Vietnamese supplement manufacturing industry - the effect of no marketing activities in Giai Canh pharma Company limited.pdf

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------
NGUYEN LO MINH DUC
VIETNAMESE SUPPLEMENT
MANUFACTURING INDUSTRY:
THE EFFECT OF NO MARKETING ACTIVITIES
IN GIAI CANH PHARMA COMPANY LIMITED
MASTER OF BUSINESS ADMINISTRATION
Ho Chi Minh City – Year: 2017 – 2018

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------
NGUYEN LO MINH DUC
VIETNAMESE SUPPLEMENT
MANUFACTURING INDUSTRY:
THE EFFECT OF NO MARKETING ACTIVITIES
IN GIAI CANH PHARMA COMPANY LIMITED
MASTER OF BUSINESS ADMINISTRATION
SUPERVIOR: PhD. LE THI THANH XUAN
Ho Chi Minh City – Year: 2017 – 2018

Nguyen Lo Minh Duc - Supervisor: PhD. Le Thi Thanh Xuan Page 1 of 57
TABLE OF CONTENT
EXECUTIVE SUMMARY....................................................................................................................2
CHAPTER 1. BACKGROUND INFORMATION..........................................................................4
1.1. INTRODUCTION........................................................................................................................ 4
1.2. COMPANY BACKGROUND........................................................................................................ 4
1.3. HISTORY TIMELINE ................................................................................................................. 6
1.4. SERVICES................................................................................................................................. 7
1.5. SLOGAN ................................................................................................................................... 7
1.6. VISION – MISSION ................................................................................................................... 7
CHAPTER 2. SYMPTOM AND PROBLEMS................................................................................7
2.1. PROBLEM FINDING PROCESS................................................................................................... 7
2.2. COMPANY’S SYMPTOMS.......................................................................................................... 8
2.3. PROBLEM IDENTIFICATION ...................................................................................................... 8
CHAPTER 3. SITUATION ANALYSIS ........................................................................................10
3.1. INITIAL CAUSE – EFFECT MAP............................................................................................... 10
3.2. LITERATURE REVIEW ............................................................................................................ 15
3.3. THE UPDATED CAUSE – EFFECT MAP ................................................................................... 18
3.2. DEFINITION OF CORE PROBLEM ............................................................................................. 23
3.3. THE EXISTENCE OF CORE PROBLEM ...................................................................................... 24
3.4. THE IMPORTANCE OF CORE PROBLEM ................................................................................... 25
3.5. FINAL CAUSE – EFFECT MAP.................................................................................................. 27
CHAPTER 4. POTENTIAL SOLUTION ......................................................................................30
4.1. MARKETING AND SALES PLAN SUMMARY............................................................................ 30
4.2. SITUATIONAL REVIEW........................................................................................................... 31
4.2.1. The market..................................................................................................................... 31
4.2.2. User sign – up process .................................................................................................. 32
4.2.3. Competition section....................................................................................................... 32
4.3. STRATEGIC OPPORTUNITIES AND THREATS .......................................................................... 33
4.4. GOALS ................................................................................................................................... 34
4.5. MARKETING AND SALES STRATEGY ..................................................................................... 34
4.5.1. Target market................................................................................................................ 34
4.5.2. Positioning .................................................................................................................... 36
4.5.3. Product.......................................................................................................................... 36
4.5.4. Service........................................................................................................................... 38
4.5.5. Price.............................................................................................................................. 38
4.5.6. User sign – up ............................................................................................................... 39
4.5.7. Promotion and Advertising ........................................................................................... 40
4.5.8. Marketing Control......................................................................................................... 42
CHAPTER 5. PROPOSED DATA AND RESOURCE PLAN.....................................................45
CONCLUSION ....................................................................................................................................45
REFERENCE ....................................................................................................................................46
APPENDIX ........................................................................................................................48

EXECUTIVE SUMMARY
This paper was delegated to examine why the sales volume of Giai Canh Pharma
Company Limited has been too low in the first 7 months of 2017 and to recommend
ways of increasing the volume.
The paper draws attention to the fact that in the first 7 months of 2017, there are many
employees taking over 10 days off within a month. The peak of this situation happened
in July 2017 that there are 7 employees left over 10 days and staying at home waiting
for jobs when company still had to pay full salary for them. This symptom happened
from the beginning of 2017 until now. Further investigations reveal that Giai Canh
Pharma Company Limited which is beginning its supplement outsourcing service had
no marketing department to do the business developing job, no publicity about their
new business and no advertising initiatives to promote the business. At the beginning,
this company was planned to be the main factory for GPharm Company to produce
their product. This background can stay the same and happens no change until the
newest announcement from Ministry of Health that any supplement manufacturing
companies which cannot meet the GMP standards will be obliged to shut down the
operation at the end of 2018. This urgent situation together with the symptoms at Giai
Canh Pharma Company promoted to this research paper.
Due to the finance limitation of Giai Canh Pharma Company and the urgency of GMP
application, the saving cost and time solution is preferred. The report evaluates this
range and concludes that it would be ideal to have a marketing plan. This plan will
temporarily create a temporarily whole solution for causes investigated in problem
finding process.
It is recommended that:
• Target to the new borned or small – sized companies which want to create
products and testing market with small quantity. Companies which raises their
own medicinal area are also preferred.
• Create a sales team to do direct sales by recruiting temporarily from GPharm
Company to immediately adopt to the job and save cost.

• Do press release at the beginning and the end of 2018 with GMP archievement
announcing purpose.
• Create a website to do pay – per – click advertising on Google for introducing
outsourcing service of Giai Canh Pharma Company Limited on the base of
GPharm Company website to take advantage of their close relationship and cost
saving priority.
The whole work will be shown in more details after this summary.

CHAPTER 1. BACKGROUND INFORMATION
1.1. Introduction
Giai Canh Pharma Company Limited previously is a manufacturing factory of GPharm
Company. The company has split from GPharm Company and became a separately
busisness organization from January 1st
2017. After split, the manufacturing
performance of company continued going down and had to open the outsourcing
service to improve the situation to quickly meet the GMP standards before due date or
being closed. However, the firm performance has nothing changed. Therefore, there is
a need of a research and investigating the problem behind the symptom to permanently
improve the situation of the company.
1.2. Company Background
This paper is about the Giai Canh Pharma Company Limited, which is a manufacturer
in supplement market. However, to understand more about this company, the author
will mention about the GPharm Company, the “older brother” of this company.
GPharm Company is formerly a family – business store named Vinh Xuan, which
focuses mainly on orientally raw and dry medicine locating in District 5. After over 35
years operating in a small family medicine store by his father, Mr. D, the son of the
business owner decided to establish an organization operating in Vietnamese
pharmaceutical market, specialized in supplement from natural ingredients. The
company named Giai Canh was established in September 2005, located in District 5
until now.
In 5 years of operating, the company mainly sold medicated oil and supplement
products which were outsourced by suppliers. In 2010, the first manufacturing factory
was set up at Binh Chanh with maximum capacity of 100 million capsules per year.
Mr. N, the deputy manager working in GPharm Company from the beginning was
assigned to become the manager of the factory. This factory proved the hope of being
actively independent in manufacturing ability and widely expand the business on
Vietnamese supplement market.

In November 2016, to manage the numbers of poor quality supplement products on the
market, the Ministry of Health announced the decision of terminating operation of any
supplement manufacturing organization which does not meet the Good Manufacturing
Pratice. This information will affect to thousands of companies that does not meet this
standard.
After 7 years of operation, in January 1st
2017, Mr. D, the manager of GPharm
Company decided to split the manufacturing factory from GPharm Company and
formed an individually business organization named Giai Canh Pharma Company
Limited. This company will manufacture the products for GPharm Company together
with doing outsourcing supplement products from natural ingredients for other
customers to increase the outcome quantity to meet the most important standard of
GMP certification, targeted manufacturing capabilities. The urgency of meeting GMP
standard in 2018 has led to this splitting initiative.
After split, Giai Canh Pharma Company Limited became an independent organization
and an eligible legal entity to operate in Vietnamese supplement market. Mr. N, the
previous manager of the factory became the manager of Giai Canh Pharma Company
Limited and took responsibility of all aspects in this organization. The company is also
finance independent and not influenced by GPharm Company, which is under
responsibility of the other boss. However, this company is still under the same owner,
Mr. D. He is both the owner of GPharm Company and the Giai Canh Pharma
Company Limited. Therefore, the relationship of 2 companies is brothers under the
same father.
At the beginning, Giai Canh Pharma Company Limited is in charge of manufacturing
products for only GPharm Company to sell on Vietnamese market. Howerver, the
business result from GPharm company was not good and led to the manufacturing
performance of Giai Canh Pharma Company Limited went down. Furthermore,
Ministry of Health will oblige all supplement manufacturing organization to apply and
meet the GMP (Good Manufacturing Practises) standards to be still remained on the
market. After the tentative date in 2018, any companies do not meet the GMP
Standards will be shut down the operation. With this urgent situation, Giai Canh

Pharma Company Limited decided to begin outsourcing service to utilize the unused
capacity, improve the manufacturing performance and also expand its own business.
This service is aimed to entrepreneurs, SMEs in pharmaceutical market, companies
which have own raw material zone and want to develop their own supplement
products, with the latest technology and the highest quality.
Giai Canh Pharma Company Limited, has 23 employees with 1 Manager, 1 Deputy
Managing Supervisor and 21 other employees, in which 2 accountants and 19 common
workers. Mr. N, the manager takes responsibility of all aspect in company. The Deputy
Managing Supervisor supports Manager to monitor the assembly and paperwork
procedures. 2 accountants are in charge of doing accounting and general admin works.
The remaining 19 workers do their jobs in each functional department of assembly.
The whole organization structure can be seen below:
Figure 1: Giai Canh Pharma Company Limited organizational structure
1.3. History Timeline
• 2005: GPharm Company was established and began operating business in
pharmacy market in Ho Chi Minh city, specialized in oriental medicine and
supplement from natural ingredients.
• 2010: The manufacturing factory is set up at Tan Kien, Binh Chanh, Ho Chi
Minh city with maximum capacity of 100 million capsules per year.
• 2017: The manufacturing factory is split separately from GPharm Company
and named Giai Canh Pharma Company Limited.

1.4. Services
Giai Canh Pharma Company Limited specializes in manufacturing, outsourcing
supplement products. Its main customer is GPharm Company. In addition, the
company also do outsourcing for organizations which have raw materials and want to
do their own products, entrepreneurs or SMEs in pharmaceutical market.
1.5. Slogan
“All for your health”
1.6. Vision – Mission
To become the leading enterprise in manufacturing supplement products made of
natural ingredients in Vietnam.
CHAPTER 2. SYMPTOM AND PROBLEMS
2.1. Problem Finding Process
At the beginning, the author tried to observe all the aspect of the company. The
company is specialized in manufacturing so this was the part that the author mostly
checked. The finding process began with the accidental detection about the workers at
company had to take many days off showed in July salary form. In July, there were 7
employees had to take over 10 days off to wait for jobs. The author checked other
previous months and found that the same situation also happened from January to
June, not only in July. When checking again by asking informally with the manager,
he said employees “had to wait for jobs due to lack of jobs to do at the company”, as
quoted from Interview 2 detailed in Appendix 2. There is no more order to
manufacture, so he decided to let employees take days off but still paid full salary for
them. It happened from the beginning of January of 2017 until now. The first
symptoms found led the author to check the manufacturing performance of the
company from the established date until now and find the core problems at the
company at present. The details about symptom will be shown after this part:

2.2. Company’s Symptoms
The table author shows under is the recording evidences about numbers of employees
following the numbers of days off that they had to take due to lack of jobs to do from
January to July in 2017:
Table 1: Recording numbers of employees taken days off in a month
Unit: Employees
January February March April May June July
0 day 12 12 23 23 23 15 13
Under 10 days 5 11 0 0 0 2 3
Over 10 days 6 0 0 0 0 6 7
The table shows the numbers of employees had to take days off in each month. The
numbers of employees were recorded comparing with the numbers of days they had to
leave. The average number of working days at Giai Canh Pharma Company Limited is
26. However, the recording table shows that the number of employees takes over 10
days off are 6 in January, June and 7 employees in July. That means there are from 6
to 7 employees just work half month when they are full – time employees.
Furthermore, there are also number of employees takes under 10 days off in January,
February, June and July. The point is Giai Canh Pharma Company Limited still had to
pay full salary for employees due to the Vietnamese labor force laws. This situation
will cause a huge lost to company labor cost when the labor force using is not
completely effective. To make the symptom strongly clear and proved existence, the
author quoted the manager words: “Company only had enough jobs for employees to
do under 20 days, the remaining days they had to be off to wait but company still pay
full salary for them due to Vietnamese Labor Law” as quoted in Interview 1 detailed in
Appendix 1. The question is “Which reasons led to this symptom?”
2.3. Problem identification
From the quote from the manager of Giai Canh Pharma Company Limited above, the
reason led to “Employees take many days off” symptom due to “lack of jobs to do” for
the employees. “Company only had enough jobs for employees to do under 20 days,
the remaining days they had to be off to wait but company still pay full salary for them

due to Vietnamese Labor Law” as quoted in Interview 1. The following reason for
“lack of jobs to do” is due to “low orders to manufacture” as quoted from manager’s
information in Interview 2 – Appendix 2. To be more specific, the manager explained:
“Previously, the orders from GPharm Company were over 10 orders per month.
Gradually, the orders decrease to 4 or 5 per month together with numbers of products
were not much. Even, there was no order at all within a month. That is why we have to
find customers to do outsourcing”. To prove clearly what manager said, the author has
recorded the manufacturing performance of from the time the factory separated into
individual organization. The performance showed as the numbers of capsules that
company could produce in a month and then divided with the maximum capacity of
the factory to get the percentage. The real record about numbers of capsules that
company has been produced can be shown in the table below:
Table 2: Manufacturing performance
Unit: Capsules
Month 7/2017 6/2017 5/2017 4/2017 3/2017 2/2017 1/2017
Performamce 420.000 780.000 300.000 1.860.000 2.952.000 1.280.000 131.040
Percentage
(comparing with
maximum capacity)
5.04% 9.36% 3.6% 22.32% 35.4% 15.36% 1.57%
Figure 2: Manufacturing Capabilities from January to July 2017
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
July June May April March February January
Manufacturing Capabilities
Capsules

When finished setting up the factory in 2010, the maximum capacity of the
manufacturing assembly is about 8.333.333 capsules/month. However, the maximum
number in reality recorded is 2.952.000 capsules/month in March 2017, it means the
performance in reality reached under 35% comparing with the maximum capacity.
Plusing all numbers in 7 months dividing with 7, the medium number can be counted
as 1.103.000 capsules/month which is 13.24% of maximum capacity. These numbers
showed the poor manufacturing performance of Giai Canh Pharma Company Limited
and proved the “low orders to manufacture” problem happening with the company.
With the symptom and reasons found, the author investigated more the other reasons
led to “low orders to manufacture” problem and choose the suitable route to solve that.
CHAPTER 3. SITUATION ANALYSIS
3.1. Initial Cause – Effect map
a) To investigate the reason led to the “low orders to manufacture” led to employees
had to take many days off due to lack of jobs to do, the author took interviews with the
manager of Giai Canh Pharma Company Limited. Manager explained in Interview 2:
were not much. Even, there was no order at all within a month. That is why we have to
find customers to do outsourcing”. It indicated the “low orders from GPharm
Company”, which is the main customer of Giai Canh Pharma Company Limited, led to
the “low orders to manufacture” problem.
- Author wondered the reason why the orders from the main customer was so
low, manager said: “Due to the competitive market, the GPharm Company
cannot do business well and so cannot cover our manufacturing ability” as
quoted from Interview 3 in Appendix 3. He also gave the author more
information by an imformal talking with him that “From the beginning,
GPharm Company – the main customer now, had very high sale results but
gradually there are more competitors attending the market. From 2010 to 2013,
there is a fair number of competitors in supplement market. But after 2013, it

increases a lot and led to the numbers of products are also many. Harsh
competition led to the sale results going down”, as quoted in Interview 1 –
Appendix 1.
- Not stop from there, author asked manager whether there is any more reason led
to low sale results from GPharm Company – the main customer of our
company. He gave one more reason: “The competition in advertising is also
harsh. Many competitors do huge advertising on TV which cannot do from
GPharm Company. These competitors have an advantage about finance so they
can invest huge money on advertising on television, which is GPharm Company
disadvantage”. It proved the limitation in finance resource is also a reason led to
“low sale result from GPharm Company – the main customer” and then led to
they can make more orders with Giai Canh Pharma Company Limited which
causes “low orders to manufacture” for our company.
b) Finishing the first reason, the author tried to investigate if there is another reason
affecting to Giai Canh Pharma Company Limited “Low orders to manufacture”
problem. Base on the information giving by the manager in Interview 1 that the
Ministry of Health obliges every organization manufacturing supplement on
Vietnamese market to meet the GMP standard in order to remain the business. Or else,
the operation must be shut down. Therefore, with the urgent situation of upgrading the
manufacturing factory to meet the GMP standard in 2018 and “GMP standard
basically requires an organization meet the high investment and highly productive
output. That is why we have to split from GPharm Company to push the
manufacturing by finding customers to do outsourcing” as quoted by the manager in
Interview 1. The author went to collect data by asking information with manager about
the situation of doing outsourcing business from the time that the factory split from
GPharm Company.
As recorded at the company, there are 2 outsourcing orders under operating from the
beginning of 2017 until now. These 2 orders are founded by the available relationship
of manager, as quoted from manager’s words in Interview 2. Therefore, author went to
ask the manager that how many outsourcing orders could be found in a month and who

went to find the customers. Manager answered that they depended on the sale team
from GPharm Company to find the customer for them but “The number of outsourcing
contracts was not many. Sometimes we have, sometime we do not” as quoted by
manager from Interview 3. It indicated “the lack of outsourcing orders to produce”
situation at present time of the Giai Canh Pharma Company Limited after 7 months of
splitting and jumping outsourcing busisness.
- The manager shared: “When the sale team introduced us customers, we also did
the consulting job, explained every procedure and stage for them. But finally,
there is no reply from them again” as quoted in Interview 3. He explained: “We
do not know exactly the reason, maybe they just ask for quotation, they are
preparing to start up the business so they want to find service suppliers or other
objective problems from them”. Furthermore, in Interview 3, he also said: “The
outsourcing orders introduced were not much and mostly we do not meet their
requirement”. Investigating deeply, the author accidentally asked the manager
whether the limitation in manufacturing assembly or technology is the potential
cause effecting to the reason that the company cannot meet customer’s
requirement led to they have no reply. He answered as quoted in Interview 3
that “Yes, it could be. We can not vary the product category so it is hard to find
the customers. Customers want to find a place that can provide all types of
products so that they do not need to find many places”. However, he continued
in Interview 3: “We has disadvantages in infrastructure about base ground and
also finance resource. So, we cannot invest spreadly like other big competitors.
Our disadvanctage is about making only 2 types of products. It is because of the
company previous policy that just built the factory for its own business”.
- When the author asked manager whether he had any solution for increasing the
outsourcing orders, he answered as quoted in Interview 3: “At present, we only
depend on the sale team from GPharm Company to find customers for us
instead of actively going to find customers by ourselves” because “The sale
team from GPharm Company had a various relationship and market”, as quoted
from Interview 2. It indicated that there is “No marketing department” at Giai

Canh Pharma Company Limited. This cause is proved by manager quote from
Interview 3 that “At present, we depend on the sale team from GPharm
Company when we do not have any one or a department in our company to find
the customers”. Furthermore, when author asked manager whether he did “No
marketing activities” at present, he explain by giving more information “We do
not do introduce the outsourcing service widely because we are practicing on
doing this business” as quoted from Interview 3. Also, the author asked
manager whether it is hard to find the customer to do outsourcing that we can
meet their requirement and why they do not do marketing activities, he said: “It
is easy but at this time we do not have time to find customer”, “We do not have
enough time because we just begin so that the result is not positive”, and
“Complicated procedures from the authorities also cause us much time to take
care” as quoted from Interview 3. These reasons are the prove for the existence
of two causes “No advertising” and “No publicity” at Giai Canh Pharma
Company Limited at present. In summary, “No marketing department”, No
advertising” and “No publicity” are 3 causes led to “No marketing activities”
and be the route to “Lack of outsourcing orders to produce” situation until now.
The whole pictures will be demonstrated as Initial Cause – Effect Map below:

Figure 3: Initial Cause – Effect Map

Following the company description, Giai Canh Pharma Company Limited mainly
focuses on manufacturing. In order to manufacture products and get jobs for
employees to work, the company has to have orders, and orders can be classified as
the sales of the company. Therefore, the consequences of lacking orders to
manufacture can be the same with low sales result of Giai Canh Pharma. Therefore,
the group of symptoms at the beginning from “Employees take many days off” to
“Lack of orders to manufacture” can be classified as “Low sale”.
In next session, the author will do related literature reviews that are as the theory
framework linking with the “low sale” symptom of the company. Then the author will
find out the core problem using data collected from depth interviews with the manager
of Giai Canh Pharma Company Limited.
3.2. Literature Review
Marketing activities in organization
According to Janet Walsh 1
, marketing activities is “A series of tools for promoting
and informing users of resources and services through a mix of communication,
distribution, public relations, advertising, and motivation”.
The importance of marketing to sales in an organization
According to Madhani PM. 2
, “sales and marketing integration has a direct and
significant impact on customers and the revenue-earning potential of the
organization”. Leventhal RC 3
stated the importance of marketing efforts in
organization by “increase your return-on-investment, allow for more successful
innovation, lead to better branding efforts, increase the effectiveness of your
promotional efforts and strengthen your web marketing efforts.”
Moreover, Corstjens and Corstjens 4
also concluded that “a lack of cooperation
between sales and marketing has the potential to damage the overall success of the
organisation”. Le Meunier-FitzHugh and Piercy 5
also gave additional confirmation
that “collaboration between sales and marketing has a positive and significant impact
on both market orientation and business performance”. Therefore, “With sales and

marketing collaboration firms will outperform competiotion; create added value as
well as customer satisfaction” as concluded by Madhani PM. 6
Furthermore, in 2011 research, Lyus D, Rogers B, Simms C. 7
proved that in small
organization, high integration between sales and marketing, together with high market
intelligence gathering and strategic reactivity will make companies grow better than
large ones.
Therefore, a company needs marketing activities to grow sales. Madhani PM. 6
concluded in his 2016 reaserch that
Sales and marketing must work together in order to achieve organization goals as sales and
marketing integration is increasingly recognized as a key driver for improving financial and
operating performance. The absence of cross-functional integration may result in promises
made by the organization's marketing department that have not been coordinated with sales,
marketing promotions that are not synchronized with sales delivery schedules, and failure to
deliver product by a firm in a specific, requested format because it is not the most efficient way
to do so. Without sales – marketing cross-functional collaboration, firms cannot be expected to
respond optimally and promptly to customers' requirements. As suggested in this paper,
through an effective sales and marketing integration, firms could enhance overall efficiency by
interlinking the sales and marketing operations, and at the same time meet the long-term
strategic goals and maximize customer value.
Publicity and advertising: matter for sales
There are 2 elements of marketing activities that matter the most for sales: publicity
and advertising according to 2014 study of Spotts H.E, Weinberger M.G, Weinberger
M.F, 8
They have also shown the relationship between publicity, advertising activity and
corporate sales of a company, Spotts H.E., Weinberger M.G., Weinberger M.F 8
proved that “Positive publicity is most important in distinguishing between firms with
higher and lower sales”. This term is especially for the new company on the market as
proved by following quote from this study:
The effects of negative publicity and advertising are dependent on a firm's existing reputation.
For companies with weaker reputations, positive publicity in tandem with business-to-
consumer (B2C) advertising is most highly associated with higher company sales.

Conversely, for firms with stronger existing reputations, advertising has a significantly
diminished role; positive and even negative publicity are most crucial in distinguishing
between companies with high and low sales. Negative publicity can be harmful to these firms
though if it is not balanced by more positive publicity.
It implies that with a company has new service on the market which is “weaker
reputations” should do more advertising and publicity to increase company sales.
From the research of Spotts H.E, Weinberger M.G, Weinberger M.F, 8
, the authors
want to imply that:
This study focused on a set of durable goods and services companies to understand the
relationship between different forms of marketing communication and corporate reputation to
determine what matters most when looking at sales results. Broadly, we found the strongest
relationship between garnering a high volume of net positive publicity and sales. While
advertising made an important difference, its influence was slightly more contingent. Firms
with weaker reputations and higher sales advertise more and have a higher volume of positive
publicity across a range of topics. That is potentially good news for managers of firms who
may wish to invest in PR activities and advertising to better manage the balance between
positive and negative publicity and overcome a weak reputation. Managers of firms with
stronger existing corporate reputations cannot expect more B2B or B2C advertising spending
alone to elevate sales. For these stronger reputation firms, continuing to garner positive
publicity and avoiding a disproportionate balance of negative publicity is particularly
important.
It is possible to clearly differentiate between firms with higher and lower sales using publicity
volume and advertising spending.
Positive publicity is more important than negative publicity volume and advertising spending
(B2C and B2B) in differentiating between higher and lower sales groups.
Overall, the volume of positive and negative publicity and advertising spending (B2C and
B2B) were higher in firms that achieved stronger sales. The larger number of negative stories
was offset by an even greater number of positive stories, suggesting that the balance between
the two is important.

For weaker reputation firms, B2C advertising spending was second in importance to positive
publicity when distinguishing between lower and higher sales groups. For stronger reputation
firms, advertising had a less important role in distinguishing between saleslevels.
3.3. The Updated Cause – Effect Map
In this part, the author will conduct the verification which problem should be solved
from the initial symptoms. As can see in initial cause – effect map, there are 2 big
problems causing “Lack of orders to manufacture”.
• The problem about “Low orders from GPharm – the main customer”:
It happened due to “the highly competitive market, GPharm Company cannot do
business well and so cannot cover our manufacturing ability” as quoted from
Interview 3 in Appendix 3. Also, he said: “GPharm Company provides the best
quality products, the market and customers still support us. However, there are too
many choices on the market” as quoted from Interview 3. This reason is objective and
depending too much on the market. Moreover, “the competitors have an advantage
about finance so they can invest huge money on advertising on television, which is
GPharm Company disadvantage” as quoted from Interview 3 is the objective reason
from the GPharm Company, which is out of author’s scope of work. Furthermore,
mananer also said “With the small amount of product can make for GPharm Company
– the main customer, we can not upgrade to meet GMP standard” as quoted from
Interview 1. With the urgency of upgrading to meet GMP standards in 2018, there is a
need of immediate solution to increase “numbers of orders and numbers of products
can be produced”, “Therefore, we need more customers and then can upgrade the
assembly to higher capacity” as quoted from Interview 3. Therefore, the author will
not solve and eliminate the “Low orders from GPharm Company”.
• The problem about “Lack of outsourcing orders to produce”
Facing the pressure of meeting GMP standard in 2018, the owner of GPharm
Company splitted the factory out from GPharm Company to form Giai Canh Pharma
Company Limited is to “allocate all priorities for production to upgrade to meet GMP
standard in 2018” as quoted from Interview 1. It led to the Giai Canh Pharma

Company Limited orientation is “upgrading the assembly to meet GMP standard and
to meet that standard, we have to response enough numbers of orders and numbers of
product can be produced. Therefore, we need more customers, from then, invest new
assembly with the same types of product can make but at a higher level” as quoted
from Interview 3. Moreover, the “low orders from GPharm Company” is expressed by
were not much. Even, there was no order at all within a month. That is why we have
to find customers to do outsourcing”, as quoted from Interview 2. The importance and
orientation of outsourcing service in meeting GMP standard led to the “Lack of
outsourcing orders to produce” will be chosen to solve.
There are 2 sub-reasons led to “Lack of outsourcing orders to produce” are “No reply
from customers” and “No marketing activities”.
o With the reason “No reply from customer”:
As described in initial cause – effect map section, the manager of Giai Canh Pharma
Company Limited said that “We do not know the exact reason they do not reply.
Maybe, they just ask for quotation, they are preparing to start up the business so they
want to find service suppliers or other objective problems from them” as quoted in
Interview 3. These reasons may be “objective from the customers”, quoted from
Interview 3. Therefore, the information is not enough and clearly to solve.
Another reason for receiving “No reply from customers” is “Limitation in technology”
as analysis above. However, the causes of this reason due to “Finance Resource
Disadvantage” and “Company Policy” proved by manager’s quote “We has
disadvantages in infrastructure about base ground and also finance resource. So, we
cannot invest spreadly like other big competitors. Our disadvanctage is about making
only 2 types of products. It is because of the company previous policy that just built
the factory for its own business”. Moreover, in Interview 3, manager also confirmed
that “Despite the disadvatages in types of products can make, we still do not invest
spreadly due to lack of finance, base ground and human resources”, “We will not
invest to vary the types of product can make and focus all the priorities to two ones we

can do the best. For example, with filtered tea, we will do the best quality product, the
best package instead”. Therefore, the “Limitation in technology” will not be solved by
the author and also eliminate the “No reply from customer” problem due to cannot be
solved.
o With the reason “No marketing activities”
The first cause led to “No marketing activities” have been shown above are “No
marketing department” due to the reason “We depend on GPharm Company to find
customer for us when we do not have some one or department to be in charge” as
quoted from manager in Interview 3. The other causes can be defined is “No
advertising” and “No publicity”. The reason led to these lacking initiatives at Giai
Canh Pharma Company Limited can be explained that “We did not actively do
advertising at this time. We just begin practicing to do outsourcing. Moreover,
complicated procedures from the authorities also cause us too much time to take care
and we cannot cover all these procedures” as quoted from Interview 3 with the
manager. The consequence can be seen that there were only 2 outsourcing orders from
the beginning of 2017 until now and there is no successfully accepted order from
GPharm sale team. The potential of solving this problem can be shown through
manager’s comment that “After practicing by doing these 2 first orders, we will create
a marketing department to find customer. This department is no need to be so
complicating, just go to find suitable customers that we need”, as quoted from
Interview 3. Moreover, he said: “Customers and us also want to know how and which
products that the market is demanding. From then, we can cooperate with the
customers more effectively to produce the product that can meet the needs of market”,
also quoted from Interview 3. Manager also said: “First, GPharm Company cannot
meet out output quantity to meet GMP standards led to we cannot solve the jobs for
employees. Second, facing the urgency of upgrading to meet GMP standard when the
due date is coming, it is obliged to focus on pushing the manufacturing”, as quoted
from Interview 1. This comment from manager showed the importance and “No
marketing activities” needs to be solved to help company have more customers to
increase the output quantity. Therefore, the author will choose to solve this problem

and “No marketing activities” is the core problem of the initial symptoms. The update
cause – effect map can be shown below:

Figure 4: Update Cause – Effect Map

Due to the due date of GMP is coming, the immediate solution can be created is an
effectively temporary marketing plan to increase the numbers of orders to
manufacture. From then, the assembly can be upgrade to meet the standard as what
manager said.
3.2. Definition of core problem
Karlícek and Drábik 9(p587)
stated that:
Marketing is a fundamental business function. Companies of all sizes and sectors have to
answer basic strategic marketing questions, such as “who is their ideal customer”, “what is
the value they propose”, “how do they ensure customers’ satisfaction” or “how do they retain
a competitive position”. These marketing decisions are integral for every business model in a
competitive market. They represent a necessary condition for the company’s long-term
performance.
Moreover, Curt Clinkinbeard 10
also indicated in his paper that “it is advantageous to
implement a "customer driven" mentality instead of one that is primarily
manufacturing driven. A customer perspective leads to products and services that are
more marketable and, ultimately, to greater manufacturing success.” They all proved
the importance of marketing in an organization and organization needs marketing
activities.
Marketing activities, as described by Janet Walsh 11(p10)
that “A series of tools for
promoting and informing users of resources and services through a mix of
communication, distribution, and motivation.”
About the significant of marketing in an organization, O'Sullivan D, Abela AV 12
‘s
research contributed strong evidences to prove that
Where marketing is capable of providing meaningful performance measures, it commands
significantly higher board level respect. More compelling again is the strong impact that
marketing has on the company's financial performance in companies that are successful in
capturing marketing's contribution.
Furthermore, Lee W, Rhee S, Oh J 13(p119)
also stated in their research about the
linkage between marketing and manufacturing activities that:

To better match its manufacturing capabilities with the market demand, the current and the
future as well, the manufacturing department requires market information about the
everchanging customer needs and competing products. The marketing department, on the
other hand, requires information about manufacturing capabilities, both existing and planned,
in order to identify a target market segment as well as develop a market offering or a set of
feasible competitive priorities so as to outperform its competitors. This simple fact
immediately signifies that the close cross-functional coordination between the two
departments will be one major key to success in manufacturing strategy and corporate strategy
as well.
In addition, the outcome of Lee W, Rhee S, Oh J13(p131)
research also proved that
“manufacturing organizations can improve plant performance by instituting and
implementing the practices of the three constructs” concluding manufacturing -
marketing integration (MMI). It partly showed the importance of manufacturing and
marketing activities linkage can enhance the performance of manufacturing firms.
3.3. The Existence of core problem
To prove the existence of core problem “No marketing activities” for the initial
symptoms, the author decided to take interview with the managers to find out if this
problem is available at the company. When the manager was asked about who found
the outsourcing customer for the company, he said: “We mainly depended on the
available relationship”. When was asked that the company had no plan on focusing
going to find outsourcing customer, he said: “Not yet, we have already had the sales
team from GPharm Company to introduce for us depending on their availably
widespread market”. He also continued: “At present, we just depended on sales team
from GPharm Company to find for us the outsourcing customers so we did not
actively go to find customers or introduce publicly or do advertising”. To explain this
action, he said: “We do not do introduce the outsourcing service widely because we
are practicing on doing this business”, “At this time, we do not have time to find
customers we need but this searching section is easy, nothing is impossible and so
hard. Now, we depended on the sales team from GPharm Company to find us the
outsourcing customer because they have already had the wide market and relationship
so we just took the advantages. If they successfully find us a customer, they will
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introduce that customer to us” as quoted from Interview 3. However, the result is not
as the manager expected. To prove that, the author asked the manager whether the
result from sales team introducing outsourcing customer to the company was good, he
said: “The number of orders is exactly not many, just sometimes we had, sometimes
we do not”. The exact numbers of orders that the Giai Canh Pharma Company
Limited has at present to do outsourcing as recording by the author are only 2.
Therefore, with the information given from the manager, it can be seen that the
existence of core problem “No marketing activities” is presently available at the Giai
Canh Pharma Company Limited.
3.4. The importance of core problem
In theory aspect, the core problem “No marketing activities” is affecting negatively
with the company are expressed through many research papers. According to Madhani
PM.2
, “sales and marketing integration has a direct and significant impact on
customers and the revenue-earning potential of the organization”. Leventhal RC 3
stated the importance of marketing efforts in organization by “increase your return-on-
investment, allow for more successful innovation, lead to better branding efforts,
increase the effectiveness of your promotional efforts and strengthen your web
marketing efforts”. Madhani PM. 6
also concluded in his 2016 research that “Sales and
marketing must work together in order to achieve organization goals as sales and
marketing integration is increasingly recognized as a key driver for improving
financial and operating performance. The absence of cross-functional integration may
result in promises made by the organization's marketing department that have not been
coordinated with sales, marketing promotions that are not synchronized with sales
delivery schedules, and failure to deliver product by a firm in a specific, requested
format because it is not the most efficient way to do so. Without sales/marketing
cross-functional collaboration, firms cannot be expected to respond optimally and
promptly to customers' requirements.
In reality, with the situation of Giai Canh Pharma Company Limited, the “No
marketing activities” core problem has affected negatively to the company by those
ways:
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o Company continues to depend on “orders from GPharm Company” to
manufacture. When the sale result from GPharm Company is not good at
present, the orders for Giai Canh Pharma Company Limited to do for this
“brother company” are still low and cannot “help us to cover the output of
manufacturing and do not have enough jobs for our employees to do” as quoted
from Interview 1.
o Because of low orders from GPharm Company, Giai Canh Pharma has to do
outsourcing. However, if Giai Canh Pharma Company Limited do not focus on
finding customers on their own, do not solve the core problem of “No
marketing activities”, Giai Canh Pharma will continue to depend on sales team
from GPharm Company to find for them the outsourcing customers when the
result of finding from sales team of GPharm Company is negative. The proof is
“The number of orders is exactly not many, just sometimes we had, sometimes
we do not” as quoted by manager from Interview 3. The exact numbers of
orders that the Giai Canh Pharma Company Limited has at present to do
outsourcing as recording by the author are only 2. If this problem cannot be
solved, the company is still “low sales”, lack of orders to manufacture and
cannot have enough jobs for their employees to do when still paying full salary
to them, which is a huge waste to labor cost and production capacity of
workers.
o The most important reason and the worst consequence if the core problem of
“No marketing activities” cannot be solved is: Company cannot actively
control the output of their manufacturing process. The sale will continue to be
low. It will lead to Giai Canh Pharma Company Limited cannot cover their cost
when doing the GMP. As the manager said: “GMP standard basically requires
an organization meet the high investment in assembly and highly productive
output” as quoted from Interview 1. However, “First, GPharm Company cannot
meet out output quantity to meet GMP standards led to we cannot solve the
jobs for employees. Second, facing the urgency of upgrading to meet GMP
standard when the due date is coming, it is obliged to focus on pushing the
manufacturing”, and “With the small production capacity at present, we cannot
6672211

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