Marketing solution to increase sales of inax

TABLE OF CONTENT

ACKNOWLEDGEMENT ........................................................................................................ 3

ABBREVIATION ...................................................................................................................... 4

LIST OF FIGURES ................................................................................................................... 5

LIST OF TABLES ..................................................................................................................... 6

EXECUTIVE SUMMARY ....................................................................................................... 7

INTRODUCTION ..................................................................................................................... 8

CHAPTER I: LITERATURE REVIEW ............................................................................... 12

1.1 Marketing Concept ............................................................................................................ 12

1.2 Role of Marketing in business .......................................................................................... 13

1.3 Elements affect to Marketing Mix in firm ...................................................................... 13

1.3.1 Macro environment .......................................................................................................... 13

1.3.2 Micro environment ........................................................................................................... 14

1.4 Analyzing elements in Marketing Mix .......................................................................... 16

1.4.1 Product .............................................................................................................................. 16

1.4.2 Price .................................................................................................................................. 22

1.4.3 Place2 ............................................................................................................................... 25

1.4.4 Promotion2 ....................................................................................................................... 28

CHAPTER 2: MARKETING ANALYSIS OF INAX .......................................................... 33

2.1 Overview of sanitary ware market in Vietnam3............................................................. 33

2.1.1 Overview of economy and construction situation in Vietnam ......................................... 33

2.1.2 Overview of sanitary ware market in Vietnam ................................................................. 35

2.2 Introducing INAX’s background3 ................................................................................... 38

2.3 Analyzing Marketing Mix of INAX in Vietnam ............................................................. 41

2.3.1 Segmentation and Targeting market4 ............................................................................... 41

2.3.2 Marketing Mix Analysis in INAX4 .................................................................................. 43

2.4 Summary of successes and shortages in Marketing Mix of INAX ................................ 61

2.4.1 Successes in Marketing Mix of INAX6 ........................................................................... 61

2.4.2 Shortages in Marketing Mix of INAX6 ............................................................................ 61

CHAPTER 3: MARKETING SOLUTIONS TO INCREASE SALES OF INAX ........... 63

3.1 Business objectives of INAX to 20156 .............................................................................. 63

3.2 Some marketing solutions to increase sales of INAX6 ................................................... 63

3.2.1 Improve marketing research activity ................................................................................ 63

3.2.2 Improve management system of marketing activity6....................................................... 65

3.2.3 Product policy ................................................................................................................... 65

3.2.4 Improving distribution system .......................................................................................... 69

3.2.5 Improve and enhance promotion activities ....................................................................... 73

3.2.6 Price policy ....................................................................................................................... 76

CONCLUSION ........................................................................................................................ 81

REFERRENCE ........................................................................................................................ 82

APPENDIX .............................................................................................................................. 83

ACKNOWLEDGEMENT

In order to finish this thesis, I have received a lot of support from many people. I

would like to take this opportunity to thank all people who helped me complete the study

course and the thesis.

I would like to express my appreciation and deeply gratitude to Dr. Vu Quoc Binh –

my Supervisor for his professional guidance and encouragement throughout the research time.

I would like to thank all professors in my EMBA course, who tried their best to supply

precious knowledge to help me upgrade skills in the real work.

I could not finish the thesis without kind supporting from my colleagues, staffs,

distributors, and interviewees. I would like to express my deep gratitude to them.

Finally, I would like to show my deeply thanks for my family – especially my wife who

helped me to do housework and take care 2 our small sons to save time for me to study and

write the thesis during 3 years.

Hanoi, July 2009

Nguyen Chien Thang

ABBREVIATION

APECAsia-Pacific Economic Co-operation Asia-Pacific Economic Co-

operation

ASAmerican Standard American Standard

GDPGross Domestic Product Gross Domestic Product

PEST Political, Economic, Society, Technology

R&DResearch & Development Research & Development

SWOT Strengness, Weakness, Opportunity, Threat

WTOWorld Trade Organization World Trade Organization

LIST OF FIGURES Figure 1.1: Basis levels of a product

Figure 1.2: Product Life-cycle

Figure 1.3: Internal factors affect to price-determination

Figure 1.4: Pricing Strategies Matrix

Figure 1.5: Moving Lines in distribution channel

Figure 1.6: Promotion activities of Producer

Figure 2.1: GDP per Capita in Vietnam

Figure 2.2: Market share of firms in Vietnam in 2008

Figure 2.3: Sold quantity of Water closet of VINAX in years

Figure 2.4: Turnover and growth rate of VINAX in years

Figure 2.5: Market segment in Sanitary wares industry

Figure 2.6: Sold quantity of water closet of VINAX from 2004-2008

Figure 2.7: Ratio of product lines of VINAX from 2004-2008

Figure 2.8: Share of product line of VINAX in 2008

Figure 2.9: Growth rate of product lines of VINAX in years

Figure 2.10: Map of distribution system of INAX in Vietnam

Figure 2.11: Market share of INAX product in Hanoi

Figure 2.12: Marketing process of INAX in project field

Figure 2.13: Domestic turnover of VINAX in years

Figure 3.1: Process of developing new product

Figure 3.2: Chart of Distribution channel of VINAX

Figure 3.3: Combination of Push and Pull Strategy

Figure 3.4: Elements affect to Price Strategy

LIST OF TABLES

Table 1.1: Advantages and Dis-advantages of Advertising methods

Table 2.1: Percentage of households having house by types of house in 2006

Table 2.2: Population structure by age group in Vietnam in time of 1/4/2007

Table 2.3: Stationary table of sanitary wares makers in Vietnam

Table 2.4: Table of comparison between INAX and other firms

Table 2.5: Turnover of regions of INAX in 2008

Table 2.6: Evaluation of retailers about distribution system of firms

Table 2.7: Table of evaluating promotion quality of firms

EXECUTIVE SUMMARY

Thanked to innovation and opening policy, in over 10 years up to now, the economy in

Vietnam has been developed strongly and from a country with concentrated economics

became market economy. In the market economy, firms must face up with many competitors,

this forces them have to always try in all business activities to exist and develop by their

limited resources.

Same as many other manufacture fields, the industry of producing construction material in

Vietnam has strongly developed. Together with increasing of income, living standard level

and high economic growth then demand for construction material in general and sanitary ware

in particular has increased in both quantitative and qualitative. Therefore, applying suitable

marketing solutions to increase sales and attract attention of customer become a very

important factor with companies’ existence and developing.

The purpose of this research is specify marketing solutions in Marketing Mix including from

theory to practical perspectives to be able to help firm to increase sales, prestige of brand in

field of sanitary wares in Vietnam

The thesis’s focus has been done to research marketing solutions to increase sales and mainly

concentrated in 4 factors in Marketing Mix as Price, Product, Place, and Promotion. Beside

that, the research specifies and analyzes factors that could be affecting to marketing activities

of firm. Through survey and analyze marketing activities of INAX Vietnam Sanitary Ware

Company (INAX), the author supplied marketing solutions to increase turnover for INAX and

found factors that affect to effect of marketing activities in INAX. However, by limitation of

time and budget, the surveys were only restricted in 6 North and Central provinces, the

research could not mention all factors that can affect business activities of the company as

factors of technology, production, and finance and so on. The author hopes, anyway,

recommendations are necessary for improving business activities, increasing sales of INAX.

The research was done mainly in first half of 2009 and finished in June of 2009.

INTRODUCTION 1. Rationale

Vietnam is a large population country with over 85 millions of people and has high young

population rate. During some current years, with strong economic growth of Viet Nam,

income of people increases rapidly, demand for housing increases sharply, many urban

projects in big cities have been born and this results in demand of construction material in

general and sanitary ware in particular increases with high speed (10-15% per year), this is a

good chance for producers of construction materials. However, beside the above favourable

conditions, competitive situation becomes more severe with appearance of many producers in

domestic and imported goods especially when Vietnam officially joining AFTA and WTO.

These push producers must to continuously improve quality, launch nice designs with

advanced function, increase advertising activity to keep market share and raising turnover.

INAX is the biggest manufacturer in Vietnam, its products was officially launched to market

from Dec of 1997 and rapidly conquered belief from consumer. From the first factory in 1997,

by now VINAX has 4 factories in Vietnam and prepare for building the 5th factory. During

over 10 years in Vietnam, with suitable business policies, INAX has kept the leading position

in the market with the highest market share, output, and turnover in Vietnam; products and

brand of INAX have high prestige with customer.

However, in recent 2 years, some problems have been raised as the growth rate has slowed

down; profit rate has reduced by increasing of input expenses. In order to improve its activity,

INAX is trying to find suitable solutions to help the company raise turnover, profit, prestige of

brand, and overcome affects of economic recession. Being a sales manager in the North and

Central provinces, the author has responsibility to help INAX to find solutions to increase

turnover and that is the reason why the author decided to choose subject “Marketing

solutions to increase sales of INAX Vietnam Sanitary Ware Co., Ltd (INAX)” for the

thesis.

2. Research Objective

In order to solve the above matters, this thesis will focus on objectives as follow:

- Summary theories used to analyze marketing environment of firm and marketing

solutions to improve firm’s business activities.

- Analyzing actual marketing activities in INAX and factors affecting to marketing

activities of the firm.

- Giving recommendation and marketing solution for INAX to increase sales of

VINAX

3. Scope of research

INAX Corporation is one of the biggest manufacturers in Japan; it specializes in producing

sanitary wares, external and internal tile. INAX Corporation invested to Vietnam both sanitary

ware and external tile, products made in Vietnam is sold in domestic market and partly export

to some countries as Japan, Myanmar, Cambodia, Malaysia.

However, by limitation of time and budget, the survey does not cover all factors that can affect

to improving business of the company as production scale, developing and applying new

technology, human resource... The survey and interview only have been conducted in some

big cities in the North and Central area, so the result is not really exact. Besides that, base on

real situation of INAX, limitation of time and budget, so the research mainly focus on aspects

as follow:

-Focus on sanitary ware field.

-Focus on North and Central area.

-Focus on analyze and propose solutions in Marketing Mix to increase sales for INAX.

4. Research Methodology

• Collecting data:

-Secondary data:

Secondary data was collected mainly from the company’s reports, newspapers, internet,

magazines, and so on. Collected information includes inside and outside information of INAX.

The inside information of the company will help to specify strong and weak points of the

company. The outside information will be collected and analyzed to help find opportunities

and threats in business environment of the company. After analyzing inside and outside

impacts, choosing marketing solution is formed and through it the author proposes some

marketing solution that suitable with ability and objectives of INAX.

-Primary Data:

Questionnaires: the author used questionnaires to collect information about respond and

evaluation of customer, projector, and architect to the company as well other rivals. This

information includes evaluation and comparison between INAX and other rivals in price,

quality, service, promotion, distribution system, design of product, profit. Because of

limitation of time and budget, the surveys only was conducted in 3 cities Hanoi, Da Nang, Hai

Phong and 3 provinces Quang Ninh, Thai Nguyen, and Thanh Hoa. Quantity of interview was

130, including 100 retailers who selling sanitary ware, 25 architects and 5 construction

contractors. Information collected in Questionnaires will help the author to find out strong and

weak points in Marketing Mix of INAX compared with other rivals, and through it the author

can supply marketing solutions for INAX to limit weaknesses and increase sales.

In-depth interview: after conducting questionnaires method, the author carried out in-depth

interview with some subjects as 3 distributors, 10 sales staffs, INAX’s General Director and

Sales Director to collect more deep information for analyzing.

• Data analysis method:

To do this research, mix (Quantitative and Qualitative) method was applied. Collected

information was used to analyzing actual situation of the company, internal and external

environment to find marketing solutions to improve the company’s marketing activities and

increase sales for INAX.

5. Structure of thesis

Apart from the Acknowledgements, Abbreviations, List of figures, List of tables, Executive

Summary and Introduction, the main body of the thesis is divided in to 3 chapters.

Chapter 1: Literature Review

This chapter will summarized relevant theories used to analyze marketing environment of firm

and marketing solutions to improve firm’s business activities.

Chapter 2: Marketing analysis of INAX

This chapter will analyze actual marketing activities; find weaknesses and strong points in

marketing activity of INAX.

Chapter 3: Some marketing solutions to increase sales of INAX.

In this chapter, the author will supply marketing solutions to help INAX increase sales and

prestige of INAX brand in Vietnam.

CHAPTER 1: LITERATURE REVIEW

1.1 MARKETING CONCEPT

Marketing happens in everywhere, it touches us very day. However Marketing is a field that is

understood very different. Some people think that marketing is advertising, is selling, or

researching market because those activities get in touch with people frequently. This think

only describes a small part but is not all marketing activities. Marketing today emphasizes

activities to create “satisfaction of customer’s demand”.

Marketing covers many fields from social activity to economic, political activities therefore

there are many different definitions about Marketing based on different points of view. Firstly,

we understand Marketing is society management process, in which individuals or groups will

receive things that they need through creating and exchanging products and values with other

people.

-Market: in point of view of Marketing, market is group of present customer or future

customer (potential customer) having same needs about product and willing to exchange to

satisfy their demand.

-Marketing: concept “market” brings us to concept “marketing”. In the literal sense,

marketing means activities of people involve market with purpose of satisfying demand

through exchange.

Marketing is process that through it, individual and organization can satisfy their demands and

wants by means of creation and exchange products with others.

As Philip Kotler, Marketing is a social process that in this process individuals or group can

receive things they want through creating and exchange freely valuable products, services with

other person.

As The American Marketing Association: Marketing is a process of planning and managing

activities of pricing, promoting and distributing ideas, goods, services to aim to create

transaction to satisfy target of individual and organization.

-Marketing Mix: It is a combination of 4 marketing elements used in sale of a particular

product or combination of the four controllable variables of Product, Price, Place, and

Promotion that are essential to define and fulfil a target market.

1.2 ROLE OF MARKETING IN BUSINESS

Along with process of social and economic development, enterprises today appreciate role of

marketing in business. If in previous time, marketing is seen having equal role with

enterprise’s elements as producing, financial, and personnel activity then now its role is more

highly appreciated; marketing becomes new philosophy in business. Role of marketing

includes:

+The first, marketing help enterprises to discover demands as well ways to satisfy

customer, marketing orients business activities and gains initiative.

+The second, marketing helps enterprises to solve well relations and balance interest of

enterprises with interest of consumer and society.

+The third, marketing is a competition tool; it helps enterprises set up position,

prestige in market and increase turnover

+The fourth, marketing becomes centre of all activities in enterprise, decisions of

technology, finance, personnel mostly depend on marketing decisions as: produce

what, for whom, how to produce and how many.

1.3 ELEMENTS AFFECT TO MARKETING MIX IN FIRM

Marketing activities of firms in market are so much different due to different combination of 4

P factors in each different circumstance. The combination of those 4 factors will be depended

on macro environment and micro environment of firm

1.3.1 Macro environment

Macro environment includes Political and legal environment, Economic environment, Social

and culture environment, Technology and science environment.

Political and legal environment

Analyzing political and legal factors will help firm catch policies, legal system that influence

to business of firm as tax policies, trade tariffs, policy of currency, export-import, economic,

and social development policy of the state.

Economic environment

Economic environment include elements that affect to purchasing power and consumption

structure, it includes macro-factors as GDP growth rate, inflation rate, unemployment rate,

income and income gap of population level and different areas, and so on.

Analyzing economic environment will help firm to define its business plan, example as

economy developing will make income of people higher, and through it purchasing power will

go up.

Social and culture environment

In each society, people group or area (province, country) have different life style, custom and

culture, those elements will influence to firm’s activities. Besides that, Social and culture

environment also includes cultural standards of people, it directly affects to consumer’s

behaviour and of course to marketing strategy of firm.

Social factors still include population element, population structure (structure in ages, in

geography,…) and population element will decide scale and structure of market.

Technology and science environment

Development of science and technology changes life of people. It helps to create new

products, raise functions, and quality of products. Therefore, in order to increase competition

ability, nations has invested for research and developing, firms spend big expenses for R&D.

Development of science and technology also make product life-cycle shorter and this will

affect to marketing strategy of firm.

1.3.2 Micro environment

1.3.2.1 Internal micro environment

Element of Human Resource: Human resource has a vey important role in success of

firm and affects to result of marketing activities. Firm will not operate effectively if it

does not have good human resource.

Financial element: Finance involves to capital source and using capital to implement

marketing activities. Firm cannot carry out a marketing plan well if it does not enough

money for activities.

Element of production technology: Production is an operation to create product for firm.

Production technology will decide quality and price of product. Base on quality and

production cost of product, firm will decide price for product and promotion activities for

product to withdraw attention of customer and increase sales volume.

Position and market segment of firm in market: Each firm has a own position in market,

identifying exact position will help firm build a suitable marketing plan

1.3.2.2 External micro environment

Customers

It is described as market of outputs. The purchasing ability of customers creates pressure on

firm and also affects to buyer’s purchasing decisions and price changes. Customers are

persons buying product of firm but at same time buying product of competitors, therefore, firm

must to know what consumer needs to serve them better.

Customers are diversified; they could be individual, organization, domestic or foreign

customer. In order to serve well each kind of customer, firm have to make research deeply

each kind. Besides that, consuming taste of customer always change, therefore firm have to

forecast factors that leading to those changes to serve customer timely.

Suppliers

They supply the firm and also competitors input of production or business process as

machines, materials, fuel, labour, finance. Choosing a supplier will affect to production cost,

product quality,…Therefore, the firm should select suppliers having prestige and some

different suppliers to avoid risk when only depending on only supplier. The firm should make

good relation with suppliers to be able support each other in difficult time.

Competitors

Firms do business in an environment with different competitors. Competitors could be

competitors in other business filed or in same field. Competitive environment will affect

directly to plan marketing activities of firm, affect to decision of production, pricing, sales

policies, and promotion methods.

1.4 ANALYZING ELEMENTS IN MARKETING MIX

1.4.1 Product

The first element in Marketing Mix is the product. The product is goods or services supplied

to satisfy the needs and wants of consumers.

Figure 1.1: Basic levels of a product

Sources: Marketingteacher.com

There are 3 basic levels of a product: core, actual and augmented. The core product is the most

basic level; consumers buy it by benefits that it brings to them. For example, consumers do not

buy a car, consumers buy benefits that cars offer as safety, comfortable. The next level of the

product is the actual product that is built around the core product, it includes brand name,

features, styling, quality, and packaging. The final, or third, level of the product is the

augmented product, it consists of all elements that surround the core and the actual product, it

provides buyer with additional services and benefits, for example as warranties or technical

assistance services.

In order to choose a right product strategy and match with other strategies in Marketing Mix

then firm need to identify product belong to what kind. We can classify product as some ways:

-Period of product using: Products can be classified by how long they can be used. Products

that can be used repeatedly in long time as motorbike, TV are called durable goods. Products

that are used in short time as food, soap, drinks are called nondurable goods or FMCG (fast

moving consumer goods)

-Purchasing habit:

+Common consuming goods: products are consumed frequently, consumer buys it

follow their habit caused they know well the products

+Products purchased by snatches

+Seasonal, occasional products

-Nature of product existence:

A product is anything tangible or intangible that can supply to consumer through purchasing.

A tangible product is one that we can touch, such as a car. An intangible product is a service

that cannot be touched such as computer guarantee service.

-Purpose of using:

+Consuming goods: used for private purpose

+Product used as input for manufacture.

1.4.1.1 Product lines and Product Mix

In business activity, firm should identify product line and scale of product mix that the firm

wants to satisfy market.

Product lines is products have same in one aspect example as same customer, same level price,

or way of using

Product Mix is number of types of product and together with it is number of models. Scope of

Product Mix includes

Breadth – number of product lines in a range

Depth – number of product items in a product line

Depending on different business strategy and objectives that firm has different decision of

product strategy as:

- Decision on number of product lines: base on analysis about market situation, firm can clear

groups of product or product types that not bring the firm profit and can expand to new

business field or new product type.

-Decision on products in a product line: Firm can narrow a product line when some products

in the line do not bring firm profit or those products out of fashion or bad selling. On the

contrary, to give customer more choices and satisfy demand of different customer groups then

the firm needs to extend product line or reject backward products, upgrade existed products

and launch new products.

1.4.1.2 Product brand

Product brand is an extremely component in product strategy, almost firms do business with

specific brand, strategy of positioning, and marketing activities will focus on brand. Brand is

valued assets of firm, it help buyer identify product of one firm with product of other firm.

Therefore, business of firm will become easier if firm owns a famous brand.

Depending on feature of product or business field, and firms’ strategy that firm can select

different options to name product. There are many way for naming as:

-Different name for each product: in this way, marketing activities will focus on each

brand (example as products of P&G)

-Same name for all product

-Naming for each product line

-Combine firm name and brand

1.4.1.3 Quality and Design

-Product quality:

Before producing a new product, firm has to choose a quality level and other function to meet

requires of brand positioning and market targeting. Quality level that firm selects to produce

product will depend on objectives and strategy orientation of firm. Firm can choose 1 quality

level or many different quality levels for 1 product to satisfy different groups of customer.

-Product design:

One important matter in product strategy is design. One product with good quality is not

enough to attract customer but it needs to have nice design, this is a battle that many firms use

to create distinguish between their product and other firm’s

1.4.1.4 Product Life-Cycle

After launching a new product to market, firms all like it has a long life and want to get much

profit to compensate for expenses that they spent in process of research and develop the

product as well expenses to penetrate market in beginning stage. Therefore, in business

process firm need to have suitable adjustments in marketing strategy to match with changes of

market as competition, market demand, and to do it well then firm supervise tightly sales

situation, market changes to make suitable decision. Firm should know that each product has

own life-cycle. In general, life cycle of a product includes 4 stages: Introduction stage, Growth

stage, Maturity stage, Decline stage.

Figure 1.2: Product Life-Cycle

Sources: QuickMBA.com

-Introduction stage: this is the stage that product begins to launch to market. In the stage,

output and turnover increase slowly by almost buyers do not know about it or consumer does

not give up habit of using present products. Therefore, in this stage, firm should enhance

marketing activities to attract customers and increase their awareness to the product, enforce

distribution system.

Firms can apply “Storm marketing” strategy with noisy advertising and promotion campaigns

to the product quickly come to the market, or apply careful marketing strategy to step by step

enter market.

-Growth strategy: In this stage, sales quantity gone up much by buyers accepted the new

product, however competitive level also higher. In the stage, production cost considerable

reduce so firm can get more profit and can calculate again selling price. In order to reach

highest sale then in this stage the firm should carry out:

+ Expand market and attack to new market segments.

+Increase customer’s choice by services, provide more new models.

+Reduce price or launch sales promotion programs to raise sale, and the firm can keep

price to maximize profit.

+Enhance distribution channels or strengthen channel’s activities.

+Increase advertising activities to build prestige and create belief with customer.

-Maturity Stage: This is the stage that output and sale are the highest and growth rate is very

low by saturated demand of customer. Besides that, in the stage, the firm faces up severe

competiveness and profit rate trend to reduce. To maintain competitive ability and raise

turnover, the firm needs:

+Try to keep old market and exploit new market.

+Upgrade or innovate product (quality, function, or new design), reinforce old

distribution channels and open new channels, intensify advertising activities and

promotion.

-Decline Stage: Decline stage happens when sale and profit drop seriously. Depending on

many factors, the stage can happen gradually or quickly, and this requires the firm must

frequently collect market information; analyze changes of turnover, profit, market share to see

stages in the product life-cycle to avoid loss.

To avoid negative effect of the decline stage, the firm should always research and develop new

products to change for old products.

In reality, length of stages and structure of life-cycle depend on many factors: product’s

particularity, consumer’s behaviour, technology development, competitive situation, firm’s

marketing ability.

1.4.1.5 New product development

New product is blood to raise firm and is firm’s future. New product is developed to meet non-

stopped changing demand of consumer, to catch up new technology and against rival in the

market.

There are 2 ways to have new product: the first is buying from other (buy product and do

marketing with own brand, or buy design,..), the second is developing new product through

R&D activities of the firm. However, new product development is a rather risk action, many

new products get failure by wrong estimation of market demand, bad design, lack of market

information, high R&D expenses, or rival’s new products enter market earlier.

In general, to develop a new product successfully, the firm must understand customer’s

demand, competitors and create different points with other rival’s.

New product development process:

-Finding new ideas about product: new ideas can be taken from R&D section,

production section, and sales section or from market research.

-Select ideas: through gather ideas, firm choose good ideas to use for developing new

product.

-Design product and make a test

-Build a draft of marketing strategy for new product.

-Analyzing business effect of new product.

-New product making.

-Survey responds of customer with new product.

-Launch new product to market.

1.4.2 Price

The second element in Marketing Mix is price. Price is the amount of money that consumers

are willing to pay for a product or service. Price is the only element creates revenue of firm.

The firm can increase turnover and profit by way of increasing price. Price is an important

factor affect to purchasing decision of buyer, market share of firm and ability to conquer

market.

In order to pricing a product, companies must consider both internal and external factors of the

companies. The internal factors include organization’s overall business objectives, marketing

mix strategy, production cost. Price objectives usually take one of 4 forms: profitability,

volume (output or turnover), competition ability, and prestige.

1.4.2.1 Factors affect to pricing

To build a good price strategy, firm need analyze factors that can affect to the price strategy;

those factors include internal factors and external factors.

-Internal Factors:

Figure 1.3: Internal factors affect to price-determination

Sources: the author’s design

+Objectives of pricing: Pricing must serve for marketing objectives of firm. Each

marketing objective of firm will have different price strategy, the objectives of firm

can be:

Price-determination

Marketing

objectives

Production

t

Customer’s

responds Competitors Legal

Market

form

• Definite sales volume

• Achieve profit

• Larger market share

• Maintain market share

• Eliminate competition

• Advantages of mass production

+Production costs:

Production cost take an important role by it is one of main factor to pricing a product,

production cost will decide profit of firm.

In competitive environment, when product price hardly change in higher trend then

production cost reduction will decide success or failure, competitive ability of the firm.

The firm could reduce production cost by saving materials, increasing production

capacity, re-arranging labour force.

-External factors:

External factors influence price-determination include responds of customer,

competitors, product life-cycle, reaction of distributors, substitute goods, nature of

demand, legal and policies of the state, form of market.

+Responds of customers: customer’s psychology influences their awareness of product

price. Customers often think that price accompanies with quality, product has high

price then quality is better. Besides that, a product with good brand and high price

more easily accepted by customer. In market of consumer, customer willing buying

one product that its price stays in acceptable price range and this range depend on

income of people. In market of business, customer often seeks the lowest price to buy

products with an acceptable quality to reduce business expenses.

+Competitors: when pricing product, the firm has to compare its product with rivals’

firm to see strong and weak points of product. Through analyzing quality, price of rival

products and based on marketing objectives, the firm will decide price of product.

+Legal, Regulatory, and Ethical concerns: when pricing a product, the firm must

comply with rules, regulations in the country and international rules – in case selling

product in other countries.

+Form of market: price-determination also depends on form of market as perfect

competition, monopolistic competition, monopoly, or oligopoly.

1.4.2.2 Pricing method

There are many ways to price a product; hereinafter we will analyze some basic ways

Figure 1.4: Pricing Strategies Matrix

Sources: Marketingteacher.com

-Premium Pricing: Use a high price when the product or service of firm is uniqueness. This

way is used where the firm has high competitive advantage and often applied for luxury

product, high quality, and leading brand.

-Penetration Pricing: The price charges for products and services which the firm wants to gain

market share and the firm will increase price again when achieve the target

L

O

W

H

I

G

H

P

R

I

C

E

L O W H I G H

Q U A L I T Y

-Economy Pricing: The firm charges a best price for buyers through keeping at a minimum

cost of marketing and manufacture.

-Price Skimming: The firm charges a high price when having a high competitive advantage.

However, the advantage does not take long by the high price tends to attract new competitors

in to the market, and the price will surely fall due to more suppliers.

1.4.3 Place

Place is understand as channel, distribution, or intermediary. It brings goods/service from

manufacturer/service supplier to user or consumer. Distribution channel is an important part in

marketing mix strategy. Distribution activity involve to many people, many different sections;

therefore a suitable distribution strategy in each specific circumstance will support for other

marketing strategies in Marketing Mix and concurrently increase competitive ability and brand

image of the firm.

Distribution is a system of activities of transfer a product, service to consumer at right time,

right place to satisfy demand and needs of consumer or intermediaries.

Distribution channel is a set of firms and individuals who independent and interdependent

each other. Members in the channel include manufacturer (supplier), wholesaler, retailer, and

consumer.

1.4.3.1 Moving lines in distribution channel.

Figure 1.5: Moving Lines in distribution channel.

Product Line

Property Line

Manufacturer Transporter End-user Retailer Wholesaler

Manufacturer Wholesaler Retailer End-user

Negotiation Line

Information Line

Promotion Line


-Product Line: is line of moving product from manufacturer to end user.

-Property Line: describe property from seller to buyer between members in the channel.

-Negotiation Line: the line is performed through purchasing activity to definite product owned

rights.

-Information Line: is exchange of information between members in channel about quantity,

quality, time,..

-Promotion Line: is support of manufacturer for members in the channel under methods as

advertising, promotion program, and public relation.

1.4.3.2 Decision of Distribution channel structure: Length of a distribution channel depends

on many factors product characteristics, geographic, and marketing objectives of firm. In order

to decide structure of distribution channel, the firm has to decide matter as follows:

Manufacturer Wholesaler Retailer End-user

Manufacturer Transporter Wholesaler Retailer End-user

Manufacturer Advertising Wholesaler Retailer End-user

-Does the firm use direct or indirect channels (the firm sells directly to consumer or via

wholesaler?). Direct distribution channel is suitable with products having high value, huge

shape, complicated technology, or consumer concentrating in one small area.

-Will the firm set up single or multiple channels?

-Decision on cumulative length of the channels.

-Decision on types of intermediary

-Number of intermediaries at each level

-Which intermediaries used to avoid conflict between in channel?

1.4.3.3 Types of distribution channel

-Direct supply/Direct sale

Direct selling is selling directly to customer. It could be retail, door to door; mail order and

ecommerce all directly sell to customers. The advantage of this method is the firm can directly

contact with customer and can catch quickly changes of market, changes in demand of

customer about the product (price, quality, function, design...). This channel is suitable with

products having high value, big size and difficult in transportation, complicated technology,

easy to be ruined, or customers concentrate in one area.

-Direct to retailer

If the firm does not want to spent expenses of opening retail outlet to sell to customers then the

firm can sell to customers through existing retailers in market. This method will save a lot of

money for the firm comparing with opening many retail outlets to cover large area. This

distribution channel is used when manufacturer and retailers have enough ability to serve well

customers. However, this method has weak points are difficult administration and

manufacturer have to have a good sales team to consult and supervise activities of retailers

(product, price, promotion, display), beside that manufacturer also get more risks in finance as

it have to many small accounts at the same time.

-Wholesaler, merchant, or agent supplier

Selling to wholesalers or agent suppliers will reduce pressure of distribution. In addition, the

firm can reduce the level of storage space to hold stock. The firm can get more income and

more stable business when selling to big wholesales or agent suppliers. However, with this

method, the firm can lose firm name, for example, the agent suppliers may request that the

firm’s product is sold under brand name of wholesaler or agent.

In order to avoid limitation of types of distribution channel, the firm may combine different

distribution methods to maximize advantages of each intermediary.

1.4.3.4 Distribution channel design

-Select intermediaries: the firm may select existing distribution systems to set up the firm own

distribution channel. Beside the firm’s sales force, the firm may use distributors of rivals,

retailers, wholesalers to sell product. However, base on ability of the firm and reality situation

then the firm can set up a new distribution system work parallel with the old system.

-Decision on number of intermediary: base on marketing objective, the firm builds different

policies and decide number of intermediaries in each channel. Number of intermediaries has to

be carefully considered to limit conflicts and negative competitiveness between channel

members.

1.4.4 Promotion

Promotion is the fourth element in Marketing Mix. Promotion is a communication process that

takes place between a firm and its publics. Publics could be individuals and organizations that

concern to products/service, activity of the firm. Promotion has an important role in firms’

activity, it is competitive tool to help firms penetrate new market, keep market share, increase

turnover, seek new customer. Promotion help firm introducing new product to targeted

customer, build firm image in public and support for distribution activity.

Various promotional tools are used to communicate messages about products, ideas, or

services from firms to their customers. The promotional tools include Advertising, Personal

selling, Sales promotion, Public relation, Trade fairs and Exhibition, and Sponsorship. In

reality, firms often apply combination of the tools to increase effective of promotion and this

combination is called Promotions Mix.

1.4.4.1 Promotion tools (Promotion Mix)

Personal Selling:

Personal selling is an effective way to manage personal customer relationship. On behalf of

the firm, sales person will deal with customer. Success of this activity depend much on the

staff’s skills, therefore, the staff has to have good knowledge of product, customer, market and

competitor, and good communication skill. However, using sales staffs in this case is rather

expensive, the firm will lose a large expense for one product sold, so this method will suitable

with goods that return firm high margin.

Sales Promotion:

Sales promotions are short term incentives used to encourage consumers to purchase a product

or service. Purpose of sales promotion is encourage customers to buy a new product or a

present product, increase loyalty with a product, keep market share, increase sale, increase

effect of advertising and other marketing activities.

There are many methods of sales promotion as bonus, price reduction, free involved services,

couponing, and so on. Each sales promotion should be carefully calculated and compared with

other alternative methods.

Public Relation (PR):

PR is activities to establish and maintain good relationship, or understanding between firm and

its publics by using media means to supply information of the firm to publics. PR is performed

through activities as press releases, product publicity, official communications, lobbying, and

organizing events. In order to carry out PR activities effectively, the firm should combine

many activities and carry out in long term and make carefully plan.

Advertising:

Advertising is un-individual communication activity to bring information of product/brand

name to target market through means. Advertising is divided in to 6 subcategories: pioneering,

competitive, comparative, advocacy, reminder, and cooperative advertising.

-Pioneer advertising aims to develop primary demand for a product.

-Competitive advertising seeks to contrast one product/service with another.

-Advocacy advertising is an organizational approach designed to support socially responsible

activities, causes, or messages such as helping food for homeless.

-Reminder advertising seeks to keep a product or brand name in the mind of consumers by its

repetitive nature.

-Cooperative advertising occurs when wholesalers and retailers work with producers to

produce a single advertising campaign and share the costs.

Advertising methods could be newspaper, magazine, Radio, televisions, outdoor advertising,

direct mail, and internet.

Table 1.1: Advantages and Dis-advantages of Advertising methods Advantage Dis-advantage

Newspaper Flexible, large market coverage, high

believable

Short time existence, less attention of viewer,

limited issue quantity

Magazine High selection of viewer and geography,

creating high attention, high advertising

quality, longer existence compared to

newspaper

High expenses, limited issue quantity, long

time repetition.

Radio Large market coverage, low cost, flexible in

local areas

Low attraction level, short time, limitation in

waves coverage

Television High market coverage, attractive advertising

(combining image, sound), low cost/1time

Low viewer selection level, viewer can pass

by boring, short time/1 show, high cost for

whole campaign

Outdoor Ad Strong image with large size, colour, image,

low competitiveness, long existence, low

cost

Information limitation, unable to focus on

specific viewer.

Direct mail High viewer selection level, flexible, no

competition, individual focus

Difficult update of information, less attraction

Advertising in

internet

High speed and large information

transmitting, high interaction ability

High viewer selection level, low cost,

measurable

Limitation of internet users, low attraction

level.

Sources: the author’s summary

Trade fairs and Exhibitions

Trade fairs and exhibitions are very good for making new contacts and renewing old product.

Those opportunities will increase awareness of customer and stimulate them take a trial.

Sponsorship

Sponsorship is an activity that a firm pays to be associated with a particular event, and through

it the firm can popularize its image and brand name.

In general, in order to promotion activity to be effective, the firm should blend promotion

tools together to achieve better result.

1.4.4.2 Promotion Strategy

Promotion Mix could be affected by some factors as product, life-cycle of product and budget.

Therefore, it is difficult for the firm to apply all promotion tools and it needs to choose

suitable strategies in particular circumstances. There are 2 promotion strategies: Pull Strategy

and Push Strategy.

Figure 1.6: Promotion activities of Producer

PUSH STRATEGY

Promotion of producer Promotion of distributor

PULL STRATEGY

Demand Demand Demand


Producer Intermediaries Consumer

Producer Intermediaries Consumer

Push strategy: using sales promotion for intermediaries or sales staffs to increase sales

amount. In the push strategy, promotion activities focus on intermediaries to inform, persuade

them and the intermediaries will inform to consumers. Trade promotion for intermediaries and

personal selling is common and effective tools in this strategy.

Pull strategy: Withdraw consumer’s attention to the product by advertising activities to create

demand of product of consumer. Consumer will require buying the product from

intermediaries and the intermediaries will buy the product to sell to consumer. In this strategy,

the promotion activities mainly focus on communication, advertising, and sales promotion for

consumer.

Summary of the Chapter 1: In general, through content of theory is presented in the Chapter

1, the author provided a general theoretical foundation in analyzing external and internal

factors of one firm that can affect to the firm’s activity at present and in future. Analyzing

those factors will help firms to find solutions to adapt with changes of market and gain targets.

Apart from analyzing factors in marketing environment, in this Chapter the author supplies

some specific marketing solutions in Marketing Mix as Product, Price, Promotion, Place

(Distribution) that can help firm to increase sales and market share.

CHAPTER II: MARKETING ANALYSIS OF INAX

2.1 OVERVIEW OF SANITARY WARE MARKET IN VIETNAM

2.1.1 Overview of the economy and construction situation in Vietnam

Vietnam is the country of great potential economy. With a stable politics, crowded population

and cheap labour force, Vietnam has attracted many foreign investors to come for business.

Besides issuing the open-policies to stimulate the economy, many rules and regulations issued

as Enterprises Law, Common Investment Law… have created more chances for business

components.

With policies of open-door and integration, Vietnam took part more in economic cooperation

organization in both the region and the world. Vietnam became member of ASIAN, ASEM,

WTO, AFTA, and APEC. Joining in international and regional organizations has created many

opportunities for expanding export market, but it has created threats with domestic production

section by lower tariff barrier

After over 20 years of innovation, Vietnam has obtained big achievements in social and

economic development. Average growth-rate of GDP always achieves high levels of over

7.5% in 5 constant years, GDP per capita gone up sharply from 412$ in 2001 to 1024$ in 2008

Figure 2.1: GDP per Capita in Vietnam

Sources: from General Statistic Office

In recent 5 years, construction field has strong development, many big real estate projects as

urban zones, hotels, resorts, trading centres have been invested to serve for demand of people

accommodation, tourism, office, and trading. The strong development of the economy has

created higher income for people and together with this is higher demand of housing; this is a

good chance for manufacturers of construction materials. The below figures show demand for

building house is very huge especially in rural area.

Table 2.1: Percentage of households having house by types of house in 2006

Permanent house Simi-Permanent

house

Temporary and

other house

Whole country 23.7 60.3 16

Urban 41.4 51.3 7.4

Rural 17.0 63.7 19.3

Source: from General Statistic Office

Vietnam is a crowded population country with over 86 million of people and increasing rate

over 1%/year. In which population rate in urban is around 25% and this rate will increase

more in many next years thanked to high speed of urbanization and shifting labour from rural

area to urban area.

One of advantage factors helps Vietnam to develop the economy and attract foreign

investment is high rate of young population, at the moment rate of population having age

fewer than 30 is 52.5% and in labour age is 54% in population. With the high rate of young

population, demand for housing is very high and still continue to increase more in future and

this is a good chance for manufacturers in Vietnam.

Table 2.2: Population structure by age group in Vietnam in time of 1/4/2007

Age

group

0-4 5-9 10-14 15-19 20-

24

25-

29

30-

34

35-

39

40-

44

45-

49

50-

54

55-

59

60 +

Rate

(%)

7.49 7.84 10.18 10.71 8.69 7.66 7.71 7.66 7.51 6.44 5.23 3.43 9.45

Source: from General Statistic Office

2.1.2 Overview of sanitary ware market in Vietnam

At present, there are over 10 manufacturer of sanitary ware in Viet Nam, in which there are

four foreign companies (including INAX, TOTO, Caesar, AS). Beside domestic products,

many over sea sanitary wares from many firms of countries as Thailand, Taiwan, USA,

Germany, Italy, and Indonesia… to be imported to Vietnam. Although taking small market

share but imported products partly affected to sales of medium and High-class products of

domestic producers.

Table 2.3: Stationary table of sanitary wares makers in Vietnam

No Manufacturer Capacity Location Formed Year

1 Viglacera 650.000 Hanoi, Viettri 1990

2 Thien thanh 400.000 TP HCM 1991

3 INAX 2.000.000 Hanoi 1996

4 American Standard 400.000 TP HCM 1994

5 Ceasar 500.000 TP HCM 1998

6 TOTO 1.250.000 Hanoi 2002

7. Cosevco 300.000 Da Nang 1993

Source: from the author’s summary

Figure 2.2: Market share of firms in Vietnam in 2008

Source: from the annual report of INAX

In above firms then TOTO, American Standard, and Caesar are the biggest competitors of

INAX in Vietnam at the moment.

-TOTO:

TOTO is the biggest sanitary wares manufacturer in Japan with the market share over 60%

and it is one of the most famous sanitary ware brands in the world. TOTO is specializes in

producing sanitary ware and toilet fitting in Japan with 80 years of experience. During over 20

years, TOTO has continuously promoted investment activities to overseas market to expand

market as building factories, opening representative to promote business in tens of countries in

Europe, Asia, America, In Asia only, TOTO built factories in Vietnam, Thailand, China,

Indonesia, Taiwan, Philippine, Korea. In China market, sales of TOTO overcame many

famous brands from Europe and only behide American Standard (the biggest sanitary ware

manufacturer in the world).

In Vietnam market, TOTO product was imported to Vietnam for over 30 years and is known

as No 1 high-class brand in Viet Nam. Almost retailers, rich people, and constructor as well

architect appreciate highly TOTO product and they think TOTO is the most luxurious product

and have the best quality. In 1995, TOTO opened a representative office in Vietnam to carry

out activities of promoting business and researching market to prepare for building factory in

Vietnam.

From June, 2004 TOTO officially opened the factory in Thang Long industrial zone – Hanoi.

The factory is in stage 1 with total capital of 27 millions of USD and design capacity of

500,000 products/ year. This factory specializes in producing sanitary ware to sell in domestic

market and 70% export to the southern of China. In 2005, TOTO invested to build the second

factory with capacity of 750,000 products/year and with capital of 48 millions of USD. As its

plan, if market does not have bad changes it could build one more factory with total capital of

18 millions of USD to produce bathroom fittings as faucet and other accessories to serve

domestic market and export to other countries.

- American Standard (AS):

American Standard is the biggest manufacturer of sanitary ware in the world with many

factories and representative office in many countries. Its brand is known by consumers in the

South Vietnam before 1975. American Standard invested to Vietnam from 1994 and set up a

joint venture company in Binh Duong-south Vietnam. Before the factory coming in to

operation 2 year, AS imported products from Thailand and built distribution network to sell in

Vietnam, and quickly conquered the market thanked to good quality, nice design compared

with products of domestic manufacturers. The factory in Binh duong had total capacity of

300,000 products/ years and was raised of capacity up to 500,000products/ year in 2005.

Although owning a famous brand, strong support from mother corporation, and having a

larger product lines from beginning but due to mistakes in building distribution and sales

policies, and weak new product development activity, AS has quickly lost market share to

other firms as Caesar and especially INAX. Meanwhile INAX continuously builds more

factories then AS still stands in one place, although having only 1 factory but many times AS

is in situation of over stock and have to carry out special discount (20-30%) for reducing

stock.

-Caesar:

Caesar is the second biggest manufacturers in Taiwan. It came to Viet Nam from 2001 and its

factor with total capacity of 300,000 products/ year in Binh Duong official launched products

from 2002. Compared with other firms as INAX, TOTO, and American Standard then Caesar

is weaker in brand prestige, experience, technology but it is very flexible in business and price

is very competitive compared with other foreign competitors. One more weak point of Caesar

is from outside objective factors, mostly Vietnam people does not appreciate highly products

made in Taiwan (they think that same as made in China) and if people does not care much of

price then they will choose product made in Japanese or American companies. This is a

disadvantage point for Caesar when build product and price strategy.

Catching consumer’s psychology in Vietnam and understanding weaknesses, Caesar applied

suitable strategies to penetrate the market and gain good result. With a little bit higher price

compared with Viglacera, it has conquered a considerable from Viglacera, Cosevco, Thien

Thanh. Its market share has gone up well in provincial market where people have not high

income and do not require much about brand and quality.

In 2006, Caesar carried out expand product line to raise production capacity to 500,000

product/ year and at the same time is strengthen activity of new product development.

2.2 INTRODUCING INAX’S BACKGROUND

INAX Vietnam Sanitary Ware Co.,Ltd (INAX) was born in 1996 in Hanoi as a Joint Venture

Company between INAX Corporation (INAX Corporation is one of the biggest manufacturers

in Japan with over 80 years experiences in producing Sanitary Wares, Bathroom fittings and

External Tile) and 2 State owned companies. INAX has started operation since the end of

1997 and has been providing high quality sanitary wares and bathroom accessories for market

both in Vietnam and other countries. At the present, INAX has become the leading

manufacturer of sanitary wares in Vietnam with the highest market share and well-known

brand prestige. Manufacturing process is under the quality management system ISO 9001 and

the environment management system ISO 14001.

After one year building the first factory in Gia Lam-Hanoi, VINAX’s product officially came

to market from Dec 1997 with the beginning capacity of 300,000 products/year and 30% of

products were exported to Japan. All technical supervisors were trained in Japan, so they

caught well technology of producing sanitary ware.

Immediately after launching product to the market, the product was accepted by consumer and

seller by good quality and reasonable price.

From the beginning of 1998, INAX always tried its best to created products with better quality

and created new models to meet the market demand and it had a solid stand in the market in

the context of aggressive competition.

In over 10 years of operation, INAX has continuously developed with high growth, some new

factories was built. In the Aug of 2008, INAX completed building the 4th factory and now

capacity of 4 factories of INAX is 2,000,000 products/year, number of staff has increased

from 300 in 1998 to 1200 at the of 2008. This is the best record that other competitors cannot

obtain in a short time like that, and now INAX becomes the biggest manufacturer of sanitary

ware in Viet nam and also in South-East Asia area with market share in Vietnam nearly 40%,

distribution system of over 4000 retailers in whole country. Goal of INAX is contribute more

and more high quality products to the market to improve and up-grade life of Vietnamese and

expand market to many countries in the world. And to carry out the above goal, all activities

of the company obey 4 guidelines:

+Think of People

+Think of Quality

+Think of Service

+Keep Challenging

Figure 2.3: Sold Quantity of Water Closet of INAX in the current years

Source: from the annual report of INAX

Figure 2.4: Turnover and growth rate of INAX in years

Source: The annual report of INAX

The above data showed the high growth of INAX in many constant years, INAX’s output

increased continuously with rate in range of 112-118% from 2004 to 2008, and this rate could

be higher if news factories was built earlier.

From the years of 2001, when the first factory operated over capacity but could not meet

enough market demand then BOM (Board of Management) decided to build the 2nd factory

and it was complete and came to operration in 2003 and raised total capacity of INAX to 1

million product/years. But only 2 years later, with the strong devolpoment of the economy

then demand for sanitary ware increaes fastly, besides that was many strong marketing

activities lauched by INAX to increase sale and market share, one more time INAX continued

in situation of product shortage and the 3rd factory was decided to build in 2005.

In August, 2006 the 3rd factory offically came in to operation and raise total capacity of INAX

up to 1.5 million products/year. From that time, INAX became the biggest manufacturer of

sanitary wares in Vietnam, beside exploiting the domestic market then INAX began to expand

to new markets in other countries as Mianma, Malaysia, Korea. Although in this time, sale in

the new markets is not high but this is foundation for INAX to develop more in future.

In 2007, in order to meet higher demand in domestic and oversea market, INAX decided to

build the 4th factory in Hung Yen province. In July, 2008 the 4 factories began to operate and

raised total capacity to 2 million products/year. However, the 4th factory did not get luck as the

previous factories, the world financial crisis and economic recession has affected badly to the

world economic situation in general and in Vietnam particular. Demand for sanitary ware has

fall down sharply not only in the export market but also in Vietnam, INAX had to reduce

production capacity 30% and this reduces the profit rate. Many old problems in INAX’

activities was not solved in previous time has become more seriously and affected badly to

business situation of INAX and it requires changes.

2.3 ANALYZING MARKETING MIX OF INAX IN VIETNAM

2.3.1 Segmentation and Targeting Market

Along with economic development, demand for using sanitary wares of people as well

projects has been increased sharply. Not same as before, consumer now not only care of price

but also care of quality, design. Catching this development trend, INAX immediately entered

the Vietnam market, the company identified a specific targeted market is provide good quality

products with reasonable price, suitable with people’s income. Main targeted customer of the

company is consumers having average and high income, living in urban areas in all provinces

and cities in whole countries, in which the main markets are big cities as Ha Noi, Ho Chi

Minh, Halong, Da Nang, Hai Phong…

Through researching market, base on factors of price and product quality, INAX segmented

the market in to 4 different segments (low class product, economic product, middle class

product, high class product)

Figure 2.5: Market segment in sanitary ware field


At the present, INAX has chosen 3 market segments: Economic-class line, Medium-class line

and High-class line

As we can see on the above model, in the present situation of Vietnam, consumption amount

of low class product line is rather large by low income of most people; this product line is sold

well in rural area but will be reduced when people’s income is higher.

The economic class line has rather large volume, it is sold well and trend to increase strongly.

However, this line bears severe competition between many manufacturers and the company

cannot get high profit from this line.

The middle class product line has smaller volume compared with 2 above line. However, in 3

recent years, this line has been consummated well and attracted attention from customer

thanked to higher income with every passing day. Customer now demands products with not

only good quality, reasonable price but also nice design and more advanced function. In future

this will be main market that INAX needs to catch up caused it creates high turnover and keep

for INAX a solid stand in the market.

The high class line have high price, the products have nice design and some have special

function as one-piece water closet, products with non-stick glaze or antivirus glaze, shower

toilet. In previous time, the product line was sold badly by high price. However, along with

economic development, a class of rich appears and beside that is development of high class

projects as hotel, resort, and department… have push up this demand much higher than before.

In reality share of this class is still very low (2%) on total.

2.3.2 Marketing Mix Analysis in INAX

2.3.2.1 Product Analysis

A firm has strong competition ability when it can produce products with good quality, good

service, and reasonable price. Therefore, in order to exist and develop, INAX always try to

supply high competitive products.

Product lines of INAX

• Economic product line:

This is the product line with simple features, small design, low price (1-1.5 mil Vnd).

After making market research and positing target market, INAX has launched some

models as C-117VR, C-108VR, C-333VR, and C-306VN. Those products quickly

accepted by customer by small and nice design, they are suitable with space and design

style in Vietnam. INAX is the first manufacturer launches products with function of

high water saving and they are welcomed warmly by customer. Besides that, their

price is very competitive with domestic competitors as well as imported products.

Among product lines, the economic line has the most severe competition level between

3 foreign producers as American Standard, Caesar and INAX. The success of INAX

with this product line is thanked to applying advanced technology suitable with

demand of market, bring to customer economic effect in using and orient consumption

trend for market. This is a strong point of INAX in attracting low and medium income

customer, and through promoting this product line then INAX brand is quickly known

as product with good quality and reasonable price in Vietnam.

At the present, INAX has gained the leading position in economic product line in

Vietnam. However, from 2005, although output of this line still steadily increases but

its share in total sale of all classes has trend to reduce and share of higher classes is

increasing with considerable rate.

• Medium class product:

This product line is designed to serve for market segment of consumer with good

income and like products with nice design, good quality, but not so high price. Before

2002, the medium class product line of INAX is not interested much, number products

in this line is so few. Mostly models in the line were cancelled models of INAX-Japan

and brought to Vietnam to produce for saving expenses of R&D (C-3580V, C-775V,

C-60, C-559), in general, the products in medium class line had not nice design and no

special function. The reasons that INAX did not pay much attention on this line were

their price was rather high with income of mostly Vietnamese people at that time and

its market share is so small. However, it was weak point of INAX when competed with

other competitors as TOTO, Cotto or American Standard and this affected badly to

brand prestige when demand of customer for this line go up in future.

Due to rush in to strategies to conquer economic-class, from 1999 to 2003 INAX was

lost large market share of this line to TOTO hand. To be supported strongly in finance

from TOTO-Japan, imported products with reasonable price from TOTO factories in

South-East countries (Thailand, Indonesia) were quickly brought to Vietnam, beside

that TOTO set up larger distribution network in big cities as Hanoi, Hochiminh, and

Danang, and enhanced advertising activities. Only in short time, TOTO quickly

conquer market of medium and high-class lines, TOTO brand became wellknown, and

it created rather solid foundation for born of TOTO factory in Vietnam. This was a real

difficult for INAX in future when want taking back market of this product line.

In order to stop expansion of TOTO, preparing for future trend of market and creating

a higher position in consumer’s eyes, from 2003 INAX had one big change in business

strategy, that was focus more on developing new products in medium and high grade

product line, enhance marketing activities for those lines, and at the same time is

keeping and increasing market share of economic class products especially in

provinces where low class products is still sold well.

In stage from 2003 to 2006, INAX launched many new products in medium line as

C702, C711, C504, C522, C801, C828, and some new wash basin models. It was an

important step in competition strategy of INAX to raise brand position in the market.

Figure 2.6: Sold Quantity of WC of INAX from 2004-2008

Source: from annual report of INAX

Figure 2.7: Ratio of product lines of INAX from 2004-2008


In the above data, it shows that sold quantity of medium-class products increased

sharply from 15,271 sets in 2004 to 81,736 sets in 2008, rate of medium-class product

in total quantity increased from 7.5% in 2004 to 21.9% in 2008. Turnover of this line

has gone up 15% per year and occupy 30% in total turnover. The good results proved

that VINAX chosen the right strategy in protecting market share, increasing turnover

and building brand image.

Figure 2.8: Share of product line of INAX in 2008


• High-class product

This is the product line having high price, nice and luxury design, some products plus

special functions as anti-bacterium, non-stick glaze, or shower toilet. This line is

produced to serve for consumer with high-income and high-class project as hotels. In

years from 1997 - 2003 INAX did not pay attention much on developing medium and

high-grade product to promote brand image by low demand of those product lines.

This strategy increased high business effect, reduces production cost for INAX but did

not build high image for brand. Market of high class product mostly felt in to TOTO

and American Standard so at that time mostly people thought that INAX was not high-

class brand, its products had good quality, reasonable price but not suitable with high-

grade bathrooms. This created many difficulties for INAX when build new business

strategy and affected competitive ability with other foreign firms as TOTO, Kohler in

promoting high-class product line in future.

However, with strong developing of economy, demand for high-class products went up

quickly, TOTO imported many high-class products to sell in Vietnam to prepare for

birth of its factory. Due to with ought high-class products that enough competition

ability, INAX failed in selling products to many high-class projects as hotels,

apartments or trading centres. In order to cope with the bad situation, from year of

2003, INAX had big changes in marketing strategy and focused more on developing

high-class products.

In the year of 2005, INAX launched to the market 4 high-class models of WC and 2

high-class wash basin with luxury design and many special features as Satis, Lucence

(shower toilets imported from Japan, have special function as shower, drying,

warming, automatic flusing,..) and 2 models made in Vietnam with anti-bacterium and

non-stick glaze. 2 models imported from Japan had very high price (over 30 and 40

millions of VND/set), although their sale was very low but it was a good tool to

advertising for INAX brand. 2 models made by INAX in Vietnam were design

luxurious and applied special technology to create difference with same class products

of other firms. Thanked to the new high-class model, after 1 year turnover of high-

class product increased near 100%, INAX brand was received higher evaluation from

consumer. This was an important success of INAX in affirming brand rank with

TOTO, AS and penetrating more strongly to segment of high-class product.

Figure 2.9: Growth rate of product line of INAX in years

Source: INAX report

Continuously in next years, INAX has released many new products and mostly are

medium and high-class products. In the above chart, we saw that sales of high-class model

have gone up sharply as 37% in 2005, 80% in 2006, 56% in 2007, and 25% in 2008.

Look at the above chart, we realize that although product lines have good growth speed in

many years, but from 2008 growth rate of medium and high class product has trended to

go down. The growth rate of medium line reduced from 76% in 2007 to 33% in 2008, high

class line dropped from 56% in 2007 to 25% in 2008. As the author’ market survey, the

reason of this decline did not appear from reduction of market demand but from some

weaknesses of INAX’s products as not attractive design and poor in models.

Comparation of quality and design between INAX and other firms

Table 2.4: Table of comparation between INAX and other firms (Unit: %)

Firm Less Equal Better

American

Standard

21.6 40.5 37.9

Caesar 8.1 45.9 45.9

American

Standard

25.7 37.1 37.2

Medium-

class

Product

Design TOTO 58.2 29.1 19.7

American

Standard

20.7 41.1 38.2

Quality TOTO 57.5 36.3 6.2

American

Standard

14.7 52.9 32.4

Caesar 8.8 26.4 64.7

Economic-

class

Product

Design American

Standard

5.7 22.8 71.4

Caesar 11.7 35.5 52.9

Quality American

Standard

5.7 31.4

North Hanoi 156.2 43.12% 362.2

Provinces 206 56.88%

Provinces 96.2 36.76% INAX 68.3 29.2 2.5

Caesar 27.5 42.5 30

INAX 86.6 13.4 0

Da Nang TOTO 5.3 37.2 57.5

INAX 60.8 30.7 8.5

INAX 40 27.5 32.5

INAX 73.5 22.7 3.8

AS 6.7 13.2 80.1

Caesar 8.7 43.4 47.9

Source: the author’s survey

2.4 SUMMARY OF SUCCESSES AND SHORTAGES IN MARKETING MIX OF

INAX

In the Chapter II, the author carried out analyze deeply marketing environment of INAX and

factors that can affect to business activity of the company. Apart from outside environment

factors then the author carried out to analyze marketing activities of INAX, the activities

include basic factors in Marketing Mix as Product, price, Distribution, and Promotion.

By analyzing the outside and inside marketing environment, the author found out strong points

and shortages in Marketing Mix activities of INAX compared with main competitors.

Hereinafter is summary of strong and weak points in Marketing Mix of INAX in Vietnam.

2.4.1 Successes in Marketing Mix of INAX

-INAX has the biggest production capacity among all firms in Vietnam.

-Product quality of INAX is good with advanced function of high water saving.

-R&D activity in INAX to be invested and cared by the company leaders

-INAX has many price levels in each product line.

-Price of INAX products is reasonable and has competitive ability with other firms.

-INAX has the strongest and largest distribution system among sanitary ware firms in

Vietnam.

-Management with distribution system in INAX is rather good compared with other firms.

-Promotion activities as sales promotion, advertising, exhibition, PR are better than other firms

and created good prestige with customers.

2.4.2 Shortages in Marketing Mix of INAX

-Medium and high-class models of are not diversified so it limits choice of customer

especially with high-class projects.

-Price of imported products (sanitary wares and others) is expensive compared with other

firms.

-Although INAX has the strongest distribution system but it starts to expose some defects in

management system and increase sales expenses.

-Competition among retailers when selling INAX is so severe; therefore it makes profit for

retailers lower compared with selling other firms’ product

-Inflexible sales policy.

-Product and brand of INAX is not appreciated highly as TOTO.

-INAX brand is not common in the world except Japan and Vietnam difficult to sell to

projects having design or investment from other countries.

CHAPTER III: SOME MARKETING SOLUTIONS TO

INCREASE SALES OF INAX

3.1 BUSINESS OBJECTIVES OF INAX TO 2015

We know that the market in Vietnam is developing fastly and will have big changes in near

future; the changes come from economy integration, fast growth, severe competition between

manufactures, and competition between retailers, shopping habit and consuming trend of end-

user. Therefore, INAX should carry out many activities to improve and renovate its operation

to adapt these fluctuations and raise competition ability, in which, sales and marketing is one

of main activities. In order to improve marketing activities, INAX needs to identify specific

objectives and use it as a meter for effect of marketing activities

• Increase product quality, reduce expenses, develop new product with nice design

• Increase sales growth rate to at least 20%/year

• Increase rate of medium class product from 22% to 40%/total sold quantity

• Increase rate of high class product from 4% to 10%/total sold quantity

• Bring INAX become a believed brand by consumer in both normal and high class line,

change think of consumer about image of high class products of INAX

• Build a strong and effective distribution system with lower cost

3.2 SOME MARKETING SOLUTIONS TO INCREASE SALES OF INAX

3.2.1 Improve marketing research activities

In present business environment, market always has many changes, competition between

manufacturers become more and more severe and consumer has higher requirement on

quality, design and function of product. In order to keep the position and continue to develop,

INAX needs to heighten awareness of every people from leaders to normal staff of market,

and customer. Therefore, INAX needs has new ways of market approach to be able to collect

and process information in time and accurately. Analyzing market to find opportunities,

threats, and difficulties to find suitable solution to improve and raise business effect.

In current condition, INAX is not able to carry out research in large scale but the company

should frequently make small research to study customer, consumer’s demands and needs, and

competitors. Afterwith are some main matters that INAX needs to conduct in market research

activity:

• Competitor research

INAX needs to research and analyze competitor about financial ability, production

technology, distribution system, product, price, human resource, and so. Although, in

present time, INAX is taking the leading position among all firms in Vietnam with the

highest market share, however, in the actual activity, INAX still exists some defects and

weak points compared with other firms as TOTO, Kohler,...in segment of high class

product line. Analysis of competitors will help the company to find causes that make other

rivals to be better than INAX and solution to improve INAX’s weaknesses.

• Research on advertising and promoting brand

During over 10 years of operation in Vietnam, advertising activities and brand promoting

have been received special considerable from INAX, however those activities has not

created strong impress and some time is wasteful. In oder to heighten effect of

advertisement activities and find suitable advertising methods, INAX should analyze effect

of advertisement methods and study respond of consumer with those activities.

• Research on consumer

In order to keep the leading position in the market and high growth rate then INAX ’s

products needs meet demand of consumer. Research on consumer will help the company

satisfy well consumer’s demand and increase competitive ability with other rivals. So far,

INAX does not implement any deeply and largely research about consumer. Mostly

survey is symple, not frequently (1 time in 2 years), and not received attention from

leaders of the company. Therefore, in next time the company should do this work more

frequently and pays more attenttion on this work by spending human resource and budget

for making survey or buying from professional market research company.

• Implementing short and long term forecast about market

Carrying out short and long term forcast on market is an important work to help INAX to

cope initiatively with changes of market in future. Forecast market situation in the short

term as well in the long term will help INAX make suitable changes in price, product,

promtion, and production technology to reduce bad affects of risks in future and take full

advantage of opportunities.

The short and long term forecast is a complicated work and depend much on qualification

of persons in charge. Information and data need to be collect frequently from sources of

Newspaper, Internet, Television, and forecasts from the State bodies or foreign

organazations. Information includes macro and micro information, collected information

will be basis to make forecast.

3.2.2 Improve management system of marketing activities

In general, in INAX, market research activities is not really good and management with

marketing activities is not professional. The problems depend on awareness of leaders and

each staff, human resource quality, and budget. Improving marketing management is very

necessary, it helps the company raise effect of activities and turnover.

At the moment, all works involve to marketing as market survey, advertisement, brand

promoting, public relation are implemented by personnel in Sales Department meanwhile the

main duties are managing sales works, customer, and carry out sales promotion campaign.

This is the main reason why marketing activities in INAX lack of creativeness and do not have

depth. In order to implement well marketing activities, INAX needs to establish a independent

department or small division specialyzing in inplementing and managing marketing activities.

Information collected from marketing section will supply to other sections to make plan for

production, R&D, and business.

In order to perfect Marketing Management, INAX needs to build a management system for

this work to create closed connection between Marketing section and other sections as Sales

Dept, Production section, Accounting Dept, R&D section, Planning section.

3.2.3 Product policy

In the environment of severe competition between manufacturers, INAX specifies that

satisfying demand of customer is the most important factor to develop and obtain business

objectives.

Improving product quality and developing new products take an important role to increase

INAX brand’s prestige, turnover, market - share and competition ability. In order to create

products with good quality, apart from factors of technology, quality of material and other

input then INAX needs to raise awareness of the company and each employee about quality.

INAX should consequently educate staffs about building the company image and the brand

prestige for creating better quality products for customer. INAX needs to have incentive

policies to encourage employee to develop new ideas to improve quality of product, comply

strictly with regulation and quality management system of the company.

Parallel with continuously improving product quality then R&D activity is very important for

INAX’s existence and development. Hereinafter the author will supply some suggestion in

developing new products of INAX and improving present product (See details in Appendix 4)

3.2.3.1 Economic class line

This product line takes the largest ratio in total sales quantity in the market, with INAX sold

quantity of this line take the largest ratio among 3 product lines (in 2008: 73.8%). Share of this

product line trends to reduce in Hanoi and Ho Chi Minh but go up in provincial market where

income of people is still low but increasing steadily. This product line decides market share,

growth rate of the company especially in provincial market where cheap products are still sold

well.

As sales reports of INAX, economic products are mostly sold in big sales promotion campaign

in summer and winter season with ratio 83.6% of total sold quantity of this line. This means

that in the time of not having promotion campaign, sale of this line is very low and it affects to

turnover and market share of INAX in months of without the sales promotion campaigns.

At the moment, INAX has 4 economic-class models that are C117, C108, C333, and C306. In

these 4 models, share of C117 is 30.4%, C306 is 31.5%, C108 is 11.7%, and C333 is 0.4%.

Model C108 and C306 are sold 99% in the promotion campaign for consumer and obtain

growth rate yearly by 15-20%; C108 and C333 are sold in normal time. Through analyzing the

sales record of models in 2008 of INAX, we can find that C333 now stays in the last stage –

decline stage of product life cycle and INAX needs to reject this model and design a new

model to change for it to increase sales volume in time of without promotion.

In general, with this product line, INAX needs to keep quantity of products in the line but it

should change bad sales product by another or re-design products in decline stage.

3.2.3.2 Medium and high-class line

Along with the strong development of the economy, income of people is quickly going up and

creates many changes in consumption trend. In urban area, trend of using medium and high

class products are increasing and strongly growing in big cities as Hanoi, Hochi minh, Hai

Phong, and so on. However, sale of these products of INAX does not equal with real demand

of the market, INAX products are not appreciated highly in quality, design as TOTO, and

some imported products from Thailand and Euro. Therefore, INAX needs to have strong

innovation to improve this situation and increase the brand image.

• Medium class product line:

As the author’s survey, INAX medium products are evaluated well in design, quality and

competitive price. Strong point of this product line is their competitive price compared

with TOTO and some imported products, with products having same price level then

INAX products have better design. However, in general, medium class products of INAX

have fewer models than others and their design are not really attractive.

In order to increase more sales of this line then INAX should enhance design activity as

creating more new products with better design, reject bad sales products.

• High-class product line:

Regarding to INAX high-class product line, this is the weakest point of INAX compared

with TOTO and European products. By now, models in high-class line of INAX is not

diversified, their design is not really impressed and do not create attraction with

consumer. Therefore, to catch up new trend of market and raise up the brand image then

INAX needs to take more effort in develop new high-class products with better quality

and design.

In general, in order to create strong impress of product and withdraw attention of customer,

INAX needs to create difference between INAX products and other firms’ product. With

economic product line, water saving feature needs to be applied for all WC in this line and

make the feature to become a standard for WC of the product line. With high-class product

line, at the moment the strong point of INAX is usage of electronic technology in products,

INAX needs to use this advantage to create difference and withdraw attention of customer; the

company needs to create breakthrough in designing new products.

3.2.3.4 Diversifying and developing new product

Diversifying products outside sanitary wares

Extra bathroom products include wash basin faucet, shower faucet, bathtub, bathroom

accessories and fitting, and so on. Although they are not main products of INAX but they can

bring to INAX higher turnover. Those products help to increase competition ability of INAX

especially in project accessing the brand image for INAX. At the moment, INAX is weak in

this field, product structure is simple and price is rather high by mostly products are imported

from over sea and their price is rather expensive, some others are made by domestic suppliers

but quality is unstable or made by other companies. In order to limit this weakness, INAX

should diversify more the extra products and seek good suppliers.

New Product Development

In INAX, research and develop new product can be implemented in different ways. As the

author, there are 3 ways that INAX can apply for developing new products

• 1st Way: Importing products made in factories of INAX Corporation in other countries.

This way helps INAX to save expenses of R&D, reduce risks in case of bad sales.

However, its weak points are not initiative in business by dependence on outside,

price of product could be high so it is difficult to compete to other firm and limit sales

amount. Therefore, this way is only suitable with special high-class products as

shower toilets, shower seats, and so on. Importing of these special high class products

has not meaning of profit but it helps INAX increase the brand’s image.

• 2nd Way: Hire other manufacturers (in Vietnam or other countries) to produce products

with INAX brand under authorized and standards of INAX. This way is commonly

applied with products that INAX cannot produce or products that can be produced by

INAX over sea factories but their price is high compared price of competitors’

product. Those products include faucet, shower faucet, bathtub, and other fittings.

At the moment, not only INAX but also other rivals as TOTO, American Standard, and

Caesar are using this way. However, the weakness of this way is INAX gets difficulty

in managing product quality and product quality is not stable. To limit this weakness,

on the one hand INAX needs to invest to produce products that not require big

investment capital as bathtubs, on the other hand INAX needs to intensify keeping

close control of suppliers and select carefully suppliers.

• 3rd Way: Self Design and Produce

This way is applied for producing products is INAX’s strong – sanitary porcelain

product as water closet, wash basin. In order to ensure success of this work, INAX

should comply with process as follow:

Figure 3.1: Process of developing new product

Source: The author’s Source: The

author’s design

3.2.4 Improving distribution system

As evaluation of retailers in the author’s survey, distribution system of INAX is the best

among all sanitary wares firms in Vietnam. However, in actual it has shown many defects and

they have affected badly to INAX’s business activity, limited sales speed and growth of

market share. Therefore, improving and rejecting defects in the existence distribution system

is necessary and urgent task to ensure to keep stand and strong growth in future.

Together with seeking weaknesses in distribution activity to improve better then INAX needs

to learn experiences in building distribution channel from other companies in Vietnam and

also in other countries to apply in perfecting INAX distribution system. In forthcoming time,

INAX should quickly amend and enhance distribution management activities as follow

strategies:

3.2.4.1 Perfecting the present distribution system

In future, with trend of economic development the market will have many changes. In order to

set up, upgrade and build an effective distribution channel then INAX needs to research

deeply market in factors of economy, culture, society, customer behaviour, and business

features of retailers and dealers.

In distribution channel with many intermediaries (producer, distributor, agent, retailer, and

consumer) the INAX should:

• More strictly control on members of the distribution channel to ensure to increase

turnover and carry out truly business policies of the company. In order to do it well

then INAX needs to build good management process for each intermediaries in the

channel as distributor, provincial agent, and retailer.

• Build close relationship between members in the channel. Create connection in rights,

obligation and responsibility between the channel members so that all members have

to help each others to obtain specific goal of each member and general goal of the

company. The relationship between the members should be set up in foundation of

equality of rights and responsibility.

In the actual operation, INAX often solve conflicts between the members in

distribution channel, in which competition in internal distribution channel as selling

product to outside of permitted area (with distributors and provincial agent) and

dumping price has affected badly to rights of the members and to slow down sales

growth. The most serious conflict in the system is price competition in retailers, this

make profit of retailers reduce when they selling INAX products. Price competition of

retailers happens with all firms; however competition when selling INAX is more

serious by INAX brand prestige and policy of selling on a large scale. Low profit is

one of main reason to limit growth of turnover and market share of INAX.

In order to limit the conflict then INAX should apply at the same time many methods as

educating retailers and agents to understand harmful effect when competing in price and

violating distribution region, having incentive policy for customers compliant truly INAX’s

regulation, willing to reject members violating seriously business regulation of the company.

3.2.4.2 Renew the present distribution system

As author, research to build a new distribution system is very necessary in case of the present

system is dateless, not suitable with market development in future and not enough competitive

ability with other firms.

At the present, INAX Vietnam is using 2 different distribution channel system in the North

and the South area, of course each system has different strengths and weaknesses.

• In the North area: strengths of the North system are having a large distribution

network with many retailers, good after-sales service, business policies of the

company are obeyed truly. However, its weaknesses are losing big supporting expense

to create profit for province agents and build a same price list for all provinces and

cities.

At the moment, the supporting ratio from INAX is acceptable with province agents but

it will be low in future when business expenses become higher and this results in

reducing their profit, they can find other goods from other competitors with higher

profit ratio to deal and will not concentrate on selling INAX product. Increasing more

supporting ratio for agents compared with the present ratio is very difficult by it will

affect to the company’s profit rate and beside that this thing is limited by sales

expenditure rate issued by the state (sales and advertisement expenditure do not allow

to excess 10% of total turnover).

• In the South area: apart from strong points as easy to manage, low sales expense

compared with the North (do not spend supporting cost for agents in province) then it

exposes many serious weaknesses. These weak points include narrow sales network

(the distributors cannot cover all outlets in provinces), bad after sales service, weak

competition ability especially in provinces that other firms have their distributor,

limitation of sales growth. In fact, although the South area is bigger market than the

North, but sale in the North is much higher than the South

In order to improve those weak points, the author proposes a change in distribution channel

system. Of course the change is not carried out at once that will be implemented gradually

with careful consideration and analysis. On the one hand is to maintain the present distributors

in Hanoi, Hochiminh, and Danang to distribute to retailers in those cities and other small

provinces; on the other hand INAX will open offial distributors belong to the company (like

distributors in Hanoi and Hochiminh).

• In the North and central area: new distributors are choosing from old agents that now

belong to distribution system of the distributors in Hanoi and Danang; new

distributors will be set up at provinces having strong distribution system and high

turnover.

• In big provinces of the South area: new distributors will be selected among present

wholesalers in these provinces. With provinces that distribution system is not enough

strong, sales is still low then still keep the old system.

Criteria used to decide selecting candidates for become one distributor are:

-Having large available distribution network.

-Having good financial ability.

-Having good prestige with retailers.

-Having experience in wholesale construction material.

Advantages of the changes in distribution system include:

-Reduce supporting expenses for agents in the North and Central area, as the author

estimate then INAX will save about 3% on total turnover of the North and Central.

-Increase more sales in provinces by new distributors will focus more on selling and

expanding market when they have more profit.

-Increase competition ability with other firms in provincial market.

Figure 3.2: Chart of Distribution Channel of INAX

Source: The a Source: The author’s

design

3.2.5 Improve and enhance promotion activities

In order to improve effect and competition ability of promotion activities in business then

INAX have to select and use promotion tools effectively and match with budget and business

goals. This is a matter that INAX really has not been implementing well in previous time and

need to be considered and adjusted again in next time.

3.2.5.1 Advertisement

At the moment, advertisement activities of INAX include advertising on TV (both commercial

and documentary films), game show, magazine, newspaper, billboard, making name board for

retailers,…Basically, those activities are good and bring to INAX good effect in promoting

brand and products. Every year, the company builds an advertising budget based on turnover

target and the budget is allocated for each activities. However, these allocations are not really

suitable and sometime leads to unnecessary wasteness, and reduce effect of advertising

activities.

In order to raise effect of advertising activities then INAX should re-allocate the budget in

activity and location (budget for each advertising activities and regions), the allocation need to

be implemented on foundation of analyzing and evaluating each activities.

Improving quality of advertising methods: although the advertising activities of INAX is

rather strong and diversify compared with other competitors, however their content is rather

simple, unprofessional, have not depth, and does not create strong impress with customer. In

order to improve the above defects then in next time INAX should quickly increase quality of

advertising method by using professional advertisers and set up a special division in charge of

advertising, developing brand, and public relation.

3.2.5.2 Public relation (PR)

PR is an activity that is received special notice by the company in recent years. Although

INAX has built some long term activities and received some good results as granting annual

scholarship for students in architect department of universities in the whole country, sponsor

for activities of Vietnam Architectural Association.

However, almost PR activities of INAX are not really effective and shortage of initiative. In

order to increase effect of PR activities then INAX should diversify activities and carry out

activities with more depth, bring INAX become an important member of the community.

Press relation is the weakest point of INAX in PR, so far INAX does not have good and closed

relation with press and communication offices, many good public relation activities were not

informed to customers. Therefore INAX should quickly build closed relationship with press

and communication offices to ensure communicate information, activities of INAX to all

target customers in time.

3.2.5.3 Exhibition

In recent years, advertising activity through specialist exhibition of construction and architect

has been implemented rather well and frequently in Hanoi and Hochiminh city, display in

exhibitions created good impress with customer and raise image of brand and product.

However, this activity mainly only concentrate in big city as Hanoi, and Hochiminh city so

that in next years INAX need expand this activity to some other cities as Hai Phong, Da Nang,

or Can Tho where have strong economic potential and high growth speed.

3.2.5.4 Internet

Aware of role of website in business, INAX Vietnam built its website http://www.inax.com.vn

many years ago. However the website is not really attractive with customer, information is not

update in time, does not create connection between the company and customers, is not really a

strong tool to increase sale and promote the brand. In order to raise effect of the website and

make it become a strong tool for increasing sale and promoting image of brand and product of

INAX then the company should:

• Update in time new information about product, sales promotion campaigns.

• Supply consultancy service for customers, partners in using and purchasing.

• Create attraction for the website by building new column to introduce new information

about advanced solutions and new products in construction field, new trends of

architecture.

• Create bridge to connect the company and customer, and connect customer with each

other to exchange experience and ideas.

In general, to ensure effect of the distribution system and increase sales then the company

needs to tightly between Push-Strategy and Pull-Strategy. Push-Strategy is find way to

increase sales by using sales promotion for retailers and incentive program for good sellers

(include distributor, Sub-distributor in provinces and retailers). Pull-Strategy is to withdraw

attention of consumer to brand and product of INAX by advertising activity, communication,

public relation, and sales promotion for consumer.

Figure 3.3: Combination of Push and Pull Strategy

-Sales promotion for intermediaries (sub-

distributors, retailers)

-Incentive program for good sales

intermediaries


3.2.6 Price Policy

Pricing is an important activity in marketing activities of INAX. Pricing involves directly to

turnover, profit, market share and affects to purchasing decision of consumer. With sanitary

ware products, pricing depends on many factors as price of raw materials and fuel for oven

fire (gas or petrol), production capacity, consumption trend or taste, the state’s economic

policies, and competitors.

Figure 3.4: Elements affect to Pricing

Source: The author’s

summary

Therefore, in order to make a right price for products the INAX needs to consider and analyze

comprehensively all factors of product, economy, technology, and competitors.

3.2.6.1 Product factor

• Cost for sale and production:

Before making price decision, the company needs to detailed calculate production cost

per product unit, production capacity, sales and promotion expense. Beside that the

company has to posit targeted market for the product, decide whether it will stay in

which product line (economic, medium, or high class line).

• Product Life-cycle:

-Advertisement

-Communication

-Public Relation

-Sales promotion for consumer

Apart from calculating cost for sale and production, the company has to identify

accurately product is in which stage of product life-cycle to launch suitable price

strategy with the company’s goal. If it is a new product with special difference in

technology as products with combination of electronic technology or products with

special quality and luxury design then it should be priced in high level to withdraw

attention from customer, raise the brand’s image and collect high profit. On the

contrary, with popular products then their prices should have both competitive ability

and reasonable profit rate.

In case of one product in decline stage, its price should be reduced (by sales promotion

for consumer or directly reduce for retailers) to increase turnover or clear stock to

change by new product.

• The company’s objectives:

Pricing a product depends much on the company’s objectives for that product. If

objective is increase market share and maximize turnover, the company should launch

a competitive price with products in the same class of other competitors.

If objective is maximize profit edge, the company should apply a high price, however

this way should only use in case of product having low production capacity as high-

grade products and difficult in production.

3.2.6.2 Economic factor

• The State’s economic policies:

When making decision of pricing a new product or adjusting price of old products

then the company needs to consider the State’s economic policies. For example, by

now the Sate have launched many policies to stimulate the economy, in which

construction field is used as a motive power for economic growth. With the high

growth of construction section, demand of construction materials in general and

sanitary ware in particular will strongly increase, price will trend to go up by high

demand and the company does not need to reduce price or launch big sales promotion.

• Economic forecast:

Any firms that increase price many times in short time will create bad image and

impression with customer, therefore when the company wants to price a new product

or increase price of old products then need to forecast inflation rate and fluctuation of

input costs of production process to build stable price and ensure profit rate.

3.2.6.3 Customer factor

When building price strategy, price of each product have to match with each targeted

customer (targeted market segment). In order to build the most suitable with targeted

customer, the company has to know well customer’s behaviour, their demand,

consumption taste, and payment ability (their income). For example, with economic

product line, its targeted customer is class of people with normal income, living in both

urban and rural area. Sales price for products in this line should stay in a fixed range

from 1-2 millions VND.

3.2.6.4 Competitor factor

Besides analyzing factors of product, customer, and economic then competitor is a

very important factor that the company has to consider before pricing one product. To

do this work, the company has to collect all information about products, sales

promotion activity, and price of main competitors as Caesar, American Standard, and

TOTO. Pricing is decided after analyzing and compare all aspects of price, design,

quality, and function of other product with the company’s product.

Apart from factor involve to price and features of competitor’s product, brand value of

other firms will affect to price strategy of the company. If product of VINAX does not

have remarkable advantages compared with product of other firms then should not

price higher than price of product of firms having better brand as TOTO or KOHLER.

In general, in order to build flexible price strategy, INAX has to continuously update market’s

changes, competitors’ activities, changes of the economy and the State’s policies. Besides that

the company has to frequently measure and follow changes in turnover of each product,

purchasing power, and customer’s satisfaction to release suitable price policies.

At the present, INAX has 3 main product lines with 3 different price levels. As evaluation of

customer, water closets of INAX have competitive price compared with other rivals as TOTO,

AS. Especially in sales promotion campaign for consumer, INAX products have strongly

withdrawn attention from consumer by large discount.

Although INAX’s water closets has competitive price but price of other fittings and

accessories as faucets, bathtubs, and so on is rather expensive compared with other firms and

it limited competition ability, and increasing turnover.

To improve the above weakness, INAX should find new suppliers whom able to supply

product with good quality and more reasonable price. Apart from finding new suppliers then

INAX should build factory in Vietnam to supply products that having high demand as faucet,

bathtub to reduce price of products and raise turnover.

CONCLUSION

In the present market economy, all firms aware that firms only exist and develop if their

product is sold well. One of solutions to increase sales is firm needs to design and emplement

good marketing strategy. Implementing well marketing activities will help firm to catch up

timely changes of market and have suitable solutions to gain success

With results collected in researching the subject “Marketing solutions to increase sales of

INAX Vietnam sanitary ware Co.,Ltd” and through researchs on theory foundation and

analysis of actual situation in INAX, the thesis completed some issues as:

The thesis summaried relevant theories that used to analyze marketing environment of

firm and marketing solutions to improve firm’s business activities.

The thesis analyzed actual business and marketing activities; find weaknesses and

strong points in marketing activities of INAX.

Basing on analyzing marketing environment and actual marketing activities of INAX,

The thethis supplied marketing solutions to help INAX increase sales and prestige of

INAX brand in Vietnam

Although with the best effort but the thesis can not avoid shortages, the author wishs to

receive opinion and recommendation from lecturers, readers to be able to add knowledge and

perfect the thethis. Hoping that, recommendation and solutions in this thethis will help INAX

relizes weaknesses and improve its business activity.

REFERRENCE

1) Trọng Dương, MARKETING đòn bẩy thần kỳ cho doanh nghiệp (2005), Nhà xuất bản

Thế giới

2) Ralph W. Jackson (University of Tulsa) and Robert D.Hisrich (Case Western Reserve

University), Sales and Sales Management.

3) Lê Anh Cường, Tạo dung & Quản trị THƯƠNG HIệU danh tiếng lợi nhuận (2004),

Nhà xuất bản lao động xã hội

4) Kotler, Philip (2003). A Framework for Marketing Management. 2nd Edition. Prentice

Hall

5) E.Jerome McCarthy,William D.Perreault, Jr., Basic Marketing, 9th Edition, 1987, Irwin

6) http://www.quickmba.com

7) http://www.netmba.com

8) http://www.freeonlineresearchpapers.com

9) http://www.marketingchienluoc.com

10) http://www.businessbureau.co.uk

11) http://www.marketingteacher.com

APPENDIX

Appendix 1: The questionnaire for customer

SURVEY QUESTIONNAIRE Answer name: ………………………………………………………………………………………

Address: …………………………………………………………………………………………….

Career: …………………………………………Position:………………………………………….

Business field: ………………………………………………………………………………………

Tel: …………………..…………..City/Town…………..………..Province:………………………

Architect:

QUESTION 2: How long have you

operated in this field?

Under 1 year: 1-2 years:

2-4 years: Over 4 years:

QUESTION 4: Which sanitary ware do you sell now? (For retailers only)

TOTO: INAX: A.Standard:

Caesar: Viglacera: Other:

QUESTION 5: Which sanitary ware do you often use for your projects? (For Constructor and Architecture)

The most Normal Less

A.Standard

Caesar

Other

The best The second The third

A.Standard

Caesar

QUESTION 7: Please tell me the reason why the product of……………… (Name of the company) is the

bestseller?

…………………………………………………………………………………………..............................................

...

TOTO INAX A.Standard Caesar

Quality

QUESTION 9: What price levels of product do sell best? Please use evaluation levels as follows:

1-Very bad 2- Bad 3-Nomal 4-Good 5-Very good (asking for Water-closet only)

2.1-2.5 million

2.6-3.5 million

Over 5 million

QUESTION 10: Ask more detail about INAX products.

-Strong Points: ………………………………………………………………………………………………………

…………………………………………………………………………………………………….…………………

-Weak Points: ……………………………………………………………………………………………………….

………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………

QUESTION 12: Which

criteria that the

consumers care for when

they decide to buy

sanitary ware? (Question

for retailer only)

Most important

Quality

Design

Brand

QUESTION 11: Please evaluate the following criteria of INAX with other firms.

Please use those evaluation levels:

1 Exceed the competitor

2 A bit better

3 Same level

4 A bit less

5 Far less

TOTO A.Standard Caesar

Medium-class

(Price 1.6- 3.5

million)

Design

Quality

Profit

Popular-class

(Price 1.0- 1.5

million)

Design

Quality

Class C-504 1297 6036

Appendix 3: Summary of Strong

and Weak Points of Sanitary

Ware Firms in Vietnam (Source:

the author’s summary)

INAX -Having the biggest

production capacity in

Vietnam.

-Product quality is good,

high water saving ability.

-Medium and high-class

models are not diversified

so it limits choice of

customer especially with

high-class projects.

-Products made in other

countries are few and

expensive.

AS - Products of TOTO are diversified by it

can mobilize products with good quality

and reasonable price (sanitary ware, faucet,

other accessories) made in its factories in

some other countries as Thailand, China.

-Production capacity in Vietnam is

small so ability of developing

market as well new products is

weak.

Caesar -High production capacity.

-Product structure is diversified with many

kind products of sanitary ware and fitting.

-Quality is worst than TOTO,

INAX, AS.

Price TOTO -There are many price levels in each

product line.

-Price of imported products (sanitary wares

and others) is reasonable and cheaper than

INAX imported products.

Price of domestic product is high

compared with normal income of

Vietnamese people and higher

than other firms

INAX -Many price levels in each product line.

-Price of product is reasonable and has

competitive ability with other firms.

Price of imported

products (sanitary wares

and others) is expensive

compared with other

firms.

Caesar -Many price levels in each product line.

-Price of product is very reasonable and has

the highest competitive ability compared with

TOTO, INAX, and AS

Distribution/

Profit for

retailers TOTO

-High

profit

for

retailers

- Narrowed sales

network.

-Weak ability of

finance and

distribution of its

distributors.

-Fewest number of

sellers

INAX -Strongest and largest distribution system

among firms in Vietnam.

-Good management with distribution system.

-Lowest profit for

retailers among firms

(by so many retailers

selling severe

competition among

retailers in price)

-Inflexible sales policy.

AS

Good

profit

for

retailers

-Weak distribution

system (marketing

and selling activity in

provinces is very

weak and mainly sold

in big cities as Hanoi,

Hai Phong)

-Untighly control with

distributors business

and promotion policy

of AS is not obeyed

truly.

Caesar -High profit for retailer.

-Flexible sales policy.

-Weak distribution

system.

INAX -The most

famous

brand of

sanitary

ware in

Vietnam

thanked to

water

saving

function,

reasonable

price, and

nice design

of popular

and

medium

class

products.

-Budget

for

advertisem

ent and PR

is larger

than other

firms.

-Product and brand of

INAX is not

appreciated highly as

TOTO.

-Not famous brand in

the world except Japan

and Vietnam

difficult to sell to

projects having design

or investment from

other countries.

C333 Decline

stage

1,592 1,390,000 Reject this

model and

change by

another

model

C306 Growth

stage

117,071 1,590,000 Continue

to keep

the model,

maintain

the present

sales

promotion

for it

C504 Growth

stage

56,485 2,030,000 Continue

to keep

the model

C711 Decline

stage

1,631 2,150,000 Reject this

model and

change by

another

model

C702

Maturity

stage 17,776 2,260,000

Continue

to keep

the

model,

improve

its design

C828

Maturity

stage (low

sale) 972 2,530,000

Continue

to keep

the

model,

improve

its design

C801 Maturity

stage (low

sale)

3,209 2,850,000 Continue

to keep

the model,

improve

its design

C900 Decline

stage

2,978 5,250,000 Reject this

model and

change by

another

model

C907 Growth

stage

4,800,000 Continue

to keep

the model

C909 Growth

stage

4,507 6,000,000 Continue

to keep

the model

GC1017 Decline 1,307 6,650,000 Continue

to keep

but

upgrade

design

Marketing solution to increase sales of inax

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