Starting point of marketing orientation is the market. A company will penetrate the market before producing its good. It means that company will research about the market where its good will be sold. When an organization do market research, it will collect, record and analyse all information relate to its product and market which are very useful for business to understand more clearly about its market. In researching market, a company usually identifies market information such as: demand of customers, price, the competitors it can have, segmentation and the trend of market in the future. This information is very useful for business to understand more clearly about its market (Thetimes100, 2009). By doing research market, having much information will help the company has more advantages than its competitors and it is a good chance for the company to make suitable strategy to develop product. As a result, it enables the market-led company to keep head of the competition. However, it can be expensive and time consuming to do research which result in delay the time to produce the product and sell it in market. In some cases, others companies can depend on some companies which have done research and create “me too” product with no costs of research and development. Not only that, sometimes customer change their behavior irrationally and it is very difficult for company to have response immediately.
Main feature of marketing orientated organization is that it focuses on customer needs. Customer is the one who buy the product or service from an organization so that customer plays an important role to the organisation. In contrast to product orientation which focuses on producing the goods at first, marketing orientation focus on customers needs and customers wants. In other words, marketing orientated companies are aimed to get close to their customers so they can understand their needs and problems well. When a company identifies its market and the need of customer, they can know that what product should be produce and it is not good at all if a company produces its good but does not concern about what customer want and just think about selling. In this case, produce what company can sell has less mishap than selling what the company produces. When a company understands customers, it can communicate with customers more effectively with cost-effective marketing communications. The company can create products which are suitable for the market.
A marketing orientated company does not only get closer to customer needs but also has integrated marketing. The definition of integrated marketing in encyclopedia is “a planning process designed to assure that all contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time”. In other word, company will combine several marketing channel with the same purpose to make sure that customers can understand about its products. For example, a company can introduce their product through magazine or website. Otherwise, some companies want to introduce their products through email, billboards, print advertising, even through telephone. With many ways to marketing, company can make customers are more notice about its product, they can see advertisement everywhere. As the result when customer meet a situation which relate to products of company, they will immediately think about that products and want to buy them (Internettechboston, 2007)).
Overall, a marketing orientated company will show certain characteristics below:
- Extensive use of marketing research
- Emphasis on a benefits to customers rather than on product attributes
- Use of techniques
- The offering of ancillary services like credit availability, delivery, installation, and warranty
According to above characteristics, people may understand more deeply about the basis of marketing orientation, how does it work in an organization? and how can the company practice marketing orientation in order to maximize profit?
ELEMENTS OF THE MARKETING CONCEPT
Each organization must have its own philosophy of marketing in order to efforts and decide what they are interested in organization, customers, and society. There are alternative concepts such as production, product, selling, marketing, societal marketing and relationship marketing which under marketing activities of organizations.
First of all, we need to understand what marketing concept is and how it is important to organizations. According to the definition, “marketing concept is the philosophy that firms should analyse the needs of customers and then make decision to satisfy those needs, better than competitors. Today most firms have adopted the marketing concept, but this has not always been the case.” (Net MBA, 2009)
To better understand the marketing concept, reviewing other philosophies which once were prevailed during different historical time frame, and today those concepts are still applied in some firms without the restriction.
The Production Concept is “the philosophy that consumers will favor products that are available and highly affordable. Therefore, management should focus on improving production and distribution efficiencies.” (Kotler and Armstrong, 2005, page 12). This concept prevailed from the time of the industrial revolution until the early 1920’s. The Product Concept occurs in two situations. The first occurs when the demand of a product exceeds the supply. At this time, firms should look for ways to increase production. The second occurs when the price of a product is very high and the productivity needs bringing it down. Here are two questions that the organizations have to ask before producing a product: Can we produce the product? Can we produce enough of it? (Net MBA, 2009)
The Product Concept is “the philosophy that consumers will favor products that offer the most in quality, performance, and innovative features and an organization should devote energy to making continuous products improvement” (Kotler and Armstrong, 2005, page 12). The Product Concept could lead to the obsession with technology because managers think the technological superiority can help organizations to be successful in business. Therefore, all collected information needs analyzing very carefully since any small change in quality, performance, and features would be useful to the organizations’ success.
The Selling Concept is “the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort. (Kotler and Armstrong, 2005, page 12). By the early 1930’s however, mass production has become commonplace, competition has increased, and there was little unfulfilled demand. Around this time, firms began to practice the selling concept, under which companies not only would produce products but also would try to convince customers through advertising and personal selling. Before producing a produce, the companies should ask the key questions were: Can we sell the product? Can we charge enough for it? (Net MBA, 2009). The Sales Concept (Selling Concept) paid little attention to whether the product was actually needed, this concept was simply forced the competition to the sales with little regard customer satisfaction. Marketing was a function which was performed to products that were developed and produced. Even today, some people still come up with the word “marketing” when they really mean “sales”.
According to the Marketing Concept definition, an organization should try to achieve the organizational goals depend on knowing the needs and wants of target markets and delivering the desired satisfaction of customers better than competitors do. (Kotler and Armstrong, 2005). The marketing concept expresses the importance of customers and emphasizes the marketing activities begin and end with them. After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With the increase of discretionary income, customers could afford to be selective and buy only products that really met their changing needs and wants. These needs were not immediate obvious. The key questions were: What do customers want? Can we develop it when they still want it? How can we keep our customers satisfied? In response to these customers, companies began to adopt the marketing concept, which involves: Focusing on customers needs before developing the product, aligning all functions of the company to focus on those needs, realizing a profit by successfully satisfying customers needs to the long term.
The Marketing Concept relies upon marketing research to define market segments, their sizes, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.
Start Focus Means Ends
The Societal Marketing is the philosophy that “the organization should determine the needs, wants, and interesting of target market” (Kotler and Armstrong, 2005, page 14). It should then deliver superior value to customers in a way that maintaining or improves the consumer’s and the society’s well-being. This concept raises the question between customers short run wants and customer long run welfare. The Societal Marketing Concept emphasizes the firms’ profit always associates with the pollution and damages public’s health like fast-food industry, for example. In order to have better understanding about this concept, people should refer the below model
Consumers (Satisfaction) Company (Profit)
Relationship Marketing Concept is a business concept, which has suggested that it is not only relationship with customers, but also suppliers, agents, government or local authorities. Moreover, workforce is an important element that needs to have understanding about the relationship and how the organizations create the relationship as a motivation for them to be willing to work. (Lancaster and Reynolds, 2002)
BENEFITS AND COSTS OF USING MARKDETING APPROACH TO DO BUSINESS IN VIETNAM
Milky Products Private Limited (MPPL) would like to expand and develop business in Vietnam market so that the company needs to know about the benefits which they are going to receive when they invest in Vietnam market and the costs that they have to pay for.
An effective marketing happens in four stages, which can be represented like a wheel below
In stage 1, the marketing approach is getting to know about the market, customers, competition, and opportunities existing or not. Therefore, doing research is very important to business organization. After understanding about the market and target customers, the company thus develops their products or service to adapt target customers. In stage 3, it is concerned commercialization that means the company has done the research and plan so that it is time to take action. The company needs to implement what they have done in stage 1 and stage 2 in order to get the best result so that this action will bring profit to the company. An effective marketing can not lack stage 4 which is management step. After 3 stages, everything is running inside the company so that the company has to manage all activities to keep their customers and persuade them to re-buy products of the company. (Jazeera, 2009)
Vietnam market is not a exception of the marketing approach. Vietnam has a big and young population with approximate 86 millions people. (Vneconomy, 2009). Therefore, it is an advantage for the company to do business in Vietnam. Moreover, Vietnam market is considered as a new and young market in Asia and it is a potential market for foreign companies to discover. Vietnamese customers now are getting to know more about the wide ranges of products and service which are existing in the market. Vietnam has joined in World Trade Organisation (WTO) for 3 years so that the policy of the government to foreign companies is quite open. The government has established new tax law for foreign companies such as the reductions in corporation tax, import and export tax, value added tax (VAT) and so on. Moreover, Procedures are solved very easily and quickly so that it is a good new for companies which want to open business in Vietnam. (Economy newspaper, 2008)
For MPPL, the existing competitors in Vietnam market are still limited in comparison with other Asian markets like Singapore, Malaysia, China, Japan, and etc. In addition, the company just exports products into Vietnam market and uses distribution channels to give products to customers so that cheap employee is not an important factor to the company. However, for long term doing business the company should take care about this factor because it will help the company save a huge amount of money every year.
Besides the benefits that the company is able to receive when the company launches a new business in Vietnam, MPPL could get a lot of difficulties. On the other hand, the company would have to pay for many costs for opening a new business in a totally new market. For a new brand name, it is not easy to be well known by customers, especially Vietnamese customers. Because Vietnamese have buying habit that people prefer brand names come from developed countries like USA, Japan, Germany, and so on. Even the price is every expensive, but in customers’ perspective the quality of brand names from foreign countries is better than the quality of domestic brand names. (Vnexpress, 2009). It is a good signal for MPPL, however, the company should make plan in detail to compete with other Milky companies which have been operating in Vietnam market for long time and it is not easy at all to change customers’ attitude and buying behavior. As mentioned above, if MPPL has plan to do business in Vietnam market permanently, the company has to pay attention to human resource. Vietnam has cheap employee, but most of employees in Vietnam is unskilled or not skill enough to work immediately. That’s why MPPL has to spend amount of money to train employees. Those things are difficulties which MPPL could meet when the company does business in Vietnam. Therefore, the company must have clear understanding about what they are going to receive and what they are going to pay for a new business in a new market.
PART II: MARKETING TOOLS ANALYSED
ENVIRONMENTAL FACTORS INFLUENCING MPPL’S MARKETING DECISIONS
Macro environmental factors
Being a business, MPPL is also impacted with both macro and micro environmental factors.
The macro environment may be described in terms of some keys in expanded Political, Economic, Social, and technological factors (PEST) as follow.
Political/ Legal factor
Vietnam is a country which has stable political environment, MPPL may gain many benefits when operating its business in Vietnam market. Moreover, with milk products, the Government tends to provide some kinds of subsidies to maintain the balance of payments.
However, MPPL has to follow strictly the legislations, which are changing overtime; the change in tariffs, for example, may have a negative effect on the sales of milk. In addition, Government of Vietnam is encouraging Vietnamese using Vietnamese products so that it could be a difficulty to the company. Nevertheless, the Government of Vietnam has opened-policy to foreign enterprises. It is therefore considered as an opportunity for MPPL in order to open business in Vietnam market. (Economy newspaper, 2008)
Although Vietnam’s economy has been affected significantly because of global financial crisis, in line with the recovery of world’s economy, Vietnam’s economy has had a recoverable sign. The first quarter’s GDP was 3.1% against same period in 2008, the lowest growth quarter in recent years, but in third quarter increased by 5.8%. Generally in 9 months, GDP increased by 4.6% against same period in 2008 (General Statistics Office, 2009). In other words, it definitely proves the living condition of Vietnamese is increasing rapidly. Thus, the purchasing power of consumers also rises up. They are now willing to buy and try new products, especially if these ones are good for their health.
However, inflation rate in Vietnam is still high, which leads to general price rising, MPPL has to calculate the cost of goods sold effectively to maintain its profit margin when it plans to manufacture milk products in Vietnam in the long-term.
Vietnamese have been using milk products of Vinamilk, Dutsch Lady, Nestle for a very long time. Vinamilk occupies up to 75% market share in milky industry in Vietnam, for example. (Vietnambranding, 2009)These brands are so familiar to Vietnamese so that in order to convince them to use products of a new brand is not easy.
Demography is one of main concerns of marketer because it consists of people factors. The population in Vietnam is 8.6 millions people. According to Nielsen, Vietnam is considered a young country which leads lots of advantages for MPPL in developing DreshMilk, CreamyMilk and Filled Milk at catering service such as coffee and tea house.
Current not manufactured in Vietnam, MPPL can reduce one of their worries that is production technology. However, the company must appreciate recent situation. Nowadays, the internet is developing every where including offices, households, public, and so on. The internet influences to buying behavior of customers. The company has to know how to apply the internet in order to maximize profit and satisfy customers by establish its own website and put information about products and give consumers comment as well. It will be very helpful for customers to know more about MPPL products.
Micro environmental factors
In odder to do business successfully, it will be not enough for MPPL to consider above macro environmental factors only. Micro environment factors also can influence MPPL marketing activities remarkably. Consequently, it is very important for MPPL to analyze SWOT matrix and 5 forces as well.
5 forces analyzing
If MPPL wants to do new business in Vietnam, the company has to consider about customers power. As mentioned above, in Vietnam market Vinamilk now seems to be a leader in domestic milky industry with 2/3 of market share. Customer is therefore used to using Vinamilk’s products and the image of the company is also very strongly. MPPL wants to introduce the company’s products to Vietnamese is not easy. Customers have power to consider between many products of different brands so that to be successful in a new market, the company has to try their best by giving customers value, let them to see the company’s competitive advantages.
For a short period, MPPL does not manufacture in Vietnam just imports from Singapore so that this factor does not affect to the company much in the case operating in Vietnam market.
Nowadays, in market there are a lot of different types of beverage. Substitutes thus for milk are quite many. Moreover, other beverage are now developed much in term of technology and nutrition such as no sugar, good for health. More and more people care about such beverage like green tea 00, C2 or 100, for example. That’s why the company must have business strategy in detail to deal with this issue and find the way to develop products into market.
Vietnam is considers as a young country with young population so that the market has not been occupied by too many milky companies from domestic or international market. However, if MPPL has intention to operate in Vietnam for long time, the company needs to discover the market and strength of competitors as well. At present, there are some big domestic competitors of MPPL like Vinamilk and some international competitors such as Netsle, Dutch Lady, Abbot, and so on. These competitors have been existing in the market for many years and they have created good images to customers. Therefore, it is a big factor to MPPL in order to introduce their products to Vietnamese customers.
Threat of Entrance
Vietnamese Government has more and more open policies for foreign enterprises come in since Vietnam has participated in WTO. Milky industry is not an exception. Therefore, MPPL will have to prepare plans by itself in order to be stable in the next few years if the company really wants to do business in Vietnam.
SEGMENTATION FOR MPPL PRODUCTS
Market segmentation is defined: The subdividing of a market into distinct and increasingly homogeneous subgroups of customers, where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix (Kotler, 1994). According to this definition, MPPL can segment Vietnamese market by geography and social culture and income.
MPPL focuses on big cities such as Ho Chi Minh City, Hanoi and Danang. These cities have high population so that it could be a good new for MPPL to expand their products there. The demography in 2009 shows that Ho Chi Minh and Hanoi rank the highest positions about 7.2 millions people and 6.4 millions people, respectively. These figures will be attractive with lots of businesses because they can see a huge range of potential customers. In addition, average income of people in the two cities is higher than other cities. Average income of Hanoi people is the highest level around $ 1,500 per year. The second position is people in Ho Chi Minh City approximately $ 1,100 per year. By contrast that of Vietnam is only $ 1000 per year. With higher average income, they maybe spend more money for expenditure such as entertainment or relaxing.
Besides, people in the two cities get used to drinking coffee, especially coffee and tea with milk (Lipton with milk). These drinks always appear in menu of hundreds of coffee shop in Ho Chi Minh City and Hanoi. It can be said that drinking coffee is one of social culture in big cities. Although MPPL have many benefits when this focuses on big cities such as Ho Chi Minh City and Hanoi, it could face with two problems: great competitors, some factors increase price. MPPL has difficulties to compete with famous brand name such as Dutch Lady and VinaMilk. In Vietnam, most of people know and use products of these firms because they have existed in long term and confirmed their brand with customers.
MPPL will have spent lots of money to build retailers and franchises system so their cost for marketing will rise. Moreover, Vietnam Government always protect Vietnamese business. Therefore it is difficult for MPPL to be accepted a lower price rather than domestic products. These factors influent strongly on deciding price, or they must show higher price than their expectation. Although now some limitations need to find solution when MPPL concentrates on Ho Chi Minh City and Hanoi, there are many benefits which are brought success for MPPL. In the future, this company will solve or limit at the lowest level with these problems.
FACTORS INFLUENCING THE CHOICE OF TARGETING STRATEGIES FOR MPPL’S PRODUCTS
The milk market in Vietnam nowadays is developing, if MPPL Company wants to launch new product and product line into Vietnam, the company needs to think carefully about the factors which can influence the choice of target strategies. Milk is the popular product and it focuses on individual customers not specialize in any organisation so that MPPL decide to use multi-strategies to launch product into Vietnam. There are many factors can impact to the choice of strategies, here are 6 important factors that are important for company.
The nature of the needs and wants of customers:
The nature need and want of customers bases on their ages and hobbies. MPPL provides milk for both adult and children. For example, the babies are less than 2 years old need to use the creamy milk which help them to improve their brain, for toddler who are more than 2 years old need the milk that do not have cholesterol to avoid heart disease (Xaluan, 2009). For adult and old people, they need milk which provide enough nutrition. Beside the age, people also choose milk products base on their own habit. Some people want to drink fresh milk, some want to use condensed milk with coffee, some want to use milk to make cake and so on. Depend on their hobby, they will choose the suitable milk for them.
The size, structure, and future potential segment:
Beside identify the need and want of customers, MPPL also need to know about the milk market in Vietnam. The milk market was created from 1970 but it developed very slowly because product milk in Vietnam was very new for people. In 1980, the milk consumption was only 0.3 kg / person. In general, milk market was improved from 1990 to 2004. (DairyVietnam, 2007). In 2001, Vietnam made a plan to develop the milk market with the target is increase the process to produce milk from 64,000 tons in 2001 to 350,000 tons in 2010. Here is the chart of Vietnam’s milk produce in 2001 and2007 (DairyVietnam, 2007)
This table shows the development of produce milk industry from 2001 to 2007. Nowadays milky industry is developing gradually. However, the total of milk just satisfies 25% of customers. In the plan to develop this industry in Vietnam, Vietnam will produce 1,000000 tons milk and satisfy 38% customers in 2020.
The Availablity of company resources
MPPL is a multinational company so their source of materials and capability are always available. According to the quantity of productions and the appearance in many countries it proves that MPPL can guarantee to supply a huge amounts of products for different markets. On the other hand, MPPL is multinational company so quality of productions is very important .They product under license from a Dutch company that means their technology and worker’s skill are strong enough to guarantee the quality. Beside the workers, they have good distribution systems, agents and retailers to server the customer good.
The size of the company’s existing market share:
The market now is shared between Vinamilk, Dutch Lady, Nestle, Abbot and so forth. As mentioned above, Vinamilk occupies 75% market share in milky industry in Vietnam. Therefore, MPPL needs to appreciate the recent situation in order to have suitable strategy to occupy the market with the others.
The intensity of the competition:
Vietnam market is still considered as a young market with young population. Thus, competition here is oligopolistic. There are not many companies which are operating in milky industry in Vietnam market. However, in closed future, Vietnam market will develop very fast so that MPPL must take the chance to occupy the market before other brands come in.
The possibility of any production/marketing scale economies:
If after a time the business effectively in Vietnam, instead of importing from Singapore, MPPL can open manufacturing plant in Vietnam thereby the price will be reduced and it leads to the competitive advantage.
EFFECTS OF BUYER BEHAVIOUR FOR PETDOG’S PRODUCTS ON MARKETING ACTIVITIES IN THE TWO DIFFERENT MARKETS
In the market for individual customers
When deciding to purchase products or services, there are many internal and external factors which have an impact on the buying decisions of the consumer. Therefore, marketer does not only give ways to attract customers but he also tries to learn how consumers make final decision. In other words, marketer has to identify who will make final buying decision, different types of buying behavior. When purchasing a product, there are several processes which consumers go through. Here are how marketing activities can be applied to influence each stage of buyer behavior:
In the market for business customers
Another buying situation should be mentioned here is B2B (business to business). In other words, companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. In case of MPPL, B2B is a relationship between MPPL, the manufactures and its distributors, including coffee and tea houses, supermarkets and others. Because the natures of B2B are different from those of B2C, business buying behavior may lead different marketing activities which are discussed in detail as follow.
In order to identify specific marketing activities, we need consider business buying behavior in each stage of business buying process which includes 8 stages follow.
PART III: CONCLUSION
In this report, basic concepts of marketing were explained. From various definitions of marketing to element marketing concepts and marketing approach in Vietnam. Based on MPPL would like to launch business in Vietnam, environemtal factors which can influences to marketing activities of MPPL and possible segmentation in Vietnam market were already mentioned. Along with explaining the buyer behavior, several marketing activities have been suggested that could be employed to influence the buyers in different markets.
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