introduces the project, its rationale, problem statement, objectives, scopes and limitations the method of changing to the new orientation

3 ACKNOWLEDGEMENT In order to finish this final project, I would like to thank to my tutor, Dr Le Nguyen Hau, who has spent a lot of time support, guide me in writing this marketing plan Thanks for all of his valuable advices and wonderful guidance On this occasion, I would like to sincerely thank to all professors, who have devoted to this programme and given us precious lectures and experience during the last two years I also would like to thanks the two co-ordinators who have worked closely with Professors and our class for all useful information about the courses and class And finally, I would like to thank all of my classmates especially my group for their contribution in class that I can understand more about the courses 4 TUTOR’S COMMENTS Signed:Dr LE NGUYEN HAU TABLE OF CONTENTS Chapter I INTRODUCTION 1.1 Overall background 1.2 Company description 1.3 Problem statement 1.4 Objectives 1.5 Scope of works and limitation 1.6 Method 1.7 Structure of the thesis Chapter II ENVIRONMENT ANALYSIS 10 I CURRENT SITUATION – SALES ORIENTATION 10 Definition of Sales Orientation 10 Main components of MVG’s Sales orientation 10 2.1 Concentrate on selling products based on what they can produce rather than customers’ requirement 10 2.2 Focus on sales strategy rather than customer service 14 II CUSTOMER ORIENTATION AND ITS COMPONENTS 17 Definition of Customer Orientation 17 Components of Customer Orientation 17 Chapter III COMPARISON BETWEEN SALES ORIENTATION AND CUSTOMERS ORITENTATION; 19 I COMPARISON BETWEEN SALES ORIENTATION AND CUSTOMER ORIENTATION 19 II STEPS TO CONVERT FROM SALES ORIENTATION TO CUSTOMER ORIENTATION 22 Step 1: Leadership commitment 22 Step 2: Establish customers database system with all information as follows: 22 Step 3: training the staffs 22 Step 5: Re-organize the company structure to 23 Step 4: Recruitment for some missing positions in Customer service 23 Chapter IV: BUDGET & ACTION PLAN FOR CONVERTING FROM SALES ORIENTATION TO CUSTOMER ORIENTATION 24 Budget 24 Finance 24 Concrete strategy plan in 2011 25 Chapter V: CONCLUSION 27 LIST OF GRAPHS Page Graph 2.1.1 Market share in 2009 12 Graph 2.1.2 Sales revenue from 2006 – 2010 of some key account customers 13 Graph 2.1.3 Profit from 2005 – 2010 13 Graph 2.2.1 Decrease in order of Tan Hiep Phat & Nestle Vietnam 15 Graph 2.2.2 Customer complaint comparison (2009 & 2010) 15 Graph 2.2.3 Decrease in Customers 16 Graph 2.2.4 MVG Customer complaint solving procedure 17 Chapter I INTRODUCTION 1.1 Overall background In the past, the majority of Vietnam companies defined their operations by selling or supplying what they had to customers or consumers This orientation has deeply affected most business activities in Vietnam, especially in the state owned companies regardless any products During the last decade, Vietnam has witnessed a dramatical change towards a more market-oriented economy The global integration (e.g joining WTO) and increasing competition urge firms to radically change their business principle/philosophy in order to survive and develop Firms aligning well to the changes of external environment would have higher chance of success (For example: Vinamilk, Tan Hiep Phat… ) Otherwise, they would face challenges that critically threaten their survival as in the case of Malaya Vietnam Glass 1.2 Company description Malaya Vietnam Glass Co Ltd is a joint venture company between Malaya Glass Products Sdn Bhd (Malaysia) and Saigon Beer-Alcohol-Beverage Corp (Vietnam) in 1993 The forerunner of this joint venture is Khanh Hoi Glass Company Ltd, a state own company which was established in 1960 With the point of departure is a state owned company and being an only supplier in Vietnam at that time, the company concentrated on selling what they had to the customers In July 2010, the Malaysian sold their 70% shares to a new joint venture named O-I & BJC (Owen Illinois and Berli Jucker Corp), thus, the company is now O-I BJC Vietnam Glass Ltd (MVG) O-I is the well-known company in the world in glass packaging with more than 80 factories in the world while BJC is a big company which belongs to TTC group in Thailand This joint venture will bring new technology of glass industry and high standard glass packaging to Vietnam with a plan of strengthen marketing strategy and product quality 8 1.3 Problem statement With the advantage of being an only supplier in Vietnam market at that time, the company concentrated on production and sold what they produced to the customer This business principle is not suitable any more, especially with the modern business nowadays Customers have more choices and they prefer the products which can satisfy all of their specifications The market share has been decreased to 50% from 1997, San Miguel Yamamura Hai Phong – the main competitor from the North of Vietnam - takes 40%, and other competitors take 10% Therefore, it’s a must for MVG to change the business orientation to regain its position in the market and to develop the market not only in Vietnam but also in other foreign countries Given this situation, this study will address two following problems: How to change MVG’s orientation from sales orientation to customer orientation? What is expected to be the outcomes of this new orientation after five years? 1.4 Objectives The purpose of this study is to analyze the threats and loss from applying sales orientation and provide necessary solutions and steps for changing the current orientation to the new one and based on this fact, a new plan for the next five years will be launched to recover the market share and expand the business in Vietnam 1.5 Scope of works and limitation - This project will be implemented by all employees, all departments of MVG either in the current plant at Hochiminh City or the new facility at Ba Ria Vung Tau Province and the time for implementation is up to 2015 - Due to glass packaging is a particular industry in Vietnam, all information about competitors is scarce and there is no published information about their revenue, cost or market segment and so on… 1.6 Method - Based on the principle of market orientation and organizational change management to find out the proper steps for the changing process to the new orientation 1.7 Structure of the thesis This project is organized as follows:  Chapter One: introduces the project, its rationale, problem statement, objectives, scopes and limitations The method of changing to the new orientation  Chapter Two: Environment Analysis; Theory of Sales Orientation and Customer Orientation,  Chapter Three: Comparison between Sales Orientation and Customer Orientation and Steps to Convert to Customer Orientation  Chapter Four: Budget for implementing the Customer Orientation  Chapter V: Conclusion 10 Chapter II ENVIRONMENT ANALYSIS; THEORY OF SALES ORIENTATION AND CUSTOMER ORIENTATION I CURRENT SITUATION – SALES ORIENTATION Definition of Sales Orientation Most firms practice the selling concept when they have over capacity Their aim is to sell what they make rather than what the market wants (Kotler, 1999) In line with the above mentioned definition, the current MVG’s business orientation is exactly the same Even though MVG carried out the technology transfer in 2004 in order to increase the capacity to meet customers’ demand, the capacity still could not satisfy customer With the over-twenty-year-old furnace, the factory could not apply the modern technology which the competitors use to produce bottles in accordance with customers’ demand Thus, most of MVG’s products must meet the specification of safety, furnace age and production procedure of MVG not specification requested by customers Main components of MVG’s Sales orientation 2.1 Concentrate on selling products based on what the company can produce rather than customers’ requirement Being an only glass plant in the South of Vietnam, MVG just concentrates on selling products that we can produce rather than follow customers’ requirement Generally, when a company wants to survive in the market, they must have a thorough grasp of market demand Based on such requirement, the companies will have suitable products to satisfy the customers/consumers However; this is not applied in MVG Due to B2B model, most of MVG’s customers are companies that business line are beverage, soft drinks, 11 beer & wine, health drinks and pharmaceutical products, and besides that MVG also supplies glass jar to small customers and the jar for them we called common bottle or jar These products usually bring high margin for the company Based on the current technology and furnace age, MVG can only produce and sell the products as current time Whereas some other customers from foreign countries (Florida – USA, Singapore and New Zealand…) and local (Tan Hiep Phat Group) have a value order for MVG Below are some manifests of this business principle:  The objective of all business activities is the more selling volume increased the better revenue and profit for the company A typical example to prove this statement should be in glass color MVG can only run amber and flint glass packaging, and after every color change, MVG will have one more additional color – transitional To some other glass packaging manufacturers who have strict policy in glass color, they culletize these bottles and they become one of raw materials for the coming color change In MVG, these products are still sold in the market 2/3 of these bottles are exported to Pepsi Phillippines and the rest are for domestic market  MVG sells what they can produce for the customers without any improvement on quality and design in accordance with customers’ requirement MVG tries to push all finished goods to customers as much as it can  No commitment with customers about products’ quality, price or any promotion for this kind of product  Customers decreased every year since MVG’s products cannot find their requirement And the results of such principle were: In 2008, MVG rejected the order of a potential customer from Florida – USA due to their products are small jars (30oz) and a lot of 12 technical specification in order to concentrate on selling bottle for the current customers like Saigon Beverage-Alcohol-Beer Corp, Pepsi, Coke and so on… In 2009, MVG failed the order of Tan Hiep Phat Group, a big group in beverage, soft drinks and health drinks in Vietnam even though Tan Hiep Phat Group was a potential customer of MVG from 2000 These are reasons that makes the market share of MVG decreasing from 2005 until now, the below chart shows the percentage of market share of MVG and some other competitors in the glass packaging market in Vietnam Market share has been maintained against local manufactures however imports are growing Belows is the graph for market share in 2009 Volume (Bn Un) - Year 2009 Exports, 4,604 , 4% Imports, 16,478 , 13% Others, 11,432 , 9% Malaya Glass, 50,808 , 41% San Miguel Glass, 41,282 , 33% (Source: Internal studying) Graph 2.1.1 Market share in 2009 Due to the concentration on selling all products after production, MVG got a lot of complaints from customer about the quality of the bottles 13 The below graph will show revenue from some key account customers from 2006 to 2010 (Source: MVG Annual Report) Graph 2.1.3 Sales Revenue from 2005 – 2010 of some key account customers (Source: MVG Annual Report) Graph 2.1.4 Profit from 2005 - 2010 14 2.2 Focus on sales strategy rather than customer service According to Turban Et Al (2002) “customer service is a series of activitites designed to enhance the level of customer satisfaction – that is the feeling that a product or service has met customer expectation” With such definition, the company that has customer service usually has the following activities:  Liaising and supplying customers all information of the products  Informing the customers all promotion programs, ensuring all information is given to the customers on time for their profit  Taking care of after-sales procedures to the customers such as answering the questions and solving customers’ complaint  Organizing for annual customer conference to strengthen the relationship and to prove the customers value to them These activities have been totally absent from MVG because MVG doesn’t have Customer Service and the sales team doesn’t have skills in Customer Service Therefore, all activities in MVG are in accordance with the Sales strategy i.e strategy on selling price in order to achieve revenue and profit for the company MVG doesn’t pay much attention to customers’ expectation and has no customer value As a result, customers’ demand and orders decreased every year and Nestle and Tan Hiep Phat Group are a byword example and the below graph will present the decrease of in orders from 2007 to 2010 of the above customers 15 (Source: MVG Annual Sales Report) Graphic 2.2.1 Order decreased of Tan Hiep Phat Group and Nestle Vietnam Below is the graph for customers’ complaint in 2009 & 2010 vs the sales revenue from 2005 to 2010 (Source: MVG Internal Annual Report) Graph 2.2.2: Customers’ complaint comparison (2009 & 2010) 16 Consequently, a remarkable decrease of customers also happened, with the percentage of decrease from 2008 to 2010 was 62% - from 146 customers in 2008 to 55 customers in 2010 (Source: MVG Annual Financial Report) Graphic 2.2.3: Decrease in customers It is noted that Nestle Vietnam did not have any complaints in 2010 This is not because MVG products have been improved but because they stopped ordering from MVG in 2010 Similarly, Tan Hiep Phat Group also stopped doing business with MVG from 2009 Because there is no customer service in the business activities system, customers’s complaints were transferred to so many departments and it usally takes a long time to respond With such a mechanism, there have been more and more customers’ complaints during the last years All questions and complaints are settled by QA (Quality Assurance) follow the below chart: 17 Customers’ Complaint Checked and find out the problem by QA Dept Inform to customers about the problem and solution by Sales Team Get approval from Plant Manager for the solutions Source: MVG annual complaint report Graphic 2.2.4 MVG’s complaint procedure II CUSTOMER ORIENTATION AND ITS COMPONENTS Definition of Customer Orientation: Customer orientation is the sufficient understanding of one’s target buyers to be able to create supervisor value for them continuously (Levitt, 1980) Components of Customer Orientation  Understand customer needs: to any products or any companies, customers’needs or demands are extremely important Whenever a company wants to produce any new products, they all have a market research on customers’ demand Based on such demand, the company will develop the products However, not every 18 demand from customer will be satisfied because the company must base on its situation and budget Examples of such companies are Tan Hiep Phat Group and Vinamilk Corp These are two specific companies that always consider customers’ benefits on top They often have new products to satisfy customer demand that keep changing and developing in the new trend  Customer satisfaction objectives: The company must set its objectives is customer satisfaction These objectives help the company have proper development direction and also orientation for all business activities of the company  Measure customer satisfaction: this will be a method to measure and evaluate the company’s success in the market These activities will be organized frequently in order that company can improve products, service and so on…  Create customer value: by continuously improving products quality and designs; training and develop all skills for sales team and other relevant departments in order to gain the highest level of customer satisfaction 19 Chapter III COMPARISON BETWEEN SALES ORIENTATION AND CUSTOMERS ORIENTATION;STEPS TO CONVERT INTO THE NEW ORIENTATION I COMPARISON BETWEEN SALES ORIENTATION AND CUSTOMER ORIENTATION The below table will state out the differences of the two orientation and then from these differences, MVG can determine what to change and how to change SALES ORIENTATION CUSTOMER ORIENTATION Objectives - Sell what MVG has and - Sell products which are produce despite customers’ needs and produced based customers’ demand and needs demand - Achieve the sales target - Achieve of weekly, monthly, customer satisfaction - Create customer value quarterly and yearly Activities - Spending time for sales - Concentrate strategy on i.e delivery developing schedule for each customers customer with clear products quantity and products on potential with and new current customers with current products - No activities in marketing - Develop customers to attract new customers database with full from domestics market as information well as foreign market products particularity and about 20 strength in the market; - No supportive strategy to e.g Pepsi and Coca customers in selling price Cola’s products are soft and other strategies to drinks and energic drinks, support in Tan Hiep Phat Group’s delivery, transport, load products are soft drinks and unload the cargoes… that are made from herbal customers remedy and so on… - No customer service activities and department to take care of customers and follow up with customers’ complaint, demands of new - No or littel information of competitors including selling price, customer on key account customers and ignore the demands from small customers who have orders under the fixed level for a minimum order to the relationship with customers by annual customer conference - Organize for customers’ survey about price, products, products quality, complaint’s solving, information receiving support policies strategy strengthen feedback design/products - Concentrate - Implement from and solving concerned departments and staffs 21 OUTCOME/ CONSEQUENCE - Loose market share since - Customer satisfaction is the decrease of customer - Create customer value happens faster - Loose the increasing competitive - Sales revenue and profit advantages because the will price considerably is higher than be improved due to compertitors and there is customers satisfy with no products’ design and improvement products design on and method of working quality - Revenue selling price and the new and profit decreased because current customers choose another supplier for their companies and there is no new/potential customers From the above business activities analysis of both Sales Orientation and Customer Orientation, it’s not so difficult to see that if MVG continues with Sales Orientation, MVG will sure loose the market share in the market that there are more and more potential competitors penetrating And the most important is that the revenue and profit of the company will be decreased remarkably due to customers choose another supplier for the manufacture With such consequences as mentioned, it’s recommended that MVG should change to customer orientation in order to improve all the bad things and develop the business for MVG 22 II STEPS TO CONVERT FROM SALES ORIENTATION TO CUSTOMER ORIENTATION In order to change from sales orientation to customer orientation, MVG has to spend a lot of time to concentrate on the following steps: Step 1: Leadership commitment In order to convert to the new orientation, it’s very important for any company to change from the top management of the company because they will be the main source propose all strategies and plans for changing They will be the direct persons to instruct all Departments for any strategies or plans that give the best results to the company They should follow up the report from the relevant departmenst about customers’ satisfaction, and they must pay attention to customers’ ideas or recommendation Step 2: Establish customers database system with all information as follows: - Specific products - Annual volume - Distribution market - Potential products to be developed in the market in the next two years Step 3: training the staffs This is a necessary step for this change because the staffs are the persons who will directly implement what the management decides and will be responsible for all plan and strategies proposed by the Management In details, Sales staff will have a chance to join the courses such as:- Customer relationship management - Selling skills and customer service - Skills to take care customers 23 - Handling complaints - Negotiation skill Step 4: Re-organize the company structure to ensure that each department implements its functions and responsibility in accordance with the new Orientation Step 5: Recruitment for some missing positions in Customer service This will be a very important step for MVG because this department will be a connection between MVG and customers This department will be responsible for the following tasks: - Supply customers all information about price adjustment, contracts, service, delivery and any other information related to the company - Follow up with customer’s demand 24 Chapter IV BUDGET & ACTION PLAN FOR CONVERTING FROM SALES ORIENTATION TO CUSTOMER ORIENTATION Budget In order to convert to the new orientation, MVG will need to invest a big amount of money for recruiting new staff, implementing new marketing strategy with the new orientation… Below is the budget cost for converting strating from 2011 to 2015        Leadership   strengthening    1st year   Training cost  Research  competitors  and customers   Recruitement new  employee;  establishment and  maintain of customer  service dept and uphold;  and annual total cost   Customer conference  Total      2nd year  3rd year      192,000                  192,000             192,000      4,545    4,545       7,000                       5,570                  5,570  11,000  9,500     31,818                    31,818      246,363                 243,433  9,500              31,818             238,888 Unit: USD  4th year      192,000   5th year     192,000         5,570   5,570  8,500  8,500     31,818   31,818  228,888          228,888  Finance Due to 70% market of MVG is domestics market; the company is expected to have 25% of increment for local market Follow the marketing plan from 2011 -2015 and application of the new orientation, the revenue of the company will be increasing every year i.e 31% for 2011, and 15% for the other four years 25 Due to B2B model and the business line of the company is industry, the marketing activities will be implemented in order to transfer the definite slogan of the company and MVG will spend 8% of their cost for markting activities The below table will present the budget for marketing activities from 2011 to 2015 (Unit: USD’000) 2011 2012 2013 2014 2015 Export 2,708 3,114 3,581 4,118 4,736 Import 11,961 13,756 15,819 18,192 20,921 Local 22,337 21,328 27,853 36,232 46,227 Revenue 37,660 29,861 38,198 26,624 47,253 33,181 58,542 41,905 71,884 52,507 2,388 2,130 2,654 3,352 4,201 Total cost of sales Marketing expenses Concrete strategy plan in 2011 1st Q Key 2nd Q 3th Q 4th Q PIC activities Strenthen  Visit Annual customer customer Customer value and (key account Conference relationship customers in the South North, and Centre of Vietnam ) Production Trial run new site at Commercial Production run based on team & Sales customer orders team 26  Price increase Price New price General due to high policy for Director inflation rate customer Sales/Marketing and high cost after Team for moving to raw matereials the new Estimated site, the new ex- increment is work price 10% can be decreased 5% Branding & Update short International all A infomartion marketing on activities leaflet, about cataloge and Beverage in forecast for company November the of history, Budget: 2011 with new business, USD4,500 strategies site location and other interesting information  Budget : USD800 - Recruit CS CS Dep & Manager & Manpower staffs Recruitment Team and situation website, (video) on TV Food products, new Establish the Marketing exihibition on business program other Update year and 27 Chapter V CONCLUSION Generaly speaking, glass packaging is not a young business in Vietnam but because the nature of the business, not many of glass packaging manufacturers invest into this field But it seems to be changed in the modern society like nowadays, more people concern to environment and all products can help to protect it Because of those reasons, more and more foreign companies invest to this field as they recognize it is a potential market In the future, it will be a big challenge to MVG because their competitor is not only San Miguel Yamamura Hai Phong, but also Thai Glass Incorporation and some other local manufacturers, especially can and plastics manufacturers in according with the “take-home” trend of the consumers In summary, MVG will have to take fully five (5) steps as mentioned above in order to change to Customer Orientation, and the most important condition of this procedure is changing from the thinking of every staff in MVG The budget for converting is USD246, 363 for the first year and this budget will be decreased right after this model come into effect with the expectation of gaining back old customers and attract the new potential customers and incrase the customer value so that customers always feel satisfied for choosing our products However; this study also has some limitation Due to the business is glass packaging industry which is quite exclusive in Vietnam; there is a limitation on competitors’ information Moreover, all of the figures in this study are real figures from MVG’s internal report or self research By analyzing and overcoming the weakness and threat; together with the combination of strength and opportunities, MVG can be surely a leader in glass packaging manufacturing in Vietnam, thanks to new technology and technical support from new owners and ofcourse the new orientation also  ... rationale, problem statement, objectives, scopes and limitations The method of changing to the new orientation  Chapter Two: Environment Analysis; Theory of Sales Orientation and Customer Orientation, ... out the proper steps for the changing process to the new orientation 1.7 Structure of the thesis This project is organized as follows:  Chapter One: introduces the project, its rationale, problem. .. on top They often have new products to satisfy customer demand that keep changing and developing in the new trend  Customer satisfaction objectives: The company must set its objectives is customer