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This chapter is concerned with some basic information about DFD, NASCO, duty-free shop formation of duty-free business in the world in general and in Vietnam in particular, and concepts of duty-free. Besides, readers will have detail introduction of problems related to the study, scope of the study, research questions, methodologies and methods of data collection.
Website: http://www.docs.vn Email :1lienhe@docs.vn Tel : 0918.775.368 NATIONAL ECONOMICS UNIVERSITY ENGLISH FOR BUSINESS DEPARTMENT FACULTY OF FOREIGN LANGUAGES DO THI THU THUY Title: INCREASING THE EFFECTIVENESS OF DUTY-FREE BUSINESS THROUGH DIVERSIFYING MARKETING STRATEGIES AT NOIBAI AIRPORT SERVICES JOIN-STOCK COMPANY Website: http://www.docs.vn Email :2lienhe@docs.vn Tel : 0918.775.368 Hanoi, 05/2010 NATIONAL ECONOMICS UNIVERSITY ENGLISH FOR BUSINESS DEPARTMENT FACULTY OF FOREIGN LANGUAGES DO THI THU THUY Title: INCREASING THE EFFECTIVENESS OF DUTY-FREE BUSINESS THROUGH DIVERSIFYING MARKETING STRATEGIES AT NOIBAI AIRPORT SERVICES JOINSTOCK COMPANY Field: English for Business Studies Code: 701 Supervisor: Nguyen Phuong Hoai, M.A Hanoi, 05/2010 Website: http://www.docs.vn Email :ilienhe@docs.vn Tel : 0918.775.368 TABLE OF CONTENT Pa ge Acknowledgements Executive summary List of tables and figures INTRODUCTION Rationale of the study Scope and focus of the study Research questions Methodology Structure of the report CHAPTER INTRODUCTION OF NOIBAI AIRPORT SERVICES JOIN-STOCK COMPANY, DUTY-REE DEPARTMENT, DUTY-FREE SHOPS, THE FORMATION AND CONCEPTS OF DUTY-FREE BUSINESS 1.1 Introduce NoiBai Airport Services Join-Stock Company (NASCO), Duty-free Department (DFD) and Duty-free shops 1.1.1 NASCO 1.1.2 DFD 1.2 Formation of duty-free business in the world and in Vietnam 1.2.1 History and development of duty-free business in the world 1.2.2 The formation of duty-free business in Vietnam 1.3 Concepts of duty-free business 1.3.1 Definition 1.3.2 Kinds of duty-free shop 1.3.3 Characteristics of duty-free shops in Vietnam 1.3.3.1 Common characteristics 1.3.3.2 Places of duty-free shops 1.3.3.3 Duty-free goods 1.3.3.4 Persons entitled to purchase goods on sale in duty-free shops Website: http://www.docs.vn Email :iilienhe@docs.vn Tel : 0918.775.368 1.3.3.5 Duty-free luggage quotas for people on entry at the Vietnamese border gates 1.4 Problems related to the research topic, research questions, methodology and score of the research 1.4.1 Rationale of the study 1.4.2 Scope of the study, research questions and methodology CHAPTER 2: THEORETICAL BACKGROUND OF MARKETING STRATEGY 2.1 Promoting products: Marketing communication strategy 2.1.1 Steps in developing effective communication 2.1.2 Growth of direct marketing 2.1.3 Integrated marketing communications 2.1.4 Direct marketing 2.2 Promotion products: Advertising, sales promotion, and public relations 2.2.1 Advertising 2.2.2 Sales promotion 2.2.3 Public relations 2.3 Promotion products: Personal selling and sales management 2.3.1 The role of personal selling 2.3.2 Managing the sales force 2.3.3 Steps in the selling process CHAPTER ANALYSIS AND FINDINGS 3.1 Result of duty-free business at NoiBai International Airport 3.1.1 Total revenue of duty-free business 3.1.2 Selling duty-free goods on international flights 3.1.3 Selling duty-free goods for people on exit and transit 3.1.3.1 In 2008 3.1.3.1 In 2009 3.2 Duty-free business situation 3.2.1 The rate of growth between goods made in Vietnam and import goods is not fair 3.2.2 The weakness of advertisement activities, sales promotion, and public relations Website: http://www.docs.vn Email iii : lienhe@docs.vn Tel : 0918.775.368 3.2.2.1 Advertisement activities 3.2.2.2 Sales promotion 3.2.2.3 Public relations CHAPTER RECOMMENDATIONS 4.1 Improving state policies with duty-free goods 4.1.1 Goods made in Vietnam 4.1.2 Goods imported from foreign countries 4.2 Increasing activities of advertising, promotion programs, public relation 4.2.1 Advertising 4.2.2 Promotion programs 4.2.3 Public relations 4.3 Other recommendations 4.3.1 Increasing the level of penetration and research of customers’ psychology 4.3.2 Investing in facilities and technology equipments for duty-free business 4.3.3 Joining actively duty-free goods fair at countries in region and in the world CONCLUSION REFERENCES CHAPTER INTRODUCTION OF NOIBAI AIRPORT SERVICES JOIN-STOCK COMPANY, DUTY-FREE DEPARTMENT, DUTY-FREE SHOPS, THE FORMATION AND CONCEPTS OF DUTY-FREE GOODS This chapter is concerned with some basic information about DFD, NASCO, duty-free shop formation of duty-free business in the world in general and in Vietnam in particular, and concepts of duty-free Besides, readers will have detail introduction of problems related to the study, scope of the study, research questions, methodologies and methods of data collection 1.1 Introduction NoiBai Airport Services Join-Stock Company (NASCO) and Duty-free Department (DFD) and Duty-free shops 1.1.1 NoiBai Airport Services Join-Stock Company (NASCO) Noibai Airport Services Join-Stock Company which stands for NASCO became known as Northern Airport Services Company in Vietnam It was a state enterprise established and officially put into operation on July 1st, 1993 The company has been through some dramatic changes to become what it is today In May, 1995, Northern Airport Services Company was changed in name to become NoiBai Airport Services Company – NASCO being a member of Vietnam Airlines Corporation Decision No 3798/2005/QD-BGTVT dated on May 21 st, 2005 of the Minister of Transportation of Vietnam permitting NASCO to be privatized with a new name “NoiBai Airport Services Join-Stock Company” (NASCO) On April 5th, 2006, according to business laws NASCO officially put into operation After privatizing, inheriting and promoting solidary tradition, NASCO has continued maintaining, and developing and enhancing the effectiveness of “The Quality management system” with ISO 9001:2000 standard, investing modern technologies and the structure of management As a result, the manufacturing business continues to grow, the brand of company is increasingly prestigious, jobs and workers’ lives are guaranteed In addition to production and business development, social activities are also always concerned by managers, and most of employees who responded enthusiastically Activities of arts and sports are quite vibrant and helps employees feel relax and work comfortably Work of returning favor and supporting to victims of wars and those who have difficult situations, etc are held with the order, not only has contributed to solidarity but also builds cultural lives with a healthy spirit in company On August 13th, 2009, with achievements in business production and social activities after NASCO applies the model of join-stock Company, the President of Socialist Republic of Vietnam signed the decision to offer NASCO the second-rate Medal of Labor Structure of NASCO is not too complex through the following chart: Noibai Airport Services JoinStock Company Shareholders Supervisors Board of Directors CEO Management Units NASCO Dept Planning & Investment Dept Accounting Dept Human Resources Dept Service Units NoiBai Aviation Commercial Enterprise NoiBai Aviation Auto Transporter NoiBai Aviation General Service Enterprise Hotel and tour service agency Duty-free Dep With the clear structure, NASCO becomes popular to public by kinds of different business For instance, airport NASCO services Branch consists of serving special passengers like business passengers, first-rate passengers, etc at the airport; using specialized cars in the aircraft parking; cheking in and checking out for passengers who live in the city Services of purchasing, importing, exporting, wholesaling and retailing goods include duty-free goods, groceries, souvenirs,etc Transporting passengers by cars has airport taxi, airport bus Transporting, preserving, and packaging goods include courier goods by domestical and international air, customs warehouse, packaged goods services, etc Besides, there are also the services of tourist, hotel and restaurant including domestical and international travel, transit hotel at NoiBai International Airport, restaurants and coffee bar in inside and outside the airport, etc Technological services have lots of functions like maintaining and repairing cars, motorbikes; industrial hygiene, cleaning environment; industry and civil laundry; installing electrical equipments Agencies to provide products and services consist of selling tickets, life insurance and nonlife insurance, exchanging foreign currencies, providing fuel and liquefied gas Therefore, each department of NASCO has its functions and takes an important role in developing the company Especially, duty-free department (DFD) is one of departments which have enjoyed remarkable growth in business 1.1.2 Duty-free department (DFD) and Duty-free shops On June 23rd, 1990, at NoiBai International Airport, the Ministry of Commerce of Vietnam issued a license of duty-free business No 076/TM-DT The content of license permitted that NoiBai International Airport could cooperate with Sundance Duty Free Sales Ltd - a Hong Kong partner in order to open the first dutyfree shop serving exit passengers from Noibai International Airport NASCO manages all of duty-free shops at Noibai International Airport Duty-free department are directly responsible for selling duty-free goods for passengers who exit, entry and transit, for international flights of Vietnam Airlines only and for importing and exporting goods at NoiBai International Airport Duty-free shops are retail outlets that not apply local or national taxes and duties In other words, duty-free shops are shops selling goods which are exempted from export tax, import tax for import-export, transit They operate under the regulations issued by the Vietnam government and the license by state agencies Duty-free shops appear in many countries in the world and are more and more developing Duty-free goods have high quality, famous labels, and suitable price So, many people usually choose to buy duty-free goods with lots of different purposes such as decorating, gifting, etc NASCO has three duty-free shops in NoiBai International Airport and one shop in international flight of Vietnam Airlines Corporation Duty-free shops provide more than 4500 products For example: kinds of wine: Cognac, Whisky, Vodka, Gin, Rum,… importing from France, Italia, Scotland, Canada… with famous labels such as Remy Martin, Hennessy, Martell, Camus, Chivas, Ballantines, Malibu… Perfumes, cosmetic and skincare with various fragrances imported from France, Italia… and famous labels like Christian Dior, Lancôme, Ralph Lauren, Giorgio Armani, Kenzo, Jean Paul Gaultier, Yves Saint Laurent, and Estee Lauder Gifts and Accessories, jewelry and watches, leather and imitation leather goods with high quality imported famous fashion brands such as Pierre Cardin, Kahuna, Lacoste, Swiss, Tommy, Hilfiger, Adidas, Cross, Dunhill… Duty-free goods are imported and controlled strictly about origin, product quality in conformity with the provisions of relevant Vietnamese laws and international practices Besides, prices of duty-free goods can often be driven upward by the costs of buyer convenience, e.g., in-flight sales by airlines Vietnam has no regulations to limit the amount of duty-free goods which exit and transit passengers purchase at duty-free shops Passengers can pay in foreign currency (U.S dollar, Euro) and Vietnam dong (be converted into foreign currencies under the current average price of Vietcombank) With the quality management system ISO 9001:2008, structure of goods and the way of services at duty-free shops of NASCO continuously improved to meet needs of customers 1.2 The formation of duty-free in the world and in Vietnam 1.2.1 History and development of duty-free business in the world Duty-free business appeared in 18th century when transport developed in Europe Ships which sold products from the mainland to the international waters in order to buy to merchant ships, the Union sailors, and passengers’ ships ran across the ocean Because every item was not sold in the territory of any countries, buyers didn’t pay domestic consumption tax As a result, the definition of duty-free goods was set up On March 18th, 1947, Irish parliament passed The Customs Free Airport Act, exit and transit visitors didn’t pay tax for any goods bringing when exiting On May 18th, 1947, the world’s first duty-free shop was established at Shannon Airport by Dr Brendan O’Regan in Ireland and is in service to this date Shannon became a model for other duty-free facilities throughout the world Since then, many duty-free shops have opened inside international airports, where visitors can shop without paying local taxes, or without having to file claims to receive money back from the country they’re visiting, to cover the money they did pay in taxes Such shops usually offer high end or luxury items, which are sometimes offered at bargain prices Shoppers may still be limited by customs officials in their own country as to how much they can legally purchase and bring home without paying import taxes Allowance rate for purchases without paying duties varies from country to country Designed to provide a service for Trans-Atlantic Airline passengers typically traveling between Europe and North America whose flights stopped for refueling on both outbound and inbound legs of their journeys, it was an immediate success and has been copied worldwide In 1996, International Association of Airport Duty Free Stores (IAADFS) is established to meet the needs of the airport duty-free industry IAADFS has about 500 subsidiaries and usually held meetings to help subsidiaries have opportunities to talk and meet with customers at duty-free shops On global scale, the largest retail duty-free shops include Abu Dhabi Dutyfree Shop, Bharain Duty- Free, Dubai Duty-Free (in United Arab Emirates), Dutyfree shops at Hongkong International Airport and Blue Water Bridge Duty Free Shop (in Canada) About trading duty-free goods at airports, shops having the largest revenue consist of Dubai, duty-free shop at Heathrow Airport in London, Changi Airport in Singapore, Amsterdam in Netherlands and Paris in France Nowadays, Internet becomes a tool to help businesses develop and help customers update necessary information about those businesses And the duty-free business needs the Internet In September, 2005, a new website was set up by Australian - Peter Ellis (http://thedutypriceguide.com) The website support necessary information about the differences between the price of duty-free goods in flights and the price of duty-free goods in airport in worldwide Besides, some of website appeared widely to advertise and introduce about duty-free business namely ... realities of duty-free business at NoiBai International Airport? What should duty-free department to increase the effectiveness of the company? ??s strategy in trading duty-free goods? Whether changes of. .. INTRODUCTION OF NOIBAI AIRPORT SERVICES JOIN-STOCK COMPANY, DUTY-REE DEPARTMENT, DUTY-FREE SHOPS, THE FORMATION AND CONCEPTS OF DUTY-FREE BUSINESS 1.1 Introduce NoiBai Airport Services Join-Stock Company. .. 1990, at NoiBai International Airport, the Ministry of Commerce of Vietnam issued a license of duty-free business No 076/TM-DT The content of license permitted that NoiBai International Airport