MARKETING CHANNELS topic DESIGN MARKETING CHANNELS FOR NEW PRODUCTS, THE CASE IN NGUYEN VAN XE’S POTTERY PRODUCTION BASE

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS MARKETING CHANNELS Topic DESIGN MARKETING CHANNELS FOR NEW PRODUCTS, THE CASE IN NGUYEN VAN XE’S POTTERY PRODUCTION BASE Class : 41K12.3 - CLC Lecturer: Ph.D Ngo Thi Khue Thu Msc Nguyen Phuong Thao Danang, April 2018 GROUP MEMBERS download by : skknchat@gmail.com Nguyen Thi Hang (Leader) Nguyen Ngoc Quynh Anh Nguyen Thi My My Le Thi Diem Mi Tran Thi Duyen download by : skknchat@gmail.com CONTENTS INTRODUCTION GENERAL INFORMATION ABOUT THE SALE POINT 2.1 Producer 2.2 Business situation 2.3 The relationship between the production base and interm 2.4 Series of products selected 2.4.1 Features, opportunities for decorative ceramic products LITERATURE REVIEW 3.1 In-depth interview 3.2 Designing the channel FIELD OBSERVATION REPORT 4.1 POEMS framework INTERVIEW PROCESS REPORT 5.1 Select a product line 5.2 A set of interview questions 5.2.1 Selection of 5.2.2 Question lis 5.2.3 Form of int 5.2.4 Time and place of interview RESULTS AND DATA ANALYSIS 6.1 Answer sheet for the owner and manager: 6.2 Answer sheet for the end-users and retailers: 6.3 Data Analysis 6.3.1 The most important Insights 6.3.2 Analysis data for end – users and retailers Source 6.3.3 6.3.4 The level of customer satisfaction 6.3.5 Suggestions for decorative ceramics SOLUTIONS 7.1 Online channel Website 7.1.1 Facebook fa 7.1.2 7.2 Offline channel 7.2.1 Showroom 7.2.2 Hotels and download by : skknchat@gmail.com INTRODUCTION In today market economy, many companies and production bases in our country have a tendency to offer their products through some intermediaries This would reduce the costs, create the highest efficiency in the channel, thereby deliver products to the target market in time and meet customer needs In fact, promotion activities like advertising and discount are only beneficial in the very short run Other businesses can rapidly imitate these kinds of strategies of the companies, so companies that follow these strategies will quickly lose their competitive advantages As a result, businesses today are focusing more on developing a better distribution system in order to gain sustainable development A complete distribution system with rational distribution policies will help the business succeed Pottery villages are traditional trade villages in many areas of Vietnam Thanh Ha pottery village has been existing in Hoi An for 500 years It is not wellknown place until Hoi An has become an attractive destination of many foreign tourists Nevertheless, the village is still not popular in the eyes of local people At present, pottery villages are only distributed in Hue, Danang, Quang Nam and very few other provinces Thanks to the complete distribution system, the company has acquired a reputation for its products However, through our observation, the process of the distributing products has not yet reached maximum efficiency Therefore, we want to make Thanh Ha pottery village become traditional craft village like Bat Trang, Dong Trieu With regard to the aim of preserving and develop traditional craft villages, our group choose a pottery production base in Thanh Ha pottery village as our sale point for our project This is the production base of Mr Nguyen Van Xe GENERAL INFORMATION ABOUT THE SALE POINT 2.1 Producer Nguyen Van Xe base is a pottery production of Thanh Ha pottery village - Address: Thanh Ha pottery village, Hoi An, Vietnam Thanh Ha is known as a famous pottery village in Hoi An In recent years, Thanh Ha is a place that many visitors cannot ignore when visiting to Hoi An This is a favorable opportunity for establishing the business in this area download by : skknchat@gmail.com 2.2 Business situation Through observing the sales point and conducting the interview with Mr Nguyen Van Xe, the owner of the production base, our conclusions are: - The traditional business items of Nguyen Van Xe factory are household pottery - The current distribution system of the facility is Producer 12 Wholesalers Retailers Consumers Nguyen Van Xe production base only distributes through traditional channels with 12 wholesalers In addition, the base also produces decorative products which are ordered from restaurants and hotels However, the number of decorative potteries sales is still so small Although there is a large number of tourists visiting the village, the facilities are not yet utilized Since the base mainly sells products with large size and personal belongings, customers cannot buy them because it is difficult to bring them home Besides, the establishment has produced some products for tourism like toys but does not gain a new breakthrough in revenue In addition, other ceramic manufacturing become the competitors of the base as they try to attract visitors with a practical experience by making their own products for tourists During the interview, Mr Son, Nguyen Van Xe’s son reveals that he intends to develop decorative ceramics instead of just producing household ceramics He also download by : skknchat@gmail.com wants to introduce the private brand of the home base as the family brand because most customers only know the general brand named Thanh Ha pottery village but does not know the private brand of a production base Nguyen Van Xe in Thanh Ha However, he does not know where and how to start 2.3 The relationship between the production base and intermediaries All 12 wholesalers live in Hoi An, close to Nguyen Van Xe ceramic factory so it is very easy for picking up products The relationship between the manufacturer and 12 wholesalers is very good However, 12 intermediaries tend to give money back to Nguyen Van Xe’s base only after selling the products, making the production base stagnant in the revolving capital 2.4 Series of products selected After the observation and interviews, we realize that household ceramics have a good development while decorative ceramics initially encountered many problems Hence, setting up distribution channels for decorative ceramics is an urgent task that needs to be addressed 2.4.1 Features, opportunities for decorative ceramic products Nowadays, people would love to engage closely with the nature and ancient living spaces Ceramics are among the favorite items mostly used to decorate in the restaurant, folk cuisines as well as hotels Some households also enjoy using these small decorative items for desks and indoor spaces Besides, ceramic decoration is small size, easy to transport, aesthetic and high level of sophistication LITERATURE REVIEW 3.1 In-depth interview After observing the sale point, in order to design an effective distribution channel for new products, we choose the in-depth interviewing to deeply understand customer insights By conducting a small number of interviews intensively, researcher can explore different perspectives from respondents on a particular idea, program, or situation (Carolyn Boyce and Palena Neale, 2006) These interviews are often used to provide a complete and profound picture of what happened in the channel and will happen with new products delivery Potential participants of the interview include the owner of business, managers, retailers and end-users The manufacturer can utilize the information from the study to apply for the business 3.2 Designing the channel Generally, a channel can be designed based on steps: recognizing the need for a channel design decision, setting and coordinating distribution objectives, specifying distribution tasks, developing possible alternative channel structures, evaluating the variables affecting channel structure, choosing the “best” channel structure and selecting the channel members (Bert Rosenbloom, 2012) In this case, the owner download by : skknchat@gmail.com wants to develop a new product The existing channel already has significant elements for this kind of product, the owner only need to modify it to fit with new products FIELD OBSERVATION REPORT Mr Nguyen Van Xe’s pottery production base is located in Thanh Ha pottery village, Hoi An, Quang Nam province Main products of the base are household potteries From 10 days to 15 days, 12 wholesalers will go to the production base, pick up the potteries, carry them around, and sell them to retailers in Hue, Da Nang and Quang Nam In addition to household potteries, the production base also makes decorative potteries which are ordered from restaurants, hotels, homestays and other decorative potteries These entities than sell these items to tourists visiting the village 4.1 POEMS framework People Employees: There are employees working at the production base and living near the production base They all have worked there for a long time (from 5-10 years) Wholesalers: The production base makes oral contract with 12 wholesalers Every 15 or 20 days, 12 wholesalers go to the production base to pick up the potteries and bring them around than selling to retailers in Hue, Da Nang and Quang Nam These wholesalers have strong business relationship with the production base Consumers of the sale point mostly are tourists visiting the village, but the sales for them are not many Sometimes, restaurants and hotels managers come here to order potteries for decorating or for food serving dishes Objects Household potteries: are mainly traditional products of Nguyen Van Xe’s production base They account for 80% revenue of the production base This kind of product has a full channel system so it is impossible to change the whole system Decorative potteries are potential products that are developed by Mr Xe’s son At this time, Mr Nguyen Van Xe’s son are considering building a new channel system for this kind of product Therefore, our group decided to help Mr Nguyen Van Xe to design the channel Pottery is made by forming a ceramic (often clay) body into objects of a required shape and heating them to high temperatures in a kiln which removes all the water from the clay download by : skknchat@gmail.com Environment: The production base is located in Thanh Ha pottery village, near the river Up to now, wholesalers and consumers go directly to the production to buy the potteries The owner does not have to any intermediate activities Messages and media: Not any production bases in the village has their own brand which many people know about that Only Thanh Ha pottery village has its name on Google map and research engines Tourists just wander around the village and come to any the production bases Service: Whenever tourists go by, Mr Nguyen Van Xe and his son will perform pottery making process by hands and by the wheel potter Then, tourists try to make potteries by themselves PEOPLE Employees Consumers Wholesalers SERVICE Performance ENVIRONMENT POEM Pottery village Production base MESSAGES AND MEDIA No message and no media Only the board Known from the ancient town INTERVIEW PROCESS REPORT 5.1 Select a product line Product line: Ceramic decoration Today, people tend to love the close to nature or return to the old living space Ceramics are the favorite decorative items today in the restaurant, folk cuisine as well as the hotel Small decorative items for desks, indoor space are all family favorite Ceramic decoration is small size, easy to transport, aesthetic, high level sophistication 5.2 A set of interview questions 5.2.1 Selection of respondents Sources of selection: Businesses or individuals who trade in or use pottery decorations download by : skknchat@gmail.com Selection criteria: The respondents are currently trading or using pottery decorations Method of selection: selection of respondents Particularly, they are: o Mr Nguyen Van Xe – production base owner o Mr Nguyen Van Son - Mr Nguyen Van Xe’s son, manager as well as the heir of the production base o Mr Nguyen Van Hung - employee o Mrs Lan - wholesaler o Mrs Sang - retailer o Shop Xương Rồng – GMT Garden (621 Nui Thanh Street) o Mộc Garden (Duong Tu Minh Street) o Shop souvenirs Ms Hien (Hoi An ancient ) o Room Casa Hostel (An Thuong Street) o Nguyen My My (Individuals - Quang Nam Province) 5.2.2 Question list 5.2.2.1 Apply for the owner and manager Question 1: Do you have any difficulties in finding intermediates? Question 2: Do you have to deal with inventory? Question 3: Do intermediates pick up stock at the specific time or at the random time? Question 4: Do you want to extend market size and find more intermediates? Question 5: What you thing about the online channel? Question 6: Do you offer delivery service (how and how far?) Question 7: If we help you to set up the online channel, who can be the manager? 5.2.2.2 Apply for end-users and Retailers Question 1: Hi, are you doing the business, distributing, trading or using decorative pottery products or products related to decorative ceramics such as stone lotus, cactus etc? Is it good or difficult? If you are having difficulty, what problems you have? (For example: products, freight, design, etc) If you are a user, how you buy these decorative items? Question 2: Do you know the place of production or distribution of decorative ceramics that you are buying through the sources? Can you tell us the reasons why you choose them? Question 3: Have you ever had a problem of storage or inventory of decorative ceramics? And if so, how did you handle it? Question 4: Do you have any comments on decorative ceramic products? (design, style, size, etc) Question 5: What kind of purchases that you find more convenient (online or offline)? download by : skknchat@gmail.com download by : skknchat@gmail.com mà sản xuất nhiều hay Thật muốn Ờ, thật anh thấy đồ Trả lời tương tự Thôi cô thấy chừng Cô bán khách lẻ già rồi, khơng làm nhiều Với có tới 12 nhà buôn Lâu lâu khách sạn, nhà hàng tới đặt làm theo yêu cầu họ download by : skknchat@gmail.com Cũng mà già để thằng làm không Chủ buôn bán Đà Nẵng, Huế, Quảng Nam nhiều Cịn có khách xa đặt họ đặt xe khách, xe dừng Vĩnh Điện, chở hàng lên cho xe khách chở đến khách hàng thơi Chắc có yếu bên website cho anh 6.2 Answer sheet for the end-users and retailers: Đáp viên Shop Xương rồng Shop sen đá Mộc Shop lưu niệm chị Khách sạn Room Hiền Hội An Casa Nguyễn My My Câu hỏi bên Núi Thành Garden (Khách lẻ) download by : skknchat@gmail.com - Bn bán bình thường chậu leo bán chạy Câu Câu - Khơng rõ chủ người đặt hàng Chỉ biết chủ đặt hàng qua shop đồ gốm online nhập hàng lần, từ 20 – 30 chậu nhỏ kiểu - Giá ổn, yêu cầu thiết kế lâu download by : skknchat@gmail.com Câu Câu Đơi có tồn kho đáng kể, có mùa mưa bán chạy thơi Với gốm để xương nhìn tồn bán lẻ chậu gốm nhỏ Cần đa dạng mẫu mã hơn, quảnh trí Nhìn lâu chán download by : skknchat@gmail.com rồng… kho Shop chậu Câu Mua online tiện Tại chủ bận, công việc phụ nên đúng Cũng không cần phải đến trực tiếp làm cần giao chất hẹn Câu Cũng mua Mà ban đầu mua tầm 30 chục trở lại thơi Để coi mẫu mã có đa dạng chất lượng ok mua tiếp Bên download by : skknchat@gmail.com dòng tương cần nhiều sen lai 17 download by : skknchat@gmail.com 6.3 Data Analysis 6.1.1 The most important Insights During the interview, Mr Son, Nguyen Van Xe’s son revealed that he intends to develop decorative ceramics instead of just producing household ceramics According to him, decorative ceramics are easy to sell, transport and look more eye-catching than household pottery He looks for finding and designing new models products, more unique than its available on the market today He also wants to introduce the private brand of the home base as the family brand because most customers only know the general brand named Thanh Ha pottery village but not know the private brand of a production base Nguyen Van Xe in Thanh Ha However, he does not know where and how to start Moreover, the relationship between the manufacturer and 12 wholesalers is very good Mr Xe does not intend to seek new intermediaries because there are not enough products to supply for them That is why we choose the decorative ceramics instead of household ceramics 6.1.2 Analysis data for end – users and retailers 6.1.2.1 Business situation from customer perspectives (related to decorative ceramics) The business operations are stable Due to the specialty of the ornamental plant, there are not too many inventories related to pottery 6.1.3 Source 2/5 customers order products from online decorative pottery channel 2/5 customers are buying through a merchant 1/5 customers come directly to the manufacturer to buy Online Channel is the channel chosen by customers because of the convenience and time savings This is considered as a potential market 6.1.4 The level of customer satisfaction Most of the customers have no complaints about where to sell their decorative ceramics Delivery products at right places, quality products, suitable prices 6.1.5 Suggestions for decorative ceramics 5/5 customers are looking for more designs, new designs 18 download by : skknchat@gmail.com 2/5 customers would like to have facilities to produce decorative ceramics nearby for convenient ordering Coincidentally, he also want to design and create more new models to make a difference in the market SOLUTIONS With regards to these issues, we design the marketing channel in both online and offline channel for decorative potteries Website online Facebook fanpage Manufacture showroom Offline hotels and restaurants 6.4 Online channel 7.1.1 Website With the development of information technology, people tend to find the information on the Internet According to Google's 2015 Customer Barometer survey, more than 70% of users in Vietnam have a habit of using the search engine to find out information about a product or service before making a purchase decision This is point what we need to be concerned Therefore, the website would be a good channel for customers who live far away from the store and for those who want to upload information about the production base and the products Website manager : According to Mr Son said: “he can manage the Website and Fanpage” 19 download by : skknchat@gmail.com Website and Fanpage designer : According to Mr Son said: “Brother’s Hung who majored in information technology He can design Website and Fanpage but he is busy so he did not help Mr Son design Website and Fanpage at this time.” 7.1.2 Facebook fanpage According to The Next Web, Vietnam is one of ten countries having the most Facebook users In details, Vietnam ranks 7th 64 million facebook users, account for % of total users on over the world That say, Facebook is a potential market that no business platforms or production bases could catch up Besides, 2/5 end-users interviewed choose online channel as their main channel to buy this kind of product, meaning Facebook is perceived as an important channel in this situation 20 download by : skknchat@gmail.com In addition to finding individual customers, Facebook does a very good job at reaching restaurants and hotels which have demand for decorative potteries 6.5 Offline channel 7.1.3 Showroom This can be explained by the fact that in 2017, Hoi An attracts 3,22 million tourists, which goes up 21,66% compared with 2016 Since Thanh Ha pottery village is a hot spot in Hoi An, opening the showroom would help the base to showcase their unique products, promote their private brand as well as earn a large amount of revenue from serving the large number of tourists Showroom location: At Thanh Ha pottery village at the production base Targeted customer: Tourists in Hoi An Ways to attract customers: Work with a travel company to get customers into the showroom Mr Son will be building a showroom in May 2018 7.1.4 Hotels and restaurants The number of tourists in Da Nang and Hoi An increased rapidly, the hotel restaurant where visitors always visit Therefore, the goods are displayed in the restaurant, the hotel helps promote and sell products Display location: At hotels and restaurants in Da Nang, Hoi An Hotels and restaurants usually have souvenir shelves to sell local goods The production base 21 download by : skknchat@gmail.com can offer products at those places with reasonable discount with some criteria such as good brand, good location and positive attitude Targeted customer: tourists at the hotel, restaurants Criteria for selection hotels and restaurants: good brand, good location and positive attitude 22 download by : skknchat@gmail.com REFERENCES Boyce, C., & Neale, P (2006) Conducting in-depth interviews: A guide for designing and conducting in-depth interviews for evaluation input Watertown: Pathfinder International Rosenbloom, B (2012) Marketing Channels Cengage Learning 23 download by : skknchat@gmail.com MARKETING DEPARTMENTMARETING DEPARTMENT- DUE EVALUATION FORM FOR TEAM MEMBERS MARKETING CHANNELS PROJECT Group: ……………………………………………………………Class…… …………………………………………………………… Thesis tittle: …………………………………………… ………………………………………………………………………………… We make sure that: Evaluation is public and all of members in our team equally participate in tasks All of members in our team have agreed with this assessment Signature of members 24 download by : skknchat@gmail.com ... a pottery production base in Thanh Ha pottery village as our sale point for our project This is the production base of Mr Nguyen Van Xe GENERAL INFORMATION ABOUT THE SALE POINT 2.1 Producer Nguyen. .. can utilize the information from the study to apply for the business 3.2 Designing the channel Generally, a channel can be designed based on steps: recognizing the need for a channel design decision,... (2006) Conducting in- depth interviews: A guide for designing and conducting in- depth interviews for evaluation input Watertown: Pathfinder International Rosenbloom, B (2012) Marketing Channels Cengage