Marketing plan for truong thanh agriculture corporation till 2015 master project in business and marketing management

HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBMM4 NGUYEN HOANG THANH MARKETING PLAN FOR TRUONG THANH AGRICULTURE CORPORATION TILL 2015

TRƯỜNG ĐẠI HỌC MỞ TP HCM

HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBMM4

NGUYEN HOANG THANH

MARKETING PLAN FOR TRUONG THANH

AGRICULTURE CORPORATION TILL 2015

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

ADVISOR: Dr NGUYEN MINH DUC

HO CHI MINH CITY

(2010)

COMMITMENT

I hereby commit that the paper was written by myself with information retrieved and obtained from reliable sources and was prepared under the guidance of Dr Nguyen Minh Duc Where ideas were reproduction of other publication, the sources were clearly indicated, thus assuring no plagiarism committed

HCMC, 28 February, 2011

NGUYEN HOANG THANH

ACKNOWLEDGEMENT

I would like to express my sincere thanks to Hiep Quang Co and Truong Thanh Corp., for its documents and guidance during my thesis My deepest gratefulness goes to the dedicated professors of Solvay Business School – University of Brussels for the profound knowledge that they managed to impart to me, for the time they spent with us after class to clarify any hazy points we might have had, and for the patience they carried with them during difficult moments when we seemed to disagree with the professors My sincere thanks are reserved for Dr Nguyen Minh Duc, a senior lecturer in economics at Nong Lam University and Ho Chi Minh City Open University Without his invaluable help my paper would never have been finished as it

is now

I will not forget Mr Serge Bywaski and Ms Nguyen Thi Mong Thuy, our helpful academic program coordinator, who has been along with us throughout the course work, giving necessary help and acting enthusiastically as a medium between the class and Solvay professors

HCMC, 28 February, 2011

NGUYEN HOANG THANH

ADVISOR’S REMARKS

The author has selected a good topic related to his expertise in agricultural business He has come up in the right direction and complete the proposed objectives The marketing plan suggested in useful, realistic and applicable to direct business activities of the Truong Thanh Corporation going well The structure of this project is well-defined with logical and sub-sections

The author has worked hard to conduct field survey, collect information and do analyses for this project With this study, the author has been proved that he had understood to apply achieved knowledge from MBA program to solve specific and important problems of the Truong Thanh Corporation

I believe that this project has been well prepared and studied in a limited time Therefore, I strongly recommend the jury to accept his presentation to complete his master program

Dr Nguyen Minh Duc

TABLE OF CONTENTS

EXECUTIVE SUMMARY 1

CHAPTER 1 3

INTRODUCTION 3

1.1 Purpose of the Study 3

1.2 Scope of the Study 3

1.3 Methodology and Source of Data 3

1.3.1 Desk research 3

1.3.2 Market research 3

1.4 Company description 4

CHAPTER 2 6

SITUATION OF ANALYSIS 6

2.1 External Analysis 6

2.1.1 Market analysis 6

2.1.1.1 Market Size 6

2.1.1.2 Market Growth 6

2.1.1.3 Market trend 8

2.1.2 SLEPT Analysis 8

2.1.2.1 Social Environment 8

2.1.2.2 Legal Environment 9

2.1.2.3 Economic Environment 9

2.1.2.4 Political Environment 10

2.1.2.5 Technology Environment 10

2.1.3 Competitors Analysis 10

2.1.3.1 Suppliers (Bargaining Power Supplier): Medium 11

2.1.3.2 Buyers (Bargaining of Power Buyers): High 11

2.1.3.3 Potential Entrants (Threats of new entrants): High 12

2.1.3.4 Substitute (Threats of Substitute Product or Service): low 12

2.1.3.5 Industry Competitors (Rivalry among existing firms): High 12

2.1.4 Customers Analysis 13

2.2 Internal Analysis 14

2.3 Company Environment: SWOT analyzing 15

2.3.1 Strengths 15

2.3.2 Weakness 15

2.3.3 Opportunities 16

2.3.4 Threats 16

2.4 Key success factors 16

2.4.1 Company 17

2.4.2 Customers 17

CHAPTER 3 19

MARKETING PROGRAM 19

3.1 Marketing Objectives 19

3.2 Marketing Strategy 19

3.2.1 Targeting 19

3.2.2 Re-Positioning 20

3.3 Marketing Mix 20

3.3.1 Product Strategy 21

3.3.2 Price Strategy 22

3.3.3 Promotion Strategy 22

3.3.4 Distribution Strategy 23

3.4 Convincing target customers 24

3.4.1 Strengthen sales force team 24

3.4.2 Field action plan 24

3.5 Sales Forecast 24

3.6 Implementation and Monitoring 25

3.7 Monitoring and assessment 27

CONCLUSION 28 REFERENCES

APPENDIX

DDGS : Dried Distiller Grains with Soluble

LIST OF FIGURES & TABLES

Figure 2.1: Imported values of animal feed and ingredients in 2008 – 2009 (million USD)

Figure 2.2: Number of animal feed production factories

Figure 3.1: Sales forecast

Table 2.1: Feed for livestock industry

Table 3.1: Customers segmentation

Table 3.2: Quality of Soybean

Table 3.3: Quality of Soybean meal

Table 3.4: Sales forecast

Table 3.5: Milestone

EXECUTIVE SUMMARY

Truong Thanh Corp is a member of Hiep Quang Co., one of the leading companies in supplying feed ingredients in Vietnam Truong Thanh Corp specializes in trading ingredients for animal feed and aqua-feed production Sale volume in its first operating year achieved only 30 percent relative to proposed plan This shows that Truong Thanh Corp is carrying in business ineffectively

Current physical assets of Truong Thanh Corp include four depots and one manufacture factory to produce soybean In order to support Truong Thanh Corp carries out it business for a stable development, we have done a marketing plan for it till 2015 with following contents:

- To 2015, the objective of Truong Thanh Corp is covering up 9 percent

of market share (50,000 tons/years) of soybeans and becoming one of five leading companies in soybeans supply in Vietnam;

- Major products include soybeans (about 70 percent of sale volume) and soybean meal (about 20 percent of sale volume);

- With products of soybean and soybean meal diversified based on quality and price, Truong Thanh Corp still develop soybean products serving human nutrition segment (soybean number 1);

- Re-segmenting toward target customers are small production factories, dealers, wholesaler, marketing strategy is business to business (B2B):

- Re-positioning Truong Thanh brand based on professional workforce, diversifying products with good quality and reasonable price;

Inter-relationship (society) marketing strategy is emphasized with maintaining long business relationships as well as establish good relationships to attracting new customers via an enthusiastic sale team

Sale Forcast of Truong Thanh Corp till 2015

010.000

CHAPTER 1 INTRODUCTION 1.1 Purpose of the Study

Because Truong Thanh Corp is a member of Hiep Quang Co., based on Hiep Quang’s strategy, this project is implemented:

- To provide a road map and specific guidelines for Truong Thanh Corp

- To develop product strategy for the corporate based on needs of target customers

- To suggest a marketing strategy to achieve its business development goals in next 5 years

1.2 Scope of the Study

This study is done for southern market, focusing on the corporation’s business in feed ingredients supplying This study does not analysis for activities in Manufacturing and logistics of Truong Thanh Corp

1.3 Methodology and Source of Data

1.3.1 Desk research

Secondary data will be collected from journal, magazines, websites, books, and company’s profile and reports for situation analysis and SWOT matrix analysis

customers and to get staff’s comment for a new marketing and business plan

1.4 Company description

Truong Thanh Agriculture Corporation was founded in June, 2008 and located in District 11, Ho Chi Minh City It is a member of Hiep Quang Co., which is one of the leading companies in supplying commodities, such as soybean meal, meat and bone, fish meal, etc Target customers of Hiep Quang Co., are focused on businesses (B2B) such as Cargill, CP, Proconco, etc

Truong Thanh Corporation also specializes in trading ingredients for animal feed and aqua-feed production Truong Thanh Corp is established with initial orientation of filling in market which Hiep Quang Co., does not do well Therefore, with B2C strategy, target customers of Truong Thanh Corp are farmer, dealer, wholesalers, etc Established at the time of economic crisis as well as insufficient prepared plans and business strategies, Truong Thanh Corp has many difficulties in competing and developing business in Vietnam market

With purpose of taking Truong Thanh Corp to overcome bad effects from the economic crisis period and to develop in the future, the leaders of Truong Thanh Corp has decided to reconstruct the sales force as well as develop strongly Soybeans product which is the major product with 70 percent of sales The 30 percent remaining products are soybean meal, wheat pellet Brand, DDGS, etc

To achieve these objectives, Truong Thanh Corp should prepare a business plan carefully Wishing to contribute some ideas to make this business plan

better, I choose the theme “Marketing plan for Truong Thanh Agriculture Corporation till 2015” to do graduating report in MBMM4

CHAPTER 2 SITUATION OF ANALYSIS 2.1 External Analysis

2.1.1 Market analysis

2.1.1.1 Market Size

According to the Ministry of Agriculture and Rural Development, the livestock industry need about 17 – 18 million tons per year of food However, domestic production only meets 50 percent of the volume Vietnamese enterprises have to import up to 50 percent of ingredients needed from other countries Especially, Vietnam is still mostly dependent on imports of soybean, soybean meal, worth around US$1 billion every year

Base on the General Statistics Office, Quantities of imported animal feed and ingredients reached 1.157 billion USD in first six months of

2010 Especially, soybean volume imported 200,900 tons in first six month 2010 Actually, imported feed ingredients stay in group which has the highest increase speed

(Source: Customs head office)

Figure 2.1: Imported values of animal feed and ingredients in 2008 – 2009 (million USD)

2.1.1.2 Market Growth

The livestock sector is growing at 8-9 percent per year globally

Livestock production tends to grow fast in Asia - Pacific area, with

an estimated forecast of 7-8 percent increase in demands for

livestock products in the period 2009 – 2020 In Vietnam, the growth

in the domestic animal feed sector is 15 percent per year

With GDP growth increased highly, income and consumption

increased, meat consumption annually increased about 8-9 percent

According to the Ministry of Agriculture and Rural Development, in

2010 total meat production should reach 4,108 thousand tons The

number is expected to increase 5,279 thousand tons in 2015 and

6,788 thousand tons in 2020

The animal husbandry in Vietnam has achieved some results on

growth and increased density of livestock in agriculture

Table 2.1: Feed for livestock industry

Number of manufactories Manufactory 126 205 214 225

Total designed productivity Million Tons 3,313 7,661 10,625 12,310

Quantity of feed produced Million tons 2,690 5,344 7,776 8,536

2.1.2 SLEPT Analysis

2.1.2.1 Social Environment

Agriculture is an important economic sector of Vietnam Currently, Vietnam is still an agricultural country, with 72 percent of its population live and work in rural areas, especially in small farm

With 86 millions of total population, domestic demand consumption

of Vietnam market has a big potential to increase in animal & aquaculture production The fact of that average income per capita

is still low (1,200 USD per year) but increasing also creates a potential domestic market for animal and aquaculture products

With more than 64 millions of population are under 36 years old, human resource of Vietnam is very young They are able to access scientific-technological progress while the labor cost is still low is an advantage to develop agricultural industries in Vietnam

2.1.2.2 Legal Environment

The Circular 122/2010/TT-BTC of the Vietnam Treasury Department regulated to take ingredients and feed for animal in valorization group When supplying animal ingredients companies and feed production companies want to increase selling price, they must register with Office of Price Management of the Treasury Department

The rate of inflation reached 11.75 percent in 2010 and lower

limited credit constrained to import raw ingredients for animal and aqua feed production, especially for small and medium enterprise

Alongside with that, interest rate ranges about 14 percent-20 percent

per year also make more difficulties for enterprises to do business

In foreign exchange market, USD/VND exchange rate is increasing Exchange rate increased about 8 percent in 2010 relative to that in

2009 This limited goods and ingredients imported into Vietnam

The importing companies also faced more troubles when domestic banks tighten financial credit in lending with importers who operate

in the agricultural field

However, per capita income growth in Vietnam reached 1160 USD per year, enforcing demand and purchasing power for agricultural products

2.1.2.4 Political Environment

Vietnam is considered one of countries occupying stable political environment in the world However, Vietnam is still facing with big problems in corruption

2.1.2.5 Technology Environment

In Vietnam, technology in livestock industry is too outdated

Livestock production is scattered and still in small-scale systems

2.1.3 Competitors Analysis

The analysis of competitors for Truong Thanh Corp follows Five Forces Model suggested by Michael Porter

2.1.3.1 Suppliers (Bargaining Power Supplier): Medium

There are many suppliers in animal feed ingredients industry Therefore, the supply of animal ingredients is very large So, the pressure of suppliers comes essentially from the stability of quality ingredients in the exporting countries as well as the commitment for implementing contract of suppliers when the market fluctuates

2.1.3.2 Buyers (Bargaining of Power Buyers): High

Because of many suppliers, buyers have many choices to select the best supplier Pressure of buyers will reduce when buyers need small quantities of ingredients (such as Farmer or Trading

New entrants: High

International & domestic competitors with tremendous finial Strength

Company) or when ingredients become scarcity or price of ingredients increases suddenly

2.1.3.3 Potential Entrants (Threats of new entrants): High

Animal feed production industry has high growth rate (about 15 percent) Besides, corporations and big companies have an understanding clearly of the market (such as Bunge, Cargill, etc.) and have strong distribution systems (such as Quang Dung company, Cargill, etc.) Hence, domestic and foreign companies are very interested in internal ingredients field

2.1.3.4 Substitute (Threats of Substitute Product or Service): low

Ingredients for animal feed production industry are essential items Thus, substitution from others products is very low

2.1.3.5 Industry Competitors (Rivalry among existing firms): High

Many competitors are operating in feed ingredient supplying because of some following reasons:

- Feed ingredient supplying sector has high growth rate (about 15 percent)

- Trading in feed ingredients supplying sector is dispersed (no company dominates the market)

- Animal feed market has nearly 20 types of feed ingredients to trade Therefore, companies can select key products easily

- Competitive pressures in this branch will be reduced when ingredients become rare in the market or appear demand of new ingredients such as wheat bran, Soybeans, ect

2.1.4 Customers Analysis

According to survey results, market distribution of feed ingredients in South

of Vietnam has four major customer groups:

- Big feed mills: including animal feed manufacturing factories with production over 10,000 tons per month (CP, Cargill, Proconco, Sunjin, etc.): They buy and import directly about 60 percent - 80 percent feed ingredients volume from foreign countries The rest of ingredients are bought from domestic distributors According to the surveys, these companies will choose suppliers who have reputation and stick business relationship with these companies

- Small feed mills: including animal feed manufacturing factories with prodduction under 8,000 tons per month (Vina, Farmtech, Blustar, etc.): They bought about 50 percent commodities from domestic distributors According to the surveys, these companies will choose suppliers who have stable source & quantities, affordable price, good relationship with these companies

The trading & commercial companies, dealer, wholesaler: Most of customers are intermediators in feed and feed ingredient industry They have good finance as well as clear understanding the local market They usually buy ingredients when the market become scarcity or selling price

of ingredients has increasing signal They buy in batches to speculate and sell out According to surveys, this group of customer tends to buy feed ingredients with the best price, ingredients source needed or even speculation

Farmers and Market Store: this group needs regular and stable ingredients sources In addition, this group will buy if ingredients are ensured quality with reasonable price and have good relationship

2.2 Internal Analysis

Truong Thanh Corp is a member of Hiep Quang Co., Therefore, Truong Thanh Corp has financial support as well as ensuring input ingredients from Hiep Quang Company

Truong Thanh Corp have consulting and supporting from Hiep Quang’s experts who have understanding clearly about domestic ingredients market Furthermore, Hiep Quang Co has ten years experience in buying and selling ingredients for animal feed production

Good logistic system: Truong Thanh Corp and Hiep Quang Co have four depots (Bourbon depot, Thu Duc depot, Linh Xuan depot, Phu My depot) with area more than 35.000 m2 Four depots are spread from Easthern to Western South of Vietnam to ensure in delivery

Because of the global financial crisis as well as unclear business strategy, business result in 2008 and 2009 of Truong Thanh Corp was only less than 30 percent target In there, products which relate soybean (Soybeans, Soybean meal) accounted 90 percent yield

In 2010, Truong Thanh Corp decided to invest a machine which could classify Soybeans with production with design capacity of 6 ton/h

Until 2010, target customers of Truong Thanh Corp are direct farmers, the commercial & service companies

Truong Thanh Corp has no brand name and reputation in ingredients supplying market for animal feed production Truong Thanh Corp has no effective business strategy

2.3 Company Environment: SWOT analyzing

2.3.1 Strengths

- Truong Thanh Corp is a member of Hiep Quang Co., which is one

of the leading in supplying commodities So Truong Thanh Corp can be active in marshaling ingredients input;

- Truong Thanh Corp has well-trained, creative and self-motivated workforces who come from Hiep Quang Co;

- Using up logistics system of Hiep Quang Co to reduce transportation cost and active in distribution ingredients;

- Truong Thanh Corp have good experts who have specialized knowledge of livestock and aquaculture;

- More external financial support is available

- Truong Thanh Corp does not have good distribution system;

- Truong Thanh Corp does not have particular market in supplying ingredients for feed production “Truong Thanh” is still new brand

on the market;