Improving marketing mix for gas products in lien quang thanh business liquefied petroleum gas joint stock company

NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL TRAN THI THU HA MAJOR PROJECT Bachelor of Business Administration in English (E BBA) Thesis E BBA 4 IMPROVING MARKETING MIX FOR GAS PRODUCTS IN LIEN QUANG[.]

NATIONAL ECONOMICS UNIVERSITY

BUSINESS SCHOOL

TRAN THI THU HA

MAJOR PROJECT Bachelor of Business Administration in English (E-BBA) Thesis

E-BBA 4

IMPROVING MARKETING MIX FOR GAS PRODUCTS

IN LIEN QUANG THANH BUSINESS LIQUEFIED PETROLEUM GAS

JOINT STOCK COMPANY

Supervisor : Le Van Nam, MBA

Hanoi, 2016

TABLE OF CONTENT

THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER

PRODUCTS 3

I MARKETING AND MARKETING MIX FOR CONSUMER PRODUCTS 3

II MARKETING MIX FOR CONSUMER GOODS 8

1 Product 8

2 Price 13

3 Place 15

4 Promotion 16

5 Factors impacting marketing mix 19

LIST OF FIGURES

Figure 1.1 Concept of Marketing mix 4Figure 1.2 Three levels of Product 8

THEORETICAL BACKGROUND ON MARKETING MIX FOR

CONSUMER PRODUCTS

I MARKETING AND MARKETING MIX FOR CONSUMER PRODUCTS

Marketing is a form of human activity to satisfy the needs and desires of them throughthe exchange Initially marketing occurs through discrete acts associated with theexchange of certain situations Therefore, it can be said that marketing appearsassociated with exchange of goods Nevertheless, that does not mean that marketingoccurs simultaneously with the appearance of the exchange Marketing exchangedonly when a state or in certain situations: either the seller trying to sell, or when thebuyer is trying to buy goods It means that situations do appear to exchange marketing

is when people have to compete to sell or to buy So do the underlying causes appearMarketing is competition

In practice, marketing activity appears clearly from the modern industrialdevelopment, promoting increased production and make the provision of goods tends

to exceed demand Then, it forced businesses to find better measures for consumptiongoods The search for better solutions to promote consumption of goods led theincreasing growth of marketing and it has found a complete science – Marketing.The term marketing was first launched in America in the early twentieth century Itwas spread to Europe, Asia, and to Vietnam in the 1980s The American MarketingAssociation offers the following definition: Marketing is the process of planning andexecuting the conception, pricing, promotion, and distribution of ideas, goods, andservices to create exchanges that satisfy individual and organizational goals Marketersuse numerous tools to elicit the desired responses from their target markets Thesetools constitute a marketing mix Marketing mix is the set of marketing tools that thefirm uses to pursue its marketing objectives in the target market (Kotler 2002) Theterm “marketing mix” became popularized after Neil H.Borden published his 1964article, “The concept of the Marketing Mix” Borden began using the term in his

teaching in the late 1940’s after James Culliton has described the marketing manager

as a “mixer of ingredients” The ingredients in Borden’s marketing mix includedproduct planning, pricing, branding, distribution channels, personal selling,advertising, promotions, packaging, display, servicing, physical handling, and factfinding and analysis E Jerome McCarthy later grouped these ingredients into the fourcategories that today are known as the 4P’s of marketing including Product, Price,Place (distribution) and Promotion These 4P’s are the parameters that the marketingmanager can control, subject to the internal and external constraints of the marketingenvironment The goal is to make decisions that center the 4P’s on the customers inthe target market in order to create perceived value and generate a positive response.Kotler (2002) map the concept of marketing mix in Figure 2.1

Figure 1.1 Concept of Marketing mix

Source: Kotler, P (2002), Marketing Management, Millennium edition

Therefore, we reviewed the process of the formation and development of marketingstrategies to capture how the overall activities of the marketing mix strategy(marketing mix) developed

When market formation, production and product supply to market is the object and themain factors in the formation of exchanges between buyers and sellers at that time

When more and more products appears in the market with the same type and quality(product replacement), many manufacturers and buyers exchange trading together hascreated a chaotic and it is difficult to manage both the buyer and seller.

The buyer meets difficulty to make the best decisions, while sellers are finding itdifficult to properly segment for each group of consumers In addition, the level ofcompetition is increasing In this context, the producers (managers of each firm’smarket) have to research and improve their products to suit the countless needs ofconsumer in the market Therefore, the product strategy is launched and appliedextensively during this period

Product strategy includes the following activities:

- Segment clearly products and customer target groups Each line of productswill suit each customer group that has tended to segment

- Change the design, packaging, identity, message and communications toconsumers Innovate and create new features to products

- Improve product quality – this strategy creates greater competitive advantagefor the products by:

 Consumers feel that the product relatively cheaper compared with othercompetitors’ products

 Consumer confidence would increase for the product of thesemanufacturers, so that people can decide to purchase additional productsfrom the same company more easily It would make the manufacturerreach higher sales and bigger market shares

- Strategies related to product life cycle Manufacturers, managers mustcontinually do market research, measurement and define 4 phases: Introduction– Growth – Maturity – Decline, from which to define objectives for each phaseand the overall plan

However, competitors will quickly and easily learn the strategies and react to

market makers Thus, competition and changes in product strategy will not beenough to help the manufacturer have the advantage and differentiation to attractcustomers and increase revenue As the result, it forces manufacturers andprofessionals to think about the actions of the reaction products on price, becauseprice is one important factor and is associated with the product Consumersthemselves also always consider cost when choosing any product In addition,marketers are always looking for ways to satisfy customers and gain the highestprofit.

Pricing strategy is that the manufacturers implement the activities and actions toresponse the market price changes of the product in order to achieve the highestbenefits for producers

- Manufacturers often make the strategic and action plans related to the price asfollows: Determine the actual price an the nominal price of the product/servicethey provide

- Manufacturers will compare the level of this difference to measure the value favailability and seek for potential elements for product through pricing

- Measure and estimate the market characteristics, changes in economic andcosts and so on to specify the price in accordance with the stages in the lifecycle of the product and in accordance with market and seasons to achieve theobjectives of each phase

The more lucrative the market is, the more appearance of manufacturers has Thatled to a time that the current market will saturate the market and purchasing powerwill decline, regardless of that the product life cycle is limited This time thecompany had to consider two options:

- Invest capital to penetrate its existing markets through research and productimprovement, through its attractive prices to attract more number of currentcustomers

- Or invest in a new market.

The fact is that product A in A saturate market still could be a new product inmarket B (with different culture) Like the legendary Silk Road – It is a lesson thatwhen the silk is great importance to use in the other countries Moreover, fromhere distribution strategy was formed to help producers continue to penetrate newmarket

Distribution strategy (Place) includes activities that producers plan, organize theirdistribution system effectively sell products to different markets, for example:

- Measure and estimate demands, then segment the market based on criteria andmanagement purposes and organize a variety of suitable distribution systems;

- Determine the number and type of appropriate distribution channels;

- Plan and implement an approach to market most effectively;

- Perform a variety of strategies and tactics in order to match the demands

If new markets are not yet exploited, making consumers aware products and trustservices of the company is quite a big concern of the producer So the promotionstrategy is launched to tackle the exploitation of the maximum purchasing power

of the market

Promotion strategy comprises of activities to communicate with target consumers

in order to increase better sales It means that promotion strategy make customersaware about products and services their consumers and stimulate consumerdemand

The major activities in this strategy include:

 Direct marketing

The structure of marketing activities is an on-going progress It always accommodatesitself to the changes of the market while creating changes to the market at the sametime The economists always have to observe, study the operation of the market togenerate new strategies to create new competitive advantage, satisfy and meet marketdemands better The in-depth understanding of all the components (Product, Price,Place and Promotion) and in the marketing mix is essential in assessing and improvingmarketing strategy for a product

II MARKETING MIX FOR CONSUMER GOODS

1 Product

According to Kotler (Principles of Marketing, 2003), Product is anything that can beoffered to a market for attention, acquisition, use or consumption that might satisfy awant or need It includes physical objects, services, persons, places, organizations andideas

He also suggested that a product should be viewed in three levels as follows

Figure 1.2 Three levels of Product

Source: www.marketingteacher.com

 Level 1: Core Product is the core benefit that a product offers Customers whopurchase a camera are buying more than just a camera they are purchasingmemories.

 Level 2: Actual Product: The strategy at this level involves organizationsbranding, adding features and benefits to ensure that their product offers adifferential advantage from their competitors

 Level 3: Augmented product: is additional non-tangible benefit(s) that is (are)being offered? Competition at this level is based around after sales service,warranties, delivery and so on John Lewis, a retail departmental store, offersfree five-year guarantee on purchases of their Television sets, this gives theircustomers the additional benefit of peace of mind over the five years shouldtheir purchase develop a fault

When placing a product within a market, many factors and decisions have to be takeninto consideration These include controlling product attributes, packaging, providingproduct-support services, product mix decisions and product life-cycle strategy

 Controlling product attributes

Developing a product involves defining the benefits that the product will offer Thesebenefits are communicated and delivered by tangible product attributes, such asquality, features, style and design Decisions about these attributes are particularlyimportant as they greatly affect consumer reaction to a product Products are usuallyconsidered the number one factor contributing towards building goodwill of a firm Aproduct should be unique, durable, reliable, comfortable and economical

 Product quality

Quality is one of the marketer’s major positioning tools Quality has a direct impact onproduct performance; hence, it is closely linked to customer value and satisfaction Forexample, Siemens defines quality this way: “Quality is when our customers come backand our products don’t.” This customer-focused definition suggests that quality begins

with customer needs, goes beyond customer satisfaction and ends with customerretention “Total quality management” (TQM) is an approach in which all thecompany’s people are involved in constantly improving the quality of products,services and business processes During the past two decades, companies, large andsmall, have credited TQM with greatly improving their market shares and profits.However, customers’ requirement of quality is unlimited Therefore, companies need

to do research the quality of replaced product to identify the level of its product’squality and the payment ability of target customers

 Product features

A product can be offered with varying features Features are a competitive tool fordifferentiating the company’s product from competitors’ products Being the firstproducer to introduce a needed and valued new feature is one of the most effectiveways to compete

In order to identify new features and decide the producers need to determine whichones should be added to its product The company should periodically survey buyerswho have used the product and asked these questions: How do you like the product?Which specific features of the product do you like most? Which features could we add

to improve the product? How much would you pay for each feature? The answersprovide the company with a rich list of feature ideas Each feature should be assessed

on the basis of its customer value versus its company cost Features that customersvalue little in relation to costs should be dropped; those that customers value highly inrelation to costs should be added

 Product style and design

Another way to add customer value is through distinctive product style and design.Some companies have reputations for outstanding style and design, such as iMAC andSony Vaio Some companies have integrated style and design with their corporateculture They recognize that design is one of the most powerful competitive weapons

in a company’s marketing arsenal Many companies, however, lack a “design touch”.Their product designs function poorly or are dull or common looking Somecompanies like Fiat Auto have learnt that design and style matters The Italian carcompany’s European market share had collapsed from 10 percent in 1990 to 6 percent

in 2003 Part of the problem is that they have alienated drivers by succeeding inmaking some rather ugly-looking cars

Design is a broader concept than style Style simply describes the appearance of aproduct A sensational style may grab attention and produce pleasing aesthetics, but itdoes not necessarily make the product perform better In some cases, it might evenresult in worse performance For example, a chair may look great yet be extremelyuncomfortable Good design contributes to a product’s usefulness as well as to itslooks Canon (cameras), Sony (hi-fis), Philips (compact disc players and shavers),Ford (cars) and Swatch (watches) have also profited from their commitment to productdesign Differentiating through design is also a familiar strategy in premium productssuch as Rolex and Omega watches Good design can attract attention, improve productperformance, cut production costs and give the product a strong competitive advantage

in the target market

 Packaging

The activities of designing and producing the container or wrapped for a product Thepackage may include the product’s primary container (the tube holding and protectingClose-up toothpaste); a secondary package that is thrown away when the product isabout to be used (the cardboard box containing the tube of Close-up); and the shippingpackage necessary to store, identify and ship the product (a corrugated box carryingsix dozen tubes of Close-up toothpaste) Labeling which is printed informationappearing on or with the package is also part of packaging Innovative packaging cangive a company an advantage over competitors

 Branding