MINISTRY OF EDUCATION & TRAINING UNIVERSITE LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL
MBMM PROGRAM
Huynh Ba Chan Nhu
STRATEGIC MARKETING PLAN FOR CASUMINA 2008-2010
FINAL PROJECT
MASTER IN BUSINESS & MARKETING MANAGEMENT
Tutor: Dr Tran Xuan Kiem
Ho Chi Minh City
Trang 2ACKNOWLEDGEMENT OF COMMITMENT
I, Huynh Ba Chan Nhu, have prepared and conducted this “Strategic Marketing Plan for Casumina 2008-2010” as the final project of MBMM program
With the approval and keen advices of Mr Le Van Tri, Sales and Marketing Director of The Southern Rubber Industry Company and his team, the project has been accomplished by myself and served the company as a real case
I trust the legality of all references, information sources, and materials using to
Trang 3ACKNOWLEDGEMENT OF APPRECIATION
I would like to say thank you so much to many people who have given me helping hands in this project Your inputs and encouragement are treasureable for my project accomplishment
First of all, I would like to show my great appreciation towards Dr Tran Xuan Kiem who has provided me a lot of insightful feedbacks and devoted guidance to my work I simply can say, it is a great chance for me to be with you
I’m also thankful to Mr Le Van Tri, Sales and Marketing Director of the Casumina for giving me an opportunity to study about Casumina case and spending your valuable time giving me a lot of market insights Next, I’d also like to send many thanks to Mr Bui Quoc Long and Mr Pham Duc Dat, Sales Executives for their
Strong supports
I'd also like to take this opportunity to present my grateful heart to all professors, lecturers and tutors from the Open University of Ho Chi Minh city and the Solvay Business School In the last one and a half year, you have full-heartedly directed us to the broad path of updated knowledge treasure Besides, I’d like to present my deep thanks to the Post Graduate Office and our program coordinators, Ms Bui Phan Bao Tran, Mr Serge Bywalki for your kind supports, and especially Ph.D Le Thi Thanh Thu for her encouragement at the enrollment stage
I'd like to convey my sincerely thanks to my classmates and my group who have shared with me a lot of information and help
Trang 4TABLE OF CONTENTS ABBREVIATIONS LIST OF CHARTS AND TABLES EXECUTIVE SUMMARY INTRODUCTION
CHAPTER 1 ABOUT THE COMPANY 1.1 Establishment and achievements
1.2 Mission
1.3 Corporate goals
1.4 Core competency and sustainable competitive advantage CHAPTER 2 SITUATION ANALYSIS 2.1 SLEPT Analysis 2.1.1 Social factors 2.1.2 Legal factors 2.1.3 Economic factors 2.1.4 Political factors 2.1.5 Technological factors 2.2 Industry Analysis 2.2.1 Market demand 2.2.2 Raw material supply
Trang 52.4.2 Weaknesses 2.4.3 Opportunities 2.4.5 Threats 2.5 Customer Analysis 2.5.1 Customers’ decision-making process 2.5.2 Influencers 2.5.3 Purchasing drivers 2.5.4 Key success factors
CHAPTER 3 MARKETING STRATEGIES FOR AUTOMOBILE TIRE 3.1 Marketing and Product Objectives 3.2 Marketing Goals 3.3 Segmentation and Targeting 3.4 Point of Difference 3.5 Positioning 3.6 Marketing Strategies for Automobile Tire 3.6.1 Market penetration
3.6.2 Market share expansion 3.6.3 Brand image building
Trang 64.2.2 Financial projection 4.2.3 Budget planning 4.3 Implementation 4.3.1 Corporate structure 4.3.2 Corporate culture 4.3.3 Human Resource
Trang 7AFTA ASEAN BPTO B2B B2C CRM DRC ERP FDI GDP HCMC ISO JIS MIS OEM PNTR R&D SBU SRC US USD VND WTO ABBREVIATIONS
Asean Free Trade Area
Association of South East Asia Nations Brand Price Trade Off
Business to Business Business to Customer
Customer Relationship Management Danang Rubber Company
Enterprise Resource Planning Foreign Direct Investment Gross Domestic Product Ho Chi Minh City
International Organization of Standardization Japanese Industrial Standards
Marketing Information System Original Equipment Manufacturer Permanent Normal Trade Relation Research and Development
Trang 8il
LIST OF CHARTS AND TABLES
CHARTS
2.1 Brand Positioning Map
2.2 Casumina Distribution System
3.1 Ansoft Matrix Model for Casumina
4.1 Revenue of Casumina 2000-2010
TABLES
2.1 The Number of Registered Vehicles
Trang 9il
EXECUTIVE SUMMARY
Casumina has had good business on tire and tube production during past years when the brand knowledge was scarce and not an important component of success It was enough to develop a product with right balance of quality and price, and good distribution Certainly, the quality, price and distribution are still highly important factors for success in the marketplace But today success requires more Brand equity and long-term strategic marketing plan count a lot to sustain a company’s competitive advantage The Strategic Marketing Plan has prepared for Casumina to outline analysis on Casumina’s problems, opportunities, ambitious goals, and actionable programs to enhance its brand image perception and obtain the leader position in the new automobile tire
market of Vietnam
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optional in this plan The message of “international quality standards” is found key for the brand communication
Next, price plays an important role in a brand success, especially in B2B segment However, it is better to be perceived “cost effective” than “reasonable price” In short, the quality and price factors of Casumina automobile tire need to be in balanced equation, or even better with “value for money” perception
Thus, research on Brand Price Trade Off and Brand Health Tracking are also
designed in the program to ensure that Casumina has adequate tools to keep
track the market trend
Moreover, other marketing programs are also very critical for Casumina to gain leading position in automobile tire market They are considered as milestones of Casumina’s strategic planning
e In line with above the line activities, we giving Casumina a new and outstanding identity in showroom, point of purchase
e B2B sales will be more focused for its great contribution to sales and potential growth
e Modern tools to improve management like ERP and CRM are on development As the market leader, Casumina is actually looking at best supports to the business development
Trang 11Furthermore, to implement these programs, Casumina commits to some changes in terms of organization and corporate values Firstly, the company is bound to build professional and specialized teams which have separate functions Then, the corporate values will be more customer orientation than sales But easy said than done We all knew that these changes are critical as they are so deep and wide in an organization and might effect to the resource turnover However, they are also found critical for Casumina to sustain in the marketplace nowadays
Trang 12INTRODUCTION
Today many Vietnamese companies are taking advantage of bilateral trade agreements like AFTA, PNTR and WTO to expand their business to the
international marketplace And at the same time, these same trade agreements
are bringing more foreign competition into Vietnam These foreign competitors often have decades of branding experience behind them, and more liberal taxation policies that permit freehanded marketing expenditure For these reasons, most of Vietnamese companies have faced a lot of difficulties in domestic as well as international markets, especially when their operations are sales driven and almost neglect branding strategies
The Southern Rubber Industry Company with Casumina brand is one of the cases Though the company achieved the revenue of 100 billion US dollar, 40%
share of tire and tube market, and 94% mindshare in 2006, its brand has not yet
been perceived very positive by their customers Therefore, I have decided to work on the Strategic Marketing Plan for Casumina 2008-2010 in the hope that I can contribute some ideas for the Management Board to improve their brand performance and to succeed in competition
Trang 13of bias tire in the future Therefore, the plan has also given an emphasis on promoting Casumina’s radial tire products
The plan is supported by secondary information from desk research and primary
information from two research studies as follows:
— The “Casumina Brand Imagery Assessment” Study was conducted by
Axis Research in January 2006, with 10 in-depth interviews to automobile tire
retailers and a sampling survey of 200 purchasers of transport service companies in HCMC
— The “Casumina Brand Health Check” Study was conducted by Axis
Research in October 2006, amongst three actors in the brand decision making
process: retailer (n=100), car/ truck owners (n=100) and drivers (n=240) The
survey covered four main regions: HCMC, Dong Nai, The Central (Hue,
Trang 14CHAPTER 1
ABOUT THE COMPANY
11 ESTABLISHMENT AND ACHIEVEMENT
From a state owned company having been established since 1976, the Southern Rubber Industry Company (Casumina) became a Joint-Stock Company in 2005 The company has 7 factories and 2500 employees Casumina is now the largest
tire and tube producer in Vietnam, with the turnover of 100 million US dollar in
2006 and 40% share of Vietnamese tire and tube market Casumina is also a
partner in a joint venture with Yokohama (Japan) and Continental (Germany)
More than past 30 years, Casumina has got several significant achievements In particular, for years Casumina has been largely voted by consumers as a Vietnamese High Quality Goods Producer, and it continuously improves its production standard with ISO 9001-2000 management Furthermore, with the newly invested assembly lines of radial tire in 2003, it became the first local producer introducing radial tire into Vietnamese marketplace in 2005 Especially, Casumina ranks 69 amongst 75 top tire and tube producers in the world, being one of the only three producers ranked in ASEAN By any standard, this is a great success of Casumina
1.2 MISSION
Trang 151.3 CORPORATE GOALS
In the coming years, Casumina aims to achieve the following major goals: Non-financial goals:
1 To maintain the leadership in the tire production industry of Vietnam
2 To promote to higher rank in top 75 tire producers in the world by considerably increasing its turnover
3 To support and control up to retail outlet level in order to maximize sales volume and to ensure consistently strong brand exposure
4 To leverage the brand image so that the company can tap into a more premium segments of the market
Financial goals:
1 To capture a turnover growth of 20%-30% per year 2 To obtain a return on equity of 30%
14 CORE COMPENTENCY AND SUSTAINABLE COMPETITIVE ADVANTAGE
— With the long history of establishment, Casumina has strengthened itself
with profound know-how, rich experience, and nationwide distribution network
— Casumina provides the local market acceptably good quality products at
affordable price
— Casumina is also an entrepreneur in the local market by introducing radial
tires and pre-empting competitors in this segment
— Technology advance is another competitive advantage of Casumina to
Trang 16CHAPTER 2
SITUATION ANALYSIS
2.1 SLEPT ANALYSIS
2.1.1 Social factors
- Vietnam has a large population, over 83 millions; about 50% of households earn more than USD 1,000 (Appendix /)
- The fast industrialization and improving Vietnamese living standards lead to high social mobility, i.e the expenditure on transportation is getting higher - Consumer patterns have changing, customers begin to demand the lifestyles associated with modern technology, convenience and comfortability, e.g better transportation service
2.1.2 Legal factors
- Distribution of tire is not open to foreign companies until 2012
- Ongoing reforms to the bureaucracy in Vietnam, in a bid to speed up the approval regime for foreign investors and make it more transparent
2.1.3 Economic factors
- Vietnam has been one of the fastest — growing economies in Asia over the past five year, average growth of 7.5% per year Real GDP growth (percentage
change from a year earlier) is estimated at 7.7% in 2007 (Appendix 2)
Trang 17- Investment, together with consumption, is key driver of Vietnamese growth Investment grew in real terms by 19.3% and FDI inflows by 10.6% in 2005 - The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 20% in 2004 - Vietnam has fully joined WTO in early 2007, i.e more chances to exports tire products to other countries in the world
- Vietnam is in the trend of fast urbanization and infrastructure development, which facilitates the increase of vehicles, especially cars (Table 2.1, page 9) 2.1.4 Political factors
- The government appears determined to push ahead with the market oriented reforms necessary to double 2000’s GDP by 2010, as targeted
- The government shows to work more efficiently and effectively, with the obviously seen red tape cut off to attract more foreign investment
- Relations with the US are improving with the event of Vietnam gaining the
Permanent Normal Trade Relation (PNTR) in late 2006
2.1.5 Technological factors
Trang 182.2.1 Market demand Table 2.1 Automobile registration The number of vehicles in Vietnam 2003 2004 2005 2006 Total 461,000 528,500 602,000 700,000 1 | Passenger car =< 9 seat 137,200 178,200 209,000 250,000 2 | Mini-bus | 10-16 seat 47,600 42,600 47,000 52,000 3 | Mini-bus 2 17-25 seat 10,000 7,700 8,000 9,000 4 | Bus > 25 seat 21,800 21,700 25,000 29,000 5 | Light truck =< 2 ton 50,200 79,800 95,300 119,000 6 | Truck > 2 ton 116,800 118,000 130,500 150,000 Special purpose 7 | vehicles 49,200 55,500 58,200 60,000 8 | Others 28,200 25,000 29,000 31,000
Source: The Office of Transport Registration — Vietnam (2006)
As illustrated in the above table, the number of vehicles in Vietnam increases
every years, e.g by 16% in 2006 compared to 2005 And according to the survey conducted among 204 transportation service companies in Jan 2006, most of the
automobile owners (87% of the total) would replace with the new tire when the current hemp liner is worn out, and about three fourths (76% of the total) do the
replacement every 6-12 months (Appendix 3) This certainly results in the greater demand for tire year by year
The growth rate of Vietnamese automobile market is estimated around 10% in
2007 (versus the world growth rate of 3%) and will be even greater in the
coming years for the following reasons:
Trang 192.2.2 Raw material supply
The supply of natural rubber in Vietnam seems to be abundant, 600,000 tons whereas rubber industry only consumed 70,000 tons in 2006 In addition, a lot of raw materials still have to be imported from oversea (Appendix 5)
2.2.3 Industry capacity and output
When producers all over the world move to radialization from bias-ply, Vietnamese producers fail to meet the market demand of radial tire, the local capacity is just 38% of the total consumption Casumina is the only domestic
producer of radial tires with 50,000 pieces in 2006
Table 2.2 Capacity versus Consumption of Automobile Tire Total Capacity consumption Local supply Import Radial tires 500,000 1,312,000 50,000 1,262,000 Bias tires 3,800,000 2,100,000 1,650,000 450,000 Source: The Office of Statistics and Customs — Vietnam 2006 2.2.4 Export
With high capacity, Vietnam exported automobile tires overseas up to 260,000 pieces of bias tire in 2006 Casumina accounted for 60% of the total export
volume (180,000 pieces of bias tire)
New investors like Kumho and Chengshin expect to export 95% of their production to oversea This is obviously a common trend of other well-known tire producers that they move their factories to developing countries like
Vietnam and other Asian countries (Thailand, Indonesia and China) and back
import products to developed countries
2.3 COMPETITOR ANALYSIS
Trang 20The findings of the nationwide survey conducted among three actors (retailers, owners and drivers) in early 2006 show that DRC is apparently the direct competitor of Casumina across regions on availability, brand awareness, levels
of selling (retailer), buying (owner) and using (driver) (Appendix 7, 8, 9) - DRC has the same retail coverage with Casumina (78% versus 79%)
- DRC is just right behind Casumina on all levels of brand awareness in general and in particular HCMC, Hanoi and Dong Nai Located in Danang, DRC is obviously dominating the Central regions (Hue & Danang) on all measurements; it gains even higher brand awareness and purchase levels than Casumina (Appendix 10)
- In addition, DRC especially appears leading in bias segment with high brand awareness among retailers, high purchase levels among owners (Appendix 11, 12)
- DRC also gains higher conversion rate from ever purchase to most often purchase compared to Casumina among owners (57% versus 44%)
- Similarly, DRC is almost on par Casumina on most often usage level among drivers in Hanoi (Appendix 13)
— Last but not least, DRC is also perceived slightly better Casumina on “quality attributes” (durable, takes long to be worn out) (Appendix 14) This is probably a critical reason for owners tentatively to be more loyal to DRC than Casumina (Appendix 15)
While the segment of bias tire is clustered with local brands like Casumina, DRC and Sao Vang Rubber Company (SRC), the other one of radial tire is dominated by well-known foreign brands like Bridgestone, Michelin, Chengshin, Yokohama, Kumho, Goodyear and Hankook
Trang 2110
- The above mentioned foreign brands are especially main threats to Casumina’s growth in the segment of radial tires with higher availability, selling, buying and using levels than Casumina among retailers, owners and
drivers (Appendix 17, 15, 19) Moreover, these brands are also better associated
with “quality” and “prestige” attributes than Casumina
=" Michelin and Bridgestone clearly have similar positioning as they both are well-perceived of “reliable”, “well-known”, “consistent quality” and
“technology advanced” brands
" Yokohama, Hankook and Chengshin seem to be close to each others in terms of positioning They all have been associated with positive attributes such as “durable”, “high safety”, “smoothly run”, “reliable”, “consistent quality”, technology advanced”, “wide range” and “popular brand” by either retailer,
owners or drivers
Chart 2.1 Brand Positioning Map - Owners
Row profiles and Column profiles on axes 1 and 2 (78% ) 0.25 0.2 | Smpothly run @ High durabiity 0.15 i Chengsing Good loading capability 0.1 ¢ DRC + ¢ Consisten quality Lite thermogentic e °® Yokohama Has many attractive promotions D h i ° °
0.05 6 Co et High safety
A @ Grip the road well
' Fast, good maintenance service :
^ @ Reasonable price Suitable to Vietnanese w eather &
= 0 + road condition
= Cc i ‘ : :
bu K Hà © Costeffective Hancook Micheline
œ -0.05 Good customer services @ a wc o 6
a Se once! @ Wide availability Diversified types/ sizes Prestigious brand
° II
Trang 2211
2.4 COMPANY ANALYSIS 2.4.1 Strengths
— Management: Casumina’s management has successfully captured the market trend and its opportunities It has had a right and in-time strategy to change the product focus from motorcycle to automobile tire since 2000
- Technology/Know-how: Casumina has solid experience and technology in manufacturing tire especially for Vietnam's weather and road condition Casumina invested 100 billion dong in JIS for radial tire production in 2003 in order to pre-empt other competitors and meet the market demand Casumina also has the best laboratory in rubber industry in Vietnam
— Offerings: Casumina’s product strategy used to work on price base and economy of scale Casumina is therefore well-perceived of “reasonable price” As the market leader, Casumina now tentatively levers its price It currently sets its price on par with its direct competitor-DRC on most of its products and even higher price than DRC on some particular products that Casumina leads ahead in terms of quality and technology Its price however remains lower than foreign competitors, Michelin and Bridgestone by 20-30% Besides, Casumina has provided customer services like replacement and maintenance
— Branding: Casumina automobile brand has inherited its good imagery from its umbrella brand in motorcycle as a mass and leading brand This is apparently a competitive advantage of Casumina in automobile tire market
— Distribution: Similarly, since its launch in 2000, Casumina automobile tire
Trang 2312
network as it has highest availability (78%, nationwide), especially in the South East (97%) (Appendix 7)
Casumina follows a geographical distribution strategy and control up to
wholesale level, as follows:
Chart 2.2 Casumina Distribution System Casumina HCMC (29%) & South East (13%) Mekong Delta (5%), Central (13%) and North (40%)
Showroom Sales Wholesalers at Distributors
agents Tan Thanh
hrrnrnrrrrTrrrrrrrrrrrẺ Ỷ Vv
Retailers Retailers
y
Customers
—> Flowofsales = - Horizontal commercial transaction
Overall, Casumina sales’ distribution has been assessed highly effective Casumina has cleverly taken advantage of the distribution network which is developed by distributors, sales agents and wholesalers, as such Casumina has established long-term relationship with partners, saved cost on sales personnel and found opportunities to further distribution expansion
Trang 2413
Casumina also proves itself a dominant player of bias tire with most often selling, buying and using 41%, 30% and 34%, respectively (Appendix 9, 21, 22) 2.4.2 Weaknesses
— Research & Development (R&D): Casumina has not yet a standardized process of R&D in which technical test is in close connection with consumer poll Though Casumina conducted product trial tests among transport companies
prior the launch of radial tire, these tests have not been done in an objective
way and up to professionalism standard (i.e branded test, lack of comparison with competitors’ performance and quality control during data collection) Any innovation should not be treated as the R&D department’s task alone but a project assigned for a team including R&D, Marketing, Sales, Sales planning, Production Planning and all kinds of Buyers
— Offerings: Casumina has not yet well-perceived as a “good and consistent good quality product” (Appendix 14, 16, 20) It is commented of “reasonable
price”, but not “value for money” In other words, we have offers to the market
reasonable priced product but not as good quality as customers’ expectation Therefore, this is a major problem that Casumina needs prompt actions in its strategic plan
Trang 2514
— Distribution: Sometimes, there remain sales conflicts among region, i.e a distributor of one region sells products to others’ regions Moreover, Casumina emerges weakest in the North and the Central (Appendix 24, 25)
— Marketing/ Sales supports: Not many marketing activity has been done to pull customers to Casumina during past years Therefore, image of Casumina from customers’ eyes does not come out clearly while customer’s recalls of sales supports and after sales services to “push” products in the market come out vigorously “Pull” strategy is somehow neglected Furthermore, annually marketing budget has not been set aside for the whole year program, but only allocated according tasks This does not give us a good control on the marketing program and its effectiveness as a whole picture
2.4.3 Opportunities
- Domestic supply of natural rubber is abundant
- Labor is low cost, but skilled, well-trained and experienced
- With best distribution network in Vietnam, Casumina is considered as the
most potential partner for any foreign producer looking for business opportunities in automobile tire or in particular radial tire market
- Joined WTO in early 2007, Casumina has more opportunities to expand its production for exports
- The tire and tube industry, on one hand, has very positive investment outlook as the local automobile market grows approximately 10% per annum Moreover, a lot of well-known producers tend to transfer production from their countries to Vietnam, bringing more opportunities to consume its abundant natural rubber, to recruit local labor and improve know-how/ technology
2.4.4 Threats
- On the other hand, the huge wave of foreign investment into the tire industry could leave high pressure on Casumina in competition
Trang 2615
= Kumho Joint Venture has its factory being constructed and expects its full operation in 2008 The factory is designed for 3,000,000 radial tires per annum
= Chengshin hopes to operate its factory in the end of 2007, with the
capacity of 3,000,000 radial tire per annum
- Besides, VinaChem, a local producer is also in search for partners in its tire
production plan, with capacity of 2,000,000 radial tires per annum
- Open policy to foreign producers in distribution could be a danger for Casumina, especially when Vietnamese customers are more likely to favor imported product than locally produced products, and radial tire product is not very much sensitive to price like bias (Appendix 26)
2.55 CUSTOMER ANALYSIS
2.5.1 Customers’ decision-making process
Tire is an industrial product of high value, thus the decision making process involves more than one actor There are two main actors in the decision making process: buyers and users The buyers of tire can be individual car owners with personal usage, original equipment manufacturer (OEM) and purchasers of transport service companies for commercial usage However, the users of tire products are not always the same persons with the buyers, most of the time the users of tire are drivers, working for car owners or transport service companies 2.5.2 Influencers
The research findings highlight some insights underlying in the decision making process of this kind of product (Appendix 27), in details:
-— The buyers are mostly dependable on their own experience when comes to the decision of buying tire products
Trang 2716
- The following factors are also found very important are drivers and sellers’ recommendation
— Lastly, other sales and marketing efforts of automobile and tire producers via
leaflets/ brochures, sales representative come next as important factors
Besides, some differences are noticeable among cities Buyers in HCMC tend to trust themselves and disregard other influencers On the other hand, buyers in Hanoi and the Central are more influenced by their colleagues in transport industry than any else (Appendix 28, 29, 30)
2.5.3 Purchasing drivers
Moreover, purchasing drivers for buying radial or bias tires are different Buyers of radial tire are mainly owners or purchasers of passenger cars, light truck, thus they needs tires for comfortability of passengers and high speed, in particular “high durability, long-lastingness”, “smooth run”, “good loading capability”, “high grip to road” and “high safety” Meanwhile buyers of bias tire are mainly purchasers of goods transport service companies owning heavy trucks or special vehicles, therefore they are more favorable to commercial benefits like “good loading capability”, “high durability, long lastingness” and “reasonable price” (Appendix 26)
2.5.4 Key success factors
Trang 2817
CHAPTER 3
MARKETING STRATEGIES FOR AUTOMOBILE TIRE
3.1 MARKETING AND PRODUCT OBJECTIVES
In the trend of radialization, Casumina sets its strategic focus on the growth of radial tires in the next coming years; to become the first and best producer of
radial tires in Vietnam
Moreover, Casumina also aims at expanding its radial tire products to export markets That Casumina targets to become the most preferred local partner to foreign investors in tire industry is assessed achievable for the two main reasons:
- Casumina has strongest distribution arm in Vietnam
- Almost all well-known tire producers in the world are looking for their opportunities to transfer production base and technology to countries which have a plentiful source of natural rubber
Last but not least, another main marketing objective of Casumina is to further improve radial tire’s product quality as well as customers’ perceived quality As such, any opportunity to cooperate with foreign investors in radial tire industry might help Casumina take advantage of its partner’s know-how And marketing communication is suggested to focus on quality matter of Casumina radial tire in coming years
3.2 MARKETING GOALS
Trang 2918
— Sales target of automobile tires is 700,000 units in 2007, increased by 14%
compared to previous year (in which radial tire contributes 30% of sales, i.e 210,000 units) and approximately by 30% in the consecutive years as both domestic and export market are growing very fast and radial gradually replace bias tires The market share of automobile tires is expected to increase from
18% (2006) to 25%-30% in the planning years
— Firmly set foot on all channels in all regions, Casumina aims to increase its
availability from 79% to 95% nationwide Casumina will pre-empt new competitors in display and selling with strong branding, vigorous communication on quality
- Since 2006, Casumina has also worked for the benefits of share holders It expects a net profit of 67 billion VND (4% of turnover) in 2007 and even more in the following years (4-5% of turnover), in comparison with 45 billion
VND, (3% of turnover) in 2006
— Development of brand strategy is an important task of Casumina when it enters international markets and competition in local market gets tough
= The brand is actually in the situation that urges a need of repositioning in the way that it can obtains relevant market leader’s associations, unique brand personality, mainly anchoring on “brand reliability/ reputation” and “product quality” (consistence, durability, safety), especially in radial tire segment Otherwise, it can be defeated by foreign and long- established brands
=" The brand also needs a strong brand identity which also clearly communicates “quality ” message
=" Sub-brands for each segment which are more customer-oriented are suggestively considered to help Casumina have different customers’ associations by segment and more importantly create a more premium image
Trang 3019
3.3 SEGMENTATION AND TARGETING
We can define the target automobile tire market into two segments:
— B2C: Customers who own 1-2 cars or light trucks buy tires for their personal use
- B2B: Buyers for spare parts of logistics or transport service companies (OEM, taxi, logistics, and travel agents) Their fleets are usually large in
number However, in Vietnam there are some commercial customers like co-
orporatives includes many private business owners who behave like B2C customers
Target customers of bias and radial are also found having different needs as follows:
— Customers of radial tires are usually owners or buyers of passenger car/ bus and light truck It is because radial tires are currently perceived more complied to transportation means which operate in high speed, good quality road and gives comfortablity
— Customers of bias tires, in contrast, are owners of trucks/ heavy trucks
(loading capacity of >2 tons) They perceive bias tires of being more capable for heavy loading in poor quality road Moreover, it is assessed more economical than radial tire, which addresses the “saving cost” exercise of most goods transport companies
3.4 POINT OF DIFFERENCE
The uniquenesses that differentiate Casumina from competitors fall into the three areas:
" Strong distribution and sales have facilitated Casumina to be able to offer
Trang 3120
e Casumina definitely has an advantage in pricing lower than imported
brands However, it is better perceived “cost effective” than “cheap price” as it is at the time being
e - A/ier sdales and customer care services are really added values to its offerings Casumina appears the most active player in the market by creating many interactions with traders and customers
3.5 POSITIONING
As for automobile tire, both individual and commercial customers have
perceived it a high value purchase, i.e a more quality to price equation
Therefore, from these consumer insights, Casumina desires to obtain a
position in customers’ mind as a unique local and mass brand that offers international standard quality at most cost effective price
3.6 MARKETING STRATEGIES FOR AUTOMOBILE TIRE
Since its first launch in 2000, Casumina automobile tire has been in the growth
stage Sales are continuing to increase and, as the results, new competitors (like Kumho, Chengshin and Siam) enter the market with heavy investment on production to meet not only the local but also their export markets At this stage, marketing costs are still high; distribution becomes intensive and multiple
channels may be used, which enable Casumina to obtain its leadership in automobile market
Trang 3221 Chart 3.1 Ansoft Matrix Model for Casumina EXISTING Products NEW EXISTING ; Market penetration Product development Markets NEW Market Extension Diversification 3.6.1 Market penetration
Casumina’s strategy is to achieve the horizontal growth More penetration for
Casumina is sought in assessed weak markets, the North and the Central, in
which the Central seems to be more difficult as DRC has already established in this market
— Distributor selection in these regions needs to be reviewed in terms of retailer base, logistics, payment and man power in order to improve its efficiency and sales
— Specific trade terms and customer promotions for will be considered for these regions
— Personal selling or direct marketing can probably be used in these regions to
improve brand affection, and promote sales at the end
Moreover, Casumina might find its export opportunities for automobile tire in
their current markets (developing countries in The Middle East, South America,
Africa and Asia) as well as untapped international markets (developed countries
like The United States of America, European countries and Australia)
- Casumina will target to bias tire as a niche market in developed countries, at
the same time indicate radial tire a Strategic Business Unit (SBU) in domestic
Trang 3322 - Trade fairs are a common way to publicitize our brand in international market - Serious selection and investment will be done for distributors in these export markets
— We consider two options to maximize our productivity of automobile tire and
penetrating into international market: (1) outsource (manufacturing under contractors’ brand and selling to developed countries); (2) direct export to
developing countries
3.6.2 Market share expansion
Casumina determines to pursue general market share expansion, not being limited to any segment It is obvious that the segment of radial tire for bus and heavy truck seems not to be explored by many imported brands in comparison with the segment of radial tire for passenger car, mini-bus and light truck The later segment is larger (60%) and less price sensitive than the later one It also indicates the later segment is more profitable than the later one However, with this strategy, to some extent, we will directly confront with imported brands as they primarily target to the later segment That is a difficult proposition Therefore, we can also counter with a product differentiation strategy (e.g lower price, value added services and after-sale services) and give appropriate attention to the potential of radial tire for heavy truck and bus segment
3.6.3 Brand image building
Casumina definitely needs a new “face” when tapping into the market of
automobile tire To be sustained in the market, the brand is recommended to
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CHAPTER 4
MARKETING PROGRAM
4.1 MARKETING TACTICS
The marketing tactics that support the marketing strategies includes product improvement, development of new channels of distribution and a manipulation of price and quality
4.1.1 Product
“Quality” is still a concern of both Casumina current and potential customers Given that the quality issue probably comes from the fact that Vietnamese people generally perceive local products of being inferior quality to imported products, we need to seriously review the product performance Product test can be conducted among a fleet with the benchmark of direct competitors Furthermore, advanced technology know-how of other producers needs to be continuously learned and updated
—- Anew brand for automobile tire will be built and integrated with associations related to “high international quality” and “reliable producer” so that it has a
firm positioning in the market Moreover, the brand identity, including
packaging will be developed in a consistent way with the brand positioning —- Showroom which is strongly branded is an effective tool to communicate Besides, services like maintenance, installation or replacement provided at showrooms are strongly promoted in order to add values to its offerings
4.1.2 Price
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Research needs to be done to study the maximum range that we can increase price according to our new brand image perception
“Cost effectiveness” is another association that our brand is bound to own because that is one of key factors to success, especially in B2B segment Product quality improvement and additional services offers definitely support the customers’ perception on “cost effectiveness” Therefore, tracking study on the customers’ feedback on brand performance in competition is also crucial for management to adjust our price strategy in time
4.1.3 Place
—- All points of purchase need strong, consistent and professional branding which is in line with brand positioning and personality
- A sales force of 30 representatives will be recruited and trained to provide more care and services to wholesalers and retailers across regions
- A separate sales team of 10 includes experienced and professional people will be assigned for B2B segment Sales calls will be made to commercial customers on monthly basis
— Sales calls will be organized on quarterly basis by managers to distributors to strengthen relationship and manage more effectively any sales conflict between regions
-— Enterprise Resource Planning (ERP) is also developed to keep track sales and market responses, assisting us in using efficiently our resources
— Customer Relationship Management (CRM) is a next step for Casumina to keep track customers’ history and their contribution to sales so that the company has an appropriate program to each customer
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4.1.4 Promotion
- Communication is top important as Casumina is on the way of rejuvenating its brand position Communication via distribution channels is considered primary, i.e brand message will be conveyed at point of sales, via personal selling and direct marketing
- A “Safety and environment friendliness” campaign will be launched in mass media in order to create close relationship to customers, good brand publicity towards society and at the end positive feeling about the brand
— There will be a lot of opportunities to have brand sponsorship (exclusively or co-orporately) to events like contest on traffic laws or car racing
— In addition, CRM will be a powerful supporting tool for us to have loyalty programs for current customers and trial invitations for potentials Good customer analysis might increase our chance to win customers of competitors, which we believe the most challenge for our sales and marketing management — Flexible trade promotions on bi-monthly basis will be designed in a way that they do not have effect on sales over periods and regions More consumer promotions are considered to be conducted to commercial customers at least once per year
4.2 FINANCIAL DATA AND PROJECTION
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Sales jumped in 2003 when we launched radial tire and had sales and marketing strategies for automobile tire products Sales of automobile tire continue to rise dramatically in 2008-2010 in line with the growth of automobile vehicles in Vietnam 4.2.2 Financial projection Financial projections for Casumina automobile tires appear below: Table 4.1 2008-2010 Projection Projection Finacial Actual Estimated Year 1 Year 2 Year 3 Element Units 2006 2007 2008 2009 2010 Volume (in Unit sold) 1000] 612,000 700,000 910,000 1,183,000 1,537,900 Net sales VND billion 700 798 1037 1348 1753 Gross profit VND billion 420 479 622 809 1052
Selling & general admin
expenses VND billion 235 252 320 413 550
Operating profit VND billion 45 67 95 126 151 4.2.3 Budget planning
Table 4.2 Budget 2008-2010
Unit: VND billion Projection
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43 IMPLEMENTATION 4.3.1 Corporate structure
To achieve our marketing goals, the first thing Casumina has to do is to set up a Marketing Department, including brand managers of two main SBUs (automobile and motorcycle) and in charge of all marketing activities of each
SBU Moreover, above all, Casumina needs a Marketing Information System
(MIS) to keep track all marketing activities in the market place In-charged person of MIS is structured in the Marketing Department as well
4.3.2 Corporate culture
Having become a Joint-Stock from a State owned Company for a few years, Casumina now needs to create more customer — oriented corporate values And all employees will not only share same values but also be fully aware of the company’s strategies towards customers
4.3.3 Human resources
When the competition turns to be intensive, human resources become the most
valuable assets of the company This is also an area that Casumina will invest
considerably in order to improve technical skills, management skills, leadership,
and professionalism
Trang 39Commercial actions In-charge Ql Restructure Sales and Marketing Dep
— Marketing Dept with Brand Managers - MIS withM
Product quality review - Product test
— Product development or launch plan = test and deve nt Co values develo nt Build new brand for automobile
— Develop & test concept
— Plan for launch Build brand image on trade - Showroom build — Merchandising - POPM Research
— Brand Price Trade Off — Brand Health Check Sales force
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4.4 Evaluation, Monitoring and Control
Evaluation of strategic marketing plan will made every year by marketing audit to provide a feedback loop to the next year’s marketing plan Besides, actual sales will be compared with monthly sales targets together with any trade or marketing tactic programs Market research can be conducted pre or post - launch of any programs to customers to evaluate their impacts
Continuous tracking studies will monitor the brand performance every year The research recommendations will be considered to adjust marketing plan every year