Thuy Hanh's Final Report

8/2/2019 Thuy Hanh's Final Report

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Acknowledgement

I would like to express my heartfelt gratitude and deepest appreciation to my research

Advisor and the chairman of the examination committee, Dr. Truong Quang for his precious

guidance, share of experience, ceaseless encouragement and highly valuable suggestions

throughout the course of my research.

I would like to extend my sincere thanks to Prof. Franois Jol Broustail and Dr. Sununta

Siengthai members of the examination committee, for their valuable comments and

constructive suggestions.

My special gratitude is extended to all faculty members and staff at the School of

Management, AIT and professors in the Marketing Department at the ESCP-EAP, Paris for

their support and the valuable knowledge during my study in France.

I would also like to avail this opportunity to express my appreciation to AIT and the

Government of France for providing me the financial support to facilitate my study in both

Thailand and France.

Many thanks to Mr. Nguyen Anh Quan, Brand Manager and Ms. Trinh Thuy Nhung, Head

of Marketing Department as well as the other staff in FPT Corporation for their valuable

information and enthusiastic support for this research study.

Last but not least, the deepest and most sincere gratitude go to my beloved parents, my sister,

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fi d l t f i d f th i b dl t b d t l d

Abstract

Considered by the Government of Vietnam as one of the most important driving forces foreconomic development and social advancement, Information Technology (IT) and the ITcompanies have received extensive attention and encouragement from the State and the

public. Despite a number of certain initial achievements, the young IT industry in Vietnam isstill to face various challenges, one of which is to establish the locally and globallyrecognized IT brands ensuring service quality, customer satisfaction and customer loyalty.

As the leading company in the industry and continuously voted as the most favourite ITname, the Corporation for Financing and Promoting Technology FPT has been well-knownfor its public visibility and spectacular growth in both revenue and personnel terms. The

board of managers have, however, realized the importance and the role of branding to theirsustainable development not long ago. Only in late 2003 were a team of brand officersformed and the status of FPT brand in different affiliate companies analyzed and reported.There are many issues around FPT brand such as the inconsistent and confused appearance,the unclear strategy for brand building, a value proposition lack of emotional benefits and

point of difference. Most of the activities carried out by marketing team were mainly servingthe sales improvement purpose. Therefore, it is high time FPT measured its brand anatomyto redefine a timely and suitable branding strategy with effective communication and equity

building programs. Not starting from a scratch, but the difficulties ahead will be mouldingdue to the current mess.

In this research, the author aims to provide an overview about IT market in Vietnam and an

i i ht b t FPT b d it ti Th l i f b d id tit ill b d i l


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Table of Contents

Acknowledgement ......................................................................................................................iAbstract .....................................................................................................................................ii

Table of Contents .....................................................................................................................iii

List of Figures ..........................................................................................................................vi

List of Tables ..........................................................................................................................viii

Abbreviations ...........................................................................................................................ix

Chapter 1

Introduction ...............................................................................................................................1

1.1. Rationale of the Study .....................................................................................................11.2. Statement of the Problem ................................................................................................11.3. Objectives of the Study ....................................................................................................21.4. Research Methodology ....................................................................................................2

1.4.1. Process ............................................................................................................................21.4.2. Data collection .............................................................................................................. ..2

1.5. Scope and Limitations .....................................................................................................31.6. Organization of the Research Report .............................................................................3Research Framework ..............................................................................................................3

Chapter 2

Literature Review ....................................................................................................................5

2.1. Introduction to Brand ......................................................................................................52.1.1. Brand definition ..............................................................................................................5

2 1 2 Ch i b d l t 5


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Chapter 4

FPT and Band Inventory .......................................................................................................314.1. Overview of FPT ...........................................................................................................31

4.1.1. History and achievements .............................................................................................314.1.2. Financial capability ..................................................................................................... ..314.1.3. Lines of business ...........................................................................................................324.1.4. Human Resources .........................................................................................................364.1.5. Business partnership .....................................................................................................364.1.6. Strong corporate culture ................................................................................................37

4.1.7. SWOT analysis .............................................................................................................374.2. Brand Identity ................................................................................................................38

4.2.1. Brand anatomy ..............................................................................................................38Brand name .............................................................................................................................394.2.2. Branded house ...............................................................................................................404.2.3. FPT vision and mission .................................................................................................404.2.4. FPT business and quality objectives ..............................................................................414.2.5. Brand logo and symbol .................................................................................................41

4.2.6. Slogan ...........................................................................................................................424.2.7. Taglines .........................................................................................................................43Colors ............................................................................................................................... ......43Jingles .....................................................................................................................................43

4.3. FPTs Strategies and Marketing Communications Programs.....................................44Competitive analysis ...............................................................................................................44Brand positioning ....................................................................................................................46Product strategy ......................................................................................................................47

P i i t t 48


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6.1.1. Strengths .......................................................................................................................686.1.2. Weaknesses ...................................................................................................................68

6.2. Recommendations ..........................................................................................................696.2.1. Brand equity ..................................................................................................................69Brand audit .............................................................................................................................72Brand management .................................................................................................................726.2.4. Brand support programs ................................................................................................73

6.3. Critical Success Factors .................................................................................................74Managers commitment ..........................................................................................................74Employee involvement ...........................................................................................................75

Corporate culture advantage ...................................................................................................75Management of daily operation ..............................................................................................75

REFENRENCES .....................................................................................................................76

APPENDIX I: QUESTIONAIRE FORMS ..........................................................................78

APPENDIX II: SPSS RESULTS ...........................................................................................84


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List of Figures

Figure 1.1 The Research Framework 4

Figure 2.1 Elements to Build a Strong Brand 7

Figure 2.2 Customer-based Brand Equity Pyramid 12

Figure 2.3 Subdimensions of Brand Building Blocks 18

Figure 3.1 Vietnam IT Markets 21

Figure 3.2 World and Vietnam IT Market Structure 22

Figure 3.3 Hardware Market Value 23

Figure 3.4 Software Market Value 24

Figure 3.5 Number of Software Companies 24

Figure 3.6 Percentage of Internet Users & Subscribers in2003 25

Figure 3.7 Number of IT Training Units and IT Bachelor Education 27

Figure 4.1 FPTs Revenue 30

Fi 4 2 R C t ib ti b FPT Affilit C i 30


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Figure 5.1 IT Brands Top of Mind in Vietnam 55

Figure 5.2 Top 3 favourite IT Brands in Vietnam 56

Figure 5.3Analogy of FPT with Animals

56

Figure 5.4 Potential Customers Evaluations of FPT Brand 57

Figure 5.5Purchase Intention of FPTs Potential Customers

58

Figure 5.6 Current Customers Top 5 Recalled Brands 59

Figure 5.7Current Customers Evaluations of FPT Brand

60

Figure 5.8 FPTs Core Brand Value Pyramid 65

Figure 5.9 Brand association map for FPT 67

Figure 6.1 FPTs Brand Gaps 69

Figure 6.2 FPTs Brand Building Focus 70

Figure 6.3 FPTs Brand Life Cycle 74


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List of Tables

Table 2.1 Brand Building Process 12

Table 3.1 Evaluation of the Achievements of National IT Objectives 27

Table 4.1 FPTs SWOT Analysis 35

Table 4.2 Evaluation on FPTs Desirable Qualities for a Brand Name 38

Table 5.1 FPTs Top 3 Competitors 57

Table 5.2 Current Customers Evaluations of FPT Brand 60


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Abbreviations

Abbreviations Meaning

FPT Corporation for Financing and Promoting Technology

FDC FPT Distribution Company

FIS FPT Information System

FOX FPT Communication

Fsoft FPT Software

FSS FPT Software Solutions

FMB FPT Mobile

ADSL Asymmetric Digital Subscriber Line

IT Information TechnologyITC Information Technology and Communication

ISP Internet Service Provider

IXP Internet Exchange Provider

VDC Vietnam Data & Communication Company

CEO Chi f E ti Offi


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Chapter 1

Introduction

1.1. Rationale of the Study

Still in an infancy stage, Vietnams informatics industry has been developing at a noticeablespeed over the past decade, witnessing series of IT companies to expand and dominate the

market. Among those big names, FPT emerges as the pioneer company with 16 years ofhistory. Founded in 1988 with just 13 members, FPT made rapid and spectacular progresses,to become the nation-wide provider of informatics products and services. In 2003, FPT wasvoted by PCWorld readers as the most credit informatics corporation and awarded with the

prize of Top 5 IT companies in Vietnam. In 2003, FPT reached record revenue of 3172billion VND (a 110% growth as per 2002) and made a contribution to the States budget withVND 300 billion. Its business lines cover a wide range from Internet service, softwaresolution to hardware distribution and maintenance service. (FPT, 2003).

In the path of development and competition, FPT has been focusing continuous andconsiderable effort on establishing a brand that is well-known among Vietnameseconsumers. It has been very active in such public relation activities as forming ITassociations, and sponsoring sport events, business schools and education centers. Its efforthas been acknowledged from the well-defined business strategies, corporate culture,customer relationship, performance and quality to the training and development programs.

All f th t ff t h b ht b k t i i ifi t f it f FPT b d


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the nature of service, especially information technology service is basically invisible,intangible; a branded offering supported by firm core business will be the key to effectively

communicate the service value to the customer. So the task ahead for FPT is to build a verystrong brand identity with rich and clear elements as a base to develop further and deeper

brand equity.

1.3. Objectives of the Study

Given the rationale of the study with the stated problems, this study aims to reach thefollowing major objectives:

To investigate and describe FPTs business and marketing strategies together with itsbrand inventory elements and marketing programs.

To analyze and assess the strength, the weakness and the effectiveness of FPT brandbuilding activities based on customers awareness and evaluation.

To recommend a strategic plan with the concrete solutions to narrow in all the foundgaps in building a successful and sustainable brand.

1.4. Research Methodology

1.4.1. Process


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Current customers Questionnaire 70Potential customers Questionnaire 100

The secondary data comes from news, magazines, company brochures, company bulletinsand other internal sources.

1.5. Scope and Limitations

Based on the literature review, the research will focus on investigating and analyzing theapproach and programs implemented by the company to build its brand. Due to limit of timeand effort and to provide an in-depth exploration, the study will approach from FPT as thewhole brand umbrella with some focus on FPT- Communication, the business spending mosteffort on marketing and branding, among FPTs 13 business lines. There are somelimitations that influence the outcome of the research as:

The practice of keeping internal information confidential in State capital corporations

will somehow narrow the research coverage of business detailed information. The fact that all of the surveys and interviews will be conducted in Hanoi, North of

Vietnam may cause certain minor biases

Some information in several questionnaires is missing, but still fall in the acceptablelevel.

There is no research study in Information Industry before.

1 6 O i ti f th R h R t


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Situation Analysis ofBrand Building

Activities in FPT

Objectives of the Research

Literature Review Data Collection


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Chapter 2

Literature Review

2.1. Introduction to Brand

2.1.1. Brand definition

Although an agreement has been reached that branding serves as a means to distinguish the

goods or service of one producer from those of another, there have been a variety ofdefinitions around brand concept. American Marketing Association (2003) clarifies it bygiving a very detailed definition: "A name, term, design, symbol, or any other feature thatidentifies one seller's good or service as distinct from those of other sellers. The legal termfor brand is trademark. A brand may identify one item, a family of items, or all items of thatseller. If used for the firm as a whole, the preferred term is trade name."

A brand has several roles, one important of which is to communicate the service value of thecompany. A strong brand can reinforce the companys core values and make the servicevalue more visible. In other words, a strong brand can help increase the brand equityscontribution to the total equity of the company.

2.1.2. Choosing brand elements

A brand element is visual or verbal information that serves to identify and differentiate aproduct. The most common brand elements are brand name, logos, symbols, characters,


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Naming guidelines. As with any brand element, brand names must be chosen with the sixgeneral above-mentioned criteria in mind. Besides, brand awareness may be improved if the

chosen brands are simple and easy to pronounce or spell; familiar and meaningful; different,distinctive and unusual.

Naming procedures. Most systems for developing brand names basically adopt a procedureas follows:

1. Define the branding objectives2. Generate as many names and concepts as possible3. Screen names based on the branding objectives and marketing considerations4. Collect more extensive information on the final 5 to 10 names5. Conduct consumer research to confirm management expectations6. Choose the name that maximizes the branding and marketing objectives, then

formally register the name

URLS

URLs (Uniform Resource Locators) are used to specify locations of pages on the Web andare also commonly referred to as domain names. There is a number of URL naming advices

from industry expert:1. Bring in expert advice for your brand name and visual identity2. URL should be short, easy to spell and understandable3. Stay away from prefixes and suffixes that fail to differentiate you4. Avoid the .com5. Avoid the descriptive to prevent self-limitation6. Create a unique personality7. Go for unexpected combination

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Slogans

Slogans are short phrases that communicate descriptive or persuasive information about thebrands. Slogans often appear in advertising but can play an important role on packaging andin other aspects of the marketing programs. Slogans can be devised in a number of differentways to help build brand equity.Because slogans are perhaps the easiest brand element to change over time, there is moreflexibility in managing them. In changing slogans, however, as with changing other brandelements, it is important to recognize ho the slogan is contributing to brand equity, decidehow much of this equity enhancement and retain the needed equities in the slogan while

provide new twists of meaning.

Jingles

Jingles are musical messages written around the brand. Because of their musical nature,jingles are not nearly as transferable as other brand elements. Jingles can communicate brandbenefits but they often convey product meaning in a nondirective and fairly abstract fashiongiven their musical foundation.

Packaging

Packaging involves the activities of designing and producing containers or wrappers for a product. To achieve the marketing objectives for the brand and satisfy the desires ofconsumers, the aesthetic and functional components of packaging must be chosen correctly.Aesthetic considerations relate to a packages size and shape, material, color, text andgraphics while functionally, structural design is crucial

2 1 4 B d it


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Figure 2.2: Elements to Build a Strong Brand

Source: Farquhar, 1989

In his Managing Brand Equity, Farquhar outlined the following three stages that are

required in order to build a strong brand.

In the introductions stage, a positive evaluation by the consumer is important. In order to

achieve a positive evaluation of the brand in the consumers memory, a firm must have aquality product that delivers superior performance to the consumer with the strategy of

using the brand as the platform for the launch of future products. Farquhar distinguishes

three types of evaluations. Affective responses involve emotions or feelings toward the

brand. Cognitive evaluations are inferences made from beliefs about the brand.

Behavioural intentions are developed from habits or heuristics toward the brand. Farquhar

underlined that positive evaluations are necessary for building a strong brand, but a

common error is to assume they are sufficient.

The elaboration involves making the brand easy to remember and develop repeat usage.

There should be an accessible brand attitude, which means that the consumer should easily

remember his or her positive evaluation of the brand.

Fortification stage involves carrying a consistent image overtime to reinforce its place in

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dramatically affects customers evaluations. Awareness at the recall level further affects

choices by influencing the consideration and selection of the brand.

Brand associations

A positive brand image can be created by marketing programs that create strong, favourableand unique associations to the brand in memory. Brand associations can be created in manyways: by direct experience, words of mouth, assumptions, brand inferences or brand

marketing programs. Brand associations can help customers process or retrieve

information, be the basis for differentiation and extensions, provide a reason to buy, and

create positive feelings.

Brand loyalty

Brand loyalty is a consumers preference to buy a particular brand in a product category. Itoccurs because consumers perceive that the brand offers the right product features, images,

or level of quality at the right price. Brand loyalty generates value mainly by reducing

marketing costs. Retaining existing customers is much less costly than attracting new ones.

It is also difficult for competitors to communicate to satisfied brand users because they

have little motivation to learn about alternatives. Loyal customers can also entice others by

using the product or advising others to use it.

The overall description of brand equity incorporates the ability to provide added value toyour companys products and services. This added value can be used to your companysadvantage to charge price premiums, lower marketing costs and offer greater opportunities

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associations to perceived valuethe tradeoff between price and qualitythat will be animportant factor in their decisions.

Channel strategy

Channels can be broadly classified into direct and indirect channels.Direct channels involveselling through personal contacts from company to consumers. Indirect channels involveselling through third-party intermediaries such as agents, wholesalers or distributors. From a

branding standpoint, there are three important channel considerations:

First, consumers often have mental associations to retail stores or chains on the basisof product assortment, pricing and credit policy, quality of service, and so on. Theassociations making up the store image may be linked to its products.

Second, retailers and other channel members can affect brand equity of the productthey sell through prominently display or mention the brand, or provide information toreinforce and strengthen brand associations. Thus, manufacturers must carefully blendPush and Pull strategies accompanying with other channel supports, such asmarketing partnership or cooperative advertising.

Push considerations include those marketing activities directed to channel members tohelp them sell the product or push on to the end consumer.

Pull considerations include those marketing activities directed to the end consumers sothat them will demand the product from the tradepull through the channel.

Third, to gain greater control and build stronger relationships with consumers,manufactures may need to introduce their own retail outlets as well as market directly


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c) Processes: There are many processes to deliver services to customers. Service firmsseek for different processes from their competitors in order to stay competitive with

their unique processes to satisfy customers.

In the view of the complexity of service marketing, it requires not only external marketingdealing customers but also internal and interactive marketing.

External marketingdescribes the normal work done by the company to prepare, price,distribute, and promote the service to customers.

Internal marketingdescribes the work done by the company to train and motivate itsemployees to serve customers well.

Interactive marketingdescribes the employees skill in serving the client. The clients judgeservice quality not only by its technical quality (e.g., Was the surgery successful?) but also

by its functional quality (e.g., Did the surgeon show concern and inspire confidence?).Professionals and other service providers must deliver high touch as well as high tech.

2.1.8. Guidelines for creating a strong brand

Keller summarized guidelines for creating a strong brand as follows:

1. Research your corporate constituencies.

2. Understand your business.

3. Advance the vision.

4. Release the power of communications.

5. Set up your communications infrastructure.

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vision. This strategy has to be expressed also in the mission statement where the overallgoals or reasons for the existence of the company are stated. And next, in the brand promise

and brand proposition, the company should clarify how it wants the customers to feel andhow they will cater the expected emotional or functional benefits of experiencing acompanys products or services.

Now we address the question of how to build or create a strong brand for a service company

specifically. Keller mentioned that for building strong brand equity, companies must start

with the basics: What makes a brand strong and how you build a strong brand. According to

the customer-based brand equity model, building a strong brand involves a series of logical

steps:

Table 2.1: Brand Building Process

Step 1: establishing the proper brand identity with customers

and a strong, favorable and unique association of the brand incustomers minds with a service class or customer need.

Brand identity

Who are you?

Step 2: creating the totality of appropriate brand meaning inthe minds of customers

Brand meaningWhat are you?

Step 3: eliciting the positive and accessible brand responses

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Brand responses

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Figure 2.2: Customer-based Brand Equity Pyramid

Source: Keller, 2003

2.2.2. Core brand values

d d d l

Salience

Resonance

Performance Imagery

FeelingsJudgments


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Thus, in terms of creating brand salience, in many cases, it is not only the depth of brandawareness that matters, but also the breadth of brand awareness and properly linking the

brand to various categories and cues in customers minds. In other words, it is important thatthe brand not only be top-of-mind and have sufficient mind share but it must also do soat the right times and right places. Breadth is an often-neglected consideration, even for

brands that are category leaders. For many brands, the key question is not whethercustomers can recall the brand or not but, instead, where do they think of the brand, whenthey do think of the brand, and how easily and often do they think of the brand? In particular,many brands and products are ignored or forgotten at possible usage situations. Increasingthe salience of the brand in those settings can be an effective means to drive consumptionand increase sales volume (Keller, 2003).

Brandmeaning

It is usually not enough and not efficient to use only brand salience in building brand

equity. Brand meaning is important to create a brand image and establish what the brand is

characterized by and should stand for in customers minds.

Keller divided brand meaning in brand performance and brand imagery.

Brand performance

Brand performance is the way the product or service attempts to meet customers more

functional needs. It refers to the intrinsic properties of the brand, including inherent

product or service characteristics.


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product if it needs repair. Thus, perceptions of product performance are impacted by factorssuch as the speed, accuracy, and care of product delivery and installation; the promptness,

courtesy, and helpfulness of customer service and training; the quality of repair service andthe time involved; and so on.

Service effectiveness, efficiency, and empathy. Customers often have performance-relatedassociations that related associations that relate to the service interactions they have with

brands. Along those lines, service effectiveness refers to how completely the brand satisfiescustomers service requirements. Service efficiency refers to the manner by which theseservices are delivered in terms of speed, responsiveness, etc. Finally, service empathy refers

to the extent to which service providers are seen as trusting, caring, and with customersinterests in mind.

Style and design. Consumers may have associations to the product that go beyond itsfunctional aspects to more aesthetic considerations such as its size, shape, materials, andcolor involved. Thus, performance may also depend on sensory aspects as to how a productlooks and feels and perhaps even what it sounds or smells like

Price. Finally, the pricing policy for the brand can create associations in consumers mindsto the relevant price tier or level for the brand in the category, as wall as to its.Corresponding price volatility or variance (in terms of the frequency or magnitude ofdiscounts, etc.). In other words, the pricing strategy adopted for a brand can dictate howconsumers categorize the price of the brand (e.g., as low, medium, or high price) and howfirm or flexible that price is seen as (e.g., as frequently or infrequently discounted).


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example, customers may believe that a brand is used by many people and therefore view thebrand as popular or a marker leader

Purchase and usage situations. A second set of associations is under what conditions orsituations the brand could or should be bought and used. Associations of a typical purchasesituation may be based on a number of different considerations, such as: 1) Type of channel(e.g., department store, specialty store, or direct through internet or some other means); 2)Specific store (e.g., Macys Foot Locker or Fogdog.com); and 3) Ease of purchase andassociated rewards, if any. Similarly, associations of a typical usage situation may be basedon a number of different considerations, such as: 1) Particular time of the day, week, month,

or year to use the brand; 2) Location to use the brand (e.g., inside or outside the home); and3) Type of activity where the brand is used (e.g., formal or informal).

Personality and values. Brands may also take on personality traits and values similar to people. Brand personality is often related to the more descriptive usage imagery butinvolves much richer, more contextual information. Five dimensions of brand personality(with corresponding sub-dimensions) which have been identified are: 1) Sincerity (e.g.,

down to earth, honest, wholesome, and cheerful); 2) Excitement (e.g., daring, spirited,imaginative, and up-to-date); 3) Competence (e.g., reliable, intelligent, and successful); 4)Sophistication (e.g., upper class and charming); and 5) Ruggedness (e.g., outdoorsy andtough).

History, heritage and experiences. Finally, brands may take on associations to their pastand certain noteworthy events in the brand history. These types of associations may involvedistinctly personal experiences and episodes or be related to past behaviors and experiences


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all favorable associations are unique. Creating strong, favorable, and unique associations area real challenge to marketers, but essential in terms of building customer-based brand equity.

Brand responses

Brand responses mean to pay attention to how customers respond to the brand, its

marketing activity, and sources of information. Keller distinguished brand responses into

brand judgments and brand feelings. Brand judgments focus on customers personal

opinions about the brand based on how they put together different brand performance and

brand imagery associations. Brand feelings describe the customers emotional reactions to

the brand relate to the social currency the brand evokes. Criteria for brand responses are

positive and accessible reactions (Keller 2003)

Brand Judgments

Brand judgments focus upon customers own personal opinions and evaluations with regardto the brand. Brand judgments involve how customers put together all the different

performance and imagery associations for the brand to form different kinds of opinions.Customers may make all types of judgments with respect to a brand, but in terms of creatinga strong brand, four types of summary brand judgments are particularly important:

1) Brand quality2) Brand credibility3) Brand consideration4) Brand superiority


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feel that they are in synch with the brand. Brand resonance is characterized in terms ofintensity or the depth of the psychological bond that customers have with the brand as well

as the level of activity engendered by this loyalty (e.g., repeat purchase rates, the extent towhich customers seek out brand information, events, other loyal customers, and so on).Specifically, brand resonance can be broken down into four categories.

1) Behavioral loyalty2) Attitudinal attachment3) Sense of community4) Active engagement

According to Keller (2003), the strongest brands excel in all six of the brand-building

blocks. The most valuable building block, brand resonance, occurs when the other entire

brand -building blocks are completely in synch with customers needs, wants, and desires.

Brand resonance reflects a completely harmonious relationship between customers and the

brand. A brand with the right identity and meaning can result in a customer believing the

brand is relevant to them. The strongest brands will be the ones to which those consumers

become so attached that they, in effect, become evangelists and actively seek means to

interact with the brand and share their experiences with others. Being able to achieve

resonance and affinity with their customers, a firm can reap a host of valuable benefits, suchas greater price premium and more efficient and effective marketing programs


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Category identificationNeeds satisfied

QualityCredibility

ConsiderationSuperiority

WarmthFun

ExcitementSecurity

Social ApprovalSelf-respect

Loyalty

AttachmentCommunityEngagement

Primary characteristics& secondary featuresProduct reliability,

durability & serviceabilityService effectiveness,efficiency & empathy

Style and designPrice


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Identity

Meaning

Relationships


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Chapter 3

Overview of IT Market in Vietnam

3.1. Introduction

Vietnam is in Southeast Asia covering an area of 331,689 sq kilometres. Its population isover 80 million, with an age structure of 33% under 14, 60% from 15 to 60, and only 7%

over 60. It is considered a young country with a high literacy rate (94%). There are about22 million people enrolled in school (~27% of population) in the whole country. The annualGDP growth rate in the period of 1996-2003 is about 6-8%, with an average industrial

production growth rate of more than 15%.

Since 1986, the Vietnamese Government has implemented numerous major reforms andliberal policy changes focused at the development of a market-oriented economic system.These pro-liberal reforms have begun to show results in the form of economic growth anddevelopment. The industrial sector has grown at 14-14.5% per year, the agricultural sector at4.7-4.8% per year, and the services sector at about 11-12% per year since 1991. The liftingof the trade embargo by the U.S. in February 1994 and Vietnam's entry into the ASEAN foldin July 1995 has strengthened its economic position. The country is decisively moving out ofeconomic stagnation and international isolation and has entered a high growth phase.(Vietnam IT Association, 2003)


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the direction of the Ministry of Science, Technology, and Environment (MOSTE), has provided detailed guidance to Ministries and provincial Peoples Committees in the

development of IT action plans within their respective jurisdictions. The 2001 2005 MasterPlan recognises that progress is needed in several areas especially in the need for more andhigher quality trained IT professionals and a more liberal legal and regulatory environmentfor IT. The priority programs and major projects of the Program are attached defined in fourmain directions:

Development of telecommunication infrastructure.

Development of IT human resources.

Development of the software industry.

Development of the hardware industry by manufacturing some IT equipments tomeet local demands.

The policies reflect Vietnamese governments intention of developing IT speedily to cachingup with the regional level in the year 2010. Together with the major policies, the ITdevelopment strategy objectives and the solutions for implementing in this period have also

been defined.

3.2.2. The IT objectives

IT will become the most important factor on the socio-economic development.Developing the National Information Network in all over the country with advancetechnology so that up to the year 2010, the percentage of Internet users will be in theaverage level compared with the World


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3.3. Overall IT Market Situation

The total IT market includes hardware, software, and computer services.Vietnam's rapidly developing Information Technology (IT) industry was only valued at US$300 million in 2000, but increased by 67% to US$ 500 million by 2003, and is estimated toreach US$ 800 million by 2005, according to the International Data Group (IDG), an IT

research firm. Surveys recently conducted by IDG and the local industry association showthat for the period of 1996-2003, IT market has made some good growth, with averagegrowth rate of 20-25%, with the highest growth in 2000. This percentage has remainedrelatively steady for the last several years and is expected to hover in the same range in thenear future (Vietnam IT Association, 2003).

150180

200220

300340

400

500

200

300

400

500

600IT market value

(mil. USD)


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Microsoft, Motorola, Oracle, and Unisys. These companies have all come to Vietnam in aneffort to work in the domestic market. And while each is having varying levels of success,

there are a number of key issues that present serious constraints not only for their ownsuccess, but for overall growth of the IT sector in Vietnam. These have recently beencaptured in working papers by the AmChams IT Committee and include issues such as; lackof IPR protection, restrictions on Internet access, excessive and inconsistent taxation, hightelecommunications costs, and weaknesses in the local educational system.

3.4. Market Structure

Vietnam is a small market but has a potential to rapidly develop in the field of informationtechnology. IT experts estimate sales this year at more than US$1 billion and believe thehardware market will dominate the computer field. As the matter of fact, Vietnam has been ahardware-focused market for the past five years. Every year, computer hardware is believedto account for approximately 80 percent of total IT spending, while the software and servicesectors shared the rest equally.

IT world market structu

49%

51%

S oftware-S ervicIT Vietnam market s tructu

20,40%

79,60%


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The total market for computer hardware and peripherals in 2002 was US$ 329 million andreached 560 US$ million in 2003. The IT market is still concentrated in two major cities: Ho

Chi Minh City, which captures approximately 60.5 percent of the total market, and Hanoi,which accounts for approximately 29.8 percent of the total market.

Figure 3.3: Hardware Market Value

Source: HCM Computer Association, 2003

250280

325

398

83,33%82,35% 81,25%

79,60%

-

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003

Hardw are market (mil.USD)

Value ratio on total market


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Companies specializing in manufacture of software products are few in number largelybecause of low domestic demand and the inability to produce software packages of high

commercial values. A good signal is, according to PCWorld Vietnam, 50% of currentlyoperating software companies have been established within 2.5 years.

5060

75

102

16,67%17,65%

18,75%20,40%

-

20

40

60

80

100

120

2000 2001 2002 2003

Softw are/ services (mil.USD)

Value ratio on total market

Figure 3.4: Software Market Value

Source: Vietnam IT Association, 2003

Since 1996, the number of actual operating software companies has been going up by 22-


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Vietnams software companies, there are about 15 companies that have won the qualitycertificate ISO-9000, and there is only one that has won the highest quality rating of

Capability Maturity Model (CMM) Level 5. Two others have won CMM-4, and around 20software companies are now striving to apply for CMM-3 or CMM-4. The MPT, togetherwith the Vietnam Software Association, has taken steps to increase quality standards for theindustry (Vietnam IT Association, 2003).

A number of software parks have been built and put into operation by municipal andprovincial authorities and relevant Government agencies, offering tax holidays and otherincentives to software and related services firms. This is a manifestation of the strong

determination to promote SI development. There are now around 10 software parks in thewhole nation. Though some are newly entering into operation, there are a group of software

parks that have been running at full capacity in terms of equipment and facilities. The mostsuccessful one is the Quang Trung Software Park in Ho Chi Minh City, with 51 companiesnow operating, out of which 11 are foreign owned companies and 15 others are jointventures between Vietnamese companies and foreign partners. There are more than 1,500software engineers working in this software park.

A big problem for SI development in Vietnam currently is a high piracy rate for software inthe country. The government has recognized this issue and is taking a series of actions toreduce the piracy rate. The situation has since been improving.

3.4.3. IT infrastructure: telecommunication and Internet

Joining the Internet world in 1997, Vietnam was a latecomer in comparison with other global


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The Government of Vietnam is committed to widening the Internet field. Vietnam hasgradually removed the monopoly on Internet and international telecommunication services to

encourage fair competition and to stimulate the development of the sector. The Internet isgrowing rapidly in Vietnam following government reforms, particularly Decree 55, and theapproval of the post and telecom development strategy that favors a market more opened todifferent economic sectors. To achieve 1.5 million Internet subscribers by 2005, Vietnam

plans to make concrete measures to strongly reduce Internet tariff, line-leasing, gateway-leasing tariff, user fee, etc. Wideband Internet services have recently been provided inVietnam. This is a turning point in the development of the local telecom and informationtechnology market

3.4.4. IT training

The overall plan on application and development of IT till 2005 issued in September 2002indicates, Vietnam needs to train another 50,000 IT specialists at different levels, amongwhich 25,000 are high-level specialists and professional programmers, who are fluent in

necessary foreign language(s).

Since 1996 Vietnamese Government has strongly paid attention to information technology,the key information technologies. In past years, the universities in Vietnam have centered ontraining software specialists for the information technology. The Vietnamese Governmenthas also strongly invested in training software engineers in 7 main faculties of differentuniversities. In addition, many other universities and institutes have participated in traininginformation technology students.


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Figure 3.7: Number of IT training units and IT Bachelor Education


In recent years, the Vietnamese Government has also allowed organizations and individualsto form training centers for IT as a measure to reduce the short of human resource inVietnam. Nevertheless, one question emerging is how to balance the increasing quantity andquality of the trained persons. Many experts in information technology have believed thatuniversities and training centers could satisfy the demands for the quantity of IT engineersand university graduates. However, there are a number of graduated IT people who need to

be retrained in order to meet the general requirements of software companies. Vietnamstudents are recorded as intelligent, diligent and able to make software like Indian students,

but they are lacking of experience and are timid in their work. Their English is also aproblem. These are the challenges faced by IT human resources development in the country.

3.5. Evaluation of the achievements of national IT objectives

Table 3.1: Evaluation of the Achievements of National IT Objectives

Objectives Achievements

Up to the year 2010, the percentage ofInternet users will be in the average

At the moment the rate of Internet users inVietnam is quite high, around 4.15% of total


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in both quantitative and qualitative terms. The growth rate as analyzed, however, has not been up to the optimistic objectives in the IT master plan. Comparing the current

achievements versus the target objectives, it is obvious that the reality will be a long wayfrom the plan. Government plans and incentives are very encouraging, but they should comealong with timely investment, more suitable training programs and more effectiveintellectual property rights protection and stronger legal enforcement.

Having taken a look at the overall IT market and being aware of all opportunities and threatsthat an IT company may enjoy and encounter, it is now interesting to get an insight into thedevelopment, operation and brand building of the biggest IT Corporation in Vietnam FPT.


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Chapter 4

FPT and Band Inventory

4.1. Overview of FPT

4.1.1. History and achievements

The corporation for Financing and Promoting Technology (FPT Corporation) is an ITcompany switched under Decision No.178/QD-TTg dated February 28th 2002 by PrimeMinister from the State-owned Company belonging to Ministry of Science Technology to

joint-stock Company.

FPT was established in 1988 in Vietnam with 13 founders, belonging to the NationalInstitute of Technology Research. Since 1994, FPT became member of Ministry of Science,Technology and Environment (Now Ministry of Science and Technology) and also partner

of Compaq. Also in this year, the FPT Software Development Division was officiallyestablished. 1994 was definitely a major milestone when FPT also became the first IBM

business partner in Vietnam.

In 1997, FPT became Internet Service Provider (ISP) and Internet Content Provider (ICP) inVietnam. Now, it is a division named FPT Communication (FOX). This was also the yearwitnessing an important step signing contracts to be partner of Oracle and Microsoft


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Through 15 years of establishing and growing, FPT has proven its top-rank position in ITfield. FPT has been appreciated as one of I.T companies with high level of financial

healthiness, stability and prestige in Vietnamese I.T companies.

3,7 1225

40

60

94105

204

0

50

100

150

200

250

1992 1994 1996 1998 2000 2001 2002 2003

Annual turnover (mi llion

USD)

Figure 4.1: FPTs Revenue (1992 2003)

Source: www.fpt.com.vn, 2004

The revenue contribution by affiliate companies are as in the following picture where it canbe noticed that FPT Mobile makes the largest contribution of 80 million USD, equivalent to39% of FPTs total revenue. The next contributors are FDC and FIS with each accounting
http://www.fpt.com.vn/http://www.fpt.com.vn/http://www.fpt.com.vn/


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FPT has divided up its activities toward specialization in each area, by establishing

subsidiary companies with independent operation. Early 2003, three affiliate companies werefounded with the FPTs three already powerful areas of business, namely FPT DistributionCompany (FDC), FPT Information System (FIS), and FPT Communication (FOX). InDecember 2003, FPT has decided to set up other three affiliate companies, namely FPTSoftware (Fsoft), FPT Software Solutions (FSS), and FPT Mobile (FMB). This reshuffle istoward a specialized and complete organization with various types of business of FPT.

Figure 4.3: FPTs Business Organization

Source: www.fpt.com.vn, 2004

FPT Information System (FIS)
http://www.fpt.com.vn/http://www.fpt.com.vn/http://www.fpt.com.vn/


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The companys products and services consist of servers, desktops, laptops, systemicsoftware, applied software, micro electronic equipment to linked-net equipments. Together

with the setting up of a nation-wide IT product supplier network, FPT Distribution Companyhas also built up a supporting system for implementing customers projects.

FPT Communications Company (FOX )

FPT Communications Company is one of the four Internet Provider (IXP) granted license bythe Government and by far the second largest Internet Service Provider (ISP) in the growinginternet market of Vietnam. FOX is the first company outside the state-owned telecomindustry to obtain the right to provide services on the internet. FOX also owns the electronic

newspaper named VnExpress, considered to be the biggest newspaper in Vietnam with about12 million readers per months.

FPT Communications is appreciated as an Internet Service provider with the best servicepolicies in Vietnam. Currently, FPT Communications is also the supplier of Leased LineChannel and DSL solution for the Ministry of Science and Technology, Ministry of Finance,Institute of Finance, Vietcombank, Melia Hotel, Sofitel Plaza Hotel.

FPT Software (FSOFT)

Being the leading bird of the software export industry of Vietnam, after five years ofoperation, the Center for Software Export has become FPTs Software Company (FSOFT)on 13 December 2003. Having experienced 15 years of development, 2003 is considered as asuccessful year for FSoft with the export turnover reached by 60% compared to that numberin 2002. FSoft is pushing forward the strategy of development of human resources, the corevalue, which has long contributed to the companys growth.


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Doctors in IT, Science, Technology and other special fields. Many of them rank at the top inIT in Vietnam.

FPT mobile phone distribution (FMB)FPT Mobiphone Distribution (FMB) is a member of FPT Corporation, engaging in the areasof distribution, maintenance, and provision of VAT services for mobile phones acrossVietnam. Now, it is the only official distributor for the two leading mobile phone companiesin Vietnam, namely Samsung and Motorola.

FPT Mobiles system of agents includes over 400 companies and shops across the country.With the two Service Centers in Hanoi and Ho Chi Minh City and over 10 Authorized

Service Points which will be soon launched in 2003 in a number of provinces and citiesnationwide, FMB ensures that you will be provided with the best customer-care anywhere inVietnam. FMB is committed to maintain within only 24 hours at its service points.

FPT-APTECH

Training Centre for International Programmers (FPT-APTECH) is the result of thecooperation between FPT and APTECH Limited (India) within the framework of Vietnam-

India IT development cooperation. On the 16th and 17th of September 1999, the first twotraining centers were opened in Ho Chi Minh City and Hanoi. By the end of 2002, Aptechsystem in Vietnam has expanded to 13 training centers in many big cities across the countrysuch as Hanoi, Ho Chi Minh City, Hai Phong, Nam Dinh, Hue, Da Nang, Can Tho, etc.Since September 2001, the center has annually provided IT market with about 300

programmers. Most of them have found good opportunity in FPTs software export projects.The rest have benefited from the free of charge job consultancy in the center.


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The completion and improvement of the quality of maintenance services mean theimprovement of skill and technical standards of the contingent of engineers who serve the

maintenance work. For the past years, FPT Maintenance has not only send its staff toparticipate in training courses organized by the firms but also trained its new staff basedupon the experiences of the predecessors. As a result, at present, FPT Maintenance has over40 skillful and professional engineers capable to satisfy wide maintenance and reparationwork of equipment such as: main-server of all kinds, PC, notebook, printer of all kinds, UPS,etc. of many famous corporations like IBM, HP, Intel, Cisco System, AMP, Toshiba, Acer,Epson, APC, Up Selec, etc.

4.1.4. Human Resources

FPT has set up a strong human resource of young and professional-driven experts andgraduated from both well-known domestic and foreign universities. From a small team of13 founders in 1988, until the end of 2003, FPT has the contingent of 2045 staff members,40% of which are females and 60% of males. FPT staff has high knowledge level: 2.9% ofwhich are post-graduates, 77.6% are graduates and 19.5% are high school graduates. FPT

is regarded to be one of the corporations that have young average age of employees inVietnam (28.4).


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receive better support in technique, price and service from CISCO but also brings about thegood reputation for FPT, reinforces the confidence of customers when selecting product and

solution providers for their technology projects.

4.1.6. Strong corporate culture

FPT has a very strong corporate culture which will be later on analyzed as one of thecompanys assets, contributing to its success and fame. In general, FPT has 3 officialcompany songs and about 100 self-modified songs that all employees know and can singtogether. FPT has 3 company football championships for all the employees a year. IT also

organizes many picnics and festivals for all the staff on special occasions such as companyanniversary, 13 September, singing and dancing competitions, etc.

4.1.7. SWOT analysis

Table 4.1: FPTs SWOT analysis

Strengths

Market leader with prestige and recognition

Since 2000, FPT has been continuously voted as themost favourite IT company in Vietnam while its

products (Elead computers, software solution) havebeen considered to be the top products.

Weakness

FPT name

The name FPT itself may be a causeof problems. Not only that many

people dont understand what itstands for, quite a few still associatesit with a food processing company


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Rich corporate culture

FPT culture has become an integral part of FPT

peoples lives and FPT identity. The rich culturewith colours, arts, performance and creativity isconsidered to be a passion and a motion to stimulateworking spirit.

Highly standardized process

A systematic and well-established engineering andmanagement process is what FPT management has

been paying attention to. It has yielding in theachievements of ISO and CMM-5 certificates,ascertaining.

directly from customers and onnewspapers about the problems

caused from the product quality andservice attitude.

Threats

Small and unprotected IT market- The current domestic market scale isstill small though its potential size can be

much larger.- Intellectual property rights protectionand enforcement is weak.Vietnamese IT enterprises have a greatdeal of difficulties in entering theinternational market.

Government Policies

Opportunities

Potential and developing ITmarket The use of IT application is

becoming diversified andprofound in various areas,from socioeconomic sectors,government administrationsand businesses to the dailyactivities of many urbanpeople. This creates a greatpotential market for SI.


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there are no specific characteristics for FPT customers. That is why there is no clear point ofdifference and customers cannot see the emotional reasons for buying FPT products.

Figure 4.5: The Anatomy of FPT Brand

Core Identity

Extended Identity

Value Proposition

Value offering: FPT provides comprehensive IT solutions andperfect IT services/products.Service: Quick, accurate, comprehensive, higher qualityUsers: Organizations: Business and software enterprises

Individuals: Internet users, mobile and computer usersPrice/quality: Higher value by higher quality, cheaper price

Product scope: Software solution, Internet service, hardware Sub-brands: Fsoft, FSS, FIS, FOX, FDC, FMB, FPT EleadLogo: Green orange blue flag; Slogan: Comprehensive solution,

perfect service

Organizational associations: Connected to and supportive ofyoung and talented IT studentsBrand personality: Intelligent and flexible, full of politicalschemesEndorsers: Endorsement of young talented IT students

Functional Benefits: Effective and stable IT solutions, impressiveweb designs, reliable and fast Internet connection, high quality and

Sense offlexibility

Green

flag

Dynamic

onciseness and compassionate by FPT cement its foothold.the as the most favorite IT company. ain best profit and power in t

Strongcorporate

culture

Reasonable

price

High

quality

Optimal IT

solution

Wide range

of products

FPThouse

Goodnnovqtionp forIT contestine)

services

Red-star award

Support

youngtalented IT

students

Modern& success

Sponsorship for ITcontest


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The name has become well-known among Vietnamese intellectuals and it is much morewidely used than the Vietnamese version. However, being an abbreviation of an English

phrase, it is quite confusing and vague in its meaning to most of them. In general, only asmall part of the customers who have signed the contract clearly understand what FPT standsfor. In our opinion, this brand name has two-fold negative sides. On one hand, if FPT puts itsfull name in all means of media, it will become too long, cumbersome and difficult tounderstand to customers. On the other hand, if it also uses the short form, there is noassociation between FPT and an information technology company. Following is a checklistdeveloped with the aim to give an evaluation on the qualities of FPT brand

Table 4.1: Evaluation on FPTs Desirable Qualities for a Brand Name

It should suggest something about the products benefit No

It should suggest the product or service category Yes

It should suggest concrete, high imagery qualities No

It should be easy to spell, pronounce, recognize andremember

Yes

It should be distinctive YesIt should not carry poor meaning in other countries andlanguages

Not sure

Source: Adopted from Kotler (2003)

4.2.2. Branded house


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According to the above statement, it should be noted that the company values the

technological advantage, the national growth, staff motivation and then company growth.The second element in the vision is the contribution to the national development, whichshows very clearly its membership in Ministry of Science and Technology as a nationalorgan. Through the vision, FPT also stresses on the human resource motivation by providingchances for its staff to best develop their potential.

However, in our opinion, this vision has not been able to express the ambition of thefounders and the trend of development: being the technological leader in Vietnam and

becoming an Asian software powerhouse in international market. This vision was verysuitable for the early days, but now it lacks the new ingredients of the globalization era.Apart from the orientation for technology innovation, it is as general as of any othercompany of any field.

4.2.4. FPT business and quality objectives

FPT new business objective to the year 2005 is: becoming an Asian software powerhouse ininternational market; first Vietnamese techno company to be listed in US stock exchange

market and contribute to transform Vietnam to new-knowledge based economy.

This objective reflects the market changes, the essential demands for any company to bethriving and succeed: growing out of the national borders to the regional and even worldawareness. This business objects has shown FPTs ambition to attend of the club of world

big players after dominating the regional playing field.


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Figure 4.7: FPT Logo

Source: Draft Brand Manual, 2004

As planned, after the brand manual of FPT Corporation is finalized and released, all

branches are subject to adopt the common logo, followed by the branch specification whichalso has to conform to standard logo norm. The two proposed shapes and presentation of thecompany logo are either in vertical or horizontal direction as in Figure 4.9.

From our observations, the intention to make the logos consistent with a standard normamong the whole corporation is an appropriate decision. However, it is not necessary tomake all the company logos exactly in the same shape and form like the proposal. Instead itis possible to make a reference from the case of Virgin, which is famous for a brandextension with a huge number of different brands and logos but still quite consistent.
http://www.virginhome.co.uk/http://www.virginhome.co.uk/


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solution provider.By this motto, FPT wants to inspire its staffs creativity, responsibility,productivity and efficiency for higher product quality.

In our opinion, this slogan is not suitable and not effective enough. Not only that there issimply the implication of a service company and no implication for an IT company, theslogan just focuses on the purely functional benefits, without any emotional offering. Similarto the case of its vision, FPT has not well defined what is its specific and special offering thatcan distinguish itself from other service companies, and especially other IT companies in themarket. If all IT corporations ensure the quality and the perfect of their service, what is the

point that customers should come to FPT. Moreover, without an emotional slogan, FPT will

not be something of attachment and intimacy, but only a solution to a problem, which istemporary and subject to changes in time, in context.

4.2.7. Taglines

In terms of subsidiary companies and products, there are a number of different taglines:FPT-Soft: Your innovative software outsourcing partnerFPT Maintenance: Enthusiastic Quick Accurate ComprehensiveFPT Distribution Dream to reach a starFPT-Internet:

ADSL: Higher speed, cheaper rate!Internet: No registration fee, hours of free use!Call 1280: Connect everywhere, every timeWebsite development Let us help you!Internet phone The cheapest way for international phone


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4.3. FPTs Strategies and Marketing Communications Programs.

FPT Communication is a very young subsidiary company of FPT. Since FPT was firstofficially present in Vietnam in late 1997, FPT has rapidly become a prestigious InternetService Provider. And not only building FPT image to Vietnamese customers mind as aclose friend, a familiar address for services, FPT Communication has made largestcontribution to the company annual revenue. Following suit the slogan and working motto:Comprehensive solution Perfect service, FPT Communication has defined its strategies inline with the company visions with customer-orientation and employee-driven attitude. Tocustomers, FPT has managed to provide Internet users with an Internet connection speed of

equivalently 56 Kbps with high stability and free customer technical support of 24/24hours. To employees, it offers them with the most favorable conditions to develop their

potential. The attractive promotion programs have been continuously held also with theaim to cater a perfect service to all customers. During the past 4 years, Internet market inVietnam has owed a considerable deal to the dynamic and on-the-move FPTCommunication. It is easy to notice that FPT has played an important role in creating aspecial competitive environment in the domain of Internet service provision.

Competitive analysis

Among various competitors in many lines of business, VDC appears to be the biggest andmost direct one with FPT.

Prestige and recognition

- In the awards for Top 5 IT Companies in 2003, FPT topped the list with the revenue


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VDC; 56%

NETNAM; 5%

OTHERS; 1%

SGP; 5%

FPT; 33%

Figure 4.10: ISP Market Share (2003)


Unhealthy competition

The most obvious advantage that VDC enjoys over other competitors is the State subsidiaryand the position of the only IXP during period 1997 - 2003. Because IXPs are considered thekeystone of the Internet by providing the hub or node for other ISPs, the IXP is the glue thatallows local traffic to stay local, and provides the structural underpinnings of the local ISPcommunity. Prior to 2003, FPT had to lease the International Internet line from VDC, whichdrove FPT to suffer from great pressures in terms of lease line, prices and other conditions.


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evaluation to the quality of VDC Internet lines, which are very stable and rarely facebreakdown.

Following VDC is FPT, which benefits from a quite large customer base to lower the unitcost, resulting in a quite low price in comparison with the small competitors. However its

price competitiveness and its quality are still considerably behind VDC.Netnam and SGP are smaller players who are trying to get more and more market sharesfrom VDC and FPT. But with the small scale and as the late comers, these companies cannot

provide the attractive prices and a reliable and stable quality. Worrying about the possibilityof being crushed by the two big men, they have recently proposed to the Government

about a floor price, which is vigorously opposed by VDC and FPT.

After unceasing efforts in the line construction application, three more Internet ExchangeProviders have recently been licensed by the Vietnamese related agencies to enter the game,including FPT, Viettel and ETC. The Government will open up the Internet market tofacilitate fair and healthy competition for companies providing Internet services, and has seta target of licensing three to five Internet exchange providers and 30-40 Internet service

providers by 2005, of which about 30% of Internet services would be provided by foreign orprivate enterprises. In the year 2002, monopolies in the Internet were crossed out bylicensing the above-mentioned IXPs. By the year 2004, joint ventures (JV) in Internet marketwill have the ratio of 50:50 and by the year 2006, joint ventures in post and telecomsservices will appear.

Brand positioning


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- High quality- Low price

- Simple usage- Correct solution- Wide range of services

Points of difference: There is no clear point difference as FPT has been focusing more onpoints of parity. As matter of fact, the unique and strong brand associations that customershave about FPT is a very special corporate culture. But this point was mainly built on a wordof mouth in a spontaneous way rather than the company intention

The above figure illustrates that FPT Communication aims to position itself as the leadingInternet provider with the cheapest price and the highest quality than all other competitors.To explain how at the same time FPT can take these dual jobs, both improving quality andlowering its prices, General Manager Truong Dinh Anh has quoted FPTs efforts to enlargecustomer base, to increase market share and most importantly construct the exclusive leaseline with an estimated investment of 6 million USD. Ready to run a huge cost of initialinvestment and early loss, FPT Communication has the expectation that when having anInternet connection gate and network of its own, they will be in the position to flexibly adjust

pricing and ensure product quality offering to become the number one in the Internet market.

However, this positioning strategy is rather ambitious because it is not easy to surpass VDCin both quality and price. VDC is currently the provider of the most stable system and offerthe most attractive prices. Taking advantage of the VNPTs infrastructure and monopoly

position, VDC has been pushing FPT into corner when it launched the Mega VNN service


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This shows a clear ambition of covering all services relating to Internet and webdevelopment as well as the trend to diversify product category. This strategy well reflects the

overall strategy of FPT Corporation in growing into other fields. FPT is investing andpromoting itsIdea Garden, which appeals to young talents for new ideas, new businessdomains in high tech field to enlarge the FPT umbrella.

Besides diversifying the business lines, FPT Communication strategy is to exploit thepotential market by trying and launching new products with new features. Another successof FPT in 2001 was to offer the pre-paid Internet service. When realizing that Internet charge

being still too high in comparison with Vietnameses income is one of the primary hurdles to

the growth of Internet users, albeit the high Internet demand, FPT officially launched this product into market on 1st August 2001 after two-month trial. This is the first time inVietnam an ISP provided customers with an Internet service at a charge lower than thenormal subscription fee by 30-70% based on the access time.

Pricing strategy

Actually, since the day of existence, FPT Communication has been adopting the value-pricing strategy, to provide a very competitive price based on product cost consideration andthe continuous price discounts, promotion programs. Their pricing strategy is one part of theslogan:Higher quality, cheaper price.

Product cost: In Internet business, price setting depends a great deal on business scale andsize of customer base. FPT has advantage in a low unit cost for each of its large customer

base. Moreover, assuming that investment and operation cost is fixed regardless of user


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Pull strategy

FPT Communication has been consistently employing the pull strategy by dedicating its

marketing efforts to the end consumers, with promotional programs and informationannouncement directly targeting at them. Consumers learn about FPT products then usetheir purchasing power to influence retailers, pulling the product through channel.

Web strategies

Taking advantages of the available Internet base, FPT Communication has been building amulti-channel retailer with both a physical and an online retail channel. Customers can seeits product on line and come in person to its stores to buy and vice versa know the

products from stores then place order via Internet. These blends have not only facilitatedcustomers but also helped to reinforce the product and company image through multiplechannels.

Promotion

FPT Communication subsequently launched the different consumer promotion campaignsto attract new customers, mostly in form of a combination of contest, refunds, rebates and

bonus pack.

Contest, Reforms, rebates and bonus pack: The first promotion program for Internet Cardnamely Summer holiday on Net targeting at students has achieved the over expectedsuccesses, initially establishing market concept for Internet Card among the consumer,especially the youth.


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Advertising

In general, FPT takes more advantages of public relations rather than direct advertising;therefore it is advertised only when a new product or a promotion campaign is launched. Thecorporation brand and the corporation image have not been paid due attention and have nothad any advertising campaign. For new product advertisement, newspapers and magazinesare the most used means thanks to their low cost, high information content and multiplereaders. Among all business lines, Internet services are the most advertised, especially withthe launch of new types of Internet cards. Coming next is the hardware products with themost recent launch of FPT-Elead computers.

Meanwhile, online advertising and place advertising are more popular for all other productsand services. Big billboards are located at some main streets like Nguyen Thai Hoc, TranHung Dao with big slogan: Comprehensive solution-Perfect service to constantly remindconsumers about the companys motto. In front of each subsidiary quarter is a combinationof big, small billboards, slogan, and leaflets to create an overall impression of FPTsoperations The homepages of FPT (www.fpt.com.vn) and its subsidiary companies serveas the very effective tools to advertise the company image and products.

Sponsorship, publicity and public relations

Sponsorship

Together with the physical and financial growth, FPT has actively spent its effort to build itsimages through sponsorship programs. FPT has organized and sponsored many IT contests,among which TTVN (Vietnamese Intelligence) has been the most widely known, attracting a
http://www.fpt.com.vn/http://www.fpt.com.vn/


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Figure 4.14: Achievements of FPT

Process

Source: FPT, 2004

ability to lobby has brought FPT a lot of favorable conditions, incentives and freedom on itsway of development.

Process

If FPT were a human being, the process is considered to be its skeleton. The establishmentand development of FPT process has been in parallel with the 15 years history of FPTCompany. If in the early days, FPT operation was only based on FPT vision and a 2-pagecompany regulation, now it has a huge document system of 10 000 pages at all levels and all

business lines, including different policies, regulations, guidelines and templates.

With the satisfaction of ISO 9001:2000 requirements for all business directions and CMM-5for Software department, FPT has completed the first step in the target of Professionalisationset in 1996.Despite many modifications and complementation, FPT process has maintained the basic

principles to ensure success and sustainability:- Customer orientation: Making a profound understanding of customer requirements,

even the latent ones and best satisfy them are vital to FPTs existence.- Member participation: Each person at each position has to develop his best capacity

and creativity for the growth of FPT- Consistency and diversification: FPT is a body consistent in vision but flexible in

action.- Fact measure: Decisions and judgment are based on the analysis of data and

information.- Continuous innovation, reform and creation: FPT has to unceasingly improve


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technology in order to contribute to develop individuals, the community and the country,and to build up the corporation for permanent development.

Respect for human and personal talentThe corporations objective is to bring to each of its staff the best conditions to developtheir talents, to earn sufficiently for their physical life and abundantly for their spirituallife. The tradition of respecting for human beings, personal talent has created ademocratic and creative working environment, sharing the same objectives and ideals.Unchanged objective, adaptive actions is considered the working principle of FPT staff.Every idea is warmly welcomed.

Collective IntelligenceThere is no decision made privately in FPT. There is no place for a dictator. Staffs aresupposed to make the decision as quickly as possible, but have to wisely absorb theircolleagues consultancy.Respect for the corporations history, learn national history and cultural tradition in orderto apply creatively into business activities. Each FPT staff needs to know FPTs historyvia FPTs record - the internal bulletin, FQ questionnaires (FPT Quotation). Nationalhistoric lessons and significant Vietnamese cultural characteristics are encouraged to beapplied in daily business and management activities.

Non-stop learning and improving capacityIn parallel with the strong development of technology, FPT has always been on the move,which requires FPT to develop and complete its organization and each FPT member tofurther study to improve the professional capacity and management capacity. FPT does


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STC history and its main composition are revealed at annual STC professional shows onSept. 13th (foundation day of FPT) in Hanoi, March 13th (foundation day of FPT branchin Ho Chi Minh city) in Ho Chi Minh City. Many STC compositions are compulsory forFPT staff to learn by heart.

FPT bulletinIn FPT, in addition to administrative departments, there are other organizations operatingin favour of spiritual activities. Those are FPT Youth Union and the Internal Bulletinnamed WE. WE is the internal bulletin issued weekly, written by FPT people. The

bulletin includes the news, comments on events and shows the feelings, articles on the

activities of the whole corporation.

FPT festivalsFestivals are the important part of FPT culture. On the annual festivals, all FPT people

join together playing and working, in order to get the feelings of being the members of thebig family of FPT.

September 13th: This is the most important festival of FPT, celebrating thefoundation day of FPT (13th Sept 1988). The festival Sept 13th includes the followingmain activities: FPT Technology Day: to introduce FPT products and technology to allcustomers; Olympic: sumo, handball, body-building and other sports as football, volley

ball, swimming, etc. among different sections; STC artistic performance: the festival forFPT creativity.

Year-end Festival: held at the end of the lunar year. Traditionally, all members saygoodbye to the last year and welcome the new one. The most important activities of the


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- FPT brand name has met the criteria of brand elements as memorability, transferabilityand adaptability, but its meaningfulness and likeability are quite limited as the nameitself cannot reinforce many associations and evoke much verbal imagery.

- FPT logos and symbols for affiliate companies are still inconsistent, but the proposeddesigns are rather rigid, causing difficulties for them to specify and characterize thedifferent businesses.

- The value proposition is only functional- Point of difference is unclear- There is no brand personality- There has been a synergy in the product strategy of diversifying product line,

developing value-added services with the penetration pricing strategy of cheaper pricethrough lowering product cost and continuous promotion campaigns. As far as thedistribution strategy is concerned, a focus on pull strategy appears to be not effectiveenough. A combination of pull and push, which means more effort spent ondeveloping trade promotion, favourable offering and incentives to distributors.

- The marketing programs have been relatively well developed. Good public relationsand effective sponsorship targeting at IT customers are bringing more awareness and

prestige to the corporation. However, advertising the corporate brand FPT mainlythrough the Internet and billboards are not sufficient. As FPT is an umbrella brandcovering a wide range of products, it should be substantially advertised through more

popular means of media as television and newspapers. Also the sponsorship activitiescan be increased as this is a very influential tool.

The fact has shown that FPTs business strategies are well defined but there is an absence ofa clear branding strategy and a strategic construction of brand elements. The value


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Chapter 5

Brand Exploratory

In order to explore customers and non-customers opinions about FPTs brand and servicequality, the author has conducted a survey with both qualitative and quantitative questions.Despite some limitations, the surveys have helped providing a quite clear picture of how FPTis perceived by people of different genders, ages and professions. This chapter will beginwith the major findings from the result, followed by a deeper analysis in correspondencewith the brand pyramid and forming a brand association map to decide and conclude aboutwhat FPT has succeeded in and what is left for improvements.

5.1. Findings and Discussions

5.1.1. Findings from potential customers

Top of mind

More than half of respondents (56%) think about FPT first when asked to name 3 ITcompanies in Vietnam. Totally, 86% list FPT in their top 3 companies. In this point, FPTdoes surpass its direct competitor VDC when this company only receives 32% recallaltogether

4% 4%

1st recall


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Figure 5.2: Top 3 Favourite IT Brands in Vietnam

Meaning of brand

Only 22% of respondents understand what FPT stands for, they all interpret it to beCorporation for Financing and Promoting Technology.

Means of media

Television and newspaper are the two most popular means through which respondents firstknow about FPT but at present, Internet and billboards are providing them with most recentinformation about FPT.

Service

Most of customers think about Internet and communication as the primary service offered by

FPT; 44%

VDC; 14%CDIT; 6%

Others; 16%

No favorite ;

20%


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Competitors Percentage

VDC 26%VASC 4%

VNPT 4%

Factor evaluation

From the result of the evaluation, we can see that the highest grades are given to the group of2 factors: Technology innovation and Corporate culture. The number of people who stronglyagree that FPT means technology innovation and interesting corporate culture are also the

highest.

3,43

3,08

3,27

3,56

3,273,31

3,19

2,80

Thuy Hanh's Final Report

Documents

Transcript of Thuy Hanh's Final Report