1 ABSTRACT Food industry is one of the newest industries in Vietnam, with a population of over 88 million, Vietnam’s food industry is becoming more developed and westernized Kitchen Art Vietnam Company Limited was born in 2011 with the purpose of being a Food & Kitchen brand that leads the movement to inspire everyone to cook and live healthy with a happier experience in the kitchen everyday Since then, KITCHEN ART has now become a household name in Vietnam, widely recognized by in both business and retailed customers At the moment, KITCHEN ART has expanded beyond being a “Kitchen Store”, they have established themselves as a well-known Food & Kitchen brand in Vietnam Management of KICTCHEN ART, therefore, has worked closely not only with its business but also its target market which has a lot of impacts on the company’s sales There is no doubt that, with a reasonable target market, you can define that there is a viable market and that you can beat the competition in the market for sales This will help the company’ marketing strategy completed, leading to the perfect business plan in the future Consequently, besides providing KITCHEN ART’ concrete information in term of business and financial performance, this report aims to analyze the segmentations of the market which Kitchen Art Vietnam Company Limited target, dissect how KITCHEN ART uses the marketing mix (4P) in their target market in the first half year of 2013 and propose some recommendations for KITCHEN ART to develop their target market within scope of my knowledge I am so grateful to Kitchen Art for providing me the great chance to my internship there, special thanks to Ms - General Director of KITCHEN ART - my direct guide I also want to express my thorough gratitude to PhD Nguyen Thanh Hieu who enthusiastically helped me with my research in term of both technical knowledge and experiences Finally, I am very thankful to my classmates in Advanced Educational Program Class 51B because of their support during my internship period ABBRIVIATION KITCHEN ART Kitchen Art Vietnam Company Limited VND Vietnam dong USD US Dollar B2C Business to customer B2B Business to business F&B Food & Beverage US The United States EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization TABLE OF CONTENT ABSTRACT ABBRIVIATION TABLE OF CONTENT 2.2 Market Segmentation 14 REFERENCES 29 APPENDIX 30 LIST OF TABLE ABSTRACT ABBRIVIATION TABLE OF CONTENT 2.2 Market Segmentation 14 REFERENCES 29 APPENDIX 30 LIST OF FIGURE ABSTRACT ABBRIVIATION TABLE OF CONTENT 2.2 Market Segmentation 14 REFERENCES 29 APPENDIX 30 CHAPTER 1: OVERVIEW OF THE COMPANY 1.1 Introduction Official name: Kitchen Art Vietnam Company Limited Abbreviated name: KITCHEN ART Head quarter: No 38 Quang An Street, Tay Ho District, Hanoi Phone: 04 - 880 2771 Fax: 04 - 718 6580 Website: www.kitchenart.vn Figure 1.1: LOGO of Kitchen Art (Source: KITCHEN ART’s website) 1.2 History establishment and development KITCHEN ART was founded by two women, Ms Dao Chi Anh and Ms Dang Huong Giang, who felt there should be a place in Vietnam that kitchen and food lovers can call their "home" Chi Anh has been an avid food blogger at “Door to my kitchen” (featured as one of best Hanoi blogs of 2011 by The Word Hanoi magazine), who with that blog, found her true calling and destiny with food She cooked and journalized her way through recipes from cookbooks, food blogs and cooking shows, and soon realized that the one thing that would make her happy is to cook, write, and talk about food She set off to pursue her food dream and found many people who were supportive of her passion in Vietnam, from blog readers, social media users, to magazine editors and producers Among them was Huong Giang, a like-minded old friend from University, who was already dealing with many restaurants and hotels for their kitchen and tableware needs Very quickly, Chi Anh & Huong Giang found a common purpose and founded Kitchen Art Vietnam Company Limited in November 25th 2011 to make their kitchen dream come true KITCHEN ART has become Sia Huat’s authorized distributor in Vietnam, carrying many international branches (Sia Huat is Southeast Asia’s leading agent and direct distributor for an extensive range of foodservice products and equipment) Over one year of operations, KICTCHEN ART has become a popular destination for both expats and locals to find anything related to cooking, baking and food serving They have a regular sales from retail and B2B (restaurants, hotels…) They have established themselves as a leading Food & Kitchen website in Vietnam with 50000 visits a month, and a fast-growing social media following of nearly 20,000 fans on Facebook Furthermore, KITCHEN ART has been known one of the best in Vietnam suppliers for kitchenware, tableware, bakeware, buffetware and barware for restaurants, hotels, cafes, bars and households They carry over 40,000 imported products which could certainly meet your needs and expectations Having with their years of experience, being preffered suppliers for most of the five star hotels include Sofitel Legend Metropole Hanoi, Sofitel Plaza Hanoi, Hanoi Intercontinental, Hilton, Eastern and Easy Hotel, Hoi An Beach Resort, Lifestyle Resort Danang… The KITCHEN ART Retail store and Cooking Studio have been featured on many local magazines (Mon Ngon Viet Nam, Bep Gia Dinh, The Word Hanoi, Sketch Japanese Magazine, East & West Traveller) and even on National Television Besides, in early February 2013, KITCHEN ART has launched their first Emagazine, which was a big hit of the food media industry in Vietnam Recently, KITCHEN ART has become the official kitchenware partner of Master Chef Vietnam Just like any other international versions of Master Chef, Master Chef Vietnam is a reality television program about cooking for everyone, regardless of profession, age or gender Everyone will have a chance to pursue their dream of becoming a professional chef KITCHEN ART truly identifies itself with this purpose and passion of all the contestants for food and cooking, hence they decided to embark on this journey together with Master Chef Vietnam as the official Kitchenware Partner Especially, KITCHEN ART’s General Director Dao Chi Anh and Creative Director Nguyen Hoang Anh have won a cookbook publishing deal with Page One Publishing, a Singapore-based publisher with large international distribution network and strong book retail chain in South East Asia This book is written in both English (overseas market) and Vietnamese (Vietnam market), will be published in June 2013 1.3 Organization structure CEO FINANCIAL AND ACCOUNTING DEPARTMENT HUMAN RESOURCE DEPARTMENT MARKETING DEPARTMENT CREATIVE PRODUCTION DEPARTMENT SALES DEPARTMENT B2C B2B Figure 1.2: KITCHEN ART’s organizational structure (Source: KITCHEN ART’s website) 1.3.1 Financial and accounting department Financial and accounting department is responsible for organize accounting on business and sales activities of the company in accordance with state law of accounts and statistics In addition, it sums up the results of business management, making reports on accounting and statistics, analyzing the company’s business and sales activities for setting up controls for the implementation of its plan Last but not least, this department coordinating with Sales Department helps General Director in giving business plans, checking plan achievements and financial finalization of its affiliated units in fixed time terms 10 1.3.2 Human resource department The human resource department deals with management of people within organization Firstly, this department is responsible for hiring members of staff In addition, this department also clarifies and sets day to day goals organization It is responsible for organization of people in KITCHEN ART and plans for future ventures, objectives involving people in the company 1.3.3 Marketing department The marketing department is responsible for creating meaningful messages through words, ideas, images, and names that deliver upon the promises / benefits an organization wishes to make with its customers Furthermore, the marketing department also helps to ensure that messages, images are delivered consistently, by every member of KITCHEN ART and work closely with other departments 1.3.4 Sales department The main function of sales department is to attract and retain customers Moreover, sales department helps marketing department in meeting sales volume fore casted and analyzing demands of the market They study the consumer’s psychology, market fluctuations, prepare sales budget and explore new target market… At KITCHEN ART, they have B2C and B2B sales B2C is everyday sales to retail customers of KICTHEN ART Store On the other hands, B2B is KITCHEN ART’s business with professional corporate like restaurants, hotels, café, resorts… 1.3.5 Creative production department At KITCHEN ART, they carefully test and select recipes and showcase the exciting beauty of various cuisines, together with cooking techniques of varying difficulty level to share on their website and videos on YouTube So, the creative production department is responsible for the content of the websites and all of KITCHEN ART’s publications This department also works with marketing department to promote and develop the company’s branding 1.4 Business fields 23 Distribution (place): KITCHEN ART has only one retailed store on Xuan Dieu Street, Hanoi and some customers have made complains about the far area Although they have found that it difficult to have a location in Hanoi’s center but with one year since opening and a large amount of customers, the company still consider to open the second retailed store It will help to attract more customers from other areas of the city To solve this issue, KITCHEN ART is targeting to open stores with Parkson towards end of 2013 to expand our distribution to Ho Chi Minh City, and plan to add stores each year thereafter They believe that they like the model in which Parkson will share their risk as the rent is based on percentage of sale - and therefore the company will focus on pushing their sale effectively Although they targeted to expand and open the second retail store, KITCHEN ART’s main strategy of 2013 to develop their distribution channel is launching the online store, which will be available by the end of May An online store with both B2C and B2B products will ship nationwide, with strong product coverage that matches the likes of Crate & Barrel or William Sonoma in the US KITCHEN ART believed that with their Food Web Content gearing towards cross-promoting their products, the Web Portal (www.kitchenart.vn) will be a good complementing website to the Online Store, with cross linking of products related to Recipes featured This is new and welcoming style of marketing as users are moving away from direct advertising and are more easily influenced to use new products that are featured in a recipe KITCHEN ART also conceived that together with the Online Store, they are able to receive more B2B inquiries nationwide, as there is no Online Store serving the Commercial Food Service industry in Vietnam, while there are many hundreds of Restaurants in Hanoi or HCM city alone As launching the Online Store, this sales channel also expects decent growth of over 50% per annum, supported by rising trend of online shopping in Vietnam and their potential cooperation with a leading online commercial distribution chains 24 Figure 2.3: Merchandising sale breakdown by distribution channels (Source: KITCHEN ART’s 2012 business plan) Sales Table 2.2: KITCHEN ART’s growth analysis: Sales by channel (in USD) from 2012-2015 (Source: KITCHEN ART’s 2012 business plan) 25 CHAPTER 3: RECOMMENDATION KITCHEN ART is well-known as a multi-segmented food and kitchenware business, providing the ability of producing its own Food Media (Photography, Video) that matches industrial standard, serving advertising/marketing needs by clients in the Food & Beverage industry Despite their widely recognized in both business and retail customers, after my internship in the company, I have made two findings and recommendations which are indicative that KITCHEN ART is clearly capable of achieving their target market using this method Firstly, it is actually a challenge for a young company like KITCHEN ART to attract and retain capable staff They are having a dedicated team but the level of experience of some staff is still low, leading to high risk mistakes and more time to be spent supervising their work After my internship, I found that lack of human resource was the main reason led to KITCHEN ART’s delay on launching the Online Store (which was planned to establish at the end of 2012) Therefore, finding and keeping the right person should be the top priority for the company They had better continue to motivate and train existing staffs to retain long term I believe that good attitude is the key, as skills and experience can be learnt with time This action also support in developing B2B business In B2B, they need to have a mature Sales person with experience in dealing with Food & Beverage or Hospitality industry while their current B2B team is young, inexperienced but dedicated If they find it hard to afford their requirements, they will have to accept training the staffs from ground zero, which will be shaped to their culture easily As a result, this core team will be in charge of growing existing database of loyal customers from store to B2B customer database of Hotel chefs, Restaurant owners and maintain relationship with customers through newsletter program for Product information, Sales or Promotions related events 26 The second finding is although they have tried to figure out the most reasonable pricing strategy, the market still has a group of competitive companies, which providing cheap range that is locally produced (handmade from steel) or sourced from China and hand-carried Amazon goods with 2-3 weeks lead time upon order To deal with this difficult issue, KITCHEN ART should work closely with Logistics service firstly to bring down the cost of future imports through optimization methods practiced in the industry Furthermore, they should use product marketing strategy as a key tool to overcome pricing issues For example, through KITCHEN ART Marketing & Creative production, they should make efforts on their web portal, social media, KITCHEN ART products (Kitchenware, Tableware…) and services (Cooking Classes, Food Media Consulting) Last but not least, they had better continue to differentiate itself as high quality, international standard, contributing to higher image of modern homes and businesses Finally, a must-have done is developing new content publishing formats (Living Series Video, E-magazines, Booklets…) to build stronger audiences/readerships, create meaningful advertising/ exposure for KITCHEN ART products and services 27 CONCLUSION The target market has strong impacts on product’s marketing strategy In Vietnamese food industry, the needs and desires of the target consumer group have not been understood In order to develop a successful branding, the marketing, technical and regulatory challenges need to be overcome for every business In the case of Kitchen Art Company Limited, despite of being a well-known brand, they still need to cover some issues to reach not only their target market, but also the company’s vision: “To be a Food & Kitchen brand that leads the movement to inspire a happier experience in the kitchen everyday” Ms…- CEO of Kitchen Art Company Limited has asserted that KITCHEN ART was overcoming challenges with a strong purpose She said, “The Vietnam market will remain challenging for Kitchen Art, as we struggle through the dipping economy to maintain our business functions and team while suffering dropping sales since the month of June 2012 However, with the entire team driven by a strong purpose of being a leader in Food & Kitchen products provider as well as media, we will strive towards our goals with the limited resources and difficult market conditions to be above the rest.” In conclusion, this report would seem bring a clear picture of Kitchen Art Vietnam Company Limited: its business, its achievements, its difficulties on reaching and developing the target market This has been the purpose of this thesis This does not mean, however, that there is no market for KITCHEN ART to fulfill the dream of being market leader in Food & Kitchen related merchandises and media Nevertheless, the essence of finding a reasonable target market is undoubted, especially for KITCHEN ART - a newbie company in Food & Kitchen Industry market The writer has recently read an article on the Internet, which mentioned: “51.9% of the population is estimated to be younger than 30, implying potentially 28 dynamic opportunities for consumer goods players that targeting the mass-market segment in particular as this demographic group matures over time” so “Will it be a crucial task for KITCHEN ART to educate this market segment?” or “Based on their potential strengths, KITCHEN ART can definitely overcome the weaknesses, catch up new opportunities to improve their target market.”? 29 REFERENCES English: KITCHEN ART’s shareholder report January to June,2012 KITCHEN ART’s business plan 2012 KITCHEN ART’s business plan 2013 Website: http://www.kitchenart.vn http://www.en.wikipedia.org http://www.foodbev.com 30 APPENDIX KITCHEN ART’S FINANCIAL PROJECTION Assumptions Distributing products through Parkson retail stores: KITCHEN ART is currently talking with Parkson to discuss the possibility of distributing their kitchenware products through Parkson’s eight department stores across Vietnam In Parkson’s current model, they are planning for stores to be open by end of 2013 and gradually bring up to by 2016, 10 by 2018 This expansion in distribution channel is a key driver for their kitchenware business Establishment of a High Tea cafe chain: The current financial projection also takes into account Kitchen Art’s plan to establish a “High Tea” concept cafe chain They believe the new business should fit well with their existing segments given their leading position in baking classes and the brand’s strong connection with western lifestyle In fact, they have been approached by leading bakery chains with offers to partner in café/tea chain given their marketing and branding capability Right now, they are planning to launch our first high-tea house toward end of 2013 The target is to have additional cafes each year Assumptions on number of Parkson stores and High-tea houses 31 Growth drivers & analysis With their low base from 2011- their first year in the business, they are expecting very strong top line growth, driven by all business segments For the next five years, they are expecting stellar revenue growth of 140% per year, of which kitchenware sale is expected to grow at an average 120% growth p.a The strong growth is due to three key drivers: (1) New business segment of Cafe Chain business; (2) New distribution channel through Parkson department stores; (3) Addition of product ranges and brands that they carry On the merchandising segment separately, they are expecting growth of average 120% over the next five years driven by the above last two drivers From their three channels, Parkson will be the key contribution to growth By FY15, we expect 75% of merchandising sale will be contributed through Parkson network They are targeting to open stores with Parkson towards end of 2013 to expand our distribution to Ho Chi Minh city, and plan to add stores each year thereafter Parkson currently has eight across Vietnam and is the country’s market leader in term of retail department stores They like the model in which Parkson will share its 32 risk as the rent is based on percentage of sale - and therefore the company will focus on pushing their sale effectively KITCHEN ART’s online sales channel should also expect decent growth of over 50% per annum, supported by rising trend of online shopping in Vietnam and their potential cooperation with a leading online commercial distribution chains In terms of product segments, they should see strong growth across current segments A few notes include: They will start distribute appliances (mainly food preparation appliances) from 2013 and due to higher dollar value term per each unit, this segment will increasingly become bigger component in the merchandising business For “ingredient”, which currently contributes about 10-15% to their top line, contribution will gradually decrease as other part grows at faster pace It should be noted that we only carry this in their existing Xuan Dieu store to support their cooking classes The growth from this segment is therefore only about 20-30% p.a., much lower than others Capital expenditure projection KITCHEN ART is expecting total capex need of average 100K USD per year for the next five years The main purposes of these capital expenditures are for expansion into high-tea business and investment into of their merchandising 33 distribution network Source of funding will be from capital raising from existing shareholder for FY13 From 2014, they expect the business is self-sustained and will be able to generate healthy operating cashflow to support expansion plans 34 Financial statements 35 Profit Sheet (USD) FY 36 INTERSHIP REPORT ASSESSMENT Signature of supervisor 37 CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM Độc lập - Tự - Hạnh phúc *** GIẤY NHẬN XÉT THỰC TẬP GIAI ĐOẠN II: Từ 11/3/2013 đến 02/6/2013 Họ tên: Vũ Ngọc Anh MSSV: CQ510051 Sinh ngày: 04/9/1991 Hà Nội Hiện học lớp: Tài tiên tiến 51B Khóa: 51 Chương trình Tiên tiến - Trường Đại học Kinh tế Quốc dân Công ty TNHH Kitchen Art Việt Nam xác nhận sinh viên Vũ Ngọc Anh: Đã thực tập công ty khoảng thời gian từ ngày 11/3/2013 đến ngày 02/6/2013 Trong trình thực tập, sinh viên Vũ Ngọc Anh chấp hành tốt nội quy cơng ty có nhiều cố gắng việc hoàn thành nhiệm vụ giao Hà Nội, ngày 02 tháng năm 2013 Xác nhận sở thực tập Cán hướng dẫn thực tập ... THE TARGET MARKET OF KITCHEN ART VIETNAM COMPANY LIMITED 2.1 SWOT analysis Strengths: KITCHEN ART is the first full-fledged kitchen store in Vietnam which provides a wide-range of high quality kitchenware... 2013, KITCHEN ART has launched their first Emagazine, which was a big hit of the food media industry in Vietnam Recently, KITCHEN ART has become the official kitchenware partner of Master Chef Vietnam. .. lack of competitors in the market In term of the target market from 2011-2012, KITCHEN ART had used the marketing mix as the standard theory to achieve their target market Through this marketing