Developing marketing strategy for Hoang Anh Dalat resort period 2007 to 2010

I HC M TP. HCM UNIVERSITEÙ LIBRE DE RUXELLES
UNIVERSITEÙ OUVERTE DE HCM VILLE ECOLE DE COMMERCE SOLVAY



















Ho Chi Minh City, Vietnam – 2007

I HC M - TP. HCM UNIVERSITE LIBRE DE BRUXELLES
UNIVERSITEÙ OUVERTE DE HCM VILLE ECOLE DE COMMERCE SOLVAY

















Ho Chi Minh City, Vietnam – 2007






I would like to express my sincere thanks to Professor Doctor Bui Tuong Tri
who serves as my local coach and guidance, support and comments on my research
papers. Despite the complexity and scope of the topic, he convinces me with

scientific instruction and valuable suggestions from the very beginning to the
completion of this thesis. My great thanks also expressed to professors in the roles of
arguments and defense for contributing valued ideas, science and practices, which
much encourages me.
I would also like to thank deeply Professors of thesis defense committee who
spare their time to pay attention to my presentation, give comments and pose
valuable questions, which help me to be more comprehensive of the topic of my
thesis. My gratefulness extended to the two Directors of the MBA program, Lawyer
Doctor Tran Anh Tuan and Prof. Nagel, Vietnamese and Belgian professors,
coordinators of the MBA Vietnam – Belgium program that I am honored to follow
during the past two years.
Last but not least, I am grateful to the Management Board of Hoang Anh Gia
Lai Group and Hoang Anh Dalat Resort, my classmate, colleagues and my beloved
family members for providing me with time release to pursuit of the MBA program
at Hochiminh City Open University and Solvay Business School/ University Libre of
Brussel.

This is my original work.
Any data, result or quote in the project is clearly identified.
NGUYEN QUYNH




1-1 The marketing environment 13
1-2 Matching product and customer 20
1-3 Product components 21
1-4 The possible pricing spectrum 24
1-5 Distributing channels 29
2-1 Lam Dong GDP chart 34
2-2 Annual temperature chart 38
2-3 Annual rainfall chart 38
2-4 Temperature comparison 39
2-5 Distance from Dalat City to several cities in Vietnam by
land way

39
2-6 Chart of tourists to Lam Dong 2001-2006 40
2-7 Chart of foreigners to Vietnam and Lam Dong 2001-2006 41
2-8 Some current figures of the resort 48
2-9 List of hotels in Lam Dong 51
3-1 Marketing objectives 59
3-2 Revenue and GOP chart 2007-2010 59
3-3 Components of revenue 2007 60
3-4 Occupancy and average room rate chart 2007-2010 60
3-5 revenue of all outlet 2007-2010 61




3-6
Market value proposal
61
3-7 Market segments 64
3-8 Chart of marketing segment by sources 65
3-9 Chart of marketing segment by domestic and foreign guests 66
3-10 Chart of marketing segment by Objectives 66
3-11 Organization chart 67
3-12 Sales & marketing organization chart 68
3-13 Marketing budgeting 74
4-1
Accommodation categories
76
4-2 Conference 76
4-3 Public rates 80
4-4 Internet rates 80

4-5 Corporate rates 81
4-6 Travel agent rates 81
4-7 Industrial rates 81
4-8 Occupancy & average room rate 82
4-9 Conference rates 83






AFTA Asian Free Trade Area
ASEAN Association of South East Asia Nations
APEC Asia Pacific Economic Cooperation
FOC Free of Charge
FDI Foreign Direct Investment
GDP Gross Domestic Products
GDS Global Distribution System
GOP Gross Operating Profit
ISO International Standard Organization
NA Not Available
ODA Official Development Assistance
SWOT Strengths, Weaknesses, Opportunities and Threats
TA’s Travel Agencies
WTO World Trade Organizati
Table of Contents
Acknowledgements
Advisor’s comment
The first arguments
The second arguments

List of figures
List of abbreviations
Document references
Commitment
Foreword

INTRODUCTION
I Rationale 4
II Research history of the problem. 5
III Objectives of research, scope and limitation 6
IV Research methodology. 7

Chapter 1 LITERATURE REVIEW
1.1 Marketing and tourism concept 9
1.2 The roles of marketing in business 10
1.3 The marketing environment 11
1.4 Customer wants 13
1.5 Marketing mix 15
1.5.1 Elements of marketing mix 15
1.5.2 The characteristics of service 17
1.5.3 Marketing mix of based on 4Ps 19
1.5.4 Product strategy 19
1.5.5 Price strategy 23





1.5.6 Communication strategy 26
1.5.7 Distribution strategy 29

Chapter 2
GENERAL ENVIRONMENT
2.1 Macro environment 31
2.1.1 Geographical factor 31
2.1.2 Demographic factor 32
2.1.3 Social economic factor 33
2.1.4 Political factor 35
2.1.5 Cultural factor 36
2.2 Micro environment 37
2.2.1 Dalat city, climate, rainfall and distance 37
2.2.2 Tourism development 39
2.2.3 Visitors to Lam Dong of the past several years 40
2.2.4 Quick look at other provinces 41
2.3 The group and Hoang Anh Dalat Resort 45
2.3.1 Introduction to Hoang Anh Gia Lai Group 45
2.3.2 Introduction to Hoang Anh Dalat Resort 46
2.3.2.1 Establishment and development 46
2.3.2.2 Location and architecture 46
2.3.2.3 Dimension 47
2.3.2.4 The resort situation 47
2.3.3 SWOT analysis 49
2.3.4 Competitor analysis 51
2.3.5 Customer analysis 54
2.3.6 Supplier analysis 55

Chapter 3
PLANNING MARKETING STRATEGIES
3.1 Defining vision and mission 57

3.2 Defining marketing strategies 58
3.2.1 Marketing objectives 59
3.2.2 Market positioning 61
3.2.3 Selection of market segments 64
3.3 Organization chart 67
3.3.1 Organization chart of Hoang Anh Dalat Resort 67
3.3.2 Organization chart of sales & marketing department 68
3.4 Marketing budgeting 73

Chapter 4
PRODUCT STRATEGY, PRICING STRATEGY,
COMMUNICATION AND DISTRIBUTION
STRATEGY

4.1 Product strategy 75
4.1.1 Developing of products and services 76
4.1.2 Building of the brand 78
4.1.3 Establishing of customer relationship 79
4.2 Price strategy 80
4.3 Communication strategy 83
4.3.1 Public relation 83
4.3.2 Exhibition – special events 84
4.3.3 Newspaper release – advertising 85
4.3.4 Word of mouth 86
4.4 Distribution strategy 86
4.4.1 Travel agencies – wholesalers 86

4.4.2 E – Commerce 88
4.4.3 Sales force 89
4.4.4 Personal selling 90






Chapter 5
CONCLUSIONS
5.1 Conclusion 92
5.2 Summary of contributions 93
5.3 Suggestions for future researches 94


9



In 1776, when Adam Smith said that consumption is the sole end and purpose
of production, he was in fact describing what in recent years has become known as
marketing concept. The central idea of marketing is of a matching between a
company’s capabilities and the wants of customers in order to achieve the objectives
of both parties.
It is important at this stage to understand the different between the marketing
concept (often referred to as market orientation) and the marketing function, which is
concerned with the management of the marketing mix involves using the various
tools and techniques available to managers in order to implement the marketing
concept.

For the sake of simplicity, theses are often written about and referred to as the
four Ps, these being Product, Price, Promotion and Place although today many
scholars include a number of additional Ps, such as People and Process.
The marketing concept is discussed by many economists, scholars and
organizations in the world and there are several popular marketing definitions.

“Marketing is a process of planning and executing ideas, pricing, promoting
and distributing conceptions, goods and services to create exchange that satisfies


10

individuals and organizations’ objectives”
defined by American Marketing
Association.
“Marketing is a social and managerial process by which individuals and groups
obtain what they need and want through creating, offering and exchange products of
value with others”
defined by Phillip Kotler
.

Tourism marketing is managerial philosophy by which researching, forecasting,
selecting based on travelers’ demand can introduce suitable tourism products and
services to the market in order to gain profit for that tourism organization.
Defined
by World Tourism Organization.

Tourism marketing is a series of methods and techniques supported by special
spirit and methodical manner to satisfy unexpressed or expressed demand of
customers that can be a purpose of entertainment or other purposes of home affair,

business and meeting.
Defined by Robert Lanquar and Robert Hollier.


What causes success in the long run, by which we mean a continuous growth in
earnings per share and the capital value of the shares, has been shown by research
by Crainfield University School of Management Research Report, 1994 to depend on
four elements: products/service, process, personal marketing and people.
An excellent core product or service and all the associated R and D. Clearly,
marketing will have a heavy input into this process. All this showing is that
companies with average products deserve average success.


11

Excellent, world class, state of the art operations. All this is saying is that
inefficiency today is likely to be punished. Marketing should, of course, has an input
to defining operational efficiency in customer satisfaction terms. Where is not
allowed to, because of corporate culture, quality often becomes a sterile ISO
activity.
A culture, which encourages and produces an infrastructure within which
employees can be creative and entrepreneurial within the prescribed company
procedures. Bored and boring people for whom subservience and compliance is the
norm, cause average or below.
Professional marketing departments, staffed by qualified professionals (not
failures from other function). This means that companies who recruit professional
qualified marketers with appropriate experience have a far greater chance of success
than those whose marketing department staffed by just about any body who fancies
themselves as marketers.
Given these ingredients and, above all else, a corporate culture which is not

dominated (because of its history) by either production, operations, or financial
orientation, all the evidence shows that marketing as a function makes a contribution
to the achievement of corporate objectives. Its principal role is to spell out the
several value propositions demanded by different customer groups so that everyone
in the organization knows what their contribution is in creating this value.


The matching process referred to earlier takes place in what we can call the
marketing environment, which is the milieu in which the firm is operating. Perhaps


12

the most obvious constituent of the marketing environment is our competitors, for
what they do vitally affect our own behavior as a company.
The point is that, since what our competitors do so vitally affects our own
decisions, it is necessary to find some ways of monitoring this and other elements of
environment and of building this into our decision making process
The political, fiscal, economic and legal policies of the government of the
countries where we sell our goods also determine what we can do. For example,
inflation reduces the discretionary spending power of consumers, and this can result
in market decline. Legislation concerning such things as labeling, packaging,
advertising, environmentalism, and so on, all affect the way we run our business, and
all these things have to be taken control of when we make our plan.
Technology is constantly changing, and we can no longer consume that our
current range of products will continue to be demanded by our customers. For
example, the introduction of non-drip paint had a profound effect on what had
traditionally been stable market. Likewise, the advent of the microprocessor
revolutionized the computer industry, with a devastating effect on companies, such
as IBM, who remained dependent for too long on their supremacy in mainframes. It

is interesting to note that TBM is now mainly a service company, with little
involvement in hardware.
The point is that the environment in which we operate is not controlled by us,
and it is dynamic. Hence, it must be constantly monitored and we must be prepared
to adapt our asset base and our approach to market.




13











Let us briefly turn attention to the subject of customer wants so that we can
complete our understanding of what marketing is. Perhaps one of the greatest areas
for misunderstanding in marketing concerns this question of customer wants.
Companies are accused of manipulating innocent consumers by making them want
things they do not really need. If there were so, we would not have a situation in
which a very high proportion of all new products launched actually fail. The fact is
people have always had need, such as, for some entertainment. What changes in the
course of time is the way people satisfy this need. For example, television was only
commercially viable because people needed home entertainment, and this, yet

another way of fulfilling that need.
Nevertheless, let us not be fooled into believing that the customer, in the end,
does not have the final day. The entire customer needs have many different ways of
being satisfied, and whatever people have choice they will choose that product that

The marketing environment


Matching




The marketing environment

Company capability

Customer wants


14

they perceive as offering the greatest benefits to them at whatever price they are
prepared to pay. What this means, in effect, since all commercial organizations incur
cost in taking goods or services to the market, is that profit through customer
satisfaction, is the only measure of efficacy or worth of what the company is doing.
Cheapness, efficiency, quality (in the sense of international standards such as ISO,
or, indeed, any other measure, are not criteria of effectiveness, since there is little
point in producing anything cheaply, efficiently or perfectly if people do not really
want it and do not buy it.

Since costs are incurred in producing goods, it is necessary to find customers to
buy those goods at a sufficiently high price and in sufficient volume (margin x
turnover) to enable the company to cover its costs and to make a surplus (or profit).
This is an economic necessity to enable the company to stay in the business and
means that, unless what is being offered is seen by customers as satisfying their
wants, they will not buy it.
In the commercial sector, research has shown that there is direct link between
long run profitability and the ability of a firm to understand its customers’ need and
provide value for them. For industries previously protected from competitors such as
airline industry and telecommunication, many now know that sustainable profitability
can only come in the long run through continuous customer satisfaction.
To summarize, any organization that continues to offer something for which
there is a long-term fundamental decline in demand, unless it is prepared to change
so as to be more in tune with what the market wants in the end will go out of
business. Even less sensible would be for a government, or a parent company, to
subsidize such an operation, since we know to go on producing what people do not


15

want economically inefficient, especially when people will get what they want from
abroad if they can not buy it in their home country.
Central to this question of customer wants is an understanding that there is
rarely such a thing as a market. To start with, it is clear that it is customers who buy
products, not markets. A market is only an aggregation of customers sharing similar
needs and wants. In reality, most markets consist of a number of submarkets, each of
which is different. For example the airline market consists of freight and passenger
transport. The passenger side can be subdivided further into visiting friends and
relatives, high rated business travel, charter and so on. Failure to understand the
need of the different customer groups would result in failure to provide the desired

services at acceptable price.
However, for now it is necessary to understand that it is our ability to identify
groups of customer wants which our particular company capabilities are able to
satisfy profitably that is central to marketing management.


As we have already said, managing the marketing mix involves the use of the
tools and techniques of marketing. Thus, in order for the matching process t take
place, we need information. External and internal marketing information flows
(market research) and database management in the following chapter.

Marketing mix consists of four basic elements based on 4Ps


16

♣ Product
♣ Price
♣ Place
♣ Promotion
Nowadays, beside 4Ps, marketing mix adds 3Cs
♣ Customers
♣ Company itself
♣ Competitors
Or based on 8Ps
♣ Probing
♣ Partitioning
♣ Prioritizing
♣ Positioning
♣ Product

♣ Price
♣ Place
♣ Promotion
There is 4Ps in tourism industry
♣ People
♣ Packaging
♣ Partnership
♣ Programming


17


Service consists of four characteristics: intangibility, inseparability, variability,
perishability.

Different from material product, services cannot be seen, tasted, tried, smelt,
felt or physical touch before buying. Before stepping into an airplane or a bus,
customers have nothing but just an airline paper ticket with a promise of good quality
transport of you to your destination. Sales staff of a hotel cannot carry the hotel room
with him or her to show it to customers but they sell the right to use that room within
a certain period. When the customers leave, they will bring nothing with them except
an invoice for payment. Robert Lewis considered that people who buy a tourism
service may not have a thing in their hand but cannot be empty with his mind. Many
buys tourism service and own wonderful memories to share to the others

Most of services of hotel, resort, restaurant, both supplier and customer cannot
be separated. Customers contacting staff is the important part of the product, food in
a restaurant may not be perfect but the serving staff are not polite, lack of skill or
show bad behavior, guests will not be satisfied and have bad experience of this

service. With the characteristic of inseparability, it is shown that the supplier and
customer creating and forming consumption.


18

Inseparability means that customer is a part of service product. A new wed
couple likes to choose a quiet romantic restaurant; however, if a noisy group around
make noise and nuisance, of course the couple will not satisfy this service. In fact,
restaurant manager should have to arrange a suitable place avoiding noise and
keeping guests happy.

Service is easily changeable; the quality of a service largely depends on
supplier and whenever or wherever it is supplied to many causes them to be
variable. Service is supplied and consumed in the same time so it has limited time to
control and managed in term of quality management.
Fluctuation of customers’ demand makes it difficult to provide the same quality
service when there is a peak in demand. The quality service is also depending on
professional skills of serving staff and their contact with customers. A traveler may
be receive good service today but my not experience the same service the next day
served by the same staff. Why the server fail to provide the same quality because he
may not be feeling well or he has problem with his girl friends.
Variability and homogeneousness of service product are the cause, which make
customers disappointed.

Service cannot be stored in a warehouse; this means that this service product
cannot be kept for tomorrow sales. The service that cannot be sold today and of
course cannot be reserved for tomorrow. Indeed, a hotel with 100 rooms runs a 60%

19

occupancy today, it means that there are 60 occupied rooms and 40 vacant rooms, we
can not sell 140 rooms tomorrow, because the hotel only accommodate guests from
maximum of 100 rooms. The 40 vacant rooms of the day before will disappear and
not be sold. Because of this particular perishable feature, many hotels want to
reserve more bookings than the capacity of its accommodation.

We will be discussing on 4Ps of marketing mix to start with in-depth analysis,
which consists of four elements: price, product, place and promotion

In order to satisfy customer wants, we have to do research and development on
our product meeting with their expectation. This part will be clearly expressed in the
following part of quality service management.
A central role of the product in term of marketing management is very
important, if not well controlled and managed; it will have critical impact on our
business activities that nothing can be compensated for. Product management is the
vital aspect, which the company has to pay close attention to; such as characteristics
of product, product life cycle, profitable product, product concept, developing new
product and product portfolio. In the same time, we have to develop marketing
strategy and objective for our product and company.
Before discussing about product, let us study quality management and
understand what is product, because this is core issue often to be misunderstood in
the process of product management.