Completing the system of distribution channels of pre paid vinaphone services in the personal customer board

Along with many other topics that mention distribution channel management, however, the organization of distribution channels for a specific product, VinaPhone mobile service, has no top

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN PHƯƠNG NGA

COMPLETING THE SYSTEM OF DISTRIBUTION CHANNEL

OF PRE-PAID VINAPHONE SERVICES IN THE PERSONAL

CUSTOMER BOARD

HOÀN THIỆN HỆ THỐNG KÊNH PHÂN PHỐI SẢN PHẨM

DỊCH VỤ VINAPHONE TRẢ TRƯỚC TẠI BAN KHÁCH HÀNG CÁ NHÂN

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN PHƯƠNG NGA

COMPLETING THE SYSTEM OF DISTRIBUTION CHANNEL

OF PRE-PAID VINAPHONE SERVICES IN THE PERSONAL

CUSTOMER BOARD

HOÀN THIỆN HỆ THỐNG KÊNH PHÂN PHỐI SẢN PHẨM

DỊCH VỤ VINAPHONE TRẢ TRƯỚC TẠI BAN KHÁCH HÀNG CÁ NHÂN

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS TRẦN HUY PHƯƠNG

HÀ NỘI - 2019

WARNING

I, Nguyen Phuong Nga, graduate student of MBA15 course 2017-2019 of the Faculty of HSB, Hanoi National University, thesis "Completing the system of distribution channel of prepaid Vinaphone services in the Personal Customer Departement” by me under the guidance of Dr Tran Huy Phuong

I guarantee that all data used, research in this thesis is honest and the result

of my own research The data and information in this thesis have not been used to protect a degree, the information cited in the thesis is clearly stated

Hanoi, May 30, 2019 The reassurer

Nguyen Phuong Nga

THANK YOU

With deep affection and sincerity that allow me to deeply thank all individuals and collectives who have facilitated the process of studying and researching this thesis

In particular, I would like to express my deep gratitude to Dr Tran Huy Phuong, who directly guided and helped me a lot during the research and completion of the thesis

I would like to express my gratitude to all HSB faculty members of Hanoi National University for teaching and encouraging and facilitating me during my studies at the University as well as the completion of this thesis

I would like to express my sincere thanks to the Board of Directors, colleagues of the Personal Customer Department, the Sales Control Center for facilitating and helping me to complete this thesis

Although the author has made great efforts, the thesis is difficult to avoid certain limitations and shortcomings Due to time limits and professional qualifications, the thesis is inevitable We hope to receive the sincere advice and contributions from teachers, teachers, friends and colleagues to make the thesis more complete Once again, thank you!

Hanoi, June 20, 2019 Implementer

Nguyen Phuong Nga

CATEGORY

LIST OF ABBREVIATIONS

LIST OF TABLES, MODELS, TABLES

INTRODUCTION 1

1 The urgency of the topic 1

2 Research overview 2

3 Research objectives 3

4 Research methods 3

5 Subjects and scope of research 4

6 Contents of the thesis 4

CHAPTER 1: OVERVIEW OF DISTRIBUTION CHANNEL 6

1.1 Distribution channel 6

1.1.1 Concept 6

1.1.2 Roles and functions of distribution channels 6

1.1.3 Distribution channel classification 8

1.1.4 Distribution channel structure 10

1.1.5 Member of distribution channel 14

1.2 Management of distribution channels 19

1.2.1 Concept of distribution channel management 19

1.2.2 Role of distribution channel management 21

1.2.3 Content of distribution channel management 22

1.3 Factors affecting distribution channels 33

1.3.1 Group of internal factors 33

1.3.2 Group of external factors 34

1.3.3 Evaluating actors participating in the distribution channel system 36

1.4 Criteria for evaluating distribution system system 38

CHAPTER 2: CURRENT SITUATION OF DISTRIBUTION OF PREPAID VINAPHONE SERVICES IN THE PERSONAL CUSTOMER BOARD 41

2.1 Overview of personal customer board 41

2.1.1 The process of formation and development of enterprises 41

2.1.2 Organizational structure of individual customer committee 42

2.1.3 Business results of the Personal Customer Division for the period 2015-2018 45

2.2 Current situation of distribution channel of vinaphone prepaid products at the personal customer department 52

2.2.1 VinaPhone mobile service distribution channel structure 52

2.2.2 Members in the distribution channel of the Personal Customer Department 55

2.2.3 Contribution of distribution channel members 57

2.2.4 Overall assessment of distribution channels 59

2.3 Current situation of distribution channels of vinaphone prepaid products at the personal customer department 60

2.3.1 Select member of distribution channel 60

2.3.2 Encourage members in the channel to work 61

2.7 Commercial discount rates for channels 62

2.3.3 Evaluate channel members 63

2.3.4 The impact of the network transfer campaign to maintain the MNP number to the distribution channel 64

2.4 General evaluation on the organization of distribution channel in the personal customer board 66

2.4.1 Advantages 66

2.4.2 Defect 67

2.4.3 The development of distribution channels of competitors 68

2.4.4 The cause exists in the management of distribution channels 69

CHAPTER 3: SOME SOLUTIONS TO COMPLETE OF DISTRIBUTION CHANNELS OF VINAPHONE PREPAID PRODUCTS AT THE PERSONAL CUSTOMER BOARD 72

3.1 Orientation in business of personal clients 72

3.1.1 Forecast of influencing factors 72

3.1.2 Business goals and orientations of the Personal Customer Department 77

3.2 Some solutions to complete the distribution channel in the personal customer board 78

3.2.1 Complete the model to provide services 78

3.2.2 Create close relationships with members in the distribution channel 78

3.2.3 Adjust incentive policies 80

3.2.4 Promote mixed promotion policies 83

3.2.5 Some other support solutions 85

CONCLUDE 82

REFERENCES 84

Appendix 1: Table of evaluation criteria for quality of Retail points care 86

Appendix 2: Questionnaire survey and assess customers' distribution channels VinaPhone 88

LIST OF ABBREVIATIONS

VTTT: Provincial and City Telecommunications VNPOST: Provincial and Municipal Post Offices DVGTGT: Value-added services

DBL: Retail point

P&T: Post and Telecommunications

LIST OF TABLES, MODELS, TABLES

Figure 1.1: Types of distribution channels 8

Figure 1.4: Direct distribution channel format 13

Figure 1.5: Indirect distribution channel format 13

Figure 1.6: Mixed distribution channel format 14

Figure 1.7: Members of the distribution channel 14

Figure: 1.8 Administration distribution channel 22

Figure 1.9: Manage distribution channels 23

Form 1.10 Select channel members 23

Figure 2 1: Organizational structure of the Personal Customer Department 44

Table 2.1: Successful call setup rates in recent years 45

Table 2.2: Data on performance of yearly targets of the Personal Customer Department 47

Figure 2.2: Subscription on the Personal Customer Department network for the period 2015-2018 48

Figure 2.3: Revenue from Personal Banking Department for the period 2015-2018 49

Figure 2.4: Market share of the Personal Customer Department compared to the whole Company 51

Figure 2.5: Market share of the Personal Customer Department compared to other networks 51

Figure 2.6: Diagram of distribution channel system at the Personal Customer Department 52

Table 2.4: Statistics of distribution channels of the Personal Customer Department 56

Figure 2.7: Number of stores over the years 57

Table 2.5 Revenue contribution from channels (only for prepaid service revenue) 57

Table 2.8 Discount rate for level 1 agents 62

INTRODUCTION

1 The urgency of the topic

Currently, in the telecommunications market in Vietnam, there is a fierce competition between three operators: Vinaphone, Mobiphone, and Viettel; Vinaphone's mobile market share ranks second after Viettel network VinaPhone's main competitor, Viettel, still retains its dominant position with 52% market share

Market share of the Personal Customer Department compared to other

networks

To gain the market share of lost Vinaphone, first of all, it is necessary to perfect the system of distribution channels of Vinaphone prepaid products at the Personal Customer Department

Distribution system with the role of linking manufacturers with consumers, it affects profit, price, as well as other benefits for consumers when choosing quality products, Price is suitable for demand Therefore, the distribution channel becomes one of the effective means of competition

VinaPhone is one of three mobile service providers with the largest market share in Vietnam, in which the Personal Customer Department manages the northern region Recognizing the role of distribution channels in modern business, in the past time, the Personal Customer Department has paid much attention to this issue To ensure the mission and business of distribution system of VinaPhone services are covered widely, meeting the demand of using social services

However, the application of the theory of distribution channels in practice is inadequate in view of marketing, the system of distribution channels is still inadequate, the organization of distribution channels is overlapping, taking advantage of the old distribution channels VNPT has many shortcomings, not keeping up with the current situation after dividing the Post and Telecommunications Moreover, the direct competitor is Viettel Telecom Company of Military Telecom Group which has joined the market since the end of 2007 and now has more than 50% market share of mobile services in Vietnam This shows that units that organize well the distribution channel will achieve high business results Therefore, the study of perfecting management of VinaPhone service distribution channel is an urgent requirement now

For this reason, I chose the topic "Completing the system of distribution channels of Vinaphone prepaid products at the Personal Customer Department" as the research topic

2 Research overview

Distribution channels and management theory of distribution channels in business of product and service suppliers have been mentioned a lot in documents and research works in many countries in the world as well as in Vietnam

In the curriculum of marketing management, it is mentioned the distribution channel For example, Philip Kotler, who is considered the father of modern marketing, said that the product distribution channel is one of the four variables of mixed marketing that businesses need to build to deploy marketing efforts to the market target The development and good organization of distribution channels help businesses build and maintain a competitive advantage in the long term Because, distribution channel is a collection of external relations between independent businesses in business Creating and developing a distribution channel system requires

a lot of time, effort and intelligence so it is not easy for other businesses to follow

In Vietnam, in recent years, there have been some researches on distribution channels of some products and services such as:

- Topic: "Improving the distribution channel system of Vietnam Post Corporation" by Nguyen Thi Thanh Hai analyzed and synthesized theoretical issues

related to the management of distribution and distribution channels The actual price of distribution channel of telecommunications products of Vietnam Post and Telecommunications Corporation including VinaPhone's mobile products The author has proposed a model of distribution channel system and sales mechanism applied in the distribution channel system of Vietnam Post Corporation, but has not focused on specific research on VinaPhone mobile products

- Subject: "Business development of mobile service enterprises in Vietnam", Doctoral thesis of Hanoi National Economics University in 2008 by Le Ngoc Minh The thesis has assessed the current business situation of mobile information enterprises

in Vietnam, applying business theories of enterprises to propose solutions for business development, however, does not specifically address the specific characteristics of the mobile product's distribution

Along with many other topics that mention distribution channel management, however, the organization of distribution channels for a specific product, VinaPhone mobile service, has no topic With the desire to have organized research and improve the distribution channel of specific products, I chose this research topic

3 Research objectives

The general objective of the thesis is to propose solutions to improve the system

of distribution channels of products and services at the Personal Customer Department

Specific objectives include:

- Synthesis of the theoretical basis of distribution channels

- Evaluate the status of the system of distribution channels of Vinaphone prepaid products at the Personal Customer Department

- Proposing solutions to complete distribution channels of Vinaphone prepaid products at the Personal Customer Department

4 Research methods

The thesis using main research methods is:

Research methods at the table: This is a common method to carry out initial

assessment Authors can collect available data within your company or external sources Information can be in paper form or digitalized on issues such as: national

economic overview, market survey report, company profile, sales tracking data, trade statistics, consumer survey

Field survey method: Is the method of direct observation on the object of the

survey right at the place where the processes that the researcher can use as an argument This is a method that requires sophisticated observation of the researcher The observation of survey objects is divided into many types: according to the level of preparation, according to the relationship between the observer and the observed, according to the purpose of grasping the nature of the observed object, according to the purpose of treatment information, according to the continuity of observation and ultimately according to the means used in the observation

Expert method: Expert method is the method of using the intelligence of a

team of highly qualified experts to consider and identify a complex scientific or practical event, to find make the optimal solution for such events or evaluate a scientific product

5 Subjects and scope of research

Research subjects:

System of distribution channels for Vinaphone prepaid products at the Personal Customer Department

Research scope:

- About time: The thesis focuses on research on organization of distribution channels,

management of distribution channels in the period of 2015-2018

- About space: The scope of 28 northern provinces is managed by the Personal

Customer Department

Regarding content: Focus mainly on researching the organization and

management of prepaid channel system of VinaPhone service in the Northern region

6 Contents of the thesis

In addition to the introduction and conclusion, the dissertation is structured into

3 chapters including:

Overview of research situation

- Chapter 1: Overview of distribution channels

- Chapter 2: Current situation of distribution channels of Vinaphone prepaid products

at the Personal Customer Department

- Chapter 3: Some solutions to complete of distribution channels of Vinaphone prepaid products at the Personal Customer Department

CHAPTER 1 OVERVIEW OF DISTRIBUTION CHANNEL 1.1 Distribution channel

1.1.1 Concept

From a marketing standpoint, a distribution channel is a collection of independent, interdependent businesses and individuals involved in the process of bringing goods from producers to consumers In other words, this is a groups of organizations and individuals that carry out activities make products or services available to consumers or industrial users so they can buy and use Distribution channels create a flow of goods from producers through or through trade intermediaries to end consumers All participants in the distribution channel are called members of the channel Trading intermediaries located between producers and end consumers are important members in many distribution channels

Distribution channels exist outside the enterprise, it is not an internal organizational structure of the enterprise Distribution channels include businesses and individuals who are involved in the negotiation process of bringing goods or services from producers to end-users who have the function of negotiating, buying and selling, transfer of ownership of goods and services Other companies such as transport companies, banks, warehouses, insurance companies, advertising agencies implementing auxiliary functions are not members of the channel

1.1.2 Roles and functions of distribution channels

1.1.2.1 The role of distribution channels in business operations of enterprises

The distribution channel plays a very important role in bringing products from the place of production to the end consumers so as to satisfy customers' needs and wants in terms of quantity and type of products, time and time space and place provided, the quality of the product and the price that customers can accept [6] The distribution channel has become an important competitive tool in the long term when it becomes a part of corporate assets, creating a competitive advantage that distinguishes between businesses Achieving advantages of superiority of

products is becoming more and more difficult Strategies to cut prices are not only quick and easy to be copied by competitors but also lead to a reduction and loss of profitability

The distribution channel enhances the ability to link and cooperate among individuals and organizations operating in the areas of production and distribution

of consumption in a common purpose Providing products and services to end-users and satisfying their own goals

1.1.2.2 Function of distribution channel

The most common basic function of all distribution channels is to help businesses deliver products to consumers at the price they can buy, the right category they need, at the right time and at the location they require The distribution channel has seven basic functions [6]:

Exchange and purchase functions: This is the most common function of the

distribution channel and the essence of this function is the conduct of trading activities The purchase function involves the search and evaluation of the value of goods and services while the selling function is related to the consumption of the product It includes the use of personal sales, advertising and other marketing methods

Standardization and sorting functions: This function involves arranging

goods according to categories and quantities This makes trading easier because it reduces the need for testing and selection

Transport function: Goods are moved from one point to another, thereby

resolving the spatial conflict between production and consumption

Storage and reserve function: It is related to storage of goods and services in

warehouses and yards, providing goods and services to customers quickly and conveniently At the same time, this is also a function to maintain a stable distribution for customers in volatile market conditions

Financial functions: Concerning the provision of cash and credit needed to

transport, store and promote sales

Risk sharing function: Solving uncertainty in product distribution process in

the market

Information function: Is providing information from all channel members

and opinions from customers outside the market

Distribution channels are the way in which products and services are circulated from manufacturers to consumers As a result, it overcomes the barriers

of time, location and ownership of products and services between producers and those who wish to use them

1.1.3 Distribution channel classification

(Source: Management of distribution channels - Associate Prof Dr Truong Dinh

Chien)

Figure 1.1: Types of distribution channels

There are two types of distribution channels: direct distribution and indirect distribution:

1.1.3.1 Direct distribution channel

Direct distribution channel is the distribution channel that members of the channel only include producers and end consumers (Figure 1.1, channel 1) In this distribution channel, the manufacturer directly performs the distribution function to the end consumer Manufacturers provide services through their direct selling points

Wholesale Retailer Customer

Direct channel

Indirect channel Channel 1

Channel 2

Channel 3

Channel 4

or through direct sales force With the strong development of IT ( Information Technology) has formed a non-cash payment method, developing many forms of direct channels such as vending machines, telephone sales, mail order, online sales internet has allowed manufacturers and suppliers to minimize contact with customers and still sell effectively

(Source: Management of distribution channels - Associate Prof Dr Truong

Dinh Chien) Figure 1.2: Types of direct distribution channels

1.1.3.2 Indirect distribution channel

Indirect distribution channel is a form of distribution channel in which the manufacturer or supplier of the sales service gives the final buyer through distribution intermediaries (channels 2, 3, 4, Figure 1.1)

Types of intermediaries in indirect distribution channels

In the indirect distribution channel, there are the following intermediaries: agents, brokers, wholesalers, retailers, distributors

Choosing the right types of intermediaries in the distribution channel will bring high efficiency in business, minimizing the risks that businesses face In

Manufacturer, service provider

contrast, mistakes in the selection of distribution centers often have severe consequences in business operations and need a long time to overcome The fact has shown that many "dead" products are due to mistakes in distribution strategies, choosing the wrong distribution center Depending on each business and distribution intermediary, some evaluation criteria can be selected:

- Doing business in the same market that the business is targeting;

- Having the ability and conditions to exploit the market that businesses are targeting;

- Having a full sales force with qualified training skills and sales;

- Having an independent distribution network;

- Having policies to promote trade in accordance with the policies of enterprises;

- Having strong financial ability;

- Ability to provide after-sales service;

- Product development policies in line with the policies of enterprises (suitable

in franchising business);

- Do not trade in competitive products

- Having enough conditions for warehouses and yards to store necessary quantities of goods;

- Having treasures suitable to types of goods;

- Essential market coverage conditions;

- Having a financial reputation;

- Provide appropriate management for businesses;

- Prestige and position in the market;

1.1.4 Distribution channel structure

The process of distributing distributions is also the process of deciding who will participate in the distribution stages and as a result a channel structure will form Therefore, the distribution channel structure is a group of members of the distribution channel whose collection of distribution is divided among them Different channel structures have a way of dividing distribution jobs for different

members

Distribution channel structure is usually determined through three variables: length, width of distribution channel system and intermediate type at each level (Figure 1.3)

Figure 1.3: Distribution channel structure

1.1.4.1 Length of distribution channel

- The length of the distribution channel is first determined by the number of intermediate levels present in the channel One-level channel has one intermediate level, two-level channel has two intermediate levels, three-level channel has three intermediate levels In addition, there are channels with more intermediate levels However, from the manufacturer's point of view, the more levels of the channel, the less likely it is to control its operation Based on the structure of the parts of the channel, the number of channels is classified as follows:

- Non-level channel (also known as direct channel): is the channel that producers sell their products directly to consumers The sales method also has many types: organizing stations, representative offices, by mail, by phone and right at the production place (channel 1, figure 1.1);

- One-level channel: is a channel with an intermediary between producers and consumers (retail) (channel 2, figure 1.1);

- Two-level channel: is a channel with 2 intermediaries between producers and consumers (wholesalers and retailers) (channel 3, figure 1.1);

- Three-level channel: is a channel with 3 intermediaries between producers and consumers (usually there is a big wholesale agent sold to small wholesale agents, then to retailers) (channel 4, figure 1.1 )

Intermediate forms

Distribution channel structure

Length of distribution

channel

Distribution channel

width

1.1.4.2 Width of the channel

- The width of the channel is expressed in the number of intermediaries at each level of the channel In order to achieve the best market coverage, access and exploitation, businesses must decide the number of intermediaries at the distribution levels in the channel Enterprises can research and apply one of three distribution methods:

- Centralized distribution: is a policy that a business uses for a product available and penetrates deep into the saturated market Enterprises use a large number of resale forces in an area Its goal is to achieve wide coverage, high output and profit, low cost per unit of profit

- Selective distribution: is a policy that a business selects with only a limited number of resellers to distribute products Enterprises can use a moderate number of resellers in an area This type of distribution aims to combine channel management with creating a solid image with high sales volume and profitability

- Separate distribution: is a policy by which a business assigns a single wholesaler or retailer to sell its products in a given geographical area

1.1.4.3 Commercial intermediaries in each level

- Commercial intermediaries at each level are the forms of trade intermediaries Wholesale intermediates include specialized, general wholesale, agency, brokerage, wholesale of rose-fed goods ., retail intermediaries have general retail, specialized stores, self-service Each type intermediaries have different strengths, weaknesses, scales, business methods and perform certain distribution tasks In contrast, each type of product is only suitable for certain types

of trade intermediaries The types of intermediaries in the market are always changing, the distribution channel manager must analyze the existing intermediaries

in the market to be able to use the appropriate types of intermediaries in the distribution channel system of the enterprise career

- With three basic characteristics, we can see a great number of channel structures However, there are major types of channel structures: direct distribution channels, indirect distribution channels and mixed distribution channels:

- Direct distribution channel (non-hierarchical channel): is the type of channel that the manufacturer sells directly to the end consumer Since there is no commercial intermediary, the manufacturer must perform all functions of the distribution channel The sales force of the business is responsible for direct sales to consumers (Figure 1.4)

Figure 1.4: Direct distribution channel format

- Indirect distribution channel: is the type of channel that the enterprise does not sell its goods directly to the final consumer but through commercial intermediaries (wholesalers or retailers) Depending on the situation, businesses can choose the number of intermediate levels to join the channel A one-level channel is

a manufacturer channel that sells goods to consumers through retail trade level channel is a channel with two wholesale and retail intermediaries Three-level channels with three intermediaries are first-class wholesalers, second-class wholesalers and retailers There are also more level channels, but the level of acquisition of end-user information and the level of channel control decreases as the number of intermediate levels in the channel increases (Figure 1.5)

Two-Figure 1.5: Indirect distribution channel format

Consumers

- Mixed distribution channel: is a distribution channel based on a combination

of direct distribution channels and indirect distribution channels (Figure 1.6)

Figure 1.6: Mixed distribution channel format

1.1.5 Member of distribution channel

Three basic members of the distribution channel are producers, intermediaries and end consumers (Figure 1.7)

(Source: Management of distribution channels - Associate Prof Dr Truong

The majority of manufacturing enterprises are not favorable subjects to distribute products directly to the market for consumers because they lack both necessary and effective experience to perform the direct distribution to consumers

By transferring distribution jobs to other members of the channel such as wholesalers and retailers, producers can achieve relative savings The reason is that these intermediaries distribute products of many different businesses and therefore can spread high fixed costs of implementing distribution functions for larger volumes of distributed products This allows them to operate close to the optimal point on the average cost road for producers' distribution jobs

1.1.5.2 Wholesale and retail intermediaries

- Wholesale and retail middlemen are primarily independent organizations that have their own needs and desires with specific goals other than the manufacturer

- Wholesale intermediary:

- The wholesaler includes businesses that buy goods for sale to the rest or business users such as retailers, industrial companies, industry organizations or state agencies as well as sellers Other merchants

- Wholesale intermediaries are categorized into three main groups:

- Real goods wholesale: are enterprises with independent ownership, they actually buy and sell goods, they own goods and have the right to decide on their goods They exist under a number of different names such as wholesalers, importers, distributors, assemblers The wholesaler is used in the channel to perform distribution work for the manufacturer such as: providing the ability to

satisfy market demand (covering the market), making sales contacts, keeping inventory, place orders, receive market information, help customers

- Brokers and agents: these are wholesale organizations and individuals that do not own goods but only perform certain distribution functions Their main function is to facilitate the purchase, thereby receiving income in the form

of commissions on sales They operate under names such as brokers, import and export agents, consumer agents, buying agents, and wholesalers of roses

- Branches and representative offices of enterprises: they are owned and managed by enterprises but are physically separated from enterprises They are often used first for the purpose of distributing corporate products to wholesalers Some perform reserve functions in those who need inventory, while others are purely representative because these locations and wholesalers are owned and managed by the business so they cannot identify as an independent wholesaler according to our research point of view

- Operational characteristics of wholesalers:

- Select target market: wholesalers must also identify their target customers They can identify a target group of customers by size, type of customer, or other standards;

- Decision on product and service categories: wholesaler's products are their products Wholesalers are always under pressure to sell all types and maintain sufficient stock to be able to deliver immediately but this can lead to loss of profits Therefore, they try to calculate how many types of goods should

be sold and only select products that are beneficial to them Wholesalers also consider what services need to be provided, which services need to be charged to customers;

- Price decision: wholesalers often set selling prices based on purchase price plus cost and profit for them In addition, wholesalers also incorporate many other valuation methods such as discounts and discounts, promotional pricing, geographic pricing;

- Decision on promotion measures: wholesalers do not pay much attention

to promotion activities They often implement limited advertising programs;

- Location decision: wholesalers often place a place at a cheap place, with very little cost for displaying goods and offices

- Retail intermediaries:

- Retailers include businesses that sell goods to consumers or households

- Retailers of all sizes and different forms and always appear new types of retail According to the items that retailers sell, it is divided into specialized stores, department stores, supermarkets, convenience stores, high-end shops, according to the mode of operation, people are divided into retail stores and retail not through shops

- The distribution work done by retailers includes: providing human and physical support to producers, wholesalers can have many customer contacts close to where they live ; providing personal sales, advertising and display for sale of products by producers; detect consumer demand and transmit this information back through the channel; divide the quantity of goods into small quantities in accordance with consumer demand; carry out inventory reserves; risk sharing for producers, wholesalers

- Operational characteristics of retailers:

- Determining target market: retailers identify target markets on the basis

of market research, assess the prospects of each market segment and select target

markets according to their capabilities;

- Decision on the list of goods and services: selecting a list of goods is an important decision in the competition between retailers of the same type The selection should take into account the appropriateness of the product with the target market, profit, discount, speed Retailers are interested in services for customers such as home delivery, warranty, installment sale Store atmosphere is also an important decision of the retailer;

- Decision on selling price: retail price is determined based on the purchase

price plus the cost of the retailer Retailer's price is very flexible;

- Decision on mixed promotion: retailers pay much attention to advertising activities, direct sales, propaganda promotion They focus on daily newspaper advertisements, flyers, store ads, and promotions in the form of coupons or gifts Retailers focus on training sales staff in all aspects;

- Decision on location: choosing a retail location is a decisive factor to retailer's ability to attract customers Construction or base rent costs will have a big impact on retailers' profits Small retailers can be satisfied with the available location but large retailers often choose locations with advanced methods

Distribution channels work through the flow of channel members The content

of each flow describes the work that members of the channel must perform in the distribution process Major flows include:

- Ownership transfer line: describes the transfer of ownership of products from one member to another in the distribution channel;

- Information flow: describe the process of information exchange among members of distribution channels;

- The line of material movement: describes the movement of real objects in space and time from the production site to the consumer place through the treasure system with transport means;

- Payment line: describe the movement of money and payment documents;

- Promotion line: describes the coordination and support of promotion activities among members of the distribution channel

Distribution channels are a system of manufacturers, intermediaries and consumers, all to create time and space benefits To achieve this goal, the whole system must be viewed as a cohesive whole The members of the system all benefit from working together, although in practice, cooperation is often not easy In fact, the members operate quite independently and each member has different goals in terms of profit, sales and not always suitable for each other Often there is more conflict than cooperation between members Conflicts are the direct, personal

reactions of channel members before other members' behavior causes them to be hurt or difficult Horizontal conflicts are conflicts between intermediaries at the same level of distribution in the channel, for example, conflicts between wholesalers with the same goods due to different valuations Vertical conflicts are conflicts between members at different distribution levels in the channel, such as conflicts between wholesalers and retailers in pricing for consumers The cause of conflict is due to the inadequacy of roles, resource scarcity, cognitive differences, differences in desires, disagreements about the scope of decisions, and inadequacies About the goal, information difficulties Collisions in the channel can lead to a decrease in the channel's performance even breaking the channel, but there

is also a case of conflict that increases the efficiency of the channel because members find a better way to deliver resolve conflicts The issues that channel managers need to consider are conflict detection, assessing the possible impact of conflicts, resolving conflicts in the channel

1.2 Management of distribution channels

1.2.1 Concept of distribution channel management

After the enterprise has selected the type of channel structure and members

of the channel, perfecting the organization of relationships in the channel, a distribution channel acts as an overall system of formation The channel system can

be viewed as a social system in which each member depends on others Each member plays a certain role and they have certain expectations on others Enterprises must perform the function of managing and operating the operation of their distribution channels

From the above nature of distribution channel, we can give the concept of distribution channel management as follows: Distribution channel management is the entire management and operation management of distribution channel system to ensure Collaboration among members has been selected thereby fulfilling the distribution goals of enterprises [6]

The points to note in the above concept are:

First, channel management is managing existing and active channels This means that the structure of the channel has been designed and all members of the channel have been selected Channel organization decisions are considered separately from channel management decisions In fact, this distinction can sometimes be unclear because a channel management decision can quickly turn into

a channel decision

Secondly, ensuring the cooperation of channel members means that members

of the channel do not cooperate in a natural way but need management activities to ensure their active cooperation

Third, channel management must target specific distribution goals The distribution goal is the statement of distribution activities as a part of marketing-mix that will contribute to achieving the overall marketing objectives of the business Channel management must ensure the implementation of the distribution goals of the business

- Management of distribution channels has the following characteristics:

- The scope of distribution channel management is to cover all activities of the channel, involving all members participating in the distribution channel from the manufacturer to the final consumer

- Management of distribution channels including managing both flows in the channel, whether a distribution channel system works effectively or not depends on whether its flows are run smoothly or not All flows such as negotiation, ownership transfer, information, currency, promotion must be managed effectively to achieve the distribution goals of the canal system

- Management of distribution channels is the management of activities, relations outside the enterprise, not internally, so it requires channel managers to use completely different measures than the management measures Other marketing variables The members of the distribution channel are independent organizations or individuals with their own strategies, objectives, own strength, want to manage them through negotiation negotiations

- Every position in the channel is responsible and the ability to manage channels at different levels Of course, managing the distribution channels of enterprises with channel leadership roles differs from channel management of dependent role businesses Members who hold the channel leadership role must develop a comprehensive distribution channel strategy to dominate leading other members of the distribution channel to work according to their desired goals

- The positions of different channel members have different objectives and orientations for channel management Enterprises are interested in managing channels from the upstream to the end consumer Retail and wholesale trade intermediaries are interested in managing distribution channels on both sides, their suppliers and their customers

- Distinguish management of daily distribution channels with strategic management (long-term) Daily management with long-term dialectical management with each other Long-term management focuses on strategic measures, while day-to-day management of specific distribution tasks, daily distribution management is of course governed by long-term management Distribution channel management is strategically related to the establishment of operational plans and programs that ensure long-term cooperation of members in order to achieve the company's distribution goals

- The level and ability to manage the distribution channel system of enterprises depends on the type of channel organization established by the enterprise Single and traditional channels do not allow businesses to fully manage and with a high level of operation of the channel system Vertical distribution channels allow and require enterprises to play a channel leadership role to implement comprehensive and high-level management of its operations

1.2.2 Role of distribution channel management

Management of distribution channels plays a major role in business operations

of enterprises [6]:

- Manage distribution channels to help businesses and its members clearly see

their goals and directions This is the first and most important factor for businesses, helping businesses achieve short-term and long-term goals, ceaseless and growing

- Distribution channel management helps gather, mobilize the resources of the business and enlist the cooperation of its channel members into one body, creating the emergence to realize the goal of delivering with high efficiency

- Always changing environmental conditions create unexpected opportunities and risks, manage distribution channels to play a role in helping the distribution channels of enterprises adapt to the environment, capture opportunities and reduce images well negative effects

1.2.3 Content of distribution channel management

Distribution channel management is a basic content of the full English distribution channel management, the distribution channel management including channel design (channel design) and managing channels (within the scope of the scope) The author's thesis asks permission to focus on managing channels and channels

Figure: 1.8 Administration distribution channel

After the distribution channels have been selected, it is important to manage their operations Channel management covers the entire operation of the channel, involving all members participating in the channel from the manufacturer to the end consumer Channel management includes managing all five channels Whether a channel system works effectively depends on whether its flows are smooth

Channel management includes the following contents: selecting channel members; encourage members in the channel to operate; evaluate channel members (Figure 1.9)

Manage distribution channels

Design distribution channels

Manage distribution channels

Figure 1.9: Manage distribution channels

(Source: Product distribution management system - Statistical Publishing House)

1.2.3.1 Select channel members

The process of selecting channel members is done through the following three basic steps: (1) Search for channel members; (2) determine the selection criteria; (3) ensure that members are sure to join the channel

Figure 1.10: Select channel members

(Source: Product distribution management system - Statistical Publishing House)

(1) Search for channel members:

To be able to find possible channel members, channel managers can go through the following sources:

- Regional sales organization: businesses often have their own sales force at the wholesale or retail intermediary itself and this is an important source to find channel members Sales forces can often gather information about valuable intermediaries and in fact they can provide the majority if not all the information needed to identify potential intermediaries

Select channel members

Search for channel

members

Determine the selection criteria

Make sure members are sure to join the channel

Manage distribution channels

Select members Encourage

members in the channel to work

Evaluate members in the channel

- Commercial sources: including trade associations, trade journals, businesses that sell related or similar products

- Reseller surveys: used in cases where the products of reputable businesses and distributors can enter the market with business products faster than competitors' products of the same type

- Customers: customers are a source of information, they are very enthusiastic

to contribute honest opinions about intermediaries Therefore, it is possible through surveys of end users to get information about distributors and their ability to perform distribution functions

- Ads: can produce a large amount of data about channel members in the same time and space

- Trade associations or conferences: here businesses can consider many channel members in the same time and space

- Other sources of information: such as Chamber of Commerce and Industry, banks, phone directories, yellow pages, direct mail, independent consultants (2) Determine the selection criteria:

- Standards as well as the number of standards depend on the specific conditions of each business and they may change as the conditions of the environment change

- Some important indicators when selecting channel members:

- Credit and financial conditions: almost all businesses consider the investigation of financial and credit situation of prospective intermediaries important This is the most used standard to accept future channel members

- Sales power: this is a particularly important standard, a measure of sales power is the quality of sales force, the number of real sellers working and the ability

to assist their sales force

- Product lines that intermediaries are trading: competitive products; comparable products; Popular products; Product line quality Most businesses try to

avoid intermediaries dealing directly with competing product lines Many businesses prioritize intermediaries that sell complementary products

- Reputation: this is an intangible but important value A bad intermediary, without reputation, will adversely affect the reputation of the business

- Market dominance: if an intermediary dominates too many territories, it may cause the intermediaries to encroach upon each other Enterprises need to try to achieve the best market coverage with the smallest overlap

- Selling activities: this is a basic consideration to see if intermediaries can dominate the large market segment as businesses expect Enterprises can collect data directly from potential intermediaries to assess their performance Otherwise, businesses can gather information through credit bureaus, competitive or non-competitive distributors in the region, other supply businesses and local traders

- Governance success: past success is a sign of continued development in the future

- Management ability: a channel member will not be valid if it has poor management quality The determination of management quality is difficult One of the main factors to evaluate is the ability to organize, train and maintain the force sold by good sales force as a result of good management

- Attitude perspective: this factor relates to the long-term success of product distribution but its evaluation is also a difficult issue

- Scale: large-scale intermediaries are easy to succeed, sophisticated and have

a better product line They are often able to recruit good salespeople (who will exploit the market more to sell their products) and often have better headquarters and manpower than small middlemen other

(3) Make sure members are sure to join the channel

The process of channel membership selection is a two-way process in which intermediaries can also choose who they will be representing While businesses can use a number of measures to try to persuade channel members and they offer many incentives to attract channel members, the majority of members often rate one of the

following four areas :

- Product line brings good profit

- Help with advertising, promotion

- Management assistance

- Fair trade policies and friendly relations

Good product lines: often have high potential sales and profits, businesses with a well-known commodity often have an advantage Therefore, manufacturers with less well-known products must make channel members realize the benefits of receiving their goods This can evaluate the effectiveness that their products bring to channel members

Advertising, mixed promotion: intermediaries want to get the help of enterprises in terms of advertising, promotion because it makes the product line that distribution center has increased sales Factors such as ad acceptance, collaborative advertising campaigns, product showrooms are good help and assurance for potential intermediaries to join the channel

Management assistance: channel members want to know if the business will assist them in managing their business This is a proof of interest of businesses, including: training programs; analysis, financial planning, market analysis, promotion methods

Fair trade relations: relations in distribution channels are still relations between people Therefore, although the relationship in the channel can be interpreted by agreement contracts, the human factor cannot be replaced and the two parties must establish a fair relationship

1.2.3.2 Encourage members in the channel to work

Since commercial intermediaries are not hired people to play the role of a link

in the channel as a leading enterprise as well as a trade intermediary can sell any product that the customer wants so if not active The motivating muscle can work non-positively Information that businesses can use in product development, pricing

or promotion may be misleading due to non-standard reports of intermediaries or

sometimes they are kept confidential purpose before suppliers

For channel members to be active, channel managers need to address the following three issues: (1) Find out the needs and obstacles of channel members; (2) based on those needs and obstacles, providing assistance to members; (3) use power effectively to manage channels

(1) Find out the needs and difficulties of the members of the channel

In the distribution channel, there is always an internal information flow as an official and unofficial communication system An information system is considered ideal if it provides channel managers with all the necessary information about the needs and difficulties of channel members However, in practice noise often appears

in the information system, requiring channel managers to look outside the channel system for more information The following ways can be used to identify the requirements and difficulties of channel members:

- Studies on members made by enterprises

- Studies of members made by outsiders

- Check and evaluate distribution channels

- Advisory board for distributors

Research conducted by enterprises: in many cases, the difficulty of the members can be discovered by this research This research may not have a high cost, but sometimes the information obtained is not objective

Research conducted by outsiders: may be necessary if, through that, the channel manager can obtain complete and truthful data about the problems of channel members

Assessment of distribution channels: should be conducted periodically, the aim of this work is to collect data to see where the relationship is sustainable, where

is weak, and what businesses must do to concern system in the channel develops in

a good way

Distributor Advisory Council: includes senior management representatives

from businesses and representatives of channel members The existence of this council will create recognition for the members of the channel because they all have representatives The Advisory Council provides a means to identify and discuss common requirements and difficulties that are not known through the normal flow

of information in the channel, they also help to improve the entire communication system in the channel and from there will help businesses better understand the requirements and difficulties of members in the channel and vice versa

(2) Help members in the channel

Support programs for channel members can be divided into the following three groups: Direct support, cooperation, and distribution program

Direct support plan: in loosely related distribution channels, this is the method commonly used to stimulate channel members Various forms of support such as advertising subsidies, store display items, help through sales discounts, store decoration, sales staff training, partial payment salaries for sales staff

Collaboration mode: a business cooperation plan with distributors will increase the level of stimulation of active members Collaboration not only means legally, but also provides a supportive relationship among channel members based

on their description of the role in the channel The nature of the mode of cooperation in encouraging channel members is a mutual understanding of the expected role and commitments between all parties in fulfilling their role in the long term

Create a distribution program: this is the most comprehensive way to reach a highly dynamic channel team The essence of this method is to develop a planned and professionally managed channel The process of program distribution is in the following order: first, analysis of the objectives, types and levels of support that members need to be able to achieve this goal The second step is to build channel policies, which can be divided into three main channel policy groups: discount offers; financial assistance requests; suggestions of some kind of guarantee for members of the channel

(3) Use power effectively

The foundation of encouraging members is to use power effectively The power base is based on the 5 strength bases mentioned above: rewards, imposition, legal, recognition, expert Leadership in the channel is essentially increasing or decreasing the use of one or several of these power bases This requires channel managers to use an ingenious way to maximize their influence on channel members

1.2.3.3 Evaluate channel members

The success of the business depends largely on how independent channel members work, so it is necessary to evaluate the activities of the channel members Evaluating the performance of channel members is like assessing the employment

of employees in the enterprise, the difference is that the channel manager will have

to work with independent companies and business organizations too The evaluation process is between organizations, not within an organization

In assessing members, there are problems that the channel manager must address are: (1) the factors affecting the scope and frequency of the evaluation; (2) check the operation of channel members, apply operational evaluation criteria; (3) propose adjustments to distribution channels

(1) Factors affecting the scope and frequency of the assessment

The four factors affecting the scope and frequency of the assessments are: the level of control of the producer to the channel members, the relative importance of channel members, the nature of the product and the number of channel members First, the level of control: plays an important role in determining the scope and frequency of assessment If the control is agreed by contract with certain channel members, it is the members' responsibility to provide information about most aspects of their business to the entrepreneur This helps businesses have more comprehensive data for a more comprehensive assessment

Second, the importance of channel members: if the business sells most of its products through commercial intermediaries, it is necessary to conduct a more regular assessment

Third, the nature of the product: the more complex the product, the greater the scope of the assessment and vice versa

Fourth, the number of channel members: for enterprises using a wide distribution channel system, the evaluation of channel members may be based on sales If they use a highly selective distribution channel, then a series of data is required to comprehensively evaluate all channel members

In fact, the evaluation of channel members can be divided into two categories, which are assessments to help businesses maintain control over the current activities

of distributors and a comprehensive assessment for businesses to have analysis current and future forecast of distributors' activities

In the first assessment, it can be based on the sales shown in the sales analysis report

The second approach is broader and is a more general assessment process, it includes many other criteria besides the quota and is considered a test of channel membership activities

(2) Check the activities of channel members, apply the operational evaluation criteria

Testing is a cyclical activity on the activities of channel members Testing can

be done for some or all channel members

The testing process consists of the following basic steps: developing evaluation standards; apply standards to evaluate members

Step 1, develop evaluation criteria: there are standards that are commonly used

as follows:

* Sale activity: is the most important standard and is often used to evaluate the performance of channel members Any time the channel manager needs to know the amount of sales from channel members to their customers The ability to obtain this information depends on the level of control of channel members In a channel where channel members are exclusive distributors, obtaining this information for channel managers is natural As for traditional channels, data can be limited, so the

manufacturer can estimate sales by the number of goods that he / she has sold to channel members

Sales data can be analyzed according to the following three levels of comparison:

- Current sales volume compared to sales in history

- Compare the sales of a member compared to the total sales of all members of the channel

- Sales volume of each member compared to the predetermined targets The development of indicators must be based on the evaluation of the actual selling activities of the channel members, and also the feedback from the channel members

If the ratio of the target is low in the majority of channel members, it is possible to reflect high targets not close to reality rather than the activities of inefficient channel members

* Actual inventory level: this is another important criterion to evaluate the operation of channel members Reasonable inventory helps businesses' goods to meet market demand at all times The agreement on inventory reserves can be shown in the distribution contract, when the producer can take actions that affect channel members In order to evaluate stock inventory performance, it can be based

on the following criteria:

- Complete inventory level of channel members

- The increase in sales and sales for specific products

- Conditions and means of reserve

- Reasonable level in document storage and inventory management of channel members

In addition to assessing channel members 'sales through sales, an assessment of channel members' sales force is required This is assessed through the following criteria:

- The number of sellers of channel members related to the product line of the enterprise This criterion represents a deep understanding of the manufacturer's market coverage