A study on marketing mix strategy for canons powershot digital cameras

HCMC UNIVERSITY f DEPARTMENT OF FOREIGN LANGUAGES OF INTERNATIONAL AND INFORMATION TECHNOLOGY BUSINESS ADMINISTRATION ) GRADUATION PAPER TOPIC: A STUDY ON MARKETING MIX STRATEGY FOR CANON'S POWERSHOT DIGITAL CAMERAS Student's name: LE VAN Class : KD 02 -06 Advisor : Dr JULY 2006 VO NGQC NHU OANH ACKNOWLEDGEMENT First of all, I would like to express my gratitude to all the respectful professors and teachers at Huflit university, especially to Dean TrU'ong Quang Tu~n, and all those in International Business Administration Department, who have given me usefulbackground and interesting lectures throughout my four years at university • Also, I wish to offer my thank to Ms Vo NgQc Nhu' Oanh, DBA my advisor, for her heartful guidance and corrections so that I can complete the research Without her, I would never know whether I could finish the study at its best I gratefully acknowledge all the advice, recommendation and help of Mr Hit K~ Tu4n - Deputy Director General of Vietnam Trade Promotion Agency Many 5,~ecial thanks to Mr Mike Asao - Director of Canon Vietnam Representative Office and all the staff there for taking their preciou3 time to J provide me with useful infonnation and suggestion They have offered me a valuable opportunity to get real to Canon's marketing activities Last but not least, lowe many thanks to my friends and family for their support They have always been by my side until the last moment the research is done ,' \., 0{ '1 J , ,'- , ADVISOR'S ASSESSMENT The requirement and purpose of the graduation paper • Basing on analyzing marketing mix strategy for Canon's PowerShot digital cameras, the paper reveals suggestions for improving the efficiency of Canon's distribution system and marketing mix Implication and scientific meaning of the paper The paper obtains a remarkable meaning because this is a practical issue, which is required with the affirmation about reality and science In addition to achievements the corporation has had, the Vietnamese market is also emerging hot problems which need researching to solve Research method The paper uses the secondary research The writer masters data collection, data analysis, interpretation and comparison, which represent her specific ability in scientific research However, if the writer makes questionnaires for customers in the marketing research of Canon Corporation, the findings are more persuasive References The paper contains English books and Internet Especially, data which the writer gathered from sources of Canon's cOl1ijJetitorssuch as Sony, Panasonic, Fujifilm are highly valuable in analyzing the topic I -' ii ," The setting and content As a student majoring in International Business Administration, Le Van selected a completely suitable topic because of its necessity in my opinion About the content of the graduation paper, I would like to have the examiners assess it Here, as an advisor, I only evaluate the writer's sense, independence, • and scientific research ability During the process tC1make the research on the topic, that she did her best efforts, was painful in collecting could analyze research and synthesize, Moreover, and especially Le Van always showed data from many sources, was independent and active in she always paid a strict attention to ensuring regulations of time The final result depends on the examiners' oral presentation writer deserves in front of the commentary comments as well as the writer's board Nevertheless, to get high grades if I comment capacity and effort • HCMC, July 5, 2006 Dr., VO NGQC NHl1 OANH iii the writer's I think that the working manner, ABSTRACT • Here comes the age of digital cameras and electronic devices People take pictures every moment with every feeling When they are playing happily with • friends, they take pictures When they are exciting, they take pictures When they are embarrassing, they also take pictures Many of the pictures were taken with digital cameras Digital cameras have become a very good choice for keeping the precious moments lasting forever Meantime, easy to use, a compact style, image retouching are other reasons that contributes to the flashy growth of such kind of product in Vietnam market Not a late minute, cameras manufacturers take actions to promote their products and try to gain bigger market share PowerShot, CyberShot, CoolPix, FinePix are various series introduced by different producers Therefore, a study J on marketing mix strategy is crucial to businesses who wants to know how such kind of strategy can be implemented effectively and can bring back profits for the company Collecting and analyzing data was the main method used to carry out the research Fundamental knowledge was withdrawn from textbook Internal marketing department data was core information used in assessing the marketing mix strategy To have a better subjective view, some interviews with dealers, salespersons of digital cameras were made as well Opinions from articles or forums were taken into consideration also iv The research paper was divided into three main parts The first one presented marketing and its role Main focus was placed on marketing mix and its "Four Ps": product, price, place, and promotion The second part introduced Canon, product ranges, its establishment and production in Vietnam Especially, the marketing mix strategy for PowerShot cameras was studied in this part Then, some product trends, Canon's competitors, PowerShot Swot analysis was mentioned Finally, the research was finished with suggestions - , v LIST OF FIGURES Figure 1: The four P's of the Marketing Mix Figure 2: Three Levels of Product ~ Figure 3: Five steps in pricing process 12 Figure 4: Conventional marketing channel and Vertical marketing system IS Figure 5: Major Decisions in Advertising 17 Figure 6: Advertising 18 mix Figure 7: Steps in developing the sales promotion program 20 Figure 8: Sales volume for PowerShot cameras from 2003 - 2005 51 Figure 9: Digital cameras turnover as compared with other products 51 Figure 10: Market share of digital cameras in 2005 66 vi LIST OF TABLES Table 1: List price for PowerShot models available in Vietnam Table 2: List of Canon's distributors 41 43 Table 3: List of Canon's dealers 43-44 Table 4: PowerShot models introduced at launching seminar 49 Table 5: Vietnam's social development facts 55 vii CONTENTS A CKN WLEDGEMENT ADVISOR'S i ASSESSMENT ii AB STRA CT iv LIST OF FIGURES vi Figure 1: The four P's of the Marketing Mix Figure 2: Three Levels ofProduct Figure 3: Five steps in pricing process 12 Figure 4: Conventional marketing channel and Vertical marketing system 15 Figure 5: Major Decisions in Advertising 17 Figure 6: Advertising mix 18 Figure 7: Steps in developing the sales promotion program 20 Figure 8: Sales volume for PowerShot cameras from 2003 - 2005 51 Figure 9: Digital cameras turnover as compared with other products 51 Figure 10: Market share of digital cameras in 2005 66 LIST OF TABLES vii Table 1: List price for PowerS hot models available in Vietnam 41 Table 2: List of Canon's distributors 43 Table 3: List of Canon's dealers 43-44 viii Table 4: PowerShot models introduced at launching seminar 49 Table 5: Vietnam's 55 social development facts CONTE NT S vi ii INTR D U CTI ON 1 Research paper objectives Scope of the research Research method Contents of research Chapter 1: A snapshot at marketing mix 1.1 Definition • of marketing 1.2 The need for marketing 1.2.1 Spatial separation 1.2.2 Temporal separation 1.2.3 Perceptual separation 1.204 Ownership separation 1.2.5 Separation in value : 1.3 Marketing n1ix 6 1.3.1 Target market 1.3.2 Product 1.3.3 Price II 1.3 A Place 14 1.3.5 Pron10tion 17 ix A study on marketing mix strategy for Canon's PowerShot digital cameras care products On top of it, Fujifilm's focused product line-up in Vietnam is color film such as Superia 100, Superia 200, Superia 400 In the early 2004, Fujifilm started to introduce digital cameras The FinePix digital cameras are the most popular ones with series: FinePix A, FinePix E, FinePix F, FinePix S, FinePix V, FinePix Z Fujifilm cameras' advantages were cheap price, ease of use, and a good distribution channels However, just like Sony, FujifIlm is not considered a good name in cameras because it just started to produce camera recently Fujifilm is normally known as a fIlm manufacturer Fujifilm FinePix Z (Source: www.sohoa.net) 3.2.4 Nikon - Nikon Corporation was founded in July 25, 1917 Up to March 2006, corporate capital was calculated as 36,660 million Japanese Yen, and 18753 • employees are working for Nikon all over the world Nikon is a famous producer of cameras, especially the Single Lens Reflect (SLR) cameras for • professionals manufacturing because Nikon has over 50 years in developing and cameras However, Nikon announced a loss in two successive fiscal years of 2001-2002 and 2002-2003 Nevertheless, Nikon started recovering Nikon's management hopes that they will pay 50 percent of their debts and expects a climbing-up of 70 percent in sales revenue over next three years The corporation's objective is US$ 740 -64- A study on marketing mix strategy for Canon's PowerShot digital cameras million income by the year 2009 Rapid growth in compact digital cameras is another goal of Nikon The corporation is looking forward to the production and introduction of million of such kind of cameras in 2009 Nikon's President Michio Kariya considers Canon as one of the most aggressive rivals Nikon Coolpix S4 (Source: www.sohoa.net) 3.2.5 - Olympus Founded in October 12, 1919, the company was originally named Takachiho Seisakusho by Takeshi Yamashita Later on, in January 1, 1949 the company was renamed Olympus Optical Co., Ltd Then, in 2003, the company made another change as Olympus Corporation, to show its • willingness to establish a dynamic corporate brand by unifYing the corporate name Olympus tries to maintain excellence in all three of its product group: the Imaging product group, the Medical product group, and the Integrated System and Information product group The first group includes digital cameras, cameras, and micro cassette tape recorders The second one offers medical endoscopes, clinical analyzers and other advanced medical equipment, as well as industrial endoscopes and other -65- A study on marketing mix strategy for Canon's PowerSbot digital cameras inspection instruments The last one comprises microscope and measuring equipment, as well as printers, barcode data processing devices, magnetooptical disk drives and other information peripheral products Olympus began its marketing activities in the Asian region from 1975 as a representative office, located in Singapore In 1996, the company established its first representative office in Ho Chi Minh City, Vietnam (Source: www.olympus.com) Olympus Il- mini (Source: www.vnexpress.net ) Figure 10: Market share of digital cameras Sony in 2005 Canon DPanasonic o Olympus • 16% (Source: Marketing department data, 2005) - 66- • Others A study on marketing mix strategy for Canon's PowerShot digital cameras 3.3 PowerShot's SWOT analysis 3.3.1 Strengths PowerShot cameras inherit a good brand name Canon We all know that brand is crucial to any business Brand name is one of top influences to : customers when they choose to buy a product Canon's brand name is known over the world for many years Talking about cameras, many people will think of Canon In Vietnam also, Canon is famous and reputable in Vietnamese minds as a leading cameras producer Another point that makes PowerS hot favourited is its cameras' high quality This camera's high quality feature comes from Canon's superior technology, which Canon invests thousands of dollars each year to research, develop and invent it It is Canon's world famous lenses, Powerful DIGIC II processor, and high mega pixels that make up PowerS hot high quality cameras One of Canon's policies is retaining 10 percent of sales revenue in research and development This effort creates another advantage for PowerShot cameras This means that Canon's technology would be renovated and updated constantly In the other hand, PowerShot product line-up would experience the introduction of the latest models meeting both the present and future demand Also, Canon commits to launch new products twice a year, assuring itself to be an on-demand oriented manufacturer, which puts customers' satisfaction in the center of concern and interest Canon Vietnam has a competent marketing staff that helps in promcting PowerS hot cameras to the market The staff has planned and implemented strong dynamic marketing strategies and activities An evidence of this is that Canon's marketing plans are carried out at the right time, in the right place Moreover, the four Ps - product, price, place and promotion - 67- A study on marketing mix strategy for Canon's PowerShot digital cameras strategies are all involved in a sufficient concern What is more, the staff receives guidance and support from skillful specialists in Singapore, and additional marketing training and education PowerShot strength is also shown at its affordable prices though it carries full of functions, features that deliver high quality images PowerS hot has two series which target to the right users: PowerShot Pro series which have high price and powerful features, and PowerShot A series which have economical prices 3.2.2 Weaknesses PowerS hot's major weakness is design, as compared with Ixus product line Ixus cameras are symbols of "Fashion, Style and Substance" (Source: www.canon.com.vn) - Another Canon's weakness lies in the form of the company - representative office The Vietnamese law regulates that a representative office is not allowed to produce and sell products or deliver activities for gaining profits This restriction cause many disadvantages First, Canon cannot manage sales of PowerShot directly, whereas, it will be very helpful for Canon to know that the exact sales figure would be to evaluate, consider and project for suitable strategies Beside that, every marketing plan and activity must be accepted by Canon Singapore - the South and Southeast Asian regional headquarter Obviously, this process consumes a substantial amount of time - the most vital element in business We all know that a marketing plan should always be delivered in a proper timely manner to be effective Furthermore, this is quite a disadvantage as the marketing staff is sent into a passive position, and their authority is limited Management in Singapore probably does not always understand the Vietnamese market as well as - 68" A study on marketing mix strategy for Canon's PowerShot digital cameras Canon Vietnam's marketing executives Finally not yet importantly, the fund for marketing provided by Canon Singapore might not be large enough to demonstrate big marketing campaigns to boost the sales of products Canon's late coming is the last weakness Because Canon has just entered Vietnam market, it has not gained a significant market segment in order to compete with other rivals like Sony, Panasonic The distribution network is not strong enough to cover the market 3.2.3 - Opportunities Many opportunities are paving the way for Canon and PowerShot's quick growth First, Vietnam economy is growing fast and stably, GDP per capita climbed from US$ 200 in 1995 to US$ 564 in 2004, almost triple increase That increases Vietnamese ability and willingness in paying for shopping goods like digital cameras Beside that, price is no longer a number one criterion in choosing a product Customers are becoming more and more highly demanding Because the income is risen up, they like to use high quality products with various functions and features Especially, they require to have a delightful and professional service That is why cheap products but poor quality and customer care could not hold its denominate position in the market like it used to be in the past The industrialization and modernization play an important role in affecting customers' behavior The Vietnamese are eager to receive and try new and advanced technology The demand for hi-tech products is picked up faster and faster Finally, if Vietnam joins WTO, the tax levied on imported cameras would be reduced Especially, if Vietnam reaches the target of becoming WTO member by the end of the year 2006, the tax cut-off roadmap would be • - 69- A study on marketing mix strategy for Canon's PowerShot digital cameras shorter This opportunity would be very meaningful to Canon and PowerS hot cameras since it can reduce the price and be more competitive as compared with other manufacturers, and it can minimize a threat from parallel imported good (PIG) 3.2.4 Threats Canon suffers a threat from the existence of parallel imported goods Parallel imported goods are products that enter Vietnam market through channels other than the authorized network Such a kind of cameras has much lower price as a result of tax evasion Cameras sold on the parallel market on Huynh Thuc Khang street, Ton That Tung street, Nguyen Hue Boulevard is 30 percent lower than the genuine ones on the average Authorised cameras are also "knocked-down" by parallel ones in term of a new product coming speed There are models that are sold many months before they are officially imported and introduced by authorized distributors There is even a service of hunting models according to customers' orders All of these make up parallel cameras competitive advantages over genuine products PowerShot cameras also face fierce competition from other giants Those like Sony and Panasonic have consecutive sales promotion campaign Their marketing activities prove to be effective by the evidence of increase in sales volumes On top of that, they possess a strong distribution network and they hold substantial market shares Not only existence competitors but also outsiders like Agfa, Pentax, Casio, Leica could become Canon's potential rivals in Vietnam market If Vietnam joins WTO, the ~nvestment environment will be more attractive, many investors and cameras producers will want to "jump in" this market, causing the competition to be tougher -70 - A study on marketing mix strategy for Canon's PowerShot digital cameras 3.4 Suggestions 3.4.1 Suggestions to promotion In the term 2007-2010 development, brand building should still be the top priority PowerShot brand name should be strongly positioned Only PowerShot brand occupies a certain space in the customer's mind it can become number one camera brand in the market Therefore, for the upcoming period, branding should be carried out aggressively, by using the major promotion tools, supporting by others "Ps" Advertising Emphasis should be placed on above-the-line advertising because it is one of the most effective ways in branding More television commercials (TVCs) needed to be broadcasted At the moment, there is not many TVC for digital cameras launched by any manufacturers This fact creates an advantage for the first company making such kind of advertising However, two considerations should be taken into account It is the frequency for the first A long run but dilute campaign would not be as efficient and effective as a condensed one Thus, instead of planning for a long period of broadcasting TVCs, the company can increase the frequency and decrease the time interval Timing is the second account Prime time remains the best choice Canon has done very well on such a thing If it continues to focus on brand activation, it might get more success Canon needs to get closer to customers not only by TVCs but also by other mass media Print ads could be placed on magazines for young customers as this group • IS among potential consumers of PowerS hot cameras In addition, the connection of Print ads and TVCs is required as it would generate a stronger influence - 71 - A study on marketing mix strategy for Canon's PowerShot digital cameras Moreover, Canon can make some ads on website The flash growth of Internet makes online advertising another effective way to reach a large number of viewers Some famous website that occupy a big viewed numbers include: www.vnexpress.com, www.vietnamnet.vn, www.saigonnet.vn Below-the-Iine advertising can be developed simultaneously with distribution network expansion More displays are needed presenting at each sales point Billboards should be over the streets, crossroads, or roundabouts Canon can design and deliver point-of-purchases, for instance, caps, bags, T-shirts, raincoats, stickers, bracelets, decals, which are designed in a sportive, fashionable and eye-catching style The company can use the other advertising method, which is direct email Sending advertising email has a pro of less time consuming, cost saving, but the number of viewers is limited to the number of emails sent Sales promotion Advertising and sales promotion should be planned harmoniously Otherwise, there should be a combination of advertising and sales promotion Canon can launch sales promotion campaigns not only in shopping seasons, but also in "traveling seasons", which falls in around July - August, or "offpicked" season to increase sales figure At the same period, advertising on buses would be implemented to boost the influences On Canon's website, newsletters can be added so that customers will receive daily news and information concerning Canon's products, promotion programs • -72 - activities, especially sales A study on marketing mix strategy for Canon's PowerShot digital cameras Public relation More contests for amateurs can be organized in order to attract a larger number of participants The topics for contests should be picked up simply about love, daily life, delightful moments, or power of actions, etc ! 3.4.2 Suggestions to place Distribution network should be the next consideration afterward The establishment and expansion of distributors and dealers should be pushed The larger the network is, the more advantage Canon can take Now, in Ho' Chi Minh City, only Le Bao Minh distributor sells digital cameras, whereas, many other authorized distributors and dealers are selling other Canon's products, such as printers, faxes, photocopiers than digital cameras Beside that, Vietnam's WTO membership becoming is drawing near; Canon needs to have a strong distribution network in order to maintain the market, and to compete with either existing competitors or potential newcomers Taking good care of distribution network is another way to enhance official cameras competitive over PIG Distributors and dealers must receive special treatment and priviledge to be motivated in selling official products The priviledge can be given to dealers in the form of VIP membership card Furthem10re, the relationship and cooperation among dealers or distributors need fostering so that the brand loyalty is increased and price war can be avoided 3.4.3 Suggestions to product Customer service is a key point If promotion helps to deliver value to customers, customer service plays an important role in bringing them back to the •• manufacturer after they buy company's products or services A good service is the strongest weapon that can "kill" parallel imported goods for the second benefit of - 73 - A study on marketing mix strategy COl' Canon's PowerShot digital cameras customer services Only perfecting services can help in preventing the threat from PIG First, to deliver a delightful service, brand should be activated in the internal employees ! There should be seminars or training programs technical knowledge, but also to enhance corporation's Canon's employees, ranging workers should philosophy corporation's be aware and the product's from management of the not only to educate loyalty and value Each of to sales staff or maintenance corporation's objectives and targets, merits Only when employees understand the clearly the mission can they work for common sakes Second, the customer service staff should be trained properly in order to serve the customers at their best They should not only be expertised in performing services like maintenance, customers' warranty, and repairing, but also be delicate in handling complaints and grievances Third, lessons of fundamental make nice pictures photography, how to use a camera, how to could be given for free to customers who buy Canon's cameras Such kinds of courses could be hold monthly or quarterly Fourth, Canon can cooperate with authorized distributors to diversify service offered, for instance, leasing, product life warranty, and one package warranty Fifth, Canon can establish a group to control customer service based on customers' and assess the quality of satisfaction Sixth, Canon can reserve special treatment to regular potential customers like VIP membership cards, free vouchers Finally, market research is also important to be placed so that the company can get to know more about customers' insight, their needs and expectations further improvements • • -74 - for I A study on marketing mix strategy for Canon's PowerShot digital cameras 3.4.4 Suggestions to price For the price suggestions, Canon can set up a flexible price policies that allows proper adjustment prior to changes in economy, technology, political ! regulations or other factors that affect market demand Canon can have special policy to support and encourage distributors or dealers who want to enter new markets, introduce new ranges of digital cameras or handle a bulk order 3.4.5 Suggestions to government Government actions are vital The "battle" against pnrallel cameras needs much effort interference from government More strict methods or policies against such kind of products are necessary for the steady growth of genuine ones The prevention of PIG should be handled with disciplines The other thing is imported tax Hopefully, after Vietnam joins WTO, the tax levied would be reduced soon • ••• • • -75 - A study on marketing mix strategy for Canon's PowerShot digital cameras CONCLUSION In general, it can be said that PowerShot's success depends on effective marketing campaigns The company has targeted at the right customers Then, the development and introduction of "on-demand" high quality cameras has made a "punch" to the market Also, Canon has arranged a suitable pricing strategy to all levels of distributions, dealers and end-users At the same time, efforts in setting up and expanding distribution network should be appreciated as this devotes to the increase of PowerShot sales Promotion strategy is the last but not least one that creates and builds up a brand name for PowerShot Without such activities, market positioning would never be effective, and the company would not see its PowerShot fast growing Though, lots of difficulties and challenges are ahead The tough competition, the threat from parallel products were, are, and will be barriers that Canon has to overcome if it wants to be the leading digital cameras manufacturer in Vietnam Despite that, the rapid development of economy and technology creates a prospective market for digital cameras Knowing what Canon and its marketing staff have done; I do, my self, have a strong belief in Canon and PowerShot future potential growth Because of the slogan "Delighting you always" and "Kyosei" Corporate philosophy, the company's development and success can also generate social interest and stakeholder's welfare • Because of time and expenence limitation, this research paper still faces shortcomings More researches need considering in order to have the most accurate view of the marketing campaigns Hopefully, the research paper is useful for those who are interested in learning marketing practice and implementation -76 - REFERENCES Textbook l Charles W Lamb, Jr., Joseph F.Hair, Jr., Carl McDaniel Essentials of Marketing Ohio: South-Western College Publishing_1 999 Philip Kotler and Gary Armstrong Principles of Marketing New Jersey: Prentice Hall 1996 Simon Sweeney Communicating in Business Cambridge: Cambridge University Press_2000 Thomas T Kinnear, Kenneth L Bernhardt,and Kathleen A Krentler Principle of Marketing Harper Collins College Publishers_I 995 Magazines Informatics and Life newspaper - publication 1(85), 2006 @ magazine - publication 101, 2006 Websites • www.canon.com www.canon.com.sg www.canon.com.vn 10 http://consumer.canon.usa.com II www.sony.com 12 www.sony.com.vn 13 www.panasomc.com 14 www.panasol1lc.com.vn •• -77 - ( 15 www.fujifilm.com ~ 16 www.fujifilm.com.vn I 17 www.nikon.com 18 www.o1ympus.com 19 www.sohoa.net 20 www.vneconomy.com 21 www.thanhnien.com 22 www.undp.com.vn 23 http://www.undp.org.vn/undp/fact/base.htm 24 http://www.vvg-vietnam.com/economicscvr.htm 25: http://www.state.gov/r/pa/ei/bgn/4130.htm Other sources 26 Canon images library 27 Canon marketing department data • • -78 -