Improving marketing mix for gas products in lien quang thanh business liquefied petroleum gas joint stock company

NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL IMPROVING MARKETING MIX FOR GAS PRODUCTS IN LIEN QUANG THANH BUSINESS LIQUEFIED PETROLEUM GAS JOINT STOCK COMPANY Bachelor of Business Administration in English (E-BBA) Thesis Student : Tran Thi Thu Ha Class : EBBA4-A Supervisor : Le Van Nam, MBA ề Đ án nh Ki Hanoi, 2016 tế ốc qu tế ACKNOWLEDGEMENT A completed study would not be done without any assistance Therefore, the author who conducted this thesis gratefully gives acknowledgement to their support and motivation during the time of doing this thesis as a requirement of completing my Degree of E-BBA Program in National Economics University First of all, I would like to express my endless thanks and gratefulness to my supervisor MBA Le Van Nam His kindly support and continuous advices went through the process of completion of my thesis His encouragement and comments had significantly enriched and improved my work Without his motivation and instructions, the thesis would have been impossible to be done effectively Secondly, I want to extend many thanks to the Director and all employees at the Lien Quang Thanh Business Liquefied Petroleum Gas Joint Stock Company who offered me a valuable three-month internship with full support Without their help, the data could not have been gathered correctly and fully My special thanks approve to my parents for their endless love, care and have most assistances and motivation me for the whole of my life I also would like to explain my thanks to my sisters for their support and care me all the time At last, my deeply thanks come to all my friends during time I study in E-BBA Program Their kindly help, care, motivation gave me strength and lift me up all the trouble for the rest of my life ề Đ án nh Ki tế ốc qu tế TABLE OF CONTENTS ACKNOWLEDGEMENT LIST OF ABBREVIATIONS LIST OF TABLES .5 LIST OF FIGURES EXECUTIVE SUMMARY .7 CHAPTER 1: INTRODUCTION .9 1.1 Rationale 1.3 Research objectives and Research questions: 12 1.4 Research methodology 13 1.4.1 Research process 13 1.4.2 Data source 13 1.4.3 Data analysis 14 1.5 Scope of the research 15 1.6 Research structure .15 CHAPTER 2: THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER PRODUCTS .16 2.1 Marketing and marketing mix for consumer products 16 2.2 Marketing mix for consumer goods .21 2.2.1 Product 21 2.2.2 Price 26 2.2.3 Place .28 2.2.4 Promotion .29 2.2.5 Factors impacting marketing mix 32 CHAPTER 3: ANALYSIS OF LIEN QUANG THANH.,JSC’S MARKETING MIX FOR GAS PRODUCTS 35 3.1 Overview of Lien Quang Thanh.,JSC 35 3.1.1 Company Overview .35 ề Đ 3.1.2 Foundation and Development of the company 35 án nh Ki 3.1.3 Organization chart .35 tế ốc qu tế 3.1.4 Core line products 36 3.1.5 Financial Report of Lien Quang Thanh.,JSC (2012-2014) 37 3.2 Analysis of marketing mix for Lien Quang Thanh.,JSC’s gas product line 39 3.2.1 Respondents profiles 39 3.2.2 Target customer 39 3.2.3 Products .40 3.2.4 Price .49 3.2.5 Place 50 3.2.6 Promotion 52 CHAPTER 4: RECOMMENDATIONS FOR IMPROVING MARKETING MIX OF GAS PRODUCTS IN LIEN QUANG THANH.,JSC 56 4.1 Lien Quang Thanh.,JSC’s marketing objectives for gas products .56 4.2 Recommendations for improving marketing mix for gas products .56 4.2.1 Improving product strategy through market and customer study 56 4.2.2 Adjusting price strategy to be more market competitive 58 4.2.3 Better motivating and managing distribution channels 58 4.2.4 Better planning and managing promotional activities 59 4.2.5 Recommendations for better marketing management 60 4.3 Conditions for solution implementation 61 CONCLUSION 63 APPENDIX 64 APPENDIX 67 APPENDIX 72 ề Đ án nh Ki tế ốc qu tế LIST OF ABBREVIATIONS LQT Lien Quang Thanh.,JSC PR Public Relations ề Đ án nh Ki tế ốc qu tế LIST OF TABLES Table 3.1: Brief Financial report of Lien Quang Thanh.,JSC in 2012, 2013 and 2014 38 Table 3.2: Competitive price review of gas products of LQT (VND) 50 ề Đ án nh Ki tế ốc qu tế LIST OF FIGURES Figure 1.1: Research Process .13 Figure 2.1 Concept of Marketing mix 17 Figure2.2 Three levels of Product .21 Figure 3.1: Organization chart of LQT 36 Figure 3.2: The gas product consumption of Lien Quang Thanh.,JSC .45 Figure 3.3: The revenue proportion of gas products of Lien Quang Thanh.,JSC .46 Figure 3.4: Products customers often buy at Lien Quang Thanh.,JSC .47 Figure 3.5: Reason customers buy gas products of the company .48 Figure 3.6: Criteria that affect customers’ choice of paint brands 48 Figure 3.7: Distribution Channel Of Lien Quang Thanh.,JSC 51 Figure 3.8: Sales performance by Lien Quang Thanh.,JSC in 2014 52 Figure 3.9: Channels through which customers know about the company 53 Figure 3.10: Promotional programs that influence customers’ purchase 54 ề Đ án nh Ki tế ốc qu tế EXECUTIVE SUMMARY There is a high competition in gas industry in Vietnam with many local and brands Gas industry is an industry which needs the high trust and support of customers To that, the company have to continually invest in developing and improving quality of products to meet customers’ demands The objective of the thesis “IMPROVING MARKETING MIX FOR GAS PRODUCTS IN LIEN QUANG THANH BUSINESS LIQUEFIED PETROLEUM GAS JOINT STOCK COMPANY” is to analyze the current marketing mix of Lien Quang Thanh.,JSC’s gas products, to explore the weaknesses in the marketing mix and to recommend the tactics and approaches towards improving the marketing mix so that Lien Quang Thanh.,JSC can gain more success in the long term in the gas market Based on the theory on marketing mix for consumer goods together with primary data (survey 30 customers, interview managers and staffs at Lien Quang Thanh.,JSC and observation) and secondary (publications, reports, articles, books), the author has analyzed the each element of marketing mix (Product, Price, Place and Promotion) for gas products at Lien Quang Thanh.,JSC and compare it with competitors and customers’ expectations Key findings are:  Inadequate control and investment in product strategy  Inflexible pricing strategy which needs to be more market-oriented  Improper management of the distribution channels  Negligence in gaining the support from the company’s staffs for the advertising and PR activities  Unplanned management in advertising and PR activities:  Incompetent reporting system  Management flaws in implementing sales promotion  Unprofessionalism in mobile marketing  Inadequate investment in training and improving personal selling Đ ề skills of the sales staffs án nh Ki tế ốc qu tế Based on the findings, author has proposed recommendations for Lien Quang Thanh.,JSC to improve its marketing mix for gas products such as:  Strengthening product strategy by professional study of the market and the targeted customers  Adjusting price strategy to be more market competitive  Better motivating and managing distribution channels by motivating and improving Lien Quang Thanh.,JSC’s own sub-agents  Properly planning for all advertising and PR activities, better controlling of the sales promotion programs, being more professional in direct marketing and improving personal selling skills for sales staffs  Making sure that different divisions coordinate and support each other  Setting up key performance indicators for marketing activities  Preparing master marketing plans ề Đ án nh Ki tế ốc qu tế CHAPTER INTRODUCTION 1.1 Rationale In the development of global economy, the competition between companies, organizations becomes more and more intense Hence, marketing strategies play important role in attracting customers In that trend, gas market in Vietnam is not an exception Over the last years, with the growth rate 15% - 20% per year, gas has been a potential product In the whole country, there are hundreds of gas companies operating in many different forms The attractiveness of this market has created a fierce competition between domestic products and imported ones Lien Quang Thanh Business Liquefied Petroleum Gas Joint Stock Company was established in January 15, 2008 Initially, the company is just only as a small organization which sells gas to agencies and customers Until now, LQT has grown bigger, have more items to sell and has reputation in local Along with the growth of the national economy, Lien Quang Thanh Business Liquefied Petroleum Gas Joint Stock Company has achieved a lot of success, contributing to the gasoline industry Currently the company does business in various activities such as producing, wholesaling, retailing fuel trade of solid, liquid, gas and related products; electrical appliances, household appliances, gas stoves, metal utensils in kitchens and pure bottled water,… In which, gas products create 80% of the total revenue for Lien Quang Thanh.,JSC However, since 2011, gas companies have appeared rapidly in Thai Binh Province, this made the market share fragmented Lien Quang Thanh.,JSC faces to a lot of challenges which destabilizes the current position in the local market In addition to the fluctuation of world and domestic petroleum gas price affected company’s production cost ề Đ In this currently competitive situation, to promote sales of its gasoline product in án nh Ki order to maximizing profits, Lien Quang Thanh.,JSC should change the way that they tế ốc qu tế - To the wholesale agencies, the company contributes to agencies average over 50-70 gas bottles/1 month To agencies that having the quantity reached over 50% the average quantity/1 month will be discounted from 3-5 % the value of order - To retail customers, the company should be free of cost installation or give gas valves, gas conductors The company can simply increase the price of a gas bottle from 5.000 - 10.000vnđ and give the customers attached products of gas This will attract customers and focus on client’s need - Gift voucher is useful tool in attracting customers so LQT should run more of this promotion with better control and management 4.2.4.3 Improving personal selling skills for sales staffs It is obvious that the company does not make this task of high priority However, the sales staffs should be trained by the experienced leaders In order to achieve this target, LQT should implement following actions: - Training sales staffs: training modules for Lien Quang Thanh.,JSC’s sales staffs should be designed to meet three targets: (i) to improve the staff’s personal selling skills, (ii) to provide the sales staff’s full package of products knowledge: (iii) to change the staffs’ bias attitudes and lack of customeroriented ability - Better motivating the sales staffs: increasing salary and providing benefit package for employees should be considered at the moment because their current income is quite low if compared to the rate of inflation and those of this field The company has to offer an incentive policy for sales person such as contests, recognition and extra compensation are used to encourage them to communicate with customers effectively 4.2.5 Recommendations for better marketing management 4.2.5.1 Making sure that different divisions coordinate and support each ề Đ án other nh Ki tế ốc qu 63 tế It is important that all the divisions of LQT cooperate and support each other to achieve the common goal The marketing team is to be asked for advice and be kept informed of the work of the product team so that the marketing team knows more exact information about products Based on such information, marketing team designs the advertising and PR packages for products to customers When marketing team conduct a event or advertising campaign and need more human resource, all other divisions should be ready to give a helpful hand and consider it as part of their work responsibilities 4.2.5.2 Preparing master marketing plan Dealing with the weaknesses and incompetence in all the 4Ps of the marketing mix is needed to improve the LQT’s system in near future So as to maintain steady development, it is important that LQT have a master marketing plan for every three years, which serves as the guideline for the operation of the whole system The marketing plan includes: - Reviewing contemporary market situations, the rationale for my focus in the marketing activities - Setting the vision, goals and targets for each period - Outlining the tactics, tools for all marketing mix elements - Setting the contents for marketing measuring systems to evaluate the marketing efforts 4.3 Conditions for solution implementation In order to put those suggestions into practice, it requires the company to have: Budget, Time, People and Strategy To improve the marketing mix plans for gas products, LQT’s management need to design a detailed strategy about how to change the marketing mix plans, what conditions are needed, who are involved in… The factor affecting the solution implementation the most is strategy A detailed ề Đ strategy will help LQT know what they should to solve the problems effectively án The strategy must be clear and managers should have methods in controlling and nh Ki tế ốc qu 64 tế supervising to ensure the strategies are applied smoothly On the other hand, LQT also need to get its employees to follow the strategies and contribute to the implementations in accord with the organization The process of implementing the solutions does not require a long time It may take a short period to see the effect of the change in marketing mix plans However, the process requires a large budget to implement The board of directors of Lien Quang Thanh.,JSC should hold quarterly meeting to make appropriate decisions for all marketing activities ề Đ án nh Ki tế ốc qu 65 tế CONCLUSION Lien Quang Thanh.,JSC’s marketing mix for gas products can be considered as a success so far as it helps to expand the store chain and build up brand equity to maintain one of the top gas company in Thai Binh market However, through the analysis of the current situation, the author has pointed out the weaknesses in the marketing mix and recommended both short-term and long-term solutions to improve these weaknesses so that Lien Quang Thanh.,JSC is able to maintain its top ranking in Thai Binh market The recommendations serve as brief guidelines, from which Lien Quang Thanh.,JSC can develop the best marketing strategy for gas products The marketing strategy is based on the company’s resources, targeted customers, economic conditions and a number of other factors The author has tried the best to the thesis but there are certain limitations that the thesis has fully covered and exploited due to limited capability and information constraints Therefore, the valuable comments and feedbacks from teachers and friends are highly appreciated and welcome to make the thesis better in terms of academic research and real life business operations ề Đ án nh Ki tế ốc qu 66 tế APPENDIX QUESTIONNAIRE CUSTOMER SURVEY ABOUT GAS PRODUCTS Gender: Age: Male 20-30 Female 30-40 >40 Average income (VND/month): < million million – million > million Which criteria are important to your choice of gas products? (Can be more than one choice) A Price B Quality C Brand D Customer service Which brand of products you often buy? A Totalgaz ề Đ án nh Ki B Shell Gas tế ốc qu 67 tế C Dai Hai Gas Through which channels you know about LQT? A Television B Radio C Newspaper, magazines D Internet E Leaflets, Brochures F Word-of-mouth What is your opinion about products of LQT? A High quality B Suitable price C High price D Low quality Which promotional program most affects your purchasing decision? A Gift with purchase B Coupon C Gift voucher D Saving point card (Discount 10% for th purchase) What is the reason that you buy gas products of the company? A High quality ề Đ B Various products án nh Ki tế ốc qu 68 tế C Good customer service D Reputation E Good price ề Đ án nh Ki tế ốc qu 69 tế What you recommend to make more people choose gas products of the company? A Lower price B Better customer service C Advertise more D More choices of products ề Đ án nh Ki tế ốc qu 70 tế APPENDIX RESULT OF QUESTIONNAIRE CUSTOMER SURVEY ABOUT GAS PRODUCTS Gender Number of answers % Male 10 20 Female 40 80 20% Male Female 80% Age Number of answers % 20 – 30 10 30 – 40 25 50 > 40 20 40 10% 40% 20-30 30-40 >40 50% ề Đ án nh Ki tế ốc qu 71 tế Average income Number of answers % < million 11 22 – million 25 50 > million 14 28 (VND/month) < million - million > million 10 20 30 40 50 60 What criteria are important to your choice of gas Q1 products? (Can be more than one choice) Number of answers % Price 40 80 Quality 50 100 Brand 20 40 Customer service 45 90 Customer service Brand Quality Price 10 20 30 40 50 60 ề Đ án nh Ki tế ốc qu 72 tế Q2 Which brand of products you often buy? Number of answers % Totalgaz 30 60 Shell gas 10 Dai Hai gas 15 30 30% Totalgaz Shell gas Dai Hai gas 60% 10% Q3 Through which channels you know about LQT Number of answers % Television 10 20 Radio Newspapers 10 Internet Leaflet, brochures 10 Word-of-mouth 25 50 10% 20% 2% 8% 50% Television Radio Internet Leaflet, brochures word-of-mouth Newspapers 10% ề Đ án nh Ki tế ốc qu 73 tế Q4 What is your opinion about products of LQT Number of answers % High quality 30 60 Suitable price 15 30 High price 10 Low quality 0 10% High quality Suitable price 30% High price 60% Low quality Which promotional program most effects your Q5 purchasing decision? Number of answers % Gift with purchase 60 30 Coupon Gift voucher 12 Saving point card 22 11 22% Gift with purchase Coupon 12% 60% Gift voucher Saving point card 6% ề Đ án nh Ki tế ốc qu 74 tế What is the reason that you buy gas products of Q6 the company? Number of answers % High quality 20 40 Good price 10 Various products Good customer service 14 Reputation 17 34 High quality 34% Good price 40% Various products Good customer service Reputation 14% 10% 2% Q7 What you recommend to make more people choose gas products of the company? Number of answers % Lower price 14 28 Better customer service 16 Advertise more 18 36 More choices of 10 20 products ề Đ án nh Ki tế ốc qu 75 tế 20% 28% Lower price Better customer service Advertise more More choices of products 16% 36% APPENDIX GUIDELINES FOR IN-DEPTH INTERVIEW Note: For internal employees only Objectives:  Explore the internal matters in relations to marketing activities of the company  Understanding the behavior of employees towards the company’s marketing plans  Explore the employees’ ideas about appropriate suggestions for improvements Introduction and warm-up - Introduce the objectives of the interview and several rules during discussion - Moderator introduces herself and the objectives - The discussion does not require any specific knowledge, no correct and wrong answer, so interviewees could talk anything which they feel and experience Đ ề Brief conversation án nh Ki tế ốc qu 76 tế - Personal information of employee: age, marital status, number of children, education, health issues and so on - Deep questions related to their job: current position Interview questions - Number of working years at Lien Quang Thanh.,JSC? - Does he/she think that the gas products’ marketing plans of Lien Quang Thanh.,JSC are suitable? - If not suitable, which points are not suitable? - How these unsuitable points affect the selling gas products? - What should the company in order to improve the plans and the selling gas products? Thank you and finish the interview ề Đ án nh Ki tế ốc qu 77 tế