Organizing marketing activities for Vietnamese-Owned automobile assemblers in the present development process of Vietnamese economy

ĐỖ VIẾT DƯƠNG ORGANIZING MARKETING ACTIVITIES FOR VIETNAMESE-OWNED AUTOMOBILE ASSEMBLERS IN THE PRESENT DEVELOPMENT PROCESS OF VIETNAMESE ECONOMY LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

ĐỖ VIẾT DƯƠNG

ORGANIZING MARKETING ACTIVITIES FOR VIETNAMESE-OWNED AUTOMOBILE ASSEMBLERS IN THE PRESENT DEVELOPMENT PROCESS OF VIETNAMESE

ECONOMY

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS Nguyễn Ngọc Anh Th.S Nguyễn Việt Anh

ĐỖ VIẾT DƯƠNG

ORGANIZING MARKETING ACTIVITIES FOR VIETNAMESE-OWNED AUTOMOBILE ASSEMBLERS IN THE PRESENT DEVELOPMENT PROCESS OF VIETNAMESE

ECONOMY

Chuyên ngành: Quản trị kinh doanh

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS Nguyễn Ngọc Anh Th.S Nguyễn Việt Anh

TABLE OF CONTENTS

Abstract……….……… …… i

Tóm tắt: iii

Acknowledgments……….……….v

Abbreviation & Acronyms ……… vi

Table of contents……… vii

Introduction 1

Chapter 1: Literature review 5

1.1 Marketing definition and its basic concepts 5

1.1.1 Definition of Automobile marketing 5

1.1.2 Fundamental concepts 5

1.1.3 The development process of automobile marketing 7

1.1.4 Distinguishing marketing orientation and non-marketing orientation company 10

1.2 Environmental marketing of VAAs in the market economic conditions 12

1.2.1 Macro-Environment factors 12

1.2.2 Integrated factors for successful marketing of VAAs 14

1.2.3 Creating value, satisfaction, conserving customer in VAAs 14

1.3 Ascertaining the marketing activities contents for VAAs 22

1.3.1 Models and marketing management contents for VAAs in currently market 22

1.3.2 The necessary and principles to evaluate the rational organizing marketing activities in VAAs 34

Conclusion: 35

Chapter 2 : Current status of organizing marketing activities of

automobile assemblers in Vietnam 36

2.1 The development process of Vietnamese automobile industry 36

2.1.1 Introduction 36

2.1.2 Characteristics 38

2.1.3 Vietnam Automobile Manufacturers Association (VAMA) 38

2.2 Market status review 40

2.2.1 Automobile market analysis 40

2.3 Current status of organizing marketing activities of local automobile assemblers in Vietnam 46

2.3.1 Marketing in Vietnam and Marketing in automobile industry 46

2.3.2 Appraising the marketing activities of FAAs 47

2.3.3 Appraising the marketing activities of VAAs 62

Conclusion 71

Chapter 3: Solutions for improving marketing activities in VAAs 72

3.1.1 The changes in Macro-Environment and opportunities, challenges for local Vietnam automobile assemblers 72

3.1.2 The Vietnamese automotive market forecasting by 2010 77

3.2 Development orientation of Government for automobile industry in period (2005-2010) and overview 2020 78

3.3 Recommendations for improving the organizing marketing activities for Vietnamese-owned automobile assemblers 83

3.3.1 Improving the marketing research, marketing analysis and building marketing information system for VAAs 83

3.3.2 Improving the organizing target marketing for VAAs 88

3.3.3 Improving the organizing marketing mix for VAAs 89

3.3.4 Improving the organizing marketing resources of VAAs 96

3.4 The requests for government policies 98

3.4.1 Improving legally environment 98

3.4.2 Improving Infrastructure and Motorization 98

3.4.3 Improving state management for auto industry 99

3.5 The requests for VAAs 101

3.5.1 Sales and distribution 101

3.5.2 After-sales service 102

Conclusion 102

Conclusion 104 References

Appendix

Abbreviation & Acronyms

ASEAN : Association of Southeast Asian nations

CEPT : Common Effective Preferential Tariff

FAAs : Foreign – Owned Automobile Assemblers

GDP : Gross Domestic Product

LAVVs : Local Vietnamese Automobile Assemblers

MIS : Marketing Information System

R&D : Research and Development

SCT : Special Consumption Tax

SOEs : State-Owned Enterprises

USA : United States of America

VAAs : Vietnamese-Owned Automobile Assemblers

VAMA : Vietnam Automobile manufacturers’ Association

VNPT : Vietnam Posts and Telecommunications Corporation

List of Tables

Chapter 1

Table:

1.1 Types of marketing control……… 33

Chapter 2 Table: 2.1 VAMA’s members list……… ….…39

2.2 Evaluation from customer about marketing activities of FAAs …47

2.3 Compare price ……….……….……….52

2.4 Number of authorized dealers for each auto makers……… 55

2.5 Evaluating for marketing management of FAAs ……… ………55

2.6 Evaluation from customer about marketing activites of VAAs………62

2.7 List if Vechicle models and agency number of VAAs……… 64

2.8 Evaluating for marketing management of FAAs ……… ………67

Chapter 3 Table: 3.1 Remarkable achievements in economic growth and macro-economic (2001-2005)……… ………75

3.2 Automobile output plan in 2005, 2010 and 2020……… 79

3.3 Balancing ability, demand and supplementing automobile output up to 2010……… ………80

3.4 Segment by models……… ……….88

List of Figures

Chapter 1

Figure:

1.1 Steps of building plan according to non-marketing orientation………10

1.2 The building process of plan according to marketing orientation.… 11

1.3 Customer’s satisfaction, customer loyalty, value added for customer.15 1.4 Porter's Generic Value Chain……….……… 17

1.5 The Value System……… 21

1.6 SWOT analysis fits into a strategic situation analysis……… 24

1.7 Steps in segmentation process, market positioning……… … 25

1.8 Marketing mix and target marke………… ……… … 27

Chapter 2 Figure: 2.1 Sales of automobile volume by years .42

2.2 Sales record by months up to October, 2005 42

2.3 Market share in 2005 and 2006 ……… ……… 43

2.4 Perceived quality of automotive brands ……… …….50

2.5 Customer’s opinion of service satisfaction ……… … 50

2.6 Price competitive advantage……… ……… 53

Chapter 3 Figure: 3.1 Forecasting the automobile market demand in period 2005-2010 … 77

3.2 SWOT analysis model…… ……… … 85

3.3 MIS model for VAAs……… ……… … 86

3.4 Positioning by Auto Brands ……… ………….….89

INTRODUCTION

1 Necessary of the thesis

The development orientation of Government is building the development automobile industry so that by 2020, it becomes a key industry

of the country, capable of meeting the highest demand of local market and joining regional and international market

From the customers expectation that Vietnam will has the developed automobile market and both model quality, supporting services and information of them In addition, with more than 80 million of population, but scale of automobile market vary small, total sales of VAMA highest in

2003 is 42,556 vehicles, 2004 (40,141) and ten months of 2005 only achieved 28,381 vehicles, thus it is not symmetrical The knowledge of customers about the domestic car is very poor, now they are favor import car than domestic one So it is a reason for less development of Vietnamese automotive industry

From the inefficiently operation of FAAs and we have some new Vietnamese owned automobile firm join to this market currently, also they have poor marketing activities both in structure and contents so they did not gained the high attention of customer even in awareness

They will face the pressure from the integrated of economy, especially

in given the deadline for AFTA commitment and pending WTO entry, Vietnam has not much time left to promote the localization program while few protectionist policies can be implemented

Thus the scope of thesis I would like to study and propose some new

model of organizing marketing activities for VAAs in currently and for next period To build Vietnamese brand name and gain more and more in sale and market share and become the big automobile corporation in Vietnam

2 Objective of the research

To systematize the basis marketing theory in automobile industry, research and establish the basis contents of marketing activities for VAAs now, figure out the role of marketing activities in auto development process

in current Vietnamese automotive market

To quantitative the result of marketing activities of FAAs and VAAs achievements, and identify the successes, weaknesses and find the main reasons to improving

And then, suggest applied solutions to improving the organizing strategic marketing for Vietnamese automotive industry up to 2010 and overview 2020, together submit some requests to government to create favor environment for these model developing

3 Key research area

- Object of study: The organizing marketing activities in automobile industry in generally, and especially in member of VAMA The main contents are including organizing the marketing activities and organizing marketing resources of above object

- Research area: Automobile assemblers in Hanoi area limited

4 Methodology

The methodology gives us the guidelines for how we should gather information for our research and work with it

- Research problem;

With the research areas of “Current Vietnamese automotive marketing activities” thus and then figure out the improving marketing activities solution and submit some requests to government to support this sector

- Research objective:

Out research purpose is descriptive and analysis the Vietnamese automotive market and its current marketing activities of FAAs & VAAs in the future to build develop automobile industry and improving it’s more competitive in the integrated of Vietnamese economy

- Research method:

The research approach is qualitative study that helps us deeper understanding of how important of marketing activities impacts to automobile industry We also use quantitative method to choose the sample size of 100 customers to understand their need is what will they be got from marketing activities of FAAs & VAAs also evaluate how satisfy of them for current Vietnamese automotive industry for both products and supporting services

- Data collection;

The choice of a data collection method is a critical point research process

5 Contributions of the thesis

With the purpose to analyze the current Vietnamese automotive marketing activities in the market the thesis has contributed some new contributions as follow:

- Analyzing the status of marketing activities in FAAs, concurrently evaluating the successes and weaknesses, identify the reasons that FAAs

must focus on marketing activities for next period

- A comprehensive realize of role, position, function of marketing in automobile industry, clarify the natural of objective environment factors impact to marketing activities, thence ascertain the basis request for a marketing program to premises for applying in VAAs

- Establishing the detail content and implemented model of marketing activities in order to the development trend of automobile industry in the near future Also, systematize and develop the theory of marketing in VAAs in Vietnam now

6 Thesis structure

Beside introduction and conclusion, the thesis consists 3 chapters:

Chapter1: Literature review is given to providing theories relevant for

automobile marketing activities area

Chapter 2: Current status of organizing marketing activities in FAAs

Chapter 3

Solutions for Improving

CHAPTER 1 LITERATURE REVIEW 1.1 Marketing definition and its basic concepts

1.1.1 Definition of Automobile marketing

Macro: Automobile marketing is a structure of organizational system supply chain of Auto products and its support service to satisfy expect and demand of customers in the definitive of society-economic system

Micro: Automobile marketing is the marketing activities system of automobile manufacturers, auto-distributors, and others marketing organization It is marketing activities system of profit organization and non-profit organization, automobile marketing is understood specially that

it is the control function of auto-manufacturers, the planning, managing marketing project, price, distribution system, products, services and PR, advertising< to create the exchange to satisfy for personality and organizational objectives

1.1.2 Fundamental concepts

1.1.2.1 Concept and differentiation between demand and expectation

The difference between “demand” and “expectation” is always getting more attention of marketing in the automobile industry In the facts, what are the customers want maybe it is not their need Demand is defined that “the deficient impression for something but we are can feeling” and demand are wants for specific products backed by an ability to pay and it can be satisfied by marketing activities system of automobile manufacturers Expectation is defined that “wish for or aspiration for something”

1.1.2.2 Market demand

Demands, expectation we have just defined above were make clearly about products, services to satisfy those demands and expectation So market demand is the attraction, attention, buying, using or consumption for products or services that will satisfy the expectation and market demands

1.1.2.3 Determine customer and customer satisfaction

Whether the buyer is satisfied after purchase depends on the offer’s performances in relation to the buyer’s expectations In general, satisfaction

is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her expectations

1.1.2.4 Exchange and transactions

Exchange: This is the core concept of marketing, “is the process of obtaining a desired product from someone by offering something in return” The concept of exchange is including some conditions potential to exist, and basis for marketing activities later First, there are at least two parties have demand were not satisfy One party maybe the customer are looking for or desire for an automobile, auto-service or any information related And other

is the party also looking for customers or providing auto-products Second, demand or capability of one party can meet the demand Third, both parties must have something to exchange

Transactions: is a trade of value between two or more parties, it involves trading goods or services for other goods or services or popular is the trading goods or service for money And it also involves several

dimensions: at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement

1.1.2.5 Trading

Trading is the personal or organizational activities in co-relationship with market, it holds that the key to achieving their goals or organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to is chosen target markets For example: automobile manufacturer want to sell its products they must through market to find or get in touch with customers Thus, the basis concepts of marketing activities are creating products, integrated market, building business relation, distribution, setting price, and offer services

1.1.3 The development process of automobile marketing

In the traditional business, automobile marketing field has old history

of operation so the marketing activities are appear very soon in the world

1.1.3.1 Production oriented period:

To understanding how automobile marketing develop, we will study the case of famous auto company: Ford Motor Corporation, the second biggest auto manufacturer in the world

Ford Motor Corporation, headquarter office in Detroit, chief city of

US automobile manufacturing industry, and it has been produced automobile since eighteen century At that time, the most important objective of company is the producing automobile with high quality So that the revenue they have and customer habit they get depend on the quality of automobile which Ford was produced

That status also happened with other famous auto manufacturers in the world They have just only focused on producing cars with quality but have not understand what are their customers wants or expects for their products and desires for their support service

1.1.3.2 Sales oriented period

As other traditional enterprises, production oriented period well operated until the end of eighteen century, early of 19th century But in the 1920s, car was becoming indispensable of the life in the developed countries

At that time, customers were more flexible, more active, and market was not focus as before Thus, for almost company, they changed strategy by organized or hired big mobile sales teams Competition is expressed by capability of building mobile sales teams And auto manufacturers were not exceptionable, such as: Ford had been changed their strategy by building mobile sales teams and in whole US and expending their showroom system

1.1.3.3 Marketing period

Marketing oriented period beginning after World War II, in the en of 1940s, many companies recognized that they were the technology development epoch and have been started with restructuring their economy after war In addition, the consumption has recovered by increasing the demand for goods and services For many organizations, one of the most important question that what product or service they should provide at that time? As new awareness, customers were who oriented for producing process and distributed resources for the firms

Hence, automobile manufacture industry was also like others business field, a same orientation was development follow marketing

oriented Automobile manufacturers may provide big amount of car by mobilized, distributed resources and restructured producing process What the changes of this period through marketing oriented concept The marketing orientation were expressed through oriented for developing the range of cars and supporting services including: marketing service, sales service, advertising, PR, maintenance service, repair and other promotion service after sales<This development orientation combine with the distribution systems has met the market demand and satisfied their customer

1.1.3.4 The marketing culture period

Some companies have achieved the advanced marketing level when their marketing activities become to a part of corporate culture and distracted through all level department of corporate And the marketing activities now is not only tasks for marketing department, it is effort of all person in the company

In this period customer are center for all their activities Automobile manufacturers and supplier also recognized that customers are center for all their activities

In this period: the marketing oriented concept is evaluated by follow factors:

- Customer oriented: understanding and thoughtful of target customers for providing surpassing service for customer

- Competition oriented: define the competitors (Current and potential) and analysis their strengths, weaknesses and strategy

- Diagonal function integrated: integrating and promoting resources

of company focus on creating the value for customer

- Strategic management oriented: finding solution for promoting value by right investment and suitable

- Profit: having revenue enough to compensate for long -run expense and satisfy stockholders

- Public oriented: Concentrate on serving long-run benefits of customers and society

1.1.4 Distinguishing marketing orientation and non-marketing orientation company

Nowadays, whereas most of automobile manufacturers operate base

on customer oriented and effort to widen marketing orientation through out all departments of firm, but in some companies also have the non-marketing orientation exist on long-run planning So to understand clearly two concepts above we can distinguish by building long-run planning process as follow:

1.1.4.1 Non-marketing orientation

The figure 1.1 as follow describes the steps of building long-run planning process in the non-marketing orientation company:

Figure 1.1: Steps of building plan according to non-marketing orientation

1 Identify mission and objective

2 Forming Strategy

3 Implementation

In the past, manufacturing car and providing services of VAAs are usually unprompted, they are all provided depend on the plan which the government was assigned In generally, the first step is identifying the mission and objective of the firm And then the second step of this process is building the strategy, this step is very difficult and take more time than others Next, the step of applying the strategy that more difficult Because of the firm can not know that strategy is favored by customers or not?

1.1.4.2 Marketing orientation

The building plan process according to marketing orientation

completely differentiated with non-marketing orientation as described in follow model 1.2:

Figure 1.2: The building process of plan according to marketing

orientation

The first step of both models are the same, for every company must define the clearly their mission and objective The differentiation appears from second step, when the market demand is evaluated as the factor effect

Identify Mission and objective

Define requests for advanced different

Evaluate market demand

Building strategy

Test

Implementation

Marketing

to activities of company: what model of car is favored by customer currently, what service is now successful, and how many potential customers in the future?

1.2 Environmental marketing of VAAs in the market economic conditions

1.2.1 Macro-Environment factors

As however, every marketing strategy has impacted by environment factors, they are mainly including: political and policy, economic, social, technological, and competitiveness factors In basically, those factors are uncontrolled but they effect to marketing strategy Base on macro-environment analysis the automobile manufacturers will find out the convenient strategy to serving customer and improving position in the market We will analyze each of factors as follow:

macro-1.2.1.1 Political and policy factors

This factors include the requests, mechanism with legally and this factor may analyze base on: political stability, risk of military invasion, legal framework for contract enforcement, intellectual property protection, trade regulations & tariffs, favored trading partners, anti-trust laws, pricing regulations, taxation - tax rates and incentives, wage legislation - minimum wage and overtime, industrial safety regulations< must have improved by government

1.2.1.2 Social factors

Social factors as demographics, class structure, education, culture (gender roles, etc.), entrepreneurial spirit, attitudes (health, environmental consciousness, etc.) leisure interests are must definite it very important in marketing for automobile

1.2.1.3 Technological factors

Technological factors are decisive factor for automobile industry, because every automaker must have innovative technology in hand to compete with others Technological factors effect to every step to produce automobile To evaluate technological factors we can base on some factors as follow:

 Recent technological developments

 Technology's impact on product offering

 Impact on cost structure

 Impact on value chain structure

 Rate of technological diffusion

1.2.1.4 Economical factors

Those factors are GDP per person, financial conditions, interest rate inflation rate, growth rate, labor cost, infrastructure quality< can effect to investment decision of company

1.2.1.5 Competitiveness factors

Competitiveness factors are always can not control in every marketing plan, and marketing plan is built base on these factors exist in the market

The number of macro-environmental factors is virtually unlimited In practice, the firm must prioritize and monitor those factors that influence its industry Even so, it may be difficult to forecast future trends with an acceptable level of accuracy In this regard, the firm may turn to scenario planning techniques to deal with high levels of uncertainty in important macro-environmental variables

1.2.2 Integrated factors for successful marketing of VAAs

To organizing successful marketing activities in the market, we must define very clear the integrated factors for marketing in the new market or current period, there are many automakers There are four integrated factors for successful marketing of VAAs and described as follow:

- Pressure form market oriented: the first factors that company get pressure is market oriented, so that every automaker must unity in a marketing program to get more efficiently In there, not only senior management but also every member in company must thoughtfully and meet the market demand Every objectives of each department must engage

in target of satisfying customer

- The ability of satisfy customer and meet the market demand: VAAs have enough marketer with knowledge and experience to analysis the market and define the customer needs or demand to serving in carefully And also they have got enough budgets for marketing activities and using efficiently

- Understanding the market, keen in building and distribute the value

of product or service to customer: they must define “who are their customers? What do they want or desire for”

- The convenience between activities plan and market demand: at last, every automaker must have detail marketing plan including strategy and steps to implement

1.2.3 Creating value, satisfaction, conserving customer in VAAs

Nowadays, beside the imported car, Vietnam has seventeen automobile assemblers (including 11 FAAs and 6 VAAs except Honda

motors) providing car and their support service in the market so that customer has many option to choose the products and using service base on quality, price, delivery< thus get more opportunities selecting, customer will choose the product which let them get the highest value compare with their income, price, objective

Figure 1.3: Customer’s satisfaction, customer loyalty, value added for customer

is highly satisfied or delighted Most of automakers provided the basis satisfaction for customer and they will increase the satisfaction for customer

Value added for customer

- Satisfy the demand of target customer

- Operating more efficiently than competitors

- Create new value, unique for customer

1.2.3.2 Customer loyalty

In general, when customer get higher satisfaction, the higher rate of customer loyalty, because of characteristic of automobile industry that the rate of customer loyalty very high but some research showed that some company had lose the market share while the customer’s satisfaction very high It means that customer loyalty in this industry not only base on product but also base on the supporting service they provided

1.2.3.3 Value added for customer

The approach for customer’s satisfaction focuses on finding the way

to satisfy the current customer And the approach for value added will bring customer focus on study decision of customer while buy products or using service And automakers must answer three questions as follow:

- What are the norms of getting highly appreciate of customer when buy their car, or competitor car?

- How customer ranks them and their competitor base on norms effect to buying decision?

- How important of each norm in total value added bring to customer?

By studying the value added for customer, automakers can improving their competitive position, conserving and attract more new customer, increasing profits

1.2.3.4 Creating satisfaction and value added for customer

In order to understanding more activities, and base on them automakers can create the competitive advantages We can divide activities into small segment which through automakers can create value added, or

we can call model value chain Michael Porter of Harvard proposed the value chain as a tool for identifying ways to create more customer value including the same activities in most of business organization He divided activities of business organization into two kinds: primary activities and support activities and described as follow figure:

Figure 1.4: Porter's Generic Value Chain

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin

The primary value chain activities are:

 Inbound Logistics: the receiving and warehousing of raw materials and their distribution to manufacturing as they are required

 Operations: the processes of transforming inputs into finished products and services

 Outbound Logistics: the warehousing and distribution of finished goods

 Marketing & Sales: the identification of customer needs and the generation of sales

M A

R G IN

M A R G IN

Procurement Technology Development

HR Management Firm Infrastructure

Inbound

Outbound Logistics

 Service: the support of customers after the products and services are sold to them

These primary activities are supported by:

 The infrastructure of the firm: organizational structure, control systems, company culture, etc

 Human resource management: employee recruiting, hiring, training, development, and compensation

 Technology development: technologies to support value-creating activities

 Procurement: purchasing inputs such as materials, supplies, and equipment

The firm's margin or profit then depends on its effectiveness in performing these activities efficiently, so that the amount that the customer

is willing to pay for the products exceeds the cost of the activities in the value chain It is in these activities that a firm has the opportunity to generate superior value A competitive advantage may be achieved by reconfiguring the value chain to provide lower cost or better differentiation

The value chain model is a useful analysis tool for defining a firm's core competencies and the activities in which it can pursue a competitive advantage as follows:

 Cost advantage: by better understanding costs and squeezing them

out of the value-adding activities

 Differentiation: by focusing on those activities associated with core

competencies and capabilities in order to perform them better than

do competitors

1.2.3.5 Cost Advantage and the Value Chain

A firm may create a cost advantage either by reducing the cost of individual value chain activities or by reconfiguring the value chain

Once the value chain is defined, a cost analysis can be performed by assigning costs to the value chain activities The costs obtained from the accounting report may need to be modified in order to allocate them properly to the value creating activities

Porter identified 10 cost drivers related to value chain activities:

 Economies of scale

 Learning

 Capacity utilization

 Linkages among activities

 Interrelationships among business units

 Degree of vertical integration

 Timing of market entry

 Firm's policy of cost or differentiation

 Geographic location

 Institutional factors (regulation, union activity, taxes, etc.)

VAAs develop a cost advantage by controlling these drivers better than the competitors do

A cost advantage also can be pursued by reconfiguring the value chain Reconfiguration means structural changes such a new production process, new distribution channels, or a different sales approach For example, FedEx structurally redefined express freight service by acquiring its own planes and implementing a hub and spoke system

1.2.3.6 Differentiation and the Value Chain

A differentiation advantage can arise from any part of the value chain For example, procurement of inputs that are unique and not widely available to competitors can create differentiation, as can distribution channels that offer high service levels

Differentiation stems from uniqueness A differentiation advantage may be achieved either by changing individual value chain activities to increase uniqueness in the final product or by reconfiguring the value chain

Porter identified several drivers of uniqueness: policies and decisions, linkages among activities, timing, location, interrelationships, learning, integration, scale (e.g better service as a result of large scale), and institutional factors

Many of these also serve as cost drivers Differentiation often results

in greater costs, resulting in tradeoffs between cost and differentiation There are several ways in which a firm can reconfigure its value chain in order to create uniqueness It can forward integrate in order to perform functions that once were performed by its customers It can backward integrate in order to have more control over its inputs It may implement new process technologies or utilize new distribution channels Ultimately, the firm may need to be creative in order to develop a novel value chain configuration that increases product differentiation

1.2.3.7 Linkages between Value Chain Activities

Value chain activities are not isolated from one another Rather, one value chain activity often affects the cost or performance of other ones Linkages may exist between primary activities and also between primary

and support activities

Consider the case in which the design of a product is changed in order to reduce manufacturing costs Suppose that inadvertently the new product design results in increased service costs; the cost reduction could be less than anticipated and even worse, there could be a net cost increase

Sometimes however, the firm may be able to reduce cost in one activity and consequently enjoy a cost reduction in another, such as when a design change simultaneously reduces manufacturing costs and improves reliability so that the service costs also are reduced Through such improvements the firm has the potential to develop a competitive advantage

1.2.3.8 The Value Chain System

A firm's value chain is part of a larger system that includes the value chains of upstream suppliers and downstream channels and customers Porter calls this series of value chains the value system, shown conceptually below:

Figure 1.5: The Value System

>

Supplier Value Chain

>

Firm Value Chain

>

Channel Value Chain

>

Buyer Value Chain Linkages exist not only in a firm's value chain, but also between value chains While a firm exhibiting a high degree of vertical integration is poised

to better coordinate upstream and downstream activities, a firm having a lesser degree of vertical integration nonetheless can forge agreements with suppliers and channel partners to achieve better coordination For example,

an auto manufacturer may have its suppliers set up facilities in close

Clearly, a firm's success in developing and sustaining a competitive advantage depends not only on its own value chain, but on its ability to manage the value system of which it is a part

1.3 Ascertaining the marketing activities contents for VAAs

1.3.1 Models and marketing management contents for VAAs in currently market

1.3.1.1 Marketing research and SWOT analysis of VAAs

- Marketing research

Some marketing oriented organizations always find the new method

to research about marketing with targeted design, analysis, and report in systematically information which they are will be related to specific marketing situation of that organization

In the automobile industry, with its characteristics, the research processes must define or determine accurate and timely feedback information of environment relate to providing products and services activities such as:

+ The changes in macro-environment relate to automobile industry: tariff policy<

+ The demand, customer behavior

+ Competitors situation, competitor movement

+ Customer analysis about the image, quality, price of company< The Marketing research process in automobile including 6 steps as follow:

+ Step 1: Define the problems, the research objectives: the more clear problems defined the more accurate result they get And define the research

objective that has four types: Discovery (research the problem’s reasons), describe (determine the changes of market), checking (appraise the project feasibility), forecast (predict the trend of industry in the near future)

+ Step 2: Develop the research plan: including determine the data sources, research approaches, research instruments, budget, and implementing plan

+ Step 3: Collect the information: including three methods: observation, checking the sample, and investigation (through telephone, direct interview, focus group or mailing)

+ Step 4: Analyze the information and present the findings including qualitative and quantitative methods

+ Step 5: Make the decision

- SWOT analysis

SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans SWOT (sometimes referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats the SWOT framework was described in the late 1960's by Edmund P Learned, C Roland Christiansen, Kenneth Andrews, and William D Guth in Business Policy, Text and Cases (Homewood, IL: Irwin, 1969) The General Electric Growth Council used this form of analysis

in the 1980's Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation

Figure 1.5: SWOT analysis fits into a strategic situation analysis

to a manageable quantity of key issues The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats

Internal Analysis

The internal analysis is a comprehensive evaluation of the internal environment's potential strengths and weaknesses Factors should be evaluated across the organization in areas such as: company culture, company image, organizational structure, key staff, and access to natural resources, position on the experience curve, operational efficiency,

operational capacity, brand awareness, market share, financial resources, exclusive contracts, patents and trade secrets

The SWOT analysis summarizes the internal factors of the firm as a list of strengths and weaknesses

External Analysis

An opportunity is the chance to introduce a new product or service that can generate superior returns Opportunities can arise when changes occur in the external environment Many of these changes can be perceived

as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive Changes in the external environment may be related to: customers, competitors, market trends, suppliers, partners, social changes, new technology, and economic environment, political and regulatory environment

1.3.1.2 Organizing target marketing process for VAAs

All of automobile firms can not serve all customers in a broad market, the customers are too numerous and diverse in their buying requirement So they need to identify the market segments they can serve effectively

Figure 1.7: Steps in segmentation process, market positioning

- Segment positioning

- Marketing-Mix strategy

a similar set of wants, so that company can serve partly or wholly base on their marketing mix Thus, we would distinguish between car buyers who are primarily seeking low-cost basis transportation and those seeking a luxurious driving experience Major segmentation variables for customer markets are: geographic, demographic, psychographic, and behavioral How more clear identification market segmentation, automobile manufacturers are easier in selecting the product or service will be provided Thus, marketing activities will more focus and more efficiently

 Selecting target markets

After segmenting market according to above regulars, for next step is evaluation the segment attractiveness to identify the target market An automobile manufacturer will select target market base on two factors: segment attractiveness level, their competitiveness in that market segment

 Positioning products and services in the market

After selecting target market, automobile manufacturers must position where their products and services are in the market Base on the customer demand, compare with competitors’ products or services and combination with their core competency They must decision whether their products or services so as to having useful and competitive towards target customers The regulars create the products positioning are including: having valuable toward customers, differentiation, bring surpassing value and suitable with customer’s budget, also make feasibility profit for automobile manufacturers

1.3.1.3 Organizing marketing mix activities for VAAs

The next step after positioning products and services in the market is planning and implementing marketing strategy efforts through building and implement marketing mix Marketing mix is the set of necessary business oriented factors and can control Through them the automakers can applied for getting revenue or profits in the target market They are including: products/services, price, distribution (place), promotion, people, process, and physical evidence as the follow model:

Figure 1.8: Marketing mix and target market

- Products/services

Products/ service are the commodities, service or event the ideas are provided in the market, in the automobile industry products and service are decisive factors, and customers can aware about the car by brand name, functionality and how the safe of car, the quality, style, and packaging does, and how the service after sale does, they are can evaluate by Repairs and Support, warranty, accessories and services All above factors attribute for success of famous products or service

total sales record, market share, image and stable of price), here are some examples of pricing decisions to be made include:

+ Pricing strategy (skim, penetration, etc.)

+ Suggested retail price

+ Volume discounts and wholesale pricing

+ Cash and early payment discounts

Distribution channels: in normally, automakers always use methods

of distribution their products to market by built their agency in whole country or in target region Beside evaluate of using distribution channels to getting the products to customer we must analyze how market coverage they do, and specific channel members and how their management their inventory also the order processing<

- Promotion

In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response Marketing communication decisions include:

+ Promotional strategy (push, pull, etc.) with every promotion campaign, automakers must choose the suitable promotional strategy, depend on the target of campaign

+ Advertising: we can distinguish advertising with other tools of marketing promotion is that advertising is the direct expense to expand their products or services to customer When an automaker use advertising tools to get awareness of customer they can control through provided message and received customer But their can not manage or get the feedback form customer of their products or service

+ Public relations & publicity: popular for automobile makers, because this tools including many indirect expenses to introduce products

or service Through the public relationship, they encourage the press to release or post the news about automobile makers operation For example, they can organize the press conference for launching new car model, or new service supporting or new warranty service campaign<the most advantage

of public relation is that their can raise the high belief of customer but the most advantage is that they can not control how the message was public

+ Personal selling & sales force, sales promotions, marketing communications budget are the important tools in promotion campaign They are including the activities to encourage customer buying products or using services

- People

Most of automakers have the professional staffs and employees, from selection, training and motivation employee are very important to get the objective is getting customer’s satisfaction

To getting customer’s satisfaction, employee had selected and trained very careful, they will achieve high performance and knowledge in dealing with customer: attitude with customer, meet the customer requests, positive, and ability solve problem in quickly and enthusiasm for serving customer

- Physical

With the characteristic of products is tangible and intangible of service so that automobile have a lot of ways to convinced the customer about the quality of product and flexible of service supporting for product Thus, automakers have expanded their infrastructure and physical evidence, for example, physical of automaker must express that high quality, stylist, modern product, professional service and modern factory They must organize the tour visiting for potential customer, TVC introduction, advertising in brochures, internet, and leaflets to get the belief of customer

- Process

An automaker can have numerous marketing processes to achieve their objectives With characteristics of automobile industry have many processes in manufacture and provide service for customer to get the satisfaction Marketing products is that management the process of making process, from design to complete products and make product differentiate with other in the market And marketing service is the process in providing support service to customer to get the loyalty customer

In conclusion, to build the efficiently marketing strategy, we must build seven factors in uninterrupted in target market of automobile manufacturers, to get profits base on customer’s satisfaction in

comprehensive, to improving product’s position and company’s image in the market

1.3.1.4 Organizing resources for marketing activities of VAAs

- Marketing department

The targets can be achieved efficiency or not depend on ability of marketing department We must planning enough people and also financial budget for marketing department We must evaluate organizing human for marketing activities of an automaker base on total marketers in marketing department, how quality of staff such as: experience, mental, ability, creative, inspirits of staff<also the activity of selection and training also attribute to promote the marketing force

- Marketing information system (MIS)

This system is very important but currently it is not applied well in VAAs Basically, MIS are including four parts as follow:

+ Internal record system: including internal report on orders, sales, prices, costs, inventory levels, receivables, payables and so on By analyzing this information, they can spot important opportunities and problems

+ Marketing intelligence system: is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment from sale team, PR group, and mass media providing information

+ Marketing research system: studies of specific the problems and opportunities that marketing is facing

+ Marketing decision support system: including statistic analysis method, modern models to support marketing managers make better

decisions

- Budget for marketing plan

All of Automobile manufacturers must have the define budget for marketing Because it very necessary for the marketing activities effective or not, and it also effect to sales record of company Marketing budget usually draw from business expense and value added from marketing activities, allocation base on periodic marketing plan or annual plan

Methods of generating budget for marketing activities in VAAs:

+ Percentage per sale method

+ Capability method

+ Balance competition method

+ Target – Objective method

And also person in charge in budgeting must follow and control cost and efficiency of marketing

1.3.1.5 Checking and marketing control for VAAs

When the marketing strategy is deployed then the tasks of marketing department must evaluate the efficiency and marketing control

Efficiency is perhaps evaluated by 2 ways: base on market result and financial result The market results are revenue, market share, attitude and loyalty of customer Financial results are evaluating base outcome compare with cost

Marketing control are including marketing control process building follow close behind the objectives of marketing department