Enhancing the marketing activities of PNAT trading and services co.,ltd

MINISTRY OF EDUCATION & TRAINING UNIVERSITEÙ LIBRE DE BRUXELLES
HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL

MBMM PROGRAM


Lyù Lan Phöông



ENHANCING THE MARKETING ACTIVITIES OF
PNAT TRADING & SERVICES CO. LTD.



Final Project
Master in Business & Marketing Management





Ho Chi Minh City
2007
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MINISTRY OF EDUCATION & TRAINING UNIVERSITEÙ LIBRE DE BRUXELLES
HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL

MBMM PROGRAM

Lyù Lan Phöông


ENHANCING THE MARKETING ACTIVITIES OF
PNAT TRADING & SERVICES CO. LTD.


Final Project
Master in Business & Marketing Management



Project Tutor: Traàn Xuaân Kieâm

Doctor in Business Administration



Ho Chi Minh City
2007
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Student Declaration

I hereby certify that the attached assignment is my own work. Materials drawn
from other sources has been acknowledged according to specific requirements
for referencing.



Ho Chi Minh City, 25
th
May, 2007




Ly Lan Phuong

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Acknowledgments


The author wishes to express sincere appreciation to Dr. Traàn Xuaân Kieâm for his
guidance in the preparation and writing of this final project report.

Special thanks to Mr. Nguyeãn Vaên Taâm, IT Director of PNAT Trading &
Services Co. Ltd., for his valuable input and feedback, and also to the
management and staff of PNAT, the members of the Postgraduate Office of
Open University HCMC and Solvay Business School for their assistance and
encouragement in making this project a reality.


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Remarks from Project Tutor

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Executive Summary

PNAT Trading & Services Co. Ltd. (hereinafter to be called PNAT) is a family-
owned business specializing in trading and servicing Informatics (IT) products
and office equipment. It is a newly set-up company (one year old), but has made

a good reputation for quality goods and services at competitive price. Currently,
PNAT has an insignificant market share (less than 1 per cent), and it seeks to
expand its customer reach and win a better market share in the IT market in
Hochiminh City.

Marketing Objectives

PNAT has managed to have a gross sales of USD 64,369 for its first year 2006,
with a small loss of USD 1,889 due to high set-up costs for company
infrastructure . Nevertheless, PNAT has developed a long-term relationship with
local and international companies. Now PNAT intends to expand its sales of IT
products and services, focusing on international and local SBs
1
, and heavy
home-users of IT. Its goal is to increase gross sales by 20 per cent in the year
2008 and incrementally in the subsequent years.

Products or Services

PNAT has signed contracts with large manufacturing companies and authorized
distributors in Vietnam such as IBM, ASUS, HP, and FTP to distribute their
products to SBs on order, at a margin of 5%. The pricing structure of PNAT is

1
Small Businesses
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competitively lower than its competitors, and PNAT further differentiates itself
by giving free-of-charge after-sales services. Together with the sales of
products, PNAT carries out maintenance and trouble-shooting services to these
SBs whenever there is a need. Now, as the market environment has been
increasingly changed at a fast pace since Vietnam joined the World Trade
Organization in 2006, PNAT plans to meet the new demands of the market, and
aggressively embark on sales of IT products and services.

Resources Needed

PNAT is a newly set-up company, with low financial strength and manpower
resources. To increase sales of IT products and services, it plans to boost
eMarketing and eCommerce, as this can save costs and increase marketing
efficiency. PNAT has the management expertise to accomplish this plan, and
being an IT service company, PNAT does not need to hire outside consultants to
develop its website and bring to full operation. All that is required will be about
USD 1,800 to redesign and develop the website, and 3 IT specialists to take turns
in monitoring the website.

Marketing Matrix Components

PNAT has the benefit of beginning online marketing with its loyal customers,
who are well established companies
2
. PNAT hopes to expand communication
links with its current customers and attract new customers who are local and
international SBs, and heavy home-users of IT products and services. The

2
Please refer to 1.4.3: List of Loyal Customers
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objectives of PNAT’s online marketing is brand and image building, and a wider
reach of customers, for increase in sales.


Projected Outcomes

It is expected that the brand of PNAT and its quality services and goods will be
better known and utilized, so that its gross sales can be increased by 20% (about
USD 76,800) in the first year (2008), and for the subsequent years, by 30%. It is
also expected that, thanks to its online marketing, PNAT will have better
understanding of the customer’s ‘unsatisfied demands’, and to satisfy these
demands with a USP
3
in a way that no other competitors can manage to achieve,
to increase barriers to entry for its competitors, and achieve a sustainable
competitive edge.

3
Unique Selling Proposal
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TABLE OF CONTENTS

Student Declaration ii
Acknowledgments iii
Remarks from Project Tutor iv
Executive Summary v
Marketing Objectives v
Products or Services v
Resources Needed vi
Marketing Matrix Components vi
Projected Outcomes vii
TABLE OF CONTENTS viii
LIST OF FIGURES x
FOREWORD 1
1. Background 1
2. Research Objectives & Scope 2
3. Research Method 2
3.1 Method of Information-gathering 2

3.2 Method of Analysis and Synthesis 3
4. Project Outline 3
CHAPTER 1: MARKETING ACTIVITIES OF PNAT 4
1.1 INTRODUCTION TO PNAT 4
1.1.1 History of Establishment of PNAT 4
1.1.2 Organization Structure of PNAT 4
1.1.3 Company Performance 5
1.2 PRODUCT OF PNAT 5
1.3 PRICING 7
1.3.1 Products 7
1.3.2 Services 7
1.4 DISTRIBUTION CHANNELS AND MERCHANDISING 7
1.4 PROMOTION ACTIVITIES 8
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1.4.1 Telemarketing 9
1.4.2 Email Marketing 9
1.4.3 eCommerce 9
1.4.4 Other Promotion Activities 10
CHAPTER 2: SITUATION ANALYSIS 11
2.1 MARKET ANALYSIS 11
2.1.1 Changes in the Competitive Environment 11
2.1.2 Changes in the Sociocultural, Political and Legal Environment 11
2.2 COMPETITOR ANALYSIS 13

2.2.1 Competitor Matrix 13
2.2.2 Analysis of 2 key competitors of PNAT 13
2.3 TARGET ANALYSIS 15
2.4 SWOT ANALYSIS 15
2.4.1 Strengths 15
2.4.2 Weaknesses 16
2.4.3 Opportunities 17
2.4.4 Threats 17
CHAPTER 3: ENHANCING MARKETING ACTIVITIES OF PNAT 18
3.1 OPERATING PHILOSOPHY & MISSION STATEMENT 18
3.2 ANALYSIS AND PROPOSAL FOR STRATEGY 19
3.3 RECOMMENDATIONS 19
CONCLUSION 25
BIBLIOGRAPHY 26
1. Books/Articles: 26
2. Websites: 26
APPENDICES 1
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LIST OF FIGURES

Figure 1: Organization Chart of PNAT 2
Figure 2: Balance Sheet of PNAT for 2006 3
Figure 3: Income Statement of PNAT for 2006 4
Figure 4: Marketing Expenditure for PNAT in 2006 5
Figure 5: PNAT website displaying products for sale 6
Figure 6: PNAT Distribution Channel Process Flow 7
Figure 7: PNAT’s webpage of “Web Design Service” still incompleted 8
Figure 8: Competitor Rating Matrix of PNAT 9
Figure 9: List of Loyal Customers of PNAT 10
Figure 10: Website of Phuong Nhut IT Services (no English version) 11
Figure 11: Phong Vu Website displaying IT products 12
Figure 12: Phong Vu Website displaying Product Price and Promotion 13
Figure 13: PNAT website with wordy advertising of its services and expertise 14
Figure 14: PNAT’s “Desired Targeting” vs “As Is Targeting” 15
Figure 16: PNAT’s enhanced website with more focused services 16
Figure 17: PNAT’s enhanced website promoting Free Weekly Newsletter 16
Figure 19: Good example of ‘In-home Network Services’ by DataDoctors 18
Figure 20: Good Example of Computer Metrics (for PNAT to adapt) 19
Figure 21: SWOT vs. KSFs of PNAT 1
Figure 22: eMarketing Plan for PNAT 4
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FOREWORD
1. Background

Peter Drucker, a leading management theorist, has stated “The aim of
Marketing is to make selling superfluous. The aim of Marketing is to know
and understand the customer so well that the product or service fits him and
sells itself profitably. Ideally, Marketing should result in a customer who is
ready to buy

4
”.

Yes, Marketing has been proven as critical for the long-term sustainability of
any organization. Within the constraint of this Final Project, I have chosen
PNAT, a small company, to apply my Marketing knowledge and identify
some feasible solutions to enhance their Marketing activities.

PNAT is a newly established company (one year old), and has made some
good business transactions in the IT and office products market in Hochiminh
City. PNAT has implemented some marketing activities, including the
development of its website (
www.pnat-it.com), but this is mainly for
information, and under-utilized (only about 5,000 visits so far). Now PNAT is
keen on finding low-cost measures to promote its brand and image and
increase market share.



4
Kotler, P. cit., pg 4.
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2. Research Objectives & Scope
This research aims at looking at PNAT current marketing activities and find
solutions that are ‘low cost, but effective and efficient’. As we can see from
PNAT Balance Sheet and Income Statement for year 2006
5
, PNAT has made
a small loss for the previous year, and needs low cost operations to sustain
itself. The research also includes an analysis of market trends in Vietnam,
revisit PNAT’s vision, operating philosophy, key success factors, and propose
recommendations for improvement.

However, due to the constraints of the project, this research is more focused
on PNAT IT product sales & services, and not on Office products and
services, as PNAT has realized that IT-related sales far outweigh office
equipment sales.

3. Research Method
The project uses the following methods:
3.1 Method of Information-gathering

3.1.1 Reference Method:
The reference method is secondary research, with references to
materials and information from PNAT, as well as materials from
other sources such as course notes, online newspaper reports,
books, internet, etc., focusing on reliable internet statistics for
comparison between PNAT and its counterparts, and for data
gathering of IT market trends.


5

Please refer to Appendices (Figures 2-4, pp. 3-,5)
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3.1.2 Indepth-Interview Method:
In-depth interviews are carried out with the management and staff
of PNAT to understand PNAT activities, website information, short-
term and long-term strategies, and discuss possible marketing
activity enhancement.

3.2 Method of Analysis and Synthesis

The method of data analysis, deduction, or induction is used to generate
feasible recommendations.

4. Project Outline
Besides the Foreword, Tables, Figures, etc., the Final Project will comprise the
following two main parts:

a. Chapter 1: Marketing Activities of PNAT
b. Chapter 2: Situation Analysis
c. Chapter 3: Enhancing Marketing Activities of PNAT

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CHAPTER 1: MARKETING ACTIVITIES OF PNAT

1.1 INTRODUCTION TO PNAT

1.1.1 History of Establishment of PNAT
On 16
th
June 2006, PNAT Trading & Services Co. Ltd. (PNAT)
received its business licence. On 26
th
June 2006, PNAT began its
operation, providing companies with products and services of IT
and office equipment.

Currently, PNAT has a rented office with details as follows:
Address: 207/65A1, Nguyen Van Dau St., 11
th
Ward, Binh
Thanh District, Hochiminh City, Vietnam
Telephone: 84-8-4551939
Fax: 84-8-5153924
Website: www.pnat-it.com

1.1.2 Organization Structure of PNAT

PNAT is a family-owned business with an invested capital of USD
310,000. Following are the founding members:
1. Mr. Nguyen Dang Quang: 40% equity: President of Managing
Board
2. Mr. Nguyen Van Tam: 30% equity: General Director
3. Mr. Ly Chanh Cuong: 30% equity: Board Member

PNAT has a total of 15 staff. Please view its organization chart in
Appendices, Firgure 1 (pg. 2).
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1.1.3 Company Performance

In Appendices (Figure 2, 3, and 4: pp 3-5) we can see PNAT’s
Balance Sheet, Income Statement, and Marketing Expenditure for
year 2006. As shown, PNAT has made a loss of USD 1,889
(0,005%), which is understandable for a newly set-up company with
high investments in infrastructure.

From the Income Statement, we can see that the sale of IT Products

has achieved a high percentage (70%). However, PNAT has high
General & Administration cost (23%), and has to reserve a large
amount of cash for purchasing stock (76%).

The Marketing Expenditure shows that PNAT allots only for 0.04%
expenditure on Marketing, and the activities are done in Quarters 3
and 4/2006. The cost for PNAT website designing and monitoring is
minimal, as PNAT has its IT specialists, and the cost is therefore
embedded in ‘Manpower Cost’. However, it must be noted that
PNAT spends 87% of its marketing expenditure (USD 2,215) on
building relationship with partners and the public.

1.2 PRODUCT OF PNAT
PNAT trades and services the following products:
1.2.1 IT Equipment
: laptop, desktop, server, CRT & LCD, peripheral
equipment, and security equipment. These are from well-known
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and authorized manufacturers: HP, Dell, IBM, Acer, Sony Vaio,
Lenovo, Viewsonic, Samsung, and LG.
1.2.2 Office Equipment
: printer, fax, PABX, photocopier, projector,

screen panel, toner & cartridge, office machine (desk telephones).
These are also branded goods from HP, Epson, Canon, Lexmark,
Panasonic, Phillips, Siemens, Toshiba, Sony, Hitachi, and Acer.

PNAT displays its products on the PNAT website, with clear pricing and product
details (upon clicking in). PNAT only sells original and new branded goods
at
competitive price. This differentiates PNAT from other competitors.

1.2.3 IT Services
: following is the range of IT Services shown on PNAT
website:
1. IT Infrastructure Services
2. Information Security & Privacy
3. Advanced Solution Delivery
4. Customer Solutions Practice
5. Business Process Outsourcing
6. Business Technology Consulting
7. Data Warehousing & Business Intelligence
8. Enterprise Resource Planning
9. Portals & Content Management
10. Program Management
11. Software Applications Services
12. Supply Chain Management
13. Quality Assurance Services
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1.3 PRICING
1.3.1 Products
For a margin of 5%, PNAT pricing structure is ‘competitive price,
but double benefits’. Its price is usually lower than its competitors
by 2%, including the subsidiaries of FPT
6
where it orders its goods.
All PNAT goods are authorized and its after-sales services are
reliable. This differentiates itself from many of its competitors who
sometimes resort to selling counterfeit or ‘retouched
7
’ IT products,
and low quality IT technicians with unreliable after-sales service.

1.3.2 Services
PNAT service rates are similar to its competitors, but it
differentiates itself by providing customers reliable and quality
services. IT products and services are often sophisticated and
costly. However, although most customers are low in IT knowledge,
they can distinguish a quality service after a few trials. In view of
this, PNAT is expanding its services to this segment of the market:
heavy home-users of IT: students, online game players, and virtual
office people; and government agencies.

1.4 DISTRIBUTION CHANNELS AND MERCHANDISING
PNAT’s channel of distribution is B2B, short-circuit, and JIT

8
. PNAT has
strategic partnerships with leading IT manufacturers like INTEL, IBM,
ASUS; or with FPT, the authorized distributor of IBM, to purchase their


6
FPT is the authorized distributor of IBM and some other IT manufacturers
7
Meaning: the product is second-hand, but the seller did some ‘touch-ups’ then sell it as new.
8
Just in time (JIT)
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goods at retail price and sell for a margin of 5% to local and international
SBs in Hochiminh City and the surrounding areas.

PNAT also does B2C and B2G
9
, but this has not been the focus. PNAT has
won a contract with Phu Quoc Vocational Training Center at Kien Giang
province, but this means some of its resources have to be allocated to this
distant area. Please view in Appendices (Figure 6, pg.7) for the

distribution process flow of B2B, and PNAT’s list of loyal customers.

The list of customers shows that PNAT has ‘repeated wealthy
transactions’
10
with many local and international SBs. PNAT has also been
servicing state-owned offices or institutions (No. 14 and 15 in the above
list). This has helped PNAT to maintain a strong foothold in IT products
and services.

As for merchandising, PNAT does not have strong financial strength for
rental of a large office to display its products or for warehousing.
Therefore it has been using the JIT (just-in-time) business model to
overcome this disadvantage.

1.4 PROMOTION ACTIVITIES
PNAT has devoted only 0.04% of its total expenditure and 25% of its time
in 2006 for marketing activities. The key promotion activities comprises of
the following:


9
Business to Consumers (B2C) and Business to Government (B2G)
10
Baeyens,J.P., cit. Pg. 11
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1.4.1 Telemarketing

PNAT telephones prospective customers and request for
appointment. The success rate is 10%.
1.4.2 Email Marketing

PNAT emails to prospective customers (using the information from
websites, directories, yellow pages, etc.). The response rate is 10-
15%.
1.4.3 eCommerce

PNAT has tried to carry out eCommerce by displaying its products
and services on the website. To promote website ‘stickiness’, it
includes current happenings relating to IT that are extracted from
online local newspapers, and an online section for customer
queries. However, this website is underused, as of date, after one
year in operation, the number of visits to the website is less than
5,000
11
.

Moreover, some sections of the website are still incompleted, e.g.
in “Website Design” section, there is the message “Under
Construction”. This is also true with the webpages of ‘Software’,
‘Technical Support’, and ‘Recruitment’
12

. The reason is that there
is yet to be a Marketer for PNAT, which is now handled by the
PNAT Director cum Software Team Leader.


11
Source: Interview with PNAT Director, Mr. Nguyen Van Tam on 3 May 2007.
12
Accessed PNAT website on 9
th
May 2007. Please refer to Appendices (Figure 7, pg.8)
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1.4.4 Other Promotion Activities

Other promotion activities are as follows:

• Volume discounts of 3% for purchases of over USD 2,000
• Seasonal promotions during public holiday periods: e.g. for the
purchase of 1 laptop the customer is given 1 free gift of
“Privacy Filter”
• Commission for buyers, at the discretion of both parties
• Gifts to selected key customers or Purchasing departments at
companies

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CHAPTER 2: SITUATION ANALYSIS

2.1 MARKET ANALYSIS
Since Vietnam became the 150
th
member of the World Trade
Organization in 2006, many changes have taken place which affects the
market environment of IT . Following are some key changes:

2.1.1 Changes in the Competitive Environment
2.1.1.1 Opportunities
According to Indonesian newspaper Tempo, Vietnam has a
fast developing market for computers, and IT experts
forecasted that by 2008-2009, Vietnam could rank first in
South East Asia in the number of computer users
13
.


2.1.1.2 Threats

Suppliers of IT products and services have speedily
increased. Just viewing Pcworld.com
14
website, we can find
advertisements from 560 IT service companies and 532 IT
fabricating companies in Vietnam.

2.1.2 Changes in the Sociocultural, Political and Legal Environment
2.1.2.1 Opportunities
• Ho Chi Minh City targets to increase the growth rate of the
hardware sector by 60% in 2007 while software and related
services are expected to grow 25%.


13
Vietnam Net, cit., 11/6/2005
14
PC World, cit., accessed on 10/5/2007
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• The government has implemented a series of projects and
supporting policies to help IT businesses benefit from development
opportunities. Attention is paid to e-commercial supporting services
for sectors relating to public transactions like online services, e-

customs, licence granting and business registering through the
Internet
15
.
• According to statistics, from 2000-2006, Vietnam internet users
have increased to 5,255.5% in 2006, with a total of 10,711,000
users, equivalent to a 12.8% of total population penetration
16
.
• 70% of Vietnamese organisations and companies are facing serious
network security threats, especially state offices, banks, financial
institutions and securities companies, industry experts say
17
.
Therefore solution providers can provide solutions at acceptable
prices and reasonable levels of difficulty.
18

2.1.1.2 Threats:
To become a WTO member, Vietnam has agreed with the USA on the
following
19
:
• Vietnam is to improve access in the computer and related services
sector, including allowing 100-percent foreign equity investment in
this rapidly growing sector, in which U.S. companies are globally
competitive.

15
Vietnam Net, cit., 20/3/2007.

16
Gruslin, C. ,cit. Module 1, pg 34.
17
Vietnam Net, cit.,
16/04/2007.
18
Vietnam Net, cit. 04/05/2007.
19
Vietnam Net, cit., 01/06/2006.
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• The USA will enjoy some tariff reductions in areas of commercial
significance which include IT products. Upon accession, Vietnam
will join the Information Technology Agreement (ITA), which
eliminates tariffs on information technology products including
computers, cell phones and modems. U.S. exports to Vietnam of
these products exceeded $40 million in 2005.
2.2 COMPETITOR ANALYSIS
2.2.1 Competitor Matrix
In Appendices (Figure 8, pg.9), we can see a comparison of PNAT
with its two key competitors, Phuong Nhut Computer and Networks,
and Phong Vu Computer Services.
2.2.2 Analysis of 2 key competitors of PNAT
2.2.2.1 Phuong Nhut Computer & Networks

Below are the details of Phuong Nhut office:
Address: 209 Ly Thuong Kiet, District 11
Telephone: 8530058, Fax: 9551610
Website: www.phuongnhut.com
With its slogan of “Advanced Technologies Ever”, Phuong Nhut
specializes in IT products and services with competitive price
structure. Its website has links to websites on current news, music,
real estate, poetry, mobile phones, etc., with a customer rating
section on the service of its staff. It is therefore understandable that
the number of visits as of 9
th
May 2007 has reached 29,796
20
.



20
Please refer to Appendices, Figure 10, pg.11) to view Phuong Nhut’s Homepage.
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Phuong Nhut’s advertising of range of activities is more user-friendly and
focused than PNAT, with only 5 key service areas:
• IT network solutions

• Provision of IT accessories
• Installation and servicing at site
• Maintenance service at site
• Website design

2.2.2.2 Phong Vu Computer Services
Compared with PNAT and Phuong Nhut, Phong Vu is operating on a
larger scale, with a head office and a maintenance center:

Phong Vu Head Office:
Address: 264C Nguyen Thi Minh Khai Street, District 3, HCMC
Telephone: 84-8- 9330762 - 9330763 – 9330764 - 9330766 - 9301292
Fax: 84-8- 9330765
Email:
Website: www.vitinhphongvu.com

Phong Vu Maintenance Center:
Address: 129, Cach Mang Thang 8 Street, District 3, HCMC
Telephone: 84-8 - 8327872 - 8327873 - 9290623 – 9290624

Phong Vu has more diverse range of IT products, and it is more focused
than PNAT which sells both IT and Office products. Phong Vu has a
detailed price list of all products on sale. This pricing is very competitive,
and Phong Vu also has volume/price discounts for high purchase
amounts
21
.


21

Please refer to Appendices (Figure 11, pg. 12) for Homepage of Phong Vu’s website.
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