Solutions to improve marketing mix strategy in MIKADO ceramic company

Argumentum foundations on organization and management of the mixed promotion systemCurrent situations of activities of mixed promotion system in MIKADO Ceramic Tile CompanySolutions aimed at enhancing activities of the mixed promotion system in the Company

Title: Solutions to improve Marketing-Mix strategy in

MIKADO Ceramic Tiles Company

ACKNOWLEDGEMENT

We would like to send our many thanks to people, who contributed to this

Capstone project Especially great thanks to the Faculty from Centre, our supervisor

who helps us a lot from beginning to the end, from choosing the Capstone project topic, the methodology, to the improvement of our Capstone project by professional advices

Thank you very much to teacher from Centre, you not only provide us knowledge but also have share a lot of works and give us more support to finish our work

Our very appreciate to our colleagues and group of friends, who contribute the very helpful reference for our writing

We would like to thank MIKADO Managers, who have created the unique culture that motivates not only our efforts at work but also my inspiration to choose the graduated topic We also express our great thanks to managers and staff in support of survey and study industry and business information

Thank you very much all of you, we do believe that we can not succeed without your support and encouragements

TABLE OF CONTENTS

ACKNOWLEDGEMENT ii

TABLE OF CONTENTS iii

LIST OF TABLE v

LIST OF FIGURES, GRAPHS vi

INTRODUCTION 1

CHAPTER I: 4

ARGUMENTUM FOUNDATIONS ON ORGANIZATION AND MANAGEMENT OF THE MIXED PROMOTION SYSTEM 4

I Organization and management roles of the mixed promotion system 4

1 Overview on the mixed promotion system 4

2 Roles of the mixed promotion system in marketing activities of enterprises 5

II Basic contents of organization and management the mixed promotion system in enterprises 7

1 Advertising 7

1.1 Identifying advertising objectives 8

1.2 Decisions on advertising budget 8

1.3 Decisions on advertising messages 8

1.4 Decision on advertising means 8

1.5 Evaluation of advertising efficiencies 9

2 Direct Marketing 10

3 Consumption stimulation 11

3.1 Identification of consumption stimulation objectives 12

3.2 Selection of consumption stimulation tools 12

3.4 Trial testing program of consumption stimulation 13

3.5 Implementation and inspection of the consumption stimulation program 13

3.6 Evaluation of consumption stimulation results 14

4 Public relations 14

4.1 Identification of Marketing Public relations objectives 14

4.2 Selection of messages and public relations means 14

4.3 Evaluation of marketing public relations results 15

5 Direct sales 15

5.1 Organization of sales forces 15

5.2 Management of sales forces 16

CHAPTER II 17

CURRENT SITUATION OF ACTIVITIES OF MIXED PROMOTION SYSTEM IN MIKADO CERAMIC TILE COMPANY 17

I Overview on ceramic tile market in Vietnam 17

II Reality of business and production of MIKADO Ceramic Tile Company 20

1 Establishment and development history of Company 20

3 Business and production competence 22

3.1 Situations of equipments and materials, technique, material facilities 22

3.2 Financial status 22

3.4 Marketing’s performance status 23

3.4.1 Product policy 24

3.4.2 Price policy 24

3.4.3 Distribution policy 25

3.4.4 Mixed promotion policy 26

3 Elements of Company’s Marketing Environment 27

3.1 Macroscopic environment 27

3.1.1 Cultural environment 28

3.1.2 Demographic environment 28

3.1.3 Economic environment 29

3.1.4 Political environment 29

3.1.5 Technological environment 30

3.1.6 Natural environment 30

3.2.1 Customer 31

3.2.2 Competitors 32

3.2.3 Suppliers 32

3.2.4 Elements and forces inside enterprise 32

3.2.5 Intermediaries of Marketing 33

3.2.6 Direct public 33

4 SWOT analysis of strength and weakness, opportunities and risks of Company 33

4.3 Direct marketing 39

4.3.1 Marketing via catalog 39

4.3.2 Marketing via direct letters 39

4.3.3 Marketing via phones 40

4.3.4 Some another direct Marketing tools, for example: 40

4.4 Promotion program: This has been regularly held on occasions of earlier year and construction season 40

4.5 Participating in exhibitions, fairs 41

4.6 Relations of public and propagandization 41

4.7 Direct sale 42

SOLUTIONS AIMED AT ENHANCING ACTIVITIES OF THE MIXED

PROMOTION SYSTEM IN MIKADO 49

I Improving operation programs of Marketing 49

1 Improving Marketing competence for Company 49

2 Organizing market research for selecting target market 50

2.1 Market research 50

2.2 Selecting target market 53

II Marketing solutions aiming to improve operation of mix-promotion system. 54

1 Operation objective of mix-promotion system in general goal of Marketing 54

2 Building viewpoint and strategic design regulation for mix-promotion system 55

3 Decision on budget for mix-promotion system 56

4 Mix-promotion activities must aim at improving imagine, product prestige of the Company 57

5 Mix-promotion system is designed in order to transmit information to customers in the fastest way about business policies and new products of the Company 57

6 Mix-promotion system must have flexible self-adaptation capacity to environmental change 58

7 Mix-promotion system supports distribution channel system to reinforce and extend consuming market 58

8 Decision on operation of Mix-promotion system 59

9 Decisions on products, price and distribution channel 65

9.1 Product policy 65

9.2 Pricing policy 66

9.3 Distribution policy 67

10 Suggestions 68

CONCLUSION 70

REFERENCE 72

LIST OF TABLE

Table 2.1 Production capacity of enterprises in tile production and business 25

LIST OF FIGURES, GRAPHS

Fig.1.1: Decisions in organization and management of advertising activities 16

Diagram 2.1: Distribution channel system of MIKADO Ceramic Company 32

INTRODUCTION

1 The reason to choose this Article

Owning the number of crowded population (around 90 million people) along

with high economic growth rate in the last few years, which continuously improve the living standard of people, increase the needs on construction more and more, provides good foundation for a series of new urban areas in big centers, Vietnam is certainly a potential and attractive market to investor and manufacturers of construction materials nationwide

MIKADO Ceramic Tile Company has involved in manufacture & supply of ceramic glazed tile products in Vietnam market since 2004 up till now Having experienced 5 years of growth and development, facing brick products of the Company has won preference of a majority of domestic consumers and some foreign markets such as France, Iraq, and Taiwan

Such remarkable results can be attributed to the Company’s continuous renovations on models, enhancement of product quality services provided to consumers Apart from that advertising, promotion, propaganda activities have also been attached great importance by the Company, which takes a great part in continuous growth and development of the Company

Therefore, on the basis of factual situation of business activities in MIKADO Ceramic Tile Company in recent years, the research group decided to select the topic: “Solutions to improve Marketing-Mix strategy in MIKADO

Ceramic Tiles Company” as the big exercise of the group

2 The research objectives

Research objectives of the group through this selected the topic include:

- Putting the theory in the practice, clarifying scientific arguments on the use

of mixed promotion

- Analyzing current situations of the mixed promotion system in MIKADO Ceramic Tile Company, thereby evaluating problems unresolved and working out respective solutions

3 The research range

Because of limited time and the Article requires some specialized knowledge, so this Capstone Project only concentrate on researching some basic contents Details: Solutions to improve Marketing-Mix strategy in MIKADO Ceramic Tiles Company

4 The research methods

4.1 The method of data collection

The data are collected by collection elementary data and reality observations

in MIKADO as well as interview Board of Directors & Departments

4.2 The method of data process:

* The compared method: Compare data throughout recent years This method shows the change of MIKADO business’ capability and result through reported periods

* The method of comparison and statistics by table and diagram (statistics to

find out the common trends or features of analysis factors)

4.3 The SWOT Matrix method: Find out the strengths, weaknesses internal MIKADO and changes, opportunities external MIKADO This is the key method to build the strategy of MIKADO

5 The scientific and practical meaning of this capstone project

The research Article of our group will contribute a small portion in completing and improving the marketing-mix as well as apply marketing theory into business process of Mikado in near future

The whole capstone project will be presented in 3 Chapters:

Chapter I: Argumentum foundations on organization and management

of the mixed promotion system

This Chapter will present on argumentum foundations of mixed promotion,

of which an overall introduction on the status, roles of mixed promotion in Marketing activities is introduce, at the same time basic duties are listed for a marketing staff to implement the organization and management of an enterprise’s mixed promotion system

Chapter II: Current situations of activities of mixed promotion system

in MIKADO Ceramic Tile Company

Within this program, the research group has applied knowledge learnt in analysis of practical situations of business activities in the Company from the aspect

of Marketing, evaluated advantages and disadvantages of the Company in the Marketing field, from which shortcomings are found out and respective solutions are introduced

Chapter III: Solutions aimed at enhancing activities of the mixed promotion system in the Company

In this Chapter, the group has applied theories on mixed promotion presented

in Chapter I to introduce some solutions to overcome problems unresolved as presented in Chapter II

It is hoped that the studies of the group will take a small part in more and more effective activities of MIKADO Ceramic Tile Company in the years to come,

as well as in the application of marketing sciences in factual situations of Vietnam The first time putting the theory in practice undoubtedly made the big exercise of the group cover mistakes, defects The research group would be very grateful and would highly appreciate instructions, suggestions from teachers and friends so that the group can be more mature thanks to the source of knowledge learnt

Thank you!

CHAPTER I:

ARGUMENTUM FOUNDATIONS ON ORGANIZATION AND

MANAGEMENT OF THE MIXED PROMOTION SYSTEM

I Organization and management roles of the mixed promotion system

1 Overview on the mixed promotion system

Mixed promotion is a parameter of Marketing-Mix There are various concepts on promotion

According to theorists in capitalist countries, mixed promotion a relation form identified between the seller and the buyer, an activity field oriented at offering the goods the most actively and effectively

Economists in Western European countries believe that: mixed promotion is

a tool, a policy of business activities aimed at activating and making influences on orientations between the seller and the buyer, a propaganda activity form aimed at drawing attention and showing benefits of potential customer group in terms of goods and services

According to the text book “behavior theories and arts in business” of the Marketing faculty the National Economics University, mixed promotion is artistic measures used by businessmen to provide information on the goods, making impacts on the buyer, luring the buyer toward their sides, at the same time it is also

a measure to support sales of goods

According to the text book “administration of the distribution channel system” of the Marketing faculty- the National Economics University, mixed promotion is a cooperative program and is controlled in terms of methods and mass media designed to introduce a company and its products to potential customers, transmit information on products and enterprises to satisfy customers, create favorable conditions for sales of goods and as a consequence, make long-term profits

According to the text book “Marketing services” mixed promotion is an information activity on Marketing to potential customers For enterprises activities services, information on Marketing is empowerment, transfer of necessary messages

on enterprises, on products of enterprises, on serving methods, on benefits customers will get when purchasing products of enterprises, as well as necessary information from customers, whereby enterprises find out the best way to satisfy customers’ needs

Originating from concepts on the above-mentioned mixed promotion, we can find that: mixed promotion comprises of activities intended in the Marketing field

of enterprises aimed at finding, promoting opportunities of goods purchase and sales and business supply services Mixed promotion includes main activities such as: advertising, direct marketing, consumption stimulation, public relations and propaganda, direct sales

2 Roles of the mixed promotion system in marketing activities of enterprises

According to previous opinions, mixed promotion has some important roles such as: stimulating effectively sales force, stimulate customers by price reduction

of products or retaining the price but increasing the quality of products In Vietnam, since 1990s up till now, mixed promotion is important activities that are indispensable in business activities of enterprises

Mixed promotion activities will help enterprises have good opportunities to develop business relations with domestic fellow traders as well as foreign fellow traders Through mixed promotion activities enterprises have good conditions to get mutual understandings, set trading relationships with one another Furthermore, through mixed promotion activities enterprises as well as customers have additional information on the market, have good conditions to quickly develop business and integrate in the regional economy

Thanks to mixed promotion activities, enterprises have good information on customers as well as competitors, whereby enterprises have tendency to renovate their business, invest new technology in business activities

Mixed promotion is an effective tool to occupy the market and increase the competitiveness of goods, services of enterprises in the market Through mixed promotion activities, enterprises get access potential markets on their necessary information, provide potential customers with necessary information, preferential services with a purpose to continue conquer customers and lure customers of competitors Mixed activities promotion will create a good image on enterprises in the eyes of customers; thereby competitive advantages of enterprises keep increasing

Mixed promotion activities is the bridge connecting between customers and enterprises, through mixed promotion activities enterprises will have good conditions to judge their advantages and disadvantages of goods, services, from which enterprises will have sound foundations to make timely and suitable decisions

Promotion facilitates sales of goods and makes it more active; putting the goods in the distribution channel irrationally, stimulate sales forces effectively

Mixed promotion is an effective tool that helps supply and demand meet with each other, especially thanks to the art of mixed promotion, these activities stimulate consumers to buy products enterprises are now offering

Through mixed promotion activities, businessmen not only sell more goods but also take part in changing consumption structure, guiding tastes of customers

It also helps enterprises build up a good image on enterprises and products of enterprises

As a result, in order to get business objectives set forth, enterprises must organize well mixed promotion activities

II Basic contents of organization and management the mixed promotion system in enterprises

In business activities of enterprises, the Marketing executive must identify targeted markets, introduce general marketing strategies, product- identifying strategy needed to be put into business, service forms needed to promote sales of goods, establish distribution systems, price identification methods Furthermore the activities must be promoted to people related to procurement in targeted markets This promotion field is an important one in marketing activities In business activities nowadays enterprises will not achieve high efficiencies if only thinking that: “high quality, cheap price goods is enough for sales of goods” Values

of goods, services, even benefits achieved when consuming products must be also informed to current customers, potential customers, as well as people that have influences procurement To get this done, enterprises must organize good implementation and management oft mixed promotion activities

Mixed promotion includes the following sections:

1 Advertising

Business is a basic activity of the market economy Advertising is an indispensable activity of an enterprise, an important tool to exploit the market Advertising will take part in faster and more sales of goods and as a like human being history As a consequence, many definitions were introduced advertising and have been elaborated from time to time

According to The American Marketing Association (AMA), advertising is

introduced as follows: Advertising is any models of indirect presence of goods,

services or thoughts, actions that people must pay to identify the advertiser

According to Philip Kotler’s, Advertising is any paid form of nonpersonal

presentation & promotion of ideas, goods, or services by an identified sponsor

As a result, advertising is an indispensable activity in business activities of enterprises However, a part form that advertising activities also retails enterprises

activities of a company As a result, when building up an advertising program, marketing managers must always begin from discovering targeted markets and motives of the buyer After that, they can continue go through five important regulations called five M

1.1 Identifying advertising objectives

Advertising objectives must be achieved with such purposes as: informing customers of new policies, products of the Company, creating image of the Company with targeted customers, and then persuading customers to consume products of the Company, finally reminding to maintain the product image of the Company in customers’ mind

1.2 Decisions on advertising budget

After identifying advertising objectives, the Company can start building up the advertising budget for each product Identification of the advertising budget must base on objectives and tasks, since it requires advertisers to identify specific objectives of advertising campaigns, after that to estimate costs of necessary activities to achieve such objectives

Four main methods are herein used to build up the advertising budget including:

- Method based on capabilities

- Method to calculate the percentage rate of sales turnover

- Method to balance competition

- Method based on objectives and tasks

1.3 Decisions on advertising messages

When marketers build up and make decisions on advertising messages for each type of product as for each mode of advertising means, the design of advertising messages must be different, which entails high creativeness, draws attention from customers

1.4 Decision on advertising means

The next task of the advertiser is to select advertising means to transmit advertising messages This process depends on advertising scope, frequency, intensity, modes

1.5 Evaluation of advertising efficiencies

Communication efficiencies of the advertising mean the measurement of its potentials impacting on levels of popularity, understanding and preferences of customers But currently the evaluation of advertising efficiencies have been not yet measured since it is often characterized by high generalization However, the evaluation of advertising efficiencies before and after advertising has great influences, helping Marketing activists implement better the advertising program and draw attention from customers

In summary, organization and management of advertising activities is summarized in five important decisions as follows:

Compete in balance based

on the capability of sales turnover percentage, objectives and duties

Decisions on advertising means

Scope, impacts, main advertising means, specific means, time distribution for

Advertising means

Evaluation of advertising Affect communication, consumption

Decisions on message Visualize the message, Evaluate and select, implement

2 Direct Marketing

Direct Marketing is often considered as subsidiary with primary advertising and direct sales tools However, it can still take a big part in marketing achievements and is now playing some big roles

In business activities, in order to speed up consumption of products and services, almost all companies primarily base on advertising, consumption stimulation and direct sales They use advertising to create popularity and attention, consumption stimulation to stimulate sales of goods, and direct sales to finalize sale

of goods Direct Marketing strives to combine 3 factors to make sale of goods direct, not through intermediary

Direct Marketing appeared at the first time under the form of directly sending letters and order catalog of goods through telephone, in recent years, thanks

to booming of electronic sciences and technologies, many other forms are added, such as Marketing through telephone, direct answer on radio and television, purchase of goods through electronic system Marketing tools of great diversification have one thing in common that is they are all used to get orders of goods directly from targeted or potential customers

Currently in the world Direct Marketing is now being attached importance and developed by enterprises Primary reason is that the cost to get access to customers is much cheaper with the use of sales forces, capabilities of controlling needs and responding more promptly and sensibly to needs of changes from customers when it must be carried out through intermediary forces The use of Direct Marketing also brings about some benefits to customers such as: saving time for customers, introducing customers a variety of goods to select and new living style, saving costs for customers when going directly to shops for sales of goods

But application of Direct Marketing tool in our country has not been attached importance and has not been widely popularized Since the infrastructure of our country has still been under-developed, therefore; the application of Direct Marketing in enterprises remains low Besides, the direct purchase of goods at shops of consumers has hanged on the mind of people due to previous consumption lifestyle To get this changed, in the years to come enterprises must quickly apply, put Direct Marketing tools in business activities aimed at reducing expenses, increasing competition capabilities among enterprises and introducing attractive and persuasive advertising items to customers on benefits achieved when using Direct Marketing in sales of goods

3 Consumption stimulation

Consumption stimulation includes a great number of different tools to stimulate, which are often short-term, aimed at stimulating consumers or commercial sectors to buy more specific products, services quickly

Consumption stimulation includes tools to stimulate consumers such as: offering samples, bonus coupon, deduction in case of cash payment, especial price reduction, gifts, awards, higher rewards to regular customers, free-of-charge trial products, warranty, performance , competition, trade promotion such as: price reduction for goods, the goods given free-of-charge, price support for goods, subsidy for advertising cooperation, goods advertising and exhibition, money given

to retail sellers, competition in sales of goods between agencies and stimulation of sales force such as: bonus, conferences of sales of goods

Consumption stimulation tools are used by most of organizations, from manufacturers, distributors, retail sellers, commercial associations to non- profit organizations Consumption stimulation tools are often preferred and selected by consumption goods enterprises

As we all know, consumption stimulation aims at adjusting short-term

consumption stimulation activities requires enterprises to have detailed and meticulous implementation plans, program, so that consumption stimulation activities can bring about high efficiencies When formulating plans for consumption stimulation activities enterprises must identify consumption stimulation objectives, selected tools, build up the program, carry out trial test of the program, implement and inspect, evaluate the results

3.1 Identification of consumption stimulation objectives

Consumption stimulation objectives are drawn from wider promotion objectives Such objectives are drawn from basic Marketing objectives set forth for respective products Specific objectives of consumption stimulation change depending on types of targeted markets For consumers, the objectives are to stimulate the purchase of more product units, create some trial users among non-users, and lure consumers to get rid of brands of competitors For the retail sellers, the objectives are to stimulate them to do business in new items of goods and to preserve the goods with higher level, to stimulate the purchase of old-fashioned goods, to stimulate preservation of items of concerned goods, to balance promotion measures of competitors, to create the loyalty with brand among retail sellers and to penetrate in new retail shops

For sales forces, the objectives are to stimulate supports to products or new models, to stimulate the finding of more potential customers and to stimulate the consumption of old-fashioned goods

3.2 Selection of consumption stimulation tools

After building up consumption stimulation objectives, we must select consumption stimulation tools to finalize consumption plans To get this done, the promotion plan formulator must consider market types, consumption stimulation objectives, competition situations and effective costs of each tool Main consumption stimulation tools used include:

+ Trade Promotion

+ Tool to stimulate consumers

+ Speed up business

3.3 Building-up of consumption stimulation program

Marketers must base on decisions to identify and build up the whole promotion program Based on consumption stimulation objectives, tools for each type of different products, marketers must make decisions on building up respective stimulation program Basic decisions on building up consumption stimulation program include:

+ Decision on training time of Program promotion

+ Decision on rewards for customers

+ Decision on selection of means of reward distribution

+ Decision on the total budget for consumption stimulation

3.4 Trial testing program of consumption stimulation

The implementation of trial testing applied for consumption stimulation program is necessary to identify whether the designated tool is conformable or not, whether the stimulation level is optimal or not and whether the introduction method

is effective or not It enables us to restrict at the maximum problems, shortcomings that may arise during the implementation As a result, the testing of marketing activities in general, of the consumption stimulation program in particular is of great necessity to which Marketing activist must pay attention

3.5 Implementation and inspection of the consumption stimulation program

During the implementation of the program, due to unintentional or deliberate causes, implementing staff may have wrong attitudes, behaviors affecting the consumption stimulation program of the Company, therefore; inspection,

supervision work is very necessary to discover and handle timely aforesaid performances and behaviors to make the program more efficient and effective

3.6 Evaluation of consumption stimulation results

The evaluation of consumption stimulation results an important need It reveals that after the program how many products the Company has consumed, how many customers to be increased, how the profit-making capability is But currently the evaluation of results is only superficially implemented since many people believe that the increase in sales turnover, increase in profit-making capability much depends on a variety of factors, not only depending on consumption stimulation

4 Public relations

Public relations are a traditional/ another important promotion tool Despite less used, it has great potentials to create the level of popularity and preference in the market It is required to re-identify the position of products and protect them Primary public relations tools include publications, events, news, talks, public interest activities, writing materials, audio-visual materials, identification means and via- telephone information services The formulation of public relations plans includes the identification of public relations objectives, selected messages and suitable means, and evaluation of public relations results

4.1 Identification of Marketing Public relations objectives

Objectives must ensure the following requirements:

+ Create the popularity

+ Create credit by transferring messages in articles

+ Stimulate sales forces and agencies

+ Reduce promotion costs

4.2 Selection of messages and public relations means

This work requires marketers have creativeness in creating interesting stories, articles as well as using various events to draw attention to their products and services

4.3 Evaluation of marketing public relations results

Of all three above-mentioned mixed promotion tools, public relations

marketing are the most difficult to measure But with the prior use of other tools, it can be easier to evaluate its contributions

5 Direct sales

Nowadays, almost all companies use their sales representatives and many of them put them on high priority in the marketing – mix Sales staffs are very effective in the implementation of specific marketing objectives At the same time, they also cost much The leadership must organize and manage tightly natural resources of direct sales

5.1 Organization of sales forces

This entails basing on decision on target, strategy, structure, and scale and remuneration system Objectives of sales forces are to explore, find mew customers, provide information, sell goods and do services, collect information and distribute Strategies of sales force are related to decisions on what combination types and ways of sales methods are the best effective (individual or collective sales ) The structure of sales forces can be organized under territories, products, markets or under the combination of such factors and the rational scale, shape of areas is identified The scale of sales force entails estimating the total work volume, the total sales time, the necessary number of sales staff Remuneration regulations of sales forces entail identifying the remuneration levels and sections of remuneration, such

as salary, commission, bonus, trip allowances and auxiliary welfare fee

5.2 Management of sales forces

It covers recruitment and selection of sales representatives, training, guiding, encouraging, and evaluating them It is necessary to recruit and select carefully sales representatives to reduce costly expenses due to hired people that fail to meet requirements The sales training program introduces new sales staff the history of the company, products and policies of the company, characteristics of the market and of competitors and the sales art Sales staff should be instructed on such things as: developing customers, building up potential customers, normalizing visit levels, and using effectively their time fund Sales staff should be stimulated by such forms as: economic awards and reorganization of achievements as they often have strong forceful decisions and overcome obstacles The main purpose is to satisfactorily encourage them, which makes them endeavor more, make higher achievements, get bigger rewards, make higher level of satisfaction and make stronger encouragements The final management step entails periodically evaluating achievements of each sales staff in order to help that person work well

The purpose of sales forces is to sell goods and sale of goods can be considered as an art The sale of goods is a process of 7 steps: exploring, finding, screening get access preliminarily, approaching, introducing and performing, overcoming objections, ending the commercial affair, monitoring and maintaining Another aspect of the sale of goods is the negotiation- and art to reach transaction conditions that can be satisfactory to both sides The third aspect is public relation marketing- an art to create closer relationships and the independence between people of the two organizations

CHAPTER II CURRENT SITUATION OF ACTIVITIES OF MIXED PROMOTION

SYSTEM IN MIKADO CERAMIC TILE COMPANY

I Overview on ceramic tile market in Vietnam

Under impacts of the market mechanism and the growth rate on construction, urbanization in recent years, ceramic tile products have been supplied by over 40 enterprises nationwide with the current designed capacity of app 250 million m2 Besides, a big number of smuggled goods from China are imported with cheap price, diversified, abundant models, which makes the domestic production encounter a number of difficulties, face harsh competition on prices and models of products According to factual investigations, the annual yield of the ceramic tile consumed is around 130 million m2 in 2008 This number is less than the supply of manufactures since the living standard of people is more and more improved, which crates a variety of selections for needs of interior and exterior decorations

In the domestic distribution network, at present, there are over 6000 building material shops Only some companies such as Dong Tam, Bach Ma, and Prime

…can organize well the direct domestic distribution network in big cities due to their strong economic potentials and good management experiences, whereas other enterprises remain weak in this stage Such activities as: Advertising, promotion, direct sales …are also being paid attention and invested by these companies

In the years to come, the ceramic tile sector requires more satisfactory attention to marketing activities right in the domestic market and it must be considered as the potential market to develop in the right direction, meeting demands of consumers

Currently, the ceramic tile production sector holds a worthy position in Vietnamese consumption goods industry, attracting a great number of labor forces and collecting a lot of foreign currencies for the State budget However domestic enterprises are now encountering big challenges including the competition with foreign direct investment enterprises, and items of smuggled goods imported from China Considering from the competitive advantages, Vietnamese enterprises are now weaker than FDI enterprises on such conditions as: capital, production management experiences, techniques, technologies and especially market conditions Therefore, in the years to come, in order to ensure the exploitation of market potentials, move forward to occupy the domestic market served for domestic demands, enterprises need further investment to make increase in both quality and quantity of products with diversification in models and types, aimed at meeting demands of consumers The Vietnam Government need to implement consumption demand stimulus measures in general and demand stimulus measures of facing brick products in particular Besides, enterprises need to enhance the relationships between manufacturers and consumers through product introduction and sales system in provinces, cities, rural areas, high and remote areas, mountain areas…

In terms of today’s export market, Vietnam’s ceramic tile has been exported

to more than 40 countries in the world Main markets are in Asian region such as Korea, Iraq, Thailand, and Taiwan which occupy about 80% of exported ceramic tile value This is a market having big demands but requiring high quality and design Therefore, in order to penetrate into these markets, the industry of tile production is required to promote their capacity to satisfy market’s requirements

Table 2.1 Production capacity of enterprises in tile production and business

production (m2)

3 CMC Phu Tho 6

31 Anh & Em (Brothers) Quang Nam 6

II Reality of business and production of MIKADO Ceramic Tile Company

1 Establishment and development history of Company

MIKADO Ceramic Tile Company initially established since 2003, with

headquarter in Tien Hai Industry Zone – Tien Hai district, Thai Binh province Once established, Company invested production of line of two-fold firing tile with the capacity of 2.5 millions m2 per year Until 2006, Company continued to invest another production line no.2 (also called two-fold firing tile) with capacity of 2.5 millions m2 per year And in 2007, Company continued to invest the production line no.3 (dedicated for paving tile) with the capacity of 3 millions m2 per year Up

to now, after more than 5 supply years in market, products of ashlars paving tile under MIKADO trademark have been well-known by domestic and foreign consumers

Starting from a Company having only production line at initial , MIKADO Enameled Tile Company have greatly developed with 3 continuous production lines

of 3 shifts/day and more than 700 staffs

- Charter capital of establishment was 14 billions and has been adjusted to 80 billions

- Nowadays production capacity is over 8 millions m2/year

_ Current personnel: more than 700 cadres and staffs

Once established, MIKADO was active to search foreign partners for export

in order to create foreign exchange receivables to have corresponding resources of material import for stabilizing production, improving product quality, affirming their prestige and trademark Management board of Company actually considered it

as works for consolidating and constructing company which is stronger and capable

of facing with fierce competition on market to make Company become gradually strong

Nowadays, MIKADO has become one of leading private companies of Vietnam in producing ceramics and tiles in terms of scale, operation and prestige in the market Achievements are attained thanks to continuous and enduring efforts of Company’s Employers and Cadres Looking back on MIKADO ceramic company’s business stages during 5 years, that is really continuous development and endless innovation

2 Company’s organizational structure

MIKADO ceramic tiles company’s head office is in Hanoi while the production plant is in Thai Binh; therefore, the structural system seems to be complicated and coincisive However, according to the research group’s assessment, this structure is fairly appropriate to the production and trading condition of the company during this period In fact, the manufactory’s products are

General Director

Production plant

Finance Manager

Sales

Manager

Informational Manager

Equipment Manager

Finance-Production plan Department

KCS technical Department

Production area

company controls the products bought from the manufactory and distribute to customers throughout the country

3 Business and production competence

Started from 2003 with only a production line, MIKADO Ceramic Company has prestigiously grown and developed in domestic and foreign markets until now

In order to have above results, management board of company has constructed a business strategy which is proper and always innovative Also, the company has implemented technical advances into production satisfying consumer’s demands in domestic and foreign countries

3.1 Situations of equipments and materials, technique, material facilities

MIKADO Company’s production lines have been equipped comprehensively and imported from countries having the biggest ceramic industries in the world such

as Italy, Spain, and China Material facilities in workshops have been fully equipped to create favorable conditions for Company’s production and operation

3.2 Financial status

With modest capitals at the beginning, after five years of development, Company’s financial status is more strongly increased that brings a lot of advantages for Company Equity capital occupying more than 80% is an advantage for company to create active conditions in company’s business Nowadays, Company has focused capital investment on reproducing and broadening their systems of distribution network This is intensive concentration with all Company’s might in main businesses of tiles

Table 3.2: the capital flow of MIKADO

Working capital 20 billion VND 40 billion VND 60 billion VND Profit ratio after tax/

With a number of around 100 workers at the beginning, MIKADO Ceramic Company has had 700 cadres and employees among which production workers occupy 80% Also, above 10% of officials and employees have levels of university and post-university, production workers have high skill At present, Company always has a good and skilled working staff recruited and trained basically They are moderately competent, enthusiastic and professional and better cultivated to prepare for new leadership, long-termed development guidelines for company Also, MIKADO Ceramic Company always concerns cadres and employees and their families’ lives

3.4 Marketing’s performance status

MIKADO Ceramic Company is one of leading companies in products of ceramic tiles in Vietnam Company has a quite big market share in Northern provinces (always occupying about 75% of production outputs of Company) This

is a worthy position of Company thanks to endless endeavours and the most effective business strategy

In order to maintain the leading position and stable growth speed, Company always finds effective methods for increasing total demands in the market

attacking actions Company’s cadres always try their best to increase Company’s market share more under the motto “increase the market share with the slogan: Covering fully and widespread”

With given aim in 2010, Company will further invest and develop products

of Granite tile (one of products was attracted by consumers thanks to quality and strength Company has promoted and developed export markets with business strategic reactions which are suitable to Company’s production competence

3.4.1 Product policy

Products of ceramic tile have particular characteristics in accordance with consumers’ liking Availability, high quality at reasonable prices of products is attached much importance by Company that led to suitable policies for products Company always monitor demands and survey consumers’ liking in every area to have the exactest information promptly for departments of model design and product development so that Company can improve models and create products which are newest and suitable to consumers MIKADO Ceramics even established a hot line between standing branches, employees in company, vendors and consumers

to identify information timely and exactly

Company always has Sample Bank which is ready to release products in the market in order to replace products out of life-cycles or copied by another firms and can deploy those models at maximum in the shortest period that is suitable to short life-cycles of products Products of tile under the MIKADO Ceramics branch were highly appreciated and recognized to be a product having “Prestige and quality” by

a lot of consumers in domestic and foreign countries

3.4.2 Price policy

Basing on prestige of quality and model, consumers can respond at various price levels MIKADO Ceramic Company has selected competitive price strategy at nearly lowest levels as compared to those of firms in the market to speed up

circulating speed of goods in order to take full advantage of production output per a product model Company has followed “one-price” policy in the whole country, and each type of products has stamps telling size, code and price

MIKADO’s ceramic products are always promoted in quality, prestige, and recognized by consumers This is an important basis having organic relations for Company to assess their prices according to objective awareness in accordance with locating ideas of Company’s products

3.4.3 Distribution policy

Distribution channel is considered as a central rule of four elements of Marketing – Mix According to those directions, MIKADO Ceramic Company in general and Company in particular always try their best to promote and construct the channel strategy which is strongest and most effective with a goal of “Covering

in near and main point market, and appearing in a distant market” With this goal, MIKADO Ceramic Company is trying their best to deploy and broaden systems of vendors, stores and total consumption, etc in all areas which are considered as potential ones by Company System of vendors in the same area trends to increase that creates conditions to develop images and product consumption to customers in each area Also through this system of vendor, Company will consider which vendor has potential and prospect in business of MIKADO Ceramic products From that, Company will cultivate and create conditions of promoting and developing in long-term, and will remove vendors having weak operation This forces vendors to try their best in consumption of products from MIKADO Ceramic Company in their distribution areas

At present, in the whole country, MIKADO Ceramic Company has two branches in Middle and South with nearly 30 distribution vendors in provinces in the North MIKADO’s products are mainly exported to five countries in the world such as Korea, France, Taiwan, Pakistan & Iraq

Diagram 2.2: Distribution channel system of MIKADO Ceramic Company

3.4.4 Mixed promotion policy

MIKADO Ceramic Company has attached much concern and importance to contracts of advertisement and marketing in domestic and foreign markets A lot of contracts have created efficiency in making Company’s products become well-known in public also thanks to outstanding position of Company

Advertising operations are broadened on television, radio, newspaper, panel, poster that aimed at broadcasting MIKADO Ceramic Company’s products to public, serving as introducing of new products and contributing to market share increase according to Company’s plans Company also attaches much importance in supports

of advertising contents and budgets for standing branches, and vendors Advertisement operations in many types of media have been performed detailed and methodically that really attracts much attention of viewers

In order to speed the completion of consumption up, program of consumption stimulation has been attached much importance’s actively such as Promotion on occasion of construction season Company increases levels of discount and reward suitable to vendor units which have completed turnover expansion In addition, Company still executes sale programs with free gifts to customers when they buy products from Company, etc

Trade exhibition and workshop are special tools for Company to concern and use during last years MIKADO Ceramic Company has taken part in many sessions

of big fairs hold in Ha Noi, Ho Chi Minh City and Da Nang, etc Through fairs, Company has sold their products and further approached potential customers which were not been approached yet by Company’s sale divisions

In addition, Company has even proposed some big programs, created relations to people and local authorities in order to propagandize and mobilize their supports through activities such as: financing students and pupils who meet financial difficulties but well study, assisting victims of floods, contributing to charity’s funds, financing sport events and home constructing programs in 2007+2009, financing Nam Dinh football team in 2005+2006+2009, etc Through above activities, Company’s product image has been heightened and made good impression on customers

3 Elements of Company’s Marketing Environment

This is a set of active subjects and operating forces inside and outside Company that has affected Company’s steering ability of Marketing operations – a set of forces which are always changeable and can not be monitored that Company must accept and find ways of deploying when constructing Marketing foundations

Marketing environment consists of macroscopic and microscopic ones

3.1 Macroscopic environment

This consists of forces in extensive social aspects affecting microscopic environments It creates corridors for enterprises in business Enterprises are not capable of changing macroscopic environment’s elements because their duties are

to approach, increase their awareness and deploy profitable elements for their business operations

Hereafter, we will consider influences of Marketing’s macroscopic environment’s elements on MIKADO Ceramic Company’s operation

3.1.1 Cultural environment

Today, values and standards of culture have been entered into each minute detail of business operations Cultural elements have affected operations of production and business that are shown in society’s cultural values – unwritten rules leading people to follow according to some certain standards, etc In ceramic tile business in general, and MIKADO Ceramic Company’s business in particular, cultural elements has had great importances It has made influences on products, forms, models and quality of products and even transaction forms of business, and sale services, etc because culture is one of means for building special characters in daily life

3.1.2 Demographic environment

About 90 millions of people in the domestic market have high demands of consumer goods and as well as of tiles in particular that has been opportunity and also challenge to MIKADO Ceramic Company and the whole of Vietnam shoes and leather industry Strong consumption and various demands have always changed – this industry’s character invented an important duty that Company needs to get in close touch with demands in the market to renew their products as well as to discover market’s gaps converted into their market share If Company can achieve such operations, their business will become effective Another characteristics also needs concerning and considering, for examples, measurement speed of market

share is at high level, natural growth of population is 1.7% of year, aging phenomenon of population and mechanical growth is at high levels associated with exchanges and integration into foreign cultures and economies, etc These characteristics also make certain influences on consumers’ demands

When Company has participated in import and export operations with countries in Europe, America, Southeast Asia, etc, demographic environment’ s elements outside country has become more complicated Therefore, it is required to comprehensively research for achieving long-termed efficiency

Elements of economic environment have often had direct or indirect influences on any enterprises, including MIKADO Ceramic Company Crises of finance and currency in region and its global consequences have affected economy

in general and Building Material production industry in particular, with clear signs

of USD/VND ratio increase that has led to increase in materials

3.1.4 Political environment

Elements of this environment have made influences on production of Company under the manifestation of legal framework, policies, adjustments, and guidance and controls in macroscopic aspects performed by Company or types of tax, quotas for imported goods, etc So, decisions of Marketing have suffered from strong influences of this environment MIKADO Ceramic Company has always

direction, and law’s regulations MIKADO Ceramic Company has always taken care of life for labors, and implemented system of policies for labors at the start when Company entered into operation Contract of co-operative agreement is specific evidence

Company has seriously executed obligations of state and society, such as: following full obligations of tax, doing charitable works, building houses of affection, and taking care of martyrs and wounded soldiers’ families, etc Thanks to complying with law, regulations, obligations of State at any time, Company has established prestige and attracted much concern of highest leaders of provinces, districts Many leaders from provinces to districts visited and encouraged Company’s staffs on the occasion of Company establishment yearly

Clear understanding of law, politics is a necessary condition for Company’s management board to propose sound policy-making that is profitable to Company’s business

3.1.5 Technological environment

Today, nobody can still deny important role of science and technique in all aspects in life Capital and technological technique has become competitive elements and boosted competitiveness in the market This requires MIKADO Ceramic Company to find ways of renewing production technology, of investing in upgrading systems of storage, workshop at any time Simultaneously, works of training and developing human resources having knowledge, technique and high skill are always included in a list of leading concerns of Company

3.1.6 Natural environment

Vietnam’s types of climate and weather have a lot of influences on consumer demand of tiles In rainy season or Lunar calendar’s July (few of houses constructed and completed), used output is always low in these months Therefore, MIKADO Ceramic Company, one of companies producing and providing types of high-quality

shoes and sandals, has always had plans of production and package maintenance of tile boxes to keep box covers’ colors Therefore, box covers are still new when released to the market in months of having high demands

3.2 Microscopic environment

Microscopic environment of Marketing is one of forces having direct

relations with Company and can make direct influences on the approval of marketing decisions of Company Decisions’ duties are to ensure production and supply of attractive items for targeted markets so that goods can be sold and profits

belonging to microscopic environment including:

3.2.1 Customer

According to behavior principles, Company’s customers can be divided into main groups as follows:

Industrial purchase behavior includes:

- Customers of “industry” are companies of construction and design consultancy

- Customers are general distribution vendors or intermediate sellers who buy Company’s tiles This group consists of general agencies, stores of building materials, and supermarkets

- Customers in export market (but according to introduced subject frame, this special subject shall not focus on researching this type of customers)

*Behavior of consumer purchase includes existing buyers and those who will buy Company’s products to serve needs of individuals and their family

Company’s main customers are people of aged class understanding advantages of Company’s products Making decisions and influences of purchase to this class is not complicated as compared to that relating to industry customers However, process of decision-making is very multiform because a number of civil

3.2.2 Competitors

In the market of ceramic tiles, most of private companies have production capacity of about 6 millions m2/year are main competitors to MIKADO Ceramic Company Those companies’ advantages include similar prices (or little cheaper) In terms of design, those company usually copy best-selling products’ designs from big firms including from MIKADO Therefore, Company must endlessly learn and improve knowledge of technique as well as of business and research to catch market demands to create products which are suitable to consumers’ tasting Company needs to find and effectively perform suitable reactions of competition

3.2.3 Suppliers

At present, Company has had customer relations with domestic and foreign companies Company has imported equipments, materials for manufacturing tiles mainly from Italy, Ukraine and China In last years, Company’ s business relations with countries have been based on volunteer bases of cooperation, mutual benefit and signed contracts to purchase and sale between parties Under the sound business motto of putting loyalty first, Company is always received great regards and high-quality items at optimal prices, and transference at maturity

3.2.4 Elements and forces inside enterprise

MIKADO Ceramic Company is a joint stock one, so business operations of Company are to create profits for Company However, whether that duty is successful or not suffers from influences of many factors and forces inside enterprise Firstly, marketing rules must comply with main duties, specific aims, policies and orientations developed by Company’s management board Therefore, businesses’ steering board has had great influences on operations and rules of marketing division Marketing division’s staffs need to act comprehensively and closely with another functional department in Company such as: Finance-accounting, materials – production, planning, upgrading and developing, divisions