Triple V of marketing plan for Merck Bioscience products in Vietnam

LIST OF TABLES Table 3.3a: Research approach and methods Table 3.3b: Extent of importance and company performance on each KDF Table 3.3c: Actionmap of a decision maker Table 4.2c: Descri

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

MBAVB3 TRAN QUANG THANH

TRIPLE V OF MARKETING PLAN FOR MERCK BIOSCIENCE PRODUCTS

IN VIETNAM

MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION

(PART-TIME)

Ho Chi Minh City

(2010)

Finally, I would like to thank my beloved ones for their continuous encouragement to me during my study

TABLE OF CONTENTS

List of abbreviations 8

List of tables 9

List of figures 10

Chapter 1: Introduction 1.1 An introduction to Biosciences and their development 11

1.2 The Biosciences in Vietnam……….16

1.3 Merck Vietnam introduction……….21

1.4 Rationale………22

1.5 Problem statement……… 23

1.6 Research objectives………23

1.7 Scope of the study……… 23

1.8 Research structure……… 23

Chapter 2: Conceptual framework/Literature review 2.1 Marketing………25

2.2 Triple values of a marketing plan………29

Chapter 3: Methodology 3.1 Research process……… 36

3.2 Qualitative study……… 37

3.3 Quantitative study………38

Chapter 4: Data analysis & findings 4.1 Reliability analysis……… …44

4.2 Sample profile……… 44

4.3 Descriptive analysis……… 52

4.4 Findings………61

Chapter 5: Conclusions and recommendations 5.1 Conclusions……… 65

5.2 Recommendations………66

5.3 Limitations of the study and future research………67

Appendices Appendix A: Questionnaire in English & Vietnamese……… 68

Appendix B: The list of paid respondents for survey questionnaire……… 75

Appendix C: Reliability analysis………76

Appendix D: Frequency tables……… 81

Appendix E: ANOVA results……….90

Bibliography

LIST OF ABBREVIATIONS

MVN Merck Vietnam Company

R&D Research and Development

USD United States Dollar

KDF Key discriminating factor

LIST OF TABLES

Table 3.3a: Research approach and methods

Table 3.3b: Extent of importance and company performance on each KDF Table 3.3c: Actionmap of a decision maker

Table 4.2c: Descriptive analysis of project quantity by organization type Table 4.2d: Sample distribution by literature source and organization type Table 4.2e: Sample distribution by literature format and organization type Table 4.2f: Sample distribution by budget source and organization type Table 4.3b1: Important factors of satisfaction

Table 4.3b2: Mean of the 6 important factors by organizations

Table 4.3c1: Satisfaction about contact for purchase

Table 4.3c2: Satisfaction about delivery

Table 4.3c3: Satisfaction about order process and documents

Table 4.3c4: Satisfaction about products & services

Table 4.3c5: Satisfaction about value

Table 4.3d1: Extent of important KDFs

Table 4.3d2: Means of the 6 KDFs between organizations

Table 4.3e: Means of all competitors’ performance on each KDF

LIST OF FIGURES

Figure 1.3: MVN Business model

Figure 2.1a: Market flows

Figure 2.1b: Holistic marketing

Figure 2.1c: Value delivery process

Figure 2.2a: Common market segment variables

Figure 2.2b: Value network options

Figure 3.1: Research process

Figure 4.2a: Sample distribution by organization type

Figure 4.2b: Sample distribution by use purpose of chemicals

Figure 4.2c: Sample distribution by project quantity being joined

Figure 4.2g: Sample distribution by % budget for chemicals and org type Figure 4.2h: Sample distribution by each purchase and org type

Figure 4.2i: Sample distribution by amount as per purchase and org type Figure 4.2j: Sample distribution by % use of Merck chemicals and org type Figure 4.2k: Sample distribution by Merck brands and org type

Figure 4.2l: Sample distribution by % use of Merck biosciences and org type Figure 4.2m: Sample distribution by favorite promotion and org type

Figure 4.2n: Sample distribution by promotion info channels and org type Figure 4.3a: End users’ actions

Figure 4.3b: Means of the 6 important factors by organizations

Figure 4.3c: Means of these composite factors by organizations

Figure 4.3d: Means of the 6 KDFs between organizations

Figure 4.3e1: Means of Merck performance on the 6 KDFs

Figure 4.3e2: All competitors’ performance on KDFs

CHAPTER 1: INTRODUCTION

1.1 An introduction to Biosciences and their development

Biosciences have been identified in numerous contexts as one of the keys to economic development in the years to come With Infosciences and Nanosciences, Biosciences constitute the real framework of the “New economy”

Three principle features are common to these three scientific and technological areas:

• The capacity to integrate with one another

• The capacity to be a development key for other industrial sectors and therefore to “enable technologies”

• The fact of being “world-wide” and “global”

However, along with these similarities, the three scientific areas show great differences in the way they grow, develop, and in their impact on local economies

A basic definition of Biosciences will help to understand the main players in the sector and the way they and their different technologies converge and interact, and will also serve as a key to understanding the problems of development in this sector

Defining life sciences and biotechnologies

The difficulty of defining biotechnologies lies in their diversity In fact, life sciences and particularly biotechnologies comprise a range of multidisciplinary technological platforms and scientific discoveries that can be combined in different and innovative ways as and when required

To this regard, biotechnologies can be defined as “every technology that uses live organisms (such as bacteria, yeasts, vegetable cells, simple or complex organism animal cells) to obtain commercial quantities of useful products, or to improve animal and plant characteristics or to develop useful micro-organisms for specific use” This general definition also includes production technologies used long ago, such as agriculture, zootechnology and the exploitation of fermentation activities of microorganisms The latter can therefore be distinguished by grouping them under the term traditional biotechnologies, to differentiate them from the truly innovative biotechnologies

From this point of view, innovative Biotechnologies are clearly the result of basic and explorative research In this field, what is clearly evident is the close relationship between basic research and applied research and production, in contrast to the traditional concept of basic research taking place uniquely in universities, and applied research and production taking place in industry

In times of globalization of information, this unique feature is bound to influence the key factors of development, and explains why real “biodistricts” come into being in specific areas

The same multidisciplinary origin of biotechnologies partly explains their applications in different industrial sectors Some examples of biotechnological applications deriving from life sciences which have become innovative processes in industrial production are:

• Human health (Pharmaceutical, diagnostics)

• Agricultural

• Zootechnology

• Cosmetics

• Bioindustry and chemical

• Environmental and energy

The integration of these technologies with infosciences and nanosciences opens further, exciting and new development areas in synergic sectors, such as bioinformatics, biomedicine, etc The biotechnologies system therefore, is particularly rich and complex However, these remarkable biotechnologies have brought with them moral, ethical and legal implications, (for instance, consider the problem of patents)

Biotechnology industry: a structural analysis of the sector

“Towards an economy founded on knowledge”

In industrially advanced societies, the creation of wealth deriving from knowledge and product quality becomes increasingly important, while at the same time the

prominence of classical parameters, such as the cost of raw materials and labor costs, decreases

The “society of knowledge” gives rise to a new economy, capable of creating high value added products

The following three sectors are the most characteristic of this new trend: information technology, nanotechnologies & new materials and biosciences Biotechnology, as we have seen, includes a wide range of technologies and procedures that foster the creation of highly competitive new products and processes in numerous industrial, agricultural and health sectors, leading to new opportunities in many sectors

Biotech products in fact distinguish themselves as being easily incorporated in multidisciplinary “technological solutions” that can be applied in different fields

In order to understand the importance and impact of the biotechnology sector, one must start with a “economy based” definition

According to some analysts “Biotechnology is selling biology” This concept seems

to be fully understood in many countries where by now biotechnologies represent

an explicitly strategic market, so much so that many leading international scientists and economists argue that the century which has just begun will be called “the biotechnology century” The revolutions in genetic and computer science have merged to form a “scientific, technological and commercial phalanx”, namely a new reality that promises to deeply influence both the individual and society

Biotechnology sector

In the last few years in industrialized countries, the biotechnology sector has shown striking economic growth impacting directly on the quality of life and on socio-economic development

This sector has been characterized by at least three relevant factors: a high technical-scientific content in rapid and continuous evolution, close links with basic research (therefore with University and other institutions) in which biotechnologies are deeply rooted, and the long time needed to introduce a new product on the

market (which today varies between 5 to 10 years, for almost all sectors of application)

Research

Research is the principal source of new ideas that, once developed, can lead to the commercial exploitation of new products or productive processes and/or their improvement

It includes mainly research carried out in public and private research structures, although it can also involve industrial research partners As a rule, companies use research results only if they are potentially marketable In order to become a process and a product of innovation, research depends, above all, on the process of technology transfer and the creation of new enterprises

Biotechnology specialized enterprises (ISB)

The “ISB” appear to be the most incisive in converting scientific discoveries into services and products with a commercial value Essentially, there are three types: a) Developing enterprises: are proprietors of an idea engaged in converting it into a product or service of a precise commercial value Many of them, in particular in the medical-healthcare sector, are involved through investments and joint ventures with larger sized enterprises This strategic approach is also adopted by large pharmaceutical industries, due to the opportunity it offers of making use of research and development activity results produced elsewhere;

b) “Integrated activity” enterprises: are enterprises that have invested in research, development, production, marketing and sales With the exception of new companies in the diagnostic sector, and Amgen, Genentech, Serono and Genzyme

in the pharmaceutical sector, there are relatively few of them;

c) Suppliers: are companies that supply equipment, materials and services either to companies which operate strictly in the biotechnology field or for end user companies This type of firm is becoming increasingly more important because of the need for companies to use technologies and services which are not available in house

Biotechnological industry convergence

Biotechnology has had the opportunity to become one of the most dynamic phenomena of this century, thanks to the convergence of numerous forces from different sectors

Biotechnology is in fact creating extensive platforms for new products and markets

on various fronts (from agriculture to chemical and industrial processes, from medicine to informatics) with many companies that relocate and integrate their scientific approaches and financial objectives

The convergence between previously distinct industries is taking place rapidly, and this could eventually lead to a more stable and sustainable biotechnological market

If this trend continues, the dividing line between biotechnological and industries of other sectors will be less evident, increasing the number of new hybrid products The biotechnological industry, apart from giving rise to the production of many new drugs for man, is increasingly interacting with non-traditional sectors, such as chemical products, semiconductors, information technology, and agriculture Many

of these industries have begun to take advantage of the power of biotechnologies, and numerous companies operate contemporaneously in many different sectors

Keys to local development in the Biotechnological sector

All these factors help us understand how development in the biotech sector is subject to a high number of variables The European Commission16 has identified numerous factors that come into play when the problem of how to encourage growth in this sector is encountered Briefly, the key elements identified are the following:

• the presence of a strong scientific base;

• the capacity to transform scientific research results into innovations;

• social impact;

• alignment with social values;

• adoption of demand oriented solutions through an informed choice;

• reliability of scientific instruments on which regulatory boards base their criteria;

• shared and transparent regulatory principles;

• belonging to international networks

Having analyzed the biotechnology sector in terms of type of enterprise and the importance of convergence/integration phenomena, the variables identified can be interpreted in the light of the future prospects they represent, as a range of strategies and as industrial policy, starting with the assumption that “in spite of the tendency towards broad internationalization of research, high technological performance tends to be tied to “home-based” research capacity (Chemistry Today)

1.2 The Biosciences in Vietnam

The bio-innovation system in Vietnam: a brief overview

The structure and actors

Overall, R&D activities in Vietnam are organized into three main domains: research institutes of the National Research Center which is now called the Vietnam Academy of Science and Technology (VAST), research institutions under line ministries such as the Ministry of Agriculture and Rural Development or the Ministry of Health, and bioscience and biotech faculties and departments of universities There are about 50 research institutes and centers dealing with bioscience and biotech in three areas of agriculture, including aquaculture, healthcare and the environment

The Ministry of Science and Technology, other ministries, and provinces have created a network of biotechnology laboratories for research, technology development and application To date, this network includes 60 laboratories and research units located throughout the country The Ministry of Science and Technology also provided the ministries with fund to establish and strengthen equipments for more than 30 laboratories Investment for last few years has been about 80 billion VND (about 5 million USD) In addition, there are 30 simple experiment units of tissue culture in almost all provinces, with investment of

30,000 USD provided by the Ministry of Science and Technology through programs on science and technology application to support rural-mountainous development In the coming period, upgrading and reorganization of these units are expected to result in investment estimated at about 5 million USD, an average of 130,000 USD per unit

In 2002, in preparation for further biotechnology development in Vietnam the Prime Minister decided to build 5 national key biotechnology laboratories and more recently to invest in supplementary national laboratory of tissue culture technology

in the South These six national key biotechnology laboratories and 60 other laboratories and research units are the backbone of biotech research and training

In universities, the system of biotechnology and bioscience mainly focuses on teaching, with less emphasis on research The Ministry of Education and Training, other ministries and S&T organizations have various training programs for Bachelors, MSc, and PhD of biotechnology in several formats Around 12 universities have created training programs and centers of biotechnology So far, training has been conducted for more than 4,000 staff, of which 1,500 obtained bachelors degrees, 400 MSc degrees and 90 PhD degrees But this training has not met the demand, especially in the major fields of biotechnology such as genetic technology, cell technology, enzyme-protein technology and microorganism technology Along with universities, R&D institutes have also participated in training biotechnological staffs During the 5-year period from 1996 to 2000, 23 MScs and 22 PhDs have been trained through this research program

As for overseas training and programs of internships, MSc and PhD training has been carried out with State budget funds of 100 billion VND per year (or around 7 mln USD) Through the Ministry of Education and Training more than 30 persons have been trained in biotech areas In the framework of national research programs

on science and technology, hundreds of biotechnology staff have collaborated with colleagues from developed countries through visits or research projects In addition, scientists from overseas have been invited to Vietnam to train in research methodology with more than 200 groups of Vietnamese biotechnology scientists In two recent years, Vietnam has also relied on some overseas scholarship schemes to send students to the US, Europe, Australia, Japan for training

Performance

In agriculture, Viet Nam has implemented artificial insemination, preservation technology, embryo transfer and vaccine production technology Technologies of forming new breeds such as tissue culture and cell generation have been applied widely in the production of rice, hybrid rice, maize, etc Up to now, the contribution of biotechnology to Vietnamese agriculture has resulted in self-sufficiency of 25% demand of F1 hybrid rice, generating economic benefits of 30-

50 million USD per year New rice production has partially contributed to Vietnam’s attainment of second position in the world rice export New rice varieties produced by local scientists are used in 70% of rice-cultivated area Biotechnology has also begun to generate aquaculture species and preventing disease such as prawn species

In health care and pharmaceutical products, for the last few years, artificial insemination technology has been applied widely at some clinics in Ho Chi Minh City and Hanoi Genetic technology, DNA and protein chip are also explored in some research institutions and health care centers They have applied fast diagnosis and early diagnosis technology in dealing with heredity problems in newborn babies and the prevention of epidemics such as poultry flu, and dengue fever The research projects for vaccine production have produced the most significant results in the field of medical biotechnology Vietnam has mastered the technology and produced 9 out of 10 kinds of vaccine to serve comprehensive vaccinated programs Two types of vaccines have met 100% of demand and the remained have met 40-60% of demand in Vietnam

Problems

In general, over the last 10 years, a system of laboratories from central to local levels has been established with relatively modern equipment However, the operation expenditure is insufficient because there were no guidance on strategic tasks and no sufficient link between theory and practical production Hence, the application of newly invested laboratories still has poor efficiency

R&D on biotechnology has focused mainly on national key biotechnology programs No realistic priority for the key program has been designed, with the research content designed primarily according to the existing background of the scientists There has been a lack of market driven real need For instance, a scientist with background in enzyme technology would propose strongly to develop research base (a program, an enzyme laboratory) in their respective area, and so on As a result, though the results of research were deemed complete, not all of them have been implemented in production

The role of enterprises, especially of private-sector enterprises in biotechnological research and application is weak and unclear The driving force for development and competitive capability of the state-owned enterprises in biotechnology has also been weak The system linkage among factors in the biotechnological innovation system (e.g enterprises, institutes and universities), similarly in many other areas

of innovation, has not been firmly seen The current relationship between R&D organizations and enterprises is experiencing some constraints, such as a shortage

of funds and capable human resources by the enterprises, in their collaboration with R&D institutions and their own conducting of R&D When cooperating with foreign firms, Vietnamese firms tend to follow the initiative of their partners Vietnam still lacks the linkage and cooperation amongst scientists, as well as qualified research teams having international level of research capability This has occurred despite the organization of several research programs

Training also still has many shortcomings In fact, there is lack of a well-designed strategy and specific structure for training programs

The bio-product market and demand for biotechnology development and biotechnological industry have been not developed It has not made the critical pull for the biotechnological industry The production base is narrow, bound to the national market via the primary, unprocessed bio-related product demand, which consists of mainly raw materials as tea, coffee, rubber, rice and aquaculture This kind of products has enjoyed only temporary comparative advantage and has weak long-term competitiveness

The policies and institutional framework for biotechnology and biotech industry have not been developed in a conducive manner The resolution of Vietnamese

government dated on March 11th, 1994 for biotechnology development until 2010; the decision 54/QD-TTg for developing the techno-economic program on biotechnology, despite all these efforts, current policies are deemed unclear and not specific enough to make an impact on biotech development

For international cooperation, the government has encouraged organizations to employ both international experts or overseas Vietnamese with high professional qualifications as consultants or take part directly in development planning, training, and R&D activities The government has also encouraged and financed international joint programs Still, there is a view that these incentives are not sufficient for attracting more international involvement in innovation activities in the country These factors, however, will have implications for future bioscience and biotech development of Vietnam

Biotechnology is one of seven key technology fields which is intensive investment

by the Vietnamese government only Total investment on biotechnology estimated USD 100 million (Biotechnology 2003) Only 15% of expense amount accounted for laboratory instruments and chemical products Meaning that, its market size was only round USD 15 million

Bio-technology industry to be expanded (Vietnam News 2008)

The aim is to produce high-quality products and reach the level of the rest of the ASEAN community by 2020 Under the plan, the Government will focus on

developing, and applying bio-technology in the areas of agro-forestry, fisheries,

food processing, food safety and sanitation, and healthcare and drugs

The plan also aims to set up an open market to help bio-tech businesses promote production and services in the next two years

From 2011 to 2015, the Government will build a number of scientific research centres for bio-tech development at the ASEAN level The educational leader has stressed the need to train qualified human resources for the bio-tech industry and build international standard bio-tech development centres by 2020

To meet staff demand, deputy prime minister urged the industry to train 20,000 university graduates and 2,500 post-graduates and to send 400 scientific workers abroad

The deputy also asked the industry to speed up the application of bio-tech research

in many industries, including agro-forestry, fisheries, food and beverages, plant and animal hybrids, bio-fertilisers, and vaccines and other drugs

The master plan encourages private enterprises to invest in development of the technology industry by offering incentives They include preferential rates on taxes, land rentals and bank loans to help the industry promote, transfer and import modern technology, and establish a favourable market for bio-technical services as well as training bio-tech scientists

bio-1.3 Merck Vietnam introduction

Merck for Biosciences provides a range of life science research products (e.g antibodies, biochemicals and inhibitors and peptide synthesis reagents) of our brands Calbiochem, Novabiochem, and Novagen, that are used worldwide in university laboratories as well as in pharmaceutical and biotech industries The company offers innovative solutions at the cutting edge of research (Merck-chemicals)

Figure 1.3: MVN Business model

+

Small dealers Dealer 1 Dealer 2 Dealer n

Customer services + In-bound logistics

Out-bound logistics

Enduser 1 Enduser 2 Enduser n

According to the business model above, the company does not sell directly to end users, sales and marketing staffs manage directly end users Traders (dealers and small dealers) sell directly to end users

Characteristics of chemicals market are price conscious (sensitive), labor intensive with competitive product quality, and very low budget for R&D activities

Merck’s positioning is premium brand (high price) and high quality products Main applications are in laboratory use chemicals Our 2 brands being used in Vietnam are Calbiochem and Novagen A sale in 2009 was around USD 13,000, only achieved below 1% of market size The four direct competitors are Sigma, Qiagen, Bio-rad, and Invitrogen

1.4 Rationale

After 15 years in Vietnam as a representative office, Merck Vietnam Company, marketing and sales of chemical products has founded in 2010 One key target for the new company will be the exploration of the chemical market for biotechnology, bioscience products, in Vietnam to drive further strong growth of this promising high-margin business However, the company has not yet developed a marketing plan to approach this market Therefore, the need for using the triple-V approach to marketing to define the three values: value segment, value proposition, and value network results in a call for this study, as a result, the marketing plan will be developed In other words, according to sales and marketing director, the study should be able to answer 3 questions such as 1) Sell to whom? 2) How to sell? and 3) How big of target segments?, is it worthy to sell into those segments?

1.5 Problem statement

The biotechnology market in Vietnam is very diverse and it’s at an infant stage of market development Major potential customers are in R&D units of hospitals, state funded research institutions, universities and R&D departments of specialized companies Merck Vietnam did not establish a strong business in the growing Vietnamese biotechnology market yet It is lacking market insight and access Consequently, Merck’s business in this market is still small and stagnating To address this problem, the triple-V approach to develop a marketing plan will be applied to achieve the company’s target Therefore, relevant questions to be answered by this study are:

1 Value segment or who to serve (valued customer)?

2 Value proposition or what to offer to the valued customers?

3 Value network or how to deliver the value proposition to the valued customer?

1.6 Research objectives

The study is designed to provide answers to the above questions, based on which appropriate marketing strategies and policies may be developed The research objectives are to define the triple values such as value segment, value proposition and value network As a result, it will provide valuable inputs for marketing strategy, plan and decisions

1.7 Scope of the study

Major potential customers are in R&D units of hospitals, state funded research institutions, universities and R&D departments of specialized companies Most of them located in Ho Chi Minh and Ha Noi city, therefore only these potential customers were surveyed

1.8 Research structure

This study report is presented in five chapters Chapter 1 introduces biosciences industry and their development, biosciences in Vietnam, Merck Vietnam

introduction, rationale, problem statement, research objectives and as well as scope

of the study Literature review is presented in chapter 2 Chapter 3 describes the methodology applied in the study Data analysis and findings are presented in chapter 4 Chapter 5 provides recommendations and recommendations

CHAPTER 2: LITERATURE REVIEW

2.1 Marketing

The scope of marketing – What is marketing? (Kotler 2002)

Marketing deals with identifying and meeting human and social needs It is about

“meeting needs profitably”

Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer

relationships in ways that benefit the organisation and its stakeholders

Marketing management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value

The aim of marketing is not selling It is to know and understand the customer so well that products and services fits him and sells itself

Marketing is everywhere – it is embedded in everything we do And it has become

a key ingredient to business success Marketing is both an “art” and a “science” and good marketing is no accident It takes careful planning and execution

Exchanges and Transactions

Exchange is a key concept in marketing It is the process of obtaining a desired product from someone by offering something in return It is a value creating process because it leaves both parties better off 5 conditions must be satisfied in this scenario such as 1) There must be at least 2 parties, 2) Each party has something of value to the other party, 3) Each party is capable of communication and delivery, 4) Each party believes it is appropriate and desirable to deal with the other party

Transaction is a trade of value between 2 or more parties Transactions need at least 2 things of value, agreed-upon conditions, a time and a place of agreement This differs from a transfer where A gives to B without anything tangible in return Marketing consists of actions undertaken to elicit desired responses from a target audience To be successful in marketing, marketers need to understand what each party expects from the transaction

Markets

In marketing terms, a market is used to describe the various groupings of customers Categories of markets include: Product market, demographic market, needs market etc In a market, there are many buyers and sellers They are connected by 4 flows

as the figure 2.1 a below

Figure 2.1a: Market flows

And there are 4 key customer markets: consumer (selling to the masses), business (selling to business), global (selling in the global marketplace), and non-profit and government (selling to churches, universities etc) Today we differentiate the marketplace (physical) and the marketspace (digital) There is also the concept of the metamarket: cluster of complementary products and services in the minds of a consumer but spread across a diverse industry

Company orientation towards the marketplace

There are 5 competing concepts under which organisations conduct marketing activities:

1) Production concept – states that consumers prefer products that are widely available and inexpensive Therefore focus on high production, low cost and mass distribution;

2) Product concept – Consumer favour quality, performance or innovation Therefore focus on superior products and constant improvement;

3) Selling concept – consumers will not buy enough if left on their own Therefore focus on aggressive selling and promotion;

Industry (a collection of

sellers)

Market (a collection of buyers)

Goods / services

Money Communication

Information

4) Marketing concept – consumer-centred philosophy Therefore focus on being more effective than competitors in creating, delivering and communicating superior customer value;

5) Holistic marketing concept – going beyond traditional applications of marketing to a more complete and cohesive approach Focus on multiple marketing approaches that work synergistically, broad and integrated approach It includes relationship, integrated, internal and social responsibility marketing as depicted in the figure 2.1b below:

Figure 2.1b: Holistic marketing

Marketing and customer value

Marketing involves satisfying consumer needs and wants The task of the business

is to deliver customer value at a profit The value delivery process at each phase has cost implications, is presented in figure 2.1c

1) Choosing the value – represents the “homework” marketing must do before any products exist;

2) Providing the value - marketing must determine specific product features, prices and distribution;

Internal Marketing

Integrated Marketing

Relationship Marketing

Social Responsible Marketing

Holistic Marketing

Marketing dept Senior Mgmt Other Depts

Communications Products & Services Channels => 4Ps

Ethics Environment Legal Community

Customers Channel Partners

3) Communicating the value - through utilisation of sales force, sales promotion, advertising, and other communication tools to announce and promote the product

Figure 2.1c: Value delivery process

Kumar uses the 3 V approach to marketing to define the value segment (value definition), the value proposition (value developing process), the value network (value delivering process) The details of this approach mentioned in next section

Marketing strategy

A written plan (usually a part of the overall corporate plan) which combines product development, promotion, distribution, and pricing approach, identifies the firm's marketing goals, and explains how they will be achieved within a stated timeframe Marketing strategy determines the choice of target market segment, positioning, marketing mix, and allocation of resources

Marketing plan

A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives It can be for a product or service, a brand, or a product line Marketing plans cover between one and five years A marketing plan may be part of an overall business plan Solid marketing strategy is the foundation

of a well-written marketing plan While a marketing plan contains a list of actions,

a marketing plan without a sound strategic foundation is of little use

Marketing process: segmentation, targeting market, and positioning (STP)

Customer

segmentati

on

Value proposi tion

Sourci

ng Pricing Service dvlmpt

Produc

t dvlpmt

Market selecti

on /

Sales promo

Sales force

Distrib uti ng Servici

ng

Advertisi

ng

Choose the value Provide the value Communicate the value

Strategic marketing Tactical marketing

Prior to launching a new product or service, to extending an existing product range

or to entering a totally new market, relevant data need to be analyzed to decide which market to enter Once the market has been selected, the marketing strategies need be defined, the marketing tactics have to be put into practice with the setting

up of a marketing plan and the marketing control of the performed marketing activities enables to determine how far the marketing plan was successful in meeting the selected strategies This four-stage approach is a marketing process by which companies create customer interest in products or services It generates the strategy that underlies sales techniques, business communication, and business development (Kotler 2008)

Specifying the 3 values for a marketing plan to extending an existing product range

is the subject of this thesis The reason why of marketing is to create value for the client through four key functions such as research, development, production, and sales of products and services In other words, marketing is the heart of value creation but we can only create tomorrow’s value by satisfying today’s need To define the value segment (customers and needs), the value proposition, and the value network is a triple-V approach to marketing (Kumar 2007)

2.2 Triple values of a marketing plan

Marketing as Strategy: Understanding the CEOs Agenda for Driving Growth and Innovation by Nirmalya Kumar

Professor Kumar has coined terms & developed new marketing concepts that have added another dimension to traditional marketing The notions of triple-V approach

are briefly overviewed as follows; value segment or market segmentation is a marketing technique that targets a group of customers with specific characteristics; value proposition is some combination of products, services, information, or experiences offered to a market to satisfy a need or want; and value network is a business analysis perspective that describes social and technical resources within

and between businesses

While the function of marketing has lost ground, the importance of marketing as a mind-set-geared toward customer focus and market orientation-has gained momentum across the entire organization The approach challenges marketers to change their role from implementers of traditional marketing functions (4Ps) to strategic coordinators of organization- wide initiatives aimed at profitably delivering value to customers (Triple-V) The approach outlines seven cross-functional and bottom-line oriented initiatives that can put marketing back on the CEOs agenda-and elevate its role in shaping: 1) from marketing as a function to marketing as a transformational engine, 2) from market segments to strategic segments, 3) from selling products to providing solutions, 4) from declining to growing distribution channels, 5) from branded bulldozers to global distribution partners, 6) from brand acquisitions to brand rationalization, 7) from market-driven

to market-driving, and 8) from strategic business unit marketing to corporate marketing

For a long time now, companies have understood the importance of clearly

knowing each customer’s value and assigning resources according to that value

But limiting the “value chain” to only one link – the customer’s – is not enough It

is not enough to know “who to attend to according to how much value they contain”, but rather which value proposition we make to that customer we have deemed as valuable Once we definitely know which differentiated value

proposition adapts to their needs, it is equally as imperative that we know how we

will communicate it to them That is to say, what value will we offer in the service,

in the way we attend to the customer: through which channels, with what messages,

by what means… Only the combination of “Valued customer + Value proposition + Value Network”, coined by Professor Nirmalya Kumar of the London Business School, is capable of guaranteeing the success of Customer Marketing Strategies

In according to Bill George’s comments, former Chairman and CEO, Medtronic Inc, “Nirmalya Kumar provides brilliant insights into how his strategic approach to marketing can transform corporations and enable them to build sustainable growth platforms All marketers would do well to heed his insights and follow his sage advice.”

The author of the approach contends that one department – marketing – rarely helps

in this quest In fact, many CEOs complain that marketing has not evolved past its focus on basic tactics He wants to correct this problem and suggests the seven-step process marketers can follow to become flexible, strategic thinkers and leaders He advocates forgetting about the classic “4 Ps” of marketing (product, place , price, and promotion) and embracing the “3 Vs” (valued customer, value proposition and value network) With this approach, serious marketers would be able to work smarter, adopt new ideas and use them to change their companies It’s about marketers doing better things rather than simply doing things better

The “3 V’s”

Value customer – who to serve?

Market segments divided by the four Ps

Conceptually, marketers begin by identifying market segments, then selecting the appropriate segment(s) to target, and finally positioning the company’s offer within the targeted segment(s) using the 4Ps Of course, in practice, segmentation is a messier process

Market segmentation

Customers within any market rarely have similar needs and expectations To uncover the various segments into which customers fall, the segmentation process identifies variables that will maximize the differences within each segment Creative segmentation can help a company get closer to its customers by developing the appropriate differential marketing mix for each segment, through changes in one or more of the 4Ps Segmentation variables can be broadly classified into two categories: identifier and response as the figure 2.2a below:

Targeting

Targeting or target market selection is the process of deciding which market segments the company should actively purse to generate sales Firms choose between adopting undifferentiated, differentiated, or concentrated targeting strategies An undifferentiated strategy attempts to target all customers with the same marketing mix A differentiated strategy simultaneously targets several market segments, each with a unique marketing mix Finally, a concentrated strategy selects one segment and concentrates on serving it

Positioning

Positioning is about developing a unique selling proposition for the target segment

A company’s unique selling proposition should be both unique, that is, appealing to the target customers

Strategic segment: divided by the triple-V

Market and service segments such as the above, which only requires changes in the marketing mix, can be distinguished from strategic segments Strategic segments that require distinct value networks, rather than just changes in the marketing mix Each of strategic segments is associated with a unique set of key success factors The identification of strategic segments help the business unit manager determine which value network to deploy If a company wishes to serve two different strategic segments, then it must develop two unique value networks Instead of simply aligning the 4Ps, as is the case with market segments, serving different strategic segment requires the alignment of other functions such as R&D or operations As a result, instead of the 4Ps, it’s more appropriate to think in terms of the triple-V: valued customer, value proposition, and value network

Value proposition – what to offer?

Value proposition or what to offer to the valued customers reveals stark differences between the two segments Four questions developed by Professors Kim and Mauborgne provide a framework for understanding the creation of value proposition, and should be addressed by every company

a Which attributes that our industry takes for granted should be eliminated? This question forces companies to reflect on whether each of the attributes offered creates value for their valued customers

b Which attributes should be reduced to below industry standards? This question pushes companies to consider whether the industry has overdesigned its products and services for their valued customers

c Which attributes should be increased to above industry standards? This question presses companies to understand the compromises that the industry currently forces its customers to make

d Which new attributes should be created that the industry has never offered? This question forces companies to think about what new sources of value creation exist within the industry

Value network – how to deliver?

On the third V – value network or how to deliver the value proposition to the valued customer, a company should systematically redefine each component to deliver low prices at a profit While the transformations in the marketing and distribution components are important, much of the savings in its value network is generated through radically streamlined operations

Differentiate deeply based on the value network

Much of the competitive advantage of each type of company lies in distinct value networks Firms need to align the triple-V When developing the triple-V, a company should ask: 1) to what extent does our marketing concept differ from others in the industry? 2) To what extent do elements of our marketing concept mutually reinforce each others? Unlike decisions to serve new segments, entering

a new strategic segment requires a new value network, and is thus a major decision for the company often requiring the approval of the board of directors

Explore different value network options for unique segments

Many companies are struggling with the question of where to slice the value network to serve different segments In fact, there is a continuum between strategic and market segments The figure 2.2b below shows the different value network options for market versus strategic segments

Figure 2.2b: Value network options

Driving marketing innovation using the triple-V

Marketing innovation can be conceptualized using the triple-V model by asking three questions:

1) Are there customers who are either unhappy with all of the industry’s offerings or are not being served at all? Through positioning this question, one can find tremendous opportunities to exploit

2) Can we offer a value proposition that delivers dramatically higher benefits or lower prices, compared with others in the industry?

3) Can we radically redefine the value network for the industry with much lower costs? The four value proposition questions presented previously and the three questions above help conceptualize opportunities for marketing innovation in the industry And using the triple-V to generate innovation clarifies that innovation is not the exclusive territory of technical R&D and product development people Rather, marketers and strategists can contribute to innovation by discovering undeserved or unhappy

segments, offering new value curves, and reinventing industry value networks

(Kumar 2004)

Based on the three research questions, this study is designed to define the triple-V

of the market and describe its characteristics Therefore, a combination of exploratory and descriptive research is suitable approach for this research

As secondary data on customers in Vietnam with regard to Bioscience products are not available, the method to be used in this study was basically primary research employing a combination of qualitative and quantitative approaches

The study was conducted in accordance with the flow chart as shown in figure 3.1

Figure 3.1: Research process

The next step in formulating a research study is a selection of the research design The design is a blueprint that guides us to undertake research on a specific problem

It links the data to be collected (and the conclusion to be drawn) to the initial questions of study It covers issues of “which” and “why” of methods, techniques and tools being selected In addition, decision on sample size and sampling procedure will be made to process of data collection, analysis procedures and statistical techniques to be used

of these four types, the survey method is chosen to conduct an empirical study of the market The reason for choosing the survey method is that surveys provide a quick, efficient and accurate means of assessing information on a population, especially in the case of a lack of secondary data (Zikmund 1997) Moreover the research questions focus mainly on form of “what” questions therefore this type of questions is justifiable rationale for conducting an exploratory survey research (Robert 2003)

The result of in-dept interview was used to determine how many potential customers should be surveyed by questionnaire, who and where they are

3.3 Quantitative study

In this research, quantitative methods are mainly applied to examine the research questions using a survey questionnaire and secondary data as the tool to define the triple-V The data and conclusions will be used for input of the marketing plan and marketing decision process Details about sampling, data collection, and data analysis methods are described in the next sections The table 3.3a below summarizes approach and methods

Table 3.3a: Research approach and methods

Research

designs

Techniques Tools Sources of

Data Collection

Information Dimensions

Exploratory

(qualitative)

Desk/library research

In-depth interviews

Checklists

Interview schedules

Secondary data

Primary data

Overall environment, industry, market, competitors, customers, internal (reports, memo), internet (websites, search engines),

macro data (government, international

publications) Company’s strategy, Bioscience industry, market trends, market focus and capacity

Descriptive

(Quantitative)

Survey Questionnaire Primary data Predictions of market,

consumer behavior, motivations, characteristics of customers, products, value proposition, value network

To define triple-V, firstly value segment, the information dimensions were used in survey questionnaire such as customer’s characters, behavior; effective price point, market size, growth rate and product positioning match

Secondly, value proposition, the information dimensions were used in survey questionnaire such as customer satisfaction and important factors

And finally, value network, the information dimensions were used in survey questionnaire such as information search, contact to company and buying decision

How to segment and target markets

The goal of any segmentation study is to identify homogeneous target groups of customers and prospective customers within heterogeneous markets Once we have

a relevant subset identified, marking customers who are after similar product benefits, many options open up to a marketing decision maker Value segmentation can provide a better understanding of company’s customers to improve the strategic direction and efficiency of the marketing effort Ensuring this only can be done by differentiating its markets and clients by client needs and not by products and services

Based on preliminary results, key segments will be identified by application fields such as Sample preparation, PCR reagent, Protein synthesis The base of segmentation is benefits sought (product features) and the criteria for selecting target segments are market size, growth rate and product positioning match The next steps are to group products into categories, then to develop a market-product grid and estimate size of the market Once they are defined, the BCG matrix or

Directional Policy Matrix will be determined for target markets and marketing actions to reach the target markets.

All data collection will be also used for value proposition analysis The analysis is undertaken to identify the real need-based buying requirements in each segment The results will show the product & non-product benefits they look for and the customer costs may have Each key discriminating feature (KDF) will be established for each benefit or cost Therefore the importance of each KDF to a decision maker will be defined The table 3.3b below will be filled-in for each customer or product:

Table 3.3b: Extent of importance and company performance on each KDF

Moreover, the product performance on each item will be benchmarked versus its competitors as follow:

Table 3.3c: Actionmap of a decision maker

e Sampling

As the result of in-depth interview with Sales & Marketing director & Bioscience segment manager, a sample of 40 potential customers was surveyed Twenty fives of them are in Ho Chi Minh and 15 of them are in Ha Noi city

f Data collection

With support of Sales & Marketing director, Bioscience segment manager, and Ngoc 2007, the questionnaire consists of 19 questions expressed in 53 items were developed