INTRODUCTION 1.1 Project background
Rationale of project and Problem statement
Petrolimex Gas Joint Stock Corporation (PGC) is a state-owned company under the Vietnam National Petroleum Corporation (Petrolimex), established on December 25, 1998, by the Ministry of Trade through Decision No 1653 – 1988/QD/BTM With a registered capital exceeding 250 billion Vietnamese dongs, PGC specializes in the import and export of liquefied petroleum gas (LPG), nationwide distribution of LPG cylinders, and the provision of LPG-related equipment and technological services for civil applications.
Petrolimex Gas Company (PGC) is the leading player in Vietnam's LPG industry, renowned for its brand The company supplies both medium and large-sized LPG cylinders as well as LPG in tanks Notably, LPG in tanks constitutes 51.27% of the total LPG delivered to the market, while medium bottled LPG accounts for 36.78% and large-sized LPG makes up 11.95%, according to the Petrolimex Gas Report from 2011.
In general, PGC is one of the leading bottled LPG companies of which distribution network is reached to all of Vietnam provinces and takes nearby 17% market share in Vietnam
PGC import one a half of total quantity LPG for company and the balance quantity is bought from local producers Dinh Co and Dung Quat Processing Plant through Petro- Vietnam
The government's encouragement of clean fuel usage, driven by sustained economic growth and rising living standards, aims to protect the environment Liquefied Petroleum Gas (LPG) is recognized as a vital energy source for heating in this context.
The advantages of LPG have led to a surge in suppliers and brands in Vietnam, fostering intense market competition This environment allows customers to easily find the best supplier that offers competitive pricing, high quality, and excellent services.
Despite possessing a robust infrastructure with a 7,200-ton LPG storage capacity and a reputable brand name, Petrolimex Gas (PGC) is struggling with an ineffective marketing strategy In 2011, PGC's sales volume of bottled LPG products only increased by 1%, significantly below the average industry growth rate of 10% Ho Chi Minh City, which accounts for 20% of the national LPG demand with a total consumption of 240,000 MT, represents a key market for PGC Among this, 140,000 MT is consumed by residential households using medium bottled LPG, while industrial households account for 100,000 MT However, PGC's sales volume of medium bottled LPG has stagnated and even declined by 5% from 2006 to 2011, resulting in a drastic drop in market share from 20% to 4.7% during the same period Currently, PGC's market share in the residential household segment lags behind competitors like Saigon Petro (24%) and PV Gas (8.6%), as well as emerging brands such as Anpha Petrol (7%) and Gia Dinh Gas.
To sustain its market share in the competitive resident household segment, PGC must implement substantial changes A thorough analysis of PGC's business operations indicates the need for a new marketing strategy tailored to current market conditions.
An effective marketing strategy is essential for sustainable growth and competitive advantage in firms It not only differentiates a brand from its competitors but also establishes an invisible barrier that protects market share Consequently, the key question arises: "What constitutes an effective marketing strategy for PGC's bottled LPG?"
1.3 OBJECTIVE OF PROJECT AND SCOPE OF PROJECT
Purpose of this project is setting up an efficiency marketing strategy to penetrate into the bottled LPG market So some objectives of the project are listed as below:
- To investigate deeply LPG market, the main LPG suppliers and main competitors also
- To analyze important marketing factors which drive customers to buy bottled LPG
- To propose marketing strategy of PETROLIMEX in period 2012-2015
For the limited resource and timing as well, this project is focus on HCM geography The scope of this study is household customers, who are using bottled LPG
This study focus on marketing issue only, not mention to other subjects such as technology, financial, human resource and so on
This project employs SWOT analysis, a strategic marketing plan, and a Marketing Mix Strategy, utilizing both primary and secondary data sources Data collection methods include mail interviews for quantitative research and expert interviews for qualitative insights Secondary data is sourced from published documents and online resources.
Qualitative research was conducted through interviews with experts and sales personnel in the bottled LPG sector to gain insights into competitor dynamics and customer behavior, along with a broader understanding of the LPG market The findings from these interviews will inform the development of a questionnaire for subsequent quantitative research.
A comprehensive questionnaire was distributed to residential households to assess brand awareness, evaluate customer knowledge of products, analyze purchasing habits, gather perceptions on PGC's current marketing strategy, and collect demographic information.
The purpose of the quantitative study is to statistically confirm the relationship between the purchase of LPG and the factors identified through the qualitative study
To reduce researcher error, a pilot study was conducted involving a questionnaire distributed to ten LPG salesmen across various districts in Ho Chi Minh City Each salesman interviewed at least one end-user based on the questionnaire and reported the findings to the Sales Department of PGC This pilot research allowed the researcher to gain insights into the actual situation and make necessary adjustments to the questionnaire.
The next step, the revised questionnaire will be sent by email to 3,000 customers who are using bottled LPG in Ho Chi Minh area
The market research conducted on Petrolimex Gas Corporation, along with insights from the Petrolimex Gas Report (2007-2011), the World Liquefied Gas Magazine (2010), and the Vietnam Gas Association Report (2010), provides a comprehensive overview of the liquefied petroleum gas (LPG) market This synthesis highlights key suppliers, market segmentation, total demand, and future demand forecasts, offering valuable insights into the evolving landscape of the LPG industry.
Vietnam Secondary data related to macroeconomic data is collected from published documents and internet
For more understanding about customer, the key objectives of market research are to find out the answer of below question
How about brand awareness of PGC and competitors in LPG bottled market?
What are the main factors and habits influence to household residents & agents purchasing behavior?
How do household residents perceive the current marketing program of PGC?
How about the customer‟s demography?
Research objects design: The objects of market research are persons who have characteristics below
Using LPG bottled at home
People who are the main decision purchase in household and LPG agent
Living in Ho chi minh
Questionnaire for household resident (Appendix 2)
This article aims to explore brand awareness and the reasons for using LPG in homes, while also examining the factors influencing purchasing decisions, brand switching, and customer perceptions of PGC's current marketing strategy.
Interview form for expert interview (Appendix 1)
Purpose: Finding the key factors affecting to industry success and factors affect to customer behaviors
Total sample for household resident segment:
Sample size n With Z: Standard error associated with chosen level of confidence (95%)
P: estimated % in the population q: 100 – p e: acceptable sample error (3.5%)
This research employed a cluster sampling technique with a fraction of 10,000, targeting a total population of approximately 8 million in Ho Chi Minh City To ensure a representative sample, at least 800 individuals were selected from various geographic areas within the city A questionnaire was distributed via email to 3,000 residents, and the responses will be filtered to match the required sample size.
Table 1.1: Number of chosen customers in HCMC
No District Population Sample size
Research methodologies
This project utilizes SWOT analysis, a strategic marketing plan, and marketing mix strategies, drawing on both primary and secondary data sources The research employs a multi-method approach, incorporating mail interviews for quantitative data and expert interviews for qualitative insights Secondary data is sourced from published documents and online resources.
Qualitative research was carried out through interviews with experts and sales personnel in the bottled LPG industry to gain insights into competitor dynamics and customer behavior, as well as to analyze the overall LPG market The findings from these interviews will inform the development of a questionnaire for subsequent quantitative research.
A comprehensive questionnaire was distributed to residential households to assess brand awareness, product knowledge, purchasing habits, perceptions of PGC's current marketing strategy, and customer demographics.
The purpose of the quantitative study is to statistically confirm the relationship between the purchase of LPG and the factors identified through the qualitative study
To reduce researcher error, a pilot study was conducted involving a questionnaire distributed to ten LPG salesmen across various districts in Ho Chi Minh City Each salesman interviewed at least one end-user using the questionnaire and reported the findings back to the Sales Department of PGC This pilot research provided valuable insights into the actual situation, allowing the researcher to refine the questionnaire for improved accuracy.
The next step, the revised questionnaire will be sent by email to 3,000 customers who are using bottled LPG in Ho Chi Minh area
The market research conducted on Petrolimex Gas Corporation, along with insights from the Petrolimex Gas Report (2007-2011), the World Liquefied Gas Magazine (2010), and the Vietnam Gas Association Report (2010), provides a comprehensive overview of the liquefied petroleum gas (LPG) market This analysis includes an examination of key suppliers, market segmentation, overall demand, and future demand forecasts, highlighting the dynamics and trends within the LPG sector.
Vietnam Secondary data related to macroeconomic data is collected from published documents and internet
For more understanding about customer, the key objectives of market research are to find out the answer of below question
How about brand awareness of PGC and competitors in LPG bottled market?
What are the main factors and habits influence to household residents & agents purchasing behavior?
How do household residents perceive the current marketing program of PGC?
How about the customer‟s demography?
Research objects design: The objects of market research are persons who have characteristics below
Using LPG bottled at home
People who are the main decision purchase in household and LPG agent
Living in Ho chi minh
Questionnaire for household resident (Appendix 2)
This article aims to assess brand awareness and explore the reasons behind the use of LPG in households It examines the factors influencing purchasing decisions, brand-switching behavior, and customer perceptions regarding the current marketing strategies employed by PGC.
Interview form for expert interview (Appendix 1)
Purpose: Finding the key factors affecting to industry success and factors affect to customer behaviors
Total sample for household resident segment:
Sample size n With Z: Standard error associated with chosen level of confidence (95%)
P: estimated % in the population q: 100 – p e: acceptable sample error (3.5%)
This research employed a cluster sampling technique with a fraction of 10,000, targeting a total population of approximately 8 million in Ho Chi Minh City To ensure representativeness, the sample size was set to be equal to or larger than 800 participants, distributed geographically across the city An email questionnaire was distributed to 3,000 residents of Ho Chi Minh City, with subsequent filtering of respondents to meet the predetermined sample size.
Table 1.1: Number of chosen customers in HCMC
No District Population Sample size
Structure of project
Project is structured as follows:
This chapter outlines the project's background and rationale, presenting the problem statement and objectives It details the research methodology, reviews related studies, and describes the organizational structure of the project.
LITERATURE REVIEW
Marketing strategy
Any organization wants to exchange its products or services in the marketplace successfully should have a marketing strategy to guide the allocation resource
A marketing strategy outlines the approach to achieving specific marketing goals, typically defined by a targeted audience and a comprehensive marketing program designed to engage that audience effectively.
A marketing strategy is a systematic approach that enables organizations to focus their limited resources on the most promising opportunities for boosting sales and attaining a sustainable competitive edge Central to this strategy is the principle that customer satisfaction is the primary objective.
After studying these theories, author withdraws some conclusion to apply in this project as follow:
Marketing strategy related to Marketing mix: product; promotion, distribution, pricing, people
Marketing strategy related to competitive advantages of firms such as brand name; infrastructure; technology; people
A marketing strategy is a crucial component of a marketing plan, serving as a systematic approach to effectively allocate a company's limited resources Its primary goals include enhancing customer satisfaction, increasing market share, achieving sales targets, and gaining a competitive advantage within a specified timeframe.
There are several marketing strategies being applied in firms today, however, author found that marketing mix is the most suitable tool for this project
The marketing mix encompasses the various tools that businesses utilize to achieve their marketing objectives within a target market McCarthy identified four primary components of this mix, known as the four Ps of marketing: Product, Price, Place, and Promotion.
Product: A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units Intangible products and often service based
The price of a product is the amount a customer pays and is influenced by various factors such as market share, competition, material costs, product identity, and the perceived value by customers Businesses may adjust their pricing based on similar offerings from other stores.
Place refers to the location where a product is available for purchase, commonly known as the distribution channel This encompasses both physical retail stores and online platforms, highlighting the diverse avenues through which consumers can access products.
Promotion encompasses all communication strategies employed by marketers in the marketplace, consisting of four key elements: advertising, public relations, word of mouth, and point of sale Advertising involves paid communication, while public relations focuses on unpaid efforts such as press releases, sponsorships, exhibitions, and conferences Word of mouth refers to informal discussions about a product among satisfied customers or individuals tasked with generating buzz Additionally, sales staff significantly contribute to both word of mouth and public relations efforts.
Figure 2.1: The 4Ps component of marketing mix strategies
Source: Philip Kotler, 2000, Marketing Management Millennium Edition
In 1993, Robert F Lauterborn introduced the four Cs framework to enhance McCarthy's 4 Ps model, emphasizing a customer-centric approach The four Cs consist of Customer Solution, Customer Cost, Convenience, and Communication Customer Solution replaces Product, focusing on fulfilling consumer needs, while Customer Cost reflects the total ownership cost, encompassing both the product and associated services Convenience replaces Placement, highlighting the ease of purchasing, locating, and obtaining product information Finally, Communication supersedes Promotions, broadening the scope to include various forms of interaction between the business and consumers, such as advertising, public relations, and personal selling.
Source: Philip Kotler, 2000, Marketing Management Millennium Edition
The four C's emphasize a customer-centric marketing approach, highlighting the importance of understanding the customer's needs when determining the rationale, offerings, timing, and methods of service delivery In the author's perspective, the 4Cs model is particularly applicable to the bottled LPG industry.
Strategic marketing plan
To optimize limited resources and enhance output, businesses must implement a strategic marketing plan that outlines future growth and profit potential Each strategic marketing plan significantly influences both short-term and long-term performance across three key areas.
Depending on the situation of the market and environment, some strategic marketing plans will be offensive plans and some will be defensive
Offensive strategic market plans focus on growth, making them particularly valuable during the growth stage of the product life cycle These plans are designed to penetrate or expand existing markets while also exploring opportunities to enter or develop new markets.
(Source: Roger J Best, 2009 Market Based Management, 5 th Edition)
Expanding market demand is a crucial component of effective offensive strategic market plans, as the number of customers in any market is inherently limited Companies can enhance their customer base by not only winning over competitors' clients but also by attracting new customers who have yet to enter the market This presents an opportunity, as there are many potential customers who, for various reasons, have not engaged with the market Understanding the barriers that prevent these customers from entering is essential for driving growth and increasing market demand.
Invest to grow sales in existing market
Invest to prove competitive position
Low cost/ improve marketing productivity
Invest to enter new market
Figure 2.3: Factors limiting full market development
(Source: Roger J Best, 2009, Market Based Management, 5 th Edition)
Defensive strategic market plans primarily aim to safeguard profitability and maintain significant market share that justifies investment Additionally, these strategies focus on managing the profitability of businesses that are transitioning away from high growth potential.
Total Market potential Untapped Market potential
Unable to use Not affordable
Potential customers can’t afford the product at the current price
Service couldn’t meet customer need
Product incompatible with lifestyle or use situation and afraid of quality of product Service couldn’t meet customer need
Customer awareness means not only product awareness, but also a compete comprehension product’s benefit
(Source: Roger J Best, 2009, Market Based Management, 5 th Edition,)
2.3.3 Product – market growth matrix strategy
The Ansoff Product-Market Growth Matrix, developed by Igor Ansoff and introduced in his 1957 Harvard Business Review article “Strategies for Diversification,” serves as a vital marketing tool It enables marketers to explore growth opportunities by analyzing existing and new products in both current and new markets This matrix assists organizations in determining appropriate strategic actions based on their current performance.
Harvest/ Divest for cash flow
Figure 2.5 Product – Market Growth Matrix
Market penetration involves a company entering existing markets with current products, primarily by capturing competitors' customers to gain market share Strategies for achieving this include attracting non-users of the product and encouraging existing clients to increase their usage through advertising and promotions As the least risky growth strategy, market penetration focuses on maximizing the potential of established products in familiar markets.
Product development in an existing market involves a company creating new products tailored to its current customer base, even if these products are not new to the market By introducing new offerings, businesses can attract new customers and enhance their competitiveness Therefore, developing new products is a vital strategy for firms aiming to thrive in their industry.
Market development (New market, existing product): An established product in the marketplace can be tweaked or targeted to a different customer
Market diversification serves as an effective strategy for firms to increase revenue by exploring new markets for existing products While the market may not be entirely new, it represents an opportunity that is unfamiliar to the company, allowing for growth and expansion.
Diversification involves developing new products to adapt to emerging markets, allowing companies to enter previously untapped markets where they lacked product presence This strategic approach not only enhances market reach but also fosters innovation and growth opportunities.
(Source: Gareme Drummond, 2008, Strategic marketing 3 rd Edition)
COMPANY & MARKET OVERVIEW 3.1 Macro-economic factors
Population
Population is a crucial factor in economic research, as it aids researchers in predicting market size and identifying the target segments that organizations should focus on.
Table 3.1 Ho Chi Minh City Population
Source: Vietnam General Statistics Office, 2011
Ho Chi Minh City is predominantly urban, with approximately 85% of its population residing in districts such as Districts 3, 4, 10, 11, Binh Tan, and Tan Binh, which experience a remarkable population density of up to 80,000 people per square kilometer With a current population growth rate of 2.5%, the city's population is projected to exceed 10 million in the coming years According to the Vietnam General Statistics Office, there were 1,824,822 households in Ho Chi Minh City in 2010, and due to a high rate of young individuals moving out to form their own households, the number of households is expected to reach 2 million by 2015, as reported by the Ho Chi Minh Real Estate Association (HOREA).
In 2010, Ho Chi Minh City (HCMC) had approximately 80,000 apartment units, with projections indicating this number will rise to 120,000 units by 2011 This growth highlights the increasing demand for liquefied petroleum gas (LPG) in HCMC in the near future.
Source: CB Richard Ellis Vietnam, 2010
GDP, GDP/Capita
A key factor in assessing economic performance is GDP and GDP per capita Ho Chi Minh City (HCMC) stands out as Vietnam's most economically dynamic city and its largest economic hub The city consistently demonstrates high levels of economic activity and maintains a strong lead in economic growth, contributing nearly one-fourth of the nation’s total GDP.
Ho Chi Minh City (HCMC), as the center of the Southern Focal Economic Zone (SFEZ), contributes 66.1% of the SFEZ's GDP and 30% of the Southern region's GDP, making it a vital economic hub Additionally, HCMC boasts the highest per capita GDP among all cities in Vietnam.
(Source: Ho Chi Minh City Statistical Office, 2010)
Table 3.2 HCM GDP & GDP per Capital
(Source: Ho Chi Minh Statistical Office, 2010 & HCM Invest - Trade Promotion
In 2011, despite facing high inflation and various challenges, Ho Chi Minh City (HCMC) achieved a remarkable GDP growth rate of 10.3%, significantly outpacing the national average of 5.8% Additionally, HCMC's GDP per capita reached $3,220, compared to the national figure of $1,300.
Ho Chi Minh City (HCMC) stands out as a premier economic hub in Vietnam, showcasing its potential as a thriving market for organizations looking to invest.
Bottled LPG market analysis
Vietnam's demand for liquefied petroleum gas (LPG) is experiencing significant growth, with consumption rising from approximately 1.27 million tons in 2011 Projections by Jaccar indicate that LPG consumption in Vietnam is expected to reach 1.5 million tons by 2015 and further increase to 2.0 million tons by 2020.
In households, various energy sources are utilized for cooking and heating, including electricity, fossil fuels like coal and kerosene, wood, and gas (LPG) However, fossil fuels are becoming less popular in urban areas, primarily due to their convenience and the pollution they cause.
In 2011, the energy output of 1kg of LPG was equivalent to 13KW of electricity, but LPG did not offer significant cost advantages compared to electricity Despite this, LPG remains the preferred fuel for household appliances in Ho Chi Minh City due to its easy ordering process, the familiarity of using LPG burners, and the convenience of cooking with them compared to electric burners.
The demand for cooking LPG is expected to increase steadily as more young people seek to establish their own homes and purchase houses or apartments.
Figure 3.2 LPG products demand in Vietnam & HCMC
Source: (Vietnam Gas Association Magazine 2011)
In 2011, the HCMC market sold approximately 270,000 MT of LPG products, with bottled LPG accounting for around 161,000 tons for household use The demand for bottled LPG is projected to rise to 167,000 MT in 2012 and reach 175,000 MT by 2013.
3.2.1 Bottled LPG in household in HCMC
With nearly 20 years of presence in Vietnam, LPG has become a vital energy source in various industrial sectors, prompting many companies to invest in their own LPG/LNG storage systems to enhance production capabilities However, smaller LPG firms are often deterred from entering the industrial segment due to financial constraints and investment limitations In contrast, LPG suppliers in the residential market benefit from easier debt collection and higher inventory turnover.
LPG DEMAND IN VIETNAM & HOCHIMINH
Bottled LPG distribution in Ho Chi Minh City (HCMC) is primarily focused on residential segments, as smaller firms tend to concentrate their efforts on this market rather than industrial sectors These companies specialize in delivering medium-sized bottled LPG to meet the needs of local households.
Vietnam, particularly Ho Chi Minh City (HCMC), relies heavily on bottled LPG for cooking and heating, in stark contrast to developed countries that have established city gas pipeline systems throughout all their cities According to a 2010 study by Rinnai, a burner manufacturer in Vietnam, approximately 95% of urban households and 78% of suburban households in HCMC utilize bottled LPG for their energy needs.
In Ho Chi Minh City, the medium-sized bottled LPG, typically ranging from 10kg to 13kg, is the most popular choice for household appliances due to its compact size and portability.
3.2.2 Current market size & market share
In Ho Chi Minh City, the household demand for LPG is approximately 165,000 tons, according to a 2010 report by the Vietnam LP Gas Association The supply consists of around 160,000 tons of bottled LPG and 5,000 tons delivered through piping systems Consequently, bottled LPG accounts for an impressive 96% of the total LPG consumption for cooking in the city.
Ho Chi Minh City boasts over 80 LPG suppliers along with thousands of distributors and agents, fostering a highly competitive market This extensive sales network ensures that bottled LPG is easily accessible not only to urban households but also to residents in the suburban areas of HCMC.
Because there are a mass of LPG suppliers joined in HCMC market, the market share for this segmentation is split up
Chart 3.1 Bottled LPG market share in 2010
(Source: Vietnam Gas Organization Magazine, 2010)
Saigon Petro, with a market share of 15.9%, is the leading LPG distributor in Ho Chi Minh City, followed by Petro Gas at 8.63% PV Gas holds the second position due to its extensive LPG storage infrastructure and ownership of two LPG plants Giadinh Gas ranks next with a 6.96% market share, benefiting from a flexible distribution network within the city.
In Vietnam, PGC holds a 19% share of the total market; however, in the HCM residential household segment, their share drops to approximately 4.7% due to intense competition from numerous rivals.
SAIGON PETRO ELF, SAIGONGAS, TOTAL
Petrolimex Gas Joint Stock Corporation introduction
PGC markets its products through its subsidiaries, including the wholly-owned Saigon Petrolimex Gas Company in Ho Chi Minh City, which specializes in trading LPG products and related services in southern Vietnam Additionally, Can Tho Petrolimex Gas focuses on distributing LPG to the Mekong Delta provinces.
Vision: Strengthening the fundamental the leading role in the gas industry and becoming one of the largest gas companies in Vietnam
Mission: Developing and operating safely and effectively the whole system of gas gathering, transportation, storage, processing, distribution in Vietnam Ensuring customer satisfaction with delivering high quality products and services
Core value: Safety is the vital question; Sustainable development for community and environmentally friendly environment; having the sense of responsibility to employees, customers, investors and partners
Table 3.3 Sale volume of PGC in HCM in period (2007-2011) Unit: Tons
(Source: PGC annual report Feb.2011)
Performance of PGC is showed that the quantity of Bottled LPG is not developed during (2007-2011) even it dropped lightly year by year
During the 2007-2008 global economic crisis, PGC experienced a 7.5% increase in bottled LPG sales by leveraging their storage capacity to import large quantities at low prices As the import prices and USD/VND exchange rates surged, PGC maintained competitive pricing, leading to notable sales performance However, once the exchange rate stabilized and market prices aligned with selling prices, PGC's sales volume subsequently declined.
Chart 3.2 Proportion of sale volume
The 13kg-bottled LPG accounts for only 5% of PGC's total sales, significantly lower than the 21% share of the 12kg-bottled LPG Despite being a strategic product for PGC, the market share and sales volume of the 13kg-bottled LPG have been declining This decline is attributed to intense price competition and limited availability of its auxiliary accessories.
3.3.3 Current Marketing strategies of PGC
PGC is setting up a multi distribution channel
The Direct Sale Channel is primarily utilized for the bulk distribution of LPG, catering mainly to significant industrial clients and occasional spot business This channel focuses on delivering products to large-scale customers, ensuring efficient service and supply for their needs.
The Direct Sale Channel is utilized for distributing bottled LPG, primarily serving small industrial clients, restaurants, and residential customers PGC operates several shops in major areas of Ho Chi Minh City to deliver their products directly to end users These PGC shops function not only as sales points but also as showrooms to showcase PGC's offerings.
Chart 3.3 Typical Route to Market of PGC’s bottled LPG
(2) Channel is used for distributing bottled LPG Customer is PGC‟s agent They resell bottled LPG to resident customers & restaurants
(3) Channel is used for distributing all LPG products Customer is general agent General only sell LPG directly to industrial customer
(4) Channel is used for distributing all LPG products through Petrolimex network in nationwide Petrolimex‟s shop only setup in remote region where PGC‟s network cannot reach out
Currently, the PGC network spans all regions of Ho Chi Minh City, yet its direct sales channel, PGC shops selling LPG to households, remains limited There are only 12 PGC shops operating across 8 out of 24 districts, including suburban areas, in Ho Chi Minh City.
Table 3.4 Quantity of Agents in distribution network of PGC in HCM
PGC shop Retail Agent General Agent Petrolimex network
Chart 3.4 Portion of sale volume in channel
Quality and diversified product policy: LPG is a mixture of propane and butane gas according to Vietnam standard
12kg-bottled LPG: (Household product)
This is the typical bottled LPG in Vietnam market; most of LPG firms are producing and selling in market The differentiation of this product is only brand name
“Petrolimex Gas” and blue color of bottle
13kg-bottled LPG: (Household product)
PGC initially introduced a product that has yet to be developed by LPG firms, primarily due to the higher cost of its accessories compared to 12kg bottled LPG Targeted at high-income consumers, this product features a "Click on system" and utilizes a safety valve and regulator from Kosanoda of Denmark, which are also more expensive than those for 12kg bottles Despite being a differentiated offering from PGC, its sales volume remains limited The ineffective sales performance of 13kg bottled LPG and constraints in accessory supply have prompted PGC to reevaluate its strategy.
PGC shop 9% eliminate this product step by step so that they focus all their financial power, facility capacity to develop 12kg-bottled LPG
48kg-bottled LPG: (Industrial product)
Most of LPG firm use this type of product to supply LPG for restaurants and small industrial households
LPG in Bulk: (Industrial Product)
LPG is stored in LPG storage and LPG is transported by specialized truck
This product is used for industrial customers
Depending on the capacity consumption, PGC produce tank storage accordingly
LPG bottles are constructed from special steel to withstand high pressure and temperature, adhering to American standards The 13kg bottle meets DOT 4BA-240 regulations, while the 12kg and 48kg bottles comply with DOT 4BW-240 Each LPG bottle undergoes testing and approval by the Center of Quality Assurance and Testing, with mandatory re-testing every five years to ensure safety and reliability in the market.
PGC's pricing strategy is carefully constructed by adding the purchasing contract price to various costs, including transportation, management fees, and packing fees This strategy is adaptable and considers factors such as region, customer needs, market conditions, and competition In Ho Chi Minh City, PGC adopts a premium pricing approach The cost of goods sold comprises the contract price, transportation fees, a management fee of $50 per metric ton, and packing fees Consequently, PGC's prices are positioned lower than ELF Gas but higher than competitors like VT Gas, Saigon Petro, and Giadinh Gas.
PV Gas and Vinagas… however the gap price of these brands is rather small It is around (7,000-15,000)VND/12kg-bottled LPG
Table 3.6 Allocation margin cost of 12kg-bottled LPG for customer
PGC has established a fixed pricing strategy, ranging from 700 to 1,300, with adjustments made based on regional and customer-specific factors For instance, in central Vietnam and the Highlands, PGC leverages its robust sales network and storage capabilities to implement a competitive pricing policy that positions it at the top compared to other market players.
PGC of HCM establishes a fixed retail price that is publicly announced for a specified period, allowing household customers to reference it However, the wholesale price is subject to adjustment based on the level of the agent, with general agents receiving the lowest price, followed by regular agents, and finally LPG shops.
Discounted pricing programs are available based on order quantities, specifically designed for wholesalers and agents who purchase in large volumes For instance, in Ho Chi Minh, PGC has established a target of 50MT per month for bottled LPG and 100MT per month for bulk LPG to qualify for these discounts.
Free transportation: This policy is applied to all customers
Free accessories devices program: LPG accessory devices are free to end user who switches into Petrolimex brand This program is applied for industrial customer
In Vietnam, the cost of LPG bottles is relatively high, requiring end-users to deposit the full value of the bottle, a policy uniformly enforced by all LPG companies However, PGC offers a deferred deposit policy for qualifying customers, allowing them to delay their deposit payment for a period ranging from one to six months.
It depends on the performance of agent
Insurance: 50millions dong per a person if explosion happen It is applied for industrial customer
After sale service: This policy is applied to all customers
PGC is committed to providing exceptional customer service through a team of well-educated technology staff who offer complimentary technical consultancy to all customers Additionally, PGC Ho Chi Minh features a dedicated hotline service at #80111096, ensuring that assistance is available to customers anytime and anywhere.
Petrolimex Group is currently developing a branding strategy that includes a logo change as part of their brand identity campaign As a member of the Petrolimex Group, PGC is aligning its brand representation with the organization's identity, leading to an updated logo that reflects this connection.
Competitor analysis
Competitor Analysis is an important part of the strategic planning process The main purpose of competitor analysis is
To help management understand their competitive advantages/disadvantages relative to competitors
To generate understanding of competitors‟ past, present (and most importantly) future strategies
To provide an informed basis to develop strategies to achieve competitive advantage in the future
To help forecast the returns that may be made from future investments (e.g how will competitors respond to a new promotion or pricing strategy?)
Established in 1993, Saigon Petro Co., Ltd is a leading player in Vietnam's LPG market, adhering to the motto "MOST SAFE – CONVENIENT – ECONOMIC." The company has consistently demonstrated robust growth, capturing a significant market share of 15% nationwide and 20% in Southern Vietnam, making it the largest provider of LPG for household consumption in the region.
Product categories: Saigon Petro has all products from 12kg-bottled LPG; 45kg-bottled LPG; 50kg-LPG and LPG in Bulk Over 60% sale volume is come from 12kg-bottled LPG
The CatLai LPG Plant is a state-of-the-art facility featuring a tank farm terminal and filling station with significant storage and filling capabilities, catering to the LPG supply needs of Ho Chi Minh City and its neighboring provinces Additionally, the plant includes an advanced gas cylinder inspection and painting facility that not only repairs and re-coats LPG bottles but also ensures they meet international inspection standards.
Saigon Petro operates a network of filling stations with four plants located in Ho Chi Minh City, specifically in the 9th, 7th, Hoc Mon, and Binh Chanh Districts Additionally, their services extend to Western provinces such as Tien Giang and Can Tho, as well as Eastern, Central, and Highlands provinces including Vung Tau, Dong Nai, Binh Phuoc, and Phu Yen The company is actively working on projects to expand its LPG market into Central and Northern Vietnam provinces.
Saigon Petro does not operate direct sales channels but boasts a robust distribution network with over 5,000 retail agents This extensive network spans Ho Chi Minh City and the southern provinces of Vietnam, from Da Nang to the southern regions, ensuring timely and efficient delivery of Saigon Petro's LPG to consumers at every corner.
PetroVietnam Gas Corporation (PV GAS) is a wholly owned subsidiary of the Vietnam Oil and Gas Group (PVN), formed through the reorganization of PetroVietnam Gas One-member Limited Liability Company and several of PVN's subsidiaries Established in 2004, PV Gas South Company operates as a subsidiary of PV GAS, focusing on the trading of liquefied petroleum gas (LPG) in the southern Vietnam market.
Product categories: Their products comprised of 12kg-bottled LPG & 45kg- bottled LPG and LPG in bulk also
PV Gas South currently lacks an LPG filling plant in Ho Chi Minh City, but it boasts a substantial LPG storage capacity of 50,000 tons across southern Vietnam, with facilities located in Can Tho, Dong Nai, and Ba Ria Province.
Distribution Network: Same as Saigon Petro, PV Gas South have no direct sale channel, until now they have 10 wholesalers in Ho Chi Minh
To meet the growing domestic demand for LPG, PV Gas has been importing LPG using refrigerated vessels and leasing floating storage capable of holding 50,000 tons since 2008, in addition to supplying approximately 30% of the market demand from Dinh Co GPP The company is also focused on expanding its market reach to neighboring countries.
PV GAS has been actively expanding its sales network, loading station systems, and storage facilities to enhance its retail business Over the past five years, the company has supplied more than 1.9 million tons of LPG, securing a 60% market share in wholesale and nearly 20% in retail across Vietnam.
PVGas South may lack a direct sales network, but it benefits from a reliable LPG resource supplied by its parent company, Petro Vietnam, through Dinh Co and Dung Quat GPP This stable product resource provides PVGas South a significant competitive advantage over other players in the market.
PV GAS SOUTH conducts annual promotion programs to express gratitude to its valued customers These initiatives are designed to enhance consumer demand for PETROVIETNAM GAS PRODUCTS The promotions feature various rewards, including prizes such as motorbikes, televisions, and washing machines, as well as direct gifts like dishwashers, washing powder, and aprons.
Anpha Petro, originally known as Gia Dinh Service and Trading Co., Ltd, was established in April 1999 to trade domestic and industrial gas In April 2004, in response to significant market changes and development pressures, An Pha S.G Petrol was founded to focus on investing and managing a comprehensive system for importing, storing, and transporting LPG for strategic partners and domestic LPG trading companies under the Gia Dinh Gas® brand.
Anpha Petro operates under three distinct brand names: Gia Dinh Gas, which serves both Northern and Southern Vietnam; JP Gas, targeting the southeastern provinces; and Dakgas, specifically catering to the highland regions of Vietnam.
Product Categories: In HoChiminh, Giadinh brand name takes 4% market share Their products include 12kg-bottled LPG; 45kg-bottled LPG; 50kg- bottled LPG
The company's distribution network operates actively across the country, utilizing various channels for product delivery Products are supplied through retail and wholesale channels, as well as agents and subsidiary companies These distribution channels are categorized to optimize efficiency and reach.
The single-tier distribution channel allows the company to supply LPG directly to its member companies, which are responsible for selling it in the market This method accounts for a significant portion of the company's LPG sales, ensuring both financial security and integrity in transactions with its members The company's competitive edge lies in its fleet of vessels, enabling efficient LPG supply from suppliers to members In addition to providing gas in cylinders, the company has secured numerous contracts for bulk LPG supply to industrial customers This distribution approach is primarily utilized in major markets like Ho Chi Minh City and Hanoi, where the company can efficiently deliver products directly to shops and agents using its own delivery trucks.
The double tier distribution channel enables a company to supply products to independent general agents who are not affiliated with the company, addressing the limitations of a single tier distribution system This approach has led to increased sales volume, as it allows both the company and the agents to leverage regional facilities, manpower, and distribution networks effectively.
Besides the above channels, company also has a sale control system to manage the quality of services, products supplied to the shops and end-users
Respondents Profile
This chapter presents analysis the data and the respondent of market research
4.1.1 Profile of respondents for mail survey
Number of responses: 1200 Number of valid responses: 800
Brand awareness
Brand awareness refers to strength of a brand in the consumer‟s mind There are two (2) levels of brand awareness ranging from recommendation to recall
Brand recognition: (aided recall) Recognition reflects familiarity and linking acquired from past exposure Remembering as such, one brand among` other is a manner of aided recall
Brand recall is a crucial aspect of consumer awareness, highlighting how a brand comes to mind when its product category is mentioned Unaided recall indicates the immediate recognition of a brand, while "top of mind" refers to the highest level of awareness, where the brand is the first to be thought of in relevant contexts (Aaker, 1996:10-13).
The awareness rates are very important for market player to know in order to re- assess their brand name printing in customer‟s mind and their evoked set
Gas PV Gas VT Gas ELF Gas Vina
Brand recognition Brand recall Top of mind
Saigon Petrol, Petrolimex Gas (PGC), and PV Gas are the leading brand names in Ho Chi Minh City According to survey results, PGC boasts a top-of-mind awareness of 33%, a brand recall of 61%, and an impressive brand recognition of 94% These figures are closely aligned with those of Saigon Petrol and PV Gas While PGC holds the second position in brand recognition, its top-of-mind awareness lags behind Saigon Petrol by 37 points and PV Gas by 34 points.
Shell and Elf gas are well-known global brands, but they have only recently re-entered the Vietnamese market As a result, their brand recognition and recall in Ho Chi Minh City remain relatively weak.
Factor influencing to purchase decision
This chapter presents analysis the data and the respondent of market research
4.1.1 Profile of respondents for mail survey
Number of responses: 1200 Number of valid responses: 800
Brand awareness refers to strength of a brand in the consumer‟s mind There are two (2) levels of brand awareness ranging from recommendation to recall
Brand recognition: (aided recall) Recognition reflects familiarity and linking acquired from past exposure Remembering as such, one brand among` other is a manner of aided recall
Brand recall is crucial for awareness, as it indicates how readily a brand comes to mind when its product category is mentioned The highest level of this awareness is referred to as "top of mind," where the brand is the first that consumers think of in relevant contexts (Aaker, 1996:10-13).
The awareness rates are very important for market player to know in order to re- assess their brand name printing in customer‟s mind and their evoked set
Gas PV Gas VT Gas ELF Gas Vina
Brand recognition Brand recall Top of mind
In Ho Chi Minh City, Saigon Petrol, Petrolimex Gas (PGC), and PV Gas are recognized as the top three strong brand names in the petroleum sector According to survey results, PGC boasts a top-of-mind awareness of 33%, a brand recall of 61%, and an impressive brand recognition rate of 94% These metrics are closely aligned with those of Saigon Petrol and PV Gas While PGC ranks second in brand recognition, its top-of-mind awareness lags behind Saigon Petrol by 37% and PV Gas by 34%.
Shell Gas and Elf Gas are well-established global brands; however, their recent re-entry into the Vietnamese market means they have yet to achieve strong brand recognition and recall among consumers in Ho Chi Minh City.
Which 3 brands of bottled LPG have you ever tried?
This part will give us information and understanding what brand ever used in past one year, using most often and buy in next order in bottled LPG business
Saigon Petro leads the market with a usage percentage of 47.3%, followed by PV Gas at 38% PGC and Giadinh Gas have lower usage rates, at 34.6% and 12.8%, respectively.
What is the brand of bottled LPG that you used most often in last 2 years?
Saigon Petro has maintained its position as the most popular gas supplier, with a market share of 34.1% over the past two years, followed by PV Gas at 26.6% PGC and Giadinh Gas hold market shares of 15% and 16.5%, respectively.
Recent data indicates a significant shift in consumer brand loyalty, with households increasingly willing to change brands rather than remain loyal to one indefinitely Over the past two years, all brands have experienced a decline in market share, with Personal Care Goods (PCG) facing the steepest drop, plummeting from 34.6% to just 15% In contrast, Giadinh Gas has emerged as a market leader, increasing its usage frequency from 12.8% to 16.5%.
What brand of bottled LPG would you be most likely to select for next purchase?
According to recent survey results, Saigon Petro leads the market with 29.5% of customers selecting it for their next purchase, followed by PV Gas at 26% PGC and Giadinh Gas hold 14.5% and 16% respectively, indicating that there are no significant changes in market share in the short term.
4.4 Purchasing habit & Reasons for using bottled LPG
According to a survey, 95% of people purchase bottled LPG by phone, while only 5% visit an LPG shop to place their orders Households typically order one bottle at a time, which is reasonable given that the consumption period for a bottle ranges from 2.5 weeks to 2 months.
Figure 4.2 Frequency of using bottled LPG
Frequency for using a full bottled LPG
Understanding the reasons customers choose bottled LPG for home use is crucial for companies aiming to enhance their marketing strategies and attract new customers Key motivations include convenience and time-saving benefits at 83%, cleanliness at 87%, and a significant 56% citing cost-effectiveness.
Figure 4.3 Reason for using bottled LPG
The criteria “convenience & saving”, “clean” and “economical” are the top three of main reasons for using bottled LPG in household segment
Above figures demonstrate that bottled LPG is used mostly in household nowadays
It is also suitable with the research of Rinnai – a burner manufacturer as we mention in previous chapter
4.5 Factors influencing to purchase decision
As the research result, there are some factors which customers think that it could affect to purchase decision
Figure 4.4 Factor influencing to purchase decision
Widely using Safety Economical Clean Recommended by friends/relative
Prestigious brand Affordable Safety Prompt delivery/on time
Introduce by expert or sale man
Not at all important Not important Neutral Important Very important
The top three most important factors affect almost for purchasing decision are
Safety is the top priority for nearly all respondents, with a nearly unanimous 100% emphasizing its importance Affordability follows closely behind, valued by 75% of participants, while prompt delivery is significant for 73.75% Additionally, 23% of respondents highlighted the importance of products being introduced by experts or salespeople Other factors received minimal attention.
Chart 4.2 Factors affect for purchasing decision
The term “Dealer nearby home” was not chose, it is also easily to understand because this term is identical with “Prompt delivery/ delivery on time”
Customer perception toward to PGC marketing plan
This chapter presents analysis the data and the respondent of market research
4.1.1 Profile of respondents for mail survey
Number of responses: 1200 Number of valid responses: 800
Brand awareness refers to strength of a brand in the consumer‟s mind There are two (2) levels of brand awareness ranging from recommendation to recall
Brand recognition: (aided recall) Recognition reflects familiarity and linking acquired from past exposure Remembering as such, one brand among` other is a manner of aided recall
Brand recall refers to the ability of consumers to remember a brand when its product category is mentioned, with unaided recall indicating spontaneous awareness The highest level of brand awareness is known as "top of mind," where the brand is the first to come to mind in relevant contexts (Aaker, 1996:10-13).
The awareness rates are very important for market player to know in order to re- assess their brand name printing in customer‟s mind and their evoked set
Gas PV Gas VT Gas ELF Gas Vina
Brand recognition Brand recall Top of mind
Saigon Petrol, Petrolimex Gas (PGC), and PV Gas are the leading fuel brands in Ho Chi Minh City According to survey results, PGC boasts a top-of-mind awareness of 33%, brand recall of 61%, and impressive brand recognition at 94% These statistics are closely aligned with those of Saigon Petrol and PV Gas While PGC ranks second in brand recognition, its top-of-mind awareness lags behind Saigon Petrol by 37 points and PV Gas by 34 points.
Shell Gas and Elf Gas are well-known global brands, but they have only recently re-entered the Vietnamese market As a result, their brand recognition and recall in Ho Chi Minh City remain relatively weak.
Which 3 brands of bottled LPG have you ever tried?
This part will give us information and understanding what brand ever used in past one year, using most often and buy in next order in bottled LPG business
Saigon Petro leads the market with a usage percentage of 47.3%, followed by PV Gas at 38% PGC and Giadinh Gas have lower usage rates at 34.6% and 12.8%, respectively.
What is the brand of bottled LPG that you used most often in last 2 years?
Saigon Petro has maintained its position as the leading gas supplier, with a remarkable market share of 34.1% over the past two years, thanks to the loyalty of its former customers Following closely is PV Gas, holding a significant share of 26.6% Meanwhile, PGC and Giadinh Gas account for 15% and 16.5%, respectively, in the gas market.
Recent data indicates a noticeable trend among households to switch brands rather than remain loyal to one indefinitely Over the past two years, all brands have experienced a decline in market share, with the personal care category (PGC) suffering the most, dropping from 34.6% to 15% In contrast, Giadinh Gas has emerged as a leader, increasing its market share from 12.8% to 16.5% in terms of frequency of use.
What brand of bottled LPG would you be most likely to select for next purchase?
According to recent survey results, Saigon Petro leads the market with 29.5% of customers choosing it for their next purchase, followed by PV Gas at 26% PGC and Giadinh Gas hold 14.5% and 16% respectively, indicating that there has been no significant change in market share in the short term.
4.4 Purchasing habit & Reasons for using bottled LPG
According to survey results, 95% of people order bottled LPG by phone, while only 5% visit LPG shops to place their orders Typically, households purchase just one bottle at a time, which is reasonable given that the consumption period for a bottle ranges from 2.5 weeks to 2 months.
Figure 4.2 Frequency of using bottled LPG
Frequency for using a full bottled LPG
Understanding the motivations behind customer usage of bottled LPG at home is crucial for companies aiming to develop effective marketing strategies that enhance market demand and attract new customers Key reasons include convenience and time-saving benefits at 83%, cleanliness at 87%, and significant cost savings, with 56% of users highlighting economization as a primary factor.
Figure 4.3 Reason for using bottled LPG
The criteria “convenience & saving”, “clean” and “economical” are the top three of main reasons for using bottled LPG in household segment
Above figures demonstrate that bottled LPG is used mostly in household nowadays
It is also suitable with the research of Rinnai – a burner manufacturer as we mention in previous chapter
4.5 Factors influencing to purchase decision
As the research result, there are some factors which customers think that it could affect to purchase decision
Figure 4.4 Factor influencing to purchase decision
Widely using Safety Economical Clean Recommended by friends/relative
Prestigious brand Affordable Safety Prompt delivery/on time
Introduce by expert or sale man
Not at all important Not important Neutral Important Very important
The top three most important factors affect almost for purchasing decision are
Safety is the top priority for nearly all respondents, with 100% emphasizing its importance Affordability follows closely, with 75% of participants considering it a key factor, while prompt delivery is valued by 73.75% Additionally, 23% of respondents highlighted the significance of being introduced by an expert or salesperson Other factors received minimal attention.
Chart 4.2 Factors affect for purchasing decision
The term “Dealer nearby home” was not chose, it is also easily to understand because this term is identical with “Prompt delivery/ delivery on time”
Understanding why customers switch brands is crucial for PGC, as it provides insights into customer behavior and aids in developing effective marketing strategies By addressing the reasons behind customer switching, PGC can enhance customer satisfaction and retain market share.
The most important reasons for customer switching was “no safety” at 100%, the follower was “not prompt delivery or not delivery on time” at 58.50%, the third was
“Dealer propose other brand” with 43.63% Attractive program take 39.88% of total respondents “Product quality” with 36% and “Price was high” with 22% are in succession at last
Affordable Safety Prompt delivery/on time
Introduce by expert or sale man Good packing
Attactive promotionGood after sale service
Figure 4.5 Reason for switching brand
4.7 Customer perception toward current PGC marketing plan
After investigating several factors affect to customer‟s purchasing, we review the perception of customer toward to current marketing program
In this part the Likert-scale was used
Range of score Mean range Meaning
Not prompt delivery/on time
No safety Price was high product quality is not good
PGC prioritizes packaging not only for aesthetic appeal but also for product protection, leading to a recall policy every five years Respondents rated PGC's packaging positively, with an average score of 3.83 Since its inception, PGC has maintained a strong safety record, achieving a mean score of 3.63 for safety features High quality is also a key focus, with a score of 3.44, followed by accurate weight and auxiliary accessories at 3.34 and 3.14, respectively However, it appears that PGC customers generally do not emphasize the weight of the product or the quality of auxiliary accessories in bottled LPG.
In generally, Product of PGC is evaluated rather well in perception of user
The service feedback for PGC has a positive mean score of 3.67, indicating that customer inquiries about LPG are promptly addressed via their hotline However, the delivery personnel's attitude received a lower mean score of 3.13, while the maintenance service and delivery performance were rated poorly, with means of 2.57 and 2.79, respectively Investigations revealed that many delivery staff neglect maintenance tasks and frequently arrive late.
Good packing High quality Accurate weight The auxiliary accessories are good
In general, service of PGC is not good, especially in term of delivery 2.79 and maintenance service
Despite PGC's bottled LPG being priced at a high level, a survey indicates that many customers (mean 3.36) do not prioritize price, as the difference between PGC and its competitors is minimal compared to the overall value of bottled LPG However, the cost of auxiliary accessories received a significant mean score of 4.09, and the deposit for the LPG cylinder is considered expensive, with no disagreement among respondents Overall, customers perceive PGC's prices as high.
Delivery on time always Maintenance service is good Delivery man has good attitude
All questions related to bottled LPG are responsed quickly
Price is high Deposit cost of LPG cylinder is high
Price of auxiliary accessories are expensive
Retail agents, excluding PGC's shops, are allowed to freely display up to three brands in their stores According to the data, brand PGC is not consistently displayed prominently, with a mean score of 2.91 from respondents Additionally, the convenience of ordering and the proximity of LPG shops to homes received high scores of 3.68 and 3.48, respectively.