines, and less than a tenth as much as Japanese or Europeans.
"It is a good news/bad news thing," said Alan Hed, managing director of US consumer goods company Proctor and Gamble (P&G)’s Vietnam operations. "The good news is that there is huge growth potential. The bad news is that there are a lot of companies competing for what is today a very small pie."
Slugging it out with competing messages of the "washes whiter than white" variety are P&G and Unilever, and a Vietnamese company, Daso.
Another 17 Vietnamese companies squeak in the background, but their message is barely heard.
"We will kill the small ones. Only Daso will survive," said Corrine Duquin, manager for Unilever’s detergent brands.
The chairman of Daso, one of Vietnam’s most successful private companies, agreed:
"It will not be long before Daso is the only Vietnamese company in the detergent market," said Dang Ngoc Hoa.
In a country where consumer choice is only just re-emerging from the mists of a disastrous 25-year foray into command economics, Daso’s marketing techniques are way ahead of the local pack.
The company even has a toll-free consumer hot-line and a team that works full-time on customer satisfaction, a ploy it has adopted from its foreign competitors.
"The foreign brands use a lot of marketing and promotion to brainwash Vietnamese consumers," said Hoa.
"We have to study what they do and learn from their experience in order to keep our market share. And I tell you, we learn quickly."
Consumers are clearly ready to listen to new marketing messages. When Unilever’s Viso brand was relaunched in a media blitz last year, it was the first to pick a single message and back it up with scientific demonstrations.
The "washes whiter and it shows" line tripled sales in just two months. "It was crazy. We just looked at our sales forecasts and said: ‘Oh well, these can go in the trash now’," Unilever’s Duquin said.
Next up to bat was P&G, which launched its Tide brand in October. Priced at 6,000 dong (US$0.55) for a 500 gram pack, Tide is 50 percent more expensive than other brands. P&G’s Hed said the high price was justified by better performance. "In the end, the consumer votes with her dong. If we don’t deliver, she won’t pay that 6,000."
In the market, housewives were unanimous. Tide is more expensive because it cleans better. They were not, however, to be seen handing over their money.
Does a high-quality image translate into high sales? Hed would not discuss sales figures or market share, but many in the industry question attaching a snob value to soap powder. "Soap powder is not a car, something to show off. People just use what works for their family at a price they can afford," said Hoa.
As long as economy remains a key issue for consumers, Daso will probably remain in the ascendant.
Detergent prices in Vietnam are low; so low, according to many in the industry, that it is impossible for foreign-invested companies with their higher production costs to make a profit unless they can command higher prices than local brands. "Joint-ventures pay more for everything," said Hoa. "I have their feasibility studies on my desk; they don’t have anything that I don’t have, and my production costs are at least 20 percent lower."
Foreign brands find it cheaper to contract production out to local firms than to do it themselves. Even then, their margins are wafer thin. "There seems to be an unwritten law in the market that soap powder costs 4,000 dong. Full stop," said one industry analyst.
At least one brand is considering printing a higher price on the pack.
"That way, the customer won’t think the shop owner is trying to rip them off," an executive explained.
Copyright 1996 Asia Times.
(c) 1996 Chamber World Network International Ltd.