Analysis of the Current Status of Marketing Activities – Mix of the Company for Tobacco Raw Material Products in the Period 2010

- About difficulties:

+ Increased input factors for production affect the business situation.

+ The weather and climate still tend to be erratic, affecting the company's planting plan.

+ State regulations still have many shortcomings that affect the application of company policies.

+ Challenges from a competitive market full of crisis.

+ The development plan is not scientific, it is scattered and the solution is proposed based on the difficulty, so there are periods when business activities decline.

2.2 Analysis of the current status of the company's Marketing-mix activities for tobacco raw materials products in the period 2010 - 2013

2.2.1 Current status of applying Marketing-mix of the company for tobacco raw material products

2.2.1.1 Product policy

Product policy is highly valued by the company and is the most important factor in the company's marketing strategy over the years, a vital issue in business operations, it determines the activities of other departments and ensures that the business is on the right track. The product policy currently applied by the company is: (1) Decisions on product quality; (2) Decisions on product types and categories; (3) Decisions on customer service; (4) Decisions on product packaging; (5) Decisions on branding. Specifically, the current status of product policy is:

- Product policy goals:

+ Continue to improve product quality and product specifications.

+ Maintain traditional customers through improving and enhancing product quality to promote customer development.

+ Product policy will help the company improve safety, reputation, profit and position of the business in the market.

- Decisions on product policy:

+ Product analysis and product quality determination:

On the issue of improving the quality of tobacco materials:

For raw tobacco products, the company constantly improves the preservation and storage process to ensure the best quality products before reaching customers. The difficulty of this product lies in the storage and transportation process because it is a raw material, so the shelf life is short. However, currently, only a few small production facilities will order raw materials. Most large cigarette companies have switched to using processed raw materials without stems.

The tobacco raw materials are processed by separating the stems and then dried again to completely remove all kinds of impurities and foreign objects such as green leaves and moldy leaves. Then they will be stored and kept at a humidity of about 13%. With a stable temperature, it will create good conditions for the fermentation process of tobacco. This will help balance the amount of dissolved sugar and nicotine, at the same time.

create more flavor, reduce the heat when smoking. In addition, with the quality of processed tobacco products, the stem is separated to meet high standards, helping the company save on transportation costs due to longer storage.

About product quality:

Specifically, product quality is improved according to clear standards. Because the quality of tobacco raw materials affects the quality of cigarettes. The quality of tobacco raw materials depends on the variety, geographical location, cultivation techniques, processing, etc.

Processed yellow tobacco raw materials : have been significantly improved to the same quality as countries in the region such as China, Malaysia, Philippines, etc. The ratio of grade 1+2 leaves is about 40%. Currently, yellow tobacco has a Nicotine content ranging from 1.5-3%, and a soluble Glucid content of 14-28%.

Processed Brown tobacco raw materials : the quality of brown grown at the company's branches has its own characteristics in flavor and chemical composition. Nicotine content ranges from 1.3-3%, low soluble Glucid content. Especially good combustion, white ash.

Processed Burley tobacco : has the best quality, considered equivalent to world Burley. CTCPHV is investing and focusing on producing this product.

About quality management:

At the processing factory, there is a quality control team, these are people with many years of experience and high professional qualifications. They will manage the quality of products from raw materials to finished tobacco materials. They are responsible for checking and guiding employees in production. In addition, the work at the finished product warehouse after processing is responsible for checking the quality of goods received in the warehouse every day. If the quality is not guaranteed, they must return them to the processing factory. This is to ensure the quality standards of the company's products. However, in the process of transportation, storage and preservation, it is inevitable that there will be errors and damage.

Because product quality is the key factor, the leading competitive factor and is of most concern to manufacturing customers. Therefore, product quality management has been implemented very well and effectively by CPHV Company. With the application of the ISO 9001:2008 quality management system; the safe product production program (Goods Agriculture Program: GAP) in tobacco management and production, raw materials during the growing process and before being processed must comply with strict inspection procedures to ensure the best quality, so the company's products are highly appreciated by customers.

+ Decision on product types and categories:

About product types:

Since its establishment, the company has had two main product groups for tobacco raw materials: unprocessed tobacco raw materials and processed tobacco raw materials with stems removed - products considered to be highly competitive products of CTCPHV.

About raw tobacco products : Cured yellow, Sun-dried yellow, Brown, Burley.

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Regarding processed tobacco raw materials, there are: Cured Yellow, Brown, Burley, including 2 types: processed from the company's input materials or processed externally from raw materials delivered by customers.

Considering the company's internal potential and the unique characteristics of the tobacco industry, the breadth of products that the company is pursuing is relatively promising, safe, and highly reliable.

Currently, due to the characteristics of scientific and technological progress, especially modern machinery and the increasing demand for output of cigarette companies, most of CTCPHV's customers prefer the group of processed tobacco raw material products with stem separation because of its superior characteristics. With a stem separation production line of 24,000/ton producing 6 tons/hour, the company constantly improves product quality and continuously develops products in the future.

Table 2.9: Types and list of tobacco raw materials products in the period 2010-2013

STT

Product	Year 2010	2011	2012	2013
1	Raw tobacco leaves	x	X	X	x
	Dry gold			X	x
	Yellow sun	x	X		x
	Burley	x	X	X	x
	High nicotine brown		X	X	x
	Local Brown	x	X	X	x
2	Finished products	x	X	X	x
	Dry gold	x	X	X	x
	Burley	x	X	X	x
	High nicotine brown			X	x
	Local Brown	x	X		x
3	Outsourcing processing services	x	X	X	x

Maybe you are interested!

(Source: Sales Department of Hoa Viet Joint Stock Company)

Product categories:

Raw tobacco materials that have not been processed in the period of 2010 - 2013: dried yellow (added since 2012), dried yellow (removed in 2012 and resumed in 2013), brown, Burley. Through table 2.9, we can see that in 2010 , the company still did not trade dried yellow and high nicotine brown products. Because the market demand for raw materials is focusing on cheap raw materials to save costs. On the other hand, due to the impact of the economic crisis, in 2010, high-priced products were not popular. In 2011 , the company added high nicotine brown. In 2012 , the company eliminated dried yellow products due to their short shelf life and supplemented with dried yellow. In 2013 , the company resumed trading dried yellow due to the demand of small-scale production facilities and groups.

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Processed tobacco raw materials: (from company sources, processing)

+ Dried gold, typically dried gold in the South: dried gold in Tay Ninh, dried gold in Ninh Thuan, dried gold in Krongpa, dried gold in Dong Nai. However, the strongest is dried gold in Gia Lai.

+ Brown: includes high nicotine brown and local brown such as Ninh Thuan brown is typical.

+ Burley: Burley Long Khanh.

+ Tobacco by-products: tobacco stems, tobacco crumbs, etc.

Depending on the market demand situation, the company can continue to increase or decrease the density of the product type. The company's strategy department will research and grasp the market situation, collect information to evaluate the types of products that need to be developed, maintained or eliminated when necessary if the product is not suitable for the market.

+ Decision on product packaging:

Table 2.10: Elements in product packaging of CTCPHV in the period 2010 - 2013

Packaging

Year 2010

2011

2012

2013

Size

1.130*710*710

1.130*720*730

1.130*740*750

Weight

Domestic box: is

8 kg

Domestic carton: 8 kg

Domestic box: is

10 kg

Domestic box: is

15 kg

Symbol label

No label

- Green and red labels are used for finished leaf products.

- Red label is used for finished products such as stems and scraps.

- Green label used for finished leaf products.

- Red label used for finished product.

- Yellow label for scrap by-products.

- Green label used for finished leaf products.

- Red label used for finished product.

- Yellow label for scrap by-products.

External note content

Stick notes with the following information: Type, season, humidity, production date, etc.

Stick notes with the following information: Type, season, humidity, production date, etc. and stick them according to customer requirements.

Packing specifications

- Dried gold: 200kg

± 01kg.

- Brown: 200kg ± 01kg.

- Burley: 160kg ± 01kg.

- Stems + crumbs:

180-200kg ± 01kg.

- Dried gold: 200kg ± 01kg.

- Brown: 200kg

± 01kg.

- Burley: 160kg ± 01kg.

- Dried gold: 200kg ± 01kg.

- Brown: 200kg ± 01kg.

- Burley: 160kg ± 01kg.

- Stem: 180-200kg ± 01kg.

- Shreds: 110-130kg ±

01kg.

- Dried gold: 200kg ± 01kg.

- Brown: 200kg ± 01kg.

- Burley: 160kg ± 01kg.

- Stem: 180-200kg ± 01kg.

- Shreds: 110-130kg ±

01kg.

(Source: Sales Department of Hoa Viet Joint Stock Company)

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In the B2B market, product packaging is mainly for product protection, not for promotion. However, for CTCPHV, packaging plays a role as an effective marketing tool. Because investing in product packaging will help preserve the product better and demonstrate the professionalism and distinct position of CTCPHV in the market.

For unprocessed or processed products with separated stems and processing services, the company has generally done a good job in designing product packaging. However, there are still some minor limitations that need to be overcome so that the packaging will be more effective.

Looking at table 2.10, we can see that packaging design over the years has been supplemented and changed significantly to better meet customer needs. Especially in terms of labels to help customers identify the product inside more easily instead of having to read the information on the box, avoiding confusion about raw materials. In addition, the box size is larger, helping to save costs in the process of storage and preservation.

+ Decisions on customer service:

The company's products are mainly products that need to be properly preserved and stored to avoid negative effects on product quality, so customer service is quite important in sales policy.

Customer service is very important, it gives the company a competitive advantage and reputation in the market. Currently, the form of customer service that the company is applying is: Direct consultation for customers such as deciding which type of product to buy to suit the business situation at the customer's company. Consulting on choosing the right product; consulting services, customer instructions; freight services; services related to contract procedures, warehousing, ...

The company is always proactive in improving customer care policies to be more suitable. Pay attention to the preservation of raw materials and finished products of customers. There are warnings about the situation of raw materials in customers' warehouses and appropriate recommendations. In addition, the company always builds a budget for taking care of existing customers and finding new customers. Classify customers: target, traditional, potential, ... to have appropriate care policies. Some specific customer policies:

(1) Information security

Disclosing the raw material type and mixing formula of the customer to other partners. There are customers who have just finished processing and the information has been leaked to the outside. This is the thing that customers are most dissatisfied with. Or for customers who do not have processing shifts, they often go to the processing factory to visit the production line. This is also a problem of information disclosure.

(2) Customer benefits: such as accommodation support, transportation,

… for customers who live far away to come to the company headquarters to make transactions or for customers waiting for the delivery time.

+ Brand

The issue that the company has been pursuing recently is “Brand” – how to enhance the “Hoa Viet Brand” in the market. CTCPHV operates on

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B2B market, therefore, the role of brand factor is quite important because most cigarette manufacturing companies will trust and cooperate long-term with a reputable raw material supplier for them. 22 years of operation, Hoa Viet has continuously improved its brand to build loyalty, trust, and image in the minds of customers.

Regarding the identification system, the company has two types of carton labels: labels for the company's investment materials (with the Hoa Viet logo) and labels for processed materials (without the logo). Some processing customers request to use labels with the Hoa Viet logo for easy sales, and some customers request to use their own labels. Currently, the logo of CTCPHV is designed quite simply, using the same logo model as TCTTLVN and adding two words "Hoa Viet" below with the symbol of the leading bird, which is the pioneering image of VINATABA Hoa Viet in the Vietnamese tobacco industry.

In addition, the company has applied and promoted the policy: "Vietnamese people use Vietnamese products" to boost domestic consumption market share. And the high-quality Vietnamese brand Hoa Viet has won the hearts and trust of customers.

- Analysis of product consumption situation:

In terms of each product, processed finished products and outsourced processing are the two main products/services that account for a high proportion of the company's consumption output over the years. This result is correct because this is the position that the company is aiming for. Specifically: In 2010: processed finished products were 2,300 tons and outsourced processing was 5,071 tons. Accounting for more than 90% of the company's consumption output. In 2011: processed finished products were 4,250 tons and outsourced processing was 5,414 tons. Accounting for more than 95% of the company's consumption output. In 2012: processed finished products were 2,200 tons and outsourced processing was 5,554 tons. Accounting for more than 97% of the company's consumption output. In 2013: processed finished products were 3,250 tons and outsourced processing was 5,455 tons. Accounts for more than 90% of the company's sales volume.

In terms of market, the Southern and Central markets are the company's two key markets, accounting for over 85% of the company's consumption output in the period 2010-2013.

Through table 2.11, we can see that the company's consumption output is relatively positive over the years. It shows that the company is operating effectively in the selected target markets.

In short, finished products processing and outsourcing in the two Southern and Central markets is the direction that the company needs to pursue.

Conclusion: Analyzing the current status of CTCPHV's product policy, we can see that the company always focuses on enhancing and improving its product policy. The company always believes that product policy is one of the important policies and needs to be invested reasonably and effectively. With the current status of product policy, it is the foundation to ensure the quality as well as the development of the company in the future.

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Table 2.11: Output consumption situation by market

(Unit: tons)

Domain

Products/Services	2010		2011		2012		2013
Products/Services	Output consume	Rate (%)	Output consume	Rate (%)	Output consume	Rate (%)	Output consume	Rate (%)
NORTH	Raw medicinal leaves variable	850	100	520	59.8	250	100	350	58.33
	Finished products variable	0	0	350	40.2	0	0	250	41.67
	Processing services	0	0	0	0	0	0	0	0
	Total	850	100	870	100	250	100	600	100
CENTRAL	Raw medicinal leaves variable	550	13.91	450	12	250	6.53	550	15.07
	Finished products variable	2.203	55.73	1,900	50.67	1,200	31.36	1,800	49.32
	Processing services	1,200	30.36	1,400	37.33	2,377	62.11	1,300	35.62
	Total	3,953	100	3,750	100	3,827	100	3,650	100
MALE	Raw medicinal leaves variable	850	12.46	750	10.80	300	6.70	550	9.31
	Finished products variable	2,100	30.79	2,200	31.67	1,000	22.34	1,200	20.32
	Processing services	3,871	56.75	3,996	57.53	3,177	70.96	4.155	70.36
	Total	6,821	100	6,946	100	4,477	100	5.905	100
TOTAL CONSUMPTION		11,624		11,566		8,554		10,155

(Source: Sales Department of Hoa Viet Joint Stock Company)

2.2.1.2 Distribution policy

- Objectives of distribution policy:

+ Improve the performance of current distribution channels with low channel costs.

+ Build a financially strong distribution channel system with full sales conditions to meet and satisfy customer needs.

+ Good control of consumption channels. Through consumption channels, the company can grasp market information to promptly adjust to unusual fluctuations.

+ Stimulate consumption through distribution policies.

- Decisions on distribution policy:

+ Regarding the basis for choosing distribution channels:

Because customers buy in large quantities and the system of tobacco raw material suppliers nationwide is not abundant. Therefore, the distribution system is almost exclusive, so it is often short, direct and without intermediaries. On the other hand, because the company's capital is not strong enough and the cost of establishing the channel is quite large, the company has not expanded the distribution channel system. Tobacco raw material products have a short shelf life and must be carefully preserved at a suitable temperature to avoid damage before producing cigarettes. Therefore, a short distribution channel system is optimal to ensure product quality.

The tobacco raw material market is currently seeing the participation of a number of new competitors with quite strong potential despite being newly established. Therefore, to create a distinct competitive advantage, the company chooses a short, direct distribution channel to easily contact customers directly in order to create a close relationship and trust from them more easily.

+ Decisions on distribution channels:

Currently, the Company uses the only distribution channel, which is the direct channel - a short, 0-level distribution channel where the company sells products directly to customers (selling directly to the customer's production facility or selling through the company's established branch).

Sales Department

The company's distribution system is shown in the diagram below:

Company

(Unprocessed raw materials)

Company

(Raw material products through stem separation processing)

Industrial customers

Diagram 2.2: Distribution channel of tobacco raw materials of CTCPHV

(Source: Sales Department - Hoa Viet Joint Stock Company) For unprocessed tobacco raw materials: the products are introduced and sold by the Company to industrial customers. The Company will directly sell tobacco raw materials to industrial customers from raw materials that

Analysis of the Current Status of Marketing Activities – Mix of the Company for Tobacco Raw Material Products in the Period 2010 – 2013

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