1. TABLE OF CONTENT
ACKNOWLEDGEMENT ........................................................................................................ 3
ABBREVIATION ...................................................................................................................... 4
LIST OF FIGURES ................................................................................................................... 5
LIST OF TABLES ..................................................................................................................... 6
EXECUTIVE SUMMARY ....................................................................................................... 7
INTRODUCTION ..................................................................................................................... 8
CHAPTER I: LITERATURE REVIEW............................................................................... 12
1.1 Marketing Concept ............................................................................................................ 12
1.2 Role of Marketing in business .......................................................................................... 13
1.3 Elements affect to Marketing Mix in firm ...................................................................... 13
1.3.1 Macro environment .......................................................................................................... 13
1.3.2 Micro environment ........................................................................................................... 14
1.4 Analyzing elements in Marketing Mix .......................................................................... 16
1.4.1 Product .............................................................................................................................. 16
1.4.2 Price .................................................................................................................................. 22
1.4.3 Place2 ............................................................................................................................... 25
1.4.4 Promotion2 ....................................................................................................................... 28
CHAPTER 2: MARKETING ANALYSIS OF INAX .......................................................... 33
2.1 Overview of sanitary ware market in Vietnam3............................................................. 33
2.1.1 Overview of economy and construction situation in Vietnam ......................................... 33
2.1.2 Overview of sanitary ware market in Vietnam ................................................................. 35
2.2 Introducing INAX’s background3 ................................................................................... 38
2.3 Analyzing Marketing Mix of INAX in Vietnam ............................................................. 41
2.3.1 Segmentation and Targeting market4 ............................................................................... 41
2.3.2 Marketing Mix Analysis in INAX4 .................................................................................. 43
2.4 Summary of successes and shortages in Marketing Mix of INAX ................................ 61
2.4.1 Successes in Marketing Mix of INAX6 ........................................................................... 61
2. 2.4.2 Shortages in Marketing Mix of INAX6 ............................................................................ 61
CHAPTER 3: MARKETING SOLUTIONS TO INCREASE SALES OF INAX ........... 63
3.1 Business objectives of INAX to 20156 .............................................................................. 63
3.2 Some marketing solutions to increase sales of INAX6 ................................................... 63
3.2.1 Improve marketing research activity ................................................................................ 63
3.2.2 Improve management system of marketing activity6....................................................... 65
3.2.3 Product policy ................................................................................................................... 65
3.2.4 Improving distribution system .......................................................................................... 69
3.2.5 Improve and enhance promotion activities....................................................................... 73
3.2.6 Price policy ....................................................................................................................... 76
CONCLUSION ........................................................................................................................ 81
REFERRENCE........................................................................................................................ 82
APPENDIX .............................................................................................................................. 83
3. ACKNOWLEDGEMENT
In order to finish this thesis, I have received a lot of support from many people. I
would like to take this opportunity to thank all people who helped me complete the study
course and the thesis.
I would like to express my appreciation and deeply gratitude to Dr. Vu Quoc Binh –
my Supervisor for his professional guidance and encouragement throughout the research time.
I would like to thank all professors in my EMBA course, who tried their best to supply
precious knowledge to help me upgrade skills in the real work.
I could not finish the thesis without kind supporting from my colleagues, staffs,
distributors, and interviewees. I would like to express my deep gratitude to them.
Finally, I would like to show my deeply thanks for my family – especially my wife who
helped me to do housework and take care 2 our small sons to save time for me to study and
write the thesis during 3 years.
Hanoi, July 2009
Nguyen Chien Thang
4. ABBREVIATION
APECAsia-Pacific Economic Co-operation Asia-Pacific Economic Co-
operation
ASAmerican Standard American Standard
GDPGross Domestic Product Gross Domestic Product
PEST Political, Economic, Society, Technology
R&DResearch & Development Research & Development
SWOT Strengness, Weakness, Opportunity, Threat
WTOWorld Trade Organization World Trade Organization
5. LIST OF FIGURES
Figure 1.1: Basis levels of a product
Figure 1.2: Product Life-cycle
Figure 1.3: Internal factors affect to price-determination
Figure 1.4: Pricing Strategies Matrix
Figure 1.5: Moving Lines in distribution channel
Figure 1.6: Promotion activities of Producer
Figure 2.1: GDP per Capita in Vietnam
Figure 2.2: Market share of firms in Vietnam in 2008
Figure 2.3: Sold quantity of Water closet of VINAX in years
Figure 2.4: Turnover and growth rate of VINAX in years
Figure 2.5: Market segment in Sanitary wares industry
Figure 2.6: Sold quantity of water closet of VINAX from 2004-2008
Figure 2.7: Ratio of product lines of VINAX from 2004-2008
Figure 2.8: Share of product line of VINAX in 2008
Figure 2.9: Growth rate of product lines of VINAX in years
Figure 2.10: Map of distribution system of INAX in Vietnam
Figure 2.11: Market share of INAX product in Hanoi
Figure 2.12: Marketing process of INAX in project field
Figure 2.13: Domestic turnover of VINAX in years
Figure 3.1: Process of developing new product
Figure 3.2: Chart of Distribution channel of VINAX
Figure 3.3: Combination of Push and Pull Strategy
Figure 3.4: Elements affect to Price Strategy
6. LIST OF TABLES
Table 1.1: Advantages and Dis-advantages of Advertising methods
Table 2.1: Percentage of households having house by types of house in 2006
Table 2.2: Population structure by age group in Vietnam in time of 1/4/2007
Table 2.3: Stationary table of sanitary wares makers in Vietnam
Table 2.4: Table of comparison between INAX and other firms
Table 2.5: Turnover of regions of INAX in 2008
Table 2.6: Evaluation of retailers about distribution system of firms
Table 2.7: Table of evaluating promotion quality of firms
7. EXECUTIVE SUMMARY
Thanked to innovation and opening policy, in over 10 years up to now, the economy in
Vietnam has been developed strongly and from a country with concentrated economics
became market economy. In the market economy, firms must face up with many competitors,
this forces them have to always try in all business activities to exist and develop by their
limited resources.
Same as many other manufacture fields, the industry of producing construction material in
Vietnam has strongly developed. Together with increasing of income, living standard level
and high economic growth then demand for construction material in general and sanitary ware
in particular has increased in both quantitative and qualitative. Therefore, applying suitable
marketing solutions to increase sales and attract attention of customer become a very
important factor with companies’ existence and developing.
The purpose of this research is specify marketing solutions in Marketing Mix including from
theory to practical perspectives to be able to help firm to increase sales, prestige of brand in
field of sanitary wares in Vietnam
The thesis’s focus has been done to research marketing solutions to increase sales and mainly
concentrated in 4 factors in Marketing Mix as Price, Product, Place, and Promotion. Beside
that, the research specifies and analyzes factors that could be affecting to marketing activities
of firm. Through survey and analyze marketing activities of INAX Vietnam Sanitary Ware
Company (INAX), the author supplied marketing solutions to increase turnover for INAX and
found factors that affect to effect of marketing activities in INAX. However, by limitation of
time and budget, the surveys were only restricted in 6 North and Central provinces, the
research could not mention all factors that can affect business activities of the company as
factors of technology, production, and finance and so on. The author hopes, anyway,
recommendations are necessary for improving business activities, increasing sales of INAX.
The research was done mainly in first half of 2009 and finished in June of 2009.
8. INTRODUCTION
1. Rationale
Vietnam is a large population country with over 85 millions of people and has high young
population rate. During some current years, with strong economic growth of Viet Nam,
income of people increases rapidly, demand for housing increases sharply, many urban
projects in big cities have been born and this results in demand of construction material in
general and sanitary ware in particular increases with high speed (10-15% per year), this is a
good chance for producers of construction materials. However, beside the above favourable
conditions, competitive situation becomes more severe with appearance of many producers in
domestic and imported goods especially when Vietnam officially joining AFTA and WTO.
These push producers must to continuously improve quality, launch nice designs with
advanced function, increase advertising activity to keep market share and raising turnover.
INAX is the biggest manufacturer in Vietnam, its products was officially launched to market
from Dec of 1997 and rapidly conquered belief from consumer. From the first factory in 1997,
by now VINAX has 4 factories in Vietnam and prepare for building the 5th factory. During
over 10 years in Vietnam, with suitable business policies, INAX has kept the leading position
in the market with the highest market share, output, and turnover in Vietnam; products and
brand of INAX have high prestige with customer.
However, in recent 2 years, some problems have been raised as the growth rate has slowed
down; profit rate has reduced by increasing of input expenses. In order to improve its activity,
INAX is trying to find suitable solutions to help the company raise turnover, profit, prestige of
brand, and overcome affects of economic recession. Being a sales manager in the North and
Central provinces, the author has responsibility to help INAX to find solutions to increase
turnover and that is the reason why the author decided to choose subject “Marketing
solutions to increase sales of INAX Vietnam Sanitary Ware Co., Ltd (INAX)” for the
thesis.
9. 2. Research Objective
In order to solve the above matters, this thesis will focus on objectives as follow:
- Summary theories used to analyze marketing environment of firm and marketing
solutions to improve firm’s business activities.
- Analyzing actual marketing activities in INAX and factors affecting to marketing
activities of the firm.
- Giving recommendation and marketing solution for INAX to increase sales of
VINAX
3. Scope of research
INAX Corporation is one of the biggest manufacturers in Japan; it specializes in producing
sanitary wares, external and internal tile. INAX Corporation invested to Vietnam both sanitary
ware and external tile, products made in Vietnam is sold in domestic market and partly export
to some countries as Japan, Myanmar, Cambodia, Malaysia.
However, by limitation of time and budget, the survey does not cover all factors that can affect
to improving business of the company as production scale, developing and applying new
technology, human resource... The survey and interview only have been conducted in some
big cities in the North and Central area, so the result is not really exact. Besides that, base on
real situation of INAX, limitation of time and budget, so the research mainly focus on aspects
as follow:
-Focus on sanitary ware field.
-Focus on North and Central area.
-Focus on analyze and propose solutions in Marketing Mix to increase sales for INAX.
4. Research Methodology
• Collecting data:
-Secondary data:
Secondary data was collected mainly from the company’s reports, newspapers, internet,
magazines, and so on. Collected information includes inside and outside information of INAX.
The inside information of the company will help to specify strong and weak points of the
10. company. The outside information will be collected and analyzed to help find opportunities
and threats in business environment of the company. After analyzing inside and outside
impacts, choosing marketing solution is formed and through it the author proposes some
marketing solution that suitable with ability and objectives of INAX.
-Primary Data:
Questionnaires: the author used questionnaires to collect information about respond and
evaluation of customer, projector, and architect to the company as well other rivals. This
information includes evaluation and comparison between INAX and other rivals in price,
quality, service, promotion, distribution system, design of product, profit. Because of
limitation of time and budget, the surveys only was conducted in 3 cities Hanoi, Da Nang, Hai
Phong and 3 provinces Quang Ninh, Thai Nguyen, and Thanh Hoa. Quantity of interview was
130, including 100 retailers who selling sanitary ware, 25 architects and 5 construction
contractors. Information collected in Questionnaires will help the author to find out strong and
weak points in Marketing Mix of INAX compared with other rivals, and through it the author
can supply marketing solutions for INAX to limit weaknesses and increase sales.
In-depth interview: after conducting questionnaires method, the author carried out in-depth
interview with some subjects as 3 distributors, 10 sales staffs, INAX’s General Director and
Sales Director to collect more deep information for analyzing.
• Data analysis method:
To do this research, mix (Quantitative and Qualitative) method was applied. Collected
information was used to analyzing actual situation of the company, internal and external
environment to find marketing solutions to improve the company’s marketing activities and
increase sales for INAX.
5. Structure of thesis
Apart from the Acknowledgements, Abbreviations, List of figures, List of tables, Executive
Summary and Introduction, the main body of the thesis is divided in to 3 chapters.
Chapter 1: Literature Review
This chapter will summarized relevant theories used to analyze marketing environment of firm
and marketing solutions to improve firm’s business activities.
11. Chapter 2: Marketing analysis of INAX
This chapter will analyze actual marketing activities; find weaknesses and strong points in
marketing activity of INAX.
Chapter 3: Some marketing solutions to increase sales of INAX.
In this chapter, the author will supply marketing solutions to help INAX increase sales and
prestige of INAX brand in Vietnam.
12. CHAPTER 1: LITERATURE REVIEW
1.1 MARKETING CONCEPT
Marketing happens in everywhere, it touches us very day. However Marketing is a field that is
understood very different. Some people think that marketing is advertising, is selling, or
researching market because those activities get in touch with people frequently. This think
only describes a small part but is not all marketing activities. Marketing today emphasizes
activities to create “satisfaction of customer’s demand”.
Marketing covers many fields from social activity to economic, political activities therefore
there are many different definitions about Marketing based on different points of view. Firstly,
we understand Marketing is society management process, in which individuals or groups will
receive things that they need through creating and exchanging products and values with other
people.
-Market: in point of view of Marketing, market is group of present customer or future
customer (potential customer) having same needs about product and willing to exchange to
satisfy their demand.
-Marketing: concept “market” brings us to concept “marketing”. In the literal sense,
marketing means activities of people involve market with purpose of satisfying demand
through exchange.
Marketing is process that through it, individual and organization can satisfy their demands and
wants by means of creation and exchange products with others.
As Philip Kotler, Marketing is a social process that in this process individuals or group can
receive things they want through creating and exchange freely valuable products, services with
other person.
As The American Marketing Association: Marketing is a process of planning and managing
activities of pricing, promoting and distributing ideas, goods, services to aim to create
transaction to satisfy target of individual and organization.
13. -Marketing Mix: It is a combination of 4 marketing elements used in sale of a particular
product or combination of the four controllable variables of Product, Price, Place, and
Promotion that are essential to define and fulfil a target market.
1.2 ROLE OF MARKETING IN BUSINESS
Along with process of social and economic development, enterprises today appreciate role of
marketing in business. If in previous time, marketing is seen having equal role with
enterprise’s elements as producing, financial, and personnel activity then now its role is more
highly appreciated; marketing becomes new philosophy in business. Role of marketing
includes:
+The first, marketing help enterprises to discover demands as well ways to satisfy
customer, marketing orients business activities and gains initiative.
+The second, marketing helps enterprises to solve well relations and balance interest of
enterprises with interest of consumer and society.
+The third, marketing is a competition tool; it helps enterprises set up position,
prestige in market and increase turnover
+The fourth, marketing becomes centre of all activities in enterprise, decisions of
technology, finance, personnel mostly depend on marketing decisions as: produce
what, for whom, how to produce and how many.
1.3 ELEMENTS AFFECT TO MARKETING MIX IN FIRM
Marketing activities of firms in market are so much different due to different combination of 4
P factors in each different circumstance. The combination of those 4 factors will be depended
on macro environment and micro environment of firm
1.3.1 Macro environment
Macro environment includes Political and legal environment, Economic environment, Social
and culture environment, Technology and science environment.
Political and legal environment
14. Analyzing political and legal factors will help firm catch policies, legal system that influence
to business of firm as tax policies, trade tariffs, policy of currency, export-import, economic,
and social development policy of the state.
Economic environment
Economic environment include elements that affect to purchasing power and consumption
structure, it includes macro-factors as GDP growth rate, inflation rate, unemployment rate,
income and income gap of population level and different areas, and so on.
Analyzing economic environment will help firm to define its business plan, example as
economy developing will make income of people higher, and through it purchasing power will
go up.
Social and culture environment
In each society, people group or area (province, country) have different life style, custom and
culture, those elements will influence to firm’s activities. Besides that, Social and culture
environment also includes cultural standards of people, it directly affects to consumer’s
behaviour and of course to marketing strategy of firm.
Social factors still include population element, population structure (structure in ages, in
geography,…) and population element will decide scale and structure of market.
Technology and science environment
Development of science and technology changes life of people. It helps to create new
products, raise functions, and quality of products. Therefore, in order to increase competition
ability, nations has invested for research and developing, firms spend big expenses for R&D.
Development of science and technology also make product life-cycle shorter and this will
affect to marketing strategy of firm.
1.3.2 Micro environment
1.3.2.1 Internal micro environment
Element of Human Resource: Human resource has a vey important role in success of
firm and affects to result of marketing activities. Firm will not operate effectively if it
does not have good human resource.
15. Financial element: Finance involves to capital source and using capital to implement
marketing activities. Firm cannot carry out a marketing plan well if it does not enough
money for activities.
Element of production technology: Production is an operation to create product for firm.
Production technology will decide quality and price of product. Base on quality and
production cost of product, firm will decide price for product and promotion activities for
product to withdraw attention of customer and increase sales volume.
Position and market segment of firm in market: Each firm has a own position in market,
identifying exact position will help firm build a suitable marketing plan
1.3.2.2 External micro environment
Customers
It is described as market of outputs. The purchasing ability of customers creates pressure on
firm and also affects to buyer’s purchasing decisions and price changes. Customers are
persons buying product of firm but at same time buying product of competitors, therefore, firm
must to know what consumer needs to serve them better.
Customers are diversified; they could be individual, organization, domestic or foreign
customer. In order to serve well each kind of customer, firm have to make research deeply
each kind. Besides that, consuming taste of customer always change, therefore firm have to
forecast factors that leading to those changes to serve customer timely.
Suppliers
They supply the firm and also competitors input of production or business process as
machines, materials, fuel, labour, finance. Choosing a supplier will affect to production cost,
product quality,…Therefore, the firm should select suppliers having prestige and some
different suppliers to avoid risk when only depending on only supplier. The firm should make
good relation with suppliers to be able support each other in difficult time.
Competitors
Firms do business in an environment with different competitors. Competitors could be
competitors in other business filed or in same field. Competitive environment will affect
16. directly to plan marketing activities of firm, affect to decision of production, pricing, sales
policies, and promotion methods.
1.4 ANALYZING ELEMENTS IN MARKETING MIX
1.4.1 Product
The first element in Marketing Mix is the product. The product is goods or services supplied
to satisfy the needs and wants of consumers.
Figure 1.1: Basic levels of a product
Sources: Marketingteacher.com
There are 3 basic levels of a product: core, actual and augmented. The core product is the most
basic level; consumers buy it by benefits that it brings to them. For example, consumers do not
buy a car, consumers buy benefits that cars offer as safety, comfortable. The next level of the
product is the actual product that is built around the core product, it includes brand name,
features, styling, quality, and packaging. The final, or third, level of the product is the
augmented product, it consists of all elements that surround the core and the actual product, it
provides buyer with additional services and benefits, for example as warranties or technical
assistance services.
In order to choose a right product strategy and match with other strategies in Marketing Mix
then firm need to identify product belong to what kind. We can classify product as some ways:
17. -Period of product using: Products can be classified by how long they can be used. Products
that can be used repeatedly in long time as motorbike, TV are called durable goods. Products
that are used in short time as food, soap, drinks are called nondurable goods or FMCG (fast
moving consumer goods)
-Purchasing habit:
+Common consuming goods: products are consumed frequently, consumer buys it
follow their habit caused they know well the products
+Products purchased by snatches
+Seasonal, occasional products
-Nature of product existence:
A product is anything tangible or intangible that can supply to consumer through purchasing.
A tangible product is one that we can touch, such as a car. An intangible product is a service
that cannot be touched such as computer guarantee service.
-Purpose of using:
+Consuming goods: used for private purpose
+Product used as input for manufacture.
1.4.1.1 Product lines and Product Mix
In business activity, firm should identify product line and scale of product mix that the firm
wants to satisfy market.
Product lines is products have same in one aspect example as same customer, same level price,
or way of using
Product Mix is number of types of product and together with it is number of models. Scope of
Product Mix includes
Breadth – number of product lines in a range
Depth – number of product items in a product line
Depending on different business strategy and objectives that firm has different decision of
product strategy as:
18. - Decision on number of product lines: base on analysis about market situation, firm can clear
groups of product or product types that not bring the firm profit and can expand to new
business field or new product type.
-Decision on products in a product line: Firm can narrow a product line when some products
in the line do not bring firm profit or those products out of fashion or bad selling. On the
contrary, to give customer more choices and satisfy demand of different customer groups then
the firm needs to extend product line or reject backward products, upgrade existed products
and launch new products.
1.4.1.2 Product brand
Product brand is an extremely component in product strategy, almost firms do business with
specific brand, strategy of positioning, and marketing activities will focus on brand. Brand is
valued assets of firm, it help buyer identify product of one firm with product of other firm.
Therefore, business of firm will become easier if firm owns a famous brand.
Depending on feature of product or business field, and firms’ strategy that firm can select
different options to name product. There are many way for naming as:
-Different name for each product: in this way, marketing activities will focus on each
brand (example as products of P&G)
-Same name for all product
-Naming for each product line
-Combine firm name and brand
1.4.1.3 Quality and Design
-Product quality:
Before producing a new product, firm has to choose a quality level and other function to meet
requires of brand positioning and market targeting. Quality level that firm selects to produce
product will depend on objectives and strategy orientation of firm. Firm can choose 1 quality
level or many different quality levels for 1 product to satisfy different groups of customer.
-Product design:
19. One important matter in product strategy is design. One product with good quality is not
enough to attract customer but it needs to have nice design, this is a battle that many firms use
to create distinguish between their product and other firm’s
1.4.1.4 Product Life-Cycle
After launching a new product to market, firms all like it has a long life and want to get much
profit to compensate for expenses that they spent in process of research and develop the
product as well expenses to penetrate market in beginning stage. Therefore, in business
process firm need to have suitable adjustments in marketing strategy to match with changes of
market as competition, market demand, and to do it well then firm supervise tightly sales
situation, market changes to make suitable decision. Firm should know that each product has
own life-cycle. In general, life cycle of a product includes 4 stages: Introduction stage, Growth
stage, Maturity stage, Decline stage.
Figure 1.2: Product Life-Cycle
Sources: QuickMBA.com
-Introduction stage: this is the stage that product begins to launch to market. In the stage,
output and turnover increase slowly by almost buyers do not know about it or consumer does
not give up habit of using present products. Therefore, in this stage, firm should enhance
20. marketing activities to attract customers and increase their awareness to the product, enforce
distribution system.
Firms can apply “Storm marketing” strategy with noisy advertising and promotion campaigns
to the product quickly come to the market, or apply careful marketing strategy to step by step
enter market.
-Growth strategy: In this stage, sales quantity gone up much by buyers accepted the new
product, however competitive level also higher. In the stage, production cost considerable
reduce so firm can get more profit and can calculate again selling price. In order to reach
highest sale then in this stage the firm should carry out:
+ Expand market and attack to new market segments.
+Increase customer’s choice by services, provide more new models.
+Reduce price or launch sales promotion programs to raise sale, and the firm can keep
price to maximize profit.
+Enhance distribution channels or strengthen channel’s activities.
+Increase advertising activities to build prestige and create belief with customer.
-Maturity Stage: This is the stage that output and sale are the highest and growth rate is very
low by saturated demand of customer. Besides that, in the stage, the firm faces up severe
competiveness and profit rate trend to reduce. To maintain competitive ability and raise
turnover, the firm needs:
+Try to keep old market and exploit new market.
+Upgrade or innovate product (quality, function, or new design), reinforce old
distribution channels and open new channels, intensify advertising activities and
promotion.
-Decline Stage: Decline stage happens when sale and profit drop seriously. Depending on
many factors, the stage can happen gradually or quickly, and this requires the firm must
frequently collect market information; analyze changes of turnover, profit, market share to see
stages in the product life-cycle to avoid loss.
21. To avoid negative effect of the decline stage, the firm should always research and develop new
products to change for old products.
In reality, length of stages and structure of life-cycle depend on many factors: product’s
particularity, consumer’s behaviour, technology development, competitive situation, firm’s
marketing ability.
1.4.1.5 New product development
New product is blood to raise firm and is firm’s future. New product is developed to meet non-
stopped changing demand of consumer, to catch up new technology and against rival in the
market.
There are 2 ways to have new product: the first is buying from other (buy product and do
marketing with own brand, or buy design,..), the second is developing new product through
R&D activities of the firm. However, new product development is a rather risk action, many
new products get failure by wrong estimation of market demand, bad design, lack of market
information, high R&D expenses, or rival’s new products enter market earlier.
In general, to develop a new product successfully, the firm must understand customer’s
demand, competitors and create different points with other rival’s.
New product development process:
-Finding new ideas about product: new ideas can be taken from R&D section,
production section, and sales section or from market research.
-Select ideas: through gather ideas, firm choose good ideas to use for developing new
product.
-Design product and make a test
-Build a draft of marketing strategy for new product.
-Analyzing business effect of new product.
-New product making.
-Survey responds of customer with new product.
-Launch new product to market.
22. 1.4.2 Price
The second element in Marketing Mix is price. Price is the amount of money that consumers
are willing to pay for a product or service. Price is the only element creates revenue of firm.
The firm can increase turnover and profit by way of increasing price. Price is an important
factor affect to purchasing decision of buyer, market share of firm and ability to conquer
market.
In order to pricing a product, companies must consider both internal and external factors of the
companies. The internal factors include organization’s overall business objectives, marketing
mix strategy, production cost. Price objectives usually take one of 4 forms: profitability,
volume (output or turnover), competition ability, and prestige.
1.4.2.1 Factors affect to pricing
To build a good price strategy, firm need analyze factors that can affect to the price strategy;
those factors include internal factors and external factors.
-Internal Factors:
Figure 1.3: Internal factors affect to price-determination
Marketing Production
objectives t
Price-determination
Customer’s Market
responds Competitors Legal form
Sources: the author’s design
+Objectives of pricing: Pricing must serve for marketing objectives of firm. Each
marketing objective of firm will have different price strategy, the objectives of firm
can be:
23. • Definite sales volume
• Achieve profit
• Larger market share
• Maintain market share
• Eliminate competition
• Advantages of mass production
+Production costs:
Production cost take an important role by it is one of main factor to pricing a product,
production cost will decide profit of firm.
In competitive environment, when product price hardly change in higher trend then
production cost reduction will decide success or failure, competitive ability of the firm.
The firm could reduce production cost by saving materials, increasing production
capacity, re-arranging labour force.
-External factors:
External factors influence price-determination include responds of customer,
competitors, product life-cycle, reaction of distributors, substitute goods, nature of
demand, legal and policies of the state, form of market.
+Responds of customers: customer’s psychology influences their awareness of product
price. Customers often think that price accompanies with quality, product has high
price then quality is better. Besides that, a product with good brand and high price
more easily accepted by customer. In market of consumer, customer willing buying
one product that its price stays in acceptable price range and this range depend on
income of people. In market of business, customer often seeks the lowest price to buy
products with an acceptable quality to reduce business expenses.
+Competitors: when pricing product, the firm has to compare its product with rivals’
firm to see strong and weak points of product. Through analyzing quality, price of rival
products and based on marketing objectives, the firm will decide price of product.
24. +Legal, Regulatory, and Ethical concerns: when pricing a product, the firm must
comply with rules, regulations in the country and international rules – in case selling
product in other countries.
+Form of market: price-determination also depends on form of market as perfect
competition, monopolistic competition, monopoly, or oligopoly.
1.4.2.2 Pricing method
There are many ways to price a product; hereinafter we will analyze some basic ways
Figure 1.4: Pricing Strategies Matrix
Q UALITY
L O W H I G H
L
P O
W
R
I
H
C
I
E G
H
Sources: Marketingteacher.com
-Premium Pricing: Use a high price when the product or service of firm is uniqueness. This
way is used where the firm has high competitive advantage and often applied for luxury
product, high quality, and leading brand.
-Penetration Pricing: The price charges for products and services which the firm wants to gain
market share and the firm will increase price again when achieve the target
25. -Economy Pricing: The firm charges a best price for buyers through keeping at a minimum
cost of marketing and manufacture.
-Price Skimming: The firm charges a high price when having a high competitive advantage.
However, the advantage does not take long by the high price tends to attract new competitors
in to the market, and the price will surely fall due to more suppliers.
1.4.3 Place
Place is understand as channel, distribution, or intermediary. It brings goods/service from
manufacturer/service supplier to user or consumer. Distribution channel is an important part in
marketing mix strategy. Distribution activity involve to many people, many different sections;
therefore a suitable distribution strategy in each specific circumstance will support for other
marketing strategies in Marketing Mix and concurrently increase competitive ability and brand
image of the firm.
Distribution is a system of activities of transfer a product, service to consumer at right time,
right place to satisfy demand and needs of consumer or intermediaries.
Distribution channel is a set of firms and individuals who independent and interdependent
each other. Members in the channel include manufacturer (supplier), wholesaler, retailer, and
consumer.
1.4.3.1 Moving lines in distribution channel.
Figure 1.5: Moving Lines in distribution channel.
Product Line
Manufacturer Transporter Wholesaler Retailer End-user
Property Line
Manufacturer Wholesaler Retailer End-user
26. Negotiation Line
Manufacturer Wholesaler Retailer End-user
Information Line
Manufacturer Transporter Wholesaler Retailer End-user
Promotion Line
Manufacturer Advertising Wholesaler Retailer End-user
Sources: the author’s design
-Product Line: is line of moving product from manufacturer to end user.
-Property Line: describe property from seller to buyer between members in the channel.
-Negotiation Line: the line is performed through purchasing activity to definite product owned
rights.
-Information Line: is exchange of information between members in channel about quantity,
quality, time,..
-Promotion Line: is support of manufacturer for members in the channel under methods as
advertising, promotion program, and public relation.
1.4.3.2 Decision of Distribution channel structure: Length of a distribution channel depends
on many factors product characteristics, geographic, and marketing objectives of firm. In order
to decide structure of distribution channel, the firm has to decide matter as follows:
27. -Does the firm use direct or indirect channels (the firm sells directly to consumer or via
wholesaler?). Direct distribution channel is suitable with products having high value, huge
shape, complicated technology, or consumer concentrating in one small area.
-Will the firm set up single or multiple channels?
-Decision on cumulative length of the channels.
-Decision on types of intermediary
-Number of intermediaries at each level
-Which intermediaries used to avoid conflict between in channel?
1.4.3.3 Types of distribution channel
-Direct supply/Direct sale
Direct selling is selling directly to customer. It could be retail, door to door; mail order and
ecommerce all directly sell to customers. The advantage of this method is the firm can directly
contact with customer and can catch quickly changes of market, changes in demand of
customer about the product (price, quality, function, design...). This channel is suitable with
products having high value, big size and difficult in transportation, complicated technology,
easy to be ruined, or customers concentrate in one area.
-Direct to retailer
If the firm does not want to spent expenses of opening retail outlet to sell to customers then the
firm can sell to customers through existing retailers in market. This method will save a lot of
money for the firm comparing with opening many retail outlets to cover large area. This
distribution channel is used when manufacturer and retailers have enough ability to serve well
customers. However, this method has weak points are difficult administration and
manufacturer have to have a good sales team to consult and supervise activities of retailers
(product, price, promotion, display), beside that manufacturer also get more risks in finance as
it have to many small accounts at the same time.
-Wholesaler, merchant, or agent supplier
28. Selling to wholesalers or agent suppliers will reduce pressure of distribution. In addition, the
firm can reduce the level of storage space to hold stock. The firm can get more income and
more stable business when selling to big wholesales or agent suppliers. However, with this
method, the firm can lose firm name, for example, the agent suppliers may request that the
firm’s product is sold under brand name of wholesaler or agent.
In order to avoid limitation of types of distribution channel, the firm may combine different
distribution methods to maximize advantages of each intermediary.
1.4.3.4 Distribution channel design
-Select intermediaries: the firm may select existing distribution systems to set up the firm own
distribution channel. Beside the firm’s sales force, the firm may use distributors of rivals,
retailers, wholesalers to sell product. However, base on ability of the firm and reality situation
then the firm can set up a new distribution system work parallel with the old system.
-Decision on number of intermediary: base on marketing objective, the firm builds different
policies and decide number of intermediaries in each channel. Number of intermediaries has to
be carefully considered to limit conflicts and negative competitiveness between channel
members.
1.4.4 Promotion
Promotion is the fourth element in Marketing Mix. Promotion is a communication process that
takes place between a firm and its publics. Publics could be individuals and organizations that
concern to products/service, activity of the firm. Promotion has an important role in firms’
activity, it is competitive tool to help firms penetrate new market, keep market share, increase
turnover, seek new customer. Promotion help firm introducing new product to targeted
customer, build firm image in public and support for distribution activity.
Various promotional tools are used to communicate messages about products, ideas, or
services from firms to their customers. The promotional tools include Advertising, Personal
selling, Sales promotion, Public relation, Trade fairs and Exhibition, and Sponsorship. In
reality, firms often apply combination of the tools to increase effective of promotion and this
combination is called Promotions Mix.
29. 1.4.4.1 Promotion tools (Promotion Mix)
Personal Selling:
Personal selling is an effective way to manage personal customer relationship. On behalf of
the firm, sales person will deal with customer. Success of this activity depend much on the
staff’s skills, therefore, the staff has to have good knowledge of product, customer, market and
competitor, and good communication skill. However, using sales staffs in this case is rather
expensive, the firm will lose a large expense for one product sold, so this method will suitable
with goods that return firm high margin.
Sales Promotion:
Sales promotions are short term incentives used to encourage consumers to purchase a product
or service. Purpose of sales promotion is encourage customers to buy a new product or a
present product, increase loyalty with a product, keep market share, increase sale, increase
effect of advertising and other marketing activities.
There are many methods of sales promotion as bonus, price reduction, free involved services,
couponing, and so on. Each sales promotion should be carefully calculated and compared with
other alternative methods.
Public Relation (PR):
PR is activities to establish and maintain good relationship, or understanding between firm and
its publics by using media means to supply information of the firm to publics. PR is performed
through activities as press releases, product publicity, official communications, lobbying, and
organizing events. In order to carry out PR activities effectively, the firm should combine
many activities and carry out in long term and make carefully plan.
Advertising:
Advertising is un-individual communication activity to bring information of product/brand
name to target market through means. Advertising is divided in to 6 subcategories: pioneering,
competitive, comparative, advocacy, reminder, and cooperative advertising.
-Pioneer advertising aims to develop primary demand for a product.
-Competitive advertising seeks to contrast one product/service with another.
30. -Advocacy advertising is an organizational approach designed to support socially responsible
activities, causes, or messages such as helping food for homeless.
-Reminder advertising seeks to keep a product or brand name in the mind of consumers by its
repetitive nature.
-Cooperative advertising occurs when wholesalers and retailers work with producers to
produce a single advertising campaign and share the costs.
Advertising methods could be newspaper, magazine, Radio, televisions, outdoor advertising,
direct mail, and internet.
Table 1.1: Advantages and Dis-advantages of Advertising methods
Advantage Dis-advantage
Newspaper Flexible, large market coverage, high Short time existence, less attention of viewer,
believable limited issue quantity
Magazine High selection of viewer and geography, High expenses, limited issue quantity, long
creating high attention, high advertising time repetition.
quality, longer existence compared to
newspaper
Radio Large market coverage, low cost, flexible in Low attraction level, short time, limitation in
local areas waves coverage
Television High market coverage, attractive advertising Low viewer selection level, viewer can pass
(combining image, sound), low cost/1time by boring, short time/1 show, high cost for
whole campaign
Outdoor Ad Strong image with large size, colour, image, Information limitation, unable to focus on
low competitiveness, long existence, low specific viewer.
cost
Direct mail High viewer selection level, flexible, no Difficult update of information, less attraction
competition, individual focus
Advertising in High speed and large information Limitation of internet users, low attraction
internet transmitting, high interaction ability level.
High viewer selection level, low cost,
measurable
Sources: the author’s summary
Trade fairs and Exhibitions
31. Trade fairs and exhibitions are very good for making new contacts and renewing old product.
Those opportunities will increase awareness of customer and stimulate them take a trial.
Sponsorship
Sponsorship is an activity that a firm pays to be associated with a particular event, and through
it the firm can popularize its image and brand name.
In general, in order to promotion activity to be effective, the firm should blend promotion
tools together to achieve better result.
1.4.4.2 Promotion Strategy
Promotion Mix could be affected by some factors as product, life-cycle of product and budget.
Therefore, it is difficult for the firm to apply all promotion tools and it needs to choose
suitable strategies in particular circumstances. There are 2 promotion strategies: Pull Strategy
and Push Strategy.
Figure 1.6: Promotion activities of Producer
PUSH STRATEGY
Promotion of producer Promotion of distributor
Producer Intermediaries Consumer
PULL STRATEGY
Demand Demand Demand
Producer Intermediaries Consumer
Sources: the author’s design
32. Push strategy: using sales promotion for intermediaries or sales staffs to increase sales
amount. In the push strategy, promotion activities focus on intermediaries to inform, persuade
them and the intermediaries will inform to consumers. Trade promotion for intermediaries and
personal selling is common and effective tools in this strategy.
Pull strategy: Withdraw consumer’s attention to the product by advertising activities to create
demand of product of consumer. Consumer will require buying the product from
intermediaries and the intermediaries will buy the product to sell to consumer. In this strategy,
the promotion activities mainly focus on communication, advertising, and sales promotion for
consumer.
Summary of the Chapter 1: In general, through content of theory is presented in the Chapter
1, the author provided a general theoretical foundation in analyzing external and internal
factors of one firm that can affect to the firm’s activity at present and in future. Analyzing
those factors will help firms to find solutions to adapt with changes of market and gain targets.
Apart from analyzing factors in marketing environment, in this Chapter the author supplies
some specific marketing solutions in Marketing Mix as Product, Price, Promotion, Place
(Distribution) that can help firm to increase sales and market share.
33. CHAPTER II: MARKETING ANALYSIS OF INAX
2.1 OVERVIEW OF SANITARY WARE MARKET IN VIETNAM
2.1.1 Overview of the economy and construction situation in Vietnam
Vietnam is the country of great potential economy. With a stable politics, crowded population
and cheap labour force, Vietnam has attracted many foreign investors to come for business.
Besides issuing the open-policies to stimulate the economy, many rules and regulations issued
as Enterprises Law, Common Investment Law… have created more chances for business
components.
With policies of open-door and integration, Vietnam took part more in economic cooperation
organization in both the region and the world. Vietnam became member of ASIAN, ASEM,
WTO, AFTA, and APEC. Joining in international and regional organizations has created many
opportunities for expanding export market, but it has created threats with domestic production
section by lower tariff barrier
After over 20 years of innovation, Vietnam has obtained big achievements in social and
economic development. Average growth-rate of GDP always achieves high levels of over
7.5% in 5 constant years, GDP per capita gone up sharply from 412$ in 2001 to 1024$ in 2008
Figure 2.1: GDP per Capita in Vietnam
Sources: from General Statistic Office
34. In recent 5 years, construction field has strong development, many big real estate projects as
urban zones, hotels, resorts, trading centres have been invested to serve for demand of people
accommodation, tourism, office, and trading. The strong development of the economy has
created higher income for people and together with this is higher demand of housing; this is a
good chance for manufacturers of construction materials. The below figures show demand for
building house is very huge especially in rural area.
Table 2.1: Percentage of households having house by types of house in 2006
Permanent house Simi-Permanent Temporary and
house other house
Whole country 23.7 60.3 16
Urban 41.4 51.3 7.4
Rural 17.0 63.7 19.3
Source: from General Statistic Office
Vietnam is a crowded population country with over 86 million of people and increasing rate
over 1%/year. In which population rate in urban is around 25% and this rate will increase
more in many next years thanked to high speed of urbanization and shifting labour from rural
area to urban area.
One of advantage factors helps Vietnam to develop the economy and attract foreign
investment is high rate of young population, at the moment rate of population having age
fewer than 30 is 52.5% and in labour age is 54% in population. With the high rate of young
population, demand for housing is very high and still continue to increase more in future and
this is a good chance for manufacturers in Vietnam.
Table 2.2: Population structure by age group in Vietnam in time of 1/4/2007
Age 0-4 5-9 10-14 15-19 20- 25- 30- 35- 40- 45- 50- 55- 60 +
group 24 29 34 39 44 49 54 59
Rate 7.49 7.84 10.18 10.71 8.69 7.66 7.71 7.66 7.51 6.44 5.23 3.43 9.45
(%)
Source: from General Statistic Office
35. 2.1.2 Overview of sanitary ware market in Vietnam
At present, there are over 10 manufacturer of sanitary ware in Viet Nam, in which there are
four foreign companies (including INAX, TOTO, Caesar, AS). Beside domestic products,
many over sea sanitary wares from many firms of countries as Thailand, Taiwan, USA,
Germany, Italy, and Indonesia… to be imported to Vietnam. Although taking small market
share but imported products partly affected to sales of medium and High-class products of
domestic producers.
Table 2.3: Stationary table of sanitary wares makers in Vietnam
No Manufacturer Capacity Location Formed Year
1 Viglacera 650.000 Hanoi, Viettri 1990
2 Thien thanh 400.000 TP HCM 1991
3 INAX 2.000.000 Hanoi 1996
4 American Standard 400.000 TP HCM 1994
5 Ceasar 500.000 TP HCM 1998
6 TOTO 1.250.000 Hanoi 2002
7. Cosevco 300.000 Da Nang 1993
Source: from the author’s summary
Figure 2.2: Market share of firms in Vietnam in 2008
Source: from the annual report of INAX
36. In above firms then TOTO, American Standard, and Caesar are the biggest competitors of
INAX in Vietnam at the moment.
-TOTO:
TOTO is the biggest sanitary wares manufacturer in Japan with the market share over 60%
and it is one of the most famous sanitary ware brands in the world. TOTO is specializes in
producing sanitary ware and toilet fitting in Japan with 80 years of experience. During over 20
years, TOTO has continuously promoted investment activities to overseas market to expand
market as building factories, opening representative to promote business in tens of countries in
Europe, Asia, America, In Asia only, TOTO built factories in Vietnam, Thailand, China,
Indonesia, Taiwan, Philippine, Korea. In China market, sales of TOTO overcame many
famous brands from Europe and only behide American Standard (the biggest sanitary ware
manufacturer in the world).
In Vietnam market, TOTO product was imported to Vietnam for over 30 years and is known
as No 1 high-class brand in Viet Nam. Almost retailers, rich people, and constructor as well
architect appreciate highly TOTO product and they think TOTO is the most luxurious product
and have the best quality. In 1995, TOTO opened a representative office in Vietnam to carry
out activities of promoting business and researching market to prepare for building factory in
Vietnam.
From June, 2004 TOTO officially opened the factory in Thang Long industrial zone – Hanoi.
The factory is in stage 1 with total capital of 27 millions of USD and design capacity of
500,000 products/ year. This factory specializes in producing sanitary ware to sell in domestic
market and 70% export to the southern of China. In 2005, TOTO invested to build the second
factory with capacity of 750,000 products/year and with capital of 48 millions of USD. As its
plan, if market does not have bad changes it could build one more factory with total capital of
18 millions of USD to produce bathroom fittings as faucet and other accessories to serve
domestic market and export to other countries.
- American Standard (AS):
American Standard is the biggest manufacturer of sanitary ware in the world with many
factories and representative office in many countries. Its brand is known by consumers in the
South Vietnam before 1975. American Standard invested to Vietnam from 1994 and set up a
37. joint venture company in Binh Duong-south Vietnam. Before the factory coming in to
operation 2 year, AS imported products from Thailand and built distribution network to sell in
Vietnam, and quickly conquered the market thanked to good quality, nice design compared
with products of domestic manufacturers. The factory in Binh duong had total capacity of
300,000 products/ years and was raised of capacity up to 500,000products/ year in 2005.
Although owning a famous brand, strong support from mother corporation, and having a
larger product lines from beginning but due to mistakes in building distribution and sales
policies, and weak new product development activity, AS has quickly lost market share to
other firms as Caesar and especially INAX. Meanwhile INAX continuously builds more
factories then AS still stands in one place, although having only 1 factory but many times AS
is in situation of over stock and have to carry out special discount (20-30%) for reducing
stock.
-Caesar:
Caesar is the second biggest manufacturers in Taiwan. It came to Viet Nam from 2001 and its
factor with total capacity of 300,000 products/ year in Binh Duong official launched products
from 2002. Compared with other firms as INAX, TOTO, and American Standard then Caesar
is weaker in brand prestige, experience, technology but it is very flexible in business and price
is very competitive compared with other foreign competitors. One more weak point of Caesar
is from outside objective factors, mostly Vietnam people does not appreciate highly products
made in Taiwan (they think that same as made in China) and if people does not care much of
price then they will choose product made in Japanese or American companies. This is a
disadvantage point for Caesar when build product and price strategy.
Catching consumer’s psychology in Vietnam and understanding weaknesses, Caesar applied
suitable strategies to penetrate the market and gain good result. With a little bit higher price
compared with Viglacera, it has conquered a considerable from Viglacera, Cosevco, Thien
Thanh. Its market share has gone up well in provincial market where people have not high
income and do not require much about brand and quality.
In 2006, Caesar carried out expand product line to raise production capacity to 500,000
product/ year and at the same time is strengthen activity of new product development.
38. 2.2 INTRODUCING INAX’S BACKGROUND
INAX Vietnam Sanitary Ware Co.,Ltd (INAX) was born in 1996 in Hanoi as a Joint Venture
Company between INAX Corporation (INAX Corporation is one of the biggest manufacturers
in Japan with over 80 years experiences in producing Sanitary Wares, Bathroom fittings and
External Tile) and 2 State owned companies. INAX has started operation since the end of
1997 and has been providing high quality sanitary wares and bathroom accessories for market
both in Vietnam and other countries. At the present, INAX has become the leading
manufacturer of sanitary wares in Vietnam with the highest market share and well-known
brand prestige. Manufacturing process is under the quality management system ISO 9001 and
the environment management system ISO 14001.
After one year building the first factory in Gia Lam-Hanoi, VINAX’s product officially came
to market from Dec 1997 with the beginning capacity of 300,000 products/year and 30% of
products were exported to Japan. All technical supervisors were trained in Japan, so they
caught well technology of producing sanitary ware.
Immediately after launching product to the market, the product was accepted by consumer and
seller by good quality and reasonable price.
From the beginning of 1998, INAX always tried its best to created products with better quality
and created new models to meet the market demand and it had a solid stand in the market in
the context of aggressive competition.
In over 10 years of operation, INAX has continuously developed with high growth, some new
factories was built. In the Aug of 2008, INAX completed building the 4th factory and now
capacity of 4 factories of INAX is 2,000,000 products/year, number of staff has increased
from 300 in 1998 to 1200 at the of 2008. This is the best record that other competitors cannot
obtain in a short time like that, and now INAX becomes the biggest manufacturer of sanitary
ware in Viet nam and also in South-East Asia area with market share in Vietnam nearly 40%,
distribution system of over 4000 retailers in whole country. Goal of INAX is contribute more
and more high quality products to the market to improve and up-grade life of Vietnamese and
expand market to many countries in the world. And to carry out the above goal, all activities
of the company obey 4 guidelines:
+Think of People
39. +Think of Quality
+Think of Service
+Keep Challenging
Figure 2.3: Sold Quantity of Water Closet of INAX in the current years
Source: from the annual report of INAX
Figure 2.4: Turnover and growth rate of INAX in years
Source: The annual report of INAX
40. The above data showed the high growth of INAX in many constant years, INAX’s output
increased continuously with rate in range of 112-118% from 2004 to 2008, and this rate could
be higher if news factories was built earlier.
From the years of 2001, when the first factory operated over capacity but could not meet
enough market demand then BOM (Board of Management) decided to build the 2nd factory
and it was complete and came to operration in 2003 and raised total capacity of INAX to 1
million product/years. But only 2 years later, with the strong devolpoment of the economy
then demand for sanitary ware increaes fastly, besides that was many strong marketing
activities lauched by INAX to increase sale and market share, one more time INAX continued
in situation of product shortage and the 3rd factory was decided to build in 2005.
In August, 2006 the 3rd factory offically came in to operation and raise total capacity of INAX
up to 1.5 million products/year. From that time, INAX became the biggest manufacturer of
sanitary wares in Vietnam, beside exploiting the domestic market then INAX began to expand
to new markets in other countries as Mianma, Malaysia, Korea. Although in this time, sale in
the new markets is not high but this is foundation for INAX to develop more in future.
In 2007, in order to meet higher demand in domestic and oversea market, INAX decided to
build the 4th factory in Hung Yen province. In July, 2008 the 4 factories began to operate and
raised total capacity to 2 million products/year. However, the 4th factory did not get luck as the
previous factories, the world financial crisis and economic recession has affected badly to the
world economic situation in general and in Vietnam particular. Demand for sanitary ware has
fall down sharply not only in the export market but also in Vietnam, INAX had to reduce
production capacity 30% and this reduces the profit rate. Many old problems in INAX’
activities was not solved in previous time has become more seriously and affected badly to
business situation of INAX and it requires changes.
2.3 ANALYZING MARKETING MIX OF INAX IN VIETNAM
2.3.1 Segmentation and Targeting Market
Along with economic development, demand for using sanitary wares of people as well
projects has been increased sharply. Not same as before, consumer now not only care of price
but also care of quality, design. Catching this development trend, INAX immediately entered
41. the Vietnam market, the company identified a specific targeted market is provide good quality
products with reasonable price, suitable with people’s income. Main targeted customer of the
company is consumers having average and high income, living in urban areas in all provinces
and cities in whole countries, in which the main markets are big cities as Ha Noi, Ho Chi
Minh, Halong, Da Nang, Hai Phong…
Through researching market, base on factors of price and product quality, INAX segmented
the market in to 4 different segments (low class product, economic product, middle class
product, high class product)
Figure 2.5: Market segment in sanitary ware field
Sources: the author’s design
At the present, INAX has chosen 3 market segments: Economic-class line, Medium-class line
and High-class line
As we can see on the above model, in the present situation of Vietnam, consumption amount
of low class product line is rather large by low income of most people; this product line is sold
well in rural area but will be reduced when people’s income is higher.
The economic class line has rather large volume, it is sold well and trend to increase strongly.
However, this line bears severe competition between many manufacturers and the company
cannot get high profit from this line.
The middle class product line has smaller volume compared with 2 above line. However, in 3
recent years, this line has been consummated well and attracted attention from customer
thanked to higher income with every passing day. Customer now demands products with not
only good quality, reasonable price but also nice design and more advanced function. In future
this will be main market that INAX needs to catch up caused it creates high turnover and keep
for INAX a solid stand in the market.
42. The high class line have high price, the products have nice design and some have special
function as one-piece water closet, products with non-stick glaze or antivirus glaze, shower
toilet. In previous time, the product line was sold badly by high price. However, along with
economic development, a class of rich appears and beside that is development of high class
projects as hotel, resort, and department… have push up this demand much higher than before.
In reality share of this class is still very low (2%) on total.
2.3.2 Marketing Mix Analysis in INAX
2.3.2.1 Product Analysis
A firm has strong competition ability when it can produce products with good quality, good
service, and reasonable price. Therefore, in order to exist and develop, INAX always try to
supply high competitive products.
Product lines of INAX
• Economic product line:
This is the product line with simple features, small design, low price (1-1.5 mil Vnd).
After making market research and positing target market, INAX has launched some
models as C-117VR, C-108VR, C-333VR, and C-306VN. Those products quickly
accepted by customer by small and nice design, they are suitable with space and design
style in Vietnam. INAX is the first manufacturer launches products with function of
high water saving and they are welcomed warmly by customer. Besides that, their
price is very competitive with domestic competitors as well as imported products.
Among product lines, the economic line has the most severe competition level between
3 foreign producers as American Standard, Caesar and INAX. The success of INAX
with this product line is thanked to applying advanced technology suitable with
demand of market, bring to customer economic effect in using and orient consumption
trend for market. This is a strong point of INAX in attracting low and medium income
customer, and through promoting this product line then INAX brand is quickly known
as product with good quality and reasonable price in Vietnam.
At the present, INAX has gained the leading position in economic product line in
Vietnam. However, from 2005, although output of this line still steadily increases but
43. its share in total sale of all classes has trend to reduce and share of higher classes is
increasing with considerable rate.
• Medium class product:
This product line is designed to serve for market segment of consumer with good
income and like products with nice design, good quality, but not so high price. Before
2002, the medium class product line of INAX is not interested much, number products
in this line is so few. Mostly models in the line were cancelled models of INAX-Japan
and brought to Vietnam to produce for saving expenses of R&D (C-3580V, C-775V,
C-60, C-559), in general, the products in medium class line had not nice design and no
special function. The reasons that INAX did not pay much attention on this line were
their price was rather high with income of mostly Vietnamese people at that time and
its market share is so small. However, it was weak point of INAX when competed with
other competitors as TOTO, Cotto or American Standard and this affected badly to
brand prestige when demand of customer for this line go up in future.
Due to rush in to strategies to conquer economic-class, from 1999 to 2003 INAX was
lost large market share of this line to TOTO hand. To be supported strongly in finance
from TOTO-Japan, imported products with reasonable price from TOTO factories in
South-East countries (Thailand, Indonesia) were quickly brought to Vietnam, beside
that TOTO set up larger distribution network in big cities as Hanoi, Hochiminh, and
Danang, and enhanced advertising activities. Only in short time, TOTO quickly
conquer market of medium and high-class lines, TOTO brand became wellknown, and
it created rather solid foundation for born of TOTO factory in Vietnam. This was a real
difficult for INAX in future when want taking back market of this product line.
In order to stop expansion of TOTO, preparing for future trend of market and creating
a higher position in consumer’s eyes, from 2003 INAX had one big change in business
strategy, that was focus more on developing new products in medium and high grade
product line, enhance marketing activities for those lines, and at the same time is
keeping and increasing market share of economic class products especially in
provinces where low class products is still sold well.
44. In stage from 2003 to 2006, INAX launched many new products in medium line as
C702, C711, C504, C522, C801, C828, and some new wash basin models. It was an
important step in competition strategy of INAX to raise brand position in the market.
Figure 2.6: Sold Quantity of WC of INAX from 2004-2008
Source: from annual report of INAX
Figure 2.7: Ratio of product lines of INAX from 2004-2008
Source: from annual report of INAX
In the above data, it shows that sold quantity of medium-class products increased
sharply from 15,271 sets in 2004 to 81,736 sets in 2008, rate of medium-class product
in total quantity increased from 7.5% in 2004 to 21.9% in 2008. Turnover of this line
has gone up 15% per year and occupy 30% in total turnover. The good results proved
that VINAX chosen the right strategy in protecting market share, increasing turnover
and building brand image.
Figure 2.8: Share of product line of INAX in 2008
Source: from annual report of INAX
• High-class product
45. This is the product line having high price, nice and luxury design, some products plus
special functions as anti-bacterium, non-stick glaze, or shower toilet. This line is
produced to serve for consumer with high-income and high-class project as hotels. In
years from 1997 - 2003 INAX did not pay attention much on developing medium and
high-grade product to promote brand image by low demand of those product lines.
This strategy increased high business effect, reduces production cost for INAX but did
not build high image for brand. Market of high class product mostly felt in to TOTO
and American Standard so at that time mostly people thought that INAX was not high-
class brand, its products had good quality, reasonable price but not suitable with high-
grade bathrooms. This created many difficulties for INAX when build new business
strategy and affected competitive ability with other foreign firms as TOTO, Kohler in
promoting high-class product line in future.
However, with strong developing of economy, demand for high-class products went up
quickly, TOTO imported many high-class products to sell in Vietnam to prepare for
birth of its factory. Due to with ought high-class products that enough competition
ability, INAX failed in selling products to many high-class projects as hotels,
apartments or trading centres. In order to cope with the bad situation, from year of
2003, INAX had big changes in marketing strategy and focused more on developing
high-class products.
In the year of 2005, INAX launched to the market 4 high-class models of WC and 2
high-class wash basin with luxury design and many special features as Satis, Lucence
(shower toilets imported from Japan, have special function as shower, drying,
warming, automatic flusing,..) and 2 models made in Vietnam with anti-bacterium and
non-stick glaze. 2 models imported from Japan had very high price (over 30 and 40
millions of VND/set), although their sale was very low but it was a good tool to
advertising for INAX brand. 2 models made by INAX in Vietnam were design
luxurious and applied special technology to create difference with same class products
of other firms. Thanked to the new high-class model, after 1 year turnover of high-
class product increased near 100%, INAX brand was received higher evaluation from
consumer. This was an important success of INAX in affirming brand rank with
TOTO, AS and penetrating more strongly to segment of high-class product.
46. Figure 2.9: Growth rate of product line of INAX in years
Source: INAX report
Continuously in next years, INAX has released many new products and mostly are
medium and high-class products. In the above chart, we saw that sales of high-class model
have gone up sharply as 37% in 2005, 80% in 2006, 56% in 2007, and 25% in 2008.
Look at the above chart, we realize that although product lines have good growth speed in
many years, but from 2008 growth rate of medium and high class product has trended to
go down. The growth rate of medium line reduced from 76% in 2007 to 33% in 2008, high
class line dropped from 56% in 2007 to 25% in 2008. As the author’ market survey, the
reason of this decline did not appear from reduction of market demand but from some
weaknesses of INAX’s products as not attractive design and poor in models.
Comparation of quality and design between INAX and other firms
Table 2.4: Table of comparation between INAX and other firms (Unit: %)
Firm Less Equal Better
American 21.6 40.5 37.9
Standard
Caesar 8.1 45.9 45.9
American 25.7 37.1 37.2
Standard
Medium- Design TOTO 58.2 29.1 19.7
class American 20.7 41.1 38.2
Product Standard
Quality TOTO 57.5 36.3 6.2
American 14.7 52.9 32.4
Standard
47. Caesar 8.8 26.4 64.7
Economic- Design American 5.7 22.8 71.4
class Standard
Product Caesar 11.7 35.5 52.9
Quality American 5.7 31.4
Standard
North Hanoi 156.2 43.12% 362.2
Provinces 206 56.88%
Provinces 96.2 36.76%
INAX 68.3 29.2 2.5
Caesar 27.5 42.5 30
INAX 86.6 13.4 0
Da Nang TOTO 5.3 37.2 57.5
INAX 60.8 30.7 8.5
INAX 40 27.5 32.5
INAX 73.5 22.7 3.8
AS 6.7 13.2 80.1
Caesar 8.7 43.4 47.9
Source: the author’s survey
2.4 SUMMARY OF SUCCESSES AND SHORTAGES IN MARKETING MIX OF
INAX
In the Chapter II, the author carried out analyze deeply marketing environment of INAX and
factors that can affect to business activity of the company. Apart from outside environment
factors then the author carried out to analyze marketing activities of INAX, the activities
include basic factors in Marketing Mix as Product, price, Distribution, and Promotion.
By analyzing the outside and inside marketing environment, the author found out strong points
and shortages in Marketing Mix activities of INAX compared with main competitors.
Hereinafter is summary of strong and weak points in Marketing Mix of INAX in Vietnam.
2.4.1 Successes in Marketing Mix of INAX
-INAX has the biggest production capacity among all firms in Vietnam.
-Product quality of INAX is good with advanced function of high water saving.
48. -R&D activity in INAX to be invested and cared by the company leaders
-INAX has many price levels in each product line.
-Price of INAX products is reasonable and has competitive ability with other firms.
-INAX has the strongest and largest distribution system among sanitary ware firms in
Vietnam.
-Management with distribution system in INAX is rather good compared with other firms.
-Promotion activities as sales promotion, advertising, exhibition, PR are better than other firms
and created good prestige with customers.
2.4.2 Shortages in Marketing Mix of INAX
-Medium and high-class models of are not diversified so it limits choice of customer
especially with high-class projects.
-Price of imported products (sanitary wares and others) is expensive compared with other
firms.
-Although INAX has the strongest distribution system but it starts to expose some defects in
management system and increase sales expenses.
-Competition among retailers when selling INAX is so severe; therefore it makes profit for
retailers lower compared with selling other firms’ product
-Inflexible sales policy.
-Product and brand of INAX is not appreciated highly as TOTO.
-INAX brand is not common in the world except Japan and Vietnam difficult to sell to
projects having design or investment from other countries.
49. CHAPTER III: SOME MARKETING SOLUTIONS TO
INCREASE SALES OF INAX
3.1 BUSINESS OBJECTIVES OF INAX TO 2015
We know that the market in Vietnam is developing fastly and will have big changes in near
future; the changes come from economy integration, fast growth, severe competition between
manufactures, and competition between retailers, shopping habit and consuming trend of end-
user. Therefore, INAX should carry out many activities to improve and renovate its operation
to adapt these fluctuations and raise competition ability, in which, sales and marketing is one
of main activities. In order to improve marketing activities, INAX needs to identify specific
objectives and use it as a meter for effect of marketing activities
• Increase product quality, reduce expenses, develop new product with nice design
50. • Increase sales growth rate to at least 20%/year
• Increase rate of medium class product from 22% to 40%/total sold quantity
• Increase rate of high class product from 4% to 10%/total sold quantity
• Bring INAX become a believed brand by consumer in both normal and high class line,
change think of consumer about image of high class products of INAX
• Build a strong and effective distribution system with lower cost
3.2 SOME MARKETING SOLUTIONS TO INCREASE SALES OF INAX
3.2.1 Improve marketing research activities
In present business environment, market always has many changes, competition between
manufacturers become more and more severe and consumer has higher requirement on
quality, design and function of product. In order to keep the position and continue to develop,
INAX needs to heighten awareness of every people from leaders to normal staff of market,
and customer. Therefore, INAX needs has new ways of market approach to be able to collect
and process information in time and accurately. Analyzing market to find opportunities,
threats, and difficulties to find suitable solution to improve and raise business effect.
In current condition, INAX is not able to carry out research in large scale but the company
should frequently make small research to study customer, consumer’s demands and needs, and
competitors. Afterwith are some main matters that INAX needs to conduct in market research
activity:
• Competitor research
INAX needs to research and analyze competitor about financial ability, production
technology, distribution system, product, price, human resource, and so. Although, in
present time, INAX is taking the leading position among all firms in Vietnam with the
highest market share, however, in the actual activity, INAX still exists some defects and
weak points compared with other firms as TOTO, Kohler,...in segment of high class
product line. Analysis of competitors will help the company to find causes that make other
rivals to be better than INAX and solution to improve INAX’s weaknesses.
• Research on advertising and promoting brand
51. During over 10 years of operation in Vietnam, advertising activities and brand promoting
have been received special considerable from INAX, however those activities has not
created strong impress and some time is wasteful. In oder to heighten effect of
advertisement activities and find suitable advertising methods, INAX should analyze effect
of advertisement methods and study respond of consumer with those activities.
• Research on consumer
In order to keep the leading position in the market and high growth rate then INAX ’s
products needs meet demand of consumer. Research on consumer will help the company
satisfy well consumer’s demand and increase competitive ability with other rivals. So far,
INAX does not implement any deeply and largely research about consumer. Mostly
survey is symple, not frequently (1 time in 2 years), and not received attention from
leaders of the company. Therefore, in next time the company should do this work more
frequently and pays more attenttion on this work by spending human resource and budget
for making survey or buying from professional market research company.
• Implementing short and long term forecast about market
Carrying out short and long term forcast on market is an important work to help INAX to
cope initiatively with changes of market in future. Forecast market situation in the short
term as well in the long term will help INAX make suitable changes in price, product,
promtion, and production technology to reduce bad affects of risks in future and take full
advantage of opportunities.
The short and long term forecast is a complicated work and depend much on qualification
of persons in charge. Information and data need to be collect frequently from sources of
Newspaper, Internet, Television, and forecasts from the State bodies or foreign
organazations. Information includes macro and micro information, collected information
will be basis to make forecast.
3.2.2 Improve management system of marketing activities
In general, in INAX, market research activities is not really good and management with
marketing activities is not professional. The problems depend on awareness of leaders and
each staff, human resource quality, and budget. Improving marketing management is very
52. necessary, it helps the company raise effect of activities and turnover.
At the moment, all works involve to marketing as market survey, advertisement, brand
promoting, public relation are implemented by personnel in Sales Department meanwhile the
main duties are managing sales works, customer, and carry out sales promotion campaign.
This is the main reason why marketing activities in INAX lack of creativeness and do not have
depth. In order to implement well marketing activities, INAX needs to establish a independent
department or small division specialyzing in inplementing and managing marketing activities.
Information collected from marketing section will supply to other sections to make plan for
production, R&D, and business.
In order to perfect Marketing Management, INAX needs to build a management system for
this work to create closed connection between Marketing section and other sections as Sales
Dept, Production section, Accounting Dept, R&D section, Planning section.
3.2.3 Product policy
In the environment of severe competition between manufacturers, INAX specifies that
satisfying demand of customer is the most important factor to develop and obtain business
objectives.
Improving product quality and developing new products take an important role to increase
INAX brand’s prestige, turnover, market - share and competition ability. In order to create
products with good quality, apart from factors of technology, quality of material and other
input then INAX needs to raise awareness of the company and each employee about quality.
INAX should consequently educate staffs about building the company image and the brand
prestige for creating better quality products for customer. INAX needs to have incentive
policies to encourage employee to develop new ideas to improve quality of product, comply
strictly with regulation and quality management system of the company.
Parallel with continuously improving product quality then R&D activity is very important for
INAX’s existence and development. Hereinafter the author will supply some suggestion in
developing new products of INAX and improving present product (See details in Appendix 4)
3.2.3.1 Economic class line
53. This product line takes the largest ratio in total sales quantity in the market, with INAX sold
quantity of this line take the largest ratio among 3 product lines (in 2008: 73.8%). Share of this
product line trends to reduce in Hanoi and Ho Chi Minh but go up in provincial market where
income of people is still low but increasing steadily. This product line decides market share,
growth rate of the company especially in provincial market where cheap products are still sold
well.
As sales reports of INAX, economic products are mostly sold in big sales promotion campaign
in summer and winter season with ratio 83.6% of total sold quantity of this line. This means
that in the time of not having promotion campaign, sale of this line is very low and it affects to
turnover and market share of INAX in months of without the sales promotion campaigns.
At the moment, INAX has 4 economic-class models that are C117, C108, C333, and C306. In
these 4 models, share of C117 is 30.4%, C306 is 31.5%, C108 is 11.7%, and C333 is 0.4%.
Model C108 and C306 are sold 99% in the promotion campaign for consumer and obtain
growth rate yearly by 15-20%; C108 and C333 are sold in normal time. Through analyzing the
sales record of models in 2008 of INAX, we can find that C333 now stays in the last stage –
decline stage of product life cycle and INAX needs to reject this model and design a new
model to change for it to increase sales volume in time of without promotion.
In general, with this product line, INAX needs to keep quantity of products in the line but it
should change bad sales product by another or re-design products in decline stage.
3.2.3.2 Medium and high-class line
Along with the strong development of the economy, income of people is quickly going up and
creates many changes in consumption trend. In urban area, trend of using medium and high
class products are increasing and strongly growing in big cities as Hanoi, Hochi minh, Hai
Phong, and so on. However, sale of these products of INAX does not equal with real demand
of the market, INAX products are not appreciated highly in quality, design as TOTO, and
some imported products from Thailand and Euro. Therefore, INAX needs to have strong
innovation to improve this situation and increase the brand image.
• Medium class product line:
54. As the author’s survey, INAX medium products are evaluated well in design, quality and
competitive price. Strong point of this product line is their competitive price compared
with TOTO and some imported products, with products having same price level then
INAX products have better design. However, in general, medium class products of INAX
have fewer models than others and their design are not really attractive.
In order to increase more sales of this line then INAX should enhance design activity as
creating more new products with better design, reject bad sales products.
• High-class product line:
Regarding to INAX high-class product line, this is the weakest point of INAX compared
with TOTO and European products. By now, models in high-class line of INAX is not
diversified, their design is not really impressed and do not create attraction with
consumer. Therefore, to catch up new trend of market and raise up the brand image then
INAX needs to take more effort in develop new high-class products with better quality
and design.
In general, in order to create strong impress of product and withdraw attention of customer,
INAX needs to create difference between INAX products and other firms’ product. With
economic product line, water saving feature needs to be applied for all WC in this line and
make the feature to become a standard for WC of the product line. With high-class product
line, at the moment the strong point of INAX is usage of electronic technology in products,
INAX needs to use this advantage to create difference and withdraw attention of customer; the
company needs to create breakthrough in designing new products.
3.2.3.4 Diversifying and developing new product
Diversifying products outside sanitary wares
Extra bathroom products include wash basin faucet, shower faucet, bathtub, bathroom
accessories and fitting, and so on. Although they are not main products of INAX but they can
bring to INAX higher turnover. Those products help to increase competition ability of INAX
especially in project accessing the brand image for INAX. At the moment, INAX is weak in
this field, product structure is simple and price is rather high by mostly products are imported
from over sea and their price is rather expensive, some others are made by domestic suppliers
55. but quality is unstable or made by other companies. In order to limit this weakness, INAX
should diversify more the extra products and seek good suppliers.
New Product Development
In INAX, research and develop new product can be implemented in different ways. As the
author, there are 3 ways that INAX can apply for developing new products
• 1st Way: Importing products made in factories of INAX Corporation in other countries.
This way helps INAX to save expenses of R&D, reduce risks in case of bad sales.
However, its weak points are not initiative in business by dependence on outside,
price of product could be high so it is difficult to compete to other firm and limit sales
amount. Therefore, this way is only suitable with special high-class products as
shower toilets, shower seats, and so on. Importing of these special high class products
has not meaning of profit but it helps INAX increase the brand’s image.
• 2nd Way: Hire other manufacturers (in Vietnam or other countries) to produce products
with INAX brand under authorized and standards of INAX. This way is commonly
applied with products that INAX cannot produce or products that can be produced by
INAX over sea factories but their price is high compared price of competitors’
product. Those products include faucet, shower faucet, bathtub, and other fittings.
At the moment, not only INAX but also other rivals as TOTO, American Standard, and
Caesar are using this way. However, the weakness of this way is INAX gets difficulty
in managing product quality and product quality is not stable. To limit this weakness,
on the one hand INAX needs to invest to produce products that not require big
investment capital as bathtubs, on the other hand INAX needs to intensify keeping
close control of suppliers and select carefully suppliers.
• 3rd Way: Self Design and Produce
This way is applied for producing products is INAX’s strong – sanitary porcelain
product as water closet, wash basin. In order to ensure success of this work, INAX
should comply with process as follow:
Figure 3.1: Process of developing new product