Creat marketing strategies jat industrial equipment and automobile accessories company in the period from 2012 to 2020

Paris Graduate School of Management

Thai Nguyen University

INTERNATIONAL EXECUTIVE
MASTER OF BUSINESS ADMINISTRATION PROGRAM

THESIS TITLE

CREATE MARKETING STRATEGIES JAT INDUSTRIAL
EQUIPMENT AND AUTOMOBILE ACCESSORIES COMPANY
IN THE PERIOD FROM 2012 TO 2020

Student name:

NGUYEN BUI HA

Intake I

11 - 2012


Graduation thesis

TABLE OF CONTENT:

INTRODUCTION ................................................................................................ 7
1. The necessity of theme research: ..........................................................................7
2. Purpose and applicability of thesis........................................................................7
3. Research method...................................................................................................8
4. Structure and composition of the thesis ................................................................8

CHAPTER I: RATIONALE FOUNDATION TO CONSTRUCTION AND
DEVELOPMENT OF BUSINESS STRATEGY ................................................ 9
I. Concept, role and position of Strategic Marketing ................................................9
1. Overview of the business development strategy .................................................9
1.1. The concept of marketing strategy of the business .........................................9
1.1.1. Concept of strategy....................................................................................9
1.2. The role and position of the marketing strategy in a company ....................17
II. Research and market segmentation in Marketing .............................................18
2.1. Common market research ..............................................................................18
2.1.1. Market and the role of market ...................................................................18
2.1.1. Theory of market research.......................................................................18
2.1.2. The process of market research ...............................................................19
2.1.3. Definition of customer satisfaction (Philip Kotler, 2003) .........................19
2.1.4. The relationship between customer satisfaction and service quality ........20
2.1.5. The different levels of demands and mission of Marketing .......................21
III. Marketing strategy development of a business .................................................22
3.1. Position of marketing strategy planning in the strategic management
process ....................................................................................................................22
3.2. Marketing strategic planning .........................................................................24
3.2.1 Marketing plan making in business............................................................26
3.2.2. Marketing strategic planning.....................................................................26
3.2.3 Marketing strategy selection………………………………………………………………………….…..26
3,2.4. Marketing process management ..............................................................26
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CHAPTER II ...................................................................................................... 30
ANALYZE

THE

EQUIPMENT

&

BUSINESS

PICTURE

AUTOMOBILE

OF

JAT

ACCESSORIES

INDUSTRIAL

JOINT

STOCK

COMPANY ......................................................................................................... 30
I.

GENERAL INTRODUCTION TO JAT INDUSTRIAL EQUIPMENT &

AUTOMOBILE ACCESSORIES JOINT STOCK COMPANY............................30
1. History of foundation and development ...........................................................30
1.1. The process of foundation ............................................................................30
1.2 Function & duty ............................................................................................31
1.3 Mission, vision, business philosophy .............................................................32
1.3.1 Mission .....................................................................................................32
1.3.2 Vision .......................................................................................................33
1.3.3 Business philosophy: ................................................................................33
1.3.4 Organization: ...........................................................................................33
2. Resource factors.................................................................................................35
2.1 Capital resource.............................................................................................35
2.2 Human resource ............................................................................................36
2.3 Technology ....................................................................................................36
2.3.1. Machines & equipment ............................................................................36
2.3.2. Production technology: ...........................................................................37
2.4 Economic relations ........................................................................................37
3. Business picture .................................................................................................38
3.1. Investment state ............................................................................................38
3.2. The objective and the general of the project: ................................................38
3.3. The business picture .....................................................................................39
3.4. Business result:.............................................................................................42
3.5 Financial activities ........................................................................................43
3.5.1 Depreciate fixed assets:............................................................................43
3.5.2 Mean salary: ............................................................................................43
II. ANALYSIS OF EXTERIOR FACTORS AFFECTING ENTERPRISE ..........43
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1. Macroscopic environment .................................................................................43
1.1 Economic environment..................................................................................43
1.2 Political-legal environment...........................................................................46
1.3 Cultural and social environment ...................................................................47
1.4 Technological environment ...........................................................................47
1.5 Natural environment.....................................................................................48
2. Analysis on the industry premises.....................................................................48
2.1 Analysis on the forces from potential competitors.........................................48
2.2 Analysis on the forces from customers ..........................................................49
2.3 Analysis on the forces from supplier .............................................................49
2.4. Forces from substitute products....................................................................50
2.5. Analysis on the forces from competitors in the same industry......................51
3. Opportunities and challenges ............................................................................51
3.1. Opportunities: ...............................................................................................51
3.2. Challenges ....................................................................................................53
4. Analysis of competition, matrix model CPM....................................................54
5. Matrix model EFE .............................................................................................55
III. Analysis of the companies’ internal situation....................................................56
1. Analysis of resources..........................................................................................56
1.1 Labor resource...............................................................................................56
1.2 Analysis of marketing activities .....................................................................56
1.3. Product strategy:...........................................................................................59
1.4. The price strategy: ........................................................................................59
1.5. The product distribution strategy:.................................................................60
1.6. The sales promotion strategy: .......................................................................60

1.7. The customer relationship management strategy – The key element creating
the success of the company: ................................................................................60
1.8. The other marketing strategies: ....................................................................61
1.8.1. The human strategy: ................................................................................61
1.8.2. E-channel management policy:................................................................61
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1.8.3.The business intelligence strategy (can be used).......................................61
1.9. About the technology ....................................................................................61
1.10. Analysis of fiscal capability ........................................................................61
1.11. Management Policy ....................................................................................63
1.12. Analysis of production activities .................................................................63
1.13. Analysis of Research and Development Activities ......................................65
1.14. Analysis of Information Management Activities ........................................65
2. Analysis of Support Activities ...........................................................................66
2.1 Analysis of management activities of the supplier .........................................66
2.2 Analysis of management activities of workforce............................................66
2.3 General analysis of management activities....................................................67
3. Analysis of assessment, identification and assessment of valued force and
essential capacity....................................................................................................68
4. IFE matrix construction ....................................................................................69
IV. SWOT ANALYSIS .............................................................................................70

CHAPTER III: CONCLUSIONS AND RECOMMENDATIONS ................. 72
I. BUSINESS DEVELOPMENT ORIENTATION FOR 2012-2020 ......................72

1. Marketing plan objectives .................................................................................72
1.1. Scale, market share.......................................................................................72
1.2. Specific objectives .........................................................................................72
II. PROPOSAL FOR BUSINESS STRATEGY ......................................................74
1. TOWS Matrix ....................................................................................................74
2. SPACE matrix....................................................................................................75
3. Proposed strategic options through QSPM matrix ..........................................78
3.1. QSPM for S-O Group ...................................................................................78
3.2. QSPM for S-T group.....................................................................................80
3.3. QSPM for W-O group...................................................................................81
3.4. QSPM matrix for W-T group........................................................................82
III.

SUGGEST SOLUTIONS TO DEVELOP STRATEGIES FOR THE

COMPANY ...............................................................................................................83
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1. Human resource.................................................................................................83
2. Financial solution...............................................................................................85
3. Suggest marketing strategies for the company: ...............................................85
3.1 Design the marketing system .........................................................................86
C. SPECIFIC MARKETING-MIX POLICY ...................................................88
3.2. The reality of supporting organization for marketing strategy .....................91
3.2.1. Use information systems ..........................................................................91

3.3 Strategic Marketing plan ...............................................................................92
3.3.1 Advertising plan .......................................................................................92
3.4. Measures for promotion and other consumption support ............................93
3.5. Specifying marketing strategy.......................................................................94
4. R&D solution .....................................................................................................95
IV. PROPOSAL FOR GOVERNMENT and enterprise.........................................96
A.

For government ...............................................................................................96

LIST OF REFERENCES ..................................................................................... 98

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INTRODUCTION
1. The necessity of theme research:
Creating business strategies is a permanent activity of a company. It is said that
identifying a right strategy will decide the success of that company’s objective and
mission. However, it mustn’t be that all Vietnamese companies have good strategies.
Every failure of a company is an evidence of a poor strategy. Therefore, creating
strategies is always focused on by businesses and keeps its burning nature including
businesses with the good development strategies. This becomes more important in the
Vietnam’s integration into the global economy.

Big chances are more, and then

challenges are more. To compete successfully, businesses should identify right ways and
good strategies so that they can identify their strong points, weak points, opportunities
and their risks.
In fact, many businesses do not pay much attention to development strategies,
especially medium businesses and small size businesses. Even these businesses do not
identify a strategy for their development because the main reason that they are not aware
of the role of strategies.
Now, Vietnam is developing the branch of automobiles and motorcycle
manufacture but that the internal supporting industry is a fledgling one with the slow
development speed is the biggest barrier which is holding the development of this branch
back. One of the reasons which make Vietnam’s supporting industry underdeveloped is
that businesses do not attach special importance to create business and manufacture
strategies methodically. This thesis is very necessary to establish a model of company in
the field of manufacturing small but sophisticated accessories for motorbikes effectively
contributing its part to the development of the automobile and motorcycle industry and
supporting industry in Vietnam.
2. Purpose and applicability of thesis
 In theory:
This thesis includes knowledge of all subjects taught at IEMBA course and applied in
the practical manufacture at JAT Industrial Equipment & Automobile Accessories Joint
Stock Company effectively.
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

In practice:
Contribute to equalize manufacture of automobile accessories and industrial

equipment, JAT created successfully highly applicable business strategies for the period
2012 - 2020.
Build JAT Industrial Equipment & Automobile Accessories Joint Stock Company
into a model of businesses in the supporting industry: small, sophisticated, effective.
Create a breakthrough step in strategy helping the supporting industry of Vietnam to
develop next years.
3. Research method
Main research method applied to research this thesis is descriptive and statistical
method and strategy planning matrix (Internal Factor Evaluation Matrix - IFE, External
Factor Evaluation Matrix – EFE, Competitive Profile Matrix, Opportunity, Threats,
Strong, Weakness - SWOT,...). Theorical foundation of this method is mentioned in
Chapter 1 of this thesis.


Information collection:
Secondary information: will be collected from Vietnam Association of Car and

Motorcycle including statistics data of Vietnam Honda Company, JAT Industrial
Equipment & Automobile Accessories Joint Stock Company and audited financial
accounting information.
Primary information: Interview directly staffs: business department, production
department, deliver questionnaires to customers and suppliers.
Analyze data: apply statistic techniques to process, summarize, evaluate, compare,
assess and produce results of all researched contents.
4. Structure and composition of the thesis: this thesis consists of 3 as follows:
Introduction

Chapter I: Aargumentative basis for creating business strategies for businesses.
Chapter II: Analyze the business picture of JAT industrial equipment &
automobile accessories joint stock Company.
Chapter III: Conclusion and suggestion
Conclusion
List of reference materials
Appendix
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CHAPTER I: RATIONALE FOUNDATION TO CONSTRUCTION
AND DEVELOPMENT OF BUSINESS STRATEGY

I. CONCEPT, ROLE AND POSITION OF STRATEGIC MARKETING
1. Overview of the business development strategy
1.1. The concept of marketing strategy of the business
1.1.1. Concept of strategy
At the moment there are many different definitions of strategy, the underlying cause
of this difference is due to the different systematic concepts for the organization in
general and the different approaches of the organization's strategy in particular.
Ontologically, depending on the perspective of positivism or constructivism, the
essence of strategy is determined by the law of nature or the significant impact of subject.
In fact, strategy is usually defined towards practices in order to easily facilitate the
process of practice within the organization.
According to Johnson and Scholes, strategy is defined as follows:
“Strategy is the determination of direction and scope of an organization over the

long run, in which the organization must gain the advantage through a combination of
resources in a challenging environment, to meet the best market demands and satisfy the
expectations of the stakeholders of the organization”.
According to Michael Porter (1996), "Strategy is the job to create a balance for
activities in a company. The success of strategy is mainly based on carrying on the tasks
successfully... and combine them together ... the core of the strategy is to "choose what
not to do".
With this approach, strategy is making a difference in competition, search and do
what not to be done. Basically, strategy is to build competitive advantages, which only
exists in unique activities. Strategy is constructing an only position and has a function to
impact a set of different activities.
Known strategy is a plan for a task, mission, or a long-term orientation, that requires
longer time to make. Usually it carries a big significance, such like military strategy is to
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plan the direction for a campaign, or a business strategy is to plan its development in a
period of 5 or 10 years...
1.1.2. Concept of Marketing
There are many different concepts of Marketing, depending on the actual situation
and the different perceptions people have that forms those differences. The differences
are not only in the level of details but also in the content that it contains. However it is
admitted that marketing is created in order to support efficiently commercial activities,
sales and consumption of products. Nowadays, with the help of modern science,
management level and the industry, it gives birth to Business Marketing and Modern
Marketing. With this new point of view, marketing activities grow both in quality and

quantity that explains more correctly the meaning that it carries. We can define marketing
as follows:
“Marketing is the process of implementing activities to achieve the organization's
objectives by anticipating the needs of customers or consumers to control the flow of
goods and services to satisfy the needs from manufacturer to the customers or
consumers” (according to E.J McCarthy).
And in order to apply modern marketing to the commerce of economic
organizations, the definition of commercial marketing can be accepted:
“Commercial marketing is the process of organizing, managing and controlling
activities in order to create possibilities and achieve the most effective consumption of a
product of an organization to best satisfy the demand of producers, traders and
consumers.”
Modern Marketing is no longer confined to commercial areas, it is no longer
activities to help sales or consume the available goods. If traditionally, people concept
marketing to be looking for the market to sell the existing products, which considers
production on top, then followed by the market, in the modern view market is seen as the
most important thing in determining reproduction of goods. In the market, buyers
(demand) are the determination in the business production process.
Modern Marketing starts from the market. It includes all activities such as market
research, forecasting the development of the market in the future to the product strategy,
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sales and after-sales services for the product that the market requires so that the volume
of goods produced are to be fully consumed in the market.
In summary, in the process of forming a marketing point of view so far, there are all

basic concepts for organizations to carry out marketing activities such as:


Marketing as an activity
 Incorrect views about marketing

a. Marketing is advertising and promote sales
Every day we get a lot of advertising in newspapers, television, flyers and a lot of
solicitations from sellers in shops, markets and agencies coming to our workplace. Not to
mention other promotional activities like sales promotion, event sponsorships,
exhibitions, fairs, customer conferences.
All the above activities are within the scope of marketing. However if we consider
marketing to only those activities, or consider those activities to be the essence of
marketing, it is incomplete. The promotional activities are just part of consumption
process, and consumption process is just the tip of a marketing iceberg.
b. Marketing is product consumption
Product consumption is the activity that happens right after production in order to
transfer ownership of the products or services to the buyers and collect the money.
Consumption is only one of the 4 main activities of the business, while marketing
appears in all 4 stages of the business process.


Social orientation of marketing

Marketing is a social activity of human being to satisfy demands through trading.
According

to

the

American

Marketing

Association:

"Marketing

is

the

implementation of business line aimed at transportation of goods and services from
producers to consumers or user."
According to Philip Kotler: "Marketing is a form of human activity in order to
satisfy their needs and wants through exchange."


Administrative definition of marketing

Marketing is the administrative activities to product design, pricing, distribution,
promotion and sale to customers in order to satisfy their goals and objectives of the
organization.
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 A general definition of Marketing:
Marketing is a social management process, in which the various individuals and
groups of people get what they need and want through creating, offering and exchanging
products of value with each others.
This definition of marketing leads us to the following core concepts: urgent needs,
wants, needs, products, benefits, cost, customer satisfaction, exchange, trading, market,
marketing and marketers.
 Needs
Needs of human being are the sense of lacking something that they can feel.
People’s needs are diverse and complex. They include basic physiological needs such as
foods, clothes, keeping warm, security as well as social needs such as intimacy, trust,
relationship and other personal needs of self-esteem and self-achievement. Needs are the
fundamental element of human nature, it is not defined by social or marketers.
 Wants
Human’s wants are a particular type of desire, corresponding to the level of
knowledge and personality of an individual. It desires to manifest into specific things that
can satisfy personal wants in the way that socio-cultural life of a particular society
appears to be used to.
When the society develops, needs of its members grow? People expose more to the
objects that raise curiosity, interest and desire. The manufacturer always directs their
activities toward stimulating the desire to purchase and try to establish the relationship
between adaptations of their products with the basic needs of the people.
 Demands
Human’s needs are the desire to add more solvencies conditions. The desires
become demands when they meet purchasing power. Human is not limited by the desire
but the ability to satisfy the desire. Many people want the same product, but only a few of
them are able to satisfy their desire thanks to their ability to afford. Therefore, in
marketing activities, businesses must measure not only how many people want their
products, but more importantly how many people are capable and willing to buy them.



Products
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The basic needs, wants and desires give way to the presence of products. Products
are anything that can be brought to the market, catch attention, be received, be consumed
or used to satisfy a need or want of a person.
The concept of product and demand lead us to the concept of product satisfaction.
We can express a certain product and a certain demand into circles and present the
satisfactory level of the product by the coverage of the desired circles.
The more people the product can satisfy, the easier it can be accepted by the
consumers. So it can come to a conclusion, the manufacturers need to identify the groups
of customers that they want to sell the products to, and should provide the products that
can satisfy the demand of these groups as many as they can.


Benefit

Typically, each buyer has an income limit, a certain level of knowledge about the
product and purchasing experience. In such conditions, the buyer will have to decide to
buy the product, which produced it, how much quantity he needs to maximize an overall
satisfaction or the overall benefit as a consumer of that product.
Overall benefit of the customer is an entire benefit that he expects in each particular
product or service that can include core benefit of the product, benefit from augmented

service of that product, quality and customer service of the manufacturer, reputation and
image of the business...


Cost

Total cost of the customer is an entire cost that the customer has to give up to own
the product. It includes time, effort and spirit to search and choose the product. The
buyers assess these costs along with the cost of money to get a full idea of the total cost.
During the stage of purchasing-selling of the product, the above solution makes it
easy for the buyer to buy what they want and the seller can sell the product. However in
the consumption process, the seller needs to know if the buyer is satisfied with what they
expect from the product.


Customer Satisfaction

Customer satisfaction is the stage of perceiving of an individual through the
consumption of a product about the level of benefit that product actually brings
comparing to the expectation.
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So, to evaluate the satisfaction level of customers for a product, we compared the
results obtained from the product with his or her expectations. 3 levels of satisfaction can
exist: customer dissatisfaction if actual results are less than what they expected; customer

satisfaction if results provide commensurate with customer expectations and customers
are very satisfied if the results exceed expectations.
Customer expectations are usually formed from their previous shopping experience,
the opinions of friends and colleagues, and the information or promise from suppliers and
competitors. Through marketing efforts, the seller can influence or even alter the
expectations of the buyer. It should avoid two trends: one is, the seller manifests in the
buyer a too high expectations for its products while it does not deserve, so will disappoint
buyers; the other one is, the seller makes buyers have lower expectations of the product,
it will satisfy the buyer, but will not attract many buyers. In this case, a reasonable
marketing solution that successful businesses usually applied is the increasing
expectations of customers while ensuring product features match expectations.


Exchange and Transaction

Marketing activities take place when people decide to satisfy their desire through
the exchange.


Exchange

Exchange is the act to collect desired goods from someone by sacrificing something
in return. Exchange is one of the 4 ways that people can get what they want (selfproduction, appropriation, begging and exchange. Marketing was born from this
approach in order to get the products. Exchange is the core concept of marketing.
Exchange is a complex human activity, is the people own behavior, which never
have been in the animal world. According to Adam Smith, "People have a natural
tendency to exchange things, do transaction, and give away one thing in exchange for
another.”


Transaction

If the two parties commit an exchange have negotiated and reached an agreement,
then we say a transaction (business transactions) have occurred. Transaction is the main
unit of exchange. A business transaction is an exchange of values between the two
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parties. We can say A hand X to B in exchange for receiving Y. C gives D an amount of
3 million Dong and receive a TV. That is a business transaction made by cash.
However, there are also business transactions do not require money as one of the
commercial value. An exchanging transaction takes place when C gives D a TV and
receives a refrigerator in return. Or the exchange transaction can include giving and
receiving services instead of products, like when engineer M repairs the motorbike for
artist D and in return, D paints a portrait for M.
A business transaction involves at least two valuable objects, the conditions of the
agreement, an appropriate time, and a suitable place. Usually there is a legal system
involved to support and enforce the parties to act according to bound agreements.
Transaction differs from transfer. In a transfer, A gives X to B but does not receive
anything significant. When A gives B a present, a help or a charitable distribution, it is
called a transfer, rather than a business transaction. Marketing research object is limited
mainly in the concept of exchange and not transfer. However, the transfer behavior can
also be understood through the views of exchange. The transferor gives a product with
the hope to gain some of the benefits, such as sympathy, reduced feelings of guilt, or to
see a good behavior from the transferee.


Market

The concept of exchange inevitably leads to the concept of the market. Market is a
set of real or potential buyers for a product. The size of the market depends on the
number of individuals in demand and has the products being interested in and willing to
exchange these products to have what they want.
A market can be formed around a product, a service, or anything else of value. For
example, the labor market, including those who want to devote their work in exchange
for the amount of money or products. Currency market appears to satisfy the needs of the
people so that they can borrow, save and preserve money.
 Marketing as a business perspective


Perspective before marketing

a. Production-oriented perspective

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This point of view thinks that the secret of success in business is to produce
products cheaper and distribute them widely.
b. Product-oriented perspective
This is the perspective that the secret of success in business is to produce better
products than the competitors.

c. Sales oriented perspective
This is the perspective that the secret of success in business are sales skills and
ability to promote better than the competitors.


Marketing perspective

This perspective believes that the secret of success in business is to identify the
right target customers and their needs, satisfy these needs more effectively than
competitors.
This perspective has 4 main foundations:


Identify the right target customers



Identify the right needs of the target customers



Satisfy the needs of the target customers



Achieve the satisfaction of target customers better than the

competitors.


Social marketing perspective

This perspective thinks that the secret of success in business is to identify the right
target customers and their needs, satisfy these needs more effectively than competitors, at
the same time not compromising the long-term interests of the customers and society.
 The core concept of marketing


Need

Need is a sense of lacking something that a person can sense.
Example: needs of foods, sleep, study...
Need is not created by the society or marketers, it exists as a component of human.
The job of a marketer is to identify it and stimulate demand to develop the need.
* Maslow’s hierarchy of needs

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

Want

Want is the desire of specific things to satisfy the demand. Human’s wants never
stop to develop and is formed by the conditions of economy, politics, society...


Demand

Demand is the quantity, type of goods or services that buyers want to buy and is
able to pay.


Exchange

Exchange is an act of a person or a party to receive something and give back
something to the other party something of an equivalent value.
Conditions to carry out an exchange:
 There must be at least 2 parties
 Each party must have something of value for exchanging with the other party
 Each party must be able to execute a transaction and exchange goods or other
things
 Each party must be willing to exchange
 The 2 parties must come to an agreement of conditions to exchange
1.2. The role and position of the marketing strategy in a company
1.2.1 The role of marketing
Marketing decides and coordinates business production activities of the business
with the market. It ensures that the business activities are market driven, know to make
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market, needs and wants of customers a solid ground for all business decisions.

Marketing nowadays plays a central role in translating customer information to new
products, new services and then segment these products on the market.
1.2.2 The role and position of modern marketing in business
New products and services is the companies’ answer to changing customer
preferences and also the dynamics of the competition. Customer needs change, and the
companies have to stay innovative in order to satisfy and meet the needs of our
customers.
So marketing plays a role to:
- Identify customer needs, establish and lead the process of innovation.
- Collaborate other research and development process to accelerate the
implementation of new products, and it is the most important factor affecting the
success of a product.
- Help businesses spot the new trends, quickly become lever, turn them into
opportunities, which aids for a strategic development and sustainable growth of
the business.
II. RESEARCH AND MARKET SEGMENTATION IN MARKETING
1. Common market research
1.1. Market and the role of market
1.1.1. Theory of market research
a. Concept
Market research is the process of collecting and processing data to provide market
information to support decision-making processes related to marketing activities. The
purpose of market research is to reduce the risk for marketing decisions by providing
market information and updates based on reliable data and evidence.
b. The role of market research
Market research helps identify marketing opportunities, such as the unfulfilled
needs of customers. It also helps detect threats, such as detecting declining market share
and customers no longer loyal to the brand. Marketing manager will use information
provided by market research process to make suitable decisions, for example develop
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new products to meet customer demands or construct a communication channel in a more
effective way. Marketing managers sometimes want to test before making a decision;
market research will help them do the test, such as survey consumers about a certain
product.
1.1.2. The process of market research
Identify
Object
to
research

Identify
information
to be
collected

Research
and
Design

Collect
Data

Analyze Data
and

Interpretation

Presentation
of Result

Source: Business Edge
1.1.3. Definition of customer satisfaction (Philip Kotler, 2003)
"Satisfaction is the degree of the state of human feeling derived from the
comparison of the results obtained with the expectations of the product" (Kotler, 2003).
"Satisfaction is the reaction of consumers to the estimation of the difference between
the initial expectation and the feeling after using the product" (Tse and Wilton, 1988).
“Satisfaction is the response of consumers when expectations are meeting"(Oliver, 1997).
Although there are many different definitions of customer satisfaction, we can
understand that customer satisfaction is the satisfaction of the consumer in the
consumption of products or services for they meet their requirements, including
satisfactory level to be above or under expectation.
Implicit requirement (features): requirement that customers do not reveal but they
take it as default to be available in the product or service. If the feature is not available,
customers will be extremely dissatisfied, but if the feature is improved, customers will
take it as if it should be so, and the satisfaction is unchanged.
Prerequisite requirement (linear): requirement that customers want to have and can
be satisfied. The higher the quality level is the more satisfied customers will be.
Undisclosed requirement (interest): requirement that customers have not yet
expected or thought of, and without it customers will not be miffed, however if it exists it
will make customers extremely pleased and it will encourage them to purchase the
product or use the service.
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1.1.4. The relationship between customer satisfaction and service quality
Figure 3.6. Factors that affect customer satisfaction

Customer Satisfaction
Product
 Variety of products;
 Price;
 Quality and product
specifications;
 Service quality, aftersale service…

Convenience






Location;
Shopping condition;
Goods return condition;
Opening hours;
Payment method…

Human
 Sellers’ skill;
 Staff behaviour and

attitude…

Source: Philip Kotler, 2003
Three main factors of customer satisfaction are product, convenience and human.
Service quality is a factor that has an impact on customer satisfaction. This shows that
customer satisfaction has a broader meaning than service quality.
a) The business market
According to neo-classical economics: The market is a meeting place between
supply and demand.
In a marketer’s point of view: When talking about market, it should mention about
stakeholders (those who directly or indirectly are involved in making supply and demand
meet). It is important to understand and grasp the market demand.
 The business market is a set of products, services or characters that businesses must
compete and achieve success through their own activities.
b) Market share
Market share of a certain product is the ratio of sales of that product in the market
comparing to the total revenue of all products in the same category in the same market.
For example:


Market penetration rate

Existing customers: customers who are using products of a business.

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Potential customers: customers who are not yet using products of a business but
they can possibly use them in the future.
* Market penetration rate is the rate between existing customers and potential
customers.
1.1.5. The different levels of demands and mission of Marketing
a) Negative Demand
Is the market demand that majority of customers do not like the product? Marketing
mission is to find out the reason why customers do not like the product. Based on that
there should be a reconstruction of 4 elements of Marketing-mix to attract the customers.
b) No demand
Is the situation when target customers neglect to care about offered products? In this
case, marketing mission is to make customers believe that the products will satisfy some
of their needs through promotion programs.
c) Potential demand
Demand is not yet satisfied. In the market there are always unsatisfied demands.
Marketing mission is to recognize and evaluate the scale of the market and make products
according to those demands’ satisfaction.
d) Declining demand
Is the demand that is reducing over time? Marketing mission is to identify clearly
the cause of the decline and propose policies, expansion strategy for the demand by
finding new target, or adjust the 4 elements of Marketing-mix.
e) Non-stable demand over time.
Is the demand that changes through time (hours in a day, days in a week, weeks in a
month, and months in a year...)? Non-stable demand makes organization sometimes in
surplus supply, sometimes overloaded in works to be done. Marketing mission is to find a
way to balance the demand through strategy to evaluate flexibly, strategy to promote and
other incentive strategies.
f) Demand in full
This is the situation when an organization is satisfied with the existing demand.

Marketing mission is to maintain the level of existing demand to avoid declining demand
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due to increasing competition as well as changing customer preferences. Businesses need
to regularly measure customer satisfaction for timely adjustment of marketing-mix.
g) Demand exceeding supply
This is the situation when an organization is unable to satisfy all market demands.
Marketing mission is to use pricing and promotion strategies to temporarily or
permanently reduce demands in markets that have low profit, or demands that are not
urgent. The current demand of electricity in Vietnam is one of these types. The
government prices electricity progressively to restrict from being used excessively. At the
same time the government increases public information and propaganda for the people’s
knowledge of how to use electricity economically.
h) Unhealthy demand
Marketing mission is to reduce demand by pricing and promotion strategies to
restrict sources of supply (cigarette, liquor, games, drugs...). By looking at 8 levels of
demands and marketing missions above we can see that Marketing has a role of
management using different policies.
III. MARKETING STRATEGY DEVELOPMENT OF A BUSINESS
1. Position of marketing strategy planning in the strategic management process
Based on the agreed business strategy, business needs to build and choose the most
appropriate marketing strategy to orient the whole marketing activities.
Marketing strategy to be built must include the followings:


Marketing strategy target



Marketing-mix format



Competitive marketing strategy of the business



Marketing budget and budget allocation for marketing activities

1.1 Marketing-mix implementation
Marketing mix is the set of controllable marketing methods that business
coordinative uses to make necessary responses to the target market demands in order to
achieve marketing target. There are many different tools used in the marketing mix, but
according to J. Mc Carthy, they can be grouped into 4 elements called the 4Ps: products,

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price, distribution (place) and promotion. Businesses implementing marketing-mix by
combining the 4Ps to direct market demands to the business’s advantage.
Products: A combination of "items and services" that the business offers to the

target market including quality, features, style, brand, packaging and specifications
(size),service, warranty, ...
Price: the amount of money that customers have to spend to get the product. Price
must be commensurate with the perceived value in the offered item; otherwise customers
will search for another supplier’s products. Price includes: regulations, discount, subsidy,
payment time limit, credit conditions...
Place: A set of different activities performed by the business in order to bring the
products to the target customers, such as identifying distribution channel, choosing the
intermediaries, market coverage, sales allocation in different market area, inventory,
transportation and storage.
Promotion: All communicational activities to promote the value of the products and
convince target customers to purchase those products. Promotion includes advertisings,
direct sales, sales-off, public relations.
Constructing the marketing-mix is related with 2 budgeting decisions. Firstly,
business must decide the total spending for marketing efforts (decisions on marketing
costs). Secondly, business must determine the total spending for marketing tools that are
parts of marketing-mix (decisions on marketing-mix costs).
The order and structure of the marketing-mix are deployed depending on the
identified marketing strategy plan. Marketing - mix can be implemented uniformly or
varies by the selected target market. In addition, decisions about marketing-mix strongly
influenced the decisions of the business’ market positioning. The structure of the
marketing-mix, the support and alignment of the components in the marketing-mix must
be clear in order to avoid difficulties in the implementation process. For example, a big
advertising campaign must be backed by a massive distribution; otherwise customers will
find it difficult to response to the advertising campaign.
It should be emphasized that the marketing-mix of a business at a certain time t for
a particular product is a combination of changes in product, price, place and promotion
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(P1, P2, P3, and P4). It is just a choice in a multiple possibilities of combination among
the variables mentioned above.
Content of each variable in the marketing-mix can be designed by the policies or
programs. But often, marketing-mix is implemented by policies.
Not all marketing-mix variables can be adjusted in a short time. Usually business
can change variables like price, scale of sales force or advertising costs in short-term.
Developing new products or changing distribution channel requires a long-term plan.
Hence in short term, businesses do not change marketing-mix plan that is decided, but
adjust some variables.
1.2 Organizing and supervising marketing activities
Constructing brand-new only stays as a draft form, it represents what should be
conducted in the future, so business needs to turn those plans into reality by
implementing marketing-mix effectively. The implementation of a marketing plan
includes:
 Develop a specific action plan.
 Organize marketing department in accordance with the business’ marketing
activities scale.
 Develop a reward and decision-making system.
 Develop a positive working atmosphere that encourages staffs to put effort in
achieving the goals.
 Develop human resources capable of implementing decided marketing programs.
Business should also supervise and elaborate marketing activities to ensure that the
implementation is progressing according to the plan, as well as giving opportunity to
adjustments if needed to achieve the objectives.
2. Marketing strategic planning
2.1 Marketing strategic planning

Market-oriented marketing strategic planning: is a process of management to
develop and maintain adaptation between objectives, skills and resources of the
organization with market opportunities that are rapidly changing. The goal of this
planning is to make products and business unit achieve targeted profit and growth.
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Concepts and tools of strategic planning were founded in the ‘70s as a result of
shocks that impacted the US industry: energy crisis, double-digit inflation, economy
downturn, victory of the Japanese in competition... American companies could no longer
rely on simple growing projects to plan for products, revenue and profit. Nowadays,
target objective of strategic planning is to help the company choose and organize
business units towards maintaining its power even when unexpected events misdirect
separate business units or company’s products.
Strategic planning requires activities in 3 main areas: Managing business units as
one port-folio. The second area includes evaluating the strength of each unit by looking at
market growth rate, company positioning and market adaptation. The third area is the
strategy. To each business unit, the company must develop a separate plan to achieve
long-term goals.
Marketing plays a key role in the strategic planning process. According to strategic
planning executives at General Electric: “Marketing manager plays a most important role
in strategic planning, they play a leadership role in deciding business mission, analyzing
the environment, competition and business events, develop objectives, goals and
strategies; determine the products, market, distribution channels, and other qualitative
plans to implement the business unit plan. These roles lead to the development of
programs and operational plan that fully connects with strategic plans.

To understand marketing management, we must understand the strategic planning.
And to understand the strategy, we must realize that: companies usually plan by 3 levels
of organization: corporate level, business unit level and operational level. Corporate level
is in charge of constructing the overall strategy to orient activities for the whole
organization; makes decisions to allocate resources to each unit and department. Each
business unit will develop its own strategy to make sure profit earning in the future.
Business unit level is implemented by the coordination of different business
functions (marketing, production, R&D)..., and so each business unit or product level
(product line, brand) in a business unit will develop its own marketing plan to achieve the
goals in the target market.

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