MARKETING SITUATIONS AND SOLUTIONS FOR PRODUCTS OF HAIHA CONFECTIONARY JOINT - STOCK COMPANY

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION -*** REPORT OF MID-TERM INTERNSHIP MARKETING SITUATIONS AND SOLUTIONS FOR PRODUCTS OF HAIHA CONFECTIONARY JOINT STOCK COMPANY Full name: Nguyen Thi Quyen Student ID: 1111250031 Class: A14 CLC QTKD K50 Guidance teacher: Ms Le Thu Hang, MBA Hanoi, July 2014 TABLE OF CONTENT Table 2.5: A number of Haiha bakery stores (year 2012) 30 LIST OF TABLE Table 2.5: A number of Haiha bakery stores (year 2012) 30 EXECUTIVE SUMMARY In recent years, along with the development of the economy and the population growth rapidly, the demand for food which improved people’s living standard is markedly necessary One of the most important manifestations is demand for confectionery In fact, confectionery field of Vietnam has a quite stable development stages It is estimated about 7,473 billion the overall worth of Vietnam market Confectionery field in Vietnam has ability to maintain high growth level and become one of the biggest markets in Asia – Pacific area In order to have this position, enterprises must have right marketing strategies because marketing makes living quality much better Marketing helped business flexible, understand customers’ demand, win competitors and then get profit There are now more than 30 confectionery manufacturing enterprises which have reputation Hai Ha Confectionery Joint Stock Company (HAHACO) is one of the leading confectionery manufacturers of Vietnam which consumers believe to utilize The company specializes in producing all kinds of confectionery items with a diversified variety of designs and models such as biscuits, cakes, sponge candy, soft candy, hard candy These items have made customers satisfied as company’s expectations because the company has focused on advertising effectively In order to have better overview of company’s marketing activities, I have chosen the topic: “Marketing situations and solutions for products of HaiHa Confectionery Joint - Stock Company” The report is divided into four chapters: In chapter 1, the author gives a brief presentation on the establishment and development of Hai Ha Confectionery Joint Stock Company (HAHACO) and introduction about their functions, missions and the company’s structure In additions, there are overviews of results of business activities at HAHACO in recent years In chapter 2, the author presents theoretical framework which is supported to the report This chapter covers key terms and definitions of marketing, targeted customers, market segmentation, etc Moreover, the author will mention about role of marketing and factors affecting marketing activities such as marketing environment (economy, society), budget, customers or competitors Then, in chapter 3, by doing research of targeted market, product strategies, price strategies, distribution strategies and promotion mix strategies, the author gives evaluations both advantages and disadvantages about marketing situations at HAHACO as well as HAHACO’s achievement and failures Finally, in chapter 4, the author makes some recommendations and solutions to strengthen marketing activities at HAHACO Due to my limitation of knowledge, skills and experience, mistakes and faults are inevitable I welcome all comments, advices and suggestions that help me improve the quality of the report Finally, I would like to express my gratitude to my instructors and HAIHACO staff for helping me complete my mid-course internship CHAPTER1: OVERVIEW ABOUT HAIHA CONFECTIONARY JOINT- STOCK COMPANY 1.1.General introduction Name of company: HaiHa Confectionery Joint - Stock Company Transaction name: HaiHa Confectionery Joint - Stock Company The company is established as decision No 191/QD - BCN on 23/11/2003 of the Ministry of Industry directly under Vietnam Tobacco Corporations Head quarter : No 25 Truong Dinh street, Hai Ba Trung District, Hanoi Abbreviation name: HAIHACO Web: http://www.haihaco.com.vn Telephone number: (+84.4) 8632956 / 8632041 Fax: (84 4) 8631 683 638730 Tax code: 0101444379 Bank account: 1020.10000054566 in the branch of Industrial and Commercial Bank, 275 Nguyen Trai Street, Thanh Xuan District, Hanoi Email: haihaco@hn.vnn.vn Charter capital: 36.500.000.000 VND 1.2 History and development progress HaiHa Confectionery Joint - Stock Company, which is under the Ministry of Light Industry, was established on 25th December, 1960 for the confectionery production to meet domestic demand and export partly In 2003 the company implemented equitization under No 191/2003/QD-BCN decision dated 14/11/2003 of the Ministry of Industry (now the Ministry of Industry and Trade) The company was granted the certificate of business registration No 010300614 dated 20 th January, 2004 and the second change on 13th August, 2007 by Department of Planning and Investment of Hanoi After more than 50 years of development, the company has experienced significant milestone follows: 1.2.1 Period 1959 – 1961 On November 1959, Northern native agricultural products corporation has built an empirical establishment for researching pearl beads with officers and employees of the Corporation At the beginning of 1960, implement the policy of companies, bench has studied in depth and produced vermicelli items from green bean On that basis, Hoang Mai vermicelli workshop was born on 2nd December 1960 1.2.2 Period 1962– 1967 At this time, Hoang Mai vermicelli workshop has been tested successfully and been in production some items such as soybean oil and corn starch providing for Van Dien battery factory In 1966, Botanical Institute has taken this place as an establishment for the trial production of food topics Since then, it had disseminated to local to produce, to solve logistics on a spot which was suitable in war situation And from that, Hoang Mai vermicelli workshop renamed Hai Ha food empirical factory In addition, the factory also produced a number of other items such as bullets, fermented sauce, fruit sauce, protein oil, bread and nutrition flour And an important thing is the factory initially studied malt in order to become Confectionery Company 1.2.3 Period 1968– 1991 In 1968, the factory was managed by the Food Department By June 1970, according to the directives of the Food Department, the factory has accessed Hai Chau confectionery workshop to hand over with 900 tons/year for producing dental gum, starch paper on 1970, it was renamed Hai Ha food factory with 444 people On December 1976, the factory was approved to expand area with the capacity from 900 tons / year to 6000 tons / year The factory gradually expanded the scale of production, equipped with many new production lines, technical innovation, advanced technology, step by step to meet the needs of the consumer better Until 1987 the factory was again renamed into Hai Ha exporting confectionery factory managed by the food agriculture and industry department The company's products are consumed not only in domestic but also in the foreign as well The speed for growth of annual output reached from percent to 15 percent and manual production has gradually mechanized 70 80 percent with state funds received from the day 01/01/1991 was 454 000 000 dong 1.2.4 Period 1992 to 2002 On January 1992, the factory was managed by the light industrial Department On July 1992, it was changed to Hai Ha Confectionery Joint - Stock Company In the situation of the large fluctuations of the market, there are many difficulties for enterprises to adapt new regime, yet HAIHACO still stood firm in the face of difficults and grew In 1993, establishment of Hai Ha Kotobuki joint venture Main products are hard candy, snack, cookies and gum Until now, this joint venture has still operated efficiently In 1995, establishment of Viet Tri Miwon glutamate joint Venture Company In 1996, establishment of the third joint venture was Kameda Haiha in Nam Dinh, but unfortunately this joint venture company has been in operation less efficient and dissolved on November 1998 1.2.5 Period 2003 to now In 2003, the company implemented equitization under the decision No 192/2003/QD-BCN of Industry Department on 14/11/2003 From 1/2004, the company has been operating in the form of a joint stock company by the certificate of business registration No 0103003614 issued on 20/01/2004 by the Department of Hanoi Planning and Investment And then it changed the second time on 08/13/2007 The company was approved for listing its shares on Hanoi Stock Exchange Center No 312/QD-TTGDHN dated 08/11/2007 and traded officially from the date of 20/11/2007 The prestige of the company over time increased, so far the company has five factories including joint venture companies with nearly 2,000 people and modern equipment The company is state enterprise which has integrated legal, independently economic accounting, opened bank accounts and used the seal as the state prescribed 1.3 Functions and missions Hai Ha Confectionery Joint - Stock Company was founded with the function of producing candy to meet domestic demand and export In order to implement the assigned functions, Board of Directors and all employees of the company must perform the following tasks: Firstly, it is necessary to increase investment in depth with the purpose of enhancing product quality, increasing productivity, diversifying products so as to expand market Secondly, it is very important to build the strategy for confectionery production technology and a number of other products from 2010 to 2020, strength technological innovation and improve the quality of products to increase competitiveness Finally, the firm needs to identify the primary market, secondary market, focus on new markets and pay more attention to export markets, particularly the foreign markets 1.4 Professions and business fields Activities of the company were followed the business certificate No 0103003614 which changed on August 13, 2007 is: - Manufacture of bakery products - Processing of milk and dairy products - Manufacture of starches and starch products - Production of sugar - Manufacture of cocoa, chocolate and confections and preserved fruits - Manufacture of other products such as: + Production of coffee products + Roasting and filtering coffee + Manufacturing substitutes for coffee - Production of non-alcoholic beverages, mineral water - Wholesale food For example: Wholesale sugar, milk and dairy products, candy products and the products of cereals, flour, starch, coffee - Wholesale beverages - Retail food in specialized stores For instance: + Retail sugar, milk and dairy products, bread, jelly, candy and other products made from cereals, flour, starch in the specialized shops; + Retail coffee powder, instant coffee; - Beverage Services (excluding bars) - Wholesale of machinery, equipment and other machine parts - Investing in construction, leasing offices, residential, commercial centers, consulting, managing, real estate advertising; Import and Export commodities company business Main products: + Candy: Chew Candy, soft candy, hard candy lollipop (Haiha pop), Jelly Candy + Cake: Advanced soft Cake, chocolate covered cake, biscuits, crackers, wafers, wafer tube (Miniwaf), Snack + Box Candy, moon cake (seasonal business products) + Instant coffee 25 Advantages:  Stimulates creativity and enhance the productivity of staff  Create a variety of products for customers to choose  Every brand can attract specific target customer groups  Show believe for daring to assert its presence in the market, as a basis for the choice of the customer  The basis for avoiding counterfeits Disadvantages  Disperse resources of company  Create market fragmentation 3.2.2 Packing Packaging plays a very important role in the decision about the product The company has a large number of products so that they always focus on the product's packaging The company has to research about consumers in order to create suitable packages for each subject and each consumer's needs Packaging of the Company is adhered to the simple principle, true picture, unique design, and the shelves effects To choose a suitable package, they need to base on the package tests including: testing of technique, testing of form, testing of business, testing of consumers’ feedback After deciding which package is selected, the next task is to select the information to be printed on the packaging 26 3.2.3 Product catalogues Table 2.4: Product catalogues of company in 2012 Source: Compiled from the product price list of Market Planning Department, 2012 Cake, candy and coffee are the goods normally, which the company produces continuously, serve the entire market of the company These goods are manufactured due to the research from customers and competitors In addition, seasonal products like moon cakes are only produced on the occasion of Mid-Autumn Festival in order to serve mainly the northern market because many customers have known them and its distribution channels system is strong Jam and boxed candy are produced near the Lunar New Year to serve the needs of Luxury confectionery market 27 Product line of the company: o Chew candy o Soft candy, hard candy o Jelly candy o Biscuits & Crackers o Wafers o Boxed cake, mooncakes o Luxury soft Cake o Coffee 3.2.4 New product development The company always has departments of researching and introducing new products so as to enhance their competitiveness and exploit new products The company has launched products with unique characteristics to suit each customer The steps and contents which the company did to design and develop new products: Research market Nowadays, the company applies both ways including self study and external research The officials working in the research department are trained from universities in country and they have extensive experience in the field of confectionery production The company always creates the best conditions for staff to access the latest information about new products, new technologies, new trends of the market in which the new product development Set the plan - Researching production technology, the solutions to improve the old products, research new materials - Identifying target customers - Positioning for each customer class - Planning distribution, media, advertising, PR Implement 28 This is the final stage, the obligation of this step is to launch new products to market, evaluate the results and draw their own experience 3.3 Pricing strategies Pricing strategies play an important role in the production and business activities affecting the amount of sold goods and the customer's buying decision To come up with a reasonable price, the company must consider many different factors such as the cost of production and consumption of products, desired profit, the consumer's preference, the time of sale and competitor’s price in market 3.3.1 Valuation methods: The price of the company is determined from the cost of production, business combined with the price of competitors: P= C*(1+mc ) + ∆Pdc In which: P: Base price C: The overall production cost or the average cost per unit of product mc: Expected interest rate on cost ΔPdc: The adjustment based on competitor’s price and supply and demand relation of the market The company values products lower than the market price, but higher than the cost of production and consumption means accept low rate Due to the role of the agent, the Company applied discount price measures to promote consumption 29 3.4 Distribution strategies HAIHACO DEPARTMENT OF PLAN – MARKET  NORTHERN REGION CENTRAL REGION SOUTHERN REGION The organizational model of sales network, which the company is currently applying, is combined between DIRECT DISTRIBUTION CHANNEL market areas and customers The company divided the INDIRECT DISTRIBUTION CHANNEL market into three regions: North, Central, and South Department of Plan – Market is responsible for planning business production, accessing the market, managing items on the market, organizing marketing activities from manufacturing to consumption + Northern region includes Hanoi, Hai Duong, Bac Giang, Thai Nguyen, Phu Tho, Nam Dinh, Hung Yen, Thai Binh, Vinh Phuc, Hai Phong, Quang Ninh, the northern mountainous provinces Sales Manager at the North region is Head of Department of Plan - Market + Central Region includes Da Nang, Thanh Hoa, Nghe An, Ha Tinh Sales Manager at Central Region is Director of Da Nang branch + Southern Region includes Ho Chi Minh City Sales Manager at Southern Region is Director of Ho Chi Minh City branch In each region, the officers are in charge of distribution channels, managing and monitoring sales and staff involved in business work force of the company 30 Direct distribution channel is mode of its products to consumers through showrooms system of products, chain stores or Haiha bakery or direct orders of customers and the seasonal sale point of the company at trade fairs Table 2.5: A number of Haiha bakery stores (year 2012) Stores Haiha Bakery Area/Region Quantity North Region Central Region South Region Indirect distribution channel is mainly distribution channel of company by means of some intermediate such as distributors, dealers, supermarkets and small business households Table 2.6: Dealers of Haiha Confectionery Joint - Stock Company in 2012 Area/Region Quantity Proportion (%) North Region 152 74,88 Central Region 38 18,72 South Region 13 6,04 Total 203 100 Source: Compiled from selling reports of Department of Plan – Market in 2012 31 Table 2.7: Consumption situation by distribution channel Year 2009 Year 2010 Revenue (million dong) Channel Direct channel 119.990 Indirect channel 339.390 Total 459.380 Source: Compiled from reports Proportion (%) 26,12 73,88 100 of the consumption Revenue (million dong) Proportion (%) 150.229 28,32 380.300 71,68 530.529 100 situation in 2009 and 2012 of the Department of Plan – Market 3.5 Promotion mix strategies 3.5.1 Advertising Nowadays the company has been applying the advertising medium such as panels, posters, catalogs, mail, packages and word of mouth, internet marketing, via delivery truck, bus, stalls in fairs Advertising activities of the company not bring big results due to financial investment for it weakly Table 2.8: Budget for marketing activities Unit: million VND Year Budget 2010 6.557 2011 7.773 2012 9.327 2013 10.489 3.5.2 Sales promotion o Group of promoting consumer directly + Samples: On the occasion, the company has a team of sales, PG to introduce new products, invite customers to try products or service at the supermarket, direct retail dealer 32 + Gifts: Giving gifts for customers when they purchase products is to stimulate consumption o Group of promoting intermediary activities in distribution channel + Free Goods: Goods donated to the dealer when buying in bulk + Exhibited goods at the counter of product introduction and convenient location + Support advertisement for agents such as banners, slogans, and sales staff + Support finance for agents when there is opening orders and the discount of dealer + Discount 2-10% for confectionery products, 15-30% for the cake and bowed candy + To encourage agents increasing sales, the company set bonus In every quarter, the company totals revenue of each area to find out 10 dealers with highest turnover and then gives a prize Or in the peak drives as Lunar New Year, Mid-Autumn, agent will be rewarded if exceed the company's plans + Dealers have the right to return damaged goods due to expiry, broken, shattered during shipping + If dealers timely pay or pay cash directly, they will be the trade discount 3.5.3 Personal selling Due to the characteristics of the company's products, personal selling are effective tools for promoting the product consumption of corporate This is an important step in the promotion mix activities in company In Department of Plan – Market, marketing staff is responsible for implementing the work of individual sales Specifically: + Explore and search new customers + Communicate information about products, services and prices 33 + Make the sale + Provide delivery, transportation, and service problems after the sale + Research market information + Evaluate Customer’s nature 3.5.4 Direct marketing The company uses all three factors Advertising, sales promotion, personal selling to conduct direct sales The main tools of direct marketing are: + Marketing by catalog: company sends catalog by post to the customer Due to catalog, customers can place orders via mail, phone, fax + Marketing by direct-mail: Company sends offer letter by post in order to advertise and collect client list + Marketing via phone: the company uses phone to offer directly to selected customers Customers can order via the phone + Computer Marketing: Introduce product catalogs, product policy through the company’s mail or website Customers can place orders and pay directly from networked computers 3.5.5 Public relations The aim of PR is to show the interest and responsibility for the development and prosperity of society The social activities have been carried out as giving gifts to children, the elderly, people in remote areas for special occasions like Autumn, Holidays, taking care hero Vietnam mother, These activities have brought positive results so that they received the commendation of the relevant authorities as well as the praise of the people 34 3.6 Evaluate marketing situations: advantages and disadvantages 3.6.1 Advantages By analyzing and evaluating the situation of organizing sales network for confectionery products the company has achieved encouraging success: - Company selected organizational model of sales network in accordance with specifications of products, customers, and exploit the production capacity, financial resources, corporation’s human That is an organizational model of mix sales network between regions and customers - Build a network of over 200 agents covering the whole north - the company's main markets helped products easily to access to customers - Indirect Distribution channel operates efficiently; the company's revenue comes from this channel, revenue increased over the following five years ago - The Company has established and maintained long term relationships with dealers nation widely 3.6.2 Disadvantages - Identify target markets only focused on exploiting traditional markets, not actively exploit other potential market - Products of the company has yet convinced consumers about design, price eg coffee products, snacks, ice cream cake - Agent system developed inconsistent, especially in the South and Central regions - Manage distribution channels weakly while the competitor's products are sold, even on display in a beautiful location than the company's products - The store system product introduction is limited in the country 35 - Pricing policy has not attracted dealers in the country, especially the South and Central - Program promotion, advertising, sales promotion lacks so the products not to attract the attention of customers, yet provide maximum efficiency 3.6.3 Reasons - Confectionery market has many strong competitors at domestic and abroad to create a big challenge for the company - Sources of funding for marketing activities is limited - Lack of human resource for marketing activities who had experience to implement marketing - Marketing policy has not been properly invested company 36 CHAPTER 4: RECOMMENDATIONS 4.1 Development orientation of the company 4.1.1 Enterprise development orientation - Promoting exports and opening new export markets The company continues to expand consumption in markets where the Company's products consumption is weak compared to the potential ones - Enhancing the quality control of products and services and complying with requirements of the quality assurance system ISO 9001: 2008 - Promoting activities of building brand name and labels of products to keep their positions on the market 4.1.2 Orientation of marketing activities - Promote research of the investment and development of new products, improve packaging design Investing heavily in seasonal products such as mooncakes, the products in the system Bakery In 2013, the company continues to invest in innovating technology and focusing on researching and producing cookie, cracker and the Luxury custard - Researching to rationalize the production process and studying extra automated equipment to reduce manual labor in order to increase labor productivity for saving raw materials to lower costs of product, enhancing the competitiveness of business and increasing the business efficiency - Focus on production and consumption of dominant products in the market and the products have high value, large profits and good competitiveness 37 4.2 Solutions for marketing activities 4.2.1 Solution 1: People strategy In order to adapt quickly the changes of market, it requires HAIHACO must set up a separate marketing department This department has about 6-8 people The company should choose the qualified staff in Department of Plan Market instead of recruiting new staff to save costs The company captures information about market still sketchily, inaccurately so that they have yet given the forerunners forecasts of market’s demand 4.2.2 Solution 2: Complete products o Diversify products o Invest and improve the quality of packaging  Benefits - Create various types of products, beautiful designs for customers to choose - Serve Luxury confectionery market to bring greater profits for the company 4.2.3 Solution 3: Finalize distribution channels - Increasing agent system in Southern and Central - The company needs to develop retail system and ensure the interests of consumers - Expand HaiHa Bakery stories 4.2.4 Solution 4: Pricing strategy o Lower product prices o Increase trade discounts to resellers 4.2.5 Solution 5: Trade promotion policy o Advertising o Direct marketing o PR 38 SOLUTION In fact, the production and business activities of the enterprise are a very complex operation To perform this operation is very difficult, but the research of finding and analysis about these activities is even more difficult Topic " Marketing situations and solutions for products of HaiHa Confectionery Joint - Stock Company" is the result of the research process about the situations of production and business activities of the Company as well as feedback from the customers By preliminary analysis and solutions on strengthening the marketing activities, the writer hopes to contribute a certain part in raising the competitiveness of HAIHACO Despite the great help of the director and the staff of HAIHACO, this report will be difficult to avoid these shortcomings due to limited knowledge So, the writer hopes to receive a thorough review and evaluation of teachers and readers in order to more complete knowledge and experience I sincerely thank you! 39 REFERENCES Department of Accounting, Audit report (2010-2013) Department of Accounting, Balance sheet (2010-2013) Department of Plan and Market, market research report (2010-2013) Department of General Administration, revise charter (2007) Department of Plan and Market, Business report (2010-2013) Department of Plan and Market, Consumption situation report (2009 and 2012) Department of Plan and Market, Marketing budget report (2010-2013) Kotler Armstrong Principle of Marketing (14th ed.) Websites: http://s.cafef.vn/bao-cao-tai-chinh/HHC/IncSta/2013/0/0/0/ket-quahoat-dong-kinh-doanh-cong-ty-co-phan-banh-keo-hai-ha.chn ... CONFECTIONARY JOINT- STOCK COMPANY 1.1.General introduction Name of company: HaiHa Confectionery Joint - Stock Company Transaction name: HaiHa Confectionery Joint - Stock Company The company is... bakery products - Processing of milk and dairy products - Manufacture of starches and starch products - Production of sugar - Manufacture of cocoa, chocolate and confections and preserved fruits -. .. to have better overview of company s marketing activities, I have chosen the topic: Marketing situations and solutions for products of HaiHa Confectionery Joint - Stock Company The report is