How to increase penetration of nokia in rural of vietnam in 2012

Page [1] TRƯỜNG ĐẠI HỌC MỞ TP.HCM UNIVERSITE LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBMM5 Nguyen Thi Thu Hang HOW TO INCREASE PENETRATION OF NOKIA IN RURAL OF VIETNAM IN 2012 MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Tutor: Phd Hoang Thi Phuong Thao Ho Chi Minh City (2012) Page [2] The author – Nguyen Thi Thu Hang - produced this project solely by herself with materials retrieved from either public sources or Nokia’s The paper was made exclusively for the completion of Master in Marketing and Business Management, Solvay Brussels School No substance was used or would be for any other purpose Page [3] I would like to express my appreciation to PhD Hoang Thi Phuong Thao for her supervision of this final project and a deep sense of gratitude to Mom, Mandy and especially Elizabeth for their constant love and supports Page [4] LETTER OF RECOMMENDATION I am writing to confirm that the project entitled: HOW TO INCREASE PENETRATION OF NOKIA IN RURAL OF VIETNAM 2012 Which was prepared by Ms Nguyen Thi Thu Hang has satisfied requirements for a Master project in Business and Marketing Management (part time) She is now qualified to present it to the Jury Yours sincerely, Tutor, Hoang Thi Phuong Thao (PhD) Page [5] ABSTRACT Established since 1996, Nokia is very successful in Vietnam as market leader Its performance in terms of business growth rate ranked number one among global system for the past 14 years 2011 was started with worries of local team due to economy downtrend However, by year end, we’ve realized that severe inflation turns out did not have much influence on the growth of handset market Market keeps on good growth, indeed And Nokia enjoys another year of success But, there are early signs of market saturation in urban of Vietnam Market growth in volume was approximately million pieces in 2011, in which only million pieces was from urban market while another million came from rural one – a “virgin” market which Nokia has spent zero dollars for direct marketing activities The purpose of this paper, therefore, is to study the opportunity to expand Nokia business to rural of Vietnam Strategy is to seek for business growth in 2012 by increasing the penetration in such driven market, so each single dollar we spend would have a higher rate of return on investment In order to that, it is essential for undertaking many researches so we know target consumers’ lifestyle, income, touch points; how cellular phone plays a role in their daily lives; what are the options for cellular phones, from then identify our competitors and how they are doing Most importantly, to find out what is the driven value which leads to a purchase: is it price, is it brand equity or is it the design / features of the product? Relevant desk researches and secondary information are used for the analysis And a qualitative research is conducted in outskirts of provinces, which represent regions: Mekong Delta, South, Middle and North to uncover the truths of rural consumers The findings will finally lead us to Nokia’ SWOT analysis before a marketing strategy is recommended, in which a profitable market segmentation will be selected; treatment for 4P mix is suggested, e.g how to communicate to target audiences effectively; what we should to improve our distribution system; which product portfolio should be introduced, and at what price range This paper will be a ready-to-use menu for all marketing activities Nokia should take in 2012 toward rural market in order to hit 8.4% penetration and 58% market shares in rural by first half of 2012 and maintain it over the year Page [6] TABLE OF CONTENT CHAPTER I: DEFINITIONS Market Share and market penetration Rural Vietnam CHAPTER II: INTRODUCTION Background Problem Statement and Rationales Project Objectives Methodology Scope and Limitation Organization of the Thesis CHAPTER III: SITUATION ANALYSIS Customer Analysis 1.1 Research Objectives 1.2 Specific Research Questions 1.3 Scope 1.4 The design of the research 1.5 Target respondent recruitment criteria 1.6 Samples design 1.7 Area of investigation 1.8 Key Findings 1.9 Section Remarks Competitor Analysis 2.1 Brand Perception 2.2 Samsung Strengths and Weaknesses 2.3 Chinese Brands Strengths and Weaknesses 2.4 Section Remarks Collaborator Analysis 3.1 Operators 3.2 Retailers Macro Environment Analysis 4.1 Political factors 4.2 Economic factors 4.3 Social factors 08 08 09 11 11 12 14 14 14 15 17 17 17 17 17 18 18 18 19 20 23 23 24 25 26 26 27 27 28 29 29 29 30 Page [7] 4.4 Technology factors SWOT Analysis 5.1 Strengths 5.2 Weaknesses 5.3 Opportunities 5.4 Threats Chapter Conclusion CHAPTER IV: RECOMMENDED STRATEGIES AND ACTION PLAN Business Goals Market Segmentation Marketing Mix Strategies 3.1 Pricing 3.2 Products 3.3 Place / Distribution 3.4 Promotion / Communication Action Plan 4.1 Rural Marketing Agenda 4.2 Budget 2012 for rural expansion 4.3 KPIs 31 31 31 32 32 32 32 34 34 34 34 35 40 43 47 52 52 52 53 REFERENCES 55 APPENDIX A 56 APPENDIX B 59 APPENDIX C 62 APPENDIX D 63 Page [8] CHAPTER I: DEFINITIONS The purpose of chapter is to provide (1) theoretical understanding for the difference and relevance between market share and market penetration, and (2) an official administrative definition of Rural Vietnam, so to avoid possible confusion in reading further of this paper Market share and market penetration Investopedia explains market share is the percentage of an industry or market's total sales that is earned by a particular company over a specified time period Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period (normally a year) This metric is used to give a general idea of the size of a company to its market and its competitors Marketeers look at market share increases and decreases carefully because they can be a sign of the relative competitiveness of the company's products or services As the total market for a product or service grows, a company that is maintaining its market share is growing revenues at the same rate as the total market A company that is growing its market share will be growing its revenues faster than its competitors Market share increases can allow a company to achieve greater scale in its operations and improve profitability Companies are always looking to expand their share in addition to try growing market size Often, managers must decide whether to seek sales growth by acquiring existing category users from their competitors or by expanding the total population of category users, attracting new customers to the market by appealing to larger demographics, or convincing current clients to use more of our product/service (by lowering prices, advertising etc.) Market Penetration is a measure of brand or category popularity It is defined as the number of people who buy a specific brand or a category of goods at least once in a given period, divided by the size of the relevant market population ƒ Market Penetration (%) = Customers Who Have Purchased a Product in the Category (#)/Total Population (#) ƒ Brand Penetration (%) = Customers Who Have Purchased the Brand (#)/Total Population (#) Page [9] ƒ Penetration Share (%) = Brand Penetration (%)/Market Penetration (%) ƒ Penetration Share (%) = Customers Who Have Purchased the Brand (#)/Customers Who Have Purchased a Product in the Category (#) So, increasing market penetration could be understood in both dimensions: increasing our competitiveness to competitors (unless market grows faster than brand does) and to increase brand popularity by recruiting new users to the category Increasing market penetration is one of the four growth strategies of the Product-Market Growth Matrix as defined by H Igor Ansoff (1918 – 2002), known as the father of Strategic Management Market penetration occurs when a company penetrates a market in which current products already exist The other three growth strategies are: ƒ ƒ ƒ Product development (existing markets, new products) Market development (new markets, existing products) Diversification (new markets, new products) For the purpose of this project, we will focus on market penetration as a strategic decision to expand Nokia business in 2012 The target market is rural, the most profitable in 2011 should we take return on investment into account However, there are different understandings for rural It is essential to follow one official definition Rural of Vietnam Rural population refers to people living in the rural General Statistic Office (hereafter refers to as GSO) define urban and rural based on population density Page [10] Vietnam Administrative Structure Source: GSO The chart reflects that rural is everywhere, even in national cities like HCMC, the biggest and most modern city of Vietnam The latest report from GOS announces the population of Vietnam is reaching close to 88 million people by end of 2011, in which approximately 61 million is living in the rural, making up 69% of the whole population Page [53] Nokia Investment for Rural 2012 3% 3% 3% 2% 2% Road show Nokia partners stores 22% Retail POSM 11% TV OOH 20% 17% Loud Speaker 17% Internet Room Radio PR Digital 4.3 KPIs Strategic Business Results YTD Nov2011 Exit 2012 Brand Penetration (Rural) – (Source Nokia) Market Volume share (Rural) - (Source GFK) YTDNov2011 YTD2012 37.8% 45% 50% 54% Q4-2011 Q4-2012 75% 80% Impression Time length Media performance (Source Carat media report) 70,166,727 2months TV 25,795,000 Radio 4,102,180 OOH Online 29,736,560 10,532,987 (Segments 500to1miovnd,1to2miovnd) Segment500to1mio vnd Segment1to2mio vnd Sales volume incremental (Rural) – (Source Nokia) Operational Results Marketing communication TOM awareness on Nokia Dual sim – (Source ACN) Operational Results Operational Results Coverage Time length Page [54] Retail communication Coverage for Launch communication (Source Nokia) 90%#7,000 stores Coverage for Road show (Source Nokia) 20%#1,600 stores Last 3months In 4months Road show performance Number of spots covered (Source Nokia) 326 Direct reach for education (Source Nokia) 277,800 Retail development 10% GRA to be converted to Nokia’s partner (Source Nokia) By end 2012 The author believes increasing penetration in rural is a strategic direction for expanding Nokia business, not only in year 2012 but years after In the past, all concentrate on urban population However, the market is now getting closer to saturation point and urban consumers are now wealthier and more sophisticated Marketing and product ranges need to adapt to the new demands, while, at the same time, identifying new needs of emerging market, rural And there, Nokia would maintain its stronghold, challenging all fierce competitions that could be Page [55] REFERENCES Nokia internal report 2011 GFK report 11/2011 TNS report 2009 http://en.wikipedia.org/wiki/Market_penetration http://www.ftpress.com/articles/article.aspx?p=463943&seqNum=5 http://www.quickmba.com/marketing/plan/ www.business-in-asia.com www.gso.com.vn www.investopedia.com http://vietnambusiness.asia/vietnam-telecommunication-and-it-industry-sees-qualitativechanges-in-2011/ http://searchtelecom.techtarget.com/definition/3G http://searchmobilecomputing.techtarget.com/definition/GPRS Page [56] APPENDIX A IN-DEPTH INTERVIEW (verbatim) Discussion topic: View toward life • • • • • • • “Higher income due to price increase of agriculture & husbandry products” “Not only reliant on farming; more opportunity to earn more from odd jobs thanks to urbanization (i.e mason, breakdown mechanic, in barbershop or working in small workshops in Binh Dinh)” “Now we can save a bit for buying necessary items that provide better comfort to our life Every household now can own motorbike or mobile phones” “Life is much improved now Before we don’t know whether we can get enough for surviving Now most families in our commune can own TV, VCD and motorbikes” “Life is better now…my family owns some basic durable items such as TV and VCD…of course, we looking for some other necessary items such as mobile phones or refrigerator which make our life better” “Of course, we looking for better material life in the future…thinking of purchasing one more motorbike for my son when having this crop harvested” “If I have money, I would buy a new mobile phone with more functions that I can listen to music It will entertain me after working hours on the field” Discussion topic: Motivations behind Category Adoption • • • • • • • • “I usually cal friends or consultant to ask information about taking care rice, insecticide” – Mature,Thai Binh “I call the dealers to come for purchasing right way on the field” – Mature, An Giang “All my friends have their own mobile phone I have to buy one so that they can call me if there a vacancy” - Young Adult, An Giang “Mobile help me entertain when going out to work in rubber plantation” – Adult, Binh Duong “My husband is away for working I have to buy a phone in case he call home late at night” Married Female, An Giang ““If I call to my boyfriend's house landline, I will get shied with his family members I rather call him by mobile phone to get direct contact” - Single Female, Thai Binh “I am studying far away from home so it’s quite bored at night Luckily, I can listen to music or surfing web with mobile phone” – Teen, An Giang “My parents not allow me to go out at night, so I use my mobile phone to text my friends to ask about studying” – Teen, Thai Binh Discussion Topic: Purchase decision journey Page [57] • “I didn’t find Samsung and Nokia prices significantly different, while Samsung looked more glossy with the line around so I chose Samsung” - Adult Male, Binh Duong • • • • • • • • • “My main purpose to use mobile phone is for communication, so I just thought that I would only need something that was cheap and durable” - Mature male across groups “My husband and I were clear in mind that using mobile phone for communication My husband was using that Nokia so we went to the store and picked Nokia without thinking much We just had that amount of money so that was our only choice.” – Adult female, Thai Binh “ If I bought an expensive phone, when I went to work, rubber sap would drop on it and it would stop working anyway so I just bought a cheap one” – Male, Binh Duong “I loved my phone to have music feature as I work deep in the forest where there is nothing for entertainment I didn’t have much money so I would look for something that was at affordable price yet offered my desired features’ - Male, Binh Duong “I lived far away from my home and I didn’t have much entertainment activities therefore I asked my parents to buy me a mobile phone that could access to the internet then I used it for searching purpose for both study and entertainment” – Teen, An Giang “A few years ago, a lot of my friends used Chinese phone that were under mil but had many functions i.e camera, taking pictures, music so I asked my parents to give me the money to buy” - Young male, Thai Binh “I loved Nokia touch-screen as I heard that Nokia touchscreen was very durable Then Nokia touchscreen turned out to be too expensive Then I saw Samsung with touchscreen and knew that its price was affordable Samsung brand name is a popular one so I picked this” – Female “Before going to the store, I knew that Nokia was durable, and the keyboard was easy to use so I like it That day we went to the store and I chose Nokia models, which was very beautiful yet was too expensive for me to buy Then I didn’t choose Nokia but turned to other brands I found this Q mobile looked nice with camera so I bought it” - Young female “I have young children Before, I used a mobile phone that looked beautiful and it was expensive My children played with my phone and damaged it Then I bought cheap one Nokia is cheap and durable as well No matter how my children plays, it is durable In case it is damaged, I think I would not feel so bad because it’s cheap anyway” – Female, An Giang • • • “When I use mobile phone, if people needed me to work for them, they would call me directly So when I lost my mobile phone, I needed to buy a new one immediately so that I could get jobs to I borrowed money from my parents, about 600k Then I went to the stores to ask if they had phones below 600k They recommended me this and I bought it right away” – Young Male “When I went to school, I needed a moblie phone that had internet access to search for ways to solve a hard exercises Now I stay at home, working on the field with parents thus no needs to use the internet Making and receiving calls are good enough for me” - Young male, Thai Binh “I studied too much and I was so stressful that I wanted a mobile phone with music feature for entertainment I told my parents to buy new mobile phone for me because my current phone Page [58] • • didn’t have music feature and the internet shop was always crowded so I couldn’t go there to listen to music” - Teen boy, Binh Duong “I saw K-Touch TVCs and found it quite beautiful with many functions, camera, pictures so I went to the store to ask about it I also looked around for Nokia and Samsung, yet this was the only of which price best suited my budget so I just bought it” Male adult - An Giang “I liked the Nokia that my friend use with the camera, taking pictures functions, the design was nice as well I asked the seller and find Nokia more than mils I didn’t have that much money so I gave it up Then I found Samsung with camera and taking pictures that only costed 1,2 mil and it looked nice as well I wished I had money to buy Nokia that time” Young female, Thai Binh • “When I saw K-Touch TVCs with multifunctions, I liked it as it had many functions i.e camera, taking pictures, memory cards and it looked nice so I asked about it first thing when I came to the store” – Young female, An Giang Discussion topic: Brand Perception • • • • • • • • • • • “Nokia is durable, user-friendly functions, good quality” - Young Adult, Male, Binh Duong “Simply put, the design of Nokia is a bit plain, more simple than other brands” - Adult Male, Binh Dinh “Nokia is durable, good quality of calls, clear quality of pictures taken” - Young Adult, Male, Thai Binh “Samsung is also an authentic brand, it’s more affordable” - Mature Adult, Male, An Giang Bad keyboard and cable, broken easily Samsung is also a famous brand but quality of calls is worse than Nokia because either the reception or the device is bad” - Mature Adult, Male, Thai Binh “Nice color and design Clear quality of loudspeakers” - Mature Adult, Male, Thai Binh “It takes more time to text on Samsung devices The operating system runs slower” Teenagers, Binh Duong “Chinese brands include many functions video recording, camera, music player Dual sim Able to go online Affordably priced, fit my budget” - Adult Male, Binh Dinh “Chinese mobiles get broken easily, need to fix them many times” - Adult Male, An Giang “I’m impressed with Q Mobile’s affordable price, dual sim’ - Adult Female, Binh Duong “Chinese mobile phones are not durable” - Mature Adult Male, Binh Duong Discussion topic: Response to Nokia 1280 • • • • “With the price of 500k, there must be other functions” – Teen, Thai Binh “It doesn’t have many features” - Mature Male, Binh Duong “There is no difference between color and monochrome screen” – Teen, An Giang “I think it is affordable, I can stretch my budget to buy it” - Mature Male, Thai Binh Page [59] APPENDIX B: VIETNAM DISCOVER – TNS REPORT 2009, RURAL ZOOM-IN Page [60] Page [61] Page [62] APPENDIX C NOKIA PRODUCTS DATA SHEET Page [63] APPENDIX D NOKIA BRAND PENETRATION AND MARKET SHARE PROJECTION IN 2012 Brand Penetration YTDNov2011 Nokia Volume share Target YTDNov2012 Market size Nokia Vol per month Nokia Volume share Market size Growth rate Market size Nokia Vol per month Volume Growth (incremental) Segment 500to1mio 37.8% 1,806,000 62,061 50% 135% 2,436,004 110,727 78% Segment 1to2mio 45.0% 1,867,000 76,377 54% 152% 2,835,030 139,174 82% Total rural 54.0% 6,152,000 302,007 58% 132% 8,139,096 429,152 42% Nokia Volume 3,322,080 4,720,676 Population Rural Brand penetration 60,832,711 60,962,398 0.21% 6.0% 8.4% 42% Total Vietnam 54.3% 14,494,847 715,518 42% 56.0% 18,630,791 948,477 33% Nokia Volume 7,870,702 10,433,243 Population VN Brand penetration 87,840,000 88,766,298 1.05% 9.8% 12.8% 31% Population Rural, Growth Population Rural Growth Vietnam Growth 2008 60,445,600 85,118,700 2009 60,440,300 99.99% 86,025,000 101.06% 2010 60,703,300 100.44% 86,927,700 101.05% 2011 60,832,711 100.21% 87,840,000 101.05% 2012 60,962,398 100.21% 88,766,298 101.05% Page [64] Market size – Nokia size Rural Market size Nokia vol share Nokia vol Market growth Nokia growth Total market Nokia share Nokia vol Market growth Nokia growth YTDNov09 2,865,000 66.9% 1,916,685 8,305,000 61.8% 5,132,490 YTDNov10 4,027,000 57.4% 2,311,498 140.6% 120.6% YTDNov11 6,152,000 54.0% 3,322,080 152.8% 143.7% Avg 147% 132% 11,277,000 53.6% 6,044,472 135.8% 117.8% 14,495,000 54.3% 7,870,785 128.5% 130.2% 132% 124% [Chart - Volume share segment 500to1miovnd – Rural – GFK 11/2011] Page [65] [Chart - Volume share segment 1to2miovnd – Rural – GFK11/2011] [Chart - Volume share – Rural – GFK 11/2011] Page [66] [Chart -Volume share 2009-2010-2011- Rural/Vietnam – GFK 11/2011] [Chart - Segment growth YTD2010-YTD2011- Rural – GFK 11/2011] Page [67] [Chart - Brand share growth YTD2010-YTD2011- Vietnam – GFK 11/2011] ... us to understand the definition of Penetration and to define rural of Vietnam CHAPTER II - INTRODUCTION: to introduce the background of Mobile Industry of Vietnam and how Nokia Vietnam is doing,... ready -to- use menu for all marketing activities Nokia should take in 2012 toward rural market in order to hit 8.4% penetration and 58% market shares in rural by first half of 2012 and maintain it... that Nokia offers GR with branded cabinets, signages, showcases to increase its in- store visibility Since 2008, mobile chains & CESs have started to expand their network in provincial towns and rural