MARKETING CHANNELS topic DESIGN MARKETING CHANNELS FOR NEW PRODUCTS, THE CASE IN NGUYEN VAN XE’S POTTERY PRODUCTION BASE

THE UNIVERSITY OF DANANGUNIVERSITY OF ECONOMICS  MARKETING CHANNELS Topic DESIGN MARKETING CHANNELS FOR NEW PRODUCTS, THE CASE IN NGUYEN VAN XE’S POTTERY PRODUCTION BASE Class : 41K12

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THE UNIVERSITY OF DANANG

UNIVERSITY OF ECONOMICS



MARKETING CHANNELS

Topic DESIGN MARKETING CHANNELS FOR NEW PRODUCTS, THE CASE IN NGUYEN VAN XE’S

POTTERY PRODUCTION BASE

Class : 41K12.3 - CLC Lecturer: Ph.D Ngo Thi Khue Thu Msc Nguyen Phuong Thao

Danang, April 2018

GROUP MEMBERS

download by : skknchat@gmail.com

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Nguyen Thi Hang (Leader)Nguyen Ngoc Quynh AnhNguyen Thi My My

Le Thi Diem MiTran Thi Duyen

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1 INTRODUCTION 4

2 GENERAL INFORMATION ABOUT THE SALE POINT 4

2.1 Producer 4

2.2 Business situation 5

2.3 The relationship between the production base and intermediaries 6

2.4 Series of products selected 6

2.4.1 Features, opportunities for decorative ceramic products 6

3 LITERATURE REVIEW 6

3.1 In-depth interview 6

3.2 Designing the channel 6

4 FIELD OBSERVATION REPORT 7

4.1 POEMS framework 7

5 INTERVIEW PROCESS REPORT 8

5.1 Select a product line 8

5.2 A set of interview questions 9

5.2.1 Selection of respondents 9

5.2.2 Question list 9

5.2.3 Form of interview 10

6 RESULTS AND DATA ANALYSIS 11

6.1 Answer sheet for the owner and manager: 11

6.2 Answer sheet for the end-users and retailers: 14

6.3 Data Analysis 19

6.3.1 The most important Insights 19

6.3.2 Analysis data for end – users and retailers 19

6.3.3 Source 19

6.3.4 The level of customer satisfaction 19

6.3.5 Suggestions for decorative ceramics 19

7 SOLUTIONS 20

7.1 Online channel 20

7.1.1 Website 20

7.1.2 Facebook fanpage 21

7.2 Offline channel 22

7.2.1 Showroom 22

7.2.2 Hotels and restaurants 22

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1 INTRODUCTION

In today market economy, many companies and production bases in ourcountry have a tendency to offer their products through some intermediaries Thiswould reduce the costs, create the highest efficiency in the channel, thereby deliverproducts to the target market in time and meet customer needs

In fact, promotion activities like advertising and discount are only beneficial inthe very short run Other businesses can rapidly imitate these kinds of strategies of thecompanies, so companies that follow these strategies will quickly lose theircompetitive advantages As a result, businesses today are focusing more ondeveloping a better distribution system in order to gain sustainable development Acomplete distribution system with rational distribution policies will help the businesssucceed

Pottery villages are traditional trade villages in many areas of Vietnam Thanh

Ha pottery village has been existing in Hoi An for 500 years It is not well-knownplace until Hoi An has become an attractive destination of many foreign tourists.Nevertheless, the village is still not popular in the eyes of local people At present,pottery villages are only distributed in Hue, Danang, Quang Nam and very few otherprovinces

Thanks to the complete distribution system, the company has acquired areputation for its products However, through our observation, the process of thedistributing products has not yet reached maximum efficiency Therefore, we want tomake Thanh Ha pottery village become traditional craft village like Bat Trang, DongTrieu

With regard to the aim of preserving and develop traditional craft villages, ourgroup choose a pottery production base in Thanh Ha pottery village as our sale pointfor our project This is the production base of Mr Nguyen Van Xe

2.1 Producer

- Nguyen Van Xe base is a pottery production of Thanh Ha pottery village

- Address: Thanh Ha pottery village, Hoi An, Vietnam

Thanh Ha is known as a famous pottery village in Hoi An In recent years,Thanh Ha is a place that many visitors cannot ignore when visiting to Hoi An This is

a favorable opportunity for establishing the business in this area

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2.2 Business situation

Through observing the sales point and conducting the interview with Mr Nguyen Van Xe, the owner of the production base, our conclusions are:

- The traditional business items of Nguyen Van Xe factory are household pottery

- The current distribution system of the facility is

Nguyen Van Xe production base only distributes through traditional channelswith 12 wholesalers In addition, the base also produces decorative products which areordered from restaurants and hotels However, the number of decorative potteries sales

is still so small

Although there is a large number of tourists visiting the village, the facilitiesare not yet utilized Since the base mainly sells products with large size and personalbelongings, customers cannot buy them because it is difficult to bring them home.Besides, the establishment has produced some products for tourism like toys but doesnot gain a new breakthrough in revenue In addition, other ceramic manufacturingbecome the competitors of the base as they try to attract visitors with a practicalexperience by making their own products for tourists

During the interview, Mr Son, Nguyen Van Xe’s son reveals that he intends todevelop decorative ceramics instead of just producing household ceramics He also

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wants to introduce the private brand of the home base as the family brand becausemost customers only know the general brand named Thanh Ha pottery village but doesnot know the private brand of a production base Nguyen Van Xe in Thanh Ha.However, he does not know where and how to start.

2.3 The relationship between the production base and intermediaries

All 12 wholesalers live in Hoi An, close to Nguyen Van Xe ceramic factory so

it is very easy for picking up products The relationship between the manufacturer and

12 wholesalers is very good However, 12 intermediaries tend to give money back toNguyen Van Xe’s base only after selling the products, making the production basestagnant in the revolving capital

2.4 Series of products selected

After the observation and interviews, we realize that household ceramics have agood development while decorative ceramics initially encountered many problems.Hence, setting up distribution channels for decorative ceramics is an urgent task thatneeds to be addressed

2.4.1 Features, opportunities for decorative ceramic products

Nowadays, people would love to engage closely with the nature and ancientliving spaces Ceramics are among the favorite items mostly used to decorate in therestaurant, folk cuisines as well as hotels Some households also enjoy using thesesmall decorative items for desks and indoor spaces Besides, ceramic decoration issmall size, easy to transport, aesthetic and high level of sophistication

3.1 In-depth interview

After observing the sale point, in order to design an effective distribution channelfor new products, we choose the in-depth interviewing to deeply understand customerinsights By conducting a small number of interviews intensively, researcher canexplore different perspectives from respondents on a particular idea, program, orsituation (Carolyn Boyce and Palena Neale, 2006) These interviews are often used

to provide a complete and profound picture of what happened in the channel and willhappen with new products delivery Potential participants of the interview include theowner of business, managers, retailers and end-users The manufacturer can utilize theinformation from the study to apply for the business

3.2 Designing the channel

Generally, a channel can be designed based on 7 steps: recognizing the need for

a channel design decision, setting and coordinating distribution objectives, specifyingdistribution tasks, developing possible alternative channel structures, evaluating thevariables affecting channel structure, choosing the “best” channel structure andselecting the channel members (Bert Rosenbloom, 2012) In this case, the owner

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wants to develop a new product The existing channel already has significant elementsfor this kind of product, the owner only need to modify it to fit with new products.

Mr Nguyen Van Xe’s pottery production base is located in Thanh Ha potteryvillage, Hoi An, Quang Nam province Main products of the base are householdpotteries From 10 days to 15 days, 12 wholesalers will go to the production base, pick

up the potteries, carry them around, and sell them to retailers in Hue, Da Nang andQuang Nam

In addition to household potteries, the production base also makes decorativepotteries which are ordered from restaurants, hotels, homestays and other decorativepotteries These entities than sell these items to tourists visiting the village

4.1 POEMS framework

People

Employees: There are 5 employees working at the production base and living

near the production base They all have worked there for a long time (from 5-10years)

Wholesalers: The production base makes oral contract with 12 wholesalers.

Every 15 or 20 days, 12 wholesalers go to the production base to pick up the potteriesand bring them around than selling to retailers in Hue, Da Nang and Quang Nam.These wholesalers have strong business relationship with the production base

Consumers of the sale point mostly are tourists visiting the village, but the sales

for them are not many Sometimes, restaurants and hotels managers come here toorder potteries for decorating or for food serving dishes

Objects

Household potteries: are mainly traditional products of Nguyen Van Xe’s

production base They account for 80% revenue of the production base This kind ofproduct has a full channel system so it is impossible to change the whole system

Decorative potteries are potential products that are developed by Mr Xe’s son.

At this time, Mr Nguyen Van Xe’s son are considering building a new channel systemfor this kind of product Therefore, our group decided to help Mr Nguyen Van Xe todesign the channel

Pottery is made by forming a ceramic (often clay) body into objects of a

required shape and heating them to high temperatures in a kiln which removes all thewater from the clay

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Environment: The production base is located in Thanh Ha pottery village, near

the river Up to now, wholesalers and consumers go directly to the production to buythe potteries The owner does not have to do any intermediate activities

Messages and media: Not any production bases in the village has their own

brand which many people know about that Only Thanh Ha pottery village has itsname on Google map and research engines Tourists just wander around the villageand come to any the production bases

Service: Whenever tourists go by, Mr Nguyen Van Xe and his son will perform

pottery making process by hands and by the wheel potter Then, tourists try to makepotteries by themselves

5.1 Select a product line

Product line: Ceramic decoration

Today, people tend to love the close to nature or return to the old living space Ceramics are the favorite decorative items today in the restaurant, folk cuisine as well

ENVIRONMENT

Pottery villageProduction base

OBJECTS

Household potteriesDecorative pottiesPotter's wheel & Kiln

MESSAGES AND MEDIA

No message and no media

Only the board

Known from the ancient town

SERVICE

Performance

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- Selection criteria: The respondents are currently trading or using potterydecorations.

- Method of selection: selection of respondents Particularly, they are:

o Mr Nguyen Van Xe –

production base owner

o Mr Nguyen Van Son - Mr

Nguyen Van Xe’s son,

manager as well as the heir of

the production base

o Mr Nguyen Van Hung -

employee

o Mrs Lan - wholesaler

o Mrs Sang - retailer

o Shop Xương Rồng – GMT Garden (621 Nui Thanh Street)

o Mộc Garden (Duong Tu Minh Street)

o Shop souvenirs Ms Hien (Hoi

An ancient )

o Room Casa Hostel (An Thuong 4 Street)

o Nguyen My My (Individuals - Quang Nam Province)

5.2.2 Question list

5.2.2.1 Apply for the owner and manager

Question 1: Do you have any difficulties in finding intermediates?

Question 2: Do you have to deal with inventory?

Question 3: Do intermediates pick up stock at the specific time or at therandom time?

Question 4: Do you want to extend market size and find more intermediates?Question 5: What do you thing about the online channel?

Question 6: Do you offer delivery service (how and how far?)

Question 7: If we help you to set up the online channel, who can be themanager?

5.2.2.2 Apply for end-users and Retailers

Question 1: Hi, are you doing the business, distributing, trading or usingdecorative pottery products or products related to decorative ceramics such asstone lotus, cactus etc? Is it good or difficult? If you are having difficulty, whatproblems do you have? (For example: products, freight, design, etc) If you are

a user, how do you buy these decorative items?

Question 2: Do you know the place of production or distribution of decorativeceramics that you are buying through the sources? Can you tell us the reasonswhy you choose them?

Question 3: Have you ever had a problem of storage or inventory of decorativeceramics? And if so, how did you handle it?

Question 4: Do you have any comments on decorative ceramic products?(design, style, size, etc)

Question 5: What kind of purchases that you find more convenient (online oroffline)?

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Question 6: If there is a factory producing decorative pottery with original priceand diversified designs, are you willing to buy?

5.2.3 Form of interview

- Discussing face to face with respondents about the decorative pottery

- Using a cell phone to record the interview and use the notebook to record it

- Interview time: 45-60 minutes for each interview on 10/04/2017 and11/04/2017

- Location: Da Nang city and Quang Nam province

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6 RESULTS AND DATA ANALYSIS

6.1 Answer sheet for the owner and manager:

Đáp viên

Câu hỏi

Mr Nguyen Van

Xe – production base owner

Mr Nguyen Van Son - Mr Nguyen Van Xe’s son

Mr Nguyen Van Hung - employee

Mrs Lan wholesaler

Mrs Sang retailer

-1

Cũng không khó khănlắm Vì xưa giờ làmqua 12 trung gianquen biết rồi, cứ đếntháng là họ đến lấyhàng thôi Họ khôngtrả tiền ngay mà đếnkhi nào bán đượchàng thì gửi tiền sau

Bên đồ gia dụng cũngkhông khó lắm Mình

có 12 nhà buôn quenrồi, tháng nào cũngđến lấy hàng Mùamưa thì ít chứ mùa hèlàm không kịp cho họlấy Lâu lâu cũng cókhách sạn, nhà hàng,quán ăn đến đặt

Trả lời tương tự nhưchú Xê

Không khó tìm Hồixưa thì khó chứ chừ

có bạn hàng rồi, lấyquen rồi

Không có trunggian con Cô là báncho khách lẻ, làphụ nữ sau sinhhay lâu lâu có nhàhàng tới đặt…

2

Không có tồn khonhiều Khi nào họthiếu thì họ nói mìnhtiếng mình làm thêmcho họ

Không có nhiều hàngtồn kho cho lắm

Cũng có hàng tồnkho mà khôngnhiều Cũng tùy mùa

mà bên lẻ mua nhiềuhay ít

Bên cô thì hết hàngmới lấy tiếp nênhầu như không có

dư Khoảng tầmhơn 1 tháng lấymột lần

đến lấy hàng thôi, chứmình không có chởhàng ra cho bán buôn

Với tùy theo thời tiết

Thì đầu tháng họ đếnlấy hàng thôi em

Thiếu thì báo mìnhmình làm thêm

Mình là bán sỉ cho

họ mà Mình phảichở hàng qua cho họchứ

Không

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