Wednesday, February 6, 2008

Marketing in Vietnam

Read first installment here.
The Marketing Infrastructure. My first trip to teach in Vietnam produced two immediate, huge surprises:
•How well grounded in the basics of marketing the students in this executive training program were. Many speak excellent English and some have lived and/or studied in the West.
•How warmly I, so obviously an American, and my American marketing expertise were welcomed.
Over the week of teaching another important realization grew; that the marketing infrastructure I was accustomed to in the US and Europe simply didn’t exist in Vietnam.

The basic media structure we are accustomed to is present in the cities. Media, especially outdoor and interactive, seem to be growing rapidly, but I haven’t been able to find any data in English. Many print and broadcast outlets are controlled by the government, but I didn’t see any direct effects of that on advertising. Just looking at what’s available from street vendors, there are many newspapers and magazines available. Internet connections are slow but they work, even to the extent of allowing brief streaming video in the classroom. I didn’t hear any discussion of government control of Internet content, but I wasn’t operating in a space where political issues were often mentioned.

One student had an advertising story that illustrates the need to beware of western expectations when using media in Vietnam. When he tried to use newspaper inserts for advertising purposes, he found one major distributor removing the FSIs and selling them for waste paper. Back to display advertising!

The biggest issue for marketers in Vietnam is the lack of a trusted payment system. In 2007 most of my students agreed that it was difficult to get a credit card. It is like poor credit in the US—put up a large amount of money in order to obtain the card. Some older professionals assured me that is not true, but I suspect they bank in non-Vietnamese banks. I specifically asked the question this year and was told that “if your company has relationships with banks, it’s easy to get a credit card.” However, one student added that he was unable to use his credit card to make an Internet purchase from outside Vietnam. I believe that it’s still not possible to sign up for a personal PayPal account from Vietnam, although you can transfer money to firms “in the PayPal network.” It sounds to me like my experience with Western Union—transfers have to be cash-based, not credit card or bank account.

Add to that the fact that the mail system is considered unreliable. In 2007 one magazine manager told of sending representatives out to collect for magazine subscriptions in person; they just didn’t find it possible to collect by mail. The result is that mail marketing and e-commerce as we know them in the US are non-existent. In addition, the majority of students seemed to believe that email marketing absolutely does not work in Vietnam. The reason is a huge amount of spam, resulting in filters that prevent most commercial mail from getting through. Email wasn’t a large part of my subject matter, but they were interested in registration forms, incentives and other aspects of permission marketing. One of the consumer products companies represented does seem to be using a website and email successfully. Careful permission-based email marketing seems to have promise but I recommend that the permissionning process be very careful and informative with clear value offered to the consumer for signing up and receiving email communications. Coupon distribution seems one obvious application.

The growing economy and middle class are attracting companies that provide marketing infrastructure. Media research, marketing research, and advertising agencies have offices in either Hanoi or Saigon or both. I’ve talked to other firms that operate in the Asia-Pacific that are watching Vietnam as an opportunity. So the infrastructure is growing. This slideshow appears to be a product of Yahoo! in Vietnam, which seems reasonable because Yahoo! is highly popular there.

My own opinion is that the lack of a trusted payment system is going to be the greatest barrier to a vibrant consumer economy, and that’s something that marketers cannot fix on their own.

One final story has a lot to say about marketing and the consumer in Vietnam. Several students were from AIG, the global insurance company. The story is that a year or so ago AIG had a sponsorship relationship with Manchester United. Soccer is wildly popular in Vietnam, just as in much of the rest of the world. However, AIG is a new brand and not yet well known in Vietnam. Consequently, there is now consumer confusion—many seem to believe that AIG is a soccer team!

I believe that Western companies that establish offices in Vietnam or who are looking for Vietnamese partners will find a reasonable supply of well-trained and highly motivated marketing personnel. Beware, however, of media and marketing infrastructures that require strategies specially designed for the situation there—and expect that situation to continue changing rapidly as the economy matures!
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