Some recommendations to develop the market share, the case of ILA vietnam in hanoi

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Tran Thuy Linh SOME RECOMMENDATIONS TO DEVELOP THE MARKET SHARE, THE CASE OF ILA VIETNAM IN HANOI MASTER OF BUSINESS ADMINISTRATION THESIS Hanoi - 2011 VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Tran Thuy Linh SOME RECOMMENDATIONS TO DEVELOP THE MARKET SHARE, THE CASE OF ILA VIETNAM IN HANOI Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr Nguyen Thi Phi Nga Hanoi - 2011 TABLE OF CONTENTS ACKNOWLEDGEMENTS i ABSTRACT ii TÓM TẮT iv TABLE OF CONTENTS vi LIST OF FIGURE viii LIST OF TABLE ix INTRODUCTION 1 Research Problem Objective and aim of thesis Scope and scale of thesis Methodology Data resources CHAPTER 1: LITERATURE REVIEW 1.1 Market share 1.1.1 Definition 1.1.2 Ways to increase market share 1.2 Consumer decision making process 1.2.1 Information search 1.2.2 Source of information 1.2.3 Information search on the Internet 1.3 Customer Value, Satisfaction, and Loyalty 13 1.3.1 Customer Value 14 1.3.2 Total Customer Satisfaction 17 1.3.2.1 Customer expectation 18 1.3.2.2 Measuring Satisfaction 18 1.4.Marketing mix 19 1.4.1 The product 19 1.4.2 Promotion mix 27 1.4.2.1 Advertising 28 1.4.2.2 Sales promotion 31 vi 1.4.2.3 Public relation 33 1.4.3 Place 34 1.4.4 Price 39 CHAPTER 2: THE CASE OF ILA VIETNAM IN HANOI 41 2.1 Introduction 41 2.2 Business analysis 44 2.2.1 Analysis of visitor and sources of information channel 44 2.2.3 Product analysis and comparison 47 2.2.3 New sales analysis 55 2.2.4 Re-enrolment and customers‟ loyalty analysis 57 2.2.5 Promotion mix analysis 58 2.2.6 Place 63 CHAPTER 3: CONCLUSION AND RECOMMENDATIONS 67 3.1 Conclusion 67 3.2 Recommendations 69 3.2.1 The information search on the Internet 69 3.2.2 Building Customer Value, Satisfaction, and Loyalty 70 3.2.3 Marketing mix 73 3.1 Product 73 3.2 Promotion mix 77 3.3 Place 81 REFERENCES 83 Appendix 85 vii LIST OF FIGURE Figure 1-1: Decision making process Figure 1-2 Information sources for Purchase Decision Figure 1-3: Customer delivered value 14 Figure 1-4: Levels of product 20 Figure 1-5: The tangible-intangible continuum of goods and services 21 Figure 1-6: Steps in new product development process 23 Figure 1-7: Vertical marketing system model 36 Figure 2-1: Sales volume of ILA Vietnam in Hanoi since 2007 56 viii LIST OF TABLE Table 2-1: Number of visitor from 2008 to2010 45 Table 2-2: Sources of information that customer knew ILA from .45 Table 2-3: Programme, schedule and fee of English course in ILA Hanoi 48 Table 2-4: Programme, schedule and fee of English course in Apollo Centre 50 Table 2-5: Programme, schedule and fee of English course in Language Link 51 Table 2-6: Book using analysis 54 Table 2-7: The number of new sales volume 55 Table 2-8: Re-enrolment in ILA Hanoi 57 Table 2-9: The role of advertising is more critical in Hanoi 59 Table 2-10: Types of advertising and frequency 59 Table 2-11: Student statement by district and areas 64 ix INTRODUCTION Research Problem ILA Vietnam in Hochiminh City is a very famous English Training Centre Everyone can recommend friends and relatives to ILA to study when they are asked There are six training centres in HCMC, one in Vung Tau, one in Da Nang and one in Hanoi The centre in Hanoi was established in 2007 This centre has a big problem with the market share development Although Hanoi Training centre has more than three years running, it now still has negative profit The problem is that ILA Hanoi has to compete with many big competitors such as Apollo, Language Link, ACET and British Council Hanoians are familiar with these centres and know little about ILA Vietnam Besides, ILA still uses one marketing strategy for both northern and southern area With those research problems, the thesis will be conducted with the purpose to improve the market share then to get more profit for ILA Vietnam in Hanoi for the period of 2011-2016 The objectives will include: Study the comments of customers in Hanoi about ILA‟s products and marketing activities; analyse business performance of ILA in Hanoi; find out the problems occurring in the Hanoi Centre; and give the recommendations to develop the market share based on applying the suitable marketing mix to Hanoi market Objective and aim of thesis Those research problems will be discovered with the purpose to improve the market share then to get more profit for ILA Vietnam in Hanoi for the period of 2011-2016 The objectives will conclude: - Study about marketing performance of ILA Hanoi - Find out the problem occur in the ILA Language training centre in Hanoi - Study comments of customers in Hanoi about ILA products and marketing activities then build up the suitable marketing program to increase market share - Give the recommendations to develop the market share Scope and scale of thesis This research will be conducted based on some major objects are: - Current customers of ILA Vietnam in Hanoi - Visit customers, students of University, secondary and high schools, parents of primary students - Staffs and manager in Hanoi Methodology The thesis used some method of research such as surveys potential customers, existing customers, ILA‟s staffs and analyse reports of the company One hundred customers were asked to collect information of their need in studying English and the source of information that they used to find and select an English Training centre The company‟s reports were used to analyse the business performance such as the sales number, the number of visitors and number of students The existing students were asked for their satisfaction on courses, customer services, books, teachers, teaching assistants and if they would recommend their friends and relatives The comments of customers were used to measure the effectiveness of marketing activities of ILA in Hanoi The more suitable marketing strategy could help ILA to attract more customers and expand its market share Data resources The primary data was gathered from direct interviews and discussions with the customers, students, visitors, parents of students, staffs and managers of ILA The second sources of the thesis was secondary data such as books, newspapers, internal and external reports and the Internet CHAPTER 1: LITERATURE REVIEW The literature included theory of market share, ways to increase market share, information search and building customer loyalty, marketing mix This section will start off by explaining the market share concepts 1.1 Market share 1.1.1 Definition There were some definitions of market share as the following: "Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity." By Farris, Paul W.; Neil T Bendle; Phillip E Pfeifer; David J Reibstein (2010) Marketing Metrics: The Definitive Guide to Measuring Marketing Performance Another author of investopedia said that market share was the percentage of an industry or market's total sales that was earned by a particular company over a specified time period According to this author, market share was calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period This metric was used to give a general idea of the size of a company to its market and its competitors “Market share is the percentage of a company‟s sales of a particular product or service in a given area It can be calculated in terms of revenue or of units sold.” By Author(s) from Penetrating.net “In very simple terms, market share is the number of loyal customers your business or company has been able to retain over a long period of time” by Tito Philip, Jnr It was quite different from other definition when mentioning the loyal customers This author thought that no one else but loyal customers were the real market share of the companies the time, energy, and psychic costs Third, it can reduce its product's monetary cost to the buyer Suppose ILA concludes that the customer sees its offer as worth $6.75 Further, suppose ILA's cost of one hour is $3 This means that ILA's offer potentially generates $3 over the company's cost, so ILA needs to charge a price between $3 and $6.75 If it charges less than $3, it won't cover its costs; if it charges more than $6.75, it will price itself out of the market The price ILA charges will determine how much value will be delivered to the buyer and how much will flow to ILA For example, if ILA charges $5.75, it is creating $1 of customer perceived value and keeping $2.75 for itself The lower ILA sets its price, the higher the customer perceived value and, therefore, the higher the customer's incentive to purchase To win the sale, ILA must offer more customers perceived value than Apollo and other English centre does Customers were becoming harder to please They were smarter, more price conscious, more demanding, less forgiving, and they were approached by many more competitors with equal or better services There were two main ways to keep customer One was to raise high switching barriers Customers were less tending to switch to another English centre when this would involve high timing costs, high search costs, or the loss of loyal-customer discounts The better approach was to deliver high customer satisfaction This made it harder for competitors to offer lower prices or inducements to switch So ILA should look to capture the market by lowering prices, but making it difficult to switch later In order to improve the rate of re-enrolment from loyalty customers, the company should build good relationships with customers through some marketing strategy Most companies practice only basic marketing when their markets contain many customers and their unit profit margins were small In the service industry like English training markets with few customers and high profit margins, most companies used partnership marketing, ILA should choose partnership marketing as 71 well In order to so, ILA should treat employees as well as they treat the customers Regarding loyalty, author thinks that the company should keep on developing their loyalty programs and customers services linked to their English training programmes – such as offering one year of free entrance testing fee In addition, promotion for existing students should be applied to encourage reenrolment for next-time study such as loyalty discount or scholarship for high achievement students On the other hand, ILA should consider applying the Loyalty Profit Chain as the chart below explains This approach could make a real difference in employee turnover and customer satisfaction and eventually shareholder return Chart 3-1: Loyalty Profit Chain In this chain, the internal service quality was the starting point for others The company should increase staff‟s welfare to achieve high employee satisfaction which seems not relevant to customer loyalty but it affects not only employee productivity but also external service quality In this case, external service quality 72 has a direct link to customer satisfaction, value and loyalty Once ILA had customer loyalty, they would tell friends about courses and services at ILA which led to more customers enrolling, and thus, more revenue to the firm Regarding loyalty, author recommended that the company should keep on developing their loyalty programs and customers services linked to their English training programmes – such as, for instance, offering one year of free entrance testing fee 3.2.3 Marketing mix 3.1 Product ILA did not have new products for years It was necessary for ILA to have new products to attract more customers and gain the market share There were two ways to have the new products The company could renew current products and develop the new product The author recommended doing both at ILA Renew products could help ILA save time and cost in short term In long term, ILA had to develop new product to gain competitive advantages Bellows were the recommendations for both cases: - Renew current products o Device the duration of the young learner‟s courses into shorter with more modules Each module could be 45 to 50 hour long only By this way, customers only had to pay around 200USD each time and it could be easier for them to decide However, there was another story for adult courses There were too many modules for these programmes The duration of total level was longer than same product for children i.e same elementary level, children had to study for 100 hours but adult had to study in 184 hrs It could be changed into two modules and each module could be fifty hour long o The schedules of the course could be variety for students to choose For example: ILA did not have weekday class for Jumpstart students 73 and one lesson per week for Juniors, Seniors and Elite students It was simply because ILA did not have this schedule before and people afraid of changing Many other students had demand of study English one weekday and one weekend They still wanted to study but they also wanted to travel with the family It was increasing demand due to the changing of the modern life o ILA could change the course books to renew products by adding value for customers There were many new books written each year with updated information and technology applied The academic department could search to find the suitable book from Macmillan and Cambridge publishers Books for children could have lot of interesting pictures to attract them CD-ROM for computer installment was one extra value for customers; ILA could choose course books that have attached CD-ROM o Out-door activities could be included in the course schedule Customers were willing to pay if their children could join to improve social personality For Jumpstart programme, ILA could let student to have topic lesson at the zoo, park and play grounds near ILA Seniors and Elite could have lesson by topic at cinema, zoo, museum …then they had to write reports after that Each year, ILA could choose at least two times to organize camping day for students to join and practice English with teachers and friends It could be the time for advertising and doing PR too o ILA could set up a separately customer care department for dealing with customer from the sales department It could help ILA building professional service than current combination and stop students could be care more than current system o Customer service was a strong point of ILA However, the process of complaints solving still needed to be improved Front office staffs 74 received complaints could directly check the situations instead of moving to back office staffs The company could empower these staffs in some standard cases to satisfy the customers o Teaching assistant team contributed to success or failure of the service They looked after children in the class and contact with parents every month ILA could set up for this team a department with its controller This supervisor could dealing with teacher changing, covering and handling - New product development New-product strategy The ILA Company could build a strategy for developing a new product due to the need of changing and market leading position (in Hochiminh City) Marketing department could get approval from CEO Idea generation In order to find a few good ideas, the marketing could market research internal and external First of all, they could survey to current students and visitors By asking these students, ILA could use staffs and teaching assistants in class that could save cost than hire market research organizations Idea screening In this step, marketing could reduce the number of ideas, keeping good ones, clearing bad ones i.e many university students wanted to learn English course that could help them practice their field ILA could consider short course for business report writing, presentation skill in English, English for meeting note taking, English for engineering, English in hospital for nurses etc… ILA could choose few of the demand to develop new product Of those ideas, business students were major so ILA could choose developing business course for them first Concept development and testing 75 The concepts of short English course for business students were possibility reasonable to develop the new product because it was suitable with students‟ payment ability and market size After having a concept of short business course, ILA could test it with students at Vietnam Commercial University near ILA to see how it was Marketing strategy development In this step, the marketing department could make a strategy statement with three parts: The first part, it described the target market to university student, the planned product positioning to high quality with reasonable price, and the sales at each university, market share and profit goals for the first few years The second part of strategy statement could outline the product price and marketing budget for the first year The last part of the marketing strategy statement could describe the planned sales in long term and profit goals and marketing mix strategy Business analysis In this step, the marketing department could get approval from board of management on its product concept and marketing strategy proposal Business analysis reviewed the sales, costs and profit projections for a new product to find out if they could satisfy the company‟s objectives i.e in this period of time, market share was the first priority so profit could be the second objective Because of this reason, products for students could help increase the number of student than profit utility The company could estimate sales by looking at the sales history of similar products and conducts surveys of market opinion Product development The marketing department could co-operation with academic department to design a trial product with suitable duration and course book Because the teaching service was intangible, academic department also played function of R&D development 76 Test marketing The marketing department could co-operate with academic department to re-design if trial product suitable Product could be test by teachers and volunteer students in order to get feedback from them Through received comments, marketing department could adjust product and price to suite the customer‟s demands Before launching to nation wide, ILA could apply new product at one area in Hanoi or Hochiminh city Commercialization After the test, ILA could introduce product to the market ILA had to spend lot of money in the first year for advertising, sales promotion and other marketing effort If the company failed in this step, competitors might have chance of replacement In this example, the author suggested to focus marketing on the third and fourth year university student at some business school near ILA The new product development process had nine steps but ILA could combine some steps due to the service‟s characters 3.2 Promotion mix In this part, the thesis delivered recommendations of changing on advertising, public relation and sales promotions Bellows were the details:  Advertising - ILA Hanoi should have one marketing executive for decentralization marketing activities At the same time, budget for advertising in the period of 2011 to 2016 should be support from head office to gain the objective of developing the market share - ILA‟s advertisings were too academic and complicate for customers to understand It could be straight to education or English teaching rather than “education for life” 77 - ILA in Hanoi should choose newspaper, online websites and forums that popular to Hanoian such as www.dantri.com, www.vnexpress.net, www.vietnamnet.vn, www.kenh14.vn, Lao Dong, Nhan Dan, Hanoimoi, Webtretho, etc… and forums of Foreign Trade University, Vietnam Commercial University, Academy of Finance, Diplomatic Academy of Vietnam and many others private universities - The frequency of print and online ads should be increase to three time per week and two weeks each month - Information boards of schools were other places for advertising ILA should sponsor for school to upgrade this board for free On this board, ILA should add the information box to collect inquiry of customer about courses Each of inquiry should receive reward such as English tips, trial lesson for free etc… - Advertising on television should be considered for ILA Hanoi Even these ads were expensive, the people in Hanoi still believed in this channel, according to the research of AC Neilson - Advertising boards in lifts of building near ILA were recommended ILA should also use video clip of teaching to advertise in apartment buildings in Trung Hoa, The Manor, MyDinh, Dong Da and Ba Dinh districts - Sign-boards at street and book-stores were also a good choice ILA should place some sign board at Kim Ma street and HoTungMau street to guide customers ILA Hanoi should also hire a higher position on CTM building to place a sign board too Customer did not recognized ILA when they were traveling on Caugiay Street - Street banner was another cheap and effective choice ILA should use this method when having promotions - ILA‟s brochures combined some programmes at once and costly for printing ILA should design simple one for flyer distribution at school and universities The brochures should have clear term and condition for register 78 - ILA should attend students‟ fairs It was considered as an advertising method for branding  Public relation ILA should set a clear message when doing PR The message should be related to benefit of students and should show ILA‟s care and environment With a clear message, ILA should a series of events and donations to poor students but had good study result The marketing department should choose some primary, secondary and high school to deliver scholarships for these students ILA should inform journalists for before the events then they could write news about that ILA should organize free class for student of SOS and other orphanages Besides teaching English, ILA should organize events for students at ILA centre to visit orphanages to educate them about life and, by the way, show what ILA doing The events should be post on ILA‟s website, Facebook, Twister and other social network for advertising purpose Like other competitors, ILA should choose a Hanoi television channel that have education program to sponsor and build a free English program on TV The program “Vui hoc Tieng Anh” was successful on HTV7 channel and it could be used in Hanoi  Sales promotion There were some sales promotion tools such as consumer promotion, trade promotion and business promotions The major of ILA‟s customers were individuals so it should use consumer promotion tools The main consumer promotion tools included samples, coupons, cash refunds, price packs, premiums, advertising specialties, patronage rewards, point-of-purchase displays and demonstrations, and contests In the implement process, there were some decisions that need to be decided: size of incentive, conditions, length of 79 promotion, response mechanisms, sell-off time etc… Bellows were some suggestions: - ILA should use VIP card for students that bought more than three courses or had more than one sibling that studying at ILA This card could be use in some cases: discount for cardholder‟s friends, relatives and for owner; pointof-purchase for owner when pay tuition fee When people were recommended by cardholders, they could get 10% discount for the first time register Cardholder would receive 1points for each million payment by themselves or by their relatives Once cardholder got 100 points, they could get one free course The card would be expiring if the owner did not use in one year - Coupon could be use as reward for students ILA could buy coupon from supermarket, book stores or cinema tickets This coupon should be used to encourage in buying courses For example: students registered and paid money from 23/12 to 03/01 could have 500,000vnd coupon of Fivimark supermarket or Fahasa book-store Best students in ILA classes could receive these book coupons too - Off-peak discount should be applied in the period of Christmas, before and after Tet holiday and school‟s examination time ILA should discount 20% in three days of each campaign After one big promotion, the number of sales would be decrease ILA should consider using this promotion once a month - Trial lesson should be use to visualize service and encourage considering customers Customers could study two lessons in class that suitable to the level In this lesson, customers could image how the long term service could be This trial less could also use as an event for advertisement Customer who could not study long term at ILA still had the right to register in this demo lessons - Contest could be used as PR event and sales promotions For example, spelling competition for all primary and secondary schools in Hanoi 80 Through this competition, ILA could collect more data base of registers and ILA‟s brand could be recognized The winner could receive ILA‟s scholarship and other value - ILA‟s advertising productions as back-pack, rain-coat, T-shirt; helmet etc could also be gift for customer For example: ILA could use cross-word on Hoahoctro newspaper Everyone could answer cross-word would receive one ILA‟s back-pack - Discount for loyal customers: In order to improve the rate of re-enrolment from loyalty customers, the company should build good relationships with customers through some marketing strategy Customers who finished one course and pay for the second course before the first course end-date could receive five percent discount From the third course, customers could receive ten percent discount Besides using consumer promotion tools, ILA should use trade promotion tools to get more corporate contracts For example, if Metro Thang Long signed a contract with ILA to train for fifty students, ILA should discount for them 10% The discount rate of the course should be considered if the number of student was increase Another example was Lomonoxop School ILA should encourage customer to organise more classes with ILA in order to receive 20% commission ILA could offer this school decorating a class as ILA‟s style It also was an advertising action for ILA brand 3.3 Place In order to get more market share, ILA could try to get more students but customer could not travel for two hours to use two hours service ILA should expand the business in Hanoi The company should open a new centre in Hanoi downtown because, in the customers‟ mind, the famous brand name “must have” a branch in downtown If a company have an office or branch in the city centre, the brand name was perceived as a high value one The author would recommend ILA to set up a 81 new training centre in Hai Ba Trung Street for collecting students from Hoan Kiem, Long Bien, part of Hai Ba Trung districts and Gia Lam One more training centre should be open on Tay Son Street in order to collect students from Ha Dong, Dong Da, Thanh Xuan Districts It cost the huge amount of capital to establish many training centres ILA should consider using franchise There were some advantages: - Franchising could help ILA save cost of building set up, staff‟s ILA could also receive the initial fee - The rapidly expansion would help ILA increase its market share faster - The centre‟s managers worked for themselves so the business must be different than current centre in development and management Beside these advantages, ILA had to face some disadvantage of franchising as the following: - ILA had to give up some control - The franchisees might not perform exactly ILA standards so it could harm to ILA brand name - The franchisees might not be good dealers To avoid these disadvantages, ILA should design the standard contract that point clearly that ILA had the right of recruit teacher and supply course books ILA should franchise in Hai Phong, Quang Ninh and Bac Ninh provinces In general, the place of ILA, a service company, were very different from develop a place marketing mix to other products ILA should choose suitable partner to achieve success 82 REFERENCES Aaker, D A., Kumar, V., & Day, G S (2003) Marketing Research Hoboken, New Jersey: John Wiley & Sons Best, Hawkins, Coney (2004); “Consumer Behaviour”, 9th edition, McGrawHill Companies, Inc, USA Bryman, A & Bell, E (2007) Business Research Methods Oxford University Press Inc., New York Danziger, Pamela N., 2004: Why People Buy Things They Don’t Need: Understanding and Predicting Consumer Behavior Dearborn Trade Publishing Dichter, Ernest, 1964: Handbook of Consumer Motivations New York Donald 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Upper Saddle River, New Jersey: Pearson Education Solomon, M., Bamossy, G., Askegaard, S and Hogg, M.K (2007), Consumer Behavior: A European Perspective, 3rd ed., Upper Saddle River: Pearson Prentice Hall Souiden N., Kassim N M and Hong H-J (2006), The effect of corporate branding dimensions on consumers product evaluation: A cross-cultural analysis, European Journal of Marketing, Vol 40 No 7/8, p 825-845 Vietnam Economic Times, 1, 2, 3, 4, 5, 6- 2010 84 Appendix Questions used to ask customers who visited ILA and students of ILA What is your demand of studying English? What programmes would you like studying? How many percentages of native speaker teachers in the class that is suitable you think? How does the location of the training centre affect your choosing? How you think about the course of ILA? Do you satisfy with the quality of the course? Would you recommend ILA to your friends and relatives? How you think of the course duration? How you think of customer service of ILA? 10 How did you search for the information when you chose a training centre? 11 What were the factors that affected your decision in choosing an English centre? 12 How you think about ILA‟s website? 13 How you think of the fee of the course? 14 Which schedule you want? 15 How many times per week you want to study? 16 How many payment times you want to pay for a course? 17 Which type of payment method that you want to use: bank transfer, credit card or cash? 85 ... business performance of ILA in Hanoi; find out the problems occurring in the Hanoi Centre; and give the recommendations to develop the market share based on applying the suitable marketing mix to. . .VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Tran Thuy Linh SOME RECOMMENDATIONS TO DEVELOP THE MARKET SHARE, THE CASE OF ILA VIETNAM IN HANOI Major: Business Administration... share then to get more profit for ILA Vietnam in Hanoi for the period of 2011-2016 The objectives will include: Study the comments of customers in Hanoi about ILA? ??s products and marketing activities;