UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ PHAN DUY HIỂN IMPROVING PERFORMANCE OF LONG-TERM DEALERS: A STUDY OF SÔNG VÀM RICE COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2020 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ PHAN DUY HIỂN IMPROVING PERFORMANCE OF LONG-TERM DEALERS: A STUDY OF SÔNG VÀM RICE COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. NGUYỄN THỊ MAI TRANG Ho Chi Minh City – Year 2020 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Contents Executive Summary. 2 LIST OF TABLES. 3 LIST OF FIGURES .1 Sông Vàm Rice company .2 Organizational structure of Sông Vàm Rice .3 Mission of Sông Vàm Rice .4 Vision of Sông Vàm Rice .1 Vietnamese rice industry.2 Analyzing the competitors of Sông Vàm Rice .3 Customer segment of Sông Vàm Rice.
Symptom of Sông Vàm Rice.1 Possible problem 1: Slow in finding new dealers.2 Possible problem 2: Underperformance of long-term dealers.3 Possible problem 3: Some dealers stopped cooperation with Sông Vàm Rice by low sales revenues & profits. Identifying main problem. Exploration of causes.1 Lack of a trade marketing plan.2 Incentive policy is not enough to boost motivation of dealers.3 Inefficient training programs for dealers.4 Lack of modern technology and software to manage performance of sales team and dealers.5 Identifying main cause.1 Alternative solution 1: Cooperating with a marketing agency.2 Alternative solution 2: Recruiting a trade marketing manager.3 Alternative solution 3: Designing an effective trade marketing package for dealers by using current resources of sales and marketing department.4 Choosing the most suitable solution for Sông Vàm Rice. Action plan of organization.
52 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 75 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Executive Summary Sông Vàm Rice is a company working in the rice industry. It was established in 2016, the main business of the company is providing hygiene and speciality rice (products without pesticide residuals) for customers in Ho Chi Minh city. The company developed its distribution channel with the strategy: Focusing on cooperating with dealers.
However, the actual performance of dealers channel in 2019 was lower than the target of CEO. This affected sales revenues, profits and relationships between Sông Vàm Rice and its dealers. This study used secondary data, primary data of the company to explore the main problem it is facing: “ Underperformance of long-term dealers”. In which, the root cause was identified that the company lacked of a trade marketing plan to support long-term dealers.
Therefore, we proposed three alternative solutions to deal with the main problem by using qualitative research and quantitative research. These solutions could help the company improving performance of long-term dealers and build a sustainable relationship with them. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Acknowledgements I would like to say thank you very much to Dr. Nguyen Thi Mai Trang.
She is a dedicated teacher. Without her encouragements and guidance, I couldn’t complete the THESIS well. It was a pleasure for me to be your student in MBA class. Besides that, I would like to send my appreciation to other lecturers in ISB who taught me valuable knowledge and lessons in the course.
I would like to say thank you my family: parents, my younger brother, my aunts and especially my wife who supporting me during MBA course. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 1: Value proposition evaluation between Sông Vàm Rice and other competitors. Table 2: Competitive strength assessment between Sông Vàm Rice and other competitors. Table 3: Comparing actual performance against target of CEO in 2018 and 2019.
Table 4: Performance of 3 types of dealers and sales target of CEO in 2019. Table 5: Reasons to stop cooperation of dealers. Table 6: Effectiveness of marketing activities to support a dealer in Binh Thanh district in 2019. Table 7: Incentive policy for dealers of Sông Vàm Rice.
Table 8: Costs & benefits of solution 1. Table 9: Costs & benefits of solution 2. Table 10: 9 trade marketing packages were created by Orthogonal Design in SPSS. Table 11: Part-Worth scaling (Utility) for each factor level.
Table 12: Relative importance of each attribute. Table 13: Costs and benefits of solution 3. Table 14: Action plan of Sông Vàm Rice. Table 15: Secondary data collection.
Table 16: Primary data collection. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1: Organizational structure of Sông Vàm Rice. Figure 2: Sales & marketing department of Sông Vàm Rice in Ho Chi Minh city. Figure 3: Strategic group mapping.
Figure 4: Average sales quantity/channel/month of Sông Vàm Rice from 2017 to 2019. Figure 5: Proportion of each channel in average total sales quantity/month of Sông Vàm Rice in 2019. Figure 6: Comparing average actual performance/month against average target performance/month of CEO for dealers channel in 2017, 2018 and 2019. Figure 7: A diagram of symptom and possible problems of Sông Vàm Rice.
Figure 8: Value chain of Sông Vàm Rice. Figure 9: A model of key factors affecting relationship satisfaction. Figure 10: Final cause-effect map of Sông Vàm Rice. Figure 11: Trade marketing model.
Figure 12: New structure of sales and marketing department after recruiting a trade marketing manager. Figure 13: Trade Marketing Planning Framework. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Sông Vàm Rice company Sông Vàm Rice was established in 2016 with the purpose of business is bringing hygienic rice for customer’s family. The main business of Sông Vàm Rice is producing, manufacturing and distributing hygienic and speciality rice.
Main market of Sông Vàm Rice concentrated on big cities in Vietnam such as Ho Chi Minh city, Ha Noi and Da Nang. Initially, the company developed distribution channels in Ho Chi Minh city. Beside that, It had built two rice stores, one in Long An province and one in Ho Chi Minh city since 2017 to introduce and display the products to the customers. The factory of Sông Vàm Rice is located in Tan Tru district, Long An province.
In the value chain of Sông Vàm Rice, high quality of materials is one of the most important factor affecting the success of business. This could help the company producing high quality rice (rice with purity, color, fragrance and degree of stickiness) and guarantee the hygiene of the product for the customers ( rice without pesticide residuals). Therefore, the company put many efforts to establish a sustainable relationship with farmers in Long An province and Mekong Delta to grow hygienic rice in these areas. Agriculture engineers of the company will consult the efficient process to grow rice for the farmers and supervise activities during harvest.
The company will sign long-term contract with leaders of cooperative farmers groups to buy all paddy when harvest comes, usually the price offered by Sông Vàm Rice for farmers was higher than the price of the market from 500,000 VND/ton. This would help the farmers gaining more sustainable benefits. Meanwhile, Sông Vàm Rice has a good source of materials to produce high quality rice without pesticide residuals. It is a competitive advanatage for the company when comparing with other rivals in the market.
In the business model of Sông Vàm Rice, the company is not the first-mover in rice brand industry, so CEO chose the strategy: “best-cost provider” to compete in the market. It means Sông Vàm Rice provides high quality and hygienic rice (some main characteristics: the purity, color, fragrance, stickiness and without pesticide residuals) with a reasonable price compares to other competitors in the rice industry. A strong distribution channel plays a vital role in the success of any companies. Instead of competing directly with big competitors such as Hat Ngoc Troi rice, Minh Tam rice in MT (modern trade) channel such as supermarket (Big C, Coopmart, MM supermarket) or big grocery stores (Vinmart, Bach Hoa Xanh, CoopFood), the strategy of Sông Vàm Rice is attacking the potential market in apartment areas or residential areas through cooperating 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com with dealers in these areas where the competition is not fierce to gain the market share quickly.
Salesmen of Sông Vàm Rice will be repsonsible for finding potential dealers in these areas to cooperate with them. Dealers could be traditional rice stores, family-owned grocery store or people live in the residential and apartment building area. They have a place to store and sell rice for the customers or they have many relationship in their living area, especially, they would like to earn extra income for their family. Salesmen of Sông Vàm Rice will introduce sales policy of the company, consult dealers about the products knowledge about rice industry as well as rice production process in factory, process of growing rice.
Moreover, salesmen cooperate closely with marketing employees to organize trade marketing activities to support dealers such as sampling, promotion program, point of sales materials, standee to boost the revenue and profit for sellers. This strategy could help Sông Vàm Rice gain market share quickly before big competitors start to attack this distribution channel. Besides that, Sông Vàm Rice diversified its distribution channel to protect the business through signing long-term contract with companies, restaurants and schools in Ho Chi Minh city who have demand for hygienic rice. It could help the company having sustainable profit.
Therefore, the performance and cooperation of sales team and marketing employees had a huge positive impact on the success of Sông Vàm Rice. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 Organizational structure of Sông Vàm Rice Sông Vàm Rice is a small company. Total employees of the company is 25. Accounting & finance department (4 people), company service department ( 2 people), technical & production department (5 people), warehouse and procument department (5 people), sales & marketing department (9 people).
CEO Operational Business development department department (6 people) (19 people) Account & Technical & Finance Production department department (4 people) (5 people) Company Warehouse and service procument department department (2 people) (5 people) Sales & Marketing department (9 people) Figure 1: Organizational structure of Sông Vàm Rice. Source: Sông Vàm Rice profile. As mentioned above, the strategy of Sông Vàm Rice is not competing directly with big competitors with large resources as Hat Ngoc Troi rice, Minh Tam Rice in MT channel (supermarket, grocery store chain like Coopmart, CoopFood, Bach Hoa Xanh). Initially, the company developed its distribution channel by finding potential dealers in residential areas or apartment buildings in Ho Chi Minh city.
Hence, the role of salesmen and marketing employees 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com is very crucial in the development of the company. They need to find potential dealers to cooperate, boosting sales revenues through marketing activities to achieve target of CEO. That is the reason why we need to understand deeply the organizational structure and the working process of this department to enhance the performance of the company. Sales manager (1 person) Marketing employees (3 Salesmen (5 people) people) Content (1 person) Trade marketing (2 people) Figure 2: The organizational structure of sales & marketing department in Ho Chi Minh city of Sông Vàm Rice.
Source: Sông Vàm Rice internal report in 2019. Sales & marketing department consists of 9 people, they have responsibility to expand market share of Sông Vàm Rice in Ho Chi Minh city. Sales manager will handle all members in this department and offer a plan for CEO to increase sales revenue. Besides that, Sông Vàm Rice has 5 salesmen to develop its business by finding potential dealers and taking care of them.
Marketing employees will cooperate with salesmen to execute marketing activities to not only support salesmen and dealers but also build the brand of Sông Vàm Rice. Salesmen will report the sales data and performance of dealers for sales manager.