Managing retail customers at duong minh phuc company limited

MASTEROFBUSINESS ADMINISTRATION HoChiMinhCity–Year2017... MASTEROFBUSINESS ADMINISTRATION SUPERVISOR:Prof.TranHaMinh Quan HoChiMinhCity–Year2017... Unfairly competeLow buyers satisfactio

MASTEROFBUSINESS ADMINISTRATION

HoChiMinhCity–Year2017

MASTEROFBUSINESS ADMINISTRATION

SUPERVISOR:Prof.TranHaMinh Quan

HoChiMinhCity–Year2017

 Remarksontheassignment’sacademicquality:

reductionofexistingcustomersandthepossibilityofnewbuyerattraction.InordertodiscovertheissuesthatD M P i s f a c i n g , t h e surveya b o u t c u s t o m e r s ’ s a t i s f a c t i o n a n d t h o

u g h t s h a s b e e n t a k e n DMPh a d o r g a n i z e d s o m e meetingsw i t h S a l e s d e p a r t m e

n t , M a r k e t i n g d e p a r t m e n t a n d c o m p a n y CEOtoresearchandanalyzethesurvey’sresult.DMPhasusedthetheoryo f MichaelPorterreferredto"Porter'sFiveCompetitiveP r e ssu r e" todeterminethecompetitivepressurethatthecompanyisfacinginrecentdays.A f t er interviewingsomepotential

consumers,DMPhasfoundoutsomereasonablef a c t o r s t h a t madet h e s a l e s i n p r o d u c t

r e d u c e d T h e mainr e a s o n isd u e t o c u s t o m e r s ’ di ssat isf act ion andthepenetrationofnewsubstitutes.Interviewershavecomplaintaboutth e a t t i t u d e o f c o m p a n y s t

a f f a s w e l l a s thepromotionf o r o l d b u y e r s D M P h a s n o t f o c u s e d muchonmarketingstrategywhenitcomestohouseholdconsumersegment;asar e s u l t , theexistingcustomerstendtochooseotherdistributorsforthegascylinder

However,theproblemandcauseitselfmaynotcorrectandappropriateduetothelimitedinterviewera n d thefluctuationofmarket.Becauseofthelimitedresourcesandtime,D M P onlyinterviewedsomepotentialconsumers,whichmayresultinthesubjectiveandt h e r e isnoguaranteethatanswerstodeterminethewholeproblemofcompanyisvalidan d reliable.Therefore,managersofalldepartmentwillanalyzetheproblemandcausec a r e f u l l y andspecificallytofindsolutionsforeachissues.Thesolutionswillmainlyfocuso n h o w t o

i m p r o v e a n d d e v e l o p t h e c u s t o m e r s ’ s e r v i c e a n d marketingtheproduct,e s p e c i a l l y intrainingthestaffs,promotionprogramsandhasastraightplanforthefuture

EngineerSales Accounting Logistics

Withasmallscaleoffewerthan10employees,DMP

iscategorizedassmallandmediumenterprises( S M E s ) C o n s e q u e n t l y , D M P ’ s o r

g a n i z a t i o n s t r u c t u r e i s e x t r e m e l y s i m p l e w h i c h issuitableforitsoperationsincethecompanyneedsflexibleandefficientm a n a g e m e n t s T h e chartoforganizationisasfollows:

• Income:loworhigh

b u y services.Thus,DMPhastolearna n d forecastthecompetitors’strategy onthewayofmakingitsownplantogainmoremarkets h a r e a s i t i s a n e w enterprisei n HoC h i

M i n h market.T h e r e f o r e , f o r e c a s t i n g methodisconsidertobethekeyfactorforthecompany’scomparativeadvantage

Furthermore,a t t r a c t i n g a n d r e t a i n i n g t a l e n t e d e m p l o y e e s i s a n o b v i o u s c h a l l e

n g e Keypersonnelw h o impactt h e b u s i n e s s ’ a b i l i t y t o d e l i v e r c u s t o m e r s e r

v i c e s h o u l d n o t ber e p l a c e d r e g u l a r l y i n o r d e r t o a v o i d i n t e r r u p t i o n i n k

e e p i n g c o n t a c t s w i t h c u s t o m e r s S e n i o r managershouldconcentratenotonlyonconsumers,butalsoontheiremployeesby

u a n t i t y w it hi n 6 monthsonly,f r o m 15to32clients.DMPexperiencedapeakofthisnumberfromthelastquarterof2016tothefirstmonthofnextyear.However,thefiguresbegantodecreasefrom50to4 3s i n c e t h e b e g i n n i n g o f 2 0 1 7 T h i s s t i l l c o u n t e

d t o b e a g o o d performancef o r t h e c o m p a n y sincethenumberof

customersofDMPinJune2017wasbynearlytripleofthatinJune2015

Althoughthereismoregrowththanwhen

thecompanyfirstenteredthemarketinHoChiM i n h City,thenumberofcustomersin2017comparedto2016hasdroppedsignificantly( f r o m 50to43).ThisshowsthatcompanyDMPhasineffectivebusinessstrategiesthatlead tocustomerdissatisfaction,therebylosingasignificantnumberofcustomers.Pricingstrategies,marketingorafter-

buyservicearealsooneofthekeypointsformanycompaniestodaytoretaintheircustomers.However,perhapswithsomewrongstepsin

r e l i a b i l i t y a r e a l s o o n e o f t h e keyf a c t o r s t h a t h e l p t h e c o m p a n y g a i n t h e t r u s t

o f o t h e r s Witht h e f i e r c e l y com pe ti ti ve g a s m a r k e t i n H o C h i M i n h City,D M P n

e e d s t o improveitsdesignandproductqualitytomatchthetastesofitscustomersaswellascatchu pwithitscompetitors

Thel i n e g r a p h p r e s e n t s t h e a v e r a g e t u r n o v e r o f g a s c y l i n d e r s fromJ u n e 2 0 1 5 t o

J u n e 2 01 7 Overall,therewasamoderatedropinthisnumberoverthepasttwoyears.Ithasb e e n significantlylengthened from0.75–1.0monthsto1.5–3monthsforaconsumertoassumeonecylinderofgassinceJune2016tocurrent.Itmeansthatthegascylinderstob e consumedinamonthhasgonedownfrom1unitpermonthtoonly0.3unitpermonth.P a r t ofthereasonforthissituationisbecausethebusinesspolicyofthecompanyhasnotr e a

l l y suitedtotheconsumermarketinHoChiMinhCity.Themarketsaturationat1.0u n i t inthefirstyearwhenthecompanyjustenteredthemarketisunderstandable,becausetheyofferedanewproduct, sothe marketneeds timetoadaptandtrust However, the

sharpdeclinefromthehighestpointtothelowestinthetwoyearsfrom2016to2017isveryworrying

Therootoftheproblemisvariouschoicesin replacementofgassuchaselectronicstoveso r f o o d d e l i v e r y a s i t s m o r e c o n v e n i e n c e T e c h n o l o g y p r o d u c t s a r e i

n c r e a s i n g l y d e v e l o p e d andwidespread,makinggasappliancesbecomeobsoleteinmajorcities.T r e n d s incookingutensilsaswellasconsumers'eatingpatternshavegreatlyinfluencedc o n s u m e r s ' perceptionsabouttheuseofgas.Inaddition,thecompetitionintheindustryisq u i t e afactorthatmakesthemarketsharedeclinesignificantly.Astheeconomygrows,t h e gasmarketisalsoexpanding,manyenterprisesentertheindustry,givingcustomersmorechoices.Asaresult,DMP'sstrategiesarenolongerrelevanttothesector'scompetition andlosemuchofitsmarketshare

Thisp u t s f i n a n c i a l b u r d e n o n t h e b u s i n e s s o p e r a t i o n d u e tot h e i n c r e a s e o n

w e i g h t e d av er ag e costofcapital(i.e spendingmoretoordermore cylinders).DMPshouldhave morestringentcostcontrolpoliciesinthecomingyears.Becausethedeclineinmarkets h a r e haspartlyincreasedfixedcosts,thefinancialburdenofthecompanyhasincreasedrespectively

Sales Revenue (million VND)

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarA p r May Jun

2,84 2,84 2,84 5,01 5,01 6,41 6,41 11,4 11,4 11,4 8,01 8,01 5,376,01 6,01 3,84 3,84 4,08 4,08 10,2 8,77 8,153,26 3,26 3,26 3,61 3,61 3,61 6,02 6,02 8,18 8,18 14,5 14,5 14,3 10,1 10,1 6,777,58 7,52 4,49 4,81 5,45 5,45 14,4 12,4 12,95,16 4,95 4,95

Figure2.2CostofgoodssalesandSalesRevenuefromJune2015toJune2017

r al , thecostandrevenue ofthe companyincreaseda n n u a l l y C osts andsalesofthecompany bothhavethe highes

ts c o r e of11.4 &14.5respectivelyin2016 and10.2 &14.4in 2017.Although revenueisalwayshigherthancostsinthepastt h r e e years,butthisisstillnotapositivesignwhenrevenuecontinuedtofallsharplylastyear.Asmentionedabove,ther e d u c t i o n inmarketshareleadstohighercostsduetofixedcostsoftheproduct.Overtime,therateofrevenuegrowthwillnotbegreaterthantherateofincreaseincosts,leadingtolossesofthecompany.Thechartaboveshowshowthedeclineinsaleswillaffectprofitability,asthecompany'srevenuehasfluctuatedsignificantlyovertheyearsandthecompany'sprofith a s

a l s o decreased.Althoughthenumberofcustomershasbeenincreasingformonths,theprofitgainedhasnotbeenrisingaccordingly.Increasingcostovertheyearsandreducingrevenueisonereasonforthis,DMPhasbeentryingtoovercomet h e s e costsaswellasattractmorecustomerswithpreferentialpolicies,

keepinginmindtheaimofincreasingandstabilizingmarketshareofthehouseholdconsumersegment

3 Competitiverivalry:Themaindriveristhenumberandcapabilityofcompetitorsint h

e market.Manycompetitors,offeringundifferentiatedproductsandservices,willr e d u c emarketattractiveness

4 Threatofsubstitution:Whereclosesubstituteproductsexistinamarket,itincreasest h

e likelihoodofcustomersswitchingtoalternativesinresponsetopriceincreases.Thisreducesboththepowerofsuppliersandtheattractivenessofthemarket

Unfairly compete

Low buyers satisfaction Low buyers’ awareness High cost of refilling

New substitutes

5 Threato f n e w e n t r y :Profitablemarketsa t t r a c t n e w e n t r a n t s , w h i c h e r o d

e s p r o f i t a b i l i t y Unlessincumbentshavestrong anddurablebarrierstoentry,forexample,patents,economiesofscale,capitalrequirementsorgovernmentpolicies,thenp r

3.1 Supplierpower

ofatleast300m3;thequantityo f bottlesofallkindseligibleforcirculationo n t h e m a r k e t s

h a l l b e o w n e d byt r a d e r s w i t h a t o t a l t o n n a g e o f a t l e a s t 2 , 6 2 0 , 0 0 0

l i t e r s ( e q u i v a l e n t t o 1 0 0 , 0 0 0 b o t t l e s o f 12kg gradegas cylinders)tobelicensedf o r operationonmarket(2).Thoughtherearemanyopinionsandappeals,thisDecreeissti ll a p p l i e d b e c a u s e noo t h e r D e c r e e h a s b e e n r e p l a c e d r e c e n t l y T h i

s h a s n e g a t i v e l y impactedthecostoftheDMPwhentheypreviouslyjusthadtoinvestcertaincapitaltomeettheconditionsthatthegovernmentoffered,butnowthecosthasincreasedsteadilya s the governmentchangedandtightenedregulations.Thecostcontrolproblemisalways

difficultf o r a l l b u s i n e s s e s a n d t h a t i s n o e x c e p t i o n f o r D M P , s o c u t t i n g d

o w n s o m e u n n e c e s s a r y costswillbethestrategythatDMPislookingforwardtointhefuture.3.2 Buyerpower.

Thec o n c e p t o f ‘ s u p p l e m e n t a r y c u s t o m e r s e r v i c e s ’ i n t r o d u c e byP a r a s h

u r a m a n ( 1 9 9 8 ) d ef in es t h o s e s e r v i c e s a s o n e s f r e e ofcharge,a t t a c h e d t o

t h e c o r e p r o d u c t s a n d / o r services.Swoboda(3)e ta l

( 2 0 0 7 ) s u g g e s t s t h a t s e r v i c e i s t h e m o s t v i t a l e l e m e n t i n b u i l d i n g andfosteringabrandbesidesothercriteriasuchasvalue,assortment,advertisingan d storedesign.Infact,DMPhasnotcreateditsgreatdifferencesfromitscompetitorst o improveitsimageorbrandidentityincustomers’perception.T h e customerservicesa r e notrich enoughto

policiestotr eat itsloyaltycustomers,whichmakesthemfeelunsatisfiedtocontinuetouseDMP’sp r od u c t s andservicesandtheyeasilymoveontoacompetitor’soffer.Also,therearenostrategicpromotionandadvertisementtointroducewidelyitsbrandname

Thep r o b l e m s a r e d u e t o t h e l a c k o f p r o f e s s i o n a l i s m a n d l o w l e v e l o f e x p e r t i s e

o f t h e companystaff.BecauseDMPisasmallandmediumenterprise,theshortageofhumanr e s o u r c e s h a s l e d t o m a n y l o w -

s k i l l e d e m p l o y e e s b e i n g r e c r u i t e d F o r t h e marketingdepartment,M a r k e t

i n g s t a f f d o n o t r e a l l y u n d e r s t a n d a n d r e s e a r c h t h e t r e n d o f p r i c e f l u c t

u a t i o n o f t h e market.I n a d d i t i o n , t h e c o m p a n y d o n o t s t r o n g l y p a i d a t t e n t

i o n i n promotionprogramsandpresentsforoldconsumersinholidays.Moreover,thefinancial

o t h e company.Theys i m p l y d o t h e i r a s s i g n e d t a s k s w i t h i n normalworkinghourswithouttheintentionsofbeingmoreactiveintheirwork.Interviewoneofcurrentcustomers,itcouldberecognizedthatDMPislosingtheirloyalcustomersbylackoffrequentandstableinteractionswithcustomers.

Inaddition,part-timeemployeesdonothavetheexpertiseandprofessionalismneededtos e r v e thejobintheDMP.Morethan60%ofDMPemployeesarepart-

timeemployees,r esu lt in g inthelackofstabilityandcohesivenesswithinthecompany'spersonnel,whichmadet h e D M P d o e s n o t a d d r e s s t h e p r o b l e m a n d meett h e n e e

d s o f t h e i r c u s t o m e r s leadingtoasignificantlossinthenumberofpotentialcustomers.Mos

tofthepart-timeemployeesa r e e i t h e r freshmeno r g r a d u a t e , s o theyh a v e n o t h a d t h e e x

p e r i e n c e inc o m m u n i c a t i n g ortakingcareofclients.Theclearevidenceisshowninthemajorityofsurveyedclientssaidtheywerenotsatisfiedwiththebehaviorsandinformationprovided

byt h e c o m p a n y ' s e m p l o y e e s F u r t h e r m o r e , t h e a t t i t u d e o f employeesi s a l

s o t h e c o r e factorintheprocessofcontactandcustomersservice.Asmentionedabove,someinterviewerscomplainedthattheattitudesofDMPstaffwerenotpositiveandproactivelyp r o v i

d e d thenecessarymeasuresorinformationthattheclientrequested.Moreover,someemployeesa

r e u n c o m f o r t a b l e a n d d o n o t w a n t t o i n t e r a c t w i t h thec o n s u m e r s T h e s e

f a c t o r s havecreatedtheweakpointofDMPininformationtransferandinteractionwithcustomers.W h i l e o t h e r c o m p e t i t o r s a r e p u s h i n g f o r c u s t o m e r c a r e , D M P seemst o b e q u i t e distractedandhasnotreallyfocusedonthissegment.Thisisanothercriticalissuethatthecompanyisfacinginmeetingthecustomersatisfactions

yw o r d o f

-m o u t h , a c c o r d i n g toB o w e n a n d C h e n , 2 0 0 1 ; Fecikova,2004.InVietna-m,followingthecrowdandwordofmouthareoneofthebestto o l s t h a t L P G c o m p a n i e s u s e

t o b u i l d t h e i r r e p u t a t i o n a n d p r o d u c t b r a n d I n a d d i t i o n , with t h e s e t o o l s , L P

G c o m p a n i e s c a n s a v e m o n e y and h a v e a n e c o n o m i c a l b u d g e t f o r promotingt h

e c o m p a n y ' s i m a g e C u s t o m e r l o y a l t y a n d s a t i s f a c t i o n a r e t h e t w o maind e t e r m i n a n t s o f t h i s f r e e t o o l E s p e c i a l l y i n t h e h o u s e h o l d s e g m e n t , w

h e r e c o n s u m e r s s h o p mainlythroughwordofmouthandlistentotheexperiencesofprevioususers,thel o y a l t y oftheoldandnewcustomersmustalwaysbeputinhighconcernandpriority.

DMPhas no tbrought i t s cu st ome rs sales p ro mo ti on or loyalty programmes,wh i

ch are o n e of

theminuspointscomparingtothecompetitors.Thisisquiteunderstandable,asthemainmarketforDMPisnotonlyconcentratedontheconsumersegmentbutalsoontheindustrialsegment.Duetothecompany'slimitedresources,DMPhasnotreallyfocusedo n investinginmarketingandpromotionprogramstogainloyalty.Moreover,sincethecompanyhasonlyp

e n e t r a t e d themarketfortwoyears,itisdifficulttoavoidtheu n c e r t a i n t i e s andchallengesinoperationals t r u c t u r e ofthegasmarket inHoChiMinhCity.Thecompanyhasdifferentmarketingprogramssuchasgifts,coupons,etcsofar,b u t DMPjustfocusedonrunningmarketingcampaignsforlongtimeandfamiliarcustomerswithoutattractingthenewconsumer.Inthehouseholdsegment,theacquisitiono f loyaltyofnewcustomershasnotbeentakeninadvance,sowithdifferentmarketing strategiesf r o m competingcompanies,DMPhaslosta lotofopportunitiestog a i n theloyalcustomers

u s i n g i n j u r i e s o r e v e n f a t a l i t i e s Asa r e s u l t , customerswilltendtofindretailerswhoprovidethemwiththeproductsorservicesatthemostcompetitivepricesinsteadofkeepingusingqualitybrandslikeDMP

Additionally,f o r s a v i n g c o s t s , s o m e u n s t a n d a r d i z e d p r o v i d e r s usemanuala n

d u n s a f e techniquestoexactgasolinetocylinders,whichdeclinesingasolinequality(thec o n

c e n t r a t i o n ofC2+,C5+)andisalsopotentialdangerstoconsumers.Competitorscanu s

e cheapbutinexpensivegasvalvesortubestomanufactureandassemblegascylinders

s e h o l d i n V i n h P h u c prov in ce, whichhasleftonedead

andtwoseriouslyinjured.OrthefireinThanh

Hoaduet o thequalityofthegasvalveburnedmanyassetsofafamilyandcause3peopleinjured.B

o t h c a s e s a r e onlyp a r t o f t h e i r r e s p o n s i b i l i t y o f g a s t a n k m a n u f a c t u r e r

s a s w e l l ascustomersubjectivity.Buildingcustomerperceptionsisanimportantstepintheprocesso f gainingtrustandloyalty.Therefore,DMPcompaniesneedstrategiestoattractcustomerswithpromotional andadvertising pr om ot io ns Extensive levelsofsafety andq u a l i t y ofproducts, fromwhichtheconsumerperceptionnotonlyintermsofpricebutalsoinqualityofproducts

3.3 Competitiverivalry

3.3.1 Pricing strategy

Pricinghasbeenwidelyinvestigatedbypast-to-presentresearchers.Amongthosestudiesa r e thepointofview’sDolanandSimon,1996;GaborandGranger,1966whichconsidersthepriceasafactorofpositioningabrandinthemarketaswellasatoolforcustomerstomeasurethebrand(5 ).DMP’s keymarketisfocusingontheareasofBinhT h a n h , andGoVapDistrictwherehundredsofsmallandmediumgasolineretailershaveestablishedtheirpresenceinthemarket.Accordingtostatistics,thereare31mainc

o m p e t i t o r s whoprovidecustomerswithsimilarproductsandservices,whichconsidertob eamajornumber.BinhThanh,andGoVapDistrictaretworelativelydenselypopulateda n d l a b o r -

d o m i n a t e d a r e as T h e r e f o r e , p r i c e s t r a t e g y ist h e mosti m p o r t a n t w h e n D M P wantstogainmarketshareintheseareas.ThemorecompaniesenterthemarketinHo

ChiM i n h City,e s p e c i a l l y i n t h e s e t w o a r e a s , t h e h i g h e r t h e c o m p e t i t i o

n r a t e o f t h e industry.C onse que nt ly , witht he company's l im it ed financial r e s o

u r c e s , DMP hasbeen r e s e a r c h i n g andsurveyingconsumersforpricestohaveeffectiveinsightsandstrategiestargetedatthistargetmarket

MrsNguyenThiTam–aconsumerinBinhThanhsharedthat:

Gasolineisanecessitytomostfamiliesfordailycooking.Thus,expendituresfort h istypeofgoodstakeaconsiderationfromhousewiveseconomically.Theytendtob uyLPGatacompetitiveprice.

MrsVoNgocUyen–

asinglemomwith2daughterslivinginbusyresidenceinGoVapexpressedherconcernopenly:

Despiteofworryingthetruthof“yougetwhatyoupayfor”,shestillhadtosett ightb u d g e t o n s p e n d i n g b e c a u s e s h e h a d t o s t r u g g l e w i t h a single- moml i f e Hence, shesurelychoosedistributorswhoofferthecheapestproductsor attachedg if t s totheirgoods.

Accordingt o s t a t i s t i c s , 7 0 p e r c e n t o f r e s p o n d e n t s s h o w t h e i r i d e a s o f p r i o r i t i

z i n g t h e cheapestg a s o l i n e T h e r e s u l t i s u n d e r s t a n d a b l e b e c a u s e V i e t n a

m i s s t i l l a d e v e l o p i n g countrywith80%oftheagriculturalsector's primaryincome.Therefore,thepercapitaincomeo f t h e V i e t n a m e s e p e o p l e i s s t i l l ata n a

%

saidincomesarenotenoughtoliveon(7).Afterstudyingandanalyzingt h e s e statistics,LPGcompaniesinthemarketoftenfocusonpricestrategywhencompetingi n t h e m a r k e t I n p a

r t b e c a u s e g a s cylindersa r e c o n s u m e r g o o d s , f o r t h e

householdc o n s u m e r t h e p ri ce i s a v it al f ac t o r whe nc h o o s i n g top u r c h a s e t h e p r o

ofnumerouscylindersofgas.Onlywhenthecompanyrealizedthedeclineofgascylindersandsents t a f f totest,fromwhichtheruseofthenewrivalswerediscovered.Eventhoughitwasdiscoveredea rl y on,DM P co u l d no tc o n t r o l the q uan ti ty andkeeptr ack

o f th e displacement ofgascylinders,whichledtoanincreaseinthecostofpurchasingnewgascylindersandstaffcostsforcheckingthepackages.Eventually, theincreaseinproductc o s t s l e a d i n g t o t h e r i s e i n p r i c e a n d t h e d r o p i n m a r k e t s h a r e t h a t D

M P g a i n e d Asmentionedabove,in thehouseholdsegment,thepricefactorisoneofthedeterminantsoft h e company'spositioning.Thisisoneoftheissuesthatthecompanyneedstosetouttor e a c h theeffectivesolution

b IllegalrefillingandLackofregularinspectionandtightcontrolsfromauthorities

Smugglinggas, t h e instability ofsa l e ofg a s and gas m ar ket disorderare thep e r s is

t e n t problemsinthegasindustryinrecentyears.Consequently,consumersare"pickpockets"

withproductsthatdonotmeetthequalitystandardsandpotentialfirerisks.Accordingtostatisticsin2016,upto30%ofgasine a c h homeisgastoi l l e g a l l y extracted,notcontrolledq u a l i t y

a n d p o t e n t i a l f i r e risk(8).T h e i l l e g a l l y r e f i l l i n g g a s marketisincreasinglyexpandingwithcomplicatedandsophisticatedtricksfrommanufacturers.Ino r d e r toreducecostsandincreaseprofits,theyavoidlawandgovernmentregulationstog e t cheapgascylinderstoattractmorecustomersinthemarket.AtypicalexampleistheillegalextractionofgasesinLongAnprovincewhichhashelpedtheproducersofgascylinderswithmonthlyprofitsofuptoVND2billiontoVND4billionforoutputfrom8 0 0 tothousandsofbottles(onpeakdays)

(9).Besidesthat,inHoChiMinhCity,BinhChanhDistrictMarketManagementTeamdiscovered51gastanksof12kgtypeconnectedto14self-

madegastrays,5,000minigascylindersand7motorcyclesdesigneda s deliveryvehicles.Withagasbottleof12kgtoillegallyextract,theproducergainedt h e profitabout300,000VNDforonebottle(10).ItisbecauseofsuchhugeprofitsthatillegalmanufacturersareconstantlyenteringthemarketandmakingitdifficultforcompanieslikeDMPtohavecomparativeadvantagestocompeteinpricecompetition

Inaddition,the lackofgovernmentrigorandcontrol isalsoone ofthereasonsfortheg

r o w i n g illegalrefillinggasmarketinmajorcities.Themarketforillegalgasextractionisa largeandpotentialmarketwithprofitablebenefitswithlowcostaswellashighmarkets h a r e Asaresult,withtheincreasingnumberofunlicensedmanufacturersenteringtheindustry,thegovernmentcannotcontrolit,andwithineffectivepolicies,theyhascontributedtoincreasingcompetitivepressuresforLPGcompaniesingeneralandDMPenterprisesi n p a r t i c

u l a r I n 2 0 1 5 , a d r a f t b y t h e M i n i s t r y o f I n d u s t r y a n d C o m m e r c e d r a f t e

d , withtheconditionthatwasnotonlytightenedbutopenedforthegasbusiness.Accordingly,insteadof300,000shellsas

before,businessesonlyneedtohave100,000to1 5 0 , 0 0 0 gas cy l i n d e r s w il l qualifyasw ho lesa le t r a d e r s, d i s t r i b u t o r s an dl i c e ns e d operations However,thisdrafthasencounteredalotofoppositionandappealsfromtheauthoritiesofHoChiMinhCitytotheseniorleadersoflargecompanies(11).

NguyenPhuongDong, dep ut y directoroft he DepartmentofI nd us tr y andTradeof H

o C h i M i n h C i t y , s a i d t h a t t h e " l o w e r i n g " w i l l makemanagementd i f f i c

u l t , w h i l e t h e situationinthegasbusinesshasnotbeeneffectivelycorrected(12).

"Loweringthisstandardmeansencouragingmorebusinessestojointhemarkettocontinuescattering.Accordingly, thesituation ofoccupyingthebottle,swappingtoe x t r a c t gasandillegallyrefillgasismoredifficulttocontrolleadingtothemarketmore

i t s T h e r e f o r e , i n o r d er forthegasmarket toremainstableandlegitimate,thegovernment shouldsetupappropriateandeffective policiesinthislargemarketmanagement,aswellasseverelyp u n i s h thosethatdoillegalactionwhichagainstthelaw.DMPsalsoneedtohavecertainp o l i c i e s , especiallycostcontrolpolicies,tocreatecompetitiveadvantageinthehouseholdsegment

ter-in-lawadvisestoswitchtoelectricstoveduetoitssafeandcon ven ien ce S o,

no wIjustcookon thegasoline stovewhen I needtobe

quicklikecooking instantnoodles(smile).Itmaytakeup4– 5monthstorequireanewgascylinder.”

Inrecentdays,thekitchenoptionhasnotonlystoppedatthegasstove.Newnamessucha s magneticc o o k e r s , i n f r a r e d c o o k e r s h a v e startedtoa p p e a r inVietnamesemarketr e c e

n t l y andaremostfrequentlymentionedintimesofincreasinggaspricesaswellasf i r e relatedaccidents.Recognizingthepotentialmarketfornewproductsinlargecities,w i t

h

middle-to-highincomehouseholds,manufacturershavebeenracingtolaunchsmartp r o d u c t linesintheseareas.Itisagreatwaytocookfoodandsavemoneyforconsumersw h e n theyusemodernizedandtechnologicalproductsinsteadofgasstove.Exceptionalf e at u r e s andnewtechnologyappliedtoelectriccooker,inductioncookers, havemadethecompetitionofgasmarketmoreandmorefierce

Ascanbeseenonthetable,theproductivityandefficiencyoftwonewtypesofcookersa r e verygood,whichleadstogasstovesthatseemtobeoutdatedandlessefficientthant h o s e usedincommercialcookers.Inaddition,timeisalsoaprerequisitewhenchoosingak i t c h e n equipmentforcookingandthesenewtechnologycanaffordtomeetthebuyers

inahurryfortheirwork,socookingtimeise x t r e m e l y c r u c i a l t o t h e m M o r e o v e r , f o r h o

u s e h o l d c u s t o m e r s , s a v i n g b u d g e t i s a t o p priority.Therefore,theyoftenchoosethemostcost-

effectivekitchentoolsforthefamilyt o haveanoptimalbudget.Theevaluationandresearchshowsthattheinductioncookeristheproductthatcansaveelectricityinthemaximumway,fromthecomparisontableitc a n becalculatedamonthcostforconsumers

whousetheinductioncookerforcookingis1 2 0 ,0 0 0 -1 5 0 , 0 0 0 V ND

p er month,a n d i f theyu s e g a s s t o v e , t h e c o s t w i l l

b e a b o u t 3 20 ,0 00 VND /month,withinfraredcookertheywillspendabout250,000VND/

month( 1 3 ).Thisisalsooneofthereasonswhythegasmarketin2017hascertainfluctuationsan disoneofthechallengesthatLPGcompaniesingeneral,DMPinparticulararefacing

3.4.2 Eating out and Online delivery food

Someotherfamilieschoosetoeatouttosavetheirtimeofcooking

Ms.N g u y e n M i n h C h a u : “ A s y o u s e e , I a m a l w a y s d o i n g m a n u a l j o b s s u c

h ascl ea n in g h o u s e s , t a k i n g c a r e o f 3 littlek i d s o f o u r s a s w e l l a s ma nagingm y grocery s h o p I h a v e n o t i m e t oc o o k Myh u s b a n d f re q u e n t l y h av

em e a l s a t h is company,whichisanallowancebesideshiswages.Similartom ykids,Ialwayspayf o r t h e i r m e a l s a t s c h o o l s a t t h e b e g i n n i n g o f a n e w s e

m e s t e r A b o u t m e , I simplyeatwhatIcanlikeinstantnoodles,itisnotsuchanim portantthingtomesmile).”

Becausethemodernizationofsocietyisdeveloping,theinventionofcutting-edgep r o d u c t s s u c h a s I n t e r n e t , s m a r t p h o n e a n d n u m e r o u s t e c h n o l o g i c a l

g a d g e t s h a v e b e e n u s e fu l andnecessaryforindividuals.Theeatinghabitofthecustomersalsovariesfromh o m e - c o o k e d mealstomealsout tothedevelopmentofthemostrecent deliveryservices.WiththeimportofWesternculture

theworld,nowadaysnumerousfastfoodchainswithdifferentbrandshavebeenbuiltinVietnamtoservethecustomers’desireofeatoutside.In2017,KFCandLotteriaarebothleadinginthecurrentmarket,bothofwhichhaveacomparableturnoverofmorethantrillionVNDeachyear

whileJollibee, thethirdlargestmarketforfriedchicken,is one-thirdhaving lessrevenuesthantwoothers(14).

Fromtheabovedata,itcanbeseenthattoVietnamingeneralandHoChiMinhCityinparticular,thepenetrationoffast

foodchainshasbroughtmanydisadvantagesforthegasmarketi n t h e s e g m e n t o f h o u s e

h o l d c o n s u m e r B e c a u s e w i t h suche a t i n g h a b i t s a n d lifestyles,householdgasconsumptioninmajorcitiesisdecliningandcomingtoanend.N o t tomentionmoreandmorepeoplearechoosingtoeatoutinsteadofcookingtosavetimeandmoney

Furthermore,thegrowingarrayoftechnologiesleadingtomultipleonlineorderinga p p l i c a t

i o n s whichcontributestothecompetitivemarketofgascylinderinthehouseholdsegment.InHoChiMinhCity,whenitcomestodeliveryservice,thefirstapplicationsconsumersh a

d u s e d a n d w a n t t o c o n t i n u e a r e namelyDeliveryN o w , F o o d y , V i e t n a m m

m c o m , GrabFoodorevenfromrestaurantsandcoffeestore.Thefastmovingconsumermarket(FMCG)in2017grew5.4%froma4.9%increasein2016,despitea d e c l i n e

i n t h e l a s t q u a r t e r o f t h e year( 1 5 ).T h e e x p l o s i o n o f t h e S m a r t p h o n e e r a

h a s