A study on marketing mix strategy for canons powershot digital cameras

HCMC UNIVERSITY

.f

DEPARTMENT

OF FOREIGN

LANGUAGES

OF INTERNATIONAL

AND INFORMATION

TECHNOLOGY

BUSINESS ADMINISTRATION

)

GRADUATION PAPER

TOPIC:

A STUDY ON MARKETING MIX
STRATEGY FOR CANON'S
POWERSHOT DIGITAL CAMERAS

Student's

name:

LE

VAN

Class

: KD 02 -06

Advisor

: Dr.

JULY 2006

VO NGQC NHU OANH


ACKNOWLEDGEMENT
First of all, I would like to express my gratitude to all the respectful professors and
teachers at Huflit university, especially to Dean TrU'ong Quang Tu~n, and all
those in International Business Administration Department, who have given me
usefulbackground and interesting lectures throughout my four years at university .

•

Also, I wish to offer my thank to Ms. Vo NgQc Nhu' Oanh, DBA my advisor, for
her heartful guidance and corrections so that I can complete the research. Without
her, I would never know whether I could finish the study at its best.

I gratefully acknowledge all the advice, recommendation and help of Mr. Hit K~
Tu4n - Deputy Director General of Vietnam Trade Promotion Agency.

Many 5,~ecial thanks to Mr.

Mike Asao - Director of Canon Vietnam

Representative Office and all the staff there for taking their preciou3 time to

J

provide me with useful infonnation and suggestion. They have offered me a
valuable opportunity to get real to Canon's marketing activities.

Last but not least, lowe many thanks to my friends and family for their support.
They have always been by my side until the last moment the research is done .

.... .

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ADVISOR'S ASSESSMENT.

1.

The requirement and purpose of the graduation
paper

•

Basing on analyzing marketing mix strategy for Canon's PowerShot digital
cameras, the paper reveals suggestions for improving the efficiency of Canon's
distribution system and marketing mix.

2.

Implication and scientific meaning of the paper
The paper obtains a remarkable meaning because this is a practical issue,

which is required with the affirmation about reality and science. In addition to
achievements the corporation has had, the Vietnamese market is also emerging hot
problems which need researching to solve.

3.

Research method
The paper uses the secondary research. The writer masters data collection,

data analysis, interpretation and comparison, which represent her specific ability in
scientific research. However, if the writer makes questionnaires for customers in
the marketing research of Canon Corporation, the findings are more persuasive.

4.

References
The paper contains English books and Internet. Especially, data which the

writer gathered from sources of Canon's cOl1ijJetitorssuch as Sony, Panasonic,
Fujifilm are highly valuable in analyzing the topic.

I

-'
ii


,"

5.

The setting and content
As a student

majoring

in International

Business

Administration,

Le

Van

selected a completely suitable topic because of its necessity in my opinion.
About the content of the graduation paper, I would like to have the examiners
assess it. Here, as an advisor, I only evaluate the writer's sense, independence,

•

and

scientific research ability .
During the process tC1make the research on the topic,
that she did her best efforts, was painful in collecting
could

analyze

research.

and synthesize,

Moreover,

and especially

Le Van

always showed

data from many sources,

was independent

and active

in

she always paid a strict attention to ensuring regulations

of

time.
The final result depends on the examiners'
oral presentation
writer deserves

in front of the commentary

comments as well as the writer's

board. Nevertheless,

to get high grades if I comment

capacity and effort .

•
HCMC, July 5, 2006

Dr., VO NGQC NHl1 OANH

iii

the writer's

I think that the
working

manner,


..

ABSTRACT

•

Here comes the age of digital cameras and electronic devices. People take
pictures every moment with every feeling. When they are playing happily with
•

friends, they take pictures. When they are exciting, they take pictures. When they
are embarrassing, they also take pictures. Many of the pictures were taken with
digital cameras. Digital cameras have become a very good choice for keeping the

precious moments lasting forever. Meantime, easy to use, a compact style, image
retouching are other reasons that contributes to the flashy growth of such kind of
product in Vietnam market.

Not a late minute, cameras manufacturers take actions to promote their
products and try to gain bigger market share. PowerShot, CyberShot, CoolPix,
FinePix ... are various series introduced by different producers. Therefore, a study
..J

on marketing mix strategy is crucial to businesses who wants to know how such
kind of strategy can be implemented effectively and can bring back profits for the
company.

Collecting and analyzing data was the main method used to carry out the
research.

Fundamental

knowledge

was withdrawn

from textbook.

Internal

marketing department data was core information used in assessing the marketing
mix strategy. To have a better subjective view, some interviews with dealers,
salespersons of digital cameras were made as well. Opinions from articles or
forums were taken into consideration also.

iv


The research paper was divided into three main parts. The first one presented
marketing and its role. Main focus was placed on marketing mix and its "Four Ps":
product, price, place, and promotion. The second part introduced Canon, product
ranges, its establishment and production in Vietnam. Especially, the marketing
mix strategy for PowerShot cameras was studied in this part. Then, some product
trends, Canon's competitors, PowerShot Swot analysis was mentioned. Finally, the
research was finished with suggestions.

-

,

v


LIST OF FIGURES
Figure 1: The four P's of the Marketing Mix

7

Figure 2: Three Levels of Product.. ..~

8

Figure 3: Five steps in pricing process

12

Figure 4: Conventional

marketing channel

and Vertical marketing system

IS

Figure 5: Major Decisions in Advertising

17

Figure 6: Advertising

18

mix

Figure 7: Steps in developing the sales promotion program

20

Figure 8: Sales volume for PowerShot cameras from 2003 - 2005

51

Figure 9: Digital cameras turnover
as compared with other products

51

Figure 10: Market share of digital cameras in 2005

66

vi


LIST OF TABLES
Table 1: List price for PowerShot models available in Vietnam
Table 2: List of Canon's distributors

.41
43

. Table 3: List of Canon's dealers

.43-44

Table 4: PowerShot models introduced at launching seminar

49

Table 5: Vietnam's social development facts

55

vii

CONTENTS
A CKN 0 WLEDGEMENT
ADVISOR'S

i

ASSESSMENT

ii

AB STRA CT

iv

LIST OF FIGURES

vi

Figure 1: The four P's of the Marketing Mix

7

Figure 2: Three Levels ofProduct..

8

Figure 3: Five steps in pricing process

12

Figure 4: Conventional marketing channel
and Vertical marketing system

15

Figure 5: Major Decisions in Advertising

17

Figure 6: Advertising mix

18

Figure 7: Steps in developing the sales promotion program

20

Figure 8: Sales volume for PowerShot cameras from 2003 - 2005

51

Figure 9: Digital cameras turnover
as compared with other products

51

Figure 10: Market share of digital cameras in 2005

66

LIST OF TABLES

vii

Table 1: List price for PowerS hot models available in Vietnam

41

Table 2: List of Canon's distributors

43

Table 3: List of Canon's dealers

.43-44

viii


Table 4: PowerShot models introduced at launching seminar

49

Table 5: Vietnam's

55

social development

facts

CONTE NT S

vi ii

INTR 0 D U CTI ON

1

1. Research paper objectives

1

2. Scope of the research

2

3. Research method

3

4. Contents of research

3

Chapter 1: A snapshot at marketing mix

1.1. Definition

•

4

of marketing

4

1.2. The need for marketing

5

1.2.1. Spatial separation

5

1.2.2. Temporal separation

5

1.2.3. Perceptual separation

5

1.204. Ownership separation

6

1.2.5. Separation in value

:

1.3. Marketing n1ix

6
6

1.3.1. Target market

7

1.3.2. Product

8

1.3.3. Price

II

1.3 A. Place

14

1.3.5. Pron10tion

17

ix

I
,

Chapter 2: Zooming in on Canon and PowerShot

2.1. About Canon

23

23

2.1.1. Corporate profile

23

2.1.2. Canon's history

24

2.1.3. Canon's philosophy

27

2. 1.4. Canon in Vietnam

28

2.1.5. Canon's products in Vietnam

30

2.1. Marketing mix strategies for PowerShot digital cameras

35

2.2.1. Product strategy

36

2.2.2. Price strategy

40

2.2.3. Place strategy

42

2.2.4. Promotion strategy

45

Chapter 3: Analysis and suggestions to promote sales

3.1. Trends of the product...

53

53

3.1.1. Economic and social factors
affecting the market growth rate of digital cameras

53

3. I .2. Specific trends of digital cameras

56

3.2. Canon's competitors

58

3.2.1. Sony

58

3.2.2. Panasonic

61

3.2.3. Fuj ifilm

62

3.2.4. Nikon

64

3.2.5. Olyn1pus

65

3.3. PowerShot's

SWOT analysis

67

3.3.1. Strengths

-

67

x


3.3.2. Weaknesses

:.. 68

3.3.3. Opportunities

69

3.3.4. Threats

70

3.4. Suggestions

71

3.4.1. Suggestions to promotion

71

3.4.2. Suggestions to place

73

3.4.3. Suggestions to product...

73

3.4.4. Suggestions to price

75

3.4.5. Suggestions to govemment..

75

C ON CL USI ON

76

RE FE REN CE S

77

xi


A study on marketing mix strategy for Canon's PowerShot digital cameras

INTRODUCTION
1.

Research Paper Objectives
On October 7, 1975, the first digital picture was taken in a laboratory room at

Kodak Company in Rochester, New York, the USA. The digital camera was
invented even before the introduction of Compact Disc, personal computer and
Internet. At that time, the digital camera weight 8.5 pounds. Thirty years later, this
product has become one of the most favourite devices with many features and
functions, and met the very demand of customers with photographical interest. In
2004, 74 million digital cameras were sold all over the world. About 14 billion of
digital pictures were taken in 2005. (Source: Informatics and Life newspaper publication 1(85),2006, page 24)

Mobile phones, mp3 players and digital cameras are among outstanding
devices of modem life in Vietnam. Digital cameras have become increasingly
popular in this dynamic society, especially to young people including me. They,
and I like to take digital cameras along with us on occasions like holidays, picnics,
and parties in order to catch and record the precious moments in life .... High
image quality, ease of use, large storage capacity and reasonable price are among
features that make digital cameras attract the Vietnamese's interest.

Identifying the potential of this market in Vietnam, many large electronic

producers like Sony, Fujifilm, Nikon, Olympus, Sanyo ... have taken necessary
actions. Sanyo decided to invest US$13 million to build a digital camera plant in
the South of Vietnam. Earlier in 2003, Sony also poured US$12 million to
establish such a plant in Ho Chi Minh City.

(Source: www.thanhnien.com).

Another major player in this market is Canon. Eddie Udgawar, Product Manager

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A study on marl,eting mix strategy for Canon's PowerShot digital cameras

of Canon Singapore announced launching new products at the press conference on
November 3'd 2005, "There will be 1.000 million pictures in the world in 2008.
That forecast is the main reason for Canon to launch 29 new products today."
Those are the signs revealing a fact that Vietnam's digital camera market is
heating up. That is how digital camera becomes a promising topic!

Now, what should Canon do in order to be the champion in this "marathon"?
Canon's leading products are PowerShot digital cameras, which have appealed the
interest of consumers since they were launched for its excel1ent functions and
modem shapes. With an advertising clip involving the action of Maria Sharapova
- one of the hottest Russian tennis player and, other significant marketing efforts,
Canon' experiences a substantial increase in its sales volume in this product range.
However, PowerShot still faces many difficulties due to fierce competition and a
very price - sensitive market. PowerShot cameras also meet challenges from
CoolPix digital cameras of Nikon, Fujifilm FinePix models, Cyber-shot DSC-Nl
and DSC-M2 of Sony, etc. Thus, PowerShot gets into my attention and becomes

my topic. The purpose of this study is to evaluate the effectiveness of.marketing
activities that Canon has implemented for its PowerShot on the base of on
information and data collected, and then some possible suggestions would be
offered to promote sales.

2.

Scope of the research
The scope of research would be focused in marketing because Canon

Vietnam is not in charge of production of digital cameras. Its main functions are to
provide direct marketing, to service and to train SUPPOlt targeting at users, to
manage the network of authorized distributors and to service dealers.

..
2 ..


A study on marketing mix strategy for Canon's PowerShot digital cameras

3.

Research method
To do the research, first of all, I get fundamental knowledge of marketing

from textbooks. And then, I collect data, information, figures, statistics ... for
analysis and evaluation. I also refer to articles on newspapers, professional
journals,

and

ideas

from

on-the-net

forums

about

digital

cameras

and

manufacturers to have a subjective view on this topic.

4. Contents of research
The research paper is divided into three chapters. Chapter one outlines basic
knowledge concerning the marketing mix and the "Four Ps formula". Chapter two
introduces Canon Vietnam, its operation, products and marketing mix strategy for
PowerShot. The last chapter deals with SWOT and competitors' analysis and some
suggestions.

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A study on marketing mix strategy for Canon's PowerShot digital cameras

CHAPTER 1: A SNAPSHOT AT
MARKETING MIX
1.1. Definition of Marketing
In 1985, the American Marketing Association approved this definition of
marketing: "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 objectives".
However, a new definition was adopted by the American Marketing
Association

Board

of Directors

in August,

2004:

"Marketing

is an

organizational function and a set of processes for creating, communicating, and
delivering value to customers and for managing customer relationships in ways
that benefit the organization and its stakeholders."
This new concept places the customers into the center of marketing. All of
the marketing efforts are for satisfYing customer's needs through which the
company

achieves

its goals. The definition replaced

"ideas, goods, and

services" of the old concept with only one word "value". The core reason for a

..

customer to buy a product or service is the value it provides to them. That is
why the first step of marketing is to create value to customers, which can be
found out by market research, and to deliver the best value including after-sale
services

also.

The

last

point

concerning

the

up-dated

definition

is

"stakeholders". Not only organization's benefits but also stakeholder's interest
are the marketing final goals. The stakeholders are all the groups of people who
have a stake in or interest in an organization that consists of suppliers,
employees, and the local community.

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A study on marketing mix strategy for Canon's PowcrShot digital cameras

1.2. The need for marketing
Marketing is a critical determinant of the success or the failure of a
business. Thomas T. Kinnear, Kenneth L. Bernhardt,and

Kathleen A. Krentler,

in their famous book Principle of Marketing, identified five special separations
between the producer and the consumer that results in the existence of a need
for marketing.

1.2.1. Spatial separation
Not many producers could locate their business places right next door to
their consumers. There is often a geographic distance between the two parties.
For example, a T-shili that is made in Beijing, China, could be purchased at a
department store in Ho Chi Minh City, Vietnam. This transaction involves
many efforts of the marketing functions. Marketing and its two storage and
transportation tools are crucial in making the product available to the customers

and to where there are demands.

1.2.2. Temporal separation
This kind of separation makes the time for manufacturing, transporting,
and shelf-sitting of a product be a concern. Normally, a substantial amount of
time is needed to produce a product, and the product is not always bought right
after it is manufactured. Therefore, the key point here is to make the product
available to the customers whenever they need it. Marketing has made it
possible for a firm to meet that goal by investigating and directing distribution
activities.

1.2.3. Perceptual separation
Producers do not know what is in mind of customers and vice versa. This
fact is how a perceptual

separation comes to exist. Because of such a

separation, to find out what the customers want, their tastes, or personal
income, etc is a challenge to a manufacturer. In contrast, consumers sometimes

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A study on marketing

mix strategy for Canon's PowerShot digital cameras

overlook the value of an offer given by the producers. Thanks to marketing,
these problems

could be overcome. By carrying out a thorough market

research, producers can get information about its target markets and customers.
In addition, the customers have more knowledge on the product they are about
to buy through advertisements.

1.2.4.

•

Ownership separation

Logically and legally, a product is initially owned by its manufacturers .
After being bought or consumed, it becomes the consumer's property. This
shift in the ownership also requires marketing to facilitate the purchase of the
product.

1.2.5. Separation in values
The initial value a product set by the producers is different from that in the
sales place. The producers set values by factoring in the production cost and the
competitive prices whereas the customers evaluate it with its usefulness, the
satisfaction that the product generates, and their ability to pay. Because of the
different views of the products from the customers, many producers put a great
emphasis on product differentiation

in the development process. Marketing

minimizes this separation in viewing a product's value by making the customer
perceive the value of the product on which the manufacturer places on it.

1.3. Marketing mix
By definition,

a marketing mIx IS the set of controllable marketing

variables that the finn blends to produce the response it wants in the target
market (Philip Kotler and Gary Armstrong. Principles of Marketing. New
Jersey: Prentice Hall_1996--page 49). In marketing mix, people develop the
well-known formula called 'The Four Ps" which includes product, price, place
and promotion.

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A study on marketing mix strategy for Canon's PowerShot digital cameras

Figure 1: The four P's of the Marketing

Quality
Features
Options
Style
Brand name
Packaging
Sizes
Services
Warranties
Returns

Place

Product

Mix

Channels
Coverage
Locations
Inventory
Transport

Promotion

Price

Advertising
Personal selling
Sales promotion
Publicity

List price
Discounts
Allowances
Payment
period
Credit terms

Source: Philip Kotler and Gary Armstrong. Principles of Marketing. New
Jersey: Prentice Hall_l 996-page 49.

1.3.1. Target market
The first step of any marketing management process is to identify target
consumers and target markets. The target market is a defined segment of the
market that is the strategic focus of a business or a marketing plan. Normally
the members of this segment possess common characteristics and a relatively
high propensity to purchase a particular product or service. Therefore, the
members of this segment present the greatest potential in sales volume and
frequency.

The target market is often defined in terms of geographic,

demographic,

and psychographic

characteristics.

The group of potential

customers shares common needs and characteristics that a business decides to
serve.

.7-


A study on marketing

mix strategy for Canon's PowerShot digital cameras

1.3.2. Product

. A product is anything that can be offered for sale and that can satisfy a
need or want. It can be something totally new which may not have a
preexisting demand
There are three levels of products

Figure 2: Three Levels of Product

Augmented
Installation

product

Actual
Packaging

Delivery
and
Credit

product

Brand
name

Features
Aftersale
ser-

Quality

Core
product

Styling

••

Warranty

Source: Philip Kotler and Gary Armstrong. Principles of Marketing. New
Jersey: Prentice Hall_l 999-'page 275.

A product is often classified into three groups:
o

Durable goods, non-durable goods and services: Durable goods

are long-lasting goods such as computers, CD-players, refrigerators,

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A study on marketing

mix strategy for Canon's PowerShot digital cameras

etc. In contrast, non-durable

goods are goods usually consumed

immediately such as coke, cakes, sugar, etc. Services are intangible
goods offered to consumers such as tourism, travel, haircut, etc
Q

Consumer goods are those bought and consumed by ultimate

consumers. Consumer goods then can be divided into four small
categories.

First, convenience

goods - those that you can buy

anywhere you find convenience.

Second, shopping goods - those

bought with more specific considerations. Third, specialty goods goods with a special brand-recognition

or unique characteristic and

finally, unsought goods - goods that consumer rarely seeks to buy.
Q

Industrial goods are those bought by individuals or organizations

for further processing or for use in another business.

There are major components of a product:
Q

Quality is the ability of a product to perform its functions; it

includes the product's overall durability, reliability, precision, ease of
operation and repair. The product quality is not necessarily at the
highest level. Producers will determine the quality of a product by
basing on the customer satisfaction obtained. A "Defect-free" product
is likely to be the most important indicator of good quality and highly
appreciated by customers. A producer who offers products with better
quality as it is compared with others will achieve greater success.

Q

Features are distinct characteristics of a product and, are used to

distinguish it from competitors' products. A unique special feature
that

meets

customers'

demand

can

obtain

customers'

favor.

Therefore, the producer needs to invest time and money in making
research and development.

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A study on marketing

o

mix strategy for Canon's PowerS hot digital cameras

Design is the act of working out the form of something. It includes

both the process and the result of structuring the elements of visual
form. However, the designing process should take into account the
product performance. A product should be designed in an 'attractive
style without affecting negatively the use or operation of the product.
Product design is especially important to hi-tech products because
this type of goods needs a simple ease-of-operation design, if not, it
will cause lots of confusion and inconvenience for the user.

o Branding is vital to any business. A brand represented by brand
name, symbol, design or logo, etc, is the identity of a particular
producer. From that, customers recognize it is different from others.
Brand includes brand name - part of the brand which can be spoken
out, and brand mark - part that can be recognized, but cannot be
spelled out. Two common kinds of brand name are manufacturer

brand and private brand. A manufacturer's

brand is designated,

owned and used by the manufacturer of the product, whereas, a
private brand is designated, owned and used by a wholesaler or
retailer.

o

Packaging is the outer wrapping of a product. It has the following

functions:
•

One IS facilitating

distribution.

The pnmary

purpose

of

packaging is to protect products from dampness, rust, shock, etc.
A proper package helps to reduce damages during delivery or
transportation.
•

The other is facilitating promotion. Packaging is often the

most relevant element of a trademark, and conduces to advertising
or

communication.

Firstly,

packaging

helps

to

Improve

recognition of a product and its producer. Secondly, attractive

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A study on marketing

mix strategy for Canon's PowerShot digital cameras

packages will likely get into customers' attention, and thus, can
create competitive advantages over other products. And finally,
package is sometimes used as part of a sales promotion campaign.

o

A customer service describes the assistance provided to help a

customer with the purchase or use of a product. Major activities of a
customer service are operated:
•

During the purchasing process such as providing information

about product alternatives, training in product usage, credit and
financing services.
•

During the post-purchase process, for example, providing fast

and reliable

delivery, quick installation,

accessible

technical

information and advice, repair services and warranty.

Price, put it simply, is the amount of money you have to pay for

1.3.3.

a good or service.
Price has a special relationship with the other "Ps" in marketing mix
o

Price-product relation:
•

Price is often adjusted according to Product Life Cycle.

•

Price is sometimes a criterion to distinguish

products

111

product lines.
•

Price plays a certain role affecting the perceived customer

value. A high price is normally connected with a high quality
product

o

Price-promotion

relation:

price-based

promotion

campaIgn

usually planned such as: 50 percent price-off, reduced price.

-11-

IS


Le Van
o Price-place

relation:

distribution

is in a considerable

cost

contributed to the price of the product. Distributors at different levels
are set at different prices.

Figure 3: Five steps in pricing process

Step 1: Establishing pricing goals

Step 2: Estimate demand, costs and
profits

Step 3: Choose a price strategy to
help determine a base price

Step 4: Fine tune the base with pricing
tactics

Step 5: Results lead to the right
people

Source: Charles W. Lamb, Jr., Joseph F.Hair, Jr., Carl McDaniel. Essentials
of Marketing. Ohio: South-Western College Publishing_l 999--'page 433

o

Step 1: pncmg

maximization,

goals could be set as profit-oriented

satisfactory

profit,

return

on investment),

(profit
sales-

oriented (market share, sales maximization). Pricing goals should be
relevant to corporation objectives.

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A study on marketing mix strategy for Canon's PowerShot digital cameras

D

Step 2: at this stage, the firm identifies several prices, and then it

will estimate revenues, consider costs, and forecast profits.
D

Step 3: is a long-term pricing policy for setting, controlling and

adjusting prices over the product life cycle. Normally, there are three
pricing strategies: price skimming, penetration, status-quo price.

.-

D

Step 4: the company can adjust to base price-the average price in

the market. Those pricing tactics allow the firm to adjust for
competition

III

certain

markets,

meet

changing

government

regulations, take advantages of unique demand situations and meet
promotional

and positioning

goals. The pricing

tactics include

discounts, allowances, rebate, trade loading, etc
D

Step 5: a right price pleases both managers and customers.

Factors affecting pricing can be summarized in "The Five Cs formula":
cost, customers, channels of distribution, competition, and compatibility.
D

Cost does not merely mean production

cost, but also means

distribution and promotion expenses. Prices must be adjusted to cover
the cost and to bring the profit. Competitors' prices must be taken
into account also when the company calculates price.
D

Customers' demand is crucial. The main idea of marketing is to

satisfy customer demand. When we mention to "demand", we mean
the willingness and the ability to pay for a product during a period of
time. Therefore, price should be set following customer demand.
Only when the customers accept the price, the producer can sell their
products.
D

Channels

jobber....

of

distribution

When

calculating

involve
price,

wholesaler,

producers

have

retailer,

and

to leave

a

reasonable margin for intermediaries. For example, the price for a
bottle of milk is charged VND 2,000. Then, the wholesaler will add
VND 500, and another VND 500 for retailers. Thus, the reasonable

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