The marketing strategy of tuong an vegetable oil factory in ho chi minh city

I J 1, HO CHI MINH CITY UNIVERSITY OF FOREIGN LANGUAGES INFORMATION TECHNOLOGY SCHOOL OF FOREIGN LANGUAGES 11 GRADUATION PAPER I THE MARKETING STRA TEGY OF TUONG AN VEGETABLE OIL FACTORY IN HO CHI MINH CITY Advisor: Mr Nguy~n Van ST,BA Student: Cao Thi Ty Class: KA960z HCMC, July, 2000 TV DQi HQc Huflit 1111111111111111111111111111 101000422 ACKNOWLEDGEMENTS In completing this research paper, 1- the student of class KA960z - have received invaluable encouragement, advide and help from my teachers, experts, and friends, First of all, I would like to thank my sponsor, Mr NguySn Van ST, for recommending and providing materials and for giving me ideals and advice in widening my knowledge of this issue and completing the research paper I am also grateful to President Huynh The' CUQc, who has enthusiastically encouraged me, Dear Lucing Thi Ly and Vice- Le Thi Thu H~ng for their helpful comments and advice I would like to take this opportunity to thank the following people and organizations for their help and supports: TUONG AN Vegetable Oil Factory, The National Company for Vegetable Oils, Aromas, Cosmetics of Vietnam and Statistical Office of Ho Chi Minh City Last but not least, I also wish to express my great appreciation to my friends's supports and encouragement THE TABLE OF CONTENTS ABSTRACT Pages 1-2 INTRODUCTION CHAPTERl: THE BASIC THEORIES Pages 4-29 APPEARANCE AND DEVELOPMENT OF MARKETING Role, Purpose and Function of Marketing In Society 2.1 Marketing Concepts 2.2 Role, Purpose and Function of Marketing 2.2.1 The Economic Role of Marketing in Society 2.2.2 The Economic Purpose of Marketing in Society 10 2.2.3 The Social Role of Marketing in Society 11 2.2.4 The Social Purpose of Marketing in Society 11 STRATEGIC MARKETING PLANNING PROCESS 12 3.1 Assess Current Performance 13 3.1.1 The Strategic Business Unit (SBU) 13 3.1.2 Business Portfolio Analysis 14 3.2 Establishing Specific Objectives 16 3.2.1 Monitor The Environment 16 3.2.2 Recognize The capabilities, Resource and Limitations 17 3.2.3 Understand The Opportunities and Risk 17 3.3 Develop The Marketing Strategy 18 3.3.1 Positioning 18 3.3.2 Growth Approaches 18 3.3.3 Marketing Approaches 19 3.4 Develop The Marketing Program 19 3.4.1 Select The Target Market 20 3.4.2 Develop Marketing Mix 20 3.4.3 Control The Marketing Plan 21 BASIC CONTENTS OF MARKETING STRATEGY 21 4.1 Product Strategy 21 4.2 Price Strategy 22 4.3 Distribution Strategy 25 4.4 Promotion Strategy 27 MARKET SEGMENTATION 28 5.1 Concepts 28 5.2 Market Segment Methods 28 29 5.3 Market Segment Strategy 29 5.3.1 Segmentation and Undifferentiated Marketing 29 5.3.2 Segmentation and Differentiated Marketing 29 5.3.3 Segmentation and Concentrate Marketing CHNrER 2: ANALYSING MACRO ENVIRONMENT OF ENTERPRISE AND VIETNAMESE VEGETABLE OIL MARKET Pages 30-39 A ANALYSING MACRO ENVIRONMENT OF ENTERPRISE 30 POPULATION 30 1.1 Age Structure 30 1.2 Situation of Accommodation Moving 30 1.3 Education Situation 31 ECONOMY ENVIRONMENT 31 2.1 Income of Population 31 2.2 Prices of Goods 31 2.3 Saving in Population 32 2.4 Structure of Expenditure per person in 1998 32 NATURAL ENVIRONMENT 33 TECHNOLOGY ENVIRONMENT 33 LAWS, POLITICS ENVIRONMENT 33 B VIETNAMESE VEGETABLE OIL MARKET 34 PRESENT CONDITION 34 MARKET FORCAST 36 THE DEVELOPMENT OF VIETANMESE VEGETABLE OIL SECTOR 37 CHOLESTEROL AND THE POPULATION OF USE VEGETABLE OIL 38 THE ROLE OF TUONG AN FACTORY IN THE MARKET 39 CHAPTER 3: ANALYSING MARKET OPPORTUNITY AND THE CONPETITION STRATEGIES OF TUONG AN pages 40-58 Overview of TUONG AN Activities 1.1 Appearance and Development 1.2 Analyzing TUONG AN factory's position 1.2.1 Finance 1.2.2 Production ANALYZING COMPETITORS 2.1 Neptune 2.2 Sailing Boat 2.3 Nakydaco 2.4 Maverlla 2.5 Other competitors THE COMPETITION STRATEGIES OF TUONG AN 3.1 Analyzing Advantages and Disadvantages of TUONG AN 3.2 Solutions to Perfect Marketing Strategy 3.2.1 Product Strategy and Raising Product Quality 3.2.2 Price Strategy 3.2.3 Distribution Strategy 3.2.4 Promotion Strategy CONCLUSION 40 40 44 44 45 45 45 46 46 46 47 47 47 50 50 54 56 58 pages 62-64 ABSTRACT With the open door policy Vietnam has renovated its economy and established the socialist oriented market under the state control The open door policy not only helps our economy recover gradually after a long period of war but also makes Vietnam become an attractive market Because of the fact that marketing strategy has an important role in the development of companies, therefore to survive in this fiercely competitive market, enterprises should have suitable marketing strategies for each stage of economy The research aims at providing some data and information derived from literature and practical activities of TUONG AN vegetable oil factory and analyzing some remarkable factors that have been considered to have effects on the strategies of this company The first part of this study is a summary of relevant theories and some opinions stated by some reliable marketing researchers and lecturers A collection of information from books in English or Vietnamese brings a further understanding of the issue such as the origin of the marketing, its importance, its social roles and purposes social as well as its economic aspects The type of marketing planning process and segmentation are also mentioned in this part of the study Besides that, I take into consideration the contents of the marketing strategy The second part discusses mainly about the macro environment of the factory, the vegetable oil market of Vietnam and TUONG AN market opportunity analysis The third part presents the marketing strategy of TUONG AN factory and some of its advantages and disadvantages c2Jrad/ialioH paper The last part consists of the conclusion and some suggestions, opinions about the policy of government for development of vegetable oil sector and for TUONG AN factory cJ)raduation /JtJ/!er INTRODUCTION Nowadays, the survival of an enterprise depends not only on the organization structure, finance situation and commercial activities, but also on the marketing strategy of the enterprise The fact that the vital challenge which makes present enterprises cope with is how to establish and maintain enterprises in the rapid changing of market environment and 'how to enter the common market are the big problems of managers The aim of this research is to point out the importance of marketing in business activities and find out the strategic marketing for TUONG AN vegetable oil factory to enlarge its market share The focus of this research is on consumption goods in Ho Chi Minh City market, to analyze the competitive strategy of TUONG AN vegetable oil factory The organizations of this research including the appearance, development, roles and functions of marketing planning process, market segmentations, and contents of marketing strategy are also described in this chapter Chapter shows some factors such as the macro environment of the factory and the vegetable oil market of Vietnam Then in chapter there comes the analyzing market opportunity and the competition strategies of TUONG AN And the last part of this study is the conclusion and some suggestions that may be worth being taken into consideration "c;9ratillalitJn paper CHAPTER ONE: THE BASIC THEORIES l.APPERANCE AND DEVELOPMENT OF MARKETING When the goods production of human beings has developed to period which manual work gradually replacing by machine, productivity has increased, products have been made more many, at that moment enterprises focused on looking for market to consumer and find all methods to stimulate consumption Marketing with itself meaning "make market" appeared and contributed to solve the above problem however, since Marketing appeared until now, it has undergone a process of changing sides of worldwide economy- society- politics Beside that, Marketing also has a historical period of different development in nation over the world, has different definitions and differs its application scope in production and others For that reason, there are traditional Marketing, modern Marketing and future Marketing In I6S0,the "phenomenon" of Marketing appeared in Japan when Mitsui, an expert recorded who his customers were, their ideas and attitudes towards each item and the difference of their ideas in reforming of his business activities to suit for their demands Until 19th century (1809 - 1884) Lyres H and Me Lonmich whom were the first person in Western to start systematic studying about Marketing? They said "Marketing is a function of commercial companies, enterprise and a special work of management to find solutions in order to attract customer with most quantity and gaining maximum profit They were appreciate in discovering method of market research and segmentation, structure and content of market, distribution ,&adttali{)n paper strategy, promotion policy, sale strategy All their contributions set a basement to form theory foundation of Marketing science Until the beginning of 20th century, mass economists perfected more about Marketing theories and Marketing form (speeding up sale product, advertisement, and construction of product consumption, price strategy, and customer research ) During this time, the foundation of marketing research established step by step in England, German, and Austria with scientific name of marketing, marketing advisory department The first time which marketing term was used in 1920 at the auditorium of Michigan university in United- States To 191O,all the important general university in United- States started to teach marketing subject During near haft of century, marketing was just taught in countries where used English language Marketing was popularized to Western Europe and Japan Until after World War II, in 50s, 60s, The first marketing subject of Europe was established in Graj (Austria) in 1968 After one year, in Master (the city of Federal republic of German) in which a marketing subject of Europe also appeared Nowadays, marketing has been propagated, rapidly applies and effects in business, production in all America, Europe, Asia, Australia, and Africa countries At present marketing theory and application develop not only in business field but also in other fields such as politics, diplomacy, army, training and training program, union task With the open door policy, the socialist oriented market economy under the state control has been established, marketing developed and applied effectively in production, especially garments it succeed in cooking oil, rice, seafood, footwear and c2JradliafitJfl paper 2.ROLE, PUPOSE AND FUNCTION OF MARKETING 2.1 Marketing Concepts Before turning to the role and fuction of marketing we mention cursorily about marketing concepts Peter Drucker a leading management thinker put marketing in this way: "The aim of marketing is to make selling superfluous The aim is to know and understand the customer so well that the product and service fits him and sells itself".this does not mean that selling and promotion are unimportant, but rather that they are part of a larger "Marketing mix" a set of marketing tools that work together to affect the marketplace According to Elizabeth, Wiesechofer Barners , Bod Mcdelland, Richard Meyer, Hideyard and Nike Worsam: "Marketing is concerned with identifying satisfying customers and customer 'S and needs Or with Philip Kotler and Amstrong marketing is defined "Marketing is human activity directed at satisfying needs and wants through exchange marketing processes " In addition, speccific trait of modern that: "market is the most important position of reproduction process of product In the market, buyer has determining role Demand is his aim of production and meet the needs is the most vital factor of production " It is said that "Modern marketing concept affirms that the first requirement to obtain business target is define the demand and wants of market and guarantee the degree of satisfying need by more effective than the methods of competition" (Philip Kotler) The marketing concept has been stated in colorful ways, such as "Find a need and fill it", "Make what you can sell instead of trying to sell what you can make", "Have it your way "(Burger King) ;and "you are the boss "(United Arlines) r:;9raduatiofl recognizing paper 51 and specifying a particular product if they want to choose it agam or recommend it to others Second, a brand also enables marketers to develop specific images and interrelated marketing strategies for a particular product In addition, a brand can command a premium price in the market place, and it is often the only element of a product competitors can not copy Third, brand owners are not the only ones who benefit from branding, however For customers, brand names simplify shopping Brands also protect customers from repurchasing the product that they not like or that they have problems With these above reasons, I think TUONG AN factory can take its considerable stature in the minds of consumers at any time when mentioning or reminding the "Red Elephant" trade mark In addition, I think that, it is necessary to investigate the taste of customers and forecast the market demands through market research, if we want to improve product quality in order to meet their needs and wants However, to attain international quality standard, it is needed to grasp scientific knowledge and modern technology To that, TUONG AN factory should take chemical engineers and technicians to study in foreign countries where have advanced vegetable oil industry sectors such as: Netherlands, Japan, Malaysia and Singapore TUONG AN factory also needs to encourage staff and workers to learn more in order to improve their professional standard in any sector, which they are responsible, by granting scholarships, supporting expenditure This is a good way to get up to date knowledge, receive advanced technology serving the progress of improving oils product quality Thanks to considerable efforts of TUONG AN factory in improving and adding assembly technology of modern oil neutralized equipment, TUONG AN products always c9radtlati(Jfl paper 52 get over level of foodstuff quality However, it is necessary to mention about the matter of researching to improve product quality and diversifying The connection of merchandise symbol with distinct name of product is also a strategy of TUONG AN factory With the merchandise symbol registered to make TUONG AN name legal, the private symbol is to separate from the other vegetable oil products Once a brand is registered, TUONG AN can help ensure that it remain protected by using it regularly and renewing the registration when necessary Beside the quality and brand name, packaging is also an important part of product strategy Packaging is the first proclamation of products, this is also a free exchange of the sense of sight" It is clear that vegetable oil is a liquid product If packaging is not good, it is easy broken when transporting So improper and dangerous packaging materials can create a serious risk situation for both TUONG AN, intermediaries and customers Consequently, TUONG AN factory needs to understand clearly the taste of customers about the solid degree and the convenience of vegetable oil packaging TUONG AN oil marketers also need to gather information from sellers, several small requires to improve useful character of products Apart from that, TUONG AN should innovate and perfect packaging to be content with customer's taste about packaging sizes For example: through the investigation and information of sellers, TUONG AN factory knows that demand of big customers such as restaurants, hotels are the oil plastic can of litres and housewife still like the PET bottle of 0,5% litre or litre or litres Therefore, the oil products of TUONG AN factory are needed to pack in the above kinds with suitable ratio 53 r;9ratiualioH paper It is clear that packaging has three basic functions The first, it supplies to customers a piece of information such as ingredient using to produce products , production place, production time, production firm The second is protection function: packaging has the function to protect products to avoid being decayed, degenerated in transport and distribution process The last function is to stimulate consumption through colorful and attractive pattern of packaging Hence, vegetable oil packaging must contain a fixed capacity: 0,5 litre, litre litres, litres, 18 litres or can of 200 litres which must protect products completely It is important, however, packaging often communicates with customers during the purchase decision, and they must communicate their promotional messages within a very short period of time So TUONG AN packaging should outline ingredient picture which create oil categories This will attract the interest of consumers At present In the market, there are many oil bottles with attractive appearance However, to enlarge the market share, TUONG AN factory has carried out" product diversification" instead of producing one product like Neptune, Sailing Boat Apart from soybean oil, cooking oil, TUONG AN produces more kinds of super oil as sesame oil, brad oil, peanut oil which are used to treat heart attack, malnutrition and oedema diseases Especially recently, TUONG AN has produced a new vegetable oil with the brand name" daisy oil" with this new pattern and its particular character of quality, TUONG AN factory hopes to get more customers attention at average suitable price( 12,000 dong per litre) Another advantage of TUONG AN is many different kinds of oil From this point, it becomes a larger competitor than other companies in the foodstuff market In recent years, the living standard and knowledge standard have increased clearly, therefore, consumer's requirement about good quality is higher especially in foodstuffs r;2Jradllalion paper 54 So, TUONG AN is trying to produce more refined oils because of its high quality This is also a strategy that" TUONG AN should implement towards consumers" To carry out this strategy, TUONG AN makes use of the agreement of VOCARIMEX and department concerned to enlarge the production area and assemble more the refined oil equipment to improve the capacity getting near 30,000 tons/ year With senior prestige, TUONG AN factory not only meets the internal demands but also the external ones as well as Japan, China, Laos the ratio of exported quantity is about 12% of the total output of the factory Last but not least, when Bill Clinton president lifted the embargo policy and normalized the diplomatic relation between Vietnam and United States, Vietnam market has become a target for inside and outside companies Nowadays, Vietnam has become the 7th member of ASEAN, Vietnam market is full of vegetable oil trademarks So, improving equipment to get good quality is the necessary matter of TUONG AN to first I 3.2.2 Price Strategy Three of the marketing mIX elements- product, promotion, and distribution- are concerned with delivering value to customers Price, on the other hand, attempts to get something of value back from the customers Price also has a decisive role when buyers want to buy this item or that item With the TUONG AN factory, price has a special position in reproduction process, because it is the last stage, which shows the result of other stages Price is a field, which presents the competition in economic profit and the firm's sole position From the other side, price has a decisive role in the market competition because market affects production mainly through prices 55 wadttalitYll paper Because of realizing the above matter, TUONG AN has step by step put forward the price strategy depending on each development stage of product with the target of enlarging market share With the above marketing purpose, TUONG AN applies product price which is relatively cheaper than other competitors This matter depends on following advantages conditions at Vietnam market - First, because the standard of living is not so high, the unequal price of an oil bottle from five hundred to one thousand dong can create considerable competition - Second, the stimulating demand can create a large consumption This encourages the increase of output and the decrease of production cost Finally TUONG AN selects customers who have high nutrition demand This helps TUONG AN avoid real and potential competition However, to get such a position, TUONG AN has overcome some pricing constraints to carries out the price strategy as follows: • Costs The price, which TUONG AN company gets for its product, must cover the cost of production and marketing, plus a variety of other expenses and something for profit Because of the change of packaging, production, distribution so identifying price is not always as simple as simple as it might seem at first Therefore, to stabilize price TUONG AN has signed long term contracts buying raw materials at the harvest time, then holds them at the company's store house to get back to produce • Government influences: The Vietnam government plays a big role in pricing, the same as the one of many other countries In an effort to protect consumers and encourage fair competition, the c9radllafion paper 56 government has enacted a variety of price- related legislation over the years, and all marketers need to be aware of legal ramifications To be a state controls company, so the government influences the pricing decision of TUONG AN so much • Channel expectations: Pricing through the distribution channel can be a delicate balancing act Imagine that a bottle of cooking oil, which the customer bought from a neighborhood supermarket There are at least three companies that owned this bottle before that customer, TUONG AN the agent and the supermarket And each of them needs to make a profit when it sells the cooking oil bottle Therefore, TUONG AN has supported transportation cost by sales discounts to wholesalers Its target aims at stabilizing the price and ensures that it's a competitive price • Trade discount: The purpose of trade discounts is to encourage buyers to consume the products Hence, TUONG AN discounts for wholesalers depends on goods quantity Furthermore, this company also selects the occasion to discount and increase sales discount to stimulate demand for example on the occasion of in Tet holidays, festivals, fair, etc • Price competition : With the effort to increase its own market share, TUONG AN fixes a price a bit lower than its competitors To carry out this strategy, TUONG AN should frequently study its market frequently to understand clearly about customer's attitude towards each item This helps the company fixing a suitable price at each period of time 3.2.3 Distribution Strategy Distribution channels serve three purposes for TUONG AN company First, they take care of the transaction aspects of marketing, including selling and financing Second, c;2zradllalion paper 57 they perform the logistical function of delivering products to customers Third, they help TUONG AN to promote goods Also, these channels help the customers to access the right product, in the right place, at the right time and with the right quantities Channels perform five basic functions in the marketing mix First, they facilitate the exchange process, making it more efficient and more cost effective Second, they alleviate discrepancies of both quantity and assortment Third, they standardize transactions, which helps producers, intermediaries and customers Forth, they bring buyers and sellers together Fifth, they provide essential customer support and service activities Therefore, it \ is said that both distribution strategy and price strategy creates the winning of TUONG AN company TUONG AN has applied three following distribution channels: Channel one: Retailer I Factory H Consumer Channel two: Factory - Retailer Wholesaler ~ Consumer Channel three: E:J-1Agent 1-1 Wholesaler 1-+E:J -1 Consumer In addition, TUONG AN also carries out several methods to "make distribution strategy more effective c2Jradlla!ion paper 58 Firstly, TUONG AN does not deliver goods to any agent which is not capable of liquidating This method helps TUONG AN to avoid being owned capital Secondly, TUONG AN does not apply the acquaintance principle but the capacity of business to choose its agent Finally, a contract should be signed between both sides The company never entrusts completely its agent with the business To these above things TUONG AN prepares several steps Studying carefully the research of some private agent organizations