Situation analysis report phu nhuan jewelry joint stock company

Situation Analysis Report Phu Nhuan Jewelry Joint Stock Company Phan Quoc Thinh Han Trung Kien Nguyen Hong Nhung Nguyen Thu Thao Le Quang Thai Nguyen Dang Quang 22 November 2015 2015 Situation Analysis Report Phu Nhuan Jewelry Joint Stock Company (PNJ) • Phan Quoc Thinh – Leader S 3582943 • Han Trung Kien S 3515531 • Nguyen Hong Nhung S 3577671 • Nguyen Thu Thao S 3577785 • Le Quang Thai S 3505985 • Nguyen Dang Quang S 3577806 Lecturer: Phung Thanh Phuong Situation Analysis Report MKTG1205 Group – Team Saturday, November 21, 2015 Table of Contents Company profile Micro-environment The company Suppliers Marketing intermediaries 4 Customers 5 Competitors Publics Macro-environment forces Demographic forces Economic forces Technological forces Political forces Cultural forces SWOT analysis Strengths Weaknesses Opportunities Threats Market segmentation 10 Market targeting 11 Positioning 11 Differentiation 11 Product differentiation 11 Service differentiation 12 Channel differentiation 12 Image differentiation 12 Conclusion 13 Bibliography Error! Bookmark not defined 1|Page Company profile Name Abbreviation Address Sector and Industry Core business Business lines Raw materials Charter capital (2014) Telephone Email Website Legal representative Vision Mission Core values Main competitors PHU NHUAN JEWELRY JOINT STOCK COMPANY PNJ 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, Ho Chi Minh City, Vietnam Consumer Cyclical and Luxury goods Fine gold (bar), gold and silver jewelry  Trading watches and gold bar  Testing diamond, gemstone and precious metals  Real Estate house leasing  Business Law Raw gold and silver materials, gems, gemstones, diamonds VND 755,970,355,000 +84 839 951 703 pnj@pnj.com.vn www.pnj.com.vn Ms Cao Thi Ngoc Dung - chairwomen Becoming the leading jewelry processor and retailer in Asia market and securing number one position in the segment of medium and high-end jewelry in Vietnam PNJ brings customer pride with elegant, outstanding quality jewelry products  Honesty  Responsibility  Quality  Creativity  Innovation  Doji Jewelry Corporation (Doji)  Sai Gon Jewelry Company Limited (SJC)  Bao Tin Minh Chau Jewelry and Gemstone Co.Ltd  Sacombank Jewelry (SBJ) Sources: (FPT Securities, 2014) (PNJ Annual Report, 2014) 2|Page Introduction hu Nhuan Jewelry Joint Stock Company, better known with abbreviation name as PNJ, is one of the most renowned and respected jewelry retailers in Vietnam Not only is PNJ domestically successful, but the company is also honored in Asia by Retail Asia magazine (Singapore) as one among top 500 retailers in Asia Pacific between 2004 and 2009 Officially established on 28 April 1988 by twenty progressive like-minded people in Phu Nhuan district, PNJ has been since showing strong and consistent development and performance, and has consolidated its position as the biggest player in the Vietnamese jewelry sector With more than 173 stores spanning across the nation, employing nearly 2,500 employees, and even becoming the only Vietnamese company that has the capability to export gold and jewelry to the international market, PNJ has not only established its dominant presence nationwide but also advance to business internationally In order to have today success, it is the diligence, persistence and smart moves sanctioned by the board of management over the last 30 years, with special regard to Ms Cao Thi Ngoc Dung, who simultaneously served as the chief executive director and the chairwoman ever since (Bloomberg, 2015) P The tale of this enterprise began in 1988 and the formative stage lasted years During that time, Vietnam jewelry market was of tender ages, which posed many challenges and innumerable difficulties regarding human resources, financial supports and lackluster governmental subsidies The next developing period was between 1993 and 2000, when PNJ expanded its business to reach Hanoi by opened a ramification in the capital in 1994, together with many different strategic locations That were also memorable years as the company had its products exported for the very first time, but more importantly, it started gaining customers’ trust and reputation Moving on, January 2004 marked the next milestone in the company’s history because of the participation to the stock market, which effectively raised capital and promoted equalization Since then, the company has always been improving and diversifying its products, aiming to fulfill high customer's satisfaction by delivering superior quality items and services, as accorded to the company mission statement PNJ also furthers its business by providing sponsorship to many beauty competitions, such as the Miss Universe 2008 and Miss Earth 2010, Nevertheless, in 2012, the claimed Asian biggest jewelry manufacturing factory was built to accelerate the firm’s productivity to the next level (Young Tiffany, 2012) With the vision of becoming the leader in jewelry fashion industry in Vietnam, incorporate with the proposed philosophy “Customer benefits is our commitment”, PNJ has received many praiseworthy achievements and is well on the way to approach its prospects According to Bloomberg: “For the period [the first half of 2015], the company reported revenue of VND 3.846 billion, up 6%, gross profit of VND 546 billion, up 43% and net profit before tax was VND 228 billion, up 46% over the same period last year, completed 60% annual target” This report is written with care and dedication giving readers an insight about the business operation at PNJ, and to give detailed explanations to many factors that affect the company, as well as the brand’s value proposition Diagrams, charts, and further information are written under Appendices section 3|Page Micro-environment The company The board of Directors at PNJ has been working closely to implement action plans for both production and business operations To begin with, the department of human resources has been ordered to improve the labor productivity by running additional training and helpful workshops, reorganizing organizational structure and increase the ratio of junior to senior staffs with the ambition to rejuvenate the workforce Next is R&D, which is PNJ backbone department that has been received huge subsidies and financial support from the top management in order to accomplish a sole mission of meeting customers’ increasingly stringent requirements of jewelry products The department has done well by regularly hitting the market with new exclusive jewelry collections, employing and well-treating proficient artisans, and running competitions to recruit innovative design ideas as well as adapting production line with advanced technology Last but certainly not least, the sales department is strengthened by regularly opening short staff-training courses, running incentive programs to give attractive bonuses and create “PNJ Common Home” for team-building and relaxation A strong culture identity is PNJ biggest asset, said by the company CEO, as it can be extremely beneficial for the development of the organization by providing the much-needed motivation to increase productivity and improve employee morale as well as personal wellbeing In addition, the well-developed culture creates a participative and cooperative workplace, where people enjoy working, willing to work hard and they, therefore, can increase responsibility to deliver better customer services (PNJ Annual Report, Annual Report 2014, 2014) Suppliers The inputs used in manufacturing jewelry are precious metal, i.e gold and silver, and gemstone with prices are often highly responsive to changes in the global market, often unpredictable and even unprecedented Therefore, PNJ applies strict control to minimize the negative effect this may have on the company business • Raw gold input: Due to the government strict policy upon gold importation, PNJ speculates its warehouse by collecting raw gold from local suppliers whose gold are taken from various sources A large proportion of this kind of gold is not trademarked, also known as not SJC, is abundantly available and sold at a cheaper price • Raw silver input: With no restrictions of the government, the firm imports silver directly from MatalLor (Belgium) • Raw gemstones are imported mainly from Creative Gems BKK (Thailand) and RMC (Hong Kong) while diamond inputs are bought from multiple international accredited sources, such as Yakubov, Forte and Fischler (Belgium) (Phong, 2013) Marketing intermediaries • Resellers: Strictly, the products manufactured by PNJ are only sold in PNJ-owned outlets across the country There are 173 stores in every major city and suburban area across 44 provinces in Vietnam (PNJ, 2014) Most of the outlets are situated in main streets, as well as in shopping malls, supermarkets and airports, such as Aeon Malls, Parkson C&T, BigC and Tan San Nhat international airport • Physical distribution firms: PNJ accepts home delivery option and thus the customers’ ordered products are protected by the representative of the authority during the transport PNJ has four warehouses operating at highest security and when there is a need for airline transport, the cargo is airlifted under the protection police force (FPT Securities, 2014) • Marketing services agencies: In 2011, PNJ signed a contract with Value Partners Management Consulting, a consulting firm from Italia, to help PNJ deal with market research, decision-making at management level, business operations and expectation for future jewelry market On the other hand, since PNJ is a powerful jeweler in the domestic market, the firm receives much attention from the media and the government Most of the 4|Page business-related newspapers are conveying updates about PNJ operations while magazines publish new collections worn by the brand ambassadors, who are usually public celebrities Furthermore, the firm also delivers its brand image through the sponsorship of many beauty competitions and actively maintains a Facebook page with promotions updates as well as products exhibition (Doanhnhansaigon, 2014) (Tan Viet Securities, 2015) (VNexpress, 2015) Customers • Consumer markets: On average, 91% of PNJ total revenue and 87% gross profit in the period between 2007 and 2013 came from retailing services There are four differentiated jewelry brands, namely PNJ Gold, PNJ Silver, JEMMA and CAO Fine Jewelry, are made to satisfy different needs of individuals whose age are from 15 to 45+ • Business markets: PNJ supplies gold and silver jewelry to many smaller enterprises, which not have the capability of large-scale jewelry production and the technology required This wholesale gold and silver have lower quality, less delicacy and usually not interfere with PNJ products sold in-store Some names in this partnership include Vietinbank Gold and Jewelry, Phu Quy Gemstone and Jewelry and Phuong Nam Jewelry Commercial Corporation (FPT Securities, 2014) • International markets: Only contributing a tiny fraction to PNJ net profit PNJ is the only jeweler in Vietnam who has the ability to export products However, experts expect that this segment will not grow by much since PNJ is using resources to focus in the domestic playground (FPT Securities, 2014) (PNJ Annual Report, Annual Report 2014, 2014) (PNJ Annual Report, 2013) Competitors • Three main competitors are “Sai Gon Jewelry Company Limited (SJC), Doji Jewelry Corporation (Doji) and Bao Tin Minh Chau Jewelry and Gemstone Co Ltd (BTMC)” (FPT Securities, 2014) • All of these big four jewelry companies, including PNJ, however, accounts for a merely 20% of market share according to Mr Huynh Trung Chanh - vice president of Viet Nam Gold Traders Association (FPT Securities, 2014) Small traditional family-owned business, minor manufacturers and small retailers scattering across the country own the rest 80% of market share Publics A Financial publics • By participating to the stock market, PNJ has effectively raised its market capitalization to 3,144.8 billion VND and 49% foreign ownership (MorningStar, 2015) This has brought huge amount investment for PNJ to spend on its business operations, brand expansion and facility development • Internal shareholders still hold the highest share capital percentage, of 40% • Vietnam Azalea Fund Limited (Mekong Capital) owned 565,500 shares (Vietcombank Securities, 2011) • Vietnam Enterprise Investments Limited (Dragon Capital) owns 6.57% shares • Route One Investment Company owns 5.04% shares • Deutsche Bank AG & Deutsche Asset Management (Asia) Ltd owns 4.83% shares (FPT Securities, 2014) B Government publics • The jeweler has received much governmental recognition for its achievements in terms of business running, customers’ satisfaction and society contributions Some of most prominent 5|Page • awards included the Vietnam Value Award by the Vietnamese government in 2010, First Labor Medal by the President in 2003, Vietnam Excellent Brand 2006 -2009 by the Ministry of Commerce and the Top 50 Best Performing Companies in Vietnam in 2012 (PNJ, PNJ achievements, 2015) However, the influence of government policy on PNJ operations and marketing strategy is substantial, often unpredictable and can be either favorable or disadvantageous Further detail is discussed in Macro-environment and Appendices section C The general publics • According to a market research published by (VNExpress, 2014), PNJ brand image in the eyes of customers is quality-oriented and trustworthy and company products are served by courteous and professional staffs Founded in 1988, PNJ has been building a strong accountable entity with personnel who have high responsibility and eager for building profitable relationship with customers • PNJ outreaches to help community through the operation of PNJ Charity Fund In 2014, PNJ spent 4.5 billion VND on charity budget alone, gave out hundreds scholarships to poor but studious students, and brought thousands gifts to highlanders and habitants in sparsely areas (VietnamNet, 2015) (PNJ, Mái ấm lòng, 2015) All of these meaningful activities to society have contributed positively on the public image and customers’ perception of PNJ Macro-environment forces Demographic forces • In July 2014, Vietnam had an estimated population of 93,421,835 and the number of people whose age between 15 and 54 accounts for the greatest proportion of 62.6% (CIA World Factbook, 2015) This is a big market and, as the result, PNJ can take this young, large and rapidly growing population to its advantage • The middle-class is to burgeon in Vietnam (Foreign and Commonwealth Office, 2015) states that Vietnam has the fastest regional growth rate regarding middle-class among other Southeast Asian countries, i.e a consistent 12.9% year-to-year in the period 2012-20 With regard to the particular traits of the jewelry industry, the emerging middle-class brings prosperity and opportunities to PNJ • (Foreign and Commonwealth Office, 2015) also points out there is a geographical shift in distribution map of jewelry-consuming The demand for premium quality jewelry has now expanded beyond the Vietnamese two most populous cities, i.e Hanoi and Ho Chi Minh, to smaller cities and many “new provincial pockets of affluence” across the nation (Le Chi, 2014) consolidated this claim with a report published by ANZ Anticipate this ongoing trend, PNJ has planned to open 35 new stores at the end of 2015, effectively increase the firm’s presence to 44 provinces nationwide (PNJ, 2015) Economic forces • Despite many challenges, the economy of Vietnam has recovered substantially and even become the bright spot in Asian’s gray picture According to (World Bank, 2015), GDP in the first two-quarters of Vietnam witnessed the greatest increase in the last years, reached 6.28% The inflation rate has been maintained low, at 4.1% and the unemployment rate has decreased substantially by 10.91% (International Monetary Fund, 2015) • The Prime Minister sanctioned the increase in Vietnam’s monthly salary, which took effect from January 2015 that allowed wage floor to reach up to VND 3.1 million, depending on region (Wageindicator, 2014) Furthermore, the government has recently approved a further 6|Page • • raise of 12.4% on minimum wage, which take effect on January 2016 (IndustriALL , 2015) PNJ believes this robust domestic economy will increase the proportion of middle to upper middles-class and that will effectively increase the market share of the firm Since jewelry has high income elasticity of demand, as incomes rise, customers ‘’will likely use their increased income to purchase more luxury goods and services” (Investopedia, 2015) Vietnam joined World Trade Organization (WTO) more than years ago, on 11 January 2007 (WTO, 2007) According to the article “10 benefits of the WTO trading system” written by (VCCI, 2010), PNJ could gain many advantages once joined this international playground, most notably, including market transparency, foreigner investment, raise in general population incomes and encouragement of good governmental operation This trade agreement, together with FTA, AEC and TPP, however, also come with great challenges and cost, as to compete against rivals that are more powerful Technological forces • (FPT Securities, 2014) shows that research, technology and manufacturing are the underlying part of PNJ business and are what differentiate the firm from others PNJ has achieved its first position today primarily because of superior innovative products and cutting-edge technology • December 2012, PNJ established the largest jewelry-manufacturing factory in Vietnam, sixstorey heights and total floor area of 12,500 m2, employed 1,000 workers at that time All equipment and machinery are imported directly from Italy and Germany The factory has increased the productivity of PNJ dramatically to million product units per annum • ERP system – a unique inventory management and selling-control software used by PNJ that allow real-time communication between the Board, the departments, and the stores This software makes top-down operations easy and optimizes risk controlling PNJ named the software Xman, short for eXtra MANagement, and was built upon 3-tier client/server architecture (FPT Securities, 2014) • Jewelry design processes at PNJ are done by creating 3D models from specialized software, such as the famous Cad-cam modeling, Jewel Cam or Matrix After that, the computerized models are produced using Resin molding technology (Huy Truong, 2014) • 42.97% of the Vietnam population is internet users (Internet Live Stats, 2014) In order to catch the boom of the internet, PNJ has acknowledged and invested heavily on the firm website to achieve professional glittering layout, clear-cut information on every product and launch attractive advertisements PNJ also has online shopping, credit card payments, bank transfer and allows a purchaser to order through mobile phone by sending a text (PNJ Shopping, 2015) Political forces According to (BaoViet Securities, 2013), the biggest risk associated with PNJ business is the unpredicted changes in the government policies Jewelry accessories and gold in particular, are very sensitive and susceptible to changes made by policy makers • Circular 22/2013/TT-BKHCN effective on 01/06/2014 was a blessing to PNJ in the market that was once highly scattered The circular states that all business units in jewelry industry must list the amount of gold in each of their product explicitly This contributes to the transparency of jewelry quality in the market, which had been allowed to float freely for a long time, and effectively put an end to fraud in determining the age of gold (FPT Securities, 2014) (PNJ Annual Report, 2014) • Decree No.24/2012/NĐ-CP published on 25/05/2012 is another strongly favorable enactment toward big jewelers such as PNJ and SJC Overall, the circular was issued to apply stricter control over the gold and jewelry business, only a handful of strictly qualified 7|Page • companies are permitted to operate in the market Individuals who wish to run this kind of business will have to apply to open company (Nguyễn Thị Cúc, 2015) Decree No.36/2015/TT–BTC, took effect on 07/05/2015, was, however, a strike on PNJ The exportation tax was raised from 0% to 2% on all “gold jewelry product, craft and other gold products with the gold content of 95% and above” (PNJ News, 2015) This heavy blow led to the abandonment of the entity’s gold exportation Cultural forces Gold has long been a part of Vietnamese culture and the demand for gold is ever-growing in here In daily life, gold can be used as blessing gifts in wedding ceremonies, such as wedding ring, bracelets and wedding bands The article “Analyzes on Gold and US Dollar in Vietnam's Transitional Economy” by (Vuong Quan Hoang, 2004) states that gold can also be utilized as kind of savings, “a notion of guarantee”, a hedge against currency depreciation and for investment In addition, according to (FPT Securities, 2014), the average annual demand of gold and gold jewelry in Vietnam is very large, 52 tones and 19 tones respectively and seemingly showing no sign to halt This can be viewed as promising opportunities for PNJ to expand its business as the demand for gold, jewelry in special occasions is substantial, and the market is still young SWOT analysis Strengths  More than 25 years of experience in jewelry manufacturing, retailing and services PNJ is currently the biggest, the most renowned and influential jewelry enterprise in Vietnam With more than 25 years striving for excellence, gaining invaluable customers’ trust and building long-run profitable customers’ bonding, PNJ can easily outpace domestic competitors, have a tremendous advantage over newcomers and advance gradually to the international market  Strong R&D department Realizing the utmost importance of R&D in running jewelry business, PNJ has invested heavily on to this department in terms of human resources and technology As expected, PNJ new innovative collections and products are highly appreciated by both the public and the critics Jewelry made by PNJ is differentiated and is bespoken for specifically targeted segments Furthermore, what makes R&D department in PNJ outstanding is the presence of a team of four jewelry experts among twenty artisans who work closely together on each item  Attractive and beneficial PNJ’s policy issued for customer services PNJ has the policy that allows customers to sell their bought jewelry and accessories back to PNJ at very good prices, often equal to at least 70% of the purchased price, and even up to 98% if it is diamond products The highest price a customer can resell elsewhere is only 70% (FPT Securities, 2014)  Established retailers in strategic locations and large standardized retail network nationwide PNJ makes outlets easy to locate, to find and to remember, which effectively raise brand awareness PNJ launches standard store model, which standardize the way a store is operated, including “image, colors, light, decorations, product display and professional service manner” (PNJ Annual Report, 2014)  With strong financial capability, PNJ can equip cutting-edge technology to increase overall productivity, outpace competitors in terms of mass production and product sophistication The amount of raw gold material wasted is significantly reduced to an impressive 1% To be specific, each year PNJ uses approximately tons of raw gold input, 1% gold wasted due to 8|Page inefficient production is 50 kg and would cost the firm 44 billion VND This number is unimaginably costly for other companies (FPT Securities, 2014) Weaknesses  Not focus on exploiting the potential of the enormous demand for gold bar It is estimated that during the period between 1997 and 2013, Vietnam imported 890 tons of gold bars and the annual demand for gold bar is 52 tons However, contradict to the appealing sound, PNJ gold bar business is dreary due to low gross profit margin (0.17%) and only contributes 0.2% to the company’s gross profit  PNJ is not as favorable in the North as it is in the South Bao Tin Minh Chau (BTMC) is still holding the number one position in the Northern market, particularly Hanoi This is partly because BTMC established its presence long before PNJ came Besides, according to researchers, people in Hanoi are more traditional and enjoy jewelry of nostalgic style as well as the aversion to change  All raw materials are mostly imported This is arguably due to the characteristics of jewelry manufacturing that require high quality processed materials and the skill level in Vietnam is not up to that point yet However, too much importation can make PNJ’s contracts severely vulnerable to external factors such as political tension, fluctuated exchange rate, and inflation Opportunities  The rising of middle and upper middle class in Vietnam Vietnam has been doing relatively well in terms of economic growth rate and inflation control among other regional countries According to Chief Analyst of ANZ, Mr Glenn B.Maguire, the per capita income in Vietnam can be able to reach up to $3,000/year by 2020, along with the increase in average monthly salary at a relatively stable rate of about 10% per year (Bizlive, 2014) Clearly, the proliferation of middle class brings tremendous opportunity to PNJ, as this is the main segmentation of customers that PNJ focuses on traditionally  Targeting segments of customers that have huge potential to grow demographically According to CIA World Factbook, the number of people aged between 15 and 54, which is the targeting age group of PNJ, makes up over 60% current population of Vietnam Besides, ANZ estimates the number of people belonged to consumer class will increase from a current of 17 million people to 32 million people by the end of this decade With this ever-increasing population growth rate, PNJ has an enormous room to snowball its business  With the current reputation of the brand, the expansion to acquire more market share is highly feasible On the one hand, as mentioned in Microeconomic section, big jewelry manufacturing companies control only 25% of the jewelry market, and PNJ holds 20% of that 25%, making a total of 5% jewelry market acquisition by PNJ On the other hand, PNJ has built a domestically strong brand image and has imprinted its products with quality and satisfaction, all of which contribute to massive support from its customers, let alone any favorable governmental interventions Threats  Vietnam gold-jewelry market is also, however, a delicious pie for foreign investors Potential competitors are inevitable as Vietnam joined WTO in 2007, agreed to open domestic market to the world and reduce tax It is even more promising for outside investors when the Vietnam jewelry industry owns $3.5 billion worth of turnover and 25% annual growth rate In fact, retailers from France, Hong Kong, Thailand, and Malaysia have 9|Page been doing market research and some have even begun to invest Nevertheless, PNJ also has the domestic pressure due to the presence of DOJI and SJC  Unstable and even unprecedented global gold price The price of diamond and gold in the world is fluctuating, the price can escalate but also can drop dramatically, making severe lost for PNJ due to the exchange rate  Internal threat of losing experienced and proficient artisans to the hand of competitors PNJ has to deal with the loyalty of a group of workers and technicians who are indecisive and attracted to work at other firms because of appealing offers and promotions Losing key personnel, especially skillful craftsmen can harm the company’s productivity and working attitude and can be costly due to budget spent for scouting and training new workers from scratch  Massive long-term investment and running multiple diversified businesses The final threat of PNJ comes from its long-term investment in operations on real estate, watches, petroleum, and banking PNJ is running a high risk if these big investments in unfamiliar businesses not yield the expected outcome DongA Bank, for example, causes PNJ to have to make a cumulative provision budget for loss of 55 billion VND and even be on the verge of losing all capital (Đan Nguyên, 2015) Market segmentation Geographic Northern Vietnam - Red river delta, North central coastal; Southern Vietnam Country region – Central Highlands, South central coastal, South Eastern, Mekong river delta Density Urban, Suburban Demographic Age 15-25, 25-45, 45+ Gender Female Family life cycle Young, single/married, with/without children; Older, married with children Middle income (B+ to 13 million VND/month) to high income (class A 13 to Income 20 million VND/month) Professionals, white collars; celebrities, affluent businessmen, businesswomen, Occupation senior executives Generation Generation X, Generation Y Nationality Vietnamese, foreigners occasionally Psychographic Social class Middle class to upper class Lifestyle Succeeders, aspirers, mainstreamers Personality Confidence, materialistic, acquisitive, self-expression Behavioral Special occasions: Wedding, engagement, prom, formal meeting, diner gala Occasions party and celebration Aesthetically pleasing, symbolize wealth and social status, express personality, Benefits sought increase self-esteem and boost confidence User status Potential user, first-time user, occasional users and ex-users User rates Occasional, light to medium Loyalty status Somewhat loyal Attitude toward Positive, increasing level of customers’ satisfaction product 10 | P a g e Table 1: PNJ market segmentation* *Please refer to Appendix for the In-depth PNJ segmentation analysis and terms explanations Market targeting PNJ targets tangible market segments and has been researching restlessly in order to fully understand customers’ needs and eventually deliver superior jewelry products The four brand products are made to suit the distinct need of different categories of customers Furthermore, with the emerging of middle class and positive forecasted economy, PNJ is operating in a market that has high segment structural attractiveness and accounts for more than 62% of population Therefore, the marketing strategy that PNJ is using is Differentiated Marketing Positioning Positioning maps With the upper edge technology and the dominant number of artisans employed, PNJ is indisputably producing the highest quality jewelry products in the domestic market Higher quality comes with a higher price, and customers who are willing to spend large sums will possess more sophisticated items affixed with materials that are more precious DOJI follows after, selling at a relatively high price but lower quality products SJC and BTMC have the advantage in gold and gold bar trading but in terms of the jewelry business, they fall short in the competition Positioning strategy Benefits Price More More The same Less PNJ More for the same More for less The same for less Less for much less The same Less Table 2: Possible PNJ's value proposition PNJ “more for more” positioning strategy involves providing upscale quality jewelry products and delivering superior services by charging prices accordingly The higher price that customers are willing and able to purchase, the more worthy their products will be Higher price comes with increasing benefits and more sophisticated design Differentiation Product differentiation PNJ sets itself apart from competitors by offering distinctive jewelry collection and items 11 | P a g e • • • PNJ silver is made for teen and young adults The selected criteria for PNJ silver collections are charm, courteousness, and age-appropriation and are sold at reasonable prices PNJ gold jewellery is dedicated for mature adults and middle-aged women This line extension aims to serve customers who want items that symbolize their happiness, prosperity and elegance The products of this line are often decorated with diamonds, gemstones, or pearls CAO Fine Jewellery are marked with distinctive luxurious products and collections This brand is for financially strong individuals, thus quality is equal to price purchased Service differentiation PNJ offers speedy, convenient, secure and careful services, making services as strong competitive points • Professional website layout, highly comprehensive and convenient to navigate • Online shopping, PNJ membership, loyalty card and online membership accumulative point system • Highly beneficial exchange policy to customers • PNJ first call center and hotline (1800 54 54 57) One of the first call centres operated in the jewellery industry in Vietnam opened in October 2014 with the mission of proving help and professional support regarding warranty and aftersales services • Precious metal consultation and Diamond inspection service run by PNJ Laboratory Company limited “PNJ was the first Vietnamese company that had the certification ISO 17025”, issued by ISO (International Organization Standardization) Therefore, PNJ’s gemstone certification and other accreditation services are widely accepted worldwide Channel differentiation • Easily accessible distribution channel, customers can reach PNJ from one of the 173 stores nationwide, from main streets to most populous and renowned malls • Four main depots in Ho Chi Minh, Can Tho, Da Nang and Ha Noi, ensuring the seamless network connection nationwide Image differentiation The PNJ’s brand image in customers’ minds is a luxurious, trustful and professional • Logo Converge to shine • Slogan Faith and style • Logo explanation  The logo depicts an illustration of a diamond, which is known as the most luxury gemstone, a symbol of longevity and transparent Figure 1: PNJ logo and slogan  This logo shows all diverse business areas of PNJ that based on the company’s core values that have been established and constantly strengthened  glimmers are soft and simple, but powerful, and imply five basic elements (metal, wood, water, fire, earth, according to Eastern philosophy), reflecting the active and ongoing development of PNJ  PNJ blue is the color of the sky and sea – a symbol of trust  Golden yellow is the color of gold, the symbol of prosperity and wealth 12 | P a g e Conclusion PNJ is persuasively demonstrating the strength and the vision of a leading organization in gold and jewelry manufacturing and retailing services in Vietnam To put its size into perspective, the production capability of PNJ is times of that of the next domestic competitor and PNJ is currently holding 70% of the total number of jewelry artisans – the masters of jewelers (FPT Securities, 2014) PNJ’s success story today is because of the harmonious combination of a superb management, adoption of cutting-edge technology, strong organizational culture and some favorable government policies The jeweler accomplished impressive business results in 2014 as the gross profit reached 790 billion VND, rose 32% in comparison to the same period and exceeded yearly plan by 17%, ensured earnings before tax to reach 326 billion VND – rose 36% and earnings after tax to be 255 billion VND (PNJ Annual Report, 2014) Net profit in 205 is forecasted to reach 319 billion VND (+21% yoy) However, harsh challenges and difficulties are inevitable in today ever-increasing competitiveness, especially when the world is getting flatter and markets are more open Firstly, PNJ is not hugely favorable in the North as it is in the South Experts believe this cautious sentiment is due to the difference in cultural perception on the aesthetic of products and the long establishment of Bao Tin Minh Chau (BTMC) – a brand that have earned the preference because of history and liable record Secondly, trade agreements are requisite for some of the top jewelry brands in the world to flux in Vietnam and some firms have already done the market research Not only the prestigious Tiffany&Co and Mikimoto, but also many renowned regional retailers from Thailand, Malaysia and Hong Kong are preparing to pressurize Vietnam jewelry and luxury goods market Lastly, the unpredictable nature of gold and silver price and the uncertainty in economic stability can combine to cause major losses if unprepared All in all, PNJ has done well in building profitable and learning relationship with their invaluable customers The organization constantly develops clear action plans to relentlessly improve its products and ask for positive changes in customer services and policy, with the ultimate goal is to achieve highest customers’ satisfaction In addition, PNJ also takes care of its employees’ personal development, as illustrated by “PNJ Common Home”, “PNJ family day” and “Healthcare club” as well as promised raise and incentive programs Nevertheless, giving back to the community is a meaningful activity that PNJ pursues as an appreciation “PNJ charity fund- A journey of love” contributed greatly to the society by giving billions VND to improve the lives of poor people, poor patients and cultivate gifted children (PNJ Annual Report, 2014) PNJ is a Vietnamese company and, therefore, a pride of the nation Overcoming challenges, PNJ consolidates maturity 13 | P a g e APPENDIX 1: IN-DEPTH PNJ SEGMENTATION ANALYSIS Geographic Segmentation With the focus on developing the domestic market, PNJ symbolizes its influence by operating 173 outlets across every major city and suburban areas nationwide, and the figure is ever increasing The business does not only aim to have a significant presence in the two biggest cities, namely Hanoi and Ho Chi Minh but also has imprinted the prestigious brand image to local residents in emerging economic cities, such as Binh Duong, Can Tho and Hai Phong Overall, PNJ focuses more on the market in the South of Vietnam, resulting in 85% and 70% total revenue, for PNJ gold and PNJ silver respectively, that come from the region alone Demographic segmentation • Overall, virtually all PNJ jewelry products are dedicated to female customers, with only a few exceptions such as some men’s watch collections and some exclusively designed CAO Fine Jewelry ordered by executives • PNJ offers four differentiated brand products to target four different groups of customers To begin with, PNJ silver aims to cater the needs of 15 to 25 years old girls, who love fashion and are always looking for ego expression, by offering graceful and elegant bracelets and necklaces Next, is JEMMA, a brand option designated for young female office workers, who are interested in looking good and renew themselves Thirdly, PNJ gold segments 25 to 45 years old, comprising wealthier and medium to upper medium class of females who are less price-conscious Finally, the renowned CAO Fine Jewelry includes luxury and high-end collections, which are crafted specifically to serve high-income customers and Vietnamese overseas Psychographic segmentation Here we use the 4Cs lifestyle classification, which is short for Cross-Cultural-ConsumerCharacterization proposed by (Young & Rubican, 2015) • Customers for the luxury product line of PNJ are often top managers, senior executive, affluent businesspersons, and politicians They are the succeeders who have work-centric, high social status, confidence, and brand choices often toward prestigious brands • Aspirers are people who have attention to appearance, tend to be younger and acquisitive They are concerned with their image in the eyes of other people and can be materialistic to some extent These unflinching customers contribute the largest sales proportion of PNJ • Mainstreamers make up the largest category of customers who visit PNJ and are the latent consumers They are, however, the majority of society, ordinary, sentimental and more familiar with consuming “family” brands Behavioral segmentation • Without questions, PNJ has the most interest in the occasions that consumers spend their disposable income on jewelry products, considering that the general features of jewelry are only optional items, expensive and being used in only particular events Some are the predictable time of the year when the demand is high, such as the wedding season starting from September annually Others events are relatively unpredictable but happen all-yearround such as prom, partner meeting, company formal party and gala dinner • Customers who visit a PNJ store usually already have some reasons to buy jewelry in their minds For whatever the reason can be, they are potential users to PNJ, and a proportion of them who have the willingness and the ability to buy will become first-time users The increasing level of satisfaction that PNJ have delivered is bringing many customers back to the brand and they are occasional customers However, the jewelry market in Vietnam is highly competitive, with plenty of substitutes provided by competitors that affect loyalty and drag buyers away from PNJ 14 | P a g e APPENDIX 2: GOVERNMENTAL INTERVENTION AND POLICY Thriving in the market of Gold and Jewelry, PNJ stands in middle of the unforeseen flow of government policies Playing with this double-edge sword, PNJ gains a dozen of benefits with the establishment of Circular 22/2013/TT-BKHCN and Decree No 24/2012/ND-CP, and also suffers a severe loss from Decree No 36/2015/TT-BTC These up-and-down reflect the vulnerability of PNJ to the change in policies made by Government Circular 22/2013/TT-BKHCN is considered “a breakthrough of Vietnam Gold market” (FPT Securities, 2014) This Circular thoroughly favors medium and large scale corporations in Gold Jewelry Production, specifically PNJ, with two main points From June 1st 2014, a technical requirement in measuring and scaling equipment has been demanded: any balance involved in identifying the purity of gold production has to be officially qualified, certificated and lead sealed by the Department of Standards, Metrology and Quality or any other authorities, plus, the standard error limits based on masses ( kilograms) are strictly set, with formula stated in the Content of Circular 22 (Ministry of Justice, 2013) In addition to new stipulations of scaling supports, the Circular also requests manufacturers and retailers of Gold production to specifically provide customers with information about gold purity and product’s serial, before validating in commercial environment These prerequisites of gold products (scaling equipment and technical information) before joining commercial scenes has eradicated a massive market portion of small scale producers, who mostly have processed business based on technical shenanigans of gold product for a long time Decree No 24/2012/ND-CP, valid from May 25th 2012, is also a great support to giants in Gold market This policy puts a control on gold and jewelry business: only a certain number of qualified corporations are legally allowed to operate in the market (Ministry of Justice, 2012) This decree greatly hinders the growth of small scale companies, which currently cover an enormous share of Gold market Decree No 36/2015/TT-BTC, in contrast to former favorable policies, published on May 7th 2015, could be considered the “cutting edge” for PNJ The exportation tax on some products, serials 7113.19.10, 7114.19.00, 7115.90.10, etc - “gold jewelry product, craft and other gold products with gold content of 95% and above” (Vietnam Customs, 2015) was increased from to 2% Considering the position of PNJ in gold exportation industry, new taxing level swiftly ceases the company’s gold exportation activity 15 | P a g e APPENDIX 3: DIAGRAMS, GRAPHS AND ILLUSTRATIONS Description: The graph shows an increase in revenue of PNJ in the period between 2014 and 2015 by 4% More important, data implies a change in product’s concentration: in 2015, PNJ focuses more on Bullion gold (+38%) and drifts away from all three categories in Jewelry/Accessory, include Jewelry gold, silver and especially watches (-41%) In 2014, total revenue of Bullion gold is equivalent to approximately 39.59% that of Jewelry gold; however, revenue of Bullion gold has been rising to 78.10% in comparison to total revenue of Jewelry gold in 2015 In general, PNJ Jewelry gold still plays a big part on the chart (69.91% in 2014 and 55.04% in 2015), but the company will balance the profit between bullion gold and gold jewelry in the near future 16 | P a g e Description: Judging from PNJ 2015’s plan, there are two major changes: financial sales will decline by 75%, from 48,071 to 12,000 million VND, and the retail network coverage will be doubled (18 to 35 new stores, 94% increase) These movements show PNJ’s intention to reallocate resources and broaden their retail system Description: The pie chart represents importation of jewelry of Vietnam in 2012 China occupied a vast portion of the share, up to 48% Three big countries after China on the chart are respectively Korea (12%), Japan (11%) and Hong Kong (9%) Developed countries like US, Germany, Italy, etc are not significantly visible on the chart, in comparison to China, Korea, Japan and Hong Kong 17 | P a g e Description: From the graph, there are three significant points First, Gold Jewelry Revenue is solidly increasing over the period 2010-2014, with the rate varies from 3% (2011-2012) to 18% (2013-2014) Secondly, Gold retail sale also consistently increases over the time However, the growth rate of gold retail is not showing any general direction: it decreases from 2010 to 2012, and after that, swiftly increases from 2012 to 2014 Description: The data shows that PNJ is making profit, comparing beginning and ending balance The difference is 1%, which is not significant, but stands as a solid proof for the growing of the company 18 | P a g e Description: The bar graph shows a fluctuation in retail market share for PNJ Jewelry from 2009 to 2013 However, with the small change (1-2%), it’s safely to state that PNJ constantly maintain their retail market share at a notable level In 2014, PNJ, with all the favoring factors mentioned in the report, gains a huge boost in market share, from 14% in 2013 to 21% in 2014 (+50%) Sources: All diagrams are taken form (FPT Securities, 2014) 19 | P a g e References BaoViet Securities, 2013 Company Update, Phu Nhuan Jewelry (PNJ) Hanoi: BaoViet Securities Bloomberg, 2015, ‘Company Overview of Phu Nhuan Jewelry Joint Stock Company’, viewed November 2015, Chi, L., 13 July 2014, ‘ANZ - Middle-class in Vietnam fastest increase in Asia’, viewed November 2015, Chính, P M., & Hoàng, V Q., 2009, Kinh tế Việt Nam: Thăng trầm đột phá Nxb Chính trị quốc gia, Hà Nội CIA World Factbook, 30 June 2015, ‘Vietnam Age Structure’, viewed November 2015, Cúc, N T., 2015, ‘Đặc san Toàn cảnh Ngân hàng Việt Nam’, Doanhnhansaigon.vn, 26 August 2014, ‘Chủ tịch PNJ: Cuộc chinh phạt mới’, viewed November 2015, Đan Nguyên, 17 August 2015, ‘PNJ gặp bất lợi từ DongA Bank?’, viewed November 2015, Foreign and Commonwealth Office, January 2015, ‘Vietnam ; from 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vàng trang sức, mỹ nghệ lưu thông thị trường’, viewed 22 November 2015, http://moj.gov.vn/vbpq/Pages/View_Propertes.aspx?ItemID=29787 19 Ministry of Justice, 2012, ‘NGHỊ ĐỊNH: Về quản lý hoạt động kinh doanh vàng’, viewed 22 November 2015, 20 Nam Phong, 2013, ‘Domestic jewelry market catches foreign investors’ eyes’, viewed 13 November 2013, 21 PNJ, 2015, ‘Core business activity of PNJ has grown impressively’, viewed 14 November 2015, 22 PNJ, 2015, ‘Mái ấm lòng’, viewed 13 November 2015, 23 PNJ, 2015, ‘PNJ achievements’, viewed 15 November 2015, 24 PNJ Annual Report, 2013, ‘Phu Nhuan Jewelry Join Stock Company’, viewed November 2015, 25 PNJ Annual Report, 2014, ‘Annual Report 2014 HoChiMinh: Phu Nhuan Jewelry (PNJ)’, viewed November 2015, 26 27 PNJ News, 2015, ‘Opportunities for gold jewellery exportation’, viewed 11 November 2015, 28 PNJ Shopping, 2015, ‘How to purchase’, viewed 14 November 2015, 29 Tan Viet Securities, 2015, ‘CTCP Vàng Bạc Đá Qúy Phú Nhuận (PNJ)’, viewed November 2015, 30 VCCI, 2010, ‘10 benefits of the WTO trading system’, viewed 12 November 2015, 31 Vietcombank Securities, 2011, ‘PNJ: Vietnam Azelea Fund Limited buys 565500 shares’, viewed 10 November 2015, 32 Viet Capital Security, 2012, ‘Young Tiffany’, viewed 16 November 2015, 33 Vietnam Customs, 2015, ‘Thông tư số 36/2015/TT-BTC ngày 23/3/2015 Bộ Tài sửa đổi mức thuế suất thuế xuất mặt hàng vàng trang sức, kỹ nghệ sản phẩm khác vàng thuộc nhóm 71.13, 71.14, 71.15 Biểu thuế xuất khẩu’, viewed 22 November 2015, 21 | P a g e 34 VietnamNet, 2015, ‘PNJ launches charity housing program for the poor’, viewed 10 August 2015 35 VNExpress, 2014, ‘Vì khách hàng tín nhiệm trang sức PNJ?’, viewed 13 November 2015, 36 VNexpress, 2015, ‘PNJ Tag’, viewed November 2015, 37 Vuong, Q.-H., 2010, ‘Financial markets in Vietnam's transition economy’, VDM Verlag, Germany 38 Wage Indicator, 2014, ‘Minimum Wage Increase in Vietnam from January 2015’, viewed November 2015, 39 World Bank, 2015, ‘WB: GDP tháng Việt 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References BaoViet Securities, 2013 Company Update, Phu Nhuan Jewelry (PNJ) Hanoi: BaoViet Securities Bloomberg, 2015, ? ?Company Overview of Phu Nhuan Jewelry Joint Stock Company? ??, viewed November 2015,...2015 Situation Analysis Report Phu Nhuan Jewelry Joint Stock Company (PNJ) • Phan Quoc Thinh – Leader S 3582943 • Han Trung Kien... representative Vision Mission Core values Main competitors PHU NHUAN JEWELRY JOINT STOCK COMPANY PNJ 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, Ho Chi Minh City, Vietnam Consumer Cyclical