understanding consumer behavior for washing machine of sanyo home applicance asia corporation

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITYNEU BUSINESS SCHOOL DO THI MINH NGUYET UNDERSTANDING CONSUMER BEHAVIOR FOR WASHING MACHINE OF SANYO HOME APPLICANCE ASIA C

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY

NEU BUSINESS SCHOOL

DO THI MINH NGUYET

UNDERSTANDING CONSUMER BEHAVIOR FOR WASHING MACHINE OF SANYO HOME

APPLICANCE ASIA CORPORATION

MASTER OF BUSINESS ADMINISTRATION THESIS

60.34.05

SUPERVISOR: DR TRAN VAN HUNG

HANOI - 2010

I am grateful to a number of people who have helped me in the writing

of this research Firstly, I would like to express my gratitude to Dr Tran VanHung, who guided me all their heart during the process I wrote theassignment Furthermore, I would also like to thank the lecturers who taught

me other subjects in BSNEU and created good conditions for me to study andwrite this assignment

I would like to thank Mr Hoang Tat Thang working at Pico Plaza; MrsNguyen Minh Ngoc is working at Sai Gon Nguyen Kim Plaza , Where Icollect informations, interview and apply qualitative and quantitative methods

to understand more about selling and management systems in trade centers inViet Nam

I hope that this graduation assignment will appeal to all of those whohelped me make it

Do Thi Minh Nguyet

CoA: Cojoint Analysis

CuA: Cluster Analysis

WM: Washing machine

HCMC: Ho Chi Minh City

MBA: Master of Bussiness Administration

PLC: Product Life cycle

LIST OF TABLES

Table 1: Table illustrates the SLEPT analysis method 28Table 2: Distribution diagram of SHA 35Table 3: SWOT analysis in Marketing Mix strategy of SHA 53

LIST OF FIGURES

Figure 1: The number of families are using the washing machine in Vietnam (From 2002 to 2008) 38

Figure 2: Result of questionair for customers at trade sites 49

Figure 3: The newspapers and magazines which the consumers often read 59

TABLE OF CONTENTS

EXECUTIVE SUMMARY 6

ABSTRACT 10

CHAPTER 1: INTRODUCTION 11

1.1 Rationale: 11

1.4 Research questions 13

CHAPTER 2: THEORETICAL BACKGROUND OF CUSTOMERR BEHAVIOR 14

2.1 Factors influent customer behaviors 19

2.2 Consumer choice theory 23

2.2.1 Buyer decision processes 23

2.2.2 Aplication: Cojoint Analysis (CoA) 25

2.2.3 Empirical Model for CoA 27

2.3.4 SLEPT analysis 28

CHAPTER 3: LITERATURE REVIEW 29

3.1 What is Marketing? 29

3.2 Classifying Marketing 29

3 3 The functions of Marketing 30

3.3.1 Making the products satisfy to the demands of the market 30

3.3.2 The Distribution 30

3.3.3 The sale 31

3.3.4 The supportive activities 31

3 4 SWOT Analysis 31

3 5 Using SWOT analysis to find out the suitable Marketing strategy to increase the market share for washing machine field of SHA 33

CHAPTER 4: ANALYZE CURRENT SITUATION 34

OF MARKET SHARE OF WASHING MACHINE OF SANYO IN VIETNAMESE MARKET 34

4.1 Introducing something about SHA 34

4.1.1The legal basis 34

4.1.2 The activities of Sanyo Home Appliances Asia Corporation 35

4.1.3 The functions, the responsibilities and the relationship between the departments 35

4.2 The characters about the market, customers, competitors 37

4.2.1 The market characters 37

4.2.2 The customer characteristics of Vietnam 39

4.2.3 The Competitors 39

4.3 Marketing activities of washing machine field at Sanyo Vietnam 41 4.3.1 The Marketing activities of Sanyo Vietnam 41

4.3.2 The agencies system of Sanyo Vietnam 42

4.3.3 The after sale services 42

4.4 The policies for washing machine field of SHA 43

4.4.1The product policy 43

4.4.2 The price policy 44

4.4.3 The distribution policy 45

4.4.4 Advertisement and promotion 46

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 48

5.1.Conclusions 48

5.2 Recommendations 51

5.2.1 The content of strategy 52

5.2.2 Analysing SWOT base on the result of the above table 53

APPENDICES: QUESTIONAIR FOR CONSUMER SERVEY 61

REFERENCES 64

WEBSITES 65

EXECUTIVE SUMMARY

After years of market presence in Vietnam, Sanyo washing machineshave become a trusted brand name and familiar in Vietnameses life(especially people in urban areas) Under the influence of market economy,globalization trends have great impact on the operation of manufacturinghousehold goods of Sanyo factory in Vietnam, particularly affecting theconsumption of washing machines of Sanyo Home Appliances AsiaCorporation Under this context, the overall objective of the study is ti analyzecustomer behavior for washing machine of Sanyo Home Appliances AsiaCorporation, in order to apply maketting mix understanding and other theories

of consumer behavior for giving out some best and suitable proposals forSanyo Home Appliances Asia Corporation to expand the washing machinemarket share in the next period in Vietnam

The data is mainly used as inputs for this thesis are samplequestionaires, which gave to consumer at Saigon Nguyen Kim plaza and Picoplaza, make interview with sale managers, data on GSO (General statistic),Sanyo website and its competitors.

Base on the theories of consumer behavior as: Maketting mix andSWOT analysis and other theories to describe and analyze consumptionpatterns, attribute preference, impact factors and market segmentation ofSanyo washing machine in Vietnamese maket Following this result, the studyobtains findings as:

From 1997 to late months of 2006 Sanyo Home Appliances AsiaCorporation doing business very well, but from the early months in 2007 tonow, the washing machine market share of SHA is decreasing in Vietnam, in

2006 is 40% but in 2007 decreasing at 38% and 2008 is at 35%(Although Itwas voted top brand in 2009) Only from year 2006 to 2008 the washingmachine market share of SHA decrease 5%, this is issue the board of directors

of Sanyo Home Appliances Asia Corporation are very worried andembarrassing to find correct steps for SHA

SHA leadership has too much japaneses, only 6 employees in charge ofthe washing machine sector - lack of concentration of market research andlaunching sales campaigns, the strategies to attract customers fromcompetitors Beside it, SHA is depending too much on the four units – levelone agents: 266 agents for a Trade and Service Company, Huong ThuyCompany Ltd., the era of the Pacific Trade and Service Company, Trade andThanh Nha Service Company

After reviewing the spending habits of Vietnamese, washing machinefeatures available on the Vietnamese market, which is made by competitors,

in order to find its strengths and weaknesses based on the elements of theMarketing mix theory ( 4P) shows: Sanyo are not only afraid of these kinds ofcompetitors as: LG vina, Samsung, Hitachi…., but also the SHA need to payattention to the products imitated the label such as: Sankyo (imitated fromLogo of Sanyo) Sonica (imitated from Sony) It has bad influences to SHAbecause it will be misunderstood by the people have the low knowledge

The obtained sides

- About scale of market: nowadays it has been present almost the cities

and areas of Vietnam such as: Hanoi, Hai Phong, Danang, Nam Dinh, CanTho, Binh Duong….besides, the warranty and maintenance centres also havebeen expanded throughout Vietnam, satisfy immediately whenever thecustomers’ machines have problem

- About market share: In Vietnam, Sanyo has occupied over 40% the

market share in 2006 for the home appliances washing machine field

( 14 source from internal report of SHA) Having the good result due to the a lot

of factors, in there, the quality of product has been believed by the customers,the price is acceptable, the after sale services are good (warranty andmaintenance)

The limited sides

- About market share: Only from year 2006 to 2008 the washing

machine market share of SHA decrease 5% For some reasons may be: Not

establish the Marketing department separated yet (The Marketing activities depend quite on 4 companies); Not yet investing so much for advertising and financing for the big programes; Staff level; The price is not suitable…

is the big cities

+ Increasing the product advertisements suitably on the mass mediasuch as: newspaper, magazine of consumer, radio, TV However, the expense

is very expensive but the effect is very big

+ Need to invest finance for big programmes such as childrenprogrammes, educational programmes, entertainment programmes(especially housework programmes on television)

+ Adjusting or changing the personnel for Sale department where nothaving the professional staff about business knowledge.

+ Changing the salary structure suitably, should have favour policieswith staff dedicate so much for company

+ In addition, the board of directors should care for circumstances andmentality of staff, visit them when they are sick or have problem about theirmind

This research is going to see the consumer behavior for washing machine

of Sanyo Home Applicances Asia Corporation, that helps in identifying theweak points and also reflects the positive aspect of business selling

In order to give out the suitable selling methods for Sanyo HomeAppliances Asia Corporation, the research is going to carry out followingtasks:

Analyzing the current situation of the washing machine market share ofSanyo Home Appliances Asia Corporation

.To find out the factors affected to the washing machine market share ofSanyo Home Appliances Asia Corporation

.To find out the advantages and disadvantages of Sanyo HomeAppliances Asia Corporation

.To understand customer behaviours to give marketing suggestions andrecommendations to increase the washing machine market-share of SHACorporation

CHAPTER 1: INTRODUCTION

1.1 Rationale:

Vietnam is a developing country, with the population nearly 87 million.Vietnam has a thousand-year history, with an originally traditional culture,variety of relics The culture, society, politics are always stable Especially,after 11-9 event Vietnam was considered one of the safest countries in thearea and over the world In recent years, along with the development ofeconomy, the incomes of Vietnameses are increasing day by day So theirdemands about home appliances are also developing The people want to savetheir time for washing the clothes and the dishes to relax and entertain So thewashing machine has been becoming necessary and popular in almost urbanfamilies, especially, washing machine is selling well in the big cities such as:Hanoi, Saigon, Haiphong, Danang…,for that important reason, the SanyoElectronic Osaka Japan invested in Vietnam The project was executed in

1995, including three big share-holders of Corp., are Sanyo Electronic OsakaJapan, Sumitomo Corporation and Sanyo Trading Corporation with investedcapital is USD$ 75 millions 1, the operation time of the project is 30 years It

run on 26 July 1997 with named Sanyo Home Appliances Asia Corporation (SHA).

1.2 R ESEARCH PROBLEM

Vietnam is the nation has got the rate of young population, 60% in theage of working (according to the statistic in 2007) This is the cheap andplentiful labour source for the foreign investors in Vietnam but this is alsodifficult problem for Vietnam’s government to resolve the employment

The Vietnameses are very curious and like the new things Whenseeing the neighbour has got some new things so they also want their house

have got those Specially, the Vietnamese like the foreign products so much.The foreign companies will be successful if knowing this disadvantage ofVietnamese.

Sanyo is not only famous Corporation of Japan but also well-knownthrough the world about electronic products such as: refrigerator, microware,cooking, washing machine…

Sanyo label has been in Vietnam a long time before 1975 but until 1997

it has just a factory located in Bien Hoa- Dong Nai This factory is specialized

in producing and assembling the washing machine and refrigerator with

named Sanyo Home Appliances Asia Corporation (SHA) When not having

the factory in Vietnam, the products and alternative components named Sanyoare imported from Japan or Thailand (Sanyo label but made in Thailand).From 1997 to late months of 2006 Sanyo Home Appliances Asia Corporationdoing business very well in Vietnam and exporting to other countries At thistime, the products of SHA has been 30 countries in the world, but from theearly months in 2007 to now, the washing machine market share of SHA isdecreasing in Vietnam, in 2006 is 40% but in 2007 decreasing at 38% and

2008 is at 35%(Although It was voted top brand in 2009) Only from year

2006 to 2008 the washing machine market share of SHA decrease 5%, this isissue the board of directors of Sanyo Home Appliances Asia Corporation arevery worried and embarrassing to find correct steps for SHA at the presentand the future

While studying Business and management at the National EconomicUniversity I have obtained the fixed knowledge about Marketing such as:research and develop the market, analyse and evaluate the information of themarket and other competitors…etc

As a result, I chose this topic “Understanding consumer behaviour for

washing machine of Sanyo Home Applicances Asia Corporation” I want to

apply my knowledge about Marketing studied at the National EconomicUniversity to give out some best and suitable proposals for Sanyo HomeAppliances Asia Corporation to expand the washing machine market share inthe next period in Vietnam

1.3 R ESEARCH OBJECTIVE :

The aim of this research is the researcher will analysis the current situation ofSanyo Home Appliances Asia Corporation and give out some marketingsuggestions and recommendations of SHA in the next period

The main objective:

Understanding consumer behaviour for washing machine of Sanyo Home Applicances Asia Corporation

The sub- objectives:

1 To analyze the current situation of the washing machine market share of Sanyo Home Appliances Asia Corporation

2 To find out the factors affected to the washing machine market share of Sanyo Home Appliances Asia Corporation.

3 To find out the advantages and disadvantages of Sanyo Home Appliances Asia Corporation.

1.4 Research questions

Questionaires for:

How is marketing activities of SHA?

…

1.5 R ESEARCH SCOPE

Due to the limit of time and collected literatures, so the researcher onlyfocus on researching customer behavior of Sanyo washing machine to giveout the most suitable Marketing recommendation for SHA making to increasethe market share for washing machine in the next period in Vietnam (2010-2011)

1.6 R ESEARCH LIMITATIONS

Because of time limit to meet customers at the supper markets, I justchose sample size are 100 customers and give out some recommendations(not solutions or strategies) to expand market share for washing machine inthe next period in Vietnam

CHAPTER 2: THEORETICAL BACKGROUND OF

CUSTOMERR BEHAVIOR

Consumer behaviour is the study of when, why, how, and where people

do or do not buy product It blends elements from psychology, sociology,social anthropology and economics It attempts to understand the buyerdecision making process, both individually and in groups It studiescharacteristics of individual consumers such as demographics and behaviouralvariables in an attempt to understand people's wants It also tries to assessinfluences on the consumer from groups such as family, friends, referencegroups, and society in general

Customer behaviour study is based on consumer buying behaviour,with the customer playing the three distinct roles of user, payer and buyer.Relationship marketing is an influential asset for customer behaviour analysis

as it has a keen interest in the re-discovery of the true meaning of marketingthrough the re-affirmation of the importance of the customer or buyer Agreater importance is also placed on consumer retention, customerrelationship management, personalisation, customisation and one-to-onemarketing Social functions can be categorized into social choice and welfarefunctions

Each method for vote counting is assumed as a social function but ifArrow’s possibility theorem is used for a social function, social welfarefunction is achieved Some specifications of the social functions aredecisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneityand weak and strong Pareto optimality No social choice function meets theserequirements in an ordinal scale simultaneously The most importantcharacteristic of a social function is identification of the interactive effect ofalternatives and creating a logical relation with the ranks Marketing providesservices in order to satisfy customers With that in mind, the productive

system is considered from its beginning at the production level, to the end ofthe cycle, the consumer (Kioumarsi et al., 2009).

Belch and Belch define consumer behaviour as 'the process andactivities people engage in when searching for, selecting, purchasing, using,evaluating, and disposing of products and services so as to satisfy their needsand desires'.'

(Definition from http://en.wikipedia.org)

Definition of Buying Behavior:

Buying Behavior is the decision processes and acts of people involved

in buying and using products

We have to find:

+ Why consumers make the purchases that they make?

+ What factors influence consumer purchases?

+ The changing factors in our society

Consumer Buying Behavior refers to the buying behavior of theultimate consumer A firm needs to analyze buying behavior for:

Buyers reactions to a firms marketing strategy has a great impact on thefirms success

The marketing concept stresses that a firm should create a MarketingMix (MM) that satisfies (gives utility to) customers, therefore need to analyzethe what, where, when and how consumers buy

Marketers can better predict how consumers will respond to marketingstrategies

Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:

+ Level of Involvement in purchase decision Importance and intensity

of interest in a product in a particular situation

+ Buyers level of involvement determines why he (she) is motivated toseek information about a certain products and brands but virtually ignoresothers

+ High involvement purchases: Honda Motorbike, high priced goods,products visible to others, and the higher the risk the higher the involvement.Types of risk:

Personal risk

Social risk

Economic risk

The four type of consumer buying behavior are:

Routine Behavior buying: low involvement frequently purchased lowcost items; need very little search and decision effort; purchased almostautomatically Examples include soft drinks, foods etc

Limited Decision Making buying product occasionally When you need

to obtain information about unfamiliar brand in a familiar product category,perhaps Requires a moderate amount of time for information gathering.Examples: Clothes know product class but not the brand

Extensive Decision Making (Complex high involvement, unfamiliar,expensive or infrequently bought products) High degree of economic,performance and psychological risk Examples: cars, homes, computers,education Spend alot of time seeking information and deciding Information

from the companies; friends and relatives, store personnel etc Go through all sixstages of the buying process

Impulse buying, no conscious planning: The purchase of the sameproduct does not always elicit the same Buying Behavior Product can shiftfrom one category to the next

For example:

Going out for dinner for one person may be extensive decision making(for someone that does not go out often at all), but limited decision makingfor someone else The reason for the dinner, whether it is an anniversarycelebration, or a meal with a couple of friends will also determine the extent

of the decision making

Stages of the Consumer Buying Process:

Consumer buying behavior refers to the buying behavior of final

consumers (individual and housholds) who buy good and services forpersonal consumption

Six Stages to the Consumer Buying Decision Process (For complexdecisions) Actual purchasing is only one stage of the process Not alldecision processes lead to a purchase All consumer decisions do not alwaysinclude all 6 stages

The 6 stages are:

Problem Recognition (awareness of need): difference between thedesired state and the actual condition Deficit in assortment of products

Example: Hunger-Food, Hunger stimulates your need to eat Information search (Internal search, memory): External search if youneed more information

Example: Customer can find from public sources, friends or aftercomparison shopping

Evaluation of Alternatives need to establish criteria for evaluation,features the buyer wants or does not want Rank/weight alternatives or resumesearch

If not satisfied with your choice then return to the search phase Canyou think of another restaurant? Look in the yellow pages etc Informationfrom different sources may be treated differently Marketers try to influence

Therefore, consumer behavior research that is looking for answers toquestion: “ How do consumers respond to the marketing effort the companymight use?”, From that, we can offer solutions to access and attract customer

2.1 Factors influent customer behaviors

Culture: culture is intimately relates to consumer behavior of individuals

and social organizations:

Culture is affecting consumer behavior, to the purchase decision of eachperson Thus, consumer behavior was viewed as a study of the characteristics

of consumer, demographic, psychiatry and the transformation of humanneeds

In addition, it is also used to assess the influence of a group of people

as family, friends and society to an individual Since all aspects of consumerbehavior are cultural elements covered, so the marketing people need toidentify and understand these factors and its impact on global marketing toachieve success in business

The relationship between culture and consumer behavior:

Cultural barriers for market development were apparent To overcomethis barrier requires manufacturers and dealers must "always understood"local culture and cultural impact of her decision to purchase In a range ofsocial behavior of individual consumers will express their own personalityand to build social relationships under the guidance of cultural factors I justtake for example through Hofsted index measurement in multi-culturalcountry

In Indonesia, some people inherit a legacy of Malay but importantchange has been more than 300 different cultures in the territory Culturaldifferences are rooted in conflicts between nations, cultures and beliefs thatproduce different consumer behavior One of the interesting things that theIndonesians are very polite and always say the word "Yes" in answer althoughsometimes the answer is not really accurate They say that the word "No" willdemonstrate impolite, disrespectful people face

If not understand what little communication there, how to do business,people can understand and sell to people here If we do not understand theculture of Indonesia, did not know about the behavior, human Indonesia, wecan not provide them with products and services

Culture is a shared experience includes acts was to experience anddirectly influence the decision of each individual in society The consumerbecomes an active social process rooted in cultural factors Culture affects the

choice of consumer products and also affect the beliefs and attitudes of

Also, marketing people not only understand customer behavior, change thebehavior of each individual that we need to identify different aspects ofenvironmental change, competition…

To succeed in the competitive market, we must understand whatcompetition brings to consumers and their strategies for us to try to respondpromptly That is indeed not easy We deeply understand consumer behavior,expectations and their desires so that we can develop new goods and serviceswith specific strategies on the markets in the world

Social factor:

Social class is an open group of individuals who have similar social rank

US is not a classless society US criteria; occupation, education, income,wealth, race, ethnic groups and possessions

Social class influences many aspects of our lives upper middle classAmericans prefer luxury cars Mercedes

+ Upper Americans class (3%) inherited wealth, aristocratic names + Lower-upper class (1.2%) newer social elite, from current professionalsand corporate elite

+ Upper-middle class (12.5%) ollege graduates, managers andprofessionals

+ Middle Americans-middle class (2%) average pay white collar workersand blue collar friends

+ Working class (38%) average pay blue collar workers

+ Lower Americans-lower class (9%) working, not on welfare

+ Lower-lower class (7%) on welfare

Social class determines to some extent, the types, quality, quantity ofproducts that a person buys or uses

Lower class people tend to stay close to home when shopping, do notengage in much prepurchase information gathering

Stores project definite class images

Family, reference groups and social classes are all social influences onconsumer behavior All operate within a larger culture

Family factor: Family consists of different entinities, that have different

age and possition in that family: the choice of products is influenced byspending of houshold, savings, assets, debts Family is the most basic group aperson belongs to Marketers must understand:

+ That many family decisions are made by the family unit

+ Consumer behavior starts in the family unit

+ Family roles and preferences are the model for children's future family.+ Family buying decisions are a mixture of family interactions and

individual decision making

+ Family acts an interpreter of social and cultural values for the

individual

The Family life cycle: families go through stages, each stage creates different consumer demands:

+ Bachelor stage

+ Newly married, young, no children me

+ Youngest child under 6

+ Youngest child 6 or over

+ Older married couples with dependant children

+ Older married couples with no children living with them, head in labor force

+ Older married couples, no children living at home, head retired

+ Solitary survivor, in labor force

+ Solitary survivor, retired

+ Modernized life cycle includes divorced and no children

Besides the factors mentioned above, there are a number of otherfactors directly influence purchasing decisions as well as customer behavior,such as economic factors, business factors, personal factors

2.2 Consumer choice theory

2.2.1 Buyer decision processes

Buyer decision processes are the decision making processes undertaken

by consumers in regard to a potential market transaction before, during, andafter the purchase of a product or service

General, decision making is the cognitive process of selecting a course

of action from among multiple alternatives Common examples include

shopping and deciding what to eat Decision making is said to be apsychological construct This means that although we can never "see" adecision, we can infer from observable behaviour that a decision has beenmade Therefore we conclude that a psychological event that we call

"decision making" has occurred It is a construction that imputes commitment

to action That is, based on observable actions, we assume that people havemade a commitment to effect the action

In general there are three ways of analysing consumer buying decisions.They are:

Economic models - These models are largely quantitative and are based

on the assumptions of rationality and near perfect knowledge The consumer

is seen to maximize their utility See consumer theory Game theory can also

be used in some circumstances

Psychological models - These models concentrate on psychological andcognitive processes such as motivation and need recognition They arequalitative rather than quantitative and build on sociological factors likecultural influences and family influences

Consumer behaviour models - These are practical models used bymarketers They typically blend both economic and psychological models

Nobel laureate Herbert Simon sees economic decision making as a vain

attempt to be rational He claims (in 1947 and 1957) that if a completeanalysis is to be done, a decision will be immensely complex He also saysthat peoples' information processing ability is very limited The assumption of

a perfectly rational economic actor is unrealistic Often we are influenced byemotional and non-rational considerations When we try to be rational we are

at best only partially successful

Buyer decision processes are the decision making processes undertaken

by consumers in regard to a potential market transaction before, during, andafter the purchase of a product or service

(Definition from http://en.wikipedia.org)

2.2.2 Aplication: Cojoint Analysis (CoA)

CoA definition: is a popular marketing research technique that

marketers use to determine what features a new product should have and how

it should be priced Conjoint analysis became popular because it was a far lessexpensive and more flexible way to address these issues than concept testing

When faced with a critical product or pricing decision, conjointanalysis can help and Conjoint is a powerful advanced research technique thatpredicts how the market will respond to product or pricing changes byunderstanding the trade-offs that customers make during the decision-makingprocess The technique can be used to answer the all-important question: whatvalue does the market place on products or services and their features? Conjoint analysis allows you to understand your customers’ underlyingvalue systems and build a market model based on those values The modelallows you to test the potential impact of product improvements and newproducts on market demand The resulting insights give you a clearcompetitive edge

Conjoint analysis helps answer vital product development and pricingquestions, such as:

+ What combination of features should a product or service offer?Which are the most critical features, and which are less important?

+ How does price impact demand for the product or service?

+ How well will a new product or service compete in the market?

+ Which strategies will maximize market preference across your productportfolio?

+ Which strategies will minimize cannibalization of existing offerings,especially premium or higher margin products or services?

+ How vulnerable are you to competitive response?

Steps in developing a conjoint Analysis:

1 Choose product attributes, for example, appearance, size, or price

2 Choose the values or options for each attribute For example, for theattribute of size, one may choose the levels of 5”, 10”, or 20” Thehigher the number of options used for each attribute, the moreburden that is placed on the respondents

3 Define products as a combination of attribute options The set ofcombinations of attributes that will be a subset of the possibleuniverse of products

4 Choose the form in which the combinations of attributes are to bepresented to the respondents Options include verbal presentation,paragraph description, and pictorial presentation

5 Decide how responses will be aggregated There are three choices –use individual responses, pool all responses into a single utinityfunction, or define segments of respondents who have similarpreferences

6 Select the technique to be used to analyze the collected data Thepart worth model is one of the simple models used to express theutilities of the various attributes There also are vector (linear)models and ideal-point (quadralic) model

2.2.3 Empirical Model for CoA

2.2.3.1 The model

As metioned above, the total utility of individuals for specific product

is the total of part value of each attribute, which belong this product Theutility function will be established by the regression model The level ofpreference of respondent and utility of each attribute will be determined bythis model In this OLS model (Funtion of linear square estimate) yi isdependent variable, and Xi are independent variables:

Yi = β0 + β0 + β1X1 + +βmXm + Ui

In which, βi is established coefficient and ui is an additice random

“error” term representing variation in yi that was not explained by theindependent variables Xi (Switon and Labata, 2003)

In this research, the model will be applied as:

Wi

wm = βi1 + βi2 Brand + βi3Price + βi4 volume + βi5advertisment + βi6

Convinience + ei

in which, Wi

wm is the utinity preference of washing machine customer i,

βij are the establised coefficient (j=1,9)

You can get even more value from a conjoint analysis study withneeds-based segmentation, a technique that divides a market into groups ofpeople who place similar value on the various features of a product or service.Going this extra step can lead to more highly targeted product developmentand pricing strategies

2.3.4 SLEPT analysis

Table 1: table illustrates the SLEPT analysis method

In order to be able to understand its customers' requirements and

respond to other changes, it is important for a company to analyse its

environment A SLEPT analysis is a tool that helps to analyse the

CHAPTER 3: LITERATURE REVIEW3.1 What is Marketing?

A social and managerial process by which individuals and groupsobtain what they need and want through creating and exchanging productsand value with others

3.2 Classifying Marketing

Traditional Marketing (classical Marketing )

All the activities of traditional Marketing only happen on the market inthe circulation The first action of Marketing is create a market and motivatethe development on its circulation channels

In the action builds a market, the businessmen know that the buyersare the vital factor which decides the action for trading of the firms Thepolicies, measures aim at objective selling everything – produced

The bearing of traditional Marketing plays important role in the shape

+ Starting from the market demand to organizing, distributing andselling goods in order to satisfy that demand .In the modern marketing,market, production, distribution and exchange are researched together

Marketing Mix:

The Marketing Mix is the combination of factors which are used withany particular products

The four key factors in the Marketing Mix are:

- The characteristics of the product itself

- The type of promotion used to sell it

- The price charged for it

- The place chosen to sell it 4

3 3 The functions of Marketing

3.3.1 Making the products satisfy to the demands of the market.

Product Marketing, research the market’s demands and connect theseactivities closely together

3.3.2 The Distribution

This function comprises of all the activities in order to organize the bestmobilization of the goods and services from when finishing the productionprocess until them delivered to wholesale, retail agencies or consumers directly

- Researching the agencies and selecting the best agencies

- Guiding the procedures about the contract, orders and relative othersfor the customers to deliver availably

- Organizing the professional transport team, the necessary proceduresfor rent the transport and the delivery terms

- Arranging the warehouse system to store the goods

- Holding the services for helping the consumers

- Finding out and resolving the ineffective distribution channels

3.3.3 The sale

Including 2 main activities:

- Control the price

- Show the professional sale skills

3.3.4 The supportive activities

Including: Advertising, promotive goods, product services, thesupportive exhibition1

SWOT stands for strengths, weaknesses, opportunities, and threats Strengths and weaknesses are internal factors

A strength could be:

 Your specialist marketing expertise

 A new, innovative product or service

 Location of your business

 Quality processes and procedures

 Any other aspects of your business that adds value to your product or service

1 Source from: Principle of Marketing- Philip Kotler

A weakness could be:

 Lack of marketing expertise

 Undifferentiated products and service (i.e in relation to your competitors)

 Location of your business

 Poor quality goods or services

 Damaged reputation

Opportunities and threats are external factors For example:

An opportunity could be:

 A developing market such as the Internet

 Mergers, joint ventures or strategic alliances

 Moving into new market segments that offer improved profits

 A new international market

 A market vacated by an ineffective competitor

A threat could be:

 A new competitor in your home market

 Price wars with competitors

 A competitor has a new, innovative product or service

 Competitors have superior access to channels of distribution

 Taxation is introduced on your product or service

A word of caution, SWOT analysis can be very subjective Do not rely on ittoo much SWOT analysis is extremely similar It simply looks at the negativefactors first in order to turn them into positive factors So use it as guide andnot a prescription