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Table 2.1 Summary of Characteristic, Objectives and Strategy of Product Life Cycle Stage
Product strategies are effective ways of doing business, based on
guaranteed to satisfy the needs of the market and customer tastes in each period
of the enterprise business.
Strategic commodities have an important part to be considered the
backbone of the strategy of selling. The higher production level, increasingly
fierce competition, the vital role of commodity products become increasingly
important. Product strategy not only guarantees production and business
activities in the right direction but also inextricably linked to the stages of the
process of reproduction of business expansion to implement the objectives of the
Pricing strategy is to offer the kind of price for a commodity type of
product, corresponding to the market, corresponding to each period to sell the
most and highest rates. Business rates are given to ensure profit maximization
but consistent with consumers and consumer acceptable. Rates will vary
according to the product life cycle, so businesses need to realize precisely to
change the most reasonable.
Although currently on the market, price competition has ceded the
position to compete on quality and service but the prices are still certain
important roles. Price is still important in determining the economic benefit
between the seller and the buyer. If the product strategy that will guide the
production, pricing strategies oriented to consumption.
Pricing strategies have intimate relationships with strategic commodities.
Product strategy is very important though, and has built a thoughtful way will
not provide high efficiency without the price strategy or price strategy carries
New businesses established or new market penetration typically applied
pricing strategies to attract customers towards themselves to occupy a market
share. For Vietnam market, low-income residents, requirements are not highquality products are competitive in pricing strategy is still effective weapon. But
do not be too abusive to compete on price because it can be counterproductive to
harm the business.
2.2.3 Research of distribution channels
What is categorized as a channel of distribution is generally the route
which goods are shipped from the manufacturers and then ultimately to the
consumers (Tybout, A., Calder, B. 2010). In a distribution network system, the
producer places his product directly in the hands of actual users. The cycle of
distribution involves the initial producer, the eventual buyer, and any
intermediaries - to include a wholesaler or retailer (Kotler, P., G. Armstrong, J.
Saunders & V. Wong, 2007).
A middleman is a term that refers to any company or individual in the cycle
which either acquires rights to the goods, deals with price negotiations, or sells
in the same capacity as an agent or broker (Tybout, A., Calder, B. 2010).
Facilitating agencies that assist in functions concerning marketing are not
classified as middlemen in the cycle of distribution.
Intermediaries are used by producers in order to distribute their products to
any given market (Meffert, H., C. Burmann, M. Kirchgeorg, 2008).
The intent of the producer is to establish a cycle of distribution, or often
referred to as a distribution channel, in order to accomplish this goal.
The decision that a company makes, in regards to its proper selection of a
channel, weighs heavily on the outcome of any and all other marketing decisions
made. The strategies, pricing objectives, and distribution processes of a
marketer, who deals with mass producing companies, as apposed to product
distribution to a novelty shop, would reflect stark contrasts. The decision of
which retailers to select, along with certain intermediaries, depends mainly upon
the actual product. The role of the mass merchandiser is to sell middle-priced
products and simultaneously distribute high-end products to novelty shops, like
a furniture store for example.
The true effectiveness of a firm’s communication and sales prowess falls
largely on the amount of training and motivation is required from the support
channel (Crawens, David W., Nigel F. Piercy, 2009). Acquiring a particular
product may also have a direct correlation to the capabilities of the channel
members themselves. Many companies have often made the mistake of paying
not enough attention to their channels; in the meantime, other companies such as
Apple Inc., UPS, and Merrill Lynch flourish.
Distribution strategies can classify into various categories:
+ Based on sales forms:
Distribution strategy in the form of retail distribution strategy is for goods
and services to final consumers. This strategy by the producer or reseller did.
Distribution strategy in the form of wholesale: the strategic distribution of
goods and services to the buyer for resale.
+ Based on the contact between businesses and final consumers
Direct distribution strategy: the distribution strategy which producers sell
their products won the final consumer without going through any intermediate
Indirect distribution strategy: the strategy is carried out through some
We can be found through the following diagram:
Figure 2.3 Types of distribution channels
Channel 1: Direct channel
Channel 2, 3, 4: Indirect channel
The content of the distribution channel
Identify strategic objectives of distribution: distribution strategy has many
different purposes, but there are four main objectives; ensuring rapid distribution;
consume large quantities of products and services, ensuring the quality of goods;
low cost. Depending on the overall goal of the strategy of selling the businesses can
choose one of the primary targets to build distribution strategy.
Selection based distribution strategic:
- Based on the characteristics of the goods can be divided into three
groups: goods involved to preserve damaged roots require direct market access;
single goods; engineering goods have special needs made by direct sale; goods
to sell in bulk through intermediaries.
- Based on customer characteristics: East or sporadic customers,
concentrated or dispersed, stable levels of consumption.
Identify distribution channels: the important content distribution strategy
is to select the appropriate distribution channel for the characteristics of the
product and customer characteristics so that enterprises achieve strategic goals
2.2.4 Promotion policy
It is the primary tool of the marketing mix that enterprise can use to impact
on the target market to achieve the business objectives. The nature of these
activities promote dissemination of products information to convince customers
to buy, so it calls marketing communications activities.
Some types of promotion policy:
Advertisement: Includes all forms of long introduction and promotion of
ideas, goods or services to be performed at the request of the subject advertising
Sales promotion: short-term measure impact on encouraging the purchase
of products or services.
Propagation: the stimulus indirectly to increase the demand for goods and
services or increase the prestige of a business unit by providing meaningful
information about our trade publications in a convenient and free the mass
Personal Sales: the oral introduction of the goods and services seller
through dialogue with one or more potential customers for the purpose of sale.
Enterprises will choose appropriate media and actually by the analysis of
the characteristics of the recipient believe the level of awareness, standards
living, purchasing power .., and enterprise should consider costing of doing
business for this activity after confirming media objectives.
2.2.5 Implementing product sales plan
In fact, the goods are not sold is not only due to the quality and price but
also weakness organizations to consume products. In order to streamline the
activities of consumption, enterprise should follow:
Sellers is the straight person who contacts and communicate with
customers. They have an important role in determining the success of
consumption process. Besides the distinctive features of the product, the service
style of sellers will make up the company's image, in particular for the products
that are highly competitive with the products of easy replacement. Therefore, the
enterprise should arrange labors who have high qualified professional, skillful
and sensitive to customer psychology. They must have a clear understanding of
the product and attract customers to the unique properties of the product
compared to other products.
Trading and contracting activities: When enterprise sale products in this
form, it help them sell a large volume and build the long-term business
relationship at the same time. Therefore, in the process of signing a contract, the
enterprise need dexterity, agreement flexibility terms that create a relaxed
atmosphere, trust and try to collect more information about the future demand of
Organization of the distribution network: In essence, the organizational
forms of distribution channels them. The enterprise base on product
characteristics, market conditions to choose the form of a logical channel, low
cost, quick information, and control goods are distributed.
2.2.6 Customer service
The pre-sales services include information services, referrals, introduction,
advertising, join the Expo. It introduces the use of products and services in order
to attach to consumers demand. Therefore enterprise persuades them to buy and
use their products.
The service while selling: the communication services between customers
and enterprise. It includes the introduction of the products, guiding the selection
of products, payment contracting and transportation of the products... Services
impact on the consumer behavior about sentiment the credibility of the
company, the quality, and price of products.
After-sales service: The activities include the installation, repair, warranty,
consumer consultant, former procurement, replacement, and maintenance ...This
work enhances the reputation of the enterprise, raise the confidence of
consumers when buying and using goods produced by the enterprise.
2.2.7 Assessing the product consumption process
The criteria to assess the effectiveness of consumption product activities of
the enterprise shown by the indicators reflecting the situation of consumption
products. It measures by the volume of product and price.
Analysis of the component to analyze indicator changes not only in
absolute terms but also in structure between the actual parts of the plan, and the
integration of the transformation structure research.
According to the method of consumption, there are many different ways:
Enterprise self-consumption, provided directly to consumers Through the
venture, association, and agent Commercial Affairs for the State. Sold to private
2.3 Factors affecting the products consumption of craft villages
2.3.1 External factors
If political and laws clear and stable, it will ensure favorable conditions and
equality for the enterprise to participate in the market competition in a healthy
manner, with high efficiency. Political and law influence directly or indirectly to
the operation of the consumption. There are some types of political factors affect
product consumption such as financial policies, the protectionist policies of free
trade, the views in the field of import, the national program, the regime wages,
benefits and allowances for labors
Factors on science and technology
Competitiveness in the market or the ability to consume products decides
by quality and price. Science and Technology decided to 2 factors. It applies in
production contribute to rising the quality of goods and services, minimize
The economic factor
The economic factor plays a critical role now, it decided to complete the
formation and business environment and affect the competitiveness of enterprise
in the market. Including the following factors:
- Economic Policy of the State: State Policy support effects or a substantial
barrier to business operations of enterprise
- The economic growth: If the economy is stable and high growth, it will make
income increased. Thereby the purchasing power of goods and services increase too.
- Exchange rate: Local currency decrease prices lead to increased exports. It is
the opportunity for production and higher competitiveness in the domestic
market and internationally. Because of the decreasing in price domestic goods
sold, it compared to foreign competitors
- Inflation: business risk occurs when inflation is very high. When inflation is
high, self-defense business by myself: do not invest in production and business
investment as remanufactured expansion and technological renovation of
Products produced to suit the tastes of consumers; there is such a new
satisfies the needs of new customers eager to speed up consumption. It is also
significant factors to affect demand in the market. Consumers will buy more if
the goods with the tastes and essential to them.
Competitive research is to study the competition and set orientation,
remedial measures in accordance with its business.
In general, all businesses are faced with different competitors. Considering
competing viewpoints on 4 levels:
- Competition desired with the same amount of income they can use in
various purposes, procurement of equipment for family, travel… when this
purpose can be used not only used for other purpose, for many purposes this will
limit other purpose. Detailed structure may reflect trend consumers, thereby
creating opportunities or threats consumption activities.
- Competition between various types of products to satisfy the same desire.
The desire of vehicles or expectations can cause the same competition.
- Competition products of the same type
- Competition between brands
4 categories on the level of competition are fierce gradually from 1 to 4.
When considering competing manufacturers must take into account the 4 levels
to determine the operational plan for its consumption, to determine anticipate
problems and what will happened during the competition to find manufactures
compete period. If the manufacture’s potential was low, not competitive enough,
the manufactures must find the market gaps to avoid cross-eyed, which is to find
products that rival skip to manufacture and the market development objectives
to maximize the revenue for themselves.
2.3.2 Internal factors
Price product sale
Commodity prices are one of the key factors affecting consumer activity Commodity prices can stimulate or restrict the supply and demand in the market
and thus affect consumption. Determining the right price to attract customers to
ensure ability highest profit or avoid stagnant water and limit losses. Depending
on the environment, the market segments that businesses should set high or low
prices to attract customers, and will, therefore, sell more goods and increase
sales for your business. Moreover, the price to be adjusted flexibly in every
phase of business, each period of development or business cycle to attract
customers and stimulate their consumption, increase the speed of product sales
Prices have significantly influenced consumer activity so it can also
use as a weapon in the most competitive regarding people's income is low.
So be very careful to compete on price, directions, proper planning
regarding price is a necessary condition for increasing the speed of the
goods consumed by enterprises today.
When it comes to product quality goods, refers to the intrinsic
characteristics of the product is determined by the parameters that can be
measured or comparable suit current conditions and meets the current needs of
When consumers buy something, they think about the possibility of goods
to satisfy their needs, to the quality it has. In the current conditions of quality is
the most important factor that large companies are often used in competition
because it offers the potential for "substantial victory". It is also the way that
businesses attract customers and build, preserve the best reputation. Any product
that is selling goods on the market contain a certain use value, but fellow human
products manufactured from various businesses will have different quality
products businesses which have the higher quality will attract your customers.
When customers know the quality of goods and products of the business and
believe in quality, they will purchase the business. Enterprises sell maintain not
only traditional markets but also expand new markets, strengthen the position of
enterprises in the market.
The highest goal of business is profit targets but to achieve profitability; the
enterprises need to sell goods and collect money for customers, i.e., be accepted.
For this external price factors now have to focus on the quality factor, the quality
of products can make a solid position in the market of the product. At the same
time, the quality will attract long-term customers, sustainability and make loyal
customers with products of the business goods.
Regarding today's fiercely competitive advertising plays a huge role in
promoting the consumption of goods and products. Advertising to introduce
products to consumers and stimulate their needs.
Because the ads are very expensive so to ensure effective advertising need
to hire advertising agencies to advertise the program editor, hired analysts,
stimulate consumption to build advertising programs, promotion to create the
image of the enterprise. Businesses can advertise in newspapers, television,
radio and more sales letters used to advertise their products to match the best.
The fact that so many businesses thanks to good advertising sales have
grown rapidly, and there are now spending a lot of money on advertising, but
advertising content not reasonably lead to consumers buy not only products but
also the opposition. So when developing advertising programs must now be very
careful to promotional activities to accelerate the consumption of the business.
Distribution channel and after-sale service
Well-organized distribution channels and after-sales service will increase
the speed of the goods consumed by enterprises; distribution channels include
wholesale networks, retailers, agents organized. It will occupy the market space,
create conditions for consumers and further stimulate their needs.
Establish a network marketing channel strategy should base on
consumption which is now pursued, the resources of the enterprise, in the
characteristics of customers, consumer habits and channels of competitors.
To do well in distributed enterprises should ensure civilized politeness,
punctuality in the transactions, create the most favorable conditions for
customers to purchase. More flexibility to flexibility in payment methods,
delivery of goods to ensure mutually beneficial to avoid causing problems for
customers. In addition to the after-sales services also assist in ensuring
customers when shopping for goods and make customers more confidence and
peace of mind when deciding consumer products businesses and will, therefore,
sell goods more stable and increase the consumption of corporate products.