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

NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL IMPROVING MARKETING MIX FOR GAS PRODUCTS IN LIEN QUANG THANH BUSINESS LIQUEFIED PETROLEUM GAS JOINT STOCK COMPANY Bachelor of Business Administration in E[.]

NATIONAL ECONOMICS UNIVERSITY

BUSINESS SCHOOL

IMPROVING MARKETING MIX FOR GAS PRODUCTS

IN LIEN QUANG THANH BUSINESS LIQUEFIED PETROLEUM GAS

JOINT STOCK COMPANY

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

Student : Tran Thi Thu Ha Class : EBBA4-A

Supervisor : Le Van Nam, MBA

Hanoi, 2016

A completed study would not be done without any assistance Therefore, theauthor who conducted this thesis gratefully gives acknowledgement to theirsupport and motivation during the time of doing this thesis as a requirement ofcompleting my Degree of E-BBA Program in National Economics University.First of all, I would like to express my endless thanks and gratefulness to mysupervisor MBA Le Van Nam His kindly support and continuous advices wentthrough the process of completion of my thesis His encouragement andcomments had significantly enriched and improved my work Without hismotivation and instructions, the thesis would have been impossible to be doneeffectively

Secondly, I want to extend many thanks to the Director and all employees atthe Lien Quang Thanh Business Liquefied Petroleum Gas Joint Stock Companywho offered me a valuable three-month internship with full support Withouttheir help, the data could not have been gathered correctly and fully

My special thanks approve to my parents for their endless love, care andhave most assistances and motivation me for the whole of my life I also wouldlike to explain my thanks to my sisters for their support and care me all the time

At last, my deeply thanks come to all my friends during time I study in E-BBAProgram Their kindly help, care, motivation gave me strength and lift me up allthe trouble for the rest of my life

TABLE OF CONTENTS

ACKNOWLEDGEMENT 1

LIST OF ABBREVIATIONS 4

LIST OF TABLES 5

LIST OF FIGURES 6

EXECUTIVE SUMMARY 7

CHAPTER 1: INTRODUCTION 9

1.1 Rationale 9

1.3 Research objectives and Research questions: 12

1.4 Research methodology 13

1.4.1 Research process 13

1.4.2 Data source 13

1.4.3 Data analysis 14

1.5 Scope of the research 15

1.6 Research structure 15

CHAPTER 2: THEORETICAL BACKGROUND ON MARKETING MIX FOR CONSUMER PRODUCTS 16

2.1 Marketing and marketing mix for consumer products 16

2.2 Marketing mix for consumer goods 21

2.2.1 Product 21

2.2.2 Price 26

2.2.3 Place 28

2.2.4 Promotion 29

2.2.5 Factors impacting marketing mix 32

CHAPTER 3: ANALYSIS OF LIEN QUANG THANH.,JSC’S MARKETING MIX FOR GAS PRODUCTS 35

3.1 Overview of Lien Quang Thanh.,JSC 35

3.1.1 Company Overview 35

3.1.2 Foundation and Development of the company 35

3.1.3 Organization chart 35

3.1.4 Core line products 36

3.1.5 Financial Report of Lien Quang Thanh.,JSC (2012-2014) 37

3.2 Analysis of marketing mix for Lien Quang Thanh.,JSC’s gas product line 39

3.2.1 Respondents profiles 39

3.2.2 Target customer 39

3.2.3 Products 40

3.2.4 Price 49

3.2.5 Place 50

3.2.6 Promotion 52

CHAPTER 4: RECOMMENDATIONS FOR IMPROVING MARKETING MIX OF GAS PRODUCTS IN LIEN QUANG THANH.,JSC 56

4.1 Lien Quang Thanh.,JSC’s marketing objectives for gas products 56

4.2 Recommendations for improving marketing mix for gas products 56

4.2.1 Improving product strategy through market and customer study 56

4.2.2 Adjusting price strategy to be more market competitive 58

4.2.3 Better motivating and managing distribution channels 58

4.2.4 Better planning and managing promotional activities 59

4.2.5 Recommendations for better marketing management 60

4.3 Conditions for solution implementation 61

CONCLUSION 63

APPENDIX 1 64

APPENDIX 2 67

APPENDIX 3 72

LIST OF ABBREVIATIONS

LQT Lien Quang Thanh.,JSC

PR Public Relations

LIST OF TABLES

Table 3.1: Brief Financial report of Lien Quang Thanh.,JSC in 2012, 2013 and 2014 38Table 3.2: Competitive price review of gas products of LQT (VND) 50

LIST OF FIGURES

Figure 1.1: Research Process 13

Figure 2.1 Concept of Marketing mix 17

Figure2.2 Three levels of Product 21

Figure 3.1: Organization chart of LQT 36

Figure 3.2: The gas product consumption of Lien Quang Thanh.,JSC 45

Figure 3.3: The revenue proportion of gas products of Lien Quang Thanh.,JSC 46

Figure 3.4: Products customers often buy at Lien Quang Thanh.,JSC 47

Figure 3.5: Reason customers buy gas products of the company 48

Figure 3.6: Criteria that affect customers’ choice of paint brands 48

Figure 3.7: Distribution Channel Of Lien Quang Thanh.,JSC 51

Figure 3.8: Sales performance by Lien Quang Thanh.,JSC in 2014 52

Figure 3.9: Channels through which customers know about the company 53

Figure 3.10: Promotional programs that influence customers’ purchase 54

EXECUTIVE SUMMARY

There is a high competition in gas industry in Vietnam with many local andbrands Gas industry is an industry which needs the high trust and support ofcustomers To do that, the company have to continually invest in developing andimproving quality of products to meet customers’ demands

The objective of the thesis “IMPROVING MARKETING MIX FOR GAS PRODUCTS INLIEN QUANG THANH BUSINESS LIQUEFIED PETROLEUM GAS JOINT STOCKCOMPANY” is to analyze the current marketing mix of Lien Quang Thanh.,JSC’sgas products, to explore the weaknesses in the marketing mix and to recommendthe tactics and approaches towards improving the marketing mix so that LienQuang Thanh.,JSC can gain more success in the long term in the gas market

Based on the theory on marketing mix for consumer goods together with primarydata (survey 30 customers, interview 4 managers and staffs at Lien QuangThanh.,JSC and observation) and secondary (publications, reports, articles,books), the author has analyzed the each element of marketing mix (Product,Price, Place and Promotion) for gas products at Lien Quang Thanh.,JSC andcompare it with competitors and customers’ expectations Key findings are:

 Inadequate control and investment in product strategy

 Inflexible pricing strategy which needs to be more market-oriented

 Improper management of the distribution channels

 Negligence in gaining the support from the company’s staffs for theadvertising and PR activities

 Unplanned management in advertising and PR activities:

 Incompetent reporting system

 Management flaws in implementing sales promotion

 Unprofessionalism in mobile marketing

 Inadequate investment in training and improving personal sellingskills of the sales staffs

Based on the findings, author has proposed recommendations for Lien QuangThanh.,JSC to improve its marketing mix for gas products such as:

 Strengthening product strategy by professional study of the marketand the targeted customers

 Adjusting price strategy to be more market competitive

 Better motivating and managing distribution channels by motivatingand improving Lien Quang Thanh.,JSC’s own sub-agents

 Properly planning for all advertising and PR activities, bettercontrolling of the sales promotion programs, being moreprofessional in direct marketing and improving personal sellingskills for sales staffs

 Making sure that different divisions coordinate and support eachother

 Setting up key performance indicators for marketing activities

 Preparing master marketing plans

CHAPTER 1 INTRODUCTION

1.1 Rationale

In the development of global economy, the competition between companies,organizations becomes more and more intense Hence, marketing strategies playimportant role in attracting customers

In that trend, gas market in Vietnam is not an exception Over the last 5years, with the growth rate 15% - 20% per year, gas has been a potential product

In the whole country, there are hundreds of gas companies operating in manydifferent forms The attractiveness of this market has created a fiercecompetition between domestic products and imported ones

Lien Quang Thanh Business Liquefied Petroleum Gas Joint Stock Companywas established in January 15, 2008 Initially, the company is just only as a smallorganization which sells gas to agencies and customers Until now, LQT hasgrown bigger, have more items to sell and has reputation in local Along with thegrowth of the national economy, Lien Quang Thanh Business Liquefied PetroleumGas Joint Stock Company has achieved a lot of success, contributing to thegasoline industry Currently the company does business in various activities such

as producing, wholesaling, retailing fuel trade of solid, liquid, gas and relatedproducts; electrical appliances, household appliances, gas stoves, metal utensils

in kitchens and pure bottled water,… In which, gas products create 80% of thetotal revenue for Lien Quang Thanh.,JSC

However, since 2011, gas companies have appeared rapidly in Thai BinhProvince, this made the market share fragmented Lien Quang Thanh.,JSC faces to

a lot of challenges which destabilizes the current position in the local market Inaddition to the fluctuation of world and domestic petroleum gas price affectedcompany’s production cost

In this currently competitive situation, to promote sales of its gasoline product inorder to maximizing profits, Lien Quang Thanh.,JSC should change the way that they

interact with customers and steps by steps have a better business market Afterinternships period, I found a fact that Lien Quang Thanh.,JSC needs a comprehensivemarketing form Actually, marketing mix seems to be the most reasonable choice.Base on this research, some problems are identified and there are also suitable solutionare suggested, which encourages me to choose the topic “Improving marketing mix forgas products in Lien Quang Thanh Business Liquefied Petroleum Gas Joint StockCompany” as the final thesis to graduate from the National Economics University

1.2 Literature review

Marketing mix is a model of implementing marketing strategies thatstressed the blending of various factors in a way for both organizational andconsumer objectives are attained This model was developed by Neil Borden,

1964 who first started using the phase in 1949 The phase came to Neil Bordenwhile reading James Culliton’s description of business activities: “A mixer ofingredients who follows a recipe goes along, sometimes adapts a recipe to theingredients immediately and sometimes experiments with ingredients no oneelse has tried” (Culliton, J 1948)

When blending the mix elements, marketer must consider the target marketand understand the wants and needs (Maslow theory) of the market Then usethese mix elements in formulating appropriate marketing strategies and plansthat will satisfy the consumer wants The mix must also exceed the objectives ofthe organization As Neil Borden, 1964, put it, “When building a marketingprogram to fit the needs of the firm, the marketing manager has to weigh thebehavioral forces and then juggle marketing elements in the mix with a keen eye

on the resources with which marketing manager has to work” (Neil Borden, 1964page 365)

Neil H Borden, “The Concept of the Marketing Mix”, 1964

A separate marketing mix is normally crafted for the product offering onmarket segment depending on organization structure of the firm Neil Borden,

1964, goes on to suggest a procedure for developing a marketing mix NeilBorden, 1964, claims that need two sets of information:

- A list of important elements that go into the mix

- A list of forces that influence these decision variables

E Jerome McCarthy, “Basic Marketing: A Managerial Approach”, Homewood, IL: Richard D Irwin 1960

McCarthy (1964) refined Borden’s (1965) idea further and defined themarketing mix as a combination of all of the factors at a marketing manger’scommand to satisfy the target market He regrouped Borden’s 12 elements to fourelements or 4Ps, namely product, price, promotion and place at a marketingmanger’s command to satisfy the target market Jerome McCarthy, 1960, said thatmarketers have essentially these four variables to use when formulating themarketing strategy and marketing plan

Moller, K (2006), Comment on: The Marketing Mix Revisited: Towards the 21th Century Marketing Journal of Marketing Management, vol.22, pp 439-450

Moller (2006) presents an up-to-date picture of the current standing in thedebate around the Mix as marketing paradigm and predominant marketingmanagement tool by reviewing academic views from five marketing managementsub-disciplines (consumer marketing, relationship marketing, services marketing,retail marketing and industrial marketing) and an emerging marketing (E-Commerce)

Development of marketing mix has received considerable academic andindustry attention Numerous modifications to the 4Ps framework have beenproposed, the most concerted criticism has come from the services marketingarea (Rafiq and Ahmed, 1995) The concept of 4Ps has been criticized as being aproduction-oriented definition of marketing, and not a customer-oriented(Popovic, 2006) It is referred to as a marketing management perspective.Lauterborn (1990) claimed that each of these variables should also be seen from

a consumer’s perspective This transformation is accomplished by convertingproduct into customer solution, price in to cost to the customer, place intoconvenience, and promotion into communication, or the 4C’s Moller (2006)highlighted 3-4 key criticisms against the Marketing Mix framework including:

- The Mix does not consider customer behavior but is internallyoriented

- The Mix regards customers as passive; it does not allow interactionand can not capture relationships

- The Mix is void of theoretical content; it works primarily as asimplistic device focusing the attention of management

Fakeideas, Revision: Reviewing the Marketing Mix, 2008

The review of this article found that:

- The mix does not take into consideration the unique elements ofservices marketing

- Product is stated in the singular but most companies do not sell aproduct in isolation Marketers sell product lines, or brands, allinterconnected in the mind of the consumer

- The mix does not mention relationship building which has become amajor marketing focus, or the experiences that consumers buy

- The conceptualization of the mix has implied marketers are thecentral element This is not the case Marketing is meant to be

“customer-focused management”

1.3 Research objectives and Research questions:

To solve the above problem, the researcher will focus on three followingobjectives:

 Synthesize the theoretical background of marketing mix for customer product

 Analyze and evaluate the current situation of marketing mix for Lien QuangThanh.,JSC

 Identify the weakness and problem of marketing mix for Lien QuangThanh.,JSC

 Propose recommendations to strengthen the marketing mix for Lien QuangThanh.,JSC

In order to achieve the objectives, the research is conducted to answer thefollowing questions:

 What are the theories of marketing mix for customer product?

 What are the current situations of the marketing mix for Lien QuangThanh.,JSC?

 What are the weakness and problems of marketing mix for Lien QuangThanh.,JSC?

 How to improve the marketing mix for Lien Quang Thanh.,JSC?

Literature

Review

Requirements of marketing mix of gas products

Figure 1.1: Research Process

Source: Author’s design

- Opinions towardsstrategy for products

Quantitative Survey At least 50

customers whoalready used gasproducts of thecompany

- Demographic

- Awareness of gasproduct of Lien QuangThanh.,JSC

- Opinions towards theproducts

- Opinions towards theproducts and salessupporting activities

Source: Author’s data collection method

1.4.3 Data analysis

The result of the survey will be processed with MS Excel and tablingapplication while conceptual analysis will be employed for opinions collected frominformants

1.5 Scope of the research

- The research focuses on marketing channel of gas products of Lien Quang

Thanh.,JSC

- Research is conducted in Thai Binh

- Timing

 Secondary data: For the period from 2014 to early 2015

 Primary data: For the period from 2014 to early 2015

1.6 Research structure

To present a comprehensive and coherent report this thesis adopts thefollowing structure:

CHAPTER 1: INTRODUCTION

CHAPTER 2: THEORETICAL BACKGROUND ON MARKETING MIX

FOR CONSUMER GOODS

CHAPTER 3: ANALYSIS OF LIEN QUANG THANH.,JSC’S

MARKETING MIX FOR GAS PRODUCTS

CHAPTER 4: RECOMMENDATIONS TO IMPROVE MARKETING

MIX FOR GAS PRODUCTS

CHAPTER 2 THEORETICAL BACKGROUND ON 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 1964

article, “The concept of the Marketing Mix” Borden began using the term in histeaching 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 2.1 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 the

main 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 tomarket 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 current

- 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:

 Advertising

 Promotion

 Personal selling

 Public relations and publicity

 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

2.2 Marketing mix for consumer goods

2.2.1 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

Figure2.2 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 back

and our products don’t.” This customer-focused definition suggests that quality beginswith 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 corporate

culture 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

Brand is a name, term, sign, symbol or design that adds value to the products Perhapsthe most distinctive skill of professional marketers is their ability to create, maintain,protect and enhance brands The American Marketing Association defines a brand as aname, term, sign, symbol, or design, or a combination of these, intended to identify thegoods or services of one seller or group of sellers and to differentiate them from those

of competitors For example, most consumers would perceive a bottle of Channelperfume as a high-quality, expensive product However, the same perfume in anunmarked bottle would likely be viewed as lower in quality, even if the fragrance wereidentical

 Brand positioning

Brand positioning is the work of identifying a market niche for a brand, product orservice utilizing traditional marketing placement strategies (i.e price, promotion,distribution, packaging and competition) A strong brand positioning means the brandhas a unique, credible, sustainable and valued place in customers’ minds

 Brand personality

Brand personality can be defined as “the set of human characteristics associated with abrand” (Aaker 1997) Personality is how the brand behaves Refers to the outcome ofall consumer’s experiences with the brand, in other words, the brand personality is theweighted average of previous impressions In the consumer’s mind, these impressionsmerge to form an overall concept of what to expect from brand

 Providing product-support services

Product-support services include warranties, delivery, after sale service andinstallation More and more companies are using product-support services as a majortool in gaining competitive advantage Good customer service makes sound businesssense It costs less to keep the goodwill of existing customers than it does to attractnew customers or woo back lost customers A company should design its product andsupport services to meet the needs of target customers

 Product mix decisions

A product mix (also called product assortment) is the set of all products and items that

a particular marketer offers for sale The product mix of an individual company can bedescribed in terms of width, length, depth, and consistency

The width refers to how many different product lines the company carries;

The length refers to the total number of items in the mix;

The depth of a product mix refers to how many variants of each product are offered;The consistency of the product mix refers to how closely related the various productlines are in end use, production requirements, distribution channels, or some other way(Kotler, 2002)

2.2.2 Price

Price is the amount of money charged for a product or service More broadly, price isthe sum of all the values that consumers exchange for the benefits of having or usingthe product or service Price is the only element in the marketing mix that producesrevenue; all other elements represent costs Price is also one of the most flexibleelements of the marketing mix A well-chosen pricing strategy should do three things:

 Achieve the financial goals of the company (profitability): Price and costsdetermine financial performance Pricing strategy needs to be assessed as totheir estimated impact on the firm’s financial statements in short and long run

 Fit the realities of the marketplace: the pricing strategy should be considered tothe payment ability of customers Prices that are too high may not be accepted

advertising It often depends on how other variables in marketing mix are used.For example, price can be used as an incentive to channel members assalespersons and as a signal of value as well as a way to attack competitors.

In setting prices, a company follows a six-step procedure:

(1) Select the pricing objective

(2) Determine demand

(3) Estimate costs

(4) Analyze competitors’ costs, prices and offers

(5) Select a pricing method (cost-plus pricing, break-even analysis and target profitpricing, perceived-value pricing, going-rate pricing, sealed bid pricing andpsychological pricing)

(6) Select the final price

Companies do not usually set a single price, but rather a pricing structure that reflectsvariations in geographical demand and costs, market-segment requirements, purchasetiming, order levels, and other factors Several price-adaptation strategies areavailable:

After developing pricing strategies, firms often face situations in which they need to

change prices by initiating price cut or price increases In these situations, companiesneed to consider how stakeholders will react to price changes In addition, marketersmust develop strategies to respond to competitors’ price changes The firm’s strategyoften depends on whether it is producing homogenous or non-homogenous products Although price competition is a major problem facing companies, many do not handlepricing well The most common mistakes are these: Pricing is too cost-oriented; price

is not revised often enough to capitalize on market changes; price is set independent ofthe rest of the marketing mix rather than as an intrinsic element of market-positioningstrategy; price is not varied enough for different product items, market segments, andpurchase occasions

2.2.3 Place

The next element is the distribution system which comprised the wholesale and retailchannels through which products and services move to the final users They mayconstitute business entities such as the company’s sales force, independentdistributors, agents, as well as franchised outlets

Place stands for various activities the company undertake such as channels, coverage,location, inventory and transport, to make the product accessible and available totarget customers Thus, a firm must identify, recruit, and link various middlemen underand marketing facilitators so that its products and services are efficiently supplied tothe target market

 Channels of Distribution:

The main object of marketing process is to deliver the goods their ultimate consumers.The process involves a number of functions Of these functions two are mostimportant First, the creation of demand Secondly, the supply of goods whenever andsales promotion activities On the other hands, the distribution function is concernedwith management of system of distribution of goods This system is known aschannels of distribution is a very important one Therefore, it should be examinedthoroughly By channels of distribution it mean the intermediaries through which thegoods or products are transferred from the producers to the actual users In otherwords, distribution channels are the system of economic institutions through which aproducer of goods delivers them into the hands of the users

 Distribution (Place) Decisions:

Some examples of distribution decisions include:

 Distribution channels

 Market coverage (inclusive, selective or exclusive distribution)

 Specific channel members

Modern marketing calls for more than developing a good product, pricing itattractively, and making it accessible to target customers Companies must alsocommunicate with present and potential stakeholders, and with the general public.Promotion stands for the various activities the company undertake to communicate itsproducts merits and to persuade target customers to buy them Thus every companyhas to buy advertising, set up sales-promotions, arrange publicity and dispatch salespeople to promote its products The company must communicate information aboutproduct existence, features, terms etc to the customers, suppliers and dealers And itmust communicate to the internal public particularly to its directors, middlemanagement, sales force and works Fundamentally, there are three basic objectives ofpromotion These are:

 To present information to consumers as well as others;

 To increase demand;

 And to differentiate a product

The following are two types of Promotion:

 Above the line promotion: Promotion in the media (TV, radio, mewspapers,Internet, mobile phones) in which the advertiser pays an advertising agency toplace the ad

 Below the line promotion: All other promotion Much of this is intended to besubtle enough for the consumer to be unaware that promotion is taking place.For instance, sponsorship, product placement, endorsements, sales promotion,merchandising, direct mail, personal selling, public relations, trade shows.The specification of five elements creates a promotional mix or promotional plan.These elements are personal selling, advertising, sales promotion, direct marketing,and public relations and publicity.

 Advertising

Advertising can be defined as any paid form of non-personal presentation andpromotion of ideas, goods or services through mass media such as newspapers,magazines, television or radio by an identified sponsor Although advertising is usedmostly by business firms, it is also used by a wide range of not-for-profitorganizations, professionals and social agencies to communicate their causes tovarious target publics Advertising is a good way to inform and persuade, whether thepurpose is to sell Nokia mobile phones worldwide or to encourage smokers to give upthe habit Advertising is used in order to stimulate a response from the target audience.The response may be perceptual in nature: for example, the consumer developsspecific views or opinions about the product or brand, or these feelings are altered bythe ad The response could be behavioral: for instance, the consumer buys the product

or increases the amount that he or she buys

 Public relation and publicity

Public Relations (PR) is a field concerned with maintaining public image for profile people, commercial businesses and organizations, non-profit associations orprograms PR is used to build rapport with employees, customers, investors, voters, orthe general public Almost any organization that has a stake in how it is portrayed inthe public arena employs some levels of public relations Public relations include avariety of programs to promote or protect a company’s image or individual products

high-The appeal of public relations and publicity is based on three distinctive qualities: (1)high credibility (news stories and features are more authentic and credible than ads);(2) ability to catch buyers off guard (reach prospects who prefer to avoid salespeopleand advertisements); and (3) dramatization (the potential for dramatizing a company orproduct).

 Sales promotion

Sales promotion consists of short-term incentives, in addition to the basic benefitsoffered by the product or service, to encourage the purchase or sale of a product orservice Whereas advertising offers reasons to buy a product or service, salespromotion offers reasons that would achieve immediate sales It seeks to motivate thecustomer to buy now Sales promotion includes a wide variety of promotion toolsdesigned to stimulate earlier or stronger market response These tools are used bymany organizations - manufacturers, distributors, retailers, trade associations and non-profit institutions - and may be targeted towards the consumer or final buyer, businesscustomers, the trade or retailer and the company’s sales force Consumer promotionsinclude money-off, coupons, premiums, contests and others to: (1) increase short-termsales; (2) help build long-term market share; (3) entice consumers to try a newproduct; (4) lure consumers away from competitors’ products; (5) encourageconsumers to “load up” on a mature product; or (6) hold and reward loyal customers.Trade promotions range from special discounts, free goods and loyalty bonuses totraining

 Direct marketing

Direct marketing is a form of advertising that reaches its audience without usingtraditional formal channels of advertising, such as TV, newspapers or radio.Businesses communicate straight to the consumer with advertising techniques such asfliers, catalogue distribution, promotional letters, and street advertising Directmarketing is predominantly used by small to medium-size enterprises with limitedadvertising budgets that do not have a well-recognized brand message A well-

executed direct advertising campaign can offer a positive return on investment as themessage is not hidden with overcomplicated branding There are several tools to plan adirect marketing campaign, including direct mail, telephone and fax, mobilemarketing, online marketing, door-to-door marketing, direct response television andradio, and fliers and catalogue.

 Personal selling

Personal selling activity is crucial to enhance a company’s equity Its primary purposeincludes educating customers, providing product usage and marketing assistance, andproviding after-sale service and support to buyers It also allows for a two-waycommunications Therefore, it helps company yield intermediate feedback, bringinggreater ability to demonstrate a product’s functioning and performance characteristics

as well as developing long-term relationship

In short, marketing mix involves decisions regarding products to the made available,the price to be charged for the same, and the incentives to be provided to theconsumers in the markets where products would be made available for sale Thesedecisions are taken keeping in view the influence of marketing forces outside theorganisation

2.2.5 Factors impacting marketing mix

a Internal environment

Companies themselves play an important role of which every change even the mostdelicate one can lead to big changes in marketing activities Fully understandingcompanies’ resources from the first stage could help utilizing to achieve betterbusiness results and effectively and efficiently management Hence, in order tounderstand factors from within organizations, some of the below resources should beanalyzed:

 Financial Resources: Cash, money in hand or available for spending

due to organizational purposes It is related to the capital of thecompanies which firms can mobilize, allocate for business usage

 Human Resources: Human is the key assets and success contributors to

the companies Allocating talented staffs to suitable positions couldboost the effectiveness of the firms’ performance

 Intangible Resources: Organization’s reputation, relation or market

position can affect consumer’s decision making results With a strongpositioning and network in market, companies can be advantageous incompetition

Different companies have different backgrounds Understanding the core nature of thefirms is the very first step for further developing marketing activities With this priorstage properly considered, organizations can be able to eliminate their weaknesses,utilize strengths to achieve better results

b External environment

 Economic outlook

Economy’s forces hugely affect companies within the industries In the economicenvironment, firms need to consider proper components such as inflation, businesscycle, GDP growth, unemployment rate, etc to determine the optimal business plan.The brighter economic outlook is; the more chances are there for firms On thecontrary, in crisis stage of economy, organizations are negatively impacted andmarketing mix since then has to be changed to adapt with new circumstances

 Political environment

Of all the major force to business, government’s role is undeniable In some regions,the rules are set strictly and require firm suitable adjustments to fit in the situation.Understanding the administrative style and country’s legal environment is crucial tobetter perform in the field Organization’s direction can be shaped by differentregulations, legislative policies both from national and international markets Specific

law and particular permissions even the smallest one can lead to big changes tocompanies that can support or hold back business development.

 Technology environment

Understanding technology level of industrial and economic market is crucial forcompanies Advance in technology in the firm context helps determine companies’communicative ways whether communication is conducted effectively through highlydeveloped indigenous methods or any other methodologies It is also useful inassessing and utilizing advancement in high-tech to minimize errors, maximizingoptimal results

 Competitors

While formulating marketing mix, companies do not act alone The rivals are ofimportance when industry competition comes to fierce stages Competitiveenvironment suggests firms to react and give proper decisions of production, pricing,sales efforts and promotional choices to compete with the existing challenging player

 Customers

Customers are of important target of marketing mix plan They are persons purchaseproducts of the companies but at the same time could buy the other from competitors.Their choices reflect buying behaviors This is helpful for firms to decide what theyneed to take into consideration to satisfy these consumers and also for predictingfuture trend in the field forecast

Different customers with wide variations of background bring back differentiatedpreferences The diversification requires organizations to conduct deep researches ofparticular targeted groups of consumers and customize products and services to fittheir own tastes

 Suppliers

Suppliers are one provide rooted products for firms including items like raw materials,operating machines, fuel source, labor force, and financial support These elementsplay a key role in determining firm’s production costs and quality of output It isneeded for companies to rely on trustworthy suppliers and interact with not only aparticular supplier but different ones to avoid too much dependence on theirperformances Maintaining close relationship with them is of importance for businessnetworking and further partnership project

CHAPTER 3 ANALYSIS OF LIEN QUANG THANH.,JSC’S MARKETING MIX FOR

GAS PRODUCTS

3.1 Overview of Lien Quang Thanh.,JSC

3.1.1 Company Overview

Name: Công ty c ph n kinh doanh khí d u m hóa l ng Liên Qu ng Thànhổ ầ ầ ỏ ỏ ả

International Transaction name: Lien Quang Thanh business liquefied petroleumgas joint stock company

Headquater: A block, Tran Lam Industrial Zone, Tran Lam ward, Thai Binh city,Thai Binh province

Phone number: 0363.643.939

Manufacturing sector: The company’s main activity is wholesaling/retailinggasoline, liquefied petroleum gas and other related products;producing/wholesaling/retailing pure bottled water

3.1.2 Foundation and Development of the company

DEPARTMENT

Lien Quang Thanh.,JSC was established in January 15, 2008 Initially, thecompany is just only as a small organization which sells gas to agencies andcustomers Until now, after nearly 10 years of operation, the company has grownbigger, expended the market and had more items to sell All of this has made thecompany’s reputation more well-known in local

HUMAN RESOURCE DEPARTMENT

CHIEF ACCOUTANT

SALES ACCOUNTANT

GENERAL ACCOUNTANT TREASURER

SALES

PART

BOARD CHAIRMAN