Luận văn thạc sĩ UEB marketing solutions for NPK fertilizer of petro vietnam fertilizer and

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

Tran Van Hiep

MARKETING SOLUTIONS FOR NPK FERTILIZER OF

PETROVIETNAM FERTILIZER AND CHEMICALS

CORPORATION (PVFCCo) IN THE PERIOD 2012 – 2014

Major: Business Administration

Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

SUMMARY

Supervisor: Dr. Tran Doan Kim

Hanoi – 2011

TABLE OF CONTENTS

ACKNOWLEDGEMENTS.......................................................................................i

ABSTRACT..............................................................................................................ii

TÓM TẮT................................................................................................................iv

TABLE OF CONTENTS.........................................................................................vi

LIST ABBREVIATIONS.........................................................................................ix

LIST OF FIGURES...................................................................................................x

LIST OF TABLES...................................................................................................xii

INTRODUCTION.....................................................................................................1

1. The thesis title....................................................................................................1

2. Necessity of the thesis........................................................................................1

3. Research aim and objectives..............................................................................2

4. Research questions.............................................................................................3

5. Data sources and Research methodology...........................................................3

6. Scope of the research.........................................................................................3

7. Significance of the research...............................................................................4

8. Structure of the thesis.........................................................................................4

Chapter 1: LITERATURE REVIEW.........................................................................5

1.1 The concept of marketing.................................................................................5

1.2. The analysis of macro environment and industry............................................7

1.2.1. Macro environment analysis.....................................................................7

1.2.2. Industry analysis.....................................................................................10

1.3. Target market segmentation, selection and positioning.................................14

1.3.1. Market segmentation..............................................................................15

1.3.2. Select the target market...........................................................................17

1.3.3. Positioning in the Market........................................................................17

1.4. Marketing Mix (4P)......................................................................................20

Chapter 2: NPK MARKET ANALYSIS OF PETROVIETNAM FERTILIZER

AND CHEMICALS CORPORATION (PVFCCo).................................................23

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2.1. Process of establishment and development...................................................23

2.2. Production and operation performance of PVFCCo......................................24

2.3. Macro environment analysis.........................................................................26

2.3.1.Politics.....................................................................................................26

2.3.2 Economic factors analysis.......................................................................28

2.3.3 Cultural and social factors.......................................................................29

2.3.4 Technological factors...............................................................................31

2.4. Industry environment analysis......................................................................32

2.4.1. NPK Fertilizer market analysis...............................................................32

2.4.2. Competitors analysis...............................................................................34

2.4.3. Pressure from Customer.........................................................................48

2.4.4. Pressure from material sources...............................................................49

2.4.6. Pressure from substitute products to NPK fertilizer................................53

2.5 Target market analysis of competitors............................................................53

2.5.1 Regional demand.....................................................................................53

2.5.2 Market share............................................................................................54

2.6 Customers’ comments on NPK fertilizers......................................................57

2.6.1.Farmer customers....................................................................................57

2.6.2. Distributor and retailer customers...........................................................59

2.6.3 NPK Products Positioning Analysis.........................................................60

2.7. Analysis of Competitors’ Marketing Mix......................................................61

2.7.1. Japan Vietnam Fertilizers........................................................................61

2.7.2. BinhDien Fertilizers Joint Stock Company.............................................61

2.7.3. Lam Thao Fertilizers and Chemicals Company (LAFCHEMCO)..........62

2.7.4. Baconco Limited Company....................................................................63

2.7.5. Nam Sao International Joint Stock Company.........................................64

Chapter 3: MARKETING SOLUTIONS FOR NPK FERTILIZER

OFPETROVIETNAM FERTILIZER AND CHEMICALS CORPORATION

(PVFCCo)IN THE PERIOD 2012 – 2014...............................................................67

3.1 Target market of PVFCCo’s NPK fertilizer....................................................67

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3.1.1. Plant location..........................................................................................67

3.1.2. Marketcompetitiveness...........................................................................68

3.1.3. Market attractiveness..............................................................................69

3.2 Positioning strategy of PVFCCo’s NPK fertilizer..........................................71

3.2.1. Production technology............................................................................72

3.2.2. Raw material sources..............................................................................72

3.2.3. Production capability..............................................................................72

3.2.4. Marketing and distribution capability.....................................................73

3.2.5. Product positioning of PVFCCo’s NPK fertilizer...................................74

3.3. Marketing targets for NPK products.............................................................76

3.4. Marketing Mix for NPK fertilizer of PVFCCo.............................................78

3.4.1. Product strategies....................................................................................78

3.4.2. Price strategies........................................................................................79

3.4.3. Place strategies.......................................................................................80

3.4.4. Promotion strategy..................................................................................85

CONCLUSION.......................................................................................................87

REFERENCES........................................................................................................88

APPENDIX.............................................................................................................89

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Abbreviations

PVFCCo

P.E.S.T

N.P.K

WTO

VN

FDI

LAFCHEMCO

JSC

AFTA

ASEAN

SWOT

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LIST OF FIGURES

Figure1.1. Marketing Research Process....................................................................6

Figure 1.2. PEST Model in macro environment analysis..........................................7

Figure1.3. Five forces model for industry analysis..................................................10

Figure1.4. Marketing mix model.............................................................................20

Figure 2.1: Somepictures of PVFCCo’sthe awards.................................................24

Figure 2.2.FDI into Vietnam in theperiod 2006 – 2010...........................................27

Figure2.3. Vietnam agriculture products breakdown in 2010..................................28

Figure 2.4: NPK consumer from 3003 to 2010.......................................................33

Figure 2.5: Consumption – production balance period 2003 -2010.........................33

Figure 2.6: NPK Import from 2003 to 2010............................................................34

Figure 2.7: The main sources to produce NPK fertilizer product (Mixed Acid Route)

49

Figure 2.8: The main source to produce NPK(Nitro phosphate Route)...................49

Figure2.9.NPK’s regional demand in 2010 (Unit: percentage)................................54

Figure2.10.NPK’s regional demand in 2010 (Unit: 1000 tons)...............................54

Figure2.11. Market share of main rivals in Northern area.......................................56

Figure2.12. Market share of main rivals in Southern area.......................................56

Figure2.13. Market share of main rivals in Central area.........................................57

Figure2.14. Reference information of buying fertilizer...........................................58

Figure 2.15.Perceptual Map of NPK products.........................................................60

Figure 3.1.The designed location of NPK fertilizer production plant......................67

Figure 3.2.Market share of main rivals in Northern area.........................................68

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Figure 3.3: Market share of main rivals in Southern area........................................68

Figure 3.4: Market share of main rivals in Central area..........................................69

Figure 3.5: NPK’s regional demand in 2010 (Unit: percentage).............................70

Figure 3.6: NPK’s regional demand in 2010 (Unit: 1000 tons)...............................70

Figure 3.7: Structure of distribution system of PVFCCo.........................................73

Figure 3.8.Perceptual Map of NPK products...........................................................75

Figure 3.9.Target output of NPK in period 2012-2014............................................76

Figure 3.10.Target market share of NPK market in period 2012-2014....................77

Figure 3.11.Target revenue of NPK in period 2012-2014........................................77

Figure 3.12: NPK Fertilizer prices in period 2012-2014.........................................80

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LIST OF TABLES

Table 1.1: 4P and 4C relation..................................................................................21

Table 2.1: Production and operation performance of PVFCCo...............................25

Table 2.2. NPK Production Companies’ business area in Vietnam market..............34

Table 2.3: The strengths and weaknesses of JVF....................................................37

Table 2.4: The strengths and weaknesses of BinhDien Fertilizer Joint Stock

Company.................................................................................................................40

Table 2.5: The strengths and weaknesses of LAFCHEMCO...................................43

Table 2.6: The strengths and weaknesses of Baconco.............................................45

Table 2.7: The strengths and weaknesses of Nam Sao International JSC................48

Table2.8. Location, capacity and output of factories...............................................55

Table 3.1: The plants using NPK fertilizer..............................................................71

Table 3.2 Strengths and weaknesses of PVFCCo....................................................74

Table:3.3. The distribution system in the target market...........................................82

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INTRODUCTION

1. The thesis title

Marketing solutions for NPK fertilizer of Petrovietnam Fertilizer and

Chemicals Corporation (PVFCCo) in the period 2012 - 2014

2. Necessity of the thesis

In the period of economic renovation reform (often known as “Doi Moi”),

the most outstanding achievement made by Vietnam agricultural sector is the world

appreciation of its food production and exports. After the war end in 1975, Vietnam

fell deep into the food crisis. However, since 1989 Vietnam agriculture industry has

not only served the domestic demand but also exported products to the world

market, namely rice, coffee, cashew nuts, etc. This remarkable achievement is a

result of policy done by the Party and Government, which has paid attention to

agricultural development. In addition, the agriculture has also applied the scientific

and technical methods and effective usage of fertilizers in farming. Despite the

existing achievements, agriculture industry needs further promotion and investment

because Vietnam is still a backward agricultural country. The farming knowledge of

farmers remains limited as they commonly base on their own experience in

cultivation. Vietnam does need a comprehensive agricultural revolution to develop

the industry both in quantity and quality basis or we would fail to catch up the

skyrocketing development of the world economy.

In order to promote agriculture development both in quantity and quality

basis, the industry needs the support and contribution of all economic components,

of which the important role of fertilizer production enterprises is undeniable.

Fertilizers facilitate plants to have high productivity and quality products. Fertilizer

companies must manufacture diversified and good products to meet the market

needs. This would be a responsibility as well as a challenge for PVFCCo when the

firm provides urea and NPK fertilizers in the market.

Before 2006, the production of fertilizer companies did not meet the need of

the market; thus, the marketing activities were not paid enough attention and

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promoted by the fertilizer companies. Since Vietnam took part in World Trade

Organization (WTO) and other economic organizations together with the

government’s open policy, the fertilizer market has become very active and

effervescent with the participation of both fertilizer production and import firms. As

the result, enterprises have to pay attention to the market, customers and in order to

increase the market share they have to apply the art of marketing mix with product,

price, place and promotion strategies.

PetroVietnam Fertilizer and Chemicals Company joined the NPK fertilizer

market after the big players namely Binh Dien, Vietnam Japan, Lam Thao, etc.; the

completion is rather fierce. To draw customer’s attraction and convince them to use

the company products, PVFCCo must have a right marketing strategy and make the

most of PVFCCo’s competitive advantages to break into the target market. To this

end, it is necessary for the company to carefully analyze the macro and industry

environment and then map out the appropriate marketing solutions for NPK

fertilizers of PVFCCo. All the above-mentioned contents are covered in the thesis.

3. Research aim and objectives

The aim of this thesis is to map out some marketing solutions that are

suitable to the NPK target market of PVFCCo.

To achieve the above goal, the study needs to utilize the following objects.

i. Apply PEST model and Five Forces model to analyze macro-environment

and the NPK industry environment.

ii. Evaluate the target markets of the rivals and PVFCCo.

iii. Base on the study result, post purchase evaluation the customer

satisfaction.

Find out what are key characteristics affecting customers’ purchasing

decision, which sources of information customers refer to before purchasing

products.

iv. Apply marketing mix analysis to find out the strength and weakness

of rivals in the marketing mix policy: price, product, place and promotion.

v.Propose some marketing solutions for NPK fertilizer products of PVFCCo.

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4. Research questions

In order to map out appropriate marketing solution for PVFCCo’s NPK products in

period 2012-2014, the thesis must answer the following questions:

i. Major research question:

 What are the right marketing solutions for PVFCCo’s NPK product

in period 2012-2014?

ii. Minor research questions:

 What will affect PVFCCo’s marketing policy?

 What are the main rivals of PVFCCo in the NPK market? What are

their strengths and weaknesses?

 What makes customers satisfied and dissatisfied when they

purchased the company’s NPK products?

5. Data sources and Research methodology

The research methodology is used in this thesis is case study and this

methodology meets the research’s objective. Data used in the thesis were taken from

both realisable secondary data about PVFCCo’s operation collected in the process

of working with PVFCCo and primary data collected from interviewing agents and

customers in target market about its products, prices, places and promotions and

from author’s observation.

There are a number of techniques used to conduct a case study research which

including:

• Interviewing staff and expert

• Economic statistic method

• Methods of description and comparison

6. Scope of the research

The research focuses on evaluating the situation of the Vietnam NPK market,

then proposes appropriate marketing solutions for PVFCCo’s NPK products in

period 2012-2014. Period 2012-2014 is the target market penetration stage; it is a

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