Improving sales promotion program a case of dai thang company in vung tau viet nam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Thi Ngoc Loan IMPROVING SALES PROMOTION PROGRAM: A CASE OF DAI THANG COMPANY IN VUNG TAU-VIET NAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2019 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business DANG THI NGOC LOAN IMPROVING SALES PROMOTION PROGRAM: A CASE OF DAI THANG COMPANY IN VUNG TAU-VIET NAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Assoc Prof Nguyen Thi Mai Trang Ho Chi Minh City – Year 2019 EXECUTIVE SUMMARY This thesis aims to identify the root cause of “Ineffective sales promotion program” which lead to reduce secondary sales at Dai Thang By using in-depth interview with related person and literature reviews, ineffective sales promotion is defined as main problem which is actually existed at Dai Thang and the consequences of this problem is also analized It is necessary to solve the problem because there are a lot of significant benefits for improving the effectiveness of solving the problem Theories play an important role in finding all potential causes of ineffective sales promotion at Dai Thang But then further in-depth interview support to eliminate some potential causes and clarify the main cause which should be paid attention As a result, “Ineffective sales promotion program” is the main cause Two alternative solutions have been suggested and after clarifying the comparison of solutions about cost and benefits, building up “My Loyalty Program” and organize workshop for customers” is the better solution and a following implement action should be approved as soon as possible to solve the problem and improve sales volumes at Dai Thang ACKNOWLEDGEMENT Without the encouragement, guidance and support for Assoc Prof Nguyen Thi Mai Trang and other teachers, the entire master-level project would not be possible I would like to send my appreciation to my advisor It has been a pleasure working with you on this project I would like to thank my friends and family for greatly support me while I was working on my research TABLE OF CONTENTS EXECUTIVE SUMMARY ACKNOWLEDGEMENT Introduction 1.1 Company overview: Valvoline global lubricant market 1.2 Sales and market share in Viet Nam market 1.3 Valvoline Distribution Channel in Viet Nam market 1.4 Valvoline Product 10 1.5 The relationship of Valvoline and Dai Thang 11 1.6 Competitive advantage 12 1.7 Problem finding process 13 1.8 Symptoms 13 1.7.1 Reducing primary and secondary sales from 2015-2019 14 1.7.2 Customer„s complaint in Vung Tau (South East) seriously from Oct 2018 until now………………………………………………………………………………… 16 2.1 Initial identification of problem 18 2.2 Problem identification 21 2.2.1 The first potential problem: Limitation of Valvoline supplier in packaging/colour of Valvoline product 22 2.2.3 The third potential problem: Competitors brand switching 23 2.3 Problem Definition 24 2.4 Justify the existence of “Dissatisfaction at internal policies leading to brand switching” 25 2.5 Justify the importance of “Dissatisfaction at internal policies leading to brand switching” 26 2.6 Potential causes 27 2.6.1 The selling prices of Dai Thang is higher than other competitors with same specification and other Valvoline importers 28 2.6.2 Market competition 30 2.6.3 Ineffective sales promotion program than other competitors 31 2.7 Validation main cause and solution proposal 31 Design solution for solving problem 32 3.1 The first alternative solution: a discount program by accumulate points……… 35 3.1.1 Benefits…………………………………………………………………… 35 3.1.2 Costs 35 3.2 The second alternative up “My Loyalty Program” and organize workshop………36 3.2.1 Definition of “Loyalty Program”………………………………………… … 35 3.2.2 Importance of “Loyalty Program‟‟ 35 3.2.3 Loyalty Program steps 35 3.2.4 Benefits 38 3.2.7 Cost 39 3.3 Solution justification 39 Action Plan 40 4.1 My Loyalty Program‟s action plan 40 4.2 Effectiveness measurement after taking action plan 43 Conclusion 44 Supporting Information 44 REFERENCES………………………………………………………………………… 65 LISTS OF TABLES Table Segment Breakdown of all Valvoline importers in Viet Nam market Table Feedback‟s Customer Table Mr Nhuc‟s Actual sales volumes Table Mr Vu‟s Actual sales volumes Table Selling prices for Mr Le Anh Vu Table Comparation Valvoline prices of Dai Thang and Sam Chem Table The selling prices between Castrol and Valvoline Table Volume for loyalty program Table Action Plan LIST OF FIGURES Figure Valvoline Business Segment 2016 Figure Market shares of lubricating oil in Viet Nam market in 2018 Figure Valvoline importers ‟s volume in Viet Nam 2018 Figure Dai Thang‟s sales channel distribution Figure Review Sales out and Sales in from 2015 to 2018 Figure Review Sales out and Sales in from 2015 to 2018 Figure Initial cause-effect map Figure Updated cause effect map Figure Final cause-effect map Figure 10 Solution map INTRODUCTION 1.1 Company overview: Valvoline global lubricant market Valvoline Inc (NYSE: VVV) is established 1866 and a leading worldwide marketer and supplier of premium branded lubricants and automotive services, with sales in more than 140 countries Valvoline ranks as the No passenger car motor oil brand in the DIY market by volume It also operates and franchises the No quick-lube chain by number of stores in the United States with more than 1,170 Valvoline Instant Oil Change SM centers and the No quick-lube chain by number of stores in Canada with more than 100 Great Canadian Oil Change locations.Valvoline operates a global network of research and development labs, distribution and customer services in 150 countries in Valvoline‟s business is managed within the following three reportable segments: Core North America (51%); Quick Lubes (24%) and International (25%) Core North America 25% Quick Lubes 51% International 24% Figure Valvoline Business Segment 2016 (Source: Valvoline website) 1.2 Sales and market share in Viet Nam market Foreign businesses hold the majority of lubricant market, PLC is a domestic enterprise has the largest market share As of 2017, about 60% of the domestic market share belongs to foreign enterprises in addition to BP (Castrol), Shell, Total, Chevron (Caltex) in which Castrol BP is the market leader with 24% market share PLC is a domestic company with the largest market share with the rate of 12% Castrol/ PBPetco 24% 41% Shell, Total, Motul, Caltex PLC Others 23% 12% Figure Market shares of lubricating oil in Viet Nam market in 2018 (Source:FFPTS Research, Castrol BP) 1.3 Valvoline Distribution Channel in Viet Nam market In Viet Nam, Valvoline opened importers in expectation to take market share Dai Thang Co., Ltd Cummins Viet Nam Nam My Co., Ltd Sam Chem Co., Ltd Sy Viet Co., Ltd Hung Minh Loi., Ltd ANT Co., Ltd Corporation Engineering Plastic and Hai Phong The expectation of Valvoline for 2019 is 2,400,000 L With list of these importers above, Dai Thang Co., Ltd is one the biggest company which has the biggest volume in Viet Nam market According to Logistics Department, it can be shared volume in each company as below for 2019 Figure Valvoline importers ‟s volume in Viet Nam 2018 Source: (Valvoline report in Q4/2018) 1.4 Valvoline Product In Viet Nam market, Dai Thang is the biggest importers of Valvoline The products are allowed by Dai Thang: fishing segment and fleet segment This means that Dai Thang will mainly provide products for fisherman or fleet customers such as containers, trucks, passengers etc…Dai Thang distributes Valvoline in regions: South Central Coast, Central Highland, South East and Mekong Delta To understand clearly, segment breakdown of all Valvoline importers is shown in Table below 10 high prices There are some stranged partners who gave quotation directly not only me but also our customers with very very low prices You know, the selling prices you sold for us higher than them around 10%-15% depending on each kinds of products I feel disappointed Consequensely, customers thought that Dai Thang and I sold products with high margin The second reason is that who allows them to sell in our signed territoriy I have been building market for Dai Thang since years Compared to last six month of last year, our volumes lost big volume around 51% Valvoline packing also has limitation I need Valvoline and Dai Thang find solutions to help business in track Dang Thi Ngoc Loan: In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? Mr Vo Duc Nhuc: I think high prices Dang Thi Ngoc Loan: What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so? Mr Vo Duc Nhuc: I think prices, market competition program and sales promotion Dang Thi Ngoc Loan: What are solutions that the company has taken to improve sales results? Mr Vo Duc Nhuc: I think sales promotion program Dang Thi Ngoc Loan: What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? Mr Vo Duc Nhuc: Dai Thang should improve and organize a loyalty program to impro Dang Thi Ngoc Loan: Thank you for your taking times to join the discussion today Mr Vo Duc Nhuc: Ok Thanks 52 In-depth Interview Interviewer: Dang Thi Ngoc Loan Interviewee: Mr Tran Quang Hung Status: Dealer Dang Thi Ngoc Loan: First of all, I would like to thank for your arrangement to join the meeting today? Mr Tran Quang Hung: Yes, Thanks Dang Thi Ngoc Loan: How is Valvoline brand in Viet Nam market? Mr Tran Quang Hung: I think few people know Valvoline brand Valvoline has reputation brand; but has low brand awareness Mr Tran Quang Hung: Valvoline is reputation brand in Europe, but in Viet Nam market, product brand awareness is very low The competitors give many promotion program in our market such as many kinds of customer gifts, seminar customers or billboard… Also in our market, there is one partner to sell Valvoline products directly our customers with very low-prices Dang Thi Ngoc Loan: Could you please about your Valvoline business? Mr Tran Quang Hung: Not good Our sales volumes reduce around 50% Dang Thi Ngoc Loan: In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? Mr Tran Quang Hung: I think that sales promotion program and the packing of Valvoline is not various and attractive Dang Thi Ngoc Loan: What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so? Mr Tran Quang Hung: I think prices and sales promotion program The most important is sales promotion program 53 Dang Thi Ngoc Loan: What are solutions that the company has taken to improve sales results? Mr Tran Quang Hung: I think sales promotion program Dang Thi Ngoc Loan: What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? Mr Tran Quang Hung: Loyalty program Dang Thi Ngoc Loan: Thank you for your taking times to join the discussion today Mr Tran Quang Hung: Thanks In-depth Interview Interviewer: Dang Thi Ngoc Loan Interviewee: Mr Le Anh Vu Status: dealer Dang Thi Ngoc Loan: First of all, I would like to thank for your arrangement to join the meeting today? Mr Le Anh Vu: It is great to join your discussion today Dang Thi Ngoc Loan: How is Valvoline brand in Viet Nam market? Mr Le Anh Vu: Dang Thi Ngoc Loan: Could you please share about your Valvoline business? Mr Le Anh Vu: In my opinion, Valvoline business met difficuties in my distribution Customers‟s feedback that there were some partners to try to sell in my distribution I concerned why there stranged partners to act like that and try to sell in my distribution and also gave quotation with very low prices Dang Thi Ngoc Loan: In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? Mr Le Anh Vu: Mr Vu also complaints that Dai Thang sold Valvoline products are higher than other Valvoline importers Besides, the market is very competitive 54 Therefore, they have many kinds of sales promotion for customers to remote products and increase sales volumes However, Dai Thang has less promotion program compared to other competitors Dang Thi Ngoc Loan: What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so? Mr Le Anh Vu: In my opinion, Valvoline business met difficuties in his distribution Customers‟s feedback that there were some partners to try to sell in my distribution I concerned why there stranged partners to act like that and try to sell in my distribution and also gave quotation with very low prices Due to close relationship with his customers, Mr Vu received this information He need Dai Thang to give him the feedback why stranged partners from and why they can give prices like that Dang Thi Ngoc Loan: What are solutions that the company has taken to improve sales results? Mr Le Anh Vu: I think Dai Thang has good price policy and sales promotion program Dang Thi Ngoc Loan: What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? Mr Le Anh Vu: I think Dai Thang should have inffective sales promotion program Dang Thi Ngoc Loan: Thank you for your taking times to join the discussion today Mr Le Anh Vu: Thanks In-depth Interview Interviewer: Dang Thi Ngoc Loan Interviewee: Nguyen Van Huy Status: dealer Dang Thi Ngoc Loan: First of all, I would like to thank for your arrangement to join the meeting today? 55 Mr Nguyen Van Huy: Let‟s start Dang Thi Ngoc Loan: How is Valvoline brand in Viet Nam market? Mr Nguyen Van Huy: I would like to share that Valvoline has low Dang Thi Ngoc Loan: Could you please share about your Valvoline business? Mr Nguyen Van Huy: In my opinion, Valvoline business met difficuties in my distribution The result of sales volumes reduced around 40% Dang Thi Ngoc Loan: In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? Mr Nguyen Van Huy: Valvoline products are higher than other Valvoline importers; the market is very competitive and other brands have many kinds of promotion program Dang Thi Ngoc Loan: What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so? Mr Nguyen Van Huy: High prices; market competition and ineffective sales promotion program I think sales promotion program is very important and also the most important that leads to reduce secondary sales results Dang Thi Ngoc Loan: What are solutions that the company has taken to improve sales results? Mr Nguyen Van Huy: Sales promotion program Dang Thi Ngoc Loan: What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? Mr Nguyen Van Huy: A loyalty program can help to increase sales volumes and create loyalty program Dang Thi Ngoc Loan: Thank you for your taking times Mr Nguyen Van Huy: No problem 56 In-depth Interview Interviewer: Dang Thi Ngoc Loan Interviewee: Mr Chin- Doan Hai Ship Status: Mr Vo Duc Nhuc‟s customer Dang Thi Ngoc Loan: I would like to thank for your arrangement to join the meeting today? Mr Chin: Let‟s start Dang Thi Ngoc Loan: How is Valvoline brand in Viet Nam market? Mr Chin: I would like to share that Valvoline has low brand awareness We have been using Valvoline products in all our engines for the past years We find the performance of the engine oil to be very good and reliable We never have any related problem in our ships; however, Valvoline has low brand awareness and effects on buying products because brand awareness is very important It is one of major brand assets that adds value to the products and also measures of brand strength or brand equity Dang Thi Ngoc Loan: Could you please share about your Valvoline business? Mr Chin: Not good Mr Chin: In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? Mr Chin: Valvoline products are higher than other Valvoline importers; the market is very competitive and other brands have many kinds of promotion program Dang Thi Ngoc Loan: What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so? Mr Chin: High prices; market competition and ineffective sales promotion program I think sales promotion program is very important and also the most important that leads to reduce secondary sales results 57 Dang Thi Ngoc Loan: What are solutions that the company has taken to improve sales results? Mr Chin: Sales promotion program Dang Thi Ngoc Loan: What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? Mr Chin: A loyalty program can help to increase sales volumes and create loyalty program Dang Thi Ngoc Loan: Thank you for your taking times Mr Chin: No problem In-depth Interview Interviewer: Dang Thi Ngoc Loan Interviewee: Do Le Thach Lan Status: Sales Admin Dang Thi Ngoc Loan: First of all, I would like to thank for your arrangement to join the meeting today? Do Le Thach Lan: Let‟s start Dang Thi Ngoc Loan: How is Valvoline brand in Viet Nam market? Do Le Thach Lan: I would like to share that Valvoline has low brand awareness Dang Thi Ngoc Loan: Could you please share about your Valvoline business? Do Le Thach Lan: In my opinion, Valvoline market in Vung Tau dropped down around around 50% Comparing to 2018, customers refused to buy Valvoline products and the quantities of purchase orders are also less than last year Dang Thi Ngoc Loan: In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? 58 Do Le Thach Lan: The market is very competitive and other brands have many kinds of promotion program Dang Thi Ngoc Loan: What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so? Do Le Thach Lan: High prices; market competition and ineffective sales promotion program Dang Thi Ngoc Loan: What are solutions that the company has taken to improve sales results? Do Le Thach Lan: Sales promotion program Dang Thi Ngoc Loan: What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? Do Le Thach Lan: A loyalty program Dang Thi Ngoc Loan: Thank you for your taking times Do Le Thach Lan: No problem 59 QUALITIVE RESEARCH FINDINGS Interview: Dang Thi Ngoc Loan Interviewee: Group 1: Sales Director and Sales Executive - (1 A) Mr Nguyen Van Sang - (1 B) Mr Le Quoc Hoai Group 2: Key customers in Vung Tau - (2 A) Mr Vo Duc Nhuc - (2 B) Mr Le Anh Vu - (2 C) Mr Tran Quang Hung - (2 D) Mr Nguyen Van Huy - (2 E) Mr Chin- Doan Hai Shipping Group 3: Sales Admin - (3 A) Do Le Thach Lan 60 No Question 1A 1B 2A How is Valvoline brand Low brand Low brand Low brand in Viet Nam awareness awareness awareness market? Could you please about Not good Not good Not good your Valvoline performance performance performance business? competitors brand Could you competitors competitors switching; please share the brand brand high prices; reason why you switching; switching; market switch or buy high prices; high prices; competition products from market market other supplier? competition competition In your point of view, what is the most important problem that leads to reduce secondary sales at Dai Thang? competitors brand switching competitors brand switching competitors brand switching Findings 2B 2C 2D 2E 3A Low brand awareness Low brand awareness Low brand awareness Not good Not good Not good performanc performance performance e Not good performance Not good performance competitors brand switching; high prices; market competition competitors brand switching; high prices; market competition competitors brand switching; high prices; market competition competitors brand switching; high prices; market competition competitors brand switching; high prices; market competition competitors brand switching competitors brand switching competitors brand switching competitors brand switching competitors brand switching Low brand awareness Low brand awareness 61 What are causes of the problem? And which is the most important that leads to reduce secondary sales results? Why you think so sales promotion program sales promotion program sales promotion program sales promotion program sales promotion program sales promotion program; discount prices prices; prices; prices; prices; prices; prices; What are causes ineffective ineffective ineffective ineffective ineffective ineffective of the problem? sales sales sales sales sales sales And which is promotion promotion promotion promotion promotion promotion the most program and program and program and program program and program and important cause market market market and market market market among them? competition competition competition competition competition competition What are solutions that sales sales sales sales sales sales the company promotion promotion promotion promotion promotion promotion has taken to program program program program program program improve sales results? 62 sales promotion program; discount prices sales promotion program; discount prices prices; ineffective sales promotion program and market competition prices; ineffective sales promotion program and market competition sales promotion program sales promotion program What are your opinions about the effectiveness of above solutions? Could you please share any alternative you think should be taken to solve this problem? pushing and increasin g sales volumes pushing and increasing sales volumes pushing and increasing sales volumes pushing and increasing sales volumes pushing and increasing sales volumes 63 pushing and increasing sales volumes pushing and increasing sales volumes pushing and increasing sales volumes References Ampuero O, Vila N Consumer perceptions of product packaging Journal of consumer marketing 2006;23(2):100-12 Silayoi P, Speece M The importance of packaging attributes: a conjoint analysis approach European journal of marketing 2007;41(11/12):1495-517 Swati S, Gautam Printing and Packaging on Consumer Purchasing Behaviour International Journal of Science, Engineering and Computer Technology 2015:183-5 Olson JC, Jacoby J Cue utilization in the quality perception process ACR Special Volumes 1972 Chiu H-C, Hsieh Y-C, Li Y-C, Lee M Relationship marketing and consumer switching behavior Journal of Business Research 2005;58(12):1681-9 Olson JC, Jacoby J Cue utilization in the quality perception process ACR Special Volumes 1972 Kumar, R.R and Chaarlas, D.L (2011), “Brand switching in cellular phone service industry because of bill-related issues faced by clients”, International Journal of Event Management Research, Vol No 5, pp 231-235 Blattberg RC, Neslin SA Sales promotion Englewood Cliffs 1990 Chiu H-C, Hsieh Y-C, Li Y-C, Lee M Relationship marketing and consumer switching behavior Journal of Business Research 2005; 58(12):1681-9 10 Kumar, R.R and Chaarlas, D.L (2011) Brand switching in cellular phone service industry because of bill-related issues faced by client International Journal of Event Management Research, Vol No 5, pp 231-235 11 Shukla P Impact of contextual factors, brand loyalty and brand switching on purchase decisions The Journal of Consumer Marketing 2009;26(5):348-357 12 Lu L-C, Chang W-P, Chang H-H Consumer attitudes toward blogger’s sponsored recommendations and purchase intention: The effect of sponsorship type, product type, and brand awareness Computers in Human Behavior 2014; 34:258-66 64 13 Robert L Underwood Journal of Marketing Theory and Practice Vol 11, No (Winter, 2003), pp 62-76 14 Susan M Keaveney.Journal of Marketing Vol 59, No (Apr., 1995), pp 71-82 65 66 ... Hoai- Sales Executive in Vung Tau has been working with Dai Thang for more than years and he takes a play role for sales management in Vung Tau  Do Le Thach Lan- Sales Admin in Vung Tau has been...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business DANG THI NGOC LOAN IMPROVING SALES PROMOTION PROGRAM: A CASE OF DAI THANG COMPANY IN VUNG TAU- VIET NAM MASTER OF. .. 63% in Viet Nam market The products of Dai Thang are mainly imported from Singapore The market segmentation of Dai Thang distributes mainly on-road fleet and marine On-road fleet in lubricating