Real situation of sales promotion in ho chi minh city

Setting up sales promotion objectives 1.3.2 Sales promotion tools2.Evaluating and forecasting business activity 2.1.Results of sales promotion program 2.2 Forecasting business activities

HOcmMINH CITY UNIVERSITY OF FOREIGN LA.l\lGUAGES-INFORMATION TECHNOLOGY

SCHOOL OF FOREIGN LANGUAGES

GRADUATION PAPER

THEME:

TEACHERS' REMARKS '

••• • ~ • • • • • •••

In recent years, the business environment in Vietnam has changed

considerably There has been an increase in the appearance of many

enterprises of the same industry To compete for customers, businesses use a

variety of marketing activities Of these, sales promotion proves to be effective

activity to attract customers The purpose of this study was to have a closer

look at the sales promotion situation in typical market of Ho Chi Minh City.

Then, we find it easy to have a good view over it and find out some suggestions

to create a fair competition.

By collecting data from newspaper, reference books, and questionnaire,

the research was carried out The result revealed that sales promotion has

appealed to not only businessman but customers as well Moreover, it is likely

to knock the door of every house in the city And most sensible companies are

taking advantage of this to expand their market share and affirm their position.

Beside legal sales promotion activities, there are also some unacceptable ones.

Hence, there is a gap between domestic companies and joint venture foreign

companies In so say.ing, a specific sales promotion lmv needs to be issued and

measures that support local companies need to take into account.

'I

'I

I offer thanks to the Department of Foreign languages for giving the oppVrtunity to conduct this research and current teachers who share their questions and experience with me Special thanks to Mr Truong Quang Juan,

my professor who taught me the subject Marketing and gave me whole-hearted guidance He has \pent much time to correct all my drafis I sincerely thank him for that.

I also wish to acknowledge the librarians of Huflit University, College

of marketing, Economic University, who gave me many opportunities in finding out information.

Thanks also to my close friend, who helps me up when I face with so many difficulties.

And, of course, I offer :,pecial thanks to all members of my family Their encouragement is the most supportive and happiest source Although, they live far from me, without their wonde,:ful care, it is hard forme to finish this paper They seem to stand by me as I \pent the countless hours of time on this research I am grateful to them all.

GENERAL CONCEPTIONS OF THE THEME

I.An overview of promotion

I IAn introduction to promotion

2.1.4 Stages in the product life circle 2.1.5.Position of company in market 2.2.Sales promotion tools

2.2.1.Consumer -promotion tools 2.2.2 Trade _ promotion tools 2.2.3 Business _ promotion tools

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6 6 7 8 8 8 12 12

CHAPER THREE

1.3 Developing sales promotion program

1.3.1 Setting up sales promotion objectives

1.3.2 Sales promotion tools2.Evaluating and forecasting business activity

2.1.Results of sales promotion program

2.2 Forecasting business activities

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2.2.Encouraging sales promotion activities in unwell-known

There i\' no a~pect in our life interesting than Sales promotion involving both theory and practice In the more and more complicated business world, businessman in both private and State factor try their best 10 send expected message 10 customers Sales promotion seems 10 be the most powerjitl tool in today competitive market.

Sales promotion is very popular conception in the world market It includes many kinds of activities that are quite new to Vietnamese Particularly, there is not many reference books mentioning this problem on Vietnam's market This research aims at analyzing general sales promotion tools and its effects on domestic market It oflers a clear understanding of real situation of sale:\'promotion in Ho Chi Minh City It also tries to suggest some necessary solutions needed to improve sales promotion environment.

Due 10 the open-door policy, Vietnam's economy has been developing thoroughly with the advance of different branches In the market economy, the business activities related to marketing tools is indispensable in which, the promotion strategy is the most visible Especially, in recent years, sales promotion activities in Ho Chi Minh's market have become increasingly animated Promotion perspective is a source of never-ending inspiration It

CHAPTER ONE

GENERAL CONCEPTIONS OF THE THEME

I.An overview of promotion

1 IAn introduction to promotion

2.1.4 Stages in the product life circle

2.1.5.Position of company in market

2.2.Sales proI)1otion tools

2.2.2 Trade _ promotion tools2.2.3 Business _ promotion tools

CHAPTER ONE

GENERAL CONCEPTS OF THE THEME

1 An overview of promotion

ProJ?otion is the aspect of marketing concerned with increasing sales of

a product The task of promotion is to ensure that targeted consumers know and

availability and nature of a product, they need to be persuaded that purchase ofthe product will lead to satisfaction Thus, it is very impOitant to continually

_To increase sales by creating desire that helps increase the demand forthe product.

_To stabilize sales so that demand would not fluctuate wildly

1.2 Promotion mix

sales promotion and publicity

_ Advertising:

transmitted ?y mass media _ newspaper, magazme, television, radio, outdoorbillboard

Public relations is about creating & managing information aimed at one

or more target audiences in the hope of influencing opinions and decisions It is apromotional activity to communicate a favorable image of the product and topromote goodwill

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_Sales promotion:

The American Marketing Association defines sales promotion as "Thosemarketing activities, other than personal selling, advertising, and publicity, thatstimulate customer purchasing and dealer effectiveness, such as displays, show,and exposItions, demonstrations, and various non recurrent selling efforts not in

activities, including in-store display, sampling, contests, prices off deal, etc

1.3 Relationship among promotion tools

Promotion is the collection of methods and arts to describe the entire field

of sales communication _ adveltising, personal selling, sales promotion, & publicrelations The activities result in consumer awareness of the product's existence,

effective and successful promotion strategy

(See Figure J 1)

_Reach mass audiences quickly at a low -Cost per person cost _Carry on only one way _Build up a long term images for a communication

Adve'-tising

product. -Inflexible cannot be tailored to _Producer can control (receive & compare each member of the audience the messages of various competitors.

_Repeat a message many times.

_Personal interaction helps to observe the -High cost of selecting and different users' needs and characteristics hiring sales people.

Personal selling _All kinds of relationship can spring up _Cannot serve everybody with

_Keep thc customers' interest to build a the same way.

long-term relationship.

_Create a stronger and quicker response. -Cost

Sales promotion _ Used to supplement other promotion al _Not effective in building

_Increase salcs over a short- period.

_Strong impact on public awareness _Less control over publicity _Create a favorable company image _Public relations programs to

Public relation

_Audiences tend to find such information support product marketing more believablc than information coming objective may be ignored from an idcntified sponsor bccause of dealing \Yith

headquarters

Figure 1.1 Relationship among promotion tools.

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2 Sales promotion

The American Marketing Association defines sales promotion as "

those marketing activities, other than personal selling, adveltising, and publicity,

show and expositions, demonstrations, and various non recunent selling eff0l1s

not in the ordinmy routine"

2.1 Factors in setting promotion mix

2.1.1 Type of market

consumer-packaged goods and industrial products With a wildly dispensed mm.ket like

effective means of accomplishment Sales promotion just plays as a second role

to increase sales And with industrial products, the promotion is aimed at retailers

or wholesalers In such case, the use of personal selling is put ahead and sales

promotion _ especially contests _just also used as an aided tool

Figure 1.2 The importance of promotion tools.

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2.1.2 Push versus pull promotional strategy

manufacturer tries to get intermediaries to cany its products

members in the system to stimulate them to handle and promote company'sproducts Thus, personal selling and sales promotion are used radically

In a pull strategy (Figure J.4), all marketing activities focus on the

end-users to stimulate their demand There by, the intermediaries will order and cany

Producers Producer

marketing activities Request

lntermediarie Reseller

marketing activities

Ended

Figure 1.3 Push strategy.

Producer marketing activities

Figure 1.4 Pull strategy.

consumer promotion are used up

2.1.3 Buyer readiness stage

Advertising along with public relations play the most important role in theawareness and knowledge stage, stronger than the appearance of salespeople orsales promotion In the end of business transaction, personal selling has great

influence but advertising just has a little role in reminding In shOIt, in buyerreadiness stage adveltising and public relations are effective in the first stage,p~r~0il(t1selling and sales promotion ale in the last stage.

2.1.4 Stages in the product life cycle

During the introductory stage, a product may need to be pushed throughthe distribution system Getting intermediaries to accept the product may require

a substantial investment in personal selling and adveltising

In developing stage, all promotion tools may reduce their effectivenessbe~aLlsethe rumor plays a role as a particular lever

As the product enters the maturity stage of the circle, sales promotion,advel1ising and personal selling all have excessive impOItance according to itsposition above

During the decline stage, new products ovel1ake old ones, which areultimately abandoned So sales promotion still has substantial effectiveness Butadvertising ~nd public relations decrease little by little, sales promotion justappeal to the minimum of product attention

2.1,5 Position of company in market

influence on consumer from advertising than from sales promotion To company, it finds easier to cany out and gain successful promotion strategy

admired-Consumer usually has a higher confidence in products of long -lifecompanies than those of new ones That's why the position of company in themarket plays an important role in deciding whether a promotion strategy issuccessful or not

additional ways of reaching customer Sales promotion consists of a wide variety

of promotional tools designed to stimulate faster and stronger market response

promotion

delivered door to door, sent by mail, handed out in a store, attached to anotherproduct, or featured in advertising It is not surprised if you suddenly receive a

sample of Rejoice shampoo or that of certain company enclosing a business selfintroduction !Canc!.

_Coupons are certificates that give buyers a saving when they purchasespecified products Coupons can stimulate sales of a mature brand or promoteearly trial of a new brand We usually see newspaper's advertising coupons thatrange from 5% to 50% of the original price

_ Cas.h refund offers to refund part of the purchase price of a product toconsumers who send a "proof of purchase" to the manufacture., . On the Tetoccasion of the year 2000, buyers will be refunded 10.000 VND when they buyproduct of Tiger-beer Company

_Price back offers consumers savings off the regular price of a product The reduced prices are marked directly by the producer on the label or package.For example, two related products bounded together were sold at a reduce pricesuch as toothbrush and toothpaste's company Close up Whitening

_Premiums are goods offered either free or at low cost as an incentive to

-fv1entholatum company because they are offered free beautiful wallets

_Advertising specialties are useful articles imprinted with an advertiser's name, given as, gifts to consumers Such typical items include pens, calendars,key rings, matches, shopping bags, T-shirt, caps, coffee mugs

Figure 1.6 Premiums of,')'if{me S'hampoo and Wall's cream.

K~

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In France '98 - football season, Castrol - Lubricant company offered their

consumer a nice key ring in symbol of a Goulois Chicken

_Patronage reward is cash or other award for the regular use of certain

company's products or services For those who purchase Max T-shirt regularly,

they will receive a reduced - price card After collecting 10 cards, they can

exchange them for a new product

such as cash, trips, or goods, by luck on through extra effort Many companies

calTY out promotion strategy on special occasions For example, if guessing

Nokia mobile phone

_ Point _ of _ purchase promotion includes displays and demonstrations

that take place at the point of purchase or sale In front of Kinh Do banquet,

there, sometimes, is a puppet that gives free cake to customer

compames

Figure 1.7 ExcilinR

display ofKinh Do bakery.

_Joint - sales promotion:

two

capability Nowadays, it finds easy to see that when customers buy a Dove cream

shower along with Hazeline lotion, they will get a reduced _ price card

2.2.2 Trade - promotion tools

With four objectives of setting up trade promotion strategy, manufacturersuse a number of techniques to secure the cooperation of wholesales and retailers Trade promotion can persuade wholesales or retailers to carry a brand, give itshelf space, promote it in advertising and put it to consumers

Such consumer promotions as contests, premium displays can also be used

in trade promotion A straight discount off the list price on each purchase during

merchandise, to resellers who buy a certain quantity

Manufacturers may give retailers in specialty advertising items that cany

books, memo pads, ashtrays, yardstick etc

strategy There are two major businesses _ promotion tools _conventions & tradeshows, and sales contest Vendors receive many benefits, such as opportunities tofind new partners, contact customers, and sell more to present customers

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Trade shows also help companies reach many prospects A sales _ contest

performance over a given period

In recent years, the high _ quality Vietnamese goods Fair has begun to

occasIOn

enterprises will also part in a marketing contest Results of the contest are goldcups for the three best enterprises and the three marketing staffs

Figure 1.8High-quality Vietnamese good~ Fair.

SALES PROMOTION IN HCM CITY

I Targets of a promotion strategy

I I Consumers

1.20ffices, films

2 Effects of sales promotion on local economy

2 I Stimulating consumption

2.2 Creating competitive environment among the producers

2.3Building brand identity

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CHAPTER TWO

SALES PROMOTION IN HCM CITY

1 Targets of a promotion strategy

Business activities in market economy are really related to marketingactivity Sales promotion contributes a considerable part to create a successfulbusiness operation Nowadays, Vietnamese people are rather familiar with two

enterprises llnd companies have taken advantage of these occasions to expandtheir market share and built their position Regardless of the variety of salespromotion activities, most of companies aim at two main targets: consumers, andoffices and firms

1.1 Consumers

After launching a new product, consumers' feedback is a good and fairanswer to the existence of a celtain product It is really necessary for a company

consumer production refer to:

- Consumer_ product trial (or immediate purchase) is the most popularpurpose of sales promotion With fierce competition among companies, eachyear, there are many new products in the market To inform the potential or

manufactures need to take advantage of these activities And if successful, theycan gain a number of buyers from competitors For instant, people in Ho ChiMinh CitY are no longer astonishing when seeing a sample of Rejoice shampoo,

or Pond's skin lightening cream or that of other products offered to their house

- A big problem facing manufacturers is how to persuade consumers to

manufacturers should pay much attention to this problem Many companies havebeen applying patronage reward to appeal buyers in Ho Chi Minh City Aninteresting example of this activity isT& T shoes shop Each time when you buy

a pair of shoes, you will receive a red ticket And as a result, if you have ten redtickets, a nice valuable gift you will be offered

- How do you feel when seeing a panel "Drink 7-UP, you may have achance to own a wonderful coastal house"? This is a sales promotion program ofthe International Beverages Company to encourage consumers to continuouslybuy their products By this way, company can convince buyer not to use othercompanies' product and therefore, lengthen the time of using their brand

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existence and availability Take, Colgate Palmolive, for example Their salespromotion program is that: when buying two toothpaste tubes, consumers will be

other products

- To maintain the relationship between manufactures and consumers, itfinds essential to create harmonious combination of sales promotion and othermarketing tools, While advertising and public relations are infOlmation providingtool, sales promotion is convincing tools in promotion mix A typical example of

supplementary components to gain expected objectives of a company

- When you want to make a monkey to smile, just " say nothing butKonica" is an advertising program of film Konica By this way, the image ofKonica increasingly appeals to customers Moreover, enclosing with advertisingprogram, it offers to customers a glass collection of such pictures as Ben Thanmarket, Eiffel Tower, Notre Dame church

- Recently, there are some panels with" two dozens in Australia manner"appearing along main streets in Ho Chi Minh City This advertising program israther impressive Foster' s beer company brings to consumers an interestingadvertising and sales promotion program On the Tet occasion, with the same

Figure 2.1 Attractive advertising and sales promotion program of Foster's Beer.

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1.2 Offices, firms

depending on their business activities are different in which sales promotionaiming at offices and firms is common way to help them reach expected results

Although, manufacturers can expand distribution through wholesalers andretailers, they also spend a lot of money to have a space for their product insupermarkets, department stores more supermarkets appear, more occasion to

supermarket launched a program called: "Luck and thrift", offering a Honda

supermarket to find a lucky occasion by buying some products As a result, the

manufacturers to consume products in a short time For the reasons above, manysupermarkets put into action in Ho Chi Minh City is a good place for enterprises

to introduce products

department shops, market is the first step of appealing to consumers' attention.This issue and advertising should be carTied out at the same time to stimulate

agents have been built in hostels or in crowded wards in Ho Chi Minh City, i.e.0\ I0 dcrngc:nt agent, Vinamilk agent

- When having too many stocks enterprises usually use sales promotion to

promotion is also used to encourage intermediaries to reduce their own stocks togive space for new products

- Reducing price is preferential trade form applied when intermediaries

wholesalers and retailers along with panel or logo of their company Around the

city, we find it easy to see this fmID It is shown in Figure 2.2.

- To take part in the sales promotion war, for the time being, a lot of

meet different retailers' demand

- Nowadays, we can see, in some drug stores, medicine packets with the

interfere

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2 Effects of sales promotion on local economy

2.1 Stimulating consumption

Stimulating consumption is one of important campaigns to provide thedeveloping economy set up by government Thus, a dynamic business market is

consumers about the availability of product in market, these companies try their

promotion" increasingly become familiar with Vietnamese people And now they try to make their sales promotion program more attractive, valuable, and moreopen to participants Gradually, consumers ai'e fed up with sales promotion giftssuch as hats, pullovers, key holder or lighters

To reach this above target, it takes these companies a great deal of insight

the customer the better Sales promotion is always considered as good way toincrease sales by traders In HCM City, companies always take advantage of the

product There are such interesting places as Sai Gon Water Park, Lan Anh Cluband Phan Dinh Phung Club with the marvelous music shows Nowhere else doespromotion activity take place so dizzily like in HCM City Most of occasions areused up such as Sai Gon 300-year anniversary, Lunar New Year Celebration,Christmas time From these activities, both regular consumers and casual onesare interested in finding a good chance of owning a prize

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Figure 2.3 l~ypical com hination olsales promotion.

For these reasons the variety of sales promotion activity is manufactures'

appeared in almost of streets, particularly residential districs Children are moreinterested when buying a Wall's cream from these sellers because they areoffered a V!nh Tien notebook or a picture collection of Doremon or Moonwarrior Sometimes, we even see girls in uniform of a certain company coming toour house to give free guiding service if we buy their company's cosmetic Due toSales promotion activity consumers have chance to approach both local andforeign made goods Perhaps, in the first time they are involved in because oftheir curiosity Nevertheless, that is the important trial step to help manufacturerstest their product quality and pattem to meet customers' demand Moreover, salespromotion is also a moving force to stimulate the consumption at different leveland time

2.2 Creating competitive environment among the producers

Sales promotion is a legal trading activity and it is becoming increasingly

Government; foreign companies have a chance to look for such a new active

competitive when all consumer- oriented businesses try to attract customers Toachieve this purpose, all of sales promotion activities often concentrate on bigcenters like in Ha Noi, HCM City and on great festivals when the consumptionincreases quickly And the boom of these activities causes velY big difficultiesfor domestic producers

periods under different fonus To wholly foreign owned enterprises or foreign invested ones, they usually CaITYout tremendous sales promotion programs Forexample, early in the year 2000, Carlberg Beer Company launched into the

Carlberg beer bottles and keep the caps to win refrigerators Another fantasticexample is the LG Company When introducing new TV and VCR models, theyused Suzuki Viva 110 motorbike and LG refrigerators as sales promotion gift.With such things above, it is easy to see that lack of finance and limitedexperience cause a big problem to Vietnamese enterprises

ability Their sales promotion programs are rather modest because their pockets are not enough to afford large -scale sales promotion Take, Thien Long ball

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point pens, for example With suitable price and high quality, a great number ofproducts had consumed when they launch sales promotion program: "buying 5ball point pens, offered one free".

Keen competition takes place not only between foreign enterprises anddomestic ones but even among foreign-owned ones as welL An exciting example

sales promotion campaign offering 70 prizes worth VND I, I billion And so doesKonica film, in June, it lowered the prices of this photo paper from VND 1,Imillion per rolL Clearly, by their overwhelming capital, foreign companies cancany out huge sales promotion campaigns Thereby, an inevitable consequence isthat there are unhealthy sales promotion activities appear leading consumers'

program of collecting 12 zodiacs in instant noodle packet, but they didn't provide

components of a bicycle but they also didn't provide the sadde

Sales promotion is a necessary activity to increase sales of enterprises that

impOItant, d!Je to this activity, consumers are rather sufficiently informed aboutthe product to choose, but in this case, they are involved in a trap In business,the trust is very important which pelmits a producer to survive or not So, along

producers must ensure that their campaign is healthy and legaL

Take a look back to foreign company's sales promotion campaign, whenthey are aware of the fact that consumers might be a little fed up with CUlTentgifts, they offer more valuable ones Not far from here, such prizes as HondaSpacy, tours of foreign countries are applied As regards the sales promotion gifts

of these companies, it finds difficult for Vietnamese companies to join the racewith such similar big prize Our living standard more and more increases, so doesour demand Therefore, manufactures also try to produce more goods diversified in shape and size to meet demand And the efficient way to introduce theirproduct to consumers, besides adveltising, is sales promotion that contributes animpOltant pmt to get successful marketing strategy It also creates a fierce

reinforce their position in the market However, sales promotion will widen thegap between local and foreign products

2.3 Building brand identity

To enter a dynamic market with variety of goods, how to remindcustomers of a celtain company's brand is rather difficult Thus, besides the

new products

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A brand is a name, telm, sign, symbol or design, or a combination of thoseintended to identify the product or services of one seller or a group of sellers and

to differenti~te them from those of competitors

Brand has become a major issue in product strategy Manufacturers, at thepresent, spend a lot of money on sales promotion They make a large amount ofpullovers with their company's brand to offer the consumers In HCM City, thisfOl1n is relatively popular, i.e Coca cola, Vinh Tien Commonly, familiar brands provide consumers information, recognition, and confidence So that's

tendency of finding their familiar brand to get some more Therefore, salespromotion is velY important moving force to encourage and remind consumers ofcontinuously using their product Brand varies in the amount of power and value

consumer trial At the super markets in HCM City, there are thousands of products, so brand names help consumers pay attention to new product that mightbenefit them And how about well known brand names, they launch salespromotion program to reinforce their market share, confirm their position intarget market and remind consumers of their existence and their new products aswell

CHAPER THREE

A TYPICAL COMPANY IN HCM CITY: VINAMILK

COMPANY

I.Sales promotion activities of the company in last three years

1.1Position of company in market

1.2Company versus competitors

1.2.1: Advantages & problems of domestic company

1.2.1.1 Advantages1.2.1.2 Problems1.2.2 Problems facing the company when having new competitors1.2.3 Problems arising when launching sales promotion program1.3 Developing sales promotion program

1.3.1 Setting up sales promotion objectives1.3.2 Sales promotion tools

2.Evaluating and forecasting business activity

2.1 Results of sales promotion program

2.2 Forecasting business activities