sharon's assignment final project marketing - revised
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1.1. Student Name: Gursharan Kaur Sharon Rachael / HS101184 / Hartford
Institute / Advance Diploma in Marketing / 2007
1.2 Project Start Date: October 2007, Completion Date: December 2007
1.3 Project Title: The development of a market entry strategy for personnel
computer programming, helpdesk and technical services which Micro 2000
Technology Pte Ltd plans to expand in Vietnam.
2. Introduction
2.1 Objective
This report is essentially the evaluation result of the market potential of
Ho Chi Minh City, Vietnam in which Micro 2000 Technology Pte Ltd is planning to
expand on their marketing and sales in computer programming, helpdesk and
technical services. The point of contact for this assignment is Mr. Brandon Ng,
Managing Director of Micro 2000 Technology Pte Ltd. The company profile can
be viewed at (http://www.micro2000.com.sg). This report will discuss the current
problems faced by the organization with its competitors and the possibilities of
entering newer markets as Micro 2000 plans to expand its business to include
consultancy and integration services, distribution and retailing in the ASEAN
market and also to expand their business venture in Ho Chi Minh City, Vietnam.
The report will also present possible solutions for Micro 2000 to exploit and adopt
new marketing plans and strategies for future growth.
2.2 Purpose of Report
The rationale behind this marketing proposal is to expand and grow Micro
2000s Technology market share in the ASEAN shores and to establish a global
presence in the long term. Whilst assessing the company's current strategies to
allow for potential future growth with the company's strengths to exploit
environmental opportunities. In an era of increasing globalization, the costs of
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labor, transportation, and materials constantly fluctuate. This presents a problem
because it creates new complexities and encourages new competition. However
this also presents an opportunity because those complexities challenge
organization to re-evaluate its pricing process and grow a business.
2.3 Scope of Report
The report will look into the economic, social, financial, political,
infrastructure and technological influences in new potential markets and evaluate
potential markets and financial advantages that could be penetrated in the near
future. Foreign markets can be very attractive to a business looking for new
customers, especially when its home market is becoming saturated. Such an
expansion, however, needs to be thoroughly researched and carefully planned to
ensure that the timing is right. To begin with, a business needs to have
successful strategies. As with any company or organization, the main reason for
being in business is to make a profit. Unfortunately, there are times some tend to
lose sight of this goal because they get too involved in running the daily affairs of
the business. One key solution to restoring profitability is to review financial
ratios to restore financial health. This report examines the factors that make
Vietnam stand out among the ASEAN member nations, including the forms of
investment that are permitted, the availability of land for factory construction,
transport issues, water and electricity supply, communications, labor costs and
labor relations, and taxation.
2.4 List of recommendations made and feasibility of them
An informal interview was conducted with Mr. Brandon Ng, Managing
Director of Micro 2000 Technology. During our meeting it was discussed that
their next logical move is to upgrade its technology structure and promote
research and new product development in Vietnam. However, many issues have
to be in place for the expansion into Ho Chi Minh City, Vietnam with their various
key Business Partners in reselling the range of solution-centric products. We
discussed the marketing strategy, promotional channels and activities which I
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had proposed to boost their company IT services and sales in the Vietnam
market. The proposed marketing plan consists of 3 stages: -
Stage 1 Conducting an internal analysis of Micro 2000 Technology to see
how they can best harness new opportunities. Series of analysis covering theorganization strategy, organization mission, product and service features and
the overall marketing strategies for this new venture.
Stage 2- Macro-environment analysis of beyond the current (forecasting) to
grow the business. The analysis being from a market player beyond the
current spectrum, political stability, economic situation, social issues, financial
stability, banking sector, currency risk and technological infrastructure and
their opportunities.
Stage 3- The entry into Ho Chi Minh City, Vietnam requires in-depth
marketing entry strategies, differentiation strategies, product strategy,
promotional strategy, distribution strategy, pricing strategy, performance
analysis and funding to campaign for three year period. It will also include
Micro 2000 Technology Sales performance analysis and the budget sheet for
anticipated investment and returns of this company.
3. Internal Analysis of Micro 2000 Technology Pte Ltd
3.1 Company profile
Micro 2000 Technology was established in 1996 and have grown from
two to over forty people and now ranked as one of the top Authorized Service
provider of Apple Computer, as well as one of the top Business Partner of HP,
IBM, Microsoft and Adobe. The founding focus of the company is in personal
computer programming, IT Services, helpdesk and technical services. Today
they have expanded its business to include consultancy and integration
services, distribution and retailing. The company have proven their business
acumen that has led to various partnerships. Appointed Courts Service
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Centre, Apple GOLD Authorized Service Centre, HP Solution Partner,
SonicWall Medallion Partner, Cisco Solution Partner, Intel System Builder,
Microsoft Business Partner, to name a few. Micro 2000 Technology Pte Ltd
has plans to bring her presence to ASEAN countries such as Vietnam,
Malaysia and China. Their current operation consists of 30 staff strength in
various departments including Admin, Finance, Sales, Logistics as well as
Technical. Their business includes sourcing of all IT equipment for its local
resellers as traders. Micro 2000 plans to set-up a team of System Integration
Sales and Consultancy division to extend its arm into corporate businesses.
The companys mission is market orientated and the long-term aim is to have
fully marketing programs to create, communicate and deliver quality service to
the consumers. Other than gaining entry into new markets, another aspect
Micro 2000 is focusing on is to retain these new markets that will crate a
stable profit and economics of scale for the start-up investment. And to do
these, she will have to be more effective than competitors in creating,
delivering, designing and developing software solutions that help businesses
increase performance, reduce cost and build lasting relationships to the
chosen target market. (Philip Kotler, 2001:19).
3.2 Organizational strategy (Michael porters generic strategy)
With its continuous effort in providing IT solutions, Micro 2000 first
support plan AssistPAK was launched in mid October 1998 is an uniquely
design bed service agreements plan with flexible and comprehensive
coverage to cater to any company with an IT infrastructure. Among the
industry's top players, such as IBM and EDS, custom programming services
are only one of a multitude of IT services offered, ranging from consulting and
training to systems integration and facilities management. Indeed, the broader
IT services industry has increasingly evolved towards a one-stop solution
model, where a single contractor provides a comprehensive set of computer
services to its clients. As such, many non-government statistical sources, and
http://www.answers.com/topic/international-business-machines-corporationhttp://www.answers.com/topic/one-stophttp://www.answers.com/topic/international-business-machines-corporationhttp://www.answers.com/topic/one-stop -
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often the companies themselves, do not separate custom programming from
these other activities.
Custom programming services are used primarily as an alternative to
using packaged software unmodified and hiring in-house programming staff to
write custom software. The first use is noteworthy as a reminder that
packaged software is often modified by third-party vendors for specific
businesses; not all custom software work begins from scratch. The second
use highlights that the industry is closely associated with outsourcing
technical functions. In fact, it is sometimes described as the IT outsourcing
industry.
A separate and popular way for companies to obtain programming services
without committing to maintaining an in-house staff of programmers is to
contract for leased or temporary programmers and consultants. Several large
national agencies have special units devoted to placing experienced technical
workers. However, unless the contracting firm is itself a programming services
provider, such activities are considered outside the scope of this industry.
The diagram below is a simple summary of Porters generic strategy where
segmentation strategy is use in narrow niche market while differentiation and
cost leadership strategies are used open broad market. The choice between
differentiation and cost leadership strategy depends on the product nature
itself.
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Porters Generic Strategies
Reference: http://en.wikipedia.org/wiki/Focus_strategy#Segmentation_Strategy
According to Michael Porter, to focus on a niche market, the best strategy is
market segmentation (it is also commonly referred to as focus strategy or
niche strategy) and product differentiation strategy. By combining market
segmentation strategy with product differentiation strategy, it is an effective
way of matching the organizations supply strategy (supply side) to the
characteristics of the target market segments (demand side). Micro 2000
Technology looks to gain a competitive advantage through effectiveness
rather than efficiency, thus by focusing the marketing efforts on one or two
narrow market segments and tailoring the marketing mix to these specialized
markets, they can better meet the needs of that target market.
Product differentiation strategy describes the process of highlightingthe products unique differences to make it more attractive in the target
market. This involves differentiating it from competitors products.
Differentiation will gives them a competitive advantage over other computer
and software programming companies. Micro 2000 cost-effective solutions for
maximum service proficiency would benefits the customer if this strategy is to
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be successful. If consumers see their services as unrivaled and unequaled,
they tend to be more brands loyal and they can charge a premium price at a
later stage.
Reference:
Porter, M. E. (1980), "Competitive Strategy: Techniques for Analyzing Industries and Competitors". New York, FreePressTreacy, M., and Wiersema, F. (1993), "Customer intimacy and other value disciplines". Harvard Business Review,Jan/Feb
3.3 Organizational Chart See Appendix A
The department responsible for setting up and expanding the business
opportunities in Vietnam for Micro 2000 is Mr. Patrick Ee the Sales and
Marketing Director. His tasks include, but not limited to: providing assistance
in organizing project tasks, making assignments, scheduling staff and
workflow milestones, maintaining production logs to ensure jobs are
completed within the scheduled timeframe, reviewing deliverables for
completeness and quality, preparing deliverables for submission to client,
reviewing timesheets of production staff for correct time accounting and task
order billing, and reviewing deliverable quantities to prepare reports for project
billing.
3.4 Overall marketing strategies
The marketing strategy of the 21st century should be steered towards
social-orientated marketing, where the focus is on the consumers long-term
benefits. To ensure successful marketing of the Micro 2000 Technology
services in the international market, they must be able to meet the wants and
needs of the targeted consumers. Being a reputable company, they can only
market their products and services to lawful and respectable organization
bodies, such as government bodies and Multi-National companies. Before
they market their products and services, they will have to assess the products
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and services nature/ strengths/characteristics and the particular niche market
that they want to target on.
Adopting Porters product differentiation strategy in marketing IT
programming, consultancy and integration services, they have to
demonstrate the unique aspects of their products and services to create a
sense of value. This can be achieved with a clever integration of the
marketing mix, primarily the 4 Ps- Price, Promotion, Place and Product.
Differentiation marketing strategy, as explained earlier, is the process of
describing the differences between products or services. The objective of
differentiation is to develop a position that potential customers see as the
product as unique. Differentiation primarily impacts sales performancethrough reducing direct competition. As the product becomes more different
in the eyes of the consumers, categorization becomes more difficult and
hence draws fewer comparisons with its competition which will benefit us in
the short and long run. A successful product differentiation strategy will
move IT services from competing based on price and customer service
orientation, (which will be done in the initial stage to aid the market entry) to
competing on non-price factors (such as product characteristics, distribution
strategy, or promotional variables).
3.4.1Promotional strategy
The method of promotion includes advertising, merchandising and
through public relations. The promotional strategy should be built on the need
of delivering innovative IT solutions and advanced technical infrastructure that
ensures quick start of development process that will exceed customers
expectations. Thus it is important to upgrade with technology which is
diversified and competitive with technology-laden systems and solutions.
Reference: www.stengg.com/AR2002/finreview.htm
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3.4.2 Distribution strategy
Micro 2000 Technology being a reputable company can only promote
their products and services to lawful and respectable organization bodies,
such as government bodies and multi-national companies. The method for
distribution that they can consider includes collaboration with various key
Business Partners and securing collaboration agreements that has a strong
coverage in the local government and multi-national companies. They can
also go through different channel to have a complete coverage of this niche
market.
3.4.3 Pricing strategy
When it comes to pricing their services and products in a foreign
market, the points that they will have to consider includes the list price,
discounts allowances, payment period, cost-effective solutions and credit. The
foreign exchange risk of Micro 2000 arises from operations in foreign
countries, as revenue and incur costs generated are denominated in foreign
currencies. Presently, Micro 2000s major foreign exchange risk exposures
result from anticipated sale and purchase transactions denominated in foreign
currencies, primarily in Singapore and U.S. dollars. Thus, to hedge the impact
of foreign exchange fluctuations on the profit and loss accounts, all
transactions should be carried out in Singapore Dollars if possible.
3.5 Market entry strategy.
Successful overseas market entry requires doing business differently.
Different business practices, different business values, communication
difficulties, sustaining business relationships all create challenging market
entry barriers. To penetrate the foreign market, Micro 2000 can start by
introducing IT Solutions at international exhibitions, trade shows, delegations
and special events. Their web pages on the Internet and to its compiled
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database of prospect and customer names will allow easy access in obtaining
information on their products and companys profile.
To aid market entry into a new foreign country, they can price their
products and services as close to their competitor as possible. As a new
entrant to industry, prices need to go low in order to entice them to buy. The
supplies for raw material may be costly, thus they should constantly look for
resources to cut down on the cost.
Micro 2000 can choose to join forces with a local business partner to
provide efficient, low cost and innovative IT solutions for the country. This will
aid the company in penetrating a new market.
Reference: http://www.defensereview.com/modules.php?name=News&file=article&sid=435Reference: Philip Kotler and Kevin Lane Keller (12E edition) 2001, Marketing Management, Pearson Internationaledition
3.6 Macro environment analysis of Vietnam
Reference: http://www.lonelyplanet.com/maps/asia/vietnam/
http://www.defensereview.com/modules.php?name=News&file=article&sid=435http://www.lonelyplanet.com/maps/asia/vietnam/http://www.lonelyplanet.com/worldguide/destinations/asia/vietnam/http://www.defensereview.com/modules.php?name=News&file=article&sid=435http://www.lonelyplanet.com/maps/asia/vietnam/ -
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3.6.1 Vietnam Personal computer manufacturing Industry Overview:
While the attention of business enterprises all over the world has been
drawn to Vietnam as a target for investment, Taiwan's ICT sector is exploring
opportunities for investment in Southeast Asia. All these factors indirect opens
new markets to Micro 2000 as the ASEAN member nations, including the
forms of investment diversify to grown their businesses the cost of
communications, labor costs and labor relations, and taxation is still relatively
low in comparison to established IT areas like India, China Taiwan and
Singapore.
Growth rate of merchandise exports (% per year)
Resource: Asian Development Outlook 2007
Comparison Table: by Runckel & Associates
Country
2002
2003
2004
2005
2006
2007*
2008*
Cambodia 12.7 17.9 24.1 12.4 26.9 14.3 9.4
China 22.4 34.6 35.4 28.5 26.0 18.0 16.0
Hong Kong 4.9 12.1 15.9 11.2 9.0 3.6 10.1
India 20.3 23.3 28.5 23.4 20.0 16.0 15.0
Indonesia 3.1 8.4 10.4 22.9 18.1 9.8 12.0
Korea 7.9 20.7 30.6 12.1 14.8 13.5 14.2
Laos 2.3 21.6 11.0 31.4 50.9 15.3 31.0
Malaysia 7.2 11.0 20.9 12.0 16.9 9.5 10.6
Philippines 9.9 2.7 9.8 3.7 14.0 6.5 9.5
Singapore 3.0 15.0 24.3 15.6 18.3 10.5 10.0
Thailand 4.8 18.2 21.6 15.0 17.4 7.9 8.9
Vietnam 11.2 20.6 31.4 22.5 23.0 19.0 18.0
*Forecasted for 2007-2008
3.6.2 Vietnams Competitor Analysis
Micro 2000 designs cost-effective solutions for maximum service
proficiency. Their contracted clients enjoy substantial savings by taking
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advantage of their unique business principle. They transfer third party
products at cost. Therefore, all their clients will get the combination of the the
best product price and the best technical expertise. They offer strategies that
use the most appropriate technology to help clients reduce cost, improve
profitability and gain market share which other IT companies are not offering.
3.6.3 Vietnams Consumer analysis
According to many sources, particularly (Carmel 2003) which
provided a highly useful taxonomy for classifying and comparing exporting
nations, India, Israel and Ireland are in the top tier for software outsourcing,
while Vietnam is classified as being in the fourth tier. Tier One countries,
have numerous firms in the 100s or thousands in clusters- actively
producing software for export with export valued over $1 billion and have
been in this industry for 15 or more years. Tier four countries by
comparison have been exporting for five years or less, have companies in
the tens of companies and have export revenues of less than $25 million a
year.
Reference: IT Industry Department, Ministry of Posts and Telemetric of Vietnam
To determined Vietnams consumer analysis, a customer satisfaction
survey form was developed for Micro 2000 Technology (see appendix
B). This form will be sent to all their customers to obtain feedback on the
services rendered by this company. With the information gathered, Micro
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2000 can look at the trends; fix those areas that require improvement,
whether the company needs to improve on their products and services.
Most importantly, the company needs to provide feedback to their
customers and that their answers were appreciated and are being acted
upon. That feedback can be individual responses to the customers if
appropriate, or it can simply be fixing the things that they tell you need to
be fixed.
3.6.4. Vietnams Political Environment
A new state constitution was approved in April 1992, reaffirming the
central role of the Communist Party of Vietnam (CPV) in politics and society,
and outlining government reorganization and increased economic freedom.
Though Vietnam remains a one-party state, adherence to ideological
orthodoxy has become less important than economic development as a
national priority.
The most important powers within the Vietnamese Government--in
addition to the Communist Party--are the executive agencies created by the
1992 constitution: the offices of the president and the prime minister. The
Vietnamese President, presently Nguyen Minh Triet, functions as head of
state but also serves as the nominal commander of the armed forces and
chairman of the Council on National Defense and Security. The Prime
Minister of Vietnam, presently Nguyen Tan Dung, heads a cabinet currently
composed of three deputy prime ministers and the heads of 26 ministries and
commissions, all confirmed by the National Assembly.
3.6.5 Vietnams Economic Environment
The world's largest contract electronics manufacturer, which
assembles gadgets from Apple Inc. iPods to Sony Corp. PlayStation 3
consoles and Nokia Corp. handsets, became the latest company to announce
a high tech investment in Vietnam, with plans to spend a massive $5 billion
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over the next five years. The huge investment shows that Vietnam has
continued to increase its allure as a haven for IT investments. Last year Intel
Corp. announced it would expand a chip packaging and testing project in
Vietnam into a US$1 billion affair, more than triple the size of the original
Vietnam's progress in building its technology infrastructure, as well as the
need to support demand for its chips as the main reasons for the investment.
Once finished, it will be Intel's seventh chip assembly site in the company's
global network, which includes Penang and Kulim, Malaysia; Cavite,
Philippines; Chengdu and Shanghai, China; and San Jose, Costa Rica. Intel
plans to spend over $6 billion by the end of this year on new factories and
equipment.
All this can only add and enhance the expertise and services that Micro
2000 Technology Pte Ltd plan of expansion to a wider base.
3.6.6 Vietnams Social Environment
In the past decade, Vietnam has experienced the rapid transition to the
market economy. The Vietnamese government has focused on the promotion
of small businesses as one of the top priorities and accelerated to develop thefinancing system for them, in order to realize the poverty reduction by
increasing the employment. While the economic boom has helped more than
halve poverty rates, it has also widened the gap between rich and poor, and
many risk being left behind. The influx of new business is going to improve
the situation for many Vietnamese.
3.6.7 Vietnams Technological Environment
Currently, Vietnamese companies cannot match foreign companies interms of competitiveness, business management, and use of modern
technology. I think that the lack of modern technology is the root of all the
problems that Vietnamese businesses face today. Every year, two percent of
the country's gross domestic product (GDP) is spent on scientific research
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and technology development. State-owed companies have less inclination to
make use of research results while privately companies want very much to
modernize but have neither the expertise nor capital to do so.
It is apparent that India and China have been very successful in several
areas of technological development. China recently announced that it has
dozens of high quality high-tech centers, universities and research institutes.
At present, 40 percent of the high-tech products that are in use all over the
world were made in China. Scientific and technological development has
helped China attain the highest economic growth rate in the world. The
economic conditions within Vietnam is now are ripe in comparison to China's
experience in development with an economy that is much smaller than that of
China.
Low production costs (Vietnamese software professionals are about half
the cost of Indian equivalent software professionals and have much higher
retention rates), coupled with the governments obvious support and favorable
incentives make Vietnam one of the most competitive markets for IT
investors. Nevertheless, the Vietnam Investment Review (issued on June 26,
2006) also points out that increasing transparency on the software
companies part, and more effective policies on the governments part will
help boost Vietnamese investing environments rating from foreign investors
perspective, and hence, enhance the development of the industry.
Small U.S. and other software companies were the first to notice this
potential and to actively reach out to Vietnam. Now major U.S. companies like
Intel which has major operations in California, Hillsboro, Oregon and Arizona
have also realized the potential and have chosen Ho Chi Minh Citys Saigon
High Tech Park (SHTP - http://www.shtp.hochiminhcity.gov.vn/) as the
location for their chip first chip fabrication facility in Vietnam are also taking
note. Vietnam has rightly realized that to get this sort of notice and to continue
to build a dedicated core of IT professionals that more need to be done to
support IT education in the Ho Chi Minh City region. As such, the National
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University of Ho Chi Minh City and Portland State University in Portland,
Oregon (www.pdx.edu) are currently exploring collaboration in advanced IT
training for National University Master and PhD students and also an
innovative mixed education program leading to a joint degree or with
substantial teaching instruction based on international education models.
The software industry in Vietnam is still in an early stage of
development but the market potential is already apparent. Further,
government support for this sector and well thought out policies like the recent
tie-up of the National University of Ho Chi Minh City in respect to improving IT
education at the University and advanced degree level all bode well for the
future. This industry is therefore one that bears continued attention andselective investment where conditions warrant.
3.7 Market Entry Strategy into Vietnam:
By direct collaboration with various key Business Partners in reselling
the range of solution-centric products, Micro 2000 has secured collaboration
agreements with multiple Business Partners who has strong coverage in the
local government and Multi-National Companies space.
Secondly, their firm strengthens its image in the host country because
having proven their business efficiencies in programming, designing and
developing software solutions which is currently available on a limited scale,
would create employment opportunities for the local community which will in
turn help boost their GDP and economic growth. Thus mutual benefits can be
derived from this investment.
Reference: http://www.business-in-asia.com/asia/asia_export.html
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3.8 Problems & Situational Analysis
3.8.1 The problems currently faced by Micro 2000 Technology is their
product line integration and delivering IT solutions to a market that is rapidly
growing in the computer programming and software designing industry. This
requires discontinuing some services (some loss in revenue) and bringing on
new services in this evolving environment and restructuring the product line
with some of the services offered whilst tailoring to specified needs in the new
market place.
3.8.2 The company has gone through reorganization and moving
personnel within the organization and multi tasking. In the computer industry
with its continual evolvement and newer technology requires the need forconstant integration into newer systems.
3.8.3 The cultural differences that Micro 2000 will face in entry strategy
into Vietnam will be the differences between the operational and cultural
environment in its home market and the Vietnamese market.
4. Summary of Analysis
Micro 2000 offers professional services and solutions draw on their
pool of extensive expertise in all aspects of IT. By setting up a new network to
enhancing an existing system to developing new extensions, they have the
right solution to fit our needs. Their contracted clients enjoy substantial
savings by taking advantage of their unique business principle. They transfer
third party products at cost.
They offer strategies that use the most appropriate technology to help
their clients reduce cost, improve profitability and gain market share. TheirNetwork Consultancy Unit offers solutions that include infrastructure design
(LAN, WAN, Firewall, Structured cabling), facilitating integration (NAS,
Enterprise Storage) as well as internal and external collaboration (Messaging,
Mobility, Integrated Fax, SharePoint Services/Portal, Web Design/Hosting).
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The company always maintained their focus on delivering IT solutions that
are aligned to their business goals. Broad repertoire of solutions fulfills the
diverse needs of businesses in a wide range of industries. By matching
technology to customers' requirements, their solutions provide value for
customers' IT investment. Their solution & Consultancy unit offers solutionssuch as Server migration, Virtual Private Network (VPN), File Transfer
Protocol (FTP), Broadband, Internet/Intranet development, document
imaging, QuickTime Streaming as well as color management and Digital
Asset Management.
For business survival, companies need access to critical IT
competencies. By outsourcing various functions to Micro 2000, companies
can feel up their corporate resources and increase business continuity and
competitiveness. Backed by a proven track record of providing excellent IT
services and solutions, Micro 2000's array of solutions adds value and
positive gain to its customers' IT investment. This is reflected in the two-
pronged benefit of "Best Product Price with Best Technical Expertise" giving
the customer a competitive advantage.
Micro 2000 offer a selection of world-class IT support services that will
cover just about every imaginable support to keep an organization's IT
operations running smoothly. The company provides both phone as well ason-site help for desktop problem resolution to server support to network
assistance.
They offer application development with professional development
methodologies, tools that enhance productivity. Their Software Development
Unit provides design and implementation of the various application
components that constitute the integrated enterprise technology platform.
Whatever the business size, they can help manage the business. They
optimize business performance, cut cost, increase profitability and make
precise decisions with timely and accurate data.
The industry technology solution experts specializing in short term rental
of computer systems, network switches, routers, network printers, wireless
products as well as structured cabling catering to customers event. They also
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provide manpower in rendering on-site installation and configuration to meet
precise events requirement. Technical assistance for on-site standby is also
available.
5. Recommendations and feasibility
5.1 Marketing, promotional channels and activities:
There are various ways Micro 2000 can conduct marketing and
promotional campaign to promote their services. In order to penetrate the
Vietnam market, Micro 2000 can create brand equity. Brands identify the
source or market of a product and allow consumers either individuals or
organizations to assign responsibility to a particular manufacturer or
distributor. Their partners in Vietnam can assist potential customers evaluate
the identical product differently depending on how it is branded. Consumers
can experience the mix of products and its marketing program. Their partners
offer the firm legal protection for unique features or aspects of the services.
With assistance from their partners, Micro 2000 can break into the Vietnam
market through road shows and Computer and Science Fairs.
5.5.1 The Marketing Communication Mix
The marketing communications mix (the specific mix of advertising,
personal selling, sales promotion, and public relations a company uses to
pursue its advertising and marketing objectives) that Micro 2000 Technology
will be using are:
1) Advertising (any paid form of non personal presentation and promotion
of ideas, goods, or services by an identified sponsor) broadcast and
print media,2) Personal selling (personal presentation by the firms sales force for the
purpose of making sales and building customer relationship),
3) Trade shows to send an effective selling message to a large interested
audience at one time.
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The marketing campaign is only planned for a period of 12 months because of
their business arrangements with their partners. Their partners have the
strengths and things will get easier after the campaign.
Advertising Print MediaPC Magazine
I insert per month (positioning)Computer Shopper magazine
I insert per month (positioning)Macword magazine 1 insert per month
ColdFusion Developers Journal
magazine
1 insert per month total 12
throughout the whole campaign
(awareness)Trade shows
CeBIT Held annually in Hannover, GermanyRoad ShowsComex Singapore 1 road show monthly
Reference: Principles of Marketing Eleventh edition by Kolter and Armstrong Pg: 401
Business Marketing Management Eight edition by Michael D. Hutt and Thomas W.Speh Pg: 426
Reference: http://netvalley.com/top100mag.html
5.5.2 Strategy benefits of Communication mix
The plan of using print media, trade shows and road shows are to
position Micro 2000 Technology as a personal computer programming and IT
solutions provider and show its intention of staying in Vietnam for a long term
investment. Their business partners will participate in trade shows and road
shows to expose Micro 2000 Technology, its consultants designs in software
solutions that will help businesses increase performance, reduce costs, and
build lasting relationships that will increase future sales.
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5.5.3. Computer magazines
Micro 2000 will be featuring their products and services in most of the
computer magazine for positioning and awareness. The magazines are read
by most computer enthusiasts. These enthusiasts pay a lot of attention on the
various computer programming and IT solutions that not only appeals to
adults but also to students. They are keen to know what the newest
technology in computer programming and IT solutions that are available in the
field.
5.5.4. Personal Selling
The sales and marketing department will be provided with leads and
qualify their prospect. The salesperson will approach the respective
departments to do his presentation and demonstration. Their salespeople are
also its marketing team. This is effective for several reasons: (1) customers
appreciate talking directly with salespeople who can answer a wide range of
technical questions about methods and features, (2) their salesperson benefit
from direct customer contact through gaining an appreciation for the
environment and problems of the customer, and (3) the relationships they
build through peer-to peer contact are useful in the government agencies.
5.5.5. Trade Shows and Road Shows
Trade shows and road shows provide the opportunity for the customers
to get hands-on experience. The shows are targeted to a large and interested
audience. They are a good platform for exposure.
5.5.6 Business convention trips to Vietnam lead by Singapore
government
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Singapore Ministry of Trade Development may take the initiative to
lead a group of influential people from Singapore for networking. The team
will build a relationship with the government bodies.
5.7 Pricing
Pricing must be kept competitive in order to market their services in
Vietnam. This is because of many firms misconception that they have little
choice but to make sure their prices are comparable to those of the
competition. An expensive service simply makes their services unaffordable.
On the other hand, a low price provides opportunity for expanded product
placement, or creative promotional initiatives. Aside from making some pricing
strategies more prevalent, with the bench mark it affects the importance of
choosing correct pricing strategies by allowing customers to be better
informed and more vocal. Smart use of the Internet and available pricing
strategies can help boost their companys profile.
Reference:http://www.websitemarketingplan.com/techniques/pricing2.htm
The propriety approach from their partners to interactive provides a holistic
picture of needs, requirements, insights, challenges, risks, and opportunities.
For each digital communication they produce as shown above, their company
interactive maximizes relevance, experience, integration, and efficiency,
integration, and efficiency; ensuring that interactive marketing makes a
profound impact on their business.
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Reference: http://www.phptr.com/articles/article.asp?p=101588&seqNum=4&rl=1
5.8 Sales and Demand Forecast
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Projected Sales Forecast
Year 2007 2008 2009 2010 $3,500,000 $4,770,000 $5,177,100 $5,830,230
2007 2008 2009 2010
Based on the sales figures for 2006, we have projected that the sales for
2007 will reach S$3,500,000. The forecast for the next three years will be
18%, 23% and 30% respectively. Based on these projected sales increases,
the sales volume will be as illustrated above. The chart illustrates why we
think the ambitious sales increases we plan are reasonable: we have had
similar increases in the recent past.
5.8.1 Break-even Analysis
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For our break-even analysis, we assume running costs of approximately
$745,000 per month, which includes rent, and utilities, and an estimation of
other running costs. Payroll alone, at our present run rate, is about $435,000.
We will need to sell about $1,845,800 per month to break even, according tothese assumptions.
Monthly Units Break-even 438
Monthly Sales Break-even $1,845,800
Assumptions:
Average Unit Sale $4214
Average Per-Unit Cost $2714
5.8.2 Projected Profit and Loss
The most important assumption in the Projected Profit and Loss statement is
the gross margin, which is supposed to increase to 30% in the next 3 years.
This is up from 15% in the last year. The increase in gross margin is based on
changing our sales mix, and it is critical. Month-by-month assumptions for
profit and loss are included in the appendices.
Pro-forma Income Statement
2008 2009 2010
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Sales $4,770,000 $5,177,100 $5,830,230
Cost of Sales $1,845,800 $2,050,800 $2,280,800
Production payroll $435,000 $450,000 $485,000
Others $745,000 $760,000 $798,000
Total Cost of Sales $3,025,800 $3,260,800 $3,563,800
Gross margin $1,744,200 $1,916,300 $2, 266,430
Gross margin percent 35.56% 37% 38.87%
Operating expenses:
Advertising $96,000 $126,000 $170,000
Market Research $50,000 $55,000 $60,000
Trade Shows $340,000 $360,000 $380,000
Total Sales and Marketing Exp $486,000 $541,000 $610,000
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General and Administrative
Expenses
Leased Equipment $30,000 $31,500 $33,075
Utilities $9,000 $9,450 $9,923
Insurance $6,000 6,300 $6,615
Rent $84,000 $88,200 $92,610
Depreciation $12,681 $13,315 $13,981
Payroll Burden $60,660 $78,615 $95,265
Other $6,331 $6,648 $6,980
Total Gen.Admin. Expense $303,012 $334,413 $397,184
Other Operating Expenses
Contract/Consultants $12,000 $30,000 $30,000
Other $3,000 $3,150 $3,308
Total Other Operating Exp $15,000 $33,150 $33,308
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Profit Before Interest and Taxes $1,744,200.00 $1,916,300 $2,266,430
Taxes Incurred $176,984 $216,674 $283,233
Net Profit $1,567,216 $1,699,626 $1,983,197
5.9 Marketing Budget (Assumption)
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5.10 Control
All marketing plans need to have proper control to be successful. Micro
2000 will have to set key performance index for every committee member.
This is to ensure all objectives for the campaign are been achieved. It can
break down into phrases.
Phrase 1: Intangible
The initial target will be low. The aim is to do market penetration, branding
and positioning. The marketing objective is to increase mind share of brand
(Micro 2000).
Phrase 2: Tangible
To meet sales target set by the management and increase market share.
Marketing Budget
Plan Category Estimated Quantity Estimated AmountAdvertising
Magazine 48 $96,000.00Total Cost for Advertising $96,000.00
Market ResearchProfessional Consultation 1 $50,000.00Total Costs for MarketResearch $50,000.00
Trade Shows and RoadShowsTrade Shows 2 $40,000.00
Road Shows 60 $300,000.00Total Costs for Shows $340,000.00
Contingency (10%) $48,600.00
Total Estimated Budget $534,600.00
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Phrase 3: Correction
The management will then reviews and provide solutions. Necessary
adjustments will be made on different phrases and correct all mistakes along
the way. The committee will hold meetings on a monthly basis. The
involvement parties are to submit their reports on how targets are met. How
many results have the committee realize in the planning? Department head
will evaluate the progress of their services.
6. Final Assessment and Conclusion:
6.1 Summary of key conclusions
In summary, based on the analysis contained in this report, Vietnam with
its stable economy, political and social environment make it conducive for
Micro 2000 to enter newer market. In a competitive international market
expanding within the IT industry and making it globally with their partners can
help the company grow and break into newer markets. Micro 2000 should
work at being a reputable market leader in the IT industry by maintaining:
strong research and development skills
strong product engineering skills
strong creativity skills
good cooperation with distribution channels
strong marketing skills
incentives based on subjective measures
be able to communicate the importance of the differentiating productcharacteristics
stress continuous improvement and innovation
attract highly skilled, creative people.
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6.2 How the organization would benefit from my recommendations
Micro 2000 to hire highly educated and experience specialists
Reliable organization of software development process
Competitive prices
Emphasize service and support. The company needs to establish
their business offering as a clear and viable alternative for their target
market, to the price-only kind of buying.
Build a relationship-oriented business. Build long-term
relationships with clients, not single-transaction deals with customers.
Become the computer department, not just a vendor. Make them
understand the value of the relationship.
Differentiate and fulfill the promise. Company cannot just market
and sell service and support; they must actually deliver as well. They
need to ensure that they have the knowledge-intensive business and
service-intensive business they claim to have.
They must radically improve their direct mail efforts, reaching
their established customers with training, support services, upgrades
and seminars.