Firms spend heavily on brand promotion

Vinamilk is usually one of the highest spenders among promoters

In terms of business fields, fast-moving consumer goods (FMCG) is the field where marketing and promotion plays a vital role, with direct impacts on firms’ revenue and profit performance.

In this field, Vietnam’s top milk company Vinamilk is taking the lead in image promotion cost.

In the first half of this year, the company’s sales expenses amounted to VND5.494 trillion ($243 million), with 82 per cent of the value equal, or VND4.557 trillion ($201.6 million), going to advertising, market survey, and promotion activities.

On average, Vinamilk spent more than VND25 billion ($1.1 million) each day on sales promotion, higher than in the same period of 2017.

Earlier, in 2016 and 2017, the company’s sales expenses surpassed VND10 trillion ($442 million) annually.

In another case, Vietnam’s largest brewer Sabeco spent VND1.170 trillion ($51.7 million) in sales expenses in the first half of this year, with VND388.2 billion ($17 million) put into advertising and sales promotion activities.

Last year, the company’s advertising expenses exceeded VND1.221 trillion ($54 billion), averaging at VND3.3 billion ($146,000) per day.

Another leading brewer Habeco was reported to have spent nearly VND2 billion ($88,500) on advertising every day.

Market analysts, however, assumed that Habeco was not doing a smart job with brand promotion as the company’s premium Truc Bach beer line has yet to make much of an impression on consumers, while its other products are being positioned in the common segment.

Another big name in the FMCG field, Masan Consumer belonging to one of Vietnam’s largest private companies Masan Group, spends about VND3 trillion ($85.75 million) on sales expenses each year.

Last year, the company’s sales expenses reached VND3.013 trillion ($133 million), VND2.195 trillion ($97 million) of which was dedicated to advertising expenses, market survey, and sales promotion activities, averaging more than VND6 billion ($265,500) per day.

Mounting competition among companies on equal footing, particularly the penetration of foreign-made goods, has prompted local firms to ramp up efforts for image promotion, not only through advertising on the media, but also via impressive promotion campaigns.

Many firms smaller in size have also accepted to splash money on marketing and advertising, but the actual outcomes are hard to measure.

Sales expenses at consumer goods firms often account for 40-50 per cent of their accrued profits.

According to major market research firm Kantar Worldpanel, Vietnamese firms could spend about VND68 trillion (nearly $3 billion) on advertising expenses by the end of this year.

Investment into major branding campaigns has generated apparent outcomes, as evidenced through the fact that the top FMCG players like Vinamilk or Masan Consumer have always been among the top 3 in possessing the most favoured brands by consumers in both urban and rural areas across the country in the past six years, beside Unilever.