Promotional strategy its effectiveness on the vissan companys business activities

HO CHI MINH CITY UNIVERSITY OF FOREIGN LANGUAGES AND INFORMATION TECHNOLOGY (HUFLIT) SCHOOL OF FOREIGN LANGUAGES ro-ollJ~ , GRADUATION PAPER THEME: PROMOTIONAL STRATEGYITS EFFECTIVENESS ON THE VISSAN COMI~ANY'SBUSINESS ACTIVITIES Advisor Student Class I ' : NGUYEN THI QUYNH, MSBA : NGUYEN THANH NHA : KA9602 i TV Dqi Hqc Huflit 1[111[1[111111111111111111[1 101000423 HO CHI MINH CITY JULY, 2000 • • : Table of ",'" COllt~llts .;; ':, '; Page Acknowledgement List of figure and t~bles Introduction Chapter 1: An overview of promotion 1.1 Definition 1.2 HistolY of promotion ; 1.2.1 History of promotion in the world 1.2.2 HistOlY of promotion in Vietnam ~ 1.3 Important of promotion 104 Promotion mix 104.1 Advertising : 104.2 Personal selling 10 104.3 Publicity : ~ 10404 Sales pr6.motions : 10 ;; c••••••••••• 11 1.5 Promotion environinent 12 Chapter 2: Promotional Strategy 16 2.1 Total promotion budget , 2.2 Promotional strategy 16 19 2.2.1 Advertising : c•••••••••••••••••••••••••••••••••••••••• 2.2.2 Sales promotion , 19 24 2.2.3 Personal selling 31 2.204 Publicity 38 / Chapter 3: Promotional Strategy at the Vissan company 42 3.1.2 Targets, responsibilities and autlioritieso'i the Vissan company 3.1.3 Functions and responsibilities of departments ; 3.2 Technology and material bases : 44 45 48 3.2.1 MachineIY and equipment situation 48 3.2.2 Material supply situation ; ~ 49 3.3.3 Technology organizing process 50 3.3 Business activities at the Vissan company 52 ( 3.3.1 Ran~ing o~bu~~ne~s products 52 , 3.3.2 Busmess SItuatIon m 1993-1999 54 3.3.3 Foreign and domestic market 55 \ 3.3.4 Marketing activities at Vissan 59 3.4 Promotional strategy 60 3.4.1 Advertising 61 3.4.2 Sales promotion 3.4.3 Personal selling : , : 3.4.4 Publicity 65 70 72 3.4.5 Analyzing effects of promotion strategy on the company's business activities 73 3.4.6 Some measurement to motivate promotional activities 78 Chapter 4: Recommendation and conclusion 85 4.1 Recommendation 85 4.2 Conclusion 89 References •••• L{st offigures ll1ldtables Page Figure 2.1 , Figure 2.2 32 ~ 33 Figure 2.3 33 Figure 3.1 : 44a Figure 3.2 50 Figure 3.3 : Figure 3.4 52 :: 57 Figure 3.5 57 Figure 3.6 61 Figure 3.7 : Figure 3.8 63 : Figure 3.9 : 67 69 Figure 3.10 71 Figure 3.11 74 Figure 3.12 75 Table 3.1 53 Table 3.2 53 Table 3.3 54 Table 3.4 73 Table 3.5 ; 77 Table 3.6 80 Table 3.7 82 Table 3.8 86 ******** Acknowledgements In completing this graduation paper, I have received invaluable help, advice and encouragement from my teacher, the company and fi'iends First of all, I would like to thank my supervisor, Ms Nguyen Thi Quynh, for recommendations and providing materials and for giving me ideas and advises in widening my acknowledge and completing the graduation,paper My special thanks should go to President Huynh The euoc and Ms Luong Thi Ly for their helpful suggestion and encouragement ' I also thank to the help and advise of the Vissan company, especially for Mr Phan Van Dung providing his materials and experiences in marketing activities, particularly in promotional activities I own my thanks to, my family and my friends for their constant supports and encouragement To them, I delicate this graduation paper Page Graduation paper Nowadays, in modem marketing, the promotional strategy not only becomes a most popular strategy but also can not be lacking in all organizations to inform, persuade or remind its target market, its products and its activities Although the objective of promotion is to facilitate satisfying exchanges by communicating positive, persuasive information to a target market, promotion is one of the most highly criticized activities in marketing Most of us would agree that it would be difficult to make infonned purchase deci"sions without promotion activities To develop activities including a right promotional advertising, strategy for each company, requiring a variety of sales promotions, personal selling, publicity and direct marketing These activities are all part of promotional strategy It is a special combination of communication helping launch products to the market quickly; but its application for specific product is very difficult Advertising takes a variety of forms such as print, broadcast, outdoor, media and other forms Personal selling includes sale presentation, trade shows, and incentive programs Sales promotion encompasses point-of-purchase coupons, speciality advertising, and demonstration displays, premiums, Publicity professional discounts, uses several tools such as news story, speeches and special events to strengthen the position of organization in the market Moreover, depending on technological breakthroughs, with newer media The new technologies have encouraged mass communication to more targeted communication people can communicate more companies to move from and one-to-one dialogue Therefore, Graduation paper Page direct marketing is applied with different forms as catalogs, telemarketing, fax, Internet and so on which create promotional strategy to be more effective According to the Doi moi policy, all companies in Vietnam are also willing to analyze and submit a strong promotional strategy making the product consumed easily, creating the high prestige as well as getting more profit for them IdentifyiJ,1g objectives and setting promotional budget play an important role in the overall the promotional strategy Therefore, our research Business is carried out under the topic "The Promotional Strategy - Its Influences on Activities promotional strategy of Vissan Import.Export Corporation" is and how it influences promotional strategy and demonstrate To identify on busine'ss activities, clearly how the We analyze the some of its influences on Vissan's business activities, and then give some suggestions to improve the promotional strategy at this company Apart from the tendency above, the report begins with an overview of promotion in Chapter I about definition, history, its important role, communication process, and promotion as well as promotion environment Chapter is continued to bui~d a promotional strategy on advertising, sale promotion, personal selling and publicity The analyzing promotional strategy and its influences on Vissan's business activities are stated in Chapter Recommendation for measures to improve a right promotional strategy and motivate to greater productivity are put forward as Chapter to the study CHAPTER I AN OVERVIEW OF PROMOTION Graduation paper Page 1.1 Definition Modern marketing development, assessment requires much more thing It is not only to create of price but also to make an attractive potential and existing customers Therefore, each company must be a product image approaching a, communicator to and promotion person What is promotion? There are several definitions concerning to promotion Steven Skinner (1994) states that "Promotion refers to any communication activities used to inform, persuade and remind the target market about an organization's good, services, and ideas to its target and its activities" According combination of communication to Hemry Assael (1998) "A promotion mix is a strategies that a company uses to convey brand benefits to customers and to influence them to buy" In addition, "promotion "exists to assist people in an organization in making contact with the people who are going to buy and use services they are offering (Elizabeth Barnes, 1997) From different ideas states above, promotion itself is a term that becomes popular to everybody in marketing mix 1.2 History of Promotion 1.2.1 History of promotion in the world th From the 19 century (1809-1884), Lynas H and Mc L~nmich, the first peoples in Western studied systematically about the special work for the manager to find out a good sollition to appeal customers with the most selling productivity and get an absolute revenue Graduation paper 3.4.6 Som.~measurement Page 78 to motivate promotional activities In 1999, although there were several great changes influencing on business situation of the company, Vissan tried its best not only to maintain the network of distribution but also to increase sales with total amount of 710,056 million VND Sales is estimated to be 756,200 million VND in 2000, with the increase by 6.50% comparing to that of 1999 ):(Promotion budget To identify the promotion budget, we can count depending on the percentage of sales in 1999 The promotion budget in 2000 is 8,520 million VND Before, the percentage for each promotion tool on total adveltising and marketing expense is depend on the company's budget such as + Advertising : 30% + Personal selling + SaleS promotion : 10% + Publicity : 40% : 20% Because of a fierce competition with other companies, the company should focus on advertising in order to create a good image in customer's minds Therefore, the budget can be divided as follows: + Advertising : 30% + Sales promotion : 40% + Personal selling is 10% and publicity is 20% ):(Measurements + Advertising The design of advertising messages requires the direction of leaders Graduation paper Page 79 + On television, the company should advertise a specific product periodically, avoiding showing too many products at the same time, and need to ha~e a program to introduce about the company's food sanitary + Advertising messages need to emphasize the position of Vissan's products, such as Vietnam's high quality product + In the Center and North of Vietnam, Vissan's products can be advertised seasonally In summer day, company should advertise canned food and sausage and processed food in the " winter day + In addition to other available media that the company has implemented from the previous years, such as putting panel, posters at food stores, the company sells products by vans runmng on streets in order to target a large customers but expense a low cost of advertising + At food stores, supermarkets, exhibitions, and trade fairs, the company should have several demonstrations to introduce Vissan's products, such as catalogue and pieces of advertising paper to supply enough for customers Evaluation: The effectiveness on sales Although the advertising evaluatien on., sales is not exactly, the increasing or decreasing' on sales after implementing advertising program also reflects partly the advertising effectiveness product Therefore, we have the evaluation on its effectiveness through spring rolls Graduation paper Page 80 In September advertising 1999, we carried program and evaluate out to advertise sales b~fore advertising for spnng rolls product during (August 1999) and sales after advertising (October 1999) can be showed in Table 3.6 Table 3.6 Monthly sales report of spring rolls product in 1999 Period Before advertising Months Sales (VND) Increasing sales (VND) Percentages on during and after advertising period (%) 47,478,400 During advertising After advertising 10 53,662,900 6,184,500 13.026% 47,960,560 482,160 1.016% As we can see the table showed above, comparing with the previous advertising period, sales on spring rolls in advertising period increased by 13.026% with total amount of 6,184,500 VND In latter advettising period, sales increased by 1,016% comparing with the previous advertising period with total amount of 482,160 VND, decreased with the advertising period with total amount of 5,702,340 VND In general, advertising program has effectiveness 10,62% comparing It helps the company push up strongly sales in advertising period Besides that, advertising' also makes sales increase after advertising period comparing with before advertising, but increase slowly comparing with the advertising period + Sales promotion + The company should encourage customers buy products with a large quantity and persuade the customer to use free trial products, appeal much more new customers and reinforce potential customers on each kind of Vissan 's product Graduationpaper Page 81 + At food shops, the company should design more attractive advertising and showing Besides that, during sales promotion period, the company should hang on posters to attract customers + Moreo'ver, the company must have a clear price list easy for customers to choose a suitable product with them + The company also implements to enclose the coupon with price reduction on each product + The company should organize frequently the contests for processing from cold-cut to daily meann each family at Women Cultural House in order to create the deep influence in customer's behavior Besides many forms in customer promotion, company also improves best way to contact with retailers through some kinds o(sales promotion + The company's discount percentage is lower than the competitors Therefore, our company should have the increase of discount in order to encourage them advertise for the company's products + The company must supply equipment for retailers to service customers better such as refrigerator, glaze box, posters and price list + Organizing selling contests among wholesalers, retailers and agents Its target aims to push the relationship between the company imd intermediary and increases sales + At the trade shows, entertainment place, the company need to have demonstration to give introducing about characteristics of each product to customers Graduation paper Page 82 + To reinforce the position of the company in the market, the company orgamzes customer conference much more than one time in each year These activities make the good relationship with customers Evaluation The sales promotion's evaluation is key important element The evaluation can help the company to have more experiences and identify the suitable tools for each product The best evaluation According"to the company's is to depend on the before sales, after sales and during sales report on each month, we can evaluate the implementation of sales promotion on sterilization sausage in May 1999 Table 3.7 Monthly report of quantity of sterilization sausage in 1999 Period Before advertising Months ,During advernsing Quantity (kg) Increasing quantity (kg) Percentages on during and after sales promotion period (%) 3,608,000 5,979,000 2,371,000 65.700% After advertising 10 5,189,000 790,000 43.810% On the table above, comparing with the previous sales pFOmotion period, quantity of sterilization sausage at sales promotion period increased by 65.700% with total amount of 2,371,000 kg In after sales promotion period, quantity increased slowly by 43,810% with total amount of790,000 kg comparing with previous period Finally, we can see the evaluation program's effectiveness of sales promotion program that can show the It helps to grow the speed of consumption 'In addition, it can help the Page 83 Graduation paper productivity after sales promotion increase more than previous sales promotions period but slow + Personal selling The company alms to bring the information about new products and increase the persuasive message to target customers Besides several personal company must have the network of product distribution selling activities, the system to strongly push selling activities ," + Organizing powerful sales force to implement the company's plans + Developing sales force and the sales capabilities of employees + Having a specific program of recruiting s~~ffand training sales forces + Organizing the contests to encourage them to sell Vissan's products and creating the good environment in the internal of staff + Choosing a suitable sales force in order to persuade customers to buy and give enough information about the products Evaluatioll At present, although the company still applies the measures by authorizing the agents , to consume product and manage them, the comp~?y also must carry out to test and evaluate the effectiveness of these activities on sales force Depending on the sales, company will have different incentive levels In addition, the company usually changes wage level, rewards to sales force depending on the bellefits that they can bring to the company, Meanwhile, comfortable environment to develop their competence the company must create Graduation paper Page 84 + Publicity The company should have other activities, such as + Taking part in social activities so much in order to create a good image in Vissan's products + Creating customers' acknowledge about products by the-way inviting the chief of cookers o(all restaurants to take part in production chains + Combining with Vietnam women united organization to organize the contest and make the sponsor on three class cooking to process Vissan's products to a special meal at each family + Creating the news on television and using it as a mean to transfer the company's image when the company gets the reward, has opening festival or corporate with foreign partners + J:aking part in business conferences and Vietnam's high quality product conferences Evaluatioll It is difficult to evaluate these activities because it always combines with other promotion tools Meanwhile, this tool is used in long-term therefore it is difficult to evaluate in short-term Besides that, these social activities bring the effectiveness when implementing them in the long-term frequently and continuously In sum, the right application of this tool will create a good image about company and attract the customer's interest CHAPTER RECOMMENDATION AND CONCLUSION Graduation paper Page 85 4.1 Recommendation The current demand of company is to bring into play the role of marketing and use it effectively in developing of business activities Therefore, in my point of view, company needs to have a specific plan for advertising activities and establish a separate marketing department * Training specialized employees - Recruiting specialized employees good at marketing Besides that, company can send current staff members to join in shOlt-term specialized cours.e about marketing at Economi~ University-or Foreign Trade University - Letting marketing people to attend meeting, workshop or symposium on marketing and become members of business associations - Frequently updating the marketing knowledge for current staff members * Establishing marketing department As marketing plays an important role in business activities, Vissan needs to have a separate department for marketing It helps to apply marketing research, demand of customers and their behaviours understands the Marketing can also help to increase business activities and consume product effectively Besides that, the establishing of marketing department will help company to implement promotional strategy more systematically In addition, promotional tool only brings into play when price policy, product policy and placing policy develop simultaneously with them Graduation paper + Marketing Page 86 department's organization Table 3.8 Organization of Vissan's marketing Responsibilities Chief of marketing Marketing research Management of all product groups Advertising Sale management Customers services Number of employees 1 kinds 14 Total + Functions of marketing department department: Being responsibilities to bring out long-term policy on marketing activities, such as • Implementing marketing research continuously, positioning available product, estimating the demand of customers and searching market for new products • Establishing suitable price policies in order to encourage Vissan's customers and compete with other companies • Bringing out the most effective way of distribution • Building an effective advertising and sales promotion plan • Carrying out contact with public through exhibition, trade shows, fairs, customer's conference, etc o Future strategy At present, the company's profits, and the company's financial situation is improved, business begins to get activities have gradually maintained in stable situation The necessary for the company is to have some supports from the gov~rnment Graduation paper Page 87 * To the government: They must have several policies to support the demand of business company, such as • The slaughter management and food sanitary are still lax Besides that, the private slaughter is still far from the control of the government Therefore, Vissan should suggest the People Committee of Ho Chi Minh city to investigate the implementation of the decision No 6732/QD-UBKT at each district in order to closely manage cattle slaughter process, checking the environment sanitary and food sanitary ip.the city ' • Establishing as soon as possible a food exporting associations in order to support and create the power in business activities such as production, processing, meat exporting and all kinds of food from meat • Suggesting frozen meat and processed food of Vissan are taken part in the payment list of Vietnam for the Soviet Union It is counted depending on 'company's competence and condition • Suggesting the government has a plan for company in exempting of imported duties ' to meat production and frozen processed food (especially in the Soviet Union's market).' + Capital tax + Income tax + Exempted extra duties with goods and materials are imported to serVIce for production by.changing meat with the Soviet Union's companies' in order to create the good condition in production and export Besides that, the company competition about price at the Soviet Union's market has a good condition Graduation paper Page 88 + The sewage system at Vissan is damaged The necessary thing is to have the new investment in these activities immediately The project is anticipated about 11,268 million VND This is a huge expense Therefore, the company needs the support by the City's budget or offer the preferential loan to renovate the sewage system * To the company Mapagement system seems not efficient in the competitive company must find an efficient way to ameliorate decrease labour force, and motivate market Therefore, in distribution of gross profit logically, the implementation of labour policy Besides company should establish the right method for production management experiences the that, and exchange the with other companies Acknowledging the right position of domestic market and identifying right position of agents, retailers and wholesalers All of Vissan's food stores must combine between buying and selling stage - Motivating selling activities, turning over the company's capital in order to avoid the lack of capital in business activities - Reinforcing and bringing into play the network of domestic business; meanwhile, continuously improving structure, categories and quality of product in accordance with customers' preferences - Paying attention the appropriate distribution for retailer systems, such as production place, or contacting with customers - Making a comfortable network of marketing condition for customers on purchasing and reinforcing the Graduation paper Page 89 - Motivating sales forces at supermarkets, restaurants and, hotels, making the good relationship with tourist companies, restaurants and hotel systems and supporting high quality products on time with reasonable price - Establishing many small stores with enough facilities at the city centre - Giving customers free trial products at supermarkets, exhibitions, fairs, etc., guiding customers to use products and then collecting feedback information from customers about pattern, qualitY; meanwhile, can be access to customers immediately - Recovering gradually' back export market in frozen ml?at, high processed canned food and establishing the investment in producing canned food and developing'the food,' net of processed food 4.2.Conclusion In fiercely strategy Besides management competitive finding market economy, more customers, instead of an old management the company the company must have right business needs at company Therefore, to have an efficient the company needs to apply the marketing mix in product and company's business strategy' as much as possible for a long time The application of promotion mix can help company access more and more to the target custom,,?rs In addition, the establishing and applying promot.ion mix is very difficult; but, it becomes more easily if company has a right promotional strategy for their products and improves their present situation ' With the tendency above, this research ;{as carried out to study the application of promotion mix in the Vissan company The orientation of company looked forward to the Graduation paper Page 90 bright period in the near future In the previous years, the company not only paid attention to abroad market but also was in passive in the domestic market; but, recently the company had have a enough strong policy in broadening domestic market in order to establish a good image in customer's mind and even create a stable position in the market depending on the rig~t promotional activities Besides that, company improved continuously present situation by the way establishing the marketing department, pushing up all kinds of promotional activities and rising the budget for them Therefore, company won the trust of customers, created a good relationship with partners and become one of the most successful companies in Vietnam food industries If we look around in supermarkets or food stores of Vissan, we will have a chance to contact abundant Vissan's brands and products Besidesthat, the company's sales force who are well behaviour and reliable always already service differe.ntcustomers In order to emphasize acknowledge advantageous and apply its effectiveness side of promotional strategy, Vissan must in their marketing mix and even business activities The enhancing of marketing mix in general and promotional activities in specific is to increase the sales ahd productivity at the company In addition, in the effort to improve it considerably, we recommend that the company should be paid attention so much in these activities and combined with other strategies in marketing mix, such as price, products and placing in order to satisfy the potential market at the highest point In other ,,:ords, building a right marketin¥ , mix will bring into play its effectiveness "in consumption of products, enhance company's image and service for customers and society REFERENCES Kotler, P & Amstrong, G (1999) Principles of marketing (8tl1 ed.) 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