INTRODUCTION
Nowadays, marketing is obviously a more and more vital in the successes of every
enterprise. However, not many of the companies in Vietnam have paid adequate attention
to marketing activities, especially when both domestic and global competition is getting
fiercer and fiercer.
Being one of the companies specializing in selling air conditioners in Vietnam, Ferroli
Viet Nam has achieved certain success in this field. Its sales of air conditioners have
increased over the years since its establishment. However, the company sales growth of
air conditioners has been modest in comparison with other competitiors’. The reason for
this partly lies in its marketing. After taking a close look at Ferroli Viet Nam’s
performance, I decide to choose “Marketing strategies of Ferroli Viet Nam” as the topic
for my field study report with a view to examiming Ferroli Viet Nam’s marketing strategy
and making some recommendations to improve it.
Ferroli Viet Nam has a lot of business activities, but because of limited time, this report
focuses only on the company’s marketing activities for one line of its business, that is air
conditioners, on the market in Vietnam.
Apart from the introduction and conclusion, the report is divided into 3 chapters as
follows:
Chapter 1: Theoretical Framework
Chapter 2: The marketing Strategy of Ferroli Viet Nam
Chapter 3: Some Recommendations to Improve Ferroli Viet Nam’s Marketing
Strategy.
Chapter 1:
Theoretical Framework
1.1.
The concept of marketing
1.1.1. The definition of marketing
Today’s central problem facing business is not a shortage of goods but a shortage of
customers. Most of the world’s industries can product far more goods than the world’s
consumers can buy. Overcapacity results from individual competitors projecting a greater
market share growth than is posible. If each company projects a 10 percent growth in its
sales and the total market is growing by only 3 percent, the result is excess capacity. This
in turn leads to hyper competition. Competitors, desperate to attract customers, lower
their prices and add give aways. These strategies ultimately mean lower margins, lower
profits, some failing companies, and more mergers and acquisitions. Marketing is the
answer to how to compete on bases other than price. Because of over capacity, marketing
has become more important than over.
If forced to define marketing, most people, including some business managers, say that
marketing means “selling” or “advertising”. It’s true that these are parts of marketing. But
marketing is much more than selling and advertising. Today, marketing must be
understood not in the old sense of marketing a sale-“telling and selling”-but in the new
sense of satisfying customer needs. Selling occurs only after a product is produced. By
contrast, marketing stsrts long before a company has a product. “Marketing is the
homework that managers undertake to assess needs, measure their extent and intensity
and determine whether a prifitable opportunity exists. Marketing continues throughout the
product’s life, trying to find new customers and keep current customers by improving
product appeal and performance, learning from product sales results and managing repeat
performance”1. So that does the term “marketing” means? Actually, there is no single and
universally agreed definition of marketing. The American Marketing Association defined
marketing “is the process of planning and executing the conception, pricing, promotion
and distribution of ideas, goods, and services to create exchanges that satisfy individual
and organizational goals”2. The writer of the book “The Silk Road to International
Marketing” had another definition as follow: “Marketing is the process by which
decisions are made in a totally interrelated changing business invironment on all the
activitied that facilitate exchange in order that the targeted group of customers is satified
and the defined objectives accomplished ” 3.Though there are many definitions, a certral
part of any dfinitions of marketing is the exchange process – the process of giving
something of value in return for something of value. Or in other words, it’s the process of
tranferring between two or more parties of tangible or intangible items of value(see figure
1.1).
Cash, debt, time, votes, behavior, etc
Marketer
Marketer
Goods,
Goods,Services,
Services,
ideas,
ideas,
People
Peopleand
andPlaces
Places
Customers
Wants and needs.
Health, safety, comfort, transportation, beauty, productivity, etc.
Figure 1.1: the exchange process.
Source: Courtland L. Bovee, Jonh V. Thill , “Marketing”, 2nd edition, p.6.
For marketing to occur, at least four factors are required: (1) two or more parties with
unmet needs, (2) a desire and ability to satisfy them, (3) communication between the
_______________________
1
Amber, T.and Styles, C.(2000), The Silk Road to International Marketing, Harlow: FT Prentice Hall
2
Arch G. Woodside(1990), Outdoor advertising as experiments, Journal of the Academy of Marketing science.
3
Berkkowitz, Kerin, Hartley, Rudelius, (1990), Marketing, 2nd edition, Irwin McGrawHill.
parties, and (4) something to exchange4. Here’s what Berkowitz stated in his book
“Marketing”. As marketing is a kind if exchange, certain conditions must exist before the
exchange can occur.
1.1.2. The goals of marketing.
“Today’s successful companies at all levels have one thing in common; their success is
founded upon a strong customer focus and heavy commitment to marketing” 5. They
motivate everyone in the organization to deliver high quality and superior value for their
customers, leading to high levels of customer satisfaction. These organizations know that
if they take care of their customers, market share and profits will follow. Creating
customer values and satisfaction is at the very heart of modern marketing thinking and
practice. The goal of marketing is to attract new customers by promising superior values,
and to keep current customers by delivering satisfaction. When a company succeeds in
creating more values for customers than its competitors can do, that company is said to
enjoy competitive advantage in an in dustry.
1.2.
Competitive Analysis
It is the increasingly emerging markets that have create favorable conditions for the rapid
development of world trade and investment, which is well – manifested in the
sophisticated growth of a number of global companies. To compete in one or more
foreign markets, companies not only need to broaden relentlessly their sources of
competitive position. One particularly useful techniqui in analyzing a firm’s compatitive
position relative to its competitors is SWOT(strengths. Weaknesses, opportunities, and
threats) analysis aims to isolate the key issues that will be important to the future of the
firm and that will be addressed by subsequent marketing strategy. A SWOT analysis
divides the in formation into two main categories (internal factors and external factors)
_________________________
4
Courtland L. Bovee, Jonh V. Thill, (2000), “Marketing”, 2nd edition
5
Crag, C.S and Douglas, S.P. (2000), International Marketing Research, Chichester: Wiley
and then further into positive aspects (strengths and opportunities) and negative aspects
(weaknesses and threats).
The internal factors could be viewed as strengths or weaknesses, depending upon their
impact on the firm’s positions; i.e., they may represent strength for one firm but a
weaness, in relative terms, for another. They include all of the marketing mix (product,
price, promotion and place strategy) as well as personnel and finance.
The external factors, which again may pose a threat to one firm but create opportunities to
another, include technological changesm legilation, socio-cultural differences, and
change in the market place or competitive position.
1.3.
Global Marketing Strategy
Interms of globalization, worldwide businesses use global marketing when they take the
same or similer approach or content fro one or more elements of the marketing mix, that
is, the same ore similar brand names, advertising. And so on in diffent countries.
Although most of the multinational companies using global marketing mix-product,
pricing, promotion and place – are standardized. Business can make some elements of
marketing more global and others less so. Accordingly, possible adaptations that firms
might apply to their product, promotion, price, and place when they enter through the
foreign markets will be provided in this part.
1.3.1. Product
There are five international product and promotion strategies for a company to extend its
market base into other geographic markets(See table 1.1).
Straight extension means marketing the product in the foreign without any adaptation.
Top manager asks its marketing people to “find customers for the product as it is”. As a
result, it is seen as easiest product marketing strategy and may be the most profitable one
as well. However, the company should first determine whether foreign consumers use
that product or not. Straight extension has been successful with cameras consumer
electronics, and many machine tools. This strategy is tempting because it involves no
additional product development cost, manufacturing changes, or promotional
modification. But it can be costly in the long run if products fail to satify foreign
consumers.
Promotion
Table 1.1: Five international product and promotion strategies.
Product
Do not change Adapt product
product
Do not change Straight extension Product
promotion
adaptation
Adapt promotion Communication
Dual adaptation
adaptation
Develop new
product
Product
invention
Source: Subhash C.Jain (1995), international marketing management
Product adaptation involves changing the product to meet local conditions or prefernces.
There are several levels of adapdation. A company can produce a regional version, a
country version, a city version or even promotion retailer versions of its products.
Although, products are frequently adapted to local tastes, in some instances they must be
adapted to local superstitions or beliefs, too.
Product invention consists of creasing something new the foreign market. It can be
divided into two forms. The first is backward invention, which means reintroducing
earlier products forms that happen to be well adapted to the needs of a given country. And
forward invention is to create a new product to meet a need in another country. 6
1.3.2. Promotion
Companies can either adopt the same promotion strategy they used in home market or
change it to suit for each local market. Although some global companies use a
standardized promotion campaign changes might be needed to comply with local
regulations and references. There are four different levels of adapting promotion stratefy.
_______________________
6
Subhash C.Jain (1995), Intenational Marketing Management
Firstly, companies can use one message everywhere, varying only the language, name,
and colors. That is because colors might be changed to avoid taboos in some countries.
Also, names and slogan may havet to be modified in some countries. Secondly,
companies may use the same them globally but adapt the copy to each local market.
Thirdly, companies can develop a global pool of advertising from which each country
selects the most appropriate one. Finally, some companies allow managers to create a
specific advertising – within guidelines, of course.
Other companies follow a strategy of communication adapting their advertising messages
without any product changing. Although it retains the scale economics on the
manufacturing side the firm sacrifies protencial saving on the communication way .
another strategy is dual adaptation. It is changing both the product and the
communication to face local differences.
1.3.3. Price
Global companies face several problems in setting their international prices. Those
problems must deal with price escalation, tranfer prices, dumping charhes, and black
markets.
Price escalation problem occurs when companies sell their goods abroad.the foreign
prices probably will be higher than their domestic ones because it must add the cost of
transportation, tarriffs, importer margin, wholesaler margin, and retailer margin.
Depending on these added costs, the product may have to sell for two to five times as
much as in another country to generate the same profit. Since cost escalation varies from
country, companies have three price setting approaches in different countries.
Setting a uniform price everywhere: charging the same price everywhere in the would. By
this method, companies would earn quite different price in different countries because of
varying escalation costs. Also, this strategy would result in too high price in poor
countries and not high enough in rich countries.
Setting a market-based price in each country: charging what each country could affort.
But this strategy ignores differnces in the actual costs from country to country. In
addition, it could lead to a situation in which intermediaries in low-price countries reship
to high-price countries. Setting a cost-based price in each country: using a standard
markup of its costs everywhere. But this strategy might price out of the market in
countries where it costs are high.
Another problem arises when a company sets a tranfer price(i.e, the price that it charges
to another unit in the company) for goods that it ships to its foreign subsidiaties. If
company charges too high a price to a subsidiary, it may and up paying higher tariff
duties, even while paying loewer income taxas in that country. If company charges its
subsidiary too little, it can be charged with dumping. Dumping occurs when a company
charges either less tan it costs or less than it charges in its home market, in order to enter
or win a market.7 Various governments are watching for abuses and often force companies
to chargse the arm’s-length price – that is, the price charged by other competitors for the
same or a similar product.
Global companies also face the black-market problem. A black market means the same
product is sold at different price geografically. Dealers in the lower-price country find
ways to sell some of their products in higher-price counrtries, thus earning more. 8 Very
often a company finds some distributors buying nore than they can sell in their own
country and reshipping goods to another country to take advantage if price differences.
Multinationals try to prevent black market by policing the distributors, by raising their
prices to lower-cost distributors, or by altering the product characteristics or sevice
warranties for different countries.
Moreover, one challenge o global pricing in recent years is that countries with
overcapacity, cheap currencies, and the need to export aggressively have pushed prices
down and devalued their currencies. For multinational firms this poses great difficulties.
Sluggish demand and reluctance to pay higher proce make selling in these emerging
markets harder. Instead of lowering prices, and taking a loss, some multinationals have
found more lucratice and creative means to deal with this problem.
_____________________________
7
Keegan, Warren J.(1995), Multinational Marketing Management
8
Kotler, Philip(2000), Marketing Management.
1.3.4. Place(Distribution channels)
Global companies must take a whole-channel view of the problem of distributing products
to final consumers. Figure 1.2 show the three major links between the seller and the
ultimate user. In the first link, seller’s international maketing hearquarters the export
department or international division makes decisions on channels and other maketing-mix
element.9 The second link, channels between nations, moces the products to the boders of
the foreign nations.10 The decisions made in this link include the types on intermediaries
(agents, tradeing companies) that will be used, the type of tranportation (air, sea), and the
financing and risk arrangements. The third link, channels within foreign nations, moves
the products from their foreign entry point to final consumers.11
Channels of distribution within countries vary greatly from nation to nation first, there are
large differences in the numbers and types of intermediaries serving each foreign market.
Long channels of distribution means that the consumer’s price ends up double or triple
the importer’s price. Another difference lies in the size and character of retail units
abroad. Breaking bulk remains an important function of intermediaries and helps
perpetuate the long channels of distribution, which is a major abstacle to the expansion of
large-scale retailing in developoping countries.
1.4.
The marketing mix strategies
Philip Kotler, in his book “Principles of Marketing”; defines marketing mix as “the set of
controllable tactical marketing tools – product, price, place and promotion – that the
firm blends to produce the response it wants in the target market” 12. These ingredients
must be manipulated in a manner which ensures targeted customers are satisfied,
marketing strategies are implemented and desired brand positioning is achieved.
_______________________
9,10,11
12
Charlers Hill(1997), International Business
Philip Kotler, Gery Armstrong, John Saunders, Veronica Wong, principles of Marketing, 2nd edition,p.97
Figure 1.2: whole-channel concept for international marketing.
Seller
Seller’s international
Marketing
headquarters
Channels between
nations
Channel within foreign
nations
Ultimate buyers
Source: Chatles Hill(1997), international Business
Chapter 2
The Marketing Strategy of Ferroli Viet Nam Ltd
2.1.
An InTroduction to Ferroli Viet Nam.
2.1.1 Company development
Ferroli Viet Nam was founded on 12 th August 2002. Ferroli Viet Nam’s headquarters was
located at 193 Hoang Quoc Viet Ha Noi. It has 4 branches and plants nationwide in Ha
Noi, Hai Phong, Bac Giang and Lai Chau, and a network of distributiors around the
country. Since its establishment, Ferroli Viet Nam has operated in various fields: air
conditioners, electronics, medical equipment, technical machinery and equipment, etc.
After two years of operation, Ferroli Viet Nam expanded into other areas such as
information services, supplying and assembling lifts and other equipment. Early 2007,
Ferroli Viet Nam opened a new factory in Hai Phong for producing and selling
construction materials. It also opened a new sales representative office for selling
Viglacera’s products.
2.1.2. Company’s products
Ferroli Viet Nam specializes in selling the following:
Air conditioners of famous companies such as Toshiba(Japanese), Misubishi(Japanese),
Trane(American) and Sanyo(Japanese).
Medical and technical equipment and machinery, mainly imported from the USA, Italy,
Germany and Japan.
Lifts manufactured by Nippon (Japanese), Thysen (German), Volbin (Swiss) and Don
Yang (Korean).
Construction materials and equipment of its own and Viglacera’s, and other electronic
products.
Besides, Ferroli Viet Nam also provide other sevices such as maintenance for medical and
technical equipment, computer installing and programming.
2.1.3. Company’s Organization
Board of Directors
General Director
Deputy General
Director
Quality
Acceptance
Department
2.1.4.
Tectnical
Department
Deputy General
Director
Financial &
Accounting
Department
Trading
Department
Planning
Department
Board of Directors
Ferroli Viet Nam’s Board of Directors includes a Director General and 2 Deputy
Directors General.
Director General: Leading the company’s board of management is the Director General
who is responsible for managing the use of capital, human and other resources.
Two Deputy Directors General: These pepole provide assistance to the Director General.
They would sometimes act on behalf of the Director General in his absence. One of them
is responsible for the trading, planning, financiak and accouting matters and the other is
in charge of technical and research anddevelopment aspects in the company.
2.1.5. The departments
There are five departments, each of which is responsible for a certain part of the
company’s activities.
Trading department: this department helps the Board of Directors with trading activities.
These include organizing both domestic and international bussiness. The trading
department is also responsible for:
Doing marketing researches on products.
Promoting the company’s products through advertisements.
Holding negotiations and getting contracts for the company.
Organizing distribution channel for the company’s products.
Planning department: this department is in charge of marketing plans on importing,
material providing and preceding the contracts. Organizing the sales of products is
another main task of the department.
Financial and Accounting department: this department deals with all financial and
accounting matters. Another main function id to manage the use of capital to the right
purpose, right policies and regulations, and to assist business activities.
Technical department: this department is in charge of technical and technological matters.
The staff of this department also works closely with the factories to do researching and
applying the modern equipment and technical advance to themanufacturing and
processing. This department for the purpose of the company’s business development tales
all the adjustments or improvement to the technology.
Quality assurrance department: this department takes control over the quality of the
products. This is for the purpose of assuring that all the products will meet customers’
requirements.
Apart from the five departments, Ferroli Viet Nam has 4 plants and branches around the
country.
The organizational chart has been effectively applied for Ferroli Viet Nam since its
establishment and has resulted in good performance and operation. There have been good
assessments on the company structure: it shows to be in charge of particular activities and
they would be able to precede their fuction reasonably, which results in avoidance of
overlappong and cumbersome. This helps the company to be able to take the internal and
external advantages; to apply modern and advantanced technology to bring the best fruits
to the whole company’s efforts.
2.1.6. Company trading results
Table 2.1: Ferroli Viet Nam’s trading results in recent.
Total sales
Net profit
20001
5.527
595
2002
7.035
650
2003
10.783
927
2004
21.579
1.250
Source: Ferroli Viet Nam’s finalcial reports.
2.2.
Unit: million VND.
The marketing strategy if Ferroli Viet Nam
2.2.1. SWOT analysis of Ferroli Viet Nam
As mentioned in the previous parts, Ferroli Viet Nam has been trading in a lot of products
such as air conditioners, electronics, medical equipment, technical machinery and
equiment, etc., but with the limited time, this report focuses on the marketing strategy that
Ferroli Viet Nam has used while while dealing in air conditiners only. In this light
internal strengths and weaknesses, as well as external opportunities and threats that
Ferroli Viet Nam faces while trading in air conditioners will be identified for the
understanding of Ferroli Viet Nam’ marketing strategy.
Table 2.2: SWOT analysis of Ferroli Viet Nam
-
Good quality
-
Better market growth
-
Competitive price
-
Good busiess relation with partners
-
Customers’ loyalty
-
Ferroli
culture
-
Limited capital
-
Growing black market
-
Small size and small market share
-
Firce competition
-
Not enough techniqual staff
-
Lack of diversification in product
quality
-
Poor promotion activities.
2.2.2. Strengths
Viet
Nam’s
corporate
The first strength of Ferroli Viet Nam is that its air conditioners are of good quality.
Ferroli Viet Nam’s air cinditioners are imported from of famous companies in the world
such as Toshiba (Japanese), Misubishi (Japanese), Trane (American) and Sanyo
(Japanese). These are famous brands in the world market and Vietnamese consumers
highly appreciate them. Ferroli Viet Nam has never had any complaint about the product
quality.
The secind strength is that Ferroli Viet Nam has been offering very competitive prices for
its air conditioners. Ferroli Viet Nam has been a distributor for these firms since its early
day (Toshiba, Misubishi, Trane and Sanyo), and although there are a lots of other
companies are acting as dictributors for them, Ferroli Viet Nam has a certain advantage:
Ferroli Viet Nam has always kept its prices as compeitive as possible. Its prices are
among the lowest for air conditioners, usally between 7% and 10% lower than its
competitors.
The third strength of Ferroli Viet Nam is the good relation with its business pertners
Ferroli Viet Nam has maintained it coporation with the above mentioned business
suppliers for many years and has always been highly valued by them. This an advantage
for Ferroli Viet Nam. Every years, its technical staff are offered technical traning by the
foreign experts from Ferroli Viet Nam’s suppliers. Many if these staff also have chance to
go abroad to get training. Moreover, when there is a technical problem at Ferroli Viet
Nam, it immediately receives assistance from its partners.
The forth strength of Ferroli Viet Nam is its customers’ loyalty. As mentioned above,
beside good quality, competitive prices, and good business relation with its partners,
Ferroli Viet Nam’s customers’ has contributed a lot of the company’s success. The after
sales services of the Ferroli Viet Nam has been developing and improving rapidly over
the years. This hepls the firm to keep in touch with the old customers. And by words of
mouth, these people have brought new customers for the company.
In addition, Ferroli Viet Nam frequently holds customer meetings in which cutomers
would have chances to express or Ferroli Viet Nam their thinking about the company
products and services, this anables the company to get market research information to
built uup its reputation and customers’ loyalty.
The last strength is the coporate culture of Ferroli Viet Nam. Employees of Ferroli Viet
Nam are infused with an open, value-based coporate cuture. The cornerstones of the
company’s values are:
Staff satisfaction
Respect for the individual
Achievement
Continuous learning
Ferroli Viet Nam’s management seeks to internalize these values through debates and
discussions among teams. Its annual strategy meetings, plays an important role in this
process. The meeting focuses on brainstorming about technological and life-style trends
and discussing strategic priorities of Ferroli Viet Nam in the market.
2.2.3. Weaknesses
Firstly, limited amount of capital is posing a difficulty for Ferroli Viet Nam. The
company’s capital has’t been expanded much since its establishment. Mr Adrea, the
Managing Director of Ferroli Viet Nam, said: “we have an advantage in comparison with
our opponents in terms of customer’s loyalty and agood image and reputation, but now
we have a problem of capital that thinking is weakening our compeititveness”.
The main source for its capital has been contributions of it shareholders and Ferroli Viet
Nam has had a lot of difficulties in finding other sources of capital.
As we all know there are four main sources of investment capital that domestic
companies may access:
Long-term credits proveided by commercial banks on commercial basic:
Government’s investment and Development Support Fund
Soft loans and/or grants from foreign countries
Non-banking capital, including company’s equity and funds mobilized from
the informal banking system including the company’s employees.
With regards to investment capital from banks, Vietnamese banks are shotage of
investment capital, because of the lack of long-term deposits, which in turn due to the
regulated interest rate and low reputation of the banking system. As a consequence, it is
normally hard to get long-term ones. This mismatch of maturity causes many prblems to
Vietnamese companies including Ferroli Viet Nam.
Secondly, Ferroli Viet Nam’size and market share have been small. The shortage of
capitak is main cause of the company’s modest size and market share. Up to now, Sow
has had only 4 branches dealing in conditioners nationwide in Ha Noi, Hai Phong, Bac
Giang and Lai Chau. As a result, its market share is among the lowest in the market for
air conditioners in Vietnam. This is a major weakness for Ferroli Viet Nam, and the
company has to be determined to overcome this if it is to be successful in the future.
Thirdly, another weakness of Ferroli Viet Nam is its lack of the technical staff. Although
the current technical staff of Ferroli Viet Nam are qualified for its technical word, but
they are so few in terms of quantity. The company’s customers has never complained
about Ferroli Viet Nam’s product quality or the quality of the maintenance work that its
staff have done, but has complained about the late reply and maintenance service of the
company. The reason for this is the company’s not enough technical staff. This is also one
factor resulting in the low market share of Ferroli Viet Nam.
Fourthly, lack of diversification in product quality of also a weakness for Ferroli Viet
Nam. Ferroli Viet Nam has always been concentrating in high quality air conditioners
such as imports from Toshiba, Misubishu, Trane an Sanyo companies. These products
have high quality but are too luxurious for a large proportion of Vietnamese customers.
Besides these famous brands, Ferroli Viet Nam should deal in some lower quality ones,
which are also less exprensive such as products from Samsung, LG, and Daewoo etc. by
this way, Ferroli Viet Nam can attract low and middle-income consumers.
Lastly, Ferroli Viet Nam has had rather poor marketing and promotion practices.
Marketing and promotion pratices of Vietnamese enterprises are poorly and insufficiently
performed. Promotion is limited to market research. In addition, the organization of trade
fairs and collecting information with such important tasks as export consultation,
trademark formation and the provision of market information have not effectively been
undertaken.
Additionally, just like many of Ferroli Viet Nam’s competitors, it also has its own web
site in oder to develop their images and advertising their main products. However, most of
those web sites are not attractive enough and the information about their businesses is not
sufficient enough to appeal to customers.
2.2.4. Opportunities
The only opportunity for Ferroli Viet Nam is that can have a better market growth in the
near future. There are two reasons for this. Firstly, the market in Vietnam for air
conditioners is growing rapidly because there are more customers for this item. As
Vietnam people’s income has increased in recent years, more people can affort air
conditioners. This is no longer a luxurious item for a lot of people living in the city.
Secondly, Ferroli Viet Nam is now considering expanding, as it is looking for more
sources of capital. Some employees in Ferroli Viet Nam are thinking of investing in the
company by buying its shares.
2.2.5. Threats
Despite the impressive performance so far, Ferroli Viet Nam is facing a host of
challenges.
The first barrier is black merket pressure. The flourish of black market is posing a threat
foe air conditioner importers, in general, and for Ferroli Viet Nam in particular. Presently,
China is the biggest supplier of black market air conditioners in Vietnam.
The second barrier is that Ferroli Viet Nam is facing an unprecedented level of
competition from both exsting competitors and new entrants. Thanks to the remarkable
growth of Vietnam air conditioners recently, Vietnam id becoming a battlefied for air
conditioner manufactures and importers. There are more and more air conditioner
manufactures in Vietnam. These are either joint-venture companies or 100% foreign
owned ones. The qualities of their products are improves and their prices are much more
competitive than the imported ones that Ferroli Viet Nam is selling. As most people in
Vietnam are low and middle-income earners, the air conditioners of these manufacturers
are better suited to Vietnam consumers than Ferroli Viet Nam.
2.3.
Ferroli Viet Nam-marketing mix
2.3.1. Product
Famous international firms as products, which fundamentally provide its customers
various benefits, make air conditioners of Ferroli Viet Nam. These are core benefit,
generic product, experted product and augment product. The core benefit of Ferroli Viet
Nam is the usage of product-which the target customer finds.
The generic product is the basic characteristic about product, which was described by
color, trademark, and the package of product. Each of the products of Ferroli Viet Nam
has a separate trademark and color.
Besides, Ferroli Viet Nam has always tried to diversify its range of air conditioners.
Initially, Ferroli Viet Nam only sold 2 famous brands that are Toshiba (Japanese),
Misubishi (Japanese). Then recently it has expanded and started to sell 2 other brands:
Trane (American) and Sanyo (Japanese). This is helped to increase the number of
customers of Ferroli Viet Nam.
Morover, the quality of Ferroli Viet Nam’s air conditioners has been maintained over the
years. There has been no complaint from the consumers about their products. The
company’s two-year guarantee priod is also satisfactory to consumers.
2.3.2. Price
The first strategy that Ferroli Viet Nam adopts is low price strategy as most of
Vietnamese air conditioner uers are price-sensitive buyers. The prices of Ferroli Viet
Nam’s conditioners range from 5,000,000 to VND 30,000,000 depending on each model.
This policy of pricing is much more attractive to customers as Ferroli Viet Nam’ prices
normally are among the lowest for air conditioners’.
The second strategy that is applied by Ferroli Viet Nam’s for air conditioner is price
competition. Ferroli Viet Nam authorized dealers indeed offer the retailers who sell
Ferroli Viet Nam’s two-way air conditioners a huge commission compared to those of its
competitors. As a result, the price of Ferroli Viet Nam’s air conditioners sold by these
retailers may be cheaper as some of them may want to satifice thei commission per twoway to get profits from selling a big amount. It is the price competition between Ferroli
Viet Nam retailers that benefits customers.
The last strategy that Ferroli Viet Nam to use is in the fourth of this year it launched a
lever air conditioner at inexpressive price. This kind of product is for low and middleincome people in Vietnam. These are the air conditioners with model FUNIKI SC 09 and
SC 12, which are offered at inexpressive price of between VND 5,000,000 and VND
6,500,000. The company belives that cheaper price of two-way air conditioners and lower
installation and maintenance cost of air conditioner are the two key elements to increase
the sales of Ferroli Viet Nam’s air conditioners in Vietnam.
2.3.3. Place
A good distributing policy hepls business activities safer, increasing the connection in
business, decreasing compatition and marketing the circulation of goods more quickly
and efficiently.
In the domestic market Ferroli Viet Nam has good relations with its partners so they help
Ferroli Viet Nam very much in the distribution. They hepl Ferroli Viet Nam win over
other rivals even in the fiercest competition. Two-way air conditioners retailers are said to
gain much benefit when committing to sell the new FUNIKI set. The company not only
supplies its two ways to these retailers, but also supports them in terms of outlet
decoration, staff training and marketing activities. Besides, each retailer will get a juicy
bonus if an air conditioner is sold. Ferroli Viet Nam offers an intensive support for any
retail that is located in business centers of the cities and provinces across nation. On the
contrary, the company would offer the shop owner much more benefit such as free shopsign and decoretion and a greater commission if the seling volume is reached at a high
level. This always try their best to market as many air conditioners as ways is sold out
much more than competitors.
2.3.4. Promotion
Promotion is the aspect of marketing concerned with increasing sales. Marketing must be
considered on marking production decesion, and promotion must be considered in the
overall marketing process. Promotion attempts to persuade and influence the customer’s
attitude in various ways.
Ferroli Viet Nam has used some ways to advertise its product such as abvertisements on
television, internet, newspaper, magazine…. However, they abvertisements are not very
effient.
Ferroli Viet Nam uses two strategies promotion that is pulling strategy and pushing
strategy to each of target customer as illustrated in the following figures:
Figure 2.3: Pulling strategy
Factory
Wholesaler
Retailer
Customer
Ferroli Viet Nam uses this strategy to make the customers have an idea and believe in
product and buy the products of Ferroli Viet Nam.
Figure 2.4: Pushing strategy
Factory
Wholesaler
Retailer
Customer
Pushing strategy aims at company and branch office dividing the price for advertising and
discounted price. Ferroli Viet Nam uses this strategy because there are many branches in
company.
Chapter 3:
Some Recommendations
to Improve Ferroli Viet Nam’s Marketing Strategy
3.1. Some recommendations to the Government and relevant authorities
In doing business, Ferroli Viet Nam in particular, and other enterprises in general, are
facing not only subjective problems but also objective ones, which need efforts and
solutions from the government.
It is, therefore, recommended that our government should take these following actions so
as to create better business environment for companies like Ferroli Viet Nam.
3.2. Recommendations to Ferroli Viet Nam.
Global marketing strategy is not about standardizing the marketing process on a global
basic. Although every element of the marketing process – product design, product and
brand name, packaging, pricing, advertising strategy and execution, promotion, and
distribution – may be a candidate for standardization, standardization is just one part of a
global marketing strategy. Consequently, striking the right balance between
standardization and localization greatly contribute to Ferroli Viet Nam’s success. Ferroli
Viet Nam has developed a combination of standardization and localization of marketing
programs to match Vietnamese market. But to further promote the sales of air
conditioners by Ferroli Viet Nam, the following are recommended to the company.
3.2.1. Improving the company’s marketing mix
The company needs to build up an good marketing mix for the current marketing strategy,
which bases on the four elements:
Product: improving the quality and divertifying categories of products is the core of
product element in the marketing mix. As discussed above, the market for air conditioners
in Vietnam is becoming more sophiticated with a variety if different demands. The small
portion of the market usually set high requirements for the trend-catching and materialselecting criteria of the imported air conditioners. Others are low and middle-income
earners who require a lower quality. Temporarily, the company should consider
siversifying its product range as the most important element in its strategy.
Price: high price has always been the disadvantage in competition. Although Ferroli Viet
Nam’s prices have been considered reasonable for some brands over the few years,
keeping this low level is a quite difficult task for the company. In a addition, as Ferroli
Viet Nam is thinking of expanding its product range with higher and also lower quality
products, maintaining competitive prices is not easy. This is really a jey to the company’s
success in the future.
Place: a good distributing policy helps business activities safer, increasing the
connection in business, decreasing competiton and making the circulation of goods more
quickly and efficiently. Due to the characteristics of Ferroli Viet Nam’s activities, there
are three ways for the company to make futher improvement to its ditribution
performance. Firstly, improve Ferroli Viet Nam’s distribution users in the shortest period
of time. The second alternative is to open more branches. Ferroli Viet Nam’s current
branches are in big cities, so it advisable for the company to set up new in small towns,
where people’s incomes have been improving and can afford air conditioners. The last
alternative, which should be used in the long term and considered to be the best, that is to
establish a network of representative offices throughout the country.
Promotion: this is one of the weaknesses of Ferroli Viet Nam. For the purpose of sakes
growth, the company should invest more in promotion activities. This is a method not
only to increase sale but also to build the company’s image. The measures to build the
company’s image will be discussed in the next section.
3.2.2. Building the company’s image
It is said that advertising is a business art. Ferroli Viet Nam’s weakness is efficiency of
promotion is not good. The reason is Ferroli Viet Nam has not applied tools of promoting
policy. It might be an advertising on TV, on the radio in rush hours.
The strength of advertising on TV help viewers can see both images and sounds, colors.
Furthermore, the expenses of advertising on TV is broadcasted many timers per dat.
Besides, almost the households belong to every class in sosiety have TV and watch
favorite program on TV in their free time. The effect of this type of advertising is wide.
Today is a era of IT and modern means of communication. Internet has played an
important role in social activities and in the economy. The enterprise can introduce it to
other companies over the word. Signing the contract with Ministry of Thailand motivated
Ferroli Viet Nam’s to export in order to increase foreign curreny, expands global market.
In my opinion, Ferroli Viet Nam needs to build their webside which has global function.
Webside is a modern media and widely used on over the world particularly in developed
and developing countries. Customers can find comfortable and convenient to search
information if the company they are considering on internet. Partners can easily know
about the product, price, quality of product, etc. and they can buy through webside of the
company. Webside not only brings helpful information to the customers but also save
such expenses as transport (traffic, accidents), telephone, telex, etc.
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