MARKETING ACTIVITIES IN AN CHAU PHARMACEUTICAL JOINT STOCK COMPANY

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION ---***---GRADUATION THESIS Major: International Business Administration MARKETING ACTIVITIES IN AN CHAU PHARMACEUTICAL JOINT S

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION

-*** -GRADUATION THESIS Major: International Business Administration

MARKETING ACTIVITIES IN AN CHAU

PHARMACEUTICAL JOINT STOCK COMPANY

Student full name : Tran Thi Thanh Tam Student ID : 1113250035

Class : English 14

Supervisor : MBA Nguyen Duc Nhan

Hanoi, May 2015

This graduation thesis is the result of thirteen weeks of research and writingduring the last semester of my final academic year at Hanoi Foreign Trade University

It has been an interesting and learning experience In fulfilling this thesis, I would like

to give my special thanks to many people for their significant help, contribution andrecommendation during my writing process

First and foremost, I am heartily thankful to my supervisor, MBA Nguyen DucNhan, whose encouragement, guidance and support from the initial to the final levelenabled me to develop an understanding of the subject

Secondly, special and grate thanks must go to all the managers, staffs andcustomers of An Chau Pharmaceutical Joint Stock Company, Ha Noi Capital for theircooperation that helped me in this study

Futhermore, I offer my regards and blessing to my family and friends whosupport respect during the completion of the thesis

Lastly, gratefulness is to the readers whose feedback will help much in improvingthe thesis

Hanoi, April 2015 Tran Thi Thanh Tam

The graduation thesis represents the results of research on marketing activities

of An Chau Pharmaceutical Joint Stock Company The purposes of this study are toidentify the marketing activities of An Chau Pharmaceutical Joint Stock Company andmeasure factors affecting to the marketing activities Then, base on that, somerecommendations are put forward to help An Chau PJSC improve the quality ofmedicines and enhance the effective of marketing activities

Currently, An Chau PJSC has launched drugs in all 63 provinces and cities inVietnam However, due to some reasons both objectively and subjectively, it isimpossible to conduct the research on marketing activities in all provinces and cities inVietnam Therefore, an area should be selected to be the representative for the wholecountry In this thesis, Some province like Ha Noi, Nghe An, Ha Tinh, Da Nang, HaiPhong is chosen to study because it is the most convenient area for the researcher Inaddition, this branchs has a huge number of customers of An Chau PJSC Therefore, itmay be given more accurate information and able to take the right actions.Questionnaires were sent out to 210 customers of An Chau PJSC in some provinceabove but only 150 collected responses were usable

TABLE OF CONTENTS

TABLE OF CONTENTS i

LIST OF ACRONYMS iv

LIST OF TABLES AND FIGURES v

1 INTRODUCTION 1

1.1 Background and cause of this paper: 1

1.2 Objective 2

1.3 Research questions 3

1.4 Research scope 4

1.5 Structure of the thesis 4

2 LITERATURE REVIEW 5

2.1 Overview about Marketing 5

2.1.1 History of Marketing 5

2.1.2 Definition of Marketing 7

2.1.3 The Role of Marketing 8

2.1.4 Marketing in pharmaceutical 10

2.2 Basic content of Marketing Mix 10

2.2.1 Product 11

2.2.2 Price 18

2.2.3 Place 22

2.2.4 Promotion 24

3 RESEARCH METHOD 29

3.1 Pharmacy marketing research 29

3.2 Research process for thesis 29

3.2.1 Recogniance survey 29

3.2.2 Questionnaire design 29

3.2.3 Data collection 31

3.2.4 Conducting the results 31

4 DISCUSSION AND FINDING 32

4.1 Company background 32

4.1.1 General information 32

4.1.2 Establishment and development process 32

4.1.3 Vision, mission, values 33

4.1.4 Organization chart 35

4.1.5 Human resources 36

4.1.6 Production 37

4.1.7 Monthly financial result 38

4.2 Analyzing marketing activities of An Chau PJSC 39

4.2.1 Factors affecting the marketing activities in An Chau PJSC 39

4.2.2 An Chau PJSC market 47

4.2.3 Distribution strategy 47

4.2.4 Price 50

4.2.5 Product 53

4.2.6 Promotion and business assistance policy 59

4.3 Pros and cons of An Chau Pharmaceutical Joint Stock Company’ marketing environment 63

4.3.1 Strengths 63

4.3.2 Weaknesses 63

5 SOME SUGGESTIONS FOR THE MARKETING ACTIVITIES OF AN CHAU PJSC 66

5.1 Objectives and development orientations of the company 66

5.2 Oriented strategies from the SWOT matrix Marketing 67

5.3 Customer feedback about the marketing activities at An Chau PJSC 69

5.4 Some supporting solutions for Marketing activities 69

5.4.1 Improving and developing the market research activities 70

5.4.2 Improving product activities 70

5.4.2 Improving pricing activities 72

5.4.3 Improving distribution activities 74

5.4.4 Improving promotion activities 75

5.5 Limitations of the study and suggestions for future work 77

5.6 Contributions of the study 78

REFERENCE a

LIST OF ACRONYMSR&D Research and Development

PJSC Pharmaceutical Joint Stock Company

LIST OF TABLES AND FIGURES

FIGURE

Figure 2.3 Stages on the Product Life Cycle Marketing 19

Figure 4.1 Logo of An Chau Pharmaceutical JSC 37Figure 4.2 Organizational structure of the company 40Figure 4.3 Growth of the total amount used drugs Vietnam 46Figure 4.4 Distribution channel of An Chau PJSC 53Figure 4.5 Product Structure of An Chau 2014 60Figure 4.6 The dosage form, levels, packing of paracetamol 62Figure 4.7 Form of advertising signboards drugstores 65

TABLE

Table 4.1: Revenue, profit and retained earnings from 2012 – 2014 44

Table 4.3 The Sale Promotion Program of An Chau PJSC in 2015 57Table 4.4 The discount policy for clinics and hospitals 58Table 4.5 The product development portfolio in width in 2014 59Table 4.6 The revenue of Children product group 61Table 4.7 Portfolio of ingredient liver medicine in 2014 61Table 4.8 The development of products which have Ginkgo Biloba 64

1 INTRODUCTION

1.1 Background and cause of this paper:

Economic crisis has led to the decline of areas of the economy while MedicineIndustry is still considered to grow with the average speed growth of 18.8 % per year in

a 5-year period from 2009 to 2013 (ViettinbankSc Report, 2014) The primary factorthat impacts on this trend is that medicine can not be replaced by any other productsand the awareness of Vietnamese about medical and health care has also improved.Vietnamese pharmaceutical market has the highest growth level in South-east Asia,about 16% every year (ViettinbankSc Report, 2014) The total consumption value oftobacco was $3.3 billions in 2013 and it is predicted to increase by $10 billions in 2020(FPTS Report,2014)

All the sectors of the economy are accepted and can participate in Vietnamesemedicine market for advancing medicine supply By the end of 2013, there has been

4560 enterprises participating in supplying and contributing medicine, there are 1336domestic medicine enterprises among them and 425 foreign ones that are licensed forbusiness activities in Vietnam (FPTS Report,2014) The participation of privatecompanies with their simple organizational structures,flexible business strategies andhigh adaptation to market fluctuation has contributed to change Vietnamese medicinemarket Medicine market is getting overheating with average speed of growth 17%(FPTS Report,2014) However, most of medicine private businesses have small scales,limited economic potential, small nomenclature and severe competition betweencompanies as well When it comes to this situation, if the medicine enterprises want todevelop stably, they have to not only attach special importance to both technology andhuman resources’ investment but also specially attend to handle marketing strategiescreatively in order that they can get market opportunities and their own competitiveadvantages Marketing strategy do not always decide an enterprise’s success or failure;nevertheless, it is indispensable

An Chau Pharmaceutical joint-stock company, a private company which majors

at producing and dealing in domestic medicine It is trading in an overheating marketfilled with opportunities but threats as well If it want to exist and develop, it isessential that this company should have a certain marketing strategy and propersolutions to compete with its rivals (currently, the company just provides generalsolution and has not had an official marketing department) Therefore, I suggest thatimplementing a project to analyze the marketing activities at An Chau PharmaceuticalJoint Stock company is a necessary step to meet the customers’ demand and evaluatethe effective of marketing activities

With this actual condition and my internship period at An Chau PJSC, I hope that

my topic which is about “ Marketing activities of An Chau Pharmaceutical joint –stock company ” will assist the company in having a general look at its currentMarketing activities and solutions given will support the company to improve theirmedicine business operation, which is expected to contribute to advance their revenueand profits as well

1.2 Objective

An Chau PJSC is a local company, with 5 years of construction and developmentmedicines The company has been strides and achieved relatively good results But theeconomic situation of open competitive today, the company faced many difficulties.The current marketing strategy of the company purely generic, while Marketing has avery important role

The research topics of significance in terms of practicality Topical helpcompanies with the overall look of marketing activities in recent years and proposesome solutions to improve business performance of the company Pharmaceuticals.Besides, the subject can be used as materials for the project, other research on the roleand performance of Marketing, the performance of pharmaceutical companies in thenext phase Besides, the application of knowledge Marketing_Mix, through analysis ofthe actual economy, from customers as well as the current situation of the company to

find out the causes of the present marketing activities of companies are not reallyeffective, which proposed a number of measures the company may consider applying

to improve business performance in the future

The purpose of this thesis is to investigate the current marketing practices ofpharmaceutical companies through a literature search, case studies and interviews Theliterature search focussed on the regulations and guidelines that control the promotion

of pharmaceutical products in Vietnam markets

The case studies focussed on how the companies promoted and influencedpatients to buy their products through television commercials and websites in order tokeep their market share and maybe entice new customers to buy it

1.3 Research questions

The key question of this study is: “How do marketing activities of An ChauPharmaceutical Joint Stock Company influencing the customer satisfaction throught4P, especially product, price and promotion?” To answer this question, it is necessary

to answer the following these sub-questions:

 How did An Chau pharmaceutical PRODUCTS perform? (Overall quality,First use experience, Usage experience, )

 How is the An Chau’s promotion program? (discounts, PR )

 Overall, how satisfied were you with price of medicines of An ChauPharmaceutical JSC?

Interviews were done with a series of 10 questions with An Chau 's customer tofind out their opinions on current marketing practices of the companies, the influence

of gifts from pharmaceutical representatives on prescribing or selling particular drugsand opinions on Direct-to-Consumer (DTC), internet advertising, and how this effectsand controls their decisions on prescribing or selling particular brands of drugs.Interviews were also preformed with some pharmaceutical representatives (doctor) tofind out their opinions on their own positions within the pharmaceutical industry, theirbackgrounds, and their individual approaches in selling their particular products

1.4 Research scope

This study focuses on measuring the level of satisfaction about marketingactivities of An Chau PJSC of customers in Nghe An Province (50 clients), Ha NoiCapital (50 clients), Ha Tinh province (20 clients),Hai Phong (10 clients), Hai Duong(10 clients), Da Nang (10 clients) where there have major big customer of An ChauPJSC since the beginning of March 2015

210 customers of An Chau PJSC who is owner of drugstore, pharmacy, clinic inthese place that is mentioned above have been invited to do survey with the hypothesisthat they will fit with the whole population of An Chau PJSC customers in Vietnam

1.5 Structure of the thesis

At the beginning of the thesis there is a short description and defination ofMarketing, Marketing activities in Pharmacy company The author carries on totheories that are implicated in the different parts of the actual marketing plan Theresults of the research will be applied in the marketing plan that will be the next andcentral part of the thesis The marketing plan will consist of five parts:

 An introduction about background, purpose and research method

 Literature review about Marketing, Marketing activites and factors in thePharmacy company

 Research method

 Dicussion and Finding

 Orientation toward marketing activities and suggestions for An ChauPharmaceutical Joint Stock Company

Led by marketing scholars from several major universities in the world, thedevelopment of marketing was motivated by the need to analyze relationships andbehaviors that existed between sellers and buyers In particular, the research ofmarketing led sellers to recognize that adopting certain strategies and tactics couldnotably benefit the seller/buyer relationship Before the 1950s, Marketing often meantidentifying strategies and tactics for simply selling more products and services withlittle link for what customers really wanted Often this meant companies embraced a

“sell-as-much-as-we-can” philosophy with little interest in building relationships forthe long term

But starting in the 1950s, companies began to recognize that old ways of sellingwere not really effective As competition grew stiffer across most industries,organizations looked to the buyer side of the transaction for ways to improve Whatthey found was an emerging philosophy suggesting that the key factor in successfulmarketing is understanding the needs of customers Today enterprises want businessachieve higher economic efficiency needs to have an understanding and application ofmodern marketing

Besides that, the concept of marketing that we now see has more to do withdevelopments during the industrial revolution of the 18th and 19th centuries This was

a period of rapid social change driven by technological and scientific innovation One

result was that for the first time the production of goods was separated from theirconsumption Mass production, developing transport infrastructure and growing massmedia meant that producers needed to, and could develop more sophisticated ways ofmanaging the distribution of goods.

For much of the industrial revolution goods were generally scarce and producerscould sell pretty much all that they could produce, as long as people could afford tobuy them For much of the industrial revolution goods were generally scarce andproducers could sell pretty much all that they could produce, as long as people couldafford to buy them Their focus was on production and distribution at the lowestpossible cost and what marketing management (for example, reducing distributioncosts, opening new markets)

From the start of the twentieth century to the period following the Second WorldWar (although the development was interrupted by the wars) competition grew and thefocus of marketing turned to selling Communications, advertising and branding started

to become more important as companies needed to sell the increasing outputs ofproduction in an increasingly crowded market Marketing was therefore still a 'slave' toproduction, but focussed on distribution, communication and persuading customers thatone manufacturers goods were better than another

Marketing terms appear in the early years of the twentieth century, the first timeever in the US But after the world economic crisis (1929 - 1932) and especially afterWorld War II (1941 - 1945), Marketing reached the leap, strong growth in bothquantity and quality to really become a popular field of science today

From the 1960s onwards most markets have become saturated (the size of themarket remains the same) This means that there is now intense competition forcustomers The sophistication of marketing management has therefore developed intowhat we now see in a modern marketing department Marketers are involved at astrategic level within the organisation and therefore inform an organisation about whatshould be produced, where it should be sold, how much should be charged for it andhow it should be communicated to consumers Modern marketers research markets and

consumers They attempt to understand consumer needs (and potential needs) andallocate organisational resources appropriately to meet these needs Modern marketersare particularly interested in brands They are also increasingly interested in ensuringthat employees understand marketing, i.e that everyone within the organisationinvolves themselves with marketing activities.

First department of European Marketing was established in 1968 in the city Grai

of Austria The process of internationalization of Marketing rapid development, todayalmost all universities in the world are teaching of Marketing and Marketingapplications are also a very effective way in the field of business everywhere

2.1.2 Definition of Marketing

Along with the development over time, the Marketing has many differentconcepts The concepts depends on the actual circumstances and different perceptionsthat people have different ways of defining Marketing The difference is not only in thelevel of detail, but also reflected in the content its contains But in short, the advent ofMarketing effectively to support business operations, sales and marketing of products According to the American Marketing Association (AMA) Board of Directors,Marketing is the activity, set of institutions, and processes for creating, communicating,delivering, and exchanging offerings that have value for customers, clients, partners,and society at large Overall this is a quite perfect concept with many advantages.Firstly, this concept indicate that the product being exchanged is not limited to tangiblegoods but also ideas and services and Marketing is not only apply to the businessactivities aimed at profit Secondly, it define clearly the functions of marketing notonly the sale or distribution This concept access Marketing functional perspective,when it talk about 4P in Marketing, this is also the approach of some curricula inMarketing in Vietnam because this concept carries the advantage of being simple andhigh applicability The approach is matching the marketing management process thatPhilip Korler offering

In other hand, Julie Barile – Vice President of ecommerce, Fairway Market saidthat marketing was traditionally the means there by an organization communicates to,

links with, and engages its target audience to convey the value of and ultimately sell itsproducts and services This concept is influenced by traditional marketing ideas,emphasizing the distribution chain, cargo traffic That is an attempt to sell what wasproduced However, since the emergence of digital media, in particular social mediaand technology innovations, it has increasingly become more about companies buildingdeeper, more meaningful and lasting relationships with the people that they want tobuy their products and services The ever-increasingly fragmented world of mediacomplicates marketers’ ability connect and, at the same, time presents incredibleopportunity to forge new territory

But, Dr Philip Kotler defines marketing as the science and art of exploring,creating, and delivering value to satisfy the needs of a target market at a profit.Marketing identifies unfulfilled needs and desires It defines the measures andquantifies the size of the target market and the profit potential It pinpoints whichsegments the company is capable of serving best and it designs and promotes theappropriate products and services Futhermore, the term Marketing is defined as asocial and managerial process by which individuals and groups obtain what they needand want through creating, offering and exchanging products of value with others.Synthesis of the reviews above, I believe that Marketing is an understanding, asense of customer needs and market requirements This insight is not only in meetingthe current needs of customers, that are led and shared with customers This conceptinvolves a lot of processes Marketing activities processes such as market research tofind out the real needs of customers (insight), product research, price research,distribution including the promotion (advertising, PR, promotions, direct marketing,personal selling)

2.1.3 The Role of Marketing

As we’ve seen the key objective of an organization’s marketing efforts is todevelop satisfying relationships with customers that benefit both the customer and theorganization These efforts lead marketing to serve an important role within mostorganizations and within society

At the organizational level, marketing is a vital business function that is necessary

in nearly all industries whether the organization operates as a for-profit or as a profit For the for-profit organization, marketing is responsible for most tasks that bringrevenue and, hopefully, profits to an organization For the not-for-profit organization,marketing is responsible for attracting customers needed to support the not-for-profit’smission, such as raising donations or supporting a cause For both types oforganizations, it is unlikely they can survive without a strong marketing effort

not-for-Marketing is also the organizational business area that interacts most frequentlywith the public and, consequently, what the public knows about an organization isdetermined by their interactions with marketers For example, customers may believe acompany is dynamic and creative based on its advertising message

At a broader level marketing offers significant benefits to society These benefitsinclude:

 Developing products that satisfy needs, including products that enhancesociety’s quality of life

 Creating a competitive environment that helps lower product prices

 Developing product distribution systems that offer access to products to a largenumber of customers and many geographic regions

 Building demand for products that require organizations to expand their laborforce

 As lodestar guiding, directing and linking business activities of enterprises

 Through the marketing activities that the decision in the business ofmanufacturing enterprises have more scientific basis, more solid Therebybusiness conditions and sufficient information to facilitate more than satisfying

customer needs Marketing must determine what to produce, how muchquantity, product features, what materials to use.

 Offering techniques that have the ability to convey messages that changesocietal behavior in a positive way (e.g., anti-smoking advertising)

Pharmaceutical marketing is actually integrated policies, strategic marketing ofthe drug in order to satisfy the needs of patients, in order to serve the health carecommunity In addition to the objectives, functions like marketing generally, because

of industry-specific, active marketing in the pharmaceutical company is alsoresponsible for: drugs being sold right drug, right price, the right quantity, right timeand the right place

 Right drug: Right pharmaceutical ingredients, content, guarantee the quality andGPS

 Right quantity: Number of drug production, packing fit

 Right place: pharmacist prescription drugs, medication dispensing doctors.maintaining relationships elements distribution channels

 Right Price: Pricing for customers to be acceptable

 Right time: Ready to meet demand, while introducing time

2.2 Basic content of Marketing Mix

The marketing mix is one of the most famous marketing terms The marketingmix is the tactical or operational part of a marketing plan The marketing mix is alsocalled the 4Ps or the 7Ps The 4Ps are price, place, product and promotion The servicesmarketing mix is also called the 7Ps and includes the addition of process, people andphysical evidence

According to Kotler and Armstrong (2010), the marketing mix is the set ofcontrollable tactical marketing tools – product, price, place, and promotion – that thefirm blends to produce the response it wants in the target market

Figure 2.1 The Marketing Mix Model

Source: kbmanage.com, Marketing Mix

independent physical existence Typical examples of mass-produced, tangible objectsare the motor car and the disposable razor A less obvious but ubiquitous mass-produced service is a computer operating system.

Every product is subject to a life-cycle including a growth phase followed by amaturity phase and finally an eventual period of decline as sales fall Marketers must

do careful research on how long the life cycle of the product they are marketing islikely to be and focus their attention on different challenges that arise as the productmoves

The marketer must also consider the product mix Marketers can expand thecurrent product mix by increasing a certain product line's depth or by increasing thenumber of product lines Marketers should consider how to position the product, how

to exploit the brand, how to exploit the company's resources and how to configure theproduct mix so that each product complements the other The marketer must alsoconsider product development strategies

b The structure of the product

Acording to Philip Kotler, there are 5 product levels:

- Potential product

It is the final product that is available on the market and that the consumers canbuy This includes all the additional values and augmentations that the company finallyincluded in the product to differentiate it from the competitors’ products

- Augmented product:

Those attributes of the product that can differentiate it from the competitors’products and might provide a slight advantage over them for the consumers These mayinclude the brand name, the design, the packaging, the overall quality, the additionalfunctions (apart from the basic features), the installation, the after-sale service, thewarranty, the home delivery and the possibility to accept credit from the consumers

- Expected product

The properties that the product has and that are absolutely necessary for theconsumer to think about buying the product

c Selection of developement for the product portfolio

The product portfolio is a collection of all kinds of products and items that aparticular seller offering to sell to the buyer

Example: Kodak product portfolio consists of two main types: the product informationand images List of products of a company will have the width, length, depth andcertain density

- Width product portfolio company represents how many different types ofproducts

- Length product portfolio is the sum of items in the list of products

- The depth of product portfolio to show how much of each product plans inkind

- The density of the product portfolio represents a close relationship to someextent between different products in terms of final use, production facilities,distribution or any other aspect.

d Product life-cycle theory

The theory of a product life cycle was first introduced in the 1950s to explain theexpected life cycle of a typical product from design to obsolescence, a period dividedinto the phases of product introduction, product growth, maturity, and decline Thegoal of managing a product's life cycle is to maximize its value and profitability at eachstage Life cycle is primarily associated with marketing theory

Figure 2.3 Stages on the Product Life Cycle Marketing

Source: http://productlifecyclestages.com/

This is the stage where a product is conceptualized and first brought to market.The goal of any new product introduction is to meet consumers' needs with a qualityproduct at the lowest possible cost in order to return the highest level of profit Theintroduction of a new product can be broken down into five distinct parts:

Idea validation, which is when a company studies a market, looks for areas whereneeds are not being met by current products, and tries to think of new products thatcould meet that need The company's marketing department is responsible foridentifying market opportunities and defining who will buy the product, what theprimary benefits of the product will be, and how the product will be used

Conceptual design occurs when an idea has been approved and begins to takeshape The company has studied available materials, technology, and manufacturingcapability and determined that the new product can be created Once that is done, morethorough specifications are developed, including price and style Marketing isresponsible for minimum and maximum sales estimates, competition review, andmarket share estimates

Specification and design is when the product is nearing release Final designquestions are answered and final product specs are determined so that a prototype can

be created

Prototype and testing occur when the first version of a product is created andtested by engineers and by customers A pilot production run might be made to ensurethat engineering decisions made earlier in the process were correct, and to establishquality control The marketing department is extremely important at this point It isresponsible for developing packaging for the product, conducting the consumer teststhrough focus groups and other feedback methods, and tracking customer responses tothe product

Manufacturing ramp-up is the final stage of new product introduction This is alsoknown as commercialization This is when the product goes into full production forrelease to the market Final checks are made on product reliability and variability

In the introduction phase, sales may be slow as the company builds awareness ofits product among potential customers Advertising is crucial at this stage, so themarketing budget is often substantial The type of advertising depends on the product.

If the product is intended to reach a mass audience, than an advertising campaign builtaround one theme may be in order If a product is specialized, or if a company'sresources are limited, then smaller advertising campaigns can be used that target veryspecific audiences As a product matures, the advertising budget associated with it willmost likely shrink since audiences are already aware of the product

Techniques used to exploit early stages make use of penetration pricing (lowpricing for rapid establishment) as well as "skimming," pricing high initially and thenlowering price after the "early acceptors" have been lured in

Growth

The growth phase occurs when a product has survived its introduction and isbeginning to be noticed in the marketplace At this stage, a company can decide if itwants to go for increased market share or increased profitability This is the boom timefor any product Production increases, leading to lower unit costs Sales momentumbuilds as advertising campaigns target mass media audiences instead of specializedmarkets (if the product merits this) Competition grows as awareness of the productbuilds Minor changes are made as more feedback is gathered or as new markets aretargeted The goal for any company is to stay in this phase as long as possible

It is possible that the product will not succeed at this stage and move immediatelypast decline and straight to cancellation That is a call the marketing staff has to make

It needs to evaluate just what costs the company can bear and what the product'schances for survival are Tough choices need to be made—sticking with a losingproduct can be disastrous

If the product is doing well and killing it is out of the question, then the marketingdepartment has other responsibilities Instead of just building awareness of the product,the goal is to build brand loyalty by adding first-time buyers and retaining repeatbuyers Sales, discounts, and advertising all play an important role in that process For

products that are well-established and further along in the growth phase, marketingoptions include creating variations of the initial product that appeal to additionalaudiences.

Maturity

At the maturity stage, sales growth has started to slow and is approaching thepoint where the inevitable decline will begin Defending market share becomes thechief concern, as marketing staffs have to spend more and more on promotion to enticecustomers to buy the product Additionally, more competitors have stepped forward tochallenge the product at this stage, some of which may offer a higher-quality version ofthe product at a lower price This can touch off price wars, and lower prices meanlower profits, which will cause some companies to drop out of the market for thatproduct altogether The maturity stage is usually the longest of the four life cyclestages, and it is not uncommon for a product to be in the mature stage for severaldecades

A savvy company will seek to lower unit costs as much as possible at thematurity stage so that profits can be maximized The money earned from the matureproducts should then be used in research and development to come up with newproduct ideas to replace the maturing products Operations should be streamlined, costefficiencies sought, and hard decisions made

From a marketing standpoint, experts argue that the right promotion can makemore of an impact at this stage than at any other One popular theory postulates thatthere are two primary marketing strategies to utilize at this stage—offensive anddefensive Defensive strategies consist of special sales, promotions, cosmetic productchanges, and other means of shoring up market share It can also mean quite literallydefending the quality and integrity of your product versus your competition Marketingoffensively means looking beyond current markets and attempting to gain brand new-buyers Relaunching the product is one option Other offensive tactics include changingthe price of a product (either higher or lower) to appeal to an entirely new audience orfinding new applications for a product

This occurs when the product peaks in the maturity stage and then begins adownward slide in sales Eventually, revenues will drop to the point where it is nolonger economically feasible to continue making the product Investment is minimized.The product can simply be discontinued, or it can be sold to another company A thirdoption that combines those elements is also sometimes seen as viable, but comes tofruition only rarely Under this scenario, the product is discontinued and stock isallowed to dwindle to zero, but the company sells the rights to supporting the product

to another company, which then becomes responsible for servicing and maintaining theproduct

Contents of policy research products:

- Identify types of designs, features and utilities of products

- The quality criteria

- Color products, components

2.2.2 Price

Pricing is the process of determining what a company will receive in exchange forits product or service Pricing factors are manufacturing cost, market place,competition, market condition, brand, and quality of product Pricing is also a keyvariable in microeconomic price allocation theory Pricing is a fundamental aspect offinancial modeling and is one of the 4 Ps of the marketing mix (The other three aspectsare product, promotion, and place.) Price is the only revenue generating elementamongst the four P, the rest being cost centers However, the other Ps of marketing will

contribute to decreasing price elasticity and so enable price increases to drive greaterrevenue and profits.

Pricing is the manual or automatic process of applying prices to purchase andsales orders, based on factors such as: a fixed amount, quantity break, promotion orsales campaign, specific vendor quote, price prevailing on entry, shipment or invoicedate, combination of multiple orders or lines, and many others Automated systemsrequire more setup and maintenance but may prevent pricing errors The needs of theconsumer can be converted into demand only if the consumer has the willingness andcapacity to buy the product Thus, pricing is the most important concept in the field ofmarketing,it is used as a tactical decision in response to comparing market situation.Price is the attached value given to a quantity of goods and services

According to Kotler, price is one of the most adjustable elements and it can bemodified easily compared to modification of product features, distribution channelsand promotional activities Price is what a customer must give up to get the benefitsoffered by the rest of a firm’s marketing mix, so it plays a direct role in shapingcustomer value (Cannon, Perreault and McCarthy, 2008, p.456) In simple terms, it isthe amount of money that a buyer pays for the product

The price is determined by a number of factors including costs, demand in themarket, and price of competitors Moreover, companies should follow a certainprice setting process in order to set the most favorable price Firstly, it should defineits price objectives and then create a suitable pricing strategy that will help thecompany achieve its price goal

Finally, it should adjusts the price if there is geographical pricing,psychological pricing, etc

a Price objectives

Before setting the price, a firm must consider what kind of pricing objectives itshould go for It seems that all company sets a price which is intended for gettingmaximal profit Yet, pricing objectives varies from company to company depending

on their overall organizational goal, marketing objectives and other related factors It

means that not all firms aim at profit maximization According to marketingtextbooks, a firm can set a price aiming at three basic objectives The terms for theseobjectives differ from each other depending on who wrote the book even though theyrefer to identical things Besides these term differences, the general idea is; somecompanies set their price for achieving maximal profit, some of them aim at anincrease in their market growth or aim at creating respect in the market by setting ahigher price.

The first type of pricing objective is a profit – oriented or profitability objectiveand it has two subordinate objectives; profit maximization and target returnobjectives The former is about setting a price in order to get as much profit aspossible and setting a high price Also, a low price can lead to maximum profit Thelatter one refers to setting satisfactory profit as an objective The second type ofpricing objective is sales – oriented objectives Some firms believe that maximumsales would spontaneously lead to high profit Therefore, the set a minimum profitlevel and focus on increasing its market share in the market The status quo pricingobjective is the third type of pricing objective This objective is mostly adopted by afirm which has its aimed profit level and market level The price tend be stabilizedand non-price factors are taken in account seriously (Cannon, Perreault andMcCarthy, 2008)

As mentioned before, many external and internal factors must be taken inaccount during the price setting process The customers’ demand, the costfunction, and competitors’ prices are the most major considerations in setting price.(Kotler and Keller, 2007) In other words, firstly, a company must make research

on demand in the market Typically, demand and the price are inversely related.Secondly, a firm’s internal cost functions must be carefully examined Finally, theperson who is responsible for pricing must consider competitors’ prices, costs, andprice change reactions from customers

c Price adjusting

Depending on the competitive situation, a firm adjusts its basic list priceaccording to the variety of factors These factors can be related to geographicaldifferences, the time of deliveries, guarantees, etc There are five types of pricingpolicies that help the company to adjust the price: geographical pricing, pricediscounts and allowances, promotional pricing, differentiated pricing and product-mixpricing (Kotler and Keller, 2007)

If company operates in different location and countries, it should adjust the priceconsidering shipping costs, exchange rate, and lack of cash payments As for the pricediscounts and allowances, prices can be adjusted according to early and late payments,and purchase volumes Promotional pricing includes special event pricing, warranties,and psychological pricing Differentiated pricing involves activities like offeringdifferent price for different individuals like price for students, and seniors If acompany offers more than one product, it should consider the facts that each product’sdemand differs from another Therefore, each product requires specific pricing policy.(Kotler and Keller, 2007)

2.2.3 Place

Place is often referred as a distribution channel by marketers “Place is theactivity of making goods and services available in the right quantities and locations,when customers want them.” (Cannon, Perreault and McCarthy, 2008, P 290) Aplace can be any physical premises like supermarkets, stores, groceries, as well asvirtual places like internet shops

a Types of distribution channels

A company should choose a distribution channels that are suitable and efficientfor its business A company can sell its products either directly to the customers orthrough wholesalers, retailers, and other agents Typically, there are two types ofdistribution channels: a direct marketing channel and an indirect marketing channel

“Direct marketing channel is a marketing channel that has no intermediary level.Indirect marketing channel is a channel that contains one or more intermediary

level.” (Kotler and Armstrong, 2005) Figure 4 shows possible distribution channel that

a company can select:

Figure 2.4 Channels of distribution

Source: Distribution Channels (Kotler and Armstrong 2005, P364).

b Retailing and wholesaling

As mentioned above, a company has two choices when it comes time to chooseits distribution channel One possibility is to sell the product directly to the finalcustomers The other is to sell them with the help of intermediaries likewholesalers and retailers “Retailing covers all of the activities involved in the sale ofproducts to final consumers.” (Cannon, Perreault and McCarthy 2008, 337) It can belarge supermarket channels or an individual trader On the other hand, “wholesaling isconcerned with the activities of those persons or establishments that sell to retailersand other merchants, or to industrial, institutional, and commercial users, but do notsell in large amounts to final consumers.” (Cannon, Perreault and McCarthy 2008,355)

2.2.4 Promotion

As thinking about marketing as a whole, the first word that comes to mind isadvertising From the customers’ point of view, advertising is the most visibleactivity from all the activities that are being accomplished by a company Advertising

is so commonplace in the United States that an average person may encounter from

500 to 1,000 advertisements in a single day (Robbs 2009) However, in reality,promotion involves not only advertising but also other promotional activities such assales promotion, public relation, personal selling and direct marketing Generally,

“promotion is the function of informing, persuading, and influencing the consumer’spurchase decision.” (Kurtz and Boone 2006, 482)

Each of four elements of a marketing mix has some objectives and thepromotion does, too Informing, persuading, and reminding (Cannon, Perreault andMcCarthy 2008) are the three basic objectives of promotion Firstly, the informingobjective aims at telling customers that a certain product exists in the market so thatcustomers get aware of the product The second objective is to make the customersbuy the product by persuading them Lastly, once the product is familiar to thecustomers, a company should think about promotional activities that will help remindthe customers about the product

a Promotion Mix

A company can achieve promotion objectives through certain methods Thereare many different promotional methods In general, those promotional methods aredivided into three groups: personal selling, mass selling, and sales promotion(Cannon, Perreault and McCarthy, 2008) Each promotion method has its ownadvantages and disadvantages Therefore, it is better to take them in account incombinations

It can be seen from the name that personal selling is about having face-to-face orone- on-one interaction with the customers through salespeople It involves directspoken communication between sellers and potential customers (Cannon, Perreault

and McCarthy, 2008) The main advantage is an immediate feedback from thecustomers Yet, personal selling requires a lot of effort and money.

On the other hand, mass selling is the opposite method of personal selling “Massselling is communicating with large number of potential customers at the same time.”(Cannon, Perreault and McCarthy, 2008, P.370) There are two forms of massmarketing which are advertising and publicity

- Advertising is the main form of mass selling “Advertising is any paid form

of non-personal presentation of ideas, goods, or services by an identifiedsponsor.” (Cannon, Perreault and McCarthy, 2008, P.370) Nowadays mostmedia types such as television, radio, internet, cinema commercials, andnewspapers are used for advertisement Specially, internet promotion hasbecome one of the effective ways of promoting one’s business Websites,banner ads, interstitials, search engines, mass emails are the common types ofinternet promotion

- Publicity is any unpaid form of non-personal presentation of ideas, goods,

or services Sales promotional activities can be aimed at consumers, atmiddlemen, or at a firm’s own employees Sales promotions aimed at finalusers can be contests, coupons, samples, sponsored events Price deals,promotion allowances, and trade shows are the sales promotion formiddlemen And, lastly, a company can implement a sales promotion fortheir employees or its own sales force by organizing contests, bonuses,meetings, and trainings (Cannon, Perreault and McCarthy, 2008)

b Promotion Budget

Budgeting promotional activities involves one of the most complicated anddifficult decision making process Typically it is not easy to measure the outcome ofpromotional activities for any company In addition, the costs of promotional activitiesare different for various businesses For example, for the pharmaceutical companies,20% of sales budgeted on promotional activities is primarily from advertising, whilefor Ford and Toyota, it is less than 1% (Advertising Budget, 2009)

John Wanamaker, the father of modern advertising, once said that “I know thathalf of my advertising budget is wasted, but I’m not sure which half” However, it ischallenging to set a proper promotion budget, there are still some ways to do it sincealmost everything is measurable in our era Companies set their promotion budgetbased on many factors such as their previous experiences and observations “Themost common method of budgeting for promotion expenditure is to compute apercentage of either past sales or sales expected in the future.” (Cannon, Perreaultand McCarthy, 2008, P.390).

Conclusion to Theoretical Part

To sum up the theoretical part, putting the right product in the right place, at theright price, at the right time are considered to be the core activities of marketing Inother words, by creating a certain product that satisfies particular group of people,putting it at some place where those people often visit and pricing it at the level whichthe same people think it is worth for the product is the key to successful business.However, during the process of bringing a product to a customer, a firm has todeal with a lot of variables and make various choices and decisions that fit foreach variable The variables that a firm can control are generally called marketingmix and McCarthy classified them in four categories which are product, price, place,promotion A firm satisfies its target market using these variables by altering themproperly

Product is all about what a firm offers to the customers Product appearance,function, packaging, warranty, guarantee and other product related aspects areincluded in product decision process A firm should combine other variables which areprice, place, and promotion according to product life cycle Each cycle requiresdifferent strategies

Price is the money that customers have to pay for purchased product Price isconsidered one of the marketing mix elements because firm can adjust or change price

in order to attract customers When setting a price, a firm must look at threeimportant factors: demand in the market, cost function and competitors’ price Byconsidering these three factors, it can set the right price Pricing decisions must differalong with the product life cycle

Place covers channels, distributions, and intermediaries It is basically aboutbringing a product to the target customers A product should reach its target customersfast and safe from the manufacturers

Promotion involves advertising, personal selling, public relations These tools arerelated to communicating and attracting the target customers to the product

Promotional activities are considered to be the most visible one from the 4Ps ofmarketing.

Lastly, by creating a marketing mix that satisfies target customers, a firm will beable to achieve its strategic goal successfully and will improve the currentperformance

3 RESEARCH METHOD

3.1 Pharmacy marketing research

The research methods must be appropriate to the objectives of the study Thisresearch was carried out via exploratory research which allows me to familiarizemyself with the problem or concept to be studied, followed by descriptive-causalresearch to determine which variable might be causing a certain behavior The finalstage will be a conclusive research to provide information that is useful in reachingconclusions or decision-making and a reliable or representative picture of thepopulation through the use of a valid research instrument This paper takes acautionary stance to the impact of An Chau Pharma's marketing activities oncustomer satisfaction, via a customer survey

This study continues to research the program component aspect by examining allfour facets of the marketing activities, described here as product features, brand name,retail outlets, basic advertising message and retail pricing of a single consumer product

3.2 Research process for thesis

3.2.1 Recogniance survey

Based on findings in earlier stage, a customer survey was carried out in order tolocate the most suitable places for the research With increasing globalization, localcompany find themselves having to compete with large players by targeting nichemarkets, like provinces The section take into consideration places in Nghe AnProvince (50 clients), Ha Noi Capital (50 clients), Ha Tinh province (20 clients),HaiPhong (10 clients), Hai Duong (10 clients), Da Nang (10 clients).To excel and flaunt as

a market leader in an ultramodern era and a globalize world where we barely can catch

up with the changes, the organizations must strive not only to improve but also tocommit into a continuous improvement climate, to harvest from its marketingstrategies especially marketing mix model, benchmarking and company qualitypolicy

3.2.2 Questionnaire design

Good questionnaire construction is critical to the success of a survey Theresearch objectives and frame of reference was defined beforehand, including thequestionnaire's context of time, budget, manpower, intrusion and privacy.

A non-comparative Likert scaling techniques was used The level ofmeasurement of a variable in mathematics and statistics is a classification that wasproposed in order to describe the nature of information contained within numbersassigned to objects and, therefore, within the variable

The questionnaire is divided into 4 sections:

A typical test item in a Likert scale is a statement The respondent is asked toindicate his or her degree of agreement with the statement or any kind of subjective orobjective evaluation of the statement In Section 2, a six-point scale is used in a forcedchoice method where the middle option of 4 options is not available The questionscomprise four elements such as product, price, promotions, brand

Quantitative Marketing Research

It is the application of quantitative research techniques to the field of marketing

It has roots in both the positivist view of the world, and the modern marketingviewpoint that marketing is an interactive process in which both the buyer and sellerreach a satisfying agreement on the "four P's" of marketing: Product, Price, Place(location) and Promotion As a social research method, it typically involves theconstruction of questionnaires and scales People who respond (respondents) are asked

to complete the survey Marketers use the information so obtained to understand theneeds of individuals in the marketplace, and to create strategies and marketing plans.

Assumptions for Simple Random Sampling

Simple random sampling is one form of the general set of sampling proceduresreferred to as probability sampling Probability sampling procedures must meet 4criteria (Chochran, 1977):

- We can define the set of distinct samples which the procedure is capable ofselecting

- Each possible sample has assigned to it a known probability of selection

- We select one of the samples by a random process in which each samplereceives its appropriate probability of being selected

- The method for computing the estimate must lead to a unique estimate for anyspecific sample

3.2.3 Data collection

The study was conducted in 6 areas, Nghe An and Ha Noi are 2 of the mostpopulous province in Vietnam with approximately 9.56 million residents At the time

of the study, 6 places were chosen as the research sites

The data were collected by means of questionnaire Drugstore were the target ofthe research during the surveyed period

First appointment was conducted with the personal in-charge in each retail store

to request cooperation and approval for data collection and survey respond via formalletters from the Department of An Chau joint stock Pharmaceutical company

Field research was conducted in Ha Noi, Nghe An, Ha Tinh

A simple random sample of 152 Drugstore’s respondents was obtained fromeach of the 152 retail stores; sum up a total of 856 respondents data

3.2.4 Conducting the results

The results are attached in annex

4 DISCUSSION AND FINDING

4.1 Company background

4.1.1 General information

An Chau Joint Stock Company is pharmaceutical company with slogan “Moderntechnologies combine traditional experiences”

Figure 4.1 Logo of An Chau Pharmaceutical JSC

(Source: Marketing Department of An Chau Pharmarceutical JSC)

In terms of commitment, An Chau always try to satisfy customers’ needs byproviding a carefully defined range of products with reliable quality, high efficacy andsafety In addition, we also provide professional service for customers

An Chau major business is in:

- Research, development, production and sale modern and traditionalpharmaceutical products

- Distribution of products of other pharmaceutical manufacturer in Viet Nam

- Processing and sale of pharmaceutical materials, mainly medicinal herbs

- Transfer R&D results and/ or patents for new drugs and provision of researchservices on a contract basis

4.1.2 Establishment and development process

An Chau Pharmaceutical Joint Stock Company is one of the leading companies incombining medicine of Vietnam with the technological and pharmaceutical advance inthe world to bring the products of company into the first position on the market

An Chau is established in accordance with business registration certificate No

0105201377 issued on 18th March 2011