Đề tài Marketing strategies of Ferroli Viet Nam

ach 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 advertising – within guidelines, of course. Other companies follow a strategy of communication adapting their advertising messages without any product changing. Although it retains the scale economics on the manufacturing side the firm sacrifies protencial 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 deal with price escalation, tranfer prices, dumping charhes, 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, tarriffs, 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 would. By this method, companies would earn quite different price 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 affort. But this strategy ignores differnces 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 it costs are high. Another problem arises when a company sets a tranfer price(i.e, the price that it charges to another unit in the company) for goods that it ships to its foreign subsidiaties. If company charges too high a price to a subsidiary, it may and up paying higher tariff duties, even while paying loewer income taxas in that country. If company charges its subsidiary too little, it can be charged with dumping. Dumping occurs when a company charges either less tan 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 chargse 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 price geografically. Dealers in the lower-price country find ways to sell some of their products in higher-price counrtries, thus earning more.8 Very often a company finds some distributors buying nore than they can sell in their own country and reshipping goods to another country to take advantage if 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 sevice warranties for different countries. Moreover, one challenge o 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 proce make selling in these emerging markets harder. Instead of lowering prices, and taking a loss, some multinationals have found more lucratice 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 maketing hearquarters the export department or international division makes decisions on channels and other maketing-mix element.9 The second link, channels between nations, moces the products to the boders of the foreign nations.10 The decisions made in this link include the types on intermediaries (agents, tradeing companies) that will be used, the type of tranportation (air, sea), and the financing and risk arrangements. The third link, channels within foreign nations, moves the products from their foreign entry point to final consumers.11 Channels of distribution within countries vary greatly from nation to nation first, there are large differences in the numbers and types of intermediaries serving each foreign market. Long channels of distribution means that the consumer’s price ends up double or triple the importer’s price. Another difference lies in the size and character of retail units abroad. Breaking bulk remains an important function of intermediaries and helps perpetuate the long channels of distribution, which is a major abstacle to the expansion of large-scale retailing in developoping countries. The marketing mix strategies Philip Kotler, in his book “Principles of Marketing”; defines marketing mix as “the set of controllable tactical marketing tools – product, price, place and promotion – that the firm blends to produce the response it wants in the target market”12. These ingredients must be manipulated in a manner which ensures targeted customers are satisfied, marketing strategies are implemented and desired brand positioning is achieved. _______________________ 9,10,11 Charlers Hill(1997), International Business 12 Philip Kotler, Gery Armstrong, John Saunders, Veronica Wong, principles of Marketing, 2nd edition,p.97 Figure 1.2: whole-channel concept for international marketing. Seller Seller’s international Marketing headquarters Channels between nations Channel within foreign nations Ultimate buyers Source: Chatles Hill(1997), international Business Chapter 2 The Marketing Strategy of Ferroli Viet Nam Ltd An InTroduction to Ferroli Viet Nam. 2.1.1 Company development Ferroli Viet Nam was founded on 12th August 2002. Ferroli Viet Nam’s headquarters was located at 193 Hoang Quoc Viet Ha Noi. It has 4 branches and plants nationwide in Ha Noi, Hai Phong, Bac Giang and Lai Chau, and a network of distributiors around the country. Since its establishment, Ferroli Viet Nam has operated in various fields: air conditioners, electronics, medical equipment, technical machinery and equipment, etc. After two years of operation, Ferroli Viet Nam expanded into other areas such as information services, supplying and assembling lifts and other equipment. Early 2007, Ferroli Viet Nam opened a new factory in Hai Phong for producing and selling construction materials. It also opened a new sales representative office for selling Viglacera’s products. Company’s products Ferroli Viet Nam specializes in selling the following: Air conditioners of famous companies such as Toshiba(Japanese), Misubishi(Japanese), Trane(American) and Sanyo(Japanese). Medical and technical equipment and machinery, mainly imported from the USA, Italy, Germany and Japan. Lifts manufactured by Nippon (Japanese), Thysen (German), Volbin (Swiss) and Don Yang (Korean). Construction materials and equipment of its own and Viglacera’s, and other electronic products. Besides, Ferroli Viet Nam also provide other sevices such as maintenance for medical and technical equipment, computer installing and programming. Company’s Organization Board of Directors Deputy General Director General Director Deputy General Director Quality Acceptance Department Tectnical Department Trading Department Financial & Accounting Department Planning Department Board of Directors Ferroli Viet Nam’s Board of Directors includes a Director General and 2 Deputy Directors General. Director General: Leading the company’s board of management is the Director General who is responsible for managing the use of capital, human and other resources. Two Deputy Directors General: These pepole provide assistance to the Director General. They would sometimes act on behalf of the Director General in his absence. One of them is responsible for the trading, planning, financiak and accouting matters and the other is in charge of technical and research anddevelopment aspects in the company. The departments There are five departments, each of which is responsible for a certain part of the company’s activities. Trading department: this department helps the Board of Directors with trading activities. These include organizing both domestic and international bussiness. The trading department is also responsible for: Doing marketing researches on products. Promoting the company’s products through advertisements. Holding negotiations and getting contracts for the company. Organizing distribution channel for the company’s products. Planning department: this department is in charge of marketing plans on importing, material providing and preceding the contracts. Organizing the sales of products is another main task of the department. Financial and Accounting department: this department deals with all financial and accounting matters. Another main function id to manage the use of capital to the right purpose, right policies and regulations, and to assist business activities. Technical department: this department is in charge of technical and technological matters. The staff of this department also works closely with the factories to do researching and applying the modern equipment and technical advance to themanufacturing and processing. This department for the purpose of the company’s business development tales all the adjustments or improvement to the technology. Quality assurrance department: this department takes control over the quality of the products. This is for the purpose of assuring that all the products will meet customers’ requirements. Apart from the five departments, Ferroli Viet Nam has 4 plants and branches around the country. The organizational chart has been effectively applied for Ferroli Viet Nam since its establishment and has resulted in good performance and operation. There have been good assessments on the company structure: it shows to be in charge of particular activities and they would be able to precede their fuction reasonably, which results in avoidance of overlappong and cumbersome. This helps the company to be able to take the internal and external advantages; to apply modern and advantanced technology to bring the best fruits to the whole company’s efforts. Company trading results Table 2.1: Ferroli Viet Nam’s trading results in recent. 20001 2002 2003 2004 Total sales 5.527 7.035 10.783 21.579 Net profit 595 650 927 1.250 Source: Ferroli Viet Nam’s finalcial reports. Unit: million VND. The marketing strategy if Ferroli Viet Nam SWOT analysis of Ferroli Viet Nam As mentioned in the previous parts, Ferroli Viet Nam has been trading in a lot of products such as air conditioners, electronics, medical equipment, technical machinery and equiment, etc., but with the limited time, this report focuses on the marketing strategy that Ferroli Viet Nam has used while while dealing in air conditiners only. In this light internal strengths and weaknesses, as well as external opportunities and threats that Ferroli Viet Nam faces while trading in air conditioners will be identified for the understanding of Ferroli Viet Nam’ marketing strategy. Table 2.2: SWOT analysis of Ferroli Viet Nam Good quality Competitive price Good busiess relation with partners Customers’ loyalty Ferroli Viet Nam’s corporate culture Better market growth Limited capital Small size and small market share Not enough techniqual staff Lack of diversification in product quality Poor promotion activities. Growing black market Firce competition Strengths The first strength of Ferroli Viet Nam is that its air conditioners are of good quality. Ferroli Viet Nam’s air cinditioners are imported from of famous companies in the world such as Toshiba (Japanese), Misubishi (Japanese), Trane (American) and Sanyo (Japanese). These are famous brands in the world market and Vietnamese consumers highly appreciate them. Ferroli Viet Nam has never had any complaint about the product quality. The secind strength is that Ferroli Viet Nam has been offering very competitive prices for its air conditioners. Ferroli Viet Nam has been a distributor for these firms since its early day (Toshiba, Misubishi, Trane and Sanyo), and although there are a lots of other companies are acting as dictributors for them, Ferroli Viet Nam has a certain advantage: Ferroli Viet Nam has always kept its prices as compeitive as possible. Its prices are among the lowest for air conditioners, usally between 7% and 10% lower than its competitors. The third strength of Ferroli Viet Nam is the good relation with its business pertners Ferroli Viet Nam has maintained it coporation with the above mentioned business suppliers for many years and has always been highly valued by them. This an advantage for Ferroli Viet Nam. Every years, its technical staff are offered technical traning by the foreign experts from Ferroli Viet Nam’s suppliers. Many if these staff also have chance to go abroad to get training. Moreover, when there is a technical problem at Ferroli Viet Nam, it immediately receives assistance from its partners. The forth strength of Ferroli Viet Nam is its customers’ loyalty. As mentioned above, beside good quality, competitive prices, and good business relation with its partners, Ferroli Viet Nam’s customers’ has contributed a lot of the company’s success. The after sales services of the Ferroli Viet Nam has been developing and improving rapidly over the years. This hepls the firm to keep in touch with the old customers. And by words of mouth, these people have brought new customers for the company. In addition, Ferroli Viet Nam frequently holds customer meetings in which cutomers would have chances to express or Ferroli Viet Nam their thinking about the company products and services, this anables the company to get market research information to built uup its reputation and customers’ loyalty. The last strength is the coporate culture of Ferroli Viet Nam. Employees of Ferroli Viet Nam are infused with an open, value-based coporate cuture. The cornerstones of the company’s values are: Staff satisfaction Respect for the individual Achievement Continuous learning Ferroli Viet Nam’s management seeks to internalize these values through debates and discussions among teams. Its annual strategy meetings, plays an important role in this process. The meeting focuses on brainstorming about technological and life-style trends and discussing strategic priorities of Ferroli Viet Nam in the market. Weaknesses Firstly, limited amount of capital is posing a difficulty for Ferroli Viet Nam. The company’s capital has’t been expanded much since its establishment. Mr Adrea, the Managing Director of Ferroli Viet Nam, said: “we have an advantage in comparison with our opponents in terms of customer’s loyalty and agood image and reputation, but now we have a problem of capital that thinking is weakening our compeititveness”. The main source for its capital has been contributions of it shareholders and Ferroli Viet Nam has had a lot of difficulties in finding other sources of capital. As we all know there are four main sources of investment capital that domestic companies may access: Long-term credits proveided by commercial banks on commercial basic: Government’s investment and Development Support Fund Soft loans and/or grants from foreign countries Non-banking capital, including company’s equity and funds mobilized from the informal banking system including the company’s employees. With regards to investment capital from banks, Vietnamese banks are shotage of investment capital, because of the lack of long-term deposits, which in turn due to the regulated interest rate and low reputation of the banking system. As a consequence, it is normally hard to get long-term ones. This mismatch of maturity causes many prblems to Vietnamese companies including Ferroli Viet Nam. Secondly, Ferroli Viet Nam’size and market share have been small. The shortage of capitak is main cause of the company’s modest size and market share. Up to now, Sow has had only 4 branches dealing in conditioners nationwide in Ha Noi, Hai Phong, Bac Giang and Lai Chau. As a result, its market share is among the lowest in the market for air conditioners in Vietnam. This is a major weakness for Ferroli Viet Nam, and the company has to be determined to overcome this if it is to be successful in the future. Thirdly, another weakness of Ferroli Viet Nam is its lack of the technical staff. Although the current technical staff of Ferroli Viet Nam are qualified for its technical word, but they are so few in terms of quantity. The company’s customers has never complained about Ferroli Viet Nam’s product quality or the quality of the maintenance work that its staff have done, but has complained about the late reply and maintenance service of the company. The reason for this is the company’s not enough technical staff. This is also one factor resulting in the low market share of Ferroli Viet Nam. Fourthly, lack of diversification in product quality of also a weakness for Ferroli Viet Nam. Ferroli Viet Nam has always been concentrating in high quality air conditioners such as imports from Toshiba, Misubishu, Trane an Sanyo companies. These products have high quality but are too luxurious for a large proportion of Vietnamese customers. Besides these famous brands, Ferroli Viet Nam should deal in some lower quality ones, which are also less exprensive such as products from Samsung, LG, and Daewoo etc. by this way, Ferroli Viet Nam can attract low and middle-income consumers. Lastly, Ferroli Viet Nam has had rather poor marketing and promotion practices. Marketing and promotion pratices of Vietnamese enterprises are poorly and insufficiently performed. Promotion is limited to market research. In addition, the organization of trade fairs and collecting information with such important tasks as export consultation, trademark formation and the provision of market information have not effectively been undertaken. Additionally, just like many of Ferroli Viet Nam’s competitors, it also has its own web site in oder to develop their images and advertising their main products. However, most of those web sites are not attractive enough and the information about their businesses is not sufficient enough to appeal to customers. Opportunities The only opportunity for Ferroli Viet Nam is that can have a better market growth in the near future. There are two reasons for this. Firstly, the market in Vietnam for air conditioners is growing rapidly because there are more customers for this item. As Vietnam people’s income has increased in recent years, more people can affort air conditioners. This is no longer a luxurious item for a lot of people living in the city. Secondly, Ferroli Viet Nam is now considering expanding, as it is looking for more sources of capital. Some employees in Ferroli Viet Nam are thinking of investing in the company by buying its shares. Threats Despite the impressive performance so far, Ferroli Viet Nam is facing a host of challenges. The first barrier is black merket pressure. The flourish of black market is posing a threat foe air conditioner importers, in general, and for Ferroli Viet Nam in particular. Presently, China is the biggest supplier of black market air conditioners in Vietnam. The second barrier is that Ferroli Viet Nam is facing an unprecedented level of competition from both exsting competitors and new entrants. Thanks to the remarkable growth of Vietnam air conditioners recently, Vietnam id becoming a battlefied for air conditioner manufactures and importers. There are more and more air conditioner manufactures in Vietnam. These are either joint-venture companies or 100% foreign owned ones. The qualities of their products are improves and their prices are much more competitive than the imported ones that Ferroli Viet Nam is selling. As most people in Vietnam are low and middle-income earners, the air conditioners of these manufacturers are better suited to Vietnam consumers than Ferroli Viet Nam. Ferroli Viet Nam-marketing mix Product Famous international firms as products, which fundamentally provide its customers various benefits, make air conditioners of Ferroli Viet Nam. These are core benefit, generic product, experted product and augment product. The core benefit of Ferroli Viet Nam is the usage of product-which the target customer finds. The generic product is the basic characteristic about product, which was described by color, trademark, and the package of product. Each of the products of Ferroli Viet Nam has a separate trademark and color. Besides, Ferroli Viet Nam has always tried to diversify its range of air conditioners. Initially, Ferroli Viet Nam only sold 2 famous brands that are Toshiba (Japanese), Misubishi (Japanese). Then recently it has expanded and started to sell 2 other brands: Trane (American) and Sanyo (Japanese). This is helped to increase the number of customers of Ferroli Viet Nam. Morover, the quality of Ferroli Viet Nam’s air conditioners has been maintained over the years. There has been no complaint from the consumers about their products. The company’s two-year guarantee priod is also satisfactory to consumers. Price The first strategy that Ferroli Viet Nam adopts is low price strategy as most of Vietnamese air conditioner uers are price-sensitive buyers. The prices of Ferroli Viet Nam’s conditioners range from 5,000,000 to VND 30,000,000 depending on each model. This policy of pricing is much more attractive to customers as Ferroli Viet Nam’ prices normally are among the lowest for air conditioners’. The second strategy that is applied by Ferroli Viet Nam’s for air conditioner is price competition. Ferroli Viet Nam authorized dealers indeed offer the retailers who sell Ferroli Viet Nam’s two-way air conditioners a huge commission compared to those of its competitors. As a result, the price of Ferroli Viet Nam’s air conditioners sold by these retailers may be cheaper as some of them may want to satifice thei commission per two-way to get profits from selling a big amount. It is the price competition between Ferroli Viet Nam retailers that benefits customers. The last strategy that Ferroli Viet Nam to use is in the fourth of this year it launched a lever air conditioner at inexpressive price. This kind of product is for low and middle-income people in Vietnam. These are the air conditioners with model FUNIKI SC 09 and SC 12, which are offered at inexpressive price of between VND 5,000,000 and VND 6,500,000. The company belives that cheaper price of two-way air conditioners and lower installation and maintenance cost of air conditioner are the two key elements to increase the sales of Ferroli Viet Nam’s air conditioners in Vietnam. Place A good distributing policy hepls business activities safer, increasing the connection in business, decreasing compatition and marketing the circulation of goods more quickly and efficiently. In the domestic market Ferroli Viet Nam has good relations with its partners so they help Ferroli Viet Nam very much in the distribution. They hepl Ferroli Viet Nam win over other rivals even in the fiercest competition. Two-way air conditioners retailers are said to gain much benefit when committing to sell the new FUNIKI set. The company not only supplies its two ways to these retailers, but also supports them in terms of outlet decoration, staff training and marketing activities. Besides, each retailer will get a juicy bonus if an air conditioner is sold. Ferroli Viet Nam offers an intensive support for any retail that is located in business centers of the cities and provinces across nation. On the contrary, the company would offer the shop owner much more benefit such as free shop-sign and decoretion and a greater commission if the seling volume is reached at a high level. This always try their best to market as many air conditioners as ways is sold out much more than competitors. Promotion Promotion is the aspect of marketing concerned with increasing sales. Marketing must be considered on marking production decesion, and promoti