Marketing strategy to improve the customers loyalty of trung thủy group corporation master project in business and marketing management

TTG Trung Thuy Group Corporation LCB Lancaster Building MAB Miss Aodai Building MKR Mekong Rest Stop AQS Annam QT spa HVRS Hai Van Rest Stop MAA Miss Aodai Apartment CSSM Customer servic

TRƯỜNG ĐẠI HỌC MỞ TP HCM UNIVERSITÉ LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

MBMM4

TRAN MAI DOAN THAO

MARKETING STRATEGY

TO IMPROVE THE CUSTOMERS’ LOYALTY OF

TRUNG THUY GROUP CORPORATION

MASTER PROJECT MASTER IN BUSINESS & MARKETING

MANAGEMENT

Tutor’s Name: Dr Ha Tran Minh Quan

Ho Chi Minh City

(2010)

DECLARATION

I ensure that this thesis: "Marketing strategy to improve the customers’ loyalty

of Trung Thuy group corporation" is the work of my own research

The data and information used in this thesis is true

Author

Tran Mai Doan Thao

First, I must thank God for giving me the strength to complete this thesis With Him all things are possible My thanks to the people who have helped me throughout this Master program Without their support, encouragement, and understanding, I would never have achieved my final academic destination

I wish to express my deepest respect and heartfelt thankfulness to my tutor – Dr Ha Tran Minh Quan - for their patience and encouragement His consistent support and

guidance throughout my time were critical to the successful development and completion of this thesis

I also would like to express my deepest respect and heartfelt thankfulness to Solvay Brussels School and Ho Chi Minh City Open University, Profesor Jean-Pierre BAEYENS and the administrative staffs at ULB – Mr Serge Bywalski and OU – Ms Nguyen Thi Mong Thuy for their generous help and encouragement during my master studies.

Special Thanks go to my parents who always encourage and support me I am grateful

to them for their love, understanding, prayers and encouragements

Finally, I would like to thank all my friends and colleagues for their support, assistance, kind friendship and insight particularly Without their help, the pursuit of master degree would have been more difficult and lonely

Customer’s loyalty has always been a burning issue in any business, so in my assessment, this

is a realistic and highly applicable topic but it requires a lot of effort in the survey to find out the customers’ information exactly

And during the time to go together with her to

do this thesis, I realized that she tried to listen carefully, receive ideas and try to complete a thesis as best as she can

Sincerely

HCMC, 13 December 2010

TABLE OF CONTENTS

Declaration .ii

Acknowledgement iii

Tutor’s comments iv

Table of contents v

Abbreviation vii

List of tables and charts viii

Abstract ix

PART 1: Introduction 1

I The rise of TTG 1

II Background of study 4

III.Problem statement 5

IV Purpose of the study 6

PART 2: Literature review 7

I.Customer relationship management 7

II.The relationship between loyalty and satisfaction 12

PART 3: Methodology 14

I Introduction 14

II.Research objective 14

III.Method of research 14

IV.Analysis data 15

V.Questionnaire design 15

VI.Questionnaire layout 15

PART 4: Research findings and analysis 16

I Research findings and analysis 16

1.LCB 16

2 MKR 17

3.MAB 23

PART 5: Discussion and recommendation 24

I.Discussion 24

1.Key service drivers of each business field 24

2 What is TTG’s big ideals 24

3 Brand Architecture direction of TTG 26

II Recommendation: Marketing strategy to improve the customers’ loyalty 27

1.Develop good relationship with landlords 27

2 Develop good relationship with tenants 27

3 Cross-selling program 28

4 Strengthen and maintain the loyalty of employees 29

5 Membership card 30

6 Quarterly party for loyal customers 31

Referrence 32

Conclusion 33 Appendices

TTG Trung Thuy Group Corporation

LCB Lancaster Building

MAB Miss Aodai Building

MKR Mekong Rest Stop

AQS Annam QT spa

HVRS Hai Van Rest Stop

MAA Miss Aodai Apartment

CSSM Customer service strategic management

CRM Customer relationship management

VN Vietnam

HCMC Ho Chi Minh City

LIST OF TABLES AND CHARTS

Table 1

How much are you satisfied or dissatisfied with the following areas at Mekong Rest Stop

Table 2 How would you like to have your meal at Mekong Rest Stop?

Table 3 How much do you agree or disagree

that…?

Table 4

What is the single improvement that Mekong Rest Stop could make to increase your satisfaction?

Table 5

If Mekong Rest Stop has take-away food corner, how likely will you buy the food to take with you

Table 6 The proposal rate of Cross selling program

Table 7 The proposal rate for staffs and their

relatives

Chart 1 The average points of customers of the

criterias

Chart 2 The percentate of customers’ meal choices

Chart 3 The perception of customers about Mekong

Rest Stop

Chart 4 The percentage of improvement

Chart 5 The percentage of agreeing take-away food corner

During the past years, Vietnam has confirmed the ability and potential by developing their high successes and the impressive boom over the statistics on the economy Simultaneously, the trend of globalization and international economic integration is an inevitable trend in the world and Vietnam is no exception to this process

Clearest evidence of this development is Vietnam people lives are increasingly improving in all aspects Complying with the rules of the Maslow tower, now most Vietnam people do not worry about “meals”, they just think about "What to eat in the meal" Demand for food, accommodation, clothing, leisure has changed over the apparent transformation of the related fields

Grasp of market trends as well as potential economic development of Vietnam, during many years, Trung Thuy Group Corporation (TTG) has diversified in their investment for a wide range of products, services and achieved more successes

However, the market is growing, competition is also increasing, so besides seeking a strategy to expand markets and develop more customers, TTG should have a plan to maintain and enhance loyalty for existing customers

Maintaining the loyalty of customers before the competition hit the steps was a necessary step for existence and development of all enterprises in general and TTG in particular It’s so important because Cost of getting a new customer is five times more retaining an old customer

Some important questions need to answer before having a precise program to encourage and maintain the customers’ loyalty:

 Type of products or services that customers are looking at the company?

 How the company can meet customer's objectives?

 What do customers expect from the company and brand?

 What are the things that customers appreciate?

At first we should have a research on current customers who are using services or products of TTG’s branches Moreover, through this research, it will help the customers understand more clearly about TTG and the brands belonged

PART 1 INTRODUCTION

I The rise of TTG:

TTG started with the Miss Aodai brand since the 90’ Today MISS AODAI is one of the leading shopping centre in providing high-quality handicraft and fine arts goods and one

of the top ten travel destinations for tourists in HCMC and Hanoi

From the Miss Aodai, TTG has expanded its operation into new fields such as property development & management, spa services, green rest stops… Today TTG becomes a multidisciplinary company

Currently, TTG has 10 branches including:

1 The Lancaster building

2 The Miss Aodai building

3 The Miss Aodai apartments

4 The Miss Aodai shopping centre

5 The Aodai Hanoi shopping centre

6 The Orient shopping centre

7 The Sen Spa

8 The Anam QT Spa

9 The Mekong Rest Stop

10 Hai Van Rest stop – Da Nang

And some big projects in progress

 One premium resort and spa in BinhChau, Vungtau, Dalat province

 A chain of Rest Stops in the South and Centre of Vietnam

 Some luxury serviced apartment in Center Districts of Ho Chi Minh City

With over 800 young, dynamic, skilled staffs TTG continues assert top position in real

estate business fields and tourist services at Vietnam, provides unique products with

high quality to satisfy clients’ demands

 The customer analysis:

1 Lancaster (serviced apartment )

Owners (house holders) who buy apartments 61%

Tenants who rent apartments for 50 years 39%

Constructions & consultancy 10%

Shipping 10% Travel agent 10%

Event organizer 5%

Rubber export 5%

Pharmacy 5% Paper production 5%

7 Anam QT Spa

Travel 18% Tour guide 28%

Foreigners who work and live in

Vietnam 54%

Total 100%

Foreigners who work in Vietnam %

Japanese 47% Korea 25% Vietnam 24% Others 4%

Total 100%

II Background of study:

After a long time working for this company, I realized that although TTG’s

products/services are performing well and have turnover, but in reality there are not

many customers know these ones belonged to TTG Every branch also has a list of

potential customers but it is not be shared for each other That makes us associate the

brand structure of TTG rather disjointed and customers can not see the growth of the

TTG And things needed to do here is to make customers aware of who are TTG’s family members

Besides, building and maintaining relationships with loyal customers is always an efficient and proper strategy for the development of a business It is just because loyal customers are often satisfied easier, use the value-added services more and especially they like to promote our services or products with your friends than new customers Cost of getting a new customer is five times more retaining an old customer The programs for loyal customers have gradually become essential in the context of more and more competitors with sensitive price and similar products / services

III Problem statement:

Many documents proved that customer loyalty is a vital issue because a lost in one customer can cost a lot to a business The results of a customer refuses to return to the same store in an event to purchase a product would include a decrease in revenue, higher costs of drawing new customers, loss of free advertising through positive word-of-mouth, and reduction in employee retention

Marketing scolars have also contended that the cost of obtaining a new customer could

be as high as five to six times the cost of keeping an existing one People verified that a

5 per cent decrease in customer defection could translate into 25-85 per cent growth in profits, depending on the service industry Besides, they also argue that losing customers could have an unconstructive effect on a company’s market share too Thus, businessess should attempt to reinforce customer loyalty as the key to survival and long term growth Customer loyalty is steered by customer satisfaction

Thus, provides new avenues for examining customer loyalty, customer satisfaction, and its consequences This study is conducted with an aim to recognize the roles played by cognition and emotion in the development of customer satisfaction within the brands of TTG

In summary, the underpinning purpose of this paper is to contribute to the knowledge and understanding in measuring customer loyalty development as well as to identify and analyze the factors that impact on customer loyalty for TTG’s brands

IV Purpose of the study:

 Assess the strengths, weaknesses and customers’ satisfaction of major brands of TTG: Lancaster Building, Miss Aodai Building and Mekong Rest Stop on the minds

of customers and partners

 Define the role of the brand on the brand structure of TTG

 Suggesting the measures to maintain and increase levels of customer loyalty for the brand in the TTG group

 To examine the relationship between brand image and overall customer satisfaction

PART 2 LITERATURE REVIEW

I Customer Relationship Management:

1 Definition:

Customer Relationship Management (CRM) is a strategy by which an enterprise strives to learn, to anticipate and to manage the needs of its current and potential customers

 One central preoccupation = the customer

3 CRM strategy: Advantages of a CRM Strategy

 A cost reduction of the customer contacts

 A profitable and enduring growth : Why ?

 CRM Strategy → improvement of the service for the customer → better satisfaction

→ loyalty → more important margins due to higher prices and to lower expenses in marketing campaigns trying to capture new customers to compensate for losses of customers

4 Basic principels:

4.1 CRM: Why ?

 Big size marketing campaigns have lost their effectiveness

 A unique message cannot be adapted to an important number of recipients

4.2 4 Types of CRM:

4.2.1 Recovery and retention:

It consists in convincing less regular customers to stay loyal to our enterprise or to recover customers who have left

 Important to react rapidly after the defection

 It can be interesting to include in these campaigns customers whose demand is decreasing or who have given up some products

4.2.2 Gaining the loyalty:

3 key elements to keep the customers :

Value segmentation : a company can refuse to try to keep some customers because

of a too low marginal profitability (“20/80 rule” : a small percentage of customers represent an important percentage of profit)

Segmentation based on needs : it allows to develop a customized program to try to keep the customer (personalized offers)

Provisional model of defection : thanks to data mining techniques, it is possible to predict defection of customers on the basis of demographic data and of their past behavior

4.2.3 Offer extension/improvement:

The goal is to identify offers that could interest the customer in addition to these he

already accepted (e.g to propose an Internet connection to one of our customers who has an ordinary long-distance telecommunication subscription)

4.2.4 Prospection:

The goal is to attract new customers Key elements (in addition to the offer):

Segmentation based on the needs to identify what the customer expects

Segmentation based on profitability to identify what the customer can bring to the enterprise in terms of profit It allows to fix the level of investment that the company is ready to make

5 Why we have to gain loyalty?

World-wide competition

Transition of a products economy to a services economy

Shortening of the products life cycle

Little possibilities for differentiating products

Increasing importance of service quality for the customer importance of loyalty

5.1 Evolution of the customer relationship

 Customer relationship=love relationship

 Evolution of the customer relationship

 Relationship birth

 The enterprise learns to know the customer

 Limited loyalty, only based on products and prices

 The customer can join a competitor at any time if he is attracted by better

 Relationship fulfillment

 Links are becoming stronger

 Loyalty is not only based on products and prices but relationship itself is now a loyalty factor

 Mutual interest products or better prices

 United couple

 Extremely strong links

 Loyalty comes from a high satisfaction level of the customer

 Exclusive attachment

 A customer engaged in such a relationship = promotional vector (the customer recommends our enterprise)

6 Measure tools

 Relationship birth (customer conquest)

 Loyalty level : based on transactions

 Profitability : based on data relative to products e.g profit margin

 Relationship fulfillment (gaining loyalty of the customer)

 Loyalty level : based on the relationship e.g satisfaction level

 Profitability : portfolio share

 United couple (consumer relationship strategic management)

 Loyalty level : value criteria for customers are assimilated to those of the enterprise Loyalty measure is linked to these criteria

 Profitability : based on life cycle of the relationship with the customer

7 Customer relationship : 4 basis situations

 Customer is loyal and profitable

 The priorities are to deepen links, to reinforce loyalty, to optimize profitability with an improvement of the offer

 Customer is loyal but unprofitable

 The goal is to make it profitable by extending and improving the offer

 If he/she stays unprofitable, the relationship should be stopped

 Customer is profitable but not loyal

 Concentration on the deepening of the relationship and on gaining loyalty

 Customer is unprofitable and not loyal

 It would be judicious to stop this relationship

8 The 3 phases of CRM

 Phase 1 : customer conquest

 Development of sales force

 Benchmarking

 Analysis of customer service processes

 First surveys about customers

 Phase 2 : gaining loyalty

 Priority = Customer relationship optimization

 Segmentation in homogeneous groups

 Phase 3 : customer service strategic management

 Use of technological and IT tools to provide customers with a good quality service and to provide the best customers with a high quality service

 Win-win relationship : success of customers depends on suppliers and vice-versa

9 12 steps that allow to reach CSSM:

Step 2: to assess change willingness: Direction and personnel

are ready. 

Step 5 : To listen to the voice of the customer 

Step 3 : Segmentation : classification of customers 

Step 4 : To establish the profile of strategic customers 

Step 1: to mobilize and to convince the direction and the

Step 6 : To analyze weak points 

Step 7 : to mobilize teams in charge of strategic accounts 

Step 8 : To define a strategic action plan 

Step 9 : To assess and to validate the relevance of the action plan. 

Step 10 : to ensure the traineeship of teams plan 

Step 11 : To implement strategies by planning all functions 

Step 12 : To control results and to adjust if needed

II The Relationship between Loyalty and Satisfaction

Much research has been carried out by scholars into the importance of customer satisfaction Kotler (2000) defined satisfaction as “a person’s feelings of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectations”

Reichheld (1996, pg 381), views that “customer satisfaction is the key to securing customer loyalty”, this hypothesis has remained largely unsubstantiated and is far from robust As argued by Newell (2000, pg 30) who claims that customers today demand more that “simple satisfaction” for their loyalty and that “most companies think a

‘satisfied customer’ will be a loyal customer That may have been true at one time, but it’s not now”

Satisfaction does not continually produce in retention, similarly dissatisfaction does not necessarily result in defection There is no evidence to suggest that satisfaction alone is

a significant factor in influencing loyalty However, satisfied customers can help form the base of any successful business and result to repeat purchases, brand loyalty, and positive word of mouth exposure (Hoyer and MacInnis, 2001) What this demonstrates

is that the correlation between customer satisfaction and customer loyalty is neither clear‐cut nor linear, with satisfied customers still defecting

Zairi (2000) has commented on numerous studies that have been carried out to examine the impact of customer satisfaction on repeat purchase, loyalty and retention The end result is they all suggest a similar message in that: satisfied customers are likely to share their positive experience with approximately five or six people and dissatisfied customers are likely to tell another ten people of their unhappiness In addition gauging dissatisfied customers can be difficult since many customers will not complain and also

to differences in the industry sectors

It is vital that the distinction between satisfaction and loyalty is noted since the two are clearly different Duffy (2001, pg 36) believes satisfaction is a starting point, remarking that “it is essential to get you in the race, but it’s no longer enough to make you a

winner” The importance of satisfaction should not be overlooked and the consequences

of not satisfying customers can have severe consequences to businesses

The importance of customer satisfaction has been reinforced by La Barbera and Mazursky (1983) who commented that, “satisfaction influences repurchase intentions whereas dissatisfaction has been seen as a primary reason for customer defection or discontinuation of purchase” However, McIlroy and Barnett (2000) argue, “even if customers are satisfied with the service they will continue to defect if they believe they can get better value, convenience or quality elsewhere …

Satisfaction is a necessary but not a sufficient condition to loyalty In other words, we can have satisfaction without loyalty, but it is hard to have loyalty without satisfaction”

Miranda et al (2005, pg 230) sustains that loyalty does not result from satisfaction alone

“Breakaway customers may not have been dissatisfied with the service provided from their primary store; it is simply that it did not insulate them sufficiently from switching” This is especially significant to any business operating in a highly competitive market with many choices and low customer switching costs, as commented by Best (2005, pg 16), “Grocery store, restaurant, and bank customers can switch quickly if they are not completely satisfied” It is the authors belief that defecting customers may not have been dissatisfied with the service they received from their primary store, it is purely that the store did not insulate them adequately from switching It was discovered that loyalty was influenced by several factors such as price, level of service, travel distance and reward programs

PART 3 METHODOLOGY

I Introduction:

With ambitions to become corporation providing leading services and get a sustainable development, TTG want to develop a brand positioning strategy and also to maintain and enhance the loyalty of customers In order to develop this strategy, the research to understand customer, partner of the TTG was implemented

II Research objectives:

- Assessing the strengths and weaknesses of major brands of TTG: Lancaster Building, Miss Aodai Building and Mekong Rest Stop on the minds of customers and partners

- How did customers perceive the products and services of TTG?

- Type of products or services that customers are looking at the company?

- How the company can meet customer's objectives?

- What do customers expect from the company and brand?

- What are the things that customers appreciate?

III Research method:

- Quantitative research – Focus group:

The goal of qualitative research is to get insight into the profound thoughts, attitudes, beliefs, motivation and actions of current customers

- Qualitative research – Questionnaire:

The objective of quantitative research is to get a measure of attitudes, beliefs, motivation and actions of current customers

• 3 Focus groups, the aimed people:

‣ 15 householders and tenants of Lancaster building

‣ 15 The lessees of Miss Aodai Office building

‣ 15 Tour guides of tourism company (who used to visit Mekong Rest Stop)

• Questionnaire: 50 Tourists (interview directly at Mekong Rest Stop)

IV Analysis of Data

• Results and analysis of the data using a computer software known as Excel

V Questionnaire design:

VI Questionnaire layout:

PART 4 RESEARCH FINDINGS AND ANALYSIS

I Research findings and analysis:

1 Lancaster Building: Focus group

- Amount of participants: 15 people

- Their perception:

 Strengh:

 Weakness:

 Customer services: Customer experience on service quality does not match

the brand image in their minds:

 Change in personnel frequently makes building close relationships with customers becomes difficult