Marketing strategy for clinical express service in TNT express in Vietnam market

MBMM PROGRAM TRAN MINH HAO MARKETING STRATEGY FOR CLINICAL EXPRESS SERVICE IN TNT EXPRESS IN VIETNAM MARKET FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT TUTOR: DR... To s

MBMM PROGRAM

TRAN MINH HAO

MARKETING STRATEGY FOR CLINICAL EXPRESS SERVICE

IN TNT EXPRESS IN VIETNAM MARKET

FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

TUTOR: DR NGUYEN THANG

Ho Chi Minh City

2007

COMMITMENT

I am bound that my final project titled “Marketing Strategy for Clinical Express Service in TNT Express in Vietnam market” was developed by myself I am responsible for all the data and arguments in the thesis

ACKNOWLEGEMENT

To finish this project, I would like to express my sincere thanks and appreciation to MBMM1 professors who have facilitated and helped me with all their kindness and assistance

My special thanks to Doctor Nguyen Thang, Marketing Manager of Nokia, has encouraged and given me a lot of advice on doing this thesis Without Doctor Nguyen Thang's advice, a lot of difficulties would surely arise during my process on this task

My greatly appreciation to Ms Tran Thi Xuan Dung, Special Service Manager, TNT Express Co., who has supplied me with valuable data and information for this project There were lot of support also from all TNT & DHL Express Country Manages, Managers, Supervisors, and sales executive groups who created favorable conditions, gave me relevant data even stayed on my behalf during the time I was busy with this research dissertation

Last but not least, my family has encouraged me always, made me confident and delighted to finish this research dissertation

As all data concerning TNT Vietrans Express Vietnam & DHL VNPT Express business must be kept confidential for at least 3 years from the time of the hand-in of the thesis (2007), so I am regretted that I can not put this report in the library Ho Chi Minh City Open University for reference at this time being

Once again, all assistance helping me with this thesis is greatly appreciated

EXECUTIVE SUMMARY

Clinical Trial is an important part of the R&D process of new drugs, initiated by pharmaceutical companies In Asia, the clinical trial market is booming The pharmaceutical market grew by seven per cent on a global level to US$600 billion in Asia, while the Asia Pacific region is expected to grow by up

to 12 per cent annually

To support the growth of the clinical trials sector in Asia, TNT Vietrans Express launched Clinical Express Service, which started in Vietnam in 2004 How to market its services to customers successfully in a keen competition market is being a great issue for TNT Vietrans Express Within this thesis, we will draw out the marketing strategy for TNT Express Vietnam to develop its Clinical Express (CE) product

The qualitative methodology by using in-depth, open-ended interviews, direct observations and written documents is mainly used in this thesis combined with quantitative methodology through surveys, existing business reports, and business statistics Further more, services marketing can be combined with marketing mix as mentioned by Adrian Buckley in his book of "The Essence of Services Marketing", Prentice Hall Europe 1993 to be suggested to apply in the case of TNT Express Vietnam

With a proper services marketing strategy, we can drive our company in the right direction to win our competitors in the market where fierce competition always exist in all field of business, including clinical express industry

TABLE OF CONTENTS

Page

AKNOWLEDGEMENT i

EXECUTIVE SUM MARY ii

TABLE OF CONTENTS iii

LIST OF TABLE iv

LIST OF FIGURE iv

PART 1: INTRODUCTION 1.1 INTRODUCTION 01

1.2 PROJECT OBJECTIVE 02

1.3 SCOPE AND LIMITATION OF PROJECT 03

1.4 METHODOLOGY 04

1.5 FINAL PROJECT STRUCTURE 05

PART 2: SITUATION ANALYSIS 2.1 EXTERNAL ENVIRONTMENT ANALYSIS 06

2.1.1 Vietnam’s medicine expense 06

2.1.2 Clinical Industrial Analysis 07

2.2 INTERNAL ENVIRONTMENT ANALYSIS 13

2.2.1 TNT Express Worldwide Profile 13

2.2.2 Survey results and analysis 14

2.3 SWOT ANALYSIS OF TNT CLINICAL EXPRESS SERVICES (CE) 16

PART 3: MARKETING STRATEGY FOR CLINICAL EXPRESS

SERVICE IN TNT EXPRESS IN VIETNAM MARKET

3.1 TNT CE OBJECTIVES FOR THE YEAR 2010 17

3.1.1 The overall objectives 17

3.1.2 The specific objectives 17

3.2 CE MARKETING STRATEGY 18

3.2.1 Market Segmentation and Targeting 18

3.2.2 Pricing Strategy 21

3.2.3 Marketing Communications Mix 22

3.2.4 Logistics and other aspects 24

CONCLUSIONS 25

BIBLIOGRAPHY 26

APPENDICES 27

LIST OF TABLES

Table 1: GDP - INCOME – MEDICAL EXPENSE 2006-2010 6

Table 2: CE PRODUCT REVENUE 9

Table 3: THE COMPARISON OF PRICE OF CE SHIPMENT 10

LIST OF FIGURES Figure 1: CHART OF RESEARCH FRAMEWORK 4

Figure 2: PERCEIVED MARKET SHARE OF TOTAL CE SHIPMENTS 10

Figure 3: THE RATIO OF CUSTOMER WOKING DAY/WEEK 14

Figure 4: THE RATIO OF TESTS FOR PATIENTS/DAYS 14

Figure 5: THE REASONS FOR SELECTION OF LAB AND SERVICE 15

Figure 6: THE FACTORS MAKE CUSTOMERS LIKELY TO USE LAB 15

Figure 7: SWOT ANALYSIS OF TNT CLINICAL EXPRESS SERVICE 16

Figure 8: MARKET SEGMENTATION AND TARGETING 19

Documents Express Dalsey, Hillblom, Lynn Express Mail Service European Union Foreign Direct Investment Federal Express

Gross Domestic Products General Statistics Office Research and Development Singapore Airlines

Thomas Nationwide Transport United Parcel Service

World Trade Organization

care of analyzing the samples TNT is mainly involved in phase 3 trials, where drugs are tested on human patients: the transportation of testing kits to doctors carrying out the trials, as well as blood and urine samples to the laboratory following the successful administration of drugs to patients

TNT started Clinical Trial Logistics in 1993 worldwide Till now, as the Established Market Leader, TNT has global partnership with major clinic research organizations and pharmaceutical companies around the world and is now Clinical express service provider for many international hospitals & pharmaceutical company and government institutes

In Asia, the clinical trial market is booming Recent revisions to the pharmaceutical industry’s regulatory laws as well as improved patent laws in countries such as Japan, China and India, have led to the burgeoning clinical trials market in Asia The pharmaceutical market grew by seven per cent on a global level to US$600 billion while sales in Asia grew by about nine to ten per cent Looking forward for the next five years, the Asia Pacific region is expected

to grow by up to 12 per cent annually

To support the growth of the clinical trials sector in Asia, for Viet Nam,

TNT launched Clinical Express (CE) service, a suite of logistics services for the

clinical trial logistics market in April 2004 Targeted at pharmaceutical companies, central laboratories and contract research organizations engaged in clinical research and drug development

The biggest achievement TNT Vietnam got was with 22nd Seagames

(5-13, Dec 2003) when it did collect and moving thousands of urine specimen of

22nd Seagames Athletes from 33 locations all over country and deliver to the Beijing laboratory within 36 hours at minus 20 degree for purpose of doping test

For the development of CE service, TNT not only recognizes the importance of clinical trial logistics but also is well positioned to meet the growth and challenges presented by the sector through the innovative solutions and ability to sustain and develop the services However, there is not yet a proper marketing strategy for CE Service in Vietnam market at the time being This research dissertation aims to do that: to provide an understanding of the theory and practices in the development and execution of services marketing strategy for the TNT Clinical Express Service (for the period to the year 2010)

1.2 PROJECT OBJECTIVE

marketing strategy for Clinical Express Service of TNT Express in Vietnam market at this time being

are four specific objectives which should be achieved in this research as follows:

- To have an overview of Vietnam Market in a World chain market which impacts on CE service, especially on TNT Clinical Express in Vietnam

- To analyze and understand the current external environment aspects

- To analyze and understand the current internal environment aspects

- To recommend relevant and proper services marketing strategies composed

of target customers, pricing policy, distribution channels and integrated marketing communication campaign for Clinical Express product

Other specific objectives are: to find out SWOT (Strengths - Weaknesses - Opportunities-Threats) of CE Service; to understand customers' needs towards TNT CE service; to find out the position of TNT CE service among its competitors on the market-oriented economy in Vietnam at this moment

1.3 SCOPE AND LIMITATION OF PROJECT

Due to the limitation of time and study of the assigned task, this thesis is made to present the current business operation of TNT Express in the sense of services marketing strategy only The main concentration is to examine its CE services and to compare with other competitors Based on this concentration, the development of Clinical Express (CE) service would be considered to yield more revenue and to serve customers better and its services marketing strategy is set for a three years' period from 2007 to 2010

The valuable position of this research is that is the first time a services marketing strategy to be carried out and some specific recommendations can be considered to help TNT Express to compete with its competitors in supplying Clinical Express service to customers

Of course extra hypotheses can be though of in a fast changing world For example, with the change of Vietnamese government's policy and law, negative

or positive affection will arise accordingly International economic fluctuation is also a factor to be accounted

1.4 METHODOLOGY

The research methodology is applied to carry out this research study is mainly the qualitative method combined with quantitative method In order to obtain primary data, surveys had been made through questionnaires, phone contacts, depth-interviews For secondary data, we can take such as information available on the internet, articles from different journals and magazines, different kinds of business reports and statistics reports as well

1.5 FINAL PROJECT STRUCTURE

This res

duction of the topic, rational of the

he situation analysis with both external and

st section is the conclusions to make a brief summary of the results

the end of this project, we can get other

earch study is structured as follows:

Part 1- The introduction gives us the intro

research, problem statement, objectives, scope and limitations, value position, assumptions of research study, the brief research methodology with research framework, and the thesis structure

Part 2 – Situation analysis gives us t

internal environments analysis Moreover, the survey results from the market through which we can get the clients' needs towards TNT CE service as well Some major findings are also pointed out in SWOT analysis of TNT CE service

Part 3 – The marketing strategy supplies the marketing strategy for TNT CE service in Vietnam market to meet TNT CE objectives for the period to the year

2010

The la

achieved Based on the research, the services marketing strategy for TNT Express CE service are highlighted

Moreover, through the appendices at

information illustrating TNT Express CE's business operations

PART 2 : SISTUATION ANALYSIS

2.1 EXTERNAL ENVIRONMENT ANALYSIS

2.1.1 Vietnam’s medicine expense

The year 2006, the pace of economic growth is recorded to reach 8.2%, and it is estimated to remain stronger in 2007 (http://www.mofa.gov.vn/en) Vietnam's GDP is expected to grow at approximately 8% per annum for the next

5 years, driven by robust industrial output and continuing economic liberalization Here after we have some estimation:

Table 1: GDP -INCOME – MEDICAL EXPENSE 2006-2010

(Source: http://www.economist.com/countries/Vietnam ; http://www.cimsi.org.vn )

To 2005, the income per capita has increased significantly to 551 USD It

is estimated to reach 726.5 USD by 2010

Together with the development of economy, the medicine expense per capita also has increased by 52.0% for 2000-2005 According to the Central Institute for Medical Science Information, the expense is estimated to be nearly doubled to 18.4 USD per capita to the year 2010

From the aspect of market size and market potentiality: Vietnam currently has 876 hospitals, 75 Medical treatment areas and over 1000 clinics Just in 5 years recently, there’re 5 big hospitals and 7 clinical healthcares were opened with foreign investment (Source: http://www.moh.gov.vn/homebyt ). They all are unexplored market for CE service Although there is not yet any real CE market research, however, it is estimated that the market size is about 1-2 Mil USD in Vietnam

Being a member of WTO, doing business in the integration in the region and in the world, strong growth of international trade is expected to continue, particularly once Vietnam becomes a member of the WTO This bring about a good chance for TNT CE service, for it deals with special international shipment

2.1.2 Clinical Industrial Analysis

2.1.2.1 Asia Clinical Express Industry Overview

As CE Vietnam is allocated in the Asia region, we shall look at CE of TNT Vietrans Express in the conjunction with Asia Clinical Express Industry

Since the late 1990s, Asia has increasingly been considered an upcoming hotspot by the pharmaceutical industry when focusing on future global research and development (R&D) activities

The clinical trial market in Asia is booming The pharmaceutical market grew by seven per cent on a global level to US$600 billion while sales in Asia grew by about nine to ten per cent Looking forward for the next five years, the Asia Pacific region is expected to grow by up to 12 per cent annually (1)

To this end, It is estimated a corresponding growth of 20 per cent in the clinical trial market Recent revisions to the pharmaceutical industry’s regulatory laws as well as improved patent laws in countries such as Japan, China and India, have led to the burgeoning clinical trials market in Asia

Increasing globalization and digitalization of business has brought into prominence the importance of global logistics and multi-modal logistics As global organizations become more involved in research in the Far East there is a need for increased awareness of the problems they face when it comes to logistics

(1) Pharmafocusasia, August 2006, http://www.pharmafocusasia.com/Knowledge_bank/

The full service logistics companies, on the other hand, can offer distinct cost advantages by consolidating shipments, particularly non-infectious specimens, which can travel at normal temperatures TNT Express is of these companies, have even set up a delegate team that deals specifically with diagnostic shipments By putting in place a dedicated monitoring process, they can achieve a similar service performance at a fraction of the cost

A recent study shows that around 60% of diagnostic specimens currently on the move within Asia are managed by such companies TNT still, however, is dominating the market share

2.1.2.2 Clinical Express Development in Vietnam

Although CE service has just been launched in Vietnam since 2004, it has achieved a significant development and occupies a position in TNT’s product range, particularly TNT’s special service Some quoted estimations as below:

- The Target Market: Pharmaceutical /Clinical Research Sector/Hospitals Health institute

- Pharmaceutical R&D Market size:

Global: US$ 48 Billion in 2005, up 8%

Asia: Up to US$ 2 billion, up 12%

- Factor of Growth in VN and Asia:

Asia is one of the fast growing Pharmaceutical markets in the world

Clinical trials are increasingly required for drug registration in Asia

Asia offers ethic diversity for clinical trials

Viet Nam also have much ethic diversity

- Clinical Trial Logistic

The Role: Up to 60% of the cost of clinical trials

The Market Size: Estimated US$ 50 Mil in Asia & 1-2Mil in VN

The Growth: +20% year-on-years

2.1.2.3 CE Product Revenue

Based on the annual statistics report we can recognize the tendency of the increasing of CE product This product occupies relevant revenue among total revenue of TNT Express

Table 2: CE PRODUCT REVENUE

Product 2005

(€ 000's)

2006 (€ 000's)

% growth

Source: TNT Monthly Business Review, December 2006

Through the result of the three consecutive years of CE product, we see that the revenue of the year 2006 increased 57.4% in comparison with the year 2005

2.1.2.4 Clinical Express Perceived Usage Share of Total Shipments

TNT is still the leader on the market of CE in terms of perceived usage share total shipments In the year 2006, TNT occupied 76% of the total CE shipments on the market based on TNT country business review The figure below gives us a look at the comparison:

Figure 2: PERCEIVED MARKET SHARE OF TOTAL CE SHIPMENTS OF YEAR 2006

CE Market Share (%)

World Courrier

Express 9%

TNT Express 76%

Fedex 3%

Source: Clinical Express Breakdown Report, December 2006

2.1.2.5 Five forces analysis

- Rivalry: A prime source of competition in CE industry exists among competitors TNT Express is doing its business with main competitors: DHL, FedEx, World Courier, together with forwarders on the market

At the time being, with the early investment in the industry, TNT takes steps in advance in providing customer with more suitable service and much more competitive price These all make TNT a leading company in CE industry (account for more than 75% of market share) The table below would show that sample of the quoted price (in USD) between TNT and a strong competitor – World Courier

Table 3: THE COMPARISON OF PRICE OF CE SHIPMENT

However, there will be difficulty for TNT Express to continue to gain the market growth and dominate the market share in a severely competitive situation

of course when other competitors are going to diversify their products by launching CE service Then there will be more options for customers to choose

arising being a great concerned because it seems that big express players in Vietnam are interesting in this service business (CE) already World Courier, a

US company who experienced Bio-medical transportation since 1984, is competing with TNT and is putting more investment for CE product The other one is DHL Express Vietnam would be one of the main threats as DHL will lauch CE service in Quarter 4 in 2007

that can affect the degree of competition within express service industry There are 63 major TNT Customers who have strong bargaining power (Appendix 4,5)

competitors because of the quality incidents, pricing policy or sometimes one customer may use two express service players at the same time Other customers may define their needs of sending shipments by using different players with different pieces

2.1.2.6 Competitors of TNT Vietnam

Based on information currently available an overview of the main service providers used and their respective share of wallet, the main competitors of TNT Vietnam within the CE industry are World Courier, DHL and FedEx An overview of the main strengths and weaknesses of the competitors for the Life Sciences Global Accounts can be summarized as follow:

World Courier

Strengths

- Brand awareness is very strong in shipping diagnostics specimens in

global and regional;

- High market share in express industry and CE industry in global and

regional;

- Nominated for clinical logistic and supply chain from international clinical

project owner;

- Excellent relationship with pharmaceutical companies and international

organization (WHO, UN);

- World Courier has known as the specialist in the clinical service

especially in infectious sample

- World Courier offer fully package services that meet the requirements of

customers (procedures, packaging, dry ice, labeling)

- Strong market share with pharmaceutical companies

- Have good relationship with Airline (Thai Airline, Lufthansa)

Weaknesses

- Have agent in Vietnam via MC Trans (49 Truong Son, Tan Binh);

- Totally dependent on third party suppliers or agents to offer the

door-to-door services

- Do not have door-to-door express network

- Present in more than 40 countries

- Very high price level

- Losing market share to TNT

- Strong global marketing campaigns in CE industry in global and Asia

regional

- Brand awareness is very strong in global, regional and local

- High market share in express industry and CE industry of Pharmacy

companies

- Dedicated as shipping company for the Clinical Project’s Decision Maker

by USA and Europe

- Good relationship with the international CE, labs and pharmacy

companies

Weaknesses

- Have not launched official Clinical Services in Vietnam

- Do not have dedicated CE team in Vietnam

- Do not offer one-shop stop solutions that match the requirement of

customers

- Do not offer fully package service for shipping diagnostics specimens

- Customer service is not good compared to TNT

- Losing market share to TNT

To realize the strengths and weaknesses of those competitors is vital This will help to form strategy in marketing for CE service in more proper way

2.2 INTERNAL ENVIRONMENT ANALYSIS

2.2.1 TNT Express Worldwide Profile

- TNT set foot in Vietnam since 1991 In 1997, a join-venture company between TNT & Vietrans Co., was established This is also a point that TNT Vietrans developed to a higher business level

- Scope of business: JV TNT Viettrans was licensed for Express, Logistics and Domestic services;

- To the year 2006, TNT has 238 workers with annual revenue 12 mil Euro and growth per annum 12%

2.2.2 Survey results and analysis

A questionnaire of 13 questions was designed and delivered to 60 customers combining with face to face interviews (appendix 1) Only 45 questionnaires have been feedback The SPSS program is used for the analysis

of this survey From the survey analysis, we discover the main factors as follow:

2.2.2.1 Customer’s normal working operating hours

Figure 3: THE RATIO OF CUSTOMER WOKING DAY/WEEK

normal operating hours

1.2.2.2 Average test ordered for patients

2.2.2.3 Frequency of sending samples to labs

The result of the survey is 100% customers send sample to labs from 1-2 times per day

2.2.2.4 The reasons for selection of lab and service

The result of the survey is 33% customers select lab according to the speed of returned results and reporting

2.2.2.5 The factors that make customers likely to use lab

The result of the survey is: 27% customers preferred faster turn-around on testing and reporting

We did benefit a lot from the survey In general, the results & analysis support the strategy towards: (1) Potentiality of CE service; (2) One-stop-shop CE; (3) Express link logistic Then the mentioned results will be reflected in the SWOT analysis of TNT clinical express service as below

2.3 SWOT ANALYSIS OF TNT CLINICAL EXPRESS SERVICES

Synthesizing from all the information, from the external & internal environment analysis, from the market survey results & analysis, by using SWOT analysis we can make the summary of strengths, weaknesses,

opportunities and threats of Clinical Express Services on the market

Figure 7: SWOT ANALYSIS OF TNT CLINICAL EXPRESS SERVICES

- Depending on the global Express

Network;

- Market Leadership in Europe;

- Dedicated Global and Regional Life

Science Team expertise in Life

- Relationship with the Airline;

- Limited Airlines accept ship infectious samples;

- Supporting from Marketing are not strong;

- Inbound shipments face some difficulty in procedures due to the customs requirements are not clear;

- Lack of man power, equipments for handling CE shipments;

- Lack of practical Experience in handling CE shipments;

- Lack of knowledge in life science field;

- Haven't got dedicated Operation team master in Outbound and Inbound to support the customer's requirements

Opportunities

- Open up the capability of carrying

diagnostics shipments from Airline;

- No official competitors in Life

- Offering full service: dry ice supply,

packaging, handling, and consultancy

Threats

- Brand awareness of DHL, FedEx is very strong with the International Hospital, Labs, Pharmaceutical Company

- DHL, FedEx will be officially launching CE service in VN soon

- World Courier, Marken expanding market to Vietnam;

- International project that involved

VN nominated WC, DHL or FedEx

PART 3: MARKETING STRATEGY FOR CLINICAL EXPRESS

SERVICE IN TNT EXPRESS IN VIETNAM MARKET

3.1 TNT CE OBJECTIVES 2007-2010

3.1.1 The overall objectives:

- Grow the CE revenue by 20%/year to 1 Mil Euro in 2010

- Market CE a leading branch in Vietnam

3.1.2 The specific objectives

- Achieve profitable revenue growth through volume acquisitions at optimized

- Focus on product performance and improve cost effectiveness

- Ensure quality in all key areas

- Secure outstanding levels of customer satisfaction

- Develop leading-edge support technologies that provide added value for customers: Develop a comprehensive range of packaging solutions for clinical