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FOREIGN TRADE UNIVERSITYFACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS-----  -----GRADUATION THESISMajor: International Business EconomicsAPPLYING MARKETING MIX (7Ps) TO IMPROVEBUSINESS ACTIVITIES OF VIETJET AIR JOINTSTOCK CORPORATION IN VIETNAMMARKETPLACEStudent’s Full Name : Do Thi Quynh Anh...

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FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS

-----  -----

GRADUATION THESIS Major: International Business Economics

APPLYING MARKETING MIX (7Ps) TO IMPROVE BUSINESS ACTIVITIES OF VIETJET AIR JOINT STOCK CORPORATION IN VIETNAM MARKETPLACE

Student’s Full Name : Do Thi Quynh Anh Student ID

: 1314150004

Class

: A24 – High quality program

Intake

: 52

Supervisor

: Nguyen Ngoc Dat, MBA.

Ha Noi, December 2016

i

TABLE OF CONTENTS LIST OF ABBREVIATION ....................................................................................... iii LIST OF FIGURES ......................................................................................................iv LIST OF TABLES ......................................................................................................... v INTRODUCTION ......................................................................................................... 1 CHAPTER 1: THEORETICAL BACKGROUND .................................................... 4 1.1. Marketing strategy definition ......................................................................... 4 1.1.1. Marketing .................................................................................................... 4 1.1.2. Marketing strategy ...................................................................................... 5 1.2. Marketing Mix (7Ps) ........................................................................................ 5 1.2.1. Product ........................................................................................................7 1.2.2. Pricing ......................................................................................................... 9 1.2.3. Place (distribution) .................................................................................... 13 1.2.4. Promotion .................................................................................................. 17 1.2.5. People ........................................................................................................24 1.2.6. Process ....................................................................................................... 25 1.2.7. Physical evidence ...................................................................................... 25 CHAPTER 2: AN OVERVIEW ABOUT VIETJET AIR JOINT STOCK AND THEIR SEGMENT IN VIETNAM MARKET ........................................................ 27 2.1. Vietnam Aviation marketplace ..................................................................... 27 2.1.1. Market overview ........................................................................................ 27 2.1.2. Airport development .................................................................................. 28 2.1.3. Market share ............................................................................................. 29 2.2. History of development.................................................................................. 30 2.2.1. History ....................................................................................................... 30 2.2.2. Exploiting achievements ........................................................................... 31 2.2.3. Development strategy ................................................................................ 32 2.3. Company structure ........................................................................................ 37 2.4. Competitor in Vietnam marketplace ........................................................... 37 2.4.1. Vietnam Airlines (VNA) ...........................................................................37

ii

2.4.2. Jetstar Pacific Airlines (JPA) ................................................................... 38 2.5. Applying marketing mix (7Ps) in VJA’s business activities ...................... 40 2.5.1. Product ......................................................................................................40 2.5.2. Price ........................................................................................................... 54 2.5.3. Promotion .................................................................................................. 57 2.5.4. Place (Distribution) ...................................................................................59 2.5.5. People ........................................................................................................61 2.5.6. Process ....................................................................................................... 63 2.5.7. Physical Evidence ..................................................................................... 64 2.6. VietJet Air’ SWOT Analysis ......................................................................... 65 2.6.1. Strengths ....................................................................................................65 2.6.2. Weaknesses ................................................................................................ 65 2.6.3. Opportunities ............................................................................................. 66 2.6.4. Threats ....................................................................................................... 66 CHAPTER 3: SOME RECOMMENDATIONS FOR VIETJET AIR .................. 68 3.1. Mission ............................................................................................................ 68 3.2. Development orientation of Vietjet air in the next period ......................... 68 3.2.1. Development orientation of Vietnam civil transportation ....................... 68 3.2.2. Development orientation of VietJet Air ..................................................... 69 3.3. Recommendations .......................................................................................... 71 3.3.1. Development the inputs of the firm .......................................................... 71 3.3.2. Recommendation for marketing aspect ................................................... 73 3.3.3. Recommendations for the government .................................................... 75 CONCLUSION ............................................................................................................ 76 REFERENCE............................................................................................................... 77 APPENDICES

iii

LIST OF ABBREVIATION

Abbreviation

Meaning

VJA

VietJet Air

VNA

Vietnam Airline

JPA

Jestar Pacific Airline

WFDSA

World Federation of Direct Selling Associations

IMC

Integrated marketing communication

GDP

Gross Domestic Product

ACV

Airports Corporation of Vietnam

ADP

Aéroports de Paris

IPO

Initial Public Offering

VND

Vietnam Dong

US

US Dollar

WCHR

Passengers requiring wheelchair for ramp

WCHS

Passengers requiring wheelchair for step

WCHC

Passengers requiring wheelchair for cabin

BLND

Blind passengers

DEAF

Deaf passengers

EXST

Extra seat service

PREG

Pregnant women

INF

Infant

CHD

Children

UM

Unaccompanied minors

YPTA

Young passengers travelling alone

iv

LIST OF FIGURES

Figures

Title

Page

Figure 1.1

7Ps Marketing Mix

6

Figure 1.2

Different between with and without distributor

14

Figure 2.1

Vietnam aviation development compared to other countries

27

Figure 2.2

Vietnam domestic capacities share (% of seats) in 2016

30

Figure 2.3

Meal plans of VJA

35

Figure 2.4

Company structure

37

Figure 2.5

VJA image

43

Figure 2.6

VJA souvenir

44

Figure 2.7

VJA souvenir

45

Figure 2.8

VJA food

46

Figure 2.9

VJA food and soft drink

47

Figure 2.10

VJA duty free catalog

48

Figure 2.11

VJA duty free catalog

49

Figure 2.12

VJA price list

56

Figure 2.13

VJA sky boss first launch

58

Figure 2.14

Connection XML API operation map

60

v

LIST OF TABLES

Table

Title

Page

Table 1.1

Promotion tool kit

18

Table 2.1

Exploit achievement

32

Table 2.2

Total profit 2015 - 2016

32

Table 2.3

Jet star Pacific domestic destination from Ho Chi Minh by

39

weekly capacity in 2016 Table 3.1

Exploiting plan for 2017

70

1 INTRODUCTION 1. Rationale In recent year, along with the development of economy, Vietnam civil aviation also achieve a lot of remarkable success. Therefore, the aviation industry continue to change and improve to develop the quality, better service and plays an important role for the National Budget. In 2015, Vietnam's aviation market has made encouraging progress with an average growth rate of 20%. Continue to implement the action program of the government on international economic integration, Noi Bai international airport in Vietnam actively invest heavily in infrastructure to meet development needs, trends global integration. Airports today are expanding in size and infrastructure, modern aircraft, fully equipped, air services comes increasingly diversified to meet the needs of the people. The management of the real aircraft moving from classical to modern methods with the media, technology and innovation. Improvement on equipment is an improvement in capacity management, professional skills, quality of service and style of service of staff, trained attendants and fostering domestic and foreign operations. Vietnam is a potentially lucrative market for air transport. Regardless of the poor and limited infrastructure system and the economic growth averaging at just above 5% per year, the sector has experienced a dramatic annual two-digit growth at least over the past ten years (Kraiser, 2013). According to Vietnam Aviation Authority (2015), there were up to 17,5 million domestic seats purchased in 2015, increasing by 20,5% in relation to 2014. International Air Transport Association evaluates that Vietnamese airlines will possibly double or triple their fleets to serve the huge domestic population of more than 90 million and the number of foreign visitors annually growing by approximately 20%. Besides the advances in technology as well as the development of Vietnam's aviation industry poses challenges for the aviation business with a more competitive environment, higher customer demand for the rules, international standards become stricter. With the fierce competition between the airlines to take over the trust and the

2 confidence of consumers, air VJA has adopted several strategic marketing solutions to improve and enhance the quality of services to serve and satisfy customer needs stand. The question is proposed that how VJA can stand out, compete with domestic rivals to show its advantages and which strategy can they apply in Vietnam market place. This question has lead the author to choose the topic “Applying marketing mix (7Ps) to improve business activities of VietJetAir Joint Stock Corporation in Vietnam market place” with the purpose of analyzing the environment and applying marketing strategy of VJA. Thereby, the author could make recommendation on how to address the change for the purpose of developing and improve business activities. 2. Objectives of the study The study attempts to apply marketing mix (7Ps) in VJA marketing strategy in order to build a marketing strategy to be excluded and unique in the marketplace. The process will be analyze in 7 factors in 7Ps strategy. From those projections, the author would give some implications on policies to promote the development and competitiveness of the market. 3. The scope of the study Within the framework of a graduation thesis, the author would like to confine the scope of Vietnam aviation and the study focusing on strategy that VJA apply in Vietnam market place. Moreover, coming up some implements and some of recommendation to promote VJA image in Vietnam market. The research object is VJA and Vietnam aviation market. The main country in research would be Viet Nam market. 4. Research methodologies Overall, the study employs statistical collection, information synthetization, inductive and deductive methods. It collects and synthesizes a number of data and information to present an overview of theories and arguments in chapter 1, to give out assessment points in chapter 2. It uses inductive and deductive methods to express ideas and present supporting arguments throughout the entire paper. In addition, analysis (including comparison and contrast methods) is employed very often in chapter 2 to draw comments and conclusions about the agreements’ impacts.

3 5. Thesis structure Apart from introduction, conclusion, references and appendices, the thesis comprises the following sections as main elements. Chapter 1: Theoretical background Chapter 2: An overview about VJA joint stock and their segment in Vietnam market place. Chapter 3: Some recommendations for VietJet Air The author would like to express deep gratitude to Mr. Nguyen Ngoc Dat for his critical comments and encouraging support as a supervisor. He has employed his strong research expertise and experience not only to orient the topic, structure the outline but also to have overall and detailed looks into the study to help the author accomplish it in a better way. Being aware of the importance of the thesis, the author has paid serious attention to study and research. However, due to limited time, reference resources and professional competences as well as practical experience, the thesis does expose a number of shortcomings. Thus, any feedback or comment for this study would be of great value for the author to improve it later on.

4 CHAPTER 1: THEORETICAL BACKGROUND 1.1.

Marketing strategy definition

1.1.1. Marketing Until now, there are many term that defined “marketing” in the world (about 2000 definitions). However, these definition basically are not different and the interesting fact that none of them are exactly true, each of them has a good point to observe. According to businessdictionary.com, marketing is defined as “the management process through which goods and services moves from concept to the customer” and “marketing is based on thinking about business in term of customer needs and their satisfaction”. According to the American Marketing Association (AMA) Board of Directors, Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Or based on research, Dr. Philip Kotler defined marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”(Kotler, 2015, p.1-50) In the book Marketing - Essential techniques and strategies geared toward results, Alexander Hiam stated that “Marketing is primarily about understanding people and what makes them buy. It’s getting inside the customer’s head and trying to think as he or she thinks” (Hiam & Rastelli, 2007, p.2) In business, marketing is considered as “branding, naming, pricing and the bridge between paid and earned media. It is not sale” - Gini Dietrich, Chief Executive Officer of Arment Dietrich said. In conclusion, basically, Marketing is business’s operation aiming to satisfy the customer’s needs in the market to earn profit.

5 1.1.2. Marketing strategy Within any company, setting a good marketing strategy plays an important role in the general marketing activities. Identifying a proper marketing strategy will effectively create customer value as well as achieve profitable customer relationships. So, how can the company obtain these goals? Marketing strategy is the marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationship. The company decides which customers it will serve and how. It identifies the total market, then divides into smaller segments, selects the most promising segments, and focuses on serving and satisfying the customers in these segments. ( Kotler and Armstrong, 2010, p48) When the companies take adventures in business, after defining the customer’s needs and wants at first, they decide the marketing offering, then segment and target the market that they plan to serve. In fact, the companies are not able to serve and satisfy all customers in the same way. For that reason, the market is divided into smaller parts, which include consumers who respond in a similar way to a given set of marketing efforts. The companies evaluate the potential of these parts and select one or more to engage. By segmenting and targeting the market, the needs and wants of targeted customers will be served easier and better. (Kotler and Armstrong, 2014). Next, the companies have to determine where their position is and how they differentiate themselves from their rivals in the market. When all steps above are completed, it means the company’s overall marketing strategy is determined. Under the guidance of marketing strategy, the companies start to plan the marketing mix specifically. To achieve the company’s goals, the marketing mix elements are blended into an integrated marketing program. (Kotler and Armstrong, 2014) After deciding on its overall marketing strategy, the company is ready to begin planning the details of the marketing mix, one of the major concepts in modern marketing. 1.2.

Marketing Mix (7Ps)

The marketing mix is the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consist of everything the firm can do to influence the demand of its products.

6 Kotler and Armstrong (2014) claimed that marketing is considered as one of the major concepts in modern marketing. They also defined marketing mix as: “…the set of tactical marketing tools that the firm blends to produce the response it wants in the target market” (Kotler and Armstrong, 2014, p.76). Marketing mix has become dominant in appraising the growth of marketing theory and practice. Due to the developments and changes in the commercial landscape over the last few decades, many marketing thinkers have explored new theoretical approaches and have expanded the scope of marketing mix concept. Beside the traditional 4Ps, there have been more new P’s introduced into the marketing field to help the firms gain advantages in highly competitive environment. Marketing mix 7Ps is the development from the traditional 4...