The Marketing Strategy of Ha Anh INCOSE Co,Ltd

Nowadays, marketing is obviously more and more vital in the success of every enterprise. However, not many of the companies in Vietnam have paid adequate attention to marketing activities, especially when both domestic and global competition is getting fiercer and fiercer. Being one of the companies specializing in Production line and equipment for foodstuff industry, mechanical engineering, construction machinery in Vietnam, Ha Anh International Commercial Services Company Limited (HA ANH INCOSE CO.,Ltd) has achieved certain successes in this field. Its sales of line and equipment for foodstuff industry have increased over the years since its establishment. After taking a close look at HA ANH INCOSE CO.,Ltd’ s performance, I decided to choose “Marketing strategies of Ha Anh International Commercial Services Company Limited” as the topic for my field study report with a view to examining Ha Anh International Commercial Services Company Limited’s marketing strategy and making some recommendations to improve it. Ha Anh International Commercial Services Company Limited has a lot of business activities, but because of limited time, this report focuses only on the company’s marketing activities for one line of its business, that is line and equipment for foodstuff industry, on the market in Vietnam. Apart from the introduction and conclusion, the report is divided into 3 chapters as follows: Chapter 1: Theoretical Framework Chapter 2: Marketing strategies of Ha Anh INCOSE Co.,Ltd Chapter 3: Some Recommendations to Improve Ha Anh International Commercial Services Company Limited’s Marketing Strategy

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Field Study Report ‘‘The Marketing Strategy of Ha Anh INCOSE Co.,Ltd’’ Student: Vi Nhat Anh Class: TATM CN6 A1 Hanoi, November 2009 Field Study Report ‘‘The Marketing Strategy of Ha Anh INCOSE Co.,Ltd’’ Student: Vi Nhat Anh Class: TATM CN6 A1 Supervisor: Bui Nguyet Anh M.A Hanoi, November 2009 Acknowledgements In the process of writing this report, I have gained a great deal in terms of project planning, research methodology and information acquisition. But I could never have done this work without the help and advice of many whose ability far exceeds my own. With gratitude, I acknowledge a specific debt to my supervisor, Ms Bui Nguyet Anh, for her invaluable advice and personal guidance from the planning stage to the completion of this report. My thanks also go to all my teachers at the Foreign Trade University for their devoted teaching and for introducing me to the world of knowledge during my four and a half years at the University. Their influence will remain with me for my entire life. I would like to thank Ha Anh INCOSE Co.,Ltd for providing the information, data, materials that enabled me to complete my report. Finally, I wish to express my deepest appreciation to all people in my family for their love, understanding and encouragement. TABLE OF CONTENTS INTRODUCTION 4 Chapter 1 5 Theoretical Framework 5 1.1. The concept of marketing 5 1.1.1. The definition of marketing 5 1.1.2. The goals of marketing. 7 1.2. Competitive Analysis 7 1.3. Global Marketing Strategy 8 1.3.1. Product 8 1.3.2. Promotion 9 1.3.3. Price 10 1.3.4. Place (distribution channels) 12 1.4. The marketing mix strategies 12 Chapter 2 14 The Marketing Strategy of Ha Anh INCOSE Co.,Ltd 14 2.1. An Introduction to Ha Anh INCOSE Co.,Ltd 14 2.1.1 Company development 14 2.1.2. Company’s products 14 2.1.3. Company’s Organization 15 2.1.4. Board of Directors 15 2.1.5. The departments 16 2.1.6. Company trading results 17 2.2. The marketing strategy of Ha Anh INCOSE Co.,Ltd 17 2.2.1. SWOT analysis of Ha Anh INCOSE Co.,Ltd 17 2.2.2. Strengths 18 2.2.3. Weaknesses 19 2.2.4. Opportunities 21 2.3. Ha Anh INCOSE Co.,Ltd -marketing mix 21 2.3.1. Product 21 2.3.2. Price 21 2.3.3. Place 22 2.3.4. Promotion 22 Chapter 3:Some Recommendationsto Improve Ha Anh INCOSE Co.,Ltd’s Marketing Strategy 24 3.1. Some recommendations to the Government and relevant authorities 24 3.2. Recommendations to Ha Anh INCOSE Co.,Ltd. 24 3.2.1. Improving the company’s marketing mix 24 3.2.2. Building the company’s image 25 Conclusion 27 INTRODUCTION 1 Chapter 1: 2 Theoretical Framework 2 1.1. The concept of marketing 2 1.1.1. The definition of marketing 2 1.1.2. The goals of marketing. 4 1.2. Competitive Analysis 4 1.3. Global Marketing Strategy 5 1.3.1. Product 5 1.3.2. Promotion 6 1.3.3. Price 7 1.3.4. Place(Distribution channels) 9 1.4. The marketing mix strategies 9 Chapter 2 11 The Marketing Strategy of Ha Anh INCOSE Co.,Ltd 11 2.1. An InTroduction to Ha Anh INCOSE Co.,Ltd. 11 2.1.1 Company development 11 2.1.2. Company’s products 11 2.1.3. Company’s Organization 12 2.1.4. Board of Directors 13 2.1.5. The departments 13 2.1.6. Company trading results 14 2.2. The marketing strategy of Ha Anh INCOSE Co.,Ltd 14 2.2.1. SWOT analysis of Ha Anh INCOSE Co.,Ltd 14 2.2.2. Strengths 15 2.2.3. Weaknesses 17 2.2.4. Opportunities 18 2.2.5. Threats 19 2.3. Ha Anh INCOSE Co.,Ltd -marketing mix 19 2.3.1. Product 19 2.3.2. Price 20 2.3.3. Place 20 2.3.4. Promotion 21 Chapter 3: 23 Some Recommendations to Improve Ha Anh INCOSE Co.,Ltd’s Marketing Strategy 23 3.1. Some recommendations to the Government and relevant authorities 23 3.2. Recommendations to Ha Anh INCOSE Co.,Ltd. 23 3.2.1. Improving the company’s marketing mix 23 3.2.2. Building the company’s image 24 Conclusion 26 References 28 INTRODUCTION Nowadays, marketing is obviously more and more vital in the success of every enterprise. However, not many of the companies in Vietnam have paid adequate attention to marketing activities, especially when both domestic and global competition is getting fiercer and fiercer. Being one of the companies specializing in Production line and equipment for foodstuff industry, mechanical engineering, construction machinery in Vietnam, Ha Anh International Commercial Services Company Limited (HA ANH INCOSE CO.,Ltd) has achieved certain successes in this field. Its sales of line and equipment for foodstuff industry have increased over the years since its establishment. After taking a close look at HA ANH INCOSE CO.,Ltd’ s performance, I decided to choose “Marketing strategies of Ha Anh International Commercial Services Company Limited” as the topic for my field study report with a view to examining Ha Anh International Commercial Services Company Limited’s marketing strategy and making some recommendations to improve it. Ha Anh International Commercial Services Company Limited has a lot of business activities, but because of limited time, this report focuses only on the company’s marketing activities for one line of its business, that is line and equipment for foodstuff industry, on the market in Vietnam. Apart from the introduction and conclusion, the report is divided into 3 chapters as follows: Chapter 1: Theoretical Framework Chapter 2: Marketing strategies of Ha Anh INCOSE Co.,Ltd Chapter 3: Some Recommendations to Improve Ha Anh International Commercial Services Company Limited’s Marketing Strategy Chapter 1 Theoretical Framework The concept of marketing The definition of marketing Today’s then central problem facing businesses is not a shortage of goods but a shortage of customers. Most of the world’s industries can produce far more goods than the world’s consumers can buy. Overcapacity is resulted from individual competitors projecting a greater market share growth than is possible. If each company projects a 10 percent growth in its sales and the total market is growing by only 3 percent, the result is excess capacity. This in turn leads to hyper competition. Competitors, desperate to attract customers, lower their prices and add give away. These strategies ultimately mean lower margins, lower profits, more failing companies, and more mergers and acquisitions. Marketing is the answer to how to compete on bases other than price. Because of over capacity, marketing has become more important than over. If forced to define marketing, most people, including some business managers, say that marketing means “selling” or “advertising”. It’s true that these are parts of marketing. But marketing is much more than selling and advertising. Today, marketing must be understood not in the old sense of marketing a sale-“telling and selling”-but in the new sense of satisfying customer needs. Selling occurs only after a product is produced. In contrast, marketing starts long before a company has a product. “Marketing is the homework that managers undertake to assess needs, measure their extent and intensity and determine whether a profitable opportunity exists. Marketing continues throughout the product’s life, trying to find new customers and keep current customers by improving product appearance and performance, learning from product sales results and managing performance”1. So what does the term “marketing” mean? Actually, there is no single and universally agreed definition of marketing. The American Marketing Association defined marketing “is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals”2. The writer of the book “The Silk Road to International Marketing” had another definition as follow: “Marketing is the process by which decisions are made in a totally interrelated changing business environment on all the activities that facilitate exchange in order that the targeted group of customers is satisfied and the defined objectives accomplished ”3.Though there are many definitions, a central part of any definitions of marketing is the exchange process – the process of giving something of value in return for something of value. Or in other words, it’s the process of transferring between two or more parties of tangible or intangible items of value(see figure 1.1). Cash, debt, time, votes, behavior, etc Health, safety, comfort, transportation, beauty, productivity, etc. Figure 1.1: the exchange process Source: Courtland L. Bovee, Jonh V. Thill , “Marketing”, 2nd edition, p.6. For marketing to occur, at least four factors are required: (1) two or more parties with unmet needs, (2) a desire and ability to satisfy them, (3) communication between the _______________________ 1 Amber, T.and Styles, C.(2000), The Silk Road to International Marketing, Harlow: FT Prentice Hall 2 Arch G. Woodside(1990), Outdoor advertising as experiments, Journal of the Academy of Marketing science. 3 Berkkowitz, Kerin, Hartley, Rudelius, (1990), Marketing, 2nd edition, Irwin McGrawHill. parties, and (4) something to exchange4. Here’s what Berkowitz stated in his book “Marketing”. As marketing is a kind if exchange, certain conditions must exist before the exchange can occur. The goals of marketing. “Today’s successful companies at all levels have one thing in common; their success is founded upon a strong customer focus and heavy commitment to marketing”5. They motivate everyone in the organization to deliver high quality and superior value for their customers, leading to high levels of customer satisfaction. These organizations know that if they take care of their customers, market share and profits will follow. Creating customer values and satisfaction is at the very heart of modern marketing thinking and practice. The goal of marketing is to attract new customers by promising superior values, and to keep current customers by delivering satisfaction. When a company succeeds in creating more values for customers than its competitors can do, that company is said to enjoy competitive advantage in an industry. Competitive Analysis It is the increasingly emerging markets that have created favorable conditions for the rapid development of world trade and investment, which is well – manifested in the sophisticated growth of a number of global companies. To compete in one or more foreign markets, companies not only need to broaden relentlessly their sources of competitive position. One particularly useful technique in analyzing a firm’s competitive position relative to its competitors is SWOT (strengths. Weaknesses, opportunities, and threats) analysis aims to isolate the key issues that will be important to the future of the firm and that will be addressed by subsequent marketing strategy. A SWOT analysis divides the information into two main categories (internal factors and external factors) _________________________ 4 Courtland L. Bovee, Jonh V. Thill, (2000), “Marketing”, 2nd edition 5 Crag, C.S and Douglas, S.P. (2000), International Marketing Research, Chichester: Wiley and then further into positive aspects (strengths and opportunities) and negative aspects (weaknesses and threats). The internal factors could be viewed as strengths or weaknesses, depending upon their impact on the firm’s positions; i.e., they may represent strength for one firm but a weakness, in relative terms, for another. They include all of the marketing mix (product, price, promotion and place strategy) as well as personnel and finance. The external factors, which again may pose a threat to one firm but create opportunities to another, include technological changes, legislation, socio-cultural differences, and change in the market place or competitive position. Global Marketing Strategy In terms of globalization, worldwide businesses use global marketing when they take the same or similar approach or content for one or more elements of the marketing mix, that is, the same or similar brand names, advertising. And so on in different countries. Although most of the multinational companies using global marketing mix-product, pricing, promotion and place – are standardized. Business can make some elements of marketing more global and others less so. Accordingly, possible adaptations that firms might apply to their product, promotion, price, and place when they enter through the foreign markets will be provided in this part. Product There are five international product and promotion strategies for a company to extend its market base into other geographic markets (See table 1.1). Straight extension means marketing the product in the foreign market without any adaptation. Top manager asks its marketing people to “find customers for the product as it is”. As a result, it is seen as the easiest product marketing strategy and may be the most profitable one as well. However, the company should first determine whether foreign consumers use that product or not. Straight extension has been successful with cameras consumer electronics, and many machine tools. This strategy is tempting because it involves no additional product development cost, manufacturing changes, or promotional modification. But it can be costly in the long run if products fail to satisfy foreign consumers. Table 1.1: Five international product and promotion strategies  Product   Promotion   Do not change product  Adapt product  Develop new product    Do not change promotion  Straight extension  Product adaptation  Product invention    Adaptation promotion  Communication adaptation  Dual adaptation    Source: Subhash C.Jain (1995), international marketing management Product adaptation involves changing the product to meet local conditions or preferences. There are several levels of adaptation. A company can produce a regional version, a country version, a city version or even promotion retailer versions of its products. Although, products are frequently adapted to local tastes, in some instances they must be adapted to local superstitions or beliefs, too. Product invention consists of creasing something new the foreign market. It can be divided into two forms. The first is backward invention, which means reintroducing earlier products forms that happen to be well adapted to the needs of a given country. And forward invention is to create a new product to meet a need in another country.6 Promotion Companies can either adopt the same promotion strategy they used in home market or change it to suit each local market. Although some global companies use a standardized promotion campaign changes might be needed to comply with local regulations and references. There are four different levels of adapting promotion strategy. _______________________ 6 Subhash C.Jain (1995), International Marketing Management Firstly, companies can use one message everywhere, varying only the language, name, and colors. That is because colors might be changed to avoid taboos in some countries. Also, names and slogan may have to be modified in some countries. Secondly, companies may use the same name globally but adapt the copy to each local market. Thirdly, companies can develop a global pool of advertising from which each country selects the most appropriate one. Finally, some companies allow managers to create a specific advertisement – within guidelines, of course. Other companies follow a strategy of communication adapting their advertising messages without any product change. Although it retains the scale economy on the manufacturing side the firm sacrifices potential saving on the communication way. Another strategy is dual adaptation. It is changing both the product and the communication to face local differences. Price Global companies face several problems in setting their international prices. Those problems must be dealt with price escalation, transfer prices, dumping charges, and black markets. Price escalation problem occurs when companies sell their goods abroad. The foreign prices probably will be higher than their domestic ones because it must add the cost of transportation, tariffs, importer margin, wholesaler margin, and retailer margin. Depending on these added costs, the product may have to sell for two to five times as much as in another country to generate the same profit. Since cost escalation varies from country, companies have three price setting approaches in different countries. Setting a uniform price everywhere: charging the same price everywhere in the world. By this method, companies would have quite different prices in different countries because of varying escalation costs. Also, this strategy would result in too high price in poor countries and not high enough in rich countries. Setting a market-based price in each country: charging what each country could afford. But this strategy ignores differences in the actual costs from country to country. In addition, it could lead to a situation in which intermediaries in low-price countries reship to high-price countries. Setting a cost-based price in each country: using a standard markup of its costs everywhere. But this strategy might price out of the market in countries where costs are high. Another problem arises when a company sets a transfer price (i.e., the price that it charges to another unit in the company) for goods that it ships to its foreign subsidiaries. If a company charges too high a price to a subsidiary, it may end up paying higher tariff duties, even while paying lower income taxes in that country. If company charges its subsidiary too little, it can be charged with dumping. Dumping occurs when a company charges either less than it costs or less than it charges in its home market, in order to enter or win a market.7 Various governments are watching for abuses and often force companies to charge the arm’s-length price – that is, the price charged by other competitors for the same or a similar product. Global companies also face the black-market problem. A black market means the same product is sold at different prices geographically. Dealers in the lower-price country find ways to sell some of their products in higher-price countries, thus earning more.8 Very often a company finds some distributors buying more than they can sell in their own country and reshipping goods to another country to take advantage if there are price differences. Multinationals try to prevent black market by policing the distributors, by raising their prices to lower-cost distributors, or by altering the product characteristics or service warranties for different countries. Moreover, one challenge of global pricing in recent years is that countries with overcapacity, cheap currencies, and the need to export aggressively have pushed prices down and devalued their currencies. For multinational firms this poses great difficulties. Sluggish demand and reluctance to pay higher price make selling in these emerging markets harder. Instead of lowering prices, and taking a loss, some multinationals have found more lucrative and creative means to deal with this problem. _____________________________ 7 Keegan, Warren J.(1995), Multinational Marketing Management 8 Kotler, Philip(2000), Marketing Management. Place (distribution channels) Global companies must take a whole-channel view of the problem of distributing products to final consumers. Figure 1.2 show the three major links between the seller and the ultimate user. In the first link, seller’s international marketing headquarters the export department or international division makes decisions on channels and other marketing-mix element.9 The second link, channels between nations, maces the products to the borders of t
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