unlicensed consumer’s perception of low product quality of saigon special in saigon beer alcohol beverage corporation (SABECO)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS Consumer’s perception of low product quality of Saigon Special in Saigon Beer-Alcohol-Beverage Corporation (SABECO) Name: Tran Thi Thanh Huyen ID: 221500030 MASTER OF BUSINESS (Honours) Ho Chi Minh City- 2017 UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS Consumer’s perception of low product quality of Saigon Special in Saigon Beer-Alcohol-Beverage Corporation (SABECO) Name: Tran Thi Thanh Huyen ID: 221500030 SUPERVISOR: Dr LE NHAT HANH MASTER OF BUSSINESS ADMINISTRATION Ho Chi Minh - 2017 Acknowledge I would like to thank all of my family, friends and colleagues who inspired and supported me in this thesis writing venture I am really indebted to my supervisor Dr Le Nhat Hanh whose proper guidance and close supervision helped me to carry out this research to the right direction I would also like to show my gratitude to all of respondents who shared their experiences with me, thanks for all valuable time they have invested in this study that gave me precious information for research Last but not least, I would like to express my thankfulness to my company Sabeco, my Boss and all colleagues who supported me a lot during the time doing this research TABLE OF CONTENTS EXECUTIVE SUMMARY……………………………………………………… ………… CHAPTER PROBLEM IDENTIFICATION……………………………… …………… 1.1 Background of the company…………………………………………………….…….…….3 1.2 Background of the problem…………………………………………………………… 1.3 Problem identifying …… …………………………….……………………….….…… 11 1.3.1 Problem justifying……………………………………………………………….……… 11 1.3.2 Justify the existing of problem………………………………………….……….……… 16 1.3.3 Definition problem……………………………………………………………….……….22 1.3.4 Justify the importance of the problem: literature regarding, consequence effect….…….23 1.4 Potential causes……………………………………………………….……… ………….27 1.4.1 Opinions from other people…………………… …………………………………….….28 1.4.2 Situation…………………………………………………….……………………….…….29 1.4.3 Product physical properties………………………………………………………….…….29 1.4.4 Storage, use, and convenience of beer……………………………………………….…….30 1.4.5 Cause - effect tree………………………………………………………………………….31 1.5 Causes validation ………………………………………………………………………….32 CHAPTER ALTERNATIVE ANALYSIS…………………………………………………36 2.1 Alternative Solutions……………………… ……………………………………….…… 36 2.1.1 To improve warehousing can adapt to these rule in preservation ………………….…… 36 2.1.2 Invest on transportation vehicle beer suitable for ensure quality product………….…… 38 2.1.3 Improving reasonable distribution network…………………………………………….….39 2.2 Solution comparison…………………………………………………………………… 40 CHAPTER ACTION PLAN……………………………………………………………….43 CHAPTER CONCLUSIONS AND RECOMMENDATION… ……………………….52 REFERENCES ………………………………………………………………….…………… 54 APPENDIX …………………………………………………………………….……….……58 APPENDIX ……………………………………………………………………….………….61 APPENDIX ……………………………………………………………………….………….63 LIST OF FIGURES Figure 1: Organizational system of SABECO Figure 2: Market share of beer market in 2015 Figure 3: Market share of Sabeco from 2012 to 2015 Figure 4: Saigon Special did not choose much comparing to Heineken, Tiger by users Figure 5: Level of customer’s satisfaction Saigon special beer Figure 6: Cause-and-effect tree Figure 7: Model of determinants and consequences of perceived product quality LIST OF TABLES Table : Company information Table : Market share of all products of Sabeco from 2013 to 2015 Table : Sample details Table : Customer’s evaluation for Saigon beer report Table 5: Technical requirement of Saigon Special beer LIST OF ABBREVIATIONS - SABECO: Saigon Beer-Alcohol-Beverage Joint Stock Corporation - HABECO: Hanoi Beer and Beverage Corp - MoIT: Ministry of Industry and Trade - BMI: Business Monitor International - SATRACO : Saigon Trading Corporation - SABETRANJSC: Sabeco transportation joint stock company - SABECUCHI: SABECO Cu Chi Factory - QA: Quality Assurance - VBA: Vietnam Beverage Association EXECUTIVE SUMMARY Beer industry has witnessed higher total volume growth despite the rise in the Special Consumption Tax from 50% to 55% since 2016 Positive economic conditions in Vietnam have boosted consumers’ incomes and forced them to shift from unbranded to branded beer, as higher quality and taste Saigon Alcohol Beer & Beverages Corp (Sabeco) saw a reduction in its market share although it maintained its lead in beer Saigon Special is a new brand of SABECO that is aiming at the target segment of people who tend to drink premium beer Although at present SABECO is the leading beer producer with the market share accounting for 39% in 2016 however the launching of its new brand Saigon Special was not so successful because SABECO lacked of an effective distribution plan especially focusing on preservation during transportation activities for this new brand In exploring the weakness point of the product, Saigon Special, we have given some recommendations to grow market share and market size by investment into quality ptoduct to create the customer need Customers’ perspective of quality has been proven to be the primary element contributing to the success of the company In which, four important factors affecting customers’ perspective of quality are opinions from other people, situation, physical properties and storage, use, convenience of beer The purpose of this thesis is to identify the root cause led to the main problem after analyzing all possible causes Strongly invest for retailer in terms of point of sales material (POSM), display (for short term) and invest on distribution system in both policy and display, especially at point of sales (for long term) Finally it implicates potential solutions that can be applied to solve this problem CHAPTER 1: INTRODUCTION The first chapter presents an introduction to the research, as well as introduces about company background and discusses the purpose, objectives and research problems of this company Chapter Two will present the literature review which explains the theoretical framework and give some solutions for this research that will be used for the survey In this chapter, the two main research methods, namely quantitative and qualitative research, will be discussed The third chapter will present the empirical findings Lastly chapter fourth wills conclusion and recommendations for companies and further studies 1.1 Company background SABECO is built in 1875 In June 1977, the factory was renamed as Saigon Brewery factory In 1993 the factory was renamed as the Saigon Beer Company and became one of the company has the most modern equipment in the beer industry in Vietnam In July 2003, Saigon Beer Company expended and became one of leading enterprises in the beer industry in Vietnam- Sabeco In early in 2008 became SAIGON BEER – ALCOHOL – BEVERAGE JOINT STOCK CORPORATION upon the government's decision For over 30 years of operation in the brewery, alcohol and beverage industry, SABECO has developed to be market leader in Vietnam’s beer business in many respects Items Company name, location Description SAIGON BEER – ALCOHOL – BEVERAGE JOINT STOCK CORPORATION Hai Bà Trưng, Bến Nghé, 1, Hồ Chí Minh Website Website : http://sabeco.com.vn Product Main product classes Beer (main product), soft drinks, and low alcoholic drinks Table 1: Company information Achievements SABECO recognized titles as of to date include: The brand name “Saigon Beer” has been recognized as the “trusted brand” for 22 years; The “Saigon Beer” product has been repeatedly voted as a “High – quality Vietnamese product” for 13 consecutive years from 1997 to 2012; The “333” canned beer product won the Silver Medal at the international beer content held in Australia in years 1999, 2000, 2001 SABECO business includes three main fields First, manufacture and sale kinds of beer, alcohol, beverage, packaging, label for beer, wine, soft drinks and food; Sales materials, equipments, parts related to the production of beer, wine, soft drinks, assorted flavors, juice for the production of beer, wine and soft drinks; food Second, import and Export all types of: beer, wine, soft drinks, materials, equipments, wine and soft drink Third, provide training services, research, technology transfer, investment consulting, construction, installation, repair and maintenance in the Beer - Alcohol – Beverage industry and food SABECO main products include 333 Can and Bottle Beer, Saigon Lager Beer (Sai gon Xanh), Saigon Export (Sai gon Do) and Saigon Special Beer (Sai Gon Lun) Saigon Do, 333, Saigon Xanh are among 15 best – selling products of 36 cities Saigon Do takes first place in On – Premise channel while 333 Can become leader in Off – Premise Consumption SABECO Vision to 2025 is to become “national leading” Beverage Group, with high position in regional and international market” By the end of 2016, Sabeco included 23 branches and 21 co-owned joined ventures A part of them are dealing only in beer trading or indirectly connected to beer The production capacity of the 23 breweries reaches about 1800 mln liters per year In view of growing output volumes the company is investing into construction of new breweries planning to bring their net capacity to the level of 2000 mln liters by 2020 REFERENCES Benkovskis K, Worz J What drives the market share changes? Price versus non-price factors Working paper series 2014;1640(1);1-34 Kim C Breweries flight for high-end beer market [document on the Internet] Vietnamnet; 2015 [cited 2016 June 15] Available from: http://english.vietnamnet.vn/fms/business/121203/breweries-fight-for-high-end-beer-market.html Accounting and Makerting report of SABECO from 2013 to 2015 Jacoby J, Jerry CO, Rafael AH Price, brand name, and product composition characteristics as determinants of perceived quality Journal of Applied Psychology 1971;5(2);570-579 Gardner DM Is there a generalized price quality relationship? Journal of Marketing Research 1971;8(3);241-3 Ajzen I, Fishbein M Understanding attitudes and predicting social behavior Englewood Cliffs, NJ: Prentice-Hall; 1980 Hellofs LL, Robert J Market share and customers’ perceptions of quality: When can firms grow their way to higher versus lower quality Journal of Marketing, 1999;63(2);16-25 Becker GS A note on restaurant pricing and other example of social influences on price Journal of Political Economy 1991;99(1);199-216 McGinnies E Initial attitude, source credibility, and involvement as factors in persuasion Journal of Experimental Social Psychology 1973;9(6);285-296 10 Garvin DA Quality on the line Harvard Business Review 1983;64(5);65-73 11 Kevin LK Conceptualizing, measuring, and managing customer-based brand equity Journal of Marketing 1993;57(1);1-22 12 Mitra D, Peter N How does objective quality affect perceived quality? Short-term effects, long-term effects, and asymmetries Marketing Science 2006;25(3);230-247 13 Fishbein M, Ajzen I Belief, attitude, intention, and behavior: An introduction to theory and research Reading, MA: Addison-Wesley; 1975 14 Zeithaml VA Consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence Journal of Marketing 1988;52(3);2-22 15 Aaker DA Managing brand equity: Capitalizing on the value of a brand name New York: Free Press; 1991 16 Chaudhuri A, Holbrook MB Product class effects on brand commitment and brand out comes: The role of brand trust and brand affect Journal of Brand Management 2002;10(3);3358 17 Stobart P Brand power London: MacMillan; 1994 18 Jacobson R, Aaker DA The strategic role of product quality Journal of Marketing 1987;51(4);31-44 19 Duhan DF, Scott DJ, James BW, Gilbert DH Influences on consumer use of word-of-mouth recommendation sources Journal of the Academy of Marketing Science 1997;25(4);283-295 20 Bone PF Word-of-mouth effects on short-term and long-term product judgments Journal of Business Research 1995;32(2);213-223 21 Richins M Negative word-of-mouth by dissatisfied customers: A pilot study Journal of Marketing 1983;47(4);68-78 22 Watkins HS, Raymond L Collectivism, individualism and in-group membership: Implications for consumer complaining behaviors in multicultural contexts Journal of International Consumer Marketing 1996;8(3);69-78 23 Engs RC Family background of alcohol abuse and its relationship to alcohol consumption among college students: Unexpected finding Journal of Studies on Alcohol 1990;51(6);542-7 24 Barber JG, Bolitho F, Bertrand LD Age and gender differences in the predictors of adolescent drinking Soc Work Res 1998; 22(3);164-172 25 Hajema KJ, Knibbe RA, Changes in social roles as predictors of changes in drinking behavior Addiction 1998;93(11);1717-27 26 Beer characteristics [document on the Internet] Craft beer Academy; no date [cited 2017 January 20] Available from: http://craftbeeracademy.com/beer-characteristics/ 27 Evaluating beer: Tasting and judging for style [document on the Internet] Winning Homebrew; no date [cited 2017 February 15] Available from: http://www.winninghomebrew.com/evaluating-beer.html 28 Teas RK, Agarwal S The effects of extrinsic product cues on consumers’ perceptions of quality, sacrifice, and value Journal of the Academy of Marketing Science 2000;28(2); 278290 29 Nick C When good beer goes bad (And why it does) [document on the Internet] Kegerator; 2015 [cited 2016 December 14] Available from: https://learn.kegerator.com/why-good-beergoes-bad/ 30 Charles WLJ, Joseph FHJ, Carl M, Faria AJ, William JW Marketing US: Nelson Education Ltd.; 2012 31 Minh Q Nem nghin ti vao quang cao, ket qua bia Sai Gon nhan duoc khong he te [document on the Internet] Cafebiz; 2016 [cited 2016 October 20] Available from: http://cafebiz.vn/nemnghin-ti-vao-quang-cao-ket-qua-bia-sai-gon-nhan-duoc-khong-he-te-mot-chut-nao20160618100228607.chn 32 Ph Dinh gia hon ti USD, Sabeco van co goc khuat khong hao nhoang [document on the Internet] Viet Capital Securities; 2016 [cited 2017 March 23] Available from: https://www.vcsc.com.vn/tin-chi-tiet/-dinh-gia-hon-3-t-usd-sabeco-van-co-goc-khuat-khonghao-nhoang/110024 Appendix NB: For Consumer only I Research Objective The findings in qualitative research are strongly believed to be the foundation for later quantitative research to confirm the intensity of the explored results in previous qualitative research II Support information : The respondents were selected as result of convenient grouping Below are their profiles as at the time of the survey Respondent should at least consume Saigon beer time from the date of interviewing Questionnaires were designed to find out best scaled and measurements to reflect precisely customer evaluation Similarly to Qualitative method, respondent criteria should be selected clearly to have clean data for later analysis In fact, respondents for survey were selected based on questions listed in the following table The answers are analyzed to explore the existence of the problem for this product in SABECO III Respondent information Gender: □Male Age breakdown: □ Female □ Under 20 □20 - 25 Job status: □ Under – graduated student □ Staff □25-30 □ Over 30 □ Having just graduated (< month) □ Manager Average monthly spending for hanging out/relationship (VND) □ Under 1.000.000 VND □1.000.000 VND - 2.000.000 VND □ 2.000.000 VND - 4.000.000 VND □ Over 4.000.000 VND IV Questionnaires items for problem existence justification Questions Answers How often you a 2-3 months typically drink b Every month Saigon special c Every week beer? d Every day e Never What factors a Product physical properties (color, taste…) made customers b Brand name choice Saigon c Competitors (promotions, new products…) special beer? d Price e Other opinions Assess the quality of these Brand Heineken Very low Low Regular High Very high brands according Tiger your opinion Sapporo 333 Hanoi beer Huda beer Saigon special beer Appendix Interviewer: Tran Thi Thanh Huyen Question: Could you please share me the reasons why you assess the quality of Saigon Special is not high level? Respondent answers: No Name Answers Vo Thi Thanh Ha I always feel headache after drinking this product Ho Viet Du Beer has taste high bitter Le Huy Hoang I like to drink beer with a lot of foam Saigon Special is not like that Vo Tan Phat Beer favor is not characteristics of beer I just feel drink it like craft beer Nguyen Bao Hoang Sometimes, I drink has some bottle Saigon Special beer sour smell Tran Van Te I feel tired such as headache and nausea after using this brand Dao Thanh Tung The truth is, they need to improve it He then offered a blunt assessment of the importance of maintaining quality in an industry that is growing crazy fast Nguyen Manh Tung He wants the color of the Saigon Special beer clarity Nguyen Van Bau I drink this beer in last month in a festival, he said, had an off-flavor and “was not the best he drink.” 10 Doan Kim Hai Sometimes, I see Haze that is also easily detected by direct visual observation and can even be sufficiently quantified by shining a beam of light through the beer at right angles to the observer 11 Tran Phong Toan A beer’s foam stability is not high I have just put out beer a few minutes not the foam 12 Huynh Van Hai CO2 content (carbonation) in bottle Saigon beer is not high I drink beer feel like that drink water 13 Do Van Tung Sour beers that taste like sweaty vinegar 14 Ha Duy Vinh I drink for enjoyment and taste, sometimes several pints, sometimes sipping after a good meal, i dont decide based on the strength but I always feel headache after drinking this product 15 Dinh Bao Long Comparing to Tiger, I realize that the flavor of Saigon Special beer is regular 16 Nguyen Van Cu My friends or my partners will choose kind of beer for party I just drink follow to their But if I must be chosen Saigon Special beer, I think that the main reason is the higher alcohol content than these others 17 Phan Kim Hai I’m not satisfied the impact after drinking Saigon Special Beer I always feel headache after drinking it 18 Ho Van Phong I’m not satisfied about low brand identity and external appearance being quite difficult to get product information 19 Nguyen Van Thuan SG special use low price to compete with some international brand But everything have problem The disadvantage is the customers thought that lower price had been the same with lower quality 20 Nguyen Van Hung Beer has taste high bitter 21 Hoang Minh Quan Poor quality output Beer sour smell 22 Nguyen Tan Tien After drinking Saigon Special Beer, I often stomach ache 23 Nguyen Hai Phong I like drinking beer high alcohol content 24 Do Van Toan Comparing with some competitors current such as Tiger, Sapporo, Heineken… Saigon Special beer still cannot catch up the aroma and taste in the premium market share’s beer Appendix Transcription for customer In Depth Interview Interviewer: Tran Thi Thanh Huyen Customer: Mr Tran Duc Hoang Title: Marketing and Sales Manager Company: Global Assurance Company Age: 36 years old | Gender: Male | Marital Status: Married Method of Interview: Telephone interview Question: Would you introduce yourself? How about your working day? Response: I’m Hoang I’m manager of Marketing and Sales department of Global Assurance Company I’ve worked there from 2010 Question: Do you often drink Saigon Special beer? Could you please share me the reasons why you drink this beer? Response: I usually drink beer with my friends and family, about time per week totally Actually we drink many kinds of beers like Heineken, Tiger, not just Saigon Special Some time, I am not the one to choose beer so that my friend will decide and I just drink it (laughing) However, last week we drunk Saigon Special so that welcome to your answer Question: But if you can decide to buy beer, will you also choose Saigon Special? Why and why not? Response: Yes I will choose Saigon Special, I think Saigon Special has a better taste compared with other kinds of Sabeco like 333 or Red Saigon It is also easy to buy, I usually buy at the store near my house and supermarket Question: To what extent you evaluate this beer overall? Response: I grade it 3/5 grade Question: Could you please tell me the reasons why you just give it 3/5 grade overall? Response: Actually I think I have little choices when drink Saigon special Although it’s good but sometime I also want to try another taste I think Tiger has more options for customers than Saigon Question: what you expect more about this product? Response: Saigon should produce more products to satisfy all needs of customers Question: How about the quality of this beer? I mean what you feel about taste, aroma or alcohol content of it? Response: I think it’s acceptable It has higher alcohol content and I like it It is one of the reasons I choose it Question: Oh really? So the content of alcohol makes you buy it mostly? Response: Yeah Question: Have you ever drunk beer in bad time? Does your emotion affect your taste? Response: Sometime when I’m not happy, I want to drink some beer I think emotion also affects to my taste but it is not so much That time, I just feel boring and want to forget all things Question: Do you think storage period and way can affect the quality of beer? Response: Of course Thanks for your corporation in this interview! In Depth Interview Interviewer: Tran Thi Thanh Huyen Customer: Mr Nguyen Duc Anh Title: Engineer Company: Duc Loc Construction Company Age: 29 years old | Gender: Male | Marital Status: Married Method of Interview: Face to face Question: Would you introduce yourself? How about your working day? Response: My name is Duc Anh I am an engineer My company is at HCMC but I usually go to other provinces to build house, to fix street and other relating jobs Question: Do you often drink Saigon Special beer? Could you please share me the reasons why you drink this beer? Response: Because of working condition, I usually drink beer, about 3-4 times per week I usually choose Saigon Special beer when I work at HCMC but it is not a good choice when you drink it at other provinces like Phu Tho, Quang Tri Question: Oh really? Why you say that? Is there any difference between beers at these places? Response: Oh you know that, Saigon Special is not very popular at Central area They like other kinds instead of this beer Restaurants or stores at these provinces don’t want to keep a lot of this beer because it will out of date if customers don’t buy May be because of that, Saigon Special at these areas does not keep the high quality like HCMC Question: Why you tell that it does not keep the high quality? Response: I drink a lot, so that I feel easy when differentiate beer For me, Saigon Special at Quang Tri has darker color and lighter aroma than HCMC Question: So it will be the reason affect mostly to your choosing decision? Response: Yes, I will not drink beer at Central area HCM is okey Question: To what extent you evaluate this beer overall? Response: 2.5/5 grade Question: what you expect more about this product? Response: I think that company should improve quality of beer at the same standard for all provinces to attract customers Price is also different among provinces It makes consumers confuse and don’t want to purchase it again Question: How about the quality of this beer at HCMC? I mean what you feel about taste, aroma or alcohol content of it? Response: Saigon Special at HCMC is good I like its smell Question: Have you ever drunk beer in bad time? Does your emotion affect your taste? Response: Actually in bad or happy time I also want to drink beer But I think it‘s not affect so much on my evaluation Thanks for your corporation in this interview! Transcription for Sabeco employee In Depth Interview Interviewer: Tran Thi Thanh Huyen Customer: Mr Duong Anh Hung Title: Customer service specialist Company: SABECO Age: 45 years old | Gender: Male | Marital Status: Married Method of Interview: Face to face Question: Hi Mr Hung, how are you? Response: Fine thank you Question: Are you in-charge of analyzing customers ‘complains each day? Can you talk something about your job? Response: Yes, each year we have to collect customer evaluation about our product Then we analyze and send the result to relating Departments When customers send complains actively to company, we also have to send email or call directly to solve problem Question: Are you the person to summarize all information relating to all provinces? Response: Yes I have to go to other provinces frequently to get information and data from local customers Question: How about customer complains this year? Response: We have received more complaints of customers from about 2-3 years ago They complaint everything about our products but Saigon Special may get complaint at the highest number Question: What they complaint about Saigon Special? Response: They talk about price, sale, difficult to buy, quality… so many things But it receives fewer complaints in HCMC than other provinces Question: Have they complained about storage at other provinces? It affects to quality of beer? Response: Yes, I don’t know why but they said a lot that it’s different when drink beer at HCMC I think we have problems with retailers at other provinces Question: Why you think that? Response: We have overviewed all periods from raw material to finished product, but nothing happens So that I think retailers have problem with storage which may affect quality of beer Thanks for your corporation in this interview! ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS Consumer’s perception of low product quality of Saigon Special in Saigon Beer-Alcohol-Beverage Corporation (SABECO) Name:... to the production of beer, wine, soft drinks, assorted flavors, juice for the production of beer, wine and soft drinks; food Second, import and Export all types of: beer, wine, soft drinks, materials,... for the meaning of product quality. 10 1.3.2 Problem existing Saigon Special was selected as a convenient illustration of some products in SABECO of product quality A wide selection of competitive