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

The competitors give sales 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 Valvoli

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 3

ACKNOWLEDGEMENT 4

1 Introduction 8

1.1 Company overview: Valvoline global lubricant market 8

1.2 Sales and market share in Viet Nam market 9

1.3 Valvoline Distribution Channel in Viet Nam market 9

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

3 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

4 Action Plan 40

4.1 My Loyalty Program‟s action plan 40

4.2 Effectiveness measurement after taking action plan 43

5 Conclusion 44

6 Supporting Information 44

REFERENCES……… 65

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

1 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 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%)

Figure 1 Valvoline Business Segment 2016

(Source: Valvoline website)

51%

24%

25%

Core NorthAmerica

Quick Lubes

International

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%

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

1 Dai Thang Co., Ltd

2 Cummins Viet Nam

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 3 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

Table 1 Segment Breakdown of all Valvoline importers in Viet Nam market

(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.e 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

No Company Name Segment Northeast Northwest Red River

Delta

South Central Coast

Central Highland

South East

Melkong Delta

Cummins powered base

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

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)

Group V 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

1.7 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

1.8 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

1.8.1 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% In the first of

9 months (from Oct 2018 to May 2019), primary sales dropped down -47% compared to

2018

Secondly, secondary sales are analyzed basing on some key points Secondary sales in the first 9 months of 2016 reduced -2% compared to 2015 because Valvoline cut the North market of Dai Thang including some provinces: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, Hue, Hai Phong, Quang Ninh, Hai Duong, Hung Yen, Thai Binh, Nam Dinh

However, secondary sales in the first 9 months of 2017 increased 16% compared to the first 9 months of 2016 And in 2018, secondary sales in the first 9 months of Dai Thang also decreased 3% compared to in the first 9 months of 2017 In the first of 9 months (from October 2018 to May 2019), secondary sales in the first 9 months dropped down seriously 40%

Thirdly, basing on Figure 5, Dai Thang signed Valvoline target which increased from

2015 to 2018; but in 2019, Dai Thang only signed Valvoline target which reduced 20% compared to 2019

To conclude the first symptom from Sales Department, the negative of primary sales and secondary sales indicated that Dai Thang business was not good in 2018 and 2019

Figure 5 Review Sales out and Sales in from 2015 to 2018

(Source: Sales Department in 2019)

Figure 6 Review Sales out and Sales in from 2015 to 2018

(Source: Sales Department in 2019)

The first 9months of2015

The first 9months of2016

The first 9months of2017

The first 9months of2018

The first 9months of2019

1 Primary Sales 801,441 898,711 966,615 805,182 564,410

2 Secondary Sales 839,470 820,428 953,656 923,250 551,814

3 Signed Valvoline 1,300,000 1,350,000 1,400,000 1,500,000 1,200,000

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000

1.8.2 Customer„s complaint in Vung Tau (South East) seriously from Oct 2018

until now

Basing on some information from Customer Service Officer of Dai Thang, there are some other hints To collect information, the author made an interview with Ms Lan- Customer Service Office who has experienced and worked for Dai Thang since 2017 and stated that:

“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 Here are some collections about complaints of some customers in Vung Tau” (Ms Lan, Sales Admin, 25 years old)

Based on secondary data as shown in Table 2 above, it can see that there are some main complaints from customers as below:

1 With same product and quality, Dai Thang is selling to customers with high prices

compared other Valvoline importers This issue effects on Valvoline and Dai Thang reputation in Viet Nam market

2 Some Valvoline importers are trying to approach Dai Thang‟s customer by selling to Dai Thang‟s customers with low prices to take market shares

3 Sales promotion‟s program of Dai Thang is less and is not interesting compared

to competitors

4 Valvoline‟s product brand awareness in Viet Nam market is low

5 Valvoline products are not various products and packing

Table 2 Feedback‟s Customer

I feel very concern about Valvoline business The

market is very complicated There is a partner to sell

Valvoline products with very low-prices with same

product DTC is selling This action effects on DTC and our company 's Valvoline business in long run

2 23/11/2018 Tran Quang Hung

Valvoline is reputation brand in Europe, but in Viet

Nam market, product brand awareness is very low The competitors give sales 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

I have worked with DTC for more than 5 years I am

concerned when DTC sold us with high prices

compared to other Valvoline importers Example: The products I bought from Sam Chem is higher than DTC around 10% Also Valvoline product is not various

kinds of products and packing as other brand

4 21/01/2019 Nguyen Kha Co., Ltd

In this time, our customers complaint that there is one

partners gave us Valvoline quotation with very low

prices compared to us We need Valvoline and DTC to

help to solve this issue in urgent case because our customers refused to buy products from us

Customers prefer to buy products with variety

promotion program For example: Castrol gifts:

T-shirt, rain-coat; helmet, bag; umbrella…

Dai Thang has few promotion program and is not

interesting We need Valvoline and DTC consider and give us good promotion program to inhance customers' buying behaviour

2 PROBLEM IDENTIFICATION

2.1 Initial identification of problem

With the limit of time and cost of the solving problem project, this study will identify three main possible problems of Valvoline business of Dai Thang reduced secondary sales and suggest solutions and prove them efficient in applying into company‟s problem From all data below, we can see that this issue happened in Dai Thang‟s Sales & Marketing Department Therefore, to find out three possible problems, this study approach is based on qualitative research method including secondary from report data of Dai Thang and Valvoline from Sales & Marketing Department, logistics department and in depth-interviews from different groups of respondents such as Sales Director, Sales Executive, Customer Service Office, key dealers who

bought from Dai Thang and market industry

In-depth interview is used to find out the potential causes to “Reducing secondary sales at Sales Department” In-depth interview with 8 persons who are responsible to the symptoms and are knowledgeable about the symptoms at Dai Thang as following:

 Mr Nguyen Van Sang- Sales Director has been working Valvoline for more than 10 years In his role, Mr Sang is responsible to lead the growth of Valvoline Business at Dai Thang He also provides sales and business leadership that will drive growth through key accounts and for sustainable market share growth He manages all business activities and sales management at Dai Thang

 Mr Mr Le Quoc Hoai- Sales Executive in Vung Tau has been working with Dai Thang for more than 3 years and he takes a play role for sales management in Vung Tau

 Do Le Thach Lan- Sales Admin in Vung Tau has been working for Dai Thang more than 4 years and she takes a play role for sales service in Vung Tau

 Mr Vo Duc Nhuc is the biggest dealer of Dai Thang in Vung Tau and has been working and long-term partnership with Dai Thang for more than 10 years Mr Nhuc not only distributes Valvoline product but also many kinds of products such as Total, Castrol, Mobil … He is also a dealer at top ten at Dai Thang

 Mr Tran Quang Hung- Port Director has the second rank position in Vung Tau and also has been working with Dai Thang for around 5 years and only distributes Valvoline product

 Mr Le Anh Vu has the third rank position in Vung Tau and also has been cooperating with Dai Thang for around 6 years and only distributes only Valvoline product He is also a ship-owner

 Mr Chin- Doan Hai Ship is the long term partnership with Dai Thang has been working with Dai Thang around 4 years

 Mr Nguyen Van Huy is the long term partnership with Dai Thang has been working with Dai Thang around 6 years

After in-depth interview with 8 persons at Dai Thang, there are 3 potential problems that lead to symptom “Reducing sales volume at Sales Department” In depth-interview with Mr Nguyen Van Sang – Sales Director of Dai Thang said that the reason is mainly sales promotion program and stated that:

“In current market situation, there are many competitors who are entering Viet Nam market They are trying and approaching existing customers therefore they have sales promotion program to attract customers to buying Valvoline products For example, Castrol has many kinds of promotion program: free gifts; free product; discounts… Dai Thang also has sales promotion program, but the program is not effective.” (Mr Sang, Sales Director, 35 years old)

As the same opinion with Mr Sang, in the meeting company on May 2019, Mr Hoai – Sales Executive gave opinions by three reasons: prices; competitive market and sales promotion programs and stated that:

“First, customers also made complaint that Dai Thang‟s selling prices are higher than other competitors For example, Mr Vu also complaints that Dai Thang sold Valvoline products are

higher than other Valvoline importers Besides, the market is very competitive Therefore, they have many kinds of sales promotion for customers to remote products and increase sales volumes However, Dai Thang has few promotion programs compared to other competitors.” (Mr Hoai, Sales Executive, 27 years old)

However, according to Mr Nhuc, Mr Nhuc stated that:

“Dai Thang only provides Valvoline products and do not have enough product packing to supply for customers Therefore, Mr Nhuc distributes only Valvoline product, but he used Castrol product to replace.” (Mr Nhuc, the biggest dealer, 35 years old)

On the other hand, from conversation with Mr Vu – Dai Thang‟s dealer, he also stated that:

“I am unpleasant to confirm that customers switching products to other suppliers because of high prices In Vung Tau market, the market is very complicated There is a partner who sold Valvoline products with very low prices He made a complaint that Dai Thang sold to him high prices” (Mr Vu, dealer, 37 years old)

Besides, Mr Hung- Port Director also gave some negative points and said that:

“Although Valvoline product has the reputation and very famous in Europe and has started business in Viet Nam market around 10 years But Valvoline has low brand awareness in Viet Nam market Currently, many competitors invest advertisement strategy and they are trying to create brand awareness For example, before entering Viet Nam market, ENEOS – lubricating oil

in Japan has built many billboards in highway and main routes in order to increase brand awareness in Viet Nam market” ( Mr Hung, Port Director, 40 years old)

Based on theories and 8 in-depth interviews, and together discussion with my

Manangement Team, there are 3 potential problems leading seriously results of secondary

sales sale: limitation of Valvoline supplier in packaging/colour of Valvoline product, low

brand awareness and competitors switching brand

Figure 7 Initial cause-effect map 2.2 Problem identification

Potential problems, variables and symptom have been clarified at initial cause-effect

map In order to prove the actual correlation of variables and update some new

variables, many theories are reviewed After that, the main problem is analyzed by

using in-depth interview again and combined with literature review to eliminate some

potential problems

2.2.1 The first potential problem: Limitation of Valvoline supplier in packaging/colour of Valvoline product

Silayoi and Speece (2) stated that the package becomes a critical factor in the consumer decision-making process The study also indicated that packing was separated into two categories: visual and informational elements Besides, Swati, Siddhant, Gautam (3) indicated that 90% male says that packing effects their buying decisions in age group 10-30 years and in age 30-50 years, 100% males says that packing effect their product decisions And 100% female says that packing effect their buying decisions age group 10-30 years

An in-depth interview with Mr Vo Duc Nhuc- the biggest dealer of Dai Thang in Vung Tau said that

“Valvoline packing is actually not attractive In our market, the lubricating oil package are very various and attractive design Some customers refused to buy products due to design product from Valvoline.” (Mr Nhuc, the biggest dealer, 35 years old)

to form part of the product and the brand” Besides, packaging is a product property

or characteristic, whereas for Olson and Jacoby (6) told that packaging is an extrinsic element of the product Additionally, Underwood (13) stated that packaging is presented as part of the buying and consuming process

2.2.2 Low brand awareness

Lu L-C, Chang W-P, Chang H-H (12) stated that brand awareness is a crucial consideration It may be thought of as a buyer's ability to identify a brand within a

awareness: brand recognition and brand recall Brand recognition and brand recall are two separate types of brand awareness

In-depth interview with Mr Vo Duc Nhuc is biggest distributor of Valvoline in Vung Tau stated that”:

“Although Valvoline has reputation brand and top three in European; but in Viet Nam, Valvoline has low brand awareness and few people know about this brand Therefore, our sales team also met difficulties when approaching new customers Most of customers are using brand name as Castrol, Mobil or Total don not want to decide to change other brands.” (Mr Nhuc, the biggest dealer, 35 years old)

Moreover, to understand about brand awareness in consumer‟s side, an in-depth interview with Doan Hai shipping, Mr Chin- ship owner is using Valvoline products said that:

“We have been using Valvoline products in all our engines for the past 2 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.” (Mr Chin, ship- owner, 37 years old)

From impacting brand awareness and in-depth interview, brand awareness takes a play role in customer decision Low brand awareness can lead to reduce sales performance By building brand awareness, it can increase your market share If Brand awareness does not have a financial value on its own, it is part of the collective marketing effort that drives incremental sales

2.2.3 The third potential problem: Competitors brand switching

Kumar and Chaarlas (10) stated that brand switching is “the process by which consumers switch from using one product brand to another, of same category” Competitors brand switching happens when customers leave their original service provider in favour of service from another An exploratory also gave causes customers to switch providers by vital factors: core service failure, failed service encounters, response to failed service, price, inconvenience, ethical problems,

competition, and involuntary switching To make it clearer, the author made an

interview with key customers why competitors brand switching to buy products from

key customers

Mr Vo Duc Nhuc – the biggest distributor stated that

“I am concerned about Valvoline prices Dai Thang is currently selling for us with prices higher than other imported Valvoline Evidently, Sam Chem – imported Valvoline called for our customers and sold with very low prices Besides, unlike other competitions, Dai Thang does not have sales promotion such Castrol, Mobil or Total.” (Mr Nhuc, the biggest dealer, 35 years old)

Mr Le Thanh Viet- ship owner also said that

“Currently, in Viet Nam market, there are many competitors that they are trying to approach our current customers Therefore, they can use any ways to access our customers by very low prices, promotion program Dai Thang should consider about this issue.” (Mr Viet, dealer, 45 years old)

Basing on a deep-interview and theories below, there are outstanding aspects that lead to dissatisfaction at internal policies leading to brand switching: high prices; competitive market and ineffective promotions program

2.3 Problem Definition

Competitors brand switching happens because of declining in brand loyalty and growing acceptance of other brands It leads to increases the consumer's willingness to try alternative brands To illustrate for this point, an interview with Mr Nhuc:

“Other Valvoline importers sold to our market with very low-prices, I feel disappointed with Dai Thang I have been working with them for more than 10 years, but in the market, selling prices of end-users are very low prices compared to our prices It also lost Valvoline, Dai Thang and I have been working and cooperating with very low-prices I used to think that Valvoline and Dai Thang are cheating me Customers often choose Valvoline products with same products and quality and transfer to buy other products” (Mr Nhuc, the biggest dealer, 35 years old)

Besides that, an interview with Mr Hung, he concluded again that:

“The market is very competitive There are many brands entering to Viet Nam market Kixx gives many attractive sales promotion programs by various gifs for customers such as: set of table, umbrella, set of glasses etc while Dai Thang has limitation sales promotion program for him With some benefits, some customers bought Kixx brand of Total brand.” (Mr Hung, dealer, 40 years old)

With the theory and interview with Mr Nhuc and Mr Hung above, when customers want

to switch to other products to use, it means that customers lost brand loyalty and can be willing to accept to use other brands In conclusion, from above measurement, customers transfer to other brands because of high prices Sam Chem sold to Mr Nhuc‟s fishing customers with very low prices and created competition by “war prices” Next, the market is very competitive and many brands are entering to Viet Nam market Kixx also gives many attractive sales promotion programs by various gifs for customers such as: set of table, set of glasses etc while Dai Thang has limitation sales promotion program Therefore, high prices, market competition, sales promotion program are the key reasons that lead to competitors brand switching

2.4 Justify the existence of “Dissatisfaction at internal policies leading to brand switching”

Coming back for further in-depth interview with Mr Hoai- Sales Executive in Vung Tau, Mr Hoai confirmed competitors brand switching actually existed at Dai Thang

An interview with Mr Hoai:

“The main problem of Dai Thang is competitors brand switching in Vung Tau market Like

Mr Nhuc, Mr Hung case, sales volumes decreased seriously around more tha n 45% of market Due to some benefits, they bought other brands.” (Mr Hoai, Sales Executive, 27 years old)

To double check again, author collected data of sales volumes from Sales Department

to prove that the problem does exist in the organization and provide comparable data regarding the problem above of some key customers in Vung Tau: Mr.Nhuc, Mr Vu

as below Based on data below shown from Table 3, it can see clearly that sales volume of Mr Nhuc reduced seriously around 60%; while sales volume of Mr Vu reduced around 48% in Table 4 To conclude this point, data collected from Sales

Department reflected the behaviours stated in the definitions of the main problem and

scales underlying the main problem “Dissatisfaction at internal policies leading to

brand switching”

Table 3 Mr Nhuc‟s Actual sales volumes

(Source: Sales Department 2019)

Table 4 Mr Vu‟s Actual sales volumes

(Source: Sales Department 2018)

2.5 Justify the importance of “Dissatisfaction at internal policies leading to brand

switching”

It is proved that “Dissatisfaction at internal policies leading to brand switching” is the

major problem at Dai Thang that leads to reducing sales volume at Sales Department

There is negative impact of brand loyalty on sustainability of brand, on the other hand,

brand switching occur due to the decrease and increase in the brand loyalty and the

Sell out (L) 4,500 3,600 6,840 2,988 3,600 2,700 4,500 3,600 3,528

Month Oct Nov Dec Jan Feb March April

Feb March April

May June

May June

18,540 35,856

Dec Jan

To illustrate for this point, an interview with Mr Nhuc:

“I feel very disappointed with Dai Thang I have been working with them for more than 10 years, but in the market, selling prices of end-users are very low prices compared to our prices I lost belief from Dai Thang‟s customers.” (Mr Nhuc, the biggest dealer, 35 years old)

Besides that, in-depth interview with Mr Hung, he concluded again that

“The market is very competitive There are many brands entering to Viet Nam market Kixx gives many attractive sales promotion programs by various gifs for customers such as: set of table, umbrella, set of glasses etc while Dai Thang has limitation sales promotio n program for him With some benefits, some customers bought Kixx brand of Total brand.” (Mr Hung, dealer, 40 years old)

With the theory and interview with Mr Nhuc and Mr Hung above, when customers want

to switch to other products to use, it means that customers lost brand loyalty and can be willing to accept to use other brands In conclusion, from above measurement, customers transfer to other brands because of high prices Sam Chem sold to Mr Nhuc‟s fishing customers with very low prices and created competition by “war prices” Next, the market is very competitive and many brands are entering to Viet Nam market Kixx also gives many attractive sales promotion programs by various gifs for customers such as: set of table, set of glasses etc while Dai Thang has limitation sales promotion program High prices, market competition, sales promotion program are the key reasons that lead to brand switching Dai Thang should resolve this problem this urgent case to cover volume lost and find root causes to solve the issue

 Few sales promotion program than other competitors

2.6.1 The selling prices of Dai Thang is higher than other competitors with same

specification and other Valvoline importers

The price was the third largest switching category, mentioned by 30% of all respondents

in his study Pricing subcategories included (1) high prices, (2) price increases, (3) unfair

pricing practices, and (4) deceptive pricing practices In the "high price" subcategory,

customers switched services when service prices exceeded internal reference prices

Mr Hoai also confirmed that Dai Thang did not sell for customers with high prices To

prove for his point, he gave an example of the selling prices for Mr Le Anh Vu in Vung

Tau as Table 5 below

Table 5 Selling prices for Mr Le Anh Vu

Source: Sales Department on June 2019

To double check again, Mr Sang and he also reconfirmed again that Dai Thang did not

sell to Mr Le Anh Vu with high prices and also share that the selling prices of Sam

Chem sold to Mr Vu lower than landed cost of Dai Thang According to internal

investingating by logistics team, we had Customs data which indicated the prices of

Valvoline sold to Sam Chem are lower than Dai Thang around 30%

Table 6 Comparation Valvoline prices of Dai Thang and Sam Chem

(Source: Logistics Team in 2018)

As Table 6 above, it can see that Valvoline supported for some new importers with very

low prices It called “loss leader pricing strategy” Loss leader pricing strategy, one of the

(L)

The sell prices of Sam Chem (VND)

The selling prices of

1 ALL FLEET TURBO 20W50 18 831,600 900,000 8%

Date Import Company

Name Material Description Unit

Sam Chem Price (USD/L)

Dai Thang Price (USD/L) % Rate

10/24/2018 Sam Chem ALL FLEET E 500 15W40, API CH-4 18L L 1.5 1.95 30% 10/24/2018 Sam Chem ALL FLEET PREMIUM 15W40, API CI-4/SL 18L L 1.52 1.98 30% 9/21/2018 Sam Chem ALL FLEET PREMIUM 15W40, CI-4/SL DR 200L L 1.5 1.95 30%

common methods of traffic building, has both advantages and disvantages For example, The first thing is frequence discount may generate “ deal-prone” that means customers

wonnot buy products unless items on sales and this may lead “price war” and may

ultimately damage firms in the long run

In the meeting in last March 2019, Mr Nguyen Van Sang – Sales Director concluded that:

“Our Valvoline business is in most difficult I really concern that other Valvoline importers to try

to buy existing dealers of Dai Thang with very low pices It created “ war prices” up to know I think our firm should have take action urgently on that.” (Mr Sang, Sales Director, 35 years old) Combined with information above, we made business plan including 8 existing dealers in Vung Tau to interview customers directly after we received complaint from them

In the meeting with Mr Vo Duc Nhuc – the biggest dealer in Vung Tau concluded that:

“I am so headache with Valvoline business Actually, I would like to share with you that there are

some factors effecting to Valvoline business: Valvoline‟s 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 8 years Compared

to last six month of last year, our volumes lost big volume around 51% I need Valvoline and Dai Thang find solutions to help business in track” (Mr Nhuc, the biggest dealer, 35 years old) Moreover, in the meeting with Mr Tran Quang Hung – the second big dealer of Dai Thang in Vung Tau and also Port Director said that:

“My Valvoline business is so difficult I feel disappointed with two reasons: Valvoline‟s high

prices You know currentlythere are a person name Mr Thu gave directly my customers and sold

with very low prices Currently, my customers were annoyed why I sold for them with higher prices Currently, due to dumping prices, I lost two customers in Vung Tau: Mr Phuc and Mr Hai Lang Now I am dealers of Dai Thang in this area and has been building and promoting products for long time Why there stranged partners to act like that I need Valvoline and Dai Thang must give me clear answer about that” ( Mr Hung, Port Director, 40 years old)

Basing primary data on Table 6, Dai Thang can understand very clearly why Dai Thang can receive negative feedback in the market The root cause is not from Dai Thang to sell

to customers with high prices; the root cause is Valvoline support for new importers with very low prices This effected seriously Dai Thang and Valvoline reputation in Viet Nam market

2.6.2 Market competition

There are two outstanding aspects that created market competition: competition by “war prices” of Valvoline products and industry competition First of all, “war price” effects seriously on Dai Thang‟s customer To prove this point, author checked again opinion from key customers mentioned above

Mr Le Anh Vung- one ship owner and also the second dealer of Dai Thang in Vung Tau Mr Vu stated that:

“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” (Mr

Vu, dealer, 37 years old)

An interview with Mr Nguyen Van Huy - the third dealer in Vung Tau stated that:

“I have been building up market for Valvoline business with Dai Thang for more than 7 years Currently, I am very disappointed about Valvoline business We lost sales around 40% of signed target I would like to share with you that Sam Chem (Valvoline‟s new importer) selling directly

in our market share The customers thought that I sold them with high prices and they required

me claim back this amount of high prices.” (Mr Huy, dealer, 35 years old)

Industry competition is also very competitive as expressed on Table 7 by the comparison selling prices between Valvoline products with other famous brand such as Castrol Depending on Table 7 below, the selling prices of Castrol are very competitive compared

to Dai Thang

Table 7 The selling prices between Castrol and Valvoline

Source: Sales Department 2019

2.6.3 Ineffective sales promotion program than other competitors

Blattberg, Briesch, and Fox stated (8) that sales promotion is empirically proven to lead

to increase customer traffic Sales promotions are focused on creating short-term sales

First of all, as congruency framework of sales promotion effectiveness, Blattberg and Neslin (1990) define (8) a sales promotion as “an action-focused marketing event whose purpose is to have a direct impact on the behaviour of the firm‟s customer.” Sales promotions are believed to erode brand equity because they enhance only short-term performance by encouraging sales and brand-switching

According interview with the customer of Mr Le Van Viet – the fourth dealer stated that:

“Our Valvoline business is so not good Comparing to promotion program of other brands such as Castrol, Shell or Total, I think Valvoline promotion program is not good as other famous program I admit Valvoline product is reputation brand; however, the market is very competitve Sales promotion motivates customers give purchase decision and also affect choice whil they decide to buy product.” (Mr Viet, dealer, 45 years old)

Mr Nguyen Van Sang- Sales Manager also admited that:

“I think that Valvoline did not have sales promotion program as other famous brand For example, almost imported lubricating go to Viet Nam market, they invest high budget for sales promotion For example, Castrol often gives sales promotion for customer 1 pail give 1 shirt/ cap

or other while our policy is only 10 pails give 1 pail.” (Mr Sang, Sales Director, 35 years old)

2.7 Validation main cause and solution proposal

After analyzing all in-depth interview information from Mr Nguyen Van Sang; keys customers such as: Duc Dang Khoa Co., Ltd; Mr Le Anh Vu; Mr Le Thanh Viet, author was convinced to confirm “ Ineffective sales promotion program” is the main cause lead

to competitors brand switching This main cause can be provide as following:

Stt Product Pack Size The selling prices of

 The main cause is actually happen at Dai Thang Co., Ltd

 The main cause is top urgent matter which need to solve immediately to improve

the situation

 This main cause can be started to solve as soon as possible without spend a lot of

time and budget

Figure 9 Final cause-effect map

3 DESIGN SOLUTION FOR SOLVING PROBLEM

From all previous analysis, main cause “Ineffective sales promotion program” leads to

the main problem: “Dissatisfaction at internal policies leading to brand switching” that

leads to the symptom “Reducing sales volumes around 40% at Dai Thang” There are

some key benefits if the firm gives sales promotion programs: improved targeting;

improved positioning; building perceived quality; brand loyalty; awareness To understanding clearly about program existence of Dai Thang, Dai Thang‟s marketing plan is summarized as some key points Dai Thang often applies current sales promotion program such as discount; free gifts for customers But customers are not satisfied because of limitation of sales promotion program

The alternative solution will be designed to solve the problem at this chapter Author has designed solution basing on in-depth interview with Mr Sang, theories and personal experience

Figure 10 Solution map

3.1 The first alternative solution: a discount program by accumulate points

Mr Hoai- Sales Executive in Vung Tau is the person who undertands their team best and has their own way to handle team from the past until now He also understand the