Philips healthcare Vietnam and marketing communication strategy in times of change

11 Figure 2 - Philip Healthcare Vietnam’s products family Source: Philips Vietnam ..... 16 Figure 5 – Vietnam healthcare delivery system Source: Vietnam Ministry of Health; Frost and Sul

TR NG I H C M TP.HCM

HOCHIMINH CITY OPEN UNIVERSITY

MMA6

Author Khoi, Tran Dang Tuan, Huynh Viet Anh

PHILIPS HEALTHCARE VIETNAM

&

MARKETING COMMUNICATION STRATEGY

IN TIMES OF CHANGE

MASTER PROJECT MASTER IN MARKETING & AVERTISING

Tutor’s Name: Serge Bywalski

Ho Chi Minh City - Vietnam

(2013)

UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL ECONOMICS & MANAGEMENT

“Trade in health services will be affected by changes in general trade

liberalization, international legislation, and international institutions; in return,

it will itself impact on national economies”

(Blouin & Drager & Smith, 2005 – World Bank)

Acknowledgements

Over the time conducting the study and writing the paper, we have encountered certain difficulties, which should have certainly caused obstacles for us in accomplishing this project if we had not received great supports Therefore, we would like to dedicate our acknowledgement to those who have offered us valuable helps during the dissertation working process

First of all, we would like to express our gratitude to the all people who have contributed to this thesis and supported us

We would like to give a special thank to our tutor Serge Bywalski for his patience with our questions and for giving us a valuable feedback

We would like to offer our true thanks to our friend, Mr Ng, Kenneth - Manager Business Intelligence, ClusterAPAC Marketing and Mr Truong, Quoc Dung - SMIS Manager, SMIS Vietnam who is working at Philips Vietnam for giving us significant information of PHC Vietnam which we have been unable to search in other data sources

Last, but not least, we want to thank our friends and families for their support We would never finish this thesis without these people

Executive Summary

Nowadays, one of the most challenging factors for a company to develop is future planning because the environment is changing rapidly which forces the company to deal with change almost every day The companies and theirs Board of Directors, therefore, need to have the ability to manage their current business as well as to handle unexpected changes

Established since 2002, Philips has had an increasingly large focus on Vietnam and Philips Healthcare (PHC) is very successful in Vietnam as one of the market leader

2011 was started with worries of local team due to economy downtrend However, by year end, the market of PHC keeps on good growth

But, there are early signs of market problem in Vietnam The market is still on the upward trend but with the global recession, there will be many changes in the economy, social policies of the Vietnam government in 2012 Healthcare is one of the sectors that suffer a lot from these changes Vietnam faces pressures with budget constraints, ageing populations and growing disease of prosperity such as obesity and diabetes In addition, many of the regions are emergent and lacking essential healthcare skills and infrastructures, creating an urgent need for reform The investment in healthcare is huge and new market participants are staking their claims by introducing new business models that are changing the competitive landscape

The purpose of this study is to provide a general view about PHC Vietnam in the market, to evaluate the marketing activities of the company in the previous years and how the company should communicate with customers during times of change

All things considered, we believe that we have provided PHC Vietnam a roadmap which suggests a good plan for the future to make PHC Vietnam become the market leader in term of market share in the next 5 years

Table of Contents

Acknowledgements 3

Executive Summary 4

Table of Figures 8

List of Abbreviations 9

CHAPTER 1 – INTRODUCTION 10

1.1 Company’s background 10

1.1.1 Philips Global 10

1.1.2 Philips Vietnam 11

1.2 Time of recession/time of change 12

1.3 Problem discussion 14

1.3.1 Active strategy 14

1.3.2 Or passive strategy 14

1.4 Project objective 14

1.5 Research methodology 14

1.6 Scope and limitation 14

1.7 Outline of the study 15

CHAPTER II - SITUATION ANALYSIS 16

2.1 Market overview and business situation 16

2.1.1 Vietnam 16

2.1.2 Healthcare Indicators of Vietnam 16

2.1.3 Health Care Delivery System 17

2.1.4 Medical Device Market Size 17

2.1.5 Specifics on the local healthcare market 18

2.2 Situation analysis 19

2.2.1 Macro Environment analysis 19

2.2.2 SWOT analysis 21

2.2.3 Competitor analysis 23

2.2.4 Customer analysis 25

CHAPTER III - MARKETING COMMUNICATION IN THE PAST 33

3.1 Past marketing communication campaigns 33

3.1.1 The Annual MR & CT end-users meeting (on October) 33

3.1.2 Vietnam Annual Radiology Association Conference (on April) & Customer Service Workshop (on September) 34

3.1.3 Marketing focus to community 34

3.1.3.1 Simply Healthy @ School Program (SHS) 34

3.1.3.2 World Heart Day Vietnam: once/year 35

3.1.4 Others: 36

3.2 Evaluations of the past campaigns 36

3.2.1 The annual MR & CT end-user meeting 36

3.2.2 Vietnam annual Radiology Association Conference & Customer service workshop 36

3.2.3 Marketing focus to community (CSR) 37

3.3 Summary 37

3.4 Recommendations for the times of change 38

3.4.1 Strategy 38

3.4.2 Conclusion 39

CHAPTER IV - MARKETING COMMUNICATION STRATEGY IN TIMES OF CHANGE 42

4.1 Brand strategy 42

4.1.1 Vision 42

4.1.2 Mission 42

4.1.3 Target customer 42

4.1.4 Positioning and pricing strategy 42

4.1.5 Customer insights 42

4.2 KPIs 43

4.2.1 Business objective 43

4.2.2 Marketing objective 43

4.3 Marketing communication 43

4.3.1 Campaign idea 43

4.3.2 Key visual 44

4.3.3 Communication strategy 45

4.3.3.1 Project 1 – Boosting the brand (new concept) 45

4.3.3.2 Project 2 – Events (keep from the past campaign) 46

4.3.3.2.1 The Annual MR & CT end-users meeting 46

4.3.3.2.2 Vietnam Annual Radiology Association Conference & Customer Service Workshop 47

4.3.3.3 Project 3 – CSR (new concept modified from the past campaign) 48

4.3.3.3.1 Activity 1: Community health check for remote area 48

4.3.3.3.2 Activity 2: World Heart Day Vietnam 49

4.3.3.4 Project 4 – Philips healthcare online Center (new concept) 49

4.3.3.5 Other projects 50

4.3.3.6 Choosing the right media 50

4.4 Action plan 53

4.5 Budget 54

Appendix A 55

Questionnaires for the market research 55

Appendix B 57

PPP Projects in Vietnam Basic Understanding, Implementation and Challenges 57

References 59

Table of Figures

Figure 1 - Philip Healthcare’s products family (Source: Philips Global) 11

Figure 2 - Philip Healthcare Vietnam’s products family (Source: Philips Vietnam) 12

Figure 3 – Vietnam economy indexes (Source: TNS Vietnam) 13

Figure 4 – Vietnam healthcare indicators (Source: Frost and Sullivan analysis) 16

Figure 5 – Vietnam healthcare delivery system (Source: Vietnam Ministry of Health; Frost and Sullivan analysis) 17

Figure 6 – Medical device market (Source: Espicom) 18

Figure 7 – Competitors map (Source: Frost and Sullivan analysis) 23

Figure 8 – Revenue of PHC Vietnam (Source: Philips Vietnam) 26

Figure 9 – Market research (drivers for promotion) (Source: Philips Vietnam) 29

Figure 10 - Market research (causes for detraction) (Source: Philips Vietnam) 30

Figure 11 – Competitors (Source: Philips Vietnam) 31

Figure 12 - Competitive NPS Performance (Source: Philips Vietnam) 31

List of Abbreviations

ANGIO: Angiography

AOP: Annual Operation Plan

CEO: Chief Executive Officer

CME: Continuing Medical Education

CR: Computed Radiology (equipment)

CSA: Customer Support Agreements

CT: Computed Tomography (equipment)

CV: Cardio Vascular (equipment)

DR: Digital Radiology (equipment)

DSA: Digital Subtraction Angiography (equipment) ENT: Ear Nose and Throat specialist

EU: European Union

FDA: US Food and Drug Administration

FMCGs: Fast Moving Consumer Goods

GMP: Good Manufacturing Practices certification

KOLs: Key of Leaders

HCMC: Ho Chi Minh City

HIS: Hospital Informatics System

IMS: International Medical Statistics

MOH: Ministry of Health

MR: Magnetic Resonance (equipment)

MR: Medical Representative

ODA: Official Development Assistant

OIT: Order in take

OTC: Over the Counter

PACS: Picture Achieving Communication System OOH Order on hand

CVD Cardio Vascular Disease

PO: Purchase Order

Rep Office: Representative Office of Pharmaceutical R&D: Research and Development

RIS: Radiology Informatics System

SOP: Standard of Procedure

SWOT: Strengths Weaknesses Opportunities and Threats US: Ultrasound (equipment)

WTO: World Trade Organization

1 CHAPTER 1 – INTRODUCTION

1.1.1 Philips Global

Royal Philips Electronics of the Netherlands is a diversified Health and Well-being

company, focused on improving people’s lives through meaningful innovations As a

world leader in healthcare, Philips integrates technologies and design into centric solutions, based on fundamental customer insights and the brand promise of

people-“sense and simplicity”

Headquartered in the Netherlands, Philips employs over 122,000 employees with sales and services in more than 100 countries worldwide With sales of EUR 22.6 billion in

2011, the company is a market leader in cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications, as well as lifestyle products for personal well-being and pleasure with strong leadership positions in male shaving and grooming, portable entertainment and oral healthcare Philips is a global leader across its healthcare, lighting and lifestyle

Philips simplifies healthcare by focusing on the people in the care cycle – patients and

care providers Through combining human insights and clinical expertise, Philips aim

to improve patient outcomes while lowering the burden on the healthcare system Advanced healthcare solutions are a fundamental part of the portfolio for both healthcare professionals and consumers, to meet the needs of patients in hospitals and

at home Philips Healthcare employs approximately 35,500 people worldwide In 2011 the Healthcare business accounted for approximately 40 percent of Philips’ overall sales, the company’s largest contributor to sales

Facts and Figures

€8.9 billion sales in 2011

37,000+ people employed worldwide in 100 countries

8 % of sales invested in research and development in 2011

450+ products and services offered in more than 100 countries

Philip Healthcare’s product:

Pharmaceuticals and Biotechnology

Following the renovation of Vietnam’s economic system, which began in 1986, Philips

has had an increasingly large focus on Vietnam Philips was one of the first foreign

companies to establish its presence in Vietnam From 1992, Philips’ business in

Vietnam was managed from Singapore with Distributors in Vietnam Following that,

as a Representative Office for Philips Electronics Singapore, Philips Healthcare began its direct expansion in Vietnam Philips Electronics Vietnam, Ltd was established in

2002

Figure 1 - Philip Healthcare’s products family (Source: Philips Global)

The Healthcare team expanded greatly in the second half of 2009, in anticipation of implementing the SAP ERP M4 system (December 2009 to January 2010) Currently, Philips Healthcare Vietnam is part of Philips Electronics Vietnam, Ltd., and is licensed

to do business directly in country, able to do importation and direct sales to both Distributors and End-users

Philips Healthcares has worked with several modern hospitals in Vietnam that are focused on providing the best quality care and patient outcomes by leveraging advanced medical technology

Philips is recognized as a market leader in Cardio-Vascular X-Ray, CT, mid-range Shared Service Ultrasound, and Patient Monitoring (acute, sub-acute and maternal-fetal)

The global recession has hurt Vietnam's export-oriented economy, with GDP in

2009-2011 growing less than the 7% per annum average achieved during the last decade In

2011, exports increased by more than 33%, year-on-year, and the trade deficit, while

Figure 2 - Phi lip Healthcare Vietnam’s products family

(Source: Philips Vietnam)

reduced from 2010, remained high, prompting the government to maintain administrative trade measures to limit the trade deficit

In early 2012 Vietnam unveiled a broad "three pillar" economic reform program, proposing the restructuring of public investment, state-owned enterprises and the banking sector Vietnam's economy continues to face challenges from low foreign exchange reserves, an undercapitalized banking sector, and high borrowing costs The near-bankruptcy and subsequent default of the state-owned-enterprise Vinashin, a leading shipbuilder, led to a ratings downgrade of Vietnam's sovereign debt, exacerbating Vietnam's borrowing difficulties

The State Bank of Vietnam reported that as the end of March - 2012, Vietnam's bad debts ratio amounted US $9.6 billion U.S = 8.6% total outstanding credit

Fitch Ratings and other independent economic survey organizations estimate = 14% or 13.3 billion U.S dollars

Vietnam’s 100 largest state enterprises are indebted about US $50 billion, or more than

one third of GDP

Figure 3 – Vietnam economy indexes (Source: TNS Vietnam)

To analyze the company’s situation and find the best strategy in time of recession

To understand target customer’s needs and find their key buying triggers in the next

coming years

To make an appropriate marketing communication for the next coming years to meet with the business objective within the available budget

Relevant desk researches and secondary information are used for the analysis

A qualitative research (In-depth interview) is conducted to key persons who can influence the buying decision to know more about the health of the brand and assist for the marketing decision

This study is made on December 2012 and January 2013 Some information from desk researches is not up-to-date and result from qualitative research might not be as accurate at the time it reaches professors

The market research is conducted for markets with low sample size As a result, interpreting the results is carried out under caution

1.7 Outline of the study

The study is organized with 4 chapters

CHAPTER I - INTRODUCTION

The aim of this chapter is to present the background of the subject It starts with an overview of the company, followed by an introduction about Healthcare Industry of Vietnam, This is followed by a problem discussion, which will lead to our research question and finally the purpose of the thesis is presented: how to do the marketing in times of change

CHAPTER II - SITUATION ANALYSIS

In this chapter we will combine our theory with what happened in the market in order

to figure out how PHC Vietnam influenced from both internal and external factors, including:

Macro Environment Analysis: using PESTEL as a tool to find out the external factors

that affect the market which many desk researches is taken into account

SWOT Analysis: to identify PHC Vietnam’s advantages as well as drawbacks and

threats in times of change

Competitor Analysis: to identify PHC Vietnam’s competitors: Who are they? What

are their market positions, shares, advantages and weakness?

Customer Analysis: to get a deeper understand of PHC Vietnam’s customers

CHAPTER III - MARKETING COMMUNICATION IN THE PAST

This chapter is to review, evaluate the past campaigns to recommend new campaigns in times of change

CHAPTER IV - MARKETING COMMUNICATION IN TIMES OF CHANGE

This chapter provides the marketing communication in times of change Target for

2013, action plan, budget, timeline and KPIs for evaluation are also covered in this chapter

2 CHAPTER II - SITUATION ANALYSIS

2.1.1 Vietnam

A Southeastern Asian country, bordering the Gulf of Thailand, Gulf of Tonkin, and South China Sea, as well as China, Laos, and Cambodia There are 64 cities and provinces In the south, the Mekong River is a prominent feature Much of the country

is mountainous and hilly

A population of 91.5 million (July, 2012) and growth rate of 1.1 percent in 2011, as well as urbanization rate to grow about 3.3 percent annually, reaching an urban population of 30 million in 2014 Hence, Vietnam emerges as a populous and young nation with rapid urbanization

(Source: Vietnam General Statistic Office)

2.1.2 Healthcare Indicators of Vietnam

Vietnam represents a potentially huge medical device market, with a population of 89 million and a steady GDP growth of 7 percent annually In 2012, the market for medical equipment is worth USD $600 Million and is growing by 15 percent each year Since local production is small, the market relies entirely on imports

Figure 4 – Vietnam healthcare indicators

(Source: Frost and Sullivan analysis)

2.1.3 Health Care Delivery System

Healthcare services in Vietnam are dominated by the public sector and as of 2009, approximately 93.0 percent of hospitals were public Public sector offers healthcare services through four tiers: commune, district, provincial, and central The Ministry of Health (MOH), which is part of the central tier, handles health policies and administration

\

2.1.4 Medical Device Market Size

The Vietnamese medical device market is likely to expand in the future as more products are imported to meet the requirements of new and existing healthcare facilities A number of hospitals have opened in recent years, and with the government keen to develop its healthcare system, imports are expected to continue growing rapidly

Figure 5 – Vietnam healthcare delivery system

(Source: Vietnam Ministry of Health; Frost and Sullivan analysis)

The most recent initiative by the government that will foster medical device market growth is the 45.2 trillion dong (US$2.5 billion) pledged to build or upgrade specialty hospitals and some provincial-level general hospitals in mountainous and other disadvantaged areas in the 2009-2013 period

As Vietnamese manufacturers tend to produce only basic medical items such as syringes and needles, the more complex equipment required will continue to be sourced from overseas companies Imports have more than doubled over the 2005-

2009 period

The medical device market is expected to expand at very strong CAGR of 15.2%, which should see the market grow from an estimated US$599.2 million in 2011 to US$1,213.9 million in 2016

2.1.5 Specifics on the local healthcare market

 Distribution

Only local companies can distribute medical devices in Vietnam – foreign companies

must therefore sell their products through appointed local distributors and agents Legalities aside, Vietnamese buyers, especially in the public sector, generally expect to deal with a local distributor to handle all aspects of distribution, from delivery to after sales services and provision of spare parts

 Medical device regulations

Vietnam has no specific system of device regulation However, the MOH issues an annual list of equipment which must be registered before it can be imported This list

Figure 6 – Medical device market (Source: Espicom)

mainly comprises expensive diagnostic apparatus, products involving blood or sterilization, and emergency equipment The registration process is reportedly quick Devices with major international approvals should have little problem

Vietnam is heavily reliant on imports and lacks the capacity to make import substitution policies worthwhile

The current reform of public hospital organizational management, allowing greater hospital autonomy, has led to greater advantages for accessing private resources for hospital capital investments However, weak regulation and control over the prices of pharmaceutical products and medical technology services has, in addition, contributed

to overall escalation of health care costs, which remains an ongoing challenge

New health service facilities are expected to be charged an enterprise income tax of 10% rather than the previous 28% which will makes the private sector play a bigger

role in healthcare delivery in Vietnam, private public partnerships (PPPs) are increasing as governments seek to build greater capacity (Source: Vietnam General Statistic Office)

 Social factors

The size of the private healthcare sector in Vietnam is expanding, especially in the urban areas of the country The availability of private clinics and surgeries has improved significantly, particularly in urban areas, since the lifting of the ban on private practice in 1989 According to the WHO, the bulk of healthcare expenditure came from private sources, with the public sector spending just 44.6% of the annual total

The growth of new public and private hospitals and expansion/upgrading of existing hospitals under government healthcare development initiatives will translate into more tender projects for medical devices The emergence of private doctors and hospitals within the past 10 years has begun to expose Vietnamese hospitals to market pressure, thereby boosting the demand to improve the quality of the facilities, equipments and technology to remain competitive

ensuring social security With the world economy mired in recession and debts crises

in the US and Europe, Vietnam is determined to pursue a tight monetary policy and flexible solutions to achieve targets set for this year and the years to come

In the face of these challenges, the Vietnamese government issued the resolution No

11 to control inflation, stabilize the macro economy, and ensure social security Recently, the State Bank of Vietnam has put in place a number of measures to regulate the forex market and contain inflation The recent reduction of interest rates has helped

reduce the public’s concern over high inflation and stabilize the Vietnamese dong

Distribution system: maintain two strong distribution channels - Authorized Distributor and Spot Dealer

PHC has a strong partnership with most of the leading medical training

centers/hospitals in Vietnam, such as HCMC Medicine and Pharmacy University,

DaNang General Hospital, Hue Central Hospital, Bach Mai Hospital, Viet Duc Hospital; the partnership include:

On-site training by Philips experts and PHC’s products: Ultra-sound, CT, MR, Cardio Vascular…

System demonstration for new product that enable doctors to experience latest technology in healthcare

 Weaknesses

PHC is well-known for unbeatable technology but super expensive worldwide In the other hand, Siemen - with OEM products from China - is following competition pricing strategy: for each of the product launch, they are targeting in attack a certain model of PHC and setting the price 30 to 40 percent lower

Maintenance service is one of a big problem of PHC The spare-part price and labor cost are rather high compare to other competitors Duration for spare-part warranty is very short, only one month

Sales team is not good enough for the market Besides, PHC’s policy in sale is: “No incentive for buyer” which makes it harder for the team

 Opportunities

Vietnam represents a potentially huge medical device market, with a population of 90

million and the trend for high-tech treatment is growing by significantly each year

Vietnam’s healthcare expenditure will grow over the next five years with its healthcare

spending as a percent of GDP surpassing most ASEAN countries and growing up to 8.3 % of the GDP in 2014

Public Healthcare sector is one of the high priority sectors in investment of Vietnam government The government also aims to modernize traditional medicine by 2020 According to MOH, hospitals that offer traditional alternatives to patients will receive new equipment in 2015

The government introduced the Public Private Partnership (PPP) investment model which can play a prominent role in bringing skills, access to capital, and wider efficiencies to healthcare delivery (the Decision No 71/2010/QD-TTg of Prime Minister)

2.2.3 Competitor analysis

Over 95% of the market is made up of foreign goods The main sources are the US, Germany and Japan, with Taiwan, Italy, France and South Korea also accounting for significant shares Local production is extremely limited in terms of value, but volume levels suggest the foundation for ascent up the value chain

 Direct competitor

Siemens is the market leader in term of market share of Vietnam’s the healthcare

market Siemens opened Representative Offices in Hanoi and Ho Chi Minh City in

1993 and supplied the first two Magnetic Resonance Systems in 1996 Siemens has successfully installed and operated the Biograph 64 PET.CT and Cyclotron systems at Cho Ray Hospital in Ho Chi Minh City in early 2009 Until now, a broad spectrum of Siemens advanced diagnostics products and solutions was demonstrated at the marketplace which exhibited over 12 stations showcasing solutions ranging from

Figure 7 – Competitors map (Source: Frost and Sullivan analysis)

immunology, chemistry, integrated system, automation, IT solutions, hematology, plasma protein, blood gas, diabetes, urinalysis, microbiology to molecular Especially, Siemens diagnostics products are accounted for 35% of Vietnam market

 Advantages

By further strengthening its presence in the healthcare industry, Siemens Healthcare began expanding their solution portfolio in 2006 with the acquisition of three leading diagnostics solutions providers - Dade Behring, Bayer Diagnostics and Diagnostic Products Corporation

Siemens’s service is good with more than 50 engineers for after sale service

Some key product of Siemen offer very competitive price by producing OEM product from China with low price and fair quality

 General Electric (GE)

GE Healthcare’s partnership with private healthcare facilities, academic and research

centers, Ministry of Health departments, and Ministry of Education departments throughout the region are an integral and important aspect of its business in ASEAN

GE first set up a representative office in Hanoi in 1993, and subsequently in Ho Chi

Minh City in 2001, working in partnership with local organizations GE’s medical

solutions and equipment are present throughout the country, in local and international hospitals, such as Friendship Hospital, FV Hospital, Viet Sing Clinic, Vimec Hospital

o Advantages:

GE only focuses on the healthcare private sector

o Drawbacks

GE only focuses on mid & low budget segment of the market and lacks of qualified staffs for after-sale service

 Toshiba /Hitachi /Shimadzu:

They only focuses on mid & low budget segment of the market There is almost no marketing activity for the companies up to now

 VINAMED

MOH operates a number of medical equipment manufacturing companies, chief of which is the Vietnam Medical Equipment Corporation (VINAMED) These companies often also engage in the import, distribution and servicing of equipment Local production suffers from a lack of advanced technology, and requires external assistance, such as that from General Electric, Hitachi, Toshiba or Shimadzu, to manufacture anything but the most basic items Very few multinational companies manufacture locally

There is almost no marketing activities conducted by VINAMED

There are four main classes of medical device purchasers in Vietnam now:

The largest of which is government-funded hospitals, and these are increasingly buying expensive foreign systems that can serve a large number of patients

Foreign-owned hospitals and clinics are also a significant destination; however, these entities usually purchase supplies from their sponsoring country

Local private hospitals will exhibit the strongest growth

Research and educational institutions will also account for some demand

 PHC Vietnam’s business situation

The price of all PHC’s equipments is high compared to other competitors because PHC

is well-known with most innovative and state-of-the-art technology

Revenue of PHC Vietnam: the Healthcare team expanded greatly in the second half of

2009 with the revenue about 8mils USD From that point of time, the revenue increase gradually every year and the number in 2012 is estimated to 28.6mils USD

Before 2012: all the deals are indirect sale via distributors/ spot dealers The company gets information (tenders, projects, market information, competitors) through distributors

Figure 8 – Revenue of PHC Vietnam (Source: Philips Vietnam)

After 2012: PHC Vietnam gets the license to do direct sale to end-user

The company starts to do this business to the private sector, because it is less complicated than the government sector in term of procedure of purchasing and payment

Philips still maintains the relationship with government hospital sector, but the company prioritizes to develop the new segmentation of private & PPP sector

 Market research

 Research objective

The analysis is to provide PHC Vietnam with an insightful understanding of target customers and to track the loyalty of its customer relationship Beside, the competitors also are researched in the survey

 Target Audience

B1 & B2 customers of Philips Healthcare

Sample provided by respective market, with the account managers informing their customers about the survey

 The Design of Research

NPS can be considered as temperature check that allows Philips to track the loyalty of its customer relationship

NPS is based on the fundamental perspective that every company's customers can be divided into three categories:

Passives (7 or 8)

Satisfied but unenthusiastic customers who can be easily wooed by the competition Repurchase and referral rates are as much as 50% lower than those of promoters

Detractors (0 to 6)

Unhappy customers trapped in a bad relationship

Account for more than 80% of negative word-of-mouth

High rates of churn and defection

Criticisms and bad attitudes diminish a company’s reputation

o The design

Survey is conducted twice a year

In-depth interview with key persons who relate to the decision-making process Average interview length: 6.5 minutes

Fieldwork period: June 2012

o Questionnaire

See appendix

 Key finding

Summary of Promoters – W1’12

Account Name NPS Contact Person Role Type

Tam Duc Heart

Influencer

Bach Mai Hospital 10 Bui Xuan Vinh Manager Decision

Maker Trung Vuong

Hospital

Maker

Summary of Detractors – W1’12

Account Name NPS Contact Person Role Type

Bong Son General

Hospital

2 Nguyen Duc Bang Chief of Diagnosis

Imaging Dept

Key User (Doctor)

Device quality is high, sale-persons are professional (Bach Mai Hospital)

Mechanical and soft parts are large, providing more options to users, image quality and image reproduction are better than those of others (Quang Nam General Hospital)

Figure 9 – Market research (drivers for promotion)

(Source: Philips Vietnam)