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Modern branding a necessity

Released at: 14:00, 13/11/2017 Cosmetic Market

Modern branding a necessity

Mr. Le Quoc Vinh,Chairman & CEO of Le Invest (Holdings) Corp. (Photo from Le Invest Corp.)

Mr. Le Quoc Vinh, Chairman & CEO of Le Invest (Holdings) Corp., tells VET about Thorakao's branding strategy as it returns to the domestic cosmetics industry.

by Do Huong

What are your thoughts on Thorakao’s branding in Vietnam over recent years as it returns to the domestic cosmetics market?

Thorakao’s return to the domestic market is a good sign thanks to the efforts of its owner, the Lan Hao Cosmetics Limited Company. However, the company remains unfamiliar with the trend towards modern brand communications. Old methods are no longer suitable in gaining market access, especially for cosmetics brands, which require customer interaction at the highest level.

Do you think the quality of Thorakao’s products allows it to compete with other brands?

I believe Lan Hao has been serious about the research and development (R&D) of its products. But customer emotion is a competitive factor and requires a much stronger brand communications strategy. When product quality is relatively homogenous and not especially notable, emotional attachment among customers makes a difference to the competitiveness of a brand. I haven’t seen such a difference at Thorakao. Most existing customers remain nostalgic for Thorakao’s glorious past while others are interested in its cheap prices. These are not factors that increase the competitiveness of a brand. The competitiveness that other small domestic cosmetics have gained is not in quality based on scientific criteria but on feelings about quality through experiencing products.

Thorakao’s customer segment is mainly low-income customers in rural areas. Do you think it’s a smart strategy?

There have been many enterprises focusing on rural markets when beginning and avoiding the competition pressures in red oceans. Enterprises must have a strategy covering the urban market. The rural market is now being impacted by new trends and brand loyalty is low. With better living conditions and access to information reaching levels seen in urban areas, demand in rural areas will be more advanced. If Thorakao’s branding remains in the old style, it will be hard for it to hold on to its markets.

The brand’s weakness is packaging. What strategy is needed to resolve this issue?

This is a weakness about feelings, which Thorakao hasn’t changed. Packaging is an important part of the customer experiences. Demand among rural consumers will become more delicate and this requires improvements to the customer experience. Firstly, I think Thorakao should conduct specific market research on its packaging and design and the efficiency of its past marketing strategies, and then adopt a revised strategy. I would suggest that the aesthetic of the packaging for cosmetics is higher than the normal requirements of the targeted customer segment, as cosmetics are a luxury product, not an essential product. 

Do you think the brand’s distribution expansion via online is enough to approach its targeted customers?

Online commerce, especially commerce using social networks, is a trend in distribution channels and strongly developed at offices in urban areas. If Thorakao’s targeted customers are low income earners in rural areas, it will not reach its goals via this channel. Selling cosmetics online is selling faith and loyalty. Thorakao needs to build its customer community by changing its marketing strategy and tapping into emotions and creating opportunities for high interaction with consumers.

Thorakao is considering selling its brand to a Japanese partner. Do you think this is good news for the development of Vietnamese cosmetics brands?

This depends on the purpose of the merger and acquisition. If Lan Hao is struggling with finance to continue its R&D and changes to branding and marketing strategies, finding an investor will be necessary. However, the health of the brand is not good, and the business will suffer from this in a valuation. I think Thorakao needs a strategic partner that can make a breakthrough in brand strategy and change its face. Hopefully, the Japanese partner is suitable in this regard and not just a financial investor.

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