SEVERAL SOLUTIONS TO EXPAND MARKET SHARE OF YAMAHA MOTOR VIETNAM

MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY OPEN UNIVERSITY L’ UNIVERSITEÙ LIBRE DE BRUXELLES SOLVEY BUSINESS SCHOOL MBMM PROGRAM NGUYỄN NGỌC LAN SEVERAL SOLUTIONS TO EXPAND MARKET SHARE OF YAMAHA MOTOR VIETNAM FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Advisor Professor NGUYỄN THỊ LIÊN DIEÄP Ho Chi Minh City 2007 i Declaration I declare that the project entitled: “Several solutions to expand market share of Yamaha motor Vietnam” is my own work The information and data analysis of the project are based on reliable sources I hope that this research would be evaluated seriously and approved Moreover, I would like to recommend this paper to Yamaha Motor Company Vietnam to utilize this marketing strategy promptly in order to increase sales volumes, brand recognition, brand loyalty, etc and in overall to enlarge current market share ii Acknowledgements It has been a great pleasure to have Professor Nguyen Thi Lien Diep as my tutor who has given me great support and encouragement I have learned a tremendous knowledge from her I wonder if I could have had a better tutor I have the honor to express my deep thanks to Prof Nguyen Anh Tuan, Prof Bayeen… in Ho Chi Minh City Open University and the Solvay Business School, ULB, who gave me knowledge and invaluable advice during the MBMM course I am indebted to the kind support from Mr Dinh Quang Tuan – YMVN Marketing Manager, Mr Roger Yap - Branch Manager who gave his time and assistance to my project I also would like to thank many Yamaha Motor Vietnam Co., Ltd officers who helped me collect information and support me during the time of project Thanks to my friends in MBMM course who are willing to share their knowledge and experience during the course Finally, I would like to thank my parents, my dear husband and my new-born daughter for their encouragement and care over the years Nguyen Ngoc Lan iii Tutor comments - iv Jury comments - CONTENTS Acknowledgements Executive summary Introduction 1.1 Motivation 1.2 Limitation of the study 1.3 The topic, aims and objectives 1.3.1 The topic and scope 1.3.2 Aims 1.3.3 Objectives 1.4 Methodology 1.4.1 Method 1.4.2 Technique 1.4.3 Source of data Chapter 1: Yamaha Motor Vietnam Company – External analysis 1.1 Introduction of Yamaha Motor Vietnam 1.2 External analysis 1.2.1 Demand measurement and forecasting 1.2.2 The environment context Orientation Development strategy 1.2.3 P.E.S.T analysis Political Socio-cultural factors Economics Technological 1.2.4 Competitor Analysis 1.2.5 Customer context Decision roles involved 11 1.3 Opportunities and threats 12 1.3.1 1.3.2 2.1 Opportunities: 12 Threats 13 Mission, vision and goals 14 2.1.1 2.1.2 2.1.3 Mission 14 Vision 14 Goals 14 2.2 Marketing objectives 15 2.3 Current marketing strategy .16 2.3.1 2.3.2 2.3.3 2.3.4 Market segmentation 16 Target market 16 Positioning 16 Marketing mix 16 2.4.1 2.4.2 2.5.1 Objectives 17 Marketing communications strategy 17 Marketing expertise 19 2.4 2.5 Marketing communications 17 Promotional mix 20 2.5.1 2.5.2 Select the communications options 20 Control and evaluation 23 2.6 Internal analysis 24 3.1 `Conclusions 26 3.2 Solutions .31 3.2.2.1 Organizational structure 33 3.2.2.2 Marketing communication 33 3.2.2.3 Teamwork 34 3.2.2.4 Financial aspect 34 3.2.2.5 Stakeholders 34 Bibliography and references v Executive summary Yamaha Motor Vietnam Co., Ltd is a new comer in the motorbike market in Vietnam It has establised its presence in Vietnam since 2000 From now on it has gained the amazing brand awareness as well the market shares by effective marketing strategy However, the fierce competition in building brand awareness, and capturing market share bring the big challenge for Yamaha Motor Vietnam It requires a clear understanding about all its actions related to marketing as well as the concept of integrated marketing communications In this setting, the authour would like to offer the readers a right perspective about marketing and maketing communication which is employed by Yamaha Motor Vietnam The research is carried out taking into account following: − Customer context plays an important role in the research The target customers perceive Yamaha product in the quadrant of high quality and high price but in the perception mapping Yamaha image is lower than Honda Besides, the impact of business environment on marketing communications will be also considered carefully − Competitors, the important stakeholder need to be taken into account Honda is the main competitor of Yamaha It is now applying the mass communications to compete and protect its market shares Honda is holding 80% market shares of the joint venture segment vi − The external analysis helps Yamaha find out the opportunities and threats as well In the next coming years, Yamaha should try to make advantages in terms of new policy of the government concerning about motorbikes, consumers concerned about fuel saving But Yamaha also needs to consider some threats that may suffer the company such as fierce competition, regualtions of government about the sales promotion and advertising − The marketing activities of Yamaha will be clearly considered because it helps the author understanding about the current situation of Yamaha From the internal analysis such as mission, vision, goal, marketing communications objective and strategy, organization identity as well as marketing expertise, the author will find out the strengths and weaknesses that are benificial for giving out the conclusions and recommendations later on The research shows that Yamaha Motor Vietnam has strengths in terms of marketing communications plan fit with the overall strategy, defining target market quite well, marketing communications strategy and empowerment and teamwork Marketing communications is to facilitate the differentiated brand awareness In addition, Yamaha Motor Vietnam has achieve the coordination of using promotional mix such as caravan show, advertising and promotional campaign to enhance the brand image − However, the company has not considered customer database playing an very important role in building up effective marketing communications strategy It just uses customer database in setting up the mailing list Besides, the control and evaluation system seem not work well because most of the time, they control and evaluate based on the experiences of marketers and such a small market surveys vii Finally, the author would like to offer the recommendations for Yamha Motor Vietnam Co., Ltd to improve its marketing activities to expand the market share It could be very essential to enhance the teamwork activities, organization structure as well the control and integration with external and internal stakeholders The company should establish cross-functional teams in which every department is represented In addition, teamwork is encouraged to support for YMVN functional departments as well to avoid communications programs separate Marketing integration requires close coordination between departments Otherwise, a study of other external stakeholders such as agencies, suppliers is to control and integrate them as a united Yamaha family maintain these existing customers and prospects by reaching to them by the quality products It must have the mutual communications between YMVN and target customers Therefore, YMVN should build the customer database, it will help facilitate the sharing and exchange of information across functions that are essential to integrated marketing and other internal and external partners Rather than spending money on broad direct mailing or telemarketing campaigns, more and more companies are now using database to focus on their best customers and then to saturate them with specific marketing programs that will bring a better response rate Another aspect of customer’s relationships that YMVN must take into consideration is the control of dealer’s networks Dealers represent for YMVN to deal and cope with end users and customers This is difficult to transmit the right messages from YMVN to the end users if YMVN cannot control the marketing channel On the contrary, dealers will probably ruin the products images and confuse the target customers Besides, failure to achieve dealership commitment and corporation could ruin the brand prestige and product image at the point of sale Schultz, Don E, Marketing News, 2000 said “customer-relationship management (CRM) can and must be the key ingredient in any future marketing activity, whether electronic or traditional Organizations must know their customers better in order to be more relevant to them and able to react more quickly and effectively In short, to survive, firms will need real customer relationships, not just the names of firms they business with Datamarts, data warehouses and data mining are being done by systems integrators They generate reports and provide strategic direction from "black box" solutions that marketing and communications people either don't understand or to which they have no access Like marketing, CRM is "too important" to let marketing be involved and certainly too complex and challenging to put in the hands of the marketing guys.” Creativity is the heart and soul of marketing communications3 YMVN more or less had created some creative events that generated the customers’ awareness about Yamaha products The integration of promotional mix and the co-operation among dealers to enhance the synergy of individual activities and somehow created the customers perception about products This program integrated the other functional departments, promotional mix such as advertising, promotions, service provisions, direct marketing and central planning to conduct an outstanding awareness of regional customers YMVN also directs the marketing communications as a creative, fresh approach to its target customers Yarbrough, John F, Sales & Marketing Management Magazine said that “ Once you have an integrated marketing plan under way, make sure you give it enough time to work before deciding whether it worked or failed at least 18 months, and probably longer “ YMVN also has to make sure it can set up an internal system using a variety of criteria to evaluate how the plan is working, and incorporates that information into next year's plan “The companies that are doing this well are not dallying with it,” says Mack Reynolds of the Reynolds Communication Group in Evanston, Illinois "Companies have to be willing to stay the course." Evaluation of marketing communications campaign and issues are the important process of IMC It helps YMVN improve decision making on the best available information that can be afforded, reduce risks, improve campaign, save costs and accumulate wisdom based on the learning about campaigns have done YMVN should keep on pursuing its desirable aims to optimize the benefits of evaluation None of current available evaluation procedures can be considered as perfect measures However, it is better to acknowledge their imperfections and use them to best effect to gain inside rather than not to evaluate at all To so, skill of marketing Pickton and Broderick (2005) Pickson.2005 Pickson 2005 communication is necessary to gain as well for managers and staff to enhance the marketing communications performance It should be summarized as followed: − Marketing as a functional corporate activity: Almost everyone agrees that marketing and marketing communications must become a corporate philosophy a way of doing business, not just a functional department doing “marketing stuff.” − Ability to manage marketing as a strategic corporate initiative: There's little question that marketing, and particularly marketing communications, is being pushed further down in the corporate organization To many senior managers, marketing is too important to be handled by marketing and communication people The first thing marketing people must is expanding their skill sets to be able to address two major corporate issues: organizational structure and financial investments and returns If marketing truly can generate demand, it must have some connection to production, operations and distribution Marketing people also must have financial skills Without the accounting and financial skills driving most of today's firms, it's no wonder marketing is continually being downgraded Further, this lack of financial acumen prevents marketing people from finding suitable and acceptable methods of measuring returns on marketing and communications investments If you don't understand the basics, you're not likely able to handle the higher levels so badly needed Schultz, Don E, Marketing News, 2000 3.2 Solutions 3.2.1 SWOT analysis: Opportunities (O) SWOT Consumers are showing more Threats (T) Competitors: The threat of analysis interest in fuel saving rivals in the motorbike market is Government limited the substantial as there are many import motorbikes and existing competitors as well as prohibited which motorbikes new entrants to the market assembly factories are not Buyer Bargain Power: as a capable according to result of the vast number of government regulation competitors Yamaha faces Per capital income is challenges from many other increasing steadily over the past manufacturers as well as the years used motorbike market Road systems are upgrading Policy: Vietnam Government and expanding in the urban and investment policy is not stable rural areas Investors are always worried More merchandises are about the certainty of policy interested in doing business Regulation of the government with Yamaha about the sales promotion and Cost and standard of living: advertising the current rates of consumer spending are beneficial to the release of the new motorbikes – Consumers are spending more than ever and are less averse to taking loan for consumer’s product Vietnam has recently become the official member of WTO Strengths (S) Marketing communications plan fit the strategy Effectively defining target market S-O S-T S1, S2, S3, S4 + O1, O3, O4, O5, O6, O7 Market development strategy with high quality product, competitive price, and good marketing communication plan S1, S2, S3, S4 + T1, T2 Product development and diversify strategy, introduce new range of product that has average prize with new features and quality Clear marketing communications strategy Empowerment and teamwork S1, S2, S3, S4 + O2, O5, O8 Increase export market, brand building in local market and ASEAN area Weakness (W) W-O W-T Customer database W1,W2, W4 + O6, O7, O8 Forward integration strategy: Organization identity focusing on management Promotion mix process, customer relationship management and information 4.Control and evaluation system system W1,W2, W4 + O1, O3, O4, O7, O8 Branding strategy, human resource development W1,W2, W3, W4 + T1, T2 Linear integration strategy: coordinate with other local vendors, suppliers to improve product quality and identity in the market 3.2.2 Strategy solutions 3.2.2.1 Organizational structure: it is important for YMVN is to change the vertical organizational structures when cooperation is needed between functions because integrated messages can be sent only by an integrated company It means establishing cross-functional teams in which every department is represented Strategic planning thus becomes an enterprise-wide effort, and information and responsibilities are shared The result is a need for horizontal relationships struggling within a vertical organization 3.2.2.2 Marketing communication: high standing of marketing communication function within many marketing organizations ensures an integrated marketing communications program as high priority within the organization For many in top management, spending money on marketing communications is a luxury that can be afforded only when all else is going well 3.2.2.3 Teamwork is encouraged for YMVN functional departments as well to avoid communications programs separate Marketing integration requires close coordination between departments A company based on integrated marketing would never let the advertising department work in a vacuum: every department that is involved with delivering a marketing promise has to be involved with its formation There are some specific findings that can help align and coordinate marketing and communication programs6: • Best-practice companies make extensive use of interpersonal and acrossfunction communications designed to break down functional silos and focus managers on customers, not products and their attributes • Best-practice organizations have integrated customers into their IMC planning and development process This helps integrate marketing and communication systems not just functions • At best-practice firms, a customer is a customer to the entire organization, not just the SBU or division that is selling the specific product or services Global customer databases open up cross-selling and add-on opportunities for other departments and divisions worldwide 3.2.2.4 Financial aspect: Another important aspect of the character of an organization is the misguided emphasis upon financial rather than consumer considerations in the development of marketing strategy It is pointed out that the attitude of most managers is to let financial considerations drive their thinking when setting marketing objectives, rather than consumer wants or needs 3.2.2.5 Stakeholders: study of other external stakeholders such as agencies, suppliers to control and integrate them as a united Yamaha family Integrate outside agencies Schultz, Don, Invest in integration, INDUSTRY WEEK, 2005 with the company and with each other There's no way they can produce consistent, compatible messages unless they have the same information about target audiences and strategic goals − Be consistent, not conflicting, in communications − Provide training and rethink compensation 3.2.3 Recommendation to the Government In order to achieve the above mentioned strategy with countable outcome, author would like to propose several suggestion to Government and industry in Viet Nam as follows: - Step up the negotiation process related to motorcycle industry after becoming WTO’s member - Renovate Custom’s procedure to simplify, organize in international standard and regulation Continue to renovate import and export regimes to eliminate unnecessary costs incurred in: transportation, handling, taxation, Custom clearance procedure, etc - Improve legal system, tighten border smuggling control that seriously effect to local market Strictly apply sanctions to unauthorized, intimated goods and protect healthy competitive environment - References − Arnott, Nancy (August 1994), Selling is dying, Sales & Marketing Management magazine, vol.146, p82 − Bergen, John D (May.1996), Beyond integrated marketing, Management Review, vol.85, p62 − Chris Fill (1999), Marketing Communications, Prentice Hall UK − Chris Fill (2002), Marketing Communications, Prentice Hall UK − Cutlip, Scott M., Center, Allen H and Broom, Glen M (1994), Effective Public Relations Englewood Cliffs, NJ: Prentice Hall − D.M Roberts and P.D Berger (1999), Direct Marketing Management, Prentice Hall USA − Daniel Yadin (2001), Creative marketing communications: a practical guide to planning, skills and techniques, Kogan Page London, UK − Davis, Stanley M and Lawrence, Paul R (1978), Problems of matrix organizations Harvard Business Review − Duncan, Tom, Clarke Caywood and Doug Newsom 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www.fpt.vn − New release, September.28, 2006, Reorganization of Motorcycle Operations and Personnel Reshuffle Promoting Manufacturing Innovation by establishing a System Supplier Structure, www.yamahamotor.co.jp − July 19, 2006, Yamaha Motor Cutting Costs To Raise Competitiveness, Motorcycle NewsWire − http://www.yamaha-motor.com.vn/ − http://www.yamaha-motor.co.jp/global/ir/report/pdf/2005/2005report-q2e.pdf − http://www.moi.gov.vn/EN/News/Detail.asp?Sub=101&id=22146 − http://www.mofa.gov.vn/en/nr040807104143 Appendix (Figure & table) Figure 1: Market’s sales volume forecast 10000000 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 2003 2004 2005 2006 2007 2008 2009 2010 Motorbikes 2806272 3367526 4041031 4849037 5867578 7041094 8097258 9311846 Source: Yamaha Motor Vietnam Ltd., Co, 2006 Figure 2: Perceptual Mapping High quality Honda Yamaha Low Price Suzuki High Price Sanyang Motor Low quality Source: Yamaha Motor Vietnam Co., Ltd, market research, 2006 Figure 3: Consumer’s Decision Roles Role Initiator Influencer Decider Purchaser User Consumer Friend, colleague Family members, friend, dealers User User, parents Family members, user Source: Yamaha Motor Vietnam Co., Ltd, 2006 Figure 4: Behavioral Sequence Model (BSM): for high involvement products Consideration at each stage Need Arousal Decision roles involved Family members Friend Seller Dealer Information search and evaluation Purchase Usage Family members, Youngster, who need the new Family bikes members Friends who have experience and knowledge on bikes Sellers as a initiators Youngster At home, talking At the motorcycle with friends, At the shop, shop seller’s introduction Exhibition At home At work For pleasure For fun Where stage is likely to occur At home, talking with friends, At the shop, seller’s introduction Exhibition Timing of stage 1-4 week Change a new following need bike arousal Buying a bike How it is likely to occur Ask, call, Looking brochures, shop something visiting, special events, talking with sellers Shortly after 1-10 day after completing purchase information search and evaluation Visit motorcycle shops Satisfaction and enjoyment Source: Adapted from Chriss Fill Figure 5: Marketing Objectives Variable 2007 Market share (%) 32 Sales in units 1,877,625 Average price ($) 1,480 Sales in value ($) 2,778,884,940 Source: Yamaha Motor Vietnam Co., Ltd, 2006 Figure 6: YMVN’s Communications Strategy Yamaha Motor Vietnam Push strategy Pull strategy To push the products down through dealers toward end-user To make aware of products’ existence Dealers End users Figure 7: Marketing Department Organizational Chart Marketing Manager South Marketing Manager North Marketing Manager Assistant Marketing Manager Assistant Marketing Manager Regional marketing Executive Coordinator Caravan show Manager Whole sales