Channel strategy b04e group 10 final report on1lixco

Spatial Convenience “Many things need to be solved, so there won''''t be enough time to select and Time “We do not necessarily receive the goods immediately because there are still a few

University of Economics a nd Finance

GROUP 10

completing the report

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VAI TRÒ

ĐÁNH GIÁ TỪNG CÔNG VIỆC THAM GIA (*)

Đánh giá chung mức

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Nguyễn Hữu Thiện Leader T T T T T T T T T 100% 10 Nguyễn Thuỳ Linh member Team T K T K K T T TB K 86,6% 8,7

Lê Th Kimị Nhung member Team K TB T TB T K K TB TB 75,6% 7,6 Bùi Văn Tâm member Team TB K T TB K K T K TB 77,8% 7,8

(*): Đánh giá phần này theo quy ướ sao c

Table of Contents

I About the Company and the Product 4

1 The Company 4

2 The Product 4

3 On1’s Competitors 5

II End-users Segmentation and Service Output 6

1 End-users Segmentation 6

2 Targeting End-users by Service Output 6

III On1’s Channel Analysis and Its Function 8

1 On1’s Marketing Channel 8

2 Functions of the Channel 9

3 Individual Channel Member’s with Efficiency Template 10

IV Gap Analysis 11

1 Cost Gap 11

2 Service Gap 12

V Make and Buy Channel Analysis 13

VI Problem 16

VII Solution 18

I About the Company and the Product

- In 2019, launched the On1 brand - a premium product from nature

- Address: No 03, Street 02, Quarter 4, Linh Trung Ward, Thu Duc District, City Ho Chi Minh, Vietnam

- The On1 brand made in Vietnam by

Lix Detergent Joint Stock Company was

developed and created during the

Covid-19 outbreak On1 is considered as one of

the leading disinfectant products trusted

by consumers during the Covid-19

epidemic

- Uses: Helps to clean hands, protect

hands and surfaces such as tables and

chairs, doorknobs, kitchen floors from

bacteria, limit and prevent infectious

diseases Add Aloe to safely moisturize

the skin of the hands

3 On1’s Competitors

Direct Competitors – Lifebuoy (Unilever)

- In 1894, Lifebuoy was born in the UK, and is now a part of

Unilever group, with more than 110 years of development and

trading in products to serve the essential needs of the family They

understand and capture user psychology, from which to offer

products that match market needs at affordable prices

- During the epidemic, grasping the urgency of the difficult

epidemic period, they urgently launched the product "Antiseptic

Lifebuoy" to assist consumers in protecting their own health and

avoiding community infection

Indirect Competitors – Bath and Body Work

- Bath and Body Works is a famous brand specializing in body

care products from the UK Their products are highly

appreciated for their sophistication in terms of packaging

design and product design In addition, the "Quality" factor

cannot fail to mention when talking about Bath and Body

Works when they always bring very good and safe products

to the health of consumers

- In terms of health and beauty care, the line of hand sanitizer

is one of the most "featured" products when it comes to the

health segment of Bath and Body Works The gentle scent and

smooth feeling on the hands after use are special things that

make customers loyal to this product line of Bath and Body

Works

Competitive

Advantage

The overall design is all white, in the

form of a tall, slim bottle with a spray

nozzle, the red Lifebuoy brand logo is

placed in the middle below the name of

the product

The overall design is all white,

in the form of a tall, slim bottle with a spray nozzle, the blue ON1 brand logo is placed in the middle and below the name of the product

Price The price is ranging from 59.000 VND

to 72.000 VND

The price is ranging from 49.000VND to 60.000 VND

II End-users Segmentation and Service Output

1 End- users Segmentation

- On1 segmented customers into two main target groups based on purchasing behavior: Buying for personal use and buying for use by organizations and businesses (Personal buyers vs Bussiness buyers)

- Main Concern: They are people who care about the health of themselves and those around them

- Behaviours:

Purchased for personal use: People who need to meet many people in their daily work (Students, office workers, )

Buy to use for businesses, organizations: Schools, organizations that work

in departments, teams, need to keep the environment clean and bacteria, to avoid harming people's health

2 Targeting End-users by Service Output

Level Descriptor Demand Level

Bulk Breaking “Many departments in the

company need to use hand sanitizer frequently Need

to reserve the amount of hand sanitizer to use gradually”

Low “I just want to buy a bottle of hand sanitizer for my own use”

Pocket spray design, colorful colors, diverse scent groups Pleasant fresh produce The product is suitable for travel, convenient for hand washing immediately after contact with public surfaces

27,000 VND to 29,000 VND

(100ml)

The price is ranging from 44,000 VND to 65,000 VND (29ml)

Spatial

Convenience “Many things need to be solved, so there won't be

enough time to select and consider”

Medium “I have to buy

other household items so I will buy hand sanitizer at the same time”

Medium

Delivery/Waiting

Time “We do not necessarily receive the goods

immediately because there are still a few bottles of hand sanitizer left in stock”

Low “I have to buy

other household items so I will buy hand sanitizer at the same time”

High

Assortment/Variety “Quality products are our

top priority” High “I just want to buy hand sanitizer, any

kind”

Low

Customer Service “We need advice on

pricing and need help with shipping”

Medium “I don't need any

help because I can make up my own mind”

Low

Information

Sharing “We are very interested in product information,

product quality and how to use hand sanitizer to protect health”

High “I just wonder if

hand sanitizer dries my hands”

Medium

III On1’s Channel Analysis and Its Function

1 On1’s Marketing Channel

- In the distribution channel system of On1 (Lixco) there are 5 main distribution channels:

§ Traditional Channel (GT): Grocery stores, Kios in the market, drug stores,

§ Modern Channel (MT): Convenience stores (CircleK, Mini Stop, Winmart, .); Supermarkets (GO!, CoopMart, Lotte Mart, )

§ E-Commerce Channels: Shopee, Lazada, …

§ Horeca channel serves products for Restaurants, eateries, …

§ Export Channel

- Regarding distribution channels, in general, the traditional distribution channel (GT) is still the main channel, accounting for 44% of total product sales, followed by the modern channel (MT) with 37% Since the pandemic, the consumer behavior of customers has changed quite

a lot, since then, E-commerc platforms have developed strongly and are also potential platforms that Lixco is exploiting

- To analyze more specifically about On1 product distribution channel (Lixco), the team will choose the Traditional distribution channel (GT) branch to clarify this channel

- In On1's Traditional distribution channel (GT) system, they have 2 main intermediaries involved in the distribution process, namely Distributor and Retailer And they apply the Level

2 Distribution Channel model to their products

- According to the current regulations of the company, there are currently 63 provinces and cities in the country, each province has 1 distributor The Company's products will be shipped

to the provinces and delivered to the distributors From there, products can be sold directly to Pharmacy (retailer) (Department stores, market kiosks, ) And finally to the consumer

- Because there are many types of Pharmacy (retailer), I will do a deep analysis of the GT channel's pharmacy distribution channel

- Currently, On1 hand sanitizer is distributed in GT channel to pharmacies through: + 152 branches of An Khang pharmacy in Ho Chi Minh City

+ 124 branches of Pharmacity pharmacies in Ho Chi Minh City

+ And 500 other retail pharmacy branches in Ho Chi Minh City

2 Functions of the Channel

(3) Distributor supplies and manages the delivery of goods to pharmacy -> The cost of storage and delivery will be borne by the distributor

(4) End-users will go to retail stores to purchase and pay directly

Ownership

There are about 30 distributors in TP.HCM

• (1) Manufacturer manages more than 1200 containers in stock

• (2) Each distributor keeps about 600 boxes in stock

• (3) Each pharmacy has 10-50 boxes of goods in stock

Manufacturers, distributors and pharmacy (retailer) who own their warehouses will bear the costs of storing, storing, and losing goods in the warehouse

Promotion

(1) Year-end program 50% off for 1 bottle of On1 quick hand sanitizer

(1) When buying 1 bottle of 500ml quick hand sanitizer, you will get 1 free product of the same type

(2) If Pharmacy (retailer) sell the quantity of 2 boxes/week, the distributor will sponsor more banners and display shelves

(2) The distributor's salesperson will be the person who works directly with the Pharmacy (retailer) They will have to receive the order quantity from the retailer and calculate the quantity to deliver the order to the retailer

(2) The delivery staff of the distributor will be the person who directly delivers the goods

to the pharmacy (retailer) through the delivery vehicles

(3) Pharmacy (retailer) they will have to work directly with customers or will have sales staff to advise and assist customers in the product selection process

(4) End-users will be the ones to directly enjoy the incentives from the brand through promotions for end-users

3 Individual Channel Member’s with Efficiency Template

Importance weight for

functions: Proportional Function Performance of Channel Member

Total Cost

Benefit Potential (High, Medium, Low)

Final Weight

turer Distributor Retailer

Mannufac- user

End-Physical

Financing

(1) Manufacturer bears the cost of shipping returns from the distributors

(1) Manufacturers discount about 10% commission to distributors

(1) Distributor must be under pressure to pay from the manufacturer within 15 -

30 days through the negotiated contract

(2) Distributor bears the cost of shipping returns from the pharmacy (retailer) (3) Retailer is under pressure to pay from the distributor within 15 - 30 days of the negotiated contract

In addition, Lixco is also authorized to sign loan contracts and guarantee credit extension at Vietinbank Thu Duc Branch

(3) The end-users will go directly to the retail stores or can order via phone call

Information

sharing

(1) Lixco's official website and fanpage will be the official source of full information about products so that customers can easily find out

(3) Consulting with customers directly at retail stores (grocery, pharmacies, )

(4) End-users will be the one to directly use the product and give their own views, opinions and evaluations about the product From there, maybe they will introduce to relatives and family about the product to use together

The Efficiency Template

IV Gap Analysis

1 Service Gap

Bulk

Breaking

Spatial Covenience

Delivery/

Waiting Time

Assortment Variety

Customer Service

Infomation Sharing

Major Channel for this Segment

Spatial Convenience

- Both of these end-users are satisfied Since the number of Pharmacy (retailer) selling On1 products

is relatively common, it will be more convenient to find and buy their products (SS = SD)

Delivery/Waiting Time

- With Business Buyers, they need to stock up on the required quantity so they will order first Therefore, the delivery time does not need to be immediate, they can wait to receive the goods (SS > SD)

- Because of the necessity in daily life, when consumers choose to buy products at Pharmacy (retailer), they want to have the goods right at the checkout instead of having to wait (SS = SD)

Assortment Variety

- Because the retail locations in the GT channel are small Pharmacy (retailer), if the target audience

is Business Buyers choosing to buy from Pharmacy (retailer) in the GT channel, they will lack diversity in choice With Business Buyer, they care more about the quality and price of the product,

so they need to have many choices to consider (SS<SD)

- They only need to buy a type of hand sanitizer to use, so they do not need to choose and consider between many product brands They can browse through some of the products available at the retailer and buy them right away (SS=SD)

- And for the Personal Buyer, they usually only care about the brand of the product, so they can almost decide for themselves which product they choose to buy (SS=SD)

Cost Gaps [Affecting Which Functions?

]

Planned Techniques for Closing Gaps

Do/Did Actions Create Other Gaps?

Promotion [sales force working time]

Save working timedirectly by working through mobile phones

No

Customer Service

Build a complete customer care system through fanpage and hotline

Yes Cost of restructuring and completi

ng the customer care channel Manufactuer

through fanpage and hotline

Yes Cost of restructuring and completi

ng the customer care channel

V Make and Buy Channel Analysis

- In the existing distribution channel system of On1 (Lixco), they apply both forms: Vertical Integration and Outsourcing Channel in their distribution strategy:

About Vertical Integration:

- They own 2 separate factories to produce 2 different types of manufactured products

§ Lix Binh Duong branch is about 50,000 m2 wide used to produce liquid detergents and is also a place to store enough goods to supply to distributors in the South and neighboring provinces

§ Lix Thu Duc branch (HCMC) with an area of about 22,000 m2 specializes in producing Lixco's main washing powders

§ Another branch of Lixco's production facility supplying finished products to the Northern regions of Lixco is Lixco Bac Ninh factory, which is 12,000 m2 wide and specializes in the production of washing powder and liquid detergent In addition, this is also a warehouse for goods and is in the system of storing and transporting goods to distributors and Pharmacy (retailer) in the Northern region

ð The autonomy in production gives them many advantages over competitors in the same industry Especially, they do not have to depend on 3rd parties if they cannot produce them themselves and thereby also save a large amount of budget for business costs

ð They can manage the source of goods, the production stages and the quality of the finished product

About Outsourcing Channel: