TRƯỜNG ĐẠI HỌC MỞ TP HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBAVB4 NGUYEN LE DUC HANH MARKETING STRATEGY FOR FDI BANKING IN VIETNAM INTERNATIONAL BANK (VIB) UNTIL 2015 MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) TUTOR’S NAME: DR LE THAI THUONG QUAN HO CHI MINH CITY (2012) ii COMMITMENT I would like to commit that I have myself prepared and conducted my project titled “ Marketing strategy for FDI Banking in Vietnam International Bank (VIB) until 2015” by the knowledge obtained from the MBAVB4 program and discussions with my tutor, professors and classmates All information, data and survey results are retrieved and obtained from reliable sources and have been properly referred Ho Chi Minh City, February 2012 NGUYEN LE DUC HANH iii ACKNOWLEDGEMENTS This thesis is my effort throughout two years working, studying hard at Solvay Brussels School in Ho Chi Minh City By that time, I have been accompanied and supported by many people It is a pleasure to convey my gratitude to them all in my humble acknowledgement First of all, I would like to express my sincere gratitude to my tutor, Prof Le Thai Thuong Quan for his patience, motivation, enthusiasm, and immense knowledge His detailed and constructive comments have been of great value for me No words can express my heartfelt thanks to him It is a pleasure to show my thankfulness to VIB FDI Banking Division, to all who assisted me in collecting data, supported me with useful information, especially the managers with their supports during the writing project period I would also like to thank to all professors, lecturers, tutors and my classmates who have shared with me not only knowledge, experiences but also special moments during my learning time at Solvay Brussels School in Ho Chi Minh City Last but not least, I would like to express my special gratitude to my parents, my husband and my sister for their love, support and encouragement throughout my entire life To them I dedicate this thesis Ho Chi Minh City, February 2012 Nguyen Le Duc Hanh v EXECUTIVE SUMMARY Vietnam International bank (VIB) was established in 1996 under Decision No.22/QD/NH5 issued by the Governor of the State Bank of Vietnam (SBV) Over more than 15 year operating, VIB has been consistently in the top joint stock commercial banks in Vietnam The year 2010 marked a significant development of VIB by a strategic partnership with the Commonwealth Bank of Australia – a leading retailer of Australia In order to maintain exclusive position, since early 2011, VIB has set up a newly dedicated Foreign Direct Investment Division within VIB to serve foreign invested companies in Vietnam Given the fact that there are huge opportunities for VIB as foreign direct investment is increasing year by year in Vietnam, VIB has to realize its internal and external environment, their strengths and weakness so as to compete in a very huge but severe market with a lot of big & experienced competitors This thesis is carried out to assess the current marketing strategy of VIB FDI banking and provide some recommendations for FDI banking so as to obtained objectives assigned by the Board of Directors By determining the marketing segmentation using the quantitative and qualitative combination methodology, the project explores that VIB is still a new brand name to FDI enterprises in Vietnam and most FDI enterprises are not impressed by VIB quality of services Thus, it is necessary to suggest a suitable marketing strategy so VIB can compete effectively in this severe market vi TABLE OF CONTENTS COMMITMENT i ACKNOWLEDGEMENTS iii TUTOR’S COMMENTS iv EXECUTIVE SUMMARY v TABLE OF CONTENTS v LIST OF ABBREVIATIONS ix LIST OF FIGURES xi LIST OF TABLES xii Chapter 1: Introduction 1.1 Rationale of the study 1.2 Problem statement 1.3 Research objectives and questions 1.3.1 Research objectives: 1.3.2 Research questions: 1.4 Scope and limitations of the study: 1.5 Research method: 1.5.1 Desk Research (Secondary data) 1.5.2 Quantitative research (primary data) 1.5.3 Qualitative research (primary data) 1.6 Structure of the study: Chapter 2: LITERATURE REVIEW 2.1 MARKETING STRATEGY 2.1.1 Concept of Marketing strategy: 2.1.2 Marketing environment: 2.1.2.1 External environment: 2.1.2.2 Internal environment: 2.1.3 Marketing mix in banking sector: 2.1.3.1 Product or Banking services 10 2.1.3.2 Pricing 10 2.1.3.3 Place (Sales and Distribution) 11 2.1.3.4 Promotion 11 2.1.3.5 People 14 2.1.3.6 Physical evidence: 14 2.1.3.7 Process 14 2.1.4 Development in marketing scope at the aspect of service marketing: 15 Internal marketing 15 2.2 UNDERSTANDING BANKING BUSINESS CONSUMER BEHAVIOR 17 2.2.1 Defining Services marketing: 17 2.2.2 Challenges for services 17 2.2.3 Characteristics of services and the different between goods and services: 18 2.2.3.1 Different between goods and services: 18 2.2.3.2 Characteristics of services: 19 2.2.4 Factors that influence customers’ expectations of services: 21 2.2.5 Major influences on enterprise banking services buying: 22 vii 2.3 THE PURCHASING/ PROCUREMENT PROCESS: 26 CHAPTER 3: ANALYSIS OF FDI BANKING MARKET 30 3.1 OVERVIEW OF FDI INVESTMENT IN VIETNAM: 30 3.1.1 Definition of FDI enterprises: 30 3.1.2 Vietnam government policy to develop FDI 30 3.1.3 FDI attraction in Vietnam during 2006 – 2011 31 3.2 FDI CUSTOMERS ANALYSIS: 33 3.2.1 FDI Enterprises segmentation 33 3.2.2 Understanding the FDI enterprises’ banking services need and purchasing process 38 3.2.2.1 Korean enterprises: 38 3.2.2.2 Taiwanese enterprises: 39 3.2.2.3 Japanese enterprises: 40 3.2.2.4 Other FDI enterprises: 41 3.2.2.5 Conclusion 42 3.3 Banking services for FDI enterprise in Vietnam and VIB’s opportunity 45 CHAPTER 4: ANALYSIS OF VIB’S INTERNAL ENVIRONMENT 52 4.1 VIB FDI BANKING INTRODUCTION: 52 4.1.1 VIB FDI banking business overview: 52 4.1.2 FDI banking organization structure: 53 4.1.3 FDI banking business objectives 54 4.2 CURRENT FDI CUSTOMERS ANALYSIS: 58 4.3 CURRENT MARKETING MIX ANALYSIS: 60 4.3.1 Product: 60 4.3.2 Price: 63 4.3.3 Place: 63 4.3.4 Promotion: 64 4.3.5 People: 65 4.3.6 Physical evidence: 65 4.3.7 Process: 66 4.4 SWOT ANALYSIS: 66 4.5 CONCLUSION: 69 CHAPTER 5: DEVELOP MARKETING STRATEGY FOR FDI BANKING IN VIB 70 5.1 RECOMMENDATIONS 70 5.1.1 Customer target and segmentation 70 5.1.2 Marketing mix 71 5.1.2.1 Product 71 5.1.2.2 Price 74 5.1.2.3 Place 74 5.1.2.4 Promotion 75 5.1.2.5 People 76 5.1.2.6 Physical evidence 77 5.1.2.7 Process: 78 5.2 CONCLUSION 78 REFERENCE x APPENDIX xii APPENDIX xv viii APPENDIX xix ix LIST OF ABBREVIATIONS 4Ps Product, Price, Place and Promotion 7Ps Product, Price, Place, Promotion, People, Process, Physical Evidence ADB Asian Development Bank Amcham The American Chamber of Commerce in Vietnam ATM Automated Teller Machine ARMs Assistant to Relationship Managers Auscham The Australia Chamber of Commerce in Vietnam B2B Business to Business CBA Commonwealth bank of Australia CS Client Services EPZs Export Processing Zones Eurocham The European Chamber of Commerce in Vietnam FDI Foreign Direct Investment FI department Financial Institutions Department FIA Foreign Investment Agency GDP Gross Domestic Product GSO General Statistics Office HCMC Ho Chi Minh city HN Ha Noi IFC International Finance Corporation IZs Industrial Zones IPs Industrial Parks JSCBs Joint Stock Commercial Banks KOTRA Korea Trade Investment Promotion Agency KPIs Key Performance Indicators MPI Ministry of Planning and Investment RMs Relationship Managers SBV State Bank of Vietnam x SMEs Small and Medium Enterprises SOCBs State Owned commercial banks SWOT Strengths, Weaknesses, Opportunities and Threats SLA Services Level Agreements VIB Vietnam International Commercial Joint Stock Bank VND Vietnam Dong Q&A Questions & Answers USD United State Dollar WB World Bank WTO World Trade Organization xi LIST OF FIGURES Figure 3.1: FDI registered and disbursed capital in Vietnam during 2006 to 2011 31 Figure 3.2: FDI investment contribution to GDP in Vietnam 32 Figure 3.3 FDI’s contribution to Vietnam export, import value 12 months/2011 33 Figure 3.4: FDI segmentation by investment form 34 Figure 3.5: FDI Segmentation by industry 35 Figure 3.6: FDI Segmentation by Country of Origin 36 Figure 3.7: FDI investment segmentation by Top cities 37 Figure 3.8: FDI investment segmentation by Top Region 37 Figure 3.9: FDI loan balance in JSC banks 50 Figure 3.9: FDI loan 2009 and 2010 (by VND) 50 Figure 4.1: Business objectives 2012 - 2015 56 79 purpose of this project is to suggest a more appropriate and effective marketing strategy for VIB FDI Banking to improve revenue and win market share regardless of the fierce competition from foreign banks and state owned commercial banks The literature review helps to understand some concepts of marketing strategy and marketing environment The theory of marketing mix applied in this study is usually used for banking industry Moreover, the study on B2B marketing helps us to understand more about enterprises’ structure of demand, their reactions over changes in marketing environment as well as their decision making process About project methods, the project adopts three methodologies: the desk research, Qualitative and Quantitative research The desk research helps to know more about the Banking industry, the features of FDI enterprises and the current competitions of banks proving services to FDI enterprises The Qualitative research is implemented by in-dept interview with FDI banking RMs, Team managers to know more about what FDI customers expect about banking services, how they make a decision, how to win long term relationships and trust from FDI customers The quantitative research is conducted by delivering questionnaire to VIB’s current FDI customers to find out whether they are satisfied about VIB services and what they want VIB to change for better improvements From analyzing of VIB FDI banking current performance, competitors as well as customers, some useful findings reveals The first finding indicates that FDI customers only have relationship with those they really trust and VIB’s brand awareness and reputation is very weak in Vietnam banking market In term of competition, it is very hard for us to compete with foreign banks and state-owned banks which already have good reputation in Vietnam It is a very long step for VIB to build up our brands and reputation to compete in this fierce market Another finding reviews that utilizing our human resources together with right strategy and internal cooperation will help us to win customers and performance Through our RM and CS teams, we will first win relationship with FDI customers Good strategy and internal cooperation will make customer gradually trust about 80 VIB services and build up long term relationships with us These three elements will become our key success factors in the long term In conclusion, we think that the following key initiatives will help us to win success in this challenging but attractive segments, they are: Grow revenue - Develop Factoring and FX product tailor-made for FDI customer - Establishment of Korean Desk, Japanese Desk - Grow volume through commission scheme (IZ/EPZs boards), tactical moves, in line with market situation - Launch regular direct incentive programs in FX, Deposits - Product roll-out strategic plans for FX, Loan, Deposit, Factoring, L/C Aggressive Customer Acquisition and Reactivation - Recruitment of the right staffs for each team - Alliance with other front line sales team for cross selling - Customer campaigns: • • Co-operation with IZ/EPZs • - Co-branded card with retailers and hospitality service providers Factoring for SMEs Road show at embassies, Amcham, Eurocham, Auscham, KOTRA, Taiwanese Trade Association - Memorandum on Cooperation with Auditing, Legal firms Optimize expense - RM scorecard to ensure efficiency 81 - Expense tracking to regional and departmental levels Excelling in Customer Service - S&S model rolled out consistently across the network - Role model service centers in HCMC and HN - Excel in Relationship Management through promoting success cases - Sep up bi-lingual hot line Manage Credit Risk - Risk/Return model introduced and strictly adhered to - Credit appetite/Policy statements Optimize Distribution - Leverage on VIB existing network - ATMs and branches at key IZ/EPZs - Open Service Centers in strategic locations REFERENCE Brown, Duncan and Hayes, Nick (2008), Influencer Marketing: Who really influences your customers?, Butterworth-Heinemann Chris and Karen Fill (2005), Business to Business marketing: Relationships, Systems and Communications, Financial Times Press Christopher Lovelock and Jochen Wirtz (2011), Services Marketing – People, Technology, Strategy 7th Edition, Upper Saddle River, New Jersey, Prentice Hall David Fred R., Thirteenth Edition, Strategic Management- Concepts and Case, Prentice Hall, New Jersey, 2009 Green, J David and Saylor Michael C., First Edition, The B2B Refinery – An executive guide for improving Go-to-Market ROI throught greater Sales and Marketing Efficiency, PipeAlign LLC, 2004 Kotler & Pfoertsch (2006), B2B Brand Management, Springer Berlin Kotler, Philip (2000), Tenth Edition, Maketing Management Millenium Edition, Prentice Hall, Inc Malaval (2001), Strategy and Management of Industrial Brands: Business to Business Products and Services Powers, T.L (1991), Modern Business Marketing: A Strategic Planning Approach to Business and Industrial Markets, St Paul, MN:West 10 Steve Minett (2001), B2B Marketing, 11 William G Zikmund (1997), Fifth Edition, Business research method, Harcourt Brace College Publishers 12 Zeithaml, Valarie A et al (2009), Service Marketing (5th edition), McGraw-Hill Education 13 Vietnam Investment Law No 59/2005/QH11 14 SBV’s report on bank’s performance 15 VIB Sales Review Report 2007/ 2008/ 2009/2010 16 VIB Financial Reports 2008/ 2009/ 2010 17 Department of Planning and Investment of Hochiminh City website: http://www.dpi.hochiminhcity.gov.vn/ xi 18 Foreign Investment Review website: http://dautunuocngoai.vn/ 19 http://ezinearticles.com 20 Ministry of Planning and Investment – Foreign Investment Agency website: http://fia.mpi.gov.vn/ 21 Ministry of Planning and Investment Portal – Socialist Republic Vietnam website: http://www.mpi.gov.vn/portal/page/portal/bkhdt Website of the following banks: 22 ACB website: www.acb.com.vn 23 Agribank website: www.agribank.com.vn 24 ANZ website: www.anz.com/vietnam 25 BIDV website: www.bidv.com.vn 26 HSBC website: www.hsbc.com.vn 27 SBV website: www.sbv.go.vn 28 Shinhan bank website: www.shinhan.com.vn 29 Standard Chartered bank website: www.standardchartered.com 30 VCB website: www.vcb.com.vn 31 VIB website: http://vib.com.vn/ 32 www.marketreacher.com Lectures and slides from the courses: C.Gruslin, Market Research J.P.Baeyens, Marketing M.Claes, Applied Marketing of xii APPENDIX List of Managers and Staffs were interviewed: Position Ms Vu Thuy Quynh – Head of Level Kind of interview Manager In-dept interview Manager In-dept interview Manager In-dept interview Manager In-dept interview Manager In-dept interview Manager In-dept interview Manager In-dept interview FDI Banking Division Mr Simon HJ Chen - Head of Taiwanese Desk Mr Bui Ngoc Long - Head of FDI South Mr Hoang Dai Nguyen – Deputy head of FDI South Ms Do Anh Tam - Head of FDI North Mr Thach Do Anh - Head of Project Team Ms Tang Tho Am - Head of Client Services Mr Diu Thin Tac – RM of TWD Ms Hong Tu Thanh– RM of Non - managerial Focus group discussion Non - managerial Focus group discussion TWD Mr Luong Minh Tuan – RM of FDI South Ms To Nguyen Xuan Linh - RM of FDI South Mr Nguyen Duc Trung - ARM of FDI South Ms Vu Thi Thanh Thu - ARM of FDI South xiii Ms Do Thi Hoai Linh - RM of FDI North Ms Ta Phuong Thanh - RM of FDI North Ms Mai Kim Nga - RM of FDI Non - managerial Focus group discussion Staff Focus group discussion North Ms Vu Thi Hien - ARM of FDI North Ms Phung Kim Van – Senior CS Officer Ms Tran Thi Viet - Senior CS Officer Ms Tran Thi Ut - Senior CS Officer Ms Pham Bich Ngoc - CS Officer Ms Vu Mi Lan - CS Officer List of Questions used in the interviews and discussions: According to you, who are our targeted customers in the next years? How can we approach those customers? According to you, which is the most effective way to approach FDI customers? Why? What are FDI enterprises main banking services needs? What your current FDI customers think about VIB’s products & services? What your current FDI customers think about VIB’s pricing policy (term deposit, loan, FX selling and buying, fee schedule)? What are the competitive advantages of VIB in comparison with other financial institutions? What new FDI customers think about VIB’s products & services? What new FDI customers think about VIB brand name and reputation? xiv 10 What new FDI customers think about VIB marketing and promotion programs? 11 What FDI customers expect more from VIB? (Brand reputation? Special fee package? More competitive pricing? Convenient transactions? Modern technology? Flexible products package? etc) 12 Tell me some features about each kind of FDI enterprises and their directors? (Korean, Taiwanese, Japanese, European – American, other small group?) 13 Do FDI customers need approvals from mother companies to have new transactions or new accounts with a new bank? 14 Is this practice different between Taiwanese, Korean, Japanese, European – American enterprises? 15 Is this practice different between large corporations, medium enterprises, small enterprises or micro enterprises? 16 How long does it take for approval from mother company? 17 Please tell me about the decision making process of FDI enterprises 18 What you think about VIB’s current resources and policy for FDI banking? 19 Do you think positive or negative about the possibility of FDI objectives in the next years? 20 What you need in order to successfully reach the sales targets assigned by Board of Directors? 21 Do you have any suggestions about FDI banking‘s marketing & communication plan in the coming year? (ex: sponsor workshops, events…) xv APPENDIX Questionnaire to customers Dear Sirs/ Madam, FDI Banking is a new segment of banking services VIB is offering to FDI enterprises However, up to now there has not been any official research related to FDI banking segment in Vietnam This questionnaire is used for my MBA research project about VIB’s FDI banking All the information provided shall be treated in strict confidential and shall only be used exclusively for the purpose of academic in respect of the above research Would you please answer the below questions (by checking the appropriate box or writing a few words?) Your answer will greatly assist me in completing the course Thank you for your time and kind cooperation for this interview Sincerely yours, Nguyen Le Duc Hanh PART I: GENERAL INFORMATION Q1: Your company’s name: ………………… Q2: Your company’s country of origin:……………………… Q3: Percentage of equity owned by foreign investors:…………………… Q4: Invested capital:……… Q5: Industrial field of your company:……… Q6: Currently banking with:……… PART II: BANKING SERVICES NEEDS: Q1: Please kindly tick the banking services your company is doing with VIB: BANKING SERVICES COMMENTS ABOUT EACH SERVICES xvi • Account services • Term deposit • Bank transfer • Payroll • Cash handling/ Collection • Cash Management • Internet banking • Working capital financing • Medium & Long-term financing • Corporate bond issuing guarantee • Trade Finance • FX Services Q2: Is your company satisfied with VIB’s client services? (Level for totally satisfied and level for totally unsatisfied) Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment if any ……………………………………………………… Q3: Is your company satisfied with our RMs’ support? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied xvii Please add what should our RMs improve……………………………………… Q4: Is your company satisfied with VIB’s processing time for services like fund transfer, international payment, trade finance, loan processing? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment which services you like to improve and your proposed processing time……………………………………………………… Q5: Is your company satisfied with VIB’s interest rate for loan in comparison with other banks? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment if any…………………………………………………… Q6: Is your company satisfied with VIB’s pricing for term deposit, FX selling and buying in comparison with other banks? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment if any……………………………………………………… Q7: Is your company satisfied with VIB’s fee schedule? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment if any………………………………………………………… Q8: Is your company satisfied with VIB’s interest rate for loan in comparison with other banks? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied xviii Please add a comment if any……………………………………………………… Q9: Is your company satisfied with VIB’s payroll services? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment if any………………………………………………………… Q10: Is your company satisfied with VIB’s internet banking? Totally satisfied Satisfied Neutral Unsatisfied Totally unsatisfied Please add a comment if any………………………………………………… Q11: Please add other things you want our bank to improve (for ex: Transaction location, location of ATM, time of official transaction…) …………… ………………………………………………………………………………………… Q12: What kind of marketing activities you think VIB should let your customers/ suppliers/ shareholders know more about VIB’s FDI banking division? …………………………………………………………………………………………… xix APPENDIX Questionnaire survey result: Number of survey sent 299 out Number of survey 185 returned Questions Classification Company’s country of a Taiwan Frequency Percentage(%) 50 27% b Japan 35 19% c Korea 48 26% e Others 52 28% Percentage of equity a 100% 163 88% owned by foreign b 70 million USD) b Medium (15 - 70 Size of enterprises million USD) c Small (1- 15 million USD) d Micro (< million USD) Industrial field services xx e Others 3% a Totally satisfied 59 32% b Satisfied 40 22% c Neutral 37 20% d Unsatisfied 49 26% e Totally unsatisfied 0% a Totally satisfied 47 25% b Satisfied 39 21% c Neutral 21 11% d Unsatisfied 75 41% e Totally unsatisfied 2% a Totally satisfied 34 18% b Satisfied 68 37% c Neutral 70 38% d Unsatisfied 13 7% e Totally unsatisfied 0% a Totally satisfied 0% b Satisfied 4% c Neutral 68 37% d Unsatisfied 83 45% e Totally unsatisfied 27 14% a Totally satisfied 3% Satisfaction with VIB’s b Satisfied 86 46% pricing for term deposit, c Neutral 37 20% FX d Unsatisfied 51 28% e Totally unsatisfied 3% a Totally satisfied 34 18% b Satisfied 79 43% c Neutral 32 17% d Unsatisfied 32 17% e Totally unsatisfied 5% Satisfaction with VIB’s client services Satisfaction with VIB RMs’ supports Satisfaction with VIB’s processing time Satisfaction with VIB’s interest rate for loan 10 Satisfaction with VIB’s fee schedule xxi a Totally satisfied 10% c Neutral 135 73% d Unsatisfied 21 11% 10 6% 11 6% b Satisfied 39 21% c Neutral 69 37% d Unsatisfied 60 32% 4% a Bank reputation 109 59% b More flexible 21 11% 15 8% d Better pricing 78 42% e Customer services 73 39% f Staffs’ skills and 42 23% 34 18% b Organize workshop VIB’s internet banking 19 e Totally unsatisfied 12 Satisfaction with b Satisfied a Totally satisfied VIB’s payroll services 0% e Totally unsatisfied 11 Satisfaction with 53 29% c Sponsor workshops 19 10% 5% 85 46% products c Simple transaction 13 VIB should improve process and documenting knowledge a Publications on economics papers… 14 Marketing activities VIB should and events d Road show to IPs/EPZs… e Advertising on newspapers, TV… ... research is to evaluate the current policy for FDI segment in VIB and propose a marketing strategy for FDI Banking in Vietnam International Bank until the year 2015 3 1.3 RESEARCH OBJECTIVES AND QUESTIONS... finding and selling to customers, and the target customer 2.1.3 Marketing mix in banking sector: Marketing mix in this FDI segment will be the combination of services marketing and B2B marketing. .. prepared and conducted my project titled “ Marketing strategy for FDI Banking in Vietnam International Bank (VIB) until 2015? ?? by the knowledge obtained from the MBAVB4 program and discussions