NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL  - DANG THI VINH HA UNDERSTANDING VIETNAMESE CONSUMER BEHAVIOR FOR TOYOTA YARIS AND RECOMMENDATION FOR PROMOTION ACTIVITIES OF TOYOTA MOTOR VIETNAM MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: Dr LE THI MY LINH HANOI-2013 i TABLE OF CONTENT TABLE OF CONTENT i LIST OF TABLES v LIST OF FIGURES vi vi LIST OF CHARTS vii ACKNOWLEDGEMENT ABBREVIATIONS EXECUTIVE SUMMARY CHAPTER INTRODUCTION 1.1.Background 1.2 Rational 1.3 Research objective 1.3.1 Overall objectives: 1.3.2 Specific objectives: 1.4 Research questions: 1.5 Research methodology 1.5.1 Research process 1.5.2 Research approach .9 1.5.3 Data resources 10 1.5.4 Data processing: 14 1.5.5 Research scope 14 CHAPTER THEORETICAL BACKGROUND ON CONSUMER BEHAVIOR 15 2.1 Definition of consumer behavior .15 2.2 The importance of study consumer behavior 16 2.3 Model of consumer behavior .17 2.4 Factors influencing consumer behavior 19 ii 2.4.1 External influences .19 2.4.2 Internal factors 23 2.5 Consumer buying process 27 2.5.1 Problem recognition 28 2.5.2 Information search .29 2.5.3 Evaluation of alternatives 30 2.5.4 Product choice 30 2.5.5 Post purchase 32 2.6 Promotion mix 32 2.6.1 Advertising 33 2.6.2 Personal Selling 34 2.6.3 Sales Promotion 34 2.6.4 Public Relations 35 2.6.5 Choice of promotion mix 35 CHAPTER OVERVIEW OF VIETNAM AUTOMOTIVE MARKET AND YARIS MARKET 37 3.1 Overview of Vietnamese automobile market 37 3.2 Competitive environment 40 3.3 External environment analysis 42 3.2.1 Economic environment 42 3.2.2 Demographic environment 42 3.2.3 Social and cultural environment 43 3.2.4 Political and legal environment 43 3.3 TMV overview 44 3.3.1 TMV development history 44 3.3.2 TMV outstanding achievements 46 3.3.3 TMV-SWOT analysis 49 3.4 Toyota Yaris market in Vietnam 52 3.4.1 Overview of Small- car market in Vietnam 52 iii 3.4.2 Development history of Yaris in Vietnam market .53 3.4.2 Competitors of Yaris in Vietnam market 54 CHAPTER FINDINGS ON YARIS CONSUMER BEHAVIOR AND CURRENT MARKETING MIX 57 4.1 Characters of respondents 57 4.1.1 Demographics 57 4.1.2 Life style and media habit 59 4.2 Car ownership 61 4.3 Problem recognition 62 4.4 Information searching and importance of Car Purchase Decision 64 4.4.1 Information searching 64 4.4.2 Importance of Car purchase decision 66 4.4.3 Role of making buying decision 68 4.5 Alternatives evaluation 69 4.5.1 Other alternative cars 69 4.5.2 Evaluation criteria for car purchase 70 4.6 Consumer choice 72 4.6.1 Reasons for consumers to buy Yaris 72 4.6.2 Reasons to choose dealer to buy Yaris 74 4.6.3 Factors affecting consumers’ final decision 75 4.7 Consumer post purchase 76 4.8 Summary of the findings on Yaris consumer behavior 78 4.8.1 Consumer profile 78 4.8.2 Need recognition 79 4.8.3 Information search 80 4.8.4 Alternative evaluation 82 4.8.5 Consumers’ Yaris evaluation .83 4.9 Findings on current marketing activities for Toyota Yaris 84 4.9.1 Product 84 iv 4.9.2 Price 85 4.9.3 Promotion 86 4.9.4 Distribution 87 4.10 The gaps between current marketing mix and Yaris consumers’ expectation 88 4.10.1 Product .88 4.10.2 Price 88 4.10.3 Promotion 88 4.10.4 Distribution 90 CHAPTER RECOMMMENDATIONS FOR TMV PROMOTION ACTIVITIES 91 5.1 Defining target market .91 5.2 Setting the promotional objectives 92 5.3 Improving promotion activities 92 5.3.1 Clear message conveying 92 5.3.2 Means of promotion mix 92 5.4 Improving other marketing mix 96 5.4.1 Product 97 5.4.2 Price 99 CONCLUSION 100 REFERENCES 101 APPENDIX TOYOTA YARIS CONSUMERS’S SURVEY .103 APPENDIX GUIDANCE FOR SALE MANAGER IN_DEPTH INTERVIEW .112 v LIST OF TABLES Table 3.1: Sales volumes of Vietnamese hatchback segment 55 Table 4.1: Demographic information of the respondents 57 Table 4.2: Table of average monthly income of the respondents 58 Table 4.3: Table of education and Career information of the respondents .58 Table 4.4: Table of household size type of the respondents 59 Table 4.5: The respondents’ habit 60 Table 4.6: Main users of the vehicles .61 Table 4.7: The usage of your current car 64 Table 4.8: the Length of time from initial Decision to buy to placing order 66 Table 4.9: The importance of car purchasing decision 67 Table 4.10: The participation of each activity 68 Table 4.11: Importance of car purchase criteria 70 Table 4.12: Satisfaction about Yaris’s features .77 Table 4.13: Difference between TMV Yaris and PI Yaris 84 Table 4.14: Core contents for Yaris advertisement 85 Table 4.15: Yaris TMV price quotation basing on Yaris imported from overseas 86 Table 4.16: TMV marketing schedule for Yaris .89 Table 5.1: Consumer expectation for some option upgrade 99 vi LIST OF FIGURES Figure 1.1 Research process .9 Figure 2.1: model of consumer decision making .17 .25 Figure 2.2: Maslow’s hierarchy of needs 25 Figure 2.3: Flowchart of the consumer decision process 28 Figure 2.4: Factors break buying decisions .31 Figure 2.5: when elements of promotion are most useful .36 Figure 3.1: The stages of automotive and auto parts industry in the world 37 Figure 3.2: TMV dealer system 46 Figure 3.3: TMV Production line .48 Figure 4.1: Consumer profiles 79 Figure 4.2: Motivations to buy 80 Figure 4.3: The information sources 82 Figure 4.4: Image of Yaris advertisement 89 Figure 5.1: Upgrading features in new Yaris 98 Figure 5.2: Positioning Yaris price 100 vii LIST OF CHARTS Chart 3.1: Vehicle distribution/1000 people 39 Chart 3.2: Vietnam automotive market from 2006-2012 39 Chart 3.3.: TMV market share in 2010 41 .44 Chart 3.4: Hatchback market share 44 Chart 3.5: TMV performance from 2007 to 2012 47 Chart 3.6: Market shares in hatchback segment 55 Chart 3.7: Yaris market share in Medium compact segment 56 Chart 4.1: Types of car purchase 62 .63 Chart 4.2: Motivations of car purchase 63 Chart 4.3: Information sources 65 Chart 4.4: Relationship between the importance of the decision and the length of time 67 Chart 4.5: Competitors .69 Chart 4.6: Car purchase criteria 71 Chart 4.7: Reason to choose Yaris 73 Chart 4.8: Reasons to choose the dealer 74 Chart 4.9: Overall satisfaction about your current car .76 Chart 4.10: Respondents’ satisfactions about Yaris’s features 78 ACKNOWLEDGEMENT This report is the result of my master thesis at Business School of National Economics Universtiy with name “Understanding Vietnamese consumer behavior for Toyota Yaris and recommendations for promotion activities of Toyota Motor Vietnam”, implemented with a great deal of support from teachers and consumers and sale persons, sales managers in some Toyota dealers in Hanoi I am grateful to a number of people who have helped me in the Writing of this research Firstly, I would like to express my gratitude to Dr Le Thi My Linh, who guided me all her heart during the process I wrote the assignment It can be sure that without her help, this thesis hardly has this shape and content Furthermore, I would also like to thank the lecturers who taught me others subjects in BSNEU and created good conditions for me to study and write this assignment Secondly, I would like to thank all consumers, sales persons and sales managers in Toyota Lang Ha Limited and some other Toyota dealers in Hanoi who helped me to answer the survey, the interviews and collect information about Toyota Yaris in particular and Vietnamese automotive market in general during the whole process of my study Last is my special thanks given to my big family, who have shared all with me and help me to overcome many difficulties in study and in ordinary life to successfully complete this thesis With high appreciation Dang Thi Vinh Ha EMBA 9A ABBREVIATIONS ASEAN: Association of Southest Asian Nations CBU: Completed Built Unit CEO: Chief Executive Officer CKD: Completely Knocked Down CV: Commercial Vehicle EMS: Express Mail Service FDI: Foreign Direct Investment GDP: Gross Domestic Profit MPV: Multi-purpose Vehicle SCT: Special Consumption Tax SUV: Sport Utility Vehicle PC: Passenger Car PI: Parallel Importer PR: Public Relations HCM: Ho Chi Minh City TMC: Toyota Motor Corporation of Japan TMV: Toyota Motor Vietnam Company Limited VAMA: Vietnam Automobile Manufacturers Association VAT: Value Added Tax VEAM: Vietnam Engine and Agriculture Machinery Corporation VMC: Vietnam Motor Corporation WTO: World Trade Organization 99 Equipping these features will increase production cost Thus TMV marketers can calculate to choose the most effective features basing on findings of consumers’ need and their choice of criteria evaluation as buying a car According to report of FTA IDI 2012, consumers are willing to pay more for features which they evaluate “important” when buying a car as following tables: Table 5.1: Consumer expectation for some option upgrade Specification Safety Exterior Interior VSC Drive seat airbag Rearview camera, back sensor Power outer mirror HID headlight Front fog lamp Alloy wheels Auto A/C Steering wheel with audio control Leather seat USB and Smartphone connection port Bluetooth & hands free phone Wireless door lock Ready to Market Diff pay price 900 300 600 900 150 750 450 300 150 100 60 40 250 500 -250 330 160 170 1000 650 350 500 900 -400 200 100 100 500 300 200 300 150 150 350 50 300 150 100 50 Source: The author summary Thus TMV marketers can choose to upgrade new Yaris with rearview camera, back sensor, alloy wheels, power outer mirror, steering wheel with audio control, leather seat, USB & Smartphone connection port…with total market price of about 2070 USD which maybe expected to be worth of about 4130 by consumers Obviously these upgraded features will be high appreciated by consumers 5.4.2 Price Price is one of the most important factors which decide sales volume of a product However, as mentioned in the survey analysis, “price” factor takes the third “rank” following “safety” and “durability” factors Consumers want to buy “value-to-money”, not “cheap” product They want the product must have equal perceive value with the price Besides, many of Yaris consumers considered the car 100 as a mean to show off their upper-class position Yaris price was set up on the base of competition oriented pricing method whereby price was set based primarily on what competitors are charging In detail, it was compared with prices of Fiesta and Rio With strategy of positioning Yaris in high hatchback and compact as well segment, TMV should remain Yaris current price Figure 5.2: Positioning Yaris price Source: The author summary CONCLUSION Consumer behavior understanding and doing right things has an important role in business That is not only theory, but it is a requirement for modern professional managers 101 Understanding the above philosophy, the author would like to bring my learning from EMBA program in the Business School of the National Economics University to apply in the practice of a big corporation From the consumer study, the author learnt and found out many things The author hopes that these findings would help TMV to change their thoughts and to business well In the author benefits, the author learnt a lot from TMV and its consumers The author thought that this study could not avoid mistakes which would be very highly appreciated to have everyone’s comments REFERENCES Books Aaker,D A.et al (2004), Marketing research, 8th Edition, NJ: Wiley 102 Assets (2001), “The Nordic Employee Index”, Business Process Management Journal, 10 (5), pp.537 Colley, R H (1961) Defining Advertising Goals and Measuring Advertising Results Association of National Advertisers, New York Del I.Hawkins- Roger J.Best- Kenneth A.coney (2004), Consumer BehaviorBuilding Marketing Strategy 9th Edition McGraw-Hill/ Irwin Ferrell, O., Hartline, M., Lucas, G., Luck, D (1998), Marketing Strategy Orlando, FL: Dryden Press George E.Belch and Machael A.Belch (1990), Introduction to advertising and Promotion Management, Richard D.Irwin, Inc John C Mowen and Micheal Minor (1998) Consumer behaviour th edition Prentice Hall Upper Saddle River, New Jersey Kotler, P., Armstrong, G., Saunders, J &Wong, V (2001) Principles of Marketing, 5th European Ed Lombarda: Rotolito Michael R Solomon (2003), Consumer Behavior, 6th edition, Uppr Saddle River, N.J Pearson Prentice Hall 10 Mullins, Walker, Boyd (2008), Marketing Management: A StrategicDecision – Making Approach, Sixth edition, McGraw - Hill, New York 11 Murray, J and O’Driscoll, A (1996) Strategy and Process in Marketing Cornwall, Hartnolls Limited 12 Nguyen Xuan Chuan, President of Vietnam Society of Automotive Engineers (June 2007) “Vietnam’s auto parts industry and investment environment”, Unido- Tokyo 13 Nguyen Bich Thuy, (2007) “Industrial Policies as Determinant of Localization: The Case of Vietnamese Automobile Industry”, Vietnam University of Commerce 14 Philiip Kotler (1999), principle of Marketing 2nd Edition Prentice Hall 15 Rensis Likert (1932), “A technique for the Measurement of Attitudes”, in Achieves of Psychology 16 Sternberg, R J (1999) Cognitive psychology Fort Worth, TX: Harcourt Brace College Publishers 103 17 W.lawrence et al (2000), Social Research Methods, Qualitative and Quantitative Approaches, 4th Edition, Boston: Ally and Bacon, Websites 18 Jim Riley (2012), “Promotion- introducing the promotion mix”, 19 Ono, M, 2002, ‘Thi truong o to Viet Nam dang canh tranh khoc liet’, Vietbao, viewed June 2011, 20 Toyota Vietnam, homepage, Toyota, Vietnam, viewed June 2011, 21 Toyota Vietnam 2009, Toyota Yaris review, Toyota Vietnam 22 Toyota Vietnam 2011, Marketing Strategy Proposal Document (Feb 2011) 23 Toyota Vietnam 2011, CBU Yaris Launching Proposal Document (Feb 2011) Advertising, Sales Promotion, Events, Brand Enhancement Department 24 Toyota Vietnam 2011, Price Proposal - Product Planning & Pricing Department (Feb 2011) - Advertising, Sales Promotion, Events, Brand Enhancement Department 25 Toyota Vietnam 2010, Project Yaris Prelaunch (A Qualitative Study done by Neilsen (April 21, 2010) APPENDIX TOYOTA YARIS CONSUMERS’S SURVEY Dear sirs/madams My name is Dang Thi Vinh Ha- student of Business School I am carrying out a survey on Yaris consumers’ behavior for my Master thesis This questionnaire is used for the purpose of understanding Yaris consumers in order to improve promotional and marketing activities so as to serve consumers better 104 Your information and opinions are very important to us All information will be kept confidentially.It takes about 10 minutes to complete the questionnaire I appreciate your great support Thank you for very much A PERSONNAL INFORMATION Name: ……………………………………… Address: …………………………………… Phone number:…………………………… Email: ………………………………………… Gender Male Female Age Below 20 21-30 31-40 41-50 Above 50 Career Housewife Business owner White collar Technical school College/ University Others Education: Junior high school Post graduate or above May I know your monthly income (VND million)? Below 5-10 10-20 Above 20 Marital status Single Married How many people are in your family (referring both yourself and those who live with you at least days a week?) Above 105 What you usually in your free time? o o o o o o o o Watching TV Reading newspaper Internet Going café with friends Shopping Going picnic at weekends Going spa, message, sport centers Others ……………………… Which websites you usually use? o o o o o o o Vnexpress Dantri 24h Vietnamnet Otofun Otosaigon Others: 10 Which TV channels you usually watch? o o o o o o o VTV1 VTV3 SCTV1 HTV7 Starmovies HBO Others: …………… 11 Which newspapers you usually read? “Tuoi tre” “Thanh nien” “Tiep Thi Gia Dinh” Women Magazine 106 Motorbike and Autos The Labor Vietnam Economics Times Others: …………… B CAR PURCHASE BEHAVIOR QUESTIONNAIRE Are you using a Yaris now? o Yes registered under my name o Yes, registered under my company’s name o No Who uses the car most often? o Myself o My husband/wife o Both I and my husband/wife o My child o My parents o Other members in my family o Other members in my company What about the usage of your current car? Never months 10 Please kindly indicate the importance of the decision of purchasing a car? o Very important o Fairly important 108 o neither o Unimportant 11 Did you ever discuss your car purchasing decision with your family and friends? o Yes o No 12 What’s your role in the purchase of this car? o I am the only decision maker o I am one of the decision maker and play the decisive role o I am one of the decision maker but not play the decisive role o Totally decided by others o Others 13 Can you tell me which of the following procedures did you participate in the process of purchase and brand choice? o Purchase decision of a new car o Decision of the budget o Choices of brands and models o Contact car dealers o Price barging 14 Which following competitors did you consider? o Toyota Vios o o o o Ford Fiesta Kia Cerato Hatchback CBU Huyndai i30 CBU Mazda hatchback CBU 15 Among the following factors, please kindly choose the important ones when you buy a car? Very unimportant (1) Score 1-5 Unimportant Neither Important Very important (5) 109 Price Fuel consumption Power Riding comfort Exterior design Safety Equipment and interior After sales service Replacing parts Brand Resale value Modern technology Time of delivery Promotion Durability o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o 16 Why did you choose to buy Yaris? (Please choose most important reasons) Price Fuel consumption Power Easy to drive Exterior design Safety Equipment and interior After sales service Replacing parts Brand o o o o o o o o o o 110 o o o o o Resale’s value Technology Delivery time Promotion Durability 17 Why did you choose the dealer where you bought your car? (Please choose most important reasons) o Dealer reputation o o o o Competitive price o o o o Delay of car delivery time Professional sales person Convenient position Others: ………………………………… 18 Could your final buying decision be delayed by the following factors? o Changing tax policies Inadequate service receiving Unfavorable information of product’s quality Other …………………… 19 Overall, what about your satisfaction about your current car? Very dissatisfied o Dissatisfied o Neither Satisfied Very satisfied o o o 20 What about your satisfaction of your current car in terms of the following aspects? Very Dissatisfied dissatisfied (2) (1) Price Modern technology o o o o Neither (3) Satisfied (4) Very satisfied (5) o o o o o o 111 Equipment and interior o o o o o Promotion o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o Time of delivery Power Safety Exterior design Durability After sales service Replacing parts Easy to drive Brand Fuel consumption 21 Do you intend to introduce Yaris for your friends and family members? o Yes o No 112 APPENDIX GUIDANCE FOR SALE MANAGER IN_DEPTH INTERVIEW How long have you been working as a sales manager? How many sales persons in your department? Can you describe the structure of your sales department? How many Yaris units does your department sell per month on average? What are characteristics of Yaris consumers? Who are competitors of Yaris? What are strengths and weakness of current Thailand Yaris? In your opinion, what are the advantages and disadvantages of current TMV marketing activities of Yaris? In your dealer, what marketing activities you usually implement? 10 If you are in charge of planning marketing activities for Yaris, what would you to increase your Yaris market share? ... result of my master thesis at Business School of National Economics Universtiy with name ? ?Understanding Vietnamese consumer behavior for Toyota Yaris and recommendations for promotion activities of. .. marketing activities in order to more effectively attract the target consumers That is the reason why I chose the subject for my thesis: ? ?Understanding Vietnamese consumer behavior for Toyota Yaris and. .. understand decision making process of the Toyota Yaris consumers - To analysis factors influencing buying behavior of Toyota Yaris consumers in Viet Nam - To suggest some recommendations for Toyota