Market / Product Pair Development Model

* Choose marketing strategy based on important market orientation

business point

Michael Porter [30] summarizes the types of competitive strategies that businesses can apply according to Figure 1-7.

form of competitive advantage being pursued

Lower Costs Make a Difference

Cost leadership strategy

low fee

Strategy to make a difference

wide spread

Strategy

most reasonable cost

Low cost strategy and

concentrate

Strategy to make a difference

separate and focus

target market

Wide audience across the market

1 inch

segment or niche market

Figure 1-7: Porter's competitive strategy model

Source: Michael Porter, 2001 [30] According to the above model, businesses can choose two basic types of competitive strategies: cost leadership or differentiation . These two types of strategies are combined with the business's target market strategy (broad orientation to many different segments or just focusing on one segment).

into a narrow niche) constitutes a number of other strategic options.

* Cost leadership strategy

The aim of a company in pursuing cost leadership or low cost strategy is to outperform (have an advantage over) its competitors by implementing policies and measures that enable it to produce goods or services at a lower cost than its competitors. In the production of handicrafts

Exporting, this strategy is often suitable for some businesses operating on a large scale globally or for businesses specializing in mass processing to foreign orders with industrial production processes. In some cases, these businesses can apply a type of market response strategy called undifferentiated marketing , according to Figure 1-8.

The company's marketing mix

Market

Maybe you are interested!

Figure 1-8: Undifferentiated Marketing

Source: Philip Kotler, 2002 [31]

* Focus strategy

Focus strategy based on competitive advantage is to concentrate resources to maximize the company's capacity in a narrow market segment. This strategy is implemented through differentiation. This is a type of strategy suitable for Vietnamese handicraft export enterprises at the present time because the scale, resources and capacity of these enterprises often do not allow them to compete with large corporations in all international market segments. Moreover, in market segments, competing enterprises have suitable goods that satisfy customer needs well, so target marketing only focuses on satisfying a certain characteristic in the segment. In many cases, this strategy is called concentrated marketing (target marketing) and is shown in Figure 1-9.

The company's marketing mix

Segment 1

Segment 2

Segment 3

Figure 1-9: Concentrated Marketing

Source: Philip Kotler, 2002 [31]

* Differentiation strategy

Within a market segment, there can be many different ways to differentiate competitive attributes (such as price, distribution, service, etc.). Differentiation strategy here is limited to creating products that are perceived by consumers as unique. Strong differentiation capabilities allow businesses to escape competitive pressure.

This is a strategy that can be applied in most handicraft export enterprises. In the marketing mix of handicraft export enterprises, the "product" factor is especially important - only by creating product differentiation can enterprises compete successfully.

Differentiation between market segments is expressed in the form of

differentiated marketing, as shown in Figure 1-10.

Marketing mix 1

Marketing mix 2

Marketing mix 3

Segment / area 1

Segment / area 2

Segment / area 3

Figure 1-10: Differentiated Marketing

Source: Philip Kotler, 2002 [31]

With the above choices of strategic types, the question arises:

What type of strategy is most suitable for the characteristics and circumstances of Vietnamese handicraft enterprises and craft villages? Chapter 2 of the thesis will present some special features of Vietnamese handicraft villages and products, from

That is the basis for deciding on choosing the appropriate competitive strategy and marketing form.

* Choosing marketing strategies according to each stage in the product life cycle [31]

Implementation Phase

- Fast "skimming" strategy: launching new products to the market with high prices and high promotion costs.

- Slow skimming strategy: launch new products to the market at high prices and low promotion costs.

- Rapid penetration strategy: launch products into the market with low prices and high promotion costs.

- Slow penetration strategy: launching products into the market with low prices and low promotion costs.

Growth Phase

- Strategy to improve product quality and add new features, better designs - Strategy to add new models and complementary products (add more sizes, flavors, etc.)

- Strategy to enter new market segments

- Strategy to increase distribution and open new distribution channels

- Strategy to shift from advertising to product awareness to advertising to make customers like the product

- Strategy to lower prices to attract the next group of price-sensitive buyers

The Peace Phase

- Market adjustment strategy: find ways to expand the number of customers (attract people who have never used the product, enter a new market segment, attract customers of competitors) or find ways to increase sales (encourage customers to increase the frequency of product use, use more products on each occasion, introduce other new uses of the product).

- Product adjustment strategy: improve quality, add new features, improve product design.

- Marketing mix adjustment strategies: consider increasing or decreasing selling price, finding new distribution channels, increasing or decreasing advertising/promotion, improving service quality, etc.

Recession Stage

- Anti-commodity strategy, extending life cycle (to dominate the market or strengthen competitive position)

- Strategy to maintain investment levels until the remaining uncertainties of the industry are resolved

- Selective investment reduction strategy (eliminating unprofitable customer groups, increasing investment in highly profitable niches)

- Strategy to exit the market at the right time: exploiting the goods effectively, preserving resources and technical labor

It is important for TCMN businesses to identify

Know what stage your product is in the product life cycle to make an appropriate strategic decision based on market conditions, competitive situation, available resources, etc.

* Some strategies for market expansion and international development

After conducting market segmentation and selecting target markets, Vietnamese TCMN enterprises can refer to Figure 1-11 to plan their market expansion and international development strategies.

Current products

New products

Market

Present

1. Market penetration strategy

3. Product development strategy

New market

2. Market development strategy

4. Diversification strategy

Figure 1-11: Market/product pair development model

Source: Philip Kotler, 2002 [31]

Strategy (1): focus on a few existing products in a few existing markets. This is a typical situation for companies to start exporting. It allows adapting resources to market investment needs. Except for large companies with strong financial resources, this strategy is the most feasible means for Vietnamese handicraft export enterprises to start participating in the international market.

Strategy (2): focus on expanding product lines (many types) to adapt to the number of market segments available when the enterprise finds that it has enough potential (diversify products for the target market available), that is, attack many market segments of several countries. When successfully penetrating the market of one country or several countries, Vietnamese handicraft export enterprises can consider expanding to other market segments in those countries to fully exploit their existing advantages to increase export revenue.

Strategy (3): penetrating new market segments with appropriate products is a strategy that requires Vietnamese TCMN enterprises to have the capacity to develop new products that meet the needs of each separate market segment.

Strategy (4): total diversification, both new products and new markets, is the strategy of large multinational companies, not suitable for Vietnamese handicraft export enterprises today.

* The issue of choosing export markets for enterprises in Vietnamese handicraft villages

In their efforts to bring their products abroad, Vietnamese TCMN enterprises need to consider which country(ies) or region(s) they should target as their target market. Figure 1-12 can be referred to.

	High	Medium	Steel
High	Country X			Steel
TB		Area A
Steel	Area B
High		Country Y		High
TB			Country Z
Steel

Market attractiveness

Competitive advantage

Risk

Figure 1-12: Evaluating and selecting markets to enter

Source: Philip Kotler, 2002 [31]

This model will be further analyzed in Chapter 2 when evaluating and ranking export markets for Vietnamese handicraft products.

* Some special features in the export activities of Vietnamese handicraft products

Vietnam's handicraft exports can be classified into two main forms: cross-border exports and on-the-spot exports. Cross-border exports are further classified into two types: (1) exporting original products designed by Vietnamese artisans and (2) processing products to foreign orders.

(a) Cross-border exports

Exporting original products designed by Vietnamese artisans: is a form of exporting products created by artisans or made by artisans / craftsmen according to the designs of product designers at universities and design centers. These products are highly artistic, unique and imbued with Vietnamese cultural identity, clearly expressing tradition through the sophisticated lines and patterns of the artisans.

passed down from generation to generation. Many of the products are considered special works of art and most are of high value (both artistically and

commercial). However, these products usually serve only one

narrow market segment. The main export target is the Vietnamese and Asian communities abroad and other groups who understand or want to learn about traditional Vietnamese culture. This type of product itself can also be divided into 2 types: (1) unique, individual works of art, which are difficult to make a second identical version; (2) products originally designed by artisans/painters, but ordered by customers by those artisans to produce in large quantities for sale abroad. The characteristic of this form of export is that the product value is high (often very high) but the export quantity is low. These products are suitable for high-end markets or markets with high consumer tastes and aesthetics, demanding quality and aesthetics.

Processing products according to foreign orders : is a form of mass export according to m5 models provided by foreign customers to the manufacturer. Those m5 models can be designed / created by customers themselves, or they can also be collected or copied from many different sources, including sources in Vietnam. In this case, the craftsman only plays the main role as a master craftsman, directly manipulating difficult details and instructing other craftsmen to mass produce products, with the partial assistance of machines and tools (depending on each item). This is a form of export production that is probably the most popular today, accounting for the highest proportion of export revenue. Although the number of orders is large, the value of the products is not high, because customers mainly want to take advantage of the skillful skills of the craftsmen.

/ Vietnamese craftsmen at low cost to make products according to their own ideas and sell them in foreign markets at high profit. A large part of the m5 models ordered are models according to Western tastes or have Western cultural identity. However, the appearance of these m5 models

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