Improving performance of long term dealers a study of sông vàm rice company

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.. Sông Vàm Rice is not

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

Ho Chi Minh City – Year 2020

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

SUPERVISOR: Dr NGUYỄN THỊ MAI TRANG

Ho Chi Minh City – Year 2020

Table of Contents

Executive Summary 1

Acknowledgements 2

LIST OF TABLES 3

LIST OF FIGURES 4

1.INTRODUCTION 5

1.1 Sông Vàm Rice company 5

1.2 Organizational structure of Sông Vàm Rice 7

1.3 Mission of Sông Vàm Rice 9

1.4 Vision of Sông Vàm Rice 9

2 Problem context 10

2.1 Vietnamese rice industry 10

2.2 Analyzing the competitors of Sông Vàm Rice 11

2.3 Customer segment of Sông Vàm Rice 14

3 Symptom of Sông Vàm Rice 14

4 Problem identification 17

4.1 Possible problem 1: Slow in finding new dealers 18

4.2 Possible problem 2: Underperformance of long-term dealers 19

4.3 Possible problem 3: Some dealers stopped cooperation with Sông Vàm Rice by low sales revenues & profits 22

5 Identifying main problem 24

6 Problem justification 25

7 Exploration of causes 28

7.1 Lack of a trade marketing plan 28

7.2 Incentive policy is not enough to boost motivation of dealers 30

7.3 Inefficient training programs for dealers 31

7.4 Lack of modern technology and software to manage performance of sales team and dealers 32

7.5 Identifying main cause 32

8 Alternative solution 35

8.1 Alternative solution 1: Cooperating with a marketing agency 36

8.2 Alternative solution 2: Recruiting a trade marketing manager 39

8.3 Alternative solution 3: Designing an effective trade marketing package for dealers by using current resources of sales and marketing department 44

8.4 Choosing the most suitable solution for Sông Vàm Rice 48

9 Action plan of organization 52

10 Conclusion 56

11 Supporting information 57

APPENDIX 61

References 75

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

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

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

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

1.INTRODUCTION

1.1 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

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

1.2 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)

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

CEO

Operational department (6 people )

Account &

Finance department (4 people) Company service department (2 people)

Business development department (19 people)

Technical &

Production department (5 people )

Warehouse and procument department (5 people) Sales &

Marketing department (9 people)

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

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 CEO, sales manager and marketing employees will have meeting regularly to discuss about suitable programs to support salesmen and dealers Marketing employees put more efforts into advertising the brand of Sông Vàm Rice to customers

Sales manager (1 person)

Salesmen (5 people) Marketing employees (3 people)

Content (1 person) Trade marketing

(2 people)

1.3 Mission of Sông Vàm Rice

Although Sông Vàm Rice is only a small and medium enterprise and has just established recently But the company would like to bring high quality products of rice for customer’s family

The company emphasizes the mission mentioned as below as a guideline to lead the company to grow and move forward in the future:

• Bringing the warm meal to customer’s family

• Providing high quality rice ( rice without pesticide residuals, quick delivery service) with a reasonable price for customers

• Building a sustainable relationship with farmers, bringing a sustainable profit and an efficient process to grow hygienic rice

1.4 Vision of Sông Vàm Rice

Sông Vàm Rice has its vision to achieve in the next 10 year It helps the company creating plans, objectives and making important decisions towards the vision Vision as a map

to guide the company, define the picture of the company, how it works or what it needs to gain

to make the vision come true A vision helps keeping organization focused, connecting the valued resources to gain the huge achievement

• Branding Sông Vàm Rice becomes one of popular brand rice in a domestic market: By organizing a good distribution channel along the country, diversifying

distribution channel both in general trade channel (GT) and modern trade channel (MT)

to ensure the financial performance of the company

• Building the Vietnamese rice brand in international markets: Although Vietnam is

the third biggest exporters of rice in the world, we don’t have any famous Vietnamese brand rice in foreign supermarkets The foreign consumers don’t know about the reputation of Vietnamese rice Starting working with the supermarket in domestic market to understand deeply the process of selling rice in MT channel, this would helps

Sông Vàm Rice having experience to attack international supermarket in the future

• Diversifying value-added products from rice: The value chain of argricultural

products of Vietnam is small, we don’t have many value-added products In Thailand, they have many value-added products from rice such as rice cracker, bran rice oil, rice milk, cosmestics from bran rice… Sông Vàm Rice needs to invest money in research

& development activities to create new types of products from rice It has a purpose to

protect the business of Sông Vàm Rice in the fierce market and expand the product line

of the company

2 Problem context

2.1 Vietnamese rice industry

The rice industry in Vietnam is very potential, but the competition is very fierce Vietnam is now one of top leading exporters rice in the world There are nearly 150 rice exporters in Vietnam These exporters mainly concentrate on quantity and revenue, not pay enough attention to the brand and the quality of Vietnamese rice around the world Meanwhile, Thailand, India and recently Cambodia successfully build their brand rice in international market

In domestic market, Vietnam market is very potential, our country has over 90 million people Every year, Vietnamese farmers produced around 20 million tons of rice 1/3 of them around 7 million tons of rice are used to export for foreign countries, the rest are consumed in domestic market That is the reason why Vietnam rice market is very attractive Because of the concern of the customers about fresh and hygienic food, many rice companies in domestic market are building their brand rice to provide for customers In reality, the market share in domestic market is divided into many parts, most of them belong to traditional stores who often sell many varieties of rice without brand name, date of expiration, origin of rice

Some big players in the rice brand industry in Vietnam are Hat Ngoc Troi rice, Vinh Phat Wilmar rice and Minh Tam rice They are first players of rice brand industry with large resources and experiences They possess a strong distribution channel, especially in modern trade (MT) channel such as big chain supermarkets as Coopmart, Big C, Lotte and grocery stores as Bach Hoa Xanh, Coop Food These companies are the biggest competitors of Sông Vàm Rice However, they focus on taste of rice of customers Meanwhile, Sông Vàm Rice not only concentrates on bringing suitable taste of rice (degree of stickiness and fragrance) for customers but also providing hygienic rice (without pesticide residuals) to ensure customer’s health Some small players as Hoa Nang, Hoa Lua rice, they sell organic rice with USDA and

EU certificate However, the price is vey expensive, it ranges from 50,000 – 60,000 VND/kg (according to price of these products listed in Coopmart).The demand for safety food in Vietnam is increasing, however the price is a barrier for consumers to buy safety food

2.2 Analyzing the competitors of Sông Vàm Rice

Figure 3: Strategic group mapping

Source: Competitor Analysis Report of Sông Vàm Rice in 2019

As the chart of strategic group mapping, Minh Tâm rice and Hạt Ngọc Trời are the same segment customers with Sông Vàm Rice To compete in the market, Sông Vàm Rice is pursuing the best-cost provider strategy It means that Sông Vàm Rice will provide high quality

& hygienic rice (fragrance, stickiness and without pesticide residuals) for the customers with a reasonable price (price ranged from 20,000 VND/kg to 28,000 VND/kg)

Comparing with other competitors in same segment as Hat Ngoc Troi and Minh Tam rice, the price of product of Sông Vàm Rice is similar, however, Sông Vàm Rice put more efforts into providing hygienic rice to ensure health of customer’s family Comparing with Hoa Nang and Hoa Lua rice, Sông Vàm rice provide the products with the quality nearly similar with the quality of Hoa Lua and Hoa Nang rice with a reasonable price For instance, the highest price of Sông Vàm Rice is 28,000 VND/kg (according to company’s report), meanwhile the price of product of these companies is often range from 35,000 VND – 50,000 VND/kg (according to price listed in Coopmart and Bach Hoa Xanh)

Sông Vàm Rice is not the first-mover in rice brand industry, therefore the company chooses to build its distribution channel in general trade channel (GT channel) first to gain market share quickly by finding potential dealers to cooperate in residential areas or apartment buildings in Ho Chi Minh city Because the discount percentage for retailers as supermarkets, grocery stores in MT channel is much higher than the discount percentage for dealers in GT channel, moreover, the account receivable days in MT channel is often longer than GT channel ( 45 days comparing with 15 days) Besides that, Sông Vàm Rice also diversified distribution channel by providing rice for companies, restaurants and schools to gain sustainable profit for

the company In 2018, Sông Vàm Rice signed the contract with Auchan supermarket to start distribution rice in MT channel This helps Sông Vàm Rice having experience to understand the process of working with supermarkets Sông Vàm Rice also build two stores to display and sell rice for customers, one in Long An province, one in Ho Chi Minh city

To develop GT distribution channel, salesmen and marketing employees of Sông Vàm Rice play vital roles in the performance of the company They need to find potential dealers in residental area or apartment buildings to persuade them to cooperate with the company Dealers who could be traditional rice stores, grocery store or just a family living in these areas Salesmen needs to train sales skills, knowledge about product for dealers to help them consulting for their customers Marketing employees will support salesmen by marketing activities to boost revenues & build a good relationship with dealers

Table 1: Value proposition evaluation between Sông Vàm Rice and other competitors

Source: Competitor Analysis Report of Sông Vàm Rice in 2019

Sales department of Sông Vàm Rice conducted a survey with around 100 customers in the market (including current customers of these companies) They will rank from 1 to 10 for each factor of company’s product (1: very bad, 10: very good) After that, we will calculate average number for each factor of each company This table is used to evaluate value

proposition between Sông Vàm Rice and its competitors

Criteria Traditional

stores

Sông Vàm Rice Hạt Ngọc Trời

Minh Tâm rice

Hoa Lúa Rice Reasonable

Table 2: Competitive strength assessment between Sông Vàm Rice and other competitors

Source: Competitor Analysis Report of Sông Vàm Rice in 2019

Sales manager and sales team are responsible for evaluating competitive strength assessment

of Sông Vàm Rice and two competitors in the same segment of the company They conducted

COMPETITIVE STRENGTH ASSESSMENT Rating scale: 1 = very week, 10 = very strong

Sông Vàm Rice Hạt Ngọc Trời Rice Minh Tâm Rice Key success

factors

Important weight

Strength Weighted Strength Weighted Strength Weighted

a research in the market to report for CEO about the strength of these competitors (such as finance resources, manafacturing capabilities, strong distribution channel, with 1: very weak, 10: very strong) to help CEO having a big picture about its competitors

2.3 Customer segment of Sông Vàm Rice

Sông Vàm Rice focuses on the customers who have the demand for hygienic & high quality rice They are willing to buy hygienic & high quality rice with the price is higher than in traditional stores Customers can easily buy the products of Sông Vàm Rice through dealers channel, rice will be deliveried within maximum 30 minutes from the time dealers receiving order from customers Especially, if the customer live in apartment buildings, they can’t bring 5kg -10kg rice from stores to home, delivery staffs of dealers will help bringing rice to their home It helps the customers saving time and effort to buy rice

That is the reason why dealers, salesmen and marketing staffs are very important with Sông Vàm Rice Focusing on cooperating these valuable resources, Sông Vàm rice could achieve the good performance

3 Symptom of Sông Vàm Rice

We collected sales data of Sông Vàm Rice from 2017 to 2019 through reports of sales & marketing department to analyze and understand about the business and the status of Sông Vàm Rice

Figure 4: Average sales quantity/channel/month of Sông Vàm Rice from 2017 to 2019 Source: Sales report in 2017, 2018 and 2019 of Sông Vàm Rice

10 20 15 5 0

20

55 20

20 10

20

99 35

30 5

0 20 40 60 80 100 120 140 160 180 200 Own stores

As the chart illustrated, Sông Vàm Rice diversified its distribution channel by selling rice for various types of customers such as dealers, schools and restaurants, companies and supermarket Sông Vàm Rice also built two stores, one in Long An province, one in District 8

in Ho Chi Minh city to display products and sell rice for individual customers near the stores Sales data in figure 4 indicated that dealers channel played the most important role in the performance of Sông Vàm Rice because sales quantity of this channel was biggest during 3 years comparing with other channels from 2017 to 2019 (20 tons in 2017, 55 tons in 2018 and

Source: Sales report of Sông Vàm Rice in 2019

According to the figure 5, dealers channel contributed 52% of average total sales quantity/month of Sông Vàm Rice It illustrated for the strategy focusing on cooperating with dealers in residential areas and apartment buildings in Ho Chi Minh of the company However, although sales quantity of dealers channel increased significantly from average 20 tons/month

in 2017 to 55 tons/month in 2018 and 99 tons/month in 2019, this actual performance was lower than the target of CEO for dealers channel in 2018 and 2019 ( according to the sales

Companies Schools + Restaurants Supermarket: Auchan

report of Sông Vàm Rice) For further detail, the figure below will illustrate the symptom of Sông Vàm Rice:

Figure 6: Comparing average actual performance/month against average target

performance/month of CEO for dealers channel in 2017, 2018 and 2019

Source: Sales report of Sông Vàm Rice from 2017 to 2019

As the chart illustrated, average actual performance of dealers/month from 2017 was higher than average target for dealers/month of CEO ( 20 tons compared to 10 tons) In constrast, in

2018 and 2019, average actual performance of dealers/month was lower than the target/month for dealers ( 55 tons compared to 70 tons in 2018, 99 tons compared to 120 tons in 2019) The target of CEO for dealers is attainable A dealer of Sông Vàm Rice is often located in residential areas and apartment buildings with minimum 600 households According to data of sales department of the company and other competitors, a family can consume from 10-20kg of rice/month In addition, basing on statistics of Ministry of Agriculture and Rural Development,

a Vietnamese person can consume 96,6 kg of rice/year, it is equivalent around from 5kg-to 7kg/month/person Therefore, a family with 2-3 people will need to buy 10-20kg/month From that, we could estimate market size in dealers area around 10 tons/month CEO expected that long-term dealers could achieve at least 20% market share, around 2 tons/month In the end of

2018, the company had total 60 dealers Therefore, CEO’s target is an achievable target for

dealers channel However, the actual performance of them was lower than expectation of CEO Therefore, we should make further investigation to explore the problems and causes affecting the performance of dealers channel This would help enhancing the performance of Sông Vàm Rice This study will find the main reason of the symptom: “ Actual performance of dealers channel was lower than target of CEO”, then the author will suggest solutions and prove the efficiency of this solution to enhance the status of the company

This study uses quantitative method, qualitative method including secondary data from Ministry of agriculture and rural development of Vietnam, Sông Vàm Rice’s reports such as sales reports of sales and marketing department Besides that, the author also collects data through in-depth interviews from various stakeholders of Sông Vàm Rice as: CEO, Sông Vàm Rice’s salesmen, sales manager, marketing employees, dealers, current customers and former customers of Sông Vàm Rice to analyze the issues of Sông Vàm Rice

There are three possible problems affecting the performance of dealers channel:

1 Slow in finding new dealers

2 Underperformance of our long-term dealers

3 Some long-term dealers stop cooperation with the company

(In-depth interview 1, page 64) According to sales report of the company, It classified dealers into 3 types to manage, depending on the length of time of cooperation between the company and dealer:

1 Long-term dealer: Dealers have over one year cooperation with the

company

2 Short-term dealer: Dealers have over 3 months cooperation and under one year

with the company

3 New dealer: Dealers have under 3 months cooperation with the company

In which, long-term dealers play the most important role in the performance of the company”

Basing on opinions of CEO & sales manager, we need to collect data through sales reports of Sông Vàm Rice from 2018 and 2019, combining with point of views of related stakeholders to

identify and confirm possible problems which closely related to the symptom of Sông Vàm Rice

4.1 Possible problem 1: Slow in finding new dealers

According to the report of sales in 2018 and 2019 We have a table as below:

Table 3: Comparing actual performance against target of CEO in 2018 and 2019

Source: Sales report of Sông Vàm Rice in 2018 and 2019

Data in the table 3 indicated that the number of actual dealers of Sông Vàm Rice was lower than target of CEO in 2018 and 2019 ( 60 actual dealers comparing with target 75 dealers in

2018, 85 actual dealers comparing with target 100 dealers in 2019) Besides that, the number

of dealers decided to stop cooperation was just 2 dealers in 2018 and 3 dealers in 2019 It means that salesmen of Sông Vàm Rice found total 28 new dealers for the company in 2019 Meanwhile, we asked with Mr Le Thanh Hien - sales manager about the target of CEO for sales & marketing department He said that:

Each month, our sales team needs to achieve target of CEO: at least 4 new dealers/month It means that we must cooperate with at least 48 new dealers/year However, in 2019, our sales team could only bring total 28 new dealers for the company This problem can come from ability of our salesmen in closing deals to convert potential dealers into real dealers

(In-depth interview 2, page 66)

We continued interviewing CEO – Mr Phan Cong Binh to know his opinion about the

problem He said that:

Our sales team had total 5 people In which, there are 2 highly experienced salesmen in rice industry, others need to be trained about knowledge in rice industry and selling skills Although

I set up an attainable goal for them with just 4 dealers/month, but we couldn’t achieve it We need to deal with that problem to improve performance of the company

(In-depth interview 1, page 64)

Therefore, we can confirm that the company really had the problem with finding new dealers According to CEO and sales manager’s opinion, this problem mainly came from ability of

Year Sales target for

dealer channel/month

Actual performance of dealer

channel/month

Number of dealer target

Number of actual dealer

Number of dealer stop cooperation

salesmen in closing deals to transform potential dealers into real dealers Jolson (1) suggested that closing skill is an important part of proper relationship selling According to results of

research by Johnston, Hair and Boles (2) , consumer products salespeople indicated that ability

to get along with buyers was crucial to sales performance Slow in finding new dealers

affected the strategy of Sông Vàm Rice to expand market share and distributed products widely

in Ho Chi Minh city In addtion, the problem also impacted negatively on sales quantity and performance of dealer channel Therefore, the company should deal with that problem to increase performance of dealer channel in order to achieve target of CEO

4.2 Possible problem 2: Underperformance of long-term dealers

Initially, we analyzed the performance of each type of dealers of Sông Vàm Rice in 2019, comparing with the target of CEO in the sales report in 2019 to evaluate the importance of each type of dealer channel

Table 4: Performance of 3 types of dealers and sales target of CEO in 2019

Source: Sales report of Sông Vàm Rice in 2019

According to data in table 4, the number of long-term dealer was highest among three types of dealers, it accounted nearly 50% of total dealers of Sông Vàm Rice in 2019 ( 42 long-term dealers of total 85 dealers) Moreover, average sales quantity/month of long-term dealers contributed approximately 61,61% of total average sales quantity/month of dealer channel in

2019 (61 tons of total 99 tons in 2019) However, comparing the average actual sales

of dealers

in 2019

Average sales quantity/month for each type of dealer in 2019 (tons)

Average actual sales quantity/dealer/month

quantity/dealer per month with sales target of CEO, the performance of long-term dealers was lower than expectation of CEO ( 1,45 tons/month comparing with 2 tons/month) In contrast, the performance of other types of dealer can satisfy CEO’s expection For instance, average actual sales quantity of short-term dealers per month was higher than target of CEO ( 1,07 tons/month comparing with 1 tons/month) Furthermore, the performance of new dealers nearly achieved target of CEO ( 0,46 tons/month compared to 0,5 tons/month)

We interviewed sales manager – Mr Le Thanh Hien about the role of long-term dealers He said that:

Long-term dealers contributed significantly in the performance of dealer channel They helped our company distributing products widely and building many loyal customers in Ho Chi Minh city However, the actual performance of them can’t reach target of CEO in 2019 This affected total performance of dealer channel We need to improve it

(In-depth interview 2, page 66) For that problem, we talked with CEO of Sông Vàm Rice – Mr Phan Cong Binh to ask about his target for long-time dealers He said that:

My target for our long-time dealers is attainable and realistic Long-time dealers had experience in cooperation with our sales team & marketing employees Besides that, our dealers are often located in crowded residential areas and apartment buildings There are minimum 600 households in area of our dealers According to history data of sales department, one family with four people can consume at least 10kg-20kg rice per month From that, we can estimate market size of our dealers: 8 tons – 12 tons /month Therefore, we expected our long- time dealers could achieve 20% market share (at least 2 tons/month) in their areas by support

of salesmen & marketing staffs However, actual performance of them was lower than target

We need to deal with that problem to improve our performance

(In-depth interview 1, page 64) Basing on opinion of CEO, we checked data from sales report of Sông Vàm Rice, the data indicated average a family with four people in Ho Chi Minh city can consume from 10-20kg/month A dealer of Sông Vàm Rice is often located in residential areas and apartment buildings with minimum 600 households CEO expected that a long-term dealer can achieve

at least 20% market share, it was equivalent around 2 tons/month We can confirm it was an attainable target Because actual sales quantity of dealers of some big competitors as Hat Ngoc Troi, Minh Tam rice is higher than target of Sông Vàm Rice (around 3-4 tons/month) (according to market research report of sales and department of Sông Vàm Rice) However, the average actual performance of long-term dealers of Sông Vàm Rice was 1,45 tons/month,

it was lower than expectation of CEO Underperformance of long-term dealers affected total

performance of dealer channel To improve performance of long-term dealers, the company should make further exploration to solve the problem

Mr Tran Long Thai – an experienced saleman of Sông Vàm Rice said:

Our sales & marketing department is repsonsible for supporting dealers through marketing activities It was effective in first stage of cooperation, that is the reason why new dealers and short-term dealers can achieve target of CEO by our marketing activities In contrast, we met difficulties to boost sales revenues for long-term dealers We should focus on improving

performance of long-term dealers

(In-depth interview 3, page 69) Bello and Gilliland (3) suggested that the company should monitor indicators of distributor results (such as sales volume, market penetration of new products), it could increase the performance of the company In addition, Cavusgil and Zou (4) pointed that a manufacturer’s support and involvement with its distributors are related to performance of the company Therefore, Sông Vàm Rice should review the current process of cooperation with dealers to improve sales performance for long-time dealers This could help improving performance of dealer channel

We talked with Mrs Phan Thi Hanh Nguyen – a long-term dealer of Sông Vàm Rice in Saigonland apartment in Binh Thanh district about the sales performance of her store She said that:

I tried to expand the number of customers in my areas However, the actual performance was lower than target of CEO and my expectations We need more support from the company to attract more customers, especially I hope that the company will increase discount percentage for dealers to boost our motivation

(In-depth interview 4, page 70) Zineldin (5) proposed that there are many benefits for a long-term collaborative relationship The company should build a cooperative relationship with external and internal collaborators

In this case of Sông Vàm Rice, the company should focus on cooperating efficiently with time dealers by supporting them to increase their profits and bring more customers Moreover, salesmen and marketing staffs will help the company sharing business strategy for dealers, encouraging them to achieve the target Frazier and Rody (6) suggested that a cooperative business relationships grows over time as trust and commitment between business partners develop

long-Gathering all information and theories, Sông Vàm Rice should improve sales performance of long-time dealers to achieve target of CEO and build a sustainable relationship with dealers This will help the company developing quickly in near future

4.3 Possible problem 3: Some dealers stopped cooperation with Sông Vàm Rice by low

sales revenues & profits

In 2019, there were 3 dealers decided to stop cooperation with the company The following

table summarized reasons why these dealers ended collaboration:

Table 5: Reasons to stop cooperation of dealers

Source: Sông Vàm Rice report in 2019

According to table 5, main reasons of dealers to ended partnership with the company was not enough sales revenues & profits To understand deeply the problem, we interviewed two of these former dealers

Mr Ngo Kim Huong – a former long-term dealer in district 3 said that:

We opened a rice store to sell many types of speciality rice from many companies Although sales team of Sông Vàm Rice supported us by many marketing activities, we couldn’t achieve the target what we want to cover expense at our rice stores Therefore, we decided to do business with other products

(In-depth interview 5, page 70) Mrs Doan Nguyen Minh Duong – a former short-term dealer in B1 Truong Sa apartment, Binh Thanh district:

Sales revenues and profits of Sông Vàm Rice was lower than our traditional rice We can earn higher profit without putting more efforts to attract customers

(In-depth interview 6, page 71)

Number Location Reason to stop

cooperation

Average sales revenues/month

Types of dealers

Dealer 1 Ta Quang Buu,

Thuat, district 3

Doing business with other products with higher profit margin

Skinner et al (7) suggested that there is a positive relationship between cooperation, satisfaction and benefits The more benefits a dealer receives, the more durable the relationship Anderson and Weitz (8); Ganesan (9) showed that there was a significant relationship between satisfaction, relationship benefits and commnunication Therefore, relationship benefits play a vital role to build a sustainable partnership with dealers Sông Vàm Rice needs to tackle that problem to gain satisfaction and improve performance of dealers channel

Gathering all information collected from secondary data and primary data above, we have the initial cause-effect map of Sông Vàm Rice:

Figure 7: A diagram of symptom and potential problems of Sông Vàm Rice

5 Identifying main problem

As analysis above, there are three possible problems related to the symptom:

Underperformance of dealers channel

• Slow in finding new dealers

• Underperformance of long-term dealers

• Some dealers stop cooperation by low revenues & profits

In which, we need to consider information and data carefully to identify main problem correctly This would help Sông Vàm Rice finding right solution to improve performance of dealers channel Initially, we asked CEO of Sông Vàm Rice to know his point of view about main problem He said that:

Long-term dealers played the most important role in total performance of dealer channel

In my opinion, we need to choose the problem: underperformance of long-term dealers to deal

with If we want to expand our business quickly, distribution channel is the key factor to construct As the strategy of Sông Vàm Rice: focusing on cooperating with dealers to distribute rice widely and gain market share quickly, the company should build a sustainable relationships with dealers by helping them achieving more sales revenues and profits, especially long-term dealers Therefore, we should find solutions to improve performance of long-term dealers

(In-depth interview 1, page 64) Then, we continue interviewing sales manager – Mr Le Thanh Hien to know his opinion He said that:

Dealer channel contributed highest sales quantity and profits for our company, especially term dealers To build a close relationship with distributor members, we need to help them improving performance, gaining more revenues & profits Although slow in finding new dealers

long-is an important problem Sông Vàm Rice must tackle to build a strong and wide dlong-istribution channel, the company firstly should find solution to improve performance of long-time dealers This could help the company keeping current dealers and achieving their satisfaction

(In-depth interview 2, page 66)

According to opinions of CEO & sales manager, underperformance of long-term dealers is

the most important problem that the company should deal with If the company couldn’t improve performance of long-time dealers, the company is more likely to lose long-term dealers in the future They could cooperate with competitors if these companies could bring more revenues and profits for them Zineldin and Jonsson (10) proposed that the commitment between dealers and suppliers was built on actions, not on promises Actions come from adaption, communication, degree of cooperation, length of relationship and quality According

to Ford et al as cited by Zineldin and Jonsson (10), companies collaborate because it can help the company improving distribution activities In addition, relationship benefits is very crucial

in establishing a long-term partnerships For that reason, Sông Vàm Rice must enhance performance of long-term dealers through effective actitives

Finding a way to improve performance of long-time dealers could help Sông Vàm Rice building reputation and attracting many potential dealers They will actively looking for cooperating with Sông Vàm Rice, therefore salesmen of Sông Vàm Rice will increase the number of dealers easily and quickly Basing on that, the company can easily solve the problem: Slow in finding new dealers Furthermore, if the company could help dealers achieving target of CEO, bringing them more sales revenues & profits, they are more likely to establish a durable relationship with the company Instead of stopping cooperation with Sông Vàm Rice and switching to other companies, dealers would continue cooperating with Sông Vàm Rice if their business could make enough profit Therefore, Boosting sales performance

of long-time dealers could help the company keeping current dealers

Gathering all analysis above, Sông Vàm Rice should tackle the main problem:

“Underperformance of long-term dealers”

6 Problem justification

In this part, we will focus on validating the main problem of Sông Vàm Rice Firstly, we need to review the value chain of the company to understand the importance of distribution channel in the strategy of Sông Vàm Rice, especially long-term dealers

Figure 8: Value chain of Sông Vàm Rice

Source: Company Report in 2019

In the value chain of Sông Vàm Rice, the company concentrated on building a sustainable relationship with cooperative groups of farmers by consulting an efficient process to grow rice and signing long-term contract to buy all paddies This strategy helps Sông Vàm Rice controlling the quality of rice (such as purity, colour, degree of fragrance and stickiness) and the degree of hygienic rice ( without pesticide residuals) to build reputation for the company Stable quality plays the cornerstone in the development of the company Consumers will satisfy their needs by buying high quality product of Sông Vàm Rice with a reasonable price, salesmen and marketing staffs are confident to expand the business by finding new partners based on the competitive advantage: high quality product with a reasonable price ( best-cost provider strategy) Reed, Lemak and Mero (11) suggested that delivering high product quality to customers is a key strategy for improving performance in a competitive environment Chauhudri and Holbrook (12) pointed that a customer who trusts in a product is more likely to remain loyal to it and spread positive word-of-mouth Meanwhile, Boulding et al (13) suggested that there is a direct effect of product quality on loyalty A high level of product quality often brings satisfaction for customer Accoding to Gomez, McLaughlin and Witnik (14), there were important linkages between customer satisfaction and retail sales performance Focusing on quality product could help Sông Vàm Rice gaining satisfaction of consumers Distributors are more likely to be confident about the quality products of the company, they only need to concentrate on attracting more customers to increase sales revenues & profits Because of limited financial resources, the strategy of Sông Vàm Rice firstly focused on building distributors in general trade channel by cooperating with potential dealers in residential areas or apartment buildings in Ho Chi Minh city Dealers could be family-owned grocery stores, tradditonal rice stores or a family living in these areas Using dealer’s available resources, salesmen & marketing staffs of the company will help consulting necessary information about product, sales skills and marketing activities to boost sales revenues of dealers

Validating main problem

As my analysis in problem definition part, according to sales report in 2019, dealers channel contributed 52% sales quantity in total performance of Sông Vàm Rice However, the performance of dealer channel can’t achieve target of CEO in 2019 There are 3 possible problems related to this symptom, they are:

• Slow in finding new dealers

• Underperformance of long-term dealers

• Some dealers stop cooperation due to low sales revenues & profits

In which, underperformance of long-term dealers is the main problem that the company

should deal with it There are some reasons why we should choose it is the main problem:

• Firstly, if Sông Vàm Rice uses current resources to solve the problem: “ Slow in finding new dealers”, this could help the company increasing the number of new

dealers in short-term However, the company will immediately face a puzzle in term: how to increase performance of current dealers? If the company couldn’t do it, they are more likely to lose satisfaction of dealers It could lead them to stop cooperation with the company Zineldin (5) suggested that the relationship between supplier-dealer was affected by a number of factors These elements are among others, communication, adaption, innovation and improvements, internal cooperation, skills and performance of employees including managers, physical resources, promotion, quality, delivery and pricing of products/services, customer expectations and satisfaction

long-• Secondly, when the company help long-term dealers gaining more revenues and profits, the company can build reputation and sustainable relationships with these dealers Jonsson and Zineldin (10) suggested that the organization should develop and enhance long-term customer relationships and satisy existing customers By looking at the actual performance and profits of these dealers, potential distributors will actively come to look for opportunities to cooperate with Sông Vàm Rice Therefore, salesmen of the

company will be easy and quick to increase the number of new dealers and the problem:

“slow in finding new dealers” can be solved quickly

• Finally, Sông Vàm Rice should improve performance of long-time dealers by support activities such as promotion programs to gain satisfaction of consumers of dealers According to Gronroos (15), a satisfied customer created a strong relationship with the

provider and leads to customer loyalty This can help the company creating many loyal consumers and protect business

Summarizing all analysis above, we can validate that underperformance of long-term dealers is the main problem of Sông Vàm Rice In next part, we will continue making further

exploration to find causes which lead to the main problem of the company

7 Exploration of causes

After validating the main problem of Sông Vàm Rice, we need to investigate causes which make this problem We continue interviewing with related skateholders to find related causes which lead to underperformance of long-term dealers They proposed possible causes as following:

• Lack of a trade marketing plan

• Incentive policy is not enough to boost motivation of dealers

• Training sales skills and knowledge about products is not good

We will clarify each cause as following:

7.1 Lack of a trade marketing plan

For the current process of sales department, after dealers sign contracts to cooperate with the company, salesmen and marketing staff will discuss about suitable programs to support for dealers such as sampling, promotion programs We asked sales manager – Mr Le Thanh Hien about the impact of these programs He said that:

We often have marketing activities to support dealers They could be sampling activities, giving flyers for consumers in dealer’area or promotion programs to help dealers advertising products and increasing the number of consumers These activities are effective in the first stage of cooperation That is the reason why short-term dealers and new dealers can achieve target of CEO However, in the next stage, we faced difficulties to boost sales revenues for long-term dealers because we lack of a trade marketing plan

(In-depth interview 2, page 67)

We talked with a marketing employee of Sông Vàm Rice – Ms Luu Thi Que Tram about this issue She said that:

Our marketing activities are very effective to support new dealers However, we lack of new ideas to launch more attractive programs to boost sales revenues for long-term dealers.There programs not only must attract new customers and retain current customers, but also could help branding Sông Vàm Rice brand

(In-depth interview 7, page 72)

We continued interviewing a long-term dealer in Binh Thanh district, Mrs Phan Thi Hanh Nguyen about effectiveness of marketing programs of Sông Vàm Rice She said that:

By marketing activities of the company, I could have many customers in our apartment I can earn money to support my family My sales quantity is around 1,5 tons/month However, I faced difficulties to attract more customers in my areas I need more promotion programs and marketing activities from the company

(In-depth interview 4, page 70) Using data of sales & marketing department, we check the effectiveness of marketing activities

to support a long-term dealer in Binh Thanh district

Table 6: Effectiveness of marketing activities to support a long-term dealer in Binh Thanh

district in 2019

Source: Sales report in 2019 of Sông Vàm Rice

According to table 6, we could see that Sông Vàm Rice often used promotion programs to support long-term dealers they also displayed standee and giving flyers for customers in dealer’area However, the effectiveness of these programs is not good Furthermore, these activities are not attractive and connected and the frequency of these activities is low

To build a sustainable relationship with long-time dealers, the company should help them improving sales performance, gaining more profits by bringing satisfaction for consumers Some activities as sampling, promotion programs are not good enough to boost sales for long-term dealers Sales & marketing department should work closely with long-time dealers to understand the situation to design effective trade marketing programs These programs not only attract new customers but also keep current customers of dealers

In supplier-dealer relationship, Jonsson and Zineldin (16) suggested a model of key factors affecting relationship satisfaction

Figure 9: A model of key factors affecting relationship satisfaction (16: p.226)

Source: Jonsson and Zineldin (16)

In this model, communication and cooperation between supplier-dealer put a positive impact

on relationship satisfaction Mohr and Nevin (17) suggested that the frequency and quality of information exchange are crucial factors in determining the degree of understanding each partner’s goal and put their efforts to achieve those goals and reach a satisfactory relationship

In addition, Zineldin and Jonsson (10) proposed that cooperative activities mean for each firm

to maintain, improve its performance Therefore, in the case of Sông Vàm Rice, the communication and cooperation between long-term dealers and sales & marketing departments are very necessary to improve performance of long-term dealers A trade marketing plan could connect key stakeholders of the company

7.2 Incentive policy is not enough to boost motivation of dealers

In the list of dealer channel of Sông Vàm Rice, there are many family-owned grocery stores They often sell many kinds of products Many companies offered attractive benefits for the stores to encourage them introducing these products as a best choice for their customers It could help increasing performance of the company In the case of Sông Vàm Rice, the company gave bonus for dealers as they achieve target of the company

We interviewed a dealer in district 5 – Mrs Phan Thi Luong about incentive policy of Sông Vàm Rice She said that:

The company offered us 15% discount percentage They gave me 300,000 VND when I sold 1 ton/month I hope the company could give me more discount percentage to boost my motivation

(In-depth interview 8, page 73)

We reviewed the current incentive policy of Sông Vàm Rice for dealers:

Table 7: Incentive policy for dealers of Sông Vàm Rice

Source: Sales report in 2019 of Sông Vàm Rice

According to sales report in 2019, average sales quantity of long-time dealers was around 1,45 tons/month Therefore, long-time dealers could receive a bonus around 500,000 VND/month

In our opinion, this bonus is not good enough to boost motivation of dealers Anderson and Narus (18) suggested that there was a positive relationship existed between cooperation, satisfaction and benefits The more benefits a dealer receives, the more durable relationship Jonsson and Zineldin (16) proposed that the longer cooperation lasts, the greater are the benefits and rewards for dealers Therefore, Sông Vàm Rice should review incentive policy to increase motivation of dealers

7.3 Inefficient training programs for dealers

Besides creating marketing activities to boost sales revenues and profits for dealers, the company should focus on training necessary skills for dealers to help them can find more customers by themselves We talked with sales manager – Mr Le Thanh Hien about the training for dealers He said that:

After signing the contract with dealers, salesmen of our company will help training knowledge about products and basic sales skills for dealers This would help them having ability to consult for their customers However, after reviewing the performance of long-term dealers, we should consider carefully to give long-time dealers more training on sales skills & marketing knowledge to persuade and increase the number of customers

(In-depth interview 2, page 67)

We interviewed with Mrs Phan Thi Hanh Nguyen, a long-term dealer in Binh Thanh district about the effectviness of training course of Sông Vàm Rice She said that

The company should help us increasing ability of sales skills to find potential customers in our areas Especially, we would like to experience the process of manufacturing rice to consult for the customers The company should give us a chance to do this Sometimes, my customers asked

Sales quantity Discount percentage Bonus

me about the process of manufacturing rice I can’t answer well.In addition, the company can design advertising posters for me We will advertise on groups on Zalo, Facebook to attract customers

(In-depth interview 4, page 70) The company should train more sales skills for dealers to help them increasing actively the number of customers Furthermore, the company could organize field trip to visit factory and material paddy fields of the company to introduce clearly the process of manufacturing rice for dealers This could make improving knowledge of dealers about rice industry They can answer hard questions from customers to enhance customer’s trust about product of the company

7.4 Lack of modern technology and software to manage performance of sales team and dealers

Besides three possible causes proposed by key stakeholders of the company, we used literature and theories to find out more possible causes related to main problem: underperformance of long-term dealers Eggart and Serdaroglu (19) suggested that sales technology had a direct effect on the performance of salesperson In the case of Sông Vàm Rice, the company hasn’t used any modern technology and software to manage performance of sales team and dealers

We interviewed sales manager of the company about this cause He said that

Currently, our company managed sales team and dealers in a traditional way We only used simple software as Excel to handle performance of dealers and make report for CEO We lack of a modern software as DMS (distribution management system) to evaluate real-time performance of sales team and dealers to propose suitable solutions to increase performance of distribution channel

(In-depth interview 2, page 67)

7.5 Identifying main cause

Gathering all information in the analysis above, there are 4 possible causes related to the main problem: underperformance of long-term dealers of Sông Vàm Rice We asked CEO of Sông Vàm Rice to understand his opinion about these causes He said that:

In my opinion, the lack of a trade marketing plan is the main cause which leads to the main problem: underperformance of long-term dealers If we can create an effective trade marketing plan to support long-term dealers We could improve performance of long-term dealers

(In-depth interview 1, page 65)

Talking with sales manager of Sông Vàm Rice about identifying main cause He said that:

In my opinion, the company should focus on improving the effectiveness of cooperation between sales team and long-term dealers by creating attractive marketing activities This could help dealers gaining more satisfaction of customers and increase sales revenues.Therefore, the lack

of trade marketing plan is the main cause of the problem

(In-depth interview 2, page 67) Talking with the long-term dealer in Binh Thanh district – Mrs Phan Thi Hanh Nguyen She said that:

The company must have a trade marketing plan to support us and attract customers

These trade marketing programs must be combined and creative instead of organizing

Talking with another long-term dealer in district 5 – Mrs Phan Thi Luong said:

We think that a trade marketing plan could connect me,sales team and marketing

team of Sông Vàm Rice We could work closely to achieve target of CEO and enhance

performance of the company (In-depth interview 8, page 73)

Basing on opinions of CEO, sales manager, long-term dealers and our analysis, the lack of a trade marketing plan is the main cause which leads to the main problem of the company Sông Vàm Rice is a new brand in rice industry, therefore the company should focus on excecuting trade marketing activities to advertise products, increase sales revenues and support for dealers Current marketing activities of Sông Vàm Rice just concentrated on promotion programs and sampling activities These programs were efficient to support new dealers However, long-term dealers need an efficient trade marketing plan to increase number of customers and sales revenues These marketing activities need to be creative and connect together to bring benefits for customers, retailers and brand If the company could do well, it will help building image and reputation of Sông Vàm Rice in domestic market

Vaditating main cause

In this part, we will need to validate main cause of Sông Vàm Rice As analysis above, there are 4 possible causes which lead to undeperformance of long-term dealers They are:

• The lack of a trade marketing plan

• Incentive policy is not good enough to boost motivation of long-time dealers

• Inefficient training programs for dealers

• The lack of modern technology and software to manage performance of sales team and dealers

If the company chooses incentive policy as the main cause, they need to change sales policy and increase incentive for dealers However, this will impact the profits of the company CEO needs to consider carefully to make decision Besides that, it is not sure that long-term dealers could achieve more sales revenues if the company decides to increase bonus for them Dealers really need support from the company Furthermore, if we focus on developing training course for long-term dealers first, it will take time for dealers to apply these skills However, it is not easy for dealers to increase the number of customers without support activities from the company

Nowadays, applying modern technology and software to manage all activities of sales team and dealers is very necessary for the success of the company However, Sông Vàm Rice firstly should focus on creating a trade marketing plan to support for dealers to ensure their performance could achieve target of CEO and satisfy their needs A good trade marketing plan could increase sales revenues and profits for long-term dealers, bring more benefits for their customers In addition, the company could build reputation in the market and gain market share quickly through these marketing activities Therefore, Sông Vàm Rice must concentrate on enhacing cooperation between sales team and long-term dealers by creating an effective trade marketing plan including promotion programs, customer loyalty and brand activation activities This could help the company improving performance of dealers channel.Morgan and Hunt (20) suggested that the success of cooperate relationships depends on commitment and trust between parties Anderson and Narus (18) proposed that building a good relationships with distributors could enhance competitiveness of the company

We have the final cause -effect map for the case of Sông Vàm Rice as following:

Figure 10: Final cause-effect map of Sông Vàm Rice

8 Alternative solution

Summarizing all analysis above for the main problem of Sông Vàm Rice: Underperformance

of long-term dealers, we found the root cause was the lack of trade marketing plan Therefore,

in this part, we need to suggest solutions to tackle with that cause and improve sales

performance for the company

We propose three possible solutions to deal with the root cause: lack of trade marketing plan

of Sông Vàm Rice They are:

• Alternative solution 1: Cooperating with a marketing agency to consult an effective

trade marketing plan

• Alternative solution 2: Recruiting a trade marketing manager to be responsible for

creating a trade marketing plan

• Alternative solution 3: Developing an effective trade marketing package for long-term

dealers by using current resources of sales and marketing department of the company

Underperformance

of dealers channel

Slow in finding new dealers

Stop cooperation of

some dealers

Underperformance of long-term dealers

Incentive policy is not

manage performance of sales team and dealers

Lack of a trade marketing

We will clarify main points for these solutions

8.1 Alternative solution 1: Cooperating with a marketing agency

Nowadays, many companies put more efforts into attracting customers to exist in a fierce competition Role of marketing in organizations is too important too be ignored It established relationships between customers and the company Marketing helps the firm defining its characteristics, build the image of the firm in the eyes of customers.For that reason, marketing department plays a vital role in the success of the company Moorman and Rust (21) pointed that marketing function contributed to perceptions of firm-financial performance and customer relationship performance Day (22) suggested that marketing function facilitate the link between the customer and various key processes within a firm Gilmore et al (23) pointed that marketing in SMEs develop gradually through life-cycle of business in response to new products and market demands, focusing on satisfying customer requirements

However, many small and medium companies are struggling to create effective marketing activities to attract potential customers and boost sales revenues It mainly came from limited resources of SMEs, especially extremely limited budgets for promoting their products and services Besides that, they lack of experienced marketers to propose a good marketing strategy and apply it into real business Sales managers in SMEs are often responsible for managing marketing actitives as an add-on duty beside the main task: managing sales team Therefore, they could face many difficulties to develop a good distribution channel because of lack of support from necessary marketing activities The case of Sông Vàm Rice company is similar

in this situation Sales manager managed all activities of both sales team and marketing team Meanwhile sales team put more efforts into finding and taking care of dealers, marketing team could only support effectively in the first stage for dealers by using simple trade marketing activities as sampling or promotion programs They lack of capabilities and experiences to organize an effective trade marketing plan to coordinate sales team, dealers with customers Hence, cooperating with a marketing agency could help Sông Vàm Rice dealing with the problem Carlsson (24) suggested that outsourcing could help the company having greater capacity for flexibility, especially in adapting new technologies or complex systems

Marketing agency is an organization which provide consultant services, professional marketing solutions for other companies to help them building their brand and attracting potential customers in the market Marketing agencies offer a broad range of services to support the