Central problem of low sales in corporate reseller channel at double a company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Tran Tuan Anh CENTRAL PROBLEM OF LOW SALES IN CORPORATE RESELLER CHANNEL AT DOUBLE A COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Assoc Prof TRAN HA MINH QUAN Ho Chi Minh City – Year 2020 CONTENTS PROBLEM CONTEXT 1.1 INTRODUCTION 1.2 COMPANY OVERVIEW 1.3 NEW PRODUCTS AND ITS DISTRIBUTION CHANNELS SYMPTOM INITIAL CAUSE-EFFECT MAP POSSIBLE PROBLEMS 4.1 Corporate Resellers-Less focused on introducing product 10 4.2 Low awareness for Double A smart stapler at Corporate Reseller’s Consumers 12 4.3 Inappropriate product for Corporate Reseller’s Consumers 12 MAIN PROBLEM VALIDATION 13 POTENTAIL CAUSES 15 6.1 Low brand recognition of Double A Smart Stapler Product 16 6.2 Low brand recall of Double A Smart Stapler Product 16 MAIN CAUSE VALIDATION 17 ALTERNATATIVE SOLUTIONS 18 8.1 8.1.1 The model of the present system 18 8.1.2 Solution Requirements 19 8.2 Problem-related inputs 18 Possible Solutions 19 SOLUTION SELECTION 21 10 ACTION PLAN IN ORGANIZATION 27 11 CONCLUSION 29 REFERENCES 30 APPENDIX – IN-DEPTH INTERVIEW 33 PROBLEM CONTEXT 1.1 INTRODUCTION The basic feature of the market economy is competition Companies have continuously launched their new products and services considered to be profitable Further, the development of new products helps companies survive in the tough competitive environment They are not only the start-up companies launching their products to look for the market positions, but also the branding companies releasing new products as their competitive advantages However, all new products may carry risks affecting the companies This assignment mentions the problem of developing new products in copy paper Company, named “Double A” Through data collection and information, the real problem of the company is recognized In addition, basing on the most important cause leading to the real problem, all relevant solutions are suggested to help the company improve its performance in the involved market 1.2 COMPANY OVERVIEW Double A (1991) Public Company Limited (and subsidiaries) is a leading manufacturer and distributor of pulp and paper in Thailand The Company was established on August 8, 1991 Currently the Company have pulp mills with the capacity to produce pulp for 580,000 tons, paper mills with 600,000 tons capacity per annum In the year of 2000, Double A was introduced as a premium brand of copy paper and internationally recognized as the leading provider In 2002, The Company set up Double A Paper and Stationery Company Limited to manage and distribute stationeries for domestic customers Also, its products have been extended to innovative stationery products It has been the leading brand in Thailand for 10 consecutive years due to its quality and consistency It has presented in more than 100 countries In 2005, Double A paper was launched in Vietnam market In 2015, Double A stationery was launched in Vietnam market as new products It has established two representative offices located in Hanoi city and Ho Chi Minh City The staff in the representative offices of Ho Chi Minh city consist of General Manager, Marketing Manager, Marketing Executive, Channel Development Executives and Admin being in charge of human resource management Totally, the scare resources are persons General Manager - Marketing Manager - Channel Development Manager Absent Finance Manager - Marketing Executive - Channel Development Executive - Finance Executive - Figure 1.1 - Organization structure of Double A Representative Office in HCMC Source: Double A Company 1.3 NEW PRODUCTS AND ITS DISTRIBUTION CHANNELS In 2018, the company has developed new stationery products known Smart Stapler in Vietnam Its prominent function is to staple up to 30 sheets of copy paper 70gms with less efforts of 50 to 60 percent comparing to usual staplers Furthermore, the stapling result in flat clinch up to 30 percent more filling space This new product has strongly developed in Taiwan, China, Singapore, Thailand…despite of its high price compared to regular stapler The company focuses on developing this new product in Vietnam In order to releasing them, one main distributor in Ho Chi Minh City will import Double A smart stapler from Thailand Then, it will provide to all regional dealers throughout Vietnam who will supply this new product to other retailers In the area of Ho Chi Minh City, this main distributor will directly supply Double A smart stapler to about 590 retailers that include 90 book store shops which will sell products to mainly 80% individual end-users and 20% corporate end-users, 200 shops of corporate resellers which will sell products to 100% corporate end-users and 300 stationary shops which will sell products to about 70% of individual end-users and 30% of corporate end-users Individual end-users include students, personal office workers, individuals…and corporate end-users include corporates, companies Thus, these retailers play the crucial roles of introducing new products to the end users in Ho Chi Minh City Among of them, corporate end-users are the key target consumers of the Double A company Distributor 90 Book Stores 80% Individual End-Users 20% Corporate End-Users 200 Corporate Resellers 100% Corporate EndUsers 300 Stationary Shops 70% Individual End-Users 30% Corporate End-Users Figure 1.2 - Current distribution in HCMC for Double A Smart Stapler Source: Double A Company SYMPTOM Recently, the total market demand of normal stapler is about 150,000pcs/year In February 2018, Double A launched new stapler product to the market which called Double A smart stapler and targeted to achieve about 15% total market demand of normal stapler In launching time, Double A sold 6.498 units of Double A smart stapler to one distributor Till the end of the year 2018, this distributor sold 2.550 units to its retailers But at the end of the year 2019, the sales out of Double A smart stapler of distributor to its retailers was only 1.848 units Based on the data, the sales out of Double A smart stapler from distributor to retailers in 2019 was decreased nearly 30% compared to the year of 2018 and its sales volume per year was very low compared to the target (only achieved about 2% compared to demand of stapler market) Sales Sales Sales Sales Sales Sales Sales Sales TOTAL Distributor Q1 Q2 Q3 Q4 2018 2018 2018 2018 804 1,002 492 Q1 Q2 Q3 Q4 2019 2019 2019 2019 192 282 684 690 2018 Import 6,498 Sales 252 Inventory 2,550 3,948 TOTAL TOTAL 2018 + 2019 2019 1,848 4,398 2,100 2,100 Table 1.1 - Sales and Inventory of Double A smart stapler distributor in 2018 and 2019 Source: Double A Company By going into details of sales by channel to see why the sales volume of this smart stapler that this distributor sells to its retailers has dropped in 2019 Recently, there are about 590 retailer shops that are selling paper and stationery in Ho Chi Minh City, Double A company divides 590 retailer shops into three kinds of channel include corporate reseller channel, stationary shop channel and book store channel There are about 200 corporate resellers, 300 stationary shops and 90 bookstores in Ho Chi Minh City Corporate reseller channel includes the sellers whose customers are corporates buying for employees to use in the office They often sell via email, phone, catalogue Stationary shop channel includes the sellers whose customers are mostly individual customers, pupils, students…and they are almost located at high streets so that customers can go to the store and choose products to buy Book store channel includes the sellers whose customers are mostly pupils, students, individuals and book stores are usually located at large supermarkets In addition, book stores does not only sell stationary products, they but also sell many books, textbooks…In 2018, Double A smart stapler covered total 284 shops include 80 shops of corporate resellers, 150 shops of stationary and 54 shops of book store Till the end of the year 2019, Double A smart stapler covered 446 shops include 140 shops of corporate reseller that accounting for 70% of total shops of corporate reseller, 225 shops of stationary that accounting for about 75% of total shops of stationary, 81 shops of bookstore that accounting for about 90% of total shops of bookstore From 2018 to 2019, corporate resellers bought from distributor total 858 pcs of Double smart stapler, stationary shops bought 1.320 pcs and Bookstores bought 2.220 pcs The inventory of smart stapler at the end of the year 2019 was 719 pcs, 926 pcs and 455 pcs at corporate resellers, stationary shops and bookstores accordingly The sales out volume of Double A smart stapler in corporate reseller channel was only about pcs per month, stationary shops sold about 17 pcs per month and bookstores sold about 77 pcs per month from 2018 to 2019 Hence, corporate resellers had slowest sales out volume of Double A smart stapler Corporate resellers are providing stationery for corporate end-users which have been using and buying about 70% the demand of stationary market compared to individual end-users Therefore, the symptom of very low sales out volume of Double A smart stapler at Corporate resellers needs to be found out the real problems and solutions in order to increase the sales volume of Double A smart stapler significantly in coming years Corporate Stationary Book Store Shop channel channel Reseller channel Total shops in HCMC (A) 200 shops 300 shops 90 shops Total coverage shops in 2018 (B) 80 shops 150 shops 54 shops 40% 50% 60% 60 shops 75 shops 27 shops 140 shops 225 shops 81 shops 70% 75% 90% Total buy in 2018 + 2019 (G) 858 pcs 1,320 pcs 2,220 pcs Inventory at the end of 2019 (H) 719 pcs 926 pcs 455 pcs Total sell out in 2018 + 2019 (I=G-H) 139 pcs 394 pcs 1,765 pcs 6.04 pcs 17.13 pcs 76.74 pcs Coverage shops/ Total shops at the end of 2018 (C= B/A*100%) Total more coverage shops in 2019 (D) Total coverage shops at the end of 2019 (E=B+D) Coverage shops / Total shops at the end of 2019 (F=E/A*100%) Average sell out/ month from launching time in Feb’19 to Dec’20 (J=I/23) Table 1.2 - Sales volume, Coverage and Inventory by channels of Double A smart stapler in 2018 and 2019 Source: Double A Company INITIAL CAUSE-EFFECT MAP Based on Literature reviews and interview data, we have initial cause-effect map as below: POSSIBLE PROBLEMS To find out the problem mess for identified symptom the company is facing, desk research and interview research techniques were performed The relevant issues of low sales at Corporate Reseller Channel are studied from literatures combined with available data which collected by interviewing related members of the company and its customers to identify the possible problems as well as their causes and consequences to the company's performance More specifically, interviewees included Double A Marketing Manager, Double A Channel Development Manager Representative – a person that responsible to develop this product, 10 owners of corporate reseller and purchasers of corporate resellers’ consumers who were conducted to consolidate and specify possible problems and main problem The collected data is the basis for drawing the cause-and-effect tree, which to structure the problem mess and identify the main problem Based on the interview results with 10 corporate resellers, consumers of corporate resellers, Double A Marketing Manager and Double A Channel Development Manager Representative who is responsible for developing this product, there are potential problems leading to the low sale volume of Double A smart stapler at corporate reseller channel - Problem 1: Corporate Resellers-Less focused on introducing product - Problem 2: Low awareness for Double A smart stapler at Corporate Reseller’s Consumers - Problem 3: Inappropriate product for Corporate Reseller’s Consumers 4.1 Corporate Resellers-Less focused on introducing product About less focus on introducing Double A smart stapler products, among 10 corporate resellers that have low sales, there are 3/10 corporate resellers answered that they not have any introductions for this product, they only base on their habit to let consumers choose the stapler product they need and corporate resellers only focus on easy-to-sell products so that 10 APPENDIX – IN-DEPTH INTERVIEW LIST OF INTERVIEWEES PARTICIPATING IN – DEPTH INTERVIEW Double A Marketing Manager: Ms Phan Thi Kim Huong Double A Representative of Channel Development Manager: Mr Pham Ngoc Vu Owner of CR Cao Vinh: Ms Hieu Owner of CR Do Gia Phat: Ms Hieu Owner of CR Anh Hang: Ms Hang Owner of CR Viet Thy: Ms Thy Owner of CR Ba Nhat: Mr Rang Owner of CR Song Ma: Ms Tien Owner of CR Nguyen Vinh: Mr Vinh 10 Owner of CR Phuong Dong: Ms Manh 11 Owner of CR Dat Phu Sa: Ms Phuong 12 Owner of CR Kim Son Sai Gon: Ms Loan 13 Director of CR Nhanh Nhanh: Ms Loan 14 Purchaser of Hao Tuan company (customer of CR Cao Vinh): Ms Loan 15 Purchaser of Kim Hoan Vu company (customer of Do Gia Phat): Ms Huyen 16 Purchaser of Tan Thanh company (customer of Phuong Dong): Ms Hue 33 INTERVIEW QUESTION AND ANSWERS QUESTIONS INTERVIEWEE ANSWERS Double A smart stapler product is a new product and has many outstanding features compared to regular stapler on the market However, many people not know the benefits of this product and the price is quite high compared to the current stapler, so it has not been widely used by According to you, Double A Marketing consumers Currently Double A Manager: Ms Phan Thi smart stapler coverage at Kim Huong Corporate Resellers channel is what causes lead to low sales of Double A smart stapler? over 70% total number of Corporate Resellers in Ho Chi Minh City but sales volume is still very low Therefore, Communication about product advantages is a need to support product awareness that support purchasing decision as well as distribution expansion 34 Because the price is high, it is difficult for the corporate resellers to sell it so that they have a habit of selling and introducing familiar and easy-to-sell stapler Some shops can sell this product because they recommend it to their customers so that this product is Double A Channel only sold out when corporate Development Manager resellers introduce it to their Representative: Mr Pham customers and they let their Ngoc Vu customers try this product In addition, because this product is rarely asked by consumers so the sales out volume is slowly Double A Sales staff also not focus on introducing and supporting Corporate Resellers to sell this product Because few people ask it and the price is quite high, so it's sold Owner of CR Cao slowly, normal stapler sell at about Vinh: Ms Hieu 30.000 VND/piece, the price of this smart stapler is 35 150.000VND/piece so customers don't buy High prices make it difficult to Owner of CR Do Gia sell, customers not buy, just Phat: Ms Hieu buy regular stapler High prices and few people ask to Owner of CR Anh buy so I stock this product quite Hang: Ms Hang long The price is quite high compared to normal stapler products, when Owner of CR Viet Thy: customers need to staple many Ms Thy sheets of paper, I introduced this product and sold it but just 1-2 pcs The price is too high, sometimes customers ask the stapler to staple Owner of CR Ba Nhat: many sheets, then introduce this Mr Rang product and sells 1-2 pieces but it takes a long time to sell again The price is too high, so customers Owner of CR Song Ma: not buy because it is not Ms Tien necessary Owner of CR Nguyen Customers not have demand to Vinh: Mr Vinh buy this product 36 Few customers asked about this 10 Owner of CR Phuong stapler The demand of this stapler Dong: Ms Manh is less 11 Owner of CR Dat Phu Less customers ask this product to Sa: Ms Phuong use, the demand is less Price is high and customers said 12 Owner of CR Kim Son the product is unnecessary and Sai Gon: Ms Loan appropriate to use high-quality stapler Yes, I have introduced when consumers asked to buy the stapler, I let consumers try it, if the Have you actively consumers agree, they can buy, introduced this Owner of CR Cao otherwise they can return product? If yes, Vinh: Ms Hieu your customers Consumers have bought 1-2 pieces agree to buy this but not much compared to regular product after your stapler, they have not ordered this introduction? If no, metal stapler again Yes, I did recommend when why not they customers asked for stapler but buy? Owner of CR Do Gia they said the price was high, I also Have you let your Phat: Ms Hieu did not let customers try because I customers try this sell by phone and email product? Owner of CR Anh No, I not recommend when Hang: Ms Hang customers ask the stapler because 37 customers want to buy stapler that is using so I give them the stapler that often used Yes, I did recommend when customers ask the stapler and then Owner of CR Viet Thy: the customer bought one, but they Ms Thy haven't bought it again for a long time Yes, I introduced when the customer asked for a stapler, but Owner of CR Ba Nhat: the customer refused, I also let Mr Rang customer try it, the customer said the price was too high, just using regular stapler was enough Yes, I introduced it when the customer asked for a stapler, but Owner of CR Song Ma: the customer didn't buy, I also Ms Tien introduced the feature but the customer said it was not necessary Yes, I did recommend when customers asked to buy the stapler Owner of CR Nguyen and then the customer bought one, Vinh: Mr Vinh but the next time they ordered, they did not buy the stapler again 38 No, I not recommend this product when customers ask for stapler because customers are Owner of CR Phuong familiar with the regular stapler, Dong: Ms Manh and this stapler is easier to sell, recently there was a promotion, so I bought this stapler to sell Yes, I did introduce when customers asked me stapler but they refused because it was not Owner of CR Dat Phu necessary I also introduced the Sa: Ms Phuong feature but the customers also refused because they said normal type is okay No, I not recommend when customers ask the stapler because 10 Owner of CR Kim Son they are only accustomed to use Sai Gon: Ms Loan regular stapler, so I recommend the regular stapler I know this stapler can staple many Do you know the sheets and lightly stapling feeling features of this smart stapler? Is Owner of CR Cao but the customers don't care much this smart stapler Vinh: Ms Hieu because they don't staple many more useful than sheets of paper, so they usually use regular stapler? regular stapler 39 I know this stapler can staple many Owner of CR Do Gia sheets, but customers don't ask Phat: Ms Hieu much about this demand I not know this product's Owner of CR Anh feature very well, I bought it to sell Hang: Ms Hang when customer ask I know the benefits of this product, Owner of CR Viet Thy: but most customers find it Ms Thy unnecessary I know the product feature, this Owner of CR Ba Nhat: product staples lightly and staples Mr Rang more sheets than usual but most customers not need it This product staples many sheets Owner of CR Song Ma: and less effort, but there are few Ms Tien customers to ask it I know this product feature, but Owner of CR Nguyen customers are familiar with the Vinh: Mr Vinh regular stapler and not want to change Owner of CR Phuong I know the product features but Dong: Ms Manh there are few customers to ask it Owner of CR Dat Phu I know but customers have little Sa: Ms Phuong demand for this product 40 I know that customers are 10 Owner of CR Kim Son accustomed to using regular Sai Gon: Ms Loan stapler products Yes, I know this product and its features, I ask the stapler that can Purchaser of Hao Tuan staple many paper sheets and the company (customer of CR seller recommended it to me, I also Cao Vinh): Ms Loan bought one for my company to try it Do you know this Yes, I know, the seller introduced Double A smart stapler? Do you Purchaser of Kim Hoan me, I heard this product is less know its benefits? Vu company (customer of effort and can staple many paper Do Gia Phat): Ms Huyen sheets but I have not seen and tried it yet Purchaser of Tan Thanh I not know this product What company (customer of does it like? Phuong Dong) My company usually switches to What cases your new products when the sellers are company replace Purchaser of Hao Tuan out of the products we are using, company (customer of CR they introduce other products but Cao Vinh): Ms Loan the price is not too higher than the the existing products to new products? In your old ones so I will not need to opinion, your submit to the superior for approval 41 company buy and again In addition, there are some use this product? cases that employees ask to buy new products at high prices like this smart stapler to help their work, then I have to submit to my superior for approval Double A smart stapler is a new, quality product, but the price is quite higher than the current stapler which the company is using My company does not know much about the benefits of this product, so we can only buy 1-2 pcs for trial first My company often buys new products when the staff recommends them and then I submit them to my superior for Purchaser of Kim Hoan approval This product is good and Vu company (customer of has more features than the regular Do Gia Phat): Ms Huyen staplers that we are using but the price is quite high In order to buy this product, I have to ask for approval from my superior It is very difficult for the upper level to 42 approve to buy this high price smart stapler, it is very new My company often switches to new products when the seller runs out of what we are using After being tested, I found this smart stapler is very good, the price is Purchaser of Tan Thanh quite high but we can buy a little company (customer of to try it This product is new so I Phuong Dong) not know and employees in the company have not proposed to buy this product If we know more about this product, we may buy to try it out I have sent every departments list of stationery to select products to What is the process Purchaser of Hao Tuan buy every month I then for buying company (customer of CR summarized, submitted to my boss stationery at your Cao Vinh): Ms Loan company? for approval and made a purchase after got approval 43 I request each departments of the company to submit a proposal of stationery products to buy every Purchaser of Kim Hoan month, I summarize the request Vu company (customer of from departments in the company, Do Gia Phat): Ms Huyen then submit it to the superior for approval After getting the approval, I will contact the supplier I summarized the list of stationery Purchaser of Tan Thanh to buy from each departments company (customer of every month, then get approval Phuong Dong): Ms Hue from my manager and then contact supplier to buy Double A can advertise on our Facebook, website Currently there Owner of CR Ba Nhat: are many customers visit our What you think Mr Rang website and facebook to find out Double A should products that they need to increase the awareness of smart We often use Zalo to contact stapler product to customers, send quotation by Owner of CR Phuong corporate endusers? email Therefore, we can introduce Dong: Ms Manh Double A smart stapler product by attaching this information to the 44 quotation, email or posting on zalo so that our customers can see the product We often contact customers via Zalo, email I can attach the information of Double A smart Owner of CR Dat Phu stapler products in the price list to Sa: Ms Phuong let customers know, and can post Zalo to help customers know more about this product Double A can advertise on our company's website and facebook Owner of CR Kim Son We can also post product photos Sai Gon: Ms Loan via Zalo to let more customers know about this new product of Double A In my opinion, Double A can advertise on our company's Catalogue so that many companies Director of CR Nhanh can aware this Double A smart Nhanh: Ms Loan stapler There are also stationery companies such as Thien Long, Plus that are advertising in our Catalogue Every year we print a 45 minimum of 30,000 catalogue and send to our customers Purchaser of Hao Tuan We order stationary by Zalo company (customer of CR messaging, email, phone Cao Vinh): Ms Loan How does your Purchaser of Kim Hoan company order Vu company (customer of stationary? Do Gia Phat): Ms Huyen We order by email Purchaser of Tan Thanh We order by email We us Zalo company (customer of when ask suppliers about new Phuong Dong) products Purchaser of Hao Tuan company (customer of CR I often use Facebook, Zalo Cao Vinh): Ms Loan Purchaser of Kim Hoan Which social media Vu company (customer of I often use Facebook, Zalo you use most? Do Gia Phat): Ms Huyen Purchaser of Tan Thanh company (customer of I often use Facebook, Zalo Phuong Dong) 46 In my opinion, the first option which advertise on corporate resellers' website, Facebook, catalogue, and Zalo App to increase the recognition of Double A smart stapler product is the best because it is consistent with the goal of Double A This mothod is better than the others because working with the seller to In your opinion, Double A Marketing advertise, the ads can reach which option is the Manager: Ms Phan Thi directly to 80% of Double A's best among the Kim Huong options? target customers In addition, we can take advantage of the relationship between the seller and the buyer so we can increase the number of sales faster In addition, Double A can increase the relationship with corporate resellers so that corporate resellers will focus on introducing Double A products 47 ... the data of interviewing 10 corporate resellers that have low sales Double A smart stapler, consumers of corporate reseller, Double A Marketing Manager and Double A Channel Development Manager... caused low sales volume at this channel 4.2 Low awareness for Double A smart stapler at Corporate Reseller? ??s Consumers According to Double A Marketing Manager, she said that corporate resellers have... low sales at corporate reseller channel because consumers has low awareness for Double A smart stapler POTENTAIL CAUSES Double A smart stapler is an innovative product compared to regular stapler