Managing distribution channel for beer products in habeco trading one member company limited

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - NGUYỄN MẠNH HÙNG MANAGING DISTRIBUTION CHANNEL FOR BEER PRODUCTS IN HABECO TRADING ONE MEMBER COMPANY LIMITED ĐẨY MẠNH QUẢN LÝ KÊNH PHÂN PHỐI CÁC SẢN PHẨM BIA HÀ NỘI TẠI CÔNG TY TNHH MTV THƯƠNG MẠI HABECO LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2018 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - NGUYỄN MẠNH HÙNG MANAGING DISTRIBUTION CHANNEL FOR BEER PRODUCTS IN HABECO TRADING ONE MEMBER COMPANY LIMITED ĐẨY MẠNH QUẢN LÝ KÊNH PHÂN PHỐI CÁC SẢN PHẨM BIA HÀ NỘI TẠI CÔNG TY TNHH MTV THƯƠNG MẠI HABECO Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS HỒNG ĐÌNH PHI Hà Nội - 2018 DECLARATION I declare that the research outcome in this thesis is the result of my independent work during study and research period and it is not yet published in other’s research and article The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given I am responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration ACKNOWLEDGEMENT “First of all, I would like to send my faithful thanks to Hanoi School of Business, Vietnam National University (HSB, VNU) with all the members, lecturers and assistants for the whole knowledge, experience that has been taught and transferred through comprehensive lectures, discussions and exams in the passing time of MBA 10 course.” “Secondly, I would also want to express my sincere appreciation to my supervisor, Assoc Prof Dr Hoang Dinh Phi His wide knowledge and logical thought of business management in general, especially of marketing field has brought great values to me Based on his own experience, he had instructed and encouraged me so much to help me complete this MBA thesis.” “Thirdly, one of the most important factors which supports me to finish this thesis is the willing help of many people working at Habeco Trading One Member Company Limited, especially the leaders, who are very busy at business but still be passionate in answering my interviews Absolutely, without their opinions and information, I could never be able to complete this thesis in a practical and proper manner.” “Finally, I would like to save my special thanks to my family, without their encouragement and support, it would be extremely difficult for me to be totally focus on completing my thesis which is one of my biggest targets in this recent time.” TABLE OF CONTENTS ABBREVIATIONS i LIST OF TABLES iii LIST OF FIGURES iv EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Research objectives 1.3 Research object 1.4 Research scope 1.5 Research methodology 1.5.1 Research process 1.5.2 Data collection 1.5.3 Data analysis 1.6 Research structure CHAPTER 2: THEORETICAL BACKGROUND ON DISTRIBUTION CHANNEL MANAGEMENT FOR BEER INDUSTRY 10 2.1 Introduction of beer industry 10 2.1.1 Beer industry in the world 10 2.1.2 Beer industry in Vietnam 13 2.2 Overview of distribution channel 14 2.2.1 Definition of distribution channel 14 2.2.2 Role of distribution intermediaries 15 2.2.3 Functions of distribution channel 15 2.2.4 Kinds of distribution channel 16 2.3 Distribution channel management 17 2.3.1 Selecting channel member 17 2.3.2 Controlling conflict between channel members 18 2.3.3 Motivating channel members 19 2.3.4 Evaluating distribution channel 20 2.4 Factors affecting distribution channel 21 2.4.1 Market considerations 21 2.4.2 Product considerations 22 2.4.3 Middlemen considerations 23 CHAPTER 3: LITERATURE REVIEW 24 3.1 Previous studies on distribution channel management 24 3.2 Distribution channel management model applied for Habeco 27 CHAPTER 3: CURRENT SITUATION OF DISTRIBUTION CHANNEL MANAGEMENT FOR BEER PRODUCTS OF HABECO TRADING ONE MEMBER COMPANY LIMITED 32 4.1 Overview of Habeco Trading One Member Company Limited 32 4.1.1 History of development and establishment 32 4.1.2 Organizational structure 37 4.1.3 Human resources 38 4.1.4 Current situation of distribution channel system of Habeco 39 4.2 Dimensions and attributions to manage distribution channel for beer products in Habeco Trading One Member Company Limited 43 4.3 Sample size description 44 4.3.1 Gender 44 4.3.2 Age 45 4.3.3 Obtained degree 46 4.3.4 Working seniority 47 4.4 Actual situation of distribution channel for beer products in Habeco Trading One Member Company Limited 47 4.4.1 Selecting members for distribution channel 47 4.4.2 Training members for distribution channel 53 4.4.3 Motivating members for distribution channel 57 4.4.4 Evaluating distribution channel 62 4.5 Assessment of distribution channel management at Habeco Trading One Member Co., Ltd 66 4.5.1 Achievements 66 4.5.2 Shortcomings 66 4.5.3 Causes of shortcomings 68 CHAPTER 5: SOLUTIONS TO STRENGTHEN DISTRIBUTION CHANNEL MANAGEMENT AT HABECO TRADING ONE MEMBER CO., LTD 72 5.1 Developing orientation of distribution channel management at Habeco Trading One Member Co., Ltd 72 5.1.1 General developing orientation of Habeco Trading One Member Co., Ltd 72 5.1.2 Developing orientation of distribution channel management at Habeco Trading One Member Co., Ltd 73 5.2 Solutions to strengthen the distribution channel management at Habeco Trading One Member Co., Ltd 73 5.2.1 Improve criteria for selecting channel members 73 5.2.2 Improve training courses for channel members 74 5.2.3 Improve motivation policy for channel member 75 5.2.4 Improve evaluation method for channel members 76 5.2.5 Improve cooperation with channel members 78 5.3 Recommendations 79 5.3.1 Recommendation to the State management agencies 79 5.3.2 Recommendation to the intermediaries 81 CONCLUSION 84 LIST OF REFERENCES 85 APPENDIX 87 APPENDIX 88 APPENDIX 92 ABBREVIATIONS 4P : Product, Price, Place, Promotion ABI : Anheuser-Busch InBev Assoc Pro : Associate Doctor Bancassur ance : Bank + Insurance BL : Billion BOD : Board of Directors BVGI : Bao Viet Insurance Corporation Co., Ltd : Company Limited DC : Distribution Channel Dr : Doctor e.g : for example et al : and others etc : et cetera FMCG : Fast Moving Consumer Goods Habeco : Habeco Trading One Member Company Limited HRM Dept : Human Resources Management Department HSB : Hanoi School of Business i.e : mean IT : Information Technology KPI : Key Performance Indicator MBA : Master in Business Administration No : Number PR : Public Relations Sabeco : Saigon Alcohol Beer & Beverages Corp TPP : Trans Pacific Partnership Agreement i TV : Television UK : United Kingdom US : United States USA : United States of America VBL : Vietnam Brewery Limited VNU : Vietnam National University ii LIST OF TABLES Table 4.1: Habeco Trading One Member Co., Ltd’s staff qualification in 2017 39 Table 4.2: Dimensions and attributions to manage distribution channel for beer products in Habeco Trading One Member Company Limited 43 Table 4.3: Criteria for evaluating distribution channels of Habeco Trading One Member Co., Ltd 50 Table 4.4: Actual situation of selecting member for DC at Habeco Trading One Member Co., Ltd 51 Table 4.5: Actual situation of training member for DC at Habeco Trading One Member Co., Ltd 55 Table 4.6: Actual situation of motivating member for DC at Habeco Trading One Member Co., Ltd 59 Table 4.7: Actual situation of evaluating DC at Habeco Trading One Member Co., Ltd 63 iii career agent and direct response due to the huge difference among these channels This research proposes the sales force for distribution channel should be mainly intermediaries’ staffs and sell via their system only Therefore, this regulation would guarantee avoiding the disperse situation of the sales force, and it is much more convenient in management activity; simple in commission payment, etc After about 3-5 years when distribution channel is more developed, it will be very necessary and significant to supplement regulation of sales force for distribution channel, such as: special professional advisor; food and beverage agents; intermediaries’ collaborator; etc.” 5.3.1.3 Supplement regulation of the number of companies cooperating with intermediaries “In the business cooperation agreement with Habeco Trading One Member Co., Ltd, intermediaries are corporate agent Therefore, pursuant to the current regulation of the State, if it is noted and agreed in the cooperation contract, intermediaries can be able to sign in another contract with other companies.” “However, in order to save the security of information, as well as make sure that intermediaries can be more considered about beer sales activity, this research suggests that at the initial time, one intermediary should be agent for one Habeco Trading One Member Co., Ltd only, instead of many other providers at the same time This would help Habeco Trading One Member Co., Ltd and that intermediary can be more focused in taking more necessary actions to improve the collaborating relationship, ensure the effectiveness and benefit from their cooperation.” 5.3.1.4 Supplement regulation of commission payment for corporate agent It is very necessary to issue a separate regulation of commission payment mechanism for distribution channel activity In more detail, this regulation should be applied based on the type of products that is allowed to be distributed via distribution channel Moreover, the commission tarrif applied for distribution channel should be more attractive than the existing one to make sure that the commission received can be enough for caterring the management expenses and 80 payment for the direct sales force This will help the intermediaries’ staffs feel more attractive and encouraged in selling beer products.” 5.3.1.5 Supplement regulation of information sharing between the company and intermediaries “The lawmakers need to consider about regulations of information sharing mechanism between intermediaries and companies, types of report, etc in order to protect the information of customer who is participating in a sales contract, in addition, take necessary and timely actions to control and supervise effectively this operation.” “For the distribution channel operation at the present, companies are still taking precautioned steps to business without breaking law due to the fact that the State has not had a basic legal framework for distribution channel’s development Therefore, if its wants this operation to contribute much benefit to the general economy, the State needs to quickly research and draft some specific legal documents guiding on distribution channel business in Vietnam.” 5.3.2 Recommendation to the intermediaries “The most important thing in developing intermediaries is the commitment of the senior leaders of both intermediaries and Habeco Trading One Member Co., Ltd Based on the commitment’s content, the involving parts will transfer and implement them to be the fact, ensure the proposed plan can be developed follow the right direction and achieve high qualified results.” “Intermediaries need to clearly understand the benefits getting from distribution channel operation, that are the revenue of distribution channel commission From this point, intermediaries and companies can cooperate to make good decision on any actions, especially in selecting correct types of product to be deployed.” “The intermediaries’ IT system should be customized to be suitable with distribution channel’s database The company should also appoint their staffs to learn and use the IT system After a certain period of time, they can give their own 81 ideas to customize and improve the intermediaries’ IT system to create the best facilities for both intermediaries and Habeco Trading One Member Co., Ltd in term of managing distribution channel operation.” “Intermediaries need to actively request the company to organize training course for their staffs After the training course, they should also check the quality of the training course as well as how their staffs achieve and improve the course, make sure that they can improve distribution channel activities by increasing number of contracts and revenue.” “The intermediaries may consider cooperating with many companies or Habeco Trading One Member Co., Ltd may cooperate with some intermediaries to improve efficiency and expand product distribution strategy However, depending on the specific condition that they can be deployed in certain form: intermediaries act as an agent of Habeco Trading One Member Co., Ltd or Habeco Trading One Member Co., Ltd’s staff can work onsite at intermediaries.” “Intermediaries can develop relationship with customers through the introduction of their core products related to beer products based on the actual benefits, such as: satisfying the needs, attracting and initiating relationships with customers from sending advertised email, consul via telephone or even direct exchange with them about beer products.” “By working directly with the customers, the intermediaries’ staff and Habeco Trading One Member Co., Ltd’s staffs should collect and build up a common database system serving for the both sides This database should be sufficient and specific about customers Based on that, both intermediaries and the company can take the use of database in long term development, contribute effort to facilitate the client approaching process, then, create close and honest relationship with potential customers of intermediaries and the company as well.” “In addition, intermediaries can focus and take advantage of the mining team of its employees who have experience in selling beer products, moreover those staffes should accumulate experience and major knowledge relating to food and 82 beverage industry to be expert in the distribution channel field That will be very convenient and successful for intermediaries and the company to have that type of labor forces, who should be treated well with good incentives and repsected rewards.” 83 CONCLUSION “The development perspective of Habeco Trading One Member Co., Ltd is to ensure the sustainable development in the deep direction, improve the position and significant role of food and beverage field in the social economy of Vietnam In the context where Vietnam is more and more developed in the international market, especially after taking part in the World Trade Organization, there will be many more chances for food and beverage companies to strongly develop, otherwise, there will be also a lot of challenges to be overcome Obviously, Vietnamese food and beverage companies have to prepare with good policies and strategic direction to be well adopted in the massive improved market.” “ At the present, the company is still one of the best beverage companies in the local market However, the company still encounters many difficulties to maintain the market share and market position since being tightly competed by other players Especially, in the current opening-economy context, many other foreign food and beverage providers are gradually improving their position with huge capital and good experience In order to fight against these tough conditions, the company should focus on improving the management effectiveness of its distribution channel, which is a very potential channel for food and beverage business In the coming time, the company will invest in both human resource and finance to fully exploit the benefits of the potential distribution channel activities Moreover, it will focus on making necessary decisions to capture the benefits from the market to achieve sustainable growth and step by step reach the st position in the Vietnamese food and beverage market.” “Due to time constraint, and limited knowledge as well as experience in the distribution channel field of the researcher, a further study and comprehension of distribution channel management at the company should be needed and supplemented for a better analysis.” 84 LIST OF REFERENCES Alison, R and K Uhl (1964) Influence of beer brand identification on taste perception Journal of Marketing Research, 1: 36-39 Andrii Galkin (2015), Distribution Channels Management in Different Regions, American Journal of Economics, Finance and Management, Vol 1, No 2, 2015, pp 92-96 Anh Pham (2014); Distribution channel management for Bancassurance at Bao Viet Life, Master Thesis, BSNEU Dao Tran Minh (2006), Fundamental Marketing Textbook, Statistical Publishing House, Hanoi (2006) Francioni, J L (2012) Beer tourism: a visitor and motivational profile for North Carolina craft breweries Faculty of the Graduate School at the University of North Carolina Gundlach, G T., Bolumole, Y A., Eltantawy, R A., & Frankel, R (2006), The changing landscape of supply chain management, marketing channels of distribution, logistics and purchasing, Journal of Business & Industrial Marketing, 21(7), 428-438 Ha Pham (2014), Distribution channel management for Bancassurance at Bao Viet General Insurance Corporation (BVGI), Master Thesis, BSNEU Habeco Trading One Member Co., Ltd (2015 – 2017), documents, minutes, annual reports, etc Hoang, H and Antoncic, B (2003) Network-based research in entrepreneurship: A critical review Journal of Business Venturing, 18, 165–187 10 Mentzer, J T (2004): Fundamentals of Supply Chain Management : Twelve Drivers of Competitive Advantage, Thousand Oaks, California: Sage Publications 11 Nelson, J P (2005) Beer Advertising and Marketing Update: Structure, Conduct, and Social Cost Review of Industrial Organization, 26: 269-306 12 Philip Kotler, Kevin Lane Keller (2012), Marketing Management 85 13 Rosenbloom, B (2004): Marketing Channels: A Management View, Seventh Edition, South-Western, Cengage Learning 14 Rui Borges Lopes, Filipa Freitas, Inês Sousa (2015), Application of Lean Manufacturing Tools in the Food and Beverage Industries, J Technol Manag Innov 2015 Volume 10, Issue 15 Truong Dinh Chien (2004), Management of Distribution Channel, Statistical Publishing House, Hanoi (2004) 16 Tuan Bui (2012), Distribution channel development for Phuc Nhan Duong Pharmaceutical Co., Ltd, Master Thesis, BSNEU 17 Vlajic, J V., Vorst, J G A J., & Haijema, R (2012) A framework for designing robust food supply chains International Journal of Production Economics, 137, 176-189 doi: 10.1016/j.ijpe.2011.11.026 86 APPENDIX IN-DEPTH INTERVIEW QUESTIONS How doesHabeco Trading One Member Co., Ltdselect members for its distribution channel? How often does the company organize training courses for its DC (distribution channel) members? Which skills and benefits can be obtained by DC members when participating into the training courses held by Habeco? How about Habeco’s tuition fee support policy for its DC members when participating in those training courses? How about the measures used by the company to discover its DC members’ needs and problems? How does the company support its DC members to deal with their problems? How about the distribution program designed by the company for its DC members? What are rewards given to DC members when they have excellent results? Which criteria does the company depend on to evaluate its DC? 10 How suitable and effective are those criteria? 11 How often does the company evaluate the effectiveness of its DC? 87 APPENDIX QUESTIONNAIRE Dear ladies and gentlemen Currently, I am completing the master thesis on distribution channel (DC) management at Habeco Trading One Member Co., Ltd (Habeco) Could you please spend a little time to share your opinion about the matter? Your information will be kept secret and will not be used for any other purposes rather than the purposes of this research Part I: Respondent profile Please tick an “X” in the most appropriate box There should be only one answer for each question Gender  Male  Female Age < 30  30 – 40  40 – 50 > 50  College  Others Obtained degree  Postgraduate  University Working seniority < years  – years 88 > years Part II: Detailed analysis Please indicate your opinion for the related factors through the following statements Instruction for answer: Please complete the questionnaire by circling by an (O) to what extent each of the following statements is true according to your personal opinion Each statement is measured by the scale from to 5, which meaning is as follows: 1: Strongly disagree 4: Agree 2: Disagree 5: Strongly agree 3: Neutral Min => Max No Dimensions and attributes I 2 SELECTING MEMBERS FOR DC Habeco finds prestigious intermediaries in the beer market as its DC members Habeco selects its DC members based on their reputation and financial strength Habeco selects its DC members by identifying their product lines as competitive products, compatible products or complementary products II Habeco selects its DC members by fair dealing and friendly relationship it can establish with Habeco selects its DC members based on their advertising and promotion support given to its beer products TRAINING MEMBERS FOR DC Habeco often organizes training courses for its DC members to improve their knowledge on its beer products DC members can participate in some training courses held by 89 Min => Max No Dimensions and attributes Habeco to improve their sales and negotiation skills Training courses held by Habeco can help its DC members improve their communication skills DC members can freely be involved in the training courses held by Habeco without any charge III MOTIVATING MEMBERS FOR DC IV Habeco uses some approaches to learn about its DC members’ needs and problems Habeco offers cooperative arrangements to support its DC members to deal with their problems Habeco builds a planned, professionally comprehensive distribution program for its DC members Habeco gives some monetary rewards and recognition to its DC members with outstanding and excellent results Habeco assigns some experts to be in charge of motivating its DC members EVALUATING DC Habeco evaluates DC based on the amount of sales each DC member can give within a certain time frame Habeco periodically evaluates DC Habeco evaluates whether DC can give better profitability to the company Habeco evaluates whether it can have better control over its DC or not Meeting between Habeco and DC members are often and officially organized to discuss DC problems 90 Min => Max No Dimensions and attributes The standards and approaches used for evaluating DC are suitable and effective THANH YOU FOR YOUR COOPERATION! 91 APPENDIX SURVEY RESULTS Habeco finds prestigious intermediaries in the beer market as its DC members Habeco selects its DC members based on their reputation and financial strength Mean 0 45 34 21 3.76 0 45 33 22 3.77 0 44 34 22 3.78 29 31 24 16 3.27 16 30 47 3.45 Habeco selects its DC members by identifying their product lines as competitive products, compatible products or complementary products Habeco selects its DC members by fair dealing and friendly relationship it can establish with Habeco selects its DC members based on their advertising and promotion support given to its beer products 3.61 Habeco often organizes training courses for its DC members to improve their knowledge on its 0 30 51 19 3.89 0 31 51 18 3.87 16 30 47 3.45 beer products DC members can participate in some training courses held by Habeco to improve their sales and negotiation skills Training courses held by Habeco can help its DC members improve their communication skills 92 DC members can freely be involved in the training courses held by Habeco without any 13 28 49 10 3.56 charge 3.69 Habeco uses some approaches to learn about its DC members’ needs and problems 0 45 34 21 3.76 14 15 25 25 21 3.24 15 51 18 16 3.35 0 35 51 14 3.79 19 50 18 13 3.25 Habeco offers cooperative arrangements to support its DC members to deal with their problems Habeco builds a planned, professionally comprehensive distribution program for its DC members Habeco gives some monetary rewards and recognition to its DC members with outstanding and excellent results Habeco assigns some experts to be in charge of motivating its DC members 3.48 Habeco evaluates DC based on the amount of sales each DC member can give within a 0 34 45 21 3.87 0 45 34 21 3.76 0 45 33 22 3.77 14 15 25 25 21 3.24 19 17 18 19 27 3.18 certain time frame Habeco periodically evaluates DC Habeco evaluates whether DC can give better profitability to the company Habeco evaluates whether it can have better control over its DC or not Meeting between Habeco and DC members are often and officially organized to discuss DC 93 problems The standards and approaches used for evaluating DC are suitable and effective 17 37 34 12 3.41 3.54 94 ... Selecting members for distribution channel 47 4.4.2 Training members for distribution channel 53 4.4.3 Motivating members for distribution channel 57 4.4.4 Evaluating distribution. .. improve distribution channel management for beer products of Habeco Trading One Member Company Limited CHAPTER THEORETICAL BACKGROUND ON DISTRIBUTION CHANNEL MANAGEMENT FOR BEER INDUSTRY 2.1 Introduction... Actual situation of training member for DC at Habeco Trading One Member Co., Ltd 55 Table 4.6: Actual situation of motivating member for DC at Habeco Trading One Member Co., Ltd