Research Problem
ILA Vietnam, a renowned English training center located in Ho Chi Minh City, is highly recommended by students to their friends and family With six centers in Ho Chi Minh City, along with additional locations in Vung Tau, Da Nang, and Hanoi, ILA provides accessible and quality English language education across Vietnam.
Established in 2007, the Hanoi Training Centre faces significant challenges in developing its market share, as it has struggled to achieve profitability despite over three years of operation.
ILA Hanoi faces stiff competition from well-established centers like Apollo, Language Link, ACET, and the British Council, which are well-known among Hanoians Additionally, ILA Vietnam's marketing strategy remains uniform across both northern and southern regions, limiting its local recognition and effectiveness.
This thesis aims to enhance ILA Vietnam's market share and profitability in Hanoi from 2011 to 2016 The key objectives include analyzing customer feedback on ILA's products and marketing efforts, assessing the company's business performance in Hanoi, identifying challenges faced by the Hanoi Centre, and providing recommendations for market share growth through an effective marketing mix tailored to the Hanoi market.
Objective and aim of thesis
The research aims to identify key issues that can enhance market share and increase profits for ILA Vietnam in Hanoi from 2011 to 2016 The objectives will summarize the findings effectively.
- Study about marketing performance of ILA Hanoi
- Find out the problem occur in the ILA Language training centre in Hanoi
- Study comments of customers in Hanoi about ILA products and marketing activities then build up the suitable marketing program to increase market share
- Give the recommendations to develop the market share
Scope and scale of thesis
This research will be conducted based on some major objects are:
- Current customers of ILA Vietnam in Hanoi
- Visit customers, students of University, secondary and high schools, parents of primary students
- Staffs and manager in Hanoi
Methodology
The research for the thesis employed various methods, including surveys of potential and existing customers, staff at ILA, and an analysis of company reports A hundred customers were surveyed to gather insights into their English learning needs and the sources they used to select an English training center Company reports were analyzed to assess business performance metrics such as sales figures, visitor numbers, and student enrollment Current students provided feedback on their satisfaction with courses, customer service, teaching materials, and instructors, as well as their likelihood to recommend ILA to others Customer comments were instrumental in evaluating the effectiveness of ILA's marketing strategies in Hanoi, suggesting that a more tailored marketing approach could enhance customer attraction and increase market share.
Data resources
Primary data for the research was collected through direct interviews and discussions with customers, students, visitors, parents, staff, and managers of ILA Additionally, secondary data sources included books, newspapers, internal and external reports, and online resources.
LITERATURE REVIEW
Market share
There were some definitions of market share as the following:
"Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity."
By Farris, Paul W.; Neil T Bendle; Phillip E Pfeifer; David J Reibstein (2010)
Marketing Metrics: The Definitive Guide to Measuring Marketing Performance
Market share refers to the percentage of total sales within an industry that a specific company achieves over a defined time frame It is calculated by dividing the company's sales during that period by the overall sales of the industry This metric provides insight into a company's size relative to its market and competitors, helping to assess its competitive position.
“Market share is the percentage of a company‟s sales of a particular product or service in a given area It can be calculated in terms of revenue or of units sold.”
By Author(s) from Penetrating.net
Market share refers to the number of loyal customers that a business or company has successfully retained over an extended period.
Diverging from conventional definitions, one author uniquely views loyal customers as the true embodiment of a company's market share, setting them apart from other interpretations of customer loyalty.
The current thesis emphasizes the importance of studying consumer behavior to foster customer loyalty, which is a key strategy for increasing market share This focus on understanding and enhancing customer loyalty is central to the research presented in the thesis.
Various definitions may employ different calculations, yet they all converge on the same concept: the market share represented as a "pie" or "cake" owned by a company The key focus lies in strategies to expand this "pie" and enhance the company's market presence.
1.1.2 Ways to increase market share
There were some ways to increase the market share as the following:
- Try to sell more to existing customer: encourage customer to buy more product and higher frequency
To effectively win back old customers, it is crucial to understand the reasons behind their departure Common factors include a diminished need for the product, high pricing, dissatisfaction with the service, or a switch to competitors By addressing these issues, businesses can tailor their strategies to re-engage former clients and enhance customer loyalty.
- Try to sell effectively to similar customer by using data to telesales, send mail, advertising, word-of-mouth…
- Use other channels to sell: direct sales, whole sales, online sales or e- commerce
- Find the new market: at other province, other country
- Develop the new product for same market
Expanding into new markets can be risky and expensive, necessitating additional capital and staff However, focusing on understanding and nurturing existing customers within the same market is a more sensible approach, as it fosters loyalty and encourages repeat sales The company already has established relationships with these customers, making it easier to gauge their satisfaction and enhance their loyalty Moreover, developing new products for an existing market is typically more cost-effective and less challenging than venturing into unfamiliar territories.
In order to developing the market share for the company in the safer way, the marketer had to study the customer need and customer buying process.
Consumer decision making process
The consumer decision-making process consists of several stages: problem recognition, information search, alternative evaluation and selection, outlet selection and purchase, and post-purchase evaluation Nominal decisions, characterized by low purchase involvement, involve recognizing a problem, recalling a preferred brand from memory, making a purchase, and conducting minimal post-purchase evaluation As consumers progress from limited to extended decision-making, the information search deepens, the evaluation of alternatives becomes more comprehensive and intricate, and post-purchase assessments are more detailed.
In this thesis, the author would like using the theory of information search in analysing the promotion mix so it was only information search stage focused
When faced with problems, individuals typically engage in both internal and external searches for information related to products or services Internal searches involve recalling long-term memories of satisfactory solutions and the characteristics of potential options In contrast, external searches focus on factors such as price ranges, familiar manufacturers, and performance criteria, which may be constrained by one or two specific criteria.
After her ten-year-old fan broke down, Ms Lan decided to purchase a new fan for the summer Despite the age of the old fan, she was satisfied with its performance and opted to buy another fan from the same brand at Thong Nhat company, without exploring other options This experience highlights how satisfaction with an existing product can significantly influence the decision to repurchase.
Consumers utilize different sources of information when making purchasing decisions For instance, one individual purchased a new toothpaste product with an attached toothbrush due to its added value, demonstrating a decision made with limited information search In contrast, a mother seeking a new formula milk powder for her child engaged in extensive research, comparing nutritional content, prices, and samples from other children Ultimately, she chose the product that offered the best price while maintaining the same nutritional benefits, showcasing the use of external information in her decision-making process.
- The opinions, attitudes, behaviors, and feelings of friends, neighbours, relatives, and increasingly strangers contacted on the internet
- Professional information that was provided in articles, books, websites, and personal contacts
- Direct experiences with the product through inspection, trial, or observation
- Marketer-generated information presented in advertisements, websites, and displays and by sales personnel
Deliberate external search also occurs in the absence of problem recognition
Individuals often engage in ongoing searches for information not only for potential future use but also for the enjoyment of the process itself For instance, tennis enthusiasts may continually seek information about tennis products even when they have no issues with their current equipment This search might include reading advertisements in tennis magazines, visiting sports shops, watching professional matches on television, or interacting with fellow players and local professionals These activities offer both enjoyment and valuable insights for future reference.
Information sources can be categorized into two main types: internal and external For instance, in the examples provided, the mother relied on external sources of information, while the woman purchasing a fan utilized internal sources Understanding these distinctions is crucial for effective decision-making.
- Memory of past searches, personal experiences, and low-involvement learning
- Personal sources, such as friends, family, and other
- Independent sources, such as magazines, consumer groups, and government agencies
- Marketing sources, such as sales personnel, websites, and advertising
- Experiential sources, such as inspection or product trial
These sources were shown in Figure 1-4 Consumers decided how many and which sources of information to use
Figure 1-2 Information sources for Purchase Decision
Consumers primarily relied on internal information, which encompassed past searches and personal experiences In addition to this internal source, they also sought external information from direct product experiences, recommendations from friends, low-involvement learning, marketing materials, and personal contacts.
Marketing messages are just one of five potential information sources, yet they significantly impact all other sources due to the availability of product characteristics and distribution in the market As a result of ongoing marketing activities, customers increasingly turn to non-marketing sources for information.
1.2.3 Information search on the Internet
The internet was a new consumer information search in the communication era In the nineteen century, one expert had a prediction that:
The emergence of advanced price-and-quality search engines is transforming the consumer landscape, benefiting shoppers while posing challenges for companies and investors With a modest annual membership, these internet services will enable consumers to easily find the lowest prices on high-value products and services worldwide As a result, informed consumers will dominate the market, making purchasing decisions effortlessly with just a click.
Pingdom conducted an analysis using various online sources to gather insightful statistics about Internet and email usage, as well as social networks They explored daily questions regarding the number of websites launched and the total number of Internet and email users Below are some key facts and figures uncovered by Pingdom.com.
107 trillion – Emails were sent in 2010
294 billion – Emails were sent a day, on the average
1.88 billion – the number of people using email all over the world
480 million – New email users counted from 2009
262 billion – junk emails per day (suppose 89% emails were junk mail)
2.9 billion – Email accounts over the world
25% – Email accounts were organizational or company‟s one
255 million – websites up to December 2010
1.97 billion – over the world (up to June, 2010)
825.1million – the Internet users in Asia
475.1 million – the internet users in Europe
266.2 million– The internet users in North American
204.7 million – the number of users in Latin America/ Caribbean
110.9 million – the number of users in Africa
63.2 million – the number of users in Mid-East
21.3 million – the number of users in Oceania countries
25 billion – “tweet” on Twitter in 2010
100 million – new Twitter accounts in 2010
175 million – new Twitter users in 9, 2010
7.7 million – followers @ladygaga (Lady Gaga, Twitter)
250 million – new Facebook accounts in 2010
30 billion – number of sharing (link, note, pictures…) on Facebook each month 70% – Facebook users out of American‟s border
20 million – Facebook‟s applicant had been set up each day
2 billion – watched videos on Youtube each day
35 hours – duration of uploaded videos in one minute
186 –average number of online videos online watched by one person (in the USA) 84% – internet users who watched video online (in the USA)
14% – internet users uploaded videos (in the USA)
More than 2 billion –watched videos on Facebook each month
20 million – Video uploaded on Facebook each month
5 billion – on Flickr (up to 9, 2010)
More than 3000 – pictures that uploaded on Flickr each minute
130 million – picture uploaded on Flickr each month
30 billion – uploaded pictures on Facebook each month
36 million – pictures was uploaded on Facebook each year
Asia leads the world in internet users, experiencing a remarkable growth rate exceeding 14%, making it a prime market for online business opportunities The rapid development of social networks like Facebook and Twitter has facilitated easier and more frequent advertising, allowing companies to establish their own accounts Notably, Vietnam has demonstrated the highest growth rate, according to research conducted by Cimego Company.
In key Asian countries, internet penetration varies significantly across different levels of development Developed nations such as South Korea, Japan, Singapore, Hong Kong, Taiwan, and Malaysia boast internet usage rates between 60-80%, with gradual annual increases In contrast, emerging markets like China, Vietnam, the Philippines, and Thailand experience lower penetration rates of 20-30%, but exhibit much higher growth rates each year Meanwhile, in developing markets such as Laos and Cambodia, as well as populous countries with extensive rural areas like Indonesia and India, internet penetration remains below 10% Currently, official sources report that there are approximately 27 million internet users in these regions.
Vietnam stands out in Southeast Asia, surpassing Thailand and Malaysia in terms of internet growth As the fastest-growing internet nation in the region, Vietnam ranks among the top countries worldwide for rapid digital expansion Since the year, the country's online landscape has evolved significantly, reflecting its unique position in the global digital economy.
Since 2000, the number of internet users in Vietnam has surged by approximately 120 times A decade ago, Vietnam's internet penetration lagged behind many other Asian nations, but it has since made significant progress, aligning its internet usage with that of other major emerging markets.
Source: Cimigo, Vietnam NetCitizen Report, 2011
Research indicates that Vietnam experienced a significant surge in internet usage growth, attracting major corporations to view the country as a lucrative market, with Facebook and Google being prominent examples.
In general, internet search had become an important source of information in the decision making process
Customer Value, Satisfaction, and Loyalty
Customers should be the primary focus of every company, serving as the central profit center In this dynamic, it is the customer, not the manager, who holds the true power To thrive, businesses must identify what customers value, understand how to meet their needs, and foster loyalty among them.
In today's digital age, consumers are more informed and empowered, utilizing various tools to compare companies and make educated choices Customers have become value-maximizers, assessing options based on criteria such as product cost and overall value According to Philip Kotler, total customer delivered value is a crucial concept in understanding consumer decision-making.
Total customer value (Product, service, personal and image values )
Minus Total customer cost (Money, time, energy and psychic costs) equals Customer delivered value (Profit to the customer)
Customer delivered value is defined as the difference between the total value of benefits and the costs associated with a product or service, which encompasses not just monetary expenses but also time, energy, and emotional investment For instance, when selecting an education service such as kindergarten or primary school, parents must carefully evaluate options to find a school that offers high-quality service at a reasonable price Typically, higher tuition fees are associated with better services, while lower fees may indicate average quality This decision-making process requires parents to invest significant time and emotional effort to identify the most suitable educational institution for their children.
Total customer value was defined as the perceived monetary value of the package of economic, functional, and psychological benefits customers expect from a product
Total customer cost encompasses all expenses that customers anticipate facing when evaluating, acquiring, utilizing, and disposing of a market offering This includes not only monetary costs but also the investment of time, energy, and psychological effort involved in the process.
Customer delivered value is determined by the difference between the benefits received and the costs incurred compared to alternative options This value encompasses both tangible benefits and perceived costs To enhance customer value, marketers can either elevate functional or emotional benefits or reduce various associated costs.
Incorporating value concepts into decision-making theory can enhance success in customer sales Companies can boost total customer value by enhancing product quality, services, personnel, and brand image Additionally, they can minimize nonmonetary costs by decreasing time, energy, and psychological burdens on customers Lastly, reducing the monetary costs of products for buyers can further improve sales effectiveness.
In the Vietnamese market, consumers have long been familiar with Hitachi and Electrolux washing machines, with Electrolux known for its superior brand image, durability, lower repair costs, and better fabric care A housewife faced the decision of replacing her broken washing machine and weighed her options between the two brands Despite Electrolux's advantages, including 24/7 customer support and energy efficiency, the lower price and simpler functionality of the Hitachi model ultimately led her to choose it She concluded that the price difference outweighed the additional value offered by Electrolux, demonstrating how cost considerations can influence purchasing decisions even when quality is a significant factor.
Electrolux's pricing strategy must balance between the evaluated customer price of 15 million dong and the production cost of 10 million dong, allowing for a maximum profit margin of 5 million dong To remain competitive, the company should set prices within this range; pricing below 10 million dong would result in losses, while exceeding 15 million dong risks losing market share To enhance sales, Electrolux can offer products that deliver greater customer value compared to competitors, or their sales team can present potential options to buyers to facilitate decision-making.
To achieve the best long-term profits, it's essential for salespeople to persuade buyers' managers that focusing solely on the lowest price can be detrimental Emphasizing the value and quality of a product over its initial cost can lead to more sustainable financial success.
- The salesperson's task was to convince other people in the customer family that Elextrolux‟s product could deliver greater customer value
- The other product operation needed higher water level and electricity cost
Through this example, the conclusion was that consumers made choices that gave more weight to their personal benefit than to the company's benefit in some occations
The Customer Received Value framework is a versatile tool for sales professionals, guiding them through the process of understanding customer perceptions of value and cost, including competitor offerings Initially, salespeople should assess how customers perceive these factors If their product or service is at a disadvantage, they have two options: enhance total customer value or reduce total customer costs To increase customer value, they can improve product quality, services, personnel, and brand image If enhancing value proves ineffective, they can seek company support to lower costs by reducing prices, streamlining ordering and delivery processes, or providing warranties.
Consumers exhibit varying degrees of loyalty to specific brands, stores, and companies, with Honda motorbikes being a prime example in northern Vietnam This loyalty stems from Honda's high customer value, characterized by user-friendliness, affordable replacement parts, durability, and ease of resale As a result, Honda has established a strong competitive advantage over newer competitors by consistently delivering exceptional value to its customers.
Philip Kotler and his colleagues developed a theory of customer satisfaction, which posits that a buyer's satisfaction post-purchase is influenced by the performance of the product or service in comparison to their expectations.
Customer satisfaction is determined by the emotional response elicited when comparing a product's actual performance to personal expectations When a product fails to meet expectations, it leads to customer dissatisfaction Conversely, if the product meets expectations, the customer feels satisfied Exceeding expectations results in high satisfaction or delight among customers.
Companies often encounter a trade-off between enhancing customer satisfaction and maintaining profitability While lowering prices or improving services can boost customer satisfaction, it may also lead to reduced profits Consequently, many companies prioritize profit maximization over customer satisfaction due to the diverse interests of stakeholders, including employees, dealers, suppliers, and shareholders As a result, businesses typically opt for a balanced approach, aiming for an acceptable level of customer satisfaction rather than striving for the highest possible levels.
Customer expectations play a crucial role in determining satisfaction levels Shoppers often base their expectations on previous experiences, recommendations from friends and family, and marketing promises If marketers set expectations excessively high, it can lead to buyer disappointment Conversely, setting expectations lower than competitors may result in insufficient customer attraction To achieve success, companies must elevate expectations while ensuring their performance meets or exceeds those expectations.
Marketing mix
The product is a crucial component of the marketing mix, as it defines what a company offers to its customers In "Principles of Marketing," Kotler and his colleagues emphasize the significance of understanding the concept of "product" and the associated theories that guide effective marketing strategies.
In this thesis, the author chose some criteria that needed for the company to apply in analysis In the book, Kortler said that:
A product is defined as any item that can be presented to a market to capture interest, facilitate acquisition, or fulfill consumption, ultimately satisfying a particular want or need This broad category encompasses physical goods, services, individuals, locations, organizations, and concepts.
In this definition, he mentioned not only tangible goods but also the services or intangible things like ideas
Services are viewed as unique products that encompass activities, benefits, or satisfactions available for purchase Unlike tangible goods, services are inherently intangible and do not lead to ownership of physical items.
In order to understand why customers were buying products, the companies had to know well about three level of product They were:
Core product: The problem-solving services or core benefits that consumers were really buying when they obtain a product
Actual products: could have as many as five characteristics: a quality level, product and service features, styling, a brand name and packaging
Augmented product: were build around the core and actual products by offering additional consumer services and benefits
The core product is the fundamental element at the heart of the total product, representing the essential problem-solving benefits that consumers desire Product planners must then transform this core benefit into a tangible product Ultimately, they enhance the offering by creating an augmented product, which includes additional services and benefits that cater to consumer needs.
Because of the field of case study was in service industry so the author would like to have an overview about the theory of service in the next part
“Service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything.”
Philip Kotler, Principles of Marketing, 4 th edition
Examples of service-related activities include renting a hotel room, depositing money at a bank, traveling by ferry or airplane, visiting a doctor, getting a haircut, having a car repaired, attending a professional sports event, watching a movie, utilizing dry cleaning services, and seeking legal advice from a solicitor.
Figure 1-5: The tangible-intangible continuum of goods and services
The article illustrates the spectrum of products, ranging from tangible items like soap and cars to intangible services such as consulting and teaching It highlights the blend of goods and supplementary services, emphasizing the importance of mixed products in today's market.
There were five characteristic of service: intangibility, inseparability, variability, perishability and lack of ownership The thesis would like to discuss about each of those characteristics
Soap soft drink detergent car cosmetic fast food ad agency airline financial service consulting teaching
Services are inherently intangible, making it impossible for customers to experience them—whether through sight, taste, touch, sound, or smell—prior to purchase For instance, a customer cannot evaluate the outcome of a haircut until it is completed This intangibility leads to uncertainty regarding service quality, prompting customers to rely on observable cues such as the service environment, staff, equipment, promotional materials, and pricing Consequently, service providers must effectively manage these tangible elements, often referred to as "evidence," to influence customer perceptions and enhance trust in their offerings.
Unlike goods, which can be stored and consumed later, services are inherently tied to their providers, as they are produced and consumed simultaneously While utilizing services, customers actively participate in the process.
The variability in service quality arises from the involvement of both producers and consumers, highlighting that the quality depends on the provider, as well as the timing, location, and method of delivery Consequently, these factors make it challenging to maintain consistent service quality.
A key characteristic of services is perishability, meaning they cannot be stored for future use A prime example of this is public transportation during peak times, such as rush hours or holidays, when demand surges To accommodate this increased demand, transportation companies must deploy additional vehicles temporarily, even though these resources remain largely unused during off-peak periods throughout the year.
When purchasing tangible items like computers or cars, consumers gain ownership and the ability to resell these assets In contrast, acquiring a service provides only temporary use without any lasting ownership, highlighting the fundamental difference between goods and services in terms of value and permanence.
The company recognized the need to adapt to the evolving market and changing customer demands, prompting the development of new products to replace those that were discontinued This article aims to explore the process of new product development in response to these shifting needs.
New product development is often misunderstood as merely new inventions; however, Philip Kotler clarifies that an invention refers to a new technology or product that may not necessarily provide customer benefits In contrast, new product development involves a systematic innovation process aimed at identifying, creating, and delivering unique value to customers that previously did not exist in the market Companies can obtain new products in two primary ways: through acquisition—by purchasing a company, patent, or license to produce existing products—or through internal research and development, which leads to original products, improvements, modifications, or new brands developed by the company itself Many large firms prefer acquisitions due to the high costs associated with developing and launching major new products.
Because of the purpose of the thesis, author focused only in the second way of developing a new product and how to create and market new products
The new-product development process for finding and growing new products consists of nine main steps
Figure 1-6: Steps in new product development process
The company needed having a strategy for developing a new product because a well-definded strategy would guide staffs how to implement, what to focus on and what the managers wanted
In order to find a few good ideas, the company had to generate from thousands ones which came from many sources such as internal sources, customers, competitors, distributors and suppliers
- The force of internal source could be executives, scientists, engineers, designers, manufacturing and salespeople Toyota was a good example of benefited from its internal ideas
Commercialisation Test marketing Product development Business analysis Marketing strategy development Concept development and testing
Idea screeningIdea generation New product strategy
Customers provide valuable insights by expressing their wants and needs, and companies can enhance their offerings by actively listening to and observing their clientele.
- Competitors tested their products and the company could see how they were going then learn from them What customers said about the competitors also was a good thing to consider
- Distributors, suppliers were close to the market, they knew what customers wanted and what could be changed
To streamline the product development process, the committee will filter out ineffective ideas while retaining the promising ones They will create a comprehensive product description, identify the target market, analyze competition, and provide rough estimates for market size, pricing, development time, costs, and expected return on investment Subsequently, the committee will assess the viability of each idea based on established criteria.