MARKETING SITUATIONS AND SOLUTIONS FOR PRODUCTS OF HAIHA CONFECTIONARY JOINT - STOCK COMPANY

FACULTY OF BUSINESS ADMINISTRATION ---***---REPORT OF MID-TERM INTERNSHIP MARKETING SITUATIONS AND SOLUTIONS FOR PRODUCTS OF HAIHA CONFECTIONARY JOINT - STOCK COMPANY Full name: Nguyen T

FACULTY OF BUSINESS ADMINISTRATION

-*** -REPORT OF MID-TERM INTERNSHIP

MARKETING SITUATIONS AND SOLUTIONS FOR PRODUCTS OF HAIHA CONFECTIONARY JOINT -

STOCK COMPANY

Full name: Nguyen Thi Quyen Student ID: 1111250031 Class: A14 CLC QTKD K50 Guidance teacher: Ms Le Thu Hang, MBA

Hanoi, July 2014

TABLE OF CONTENT

LIST OF TABLE

EXECUTIVE SUMMARY 1

CHAPTER1: OVERVIEW ABOUT HAIHA CONFECTIONARY JOINT- STOCK COMPANY 3

1.1.General introduction 3

1.2 History and development progress 3

1.2.1 Period 1959 – 1961 4

1.2.2 Period 1962– 1967 4

1.2.3 Period 1968– 1991 4

1.2.4 Period 1992 to 2002 5

1.2.5 Period 2003 to now 5

1.3 Functions and missions 6

1.4 Professions and business fields 6

1.5 Organizational structure 8

1.6 Business situation and result of HAIHACO in 4 recent years 9

CHAPTER 2: THEORETICAL FRAMEWORK 17

2.1 Key terms and definitions 17

2.1.1 Marketing 17

2.1.2 Marketing research 17

2.1.3 Targeted customers 18

2.1.4 Market segmentation 18

2.1.5 Methods of segmenting customer markets 18

2.2 Role of marketing 18

2.3 Factors affecting marketing activities 19

CHAPTER 3: FINDING AND ANALYSIS 24

3.1 Select target market 24

3.2.1 Trade mark 25

3.2.2 Packing 26

3.2.3 Product catalogues 27

3.2.4 New product development 28

3.3 Pricing strategies 29

3.3.1 Valuation methods: 29

3.4 Distribution strategies 30

3.5 Promotion mix strategies 32

3.5.1 Advertising 32

3.5.2 Sales promotion 32

3.5.3 Personal selling 33

3.5.4 Direct marketing 34

3.5.5 Public relations 34

3.6 Evaluate marketing situations : advantages and disadvantages 35

3.6.1 Advantages 35

3.6.2 Disadvantages 35

3.6.3 Reasons: 36

CHAPTER 4: RECOMMENDATIONS 37

4.1 Development orientation of the company 37

4.1.1 Enterprise development orientation 37

4.1.2 Orientation of marketing activities 37

4.2 Solutions for marketing activities 38

4.2.1 Solution 1: People strategy 38

4.2.2 Solution 2: Complete products 38

4.2.3 Solution 3: Finalize distribution channels 38

4.2.4 Solution 4: Pricing strategy 38

SOLUTION 39

Table 1.1: Income statement in 4 recent years 9

Table 1.2: Balance sheet in 4 recent year 11

Table 1.3: Basis financial ratios 13

Table 1.4: Business result from 2010–2013 14

Table 1.5: The chart of the revenue, expense and profit before tax in the period of 2010– 2013 15

Table 2.1: Confectionery consumer tastes each region 19

Table 2.2: Confectionery consumption tastes by age and income 20

Table 2.3: Budget for marketing activities 22

Table 2.4: Product catalogues of company in 2012 27

Table 2.5: A number of Haiha bakery stores (year 2012) 31

Table 2.6: Dealers of Haiha Confectionery Joint - Stock Company in 2012 31

Table 2.7: Consumption situation by distribution channel 32

Table 2.8: Budget for marketing activities 32

EXECUTIVE SUMMARY

In recent years, along with the development of the economy and the populationgrowth rapidly, the demand for food which improved people’s living standard ismarkedly necessary One of the most important manifestations is demand forconfectionery

In fact, confectionery field of Vietnam has a quite stable development stages It

is estimated about 7,473 billion the overall worth of Vietnam market Confectioneryfield in Vietnam has ability to maintain high growth level and become one of thebiggest markets in Asia – Pacific area In order to have this position, enterprises musthave right marketing strategies because marketing makes living quality much better.Marketing helped business flexible, understand customers’ demand, win competitorsand then get profit

There are now more than 30 confectionery manufacturing enterprises whichhave reputation Hai Ha Confectionery Joint Stock Company (HAHACO) is one of theleading confectionery manufacturers of Vietnam which consumers believe to utilize.The company specializes in producing all kinds of confectionery items with adiversified variety of designs and models such as biscuits, cakes, sponge candy, softcandy, hard candy These items have made customers satisfied as company’sexpectations because the company has focused on advertising effectively

In order to have better overview of company’s marketing activities, I have

chosen the topic: “Marketing situations and solutions for products of HaiHa Confectionery Joint - Stock Company”

The report is divided into four chapters:

In chapter 1, the author gives a brief presentation on the establishment anddevelopment of Hai Ha Confectionery Joint Stock Company (HAHACO) andintroduction about their functions, missions and the company’s structure In additions,there are overviews of results of business activities at HAHACO in recent years

In chapter 2, the author presents theoretical framework which is supported to

the report This chapter covers key terms and definitions of marketing, targetedcustomers, market segmentation, etc Moreover, the author will mention about role ofmarketing and factors affecting marketing activities such as marketing environment(economy, society), budget, customers or competitors.

Then, in chapter 3, by doing research of targeted market, product strategies,price strategies, distribution strategies and promotion mix strategies, the author givesevaluations both advantages and disadvantages about marketing situations atHAHACO as well as HAHACO’s achievement and failures

Finally, in chapter 4, the author makes some recommendations and solutions tostrengthen marketing activities at HAHACO

Due to my limitation of knowledge, skills and experience, mistakes and faultsare inevitable I welcome all comments, advices and suggestions that help me improvethe quality of the report

Finally, I would like to express my gratitude to my instructors and HAIHACOstaff for helping me complete my mid-course internship

CHAPTER1: OVERVIEW ABOUT HAIHA CONFECTIONARY

JOINT- STOCK COMPANY1.1.General introduction

Name of company: HaiHa Confectionery Joint - Stock Company

Transaction name: HaiHa Confectionery Joint - Stock Company

The company is established as decision No 191/QD - BCN on 23/11/2003 of theMinistry of Industry directly under Vietnam Tobacco Corporations

Head quarter : No 25 Truong Dinh street, Hai Ba Trung District, Hanoi

Abbreviation name: HAIHACO

1.2 History and development progress

HaiHa Confectionery Joint - Stock Company, which is under the Ministry of LightIndustry, was established on 25th December, 1960 for the confectionery production tomeet domestic demand and export partly In 2003 the company implementedequitization under No 191/2003/QD-BCN decision dated 14/11/2003 of the Ministry

of Industry (now the Ministry of Industry and Trade) The company was granted thecertificate of business registration No 010300614 dated 20th January, 2004 and thesecond change on 13th August, 2007 by Department of Planning and Investment ofHanoi

After more than 50 years of development, the company has experienced significantmilestone follows:

1.2.1 Period 1959 – 1961

On November 1959, Northern native agricultural products corporation has built

an empirical establishment for researching pearl beads with 9 officers and employees

of the Corporation At the beginning of 1960, implement the policy of companies,bench has studied in depth and produced vermicelli items from green bean On thatbasis, Hoang Mai vermicelli workshop was born on 2nd December 1960

1.2.2 Period 1962 – 1967

At this time, Hoang Mai vermicelli workshop has been tested successfully andbeen in production some items such as soybean oil and corn starch providing for VanDien battery factory

In 1966, Botanical Institute has taken this place as an establishment for the trialproduction of food topics Since then, it had disseminated to local to produce, to solvelogistics on a spot which was suitable in war situation And from that, Hoang Maivermicelli workshop renamed Hai Ha food empirical factory In addition, the factoryalso produced a number of other items such as bullets, fermented sauce, fruit sauce,protein oil, bread and nutrition flour And an important thing is the factory initiallystudied malt in order to become Confectionery Company

1.2.3 Period 1968 – 1991

In 1968, the factory was managed by the Food Department By June 1970,according to the directives of the Food Department, the factory has accessed Hai Chauconfectionery workshop to hand over with 900 tons/year for producing dental gum,starch paper on 1970, it was renamed Hai Ha food factory with 444 people

On December 1976, the factory was approved to expand area with the capacityfrom 900 tons / year to 6000 tons / year The factory gradually expanded the scale ofproduction, equipped with many new production lines, technical innovation, advancedtechnology, step by step to meet the needs of the consumer better

Until 1987 the factory was again renamed into Hai Ha exporting confectioneryfactory managed by the food agriculture and industry department The company's

products are consumed not only in domestic but also in the foreign as well The speedfor growth of annual output reached from 1 percent to 15 percent and manualproduction has gradually mechanized 70 80 percent with state funds received from theday 01/01/1991 was 5 454 000 000 dong.

1.2.4 Period 1992 to 2002

On January 1992, the factory was managed by the light industrial Department

On July 1992, it was changed to Hai Ha Confectionery Joint - Stock Company

In the situation of the large fluctuations of the market, there are manydifficulties for enterprises to adapt new regime, yet HAIHACO still stood firm in theface of difficults and grew

In 1993, establishment of Hai Ha Kotobuki joint venture Main products arehard candy, snack, cookies and gum Until now, this joint venture has still operatedefficiently

In 1995, establishment of Viet Tri Miwon glutamate joint Venture Company

In 1996, establishment of the third joint venture was Kameda Haiha in NamDinh, but unfortunately this joint venture company has been in operation less efficientand dissolved on November 1998

1.2.5 Period 2003 to now

In 2003, the company implemented equitization under the decision No192/2003/QD-BCN of Industry Department on 14/11/2003 From 1/2004, thecompany has been operating in the form of a joint stock company by the certificate ofbusiness registration No 0103003614 issued on 20/01/2004 by the Department ofHanoi Planning and Investment And then it changed the second time on 08/13/2007

The company was approved for listing its shares on Hanoi Stock ExchangeCenter No 312/QD-TTGDHN dated 08/11/2007 and traded officially from the date of20/11/2007

The prestige of the company over time increased, so far the company has fivefactories including 2 joint venture companies with nearly 2,000 people and modernequipment The company is state enterprise which has integrated legal, independentlyeconomic accounting, opened bank accounts and used the seal as the state prescribed

1.3 Functions and missions

Hai Ha Confectionery Joint - Stock Company was founded with the function ofproducing candy to meet domestic demand and export In order to implement theassigned functions, Board of Directors and all employees of the company mustperform the following tasks:

Firstly, it is necessary to increase investment in depth with the purpose ofenhancing product quality, increasing productivity, diversifying products so as toexpand market

Secondly, it is very important to build the strategy for confectionery productiontechnology and a number of other products from 2010 to 2020, strength technologicalinnovation and improve the quality of products to increase competitiveness

Finally, the firm needs to identify the primary market, secondary market, focus onnew markets and pay more attention to export markets, particularly the foreignmarkets

1.4 Professions and business fields

Activities of the company were followed the business certificate No 0103003614which changed on August 13, 2007 is:

- Manufacture of bakery products

- Processing of milk and dairy products

- Manufacture of starches and starch products

- Production of sugar

- Manufacture of cocoa, chocolate and confections and preserved fruits

- Manufacture of other products such as:

+ Production of coffee products

+ Roasting and filtering coffee

+ Manufacturing substitutes for coffee

- Production of non-alcoholic beverages, mineral water.

- Wholesale food For example: Wholesale sugar, milk and dairy products, candyproducts and the products of cereals, flour, starch, coffee

- Wholesale beverages

- Retail food in specialized stores For instance:

+ Retail sugar, milk and dairy products, bread, jelly, candy and other products made from cereals, flour, starch in the specialized shops;

+ Retail coffee powder, instant coffee;

- Beverage Services (excluding bars)

- Wholesale of machinery, equipment and other machine parts

- Investing in construction, leasing offices, residential, commercial centers, consulting,managing, real estate advertising; Import and Export commodities company business

Main products:

+ Candy: Chew Candy, soft candy, hard candy lollipop (Haiha pop), Jelly Candy + Cake: Advanced soft Cake, chocolate covered cake, biscuits, crackers, wafers, wafertube (Miniwaf), Snack

+ Box Candy, moon cake (seasonal business products)

+ Instant coffee

1.5 Organizational structure

Source: Charter of the Company was revised in 2007 by the Department of General Administration

Board of directors

General Director

Board of controllers

Department of

developing

technology

Department of testing quality

Office Department of

Plan Market

Supply Office

Department of Finanace

Auxiliary Factory

Deputy General Director

of Technology

Deputy General Director

of Finance

1.6 Business situation and result of HAIHACO in 4 recent years

Table 1.1: Income statement in 4 recent years

2013KT/ĐL

Year 2012KT/ĐL

Year 2011KT/

ĐL

Year 2010KT/ĐL

Profit after tax for shareholders of the parent company 23,761 21,887 20,251 18,908

Source: Compiled from audit reports of the Department of the accounting in stage of 2010-2013

Table 1.2: Balance sheet in 4 recent year

BALANCE SHEET

Year 2013

KT/ĐL

Year 2012

KT/ĐL

Year 2011

KT/ĐL

Year 2010

Retained earnings 1,995 1,995 4,308 10,057

Source: Compiled from audit reports of the Department of the accounting in stage of 2010-2013

Table 1.3: Basis financial ratios

Source: Compiled from audit reports of the Department of the accounting in stage of 2010-2013

Table 1.4: Business result from 2010–2013

Table 1.5: The chart of the revenue, expense and profit before tax in the period of 2010–2013

Unit: million dong

Through above table and chart, we can realize that total revenue of companyincreases gradually over the period In 2011, total revenue rose 21, 19% compared with

2010, it increases 6, 8% in 2012 compared with 2011, and go up to 8, 2% in 2013compared with 2012 It is clear that this rate has slowed down in later As you can see,financing crisis was light in 2008 and strained in 2011 leading to quick growth in theperiod of 2010–2011 but slow development in 2012 However, in economic crisis, thecompany got more 21% (year 2011) was a big success

Total revenue is formed from 3 main sources including net revenue, financingincome, other profit In particular, net revenue accounted the highest density for morethan 99%, financing income make up the smallest density only from 0, 17% to 0,66% sothat they did not also affect the trend of total revenue Finally, other profit has small andirregular proportion

Due to the impact of the global financial crisis and in Vietnam, the total cost of thecompany also increased gradually at the same rate with total revenue, detailed as follows:21.89%; 6.76%; 8.21% It is this also explains why the total revenue of the company rosebut profits decreased as shown in Table 1.1 However, in the period 2010-2013, the profitbefore tax has increased by 32.14% This is a good result, especially with the first jointstock company in the period of economic crisis.

Ratio of debt by total capital of the company is always at a safe and stable levelthrough years, ranging from 38% to 47%

Ratio of profit before tax / total assets (ROA) of the company fluctuated around10% that is each 10 dong property, the company makes 1 dong profit before tax; ratio ofprofit after tax / equity (ROE) decreased over the years from 15.86% in 2010 to 12.51%

in 2013 Compared with the average interest rate during this period, there is a bit higherbut not really attractive to investors

To sum up, the above table shows that in the period 2010-2013, the production ofthe company developed in unfavorable economy conditions well

CHAPTER 2: THEORETICAL FRAMEWORK2.1 Key terms and definitions

2.1.1 Marketing

Marketing, more than any other business function, deals with customers

“Marketing is managing profitable customer relationships” The twofold goal ofmarketing is to attract new customers by promising superior value and keep and growcurrent customers by delivering satisfaction

Sound marketing is critical to the success of every organization Today, marketingmust be understood not in the old sense of making a sale–“telling and selling” –but in thenew sense of satisfying customer needs If marketer understands customer needs,develops products that provide superior customer value, and prices, distributes, adpromotes them effectively, these products will sell easily

In other word, marketing is a social and managerial process by which individualand organizations obtain what they need and want through creating and exchanging valuewith others Hence, marketing is defined as the process by which the companies createvalue for customers and build strong customer relationships in order to capture valuefrom customers in return

2.1.3 Targeted customers

Target customer is the person you've identified as most likely to purchase yourproducts, according to Entrepreneur.com This is a much more segmented portion of yourtarget market, as you've identified certain aspects of this individual These componentsmight include a specific age instead of a range, a specific income level versus a largeswath of income types, and the reasons these customers are most likely to purchase yourproducts.

2.1.4 Market segmentation

Market segmentation is to divide a market into smaller segments with distinctneeds, characteristics, or behavior that might require separate marketing strategies ormixes, which can be reached more efficiently and effectively with products and servicesthat match their unique needs

2.1.5 Methods of segmenting customer markets

Geographic segmentation: dividing a market into different geographical units such

as nations, states, regions, countries, cities or even neighborhoods

Demographic segmentation: dividing the market into segments based on variablessuch as age, gender, family size, family life cycle, income, occupation, education,religion, race, generation and nationality

Psychographic segmentation: dividing a market into different segments based onsocial class, life style, or personality characteristics People in the same demographicgroup can have every different psychographic characteristic Marketers also usepersonality variables to segment markets

2.2 Role of marketing

Marketing decides and coordinates the connection of business activities of theenterprise to the market It is to ensure business operations of the enterprise oriented tomarket, know to choose the market, needs and wants of the customer support solidly forall business decisions