The marketing strategy of a multinational join stock company

company’s performance, I decide to choose “Marketing strategies of a multinational join stock company” as the topic for my field study report with a view to examining amultinational join

company’s performance, I decide to choose “Marketing strategies of a multinational join stock company” as the topic for my field study report with a view to examining a

multinational join stock company’s marketing strategy and making somerecommendations to improve it

A multinational join stock company has a lot of business activities, but because of limitedtime, this report focuses only on the company’s marketing activities for one line of itsbusiness, that is air conditioners, on the market in Vietnam

Apart from the introduction and conclusion, the report is divided into 3 chapters asfollows:

Chapter 1: Theoretical Framework

Chapter 2: The marketing Strategy of a multinational join stock company

Chapter 3: Some Recommendations to Improve a multinational join stock company s Marketing Strategy.’

Chapter 1:

Theoretical Framework

1.1.1 The concept of marketing

1.1.2 The definition of marketing

Today’s central problem facing business is not a shortage of goods but a shortage ofcustomers Most of the world’s industries can product far more goods than the world’sconsumers can buy Overcapacity results from individual competitors projecting a greatermarket share growth than is possible If each company projects a 10 percent growth in itssales and the total market is growing by only 3 percent, the result is excess capacity This

in turn leads to hyper competition Competitors, desperate to attract customers, lowertheir prices and add give away These strategies ultimately mean lower margins, lowerprofits, some failing companies, and more mergers and acquisitions Marketing is theanswer to how to compete on bases other than price Because of over capacity, marketinghas become more important than over

If forced to define marketing, most people, including some business managers, say thatmarketing means “selling” or “advertising” It’s true that these are parts of marketing Butmarketing is much more than selling and advertising Today, marketing must beunderstood not in the old sense of marketing a sale-“telling and selling”-but in the newsense of satisfying customer needs Selling occurs only after a product is produced Bycontrast, marketing starts long before a company has a product “Marketing is thehomework that managers undertake to assess needs, measure their extent and intensityand determine whether a profitable opportunity exists Marketing continues throughoutthe product’s life, trying to find new customers and keep current customers by improvingproduct appeal and performance, learning from product sales results and managing repeat performance”1 So that does the term “marketing” means? Actually, there is no single anduniversally agreed definition of marketing The American Marketing Association definedmarketing “is the process of planning and executing the conception, pricing, promotionand distribution of ideas, goods, and services to create exchanges that satisfy individualand organizational goals”2

The writer of the book “The Silk Road to InternationalMarketing” had another definition as follow: “Marketing is the process by whichdecisions are made in a totally interrelated changing business environment on all theactivities that facilitate exchange in order that the targeted group of customers is satisfiesand the defined objectives accomplished ”3

.Though there are many definitions, a centralpart of any definitions of marketing is the exchange process – the process of givingsomething of value in return for something of value Or in other words, it’s the process oftransferring between two or more parties of tangible or intangible items of value

Cash, debt, time, votes, behavior, etc

Health, safety, comfort, transportation, beauty, productivity, etc.

Figure 1.1: the exchange process.

For marketing to occur, at least four factors are required: (1) two or more parties withunmet needs, (2) a desire and ability to satisfy them, (3) communication between the parties, and (4) something to exchange Here’s what Berkowitz stated in his book

“Marketing” As marketing is a kind of exchange, certain conditions must exist before theexchange can occur

1.1.3 The goals of marketing

“Today’s successful companies at all levels have one thing in common; their success isfounded upon a strong customer focus and heavy commitment to marketing” Theymotivate everyone in the organization to deliver high quality and superior value for theircustomers, leading to high levels of customer satisfaction These organizations know that

if they take care of their customers, market share and profits will follow Creatingcustomer values and satisfaction is at the very heart of modern marketing thinking andpractice The goal of marketing is to attract new customers by promising superior values,and to keep current customers by delivering satisfaction When a company succeeds increating more values for customers than its competitors can do, that company is said toenjoy competitive advantage industry

1.2 Competitive Analysis

It is the increasingly emerging markets that have create favorable conditions for the rapiddevelopment of world trade and investment, which is well – manifested in thesophisticated growth of a number of global companies To compete in one or moreforeign markets, companies not only need to broaden relentlessly their sources ofcompetitive position One particularly useful technique in analyzing a firm’s competitiveposition relative to its competitors is SWOT(strengths, weaknesses, opportunities, andthreats) analysis aims to isolate the key issues that will be important to the future of thefirm and that will be addressed by subsequent marketing strategy A SWOT analysisdivides the information into two main categories (internal factors and external factors) and then further into positive aspects (strengths and opportunities) and negative aspects(weaknesses and threats)

The internal factors could be viewed as strengths or weaknesses, depending upon theirimpact on the firm’s positions; i.e., they may represent strength for one firm but

awearness irrelative terms, for another They include all of the marketing mix (product,price, promotion and place strategy) as well as personnel and finance

The external factors, which again may pose a threat to one firm but create opportunities toanother, include technological changes legilation, social-cultural differences, and change

in the market place or competitive position

1.3 Global Marketing Strategy

In terms of globalization, worldwide businesses use global marketing when they take thesame or similar approach or content for one or more elements of the marketing mix, that

is, the same or similar brand names, advertising And so on in different countries.Although most of the multinational companies using global marketing mix-product,pricing, promotion and place – are standardized Business can make some elements ofmarketing more global and others less so Accordingly, possible adaptations that firmsmight apply to their product, promotion, price, and place when they enter through theforeign markets will be provided in this part

as well However, the company should first determine whether foreign consumers use thatproduct or not Straight extension has been successful with cameras consumer electronics,and many machine tools This strategy is tempting because it involves no additionalproduct development cost, manufacturing changes, or promotional modification But itcan be costly in the long run if products fail to satisfy foreign consumers

Straight extension Product adaptation

Productinvention

Adapt promotion Communication

adaptation

Dual adaptation

Table 1.1: Five international product and promotion strategies.

Product adaptation involves changing the product to meet local conditions or preferences.There are several levels of adaptation A company can produce a regional version, a

country version, a city version or even promotion retailer versions of its products.Although, products are frequently adapted to local tastes, in some instances they must beadapted to local superstitions or beliefs, too.

Product invention consists of creasing something new the foreign market It can bedivided into two forms The first is backward invention, which means reintroducingearlier products forms that happen to be well adapted to the needs of a given country Andforward invention is to create a new product to meet a need in another country

1.3.2 Promotion

Companies can either adapt the same promotion strategy they used in home market orchange it to suit for each local market Although some global companies use astandardized promotion campaign changes might be needed to comply with localregulations and references There are four different levels of adapting promotion strategy.Firstly, companies can use one message everywhere, varying only the language, name,and colors That is because colors might be changed to avoid taboos in some countries.Also, names and slogan may have to be modified in some countries Secondly, companiesmay use the same them globally but adapt the copy to each local market Thirdly,companies can develop a global pool of advertising from which each country selects themost appropriate one Finally, some companies allow managers to create a specificadvertising – within guidelines, of course

Other companies follow a strategy of communication adapting their advertising messageswithout any product changing Although it retains the scale economics on themanufacturing side the firm sacrifices potential saving on the communication way .another strategy is dual adaptation It is changing both the product and thecommunication to face local differences

1.3.3 Price

Global companies face several problems in setting their international prices Thoseproblems must deal with price escalation, transfer prices, dumping charges, and blackmarkets

Price escalation problem occurs when companies sell their goods abroad The foreignprices probably will be higher than their domestic ones because it must add the cost oftransportation, tariffs, importer margin, wholesaler margin, and retailer margin.Depending on these added costs, the product may have to sold for two or five times asmuch as another country to generate the same profit Since cost escalation varies fromcountry, companies have three price setting approaches in different countries

Setting a uniform price everywhere: charging the same price everywhere in the world Bythis method, companies would earn quite different price in different countries because of

varying escalation costs Also, this strategy would result in too high price in poorcountries and not high enough in rich countries.

Setting a market-based price in each country: charging what each country could effort.But this strategy ignores differences in the actual costs from country to country Inaddition, it could lead to a situation in which intermediaries in low-price countries reship

to high-price countries Setting a cost-based price in each country: using a standardmarketing of its costs everywhere But this strategy might price out of the market incountries where it costs are high

Another problem arises when a company sets a transfer price(i.e the price that it charges

to another unit in the company) for goods that it ships to its foreign subsidies If companycharges too high a price to a subsidiary, it may and up paying higher tariff duties, evenwhile paying lower income taxes in that country If company charges its subsidiary toolittle, it can be charged with dumping Dumping occurs when a company charges eitherless than it costs or less than it charges in its home market, in order to enter or win amarket Various governments are watching for abuses and often force companies tocharges the arm’s-length price – that is, the price charged by other competitors for thesame or a similar product

Global companies also face the black-market problem A black market means the sameproduct is sold at different price geographically Dealers in the lower-price country findways to sell some of their products in higher-price countries, thus earning more Manycompany finds some distributors buying more than they can sell in their own country andreshipping goods to another country to take advantage if price differences Multinationalstry to prevent black market by policing the distributors, by raising their prices to lower-cost distributors, or by altering the product characteristics or service warranties fordifferent countries

Moreover, one challenge o global pricing in recent years is that countries withovercapacity, cheap currencies, and the need to export aggressively have pushed pricesdown and devalued their currencies For multinational firms this poses great difficulties.Sluggish demand and reluctance to pay higher price make selling in these emergingmarkets harder Instead of lowering prices, and taking a loss, some multinationals havefound more creative and creative means to deal with this problem

1.3.4 Place (Distribution channels)

Global companies must take a whole-channel view of the problem of distributing products

to final consumers Figure 1.2 show the three major links between the seller and theultimate user In the first link, seller’s international marketing head quarters the exportdepartment or international division makes decisions on channels and other marketing-mix element The second link, channels between nations, moves the products to the

borders of the foreign nations The decisions made in this link include the types onintermediaries (agents, trading companies) that will be used, the type of transportation(air, sea) and the financing and risk arrangements The third link, channels within foreignnations, moves the products from their foreign entry point to final consumers.

Channels of distribution within countries vary greatly from nation to nation first, there arelarge differences in the numbers and types of intermediaries serving each foreign market.Long channels of distribution means that the consumer’s price ends up double or triplethe importer’s price Another difference lies in the size and character of retail unitsabroad Breaking bulk remains an important function of intermediaries and helpsperpetuate the long channels of distribution, which is a major abstaining to the expansion

of large-scale retailing in developing countries

1.4 The marketing mix strategies

Philip Kotler, in his book “Principles of Marketing”; defines marketing mix as “the set ofcontrollable tactical marketing tools – product, price, place and promotion – that thefirm blends to produce the response it wants in the target market” These ingredients must

be manipulated in a manner which ensures targeted customers are satisfied, marketingstrategies are implemented and desired brand positioning is achieved

Seller’s international

Marketing headquartersSeller

Channels betweennations

Channel within foreign

nations

Figure 1.2: whole-channel concept for international marketing.

Chapter 2 The marketing strategy of a multinational join stock company

2.1 An introduction to a multinational join stock company.

2.1.1 Company development

A multinational join stock company was founded on 12th August 2002 A multinationaljoin stock company’s headquarters was located at 236 Cau Giay Street, Hanoi It has 2branches in Hanoi, Hai Phong and a network of distributors around the country Since itsestablishment, a multinational join stock company has operated in various fields: airconditioners, electronics, medical equipment, technical machinery and equipment, etc.After two years of operation, a multinational join stock company expanded into otherareas such as information services, supplying and assem blind lifts and other equipment.Early 2007, a multinational join stock company opened a new branch in Hai Phong forselling construction materials It also opened a new sales representative office for sellingViglacera’s products

2.1.2 Company s products ’

A multinational join stock company specializes in selling the following:

Air conditioners of famous companies such as Toshiba(Japanese), Mitsubishi(Japanese),Trane(American) and Sanyo(Japanese)

Medical and technical equipment and machinery, mainly imported from the USA, Italy,Germany and Japan

Lifts manufactured by Nippon (Japanese), Thyssen (German), Volbin (Swiss) and DonYang (Korean)

Ultimate buyers

Construction materials and equipment of its own and Viglacera’s, and other electronicproducts.

Besides, a multinational join stock company also provide other services such asmaintenance for medical and technical equipment, computer installing and programming

2.1.3 Company s Organization ’

A multinational join stock company’s Board of Directors includes a Director General and

2 Deputy Directors General

Director General: Leading the company’s board of management is the Director Generalwho is responsible for managing the use of capital, human and other resources

Board of Directors

Deputy General Director

General Director

Deputy General Director

Quality

Acceptance

Department

Technical Department

Trading Department

Financial &

Accounting Department

Planning Department

Two Deputy Directors General: These people provide assistance to the Director General.They would sometimes act on behalf of the Director General in his absence One of them

is responsible for the trading, planning, financial and accounting matters and the other is

in charge of technical and research development aspects in the company

_ Doing marketing researches on products

_ Promoting the company’s products through advertisements

_ Holding negotiations and getting contracts for the company

_ Organizing distribution channel for the company’s products

_ Planning department: this department is in charge of marketing plans on importing,material providing and preceding the contracts Organizing the sales of products isanother main task of the department

 Financial and Accounting department: this department deals with all financial andaccounting matters Another main function is to manage the use of capital to theright purpose, right policies and regulations, and to assist business activities

 Technical department: this department is in charge of technical and technologicalmatters The staff of this department also works closely with the factories to doresearching and applying the modern equipment and technical advance to themanufacturing and processing This department for the purpose of the company’sbusiness development sales all the adjustments or improvement to the technology

 Quality assurance department: this department takes control over the quality of theproducts This is for the purpose of assuring that all the products will meetcustomers’ requirements

Apart from the five departments, a multinational join stock company as 2 branchesaround the country

The organizational chart has been effectively applied for a multinational join stockcompany since its establishment and has resulted in good performance and operation.There have been good assessments on the company structure: it shows to be in charge of

particular activities and they would be able to proceed their function reasonably, whichresults in avoidance of overlapping and cumbersome This helps the company to be able

to take the internal and external advantages; to apply modern and advantaged technology

to bring the best fruits to the whole company’s efforts

2.1.6 Company trading results

Table 2.1: A multinational join stock company s trading results in recent’

Unit: million VND

2.2 The marketing strategy of a multinational join stock company

As mentioned in the previous parts, a multinational join stock company has been trading

in a lot of products such as air conditioners, electronics, medical equipment, technicalmachinery and equipment, etc., but with the limited time, this report focuses on themarketing strategy that a multinational join stock company has used while dealing in airconditioners only In this light internal strengths and weaknesses, as well as externalopportunities and threats that a multinational join stock company faces while trading inair conditioners will be identified for the understanding of a multinational join stockcompany’s marketing strategy

- Limited capital

- Small size and small market share

- Not enough technique staff

- Lack of diversification in product

quality

- Poor promotion activities

- Growing black market

The second strength is that a multinational join stock company has been offering verycompetitive prices for its air conditioners A multinational join stock company has been adistributor for these firms since its early day (Toshiba, Mitsubishi, Trane and Sanyo), andalthough there are a lots of other companies are acting as distributors for them, amultinational join stock company has a certain advantage: a multinational join stockcompany has always kept its prices as competitive as possible Its prices are among thelowest for air conditioners, usually between 7% and 10% lower than its competitors.The third strength of a multinational join stock company is the good relation with itsbusiness partners, a multinational join stock company has maintained it corporation withthe above mentioned business suppliers for many years and has always been highlyvalued by them This an advantage for a multinational join stock company Every years,its technical staff are offered technical training by the foreign experts from amultinational join stock company’s suppliers Many staff also have chance to go abroad

to get training Moreover, when there is a technical problem at a multinational join stockcompany, it immediately receives assistance from its partners

The forth strength of a multinational join stock company is its customers’ loyalty Asmentioned above, beside good quality, competitive prices, and good business relationwith its partners, a multinational join stock company’s customers has contributed a lot ofthe company’s success The after sales services of the multinational join stock companyhas been developing and improving rapidly over the years This helps the firm to keep in

touch with the old customers And by words of mouth, these people have brought newcustomers for the company.

In addition, a multinational join stock company frequently holds customer meetings inwhich customers would have chances to express or a multinational join stock companytheir thinking about the company products and services, this enables the company to getmarket research information to built up its reputation and customers’ loyalty

The last strength is the corporate culture of a multinational join stock company.Employees of a multinational join stock company are infused with an open, value-basedcorporate culture The cornerstones of the company’s values are:

2.2.3 Weaknesses

Firstly, limited amount of capital is posing a difficulty for a multinational join stock

company The company’s capital hasn’t been expanded much since its establishment TheManaging Director of a multinational join stock company said: “we have an advantage incomparison with our opinions in terms of customer’s loyalty and a good image andreputation, but now we have a problem of capital that thinking is weakening ourcompetitiveness”

The main source for its capital has been contributions of it shareholders and amultinational join stock company has had a lot of difficulties in finding other sources ofcapital

As we all know there are four main sources of investment capital that domesticcompanies may access:

Long-term credits provided by commercial banks on commercial basic:

 Government’s investment and Development Support Fund

 Soft loans and/or grants from foreign countries

 Non-banking capital, including company’s equity and funds mobilized fromthe informal banking system including the company’s employees

With regards to investment capital from banks, Vietnamese banks are shortage ofinvestment capital, because of the lack of long-term deposits, which in turn due to the