1090SOLUTIONS TO IMPROVE MARKETING ACTIVITIES OF MANULIFE VIETNAM FROM 2007 TO 2010

The policy owner shall have insurable interests in the following persons: * The policy owner him or herself; * Legitimate wife, husband, children, father, mother of the policy owner;

MASTER IN MANAGEMENT PROGRAM (MMVCFB6)

After graduated from the Economic University of Ho Chi Minh city, I have passed five years of working in several companies, some of them are very famous like Ajinomoto Inc with Japanese management style, Manulife Vietnam – a western company bearing active authorization and MBO management style… and one of them is not famous but very dynamic and flexible like H&M – a new private local enterprise I have learned from company managers the way they lead their team, their company to meet goals I heard several complaints and discovered some disappointed emotions they received from their staffs But I did not know how the manager can do it well in handling job management, harmonizing conflicts and benefits as well, creating strategy for the company, selecting and processing from a hundred bundles of information to make right decisions…To get the answer for this question, I decided to take an advance study The Master of Management (MMVCFB6) is very suitable and the most efficiency course that can help me to understand and to improve knowledge, skill of management

After two years, the course is ending soon, and I am writing the thesis I have learned a lot during my study course from many people and received great helps from them

Firstly, I would like to thank to all Professors of the Course for their instruction on all the newest and the deepest knowledge and experience to us

Secondly, I would like to express my sincere thanks to Professor Le Tan Buu – The Head of Commercial-Tourist Department of the Economic University

final thesis

The thesis discusses about marketing activities of Manulife Vietnam company I have also received many ideas contributing from my colleagues in Marketing department, Sales managers and many agents I would like to send

my thanks to them as well for I will never finish the thesis without their assistances Thank to Board of Management who gave me a chance to interview them and helped me with many advices during the time I have worked with the company

Last but not least, I would like to send thanks to my classmates, especially to my Group-One members for their sharing knowledge, experiences, discussions that help me to build up my mind Working with them in class assignments is a chance for me to polish myself in the team

Nguyen Xuan Chinh

2005-2007

GUIDANCE ADVISER’S COMMENTS

The topic of research is highly concerned by Vietnam life insurance companies, especially to Manulife Vietnam situation The thesis's structure is logical, and well established The content

is comprehensive, clear and abundant in figures and facts The Market analysis is marvelous based on the market survey, face- to-face interview and focus group showing the hard working of student Nguyen Xuan Chinh The solutions for improving marketing activities in the company are highly practical I hereby agree to let the student present this thesis to the Board of Examiners

Doctor Le Tan Buu

TABLE OF CONTENTS

LIST OF TABLES VIII

LIST OF FIGURES IX

LIST OF GRAPHS X

CHAPTER 1 1

INTRODUCTION 1

1.1 INTRODUTION 1

1.2 OBJECTIVESANDSCOPEOFTHESTUDY 2

1.3 METHODOLOGY 2

1.4 STRUCTUREOFSTUDY 4

CHAPTER 2 5

LITERATURE REVIEW 5

2.1 THEORYOFMARKETINGANDMODERNMARKETING 5

2.1.1 Definition of marketing 5

2.1.2 Vision of marketing 6

2.1.3 Marketing concept 6

2.1.4 Marketing Process 7

2.1.4.1 Understanding behaviors and motivations 9

2.1.4.2 Segmenting markets 10

2.4.2.3 Choosing the targets 13

2.1.5 Marketing Mix 14

2.1.6 Global Marketing Management 15

2.1.7 Roles of marketing to an enterprise activities 18

2.1.8 Content of marketing activities of a life insurance company 19

2.1.9 Factors effect to Marketing activities of a life insurance company 20

2.1.9.1 Internal factor 20

2.1.9.2 External factor 21

2.2 LIFEINSURANCEINDUSTRY 23

2.2.1 Roles of life insurance in an economy 23

2.2.2 Vietnam life insurance business 24

CHAPTER 3 26

MANULIFE VIET NAM - MARKETING ANALISYS 26

3.1 HISTORY,VISION,MISSION, ENVIRONMENT,ORGANIZATIONAND OPERATION 26

3.1.1 History of the company 26

3.1.2 Manulife Vietnam Vision and Values 28

3.1.3 Business Environment 29

3.1.3.1 Suppliers 30

3.1.3.2 Competitors 31

3.1.3.3 Customers 32

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ii

3.1.3.4 Partners 33

3.1.3.5 Regulatory Agencies 33

3.1.4 Organization and Operations 34

3.1.4.1 Organisation 34

3.1.4.2 Procedure of Operation of Manulife Vietnam 39

3.1.4.3 Operation indication of manulife Vietnam from 2000 to 2006 40

3.2 MARKETSURVEYANNALISYS 40

3.2.1 General market situation analysis from the survey 40

3.2.2 Reason of client not having an life insurance contracts 43

3.2.3 Reasons to terminate contract before due date (lapsed and surrendered policies) 44

3.2.4 Factors to make a buying decision 44

3.2.5 Resistance to have a life insurance contract 46

3.2.6 Key factors when selecting a right service 46

3.2.7 Favorite benefits of life insurance service 47

3.2.8 Who should have an insurance contract 49

3.2.9 Life insurance and other investment vehicles 51

3.2.10 The company images 52

3.2.11 Potential clients 53

3.2.12 Income – Life insurance 54

3.2.13 Draft of future market shares of life insurance 55

3.3 MARKETINGACTIVITIESANALYSISOFMANULIFEVIETNAM 56

3.3.1 Human resource of Marketing department 56

3.3.2 Market research and analysis 57

3.3.3 Public relation activities 57

3.3.4 Sales support 58

3.3.5 Sale promotion and advertising 58

3.4 SWOT 59

3.4.1 Strengths 59

3.4.2 Weaknesses 60

3.4.3 Opportunities 60

3.4.4 Threats 61

3.5 MARKETSHAREANALISYS 62

3.5.1 Market Share by collection premium (Revenue) 62

3.5.2 Share by distribution channel (Number of agents) 63

3.5.3 Market Share by new contracts 64

3.5.4 Productivity of agents 65

CHAPTER 4 66

SOME SOLUTIONS TO ENHANCE MARKETING ACTIVITIES 66

IN MANULIFE VIETNAM 66

4.1 MARKETINGOBJECTIVESFROM2007TO2010 66

4.2 SOLUTIONSTOMEETOBJECTIVES 66

4.2.1 Building up a marketing department with necessary functions 66

4.2.2 Market segmentation 68

4.2.2.1 Segmentation by sex 68

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iii

4.2.2.2 Segmentation by income 69

4.2.2.3 Segmentation by age 70

4.2.3 Product development 71

4.2.3.1 Products development adapts to target segmentation 71

4.2.3.2 Products re-launching 71

4.2.4 Sales force – Distribution channel 72

4.2.4.1 Enhancing quality of distribution to build trust with customers 72

4.2.4.2 Enlarge distribution location 73

4.2.4.3 Facility for distribution 73

4.2.5 Building the Company Image 73

4.2.6 Public relation, promotion, advertisement and after sales services 74

4.3 VALIDITYOFSOLUTIONS 76

4.3.1 Estimate result of solution in segmentation and product development 76

4.3.2 Estimate results of solutions in distribution and product development 76

4.3.3 Estimate results of solutions in PR, advertisements, improving after sell customer service 77

CONSCLUSION 78

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A contract with conditions between client and insurer in a life insurance protection agreement

Before a real contract is signed, agent can use computerize proposal contract to deal and consult their client

: a Vietnamese organization or citizen who is authorized

by Insurer to solicit life insurance business in Vietnam

: any organization or individual who is residing in Vietnam having

obtained 18 years of age and above, having full capacity for civil acts, and is the

person who fills in and signs the Insurance Application Form and pays the

insurance premiums

: any individual who is accepted by Insurer for insurance under the

policy terms and conditions

: can be an organization or an individual designated by the policy

owner to receive the insurance benefits according to the terms and conditions of

the insurance policy

the relationship between policy owner and life assured in which the policy owner must suffer financial loss or mental detriment on the death

of the life assured, and the loss must be legal

The policy owner shall have insurable interests in the following persons:

* The policy owner him or herself;

* Legitimate wife, husband, children, father, mother of the policy owner;

* Siblings, others who have lawful fostering/guardian relationships with the

policy owner;

* Nephew and niece of the policy owner;

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¶

¶ VND :

Deleted: Currency of Vietnam

Deleted: Vietnam Dong¶

WTO : The World Trade Organization¶

¶

¶

¶

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* Others in relation to whom the policy owner will be subject to material financial loss as a result of the life assured's death

: a specified amount of money that the insurer receives from the policyholder in order to provide the policy benefits when a specific event occurs

as regulated in the policy wordings

: the face amount of a policy agreed by both the policy owner and insurance company in the insurance policy

: with regards to the life assured, the loss, paralysis or dismemberment of:

* Two arms; or

* Two legs; or

* One arm and one leg; or

* Two eyes; or

* One eye and one arm; or

* One eye and one leg

: A legal form issued by the Insurer The policyowner has the obligation to provide sufficient and accurate information in the application form This form is considered as an integral part of the Insurance Policy

: A legal document issued by the Insurer and is an integral part of the Insurance Contract listing core benefits of the insurance policy

: the duration between two premium due dates The premium paying frequency can be:

* Monthly; or

* Quarterly; or

* Half-yearly; or

* Yearly

: The period of 21 days from the date on which the Life Insurance Certificate is issued This period is to give you time to re-consider carefully and independently your decision of buying the insurance policy, especially after you have plenty of time to go through the “policy terms and conditions” provided in attachment with the insurance policy sent to you This free-look period is counted in the validity of the policy

: A period of 60 days from the premium due date

: during the insurance period, the annual anniversary of the date on which the insurance policy comes into effect

: the amount which the policyowner is entitled to receive if, at any point during the period of effectiveness of the policy, the policyowner chooses to cancel the insurance policy Surrender value will be payable on a policy after 2 full years insurance premium have been paid

After the second anniversary of the insurance policy, the policyholder may request surrender of all or a part of the accumulated bonuses which have been declared by Insurer under the insurance policy The value of bonus surrender is smaller than the accumulated bonus value and is subject to the point

of time when the bonus is surrendered, and increases in proportion of the length

of validity of the policy

Policy benefits payable in case of life assured's total and permernant disability: the amount received by the policy owner in case of the life assured's disability as regulated in the policy wordings

Policy benefits payable in case of life assured's death: the amount received by the policyowner in case of the life assured's death as regulated in the policywordings Insurance benefits have been made for death or total and permanent disability prior to the date on which periodic payment of sum assured is due

Policy benefits payable on the maturity date: the amount received by the

policyowner on the maturity date

: an amount of no more than 80% of the surrender value that the

policyowner may receive from Insurer if any surrender value becomes payable on

the insurance policy

: where Insurer automatically makes an advance of surrender value to the policy owner in an amount equal to the premium due in

order to settle the premium obligation if, upon expiry of the premium due date,

the policyowner fails to make premium payment and does not request

cancellation of the policy, and the surrender value is payable on the policy

means the decrease in the proceeds gained from the investment activities as a result of cash advance from the surrender value of a policy Interest

shall be determined in the percentages to the cash advances from the surrender

value on the basis of the technical interest rate

is the selling of basic life insurance products and riders through the bank's distribution channels

The quality of our future is determined by the plans we make today Our

customers have many different needs when planning for their future: some make

financial plans with the hope of starting a new business; some buy various

investment vehicles for the purchase of a new home or for their retirement or for

their children's education and development

Now with Bancassurance you can solve all of your financial needs in one place -

the bank You can select the financial plans best suited to your personal needs

and make sure your plans will be completed even in the event of unexpected

Table 2 1 : Model of customer behaviors 10

Table 2 2 : List of life insurer in Vietnam with investment amount 25

Table 2 3 : Revenue and growth rate of Vietnam Life Insurance market 25

Table 3 1 : List of suppliers 31

Table 3 2 : List of current Life insurance companies in Vietnam 32

Table 3 3 : Number of Manulife Vietnam employees 36

Table 3 4 : Some operation indicator of Manulife Vietnam from 2000 to 2006 40

Table 3 5 : Who should by service 49

Table 3 6 : Income and purchasing decision 54

Table 3 7 : Total revenue of Life insurance companies 62

Table 3 8 : Total number of new contracts of Life insurance companies 64

Table 3 9 : Productivity of agents of Life insurance companies 65

Table 4 1 : Segmentation by sex 69

Table 4 2 : Segmentation by income 70

Table 4 3 : Market Segmentation by ages 70

Table 4 4 : Estimate result of solution in segmentation & product development.76 Table 4 5 : Estimate results of solutions in development of distribution 76

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Figure 2 1 : Societal Marketing concept 7

Figure 2 2 : The Marketing Process 8

Figure 2 3 : Segmentation process 10

Figure 2 4 : Segmentation according to the clients’ characteristics (consumers).11 Figure 2 5 : Segmentation according to the clients’ characteristics 12

Figure 2 6 : Segmentation according to the clients’ expectation 12

Figure 2 7 : Segmentation according to the clients’ behaviors 12

Figure 2 8 : Approaches for targeting 14

Figure 2 9 : Culture – marketing values 17

Figure 2 10 : New place of marketing in the organization 18

Figure 2 11 : Internal Factor effects to marketing activity 20

Figure 2 12 : External Factor effects to marketing activity 21

Figure 2 13 : Source of information of marketing research and planning .22

Figure 3 1: Diagram showing the organization 29

Figure 3 2: Manulife Vietnam Organization Chart 34

Figure 3 3: Process of operation of Manulife Vietnam 39

Figure 4 1 : New functions of marketing department 67

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Graph 3 1 : Survey result – Clients have insurance contracts with insurers 41

Graph 3 2 : Survey result – Resistance to have a life insurance contract 43

Graph 3 3 : Survey result – Reason of stopping the contract before due date 44

Graph 3 4 : Survey result - Reasons to have a life insurance contract 44

Graph 3 5 : Survey result – Resistance to have a life insurance contract 46

Graph 3 6 : Survey result – Key factors when selecting a right service 46

Graph 3 7 : Survey Result – Client’s favorite benefits of life insurance service 47 Graph 3 8 : Survey result - Who should have an insurance contract 49

Graph 3 9 : Opinions on who should have life insurance contract 50

Graph 3 10 : Investment – Best way of saving money 51

Graph 3 11 : Impression of client on insurance companies’ images 52

Graph 3 12 : Potential client of life insurers 53

Graph 3 13 : Survey results - Income and purchasing decision 54

Graph 3 14 : Survey result – Market shares of life insurance company in future55 Graph 3 15 : Markets share by Revenue 2005 62

Graph 3 16 : Share of distribution chanel 63

Graph 3 17 : Market share by new contracts 64

Annex 1 – Questionaire market survey Annex 2 – Results of market survey Annex 3 – Focus group inerview notices Formatted: English (U.S.) Formatted: Centered Formatted Formatted: Font: VNI -Times, 13 pt Formatted Deleted: Figure 3-9: Statistical record Deleted: 43 Deleted: 40 Deleted: 45 Deleted: 42 Deleted: 46 Deleted: 43 Deleted: 46 Deleted: 43 Deleted: 48 Deleted: 45 Deleted: 48 Deleted: 45 Deleted: 49 Deleted: 46 Deleted: 51 Deleted: 48 Deleted: 52 Deleted: 49 Deleted: 53 Deleted: 50 Deleted: 54 Deleted: 51 Deleted: 55 Deleted: 52 Deleted: 56 Deleted: 53 Deleted: 57 Deleted: 54 Deleted: 64 Deleted: 61 Deleted: 65 Deleted: 62 Deleted: 66 Deleted: 63 Deleted: ¶ [ 18]

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Vietnam, in process of integrating into the World Economy, has actively

attracted international resources in various fields Besides that, people’s

socio-economic life has gradually increased Together with the development of the

economy, the higher of the life’s standard, the higher demand for the life People

care not only about essential demands such as foods, clothes, and place to live but

also about safety They expect their life staying away from risks Life insurance is

a kind of business which can satisfy that demand The aim of all insurance

companies is to compensate the owner against losses arising from a variety of

risks of his life, property and business

Life insurance market in Viet Nam just become more and more active after

1999when the government accepts the operation for Multinational Companies in

Life insurance market Base on the advantages of financial and experience, these

companies did lots of marketing programs to build their position in Vietnam

market However, the business has a down trendafter initial years (1999 – 2003)

that requires a study to find out the root causes of the decline of life insurance

industry in Vietnam market

Since the life insurance is a new kind of financial service in Vietnam and

Manulife (Vietnam) Ltd was the first wholly foreign-owned life insurance

company authorized to transact business in Vietnam It provides the bestfinancial

protection and investment management services tailored to customers, studying

Manulife’s marketing activities will help us to understand about Life Insurance

market in Vietnam

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Deleted: solutions to revoke the status

of the market for life insurers.

Deleted: s

Deleted: Over four years with Manulife Vietnam as a Business Analyst gives a chance to learn and to develop to

be an experts in this field The company

is chosen to apply the theories and knowledge of the Master in Management course to real life

¶

The study of “Some solutions to enhance marketing activities in Manulife

Vietnam” is to apply the theories and knowledge of the Master in Management

course to analyze the current situation of life insurance industry in Vietnam in

order to find out the solutions to improve the effectiveness of marketing activities

of Manulife Vietnam as well as to bring back the dynamic market for Life

insurance industry in Vietnam It is also can be used as a reference for other

companies in Life insurance industry

In the short time of research, analysis and assessment the real situation

there may have someshortcomings Much appreciate your comments to make it

better

Objectives : to find out the reason of market decline for Life insurance

service in Vietnam and recommend some solutions to improve marketing

activities of Manulife Vietnam

Due to time constraint, the study concentrates on analyzing and evaluating

the life insurance market, specially for marketing activities and the survey is done

with clients in Ho Chi Minh City where is the most dynamic trade and financial

centre in Vietnam occupying the most demand of Life insurance service

This research is conducted in 3 stages:

1 Review literature on marketing management, modern marketing and the

role of Life insurance in the economy

2 Marketing analysis and assessment for Manulife Vietnam including the

market survey on Life Insurance service in Ho Chi Minh City

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on marketing strategy for improvement

in future of the company from 2007 to 2010.

To identify the current situation of life insurance market in Vietnam, the

survey was done with clients in Ho Chi Minh City where is the most dynamic

commercial and financial centre of Vietnam and evaluate the customer’s

behavior and demand tendency in Life insurance service, the research focuses on

assessment of customer’s satisfaction, brand name and implicit demands through

questionnaires, the interview and focus group

The questionnaires are designed with four main parts: 1) Evaluate

customer’s satisfaction; 2) Customer’s demand tendency; 3) Research on brand

name and Manulife Vietnam ’s position in the market; 4) General information of

the person who does the questionnaires The survey was conducted by two ways

through online and hard copy to get the figures from people of many walks of life

Online survey was designed on a special website for people who are working in

the office Survey with hard copies was sent to people who rarely use internet A

total of 200 hard copy questionnaires were delivered and 100 answers were

collected With the online survey, 170 feedbacks were received Totally, there

are 270 feedbacks for the survey The data was processed by statistic tools of

excel

The interview was done with Sales managers, Department managers and

agencies of Manulife Vietnam to gather their opinions about Life insurance

service in Vietnam

Focus group are applied to get client’s opinions and behaviors about life

insurance in general and life insurance companies

3 Conclusion and recommendations:

Following the survey result and the current situation analysis of the company

in Vietnam as well as a comparison with the literature of Marketing management,

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some conclusions and recommendations are given to help Manulife Vietnam to

The thesis includes the following parts:

♣ Chapter 1: Introduction Presenting the research background, research

methodology and scope of the study

♣ Chapter 2: Introducing literature review of marketing management,

modern marketing and the role of Life insurance in an economy

♣ Chapter 3: Marketing analysis and evaluation of Manulife Vietnam

♣ Chapter 4: Some solutions to enhance marketing activities of Manulife

Vietnam

♣ Conclusion

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Deleted: This report will not mention about the marketing budgets or price and financial data of the company because some sensitive and confidential issues.¶ RESEARCH FRAMEWORK¶

¶

Marketing of products, services and ideas to individuals and organizations

comes from the faster world, more competitive world, more uncertain world and

more global world

There are different definitions of marketing as follows:

“Marketing is the process of planning and implementing the price

conception, the promotion and distribution of ideas, goods and services allowing

for exchanges consistent with the individual and organizational goals.”

“Marketing is the social and economic mechanism by which individuals

and groups satisfy their needs and desires through the creation and exchange of

products and other entities of value for others.”

“Marketing is a process initiated by organizations in order to get a control

over the exchanges that are crucial for their existence and their future.”

“Marketing is much like shooting at a moving target, and in this kind of

target shooting, it’s more useful to have a general sense of the direction and

velocity of the target than it is to have an extremely sensitive and accurate

gunsight.”

“Marketing Research can provide the « general sense of the target »

necessary for decision making.” James L Heskett

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A potential supplier (of products, services or ideas) initiates and

implements a process aiming at convincing a potential client to carry out with him

a transaction bringing to each of them a feeling of satisfaction

That process may lead to a negotiation

A supplier builds and maintains trustful long term relationships with a

group of clients (partners) in order to carry out repeat transactions to everyone’s

satisfaction

That process leads to the creation of a marketing network that becomes

one of the supplier’s prior assets

According to Kotler, “Marketing is a social and managerial process by which

individuals and groups obtain what they need and want through creating and

include:

a Needs, Wants and Demand

b Offering

c Value and Satisfaction

d Exchange and Transactions

e Relationship

1 Source: Philip Kotler, Marketing management 11 th Edition

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Philip Kotler also mentioned about “The societal marketing concept” – the

newest of the five marketing management philosophies It is showed:

Figure 2 1 : Societal Marketing concept

The purpose of Marketing process are :

- To choose the target and understand its needs, its desires and its requests

- To conceive a unique offer, fitting the needs of the target and different

from competitors

- To communicate and make it accessible

- To convince the aimed target to carry out the action that will lead to its

satisfaction

The Marketing process includes a strategic phase and an operational phase It

requires two types of skills: analysis and creativity

Societal marketing concept

Society (human welfare)

Consumers

(Want satisfaction)

Company (Profits)

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Figure 2 2 : The Marketing Process

With the conception, communication, channeling, convincing and under the

pressure of competition and fighting spirit, a company needs to identify its target

to aim to and make them to decide to buy or consume their products or services

Therefore, targeting plays a very importing role in marketing

Targeting is done based on three main aspects:

1) Understanding behaviors and motivations

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2.1.4.1 Understanding behaviors and motivations

Why customer choose such offer is called a personal black box It contains

factors influencing customers’ needs or wants and customers’ sensitivity in

decision making process

ϖ Factors influencing customers’ needs or wants are:

Geographic factors: home and main activity location such as continent,

region, sub-region, country; megacities, medium-size town, small town, village;

urban centers, suburbs, rural areas The fact that the geographic condition is

mobile or stable also impacts customers’ behaviors Languages or cultures are

considered as geographic factors as well

Demographic factors: age, sex, family situation, family life cycle

Socio-economical factors: gross income, assets, access to credit, level of

education or occupation, activity for full time, part time

Psychological factors : state of needs as mentioned by Maslow and

personal experience such as each person is unique or his or her personality and

his or her own values are the results major influence on lifestyles

ϖ Customers’ sensitivity in decision making process:

Depending on how important the decision is, customers will act at different

ways With important or risky decision, they will learn > fell -> Do With a daily

and no risk decision, they will learn > do -> feel

Customers’ behaviors and motivations are also influenced by socio-cultural

environment, cultures et sub-cultures, family and social classes, contact groups,

reference groups, mega trend ( European, Asia ), mass media, marketing and

communication stimuli

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Deleted: Theoretical framework¶ The aim of this report is focus on the marketing strategy, going to analysis deeply the strategy and finding out the way to improve it The foundation of marketing is necessary to review and concentrate into which one is the most important By reviewing the literature and combine with realistic, there are several books and document concerning this topic: ¶

Principles of Marketing (Philip Kotler and Gary Armstrong – 11th edition): ¶ Basic knowledge about marketing: t

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[ 21]

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[ 35] [ 26]

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Table 2 1 : Model of customer behaviors

2.1.4.2 Segmenting markets

ϖ is the search for homogeneousness of behavior among a

group of potential customers in order to better calibrate the marketing approach

(and therefore maximize the chances of success…) while making it economically

profitable

Figure 2 3 : Segmentation process

♣ Looking for several factors that could explain or characterize customers’

behaviors (segmentation criteria)

Cultural Social Personal Psychological

Buyer Decision Process

Buyer Responses

Product Choice Brand Choice Dealer Choice

Purchase Timing Purchase Amount

Markets are not

communication process

Need to split the market

in order to be able to :

• conceive more specific proposals

•to communicate them more efficiently

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♣ Choosing the most discriminating criterion with regard to the considered

product/service ‘s purchase and consumption and splitting the market into

more homogeneous sub-groups

♣ Measuring the size, potential and attractiveness of the identified segments

♣ Establishing the profiles of the different segments

ϖ segmentation is done according to characteristics of

potential clients, characteristics of the products or services, expectations

and behaviors of potential clients, use conditions of the products or

services

♣ Segmentation according to the clients’ characteristics :

Figure 2 4 : Segmentation according to the clients’ characteristics (consumers)

GEOGRAPHIC

SEGMENTATION

SOCIO-ECON AND DEMOGR

Splitting the market according to : life styles, personalities, values, attitudes, etc

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Figure 2 5 : Segmentation according to the clients’ characteristics

(business to business)

Figure 2 6 : Segmentation according to the clients’ expectation

Figure 2 7 : Segmentation according to the clients’ behaviors

Splitting the market according to the size (sme / big bus.), purchase potential, etc

Vs

Light users

Clients price sensitive

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[ 52]

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[ 73]

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[ 77] [ 74]

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[ 79] [ 62]

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[ 81] [ 64]

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♣ Segmentation according to usage

The segmentation is based on a similar product or service that can be

bought or used in order to fit different needs or different types of customers

♣ Segmentation according product characteristics

It is still used although it’s far less marketing vision because it goes from

the product to find the market

ϖ

When segmenting, three conditions must be followed Segmentation must

be identifiable in order to distinguish it from others It must be measurable in

terms of volume or purchasing power And finally, it must be selectively and

accessible in terms of contribution and communication

- It is as important for marketing B to B as for B to C marketing

- It is also one of the basic concepts of corporate strategy

- Some big successes result from audacious and creative segmentations

- Seemingly small unattractive markets may be sources of opportunities if

re-segmented or if looking for the new growing segments

2.4.2.3 Choosing the targets

is one of the essential strategic decisions of marketing It will bring us more efficient use of resources We need targeting to have a potential

target specialization and with targeting the competitive advantages can be

deployed with a maximum of efficiency

- Size and growth of segments (attractiveness)

- Competitive advantages (competition, clients, substitutes, barriers to entry)

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- Coherence with mission and strategy of the company

- Adequacy with resources and know how

- Degree of risk

Figure 2 8 : Approaches for targeting

Marketing mix includes products, brands, packaging, services, pricing,

distribution, promotion and retailer-whole seller Product is a complex concept

that must be carefully defined Product strategy calls for making coordinated

decisions on product items, product lines and the product mix Each product item

offered to customers can be viewed on three levels: Core product, Actual product

and augmented product Companies must develop strategies for the product items

in their lines, deciding on product attributes, branding, packaging, labeling and

product support services Most companies produce not a single product, but

Target

UNDIFFERENTIATED

DIFFERENTIATED

CONCENTRATED

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[ 92] [ 89] [ 88]

t line is a group of products related in function, customer purchases

needs, or distribution channels Each product line requires a product strategy

Product mix describes the set of product lines and items offered to customers by a

particular seller The product mix can be described by its length, width, depth and

consistency The four dimensions of the product mix are the tool for developing

the company’s product strategy

is a dynamic process Companies design a pricing structure that

covers all their products, change it over time, and adjust it to account for different

customers and situations The company can follow a Skimming pricing – by

setting prices high initially to skim the maximum amount of revenue from various

segments of the market Or Penetration pricing – by setting the low initial price to

win a large market share

channel decisions are among the most complex and challenging decisions facing the firm Each channel system creates a different

level of sales and costs Once a distribution channel has been chosen, the firm

must usually stick with it for a long time The chosen channel strongly affects, and

is affected by the other elements in the marketing mix

is one of four major elements of the company’s marketing mix

The main promotion tools – advertising, sales promotion, public relations and

personal selling – work together to achieve the company communication

objective3

Global marketing is the process of focusing the resource and objectives of a

company on global marketing opportunities Companies engage in global

marketing for two reasons: to take advantage of opportunities for growth and

3 Information from “Principles of Marketing” book – Philip Kotler and Gary Amstrong

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Deleted: (Warren J Keegan – 7th edition):This is the research about [ 95]

[ 94] [ 93]

expansion, and to survive Global marketing’s importance today is shaped by the

dynamic interplay of several driving and restraining forces The former include

market needs and wants, technology, transportation improvement, costs, quality,

global peace, world economic growth, and recognition of opportunities to develop

leverage by operating globally Restraining forces include market differences,

management myopia, organizational culture and national controls

The economic environment is a major determinant of global potential and

opportunity Countries can be categorized in terms of their stage of economic

development: low-income, lower-middle income, upper-middle income, high

income and basket cases It is possible to identify distinct stages and formulate

general estimates about the type of demand associated with a particular stage of

development For many products, the most important indicator of market potential

is income; therefore, the first step in determining the potential of a country or

region is to identify the total and per capita income

Culture aspects influence on each national market environment Global

marketers must recognize the influence of culture on all aspects of life including

work habits and consumption of products Human behavior is a function of both

person’s own unique personality and person’s interaction with the collective

forces of the particular society and culture in which he or she has lived Global

marketing has played an important role influencing the rate of culture change

around the world Global marketers have to learn to rely on people who know and

understand local customs and attitudes for marketing expertise

The legal and political environment of global marketing is the set of

government institutions, political parties, and organization that are the expression

of the people in the nations of the world The legal environment consists of laws,

courts, attorneys and legal customs and practices The regulatory environment

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consists of agencies, government that enforce laws or set guidelines for

conducting business Therefore, Marketers plan ahead to avoid situations that

might result in conflict, misunderstanding, or outright violation of national laws

Figure 2 9 : Culture – marketing values

The product is the most important element of a marketing program Global

marketers face the challenge of formulating a coherent global product strategy for

their companies Product strategy requires an evaluation of the basic needs and

conditions of use in the company’s existing and proposed markets Marketers

must consider four factors when designing products for global markets:

preferences, costs, regulation, and compatibility

Pricing decisions are a critical element of the marketing mix that must

reflect costs and competitive factors There is no absolute maximum price, but for

any customer, price must correspond to the customer’s perceived value of the

product The aim of most marketing strategies is to set a price that corresponds to

customer perceptions of value in the product and at the same time not leave

money on the table”4

4 Information from “Global Marketing Management” book – Warren J Keegan

Cultural values – Asian

• Extended family,

blood/kinship/workgroups

• Beliefs in harmony,

cooperation, avoiding confrontation

• Shared responsibility,

interdependence

• Public self and “face”

• Respect for authority

• Age and seniority important,

value tradition

• Control by “shame” and “lose

of face”

Marketing values – Asian

• Popular famous brands;

confidence in brand and corporate names

• Imitation, emulation, use of presenters as role models in ads

• Rapid adoption of successful brands

• Display of wealth and status

• Confidence in technology

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Above all ever before, marketing now plays a very crucial role in an

enterprise The world is changing faster and uncertain The demands of customer

about products and services are more and more complicated that leads to a fiercer

competition In addition, with the globalization development in the world, there is

an explosion of exchanges of products, services and ideas between individuals

and organizations, individuals among themselves, organizations among

themselves that requests the organization to have a special tool to understand the

customers’ behaviors and motivations in order to meet their satisfaction To

operate successfully, a business must identify its customer, determine the types of

products it customer want, and distribute those products in convenient, timely and

economical manner

Figure 2 10 : New place of marketing in the organization

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Deleted: <#>to have

Deleted: <#> chance to learn more about marketing key concepts and basic tools, to understand the contemporary approach and culture of marketing in the company, to make marketing analysis and generate the researching ideas and

to know importance of marketing in today’s business to make a recommendation efficiently to the company ¶

<#>Especially, the course guide me

Deleted: <#>to a deeper view on marketing analysis by the method call direct interview ¶

Deleted: ’s position in an enterprise

Deleted: is changed as follows:¶

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[ 98] [ 96]

[ 97]

Planning and controlling – the activity needed to develop a marketing plan,

measure and compare the marketing results to its plan As a cycle, modification

marketing activities to meet the plan’s objectives

Market identification – The process of examining and selecting potential

markets for the company’s products The market identification typically involves

a two-step process of market segmentation and target marketing

Product development – the activities needed to create or to revise products

to meet the needs of an identified market The products development can involve

in many departments or functions of a company In a life insurance company,

product development is set by marketing, underwriting, claim administration,

investment, actuarial, information systems, customer service, legal

Distribution – the activities and resources needed to make products

available to consumers Insurance companies usually use a separate agency unit

manages the distribution function

Promotion – The activities used to communicate with consumers in order to

influence their products purchase decision Promotion may be the direct

conversation or telecommunication, television advertising , …

Gathering market intelligence – The process of finding and compiling

information about the company’s environment, including its competition;

marketing opportunities or problems; marketing performance

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2.1.9.1 Internal factor.

Figure 2 11 : Internal Factor effects to marketing activity

of life insurancecompany

Products: Each company has many different types or lines of products in

its’ marketing plan For example, a company may concentrate more on life

insurance products than health insurance products Thus, even if the researchers

uncover a marketing opportunity for health insurance products, the company will

not pursue that market without a large amount of initial investment in money and

personnel

Market: This is the current target of the company A company focus on the

lower-income market might not have necessary knowledge or resources to

expanse in a higher income market

Current distribution systems: A company’s distribution system can

determine the markets that it plans to enter and the types of products it plans to

Distribution systems

Existing products

Existing market

Financial condition

Technological resources

Corporate culture INSURANCE COMPANY

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develop There are several ways to distribute products but the life insurance

company usually uses a agency system in which it gives commission to agents for

selling products to prospective policy owners The marketing activities must take

into account the company’s choice of distribution method to assure a reasonable

and successful match of distribution method with the products and markets

Corporate culture: The attitudes, values, perceptions and experiences

shared by a company’s employees and management make up the company

corporate culture Corporate culture impacts directly to the marketing plan

making process

Company finances: A company’s finance conditions are another important

factor in the marketing plan

2.1.9.2 External factor

Figure 2 12 : External Factor effects to marketing activity

of life insurance company

Legislative Environment

Environment

Societal Conditions

INSURANCE COMPANY External Factor Effect to Insurance Company

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Competition: Competition of a life insurance company is not only other life

insurance company but also another type of financial institutions that a approach

taken by competitor in term of products to identical markets

Regulatory environment: New laws and regulations can open or close

markets for the company’s products, effects the distribution system, enhance or

limit product development opportunities A good marketing plan or strategy

should consider such possibilities and makes provisions to adapt to such changes if

they occur

Societal environment: Marketing specialist must study the various groups

of consumers who make up a population in order to make a marketing research

Demographic factors are very important indicators to dictate the types of

coverage appealing to consumers, for example education level, society values

and beliefs as well as norms and behaviors

Figure 2 13 :Source of information of marketing research and planning

Internal report

Government

publications

Marketing organizations

Company associations

MARKETING DEPARTMENT

Agents

Consumer Surveys

Source of Information of Marketing Department

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Agents is the sales force of life insurance companies They consult

clients about the service and directly receive feedbacks from clients This is the

most important information for the marketing department

Sales report, customer complaint reports, client request handling report are source of information that the department easy to retrieve

Association of Vietnam Insurance have all information of life insurance company operating in Vietnam Marketing

department can use their public data to make analysis Beside that there are many

consumer association with useful information for the company

Their many research companies They can provide outsourcing research service related to marketing activities

The company can make the survey on it client to know how they think about the services, company images, quality of service,

requirement…

Ministry of finance, Ministry of Investment are the two main government bodies can help the company about data relate to laws,

legal aspects

Life and health insurance industry plays an important role in the national

economy By providing protection from the risk of financial loss, the life

insurance offers policy owners, insured, beneficiaries and annuitants a measure of

financial security People can pursue their goals in life.They are assured if they

die or become disabled, and their family or business will not be subjected under

the financial hardships

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In another hand, Life insurance are actually a part of financial service

industry, like banks or financial institutions, they provide three types of services:

- Deposit: customer can maintain savings, checking accounts, consumer

loan, and mortgage

- Contractual savings: Provide financial security to the client

- Investment vehicle: life insurance company can distribute bonds,

treasury bill to consumers as investments

In general, Bao Viet Vietnam is the first insurance company in Viet Nam

that was established in 1964 During the time from 1964 to 1993, there was only

one company doing business in this industry in Vietnam There are no business

relations in life insurance

To administrate the insurance industry, Vietnam government issued the

degree number 100/CP on 18/12/1993 After that, on 14/06/1997, the 74/CP

degree was adjusted in relation with other business law like investment law,

commercial law… so that the foreign insurance company could be licensed The

Insurance law was issued and effective from 01/04/2000

Life insurance in Vietnam just started in 1997 when BaoViet launched its

subsidiary, Bao Viet Life insurance company Since then, four more life insurers

have entered this new area They are high-profile named Prudential and AIA (the

Asia-Pacific branch of AIG) and two joint-ventures named Chinfon-Manulife and

Baominh-CMG in which only Baominh-CMG has a Vietnamese partner This

reflects a rather open-minded policy of the regulator and the interest of

international insurers in this high-potential market

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Table 2 2 : List of life insurer in Vietnam with investment amount

Life

Insurance

Co

Established Year in

VN

Original country

Investment method

Starting

Capital

Current capital

CMG

VN-Australia

Joint Venture

US$ 5 Bil US$10 Bil

Manulife 1999 Canada Foreign US$5 Bil US$20 Bil

Prudential 1999 UK Foreign US$14 Bil US$50 Bil

ACE life 2005 US Foreign US$10 Bil US$10 Bil

(Source: Insurance magazine, 01/2006, pages, HaNoi,2006)

The prospects for the life sector are very favorable, particularly when

considering the country's population of 78 million While life insurance is

financially beyond the reach of much of the population, some foreign insurers

believe that at least 15 - 20 % of the population, or around 11-15.8 million people

will potentially present a market for life insurance products In addition, in line

with the recovering economy, the middle class will continue to expand in size

Life premium income has been increasing very fast, partly because the

market started from scratch (see chart below)

Year 1999 2000 2001 2002 2003 2004 2005

Revenue 492 1,292 2,786 4,645 6,442 7,710 8,130

Growth - 162.60% 115.63% 66.73% 38.69% 19.68% 5.45%

(Source: Insurance magazine, 01/2006, pages, HaNoi,2006)

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