Improving personal selling activities a case of nordic car company in ho chi minh city vietnam

2 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --- Trinh Duy Bang IMPROVING PERSONAL SELLING ACTIVITIES: A CASE OF NORDIC CAR COMPANY IN HO CHI MINH

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Trinh Duy Bang

IMPROVING PERSONAL SELLING ACTIVITIES: A CASE OF NORDIC CAR COMPANY IN HO CHI MINH

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Trinh Duy Bang

IMPROVING PERSONAL SELLING ACTIVITIES: A CASE OF NORDIC CAR COMPANY IN HO CHI MINH

CITY - VIETNAM

SUPERVISOR: NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2018

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EXECUTIVE SUMMARY

When global automobile market gets a remarkable resilience, especially concentrating

in emerging nations, and Vietnamese economy started to integrate deeper into global trade, there were many luxury brands distributed mainly in Ho Chi Minh city and Ha Noi capital Coming along with this trend, premium cars such as Roll-Royce, Porsche, Maseratti, Mercedes-Benz, Lexus, Audi, BMW and so forth were retailed in Vietnam with higher numbers recent years

Although luxury car segment is always a potential market for car-retailing investors, there are only few brands which have performed well for years and become top of mind when customers decide to buy a premium car Their success could be easily explained by having effective ways in operating sales force This fenced off the penetration of other famous luxury brands which tried to attack this lucrative market

In August 2016, Nordic Car Joint Stock Company (in short, it would be called Nordic Car in this thesis) decided to distribute Volvo cars as a dealer with two branches in Ho Chi Minh city and Ha Noi capital However, sales results have been too low since Nordic Car in Ho Chi Minh city was established This research will explore the causes

of low sales results of Volvo in Ho Chi Minh branch The findings of the study revealed that ineffective personal selling activities played the most important role in low sales results comparing to other factors from August 2016 to Dec 2017 Moreover, some reasonable solutions would be suggested in order to improve personal selling activities of Nordic Car company in Ho Chi Minh branch

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

ACKNOWLEDGEMENT 4

LIST OF TABLES 6

LIST OF FIGURES 6

1 INTRODUCTION 7

1.1 Saigon General Service Corporation 7

1.2 Nordic Car Joint Stock Company 8

2 PROBLEM CONTEXT 8

2.1 Global automobile market 8

2.2 Vietnamese automobile market 11

2.3 Volvo global business results and Nordic Car company situation in Vietnam 13

3 PROBLEM IDENTIFICATION 17

3.1 Potential Problems 20

3.1.1 Unsuitable products for Vietnamese 20

3.1.2 Inconvenient business place 21

3.1.3 Inefficient advertisements and PR activities 23

3.1.4 Unattractive direct sales promotion 24

3.1.5 Ineffective personal selling activities 25

3.1.6 Uncompetitive price 28

3.2 Problem Validation 29

3.2.1 Eliminating product, place, promotion and price as the main problem 30

3.2.2 Illuminating ineffective personal selling as the main problem 34

4 POTENTIAL CAUSES 35

4.1 Lack of professional customer relationship management system 36

4.2 Disregard of technical guide on Volvo functions 38

4.3 Weak team selling accessory, insurance, finance and service 39

4.4 Cause validation 40

4.5 Cause - and - effect tree 43

5 ALTERNATIVE SOLUTIONS 44

5.1 The first alternative solution: Using a basic customer relationship management software 47

5.2 The second alternative solution: Using a modular customer relationship management software 49

6 ORGANIZATION OF ACTIONS 56

7 CONCLUSION 58

8 SUPPORTING INFORMATION 59

APPENDIX 80

REFERENCES 82

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LIST OF TABLES

Table 1: Top 10 best-selling car brands in 2017

Table 2: Volvo retail sales on over the world in 2016 and 2017

Table 3: Top 07 luxury car brands have positive change from 2016 to 2017

Table 4: Sales volume of luxury dealers around Volvo Ho Chi Minh in 2016 and 2017 Table 5: Statistics of prospects, buyers and closing ratio between Volvo Ho Chi Minh and Volvo Ha Noi in 2017

Table 6 Evolved selling process

Table 7: Estimating cost of using CRM Viet software in a year

Table 8: Estimating cost of using Azsoft software in a year

Table 9: Action plan

LIST OF FIGURES

Figure 1: Savico investment structure

Figure 2: Global cars and light-commercial vehicles sales between 2016 and 2017 Figure 3: Global cars market share by segments between 2016 and 2017

Figure 4: The number of sold cars in Vietnam from 2014 to 2017

Figure 5: Volvo global retail sales from 2013 to 2017

Figure 6: The number of sold luxury automobile in Vietnam from 2014 to 2016

Figure 7: Reason why prospects refuse to buy Volvo cars

Figure 8: Selling funnel

Figure 9: Cause - and - effect tre

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1 INTRODUCTION

1.1 Saigon General Service Corporation

Figure 1 Savico investment structure

(Source: Savico website) Saigon General Service Corporation (Savico) was established in September 1982 with the initial idea is focus on services activities The company was formally converted into a joint stock company on 4 January 2005 Savico was listed on the Hanoi Stock Trading Center (HNX) on 21 December 2006 and transfered listing status to Hochiminh City Stock Exchange (HOSE) on 1st June 2009 Over 30 years of experience in business operations, Savico’s strategy for 2015-2020 and the vision to

2030 is to continue to develop under the form of investment corporation focusing on three areas: Trading and Services, Property Services and Financial Services Savico has been setting up and developing the car dealership and motorbike dealership network of prestigious manufacturers such as Toyota, Ford, GM Daewoo through the system of 13 subsidiaries and 5 associates across Vietnam Savico now is the leading car distributor of Vietnam Automobile Manufacturers’ Association (VAMA), the market share of Savico system achieved 8.5% of VAMA in 2016

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1.2 Nordic Car Joint Stock Company

Nordic Car Joint Stock Company is a member of Savico’s automobile dealer network Nordic Car is the unique representative for import and retail of Volvo Cars Corporation in Vietnam Its operations are import, retail, marketing, supplying after-sales services for luxury cars branded Volvo in Vietnam Besides, it has authority to appoint agency and service center on nationwide In August 2016, Nordic Car opened two branches, Volvo Phu My Hung in District 7, Ho Chi Minh city and Volvo Long Vien in Long Bien District, Hanoi capital, and all facilities were invested according to the newest standard of Volvo Cars Corporation Service system was fully equipped with machines, modern technology equipments, and technical teams were trained methodically and intensively by Volvo Cars Corporation With more than 60 billion Vietnam Dong of investment, Nordic Car Joint Stock Company is expected to become one of the strongest premium car retailers in Vietnam which brings the unique and attractively Scandinavian values to Vietnamese customers Both two branches have a similar structure as follow: a managing director, a sales and marketing department with about 35 salesman divided into 2 teams, a human resources department, a finance department and a workshop

2 PROBLEM CONTEXT

2.1 Global automobile market

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Figure 2 Global cars and light-commercial vehicles sales between 2016 and 2017

(Source: JATO global car and LCV sales press release in 2017) According to JATO3 – a prestigious company of car comparison and automotive market research, global car sales had a resilience with 86.05 million units selling out

in 2017 and up 2.4 % comparing to 2016 Global car and light commercial vehicle (LCV) sales from 2016 to 2017 witnessed a decrease of traditional market like Korea and South America, but a remarkable increase in Asia Pacific and South America In the early months of 2017, Chinese government implemented a policy of limit car purchase, but from the second quarter, giant demand for the whole population revived then it boosted the growth rate at 2.3% to the end of the year Despite crisis of diesel fuel, South America showed the strongest development of automobile demand Brazil, Argentina and Chile contributed mostly in this region’s growth South East Asia region witnessed a powerful growth of Thailand due to tax policies in Asean Free Trade Area agreement

Table 1 Top 10 best-selling car brands in 2017

2017 Volkswagen, a direct competitor to Toyota, had a successful year of business

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beyond expectations Despite fraudulent gas fraud scandal with billions of US dollars

in fines, especially in the United States, German car sales unexpectedly surpassed the Japanese automaker to take the number one position But if not counting the sub brands, a single Volkswagen cannot beat Toyota Nevertheless, the popular German car – Mercedes Benz brand still finds its light in trouble thanks to good buying power

in the world's most populous market - China Volkswagen also represented the strength as the highest market share in Europe Total sales in 2017, Volkswagen grew 3% Mercedes, Suzuki and Honda were top three best performers of growth rate from

2016 to 2017

Figure 3 Global cars market share by segments between 2016 and 2017

(Source: JATO global car and LCV sales press release in 2017) Sport Utility Vehicle (SUV) was the largest drivers of growth which reached 27.85 million sold units, and 3.14 million units more than 2016 Nissan X-Trail/Rogue was the best-selling SUV with 814,000 units in 2017 and raised 6.5% volume on over the world SUV divided into some subtypes like C-SUV (built from C car’s chassis), B-SUV (built from B car’s chassis and smaller than C), and so forth Obviously, SUV have continued to take 34% market share away from traditional segments, and this trend was not restricted to particular markets – it’s a trend that we’ve seen on a global

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scale and expect to continue in some next years Compact cars, midsize sedan, wagon and MPVs were impacted the most

2.2 Vietnamese automobile market

Figure 4 The number of sold cars in Vietnam from 2014 to 2017

(Source: VAMA reports in 2014 to 2017) The number of automotive vehicles selling out in Vietnam in 2014 was 133,588 units and it was doubled in 2016 with 271.833 sold vehicles.4 VAMA divided automobile in Vietnam into three types namely passenger cars (PC), commercial vehicle (CV) and special-purpose vehicle (SPV) Total volume of sold passenger cars in 2014 was 79,813 units, and only after 12 months it passed over 117,000 units In 2016, if only counting PC, the sold-out vehicles increased 36% to reach 159,501 units Vietnam became one of the most attractive environment of automotive investment and the second fastest growth of automobile countries among South East Asia region In 2017, the whole market decreased about 7.8% because 0% imported tax from South East Asean countries created waiting psychology for entire Vietnamese buyers However,

of Vietnam,5 by 2015, the automobile industry has more than 400 enterprises, mainly

in the South East and the Red River Delta However, most businesses are small and medium size Total assembled capacity is just about 460,000 units per year, of which 47% is from foreign invested sector and 53% is from domestic In the period 2001-

2014, the average growth rate of automobile assembly is only 17% per year Each year, taxes alone, the automobile industry contributes over one billion US dollars to the state budget In addition, the industry has created jobs for about 100,000 direct employees Many types of trucks, passenger cars of 10 seats or more, specialized vehicles manufactured in Vietnam have achieved high localization rates, basically meeting the domestic market (07 tons truck meets about 70 % demand, with an average localization rate of 55%, 10 seats passenger cars and specialized vehicles meeting about 90% demand, with localization rates from 45% to 55%) Some kinds of trucks have been exported to Laos, Cambodia, Myanmar, Central America Otherwise, the localization rate of vehicles less than 9 seats is still very low Although government understood that automobile assembly industry is important to Vietnam economy, there is not enough good strategy to attract big corporations to invest assembly plants in Vietnam Economic fluctuations and policy changes, especially tax and fee policies, are major factors affecting production and consumption of cars Vietnam has been recognized as the second-prioritized choice of big corporations in Asean region producing and assembling passenger cars up to 9 seats (which help bring higher value comparing to truck assembly) Before investing in car assembly plants in Vietnam, big car corporations as Toyota or Ford have invested in large-scale car production projects in other regions of South East Asia such as Thailand or Indonesia Furthermore, basic materials such as steel, rubber, and plastics of automotive supporting industry depend on imported materials All this makes the business investment in the production of auto parts and components less competitive because

of the high production cost Beside the subjective reasons, the level of Vietnamese

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enterprises is still limited, the assemblers are not interested in supporting industry, and

do not create conditions for domestic enterprises to participate in the supply chain of production To meet the significant demand in Vietnam, most of the investors chose decreasing assembly and increasing import vehicles, especially focusing on luxury segment

2.3 Volvo global business results and Nordic Car company situation in

Vietnam

Figure 5 Volvo global retail sales from 2013 to 2017

(Source: Volvo Car Group annual report from 2014 to 2017) Volvo Car Group annual reports respectively in 2013, 2014, 2015, 2016 and 2017showed that6 the development with nearly 36,000 units every year from 2013 to 2017 has confirmed a strong development of Volvo with many new and wide-ranging products A robust 27.3% rise of operating profit from 11 billion SEK (Swedish Krona) in 2016 to 14 billion SEK in 2017 was the new record that Volvo board of directors responded to their stakeholders Moreover, 2017 net revenue for the period increased 16.5% to 210,9 million SEK compared to 180,9 million SEK in 2016 while the operating profit margin improved from 6.1% in 2016 to 6.7% in 2017 These significant figures were mainly underpinned by a strong increase in China and a

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substantial rise in the US, Volvo’s two largest individual sales markets. Mr Håkan Samuelsson, president and chief executive of Volvo Car Group stated in annual report that Volvo is going from strength to strength The new models are successful, sales are at record levels and profits are up substantially reflecting the contribution of all our employees On the back of these achievements, he foresees that 2018 will also be

a record year in terms of sales

Table 2 Volvo retail sales on over the world in 2016 and 2017

Volvo retail sales, number of cars sold 2016 2017 Change %

of 61,148 units, while the XC90 SUV model strongly supported the overall solid sales performance with 29,086 units sold If counting each single nation, China became the biggest consuming market of Volvo from 2013 Enjoying benefits from the tax cut of small engine, Volvo Cars in China reached 25.8 % growth rate and 114,410 sold units

In the USA, one of the most competitive market on over the world, Volvo keep selling 81,504 cars and received small decrease at -1.5% Clearly, Volvo catched up with SUV trend of global market and Volvo are on the way to increase their presence at fast-developing areas

Table 3 Top 07 luxury car brands have positive change from 2016 to 2017

Luxury Car Brands Have Positive Change 2016 2017 Change %

GEELY (INCLUDING VOLVO) 773,326 1,245,055 61%

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(Source: JATO global car and LCV sales press release in 2017) According to JATO3 analysis of global top 25 brands, Geely stood at 1st position

among seven luxury car brands having positive change from 2016 to 2017 Actually,

when Volvo became member of Geely automobile corporation, Geely has

continuously remained success for 7 years, and in 2017 Geely remarkably achieved

61% growth rate with 1,245,055 units including Volvo On global scale, Volvo has

been growing unstopably, and the number of sold Volvo cars in 2017 is equal to

22.5% Mercedes – the luxury market leader, 28.2% BMW, 30.9% Audi

In contrast, Volvo business activities in Vietnam did not bring successful results as

they achieved on world-wide scale or China in particular VAMA statistics within

three nearest years indicated4 that Mercedes, Lexus, BMW, Audi and Peugeot have

been five most popular brands in the segment of luxury cars in Vietnam Mercedes has

become the first choice when people buy a luxury car with over 50% market share in

luxury segment every year.4 Nordic Car company was received 60 billion Vietnam

Dong to develop Volvo in Ho Chi Minh and Ha Noi, but 95 sold out units in 2016 and

160 sold out units in 2017 were big failures of the company after 17 months doing

business The situation of Volvo in Ho Chi Minh branch has been worse since the

showroom was established in August 2016 in central area of luxury car dealers – Phu

My Hung town of District 7 of Ho Chi Minh city Volvo Ho Chi Minh branch only

contributed 40 cars for 8 months of 2016 and 60 cars for entire 2017 The highest

monthly sales volume was just 8 cars still under the minimun sales target - 20 units

given by the branch managing director

Table 4 Sales volume of luxury dealers around Volvo Ho Chi Minh in 2016 and 2017

Dealers Y16 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Y17

Mercedes 930 102 54 92 94 106 121 118 93 89 82 71 64 1,086 BMW 279 45 26 37 32 36 31 12 0 0 0 0 0 219 Peugeot 78 5 1 6 6 7 7 7 8 8 5 4 5 69 Lexus 706 42 16 43 45 48 51 53 47 45 36 38 32 496 Audi 298 26 7 23 24 28 33 35 32 33 26 18 13 298

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Minh and Audi Ho Chi Minh All of these competitors are located in District 7 and

District 1, and their monthly sales volumes are always impressive which make them

among the best luxury car dealers in the city According to data from Volvo Ho Chi

Minh sales department, Mercedes Phu My Hung sold out over 90 units per month in

2017, Lexus Ho Chi Minh got over 40 units, BMW Ho Chi Minh and Audi Ho Chi

Minh had 18 and 24 units, Peugeot Phu My Hung also achieved 6 units per month

even though Peugeot Phu My Hung are only permitted to sell for customers living in

small areas around central districts of the city by Thaco corporation – mother

company For entire 12 months of 2017, Volvo Ho Chi Minh only sold out 60 cars

that was equal to 87% sales volume of Peugeot and approximately equal to 66.7%

sales volume of Mercedes Phu My Hung in only one average month This low sales

result are unacceptable for 30 billion Vietnam Dong investment to Volvo Ho Chi

Minh branch Although both general market demands for automobile industry and

luxury segment in 2017 were lower than the previous year due to government decree

number 116/2017/ND-CP on requirement for manufacturing, assembly and import of

motor vehicle and trade in motor vehicle warranty and mantenance service, Volvo Ho

Chi Minh sales volume was still extremely low comparing to other dealers in the same

location after two years operation

Table 5 Statistics of prospects, buyers and closing ratio between Volvo Ho Chi Minh

and Volvo Ha Noi in 2017

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Y17

Ratio (%) 6.5 0.0 4.5 7.7 9.7 9.9 8.5 9.7 9.9 8.6 7.7 5.9 8.0

Ha

Noi

Prospect 61 18 68 65 71 85 81 39 86 62 61 61 758 Buyer 7 2 9 9 10 9 11 4 15 9 8 7 100 Closing

Ratio (%) 11.5 11.1 13.2 13.8 14.1 10.6 13.6 10.3 17.4 14.5 13.1 11.5 13.2

(Source: Volvo Ho Chi Minh Branch Sales Department) Statistical numbers of prospects, buyers from those prospects, and closing ratio

between Volvo Ho Chi Minh and Ha Noi showed that with similar numbers of

prospects, Volvo Ho Chi Minh generated only 60% buyers comparing to Volvo Ha

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Noi Obviously, Volvo Ho Chi Minh branch has low sales results not only in comparison with other luxury dealers around Volvo Ho Chi Minh area, but also in comparison with Volvo Ha Noi branch

In the meeting of board of directors of Nordic Car company in December 2017, Mr Mai Viet Ha – chairman of Nordic Car concluded that

We need to accept that our sales results were too low comparing to other luxury automobile distributors Volvo has been stronger than ever before on over the world Volvo changed and succeeded with three famous commitments safety, technology and environment However, Nordic Car could not follow what Volvo did to succeed on global scale We need to review each aspect that influence our low sales: product, price, place,

or promotion, in order to find out the most effective solutions

With the limit of time and cost of the solving problem project, this study will find the main reason of Volvo Ho Chi Minh low sales results and suggest solutions and prove them efficient in applying into company’s problem

This study approach is based on qualitative method including secondary data from JATO, VAMA, Ministry of Industry and Trade of The Socialist Republic of Vietnam reports, data of Nordic Car sales and marketing departments, and in-depth interviews from different groups of respondents such as: Volvo Ho Chi Minh salespeople, sales and marketing managers in Volvo Ho Chi Minh and Ha Noi branches, showroom managing directors, and customers who bought Volvo cars and another refused to buy

3 PROBLEM IDENTIFICATION

Based on the survey that Dealer Customer Relation Center (DCRC) of Volvo Ho Chi Minh Marketing department conducted by calling and sending emails to Volvo prospects, the results obviously showed reasons why Volvo prospects refuse to buy Volvo cars DCRC received prospects data from Sales and Marketing department Every month, both offline and online campaigns brought to Volvo Ho Chi Minh about

60 people who reached 4 criterion for Volvo prospect: having enough money to buy a Volvo car with minimum price at 2.7 billion Vietnam Dong, having legal rights to buy

a Volvo car, intending to buy a Volvo car within one month, and providing clearly enough contacting information such as emails, phone numbers, home addresses In the

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end of each month, DCRC employees would interview these Volvo prospects in order

to understand why or why not those prospects chose Volvo cars There were 427 people among total 748 prospects gave their opinions about why they refuse to buy Volvo cars in Nordic Car Ho Chi Minh branch in 2017

Figure 7 Reason why prospects refuse to buy Volvo cars In 2017

(Source: Dealer Customer Relation Center of Volvo Ho Chi Minh Marketing department)

By looking at the statistical numbers of DCRC interview, it showed many reasons affecting low sales results of Volvo Ho Chi Minh: products less luxury than other cars, product not having many differentiated features, product not having assembly plant in Vietnam, inconvenient to visit showrooms, lack of second-level agents in other provinces, few advertisements appearing online, few advertisements appearing offline, boring public relations activities, unattractive cash discount offers, few gifts and additional value, salespeople lack of product practical guide, salespeople lack of clients regular care, weak team selling of accessory or finance or insurance or service,

Less luxury than other cars (PRODUCT)

Few differentiated features (PRODUCT)

No assembly plant in Vietnam (PRODUCT)

Inconvenient to visit showrooms (PLACE)

No second-level agencies in provinces (PLACE)

Few ads appears online (PROMOTION) Few ads appears offline (PROMOTION)

Boring public relations activities (PROMOTION)

Unattractive cash discount offers (PROMOTION)

Few gifts and tangible value (PROMOTION)

Poor product practical guide (PERSONAL SELLING)

Lack of customer regular care (PERSONAL SELLING)

Weak team selling added value (PERSONAL SELLING)

Extravagant price of sedan models (PRICE)

Expensive price for imported spare parts (PRICE)

Reasons Why Prospects Refuse To Buy Volvo Cars In 2017

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extravagant price of sedan models, expensive imported spare parts Actually, there were other reasons also affecting low sales results of the company, but the ratio was lower than 10% (it meant lower than 42 people raising those opinions in an entire

2017 year) slightly impacted on the issue Therefore, they will not be mentioned in this thesis, and 15 negative reasons above from actual customer’s view will be real foundation for the research to find out the main problem and the crucial cause which led to low sales results suympton of Volvo Ho Chi Minh branch

In 1953, American Marketing Association addressed the term “marketing mix” as the most fundamental concept of marketing which is a set of tools that companies use to make desired response to in targeted markets.7(p1) Shoham8 concluded that marketing mix elements including product, price, place, promotion, personal selling are primary have strong effects on business performance Moreover, in order to make the study more convinced and clearer, together with the supporting theories about 4P’s factors

in marketing mix and statistical results from DCRC surveys, 8 in-depth interview were conducted with four main groups as below:

- The first group are two Volvo Ho Chi Minh sales consultants, one is experienced and one is fresh

- The second groups are two Sales and Marketing managers in Ho Chi Minh and Ha Noi branches

- The third group are two Showroom Managing Directors in Ho Chi Minh and Ha Noi branches and they are also members of Board of directors of Nordic Car company

- The fourth group are two customers used to come to Volvo Ho Chi Minh branch, one refused to buy cars and one one accepted to buy a Volvo car

Considering 15 negative reasons of Volvo buying refusal from actual customers in

2017 together with 4P’s theories and in-depth interviews, there are 6 potential problems leading to low sales results of Nordic Car company in Ho Chi Minh branch

as follows: (1) Unsuitable products for Vietnamese, (2) Inconvenient business place, (3) Inefficient advertising and PR activities, (4) Unattractive direct sales promotion, (5) Ineffective personal selling activities and (6) Uncompetitive price

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3.1 Potential Problems

3.1.1 Unsuitable products for Vietnamese

Riaz and Tanveer9 stated that “Product is something or anything that can be offered to the customers for attention, acquisition, or consumption and satisfies some want or need” Product is the main part between selling and buying Volvo car is the first thing that a Volvo prospect considers In 2004, Kotler10 suggested that a product should be viewed in three level: core product, actual product and augmented product Core product means that the core benefit that the product could offer like purchasing a camera is buying memories Actual product means that product could bring differential advantage from its competitors Augmented product means that non-tangible benefit of possessing product like after-sales service or free delivery and so forth

Firstly, Volvo seems to be less luxury than other brands in Vietnam because 2016 was the first year when Volvo officially distributed cars in Vietnam, so Vietnamese consumers are not familiar to Volvo products and they tend to choose other luxury car brands which have been operating business in Vietnam for decades

Mr Nguyen Thanh Tam – a prospect who used to come to Ho Chi Minh showroom and decided not to buy Volvo stated that:

After considering Volvo and many different luxury cars, I decided to buy another brand instead of Volvo because I think that I really need a famous luxury sedan in most of people eyes to show my financial ability in business, not only for driving I chose Mercedes E250 at 2.45 billion Vietnam Dong lower than Volvo S90 about 200 million Vietnam Dong, but I think that it’s more luxury because Mercedes has been famous for luxury cars in Vietnam for many years when I was a teenager

Kotler and Armstrong11 told that consumers view a brand as an important part of the product, and branding can add value to the product Volvo starts to distribute in Vietnam too late comparing to Mercedes or BMW or Audi, so people with little understanding about luxury brands who buying luxury cars for show-off purpose tend

to be discreet to immediately choose Volvo

Secondly, Not many people in Vietnam have much knowledge about luxury cars and they are familiar to use cars which are specialized design for Vietnamese condition

so difficult to inspire Vietnamese customers by luxury Scandinavian values

Lastly, Volvo features are assumed that they are unsuitable for Vietnamese users demands because Volvo does not have an assembly plant in Vietnam to adjust these features

Mrs Luu Bao Huong – Marketing manager of Ho Chi Minh branch also gave her comments on product that

All of Volvo models that we have right now in Vietnam are 100% imported from Sweden and they are all designed for global use with international standards, not specialized for Vietnamese There are some people claimed that Volvo does not have assembly plant in Vietnam, so Volvo cars has superfluous features which are unsuitable for Vietnamese traffic situation such as automatic braking and vibrating the whole car when many motorcycles ride across car’s head, or deeper tire groove for anti-slippery in snowy weather

3.1.2 Inconvenient business place

Kotler10 defined place “as a set of interdependent organizations that caters to the process of making a product available to the consumers” According to Goi12 and Muala & Qurneh13 stated that distribution system is a key external resource An organization should pay attention to place decisions, because of the importance of the product and consumption occurring at the same time and at the same place; a place that provides all information of customer, competition, promotion action, and marketing task Normally it takes years to build, and it is not easily changed It ranks

it importance with key internal resources such as manufacturing, research, engineering, and field sales personnel and facilities It represents, as well, a

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commitment to a set of policies and practices that constitute the basic fabric on which

is woven an extensive set of long-term relationships All car corporations are alike in distribution by opening networks of showrooms Nordic Car company is not an exceptional case, and Volvo South East Asia decided to locate two showrooms, one in district 7 - Ho Chi Minh city and one in Long Bien district - Ha Noi capital In Ho Chi Minh city, there are some complaints from both customers and salespeople about the

Ms Le Thi Phuong – a fresh salesperson in Ho Chi Minh branch thought that the location has high retal price and there is high competition among many old luxury brands

In my own opinion, Volvo Ho Chi Minh locating in Phu My Hung town in central of district 7 is inconvenient for selling Volvo cars The rental price is a burden for finance and we have to fight in old castles of Mercedes, BMW, Porsche, and Peugeot Although the number of daily visitors are up to 6 or 7 people in a same period of time, I usually struggle with gathering all customer data and taking care of them after their visits Many

of them already bought other cars before I call them again after few days

Riaz and Tanveer9 also stated that “a company can adopt multiple channels to get its product to the customers, these channels can be direct and indirect, and choice of channel has strong effect on sales

Mrs Ngo Kieu Trinh – a consumer who bought a Volvo XC90 in Ho Chi Minh branch complained that

My home town is in Long An province On my way to work, I saw Volvo cars which were carried from Hiep Phuoc – Nha Be seaport to district 7 I and my husband had to take many off-working days and went to district 7 to visit Volvo showroom many times

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to buy a XC90 Volvo car It took a lot of time and effort for us to buy this car because Nordic Car company does not have a second-level agency in Long An If we did not love this car too much, we would buy another brand

3.1.3 Inefficient advertisements and PR activities

Based on statement of Bannett14 in Dictionary of Marketing Term book, modern marketing is more than just developing a good product, attractive price and making the product available to customers Companies also have to communicate with their customers, and the company communication program is called promotion mix Promotion mix consist of advertising, public relation (PR), sales promotion and personal selling

Mishra15 stated that promotion can be loosely classified as “above-the-line” and

“below-the-line” promotion The promotional activities carried out through mass media like television, radio, newspaper, search engines online, etc is above-the-line promotion This kind of promotion is also devided into online and offline activities Firstly, Nordic Car Sales and Marketing department has conducted many programs for offline advertising since establishment of the two showrooms, the consequence still remains at lows sales numbers Both two Sales and Marketing managers thought that low supporting budget from Volvo South East Asia could not help them conduct strong offline advertising activities enough to compete with other luxury brands

Mr Nguyen Quang Phong and Ms Luu Bao Huong – Sales and Marketing managers

of Nordic Car company in Ha Noi and Ho Chi Minh both said that maintaining Volvo image on multi-media channels in recent time costs much money and they tried many times to argue with marketing managers in South East Asia headquarter of Volvo corporation about increase budget of advertising support for Vietnam market, but Nordic Car did not receive more money from Volvo corporation Even though marketing team of Volvo in South East Asia gave feedback that Volvo is already a big and famous luxury car brand in Asia, and Vietnamese dealers should only carry out their guidance in marketing campaigns without any more changes

Secondly, Nordic Car Sales and Marketing department in Ho Chi Minh spent most of budget to build Volvo brand online, while digital performance was not concentrated

on seriously

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Mr Nguyen Anh Linh – Managing Director of Ha Noi showroom confirmed that

It seems like both Ho Chi Minh and Ha Noi marketing teams worried too much about Volvo visibility online instead of finding potential customers from developed online foundation Renting many banners of Volvo brands on online automobile forums costed

us billions Vietnam Dong, but it not yet helps bring more contracts to our company Many online channels today such as Facebook, Google, or Instagram becomes effective tools to bring direct customers for luxury car dealers with precisely tracking index of efficiency

Moreover, sales consultant also blamed that PR activities of Ho Chi Minh branch are not helpful in creating more deals for salespeople

Mr Le Thi Phuong – a Nordic Car fresh sales consultant in Ho Chi Minh said that

I think that Volvo PR activities are not effective and waste too much money Nordic Car directors appearing on national TV in order to give gifts for orphans would never stimulate any person to call us to have a meeting These wasting activities could not help

us have more deals Instead of wasting money like this, why don’t they increase our commission in order to give us more motivation or lower price for customers?

3.1.4 Unattractive direct sales promotion

Mishra15 also said that above-the-line promotion is not effective with limited and specific target customers, but direct sales promotion is effective Luxury car buyers are really specific-targeted consumers, and they are easy to be defined by some criterion that luxury car retailers usually called standards of a luxury prospect such as having money, having legal right to possess a car, having demand of a luxury car, and having clear information to contact

Doyle and Stern16 stated that sales promotion is commonly used to have sales increase

in short term by using money off coupons or special offers or free goods, and it is used because results are quickly

When the advertising give customer a rational or emotional argument for buying product, sales promotion gives an economical argument However, this kind of promotion was not used as strength of Nordic Car to improve their sales results

Firstly, while other companies successfully exploit customers by professional direct approach with price reducing contents in letters, Nordic Car company seems spend

Secondly, Nordic Car hardness in gifts and additional value for customers is an emerging topic that sales consultants and customers always talk about Customers compared that they suffered loss when they decide to buy Volvo cars, because other brands like Mercedes, BMW, Audi, Lexus promise to give them many gifts or other additional value if they agree to deposit money and wait for their cars

Mrs Ngo Kieu Trinh said that

I decided to buy a Volvo car because I really love the car To tell the truth, before paying money for Volvo, I and my husband investigated promotion and price of many car brands Most of luxury car brands have more gifts for the buyer than Volvo Their better offers make me visit Volvo showroom four times to deal with the sales consultants We nearly bought another car, but finally the sales consultant accepted to give us two more years warranty and one-year free maintenance

Managers and directors of Nordic Car also admitted that giving little budget for cash discount and tangible gifts may cause some difficulties for salespeople , but they believe that this way could keep the premium value of Volvo products in the initial time appearing in Vietnam and this is also their calculated strategy

3.1.5 Ineffective personal selling activities

Khan7(p101) called that personal selling is one kind of promotion that a representative of

a company meets customers personally to sell products Personal selling can be understood as a sub-function of promotion in marketing mix theory, but it plays a very important role in the success of all companies The task of advertising is to raise

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awareness to the consumers, the task of PR is to create interest by spreading out positive information, the task of sales promotion is to encourage and give possible buyers additional benefits, whereas personal selling is to get the final goal of doing business – achieveing closed contracts However, the real survey results of buying refusal from customers in 2017 indicated that Ineffective personal selling activities had the highest ratio of blame why customer refuse to purchase Volvo car among other 5 problems Moreover, through depth interviews, both customers and company’s members mentioned about the ineffectiveness of personal selling activities as one of big problem of Volvo Ho Chi Minh city

Mr Nguyen Thanh Tam said that

I feel quite disappointed about the way that salespeople in Volvo Ho Chi Minh dealer treated me after my first visit last two weeks I carefully sent text message to the salesman that I would come to his showroom to see S90 Volvo car at 10 A.M Saturday He confirmed our meeting, but when I came, he wasn’t there, and the receptionist brought me

to another one After a long waiting-time with many inaccurate answers about car functions, suitable accessories, quality insurance and after-sales service, he informed me that the newest version of S90 is not already to deliver to me until 26th day of next month with only 1 car in white colour Finally, I accepted to deposit 10 million Dong for a reservation of the S90 car, then came home with discomfort The week after, I called the salesman whom I met in Volvo showroom to ask when they have the car He appologized and told me that he just helped his colleague to welcome me but my information was belonged to the first salesman, so it was not save in his own system, and maybe his colleague forgot to remind me that the delivery could be in the next two month I was so angry at that time, then I decide to bought a Mercerdes E250 and now I come here to take

my deposit money back

Obviously, there are major mistakes in personal selling process of Volvo Ho Chi Minh branch from saving customer information to handling data, and from processed data to presentation and closing the deal Customer data was saved uncarefully, and the data system in sales team was not clear and optimized Moreover, disregard of practical guide on a real car for customer to experience Volvo functions then quickly jumping into price and added value dealing is another failure Presentation step is

do the test And you know, she even wasn’t there with us and the salesman need to look for her everywhere in the showroom to guide us how to use the new version of the navigation device We felt uncomfortable at that time and it was poor for the new salesman without much experience on using Volvo cars to handle every thing

Eventhough a customer who already bought Volvo car from Ho Chi Minh dealer also complained about ineffective personal selling activities Disregard of practical guide

on a new product like Volvo with Vietnamese customer is a crucial factor prevent selling process moving to the closing stage On the other hand, meesy and unarranged work lead to weak team selling added value for customers This weakness of the whole team is also a barrier for the effectiveness of personal selling activities Moncrief WC, Marshall GW19 indicated that when the pressure of competitiveness, difficult conditions of doing business are rising up, the old personal selling method shift to the moderner, and individual selling is replaced by selling with a team or business center to assure sales performance

Mr Nguyen Quang Phong – Sales and Marketing manager of Volvo Ha Noi affirmed that

In Ha Noi we saw the main problem of our dealer comes from the selling activities Supporting employees are overload with sudden tasks from salespeople In one moment, there maybe 3 to 4 people need them to help or provide information They can not directly handle unarranged jobs within 8 hours per day Besides, we figured out that the sales team did not have a common communication channel to inform each other about work requirements, support information

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Bubnjević17 stated that in the era of marketing orientation after Second World War, personal selling had more significant role than the time of production orientation, and personal selling consists of consultative selling, strategic sales, and period of building partnerships In order to successfully conduct all parts of personal selling, sales consultants need to collect, save, process potential customer’s data, then use this giant database to keep in touch with eligible buyers However, it seems like Volvo Ho Chi Minh sales consultants have failed conduct it

Ms Le Thi Phuong complained that

Ithink that the biggest issue is the poor sales tool for taking care of potential customers I

am really confused in following my prospects by messy Excel files on my computers I feel tired with sending many reports and bring my laptop along with me all the time To tell the truth, I think that our bosses don’t have enough internal resources to build a professional tool like Mercedes or Audi or even Toyota You know, we have just established 17 months

3.1.6 Uncompetitive price

Nordic Car company are distributing three models of Volvo cars in Vietnam namely S90 sedan, XC60 SUV and XC90 SUV Main competitors of Volvo S90 sedan are Audi A6, Mercedes E250, BMW 528i Comparing among 4 sedan cars, Volvo S90 has the highest selling price at 2.7 billion Vietnam Dong, while Audi A6 is 2.4 billion Vietnam Dong, 2.5 billion Vietnam Dong for a Mercedes E250 and BMW 528i has the second highest price right after Volvo S90 at 2.6 billion Vietnam Dong Consumers usually complain that Volvo S90 was priced far beyond it’s using value and much higher than other famous competitors Wiedmann KP, Hennigs N, Siebels

A26 concluded that it is vital to recognize that a product or service have to be expensive to be judged as a luxury good or luxurious, and luxury consumers demand more value than only extravagant price

Vigneron F, Johnson LW27 defined that a product is called luxury when it has the highest level of prestigious brand encompassing several physical and psychological values Mr Nguyen Thanh Tam used to say that he decided to choose Mercedes E250 instead of Volvo S90 sedan due to more prestigious brand and a cheaper price In addition, customers considered that Volvo spare parts could be more expensive than

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other brands like Mercedes or Lexus because Mercedes and Lexus had their own plants in Vietnam

Mr Nguyen Thanh Tam blamed that

When I compare to buy a luxury car among many brands, I think Mercedes and Lexus would have the lowest cost of repairing services Mercedes has a big plant in Vietnam, and Lexus are imported from Indonesia Many people told me that all Volvo cars and spare parts were imported from Sweden where there was not reduced imported taxes like South East Asian countries

Sales consultants were also stuck in many questions from customers like Mr Nguyen Thanh Tam They usually avoid answering those kinds of queries about high price of Volvo spare parts due to imported taxes Ms Le Thi Phuong shared that she used to find service managers to ask for the solutions, but they were not affirmed how imported taxes affect on Volvo spare parts, so she chose to accept what customers told She said that

Another reason is the price of spare parts which made repair cost of Volvo cars I usually get stuck and accept that customers were right about Volvo expensive spare parts because

of origin from Sweden I used to find solutions from services managers, but they were not sure that if imported taxes of Sweden spare parts affect Volvo spare parts price or not in comparison with other luxury brands origin from South East Asia countries

3.2 Problem Validation

Automobile industry in Asian-pacific area and particularly in Vietnam have strongly developed recent years Volvo is also on a strong growth path among many prestigious luxury manufacturers However, negative symptons of Volvo business in

Ho Chi Minh city with low sales results comparing to other luxury dealers and even Volvo Ha Noi are really worrying for Nordic Car directors Therefore, validation of the main problem among six identified problems above is an important foundation to have appropriate solutions for positive changes

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3.2.1 Eliminating product, place, promotion and price as the main problem

Regarding to unsuitable product for Vietnamese, this issue is not a major problem leading to low sales results of Volvo Ho Chi Minh branch In fact, Volvo is a brand of quality and suitability for high class users in Vietnam On the aspect of showing social status of luxury users, Volvo is always ranked among top best luxury car brands on over the worlds US News agency ranked Volvo as one of best 14 luxury cars in

2016,28 or Forbes magazine chose Volvo as one of ten luxury car brands in China, or Europe Business Review electronic magazine ranked Volvo at 7th position in top ten car brands in Europe Moreover, Volvo has been continuously voted as the best car of the year from 2015 to 2016 by many prestigious news agencies and automobile magazines like Business Insider, Auto Express magazine, TU Automotive.29 In Vietnam, Xe Hay magazine judged Volvo XC90 as the best luxury SUV car which had the most advanced technology among many luxury car brands such as Mercedes ML-Class, BMW X5, Audi Q7, Ranger Rover Discovery.30 Actually, less luxury than other brands or few differentiated features are sophism of consumers using to deal with sales consultants Any customer who knew clearly about Volvo or not would try

to find some reasons to take advantage in dealing process On the technical aspect of car features, Volvo is far beyond Vietnamese expectation IIHS (Insurance Institute for Highway Safety organization of United State of America) voted Volvo S90 as one

of the safest car in large luxury segment in 2017.31 Volvo first priority is safety and they are also famous for safety in many decades Their philosophy of design is

“around people”, so besides bringing luxury level to buyers, Volvo provides most advanced safety technologies including active and passive safety to Vietnamese buyers when there are nearly 9000 people death by traffic accidents every year in Vietnam.32 Many features which are alleged as superfluities such as 360o collision warning system or blind spots warning displaying on windshield of Volvo XC90 are only equipped on Mercedes S class cars with price range from 5 billion to 12 billion Vietnam Dong On the other hand, sales consultant also admitted that it is difficult and takes time for them to inspire consumer about Volvo value, and they choose the easiest way to sell car by begging managers to lower the price Furthermore, most of luxury car brands in Vietnam had absolutely imported products, and they have no

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assembly plant in Vietnam Only one exceptional case is Mercedes, but Mercedes also imported spare parts Moreover, Mercedes Benz Vietnam assembled few kinds of sedan cars with price range from 1 billion Vietnam Dong to nearly 2 billion Vietnam Dong, while SUV or other kinds are absolutely imported from Germany Mercedes Benz Vietnam has just announced to assemble S class and Maybach since 2018

Inconvenient business place is also not a main reason causing low sales results of Volvo Ho Chi Minh branch District 7 in Ho Chi Minh city is ideal locations for building luxury car dealers with all of luxury brands in Vietnam Some consumers may blame that district 7 is far from district 1, but many years ago many luxury brands like Mercedes or BMW decided to open more new dealers in district 7 because they really need wide area enough for international standard of new modern dealers Concentrating in central area of the city was an old trend of developing luxury car dealers because of extremely-high rental price and traffic jam Therefore, locating Volvo dealer in district 7 in Ho Chi Minh city is a reasonable choice Even sales people of Nordic Car company admitted that they lose many deals from other luxury brands like Mercedes, BMW, Porsche because they are unable to arrange appropriate time to follow all of the Volvo prospects Sales consultants just tried to hide their weakness in selling activities by aiming to the location competitiveness Besides, the decision of locating authorized dealers and opening second-level agencies is not dependent only on Nordic Car board of directors Location of dealers and second-level agencies must be accepted by Volvo corporation in South East Asia area, so in the scale of distributor and dealer Nordic Car company cannot choose the location of dealers only by themselves Moreover, Nordic Car directors determined that building Volvo Ho Chi Minh branch as a professional dealer of luxury car is their first priority

in two years, not opening other branches in provinces

Mr Bui Cao Sinh – Managing director of Volvo Ho Chi Minh branch shared that

I knew that building a wide network of many showrooms could help us increase visibility and open more opportunities to sell cars However, in initial time we really want to stay focus on building one standardized showroom Optimizing 30 billion Vietnam Dong investment for a professional dealer of luxury car is the first priority within two years

2017 is 13.2%, while Ho Chi Minh branch got only about 8.0% Over 60 potential customers in a month were a certain success with many efforts from marketing team The mission of advertising and PR activities are to cause a change of mind leading toward purchase, but not moving prospects from completely unawareness to buying decision.23(p251) Marketing team tried to use nearly all channels of mass media to raise awareness for Volvo – a new luxury car brand comparing to Mercedes, BMW, Audi

in Vietnam with a limited budget from corporation Obviously, the remarkably low sales results of Volvo Ho Chi Minh do not derive mainly from advertisements and PR activities

For unattractive direct sales promotion, this topic is always a stable reason for customers to argue with sales people, and sales consultants usually use it to discuss with sales managers to avoid from fighting with wise customers However, this issue was thoroughly resolved in Volvo Ho Chi Minh policy itself Volvo Ho Chi Minh managers want to create differentiation among other dealers and keep long term relationship with customers by transferring all tangible gifts into five-years warranty together with one-year free maintenance and free rescue every time within five-years warranty for each sold car All of other luxury car brands only offer three-years warranty This intangible value was not explained in detail to right prospects who are able to buy Volvo cars when they know this policy Prospects in decisive stage who will definitely buy Volvo or another luxury brand like Mr Nguyen Thanh Tam were not followed and taken care of carefully with an appropriate schedule Thus, sales consultants always complain sales promotion policy, but they do not realize that their biggest mistake was unsaving proper information to following-up right prospects

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For uncompetitive price, Volvo corporation position their products in luxury segment,

so they never choose medium pricing or cheap pricing strategy for any model on any market around the world Wiedmann et al33 stated that setting a high price or called prestige pricing suggests high quality or status and make product more desirable In Vietnam, when Volvo are set in luxury segment with Mercedes, BMW, Audi, Lexus, Volvo cars definitely need to have similar high price According to Mr Nguyen Anh Linh - Managing Director of Volvo Ha Noi Showroom, Nordic Car company depends

on wholesale price from Volvo corporation, and a dealer is not allowed to lower the price lower than 5% without permission from Volvo South East Asia Volvo S90 is sold about 2.7 billion Vietnam Dong in 2017 Therefore, Nordic Car are not allowed

to sell S90 car under 2.565 billion Vietnam Dong even when sales bonus can compensate the costs, while Mercedes E250 in the same segment is sold at 2.5 billion Vietnam Dong Moreover, Mr Nguyen Anh Linh also explained more detail that Volvo S90 cars used by Sweden royal family only have symbolic meaning for luxury Volvo brand in business Volvo S90 cars are imported to Vietnam market with very limited numbers about 6 to 10 cars per year, while Volvo SUV XC90 model accounted for a large part of sales structure with a competitive price in luxury SUV segment XC90 cars were set at 3.399 billion Vietnam Dong comparing to 3.588 billion Vietnam Dong for a BMW X5 or 3.788 billion Vietnam Dong for a Audi Q7 Obviously, setting high price for S90 sedan model is a reasonable decision due to numbers and structure of cars in storage, and an appropriate branding strategy

On the other hand, domestic automobile spare parts are simple, while all main spare parts are completely imported with 90% origin from Thailand, Korea, Japan and China.34 According to Decree No.153/2017/ND-CP35 most of spare parts original from Asean countries and China was not allowed decrease tax rate from 10%-30% to 0% since 2017 Spare parts for automobile from tariff code 87.01 to 87.05 has been imposed tax rate as normal way under Decree No.125/2017/ND-CP36 Therefore, spare parts from Sweden or Germany or even Japan are imposed similar tax rate Higher price of Volvo spare parts is actually a negative rumor that customers rely on them to win sales consultants in negotiation From those reasons above, uncompetitive price of sedan type and spare parts are not the most important reason lead to low sales

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results and these issues cannot be solved by only Nordic Car company without agreement from Volvo corporation to adjust everything relavant to price

3.2.2 Illuminating ineffective personal selling as the main problem

It can be seen among six factors that ineffective personal selling activities is the main problem leading to low sales results of Nordic Car company because of three main reasons as below

Firstly, most of people who took part in the in-depth interview indicated that the key problem leading to low sales results of Nordic Car company is related mainly to personal selling activities Customers said that they were not regularly taken care of

by Volvo Ho Chi Minh sales consultants comparing to other sales people in other luxury car dealers Customers even complained that they had to explain how to use some modern features of Volvo cars to sales consultants, because they discovered differences between theoretical presentation and practical-using skill of sales people Both prospects and people who may be ready to move to signing contracts felt uncomfortable and tiring when they had to wait too long and sometimes received inaccurate information of accessories, insurance, bank loans, or warranty policies from sales team Managers and directors also stated that they got stuck in solving daily issues of their sales consultants with messy schedules and customer’s complaints Sales consultants also admitted that they missed many sales opportunities because they used so much time for Excel reports, and they are not able to arranging appropriate time to nurture potential relationships, and they do not know how to improve current circumstance without help from colleague

Secondly, product, place and above the line promotion (advertisements and PR) are three important P’s of a general marketing strategy (4P’s) that Volvo Ho Chi Minh branch has well done with limited resources they had after one and a half year operation In a short period of time, using limited resources for these 3 P’s also brought to Volvo Ho Chi Minh about 60 prospects per month who were truly eligible

to buy Volvo cars Certainly, in order to maintain high sales results like Mercedes, BMW, Audi or Lexus, Volvo Ho Chi Minh have to be together with Nordic Car company to prepare carefully for a long-term plan investing in these 3P’s fields with better budgets However, wasting 92% remaining eligible buyers is an indisputable

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failure of the P: Personal selling Furthermore, choosing which product should be imported to sell in Vietnam, building up more agencies under Volvo Ho Chi Minh branch in other provinces, or increasing double or triple budget for promotion are not able to decide only by Volvo Ho Chi Minh branch director Optimizing closing ratio

on 60 monthly prospects is the most neccesary duty in this period

Thirdly, creating intangible value by lengthening warranty and maintenance and setting high price of S90 sedan model are suitably calculated actions to make differentiation for Volvo among many famous competitors in current time After analysing among many P’s factors which Volvo Ho Chi Minh managers should concentrate changes to receive better sales results in a short term of time, only personal selling activities need to improve as soon as possible

4 POTENTIAL CAUSES

Dubinsky18 presented one of the oldest process through selling history since 1980 with

7 steps as following: (1) prospecting, (2) preapproach, (3) approach, (4) presentation, (5) overcoming objections, (6) close, and (7) follow-up Final outcome of personal selling activities in every business organization was explained by how successfully each step was conducted from the first to the seventh However, today transformative factors including booming technology, competitve environment, expanding organization selling roles, team-based approaches to selling, increased knowledgeable buyers, and others moved the traditional seven steps to a modern selling process.18Moncrief WC, Marshall GW19 clearly described the evolution of the modern selling process with important transformative factors applied in the vast majority of the Fortune 500 firms By looking closely at this new paradigm and analysing the actual situation of Volvo Ho Chi Minh personal selling steps, potential causes of ineffective personal selling activities would be obviously revealed

Table 6 Evolved selling process Traditional seven steps of selling Transformative factors Evolved selling process

(1) Prospecting Telemarketing ,Internet

selling, Organizational prospecting

(1) Customer retention and deletion

(2) Preapproach Laptop account data

Support staff

(2) Database and knowledge management (3) Approach Build a foundation (3) Nurturing the

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relationship (4) Presentation PowerPoint/

multimedia Listening Team selling Multiple calls Value-added Buying centers

(4) Marketing product

(5) Overcoming

objections Predetermining needs (5) Problem solving

goals (6) Adding value/satisfying

needs

effectiveness of communication through technology

(7) Customer relationship maintenance

(Source: The evolution of the seven steps of selling19)

4.1 Lack of professional customer relationship management system

In the first three stages of personal selling process, Volvo Ho Chi Minh sales consultants lose a lot of potential customers because they are not able to make appropriate appointments for all prospects due to unsuccessfully nurtured relationships To make a successful appointment for presentation, sales people need to collect precise database and knowledge about the prospect and have a suitable schedule to keep in touch and take care of them Szymanski DM20 clearly stated that the most important determinant of selling effectiveness is declarative knowledge and

it is the database used to interpret and identify customer’s needs After 17 months, Volvo Ho Chi Minh sales team still use Microsoft Excel software to store customer data, send price quotation and car catalogue to customers, and send raw reports to their managers, because the entire employees and managers underestimated the importance of database and knowledge management with a modern managing sales system from the initial time of operation They did not recognize that managing database and knowledge about prospects by technological supports is the extremely important step in the evolved selling process Moreover, sales consultants only input information which they think that it really helpful for winning more contracts into

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Excel files, and they always struggle with messy data and unscheduled activities from customer’s requirements

Mr Nguyen Quang Huy admitted that

In the beginning time, notebooks and Excel files were enough for us to collect data from customers and make our own schedules to work However, only after three months, everything was getting chaotic Amount of information increased uncontrollably, so many experienced sales consultants like me tried to assess customers by intuition and focused

on people who we thought that they could be potential to buy Volvo cars the nearest time

To tell the truth, finding messy data and making Excel reports are terrible things that we have to face day by day

Obviously, Volvo Ho Chi Minh sales team underestimated the importance of a professional system to store, categorize, track and manage customer information Therefore, they can not prospect right customers and defind right needs to enhance their working results Mr Nguyen Thanh Tam said that he visited Volvo showroom

by himself without any calling of reminding from Volvo salespeople, while the Mercedes sales consultant called him twice a week to pull him to Mercedes showroom Especially, the sales consultant of Mercedes always call him in the Friday evening when he has the most free time in a busy week He felt that Volvo does not need him to purchase anything from them In highly competitive market where Mercedes, BMW, Audi, Lexus are ruling the game with big shares, especially target customers are rich people, losing one prospect means giving money and all prospect’s relationships to competitors Managers and directors of Volvo Ho Chi Minh admitted that they are overwhelming with disjointed daily reports and chaotic phone call from sales people, but they did not know how to build a effective system in order to replace Excel files from internal resources

Mr Bui Cao Sinh – Managing director of Volvo Ho Chi Minh branch stated that Volvo Ha Noi sales team communicate and support each other more effectively than his branch because they use Google Spreadsheet in daily reports and storage customers data Google Spreadsheet is actually similar to an Excel file which is provided by Google on internet and online stored data is able to approach by anyone having right of access However, Google Spreadsheet is not designed to specialise in

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modern selling functions such as setting up sales meetings with customers, reminding sales people to take care of prospects, automating quotation emails and car photos, and so forth Mr Sinh and Volvo Ho Chi Minh managers really want to make an advance, but they lack of resources to build anything better

4.2 Disregard of technical guide on Volvo functions

Secondly, from the beginning time, board of directors strongly focus on recruiting many experienced sales people from other luxury car companies like Mercedes, Audi, BMW with at least 3 years working in luxury segment of car industry in order to quickly generate sales results However, this action brought a negative consequence that almost all experienced sales people in Volvo Ho Chi Minh branch only concentrate on price dealing but they disregard practial guide of using Volvo cars, especially complex functions as XC90 model On the other hand, many fresh sales consultants could talk all day about the beauty, comfort and fashion among premium cars, but when the customers took test-driving tours with them, they seemed to be confused to proficiently use some modern functions such as voice guidance system combining to Apple Car Play application on Volvo touching screen Too much confident on theoretical knowledge and disregarding practical guide from fresh salespeople in consulting caused insecure feeling for customers to buy such an expensive technical product as Volvo car McMurry21 clarified sales task for technical products that explaining the function of a product to a prospect as well as adapting it

to individual customer’s need, and such sales people who are called engineering sales are required expert knowledge of product capabilities and designs People who has less understandings about Volvo cars would stop their buying process immediately, then get back home to search more about Volvo information to guarantee their decisions in the next time visiting a luxury car showroom, but people who understood about Volvo would reject to believe in the unpractical counselling and argue immediately with the sales consultants about how to use the function in a right method Mrs Ngo Kieu Trinh bought a Volvo car, and she commented that her husband showed the salesman how to use Vietnamese voice to control the navigation system with an Android mobile phone, while the salesman affirmed that Volvo navigation system could not work with Vietnamese language Brooksbank22 indicated

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that specification of products is one of 7 elements in selling mix which enable salesperson to clinch the deal with prospects In the presentation step of modern selling process, Volvo Ho Chi Minh sales team continues failed to move prospects to the next step to close the deal Although sales people refused to accept that they disregard practical guide of using modern technical products like Volvo XC90 version

2017, both customers and managers blamed that this is a major mistake of Volvo Ho Chi Minh sales team in personal selling activities Mr Nguyen Quang Huy – said that high scores in theoretical tests of entire sales team about Volvo products contrasted with the results of practical test from Volvo South East Asia training program in 2017, and most of sales people tried to deceived their managers by pretending to be properly fluent Volvo users

4.3 Weak team selling accessory, insurance, finance and service

Experienced sales people of Volvo Ho Chi Minh mainly focus on price dealing, but could not satisfy sufficiently and quickly other questions such as how customer’s cars will be delivered or if they can change a normal screen to touch screen or how long a quick maintenance happen outside of garage Thus, in this step, Volvo Ho Chi Minh continued to loss a number of eligible buyers who would hesitate to sign contracts or decide to leave their discussions without depositing money Potential customers complained that sometimes sales consultants provided them inexact information and they had to wait for completed answers after many phone calls from salespeople to the person in charge of the right answer Weak collaboration or team work from other departments such as accessory, insurance, finance and after-sales service cause uncertainty and suspicion for customer to move to final buying decision Lancaster and Reynolds23 stated that personal selling had a new more professional task in the world today with “Selling center or team selling” It is a group of people who are come not only from sales department, but who also represent entire business of the firm like production, research and development, finance, and so forth in order to serve customers better with different views rather than just individual view Volvo Ho Chi Minh sales people also complained that they wasted much time and efforts to find answers about interest rate, credit capability, insurance fee, validated time of insurance, fit accessories for new vehicles, after-sales service and so forth instead of

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direct counselling of specialized employees Although company regulation compels consultants from supporting departments like accessory, insurance, finance and after-sales service to collaborate with sales people to close every deal as a team, these supporting employees still refuse to participate directly in any trade Managers and directors of Nordic Car company finally understood that in the initial time, employees from supporting department tried to help consult clients together with sales people, but after about three or four months with messy appointments from sales team they could not directly complete many tasks in a same range of time Hadyn Ingram24found that throughputs are the greatest determinants lead to team effectiveness Too many tasks and sudden requirements from sales people make unbearable burden for supporting employees, and they are overload to arrange time for team selling Therefore, they chose indirect help by providing information for sales people, and sales consultants who are lack of preparation and care might transmit inaccurate or inappropriate information to customers This situation led to ineffectiveness of personal selling activities in Volvo Ho Chi Minh branch Beside overload of work, weak team-selling is also explained by communication among team members Lawrence HJ, Moberg CR25 indicated in their research on team selling luxury suites that team communication between members and departments is crucial for sales success and it helps enhance capabilities of generating more revenue Obviously, many unpredictable phone calls from sales people and lack of a common communication system are challenges for a strong team selling activities in Volvo Ho Chi Minh branch

4.4 Cause validation

Based on the cause and effect tree, in-depth interview from 8 respondents divided into

4 main groups, secondary data from DCRC survey, sales and marketing department and theories of personal selling process and effectiveness, causes leading to ineffective personal selling activities of Volvo Ho Chi Minh branch are Lack of professional customer relationship management system, Disregard of practical guide Volvo technical functions, and Weak team-selling accessory, insurance, finance and service Exploring which factors is the most crucial cause of ineffective personal