Why Do FMCG Need Branding?

Why do we need to build a brand for consumer goods? When products are selling well and life is comfortable, why still invest in branding?

The reason is simple and can be summarized in one sentence: If you’re not building a brand, you’re merely doing trading.

Mr. Guo, CEO and President of Chicilon Media, shared that he has encountered many businesspeople, most of whom are sincere and direct. They often approach him, suggesting that he consider building his own brand, as they already have a strong distribution network and believe they could quickly help expand it.

In response, Mr. Guo typically asks whether they have experience in doing this.

According to Mr. Guo, they usually reply affirmatively, explaining that they have numerous distribution channels, have registered new brands, created custom packaging, and distributed their products widely. He noted that in the past, this process was relatively easy—those with strong distribution networks held a natural advantage. In Vietnam, even products of average quality could be sold successfully if supported by an effective sales network.

But things are different now. Sellers often complain that products are hard to sell, that they lack quality, and that their brand lacks influence. Even with strong distribution channels, sales are still difficult.

Trading isn’t something everyone can just do anymore. Why? Because trading only profits through sales channels, and once your product is squeezed by those channels, continuing the business becomes unsustainable.

Many people focus solely on distribution for trading, which may work initially, but over time, as distribution barriers become higher, it gets harder to succeed. That’s when people start talking about branding. Why? The logic is simple: customers choose products based on the brand, not just the sales channel.

Many companies believe that as long as they quickly produce goods and get them into the market, everything will be fine.

But if you’re not making profits, what’s so great about it?

Today, it’s hard to make a profit without a differentiated brand, and at best, you’re just covering costs.

For example, one time you may make 5 cents, another time another 5 cents, but building a brand is different. This time you might make a dollar, and the next time another dollar, but in between, you’re also gaining brand equity.

Before the COVID-19 pandemic, our entire economy was growing too quickly. Many entrepreneurs said, "Don’t talk to me about branding; I need to build the market first."

They focused on traffic, growth, and attracting investors. There was no time to sit down and think about brand positioning, brand planning, brand philosophy, or brand culture.

But now, I believe it’s time to reflect on these issues.

Challenges and Opportunities for Domestic Brands

1. The behind-the-scenes processes of the new product are the driving force for real development

The opportunity to build domestic brands is enormous, but there are also significant challenges.

First, domestic distribution channels are fragmented and highly competitive.

Second, product differentiation is crucial.

Third, there is an abundance of marketing and sales talent, but a lack of skilled personnel in product development. Moreover, sales and marketing often receive better rewards than research and development, limiting the creativity in the latter.

This means that while marketing and sales focus on creating new packaging, innovative marketing tools, or catchy new names, product development is often neglected.

Instead of investing in genuine product innovation, many simply outsource to an OEM factory for production, resulting in a lack of uniqueness or creativity in the product itself.

Product research and development require significant time and effort. Therefore, many startups feel frustrated during the initial stages. However, this perception is not entirely accurate.

The backend of product development is the real driver of success, and product managers with versatile skills are the key to winning in the market.

2. Good consumer goods must have universal and sustainable characteristics

What is sustainability? Take food as an example: don’t assume that just because you take a bite of something and find it delicious, you can continue eating an endless amount in a short time. If after 10 days or even 10 months you still find it delicious, that’s true sustainability.

What is popularity? It’s when you find something delicious and everyone around you agrees.

The hardest part of creating a consumer product is achieving both sustainability and popularity, and this is extremely challenging.

We should not underestimate the power of brands like Samsung, LG, OPPO, Daikin, Pepsi, Coca-Cola, Unilever, Nippon Paint, and Vinamilk, nor should we overlook the power of time.

Last year, I had the honor of visiting Vinamilk’s production plant. Before the visit, I thought there weren’t many barriers in the dairy industry. After the visit, my first thought was: "Wow, this is tough!"

Vinamilk has been in business for many years, listed on the stock market, and is extremely profitable. The founders, despite their age, still actively manage the business closely.

From a product standpoint, they strictly control inputs, from large farms in Da Lat and Di Linh to standardized breeds, milk quality, management methods, and inspection processes. They continuously research and improve, finding new solutions.

Consumers keep buying their milk because it has a well-established taste developed over many years. They’ve created a popular and sustainable flavor, not just a temporary one. I have also worked in the food industry and once thought my products were extraordinary. After holding taste tests within my company and feeling confident, I realized, once the product was launched, that it was only my personal opinion.

You may think your product is excellent, but when it’s compared to others on the market, you’ll find that getting consumers to keep coming back is a monumental task. Products must be so good that the majority of consumers see long-term value, like with Coca-Cola or Vinamilk.

The difficulty for new products lies in this. We have too few people focused on research and development, while too much energy is placed on pushing sales and marketing. This is a topic worth discussing.

3. Brand capability will be the competitive key for Vietnamese businesses in the future

Is There Still Opportunity? I believe there is, and it’s a big one — it's called "Brand Equity for the Next 20 Years." While many profits may diminish, brand equity is rising, and I believe this upward trend will last for at least the next 20 years. I believe branding capability will be the key competitive advantage for Vietnamese companies in the future.