MARKET OPPORTUNITIES IN EMERGING MARKETS
Case study: Rideascout’s innovative vehicle and Vietnamese
market
LAHTI UNIVERSITY OF APPLIED
SCIENCES
Degree program in International
Business
Bachelor’s Thesis
Spring 2015
Bui, Huyen Anh
Lahti University of Applied Sciences
Degree Programme in International Business
BUI, HUYEN ANH Market opportunities in emerging
markets
Case study: Rideascout’s innovative
vehicle and Vietnamese market
Bachelor’s Thesis in International Business 79 pages, 2 appendix pages
Spring 2015
ABSTRACT
Nowadays, there is no limit for innovation. Successful innovative products
promise to bring about dramatic changes to the world. Rideascout, a Finnish start-
up, is developing their new product, an innovative vehicle. In order to understand
how their product could be used in certain market areas, the company decided to
carry out an extensive market research. As part of the project, this thesis aims to
explore possible uses and market opportunities for the product in Vietnam and
more specifically in Hanoi, the capital.
The thesis employs deductive reasoning and qualitative research method. Primary
data are gathered from interviewees with 26 Hanoi consumers and the case
company. Meanwhile, secondary data are taken from trustworthy and honest
sources. In the literature review, the thesis presents discussions about emerging
markets and market opportunities in such markets. The theoretical framework
utilizes two marketing tools PESTEL and Porter’s Five Forces. In the empirical
part, there are three analyses. The country analysis, backed by PESTEL, points
out certain macro environment opportunities and challenges for the company.
Furthermore, Porter’s Five Forces help examine the competitiveness of the car
industry to which the researched product currently belongs. Besides, product
adaptation ideas from consumers’ interviews are proposed to the case company
because they represent the actual demand and expectations of consumers. The
findings of this thesis indicate there is, indeed, a niche market opportunity for the
case company in Vietnam even though there are several external challenges to
overcome. In brief, the thesis acts as a reference for the case company when they
make their decision to enter the Vietnamese market.
Key words: innovation, market opportunity, emerging market, country analysis,
industry analysis, consumer analysis, PESTEL, Porter’s Five Forces, deductive,
qualitative
CONTENTS
1!INTRODUCTION 1!
1.1!Research background 1!
1.2!Research objective and research questions 2!
1.3!Research methodology and method 2!
1.4!Theoretical framework 6!
1.5!Thesis structure 7!
1.6!Scope and limitations 9!
2!MARKET OPPORTUNITIES IN EMERGING MARKETS 10!
2.1!Emerging markets 10!
2.1.1!Definition 10!
2.1.2!General characteristics 11!
2.2!Market opportunities in emerging markets 12!
3!SITUATION ANALYSIS 14!
3.1!Country analysis 14!
3.1.1!Politics 14!
3.1.2!Economics 15!
3.1.3!Social 16!
3.1.4!Technology 17!
3.1.5!Environment 19!
3.1.6!Legal 20!
3.2!Industry analysis 21!
3.2.1!Rivalry among existing competitors 22!
3.2.2!Bargaining power of suppliers 22!
3.2.3!Bargaining power of buyers 23!
3.2.4!Threat of new entrants 23!
3.2.5!Threat of substitutes 24!
4!VIETNAM: COUNTRY & MARKET ANALYSES 25!
4.1!PESTEL analysis of Vietnam 25!
4.1.1!Political situation 25!
4.1.2!Economic situation 27!
4.1.3!Social situation 30!
4.1.4!Technological situation 32!
4.1.5!Environmental situation 33!
4.1.6!Legal situation 34!
4.2!Industry analysis 38!
4.2.1!Threat of substitutes 38!
4.2.2!Threat of new entrants 41!
4.2.3!Bargaining power of buyers 42!
4.2.4!Rivalry intensity 43!
5!CONSUMER ANALYSIS 46!
5.1!Consumers’ characteristics 46!
5.2!Hanoi consumers and Scouter 47!
5.2.1!Interview questions 47!
5.2.2!Interviewee selection 48!
5.2.3!Results 49!
6!CONCLUSION 54!
6.1!Thesis findings 54!
6.2!Suggestions for the next action and topic for further research 56!
6.3!Reliability and validity 57!
7!SUMMARY 58!
REFERENCES !
APPENDIX !
LIST OF FIGURES
FIGURE 1. Research methodology and method adapted from the research onion . 3!
FIGURE 2. General Interview Typology ………………………………………………………. 5!
FIGURE 3. Theoretical Framework ……………………………………………………………… 7!
FIGURE 4. Thesis Structure ………………………………………………………………………… 8!
FIGURE 5. Porter’s Five Forces …………………………………………………………………. 24!
FIGURE 6. Political system of Vietnam ……………………………………………………… 26!
FIGURE 7. CPI 8.2014. …………………………………………………………………………….. 28!
FIGURE 8. Consumers’ spending trends ……………………………………………………… 29!
FIGURE 9. Comparison of HIB 2012 and HIB 2013. …………………………………… 31!
FIGURE 10. Car sales 2014. ……………………………………………………………………… 43!
FIGURE 11. Car market share 2.2015. ……………………………………………………….. 44!
FIGURE 12. Characteristics of Vietnamese and Hanoi consumers …………………. 47!
FIGURE 13. Interviewee profile ………………………………………………………………… 49!
FIGURE 14. Market competitiveness …………………………………………………………. 55!
LIST OF TABLES
TABLE 1. Situations for Different Research Strategies …………………………………… 4!
TABLE 2. Current environmental trends in emerging markets. ……………………… 20!
TABLE 3. Macro- and micro- level legal factors ………………………………………….. 21!
TABLE 4. Vietnam’s development index. ……………………………………………………. 27!
TABLE 5. Household Income Classification ……………………………………………….. 31!
TABLE 6. New environmental taxation ………………………………………………………. 37!
TABLE 7. Features of Scouter and Dolphin ………………………………………………… 39!
TABLE 8. Most common opinions brought up in the interviews ……………………. 50!
TABLE 9. Macro environment challenges and opportunities …………………………. 54!
TABLE 10. Product adaptation ideas ………………………………………………………….. 56!
TABLE 11. Example Vietnamese e-newspapers used in this thesis ………………… 81!
LIST OF OTHERS
EQUATION 1. Import Tax Formula . …………………………………………………………. 35!
PICTURE 1. Electric vehicles imported from China. ……………………………………. 36!
PICTURE 2. Electric cars for tourists in Hanoi and Danang. …………………………. 37!
PICTURE 3. Dolphin – Chinese electric vehicle ………………………………………….. 40!
GLOSSARY
AC Alternative Current
ASEAN Association of Southeast Asian Nations
BCG Boston Consulting Group
CCI Consumer Confidence Index
CHO Chief Health Officer
CPI Consumer Price Index
CPP Consumer Purchasing Power
CPV Communist Party of Vietnam
CTO Chief Technology Officer
FDI Foreign Direct Investment
GDP Gross Domestic Production
HCMC Ho Chi Minh City
HIB Household Income Band
JSC Joint Stock Company
KW Kilowatt
VAT Value Added Tax
VND Vietnam Dong
1
1 INTRODUCTION
The first chapter is dedicated to introduction for this thesis work. There are six
major issues covered in this chapter: background, objective and questions,
methodology and method, theoretical framework, structure and scope and
limitations. At the end of this chapter, the readers can get the main idea of what
constitutes this thesis.
1.1 Research background
Nowadays, there are unlimited opportunities for innovations (Kotler et al. 2009,
169). In fact, thousands of new ideas and products are being brought into reality
(Wong 2010). But how many innovations become daily essentials? According to
Clancy & Shulman (1991), eight out of ten new products fail (Blythe 2012, 129).
Studies have shown that a successful product requires a positive climate, a right
innovation and technology strategy, sufficient resources and an effective idea-to–
launch system (Cooper 2011, 6).
Recent events led the author to an extraordinary coincidence: a chance to witness
a new product, possibly an innovation, in the vehicle industry. Rideascout, a
Finnish technology start-up, is developing their innovative vehicle. They believe
their product “will change the way people move in the future”. (Pitkänen 2014.)
The vehicle named Scouter has cycling pedals and four wheels. It has two seats
and runs on battery at the speed of up to 25 km/h. (Pitkänen 2015a.) Intrigued by
the innovative vehicle, the author decided to research the possibilities of adapting
the product to Vietnamese market.
There are two reasons why Vietnam was chosen as the research market. First,
Vietnam has achieved significant development in the past 15 years (US Aid
2015). The country has moved from a low-income country to lower-middle
income with average annual per-capital income of US$ 1,550 in 2012. The quality
of life has improved due to the economic growth. (Government of Canada 2014.)
The positive outlook of Vietnam economy gives the author the idea that the
country might be ready for non-basic products and services.
2
Second, road transportation has been a hot topic for several years. In 2013,
Vietnam is reported to accommodate about 89.7 million people (The World Bank
Group 2015). There are around 37 million registered motorcycles, 2 million
registered cars (2.2013) and countless bicycles and other means of transportation
(General Statistics Office 2014; Huu 2013 & Le 2013). Along come the issues of
environmental pollution, traffic accidents, health problems and economic loss
(Maritime Administration of Nha Trang 2009 & My 2014). Thus, a new green
vehicle promises to bring about positive results for road transportation.
1.2 Research objective and research questions
The main objective of the research is to discover the market opportunities for
Scouter in the Vietnamese market. In order to achieve the object, the author
develops several research questions:
1. What are the external challenges and opportunities in the Vietnamese
market?
2. How competitive is the vehicle market in Vietnam?
3. Is there a niche market for the product in Vietnam?
4. What are potential product ideas to successfully adapt the product to the
Vietnamese market?
1.3 Research methodology and method
While research method addresses the techniques by which the data are collected,
research methodology refers to the philosophy of the research process (Bailey
1994, 34). The figure below illustrates the research methodology and method of
this thesis. The contributing factors are research approach, methodological choice,
strategy and techniques.
3
FIGURE 1. Research methodology and method adapted from the research onion
(Sauders, Lewis & Thornhill 2012, 128)
First and foremost, a researcher should consider a suitable research approach.
There are three approaches: induction, deduction and abduction (Sauders, Lewis
& Thornhill 2012, 143 – 148). While the deductive approach derives findings from
theory, the inductive approach works the other way around (Bryman 2008, 11).
According to Suddaby (2006), abductive approach waivers between findings and
theory and is considered the combining approach of deduction and induction
(Sauders, Lewis & Thornhill 2012, 147). In this thesis, the author uses deductive
approach. Based on several market research theories and theoretical tools, the
author began with an assumption that “there are market opportunities for Scouter
in Vietnam”. Then, the data about the research market, Vietnam, industry and
customers were collected. Finally, the author analyzed the data and verified the
hypothesis made at the beginning of the thesis.
Second, a researcher has to pick a methodology: quantitative or qualitative and
mono-method or multi-method. Using quantitative method, the researcher needs
numerical and standardized data and utilizes diagrams and statistics for analysis
(Sauders, Lewis & Thornhill 2012, 547). As a result, quantitative method is
usually used in case of research questions that demand numerical answers e.g.
“how many” (Muijs 2011, 7). Meanwhile, qualitative research is often used to
4
answer question “why” and “how” in a study (Guest, Namey & Mitchell 2013,
21). According to Hammersley (1992), qualitative research deals with words and
meanings and derives findings from case studies (Silverman 2011, 4). Due to the
explorative nature of the research, the author decided to employ qualitative
method and collect data via semi-structured interviews. The reasons for this
choice will be elaborated below in the “technique” part.
The third factor is strategy. There are several common research strategies:
experiment, survey, archival analysis, history and case study (Bryman 2008, 35 –
63 & Sauders, Lewis & Thornhill 2012, 173 – 196). Adapted from COSMOS
Corporation, the table below shows when to use which method.
TABLE 1. Situations for Different Research Strategies (Yin 2009)
Method
Form of research
question
Requires Control of
Behaviorial events?
Focuses on
Contemporary Events
Experiment
how, why?
yes
yes
Survey
who, what, where,
how many, how
much?
no
yes
Archival
Analysis
who, what, where,
how many, how
much?
no
yes/no
History
how, why?
no
no
Case study
how, why?
no
yes
As a matter of fact, this thesis is conducted based on the actual demand of a
Finnish company. They want to explore how their new product, Scouter, could be
used in certain market areas (Pitkänen 2014). In addition, a case study is defined
as an investigation of a phenomenon within specific real-life context (Yin 2009,
18). Hence, the author employs case study strategy for this thesis. Vietnam is
chosen as the case and the outcome of the thesis is to discover how Scouter could
be used in Vietnam, and more specific, in Hanoi – the capital.
Last but not least, a researcher needs to select (a) research technique(s). There are
several techniques to choose from: participant observation, in-depth interviews,
focus groups and so on (Roller & Lavrakas 2015; Sauders, Lewis & Thornhill
2012; Guest, Namey & Mitchell 2013 & Silverman 2011). However, in-depth
interviews are most used (Silverman 2011, 165). In-depth interview is essential in
qualitative research because it provides deep insights about what people are doing
and why (Roller & Lavrakas 2015, 50). Interview typology usually concerns
formality, structure and standardization (Sauders, Lewis & Thornhill 2012, 374).
