Vinakyoei Marketing plan

Instructor: Kieu Anh Tai

Group 2:
Nguyen Van Long Son
Cao Quoc Viet
Phan Thanh Long
Le Ngoc Lan
Truong Thi Tuyet Dung

Group 2 EMBA 19

Executive Summary .......................................................................................................1

1. Situation Analysis ..................................................................................................2
1.1. The Market.......................................................................................................2
1.2. Macroenvironment...........................................................................................2
1.3. Competition......................................................................................................3
1.3.1. Direct Competition....................................................................................3
1.3.2. Indirect Competition .................................................................................3
1.4. Product Offering ..............................................................................................4
1.5. Distribution: .....................................................................................................4
1.6. Suppliers: .........................................................................................................4
1.7. SWOT Summary..............................................................................................4
2. Marketing Strategy.................................................................................................5
2.1. Financial Objectives.........................................................................................5
2.2. Marketing Objectives.......................................................................................5
2.3. Positioning .......................................................................................................5
3. Marketing Mix .......................................................................................................6
3.1. Product Marketing: (for Deformed bars) .........................................................6
3.2. Pricing ..............................................................................................................7
3.3. Promotion.........................................................................................................7
3.3.1. Advertising................................................................................................8
3.3.2. Public Relations ........................................................................................8
3.3.3. Direct Marketing:......................................................................................8
3.4. Place (Distribution)..........................................................................................8
4. Controls..................................................................................................................9
4.1. Implementation schedule .................................................................................9
4.2. Market Research ............................................................................................10

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Vinakyoei marketing plan

Executive Summary
Vina Kyoei Steel Ltd was established in January 1994 at Ba Ria Vung Tau Province as
a joint venture company between Kyoei Steel Ltd., Mitsui & Co., Ltd. and Itochu
Corporation in Japan, and Vietnam Steel Corporation in Vietnam. VKS started commercial
operation from January 1996 and is now producing deformed bars, plain bars and wire- rod
with annual capacity of 300,000 tons. With one of the most up-to-date rolling machines,
which are imported from Japan, and also well trained human resources. VKS is now
producing high quality products that can meet any international requirements. As
production is controlled by ISO-9002 and quality of the products is equivalent to JIS
(Japanese Industrial Standards), VKS has become one of the most reputable companies in
the steel industry in Vietnam.
Vina Kyoei is the number one brand name of steel products for the household segment
in Ho Chi Minh City market, taking 70% sales output of this segment, the third leading
player in the southern market of Vietnam (Da Nang Ca Mau) which accounts for 10%
market share. The 88% production is sold to the household and common consumers
(majority of this volume are deformed bare of SD295A and wire-rod). While the rest 12%
is production of high grade steel bars (grade SD390, Gr60, and Gr460B) used for the
industrial market such as large projects of high-rise buildings, bridges and ports
Vinakyoei prepares another new production line of 300,000 tons a year and it is
estmated to begin production by early April 2011.
The primary marketing objective of 2011 is to achieve the sales-output of 450,000 tons,
making up of 13% the southern market of Vietnam.
The objective of coming years, the company will reach a sales target of the full
production capacity 600,000 tons per year, taking 15% share of the southern market.
In order to fulfill the above marketing targets, the company should focus on and
increase its sales volume in the industrial market where promises a great potential demand.
In reality, Vietnams infastructure networks and real-estate business is still the dawn of
development.

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Vinakyoei marketing plan

1. Situation Analysis
1.1.

The Market

The steel industry has a wide range of products which are mainly classified
according to different product groups as follows: long products, flat products, steel
pipes/tubes, section steels( profile steels)For finance tight reason, so far Vietnamese
steel producers have only invested in technologies and machinery for making long
products. Except for pipes/tubes, other kinds of steel products are mostly imported
from overseas.
From 1976 to 2000, Vietnam steel industry was regulated by the government
through Viet Nam Steel Corporation (VSC). The total country rolling capacity was
approximately 1.5 million tons for all kinds.
After year 2000, the government has allowed investors of private and FDI sectors
to participate in the steel industry. Up to now, the total rolling capacity has reached 6
million tons/year nationwide. Total production of Southern producers (5 main
producers: Pomina, VNSTEEL, Vinakyoei, Sunsteel, Tay Do Steel) is around 3 million
tons/year, making up 50% of the whole country output.
As the restriction of this subject, we just study and research Vinakyoei Steel
products within the market area from Da Nang to Ca Mau. In year 2010, Vinakyoei
was the leading brand name in the household segment in Ho Chi Minh City,
accounting for 70% sales output market of this market segment (350,000 tons/year).
Nevertheless, the whole market (Da Nang Ca Mau), Vinakyoeis sales-output took
only 10 % share of the market demand, ranking the third position; while Pomina was
the strongest proudcer with 2010 sales result of 800,000 tons, making up of 40% the
market share. The second position was VNSTEEL, accounting for 30% market share
and the rest belonged to the imported steels and the small and medium size
producersproduction.
Regarding billet (the main raw material for making steel products), Pomina and
VNSTEEL only import 30% demand of billets to produce their products; therefore,
they can flexibly meet a big order of various product dimensions (special grades and
sizes as well) in a short time. Vinakyoei have to buy the billets from overseas, it takes a
lot of time for us to fulfill a large order, especially a purchased order of high-grade
steel products. Furthermore, because of the limited production capacity, at the same
time Vinakyoei hardly competes with Pomnia and VNSTEEL in satisfying purchase
orders from huge projects in remote areas. Beside those direct competitors, Vinakyoei
is also competed by other producers from the North of Vietnam, and foreign players
from Korea, China, Malaysia and Thailand.
With the distribution system of 18 wholesalers (distributors), Vinakyoei will face
the consumption matter when its production capacity increases.
1.2.

Macroenvironment

Based the report of the 75 members of the association sales of steel used in plant
construction in the first 8 years has increased 23% over the same period in 2008.
Vietnam Steel Association also estimates sales of construction steel next year will

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Vinakyoei marketing plan

increase at least 12%. The demand for construction steel pipe is increasing rapidly,
especially in Vietnam, due to a wave of newly launched projects for ports, railways and
other major infrastructure developments.
The joining of Vietnam to WTO has created many opportunities and threats to the
company. On one hand, the company can enjoy import low- tax rates levied on the
materials from overseas. On the other hand, imported steels will also overflow the
market due to Vietnam's tax reduction pledges to WTO.
Due to encouraged FDI policy of Vietnam Government, strong players will come
sooner or later. The investors might be from Korea, Taiwan, and China. However,
thanks to the first rank of Japan in ODA capital sponsoring to Vietnam, the company
can take advantages on the nationalism favor spirit, especially for the huge projects
sponsored by Japan Government.
Thanks to economic growth, Vietnam consumers become richer gradually. They
will choose more expensive goods when their incomes increase. The company brand
name can satisfy the sentiment preferable to foreign goods of Vietnam consumers,
especially Japanese goods. For instance, Honda motor-bike, Sony TV... are the typical
examples.
Vietnam is now at the dawn phase of infrastructure building, like roads, sea ports,
air ports and so on. Yet, according to VSA, the steel consumption per capita of
Vietnam is still low, about 130kg/person while Thailand has reached 250kg/person.
Moreover, the population of 80 millions promises a strong demand of steel in coming
years.
1.3.

Competition
1.3.1. Direct Competition
Currently Vinakyoei is the number one steel producer for the segment
of household consumers. Meanwhile, due to its production capacity,
Vinakyoei ranks the third position for the market of industrial users behind
Pomina( first) and Thep Mien Nam(SSC) - VNSTEEL( second).
In the future, the company may face an intense competition from local
producers who have expanded their production capacity by investing the
most-advanced technologies and machinery. In addition, the market share
may decrease due to the invasion of Northern local steel producers such as
Vinasteel, VPS, Vinakansai, VIS, Hoa Phat Steel...
1.3.2. Indirect Competition
In the future, the company may face an intense competition from local
producers who have expanded their production capacity by investing the
most-advanced technologies and machinery. In addition, the market share
may decrease due to the invasion of Northern local steel producers such as
Vinausteel, VPS, Vinakansai, VIS, Hoa Phat Steel...

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Vinakyoei marketing plan

1.4.

Product Offering
Vinakyoei is a product of Kyoei Steel Corporation, the largest steel
manufacturer in Japan. The company uses the advanced technology of Japan in
the latest 1990s. The product quality is stably sustained due to the effective
quality control process of the company.
However, the product range is not diversified. For deformed bar, 85%
production is grade SD295A while grade SD390 is only 15%. Besides that, the
product prices are also high. Therefore, their products are not frequently chosen
to use for industrial construction works. Moreover, the production capacity in
Viet Nam is quite low, around 300, 000 tons/year.

1.5.

Distribution:
The density coverage of Vinakyoei distribution network is very scattered.
The distribution system is only maintained with 18 distributors for the sales
territory from Phu Yen to Ca Mau.

1.6.

Suppliers:
The billet (main material for steel production) making up 95% percentage
of the product value is imported from overseas. However, billet price is
unpredictable because the world market price situation frequently changes and
can not be foreseen

1.7.

SWOT Summary
WEAKNESSES
STRENGTHS
- Advanced technology of Japan.
- Quite low production capacity.
- Not diversified product range.
- Stably sustained quality.
- Strong steel brand name in
- Scattered coverage distribution
network.
Vietnam market.
- High prices.
- Billet price is unpredictable.
OPPORTUNITIES
THREATS
- Strong demand in steel in
- Intense competition from local
coming years
producers
Consumer with higher
- Invasion of Northern local steel
payment ability
producers
Huge projecs sponsored
- The potential of joining market
by Japan Government.
of strong players due to
- Import low-tax rates for
encouraged FDI policy of
materials after Vietnam joined
Vietnam Government
WTO
- Imported steels due to Vietnam's
tax reduction pledges to WTO.
- Turbulent market conditions
which impacted by Macroeconomic

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Vinakyoei marketing plan

2. Marketing Strategy
2.1.

Financial Objectives
Objective to achieve US $6,750,000 of profit in year 2011

2.2.

Marketing Objectives
Year 2011: increases sales volume from 300,000 tons to 450,000
tons/year, making up of 13% market share (total market consumption of 3.5
million tons/year).
Year 2012 onwards: An annual targeted sale is to reach the full
production capacity of 600,000 tons, making up of 15% market share (total
market of 4 million tons).

2.3.

Positioning
* Segmentation: in Vietnam, concerning the construction steel products,
the market is divided into the following groups: household consumers and
industrial consumers

Household consumers: In this section, the consumers can be

classified and based on criteria of income and location. According to
income, they are classified as low-income group, average-income group,
and high income group. Regarding the location, rural consumers and
urban consumers might have different interests in the steel products. For
the household segment, they have a little knowledge of steel products.
Most of them decide to choose some brand name based on their relatives
& friends' recommendation or affected due to the producers' advertising
program. The prestige of the producer and price are the two most
important elements that these customers are interested in.

Industrial consumers (business users): They almost understand

deeply the steel product features and know well all steel brand names.
Furthermore, the demand on steel products of this group is very huge and
diversified in terms of types and quantity. For this category of consumer,
what makes them most interested in when they decide to use a steel
product? Hereunder are some typical points sorted in the descending
priorities: Quality and technical features; Reasonable and competitive
prices; Variety in product types and supplying ability; Credit and flexible
payment policies, After-sales services...

For the industrial consumer, there are the following segments: high-rise
building contractors, road & bridge contractors, and heavy industrial
contractors(air/sea ports, hydro/thermal electricity plants, ...).
* Target Markets:
Vinakyoei concentrates on its strong reputation as well as know-how in
producing high-grade steels used in huge projects. The aimed target markets
are:
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Vinakyoei marketing plan

Household consumers of average and high income, who live in

the big cities like: Ho Chi Minh, Binh Duong, Bien Hoa, Vung Tau,
Vinh Long, Can Tho, Long Xuyen, Dong Thap...

The contractors of high-rise building projects, who need special

steels to deploy their awarded biding construction works.

At the present, taking advantage its brand name, Vinakyoei positions it as the
number one steel producer for the segment of household consumers.
Meanwhile, due to its production capacity, Vinakyoei ranks the third position
for the market of industrial users behind Pomina( first) and Thep Mien
Nam(SSC) - VNSTEEL( second).
3. Marketing Mix
3.1.

Product Marketing: (for Deformed bars)

Three levels of Product (as P.Kotlers concept):
+ Core Product: Solidity and Endurance
+ Actual Product:
VNA KYOEI's standard for Deformed Bars:
JIS G3112 - SD295A equivalent
JIS G3112 - SD390 equivalent
10mm/12mm/14mm/16mm/18mm/20mm/22mm/25mm
/28mm/32mm/36mm/43mm/51mm

1.

Specification

2.

Sizes

3.

Standard length

11.7 m

4.

Packing

Bare in bundle, tied at 4 points by wire, weighing about

2.5 MT

Dimension: inside diameter I (mm) and outside diameter J (mm).

I (mm)
J (mm)

D10 D12 D14 D16 D18 D20 D22 D25 D28 D32 D36 D43 D51
9.3 11.2 13.1 14.9 16.8 18.6 20.5 23.3 26.1 29.8 34.8 40,2 48,7
10.9 13.0 15.1 17.3 19.4 21.6 23.7 27.1 30.3 34.6 39.8 46.4 56.7
Products recognization:
The standard length is 11,7m
The MARKS (as the photo) on the VINA KYOEI's deformed steel
bars.
The distance between 2 trade marks: 1m to 1.2m according to its
nominal diameter.

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Vinakyoei marketing plan

+ Augmented Product: VKS always put priority on customers' satisfaction.
Timely delivery is one of the factors which VKS always pay attention to. In
order to attain smooth delivery required by the customers, VKS always keep
satisfactory stock level of standard products in the yard.
Vina Kyoei Steel., now a symbol of high quality steel products in Vietnam.
3.2.

Pricing
In order to increase the sales volume, Vinakyoei will increase the industrial
market share by applying a special price policy for huge projects in located in
the big cities. Besides, thanks to low production cost, the company applies
different levels of commercial discount based on sales volume basis to
encourage the distributors to boost their selling activities to remote areas.

3.3.

Promotion
* For household consumers segment: We can create TV ads( TV
Commercials) to promote on famous TV shows, publish an advertisement on
newspapers, or build out-door advertising pannels. Besides, the company can
boost the PR activity by using Television reports. These services are frequently
launched by Televison Service Providers. We can use this service to introduce
audience about Vinakyoei's production lines as well as Japanese know-hows in
controlling of their product quality.
* For the business users segment: Vinakyoei will speed up the personal
selling efforts by approaching big construction project at the F/S stage so that
Vinakyoei's can be chosen as one of the steel material sources for the projects .
To do this job, the company should provide technical documents to the
designing and consulting companies. After the biding process has completed,
marketing officers of Vinakyoei shall co-ordinate with the selling force of
distributors to promote Vinakyoei's products to the biding-awarded contractors
of those projects. In the selling presentation process, Vinakyoei will undertake
to supply sufficient steel materials for the project in terms of product
dimensions and quantity.
3.3.1. Advertising

Advertising

Start date

End date

Budget

Manager

Department

VTC1, VTV1, HTV

1/1/2011

31/12/2011

$219,000

Long Phan

Mar

Panels on the road

(1,22,10)

1/1/2011

31/12/2011

$3,600

Long Phan

Mar

Banner on Vnexpress

1/1/2011

31/12/2011

$54,000

Long Phan

Mar

Other

1/1/2011

31/12/2011

$20,000

Long Phan

Mar

Total
Budget

Advertising

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$296,600

Vinakyoei marketing plan

3.3.2. Public Relations
PR

Start date

End date

Budget

Manager

Department

House building for

poor people

1/1/2011

31/12/2011

$45,000

Long Phan

Mar

Bridge building in
country side

1/1/2011

31/12/2011

$25,000

Long Phan

Mar

Total PR Budget

$70,000

3.3.3. Direct Marketing

Direct marrketing involves the use of mail, telephone, fax, e-mail, or
Internet to communicate directly with or solicit response or dialogue from
specific customers and prospects.
We have a plan for 4 projects in 2011
Start date
Direct Marketing
1/1/2011
Project 1
1/1/2011
Project 2
1/1/2011
Project 3
1/1/2011
Project 4
Total Direct Marketing Budget

3.4.

End date
1/6/2011
1/6/2011
1/6/2011
1/6/2011

Budget
$25,000
$25,000
$25,000
$25,000
$100,000

Manager
Long Son
Long Son
Long Son
Long Son

Department
Mar
Mar
Mar
Mar

Place (Distribution)
Only with the distribution system of 18 wholesalers for the selling territory
from Da Nang to Ca Mau, however owing to the attractiveness of Vinakyoei
brand name, the company can enjoy a very good business result.

However, Vinakyoei may face difficulty of selling performance when the

production output has increased to 600,000 ton annually. As planned, the
company will choose a distributor for each following province: Da Nang,
Khanh Hoa, Dong Thap, An Giang, and Ca Mau.

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Vinakyoei marketing plan

4. Controls
4.1.

Implementation schedule

Milestones
Advertising

Start date

End date

Budget

Manager

Department

VTC1, VTV1, HTV

1/1/2011

31/12/2011

$219,000

Long Phan

Mar

1/1/2011

31/12/2011

$3,600

Long Phan

Mar

Banner on Vnexpress

1/1/2011

31/12/2011

$54,000

Long Phan

Mar

Other

1/1/2011

31/12/2011

$20,000

Long Phan

Mar

PR

Start date

End date

Budget

Manager

Department

House builing for poor

people

1/1/2011

31/12/2011

$45,000

Long Phan

Mar

Bridge building in country

side

1/1/2011

31/12/2011

$25,000

Long Phan

Mar

Direct Marketing

Start date

End date

Budget

Manager

Department

Project 1

1/1/2011

1/6/2011

$25,000

Long Son

Mar

Project 2

1/1/2011

1/6/2011

$25,000

Long Son

Mar

Project 3

1/1/2011

1/6/2011

$25,000

Long Son

Mar

Project 4

1/1/2011

1/6/2011

$25,000

Long Son

Mar

Panels on
(1,22,10)

4.2.

the

road

Market Research
We will research the prices of competitor every week and make a summary
report about pricing for every month.
Surveys evaluate the product of competitor, brand awareness; consumers
satisfy will be reported on the June and the December of 2011.

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