Increasing Customers Loyalty In Braun Company Marketing Essay

Published Date: 23 Mar 2015

Dialysis is a medical process through which a person's blood is cleansed of the toxins the kidneys normally would flush out. It is generally used when a person's kidneys no longer function properly. This can be a result of congenital kidney disease, long-term diabetes, high blood pressure or other conditions.

Dialysis may be either temporary or permanent, depending on the person. If a dialysis patient is waiting on a kidney transplant, the procedure may be temporary. However, if the patient is not a good transplant candidate, or a transplant would not alleviate the condition, dialysis may be a life-long routine.

Peritoneal dialysis can be done in the home, by the patient, either alone or with a helper. Peritoneal dialysis uses the body's peritoneal membrane, inside the abdomen, to infuse a glucose-based solution into the abdominal cavity. The solution remains in the abdomen for about two hours, and is then drained out.

What is Hemodialysis?

Hemodialysis is the blood circulates outside the body of the patient - it goes through a machine that has special filters. The blood comes out of the patient through a catheter (a flexible tube) that is inserted into the vein. The filters do what the kidney's do; they filter out the waste products from the blood. The filtered blood then returns to the patient via another catheter. The patient is, in effect, connected to a kind of artificial kidney.

Patients need to be prepared for hemodialysis. A blood vessel, usually in the arm, needs to be enlarged. Surgery is required for this. The enlarged vein makes the insertion of the catheters possible. US researchers have developed a new way of growing blood vessels using patients' own skin cells to seed the growth of tissue and have tested it in dialysis patients with end stage kidney disease.

Hemodialysis usually lasts about 3 to 4 hours each week. The duration of each session depends on how well the patient's kidneys work, and how much fluid weights the patient has gained between treatments.

Hemodiaysis business have started operation in Vietnam since 1972, firstly the Hemodialysis department has set up in Bach Mai hospital -the biggest hospital in the North and this center is the first hemodialysis center in the North and Central of Vietnam, this center is for all patient with acute renal failure mainly malaria patients and all cases of severe poisoning from drinking carp bile, gardenal suicide, heavy metal poisoning…Since Bach Mai hospital, hemodialysis centers have established in some hospitals such as Thanh Nhan hospital, 108 Army central hospital, 103 army hospital. Similarly, in Sothern's first hemodialysis department was deployed in Cho Ray Hospital which is the biggest hospital in the South, with the help of Cho Ray hospital, some hospitals have established hemodialysis department such as Nhan dan gia dinh hospital, 115 People hospital, Trung Vuong hospital in HCMC and Can Tho hospital in Can tho city. After 40 years of development and growth, beside main and big hospitals have established dialysis center, some smaller hospitals in provinces recognized the important role of hemodialysis method and began implementing its in hospitals such as Da Nang general hospital, Hue central hospital, Kien Giang provincial hospital, Khanh Hoa provincial hospital etc… Following are main hemodialysis center in Vietnam

The dialysis business in Vietnam is highly competitive as it has opened to many hospitals. At present, the competition is even more intense given the high market value of the dialysis business. This has forced all competitors to compete with each other to gain as much market share as possible. As a result, many companies are more emphasizing more on marketing to compete for an increased market share.

Corporate image, customer satisfaction, and customer loyalty may help service companies to compete in this highly competitive environment. As corporate image will play an increasingly important role in this environment of increasing competition and identical service offerings by attracting and retaining customers (Andreassen and Lindestad, 1998). In addition, customer satisfaction is considered by healthcare providers as a key component of strategy and a significant determinant of long term viability and success under competitive situation (Andaleep, 1998). Moreover, maintaining and expanding customer loyalty is significant for any service company's long term success (Kandampully, 1998).

The delivery of consistently superior service quality has become a very important prerequisite for many companies success (Parasuraman, Zeithaml, and Berry, 1988) because it affects corporate image (Nguyen and LeBlanc, 1998), customer satisfaction (Lee, Lee and Yoo 2000), and customer loyalty (Bloemer, Ruyter, and Wetzels, 1999). Accordingly, the improvement of perceived service quality will enhance corporate image, customer satisfaction, and customer loyalty. As a result, the company can effectively compete and succeed in an increasingly competitive environment.

In Vietnam, total market value of dialysis business in 2010 was 14.5 Million US dollars (internal data), as mentioned above. although the dialysis technique was developed in Vietnam nearly 40 years but actually this dialysis business have developed strongly for 5 years with all famous companies which doing business in dialysis penetrated Vietnam market such as B.Braun (Germany), Fresenius (Germany), Nipro (Japan), Nikkiso (Japan), Gambro (Sweden) etc…

Theoretical Background

Customer Service in the business

According to Wikipedia "Customers service is a series of activities designed to enhance the level of customer satisfaction that is the felling that a product or service has met the customer need and expectation. It is important that a company ensures a good relationship with customers, when the company takes care of its customers to ensure that it bring value to customers and taking care of the customer's need is one thing possible to give company's reputation and name. Customers' service is normally an integral part of a company's customer value proposition; customer service plays a very important role in the business to generate the value and income. From that perspective, customer service should be included as part of an overall approach to systematic improvement. A customer service experience can change the entire perception a customer has of the organization. Relationship customer management (CRM) is a widely strategy for managing a company's interactions with customers, clients and sales prospects and it is a combination of policies, process and marketing activities that implemented by a company unify customer interaction. It provide a mechanism for getting customer information, from these information, each company will create the suitable strategy to get customer's need and expectation. The overall objectives are to find, persuade and get new customers, maintain and retain relationship with them. Customer relationship management describes a company marketing strategy include customer interface department (http://en.wikipedia.org/wiki/Customer_service)

Maintain customer satisfaction has many advantages. It is less expensive from existing customers and sells more services to them than to find new, single transaction customers. Following are the benefits of keeping customers:

To find new customers can cost five times as much as meet and retaining current customers.

2% increase in customers retention has the same effect on profits as cutting cost 10%

The average company loses 10% of its customers each year

A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry

The customer profitability rate tends to increase over the life of a retained customer

Price perception to products or service has been widely used to measure customer satisfaction. There are five emotions perceived by customer are satifactory as below (Li, 2008)

Satisfaction: the products can be tolerated or accepted

Content: the products bring people with happy experience and a positive

Relieved: the products eliminate people's negative state

Novelty; the products bring people with exciting.

Surprise: the products make customer unexpected pleased

Knowing the important of customer satisfaction and retention, B.Braun Co. has planned diversified marketing activities to maintain and take care of customers. All of plans aim to get customers satisfaction which result in a business development

Supply chain management

According to Supply chain is system of people, technology, organization, information and resources involved in moving product or service from supplier o customers, so supply chain included activities transform natural resources, raw material and component into a finished goods that is delivered to end customer.

Customer's loyalty

Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers. Customer loyalty is the most important goal of implementing relationship marketing activities (Oliver, 1997, p.392).

Customers are the driving force for profitable growth and customer loyalty can lead to profitability (Hayes, 2008). For a customer, loyalty is a positive attitude and behavior related to the level of re-purchasing commitment to a brand in the future (Chu, 2009). Loyal customers are less likely to switch to a competitor solely because of price, and they even make more purchases than non-loyal customers (Bowen and Shoemaker, 2003). Loyal customers are also considered to be the most important assets of a company (Blackton, 1995).The key to a successful business is a steady customer base. After all, successful businesses typically see 80 percent of their business come from 20 percent of their customers. Too many businesses neglect this loyal customer base in pursuit of new customers. However, since the cost to attract new customers is significantly more than to maintain your relationship with existing ones, your efforts toward building customer loyalty will certainly payoff. We need to distinguish five different level of investment in customer relationship building

Basic marketing activities: included all marketing activities which provide the value of company as well as value of targeted product to customers through sales and marketing team

Reactive marketing: the sales team sell product to customer, persuade customers using value of product and encourages customers feedback if they have any questions, comments or any complaint about product or service

Accountable marketing: the sales team discuss with customer to check if product is meeting customer's expectation, the sales team also check that if any product or service need improve or any specific disappointment if customer have a disappointment

Partnership marketing: company works continuously with large customer to improve their performance

Proactive marketing: the sales team often meet customer to discuss in order to find out any suggestion to improve the quality or service of products or new launch products

Data collected in the research are from two sources: primary data has been obtained

through observations, and focused group. The secondary data was

taken from company annual reports, official statistics, newspapers, and information in the

internet…

Besides collecting data in the research are from two sources: primary data has been obtained through observation and focused group. The second data was taken from company internal data, annual report, official statistics, newspaper and information in the internet. When collected data we mainly focus on 2 issues which we recognize that it will be effective on our business

The quality off the products, product competitiveness, price perception

The quality of sales team meet customers satisfaction

The delivery of product to end customers through the country

The marketing activities of company

Supply chain

Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole (Mentzer et al., 2001).

One of the most powerful tools used to address variableness in the supply chain is the concept of risk pooling. Risk pooling suggests that demand variability is reduced if one aggregates demands across locations. When we aggregate demands across different locations, it becomes more likely high demand from one customer but it will be offset by low demand from another. This reduction in variability allows a decrease in safety stock and therefore reduces average inventory (Course material of SCM, Dr. Ravi Shankar).

Human Resource

Human resource management (HRM) is a strategic and coherent approach to the management of an organization's most value assets- the people working there who individually and collectively contribute to the achievement of the objectives of the business. (http://en.wikipedia.org/wiki/human_resource_management.)

Marketing Strategy

Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered on the key concept that customer satisfaction is the main goal. (http://en.wikipedia.org/wiki/Marketing_strategy)

One of the four major elements of marketing mix is price. Pricing is an important strategic issue because it is related to product position. Furthermore, pricing effects other marketing mix elements such as product features, product benefits, channel decision and promotion. Common of pricing objectives are following

Current profit maximization: to seeks to maximize current profit

Current revenue maximization: to seeks to maximize current revenue

Maximize quantity: to seeks to maximize the numbers of units sold

Maximize profit margin: to seeks to maximize the unit profit margin

Quality leadership: signal quality to attempt to position the product as the quality leader.

Illegal competition

B.Braun and Gambro in Vietnam

About B.Braun Company

On 23 June, 1839 Mr. J.W.Braun purchased a local pharmacy called Rosen- Apotheke in Melsungen - Germany. After 170 years of development that pharmacy has developed into B.Braun International Corporation, a global company is mainly manufacturing pharmaceutical & Healthcare's products for Infusion, intensive care medicine, extra corporeal blood treatment (dialysis), anesthesia and surgery as well as service for general practitioners and hospitals.

Headquarter of B.Braun International Corporation is located in Melsungen, central zone of Germany with over 50 countries. In 2009 with about approximately 40,000 employees, B.Braun had turn over of 4.03 Billion Euros. B. Braun Vietnam Co., Ltd entered Vietnam market in early 1990, established representative office in HCMC since 1992, then in Hanoi city in 2993 and accompanied by co-operate with importers in Hanoi and HCMC. The factory is located in Hanoi in the form of a Joint Venture with Hanoi Pharmaceutical Company, was inaugurated in Aug, 1997, starting with 74 staffs included sales staffs, accounting, logistics, human resource department and from beginning of the year 2004, it was transferred into 100% foreign own company and called B.Braun Company Limited.

Being one of the early birds along-with already well established Roussel Vietnam & Rhone Poluenc, Sanofi - being the big Pharmaceutical Giants present in the market, parallel with some MNC, Chinese & Indian generic companies.

The early entry helped pave the way to get close to the medical key staffs that were eagerly looking forward to get contact with medicines & technology of the western world. So still today BBVN is turnover wise amongst the first 5 foreign Pharma/Medical Suppliers

For over 20 years of business activities in Vietnam, so far B. Braun Co., Ltd Vietnam has 01 factory in Hanoi city, 01 main office in HCMC and 03 branch offices in Hue, Da nang and Can tho. In Vietnam B.Braun Vietnam Co., Ltd included all departments such as Sales & Marketing department, Accounting, Logistic, Human Resource department. Now B.Braun Vietnam with more than 800 skillful and qualified staffs has become a prestigious trademark in Vietnam healthcare market. The products are included Intravenous solution, Infusion solutions, dialysis concentrate and medical devices, these are very good products providing to local hospitals. So it encourages the company to extend business in Vietnam market. In 2007. B.Braun Vietnam decided to build 2nd plant in outside of Hanoi city, it is about 25km far away from current plant with capacity of 15 Mio bottles IV standard solution per year and it is the 2nd biggest IV plant production on the world.

Activities of the company

Currently, B.Braun Vietnam company limited has 6 division are following

Hospital Care Division (HC) included

Pharma business Unit: specializing in intravenous solution with a wide range of intravenous fluids.

Medical Business unit: supplying a range of medical devices and instruments focusing on devices for intravenous set, intravenous catheter, infusion pumps...

2. B.Braun Avitum Division (Dialysis)

Supply of medical products and services concerning extracorporeal blood treatment including Dialysis machines, Haemodialysis concentrate solution, needle…

Asculap Division

Supplying over 17,500 items of instruments for general, orthopedic, neurological, spinal surgery and wide range of implants that are able to supply numerous kinds of neuro surgeries, spinal and orthopedic surgery

Closure technique Division (CT): supplying wide range of surgical sutures

Vascular System Division (VS): providing all products used in cardio vascular market.

Out patient market Division (OPM): the products are focusing on diabetes care, skin care, wound management, clinical nutrition as well as incontinence care and trauma

These products are used under physician' descriptions, so customer of B.Braun Company are hospitals, doctors and pharmacies…

Dialysis business in Vietnam

Dialysis include Haemodialysis and acute dialysis is new field in Vietnam since 1998, it growth very fast with 2 digit per year, especially in the 1st period of this business. Dialysis Division of B.Braun Co. has supplied to hospitals included government and private hospitals machines and needed consumables included Dialysis concentrate solution, arterial/venous system, dialyzer, needle fistula … It have turnover also increased along with general market development. During period 2005 -2010, the sales revenue of a year increased more then 35% compared to previous year.

Due to quick development and high profit from dialysis business, many competitors from Germany, Japan and Sweden have penetrated this market step by step, so this effected into the company's turnover significantly. It showed that dialysis business was facing with many difficulties and challenging from fierce competition and has shared market with competitors.

About Gambro company

Gambro was founded in 1964 and has today 8,000 employees, production facilities in 9 countries and sales in more than 100 countries. Gambro is a global medical technology company and a leader in developing, manufacturing and supplying products and therapies for Kidney, Liver dialysis, Myeloma kidney therapy and other extracorporeal therapy for Chronic and Acute patients. For decades, Gambro has been first to market with many groundbreaking innovations, by designing and delivering solution to dialysis clinics and intensive care unit. Gambro offers not just improved treatment quality, but also improve efficiency.

The main office of Gambro in Asia pacific is located in Singapore, this office is responsible for other countries such as Vietnam, Malaysia, Indonesia, the Philippines, Hong Kong, China etc…In Vietnam, Gambro has not representative office, and they are doing business through distributor. Today Gambro is one of the most successful dialysis companies in Vietnam market; it entered Vietnam since 2005 through Eastern Company (local company). In 2010 Gambro achieved total sales of 2.5 millions US dollars

Table 1: BBA Sales development period 2006 -2010

The above data shown that dialysis business operations of the company is relatively stable growth in the period 2006 -2010, the growth often is 2 digits. But the sales value increased only 9.2% compared with previous year (2008) due to fierce competition especially Gambro company which penetrated market since 2008

Table 2: the market shared of install dialysis machine in Vietnam market

The above figures are market share of company based on running machine in the market, these figures shown that B.Braun takes the first rank in the market with market share of 28.2%, Gambro takes the second rank in the market (included the 2nd hand machines) with market share of 15.8% then Nipro followed up 17.1% market share and Fresenius takes about 11.5% market share.

One of the strategies of companies is how to install, operate dialysis machines as much as possible because from installed machine company continues to supply essential consumables such dialysis concentrate solution, dialyzer, arterial & venous system …Following are market share of activities companies based on supplying consumables.

Marker share of company based on supplied consumables

The above figures are market share of company based on supplied consumables in the market, these figures shown that B.Braun takes the first rank in the market with market share of 45.6%, Gambro takes the second rank in the market (included the 2nd hand machines) with market share of 18.0% then Nipro followed up 22.5% market share, Fresenius takes about 10.5% market share and the last company is Nikkiso takes about 3.4% of market share.

Brief comparison between B.Braun and Gambro in Vietnam

Characteristics of Company

B.Braun in Vietnam

Gambro in Vietnam

Timing of entering into Vietnam market

1998

2007

Representative office or Distributor

Joint - Venture Company and Representative office

Doing business through local distributor

Number of Installed machines installed in Vietnam

465

260

Number of salesperson

22 (mainly for dialysis business)

40 (for all kind of medical equipment)

Number of service engineers

12

15 (for all kind of medical equipment)

Total sales in 2008

US$ 3,946,600

US$ 1,857,500

Total sales in 2010

US$ 5,416,900

US$ 2,520,600

Objectives of the study

As mentioned, the market is become competitive and difficult, a small market like Vietnam but all main companies which doing business in dialysis have penetrated into the market, so this creates a fierce competition among companies to increase the market share. In order to achieve a good market share as well as good reputation in the market, companies takes a diversified of form to create cement relationship with doctors, technical manager, relevance executive, stakeholders and decision makers (legal marketing activities). In order to survive in such competitive market, the company must have good preparation, product's quality is 1st priority to persuade customers, it is essential that customer service should be essential maintained and developed to meet customer's satisfaction.

Furthermore, as mentioned above, although the business activities of company develop stability and steady, but some external and internal factors still exist, the company identified issues which need to be focus to increase and keep. The factors can be listed as follows:

Supply chain management: Dialysis concentrate solution included Acetate solution and Bicarbonate solution take up about 50% of division turnover, they are chemical solution, these solutions is in package of 10 liter per canister so they are very heavy, each order normally include about hundred of canister, the company has to deliver to hospitals by car and it takes a long time from the sales person received the order from customers to deliver to warehouse of end customers.

Relationship quality: the sales and marketing staffs have not met the expectations of the company. Their role in the competition is very limited. Their proposal to conquer the market or have cognitive from customers about the value of the product is weak and incapable of showing to compete competitors. They lack a guiding theory of marketing and strategic vision. To achieve its goal setting, it is necessary for B. Braun to develop a marketing strategy for companies. Moreover, a high turnover of the sales staff had bad influence on the business

Price perception: Price is the monetary cost for a customer to purchase services or products. It is the critical determinant that influences customer buying decision. Price perception is though to be related to price searching (Lichtenstein, 1993).

Based on this situation of the company, the objective of this research study to develop, improve in supply chain management to cover almost of market in big cities as well as in provinces in order to avoid lost customers and keep customer's loyalty and implement and create reasonable marketing activities to keep customer's need/ satisfaction.

Comparison of the different keep customer's loyalty by B.Braun and Gambro

The significant difference of performance between B.Braun and Gambro in Vietnam market is mainly determined by the different use of four strategies to keep customer's loyalty

1. Price strategy

2. Relationship quality (the sales team)

In B.Braun Vietnam Co., almost all salesperson, marketing staffs and managers have graduated from the Pharmaceutical or Medical University, with good background and knowledge, they have some advantages such as they can catch up with the product knowledge very fast, they understand the product features, product benefit quickly and they know how to persuade customers to use product's value effectively. It is easy for them to approach and to get good relationship with customers who mainly are doctors or pharmacist because they can share the same idea and same career. Almost products of the company are produced in Germany or using German technology, so the quality of products is quite good, customer relationship plays an important role in business. Thus customer satisfying is top priority which company sets up for evaluating staff performance. Relationship with customers is divided into 4 kinds

With decision maker such as Director Board, Project management unit

With end customer such as doctors or nurses (who use or order products)

With technical person, who is understand the technical of medical equipment

With relevance executive such as Finance or advisor…

To achieve sales target, the sales staffs try to build good relationship with customer, so sales value of BBA division is good and retain high market share in a fierce competitive market, this is a company's success and is also considered as strength point.

With skillful and professional sales team and good service, B.Braun Vietnam Co., has good impression on most customers. That is reason why we have penetrated our products and service into all main market and potential market with high development although.

Supply chain

Illegal competition

Dialysis business is not new in Vietnam but growth rate is very fast and bring high profit, that is why this market attracts new companies penetrate into Vietnam market, the market is very competitive and a fierce competition is unavoidable even illegal strategies have been applied.

To get a position in the market, some new or small companies often use illegal tricks to sell their products, they can increase market price of products to pay commission to doctors or nurses or decision makers. The problem is how to harmonize both customer satisfaction and keeping the ethical business that the company has followed strictly as its line of code of conduct.

With full member of WTO joined since November 2006, Vietnam government determines and commit to reduce corruption, this action creates fair and competitive environment for both local and foreign companies. It is considered as good opportunity for B.Braun Vietnam which as supplied products with competitive price and keep customer satisfaction and customer loyalty through marketing activities as below:

Send doctors or nurses to attend training course.

Sponsor customers to attend local or international scientific congress, they have chance to update new knowledge; new technologies as well as they can share their experience with colleagues.