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 TIEU LUAN MOI download : skknchat@gmail.com 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. Nguyen Thi Mai Trang Ho Chi Minh City – Year 2019 TIEU LUAN MOI download : skknchat@gmail.com 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.
3 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT Without the encouragement, guidance and support for Assoc. 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. 4 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS EXECUTIVE SUMMARY. Company overview: Valvoline global lubricant market .2 Sales and market share in Viet Nam market .3 Valvoline Distribution Channel in Viet Nam market .5 The relationship of Valvoline and Dai Thang .7 Problem finding process .1 Reducing primary and secondary sales from 2015-2019 .2 Customer„s complaint in Vung Tau (South East) seriously from Oct 2018 until now…………………………………………………………………………………. Initial identification of problem .1 The first potential problem: Limitation of Valvoline supplier in packaging/colour of Valvoline product .3 The third potential problem: Competitors brand switching .4 Justify the existence of “Dissatisfaction at internal policies leading to brand switching” .5 Justify the importance of “Dissatisfaction at internal policies leading to brand switching” .1 The selling prices of Dai Thang is higher than other competitors with same specification and other Valvoline importers.
28 5 TIEU LUAN MOI download : skknchat@gmail.3 Ineffective sales promotion program than other competitors .7 Validation main cause and solution proposal. Design solution for solving problem. The first alternative solution: a discount program by accumulate points……….2 The second alternative up “My Loyalty Program” and organize workshop………36 3. Definition of “Loyalty Program”………………………………………… ….
Importance of “Loyalty Program‟‟. Loyalty Program steps .1 My Loyalty Program‟s action plan .2 Effectiveness measurement after taking action plan .65 6 TIEU LUAN MOI download : skknchat@gmail.com LISTS OF TABLES Table 1. Segment Breakdown of all Valvoline importers in Viet Nam market Table 2. Feedback‟s Customer Table 3.
Mr Nhuc‟s Actual sales volumes Table 4. Mr Vu‟s Actual sales volumes Table 5. Selling prices for Mr Le Anh Vu Table 6. Comparation Valvoline prices of Dai Thang and Sam Chem Table 7.
The selling prices between Castrol and Valvoline Table 8. Volume for loyalty program Table 9. Action Plan LIST OF FIGURES Figure 1. Valvoline Business Segment 2016 Figure 2.
Market shares of lubricating oil in Viet Nam market in 2018 Figure 3. Valvoline importers ‟s volume in Viet Nam 2018 Figure 4. Dai Thang‟s sales channel distribution Figure 5. Review Sales out and Sales in from 2015 to 2018 Figure 6.
Review Sales out and Sales in from 2015 to 2018 Figure 7. Initial cause-effect map Figure 8. Updated cause effect map Figure 9. Final cause-effect map Figure 10.
Solution map 7 TIEU LUAN MOI download : skknchat@gmail. 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.
3 passenger car motor oil brand in the DIY market by volume. It also operates and franchises the No. 2 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. 3 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% 24% International Figure 1. Valvoline Business Segment 2016 (Source: Valvoline website) 8 TIEU LUAN MOI download : skknchat@gmail.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 Shell, Total, Motul, 24% Caltex PLC 41% Others 23% 12% Figure 2. 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 8 importers in expectation to take market share. Dai Thang Co. Cummins Viet Nam 3.
Nam My Co. Sam Chem Co. Sy Viet Co. Hung Minh Loi.
Corporation Engineering Plastic and Hai Phong 9 TIEU LUAN MOI download : skknchat@gmail.com 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. 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 4 regions: South Central Coast, Central Highland, South East and Mekong Delta. To understand clearly, segment breakdown of all Valvoline importers is shown in Table 1 below. 10 TIEU LUAN MOI download : skknchat@gmail.
Segment Breakdown of all Valvoline importers in Viet Nam market South Red River Central South Melkong No Company Name Segment Northeast Northwest Central Delta Highland East Delta Coast Fishing 3 3 3 3 1 Dai Thang Fleet 3 3 3 3 Cummins 2 Cummins powered 3 3 3 3 3 3 3 base 3 Nam My PC; MCO 3 3 3 3 3 3 3 4 Sy Viet PC; MCO 3 3 3 3 3 3 3 5 Hai Phong 3 6 ANT MCO 3 3 Industrial 7 Sam Chem 3 3 3 3 Oils/ Fleet Industrial 8 Hung Minh Loi 3 3 Oils/ Fleet (Source: Sales Deparment) 1.5 The relationship of Valvoline and Dai Thang Firstly, Valvoline hereby appoints Dai Thang to act as “non-exclusive distributor” of Valvoline from Da Nang to Ca Mau. Valvoline divides in two kinds of distributors: exclusive distributor and non-exclusive distributor. Basing on distributor agreement, “Non-exclusive distributor” means that Valvoline retains the right to sell and to supply the products itself directly (i. without involvement of distributor) or through other intermediaries to the customers in the territory.
If Valvoline supplies any products directly or through third parties, distributor shall not be entitled to any commission or any other compensation relating to such supply. Dai Thang has been working and cooperating and has the long-term partnership with Valvoline for more than 10 years. Currently, Dai 11 TIEU LUAN MOI download : skknchat@gmail.com Thang‟s sales target takes account around 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 oil industry means that customer segmentation are trucks; container etc. and marine segmentation means that Dai Thang distributes for ship-owners, boat etc. Dai Thang distributes Valvoline products for dealers from Da Nang to Ca Mau province and these dealers will distributed for end-users.
The main end-users are ship-owners; trucks; containers, and passenger cars etc. Valvoline Dai Thang Dealer 1 Dealer 2 Dealer 3 End-user 1 End-user 2 End-user 3 Figure 4. Dai Thang‟s sales channel distribution (Source: Sales Department 2018) 1.6 Competitive advantage Our company‟s competitive advantage is expressed that Dai Thang distributes high quality products and a reputation brand and high-quality products because of some outstanding points. First of all, in 1993, the American Petroleum Institute (API) categorized base oils into five main groups: Group I; Group II; Group III; Group IV and 12 TIEU LUAN MOI download : skknchat@gmail.
This breakdown is based on the refining method and the base oil‟s properties in terms of viscosity and the proportion of saturates and sulfur content. Valvoline are manufactured by Group II and Group III base oils which are key components of higher quality lubricants while other products can use base oil Group I such as some local products such as Vilube. Secondly, Valvoline products are exclusively recommended and endorsed by Cummins which is the biggest engine oil in USA. Thirdly, Valvoline product is approved by American Petroleum Institute (API) which is a standard and certification for lubricating oil with high-quality.7 Problem finding process To finding main problem at Dai Thang Co., Ltd, the below steps are carried out: - Refering the primary report from about “ sales volume” from Sales Department - Conducting in-depth interview with Sales Manager and key customers in Vung Tau to clarify about the symptom and explore potential problems.
- Referring literatures to prove and update the cause-consequences relation between potential problems,variables and symptom. Meanwhile, double check the actual situation at Dai Thang Co., Ltd to understand correctly what happened. - Conducting in-depth interview again to validate the existence of central problem. - Referring literatures to understand the consequences of the central problem (the importance of solving it) and continue using in-depth interview to validate the actual importance of solving it.8 Symptoms After meetings with Sales Department Team, Dai Thang business was not good from 2018 up to now.
Secondary data and primary data will be analyzed and justified the existence of Dai Thang‟s symptoms and find out negative symptoms. 13 TIEU LUAN MOI download : skknchat@gmail.1 Reducing primary and secondary sales from 2015-2019 Sales Department provided the data of primary sales and secondary sales from 2015 to 2019. Based on figure 5 and figure 6, we can see the general picture about Dai Thang business clearly from 2015 and 2018. Primary sales is the term means Dai Thang buys from Valvoline supplier and secondary sales means that Dai Thang sells Valvoline products to customers.
Firstly, compared to 2015, primary sales in 2016 increased 12%. Similarly, primary sales in 2017 also increased 8%. However, in 2018, primary sales reduced 17%.