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Marketing solution to increase sales of inax


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Marketing solution to increase sales of inax

  1. 1. TABLE OF CONTENTACKNOWLEDGEMENT ........................................................................................................ 3ABBREVIATION ...................................................................................................................... 4LIST OF FIGURES ................................................................................................................... 5LIST OF TABLES ..................................................................................................................... 6EXECUTIVE SUMMARY ....................................................................................................... 7INTRODUCTION ..................................................................................................................... 8CHAPTER I: LITERATURE REVIEW............................................................................... 121.1 Marketing Concept ............................................................................................................ 121.2 Role of Marketing in business .......................................................................................... 131.3 Elements affect to Marketing Mix in firm ...................................................................... 131.3.1 Macro environment .......................................................................................................... 131.3.2 Micro environment ........................................................................................................... 141.4 Analyzing elements in Marketing Mix .......................................................................... 161.4.1 Product .............................................................................................................................. 161.4.2 Price .................................................................................................................................. 221.4.3 Place2 ............................................................................................................................... 251.4.4 Promotion2 ....................................................................................................................... 28CHAPTER 2: MARKETING ANALYSIS OF INAX .......................................................... 332.1 Overview of sanitary ware market in Vietnam3............................................................. 332.1.1 Overview of economy and construction situation in Vietnam ......................................... 332.1.2 Overview of sanitary ware market in Vietnam ................................................................. 352.2 Introducing INAX’s background3 ................................................................................... 382.3 Analyzing Marketing Mix of INAX in Vietnam ............................................................. 412.3.1 Segmentation and Targeting market4 ............................................................................... 412.3.2 Marketing Mix Analysis in INAX4 .................................................................................. 432.4 Summary of successes and shortages in Marketing Mix of INAX ................................ 612.4.1 Successes in Marketing Mix of INAX6 ........................................................................... 61
  2. 2. 2.4.2 Shortages in Marketing Mix of INAX6 ............................................................................ 61CHAPTER 3: MARKETING SOLUTIONS TO INCREASE SALES OF INAX ........... 633.1 Business objectives of INAX to 20156 .............................................................................. 633.2 Some marketing solutions to increase sales of INAX6 ................................................... 633.2.1 Improve marketing research activity ................................................................................ 633.2.2 Improve management system of marketing activity6....................................................... 653.2.3 Product policy ................................................................................................................... 653.2.4 Improving distribution system .......................................................................................... 693.2.5 Improve and enhance promotion activities....................................................................... 733.2.6 Price policy ....................................................................................................................... 76CONCLUSION ........................................................................................................................ 81REFERRENCE........................................................................................................................ 82APPENDIX .............................................................................................................................. 83
  3. 3. ACKNOWLEDGEMENT In order to finish this thesis, I have received a lot of support from many people. Iwould like to take this opportunity to thank all people who helped me complete the studycourse 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 supplyprecious 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 whohelped me to do housework and take care 2 our small sons to save time for me to study andwrite the thesis during 3 years.Hanoi, July 2009Nguyen Chien Thang
  4. 4. ABBREVIATIONAPECAsia-Pacific Economic Co-operation Asia-Pacific Economic Co-operationASAmerican Standard American StandardGDPGross Domestic Product Gross Domestic ProductPEST Political, Economic, Society, TechnologyR&DResearch & Development Research & DevelopmentSWOT Strengness, Weakness, Opportunity, ThreatWTOWorld Trade Organization World Trade Organization
  5. 5. LIST OF FIGURESFigure 1.1: Basis levels of a productFigure 1.2: Product Life-cycleFigure 1.3: Internal factors affect to price-determinationFigure 1.4: Pricing Strategies MatrixFigure 1.5: Moving Lines in distribution channelFigure 1.6: Promotion activities of ProducerFigure 2.1: GDP per Capita in VietnamFigure 2.2: Market share of firms in Vietnam in 2008Figure 2.3: Sold quantity of Water closet of VINAX in yearsFigure 2.4: Turnover and growth rate of VINAX in yearsFigure 2.5: Market segment in Sanitary wares industryFigure 2.6: Sold quantity of water closet of VINAX from 2004-2008Figure 2.7: Ratio of product lines of VINAX from 2004-2008Figure 2.8: Share of product line of VINAX in 2008Figure 2.9: Growth rate of product lines of VINAX in yearsFigure 2.10: Map of distribution system of INAX in VietnamFigure 2.11: Market share of INAX product in HanoiFigure 2.12: Marketing process of INAX in project fieldFigure 2.13: Domestic turnover of VINAX in yearsFigure 3.1: Process of developing new productFigure 3.2: Chart of Distribution channel of VINAXFigure 3.3: Combination of Push and Pull StrategyFigure 3.4: Elements affect to Price Strategy
  6. 6. LIST OF TABLESTable 1.1: Advantages and Dis-advantages of Advertising methodsTable 2.1: Percentage of households having house by types of house in 2006Table 2.2: Population structure by age group in Vietnam in time of 1/4/2007Table 2.3: Stationary table of sanitary wares makers in VietnamTable 2.4: Table of comparison between INAX and other firmsTable 2.5: Turnover of regions of INAX in 2008Table 2.6: Evaluation of retailers about distribution system of firmsTable 2.7: Table of evaluating promotion quality of firms
  7. 7. EXECUTIVE SUMMARYThanked to innovation and opening policy, in over 10 years up to now, the economy inVietnam has been developed strongly and from a country with concentrated economicsbecame 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 theirlimited resources.Same as many other manufacture fields, the industry of producing construction material inVietnam has strongly developed. Together with increasing of income, living standard leveland high economic growth then demand for construction material in general and sanitary warein particular has increased in both quantitative and qualitative. Therefore, applying suitablemarketing solutions to increase sales and attract attention of customer become a veryimportant factor with companies’ existence and developing.The purpose of this research is specify marketing solutions in Marketing Mix including fromtheory to practical perspectives to be able to help firm to increase sales, prestige of brand infield of sanitary wares in VietnamThe thesis’s focus has been done to research marketing solutions to increase sales and mainlyconcentrated in 4 factors in Marketing Mix as Price, Product, Place, and Promotion. Besidethat, the research specifies and analyzes factors that could be affecting to marketing activitiesof firm. Through survey and analyze marketing activities of INAX Vietnam Sanitary WareCompany (INAX), the author supplied marketing solutions to increase turnover for INAX andfound factors that affect to effect of marketing activities in INAX. However, by limitation oftime and budget, the surveys were only restricted in 6 North and Central provinces, theresearch could not mention all factors that can affect business activities of the company asfactors 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. 8. INTRODUCTION1. RationaleVietnam is a large population country with over 85 millions of people and has high youngpopulation rate. During some current years, with strong economic growth of Viet Nam,income of people increases rapidly, demand for housing increases sharply, many urbanprojects in big cities have been born and this results in demand of construction material ingeneral and sanitary ware in particular increases with high speed (10-15% per year), this is agood chance for producers of construction materials. However, beside the above favourableconditions, competitive situation becomes more severe with appearance of many producers indomestic and imported goods especially when Vietnam officially joining AFTA and WTO.These push producers must to continuously improve quality, launch nice designs withadvanced function, increase advertising activity to keep market share and raising turnover.INAX is the biggest manufacturer in Vietnam, its products was officially launched to marketfrom 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. Duringover 10 years in Vietnam, with suitable business policies, INAX has kept the leading positionin the market with the highest market share, output, and turnover in Vietnam; products andbrand of INAX have high prestige with customer.However, in recent 2 years, some problems have been raised as the growth rate has sloweddown; 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 ofbrand, and overcome affects of economic recession. Being a sales manager in the North andCentral provinces, the author has responsibility to help INAX to find solutions to increaseturnover and that is the reason why the author decided to choose subject “Marketingsolutions to increase sales of INAX Vietnam Sanitary Ware Co., Ltd (INAX)” for thethesis.
  9. 9. 2. Research ObjectiveIn 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 VINAX3. Scope of researchINAX Corporation is one of the biggest manufacturers in Japan; it specializes in producingsanitary wares, external and internal tile. INAX Corporation invested to Vietnam both sanitaryware and external tile, products made in Vietnam is sold in domestic market and partly exportto some countries as Japan, Myanmar, Cambodia, Malaysia.However, by limitation of time and budget, the survey does not cover all factors that can affectto improving business of the company as production scale, developing and applying newtechnology, human resource... The survey and interview only have been conducted in somebig cities in the North and Central area, so the result is not really exact. Besides that, base onreal situation of INAX, limitation of time and budget, so the research mainly focus on aspectsas 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. 10. company. The outside information will be collected and analyzed to help find opportunitiesand threats in business environment of the company. After analyzing inside and outsideimpacts, choosing marketing solution is formed and through it the author proposes somemarketing solution that suitable with ability and objectives of INAX.-Primary Data:Questionnaires: the author used questionnaires to collect information about respond andevaluation of customer, projector, and architect to the company as well other rivals. Thisinformation includes evaluation and comparison between INAX and other rivals in price,quality, service, promotion, distribution system, design of product, profit. Because oflimitation of time and budget, the surveys only was conducted in 3 cities Hanoi, Da Nang, HaiPhong and 3 provinces Quang Ninh, Thai Nguyen, and Thanh Hoa. Quantity of interview was130, including 100 retailers who selling sanitary ware, 25 architects and 5 constructioncontractors. Information collected in Questionnaires will help the author to find out strong andweak points in Marketing Mix of INAX compared with other rivals, and through it the authorcan supply marketing solutions for INAX to limit weaknesses and increase sales.In-depth interview: after conducting questionnaires method, the author carried out in-depthinterview with some subjects as 3 distributors, 10 sales staffs, INAX’s General Director andSales Director to collect more deep information for analyzing. • Data analysis method:To do this research, mix (Quantitative and Qualitative) method was applied. Collectedinformation was used to analyzing actual situation of the company, internal and externalenvironment to find marketing solutions to improve the company’s marketing activities andincrease sales for INAX.5. Structure of thesisApart from the Acknowledgements, Abbreviations, List of figures, List of tables, ExecutiveSummary and Introduction, the main body of the thesis is divided in to 3 chapters.Chapter 1: Literature ReviewThis chapter will summarized relevant theories used to analyze marketing environment of firmand marketing solutions to improve firm’s business activities.
  11. 11. Chapter 2: Marketing analysis of INAXThis chapter will analyze actual marketing activities; find weaknesses and strong points inmarketing 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 andprestige of INAX brand in Vietnam.
  12. 12. CHAPTER 1: LITERATURE REVIEW1.1 MARKETING CONCEPTMarketing happens in everywhere, it touches us very day. However Marketing is a field that isunderstood very different. Some people think that marketing is advertising, is selling, orresearching market because those activities get in touch with people frequently. This thinkonly describes a small part but is not all marketing activities. Marketing today emphasizesactivities to create “satisfaction of customer’s demand”.Marketing covers many fields from social activity to economic, political activities thereforethere 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 willreceive things that they need through creating and exchanging products and values with otherpeople.-Market: in point of view of Marketing, market is group of present customer or futurecustomer (potential customer) having same needs about product and willing to exchange tosatisfy 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 demandthrough exchange.Marketing is process that through it, individual and organization can satisfy their demands andwants by means of creation and exchange products with others.As Philip Kotler, Marketing is a social process that in this process individuals or group canreceive things they want through creating and exchange freely valuable products, services withother person.As The American Marketing Association: Marketing is a process of planning and managingactivities of pricing, promoting and distributing ideas, goods, services to aim to createtransaction to satisfy target of individual and organization.
  13. 13. -Marketing Mix: It is a combination of 4 marketing elements used in sale of a particularproduct or combination of the four controllable variables of Product, Price, Place, andPromotion that are essential to define and fulfil a target market.1.2 ROLE OF MARKETING IN BUSINESSAlong with process of social and economic development, enterprises today appreciate role ofmarketing in business. If in previous time, marketing is seen having equal role withenterprise’s elements as producing, financial, and personnel activity then now its role is morehighly appreciated; marketing becomes new philosophy in business. Role of marketingincludes: +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 FIRMMarketing activities of firms in market are so much different due to different combination of 4P factors in each different circumstance. The combination of those 4 factors will be dependedon macro environment and micro environment of firm1.3.1 Macro environmentMacro environment includes Political and legal environment, Economic environment, Socialand culture environment, Technology and science environment. Political and legal environment
  14. 14. Analyzing political and legal factors will help firm catch policies, legal system that influenceto business of firm as tax policies, trade tariffs, policy of currency, export-import, economic,and social development policy of the state. Economic environmentEconomic environment include elements that affect to purchasing power and consumptionstructure, 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 aseconomy developing will make income of people higher, and through it purchasing power willgo up. Social and culture environmentIn each society, people group or area (province, country) have different life style, custom andculture, those elements will influence to firm’s activities. Besides that, Social and cultureenvironment also includes cultural standards of people, it directly affects to consumer’sbehaviour and of course to marketing strategy of firm.Social factors still include population element, population structure (structure in ages, ingeography,…) and population element will decide scale and structure of market. Technology and science environmentDevelopment of science and technology changes life of people. It helps to create newproducts, raise functions, and quality of products. Therefore, in order to increase competitionability, 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 willaffect to marketing strategy of firm.1.3.2 Micro environment1.3.2.1 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. 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 plan1.3.2.2 External micro environment CustomersIt is described as market of outputs. The purchasing ability of customers creates pressure onfirm and also affects to buyer’s purchasing decisions and price changes. Customers arepersons buying product of firm but at same time buying product of competitors, therefore, firmmust to know what consumer needs to serve them better.Customers are diversified; they could be individual, organization, domestic or foreigncustomer. In order to serve well each kind of customer, firm have to make research deeplyeach kind. Besides that, consuming taste of customer always change, therefore firm have toforecast factors that leading to those changes to serve customer timely. SuppliersThey supply the firm and also competitors input of production or business process asmachines, materials, fuel, labour, finance. Choosing a supplier will affect to production cost,product quality,…Therefore, the firm should select suppliers having prestige and somedifferent suppliers to avoid risk when only depending on only supplier. The firm should makegood relation with suppliers to be able support each other in difficult time. CompetitorsFirms do business in an environment with different competitors. Competitors could becompetitors in other business filed or in same field. Competitive environment will affect
  16. 16. directly to plan marketing activities of firm, affect to decision of production, pricing, salespolicies, and promotion methods.1.4 ANALYZING ELEMENTS IN MARKETING MIX1.4.1 ProductThe first element in Marketing Mix is the product. The product is goods or services suppliedto satisfy the needs and wants of consumers. Figure 1.1: Basic levels of a product Sources: Marketingteacher.comThere are 3 basic levels of a product: core, actual and augmented. The core product is the mostbasic level; consumers buy it by benefits that it brings to them. For example, consumers do notbuy a car, consumers buy benefits that cars offer as safety, comfortable. The next level of theproduct 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 theaugmented product, it consists of all elements that surround the core and the actual product, itprovides buyer with additional services and benefits, for example as warranties or technicalassistance services.In order to choose a right product strategy and match with other strategies in Marketing Mixthen firm need to identify product belong to what kind. We can classify product as some ways:
  17. 17. -Period of product using: Products can be classified by how long they can be used. Productsthat can be used repeatedly in long time as motorbike, TV are called durable goods. Productsthat are used in short time as food, soap, drinks are called nondurable goods or FMCG (fastmoving 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 servicethat cannot be touched such as computer guarantee service.-Purpose of using: +Consuming goods: used for private purpose +Product used as input for manufacture. Product lines and Product MixIn business activity, firm should identify product line and scale of product mix that the firmwants to satisfy market.Product lines is products have same in one aspect example as same customer, same level price,or way of usingProduct Mix is number of types of product and together with it is number of models. Scope ofProduct Mix includes Breadth – number of product lines in a range Depth – number of product items in a product lineDepending on different business strategy and objectives that firm has different decision ofproduct strategy as:
  18. 18. - Decision on number of product lines: base on analysis about market situation, firm can cleargroups of product or product types that not bring the firm profit and can expand to newbusiness field or new product type.-Decision on products in a product line: Firm can narrow a product line when some productsin the line do not bring firm profit or those products out of fashion or bad selling. On thecontrary, to give customer more choices and satisfy demand of different customer groups thenthe firm needs to extend product line or reject backward products, upgrade existed productsand launch new products. Product brandProduct brand is an extremely component in product strategy, almost firms do business withspecific brand, strategy of positioning, and marketing activities will focus on brand. Brand isvalued 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 selectdifferent 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 brand1.4.1.3 Quality and Design-Product quality:Before producing a new product, firm has to choose a quality level and other function to meetrequires of brand positioning and market targeting. Quality level that firm selects to produceproduct will depend on objectives and strategy orientation of firm. Firm can choose 1 qualitylevel or many different quality levels for 1 product to satisfy different groups of customer.-Product design:
  19. 19. One important matter in product strategy is design. One product with good quality is notenough to attract customer but it needs to have nice design, this is a battle that many firms useto create distinguish between their product and other firm’s1.4.1.4 Product Life-CycleAfter launching a new product to market, firms all like it has a long life and want to get muchprofit to compensate for expenses that they spent in process of research and develop theproduct as well expenses to penetrate market in beginning stage. Therefore, in businessprocess firm need to have suitable adjustments in marketing strategy to match with changes ofmarket as competition, market demand, and to do it well then firm supervise tightly salessituation, market changes to make suitable decision. Firm should know that each product hasown life-cycle. In general, life cycle of a product includes 4 stages: Introduction stage, Growthstage, Maturity stage, Decline stage. Figure 1.2: Product Life-Cycle Sources: 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 doesnot give up habit of using present products. Therefore, in this stage, firm should enhance
  20. 20. marketing activities to attract customers and increase their awareness to the product, enforcedistribution system.Firms can apply “Storm marketing” strategy with noisy advertising and promotion campaignsto the product quickly come to the market, or apply careful marketing strategy to step by stepenter market.-Growth strategy: In this stage, sales quantity gone up much by buyers accepted the newproduct, however competitive level also higher. In the stage, production cost considerablereduce so firm can get more profit and can calculate again selling price. In order to reachhighest 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 verylow by saturated demand of customer. Besides that, in the stage, the firm faces up severecompetiveness and profit rate trend to reduce. To maintain competitive ability and raiseturnover, 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 onmany factors, the stage can happen gradually or quickly, and this requires the firm mustfrequently collect market information; analyze changes of turnover, profit, market share to seestages in the product life-cycle to avoid loss.
  21. 21. To avoid negative effect of the decline stage, the firm should always research and develop newproducts to change for old products.In reality, length of stages and structure of life-cycle depend on many factors: product’sparticularity, consumer’s behaviour, technology development, competitive situation, firm’smarketing ability. New product developmentNew 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 themarket.There are 2 ways to have new product: the first is buying from other (buy product and domarketing with own brand, or buy design,..), the second is developing new product throughR&D activities of the firm. However, new product development is a rather risk action, manynew products get failure by wrong estimation of market demand, bad design, lack of marketinformation, 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’sdemand, 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. 22. 1.4.2 PriceThe second element in Marketing Mix is price. Price is the amount of money that consumersare 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 importantfactor affect to purchasing decision of buyer, market share of firm and ability to conquermarket.In order to pricing a product, companies must consider both internal and external factors of thecompanies. The internal factors include organization’s overall business objectives, marketingmix strategy, production cost. Price objectives usually take one of 4 forms: profitability,volume (output or turnover), competition ability, and prestige. Factors affect to pricingTo 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. 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. 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. Pricing methodThere 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: Pricing: Use a high price when the product or service of firm is uniqueness. Thisway is used where the firm has high competitive advantage and often applied for luxuryproduct, high quality, and leading brand.-Penetration Pricing: The price charges for products and services which the firm wants to gainmarket share and the firm will increase price again when achieve the target
  25. 25. -Economy Pricing: The firm charges a best price for buyers through keeping at a minimumcost 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 competitorsin to the market, and the price will surely fall due to more suppliers.1.4.3 PlacePlace is understand as channel, distribution, or intermediary. It brings goods/service frommanufacturer/service supplier to user or consumer. Distribution channel is an important part inmarketing mix strategy. Distribution activity involve to many people, many different sections;therefore a suitable distribution strategy in each specific circumstance will support for othermarketing strategies in Marketing Mix and concurrently increase competitive ability and brandimage 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 interdependenteach other. Members in the channel include manufacturer (supplier), wholesaler, retailer, andconsumer. Moving lines in distribution channel. Figure 1.5: Moving Lines in distribution channel.Product Line Manufacturer Transporter Wholesaler Retailer End-userProperty Line Manufacturer Wholesaler Retailer End-user
  26. 26. Negotiation Line Manufacturer Wholesaler Retailer End-userInformation Line Manufacturer Transporter Wholesaler Retailer End-userPromotion 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 ownedrights.-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 asadvertising, promotion program, and public relation. Decision of Distribution channel structure: Length of a distribution channel dependson many factors product characteristics, geographic, and marketing objectives of firm. In orderto decide structure of distribution channel, the firm has to decide matter as follows:
  27. 27. -Does the firm use direct or indirect channels (the firm sells directly to consumer or viawholesaler?). Direct distribution channel is suitable with products having high value, hugeshape, 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? Types of distribution channel-Direct supply/Direct saleDirect selling is selling directly to customer. It could be retail, door to door; mail order andecommerce all directly sell to customers. The advantage of this method is the firm can directlycontact with customer and can catch quickly changes of market, changes in demand ofcustomer about the product (price, quality, function, design...). This channel is suitable withproducts having high value, big size and difficult in transportation, complicated technology,easy to be ruined, or customers concentrate in one area.-Direct to retailerIf the firm does not want to spent expenses of opening retail outlet to sell to customers then thefirm can sell to customers through existing retailers in market. This method will save a lot ofmoney for the firm comparing with opening many retail outlets to cover large area. Thisdistribution channel is used when manufacturer and retailers have enough ability to serve wellcustomers. However, this method has weak points are difficult administration andmanufacturer 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 asit have to many small accounts at the same time.-Wholesaler, merchant, or agent supplier
  28. 28. Selling to wholesalers or agent suppliers will reduce pressure of distribution. In addition, thefirm can reduce the level of storage space to hold stock. The firm can get more income andmore stable business when selling to big wholesales or agent suppliers. However, with thismethod, the firm can lose firm name, for example, the agent suppliers may request that thefirm’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 differentdistribution methods to maximize advantages of each intermediary. Distribution channel design-Select intermediaries: the firm may select existing distribution systems to set up the firm owndistribution 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 situationthen 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 differentpolicies and decide number of intermediaries in each channel. Number of intermediaries has tobe carefully considered to limit conflicts and negative competitiveness between channelmembers.1.4.4 PromotionPromotion is the fourth element in Marketing Mix. Promotion is a communication process thattakes place between a firm and its publics. Publics could be individuals and organizations thatconcern 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, increaseturnover, seek new customer. Promotion help firm introducing new product to targetedcustomer, build firm image in public and support for distribution activity.Various promotional tools are used to communicate messages about products, ideas, orservices from firms to their customers. The promotional tools include Advertising, Personalselling, Sales promotion, Public relation, Trade fairs and Exhibition, and Sponsorship. Inreality, firms often apply combination of the tools to increase effective of promotion and thiscombination is called Promotions Mix.
  29. 29. Promotion tools (Promotion Mix) Personal Selling:Personal selling is an effective way to manage personal customer relationship. On behalf ofthe firm, sales person will deal with customer. Success of this activity depend much on thestaff’s skills, therefore, the staff has to have good knowledge of product, customer, market andcompetitor, and good communication skill. However, using sales staffs in this case is ratherexpensive, the firm will lose a large expense for one product sold, so this method will suitablewith goods that return firm high margin. Sales Promotion:Sales promotions are short term incentives used to encourage consumers to purchase a productor service. Purpose of sales promotion is encourage customers to buy a new product or apresent product, increase loyalty with a product, keep market share, increase sale, increaseeffect 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 withother alternative methods. Public Relation (PR):PR is activities to establish and maintain good relationship, or understanding between firm andits publics by using media means to supply information of the firm to publics. PR is performedthrough activities as press releases, product publicity, official communications, lobbying, andorganizing events. In order to carry out PR activities effectively, the firm should combinemany activities and carry out in long term and make carefully plan. Advertising:Advertising is un-individual communication activity to bring information of product/brandname 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. 30. -Advocacy advertising is an organizational approach designed to support socially responsibleactivities, 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 itsrepetitive nature.-Cooperative advertising occurs when wholesalers and retailers work with producers toproduce 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-advantageNewspaper Flexible, large market coverage, high Short time existence, less attention of viewer, believable limited issue quantityMagazine High selection of viewer and geography, High expenses, limited issue quantity, long creating high attention, high advertising time repetition. quality, longer existence compared to newspaperRadio Large market coverage, low cost, flexible in Low attraction level, short time, limitation in local areas waves coverageTelevision 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 campaignOutdoor Ad Strong image with large size, colour, image, Information limitation, unable to focus on low competitiveness, long existence, low specific viewer. costDirect mail High viewer selection level, flexible, no Difficult update of information, less attraction competition, individual focusAdvertising in High speed and large information Limitation of internet users, low attractioninternet transmitting, high interaction ability level. High viewer selection level, low cost, measurable Sources: the author’s summary Trade fairs and Exhibitions
  31. 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. SponsorshipSponsorship is an activity that a firm pays to be associated with a particular event, and throughit the firm can popularize its image and brand name.In general, in order to promotion activity to be effective, the firm should blend promotiontools together to achieve better result. Promotion StrategyPromotion 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 choosesuitable strategies in particular circumstances. There are 2 promotion strategies: Pull Strategyand Push Strategy. Figure 1.6: Promotion activities of ProducerPUSH STRATEGY Promotion of producer Promotion of distributor Producer Intermediaries ConsumerPULL STRATEGY Demand Demand Demand Producer Intermediaries Consumer Sources: the author’s design
  32. 32. Push strategy: using sales promotion for intermediaries or sales staffs to increase salesamount. In the push strategy, promotion activities focus on intermediaries to inform, persuadethem and the intermediaries will inform to consumers. Trade promotion for intermediaries andpersonal selling is common and effective tools in this strategy.Pull strategy: Withdraw consumer’s attention to the product by advertising activities to createdemand of product of consumer. Consumer will require buying the product fromintermediaries 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 forconsumer.Summary of the Chapter 1: In general, through content of theory is presented in the Chapter1, the author provided a general theoretical foundation in analyzing external and internalfactors of one firm that can affect to the firm’s activity at present and in future. Analyzingthose 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 suppliessome specific marketing solutions in Marketing Mix as Product, Price, Promotion, Place(Distribution) that can help firm to increase sales and market share.
  33. 33. CHAPTER II: MARKETING ANALYSIS OF INAX2.1 OVERVIEW OF SANITARY WARE MARKET IN VIETNAM2.1.1 Overview of the economy and construction situation in VietnamVietnam is the country of great potential economy. With a stable politics, crowded populationand 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 issuedas Enterprises Law, Common Investment Law… have created more chances for businesscomponents.With policies of open-door and integration, Vietnam took part more in economic cooperationorganization 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 manyopportunities for expanding export market, but it has created threats with domestic productionsection by lower tariff barrierAfter over 20 years of innovation, Vietnam has obtained big achievements in social andeconomic development. Average growth-rate of GDP always achieves high levels of over7.5% 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. 34. In recent 5 years, construction field has strong development, many big real estate projects asurban zones, hotels, resorts, trading centres have been invested to serve for demand of peopleaccommodation, tourism, office, and trading. The strong development of the economy hascreated higher income for people and together with this is higher demand of housing; this is agood chance for manufacturers of construction materials. The below figures show demand forbuilding 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 OfficeVietnam is a crowded population country with over 86 million of people and increasing rateover 1%/year. In which population rate in urban is around 25% and this rate will increasemore in many next years thanked to high speed of urbanization and shifting labour from ruralarea to urban area.One of advantage factors helps Vietnam to develop the economy and attract foreigninvestment is high rate of young population, at the moment rate of population having agefewer than 30 is 52.5% and in labour age is 54% in population. With the high rate of youngpopulation, demand for housing is very high and still continue to increase more in future andthis 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. 35. 2.1.2 Overview of sanitary ware market in VietnamAt present, there are over 10 manufacturer of sanitary ware in Viet Nam, in which there arefour 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 marketshare but imported products partly affected to sales of medium and High-class products ofdomestic producers. Table 2.3: Stationary table of sanitary wares makers in VietnamNo Manufacturer Capacity Location Formed Year1 Viglacera 650.000 Hanoi, Viettri 19902 Thien thanh 400.000 TP HCM 19913 INAX 2.000.000 Hanoi 19964 American Standard 400.000 TP HCM 19945 Ceasar 500.000 TP HCM 19986 TOTO 1.250.000 Hanoi 20027. 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. 36. In above firms then TOTO, American Standard, and Caesar are the biggest competitors ofINAX 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 inproducing sanitary ware and toilet fitting in Japan with 80 years of experience. During over 20years, TOTO has continuously promoted investment activities to overseas market to expandmarket as building factories, opening representative to promote business in tens of countries inEurope, Asia, America, In Asia only, TOTO built factories in Vietnam, Thailand, China,Indonesia, Taiwan, Philippine, Korea. In China market, sales of TOTO overcame manyfamous brands from Europe and only behide American Standard (the biggest sanitary waremanufacturer in the world).In Vietnam market, TOTO product was imported to Vietnam for over 30 years and is knownas No 1 high-class brand in Viet Nam. Almost retailers, rich people, and constructor as wellarchitect appreciate highly TOTO product and they think TOTO is the most luxurious productand have the best quality. In 1995, TOTO opened a representative office in Vietnam to carryout activities of promoting business and researching market to prepare for building factory inVietnam.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 of500,000 products/ year. This factory specializes in producing sanitary ware to sell in domesticmarket and 70% export to the southern of China. In 2005, TOTO invested to build the secondfactory with capacity of 750,000 products/year and with capital of 48 millions of USD. As itsplan, if market does not have bad changes it could build one more factory with total capital of18 millions of USD to produce bathroom fittings as faucet and other accessories to servedomestic market and export to other countries.- American Standard (AS):American Standard is the biggest manufacturer of sanitary ware in the world with manyfactories and representative office in many countries. Its brand is known by consumers in theSouth Vietnam before 1975. American Standard invested to Vietnam from 1994 and set up a
  37. 37. joint venture company in Binh Duong-south Vietnam. Before the factory coming in tooperation 2 year, AS imported products from Thailand and built distribution network to sell inVietnam, and quickly conquered the market thanked to good quality, nice design comparedwith products of domestic manufacturers. The factory in Binh duong had total capacity of300,000 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 alarger product lines from beginning but due to mistakes in building distribution and salespolicies, and weak new product development activity, AS has quickly lost market share toother firms as Caesar and especially INAX. Meanwhile INAX continuously builds morefactories then AS still stands in one place, although having only 1 factory but many times ASis in situation of over stock and have to carry out special discount (20-30%) for reducingstock.-Caesar:Caesar is the second biggest manufacturers in Taiwan. It came to Viet Nam from 2001 and itsfactor with total capacity of 300,000 products/ year in Binh Duong official launched productsfrom 2002. Compared with other firms as INAX, TOTO, and American Standard then Caesaris weaker in brand prestige, experience, technology but it is very flexible in business and priceis very competitive compared with other foreign competitors. One more weak point of Caesaris from outside objective factors, mostly Vietnam people does not appreciate highly productsmade in Taiwan (they think that same as made in China) and if people does not care much ofprice then they will choose product made in Japanese or American companies. This is adisadvantage point for Caesar when build product and price strategy.Catching consumer’s psychology in Vietnam and understanding weaknesses, Caesar appliedsuitable strategies to penetrate the market and gain good result. With a little bit higher pricecompared with Viglacera, it has conquered a considerable from Viglacera, Cosevco, ThienThanh. Its market share has gone up well in provincial market where people have not highincome and do not require much about brand and quality.In 2006, Caesar carried out expand product line to raise production capacity to 500,000product/ year and at the same time is strengthen activity of new product development.
  38. 38. 2.2 INTRODUCING INAX’S BACKGROUNDINAX Vietnam Sanitary Ware Co.,Ltd (INAX) was born in 1996 in Hanoi as a Joint VentureCompany between INAX Corporation (INAX Corporation is one of the biggest manufacturersin Japan with over 80 years experiences in producing Sanitary Wares, Bathroom fittings andExternal Tile) and 2 State owned companies. INAX has started operation since the end of1997 and has been providing high quality sanitary wares and bathroom accessories for marketboth in Vietnam and other countries. At the present, INAX has become the leadingmanufacturer of sanitary wares in Vietnam with the highest market share and well-knownbrand prestige. Manufacturing process is under the quality management system ISO 9001 andthe environment management system ISO 14001.After one year building the first factory in Gia Lam-Hanoi, VINAX’s product officially cameto market from Dec 1997 with the beginning capacity of 300,000 products/year and 30% ofproducts were exported to Japan. All technical supervisors were trained in Japan, so theycaught well technology of producing sanitary ware.Immediately after launching product to the market, the product was accepted by consumer andseller by good quality and reasonable price.From the beginning of 1998, INAX always tried its best to created products with better qualityand created new models to meet the market demand and it had a solid stand in the market inthe context of aggressive competition.In over 10 years of operation, INAX has continuously developed with high growth, some newfactories was built. In the Aug of 2008, INAX completed building the 4th factory and nowcapacity of 4 factories of INAX is 2,000,000 products/year, number of staff has increasedfrom 300 in 1998 to 1200 at the of 2008. This is the best record that other competitors cannotobtain in a short time like that, and now INAX becomes the biggest manufacturer of sanitaryware 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 moreand more high quality products to the market to improve and up-grade life of Vietnamese andexpand market to many countries in the world. And to carry out the above goal, all activitiesof the company obey 4 guidelines: +Think of People
  39. 39. +Think of Quality +Think of Service +Keep ChallengingFigure 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. 40. The above data showed the high growth of INAX in many constant years, INAX’s outputincreased continuously with rate in range of 112-118% from 2004 to 2008, and this rate couldbe higher if news factories was built earlier.From the years of 2001, when the first factory operated over capacity but could not meetenough market demand then BOM (Board of Management) decided to build the 2nd factoryand it was complete and came to operration in 2003 and raised total capacity of INAX to 1million product/years. But only 2 years later, with the strong devolpoment of the economythen demand for sanitary ware increaes fastly, besides that was many strong marketingactivities lauched by INAX to increase sale and market share, one more time INAX continuedin 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 INAXup to 1.5 million products/year. From that time, INAX became the biggest manufacturer ofsanitary wares in Vietnam, beside exploiting the domestic market then INAX began to expandto new markets in other countries as Mianma, Malaysia, Korea. Although in this time, sale inthe 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 tobuild the 4th factory in Hung Yen province. In July, 2008 the 4 factories began to operate andraised total capacity to 2 million products/year. However, the 4th factory did not get luck as theprevious factories, the world financial crisis and economic recession has affected badly to theworld economic situation in general and in Vietnam particular. Demand for sanitary ware hasfall down sharply not only in the export market but also in Vietnam, INAX had to reduceproduction 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 tobusiness situation of INAX and it requires changes.2.3 ANALYZING MARKETING MIX OF INAX IN VIETNAM2.3.1 Segmentation and Targeting MarketAlong with economic development, demand for using sanitary wares of people as wellprojects has been increased sharply. Not same as before, consumer now not only care of pricebut also care of quality, design. Catching this development trend, INAX immediately entered
  41. 41. the Vietnam market, the company identified a specific targeted market is provide good qualityproducts with reasonable price, suitable with people’s income. Main targeted customer of thecompany is consumers having average and high income, living in urban areas in all provincesand cities in whole countries, in which the main markets are big cities as Ha Noi, Ho ChiMinh, Halong, Da Nang, Hai Phong…Through researching market, base on factors of price and product quality, INAX segmentedthe market in to 4 different segments (low class product, economic product, middle classproduct, high class product) Figure 2.5: Market segment in sanitary ware field Sources: the author’s designAt the present, INAX has chosen 3 market segments: Economic-class line, Medium-class lineand High-class lineAs we can see on the above model, in the present situation of Vietnam, consumption amountof low class product line is rather large by low income of most people; this product line is soldwell 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 companycannot get high profit from this line.The middle class product line has smaller volume compared with 2 above line. However, in 3recent years, this line has been consummated well and attracted attention from customerthanked to higher income with every passing day. Customer now demands products with notonly good quality, reasonable price but also nice design and more advanced function. In futurethis will be main market that INAX needs to catch up caused it creates high turnover and keepfor INAX a solid stand in the market.
  42. 42. The high class line have high price, the products have nice design and some have specialfunction as one-piece water closet, products with non-stick glaze or antivirus glaze, showertoilet. In previous time, the product line was sold badly by high price. However, along witheconomic development, a class of rich appears and beside that is development of high classprojects 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 INAX2.3.2.1 Product AnalysisA firm has strong competition ability when it can produce products with good quality, goodservice, and reasonable price. Therefore, in order to exist and develop, INAX always try tosupply 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. 43. its share in total sale of all classes has trend to reduce and share of higher classes isincreasing with considerable rate.• Medium class product:This product line is designed to serve for market segment of consumer with goodincome and like products with nice design, good quality, but not so high price. Before2002, the medium class product line of INAX is not interested much, number productsin this line is so few. Mostly models in the line were cancelled models of INAX-Japanand 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 nospecial function. The reasons that INAX did not pay much attention on this line weretheir price was rather high with income of mostly Vietnamese people at that time andits market share is so small. However, it was weak point of INAX when competed withother competitors as TOTO, Cotto or American Standard and this affected badly tobrand 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 waslost large market share of this line to TOTO hand. To be supported strongly in financefrom TOTO-Japan, imported products with reasonable price from TOTO factories inSouth-East countries (Thailand, Indonesia) were quickly brought to Vietnam, besidethat TOTO set up larger distribution network in big cities as Hanoi, Hochiminh, andDanang, and enhanced advertising activities. Only in short time, TOTO quicklyconquer market of medium and high-class lines, TOTO brand became wellknown, andit created rather solid foundation for born of TOTO factory in Vietnam. This was a realdifficult 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 creatinga higher position in consumer’s eyes, from 2003 INAX had one big change in businessstrategy, that was focus more on developing new products in medium and high gradeproduct line, enhance marketing activities for those lines, and at the same time iskeeping and increasing market share of economic class products especially inprovinces where low class products is still sold well.
  44. 44. In stage from 2003 to 2006, INAX launched many new products in medium line asC702, C711, C504, C522, C801, C828, and some new wash basin models. It was animportant 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 INAXIn the above data, it shows that sold quantity of medium-class products increasedsharply from 15,271 sets in 2004 to 81,736 sets in 2008, rate of medium-class productin total quantity increased from 7.5% in 2004 to 21.9% in 2008. Turnover of this linehas gone up 15% per year and occupy 30% in total turnover. The good results provedthat VINAX chosen the right strategy in protecting market share, increasing turnoverand building brand image. Figure 2.8: Share of product line of INAX in 2008 Source: from annual report of INAX• High-class product
  45. 45. This is the product line having high price, nice and luxury design, some products plusspecial functions as anti-bacterium, non-stick glaze, or shower toilet. This line isproduced to serve for consumer with high-income and high-class project as hotels. Inyears from 1997 - 2003 INAX did not pay attention much on developing medium andhigh-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 didnot build high image for brand. Market of high class product mostly felt in to TOTOand 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 businessstrategy and affected competitive ability with other foreign firms as TOTO, Kohler inpromoting high-class product line in future.However, with strong developing of economy, demand for high-class products went upquickly, TOTO imported many high-class products to sell in Vietnam to prepare forbirth of its factory. Due to with ought high-class products that enough competitionability, 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 of2003, INAX had big changes in marketing strategy and focused more on developinghigh-class products.In the year of 2005, INAX launched to the market 4 high-class models of WC and 2high-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 andnon-stick glaze. 2 models imported from Japan had very high price (over 30 and 40millions of VND/set), although their sale was very low but it was a good tool toadvertising for INAX brand. 2 models made by INAX in Vietnam were designluxurious and applied special technology to create difference with same class productsof 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 fromconsumer. This was an important success of INAX in affirming brand rank withTOTO, AS and penetrating more strongly to segment of high-class product.
  46. 46. Figure 2.9: Growth rate of product line of INAX in years Source: INAX reportContinuously in next years, INAX has released many new products and mostly aremedium and high-class products. In the above chart, we saw that sales of high-class modelhave 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 inmany years, but from 2008 growth rate of medium and high class product has trended togo down. The growth rate of medium line reduced from 76% in 2007 to 33% in 2008, highclass line dropped from 56% in 2007 to 25% in 2008. As the author’ market survey, thereason of this decline did not appear from reduction of market demand but from someweaknesses 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. 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 survey2.4 SUMMARY OF SUCCESSES AND SHORTAGES IN MARKETING MIX OF INAXIn the Chapter II, the author carried out analyze deeply marketing environment of INAX andfactors that can affect to business activity of the company. Apart from outside environmentfactors then the author carried out to analyze marketing activities of INAX, the activitiesinclude basic factors in Marketing Mix as Product, price, Distribution, and Promotion.By analyzing the outside and inside marketing environment, the author found out strong pointsand 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. 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 inVietnam.-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 firmsand 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 customerespecially with high-class projects.-Price of imported products (sanitary wares and others) is expensive compared with otherfirms.-Although INAX has the strongest distribution system but it starts to expose some defects inmanagement system and increase sales expenses.-Competition among retailers when selling INAX is so severe; therefore it makes profit forretailers 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 toprojects having design or investment from other countries.
  49. 49. CHAPTER III: SOME MARKETING SOLUTIONS TO INCREASE SALES OF INAX3.1 BUSINESS OBJECTIVES OF INAX TO 2015We know that the market in Vietnam is developing fastly and will have big changes in nearfuture; the changes come from economy integration, fast growth, severe competition betweenmanufactures, and competition between retailers, shopping habit and consuming trend of end-user. Therefore, INAX should carry out many activities to improve and renovate its operationto adapt these fluctuations and raise competition ability, in which, sales and marketing is oneof main activities. In order to improve marketing activities, INAX needs to identify specificobjectives and use it as a meter for effect of marketing activities • Increase product quality, reduce expenses, develop new product with nice design
  50. 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 cost3.2 SOME MARKETING SOLUTIONS TO INCREASE SALES OF INAX3.2.1 Improve marketing research activitiesIn present business environment, market always has many changes, competition betweenmanufacturers become more and more severe and consumer has higher requirement onquality, 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 collectand 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 companyshould frequently make small research to study customer, consumer’s demands and needs, andcompetitors. Afterwith are some main matters that INAX needs to conduct in market researchactivity: • 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, 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. 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 activitiesIn general, in INAX, market research activities is not really good and management withmarketing activities is not professional. The problems depend on awareness of leaders andeach staff, human resource quality, and budget. Improving marketing management is very
  52. 52. necessary, it helps the company raise effect of activities and turnover.At the moment, all works involve to marketing as market survey, advertisement, brandpromoting, public relation are implemented by personnel in Sales Department meanwhile themain 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 havedepth. In order to implement well marketing activities, INAX needs to establish a independentdepartment or small division specialyzing in inplementing and managing marketing activities.Information collected from marketing section will supply to other sections to make plan forproduction, R&D, and business.In order to perfect Marketing Management, INAX needs to build a management system forthis work to create closed connection between Marketing section and other sections as SalesDept, Production section, Accounting Dept, R&D section, Planning section.3.2.3 Product policyIn the environment of severe competition between manufacturers, INAX specifies thatsatisfying demand of customer is the most important factor to develop and obtain businessobjectives.Improving product quality and developing new products take an important role to increaseINAX brand’s prestige, turnover, market - share and competition ability. In order to createproducts with good quality, apart from factors of technology, quality of material and otherinput 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 brandprestige for creating better quality products for customer. INAX needs to have incentivepolicies to encourage employee to develop new ideas to improve quality of product, complystrictly with regulation and quality management system of the company.Parallel with continuously improving product quality then R&D activity is very important forINAX’s existence and development. Hereinafter the author will supply some suggestion indeveloping new products of INAX and improving present product (See details in Appendix 4) Economic class line
  53. 53. This product line takes the largest ratio in total sales quantity in the market, with INAX soldquantity of this line take the largest ratio among 3 product lines (in 2008: 73.8%). Share of thisproduct line trends to reduce in Hanoi and Ho Chi Minh but go up in provincial market whereincome 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 soldwell.As sales reports of INAX, economic products are mostly sold in big sales promotion campaignin summer and winter season with ratio 83.6% of total sold quantity of this line. This meansthat in the time of not having promotion campaign, sale of this line is very low and it affects toturnover 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. Inthese 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 obtaingrowth rate yearly by 15-20%; C108 and C333 are sold in normal time. Through analyzing thesales 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 newmodel 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 itshould change bad sales product by another or re-design products in decline stage. Medium and high-class lineAlong with the strong development of the economy, income of people is quickly going up andcreates many changes in consumption trend. In urban area, trend of using medium and highclass products are increasing and strongly growing in big cities as Hanoi, Hochi minh, HaiPhong, and so on. However, sale of these products of INAX does not equal with real demandof the market, INAX products are not appreciated highly in quality, design as TOTO, andsome imported products from Thailand and Euro. Therefore, INAX needs to have stronginnovation to improve this situation and increase the brand image. • Medium class product line:
  54. 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. Witheconomic product line, water saving feature needs to be applied for all WC in this line andmake the feature to become a standard for WC of the product line. With high-class productline, 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; thecompany needs to create breakthrough in designing new products. Diversifying and developing new product Diversifying products outside sanitary waresExtra bathroom products include wash basin faucet, shower faucet, bathtub, bathroomaccessories and fitting, and so on. Although they are not main products of INAX but they canbring to INAX higher turnover. Those products help to increase competition ability of INAXespecially in project accessing the brand image for INAX. At the moment, INAX is weak inthis field, product structure is simple and price is rather high by mostly products are importedfrom over sea and their price is rather expensive, some others are made by domestic suppliers