Marketing plan for certificate authority service of Viettel Telecom = Kế hoạch Marketing cho dịch vụ chứng thực chữ ký số của công ty viễn thông Viettel

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vietnam national university, HANOI
school of business







Nguyen Thu Phuong





MARKETING PLAN FOR CERTIFICATE AUTHORITY
SERVICE OF VIETTEL TELECOM





master of business administration thesis

Hanoi - 2011

vietnam national university, HANOI
school of business





Nguyen Thu Phuong





MARKETING PLAN FOR CERTIFICATE AUTHORITY
SERVICE OF VIETTEL TELECOM





Major: Business Administration
Code: 603405

Master of business administration thesis




Supervisors: Ph.D Tran Doan Kim







Hanoi – 2011
i
CONTENTS
ACKNOWLEDGEMENTS Error! Bookmark not defined.
ABSTRACT Error! Bookmark not defined.
TÓM TẮT Error! Bookmark not defined.
CONTENTS i
LIST OF TABLES iv
LIST OF FIGURES iv
INTRODUCTION 1
1. The problem 1
2. Objective 2
3. Scope 2
4. Methods / Approaches 2
5. Short Introduction 3
CHAPTER I 4

AN OVERVIEW OF MARKETING PLAN 4
I. Definition of marketing plan 4
1. Definition 4
2. Purpose of the Marketing Plan 5
3. The marketing planning process 5
II. MARKETING PLAN 6
1. EXECUTIVE SUMMARY 6
2. SITUATION ANALYSIS 6
2.1. Market analysis 6
2.1.1. Market Size 7
2.1.2. Market Growth Rate 7
2.1.3. Market Trends 8
2.1.4. Key Success Factors 8
2.2. Competitor analysis 8
2.3. SWOT Analysis 9
2.3.1. Strengths 9
2.3.2. Weaknesses 10
2.3.3. Opportunities 10
2.3.4. Threats 10
3. MARKETING STRATEGY 11
3.1. Marketing Objectives 11
3.2. Market Segmentation 11
3.2.1. Bases for Segmentation in Consumer Markets 12
3.2.2. Bases for Segmentation in Industrial Markets 14
3.3. Positioning 15
4. MARKETING – MIX 16
4.1. Product Marketing 16
4.1.1. Product level 16
4.1.2. Product strategy 17
4.2. Pricing 19

4.2.1. Definition 19
4.2.2. Types of Pricing strategies 20
4.3. Distribution 21
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4.4. Promotion 23
4.5. People 24
4.6. Process 26
4.7. Physical Evidence 27
5. FINANCIAL FORECAST 27
6. IMPLEMENTATION 28
CHAPTER 2 30
CURRENT MARKETING ACTIVITIES FOR VIETTEL CERTIFICATE AUTHORITY
(VIETTEL-CA) SERVICE 30
I. AN OVERVIEW OF VIETTEL GROUP 30
1. History 30
2. The growth chart 32
3. Organizing structure 34
II. THE INTRODUCTION OF CERTIFICATE AUTHORITY SERVICE
(VIETTEL-CA) 35
1. The description and features of service 35
2. Digital signature applications 36
3. Service features 36
III. MARKET ANALYSIS 37
1. Global CA market 37
2. Forecast about public digital signature market in Vietnam 39
3. Market Demand 41
3.1. Market segmentation 41
3.2. Market size 44
3.3. Market growth 45
4. Competition analysis 48

4.1. VDC 48
4.2. Nacencomm 49
4.3. BKAV 51
4.4. FPT IS 52
5. SWOT Analysis 53
5.1. Strength 53
5.2. Weakness 54
5.3. Opportunity 55
5.4. Threat 55
6. Target market 55
7. Positioning 56
8. Marketing – Mix 57
8.1. Product 57
8.1.1. The product‘s strategy 57
8.1.2. Package 58
8.1.3. Logo 58
8.2. Price 58
8.2.1. Valuation Asset Approach 59
8.2.2. Service price 61
8.2.3. Equipment price 62
8.3. Place 62
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8.3.1. Direct distribution network 62
8.3.2. Indirect distribution network 63
8.4. Promotion 63
8.4.1. Advertising 63
8.4.2. Sales promotions 63
8.4.3. Public relations & publicity 65
8.4.4. Marketing communications budget 65
8.5. People 66

8.6. Process 66
8.7. Physical evidence 66
9. Evaluation of Marketing activities‘ efficiency 67
CHAPTER 3 69
MARKETING PLAN OF VIETTEL TELECOM COMPANY FOR VIETTEL
CERTIFICATE AUTHORITY SERVICE (VIETTEL – CA) 69
1. The objectives of Marketing 69
2. Target customer 69
3. Positioning 69
4. Marketing strategy 69
4.1. Product 69
4.2. Price 70
4.3. Distribution 70
4.4. Promotion 71
4.4.1. Advertising 71
4.4.1. Sales promotions 71
4.4.1. Public relations & publicity 72
4.5. People 72
4.6. Process 73
4.7. Physical evidence 73
5. Action program 73
5.1. Schedule of marketing plan action 73
5.2. Budget 78
6. Financials 79
6.1. Expense Forecast 79
6.2. Sales Forecast 80
6.3. Income Statement 81
CONCLUSION 82
LIST OF REFERENCES 83
APPENDIX 1: LIST OF INTERVIEWEES 85

APPENDIX 2: QUESTIONAIRE 89





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LIST OF TABLES
Item
Table Description
Page
2.1
Number of potential CAs in Vietnam in 2011
45
2.2
Number of potential CAs in the market in period from 2011 to 2015
46
2.3
Number of expected CAs in the market in period from 2011 to 2015
47
3.1
Schedule of Marketing plan action of Viettel in 2012
74
3.2
Budget of Marketing plan in 2012
78
3.3
Expense Forecast of Certificate Authority service
79
3.4

Viettel‘s number forecasts of CA service from 2011 to 2015
80
3.5
Viettel‘s Sales forecast of CA service from 2011 to 2015
80
3.6
Viettel‘s Income statement of CA service from 2011 to 2015
81

LIST OF FIGURES

Item
Figure Description
Page
2.1
Revenue of Viettel Company in period from 2000 to 2010
32
2.2
Profit of Viettel Company in period from 2000 to 2010
33
2.3
Human resource of Viettel Company in period from 2000 to 2010
33
2.4
Organization structure of Viettel Telecom
34
2.5
Forecast about global CA market during 2006 – 2012
38
2.6

Number of CAs granted in South Korea during 2000-2008
39
2.7
Order receivement of enterprises during 2006 - 2008
40
2.8
Percentage of enterprises having websites during 2004 – 2008
41
2.9
Market share of Certificate Authority service
48


1
INTRODUCTION
1. The problem
Along with the development of the Internet, the e-transaction is becoming
increasingly popular and is the inevitable trend not only for trade but also for the
transaction of public administration. In Vietnam, government is implementing
projects to expand e-transaction applications in the administrative services of state
agencies, especially the administrative services of the Ministry of Finance - typical
is the project of the Department of Taxation. With this situation, the government is
creating an e-transaction market in general and service market of digital signature in
particular.
According to Decision 1605/QĐ-TTg by the Prime Minister on ―Approval of
national program in applying information technology to state-owned organizations
during 2011-1015‖, the government‘s target until 2015 is that:
- 100% of state agencies from the districts, departments or equivalent or higher,
or e-portal site provides full electronic information under Article 28 of the
Law on Information Technology, Supply for all public services online level 2

and most basic public services online at least level 3 to the people and
businesses.
- 50% individual and enterprise tax forms will be declared online
- 90% of customs offices do electronic customers procedures.
- All bidding plan, bidding notices of bidding results, the list of participating
bidders is posted on the national tender; about 20% of package goods
procurement, construction and consultant services using state funds to be
made online.
- 100% of passports issued to citizens of Vietnam serving the immigration as
electronic passports.
- 30% of the records request for a building permit is submitted online.
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It can be seen, in Vietnam, the legal framework and social needs of the e-transaction
grows, enabling the service authentication of e-transactions under development,
which is typical services of digital signature (an effective tool for authentication,
ensuring the safety and integrity of electronic transaction services).
However, people's awareness of these services is limited. Furthermore, the market
has five service providers supply the Certificate Authority is: VNPT, BKAV,
Viettel, FPT, Nacencom. Viettel is the third supplier after VNPT and BKAV.
Therefore, no advantage Viettel pioneers and fierce competition between providers.
So, to solve these problems, Viettel need to boost the marketing activities to
increase understanding of customer service as well as attracting and promoting
customer using Viettel – CA service.
While working at the Center for Business customers, Viettel Telecom, I have been
studying the Viettel Certificate Authority (Viettel – CA) and found these problems
in the process of service development. Thus, I decided to chose the topic
“Marketing Plan for Viettel Certificate Authority (Viettel – CA) service in
Viettel Telecom company” for my thesis.
2. Objective
The thesis attempt to analysis market of Certificate Authority service and current

marketing activities of Viettel for Viettel – CA service, and then built the marketing
plan for this service.
3. Scope
The thesis concentrates on the Certificate Authority service in Vietnam market. In
which, it will specifically build marketing plan to Viettel Certificate Authority
(Viettel – CA) of Viettel Telecom company (a company belong to Viettel
Corporation), one of the biggest telecommunication companies in Vietnam.
4. Methods / Approaches
The thesis focuses on typical methods of economic research such as information
gathering, facts and figures comparing and critical analyzing. The author adopts
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both primary and secondary research methods and uses domestic and foreign
material sources to find out basic theories about marketing plan, meanwhile
collecting data through marketing activities, analysis reports of Viettel Telecom and
through survey by email questionnaire and telephone follow up to 100 enterprises at
Hanoi. The enterprise selected for the survey has the following criteria: it is small
and medium enterprises in many industries to understand their different needs about
CA service, so that classify customers to different segmentation and then have
suitable marketing strategy. Then, the author uses the systematical, statistical,
analytical methods to analyze all collected data.
5. Short Introduction
Apart from the introduction, conclusion and appendices, the thesis consists of three
chapters:
- Chapter I: An overview of marketing plan
- Chapter II: Current marketing activities for Viettel Certificate Authority
(Viettel – CA) service
- Chapter III: Marketing plan of Viettel Telecom company for Viettel
Certificate Authority (Viettel – CA) service.

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CHAPTER I
AN OVERVIEW OF MARKETING PLAN
I. Definition of marketing plan
1. Definition
Following the information from Michael Baker [8], Marketing plan is defined: ―A
marketing plan is a written document that details the necessary actions to achieve
one or more marketing objectives. It can be for a product or service, a brand, or a
product line. Marketing plans cover between one and five years.
A marketing plan may be part of an overall business plan. Solid marketing strategy
is the foundation of a well-written marketing plan. While a marketing plan contains
a list of actions, a marketing plan without a sound strategic foundation is of little
use.‖
In other information source by David Parmerlee [11]: ―A marketing plan contains
information about your company and its products, marketing objectives and
strategies, as well as how you will measure the success of your marketing
activities‖.
It describes all the marketing activities you'll perform during a specified time period
(usually one year). You'll also include any background information and research
results you used to select those marketing activities. Finally, you'll document the
costs associated with your planned marketing activities as well as the measurements
you'll use to determine success.
Most often, a marketing plan is a component of a business plan. A business plan
basically states how you plan to run your company–what your goals are, how much

money it will take to achieve your goals and what activities you'll perform to
achieve your goals. Marketing, obviously, is one of those activities. Marketing plans
sometimes stand alone but should always support and be closely linked to a
company's business objectives.‖
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2. Purpose of the Marketing Plan
A marketing plan helps you establish, direct and coordinate your marketing
efforts. Preparing a marketing plan forces you to assess what's going on in your
marketplace and how it affects your business. It also provides a benchmark for later
measurement. Often, simply embarking on the process of preparing a marketing
plan guides you in developing a successful marketing strategy.
3. The marketing planning process
In most organizations, "strategic planning" is an annual process, typically covering
just the year ahead. Occasionally, a few organizations may look at a practical plan
which stretches three or more years ahead.
To be most effective, the plan has to be formalized, usually in written form, as a
formal "marketing plan." The essence of the process is that it moves from the
general to the specific; from the overall objectives of the organization down to the
individual action plan for a part of one marketing program. It is also an interactive
process, so that the draft output of each stage is checked to see what impact it has
on the earlier stages - and is amended.
The marketing process model based on the publications of Philip Kotler [13]. It
consists of 5 steps, beginning with the market & environment research. After fixing
the targets and setting the strategies, they will be realized by the marketing mix in
step 4. The last step in the process is the marketing controlling. Beside this process
of Philip Kotler, there are many other Marketing Plan Model of different marketing
specialists. So, base on my research I conclude a Marketing Plan Model below.

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II. MARKETING PLAN
1. EXECUTIVE SUMMARY
While the business plan‘s executive summary is the first thing the readers of your
business plan see, it should be the last part of the business plan you write.
The purpose of the executive summary of the business plan is to provide your
readers with an overview of the business plan. Think of it as an introduction to your
business. Therefore, the marketing plan‘s executive summary will include
summaries of:
 A description of company, including products and/or services
 Mission statement
 Business‘s management
 The market and customer
 Marketing and sales
 Competition
 Business‘s operations
 Financial projections and plans
The executive summary will end with a summary statement, a ―last kick at the can‖
sentence or two designed to persuade the readers of your business plan that your
business is a winner.
2. SITUATION ANALYSIS
2.1. Market analysis
―The goal of a market analysis is to determine the attractiveness of a market and to
understand its evolving opportunities and threats as they relate to the strengths and
weaknesses of the firm.‖
David A. Aaker outlined the following dimensions of a market analysis [3]:
 Market size (current and future)
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 Market growth rate
 Market profitability
 Market trends

 Key success factors
2.1.1. Market Size
The size of the market can be evaluated based on present sales and on potential
sales if the use of the product were expanded. The following are some information
sources for determining market size:
 Government data
 Trade associations
 Financial data from major players
 Customer surveys
2.1.2. Market Growth Rate
A simple means of forecasting the market growth rate is to extrapolate historical
data into the future. While this method may provide a first-order estimate, it does
not predict important turning points. A better method is to study growth drivers
such as demographic information and sales growth in complementary products.
Such drivers serve as leading indicators that are more accurate than simply
extrapolating historical data.
Important inflection points in the market growth rate sometimes can be predicted by
constructing a product diffusion curve. The shape of the curve can be estimated by
studying the characteristics of the adoption rate of a similar product in the past.
Ultimately, the maturity and decline stages of the product life cycle will be reached.
Some leading indicators of the decline phase include price pressure caused by
competition, a decrease in brand loyalty, and the emergence of substitute products,
market saturation, and the lack of growth drivers.
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2.1.3. Market Trends
Changes in the market are important because they often are the source of new
opportunities and threats. The relevant trends are industry-dependent, but some
examples include changes in price sensitivity, demand for variety, and level of
emphasis on service and support. Regional trends also may be relevant.
2.1.4. Key Success Factors

The key success factors are those elements that are necessary in order for the firm to
achieve its marketing objectives. A few examples of such factors include:
 Access to essential unique resources
 Ability to achieve economies of scale
 Access to distribution channels
 Technological progress
It is important to consider that key success factors may change over time, especially
as the product progresses through its life cycle.
2.2. Competitor analysis
In formulating business strategy, managers must consider the strategies of the firm's
competitors. While in highly fragmented commodity industries the moves of any
single competitor may be less important, in concentrated industries competitor
analysis becomes a vital part of strategic planning.
Competitor analysis has two primary activities, 1) obtaining information about
important competitors, and 2) using that information to predict competitor behavior.
The goal of competitor analysis is to understand:
 with which competitors to compete,
 competitors' strategies and planned actions,
 how competitors might react to a firm's actions,
 how to influence competitor behavior to the firm's own advantage.
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Casual knowledge about competitors usually is insufficient in competitor analysis.
Rather, competitors should be analyzed systematically; using organized competitor
intelligence gathering to compile a wide array of information so that well-informed
strategy decisions can be made.
Competitor Analysis Framework
Michael Porter presented a framework for analyzing competitors [14]. This
framework is based on the following four key aspects of a competitor:
 Competitor's objectives
 Competitor's assumptions

 Competitor's strategy
 Competitor's capabilities
Objectives and assumptions are what drive the competitor, and strategy and
capabilities are what the competitor is doing or is capable of doing.
2.3. SWOT Analysis
SWOT Analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable to
achieving that objective.
A SWOT analysis is a first, but critical, step in developing an organizational
strategy. By examining the company's internal capabilities—its strengths and
weaknesses and its external environment—opportunities and threats, it helps to
create strategies that can proactively contend with organizational challenges.
2.3.1. Strengths
Strengths, in the SWOT analysis, are a company's capabilities and resources that
allow it to engage in activities to generate economic value and perhaps competitive
advantage. A company's strengths may be in its ability to create unique products, to
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provide high-level customer service, or to have a presence in multiple retail
markets. Strengths may also be things such as the company's culture, its staffing and
training, or the quality of its managers. Whatever capability a company has can be
regarded as strength.
2.3.2. Weaknesses
A company's weaknesses are a lack of resources or capabilities that can prevent it
from generating economic value or gaining a competitive advantage if used to enact
the company's strategy. There are many examples of organizational weaknesses. For
example, a firm may have a large, bureaucratic structure that limits its ability to
compete with smaller, more dynamic companies. Another weakness may occur if a
company has higher labor costs than a competitor who can have similar productivity

from a lower labor cost. The characteristics of an organization that can be strength,
as listed above, can also be a weakness if the company does not do them well.
2.3.3. Opportunities
Opportunities provide the organization with a chance to improve its performance
and its competitive advantage. Some opportunities may be anticipated, others arise
unexpectedly. Opportunities may arise when there are niches for new products or
services, or when these products and services can be offered at different times and
in different locations. For instance, the increased use of the Internet has provided
numerous opportunities for companies to expand their product sales.
2.3.4. Threats
Threats can be an individual, group, or organization outside the company that aims
to reduce the level of the company's performance. Every company faces threats in
its environment. Often the more successful companies have stronger threats,
because there is a desire on the part of other companies to take some of that success
for their own. Threats may come from new products or services from other
companies that aim to take away a company's competitive advantage. Threats may
also come from government regulation or even consumer groups.
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3. MARKETING STRATEGY
Following Michael Baker [8], A marketing strategy is a process that can allow an
organization to concentrate its limited resources on the greatest opportunities to
increase sales and achieve a sustainable competitive advantage. A marketing
strategy should be centered on the key concept that customer satisfaction is the main
goal.
3.1. Marketing Objectives
Marketing objectives should be based on understanding company‘s strengths and
weaknesses, and the business environment you operate in. They should also be
linked to company‘s overall business strategy.
Objectives should always be SMART:
- Specific - for example, you might set an objective of getting ten new

customers.
- Measurable - whatever your objective is, you need to be able to check
whether you have reached it or not when you review your plan.
- Achievable - you must have the resources you need to achieve the objective.
The key resources are usually people and money.
- Realistic - targets should stretch you, not demotivate you because they are
unreasonable and seem to be out of reach.
- Time-bound - you should set a deadline for achieving the objective. For
example, you might aim to get ten new customers within the next 12 months.
3.2. Market Segmentation
Market segmentation is the identification of portions of the market that are different
from one another. Segmentation allows the firm to better satisfy the needs of its
potential customers.
The marketing concept calls for understanding customers and satisfying their needs
better than the competition. But different customers have different needs, and it
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rarely is possible to satisfy all customers by treating them alike. A good market
segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as
different as possible between segments.
3.2.1. Bases for Segmentation in Consumer Markets
Consumer markets can be segmented on the following customer characteristics:
Geographic, Demographic, Psychographic, Behavioralistic.
Geographic Segmentation
The following are some examples of geographic variables often used in
segmentation.
 Region: by continent, country, state, or even neighborhood
 Size of metropolitan area: segmented according to size of population
 Population density: often classified as urban, suburban, or rural
 Climate: according to weather patterns common to certain geographic

regions
Demographic Segmentation
Some demographic segmentation variables include:
 Age
 Gender
 Family size
 Family lifecycle
 Generation: baby-boomers, Generation X, etc.
 Income
 Occupation
 Education
 Ethnicity
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 Nationality
 Religion
 Social class
Many of these variables have standard categories for their values. For example,
family lifecycle often is expressed as bachelor, married with no children (DINKS:
Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these
categories have several stages, for example, full-nest I, II, or III depending on the
age of the children.
Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle.
Activities, interests, and opinions (AIO) surveys are one tool for measuring
lifestyle. Some psychographic variables include:
 Activities
 Interests
 Opinions
 Attitudes
 Values

Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products.
Some behavioralistic variables include:
 Benefits sought
 Usage rate
 Brand loyalty
 User status: potential, first-time, regular, etc.
 Readiness to buy
 Occasions: holidays and events that stimulate purchases
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Behavioral segmentation has the advantage of using variables that are closely
related to the product itself. It is a fairly direct starting point for market
segmentation.
3.2.2. Bases for Segmentation in Industrial Markets
In contrast to consumers, industrial customers tend to be fewer in number and
purchase larger quantities. They evaluate offerings in more detail, and the decision
process usually involves more than one person. These characteristics apply to
organizations such as manufacturers and service providers, as well as resellers,
governments, and institutions.
Many of the consumer market segmentation variables can be applied to industrial
markets. Industrial markets might be segmented on characteristics such as:
 Location
 Company type
 Behavioral characteristics
Location
In industrial markets, customer location may be important in some cases. Shipping
costs may be a purchase factor for vendor selection for products having a high bulk
to value ratio, so distance from the vendor may be critical. In some industries firms
tend to cluster together geographically and therefore may have similar needs within
a region.

Company Type
Business customers can be classified according to type as follows:
 Company size
 Industry
 Decision making unit
 Purchase Criteria
Behavioral Characteristics
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In industrial markets, patterns of purchase behavior can be a basis for segmentation.
Such behavioral characteristics may include:
 Usage rate
 Buying status: potential, first-time, regular, etc.
 Purchase procedure: sealed bids, negotiations, etc.
3.3. Positioning
Following Philip Kotler [14], After a company has decided which market segments
to enter, it must decide what 'position' it wants to occupy in those segments. A
product's position is the place the product occupies in consumers' minds. If a
product were perceived to be exactly like another product on the market, consumers
would have no reason to buy it. Market positioning gives a product a clear,
distinctive and desirable place in the minds of target consumers compared with
competing products. Marketers plan positions that distinguish their products from
competing brands and give them the greatest strategic advantage in their target
markets.
In positioning its product, the company first identifies possible competitive
advantages upon which to build the position. To gain competitive advantage, the
company must offer greater value to chosen target segments, either by charging
lower prices than competitors or by offering more benefits to justify higher prices.
However, if the company positions the product as offering greater value, it must
deliver greater value. Effective positioning begins with actually differentiating the
company's marketing offer so that it gives consumers more value than is offered by

the competition.
The company can position a product on only one important differentiating factor or
on several. However, positioning on too many factors can result in consumer
confusion or disbelief. Once the company has chosen-a desired position, it must
take steps to deliver and communicate that position to target consumers.
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4. MARKETING – MIX
According to Philip Kotler & Gary Armstrong definition [13], marketing decisions
generally fall into the following four controllable categories:
 Product
 Price
 Place (distribution)
 Promotion
 People
 Process
 Physical evidence
4.1. Product Marketing
The term "product" refers to tangible, physical products as well as services. A
product as anything that is offered to a market for attention, acquisition, use or
consumption and that might satisfy a want or need. Products include more than just
tangible goods. Broadly defined, products include physical objects, services,
persons, places, organizations, ideas or mixes of these entities.
4.1.1. Product level
When a company set a plan for it‘s product, the product should be viewed in three
levels.
- Core product: The most basic level is the core product, which addresses the
question: What is the buyer really buying? The core product stands at the
centre of the total product. It consists of the problem-solving services or core
benefits that consumers seek when they buy a product. Thus when designing
products, marketers must first define the core of benefits that the product will

provide to consumers.
- Actual product: The product planner must next build an actual product around
the core product. Actual products may have as many as five characteristics: a
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quality level, features, styling, a brand name and packaging. Its name, parts,
styling, features, packaging and other attributes have all been combined
carefully to deliver the core benefit - a convenient, high-quality way to capture
important moments. The strategy at this level involves organizations branding,
adding features and benefits to ensure that their product offers a differential
advantage from their competitors.
- Augmented product: Finally, the product planner must build an augmented
product around the core and actual products by offering additional consumer
services and benefits.
Therefore, a product is more than a simple set of tangible features. Consumers tend
to see products as complex bundles of benefits that satisfy their needs. When
developing products, marketers must first identify the core consumer needs that the
product will satisfy, then design the actual product and finally find ways to augment
it in order to create the bundle of benefits that will best satisfy consumers.
4.1.2. Product strategy
When placing a product within a market many factors and decisions have to be
taken into consideration. These include:
- Product quality:
Quality is one of the marketer's major positioning tools. Quality has two
dimensions- level and consistency. In developing a product, the marketer must first
choose a quality level that will support the product's position in the target market.
Here, product quality stands for the ability of a product to perform its functions; it
includes the product's overall durability, reliability, precision, ease of operation and
repair, and other valued attributes. Although some of these attributes can be
measured objectively, from a marketing point of view, quality should be measured
in terms of buyers' perceptions. Companies rarely try to offer the highest possible

quality level - few customers want or can afford the high levels of Product quality
offered in products. Instead, companies choose a quality level that matches target
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market needs and the quality levels of competing products. Beyond quality level,
high quality can also mean consistently delivering the targeted level of quality to
consumers. In this sense, quality means 'absence of defects or variation'.
Many companies have turned quality into a potent strategic weapon. Strategic
quality involves gaining an edge over competitors by consistently offering products
and services that better serve customers' needs and preferences for quality. As one
expert proclaims: 'Quality is not simply a problem to be solved: it is a competitive
opportunity. Others suggest, however, that quality has now become a competitive
necessity - only companies with the best quality will thrive.
- Product features:
A product can be offered with varying features. A 'stripped-down' model, one
without any extras, is the starting point. The company can create more features by
adding higher-level models. Features are a competitive tool for differentiating the
company's product from competitors' products. Being the first producer to introduce
a needed and valued new feature is one of the most effective ways to compete.
How can a company identify new features and decide which ones to add to its
product? The company should periodically survey buyers who have used the
product and asked these questions: How do you like the product? Which specific
features of the product do you like most? Which features could we add to improve
the product? How much would you pay for each feature? The answers provide the
company with a rich list of feature ideas, each of which should be assessed on the
basis of its customer value versus its company cost. The analysis should give insight
into features that customer‘s value highly in relation to costs, and which would truly
improve the product's competitive position.
- Product Design
Another way to add product distinctiveness is through product design. Some
companies have reputations for outstanding design, some companies have

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integrated design with their corporate culture. So design can be one of the most
powerful competitive weapons in a company's marketing arsenal.
As competition intensifies, design will offer one of the most potent tools for
differentiating and positioning products of all kinds. Good design can attract
attention, improve product performance, cut production costs and give the product a
strong competitive advantage in the target market.
- Product branding
One of the most important decisions a marketing manager can make is about
branding. Brands have the power of instant sales; they convey a message of
confidence, quality and reliability to their target market. Branding has become a
central issue in product strategy. On the one hand, developing branded product
requires a great deal of long-term marketing investment, especially for advertising,
promotion and packaging. A brand is a name, term, sign, symbol, design or a
combination of these, which is used to identify the goods or services of one seller or
group of sellers and to differentiate them from those of competitors. Thus a brand
identifies the maker or supplier of a product.
A brand can deliver up to four levels of meaning:
 Attributes: A brand first brings to mind certain product attributes.
 Benefits: Customers do not buy attributes, they buy benefits. Therefore,
attributes must be translated into functional and emotional benefits.
 Values: A brand also says something about the buyers' values.
 Personality: A brand also projects a personality.
4.2. Pricing
4.2.1. Definition
Pricing is one of the most important elements of the marketing mix, as it is the only
mix, which generates a turnover for the organization. Pricing is difficult and must
reflect supply and demand relationship. Pricing a product too high or too low could