Developing marketing strategy for Jemma

Develop online shopping channel is a long term strategy of company as its key benefits are clearly defined: cost saving, marketing combination, customer relationship development, and com

MBAVB2

NGUYEN THI HONG THU

DEVELOPING MARKETING STRATEGY FOR JEMMA

MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION

Tutor’s name: Dr Nguyen Dinh Tho

Ho Chi Minh City

(2011)

It is to confirm that I conducted this final project for the MBA program with the acknowledgment of the management of Jemma brand This is my original work

Marketing literature from training courses of Professor Jean-Pierre BAEYENS and professor Claes are keys to build up my theory framework

A lot of information extracted from books, public sources, news and internet are mentioned in the reference sources For some cases, I have been unable to trace the owners of copyright material, and I would appreciate any information that would enable me to do so

Besides of the above reference sources, all data and information are true I am confident to submit this project to the professors of the MBA program

Nguyen Thi Hong Thu

ACKNOWLEDGE

First of all, I would like to express my deepest acknowledge to my supervisors, Dr Nguyen

valuable, sharp comment and inputs

I would like to express my sincere appreciation to Professors of Solvay Business School who provide the academic background and practical experience about Marketing and business management that I can write and complete this thesis

I acknowledge Mrs Pham Thi My Hanh from Jemma board of management allow me investigate Jemma business performance and she also spent a lot of time to provide industry market insights that establish my argument to write this thesis

Finally, I would like to thank Ms Dang Thi Thu Ha and my classmates in MBAVB2 who always support and encourage me to fulfill this thesis

With my best regards,

Ho Chi Minh City, March 2011

Nguyen Thi Hong Thu

2009 Building brand image and increasing turnover are Jemma priority objectives in the first three years

To build brand image, Jemma invests on one flagship store located in the center of shopping district in Hochiminh city To quickly boost up for sales, Jemma apply shops-in-shop and shops-in-store models in which Jemma rend two counter booths in big shopping malls like

Parkson, Vicom, … and other four selling booths through existing PNJ shopping center

By December 2010, Jemma launch its website with the aim to expand its coverage attracting more customers as well as build online experience to be ready for the future market growth Jemma short-term objective are to build traffic into its new website and increase online turnover

Jemma target customers are female office workers, 25 -40 years old, high income class (SEC ABC), love jewelry and metropolitan life style whose potentially familiar with internet application Online therefore could be one of their favorite shopping channels

For developing countries and low-income households in developed countries, adoption of internet shopping but the conversion rate is small due to a lack of affordable internet access Develop online shopping channel is a long term strategy of company as its key benefits are clearly defined: cost saving, marketing combination, customer relationship development, and competitive advantage enhancement, especially when market moving toward technology blooming decade

The project is designed with the aim to help Jemma promote its internet shopping channel building on insights of Jemma target customers The outcome will be a marketing strategy proposal cover 7Ps of marketing mix activities for Jemma internet shopping channel in 3 years time

LIST OF FIGURES ii

LIST OF TABLES, PICTURES iii

1 CHAPTER 1: INTRODUCTION 1

1.1 STRATEMENT OF THE PROBLEM 2

1.2 QUESTIONS AND OBJECTIVES 3

1.2.1 Questions 3

1.2.2 Objectives 3

1.3 RESEARCH DESIGN 4

1.3.1 Desk research (secondary data) 4

1.3.2 Quantitative research (primary data) 4

1.4 SCOPE OF THE STUDY 4

1.5 STRUCTURE OF THE STUDY 5

1.6 SIGNIFICANCE OF STUDY 6

2 CHAPTER 2 LITERATEUR REVIEW 7

2.1 INTERNET MARKETING STRATEGY 7

2.1.1 Marketing strategy 8

2.1.2 Marketing mix 10

2.1.3 Internet marketing mix 11

2.2 UNDERSTANDING CONSUMER BEHAVIOR 16

2.2.1 Factors affect consumer behavior 16

2.2.2 Consumer decision process 18

2.2.3 Consumer decision on new products or services 20

3 CHAPTER 3: FASHION JEWELRY MARKET, INTERNET CHANNEL LANDSCAPE, AND JEMMA INTRODUCTION 23

3.1.3 Fashion jewelry in Vietnam 27

3.1.4 Vietnam internet market opportunity 30

3.2 JEMMA INTRODUCTION 33

3.2.1 Jemma business overview 33

3.2.2 Business objectives 34

3.2.3.Jemma brand propositioning 35

3.2.4.Jemma marketing mix 35

3.2.5.Jemma SWOT analysis 36

4 CHAPTER 4: SITUATIONAL ANALYSIS 37

4.1 JEMMA ONLINE CHANNEL AND ITS COMPETITORS 38

4.1.1 Jemma situation analysis 38

4.1.1.1 Assessing the current contribution of the internet to the organization 38

4.1.1.2 Product analysis 40

4.1.1.3 Pricing analysis 45

4.1.1.4 Place analysis 46

4.1.1.5 Promotion analysis 47

4.1.1.6 People, process and physical evidence 47

4.1.2 Competitors analysis 47

4.2 DEFINING CONSUMER DECISION BEHAVIOR 52

4.2.1 Factors affect consumer behavior 52

4.2.2 Consumer decision process 54

4.2.3 Consumer decision on new products or services 61

5 CHAPTER 5: RECOMMENDATIONS 64

5.1 PROPOSED JEMMA MARKETING STRATEGY 65

5.2.3 Place 68

5.2.4 Promotion 69

5.2.5 People, process and physical evidence 70

6 CHAPTER 6: CONCLUSION 71

REFERENCE 75

APPENDIX 76

ABBREVIATIONS

and Physical Evidence

Development

LIST OF FIGURES

Figure 2.1 : Internet support growth strategy 8

Figure 2.2 : Maslow hierarchy of needs 17

Figure 3.1 : Global fashion jewelry sales (2001-2006), USD billion 25

Figure 3.2 : Geographic share of the global fashion jewelry consumption 26

Figure 3.3 : Market Trends in 2006 26

Figure 3.4 : Projected global fashion jewelry sales (2010,2015), USD billion 27

Figure 4.1 : Jemma online purchase order 39

Figure 4.2 : Jemma online turnover 39

Figure 4.3 : Jemma web visitors 40

Figure 4.4 : Jemma online product assortment 45

Figure 4.5 : Products portfolio by price range 45

Figure 4.6 : Consumer income in key cities 52

Figure 4.7 : Contribution of income group in key cities 52

Figure 4.8 : Online user profile 53

Figure 4.9 : Demographic of internet users –HN&HMC 53

Figure 4.10 : Bank account ownership – HN &HCMC 53

Figure 4.11 : Consumer behavior - choices of information sources 59

Figure 4.12 : Buying occasions 59

LIST OF TABLES

Table 2.1 : Four marketing mix at consumer point of view 10

Table 3.1 : Fashion jewelry market structured by pricing and material of products 28

Table 3.2 : Jemma SWOT analysis 36

Table 4.1 : Operation cost estimated by shop type 38

Table 4.2 : Jemma online turnover 39

Table 4.3 : Jemma online marketing strengths and weaknesses 43

Table 4.4 : List of fashion jewelry website (products selling in Vietnam market) 48

Table 4.5 : Stage of model of internet marketing of fashion jewelry website 49

Table 4.6 : Important level of purchase KPIs 60

Table 4.7 : Barriers to prevent online purchase 60

Table 4.8 : Jemma and consumer behavior summary 61

LIST OF PICTURES Picture 4.1 : Jemma online product presentation 41

Picture 4.2 : Jemma web image 41

Picture 4.3 : Example of Jemma traditional store list and store images 43

Picture 4.4 : Jemma and its competitors – pricing segmentation 50

Picture 4.5 : Vietnamese urban consumer perception about brand 54

CHAPTER I:

INTRODUCTION

1 Statement of the problem

2 Questions and objectives

3 Research design

4 Scope of the study

5 Structure of the study

6 Significant of study

1.1 STATEMENT OF PROBLEM:

Vietnam is a promising consumer market with high GDP growth rate year on year Though world market has financial crisis, Vietnam keeps the GDP growth above 6 per cent and consumer confident level remains high comparing to other countries With approximate 50 percent of population under 35 years old who are key contributors of market development and consumption, Vietnam is record the potential market in Asia

In big cities, especially in Hochiminh city and Hanoi, GDP per head is around 2.5 to 3 times

vs national GDP High income class (A&B) who has personal income above 7,500,000 vnd ~

500 USD contributes 44 percent in Hanoi and 33 percent in HCMC As a sequence of high income, their personal expenses also rank at high level among average consumer groups Living in big cities, young Vietnamese consumers easily interact with modern trend choosing personal products to expose their own characteristic Fashion, jewelry and accessories are their preferred assortments

Imported brands like Thomas Sabo, Accessories, Evita Peroni, Agatha quickly open their concept stores to build brand image and push sales in this emerge growing period Local companies also extend its product range from gold jewelry to design precious jewelry such as,

SBJ, SJC, Doji, or fully focused on fashion jewelry as Goodman, Unique, Zaa … They are

just a few in a plenty of brands available in the market as the moment

To capture market arising demand, Jemma has launched its fashion and accessorizes brand in December 2009 target to young high end consumers, especially office workers who look for fashionable jewelry and accessories to manifest their own fashion style

At the present, Jemma has opened one flagship store, other six shops in shop located in big shopping malls and PNJ shopping center, and a new launching website to serve its target consumers In 2010, Jemma achieve 3 billion vnd turnover (approximate 200 thousands USD)

After 3 months operate, Jemma online marketing did not achieve its set target which caused

by no marketing strategy specific for online marketing channel To growth this channel in long-term and meet break-even target, Jemma must re-visit its business situation, define internet strategy and develop marketing activities to improve online penetration The problem statement therefore is to develop Jemma online marketing strategy to meet penetration objective and boost sales

This final project is designed to help Jemma develop its marketing activities for online distribution channel from studying fashion jewelry buying behaviors of Jemma target customers The proposed marketing mix activities aim to support Jemma online distribution system at least in its first 3 years

1.2 QUESTIONS AND OBJECTIVES

Questions:

What are consumer perceptions about online marketing channel?

If purchase product online, what are do their expectations on products and services? What are triggers and barriers to encourage consumer purchase fashion jewelry products online?

What is marketing strategy? How to build marketing activities for online distribution channel?

Research objectives:

The main purpose of this research is to identify key factors influencing consumers purchase fashion jewelry products and consumer expectations on online marketing channel in order to promote Jemma online channel The outcome of research will help to:

(2) Figure out consumer expectations on fashion jewelry products, and products selling

online

(3) Identify marketing strategy for Jemma online marketing channels and propose

marketing mix for Jemma promote its online marketing channel

1.3.1 Desk research (secondary data)

Jewelry fashion is a new product category in Vietnam which has no official market record The data uses for this thesis is collected from Jemma information source, public announcements, personal observations and records from interview with industry experts

- Data about online marketing channel expense cost and its businessperformance to show Jemma‟s issue

- Quantitative and qualitative about consumer living standard, online market conducted by

research agencies such as Cimigo, Nielsen, etc

- Data collect from web on Jemma competitors

1.3.2 Quantitative research (primary data)

Quantitative research applied two main methods: online and face- to-face Due to time constraint, the interview research scope target to male and female from 20 to 45 years old, living in Ho Chi Minh City who has bought jewelry within the past one year Sample size is

120 Information from this research is (a) target consumers of Jemma and Jemma‟s

competitors, (b) they show interested in fashion jewelry concept, (c) they have financial conditions to spend on medium price segment, (d) they are may or may not familiar with online marketing but purchase jewelry within one year

The research study consumer expectations in fashion jewelry in Hochiminh city; where Jemma concentrates on building its business Online marketing channel is an opportunity to

bring down the cost of distribution and help Jemma grow business healthily in long-term In the final part of the study, marketing activities are proposed to promote Jemma online website The number of competitors in fashion jewelry is huge However, the study will emphasize on top three competitors of Jemma (Accessories, Agatha, Trangsucshaiya.com) who share the same target segmentation and some of them invest on online services

This thesis contains six chapters

CHAPTER 1: INTRODUCTION

The preliminary chapter, which provides the problem statement, research questions and objectives, research design, scope of the study, structure of the study and contribution of the research

CHAPTER 2: LITERATURE REVIEW

This chapter covers literature referring to this study Theory about marketing strategy and marketing mix, marketing for internet channel is also mentioned in this chapter As consumer behavior is a core of marketing activities, consumer decision process is followed to help identify insights to boost up Jemma online penetration

CHAPTER 3: FASHION JEWELRY MARKET, INTERNET CHANNEL LANDSCAPE, AND JEMMA INTRODUCTION

In this chapter, we can see the fashion jewelry landscape and internet market trend And then

in this project

CHAPTER 4: SITUATIONAL ANALYSIS

The content is identifying consumer behavior on purchasing fashion jewelry products, their motivations and barriers to purchase products online It also evaluates Jemma and its competitors on online services via desk data and primary data from the survey developed for this research

CHAPTER 5: RECOMMENDATION

Basing on the situational analysis, marketing activities (marketing mix-7Ps) to promote Jemma online marketing channel will be proposed

CHAPTER 6: CONCLUSION

This chapter summarizes the previous chapters and evaluates the recommended solutions

This research has a practical contribution to Jemma business improvement It helps to solve current biggest and strategic issue of Jemma that is building marketing strategy for online marketing channel Marketing mix activities proposed help to build Jemma online channel not only in short term but also in long term

3 Internet marketing mix

2.2 UNDERSTANDING CONSUMER BEHAVIOR

1 Factors affect consumer behavior

2 Consumer decision process

3 Consumer decision on new products or services

2.1 INTERNET MARKETING STRATEGY

2.1.1 Marketing strategy:

The strategic plan defines the company's overall mission and objectives Marketing strategy is the marketing logic by which the business focus to achieve its marketing objectives and help accomplish the overall strategic objectives

Fundamentally, the market and product development matrix (Figure 2.1) can help identify strategies to grow sales volume through varying what is sold (the product dimension on the horizontal axis of Figure 2.1) and who it is sold to (the market dimension on the y axis) Specific objectives need to be set for sales generated via these strategies, so this decision relates closely to that of objective setting

Figure 2.1 Internet support growth strategy

Source: Internet Marketing, p.176

There four growing strategies are explained in the below:

(1) Market penetration

This strategy involves using digital channels to sell more existing products into existing markets As a starting point, many companies will use the Internet to help sell existing products into existing markets, although they may miss opportunities indicated by the strategies in other parts of the matrix

(2) Market developments

Here online channels are used to sell into new markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure in the customer‟s country Alternatively a product targeted at young people could also appeal to

some members of an older audience and vice versa Many companies have found that the audience and customers of their web site are quite different from their traditional audience

(3) Product developments

The web can be used to add value to or extend existing products for many companies For example, a car manufacturer can potentially provide car performance and service information via a web site But truly new products or services that can be delivered by the Internet only apply for some types of products These are typically digital media or information products

(4) Diversification

New products are developed which are sold into new markets The Internet alone cannot facilitate these high-risk business strategies, but it can facilitate them at lower costs than have previously been possible The options include: Diversification into related businesses, Diversification into unrelated businesses, Upstream integration or Downstream integration

Once the company has chosen its overall competitive marketing strategy, it is ready to begin planning the details of the marketing mix The marketing mix is set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market 2.1.2 Marketing stimuli and marketing mix:

Marketing stimuli (marketing mix) consist of the four Ps: product, price, place and promotion Other stimuli include significant forces and events in the buyer's environment; economic, technological, political and cultural All these stimuli enter the buyer's black box, where they are turned into a set of observable buyer responses: product choice, brand choice, dealer choice, purchase timing and purchase amount (Professor Bayeens, Marketing course)

To establish strong positioning in target market, company must design suitable marketing 4Ps activities to influence its target buyers In brief, product means the totality of 'goods and services' that the company offers the target market Price is what customers pay to get the product Place includes company activities that make the product available to target consumers Promotion means activities that communicate the merits of the product and persuade target customers to buy it Each marketing tool must deliver a customer benefit One marketing expert suggests that companies should view the four Ps as the customer's four Cs: Table 2.1 Four marketing mix at consumer point of view

Communication

(Source: Philip Kotler, marketing theory, p.111)

2.1.3 Internet marketing mix:

Given the potential implications of internet on marketing mix, theory of internet marketing extents key elements of the marketing mix to 7Ps (2006, Internet marketing Third Edition, Prentice Hall, p.215) By which, the selection of the marketing mix is developed base on detailed knowledge of buyer behavior collected through market research The mix is modified

to suit with online target customers as below described:

2.1.3.1 Product:

The product element of the marketing mix refers to characteristics of a product, service or

brand Product decisions are informed by market research where customers‟ needs are

assessed and the feedback is used to modify existing products or develop new products

When a company is developing its online strategy, there are many alternatives for varying the product in the online context Internet-related product decisions can be usefully divided into decisions affecting the core product and the extended product The core product refers to the main product purchased by the consumer to fulfill their needs, while the extended or augmented product refers to additional services and benefits that are built around the core of the product

The main implications of the Internet for the product aspect of the mix are:

(1) Options for varying the core product: provide enough information to consumers about core product to stimulate their purchase

(2) Options for changing the extended product: find opportunity to add in services for online customers

(3) Conducting research online: explore the need of consumers through online research

(4) Velocity of new product development: new product testing through internet channel

(5) Velocity of new product diffusion: create world-of-mouth about the products to push sales

2.1.3.2 Price:

The price variable of the marketing mix refers to an organization‟s pricing policies which are

used to define pricing models and to set prices for products and services Baker et al (2000) noted two approaches that have been commonly adopted for pricing on the Internet: start-up companies have tended to use low prices to gain a customer base, while many existing companies have transferred their existing prices to the web Other existing companies have used differential pricing with lower prices for some of their products online

The pricing element mix will often relate to the product element since online pricing depends

on the range of products offered Extending the product range may allow these products to be discounted online However, company must consider its online service level before setting pricing strategy Offering very low prices may lead to low level of customer service while it may not be acceptable for customers who have poor support and a bad experience may stop them using the service again Company must think about establishing its brand through products and quality of service rather than having the lowest prices The main implications of the Internet for the price aspect of the mix are:

(1) Increased price transparency and its implications on differential pricing;

(2) Downward pressure on price (including commoditization);

(3) New pricing approaches (including dynamic pricing and auctions);

(4) Alternative pricing structure or policies

2.1.3.3 Place:

The place element of the marketing mix refers to how the product is distributed to customers Typically, for offline channels, the aim of Place is to maximize the reach of distribution to achieve widespread availability of products while minimizing the costs of inventory, transport and storage In an online context, thanks to ease of navigating from one site to another through

the humble hyperlink, the scope of „Place‟ is less clear since Place also relates to Promotion

and Partnerships Successful retailers are those that maximize their representation or visibility

on third-party sites which are used by their target audiences These third-party sites will include search engines, online portals about mobile phones and product comparison sites When considering Place and Promotion, it is important to target both the head and the tail to maximize reach and to attract quality visitors to the destination site The main implications of the Internet for the Place aspect of the mix are:

(1) Place of purchase: to achieving competitive advantage online, Evans and Wurster (1999)

have argued that there are three aspects of „navigational advantage‟ relate to the Place

elements of the mix:

Reach: it refers to the range of products and services that can be offered since this will

increase the number of people the company can appeal to Reach can be increased by moving from a single site to representation with a large number of different intermediaries

Richness: this is the depth or detail of information which is both collected about the customer

and provided to the customer The latter is related to the richness of product information and how well it can be personalized to be relevant to the individual needs

Affiliation: This refers to whose interest the selling organization represents – consumers or

suppliers – and stresses the importance of forming the right partnerships This particularly

be evaluated for suitability for partnering with for affiliate arrangements

(c) Countermediation Should the organization partner with another independent intermediary, or set up its own independent intermediary?

The distribution channel will also be affected For instance, grocery retailers have had to

identify the best strategy for picking customers‟ goods prior to home delivery Options include

in-store picking (selection of items on customer orders) and regional picking centers The former is proving more cost-effective

(3) Channel conflicts: A significant threat arising from the introduction of an Internet channel

is that while disintermediation gives a company the opportunity to sell direct and increase profitability on products, it can also threaten distribution arrangements with existing partners

To avoid channel conflicts, the appropriate combination of channels must be arrived at Internet channel strategy will depend on the existing arrangements for the market If a geographical market is new and there are no existing agents or distributors, there is unlikely to

be channel conflict in that there is a choice of distribution through the Internet only or appointments of new agents to support Internet sales, or a combination of the two Often SMEs will attempt to use the Internet to sell products without appointing agents, but this strategy will only be possible for retail products that need limited pre-sales and after-sales support For existing geographical markets in which a company already has a mechanism for distribution in the form of agents and distributors, the situation is more complex, and there is the threat of channel conflict

2.1.3.4 Promotion:

The promotion element of the marketing mix refers to how marketing communications are used to inform customers and other stakeholders about an organization and its products

communicating to target audiences the components of the marketing program in order to

facilitate exchange”

The main elements of the promotional or communications mix can be considered to be (as stated by, for example, Fill (2000):

2.1.3.5 People, Process and Physical evidence:

The people element of the marketing mix refers to how an organization‟s staffs interact with

customers and other stakeholders during sales and pre- and post-sales communications with them

The Process is an element of the marketing mix referring to the methods and procedures companies use to achieve all marketing functions such as new product development, promotion, sales and customer service

The Physical evidence refers to the tangible expression of a product and how it is purchased

and used In an online context, „physical evidence‟ refers to the customers‟ experience of the

company through the web site It includes issues such as site ease of use or navigation, availability and performance

Target consumers are at the centre of the marketing strategy Without understanding consumer behavior, why and how they select the selling product, company cannot develop suitable

marketing programs to win consumer‟s heart and sale products In order words, marketing mix

strategy must be built on insights of consumer needs and wants in order to win over its competitors

2.2 UNDERSTANDING CONSUMER BEHAVIOR

Consumer is a key of all marketing decisions, without consumer business cannot survive Understand consumer behaviors and motivations make company first to get attention of them then convince them to purchase products by satisfying their needs When making a decision of buy or not buy a product, consumers often affect by many factors, internal and external; In marketing theory of professor Jean-Pierre BAEYENS, consumers often forms their behaviors based on two groups: personal black box and external incentives

2.2.1 Factors affect consumer behavior

2.2.1.1 Personal black box:

(1) Geographic factors: Consumer behavior affect where they live or where they grow up; for instance, people living in the country sides will act differently with people living in the cities when they purchase products Language, or cultures are few of many geographic factors change consumer behavior in some cases

(2) Demographic factors: Age and sex are two top key demographic factors influence consumer behavior In every family life cycle, such as: pre-marriage, newly wedding couple, small kids, family with teenagers or young adults, kids gone, consumer are recorded to have a different behave Pre-marriage persons tend to spend their full income for personal needs which totally different when they have kids to take care to Another factor is family situation (Traditional family, Dinks, Left alone couple, Divorced couples, and multi-branches families)

(3) Socio-economical factors: Without income, consumers can not purchase products The way consumer earns money will reflect the way they spend it There are several type of income are gross income, disposable income, net income, assets, financial assets (real estate, equipment goods), access to credit, credit for investment, credit for consumption

(credit cards)…

Also affect on behavior is level education of consumer (high school, bachelor, MBA

education degree …) or their occupation (full time, part time, women at home, students, unemployed, retired…) …

(4) Psychological factors:

Abraham Maslow is a well-known theory help explain why people are driven by particular needs and times The order of important based on Maslow's hierarchy of needs is shown in

the table below At the basic need level, breathing, food, water, sleep… are the most

import things consumer look for Later to higher of the ladder, to be safe, love or belonging, to be recognized (or esteem) and highest level is self-actualization In order words, each person tries to satisfy the most important need first When that important need

is satisfied, it will stop being a motivator and the person will then try to satisfy the next most important need

2.2.1.2 External incentives:

Besides of internal factors establishing consumer needs and wants about products, external factors also play an important role stimulating consumers choose or not choose the products

Figure 2.2: Maslow hierarchy of needs

Source: copy from internet

that they may decide earlier Those external factors called external incentives which can be structured in the detail:

* Socio-cultural environment: culture, sub-culture, family or social classes and all persons whose consumers contact or living in will build up their idea, value or attitudes about the products or services

* Mega trends: a group of people act similarly will create a norm and then the other will follow that norm to make it a trend In Asia, the recent mega trend collected from in marketing

theory of professor Baeyens are “ Individualism and freedom to live one‟s own life”,

“consumption as expression of freedom”, “Prestige as symbol of self success”… and so on

* Media exposure, models of behavior, marketing & communication stimuli such as

activation, pos material, sampling,…also make a change of consumer when they look for a

product or services

2.2.2 Consumer decision process

The consumer's choice results from the complex interplay of cultural, social, personal and psychological factors Although the marketer cannot influence many of these factors, they can

be useful in identifying interested buyers and in shaping products and appeals to serve this needs better

2.2.2.1 Type of buying behavior

There are 4 types of consumer buying behavior depend on problem solving of that product, product cost, search effort, time spent, brand reference

Complex buying behavior: Consumer buying behavior in situations characterized by high

consumer involvement in a purchase and significant perceived differences among brands

Dissonance- reducing buying behavior Consumer buying behavior in situations

characterized by high involvement but few perceived differences among brands

Habitual buying behavior: Consumer buying behavior in situations characterized by low

consumer involvement and few significant perceived brand differences

Variety-seeking buying behavior: Consumer buying behavior in situations characterized

by low consumer involvement, but significant perceived brand differences

2.2.2.2 The Buyer Decision Process

In order to understand consumer behavior, the research need to be conducted in great detail to find the answers on what consumers buy, where they buy, how and how much they buy, when they buy and why they buy But learning about the whys of consumer buying behavior and the buying decision process is not easy - the following stages are entire consumer decision process that consumers pass through to the final decision on buy or not buy a product: need recognition, information search, and evaluation of alternatives, purchase decision and post-

purchase behavior Below is detailed of 5 stages of consumer decision process:

(1) Need recognition: The first stage of the buyer decision process in which the consumer

recognizes a problem or need

(2) Information search: The stage of the buyer decision process in which the consumer is

aroused to search for more information; the consumer may simply have heightened attention or may go into active information search

The consumer can obtain information from any of several sources:

• Personal sources: family, friends, neighbours, acquaintances

• Commercial sources: advertising, salespeople, dealers, packaging, displays

• Public sources: mass media, consumer-rating organizations

• Experiential sources: handling, examining, using the product

(3) Alternative evaluation: The stage of the buyer decision process in which the consumer

uses information to evaluate alternative brands in the choice set

(4) Purchase decision: The stage of the buyer decision process in which consumer actually

purchases the product

In the evaluation stage, the consumer ranks brands and forms purchase intentions Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors, that may affect consumer decision in the last minutes Those two factors are attitudes of others and unexpected situational factors (for instance: expected family income, expected price and

expected benefits from the product…)

A consumer's decision to change, postpone or avoid a purchase decision is influenced heavily

by perceived risk Many purchases involve some risk taking The amount of perceived risk varies with the amount of money at stake, the amount of purchase uncertainty and the amount

of consumer self-confidence A consumer takes certain actions to reduce risk, such as avoiding purchase decisions, gathering more information and looking for national brand names and products with warranties Understand the factors that provoke feelings of risk in consumers, providing information can be a right way to reduce the perceived risk at consumers

(5) Post-purchase behavior: The stage of the buyer decision, process in which consumers take further action after purchase based on their satisfaction or satisfaction

2.2.3 Consumer decision process for new products or services

A new product is a good, service or idea that is perceived by some potential customers as new

It may have been around for a while, but our interest is in how consumers learn about products for the first time and make decisions on whether to adopt them The adoption process as "the mental process through which an individual passes from first learning about an innovation to

final adoption' and adoption as the decision by an individual to become a regular user of the product

Stages in the Adoption Process

Consumers go through five stages in the process of adopting a new product:

1 Awareness The consumer becomes aware of the new product, but lacks information about

it

2 Interest The consumer seeks information about the new product

3 Evaluation The consumer considers whether trying the new product makes sense

4 Trial The consumer tries the new product on a small scale to improve his or her estimate of its value

5 Adoption The consumer decides to make full and regular use of the new product

This model will help to develop activities to encourage consumers move through these stages

Individual Differences in Innovativeness

People differ greatly in their readiness to try new products In each product area, there are 'consumption pioneers' and early adopters After a slow start, an increasing number of people adopt the new product The number of adopters reaches a peak and then drops off as fewer non-adopters remain The five adopter groups have differing values

Innovators are adventurous: they try new ideas at some risk

Early adopters are guided by respect: they are opinion leaders in their community and adopt new ideas early but carefully

The early majority is deliberate: although they are rarely leaders, they adopt new ideas before the average person

The late majority is skeptical: they adopt an innovation only after most people have tried it

Finally, laggards are tradition hound: they are suspicious of changes and adopt the innovation only when it has become something of a tradition itself

This adopter classification suggests that an innovating firm should research the characteristics

of innovators and early adopters and should direct marketing efforts to them

In general, innovators tend to be relatively younger, better educated and higher in income than later adopters and non-adopters They are more receptive to unfamiliar things, rely more on their own values and judgment, and are more willing to take risks They are low brand loyal and more likely to take advantage of special promotions such as discounts, coupons and samples

CHAPTER III:

FASHION JEWELRY MARKET,

INTERNET CHANNEL LANDSCAPE, AND JEMMA INTRODUCTION

3.1 FASHION JEWELRY MARKET

1 Definition of fashion jewelry

2 World fashion jewelry industry

3 Fashion jewelry in Vietnam

4 Vietnam internet market opportunity

3.2 JEMMA INTRODUCTION

1 Jemma business overview

2 Business objectives

3 Brand propositioning

4 Marketing mix strategy

5 Jemma SWOT analysis

3.1 FASHION JEWELRY MARKET

3.1.1 Definition of fashion jewelry

Fashion jewelry (also called costume jewelry, junk jewelry, fake jewelry, or fallalery) is jewelry manufactured as ornamentation to complement a particular fashionable costume or garment Costume jewelry came into being in the 1930s as a cheap, disposable accessory meant to be worn with a specific outfit It was intended to be fashionable for a short period of time, outdate itself, and then be repurchased to fit with a new outfit or new fashion style Its main use is in fashion, as opposed to "real" (fine) jewelry which may be regarded primarily as

collectibles, keepsakes, or investments Costume jewelry is made of less valuable materials including base metals, glass, plastic, and synthetic stones; in place of more valuable materials such as precious metals and gems (Source: Wikipedia)

3.1.2 World fashion jewelry industry

According to fashion jewelry web report, the Jewelry industry can be named as a global industry due to its international supply chain process, begin with raw materials obtained from many countries like Australia, Africa, Russia and Canada, then be manufactured in China, India, Italy and Turkey to supply for the largest retail markets of jewelry selling to large number of consumers around the world living in USA, Europe, Far East, Middle East and Asia The various products produced by this industry can be categorized as bracelets, brooch, earrings, necklaces, chokers, bangles, finger rings, toe rings, anklets, pendants etc The materials used in manufacturing these jewelry pieces include semi-precious stones, beads,

ivory, lace, leather, terracotta,

plastic and pearl Metals like Silver,

aluminum, brass, etc are generally

used in its manufacturing New

variations of jewelry have also

come up in the form of costume

jewelry, designer jewelry, imitation

jewelry, etc which are more stylish

and trendy than the original

gemstone jewelry

Global Trade Volume and

Trends

The size of the global fashion

jewelry industry was approximately 146 billion US dollars by the end of the year 2006 Since

2000 this industry has been growing at an average compounded annual growth rate (CAGR)

of 5.2% Figure 3.1 shows the rapid growth of jewelry industry; make it become one of the most important industries in the world

Among all types of jewelry, the designer jewelry is the largest segment of the industry with an approximate growth rate of US$ 69 billion and a CAGR (Compounded Annual Growth Rate)

of 5% over the last 6 years The second biggest is the plain costume jewelry segment counted for 60.7 billion US$ of the total retail sale The gold jewelry segment has shown the fastest growth rate of 5.5% mainly due to a steep rise in the prices of gold

Major Consumers and Market Share

USA is the largest market for fashion jewelry and had a share of 31% of the total global fashion jewelry sales in the 2006 The other important markets are China, India, Japan,

Figure 3.1: Global fashion jewelry sales (2001-2006), USD billion

(Source: global fashion jewelry industry – www.fashionproducts.com)

Middle East, Italy, United Kingdom and Turkey India and China have shown a great rise in sales during the past five years

Industry Challenges

Many social and economic forces are leading to a transformation in the fashion jewelry industry Some of the factors hindering the growth of the fashion jewelry industry in the world are:

Great competition among the countries where polishing takes place led to a shortage in the

supply of polished semi-precious stone and thereby creating a shortage for manufacturers

of finished jewelry and thus the whole supply chain is affected

Changing fashion trends and increased consciousness of the consumers has resulted in

competition among the major manufacturing nations, and also shifting of the industry to low labor cost countries

Retailing sector has also been affected due to competition from other luxury goods,

declining investment in the sector (largely in the developed economies) and increasing consumer sophistication

Figure 3.2: Geographic share of the global fashion jewelry consumption Figure 3.3: Market Trends in 2006

(Source: global fashion jewelry industry – www.fashionproducts.com)

Future Prospects

The recent trend shows the replacement of precious stones to substitutes of precious stones such as synthetic diamonds and non-precious metals The plain gold jewelry sales therefore will continue decline and China and India will emerge as large retail markets As of the above recent changes, global jewelry industry growth is projected as following:

Market growth will be slow down in

value due to the fashion jewelry

replace gold Global fashion jewelry

sales is estimated to grow at 4.6%

annually which equal to approximate

US $ 185 billion by 2010 and US $

230 billion in 2015 China and India

together will emerge as the same size

as the US market in 2015

The CAGR of global fashion jewelry

fabrication is estimated to be 5.1%

by 2015 Again, China and India will

be the new centers for jewelry

fabrication

Pressure on lowering margins and high investment on gold jewelry benefit to grow the

fashion jewelry industry

3.1.3 Fashion jewelry in Vietnam:

As similar to other Asian countries, jewelry made from gold and precious stones still play an important role in most of Vietnamese consumers It values in both reasons: jewelry and cash conversion However, the trend moving toward to fashion jewelry start appear among the young generation

Figure 3.4: Projected global fashion jewelry sales (2010,2015), USD billion

(Source: global fashion jewelry industry from www.fashionproducts.com) :

Due to emerging price increase of gold material, real jewelry becomes too expensive to consumers, especially young people Besides, many local jewelry manufacturers activate fashion jewelry trend to enlarge market size as well as to balance the decrease of gold jewelry market demand Based on jewelry manufacturer reports, fashion jewelry contributes approximately 1 percent to 5 percent of total gold and jewelry market value, and the market is still a white space if compare with 83 billion Vietnamese population

Key market players

Fashion jewelry first introduced to Vietnamese consumers through gifts from their oversea

relatives, such as US, French or Italy… Lately, adopting Korean movie stars dressing style …

To serve consumer different needs, most of fashion brands copied or named French, Italy or Korea origin, as well as fashion jewelry Fashion jewelry market can be structured into 2 major groups: materials (precious, semi-precious, natural and other materials), price (luxury, premium, mass) or country of origin (local, imported)

Table 3.1: Fashion jewelry market structured by pricing and material of products

Premium price

Thomas Sabo (imported)

Medium

(from 500 thousands vnd to

Mass

Trangsucbac.com Nicole

Zaa, Diva

Ba Hat De

“cho dem”) Handmade products…

Sterling silver and stone Others

Most of the above companies are Vietnamese brands targeted to local consumers The other

imported brands, such as: Accessorizes, Thomas Sabo… operate business under franchise or

agent format

In overall, fashion jewelry market is at early adopt stage while competition start with plenty of brands, yet clearly define a leader brand, and differentiate by pricing segmentation

Challenges to local jewelry brands

Fashion jewelry in Vietnam is a new born market which covers both growing size opportunity

as well as challenges to make local companies to success in the long-term The four key challenges have been identified as following:

Design: a key success factor of fashion jewelry is design of product which Vietnam local

brands are lack of They often copy from others or share resource with fine jewelry industry that limit a growth opportunity of local brands in the long term

Technique: fashion jewelry requires special machines to produce high quality products

With a small market consumption, Vietnam local brands could not afford a modern production system to compete with international brands

Price: Being a neighbor of China, Thailand, the world fashion jewelry manufacturers, who

can easily export to Vietnam at a very competitive price thanks to their mass production and bilateral trade regulation after world trade organization agreement

Marketing activities: due to low market base, the profit generated from sales does not

enough to support for a heavy marketing campaign That is the reason local companies only focus on below the line marketing activities rather than a full marketing campaign to massively gain brand awareness from consumers

3.1.4 Vietnam internet market opportunity:

World internet market is huge Based on internet marketing trend report conducted by the

products over the internet that is much higher than the rate of 40 percent in the last two years Half of them regularly make online purchase one a month

In Vietnam, internet shopping has been applied in most of market industries; for instance,

home electricity, mobile phone, books, banking, or booking air tickets…; however, most of

websites use for online marketing rather than a channel for shopping Majority local online shopping websites are impulsive established or online web markets (raovat.com, chodientu.com, 123.mua ) but lack of professional marketing development to build them a long-term distribution channel

To evaluate internet opportunity, the PESTL analysis can help with an overview about Vietnam internet market as following:

Social factors:

Though having no official consumer behavior research, the obstacles prevent internet shopping develop in Vietnam could not be out of the findings from OECD about European consumers; they highlighted that 50 percent of consumer complaints extracted from Europe Consumer Center relating to purchasing online activities Delivery problems, products did not

meet speculation as described online, etc… were recorded of 75 percent of the complaints

Language, delivery fee, online different regulations and afraid of cheating are barriers to internet business development Those concerns could lead to purchase items mostly for products having low risk of delivery transaction; books are the most purchased items (see figure 3.5)

However, the trend recently shows Clothing, Accessories and Shoes the fastest growth compare to year 2005 Report of Nielsen about the growth of product purchased online of