Marketing strategy of petrolimex gas JSC for bottled liquefied petrolium gas in Ho Chi Minh city 2012 to 2015

Dang Tran Hanh Thong i Final Project - MBAVB3 `DECLARATION I declare that this final project contains no material that has been submitted to any other program in other institutes, colleges and universities This work was done by author except where due reference is made in the text ` Signature: DANG TRAN HANH THONG Date: Nov.12th , 2012 _ Dang Tran Hanh Thong ii Final Project - MBAVB3 ACKNOWLEDGEMENTS First of all, I would like to acknowledge all professors and coordinators who provided me valuable knowledge and support at Solvay Business School and Ho Chi Minh City Open University I would like to acknowledge my tutor, Dr Hoang Thi Phuong Thao, for her great assistance, her value feedbacks help me to find out the way to complete this final project I would like to express my huge thanks to my wife who support me and encourage me to complete this research I would like to acknowledge Board of Director and Sale Department of Petrolimex Gas Company who help me to collect relevant information and database And, I would like to send my thanks to all respondents Dang Tran Hanh Thong iv Final Project - MBAVB3 ABSTRACT Purpose: Thanks for the continued growth economic and people’s living standard in past years and many years are coming, bottled LPG business in HCMC to be a potential industry and attracting many suppliers into the market Consequence, bottled LPG business industry to be a strong competitive industry, it requests players in the market have to have the relevant marketing strategies for meeting customer satisfaction and achieving enterprise goals Being one of the most well-known brands in the market, Petrolimex Gas ought to become a leader in market However, due to lack of efficiency marketing strategies, Petrolimex Gas could not achieve market share as expectation and investment Research the of relevant marketing concept, marketing strategies and find out the characteristic of the market, customer purchasing habit, main factors affect to purchasing decision, customer awareness, then the proposal an efficiency marketing strategy of Petrolimex Gas for resident household segment is the aim of this study Methodology: To achieving the aim of study, the three main theories comprising Swots, Marketing Strategy and Marketing Mix are applied in this thesis Moreover, secondary data are taken from desk research to get competitor in formation, identified market share and analysis internal information Primary data are taken from expert interview for learn more the models of bottled LPG industry and mail survey to understand the customer behavior and perception of customer toward to current marketing strategy of Petrolimex Gas Conclusion & Recommendation: Through the findings of research, author understands what are the main factors influencing and playing the most important for both keeping customer loyalty and acquiring new customers Besides, author also understands the customer awareness of Dang Tran Hanh Thong v Final Project - MBAVB3 Petrolimex Gas brand name vs other competitor brand names; purchasing habit, and the perception of customer toward to current marketing strategy of Petrolimex Gas After understanding the actual situation of Petrolimex Gas marketing strategy and market situation, a proposed marketing strategy will be recommended for orienting marketing activities to Petrolimex Gas JSC in period (2012-2015) Dang Tran Hanh Thong vi Final Project - MBAVB3 TABLE OF CONTENTS Declaration and Confidentiality i Acknowledgment ii Comments of Guidance Counselor iii Abstract iv Table of contents vi Abbreviation x List of Tables xi List of Figures xii List of Charts xiii CHAPTER INTRODUCTION 1.1 Project background 1.2 Rationale of project and Problem statement 1.3 Objective of Project & Scope of Project 1.4 Research methodologies 1.5 Structure of project 10 CHAPTER LITERATURE REVIEW 2.1 What is the S.W.O.T 11 2.2 Marketing strategy 13 2.2.1 What is marketing strategy 13 2.2.2 Marketing mix strategy 13 Dang Tran Hanh Thong vii Final Project - MBAVB3 2.3 Strategic marketing plan 16 2.3.1 Offensive Strategy 16 2.3.2 Defensive Strategy 18 2.3.3 Market Grow Matrix Strategy 19 2.4 Conclusion 21 CHAPTER COMPANY & MARKET OVERVIEW 3.1 Macro-economic factors 22 3.1.1 Population 22 3.1.2 GDP, GDP/Capita 23 3.2 Bottled LPG market analysis 25 3.2.1 Bottled LPG in household in HCM 26 3.2.2 Current market size & market share 27 3.3 Petrolimex Gas Joint Stock Corporation introduction 29 3.3.1 Vision, Mission, Core value 29 3.3.2 PGC sales performance 29 3.3.3 Current Marketing Strategy of PGC 31 3.4 Competitor analysis 37 3.4.1 Competitor overview 37 3.4.2 Competitive advantage analysis 41 Dang Tran Hanh Thong viii Final Project - MBAVB3 CHAPTER MARKET RESEARCH FINDING 4.1 Respondents Profile 45 4.2 Brand awareness 46 4.3 Brand usage 47 4.4 Purchasing habit and reason for using bottled LPG 48 4.5 Factor influencing to purchase decision 49 4.6 Reason for switching brand 50 4.7 Customer perception toward to PGC marketing plan 51 4.8 SWOT Analysis 55 CHAPTER PROPOSE MARKETING STRATEGY 5.1 Marketing Objective 57 5.2 Target market 57 5.3 Brand Identity strategy 58 5.4Strategic marketing plan 58 5.5 Marketing mix strategy 59 5.5.1 Product – Customer solution 59 5.5.2 Price – Customer Cost 60 5.5.3 Place – Convenience 61 5.5.4 Promotion – Communication 62 5.6 Developing a revenue plan & marketing budget 63 5.7 Detailed of action plan for one year 64 Dang Tran Hanh Thong ix Final Project - MBAVB3 5.8 Conclusion 65 References I Appendix I II Appendix II IV Appendix III IX Appendix IV X Dang Tran Hanh Thong x Final Project - MBAVB3 GLOSSARY OF TERMS AND ABBREVIATIONS LPG Liquefied Petroleum Gas PGC Petrolimex Gas Joint Stock Corporation Petrolimex Vietnam National Petroleum Corporation GPD Gross Domestic Product SFEZ Southern Focal Economic Zone HCMC Ho Chi Minh City Dang Tran Hanh Thong xi Final Project - MBAVB3 LIST OF TABLES -Table 1.1: Numbers of chosen customers in HCMC Table 3.1: HCMC population 22 Table 3.2: HCMC GDP & GDP per Capital 24 Table 3.3: Sale volume of PGC in HCM in period (2007-2011) 29 Table 3.4: Quantity of Agents in distribution network of PGC in HCM 32 Table 3.5: Allocation margin cost of 12kg-bottled LPG for customer 35 Table 3.6: Comparison of competitor marketing strategy in general 41 Table 3.7: Price comparison 42 Table 3.8: Product comparison 42 Table 3.9: Summarized Competitor Analysis 43 61 Dang Tran Hanh Thong Final Project PGC, PGC should offer customer a break-even price as a promotion gift for the new customers 5.5.3 Place - Convenience Delivery service is the key factor influencing concern in stage of choosing a brand, switching brand and brand image, so set up the efficiency distribution network channel which can be covered the market and can give the prompt delivery service is the most important thing of place strategy According research result, the number of household resident using LPG in each district is nearly equal Meanwhile PGC currently have their own shops at district 3, 4, 5, 6, 7, Govap, Binh Thanh, Phu Nhuan The other district and suburban area of HCM only have agents In order to decrease cost of distribution and meet customer demand for each bottle per an order and easily management, PGC should modify several PGC‟s shops each district minimum shops Depending on the real operation situation of each Shop, PGC could set up more shops Taking the advantage of network of Petrolimex‟s shop, PGC easily rent space for setting up a shop aside with cheap price from mother company – Petrolimex Group For the resident apartments which not equipped LPG pipeline system, PGC should try to set up an official retail agent by using the owner, tenant to be an official dealer of PGC Their business activity only focuses on serving for residents in their apartment and supports this dealer by depositing several bottled LPG in advance Support marketing strategy for Place  Develop the Fire-fighting and fire prevention training program for PGC agent as an annual workshop So that they could re-instruct this program to customer  To avoid the overlap of PGC‟s shop and their retail agents in distribution network, the logical information network should set up so that they could 62 Dang Tran Hanh Thong Final Project control the operation of each LPG shop and their agents in the same area Besides, the standardization for choosing retail agents is adjusted The cheated agents selling the fake products of PGC will be closed  PGC use sale force of PGC‟s shops to support the marketing activities not only for its shop, they also co-operate with official PGC agents to conduct marketing activities and collect the feedback or comment from end user in each certain area 5.5.4 Promotion - Communication Nowadays, there are so many fake products with brand name PGC in HCM market Aiming to protect customer‟s rights, PGC cooperate with Vietnam Standard Consumer Association (VINASTAS) to sponsor for talking show in TV about using LPG safely and how to choose a safety product To acquiring new customers, PGC corporate with LPG burner suppliers such as Rinai, Maloca offer promotion program such a cross advertisement program between burner suppliers and PGC The buyer could get free a 12kg bottled LPG with full auxiliary accessories when buying a LPG burner Using leaflet as a direct marketing tool may be a most suitable way to communicate with resident household According to research result, residential households almost order bottled LPG via phone at home For customer retention, PGC using promotion gifts for every customer buying PGC products The free gifts are cooking spice as promotion gifts are chosen because the end usage of bottled LPG is cooking This program is applied for all agents of PGC 63 Dang Tran Hanh Thong Final Project Supported marketing activities for Promotion - The adequate reward policy should be set up to attract customer for switching to PGC product, author recommend PGC to apply this programs at every retail agents and PGC‟s shops aiming to encourage sale men to acquire the new customers 5.6 DEVELOP A REVENUE PLAN AND MARKETING BUDGET Revenue plan is based on the marketing objective In this final project, the revenue plan is based on current market demand and estimated market growth rate to offer an estimate for future demand Area of Performance Market Demand (1,000 x12kg-bottle) Market share (%) Sale volume (1000 x 12kg-bottle) Unit price (VND) Sales Revenue (VND) x 1000 Percent Margin (%) Gross Profit (VND) x 1000 Marketing expensive (VND) x 1000 MKT-selling expensive (% sale) Net Marketing contribution (VND) Other expensive (VND) x 1000 Other expensive (% sale) Profit (VND) x 1000 2011 13917 4.60% 2012E 14583 5.00% 2013(F) 15604 5.50% 2014(F) 16696 6.50% 2015(F) 17865 8.50% 640 $380,000 $243,263,333 11.8% $28,705,073 $22,866,753 9.40% $5,838,320 $4,378,740 1.80% $1,459,580 729 $420,000 $306,250,000 13.0% $39,812,500 $30,625,000 10% $9,187,500 $7,656,250 2.5% $1,531,250 858 $470,000 $403,367,708 15.0% $60,505,156 $44,370,448 11% $16,134,708 $11,294,296 2.80% $4,840,412 1085 $510,000 $553,487,594 18.0% $99,627,767 $66,971,999 12% $32,655,768 $17,047,418 3.1% $15,608,350 1519 $550,000 $835,198,587 20.0% $167,039,717 $111,164,932 13% $55,874,785 $28,296,528 3.39% $27,578,257 Net marketing contribution = Market demand x market share (%) x average selling price x margin (%) – marketing and sell expensive Profit/Loss = Net marketing contribution – other expensive Marketing Budget: Refer as appendix 64 Dang Tran Hanh Thong Final Project 5.7 DETAILED OF ACTION PLAN IN ONE YEAR To determining the success of marketing plan, the development and use of detailed action plans are64necessary The below table show that that how a particular tactical marketing strategy within a marketing plan would be implemented Action Items Responsibility Measure Product Developing new seal Investment & Planning Dept 300,000 bottles Changing Logo Technical Dept 300,000 bottles Promotion Gas alarm as free gift Marketing Dept 1000 new customers Direct marketing PGC shop & sale dept 50,000 leaflet TV talk show Marketing Dept * Place Develop new dealer shop Investment & planning Dept 10 shops Develop dealer training program Human resource Dept Fire-fighting program Price New discount program Sale & Marketing Dept ** Support marketing program Cooperation with burner supplier Investment & Planning Dept Burner suppliers Free deposited bottle Sale & Marketing Dept 1000 news customer 10,000VND/bottle for sale man Sale & Marketing Dept ** Training for customer PGC shop & Sale Dept * (*) measured by customer perception about PGC product & service after one year (**) measured by % increasing of sale volume after one year Time Frame year year months year months year year year months month year year Because the proposed marketing strategy of PGC will be implemented in years and the annual surveys and business analysis would be implemented by one year end Based on this analysis, the action plan measure will be adjusted accordingly year by year in order to meet the given marketing strategy objective 65 Dang Tran Hanh Thong Final Project 5.8 CONCLUSION This Marketing strategy was done for PGC implementation in period 2012-2015 It also associated with the annual research of PGC in 2011 Author suggests that PGC should focus on residential household segmentation thanks to the sustainable development of this segment for a long time The proposed marketing strategy is based on the research findings through external and internal environment analysis After proposing the marketing strategy to PGC, author hope that it could improve not only for PGC business performance, market share, sale volume, but also its branding position However this final project had some limits in process information and analysis This was not check price level acceptable of customer deal to bottled LPG yet Some financial figures were not revealed due to economical secrets Besides, it was not also deeply analysis about customer behavior and the effectiveness of income side to customer purchase behavior For the limited of time and supported resource, author could not research all related issue In order to make more clearly and deeply understanding as well as effective implementation into practical, author would like to propose more times and research for further marketing strategy as follow:  Research for optimizing distribution network and improving delivery efficiency  Research for evaluation of branding strategy affect to customer behavior I  Dang Tran Hanh Thong Final Project – MBAVB3   REFERENCE Alvin C B and Ronald F.B, (2003), “Marketing Research” International Edition, P(27-45), P(119-139) “CB Richard Ellis Vietnam Report”, (2010) David A.A, (1996), “Building strong brand”P7-P10 Graeme Drummond and John Ensor, (2008), “Strategic marketing” 3rd Edition , P.161 Kotler, P, (2000), “Marketing Management Millennium Edition”P10,(P235P350) Kotler, P, (2003), “Marketing Insights from A to Z” P “PGC handbook”, (2001) “PGC annual report”, (2005-2011) Robert Y.C and Brian L.D and Uma S, (2001), “Applied business research: qualitative and quantitative method”(P253-265) 10 Roger J Best, (2009), “Market Based Management” 5th Edition, P.368 , P78, P388,(P412-465) 11 “Vietnam Gas Association Magazine”, (2001, 2010) Website: 12 www.dpi.hochiminhcity.gov.vn (HCMC Department Planning and Investment) 13 www.gso.gov.vn (General Statistics Office of Vietnam) 14 www.adb.org II  Dang Tran Hanh Thong Final Project – MBAVB3   APPENDIX I DEPTH INTERVIEW QUESTIONNAIRE What are the main reasons for you to switch to other brand? Not prompt delivery/not on time Price was high Product quality was not good Could not contact for order Dealer propose other brand Dealer closed/moved What are mainly factors which influence on END USER to concern choosing a brand of bottled Prestigious brand Affordable Safety Prompt delivery/on time Introduced by expert OR sale man Good packing Attractive promotion Good after sales service Dealer nearby home What are mainly factors which influence on AGENT to concern choosing a brand of bottled III  Dang Tran Hanh Thong Final Project – MBAVB3   Good payment & discount term Affordable Safety Prompt delivery/on time Introduced by expert OR sale man Good packing Attractive promotion Good after sales service Widely used Prestigious brand What are the main key success factors affect to your business? How much are importance of each factor in below list? (0.0%-1%) Could you rank the important level of each factors from 1-4 (1 low affective -> high affective 4) Factors Prompt delivery After sale services Extensive distribution Affordable Product quality Strong brand name Effective advertising Large marketing budget Human resource LPG Storage capacity Market share Weight (0.0%-1.0%) Ranking (1-4) IV  Dang Tran Hanh Thong Final Project – MBAVB3   APPENDIX II QUESTIONAIRE FOR HOUSEHOLD RESIDENT – END USER To whom it may concern My name is Dang Tran Hanh Thong, MBA student of co-program between Solvay Business School – University Liberty of Brussels and Ho Chi Minh City Open University I am presently doing my final project: “Marketing Strategy of Petrolimex Gas Corp for Bottled LPG in Hochiminh Market” This survey is conducted to serve for my final project This survey involve in your LPG purchasing habit, evaluating about the after sale services; some information about your LPG knowledge and your some personal information I surely your information kept secret Your feedback will be appreciated If you have any additional questions, please contact me via email: hanhthong281@gmail.com Please not answer if you or any members of your family work for any of following? Market research agency Advertising or PR agency LPG related business Do not use bottled LPG at home None of above please answers below questions AWARENESS When thinking about bottled LPG, which brand name first comes to your mind? In the below brand name of bottled LPG, which brand name you know? (can choose more than one option Petrolimex Saigon Petro Gia dinh Gas Saigon Gas PV Gas VT Gas ELF Gas Vina Gas Dang Tran Hanh Thong V  Final Project – MBAVB3   Shell Gas Unknown BRAND USAGE Which brands of bottled LPG have you ever used? What is the brand of bottled LPG that you used most often? What brand of bottled LPG would you be most likely to select for next purchase? PURCHASING HABIT What are the main reasons for which you use bottled LPG? Time saving Economical Widely using Clean Safety Healthy Recommended by friends/relatives Unknown How you order/buying a bottled LPG? Go to shop Order through telephone In generally, How long does it take your household to consume a full bottled LPG (12kg) Less than weeks from 2.5 to weeks From 1to 1.5 months from 1.5 to months From to months over months On the average, how many bottled LPG (12kg) you buy per an order One bottle two bottles Three bottles More than three bottles What factor you consider to have an importance influence in your purchase decision? Please click the appropriate box to indicate the degree of your agreement or disagreement with each statement Note: = Not at all important; = Disagree; = Neutral; = important; = Very important FACTOR Prestigious brand O O O O O Dang Tran Hanh Thong VI  Final Project – MBAVB3   Affordable Safety O O O O O O O O O O Prompt delivery/on time Introduced by expert OR sale man O O O O O O O O O O Good packing Attractive promotion O O O O O O O O O O Good after sales service Dealer nearby home O O O O O O O O O O What are mainly factors which influence on you to concern choosing a brand of bottled LPG? (STICK ON the most factors) Prestigious brand Affordable Safety Prompt delivery/on time Introduced by expert OR sale man Good packing Attractive promotion Good after sales service Dealer nearby home 10 What are the main reasons for you to switch to other brand? (STICK ON the most factors) Not prompt delivery/not on time No safety Price was high Dang Tran Hanh Thong VII  Final Project – MBAVB3   Product quality was not good Could not contact for order Dealer propose other brand Dealer closed/moved If you are using PGC product, please answer question 11 if not, move to CUSTOMER PERCEPTIONS TOWARD TO CURRENT MARKETING PROGRAM 11 Please click the appropriate box to indicate the degree of your agreement or disagreement with each statement Using for Petrolimex brand only Note: = strongly disagree; = Disagree; = Neutral; = Agree; = strongly agree PRODUCT 3 Good packing High quality (blue flame color when burning) Accurate weight The auxiliary accessories are good (regulator valve, flexible hose) Safety O O O O O O O O O O O O O O O O O O O O O O O O O PRICE 5 O O O O O O O O O O O O O O O SERVICE 10 11 12 O O O O O O O O O O O O O O O O O O O O Price is high Deposit cost of LPG cylinder is so expensive Price of auxiliary accessories are expensive Delivery on time always Maintenance service is good Delivery man has good attitude All questions related to bottled LPG are responded quickly PLACE Dang Tran Hanh Thong VIII  Final Project – MBAVB3   13 Easily to order 14 LPG’s shop near to your house 15 Display of brand in LPG shop O O O O O O O O O O O O O O O PROMOTION 17 Free gift 18 Lucky draw program 19 Attractive advertising program O O O O O O O O O O O O O O O PERSONAL INFORMATION Your gender? Male Female Your age? _ What is the income level? Under 4million VND From – 6milion VND From – million VND Over Million VND Which district are you living in Hochiminh? How many people are living in your family? _ IX  Dang Tran Hanh Thong Final Project – MBAVB3   APPENDIX III MARKETING BUDGET Internet Newspaper Public Relation Direct Marketing www.google.com.vn www.yotube.com www.pgassg.com.vn www.vatgia.com www.vnexpress.net Tuoitre Thanh Nien Vietnam Gas Organization World Gas Organization Seminar & Exhibition VTV1/ InfoTV/HTV7/SCTV7 Hiep Hoi Bao Ve Nguoi Tieu Dung Brochoure/Leaflet Banner New Logo Sale Promtion Discount Free Gift Lucky Draw Program Support MKT Fire-fighting trainning program Changing Logo in bottle Total Budget Unit: VND $24,000,000 $0 $1,500,000 $6,000,000 $12,000,000 $19,500,000 $200,000,000 $200,000,000 $400,000,000 $50,000,000 $210,000,000 $2,000,000,000 $1,000,000,000 $50,000,000 $3,310,000,000 $150,000,000 $250,000,000 $6,000,000,000 $6,400,000,000 $400,000,000 $1,200,000,000 $2,000,000,000 $3,600,000,000 $1,000,000,000 $2,100,000,000 $3,100,000,000 $16,829,500,000 X  Dang Tran Hanh Thong Final Project – MBAVB3   APPENDIX IV PGC OBJECTIVE FOR MARKETING STRATEGY IN HCM (2012-2015) Criteria 2011 2012(E) 2013(F) 2014(F) 2015(F) Growth Rate (%) 3% 7% 7% 10% 12% Sale Volume (Tons) 6,553 7011 7502 8252 9242 Market Share (%) 4.60% 5.00% 5.50% 6.50% 8.50% Top of Mind 3rd Value proposition A most safe and reliable bottled LPG product in VN CHANNEL STRATEGY OF PGC IN HCM (2012-2015) Channel PGC’s Shop Petrolimex Sole Agent networks 25% 35% 10% Percent of sale 2nd Retail Agent 30% ... affecting to switching brand and perceiving of customer toward to current marketing strategy of PGC  Interview form for expert interview (Appendix 1) Purpose: Finding the key factors affecting to. .. competitor brand names; purchasing habit, and the perception of customer toward to current marketing strategy of Petrolimex Gas After understanding the actual situation of Petrolimex Gas marketing strategy. .. to separating from their families in Ho Chi Minh, the number of household is forecasted to reach at 2millions in 2015 (Source HOREA – Ho Chi Minh Real estate Association) Just only for apartment