There are four basic distribution strategies: indirect distribution, special sales, direct marketing, and some combination of the three.
Indirect distribution provides product to resellers that purchase product to end user. Product follows system: distributors >> wholesalers>> resellers>> end user. In Vietnam, this type of distribution is quite popular. Vietnam has a large resellers system. People are used buying product from resellers and use cash for every trading activity. Vinamit is a typical example for indirect distribution. Product of company focus on supermarket systems such as CO-OP mart, Big C, Citimart, Maximark, Metro, Sai Gon, Ha Noi, Super Bowl, and Vinatex.
Special sales are a part of indirect distribution. We sell product to someone other than end user. Vinamit should apply this type of distribution to increase sales. In this case, product commonly uses in parties, people eat for fun. Company should sell product to bars, or karaoke bars with discount price.
Direct marketing does not use distribution network. Distributors deal directly with the buyers. This involves selling through direct mail, telemarketing, and email.
To develop domestic market share, Vinamit can use indirect distribution strategy. Company can use direct marketing to take competitive advantage when launch new products or new oversea markets.
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Pricing Strategy
As same as many other companies, setting up good price strategies are very important for Vinamit. Price is a part of marketing mix. It changes frequently, and directly affects to business activities. Changing of the price can decide the percent of sales. The firm must have reasonable price to both maximize profits and attract customers.
We will analyze a pricing strategy which are commonly used: Competitive pricing
Competitive pricing strategy bases on the competitive ability of Vinamit with its competitors. It includes penetration pricing, limit pricing, price signaling, and going-rate pricing.( Marketing principles & Perspectives, 2001)3
Penetration pricing: the firm attracts customer by low price and high quality product. By this way, company can maximize sales, increase customer’s demand curve. Moreover, it makes competitive advantages for new product as Beef Jerky, and Broccoli & Lettuce chips. However, penetration pricing establishes long-term price expectations for the product and imagine preconception for the brand and company. For example, there are customers who always hunt low price and go away when that price raise. The firms must keep price in long-term to keep customer. Besides, this strategy leads to low profit margin.
Limit pricing (economy pricing) is a term of penetration pricing. Company use low price and low quality. Customer is still attracted by low price, but they tend to higher quality products. Therefore, the firms may engage in price skimming.
Price signaling (price skimming): we put high price and low quality. Company has a substantial competitive advantage, but that does not bring back much profits. Although company will lose a number of customers, it can capture the customer surplus who believes company will spend more to provide higher quality.
Going-rate pricing (premium pricing): we put high price and high quality. At this term, we establish successfully status for our product. Customer think when pay more money, they will received high quality product.
Here is the price of some Vinamit’s products:
Comparing with other fruits snacks:
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Marketing communications
Promotion is a part of marketing mix. It is considered as a communication between seller and buyer. Therefore, it is, some times, called “marketing communications”. According to marketing book, “Marketing communications is the process of both informing and educating users and dealers about the company, and of influencing attitudes and behavior”.5
In each marketing communication campaign, the firm always has the target audience. Then, the firm invests to a series actions of the marketing communication mix. Those are advertising, public relations, sales promotion, personal selling, direct marketing communications, and integrated marketing communication. These actions are very expensive, but it also brings back many benefits for company. For example, if the company uses advertising, it will spend fees for space where company put advertisement or time –how long this advertisement goes on. Advertising can affects a large number of people. It might change people’s awareness about company’s products. Therefore, we can consider promotion as an investment in the development of customer’s attitudes and beliefs.
To achieve the maximum influence on the customer, the company should integrate all the promotional elements. By using S.O.S.T.4M 6technique, we will analyze the promotional campaign of Vinamit to understand integrated marketing communications (IMC).
Situation: Dried fruits of Vietnam are not popular in oversee.
People commonly think that dried fruits come from Thailand.
Objective: sales Vietnam’s product in foreign country
Create product’s dried fruits which have Vietnam’s style in foreign country.
Establish Vinamit brand in foreign country.
Strategy: Applying market segmentation by location
Selling and displaying Vinamit’s products at International Trade Fairs and Exhibitions.
Tactics: Focusing on foreign consumer who tend to back to nature
Proving Vinamit brand in oversea
Affecting to domestic consumers
Men Vinamit has attracted talented man.
Money Marketing budget and cash flow are plentiful. Moreover, Vinamit can reduce marketing costs by selling product at International Trade Fairs and Exhibitions.
Measurement: Benefits of this promotion campaign can be measured by effect of Vinamit brand on international market.
Minutes the plan is launch when Vinamit promotes new products, or develops old brands.
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Vinamit has done marketing, may they go the right way. We will analyze marketing to know about this.
The extended marketing mix
“Marketing is their ability of an organization to provide the right product, at the right price, via the right outlets (place) and presented the right way (promotion).” (Marketing, 2004).8
The right marketing means that we apply the right ways of 4Ps: Product, Price, Place, Promotion, and 3Ps: Physical presence, Process, and Provision of service.
A product is something that satisfies consumer’s wants. The wants of people include:
Tangible attributes
- Availability and delivery
- Performance
- Price
- Design
Intangible attributes
(Marketing, 2004).9
People choose Vinamit’s products because they are presented everywhere with variety prices, special package design- using mauve instead of other natural colors. Besides, they think that using these products will be good for health and elevate the value of Vietnam’s fruits. Vinamit applies the vacuum drying processing technology, which preserves the fruits’ original taste, colour and aroma, a reason making its products popular.
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Place: is the importance of distribution
Distribution is also a strongest point of Vinamit in the marketing mix. Network distribution includes export and domestic network.
- Export network: product of Vinamit is exported to 17 countries in the world.
- Domestic network: product is flowed within chains of distribution such as
Producer wholesales resellers’ consumers.
Product supermarket system consumers.
Price can be defined as a measure of the value exchanged by the buyer for the value offered by the seller. (Marketing, 2004) 10
Price strategy is also a weak point of Vinamit. The firm has to spend a large costs investing to new technologies. As the result, the price is pushed up quite high comparing with other prices of snack fruit in market which is showed in part “pricing strategy” above. However, company can still keep price in competition. Buyers accept the prevailing market price.
The right promotion will lead to a successful of product. It help company directly impacts to its target segment. Company can use flexible elements such as advertising, public relations, sale promotion, personal selling, and direct mail.
Vinamit has focused on public relations. Company tends to target “food safety”, awards scholarships to student.
It is not important in the factories, but in agencies, it is an interested point to attract customer. When customer comes to store, they expect a convenient feeling, and high standard.
Company develops Customer Relationship Management Systems and departments which only focus on solving customer problems. At Vinamit, the benefit of customer is always the most important thing. People are not only solved problems, but also guided how to use product in effective way.
- Provision of customer service:
Understanding customer and building good relationship with customer is the core of customer service. It is more effective when we sell products in friendly way.
Marketing mix of Beef Jerky and Lettuce & Broccoli chips
Lettuce & Broccoli Chips and Beef Jerky are two new products, so it is seemly straight with consumers. If we have the right marketing mix strategies, those products can compete with other products.
Overall market and factors
Social factors:
Today, there are increasing in the demand of snack in Vietnam and the world. In England, there are 49 percents of children using snack every day. However, consumer health is soon very important; many people are obese. Therefore, requirement of new product with low fat, and good for health is essential.
Legal factor: the food product must be certified of Health.
Market segmentation and target market
Broccoli and Lettuce chips should contact with consumers by demographic segmentation
Children segmentation:
This is a target market of Lettuce & Broccoli chips. Children use the most snacks in market. There are some famous brand names such as Poca of Pepsi, O’star of Oreo.
Adult segmentation
Although women often like to nosh, they care of beauty. Therefore, they away with products which include fat, and make acne.
Beef Jerky
The sensory and safety segment
This segment makes use of the benefits in taste of Beef Jerky. Beside, this type of product has high nutrient and no carb. It is suitable for children and women.
The happiness segment
This market exploits the energy- filled snacks, and the habits eating for fun. Drinkers are the most users. However, percent of drinker is quiet small. So, we might not use this as a target market.
Product strategy
Broccoli & Lettuce chips and Beef Jerky are produced by the vacuum drying processing technology.
Packaging
Pricing strategy
The prices of two products have to: reciprocate fix costs and variety costs.
distinguish between wholesale and retail.
compete with substitute articles.
.
We can use the competitive strategy pricing to set price for each product.
The price of Lettuce and Broccoli chips at term 1, 2 (penetration pricing and limit pricing) are less than two dollars. At term 3, 4 (price signaling and going-rate pricing), the prices are from $ 2.5 to $ 3.5.
The price of Beef Jerky at term 1, 2 are from $ 4.5-5.5 and term 3, 4 are from $5.8- 6.3.
Here are the prices of some competitive products on Beef Jerky market.
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Distribution strategy
Vinamit can distribute product on its old distribution network. Furthermore, the firm should open new agencies which near schools to sell Lettuce and Broccoli chips. For Beef Jerky, the firm should sell in discount prices for bars, or karaoke bars.
Promotion strategy
Company should concentrate on customer services. Beside, company can make any events and distribute brochures and leaflets to consumers.
Business to business and business to consumers
When an organization starts selling their product, they have to classify two kinds of business. Those are business to business (B2B) - is known as the industrial goods market- and business to consumer (B2C).
Business to business describes commerce transactions between businesses such as business activities between Vinamit and wholesalers or supermarket systems, between wholesalers and retailers.
Business to consumer describes activities of business serving end consumers with product and/or services such as a child buys Lettuce & Broccoli chips form supermarket.
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B2B and B2C have some similar and different points:
Similar:
When we launch our marketing strategy, both B2B and B2C have to identify who the customer is and why they need to hear our message.
We also develop relationships.
- In B2B, that is the relationship of businesses.
- In B2C, that is the relationship between business and customers.
We maximize the value of relationships.
Different:
(Marketing, 2004)14
International market and domestic market
When the economic of scale is larger, the firm might not find more benefits in domestic market. They tend to international market. Vinamit’s product has exported to 17 countries in the world such as U.S.A, Australia, Taiwan, Japan, and Nepal. Therefore, company is not only thoughtful domestic market, but also international market.
The first factor, company has to care, is that increasingly rapid technology lifecycles also increases the competition among countries as to who can produce the newest in technology. Besides, if company wants to enter a new market, it needs to adapt with political and legal influences, culture of that country. For example, in the U.S., people have skillful and knowledge will get ahead, but in china, people believe outcome result more from luck. We can also apply marketing mix strategy to enter a new international market.
Here are some different points between international market and domestic market.
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To sum, before we launch a business, we need to understand market thoughtfully. Marketing mix will be an effective tool leading us to success.
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