People shop in a supermarket in Ho Chi Minh City on March 31, 2020. Photo by VnExpress/Quynh Tran.
Vietnam is among the most price sensitive markets in Southeast Asia with over 80 percent of shoppers noticing when a product’s price changes.
Up to 56 percent of sales in the country is associated with some type of price promotion, a study by market research company Nielsen finds.
The price elasticity of products in Vietnam is -2 percent, meaning that when a company raises a product’s price by 1 percent, their revenue will fall 2 percent as shoppers buy less.
This shows Vietnamese are more sensitive to price changes than other Asian markets such as Malaysia, where the elasticity is -1.9 percent, Singapore (-1.7 percent) and Thailand (-1.6 percent).
However, for every $1 spent on promotions, manufacturers are only gaining 29 cents extra in sales, lower than the global average of 50 cents, the study estimates.
“As many people have been negatively affected by the (Covid-19) pandemic, having the right price and promotion strategy is extremely important. There are many businesses that have wasted too much on promotion, and it’s time to leverage the opportunity of saving money,” said Richard Thomas, sales effectiveness director of Nielsen Vietnam.