Theoretical background on marketing mix for consumer goods1

ACKNOWLEDMENTS My thesis could be impossible to be successfully accomplished without the valuable support of my supervisor, my directors, managers as well as my colleagues in Dong Anh pressure equipment j.s.c First of all, I would like to express my special thanks to my thesis supervisor –Prof Vu Minh Duc, for his patience, support as well as guidance while I was carrying out this research Furthermore, he was also willing to give me a wide range of intellectual advice and contributing comments which made a great contribution to help me achieve the best results Next, I would like to express my warm thanks to the committee members of my thesis trial defense because their guidance and assistance in reviewing and developing my research in order that I could complete my thesis as today From the depth of my heart, I also express my special thanks to the Board of Director 's Dong Anh pressure equipment j.s.c, who always spent his valuable time providing and sharing me with a great deal of useful information in relation to the current operation of the company At the same time, my colleagues were very enthusiastic and willing to help me anytime, and simultaneously motivate me throughout my study Many thanks are also due to my best friends and my classmates at EMBA15A for their warm friendship and supporting with many good memories Finally, I would like to express my deepest gratitude to my family and my friends for their encouragement and support for my thesis Thank you and wish you all happiness and success! Student Dao Son Tung TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES EXECUTIVE SUMMARY .1 CHAPTER 1: INTRODUCTION 1.1 Rationale .3 1.2 Research Objectives 1.3 Research Questions .4 1.4 Research Methodology 1.4.1 Research Process 1.4.2 Secondary data collection .4 1.4.3 Primary data collection 1.4.4 Data analysis 1.5 Research Scope .6 1.6 Research Structure CHAPTER 2: THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER GOODS 2.1 Marketing and marketing mix for consumer products 2.1.1 Marketing .7 2.1.2 Marketing mix 2.2 Elements of marketing mix for consumer products .9 2.2.1 Product 2.2.2 Price .15 2.2.3 Place .20 2.2.4 Promotion .22 2.3 Factors affecting marketing mix 27 2.3.1 External enviroment .27 2.3.2 Internal enviroment 27 CHAPTER 3: CURRENT SITUATION OF MARKETING MIX FOR BOILER AT DONG ANH PRESSURE EQUIPMENT JSC 30 3.1 Overview of Dong Anh pressure equipment and boiler 30 3.1.1 Overview of Dong Anh pressure equipment 30 3.1.2 Overview of boiler .33 3.2 Analysis of marketing mix for boiler at Dong Anh pressure equipment jsc 34 3.2.1 Market and target customers of the company's boiler products 34 3.2.2 Product policy 36 3.2.3 Chính sách giá cho sản phẩm nồi 40 3.2.4 Chính sách phân phối 41 3.2.5 Promotion policy 44 3.3 Achievement and shortcomings 46 3.3.1 Achievements .46 3.3.2 Shortcomings and reasons 47 CHAPTER 4: RECOMMENDATIONS TO IMPROVE AND DEVELOP MARKETING MIX FOR BOILER AT DONG ANH PRESSURE EQUIPMENT JSC 50 4.1 Boiler's development orientation of Dong Anh pressure equipment jsc 50 4.1.1 The general development direction of the company .50 4.1.2 Develop the business of boiler products .52 4.2 Recommendations to improve and develop marketing mix for boiler at Dong Anh pressure equipment jsc .53 4.2.1 Market segmentation 53 4.2.2 Target market selection 54 4.2.3 Research and develop new boiler products 54 4.2.4 Nâng cao lực cạnh tranh giá bán .55 CONCLUSION .56 REFERENCES 58 APPENDIX 59 APPENDIX 60 APPENDIX 61 APPENDIX 62 SURVEY RESULTS .65 LIST OF TABLES Table 3.1: Products of DPE 32 Table 3.2: DPE's revenue from 2015 to 2017 33 Table 3.3: Some of DPE's major partners 36 Table 3.4: Some types of DPE boilers 38 Table 3.5: Price before and after the factory 41 Table 3.6: Expenditures for advertising boiler products in 2017 44 LIST OF FIGURES Figure 1.1: Marketing model - mix in the business Figure 3.1 Organizational structure of DPE 30 Figure 3.2: Current distribution channel .42 Figure 3.3: The ratio of sales between direct sales and indirect sales 43 EXECUTIVE SUMMARY Dong Anh Pressure Equipment j.s.c is one of the companies that produce pressure equipment such as boilers, industrial valves in Vietnam With more than 27 years of development history, The company is currently developing sustainably, is gradually expanding the search for customers and expand market share in Dong Anh district and industrial parks in the neighboring provinces Extremely, in the competitive economic context, DPE now not only has to turn its forcus on the competition with domestic competitors but also foreign competitors Because most of companies focus on building brand name and brieng its brand closely to customers by many different marketing program Therefore, marketing mix is very important to each firm Boiler is a kind of equipment produced by DPE Boiler is evaluated as one potential product because of its high quality and clear market segmentation The aurthor was doing the research of marketing mix for this product useful and necessary for the manufacturing and processing enterprises such as confectionary enterprises, textile enterprises and a good marketing mix for this product will create many advantages for DPE to compete with other competitors Thus, the thesis aims to identify components of marketing mix applied to Boiler; to assess current marketing mix for Boiler; and to propose solutions to improve marketing mix for Boiler to increase its market share up to 2025 Base on theoretical framework of marketing mix and marketing mix components, primary and secondary data were used in the research The primary data were collected by in - depth interviews and surveys; secondary data were collected from the company reports, regulation, internet and magazine 120 sample were selected for the study but only 92 respondents were achieved (accounting for 76,7%) The four marketing mix components were discussed and analyzed With the analysis of survey result, it is possible to see that Boiler has reached some achievement during three year of being present in Ha Noi market They did gain certain brand awareness from their customers and received good comments from their customers However, there were outstanding shortcomings and possible reasons, which should be overcome by DPE loại đối thủ cạnh tranh tỏ ưa thích khách hàng Firstly, there are many boiler suppliers with large models and distributors Second is the price of the boiler products on the third DPE's trade promotion activities are not well organized, not attractive enough and result in not bringing more customers After all, the thesis offers some ways to improve and develop boilers marketing mix strategy as the ultimate aims of research Firstly, the company should design distinguishing products to differentiate from other products The products to be provided for the customers must be at the best quality, at the best design to attract more and more customers Secondly, the company should set up a flexible price policy by analyzing the competitors well, determining the best product cost and determining pricing objectives Thirdly, the comny shoud expand theri distribution channel of retailing, wholesaling, sales promotion and direct marketing By doing these recommendations, it is possible for Dong Anh Pressure Equipment j.s.c to gain a better place in a very competitive market in VietNam CHAPTER 1: INTRODUCTION 1.1 Rationale Industrial boilers (boilers) are devices that use boiling water to form heatconducting steam to meet the heating requirements of industries such as drying, cooking, dyeing, steam-to-turbine generators, etc The special thing of the boiler that no substitute is to create a safe non-combustible power source to operate the equipment or engine in place It is forbidden to fire and to prohibit power supply (such as petrol and oil stores) Boilers are widely used in almost every industry, with each industry demanding different levels of heat and capacity Factories such as feed processing factory, confectionery factory, using boiler for drying products; Some of the plants are used for cooking, pasteurizing such as beverage plants, fish sauce plants, soy sauce or vegetable oil With the advantages of such boilers, the market can be seen Boilers are one of the potential markets where more and more companies are planning to grow Dong Anh Pressure Equipment Joint Stock Company is one of the few companies operating in the field of supplying boiler products, pressure vessels and industrial valves in Hanoi by TAIYO NIPPON SANSO - a leading corporation in the field of industrial gas and gas generators in Japan Inheriting the foundations of the General Corporation for Production and Services of Technical Materials under the Ministry of Agriculture and Rural Development, Dong Anh Pressure Equipment Company has been developing strongly The mark on the boiler market in Hanoi However, boilers are potential products to continue to exploit with large consumption market, so in the past few years, many companies in the production and sales of boiler products have entered the market and edge Direct competition with Dong Anh company Competing and gaining market share, attracting and introducing customers to know and use our boiler products is one of the most urgent issues that Dong Anh Pressure Equipment Company needs to handle Furthermore, there were some previous studies discussed to expand market for boiler product but studies for marketing mix seem insufficient especially for the Dong Anh pressure equipment jsc in particular Taking into account of all reasons mentioned above, the author decided to choose the title '' Marketing mix for boiler at Dong Anh pressure equipment j.s.c'' and insists that it had not been done before Moreover, the reason, explained for choosing four factors instead of one factor of marketing mix, is that one product wanted to be succesful on domestic market full of combination factors, so only one factor is not enough A long term marketing development orientation not only helps to exploit resources effectively, but also ensure the good condition for production and satisfies the stricter and stricter requirements of customers 1.2 Research Objectives This study is aimed to verify some key theories and methodologies of building and implementing promotion strategies for boiler based on the analysis of its market performance and enviroment over the past period The specific objectives of the study include: - To identify component of marketing mix applied to consumer goods; - To assess current marketing mix for boiler at Dong Anh pressure equipment jsc - To propose solutions to improve marketing mix for boiler to increase its market share up to 2020 1.3 Research Questions To achieve the objectives mentioned above, the research would answer the following questions: - What are components of marketing mix applied for consumer goods? - How is the current situation of marketing mix for boiler? - What should be done to improve the marketing mix for boiler? 1.4 Research Methodology 1.4.1 Research Process 1.4.2 Secondary data collection The secondary data was collected from the internal reports of Dong Anh pressure equipment jsc within years from 2015 to 2017 (number of customers, revenues, any comments from the customers on the product of boiler) In addition, wording, brochures, marketing materials and official documents of Dong Anh For DPE, identify the boiler products as the strategic product, bring the most revenue, profit and brand to the company, so the company orientation to 2022 with the equipment line Japan will produce at least 85% of the parts and components to be assembled into complete boiler products At the same time reducing costs and setting business goals for the product is to increase its market share in the North from just 14% to 30% in 2025 For the product, the company determines to regularly adjust, develop, update new features, go ahead market, produce to market high quality products, stable, simultaneously After-sales service is perfect addition, the distribution channel orientation company is focused on direct distribution channels, the next time will approach, expand and further utilize the other retail distributors in each market 4.2 Recommendations to improve and develop marketing mix for boiler at Dong Anh pressure equipment jsc 4.2.1 Market segmentation Market segmentation helps the company meet the needs of its customers based on the group of customers in the market that demand the same needs with a set of marketing stimuli To be able to grasp the needs of customers, companies need to study the market regularly to know the different market segments, the demand, tastes of boiler products are also different, changes in demand Customers, the evolution of the internal market, the new product models from which to divide the market accurately The company can apply the internal recording system: the reports of the department such as customer care, business, technology, R & D, must be constantly updated and timely report, Reliable, regular consumption of products, Based on the characteristics and utility of boiler products, we can segment the market under the criteria such as: + Market segment by geography: Northern, Central, Southern (Mountain, midland, delta) + Segmentation by customer size: Small business customers, small and 55 medium enterprise customers, large enterprise customers + Segment by product characteristics: High capacity products, medium capacity products, low capacity products Based on the market segment for boiler products Based on the strengths and weaknesses of the company and the market from which the company selects the target market to be most effective when implementing marketing mix variables 4.2.2 Target market selection DPE company has advantages due to good investment in machinery and equipment, skilled labor force, product price is not too high, the source of production is plentiful However, the capacity of the DPE boiler is not high, the models are not diversified as many competitors, distribution and promotion systems are not focused in business On the other hand, the Company is not currently a company with strong financial strength to be able to compete with the reputable, long-time competitors in the market, the brand is known as the company: boiler in Hanoi, Phu Hung pressure equipment company Dong Anh boiler today is a familiar brand for the small and medium industrial enterprises, because they are both Satisfied with the price and quality of the Dong Anh boiler, in line with their financial situation and needs While large companies favor high capacity boilers, the choice of such products at DPE is very limited 4.2.3 Research and develop new boiler products Nowadays, all the advantages of traditional or modern boilers are present on DPE boiler products But due to the orientation of the target customers are only small and medium enterprises, so large capacity boilers are only mass produced according to the orders placed, because So the models and products on display are not enough to introduce to customers Therefore, in parallel with the expansion of target customers to large corporate clients, DPE needs to develop new, safer and more advanced foreign-based boiler products Ensuring the cost factor and profitability of DPE from the boiler products sold 56 4.2.4 Nâng cao lực cạnh tranh giá bán As mentioned above, DPE's boiler products are priced at VND30 million higher than other suppliers (same type, same capacity, same capacity) At first glance, this is not a big deal for businesses, but for a device worth about 300 million, it accounts for 10% of the cost Therefore, the company should quickly stabilize production, calculate the cost of production to provide better product pricing, in line with the company's target Currently the company is having only one pricing policy for all distributors, all product models, as well as in all areas where the company This is unreasonable with the current economic conditions and business conditions The Company should develop a more specific and reasonable pricing policy by presenting in a formal and consistent manner the whole distribution system of its preferential policies The company uses a variety of distribution channels in each market However, pricing policies for these distribution channels are the same, without discrimination or incentives for effective distribution channels Therefore, the company should divide the distributors into different levels depending on the results of the cooperation over time such as seniority, sales results of the distributor, sales potential, the position of Distributors Each level of distribution channels will have different incentives, discounts, maintenance support The division of the hierarchy helps distributors to see equity and helps motivate long-term relationships with the company and prioritize sales of the company 57 CONCLUSION The complete marketing mix for boiler products at Dong Anh Pressure Equipment Joint Stock Company is very necessary, not only overcoming the shortcomings in marketing activities of the company but also helping to identify the right market , customer, increase sales volume, build brand image for boiler products Contribute to improve economic efficiency, increase production capacity through investment in breadth and depth investment, improving step by step material and spiritual life for staffs of the Company The dissertation has studied in depth some issues: The thesis has shown the theoretical basis, the need to apply solutions to complete Marketing Mix for boiler products at Dong Anh Pressure Equipment Joint Stock Company - Theoretical: The author mentioned the content of marketing mix components in the business enterprises in general including: Market segmentation and selection of target market, product policy, main price books, distribution policies and mixed promotion policies, the factors that affect marketing mix in the business and production in particular include: - On the practical side: Thesis has analyzed the current situation of marketing mix for boiler products at DPE Company including: Market segmentation defining target market, product policy, policy price, distribution policy, mixed promotion policy The author has pointed out the shortcomings and causes to overcome specific as: Products of the company has not diversified in type, capacity and capacity, the price on the market is high compared to many competitors Competing on the same target market, the distribution system of the company has not yet identified the focus on the market, the promotion tool is not really effective so the product is not widely known to consumers , the output is not reached the design capacity, the product price is high is not suitable for customers, so the competitiveness of products compared to manufacturers in the industry is limited 58 - Based on the analysis of the situation, the author has proposed some solutions with the desire to contribute a part to the renovation and improvement of Marketing Mix for boiler products at DPE Corporation include: + Perform market segmentation, identify the target market for the company + Building and developing new products + Enhancing the competitiveness of prices In the competitive market economy, in order to survive and develop in both breadth and depth, the author argues that the completion of marketing mix for boiler products at the Equipment Joint Stock Company East England pressure is needed And applying this topic to the marketing activities of the company requires managers to apply creatively from time to time to promote the effect of the topic Applying the above solutions The author believes that it will improve the competitiveness of the Company in the market, through the diversification of products, colors, sizes, reduced costs, well organized channels Distribution and promotion of communication channels to create favorable conditions for the company's products, branding products in the mind of the target customers In the time of research combined with the scientific guidance and dedicated teachers: Prof Dr Vu Minh Duc, the author selected the topic " Marketing mix for boiler at Dong Anh pressure equipment j.s.c'' But due to his knowledge and limited time, this essay can not avoid the shortcomings, the author appreciates and wishes to receive the comments of the teachers, colleagues to the thesis was further refined and improved more practical 59 REFERENCES Nguyen Thi Kim Anh, (2011), Improving the intergrated marketing communication for furniture products at Rossano Joint stock company EMBA thesis David L Loudon, Albert J Della Bitta (2004) Consumer behavior - Concepts and applications Le Thi Thanh Hai, (2011), Improve the marketing mix for Doctor Thanh Herbal Tea at Tan Hiep Phat beverage group, EMBA thesis Leon G Schiffman and Leslie Lazar Kanuk (2003) Customer behavior Phillip Kotler, Gary Armstrong, Veronia Wong & John Saunders, Principle of marketing, 5th European edition Phillip Kotler, Kevin Lane Keller: A framework for marketing management (Fifth edition), pp.20 Tran Huy Thang - NEU business school (2010) Understanding customer buying behavior for human resources software implication for CFS The website: http://noihoidonganh.com 60 APPENDIX IN - DEPTH INTERVIEW WITH DIRECTOR Dear Director, First of all, i would like to say thank you for your sharing your time with me here I have some questions for marketing mix for Boiler products in your company and your point of view in relation to development orientation and could you please help answer me In the current context when more and more businesses are manufacturing and trading pressure equipment such as boilers involved in the market, DPE companies will face many competitors, how you assess the difficulties and challenges for Boiler? How you assess about Boiler development in the years to come? Could you please have some comparison with other competitor in the market especially VBC? What are the shortcomings of boilers? How you assess about boiler's marketing mix? What are the shortcomings of the marketing mix boiler? End of questionnaire Thank you so much for your kind cooperation! 61 APPENDIX IN - DEPTH INTERVIEW WITH MARKETING MANAGER Dear Mr Doan Tuan Phong First of all, i would like to say thank you for your sharing your time with me here I have some questions for product of boiler in your company and your point of view in relation to development orientation if your company imporve its marketing mix, could you please help answer me Do boiler product in your company have any difference from other competitors? What are the target customers of your company's boiler products in the market? What should be the marketing mix components to apply for boiler? What is your development orientation and marketing strategy to promote your boiler products in the very competitive market? End of questionnaire Thank you so much for your kind cooperation! 62 APPENDIX IN - DEPTH INTERVIEW WITH 05 EXISTING CUSTOMERS Dear our respectfull customers, Thanks for your being here in my focus discussion group; i have some questions of boiler products, could you please help answer me What you think of quality of boiler product? When looking at boiler product, what you notice? What you think of boiler product's design? What else you expect from boiler product's design? What you think of boiler product's price? Do you think boiler product should be reduced its price? Where you offen buy boiler product? Which way that you get information of boiler product from? Do you have recommendations for place of distributing these boiler products? Thank you so much for your answers! 63 APPENDIX SURVEY FORM Dear respectfull customers, With a view to serving you better when using boiler product, please help us to answer the following questions I, Personal information Full name: Company: Job : Types of boilder that used: II, Common questions PRODUCT What you think of boiler product's quality? a, Very bad b, Bad c, Average d, Good e, Very good How you evaluate the quality of boiler product? a, Product's information b, Comparing with others c, Actual use of the products What the first standard for you selecting boiler products? a, Power b, Capacity c, Shape, size What you think of the design of boiler products? a, Very bad 64 b, Bad c, Average d, Good e, Very good How you rate brand of boilers of DPE? a, Very strange b, Strange c, Average d, Well know e, Very popular PRICE What you think of DPE boiler's price? a, Very high b, High c, Average d, Low e, Very low How much percent that you want price of DPE boiler be lower? a, 3-5% b, 5-10% c, 10% d, More than 10% PLACE Is it easy for you to buy boiler of DPE? a, Yes b, No Where you usually buy boiler? a, Warehouse b, Agency c, Other 65 PROMOTION 10 Where did you notice about boiler of DPE's brand? a, Television b, Internet c, Newspaper d, Other ( ) 11 What is the first choice when you make decision of buying boiler products? a, Quality b, Price c, Brand 12 What you recommend for improving boiler's product: Thank you for your cooperation! 66 SURVEY RESULTS PRODUCT Valid Frequency Percent Valid percent 0 4.35 4.35 56 60.9 60.9 32 34.8 34.8 0 Total 92 100 100 Valid Frequency Percent Valid percent 5.34 5.34 76 82.6 82.6 11 11.9 11.9 Total 92 100 100 Frequency Percent Valid percent 5.34 5.34 71 82.6 82.6 16 17.4 17.4 Total 92 100 100 Valid Valid Frequency Percent Valid percent 0 2 2.17 2.17 58 63.1 63.1 30 32.6 32.6 2.17 2.17 Total 92 100 100 67 Valid Frequency Percent Valid percent 0 2 2.17 2.17 59 64.1 64.1 27 29.4 29.4 2.17 2.17 Total 92 100 100 Frequency Percent Valid percent 0 4.24 4.24 52 62.3 62.3 28 30.1 30.1 2.17 2.17 Total 92 100 100 PRICE Valid Valid Frequency Percent Valid percent 8.6 8.6 7.6 7.6 68 74 74 9.8 9.8 Total 92 100 100 PLACE Valid Frequency Percent Valid percent 20 21.7 21.7 72 78.3 78.3 Total 92 100 100 68 Valid Frequency Percent Valid percent 16 17.4 17.4 60 65.2 65.2 16 17.4 17.4 Total 92 100 100 PROMOTION 10 Valid Frequency Percent Valid percent 8.6 8.6 7.6 7.6 68 74 74 9.8 9.8 Total 92 100 100 11 Valid Frequency Percent Valid percent 19 20.6 20.6 55 59.7 59.7 18 19.5 19.5 Total 92 100 100 69 ... MARKETING MIX FOR BOILER AT DONG ANH PRESSURE EQUIPMENT JSC CHAPTER 2: THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER GOODS 2.1 Marketing and marketing mix for consumer products 2.1.1 Marketing. .. 2: THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER GOODS 2.1 Marketing and marketing mix for consumer products 2.1.1 Marketing .7 2.1.2 Marketing mix ... INTRODUCTION Chapter 2: THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER GOODS Chapter 3: CURRENT SITUATION OF MARKETING MIX FOR BOILER AT DONG ANH PRESSURE EQUIPMENT JSC Chapter 4: RECOMMENDATIONS