Marketing strategies for attracting international tourists case of ben thanh tourist company

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL MBMMS3 NGUYEN THI THU THUY MARKETING STRATEGIES FOR ATTRACTING INTERNATIONAL TOURISTS: CASE OF BEN THANH TOURIST COMPANY M

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL

MBMMS3

NGUYEN THI THU THUY

MARKETING STRATEGIES FOR ATTRACTING INTERNATIONAL TOURISTS:

CASE OF BEN THANH TOURIST COMPANY

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Project Tutor: Prof., Dr NGUYEN DONG PHONG

Ho Chi Minh City

(2010)

STUDENT DECLRARATION

«The Université Libre De Bruxelles - Solvay Business School and The Ho Chi Minh City Open Univeristy is not responsible for any argument, data or statement contained in this final project These are only binding upon their author »

Ho Chi Minh City, 25 November, 2010

Nguyễn Thị Thu Thủy

ACKNOWLEGEMENTS

My sincere thanks to Prof., Dr Nguyen Dong Phong, who has given useful and

practical instruction to help me to finish this final project

I would like to express my sincere thanks to all professors of Solvay Business School who taught me during the courses at The Ho Chi Minh City Open

University

And my sincere thanks to Mr Bui Quang Son (PR Marketing Manager of Ben

Thanh Tourist Company) for his kind assistance

Nguyễn Thị Thu Thủy, MBMM3

Ho Chi Minh City, 25 November, 2010

COMMENTS FROM THE THESIS TUTOR

Student: NGUYEN THI THU THUY

Thesis: MARKETING STRATEGY OF BEN THANH TOURIST COMPANY

Tutor: Associate Professor Doctor NGUYEN DONG PHONG

The structure of the thesis is rational The analysis of the thesis is scientific, in detail Based on this, the thesis have given Marketing strategy of Ben Thanh Tourist Company It is necessary for Ben Thanh Tourist Company to research and apply this marketing strategy to improve

business activities in the future

During the writing time, the author has shown his scientific, creative and diligent spirit

I suggest the committee should give permission for her to present it to your kind consideration

Ho Chi Minh City, 15 November, 2009

(signed)

Assoc.Pro.Dr NGUYEN DONG PHONG

TABLE OF CONTENTS

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3.1 Overview of Vietnam’s Tourism Market cccccccccccccccccccccccccccccccccce 9

3.1.1 Factors 1nfluence the attraction oftourIsfs 9

3.1.2 Analysis of outcomes of Vietnam”s tourism 1n attracting mternational

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3.2.1 Introduction of Ben Thanh Tourist Company l3

3.2.2 Analysis the current business performance of Ben Thanh Tourist

Company c2 l4

3.2.3 Marketing activities of Ben Thanh Tourist Company 15

3.3 Results gained from the survey and date anaÌyS€S «-.««« se«« 16

CHAPTER 4: MARKETING STRATEGY OF BEN THANH TOURIST

4.2 Marketing segmenting, pOSÏ(ÏiOnÏng e «sec c có S S S n1 1 S1 111 S51 s5 22

4.3.1 Internal factors analysis (Strengths and Weaknesses analysis) 24 4.3.2 External factors analysis (Opportunities and Threats analysis) 25

4.4 Formulating marketing Objectives ccscccccscccccecccccccccccecccccscececes 27 4.5 Marketing Mix Strategies .cccccccccsccccsccccccccccccccccsscccccssscccsscsses 27

REFERENCES

APPENDIX

LIST OF FIGURES

Figure 1: Malcolm McDonald’s marketing planning process

Figure 2: Rate oŸreturn c2 c2 22 c2 vn nà nà: LIST OF TABLES Table 1: Numbers of international tourist to Vietnam in the past 10 years

Table 2: The results of the company business in 5 years (2004 — 2008)

Table 3: What is your purpose of your vIsif?

Table 4: Whom do you spend your holiday with?

Table 5: How do you know Ben Thanh Tourist Company?

Table 6: Did you make your reservation in advance?

Table 7: Ben Thanh Tourist reservation SerVIC©

Table 8: World ”s Top Tourism Spenders

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12 15 17 18 18 19 20

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EXECUTIVE SUMMARY

Nowadays, the trend towards globalization and internationalization of business has strong impact on companies’ strategy When a company is thinking about entering new markets, it needs to pay attention to variable aspect on micro and macro level Ben Thanh Tourist Company is a unit attached to Ben Thanh Cooperation (Sunimex) with abbreviation name Ben Thanh Tourist From the establishment in 1989 until now, Ben Thanh Tourist operates mainly

in traveling, restaurants, and hotels, services In recent years, most of international tourists

booking tour with are from US, Europe and some key Asian countries such as Japan, Chinese, Korea, etc We can see a very clear perspective of a new flow of international arrivals from those markets choosing Vietnam as their destination for holidays Ben Thanh Tourist has to catch off this one-off opportunity Therefore, the author decided to choose the project subject

“Marketing Strategies for attracting international tourists, case of Ben Thanh Tourist company” as the graduation project The prioritized objective of this project is to attract more international guests by analyzing the four elements of marketing mix The 2011-2012 marketing strategy for Ben Thanh Tourist Company is developed on the basic of increasing the number of international tourists and the revenue The aim of the marketing strategy is to ensure maximum effectiveness of promotional activities in order to strengthen and enhance Ben Thanh Tourist’s position as one of the leading tourist company in Vietnam

The launching this new strategy is the necessary step that company should pay more attention

on therefore building the detailed marketing plan is very important In order to set the marketing objective and creating the marketing strategies, the identification of the market customer segmentation should be considered to scope broad target customer After complete market segmentation to identified target customer, we set up the marketing objectives toward

to target group The analysis of company position in market will give us the real situation that company is facing We will know what the customers need and how strong the competitors are This analysis is mainly stated in SWOT matrix Based on the mission and objectives of the company, the project has proposed the details marketing mix strategies with implementing

The author organizes the project into three chapters in which each chapter deals with the specific aspects of the project The author explains each chapter and its relevance below:

Chapter 1 will introduce the theoretical framework of tourism and tourism marketing In this chapter, the marketing tourism is defined with its major characteristics It also introduces what tourism marketing strategy is This is a foundation for next chapter

Chapter 2 is the analysis of the current business performance of Ben Thanh Tourist Company This first part of this chapter 1s overview of Vietnam’s tourism market In this part, the author will present the current performance of Vietnam in attracting international guests in recent years and analyze some factors influencing this effort The second part is to analyze the business performance of Ben Thanh Tourist Company in recent years and its marketing

activities

Chapter 3 is the core one of this project In this chapter, the author combines the theoretical framework in chapter 1 and the marketing activities of Ben Thanh Tourist in order to present the marketing strategy for attracting international guests In this chapter, the author applies

what was learnt into the real situation of Ben Thanh Tourist

CHAPTER 1: INTRODUCTION

1.1 General information

Tourism not only creates a good economic source but also affects many social aspects, especially job creation and poverty reduction for the people Vietnam is not exception Vietnam is a beautiful South East Asian country, locating in the Indochina peninsula, with rich culture, stunning landscape and charming people It is considered very much potential for tourism industry, but there is still lot of room for development If we compared to some of our neighboring countries such as Thailand, Singapore or Malaysia, we have gain very small revenue from tourism sector Therefore, we have a lot of things to do to gain the bigger proportion

Ben Thanh Tourist Company is a unit attached to Ben Thanh Cooperation (Sunimex) with

abbreviation name Ben Thanh Tourist From the establishment in 1989 until now, Ben Thanh

Tourist operates in traveling, restaurants, and hotels, services and trading, import and export and development investment services

1.2 Problem statement

Once the Tourist Company has take the marketing activities into their consideration to run it efficiency and to gain a competitive advantage over the competitor, Ben Thanh Tourist Company should create sustain marketing strategies over the additional service Therefore, the problem statement can be stated as ““What should be marketing strategies for Ben Thanh Tourist Company to attract more international guests?”

1.3 Objectives

The study intends to explore the strategic management for Ben Thanh Tourist Company Based on the marketing mix illustration, SWOT analysis, it tries to outline the most important

indicators to formulate the objectives and strategies The following questions are addressed:

- How to attract international guests by analyzing marketing mix

- What is the company’s core competence and market position compared with its competitors?

- What are the strengths and weakness to improve the operating performance?

- What are opportunities and threats to minimize the risks?

1.4 Methodology

Population: International tourists make reservation via Ben Thanh Tourist Company

Collecting data tools: Newspaper, e-journals, textbook, e-books, questionnaire, observation

Questionnaire: The questionnaire used 1n this thesis includes 12 questions

Analysis tools: Descriptive analysis and statistical test

Method: Survey

This thesis will be focused on the information gathering from the primary date by conducting questionnaire distribution to gain deep information for the target audience Moreover, the author realized that the secondary date can give us the general overview The theoretical framework is given out to illustrate the outline of marketing planning process for service organization

CHAPTER 2: THEORETICAL FRAMEWORK

2.1 Tourism marketing

The marketing concept is the heart of good marketing management today Tourism organizations that apply the marketing concept to find out what the consumers want and needs All the government agrees that tourism is the largest industry in the world and also the one that has growth rapidly Rising income in tourism industry is considered as a positive aspect in a country

“Tourism marketing can be defined as the management process through which tourist organizations identify their selected tourists, actual and potential, and communicate with them

to ascertain and influence their needs, desires and motivations on local, regional and

international levels, in order to formulate and adapt their tourist products accordingly in view

of achieving optimal tourist satisfaction and maximizing organizational goals” (Stephen F.Witt and Luiz Montinho, 1999, Tourism Marketing and Management Handbook, Prentice Hall International, page 259.)

2.2 Marketing strategy for tourism

Marketing planning process for services

The following framework can illustrate in details the marketing planning process

The Marketing Planning Process

i | 6 Markating Objactives & Strategies | >

Creating the " Ff Forecasts of Expected Results |

Figure 1: Malcolm McDonald’s marketing planning process

Source: McDonald & Payne, 2006, p.37 The four phases can be broken down into many steps, as shown in the figure 1 Moreover, as shown in the figure 1, there are ten steps to complete the marketing planning process However, in this project only focus on the outcome of the marketing objectives and strategies There are some steps applied to this thesis Marketing strategy can be considered as the foundation of marketing plan in an organization The formulation of a marketing strategy basically includes the following steps as shown in the framework below

Goal setting

Business Mission

N

Situation Analysis (SWOT analysis)

It is necessary for all companies to set up a clear mission statement which should be briefly, highly personal and meaningful A mission can give the various stakeholders in the service organization a clear purpose and sense of direction The tourism company must define its scopes more specifically: its products, competence, market segments, target positioning, differentiations

Situation analysis (SWOT analysis)

The main purpose of internal and external factors (SWOT: Strengths, Weaknesses, Opportunities and Threat) analysis 1s to identify the key components of marketing information and strategies that fit the company’s resources and capacity

SWOT analysis is to build on the company’s strength by exploiting the opportunities, countering the threats and overcoming the weaknesses The SWOT analysis involves in the external environment analysis (opportunities and threats) and internal environment analysis Strengths and weaknesses are internal while opportunities and threats are external Marketing opportunities can be defined as “an area of need in which a company can perform profitably”

(Philip Kotler, John Bowen and James Makens, 1996, Marketing for Hospitality and Tourism, Prentice Hall International, page 8.) The company’s success depends on its business strengths All of these SWOT factors must be taken into account when planning promotion or marketing programs for the tourist company When building up promotional plans in particular, strengths should be emphasized, opportunities taken advantage of, threats minimized and weaknesses

minimized or overcome

Marketing Objectives:

Tourism marketing management is the setting of marketing goals (considering the resources of the tourism company and the market opportunities) and the planning and execution of marketing activities required to meet the goals A marketing objective is a precise statement which outlines what to be accomplished by the service company’s marketing activities The purpose of setting marketing objectives is to target the profit, revenue and market share the company wishes to achieve to satisfy the mission

Strategies formulation

Objectives indicate what the company to achieve; strategy answers how to get them Marketing strategies should state how the marketing objectives can be achieved Although there are many types of strategies, Michael Porter has condensed them into three typical types: overall cost leadership (working hard to achieve the lowest costs), differentiation (concentrating on achieving superior performance), and focus (focusing on one or more narrow market segments, rather than going after a large market)

Marketing Mix for services

In order to be able to satisfy the needs and wants of the market, the company needs to design a market offer and present it to the market for consumption Marketing mix is a set of marketing tool the company use to pursue its marketing objectives in the target market There are four elements which are necessary for company to consider in order to success in the target segments Marketing mix is the way in which a marketing strategy is put into action according

to the marketing conditions

CHAPTER 3: ANALYSIS OF THE CURRENT BUSINESS PERFORMANCE OF BEN THANH TOURIST COMPANY

3.1 Overview of Vietnam’s Tourism Market

3.1.1 Factors influence the attraction of tourists

Vietnam is still very much an unknown destination for many tourists, a land of rich culture and myths For many years there has not been professional marketing communication campaign for tourism, Vietnamese government has recently done some such activities in major markets, where there have always been many tourists having visited Vietnam for years

Vietnam Administration of Tourism (VNAT) has jointly run several marketing promotional

campaigns in France, Japan, China, and Korea The factors that make tourists choose to visit Vietnam in recent years have been professionally communicated throughout such events

The safest destination in the region

Vietnam, where celebrities come to escape!

Having looked at the period of recent 10 years, Vietnam has enjoyed the stable political situation compared to other nations in the region, which have often experienced bomb blast or violent disturbances Peace in Vietnam life style has therefore become a selling point for

Vietnam as a destination, which must not be missed

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Political safety has always been put into consideration for every long-term business investment, which subsequently increased the number of guests coming to Vietnam for business purpose, and then later returning for personal leisure

Charming Vietnamese custom

Being Asian, the Vietnamese people are popular for their genuinely friendly personality They are much appreciated by foreigners for being humble and kind Tourists are often received friendly smiles and help by the people they meet on the road

“Ao Dai” — the Vietnamese national custom — is famous as being one of the very few national customs, which beautiful, sexy and practical “Ao Dai” is highshool girl uniform and being commonly worn by women today and special occasions

In recent years, whenever there are international events being held in Vietnam, guests are offered Ao Dai to ware and gist to bring home The image of Ao Dai 1s therefore becoming more popular as being worn by diplomat and famous people

Vietnamese food

Vietnamese food has actually been popular for years, as it has followed the Vietnamese communities to many different countries The Vietnamese often do restaurant business for living, the cuisine and family recipes are therefore popular is these countries Vietnamese food

is popular for it healthy diet as natural ingredients are main components, meats and vegetable

or herb are freshly prepared and digestive balance is much paid intension Nowadays, the movement of healthy diet is much concerned, Vietnamese cuisine and its balance philosophy has becoming well received Eating is basic need, food and food festival is therefore received tremendous support and much welcomed by eaters or tourists

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It is now easy to find a cooking class to learn how to cook a local dish, or going to market with local chef to experience how a dish being prepared from a market to a dining table Many options of cooking class for tourists organised by hotels and tour operators and culinary schools are commonly available

Natural beauty

Tourists can better shop in their own countries or can even do shopping in bustling Hong Kong, Singapore or Bangkok Vietnam is simply different Vietnam has been fortunate to own such diversified natural beauty, it has a lot to offer to tourist If Vietnamese tourism organisation know how retain its guests, for sure they have to come back, as it will never be enough time to experience all faces of Vietnam beauty From the unique Ha Long bay to Nha Trang — the world top 100 beautiful bays, or the world heritage treasure of Hue, Hoi An, My

Son, or white sand beach of Da Nang and Phu Quoc, or the mountain freshness of Dalat or

fascinating floating markets in Mekong delta, or southern metropolis Ho Chi Minh city and the must-not-be-missed Hanoi old quarter

Rich culture

4,000 years of history, 54 minority groups of people living in harmony, the Chinese influence, and the colonial touch All has made Vietnam a unique and full of culture difference which really worth to visit and see with one’s own eyes Vietnam has had some destinations and

1999 | 2000 | 2001 | 2002 | 2005 | 2004 | 2005 | 2006 | 2007 | 2008 Guests arrival 1781, | 2140, | 2330, | 2628, | 2429, 2030 3467, | 3583, | 4171, | 4253, (thousand) 8 1 8 2 6 7 4 5 7

14,7

% 11,4 % 8,17 17% 184 3% 16% 6% Growth rate (%) 16,8% | 8,2% % 0 %

Table 1: Numbers of international tourist to Vietnam in the past 10 years

Source: Vietnam National Administration of Tourism

Tourists from China, Korea, United States, Japan, Taiwan and France have always accounted

to the big piece of the pie The rest are tourist from Australia, Thailand, Malaysia and

Singapore

Vietnamese tourism is not yet a strong compared to other countries in South East Asia region

If having close look at the number of international tourist arriving in Malaysia, it is 5 times higher than Vietnam, and Thailand is four time higher

Following are unprejudiced factors happened:

e The SARS outbreak back in 2003 has brought the growth rate down to -8.15

e The economy down tum happened in late 2008 and 2009 WTO expects tourism to recover only by 2011

However, achievements are:

e Yearly growth of number of international tourist is 9.07%

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e Income from tourism growth in line with plan: US$ 2,3 billions and over US$ 4 billions, with average growth rate is 15,6%

3.2 Introduction of Ben Thanh Cooperation and Ben Thanh Tourist Company

3.2.1 Introduction of Ben Thanh Cooperation and Ben Thanh Tourist Company

Ben Thanh Tourist Company is a unit attached to Ben Thanh Cooperation (Sunimex) with

abbreviation name Ben Thanh Tourist From the establishment in 1989 until now, Ben Thanh

Tourist operates in traveling, restaurants, and hotels, services and trading, import and export and development investment services Ben Thanh continuously and step by step establishes and develops services to satisfy the diversified demand of customers and partners in the industry Ben Thanh Tourist has a closed network and diversified products, large scale with the cooperation and capital contribution for investment to form many products and services

such as domestic and international tour, conference arrangement, event tour, tour

transportation, hotels and restaurants — dancing, karaoke, import and export, distribution agents and tourist agencies, money transfer, foreign exchange, precious metal and stone import and export and development investment services

Ben Thanh Tourist always confirms the consistency in its business, especially in traveling

Moreover, Ben Thanh Tourist built an international standard network and work force The

Company established the relationship with 40 traveling agencies of 25 countries and is the member of the Association ASTA, PATA, JATA The Company cooperated with localities to build new project such as Ben Thanh — Phu Xuan tourist site in Hue, Ben Thanh Non Nuoc in

Da Nang and the project under progress in Binh Thuan, Quang Binh, Ha Long, Can Tho, Khanh Hoa, etc The Company was elected by the readers of Sai Gon Tiep Thi as “pleased traveling service” in two years 2003-2004 Moreover, in eight consecutive years (1999-2006), the company was awarded the Top Ten Travelling Agency Cup in Vietnam, the “favorite Viet traveling agency in 2005-2006” elected by readers of Sai Gon Giai Phong It was also elected

as “the excellent operator” in Vietnam (2004 and 2006) This is one of the prestigious awards

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of Vietnam Tourism Recently, Ben Thanh Tourist has been awarded as Top Trading Service

and The Guide Award in 2008, 2009

3.2.2 Analysis the current business performance of Ben Thanh Tourist Company

Due to economic downturn and the swine flu, Ben Thanh Tourist has seen number of guests dropped by 10% - 20%, though discount programmes have been implemented

In respond to the economic down turn year, Ben Thanh Tourist has be inplementing following these activities this year:

e Continue to work on traditional markets such as Germany, France, Holland

e Strengthen the service quality

e Start selling tour on internet and to improve brand awareness

For overseas market, previously it focuses on Holland, France, the USA, Germany, UK,

the Philippine, Indonesia, Malaysia To expand the market, from the beginning of 2006, Ben Thanh Tourist explored to Russian market rather successfully, signed the agreement with TopTour to be the representative for Ben Thanh Tourist in Russia and this company has the plan to exploit this potential market effectively For overseas travel market, Ben Thanh Tourist was the first company to organize tours to Japan “Watching Sakura Flowers” and tours around Europe together with watching World Cup in Germany and had got the good feedback from customers Now tours on Japan for tourists and Vietnamese companies to survey the market as well as sight seeing tours to Europe are organized regularly Domestic travel is also our

attention, besides the traditional tours, there are many new tours such as: Adventure Tours at Buu Long Mountain and culture exploration tours, resting tours, exploration tours, sea tours,

food tours, rewarding tours (MICE tours) to attract and satisfy the need of guests

In 2006, the revenue of traveling service was 185 billion dong, increased by 7% as compared to the last year The Company served 704,735 customers, traveling section received and arranged tours for 116,746 customers, increased by 20% as compared to 2005 in which foreign customers were 61,570, increased by 13% as compared with the same period

In 2007, Ben Thanh Tourist continues to diversify its products, pushes the promotion, and expands the local and foreign market The Company continuously improves the quality

Goals Year Year Year Year Year

Unit 2004 2005 2006 2007 2008

- Revenue Million 324 325 bi 313 bi 352 bi 363 bi

VND billions

- Gross profit 7 45 bi 5,8 bi 14bi 12,24 bi | 18,8 bi

- Amount to submit 7 16bi 17bi 17bi 15,81 bi 19,5 bi

Table 2: The results of the company business in 5 years (2004 — 2008)

Source: Yearly reports of Ben Thanh Tourist Company

3.2.3 Marketing activities of Ben Thanh Tourist Company

Marketing activities that have been done by Ben Thanh Tourist are common in recent years: Pricing strategies: In respond to the economic downtum, Ben Thanh has launched several low cost tour packages to Hong Kong, Bali Indonesia, Thailand and Cambodia for domestic tourists The discount programs have attracted Vietnamese tourists to choose to go overseas with good quality operator like Ben Thanh but with lower price than usual Ben Thanh also introduces different discount programs for big tour group, returning guests, and regular guests (based on discount offered by airlines and hotels)

Lucky draw celebrating 20 years anniversary: In the occasion of 20-year anniversary of Ben