A company will not sure to be called as a market orientated organization if it has marketing vice-president, product managers, advertising budget, and so on. The essence is that all of them must work together to satisfy the needs of the customer. It is essential to the long-term in vision and profit-driven of the company.
1.3 Various elements of the marketing concept:
There are a lot of global company have applied the marketing concept and achieved high success such as Toyota, McDonalds’, Nordstrom, etc. According to Principle of marketing (Kotler, 1999) “The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.” From that, we can realize clearly four major pillars of the marketing concept, they are: market focus, customer orientation, integrated marketing and profit orientation.
Figure 1.1 Selling and marketing concepts contrasted
Source: Kotler, Amstrong, Saunders, Wong (1999) Principles of marketing,(chapter 1, pg 19).2nd Eroupean ed, New Jersey, USA,Prentice Hall Inc.
The first element is market focus which is considered as the starting point before company concentrate on customer satisfaction. That means they must choose and target appropriate customer. In other words, they must identify the target market in which they can operate and attain their objectives. Due to the fact that any business can not operate in each market with their abilities and satisfy all different requirements. In addition, defining the target market also help the businesses promote maximally their strength and simplify other next steps.
The second one which is extremely important as well is customer orientation. The truism is that “no customer, no business”, so having a commitment to meeting the customers’ needs is the focus point of marketing concept. It also means that the company positions offering themselves in customer’s awareness to have a brand loyalty. “Customer orientation (CO) is the set of beliefs in sales that says that customer needs and satisfaction are the priority of an organization. It focuses on dynamic interactions between the organization and customers as well as competitors in the market and its internal stakeholders. It involves a continuous improvement in business processes. It is “the business seen from the point of view of its final result, that is, from the customer’s point of view.””
The third element is integrated marketing. That means functions such as marketing research, product management, sales, advertising must be coordinated among themselves as well as integrated with the other functions of the company so that enhance the organization’s total effectiveness. It stress that all the organization must work in a stable system like in one body. This may only be executed successfully when tha executives of the organization understand how this notion important and can make it work in practice.
Finally, all businesses can not stay in business in the long-term without profit. Certainly, the company does not only aim to make money, it is to find a profitable way to provide all business activities, also includes satisfying customers. The way achieve this goal is by focusing on profit rather than sales volume.
In summary, marketing concept involves identifying the target market, ascertaining what customers need and want, creating the right products and attaining goals of organization.
1.4 Benefits and costs of using a marketing approach to doing business in Vietnam:
There are a number of benefits as well as costs when using marketing approach to doing business in Vietnam. The first thing of the benefits is from building customer loyalty. By doing research market that after choosing and targeting the market, the company will have a basic to produce the products which they can sell rather than sell products that they have. Therefore, their products will be close to the customers’ needs, and the customer will find it is easy to approach to the product. Moreover, knowing the customer needs enables the business to communicate more efficiently with cost-effective marketing communication. It will help considerably in keeping the long-term relationships with high customer satisfaction. If customer is met fully, then becomes loyal, they may buy more from the same supplier, buy more of the same or more expensive item, or advise their friends to buy. It will lead to increased sales and/or willingness to pay higher, thus lead to higher profits. That means, the image of the company is in the customer’s mind already, and obviously, the continuous expenses will cost much less. Process of becoming a loyal customer can be represented as following pyramid:
Figure 1.2 Loyalty pyramid
Source: Aaker.D, Managing brand equity
In addition, research and development enables the market-led company to keep ahead of the competition, opportunities arise out of a continuous research thrust with a large and potential market in initial. Especially, in case of VMEPH, one of the leading manufacturers motorbikes in Vietnam, which currently ranks third among the principle foreign-owned manufacturer, and a famous brand as SYM, their opportunities in this dual-branding strategy will so big because of existing trust of Vietnamese customers.
However, the cost of marketing approach still need to be cared. If VMEPH too narrows the marketing focus, a big chance of promoting the brand and getting profits can be ignored. Other cost may include some or all the following when doing marketing approach. They are advertising, salesmen time, credit checks, agent commission, initial discount, or cost of building long-term relationships with customers, suppliers, distributors, and so on.
2. Influences on VMEPH’s making decision for dual-branding strategy:
2.1 The macro and micro environmental factors in Vietnam:
As above-mention in part 1.2, all organizations exist in a system. Therefore, they are impacted by the environment around. In this VMEPH’s plan, the marketing decision might be influenced by the macro and micro factors of marketing environment as follows:
2.1.1 Macro factors:
It can be divided into four main kinds of factors which impact on making marketing decision. They are: P. political/ legal factors.
E. economic factors.
S. social/ cultural factors.
T. technological factors.
In term of technology in Vietnam, its development pace is quite fast. The internet is becoming a part of life, and the media is so popular. That is a big advantage in advertising both “Galaxy” and “Attila Elizabeth”, and receive the reaction or feedback from customers easily.
With regard of social factor, demography and lifestyle are two elements which impact significantly on this strategy of VEMPH. First, the Vietnamese age structure is young with a majority of population is from 10 to 40 age group. Relating to the VMEPH’s strategy, they planned Attila is to target the 25 to 45 age group, that means, consumer market will larger in the long-term. Second, the standard of living in Vietnam now is much higher than before, so motorbikes are not only transportation, but also considered as decoration. In the strategy of VMEPH, both “Galaxy” and “Attila Elizabeth” with distinct characteristics will appropriate with a large amount of customer.
Finally, the political factor which has a considerable influence on VMEPH is tax policy. In the past, Vietnamese government always applied high tax levels for import motorbikes, as well as engines and parts to protect young Vietnamese motorbike manufacturers with low competition force. This import tax was 90%, much higher than other countries. However, after entering WTO, Vietnam must follow the common rules. According to Dantri.com.vn, an e-newspaper, the tax of import motorbikes will down to 75%, and then 60% in 2012 and 2013 respectively. That is a good news for foreign producers, meanwhile the market of VMEPH might be narrowed. Moreover, because of more competitiveness, they must have approaches in satisfying and caring the customers, even it will reduce profits.
2.1.2 Micro factors:
There are five micro factors that influence on marketing decision: consumers, suppliers, potential entrants, competitors and substitutes. Among them, consumers and competitors probably impact the most. With regard to competitors, as above-mentioning in previous part, the decrease tax in import motorbikes leads to increase competitive rivals. As a result, VMEPH should analysis who are the organization’s direct competitors and understand them. In this time, the big brand such as HONDA, YAMAHA, or SUZUKI are competing with SYM. This competitiveness is related to image, brand identify and differentiation. VMEPH should find out their strength and weakness, to determine the amount of time, money and effort as well which have to be invested in competing with its rivals.
In terms of consumers, they always want to buy products with high quality and low price. Certainly, the price can not be too low, it must high enough to make profits and suitable to compete. Furthermore, customer care service is also important when they buy a motorbike. These things is concerned to satisfying and maintaining the customers. On the other hand, VMEPH have to care about quantity of demand as well.
2.2 Proposal for Segmentation the market:
There are a number of ways to segment the market. In this case, base on characteristics of Galaxy and Attila Elizabeth, the market for two products can be segmented by 2 main factors: Geographic and demographic.
2.2.1 Attila Elizabeth
Attila Elizabeth is a scooter, it has 6 fashionable colors: white, black, red, blue, green, and grey which give many choices to buyers. It features 113.7cc four-stroke petrol engine with built-in liquid cooling system. It is environmental friendly but wastes quite much energy, so the consumers have to spent more money than cubs during using. However, it is really simple when start the engine. The price of a Attila Elizabeth is about 33 millions VND. In comparison with many kinds of motorbikes, it is not cheap. Another feature of it is the design. Its design look very attractive, modern, fashionable, and convenient with female for wearing dress than cubs’ design. It also has spacey storage compartment to store a lot of things inside, especially when shopping. Its design avoids being dirty or muddy for clothes in rain days. However, this design is only suitable with smooth and flat roads.
First, the market for Attila Elizabeth can be segmented by geographic, and the target market is urban. In Vietnam, the cities where motorbikes are most concentrated in are Hanoi, Ho Chi Minh city, Hai Phong, etc. Those are places which have potential market for scooters because of its topography, and a lot of advantages in terms of demographic, and psychographic.
About demographic, the target market is young female consumers with the 25 to 45 age group, and high income people that are willing to pay high price to own a fashionable and convenient scooter.
2.2.2 Galaxy
Galaxy is a cub and altogether different from Attila Elizabeth. Its engine is more powerful, and economic when using because it wastes much less petrol than scooters. Its price is approximately 10.5 millions VND. Therefore, it must attract a lot of low income people. With the design, it can work on both rough or smooth roads, and can carry very big parcel.
From above characteristics, we target the market of Galaxy is rural in terms of geographic, and low-income customers at all age group in terms of demography segmentation.
When the market is segmented by demography with income level and age group, it help VMEPH has a clear criteria to provide the products in the most appropriate way. Therefore, identify and satisfy the customers become simple. However, in fact, if the company just segment in this way, it will difficult in doing a research and providing to consumers because of no focus area. If VEMPH segments the market by geography, it will avoid this thing. In addition, when targeting urban or rural, their characteristics such as age structure, population, gender, etc are researched as well. In summary, segmentation has benefits in identifying, satisfying and maintaining the customer with smaller group to concentrate on. In contrast, it increase the costs and can lead to the over fragmentation.
2.3 Factors which impact the choice of targeting strategy:
Product life cycle diagram
There are a number of factors that influence on the choice of targeting strategy for VMEPH. First, the extent to the “Galaxy” and “Attila Elizabeth” can be considered homogeneous. In this case, keeping the safety the mass marketing may be sufficient if the market is largely homogeneous. Second, the company’s resources must not be over extended by differentiated marketing. VMEPH is a big company, thus it can concentrate on more than one segment, it can be 2 or 3 segments. Finally, VMEPH have to be sufficiently advanced in its life cycle to have attracted a substantial total market. On the other hand, segmentation and targeting marketing is unlikely to be profitably because each segment would be too narrowed.
2.4 Effect of buyer behaviour:
Figure 2.4 Process of buyer behaviour
To be successful in marketing , this metal process should be referred. Looking at this process, we can realize 5 steps making the customer decision.
First of all is problem recognition. This can be triggered by internal stimuli like hunger or thirst, or external stimuli such as social esteem. In case of VMEPH, it can advertise Attila Elizabeth in terms of fashionable by film when more and more people want to be look like their idols, or Galaxy in terms of powerful and save petrol when the petrol price is very high. If the need of them rises to a threshold level, it will become a drive, and from previous experience customer know how to meet this drive through purchasing particular types of product.
Second, information system is always important. It help buyers know the producer and help the producer promote themselves among a mass of brands. With the company, information also attract the customer attention. Therefore, VMEPH should care this step.
Third, after searching the information the customer will evaluate alternatives by looking for the benefit, and choose the one which make maximize profit for them. In this step, a famous brand is also impact considerably on buyers. As a result, VMEPH must make themselves more impressive than competitors such as YAMAHA, HONDA, and so on.
Fourth, customers can be influenced by their relatives, friends, etc who used to buy this product, or like this brand when purchasing. Loyal customers have big power in this case to increase number of buyer for company. Because of that, VMEPH must have policy to maintain customer loyalty.
Finally, post purchase evaluation, the consumer will have the feeling of satisfy or dissatisfy with that product. It decides the return of that customer in the future. Thus, the company have to put quality of products first and have good customer care services, for example free maintain engine or repair under warranty.
Conclusion
By analyzing various factors which influence on the unique dual-branding strategy of VMEPH with two new products are Galaxy and Attila Elizabeth with distinct feature, we can see the potential market and big opportunity for launching them into Vietnam. It can say that this plan covers a majority of many types of customer. If it would be successful, VMEPH should think of another similar plan to make their brand more strong in Vietnam and other market.
Appendix
Figure 2.1 Macro and Micro factors of marketing environment.
Figure 2.1 Age structure pyramid of Vietnam in 2004
Source: The 12th Geographic exam question of Tien Giang province, 2006
References
Book sources:
Kotler, Amstrong, Saunders, Wong (1999) Principles of marketing,(chapter 1, pg 19).2nd Eroupean ed, New Jersey, USA: Prentice Hall Inc.
(2001) The marketing casebook- Cases and concepts.2nd, London: Thomson learning.
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