Current status and efficient improvement solutions of the customer service center at cuu long pharmaceutical joint stock company

iv ABSTRACT The study on curent status and efficient improvement solutions of the customer care central at Cuu Long pharmaceutical joint stock company DCL conducted with purpose of anal

Cohort 2016 – 2018

BY

DUONG THI MINH NGUYET

CURRENT STATUS AND EFFICIENT

IMPROVEMENT SOLUTIONS OF THE

CUSTOMER SERVICE CENTER AT CUU LONG PHARMACEUTICAL JOINT STOCK COMPANY

HANOI, AUGUST 2018

Master’s Thesis

ii

Cohort 2016 – 2018

BY

DUONG THI MINH NGUYET

CURRENT STATUS AND EFFICIENT

IMPROVEMENT SOLUTIONS OF THE

CUSTOMER SERVICE CENTER AT CUU LONG PHARMACEUTICAL JOINT STOCK COMPANY

Advisor: Dr Nguyen Trung Hien

HANOI, AUGUST 2018

Master’s Thesis

iii

Acknowledgement

First, I would like to send my sincere thanks to the lecturers, especially to my supervisor Dr Nguyen Trung Hien for his devoted attention, lessons and guidance, which have equipped me with key knowledge and essential skills throughout the course More importantly, everything I have learned here would undo ubtedly help

me tremendously in my work in the future

I would also like to thank International School - Vietnam National University, Hanoi and Nantes University for useful supports during studying and researching to complete this paper This course has equipped, improved, and added a lot of knowledge about the different areas In addition, the course also helps me to have a relationship, have the opportunity to share information and learn from other students in the program

I also would like to thank my manager - General Director of Cuu Long pharmaceutical joint stock company as well as my colleagues for their enthusiastic support and creating favorable conditions for me to have more information that is useful

iv

ABSTRACT

The study on curent status and efficient improvement solutions of the customer care central at Cuu Long pharmaceutical joint stock company (DCL) conducted with purpose of analyzing the status, strengths and weaknesses of customer care to develop a strategy for customer care in the five years 2018 - 2022 in line with DCL's strategic direction Based on the analysis results to provide the direction and strategy to enhance the effectiveness of the strengths and minimize the weakness, to create a perfect customer care service for DCL Building Customer care Hotline integrated with CRM system for the company with complete the processes (receiving calls process, calling process, collaboration process) to maximize the efficiency of customer care Building KPI (Key Performance Indicator) for staff and employee recruitment plan for the department will consider also In order to achieve these research objectives, an investigation conducted in customer conferences in 10 provinces in 2017 with a participation of nearly 1000 people A quantitative method was used with a questionnaire that was designed to collect customer feedback about factors including customer visiting frequency of sale staffs and sale leaders; customer evaluation on products and services of DCL; customer evaluation on the best pharmaceutical companies; customer evaluation on which pharmaceutical company’s the best antibiotics in Vietnam

The results of analyse shows that customers highly appreciated DCL's policies

of promotion and pricing; DCL’s sale staffs are professional, responsibility and enthusiastic DCL is the second best pharmaceutical companies evaluated by respondents It is also be ranked in the second position of the best antibiotic companies

in Vietnam However, participant unsatisfied with customer care service of the company Base on these research results, the author provide some solutions to improve quality of DCL’s customer care services such as systematize customer data of the company; classify customer system; build up customer care programs periodically; measures the satisfaction of customers with products and services of the company She also builds a detail action plan for DCL’s customer care service in 2018

v

Table of content

Acknowledgement iii

ABSTRACT iv

List of Figures and Tables viii

Abbreviations ix

Chapter 1 INTRODUCTION 1

1.1 The need of the subject 1

1.1.1 The importance of the pharmaceutical industry to society 1

1.1.2 The role of customer care in the pharmaceutical industry 2

1.1.3 The need to set up the Customer care department at Cuu Long pharmaceutical joint stock company 3

1.1.4 Vision and mission of the Customer care department to the Cuu Long pharmaceutical joint stock company 3

1.2 The objectives of the study: 4

1.2.1 General objective: 4

1.2.2 Detail goals: 6

1.3 Research scope: 8

1.3.1 Scope of the study 8

1.3.2 Time 8

1.4 Research subjects: 9

Chapter 2 THEORETICAL FRAMEWORK AND METHODOLOGY 10

2.1 Theoretical basis 10

2.1.1 The importance of service marketing to business 10

2.1.1.1 Definition of services: 10

2.1.1.2 The development trend of the service sector in Vietnam: 10

2.1.1.3 Common characteristics of service 11

2.1.1.4 The importance of defining the service marketing strategy 12

2 1 2 Customer service concepts 12

2.1.3 The relationship between customer service and customer care 13

2.1.4 Customer Satisfaction Theory 14

2.1.5 CRM theory 15

2.2 Research methods 17

2.3 Data collection method: Questionnaire 18

2.4 Data analysis method 19

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Chapter 3 COMPANY INTRODUCTION 20

3.1 The development history of Cuu Long Pharmaceutical JSC 20

3.1.1 General introduction 20

3.1.2 Infrastructure 20

3.1.3 Product 20

3.1.4 Distribution 20

3.2 Organizational structure 21

3.3 Business lines 22

3.3.1 Antibiotics factory 23

3.3.2 Non-antibiotics factory 23

3.3.3 Vikimco (Medical Instruments) 24

3.3.4 Capsule 24

3.4 Overview of production and business activities 24

3.4.1 Product segmentation 24

3.4.1.1 Pharmaceuticals: 24

3.4.1.2 Capsules: 25

3.4.1.3 Medical instruments: 26

3.4.2 Distribution network: 26

3.5 Development orientation: 26

3.6 The DCL’s growth in total assets, charter capital and turnover 27

Chapter 4: THE STATUS OF THE BUSINESS 28

4.1 SWOT analysis for enterprises 28

4.1.1 Strength 28

4.1.2 Weakness 28

4.1.3 Opportunity 28

4.1.4 Threat 29

4.1.5 Rival analysis 29

4.2 Survey and analyze customer's opinion on DCL's products and services 30

4.2.1 Questionnaire 30

4.2.2 Analyze customer feedback 31

4.2.2.1 DCL product quality 31

4.2.2.2 Price of product and customer satisfaction about the designing, packaging 31

4.2.2.4 Customers impression on DCL’s products 33

4.2.2.5 Customer evaluation for sale staffs 34

4.2.2.6 Customer assessment to visiting of area sale managers 34

4.2.2.7 Sales programs updating 35

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4.2 2.8 Delivery service 36

4.2.2.9 Customer care programs 36

4.2.2.10 Satisfaction of customer care service 37

4.2.2.11 Processes evaluating 38

4.2.2.12 Revenue of pharmacies 39

4.2.2.13 Evaluation of the best pharmaceutical companies in Vietnam 39

4.2.2.14 Evaluation of the best antibiotic companies in Vietnam 40

4.2.2.15 Comments of customer 41

4.3 The corporate strategy for the period 2018 – 2022 41

Chapter 5 CONCLUSIONS AND RECOMMENDATIONS 43

5.1 Customer Care Strategy for the period 2018 – 2022 43

5.1.1 Systematize customer data of the company 43

5.1.2 Classification of customer system 43

5.1.3 Build up customer care programs periodically 43

5.1.4 Measures the satisfaction of customers with products and services of the company 44

5.1.5 Building special customer care quarterly or yearly to make an unique for Customer care system of DCL 44

5.2 Customer care plan for 2018 44

5.2.1 Objective 44

5.2.2 Plans 45

5.2.2.1 Set up specialized CRM system to professionalize customer care 45

5.2.2.2 Complete standard and professional customer database (Build a database structure with appropriate variables) 45

5.2.2.3 Help the sales department deliver the best care to customers 45

5.2.2.4 Set up professional procedures and stabilize the personnel of the department 45 5.3 Timeline for Customer care plan 2018 45

5.4 Technology investment roadmap to support customer care solutions 47

5.4.1 Functional description of the solution 48_Toc527889176 5.4.2 Survey appropriate software solution providers: 48

5.4.3 Choose the most suitable supplier 49

5.5 Set up the process system, KPI for Customer Care 51

5.5.1 Processes of receiving calls, calling and collaboration 51

5.5.2 Organization chart of Customer care department 55_Toc527889182 5.5.3 Customer Care Department KPIs: 56

References 59

APPENDIX Questionnaire 61

viii

List of Figures and Tables

Figure 1 1 Expenditure on drug per capita in Vietnam from 2005 and forecast to 2027 1

Figure 2 1 Factors impact on customer satisfaction 15

Figure 3 1 DCL’s organization structure 21

Figure 3 2 The annual production volume of antibiotics 23

Figure 3 3 Annual production volume of non-antibiotics factory 23

Figure 3 4 The annual production volume of Vikimco medical instruments factory 24

Figure 3 5 The annual production volume of capsule factory 24

Figure 3 6 Pharmaceutical products 25

Figure 3 7 Empty capsule with various sizes 25

Figure 3 8 Syringes, Infusion wires, Others equipment 26

Figure 3 9 DCL’s development orientation 27

Chart 4 1 DCL product quality 31

Chart 4 2 DCL product price 32

Chart 4 3 Customer evaluation for DCL sale policies 33

Chart 4 4 Customer evaluation about designing and packaging products 32

Chart 4 5 Customer impression on DCL’s products 33

Chart 4 6 Visiting frequency to customers and saleman attitude 34

Chart 4 7 Customer visiting frequency of area sale managers 35

Chart 4 8 Sale programs updating 35

Chart 4 9 Customer evaluation about DCL’s delivery service 36

Chart 4 10 DCL’s customer care programs 36

Chart 4 11 Customer satisfaction with customer care service 37

Chart 4 12 Customer evaluate DCL’s processes 38

Chart 4 13 Revenue of pharmacies 39

Chart 4 14 The best pharmaceutical companies in Vietnam 39

Chart 4 15 The best antibiotic companies in Vietnam 40

Chart 4 16 Comments of customers 41

Table 5 1 A timeline of customer care strategy in 2018 46

Table 5 2 Fuctional description of system 48

Table 5 3 Price comparision among vendors 50

Table 5 4 Collaboration process 54

Table 5 5 KPIs stafff 56

Flow chart 5 1 Receiving calls process 52

Flow chart 5 2 Calling process 53

Flow chart 5 3 The organization of customer care department from 2018-2019 55

Flow chart 5 4 The organization of customer care department from 2020 55

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Abbreviations

1

Chapter 1 INTRODUCTION

1.1 The need of the subject

1.1.1 The importance of the pharmaceutical industry to society

According to the report on Top 10 Pharmaceutical Company Vietnam prestige 2017

by Vietnam Report:

- Vietnam's pharmaceutical market is on a positively growth momentum In 2017, domestic sale is estimated at $ 5.2 billion, increase about 10% compare to the previous year and is expected to continue to grow over the next five years

- As the population increases rapidly, the per capita income rises, people's knowledge is improved, the demand for medicines of the people wi ll grow The per capita spending on medicines in Vietnam has increased from $ 9.85

in 2005 to $ 22.25 in 2010 and nearly doubled in 2015 ($37.97) The average annual growth in drug spending is 14.6% between 2010 and 2015, and is expected

to remain at an annual growth rate of at least 14% per year by 2025; per capita expenditure on drugs in Vietnam is expected to double to US $ 85 in 2020 and US

$ 163 in 2025

Above-mentioned statements prove that the demand for pharmaceuticals in Vietnam

is increasing In addition to the demand for therapeutic drugs, the demand for functional foods also increases significantly This can easily be explained by the fact that, with such a high level of income, people's needs are not just essential needs; they are more and more interested in health and beauty because they are more advanced needs, helping their lives to be happier

Figure 1 1 Expenditure on drug per capita in Vietnam from 2005 and forecast to 2027

(Unit: USD/person)

Source: Report of Vietnam Assessment Report Joint Stock Company (2017)

2

Drug quality is also increasingly focused higher Many pharmaceutical factories meet WHO-GMP standards As a result, competition in the pharmaceutical market has become more acute Apart from prioritizing the selection of quality products and prestigious brands in the market, they are also interested in the form, design and taste of the product Therefore, in addition to investing in research and development of products, the import and application of high technology in production to better meet the increasing needs of customers and improving competitiveness will be more focused and considered by pharmaceutical companies than ever As a result, customers will benefit from the use of superior quality products

1.1.2 The role of customer care in the pharmaceutical industry

A study on customer caring service in the pharmaceutical industry conducted by Bellsystem24-Hoa Sao joint stock Company in over 1,000 pharmacies in the North of Vietnam showed that:

- About 15% of them are willing to give up a product of a pharmaceutical company and switch to selling the same product of another pharmaceutical company.When asked why, 30% of pharmacies have ever made the switch, claiming that the policy

of working with the pharmacies of the old pharmaceutical company did not satisfy them,

in addition to the inherent price, quality and sales reasons from medicine buyers

- Statistical results from this study indicate gaps in partner management, which are pharmacies, and customer care management of the pharmaceutical companies The majority of Vietnamese producers focus their resources on producing and competing by price, while they forget that 78% of Vietnamese still opt for medical products based on the recommendation of the pharmacy staff (the remaining 22% buy prescription drugs from a physician and are willing to change the prescriber's recommendation when alternative products are more affordable and available)

- Caring for a large number of customers spread across a large geographical area requires information management processes and reasonable time allocation At the same time, by combining professional customer care programs through the call center, or the deployment of marketing campaigns combining customer care such as Tele Marketing, Tele sale, Email Marketing etc many pharmaceutical companies have built the network linking the point of sales, thereby reducing the burden on sale department to constantly care for their old pharmacies, and spending more time accessing new pharmacies in new geographic areas

1.1.3 The need to set up the Customer care department at Cuu Long pharmaceutical

joint stock company

Establishing a dedicated customer care department for a pharmaceutical company is essential, especially with DCL - a pharmaceutical company with a long history of development This division will connect and engage customers with the company in a sustainable and effective way, contributing to maintaining customer loyalty to the company

In fact, since the inception of DCL, customer care task has been a part of the sales department and is often incorporated into sales programs At present, customer care activities of DCL include annual customer conferences, loyalty gifts for New Year and Lunar New Year Whether the customer receives the gift or not, and their satisfaction with receiving the gift will depend entirely on the skill and attitudes of the salesperson The Customer care department is set up to provide periodic customer care programs tailored to each customer category On the other hand, the Customer care department will measure customer satisfaction with the customer care programs they receive each year This enables the Customer care department to make appropriate adjustments or changes to improve customer satisfaction with DCL's customer care policies and programs

In addition, DCL's current customer data is not managed centrally and logically The information related to customers is not updated fully and consistently This will make it difficult to update and record transaction histories in order to classify customers for customer care in general, especially to take care of loyal customers in particular The creation of Customer care department will help the company systematize all customer data in a scientific and professional way through CRM solution The Customer care department will help the company make more accurate business decisions through consistent statistical reports

1.1.4 Vision and mission of the Customer care department to the Cuu Long

pharmaceutical joint stock company

In the DCL's development strategy for the next five years 2018-2022, the Board

of directors identified the importance of establishing a dedicated the Customer care department Recognizing this need, in September 2017 Board of directors of DCL

4

decided to set up the Customer care department with the following vision: "Within five years, the Customer care department of DCL will become a Customer care center model

in the pharmaceutical industry Providing excellent customer care services to the whole

of customer system of the DCL and acting as a mediator links between customer and specialized departments of the DCL"

Due to the current situation of DCL, all information of customers are managed by the sale staffs, the effectiveness of customer care is also dependent on them Customers of DCL do not have any official source of information other than information received from the salesman It is necessary to establish the Customer care department as a middleware that connects two-way information between the customer and the company, ensuring that the information from the company to the customer is conveyed accurately, timely and vice versa

self-To achieve this vision, the Customer care department needs to understand and analyze the situation of DCL's customer care service to determine the details of its development plan for the next five years To become a customer care center model in the pharmaceutical industry as well as a seamless intermediary between customers and companies in 2022 Then all information and transaction history of customers with the company will managed centrally at the customer care center Customer care will be able

to easily categorize customers and build appropriate customer care programs to further enhance customer satisfaction and loyalty to the company

1.2 The objectives of the study:

This analysis helps Customer care department recognize the position of DCL in customers’ mind From that, the Customer care department can find solutions to improve the position of DCL in the customer's mind by providing superior customer care services or combining with other departments to bring the best possible services to customers In addition, the Customer care department should also learn and capture the

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customer's impression of the customer care services of the pharmaceutical companies in the market, especially of competitors of DCL Understanding that, DCL's Customer care department will need to find solutions in order to provide customer care services that are different and better than the competitors

 Build OGSM 2018 for the Customer care department and OGSM implementation schedule in 2018

OGSM is a strategic planning process that provides clear goals and identifies the strategic choices to achieve them It defines the measures that will be followed to assure that goals are met and helps groups work together toward common objectives, across functions, geographical distance and throughout the organization OGSM’s origins can be traced back to Japan in the 1950s, stemming from the process and strategy work developed during the Occupation of Japan, post-World War II It has since been adopted

by many Fortune 500 companies In particular, Procter & Gamble uses the process to align the direction of their multinational corporation around the globe [13]

In DCL, the annual strategy formulation will follow the OGSM model O-G-S-M stands for Objective - Goal - Strategy - Measure OGSM is built consistently from company to department and then to individual in the company That consistency creates synergy, minimizes wastage of resources, increases focus, efficiency and competitiveness

for the company

- Objectives: must show the tangible results of the mission and in line with the

company's annual objective

- Goals: must be specific, clear and quantifiable Goals need to be

challenging, requiring maximum effort to accomplish, but should not be too challenging leading to impossible and disorienting in the implementation process

- Strategies: are specific actions to achieve goals

- Measures: are specific measures of numbers, milestones or ind icators,

KPIs help to easily measure the strategies that have been set up before

In parallel with determining the OGSM for 2018, building the roadmap to achieve the committed OGSM is also essential It will detail each customer care program for the year and provide guidance on how to follow the milestones Based

on that plan, the customer care staffs can set their work plans effectively

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 Expected Objectives: 80% customers know and understand the role of customer care center Improve the customer satisfaction on the scale Enhance customer loyalty and improve next purchase The establishment of the Customer care department will help DCL gradually connect well with the most practical needs of customers In order to connect effectively, the Customer care department needs to communicate well to all customers to ensure that 80% customers of DCL know and understand the roles and responsibilities of the department Accordingly, the Customer care department will capture more and more needs and suggestions from customers in order to have more appropriate solutions and customer care programs, improve customer satisfaction As a result, customer loyalty to DCL is likely to increase; hence, the purchase rate will improve

 Register SMS brand name service for the company to effectively communicate and promote the brand to customers The registration of the SMS brand name in the current circumstances of DCL is quite necessary This will be an official channel to deliver the most important messages from DCL to customers quickly The immediate benefit of this channel is to communicate the existence and role of the Customer care department to all customers Hence, the Customer care department will easily perform other connections, caring roles, such as congratulation messages on the occasions of birthdays, holidays, sales promotions, announcing product launching programs, customer conferences etc In a number of large-scale media campaigns, this channel is considered to be cost effective and efficient

 Determine the size of the department

Based on the strategy of the Customer care department and roadmap to achieve committed OGSM 2018, determining the number of needed emplloyees should be suitable to each stage of the year In the early stages of establishment of the department, the number of staffs does not need much Because that time the leader of the department needs more time to focus on researching, analyzing the customer service status of the company; establishing procedures and standards; searching and setting up appropriate CRM solutions In later years, when all the work of the department went into standard trajectory, when customers know more about the Customer care center of DCL, increasing the size of the department to meet the needs of customers will consider

 Building staff KPI and employee recruitment plan of the department

As soon as the size of the Customer care department is determined, the next action to do by the department manager is to build KPI for each employee The criteria

of this KPI must clearly reflect the functions and duties of each position and should be closely related to the annual OGSM of the department These criteria should be measured, hence the manager can evaluate the performance of each employee easily Based on the action plan for the year, the manager should propose a reasonable recruitment plan following the timeline of the year The salary, position and recruitment time should be clearly stated Once approved by the Board of directors, the plan will be sent to the HR department together with the job description and KPI accordingly to ensure that the HR department plans timely recruitment

 Survey and choose partner to provide CRM solution for customer care system

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To find a suitable and effective CRM solution for the Customer care department

of DCL, first is to build the needed functional requirements for it The required functions for the solution need to fit the functions, tasks and long-term strategy of the department The functions of this solution must meet the general CRM standards as well

as the specific requirements of DCL in order to increase the efficiency of the Customer care center Second step is to search and survey vendors Experienced suppliers in the pharmaceutical industry will be given priority Because they will better understand the needs of their customers as well as the management and operation expectations of the customer care centers in the pharmaceutical industry

The final step is to analyze the pros and cons of adjusting the available solution and developing a DCL-specific solution However, in the process of finding and surveying this solution, the Customer care department should mind to the allowed budget in order to compare all vendors to choose which the most suitable solution is

1.3 Research scope:

1.3.1 Scope of the study

With the urgent need for research and ongoing customer surveys, the Customer care department can take a preliminary look at customer needs and assessments of DCL products and services By the end of 2017, DCL planned to hold 10 customer conferences in 10 provinces Main criteria is that customers with good sales (cumulative sales of more than 10 million) will be invited to these conferences, and each conference must have 120-150 customers attended Customer care department found this to be a good opportunity to conduct the first customer survey Although the survey of customers through these conferences will be able to provide not entirely reliable feedbacks, however, with the criteria of selecting customers and with the number of customers attending these 10 conferences surely will receive highly representative and valuable feedback Through the results of this survey, the Customer care department can get an overview of customer perceptions of DCL products and services Accordingly, the Customer care department will have a basis for determining the development strategies and orienting the follow-up survey to confirm the accuracy of this result

1.3.2 Time

 Time to collect data: through 10 customer conferences of DCL from September to December 2017

 Customer feedback and satisfaction on DCL products and services

One of the most important goals of the Customer care department is to understand and improve the customer satisfaction of DCL's products and services Given DCL's status as a pharmaceutical company that has never had a Customer care department, the establishment of this department that plays the important role of connecting information and listening to customers' needs Therefore, in this study, it is imperative to review and analyze customer satisfaction of DCL products and services Since then, the Customer care department can identify the situation and offer solutions

to improve customer satisfaction in the future

a According to The American Marketing Association: “A service is in the form of

activities, profits or satisfaction offered at the time of sale or connection with the sale of goods.”

b According to Murti Sumarni: “A service is an activity or an advantage which can be given by a party to another party which is mostly intangible and can not affect

ownership, and its production or is not related to any tangible product.”

c According to Philip Kotler: “A service is any activity or benefit that one party can offer to the other, which is essentially intangible and does not give rise to any

transfer of ownership Its production can sometimes be linked to a physical product.”

d According to Philip Kotler and Amstrong: “A service is an activity or an advantage which is given by one party to another party which is basically intangible and can not effect any ownership.”

2.1.1.2 The development trend of the service sector in Vietnam:

This sector includes merchant services, utilities and not-for-profit organizations According World bank report 2017, in Vietnam, it represents about 40% of GDP 2016; the number of enterprises operating in the service sector accounts for the highest proportion of the total number of enterprises in the country (76.8%); the percentage of workers working in the service sector has also increased steadily over the years (from 15.8% in 1990 to 25.9% in 2005 and 33.4% in 2016); service ratio in GDP of Vietnam

is still low compared to many countries and territories (ranked 8th in Southeast Asia, ranking 29/34 in Asia, ranking 94/104 in the world)

As mentioned in chapter 1, service plays an important role in the pharmaceutical industry Before being sold in the market pharmaceutical products must go through the steps including submit the drug registration dossier to the Drug Administration for an approval of production and circulation; conducting production in a manufactory; testing qualified circulation products Therefore, strictly adherence to standards is mandatory for the pharmaceutical products and when they are being sold in the market, they need

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to ensure the quality and registered usage with the Drug Administration However, with the same effect or to treat the same pathological symptom, there will be many different drugs from different pharmaceutical companies, so the customers (in this report’s scope they are the pharmacy) based on what criteria to import and sell drugs of any pharmaceutical company? Certainly, beside factors of product quality and price, prestige and supporting services are factors that customers will always consider before buying drugs It can be understood that supporting services consist of pre-service, during-sales and after-sales services With the same drug prices, customers will automatically prioritize to import and sell goods of pharmaceutical companies who have got much more support services such as fast delivery service, flexible exchange services, seminars and workshops in domestic and oversea, the program gratitude customers with meaningful gifts, sales support programs at the point of sale (banner, poster, catalog etc.)

Therefore, focus on improving and enhancing customer care services is extremely important for a pharmaceutical company in today's highly competitive environment

2.1.1.3 Common characteristics of service

a Perishability: Services cannot be stored So the perishability of it is very high

b Intangibility: The service cannot be touched like physical objects Because of this characteristic, communication with customers must materialize the service

c Heterogeneity: Production of a service is based on a relationship between the customer and the staff or a material support Incompatibility between the rigidity of the company and the flexibility requested by the customer creates this characteristic of service Therefore, it is difficult to set a standard for any service Therefore, businesses need to try to make customers feel the same quality of service at different times

d Inseparability: In the production of services need the involvement of customers The customer plays the role of the producer and consumer because production and consumption are simultaneous

e Non-ownership: Customers can use service only They can not own it

These service’s characteristics are both the advantages and the disadvantages for businesses in general and for pharmaceutical companies in particular For customers (pharmacies), well caring them are a plus point for pharmaceutical companies because the service is invisible factor, moreover people are often being influent by emotions When they are to be concerned, taking care well pharmacies will remember longer and priority purchase much more products Caring is not only the frequently visit, gift giving customers but also the internal connection among departments of company to

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quickly resolve the urgent needs, complaints and suggestions came from customers It aims to help the company better meet the requirements of product quality and improve customer satisfaction on the company's services

2.1.1.4 The importance of defining the service marketing strategy

By understanding the concept of service and the characteristics of the service,

in order to maximize customer satisfaction, in addition to improving product quality, businesses need to develop strategies to bring the best service experience to customers In order to provide services in a perfect way, businesses need to build specific strategies and action plan:

• Firstly, they need to determine the most important service attributes to meet and exceed customer wishes

• Secondly, determine the service attributes on which our main competitors are most vulnerable

• Thirdly, determine the company’s current and future service capabilities

• Finally, assessing the strengths, weaknesses, reputation and values

Therefore, the service strategy will meet key customer needs, exploits the weaknesses of the competitors, capabilities and potential

2 1 2 Customer service concepts

Kocoglue, D., and Kirmaci, S (2012) defined that customer service is the act of taking care of the customer's needs by providing and delivering professional, helpful, high quality service and assistance before, during, and after the customer's requirements are met In other word, it is the process of ensuring customer satisfaction with a product or service Often, customer service takes place while performing a transaction for the customer, such as making a sale or returning an item Customer service can take the form

of an in-person interaction, a phone call, self-service systems, or by other means Some characteristics of good customer service include:

Promptness: Promises for delivery of products must be on time Delays and

cancellations of products should be avoided

Politeness: Politeness is almost a lost art Saying 'hello,' 'good afternoon,' 'sir,'

and 'thank you very much' are a part of good customer service For any business, using good manners is appropriate whether the customer makes a purchase or not

Professionalism: All customers should be treated professionally, which means

the use of competence or skill expected of the professional Professionalism shows the customer they're cared for

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Personalization: Using the customer's name is very effective in producing loyalty

Customers like the idea that whom they do business with knows them on a personal level

According to Kim et al (2003) nowadays, some companies love to talk to customers, and classify customer service as a marketing investment, rather than an expense that must constantly be slashed and analyzed Some businesses are even taking

it a step further, by turning their most prolific fans into advocates and online sales people There are three golden rules for the new marketing trend:

a Think long-term reputation vs short-term profit: Trying to optimize profit on a sale-by-sale basis is a fool's game, leads to frustrated customers and lost repeat business

b Identify your top customers and make them feel special with many companies, the most reverently loyal customers represent a disproportionately huge chunk of revenue Knowing who those people are - and giving them special attention - is a must-do for every company

c Make yourself available No outsourced call center team can match the passion, product knowledge and helpfulness of your most ardent supporters

Obviously, besides actions such as frequent ly inquiries, interest customers

in verbal, we need to satisfy customer needs and expectations base on customers’ feedback and suggestions that we collected during the customer caring process Consequently, customers will highly appreciate and become company’s loyal customers Thereby, the company will reduce the cost of finding new customers because according to the book “80/20 Principle in Marketing and Business”, Perry Mashall argues that 80% of companies' profits are from only 20% of their customers So maintaining and improving the caring quality for current customers and having the oriented customer classification for the appropriate caring programs will contribute to increase the revenue and prestige of the company

2.1.3 The relationship between customer service and customer care

Understanding the difference between customer service and customer care can be a challenge At first glance, customer service and customer care seem similar Both fields involve helping customers They use similar tools like email, chat and phone to communicate They employ similar skills like active listening and empathy to increase customer satisfaction Both customer service and customer support teams are critical to the customer experience delivered by businesses While both focuses on helping customers, the difference between them is that customer care is a specific type of customer service involving other skills such as documentation, product feedback, and technical problem solving

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Generally an entry-level job, with little

like CSAT, average handle time, and first

contact resolution

In addition to transactional metrics, also looks

at business-related metrics like net promoter score, customer effort score, and churn

Positions are available in every industry

that serves customers — e.g., retail, fast

food, banking, hospitality, etc

Positions are most often available in SaaS and ecommerce companies

Connects customers to existing answers

and solutions

Involves technical problem solving, troubleshooting, and finding new solutions and answers

2.1.4 Customer Satisfaction Theory

a Customer satisfaction is about assessing customer attitudes about products, services and brands While it's always been smart to keep customers happy (Kotler 2003), the term "customer satisfaction" became popularized in the 1980's with the total quality movement Therefore customer satisfaction postulate as one of the main indicators of business performance Accurate measurement of customer satisfaction through reliable consumer feedback is vital for developing effective management strategies coupled with allowing managers to implement satisfaction improvement programs

b Hoyer and MacInnis (2001) said that satisfaction can be associated with feelings of acceptance, happiness, relief, excitement, and delight There are many factors that affect customer satisfaction According to Hokanson (1995), these factors include friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service (see figure 2.1) Due to the peculiarity of the pharmaceutical industry and it also based on the size and authority of DCL's customer caring department which will focuses on five factors among these elements namely service quality, good value, quick service, courteous employees, helpful employees

as communication skills especially telephone communication skills, listening skills and problem-solving skills Furthermore, they need understand clearly about factors such as

- Products: quantity and the basic use of the product

- Policies and promotions periodically

- Functions and tasks of the relevant departments and the relationship between these departments: sales department, marketing department, R & D department etc

To becoming a polite, professional staff who will bring a good quality service and promptly to customers, they need to have enough knowledge of the product to consult clients; understand the sales process of company to analyse customer complaints and suggestions are right or wrong; know well the promotions programs to update information to customers when they need; and understand the functions and tasks of the relevant departments to convey information quickly and accurately

2.1.5 CRM theory

a What is CRM?: According to Tim Ehrens: “Customer relationship management (CRM) is

a term that refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving customer service relationships and assisting in customer retention and driving sales growth.”

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A CRM system allows businesses to manage business relationships and the data and information associated with them With CRM, firm can store customer and prospect contact information, accounts, leads, and sales opportunities in one central location, ideally in the cloud so the information is accessible by many, in real time [14] Customer relationship management (CRM) is an approach to manage a company's interaction with current and potential customers It uses data analysis about customers' history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth [15] One important aspect of the CRM approach is the systems of CRM that compile data from a range of different communication channels, including a company's website, telephone, email, live chat, marketing materials, and more recently, social media [16] Therefore, through the CRM approach and the systems used to facilitate it, businesses learn more about their target audiences and how to best cater to their needs

A CRM gives everyone across the business, including sales, customer service, marketing, and business development, a better way to manage the customer relationships and interactions that drive success With visibility and easy access to customer data, such as contact information, sales opportunities, service issues, and marketing campaigns, a CRM system can give organizations a clear overview of their customers With an easy-to-use, customizable dashboard, organizations can see a 360-degree view of the customer, all in one place [14] With CRM systems customers are served better on day to day process and with more reliable information their demand

of self service from companies will decrease If there is less need to interact with the

company for different problems, customer satisfaction level increases [17]

Eight benefits were recognized to provide value drivers [18]:

 Enhanced ability to target profitable customers

 Integrated assistance across channels

 Enhanced sales force efficiency and effectiveness

 Improved pricing

 Customized products and services

 Improved customer service efficiency and effectiveness

 Individualized marketing messages also called campaigns

 Connect customers and all channels on a single platform

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Currently, DCL has not applied CRM system, so transaction and customer information are not saved and evaluated completely, systematically and objective That causes difficulties for the company in statistic, updating and classifying customers in a professional, regularly and centrally way The customer classification criteria for DCL's routine care programs are being completely dependent on the cumulative revenue of the most recent period The personal information of customers has not been updated systematically so customer caring is facing difficulties

Investing in an integrated CRM system will help DCL gradually complete the customer data base systematically as well as having a comprehensive picture for each customer This is a base for DCL's customer care department carry on accurately analyzing and evaluating that serve for the company's regular customer care programs

Quantitative research is “explaining phenomena by collecting numerical data that are analysed using mathematically based methods (in particular statistics).” [20]

Quantitative research can be described as ‘entailing the collection of numerical data and exhibiting the view of relationship between theory and research as deductive, a predilection for natural science approach, and as having an objectivist conception of social reality [21]

Sources of quantitative data: There are 3 most popular sources as below

a Surveys: whether conducted online, by phone or in person These rely on the same questions being asked in the same way to a large number of people

b Observations: which may either involve counting the number of times that a particular phenomenon occurs, such as how often a particular word is used in interviews, or coding observational data to translate it into number

c Secondary data: such as company accounts

The researcher investigated for all OTC clients who took part in the company’s gratitude conferences that hold in the end of 2017 Its purpose to gather feedback from OTC clients on

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the following factors which probably help company got more information to find the better ways to improve company's products and services and better meet customer needs [19]

 Product quality

 The product prices

 Product designing and packaging

 The most impressive product

 Frequency of customer visits by the sales department

 Customer satisfaction on pharmacists’ attitudes, delivery service and customer caring service

 Preliminary assessment of customers on pharmaceutical companies in the market

2.3 Data collection method: Questionnaire

Questionnaires can be classified as both, quantitative and qualitative method depending on the nature of questions Specifically, answers obtained through closed-ended questions with multiple choice answer options are analyzed using quantitative methods and they may involve pie-charts, bar-charts and percentages Answers obtained

to open-ended questionnaire questions are analyzed using qualitative methods and they involve discussions and critical analyses without use of numbers and calculations

Advantages of questionnaires include increased speed of data collection, low or even no cost requirements, and higher levels of objectivity compared to many alternative methods of primary data collection However, questionnaires have certain disadvantages such as selection of random answer choices by respondents without properly reading the question Moreover, there is usually no possibility for respondents

to express their additional thoughts about the matter due to the absence of a relevant question [22]

An initially purpose of questionnaire developed by DCL's customer caring department to evaluate OTC customer satisfaction with company’ services in gratitude conferences by the end of 2017 The collected data would be use to analysis and base for building a strategy for 2018 as well as a development orientation for following years However, during the designing questionnaire, the sales department and the board of directors recommended adding some questions

to serve for corporate governance purposes Those questions focused on:

 Customer visiting frequency of pharmacist and business department leader The reason why the board of directors want to investigate this issue because according to the direct survey report of the customer caring department in some pharmacies in Hanoi,

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most pharmacies responded that DCL did not have a visiting pharmacist and introduce its product Visiting customer periodically is considered as a very important indicator to evaluate the pharmacist’s KPI because if s/he does not meet the clients and does not update the company's sales programs to the client, s/he is difficult to reach the sales target which means that the sales of the company can not be improved In addition, the Board of Directors also wants the managers of business departments who need to check and control the implementation this indicator for their staffs by directly visiting pharmacies to get their feedback on pharmacist’s working attitude So, sale managers have got document to apply reminding or disciplining for pharmacists who break the department's working rules

 Customer evaluation on the best pharmaceutical companies These questions will help company executives to test customer perceptions that coincide with some assessment and analysis of reputable organizations Thereby, DCL could have an appropriate orientation to better compete with its competitors

 Customer evaluation on which are the best antibiotics pharmaceutical company’s in Vietnam These questions were added to the questionnaire as the request

of the OTC sale department Because DCL is also a pharmaceutical company that focused on producing and selling antibiotics, gathering customer feedback on this issue will help DCL know how customers evaluate DCL’s antibiotics The survey results will help DCL identify the position of its competitors in the customer's mind

2.4 Data analysis method

There is a wide range of statistical techniques available to analyse quantitative data, from simple graphs to show the data through tests of correlations between two or more items, to statistical significance Other techniques include cluster analysis, useful for identifying relationships between groups of subjects where there is no obvious hypothesis, and hypothesis testing, to identify whether there are genuine differences between groups

In this study, the author would analyses collected data by figures that could be show the level, the rate of customer evaluation This data results would useful for the customer caring department to build strategic orientations to maintain the feedback positively or improve the negative feedback of customers

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Chapter 3 COMPANY INTRODUCTION

3.1 The development history of Cuu Long Pharmaceutical JSC

3.1.1 General introduction

Founded in 1976, DCL has over 40 years of experience in the pharmaceutical industry in Vietnam DCL is based in Vinh Long, Vietnam DCL is engaged in the manufacture and sales of pharmaceutical products primarily in Vietnam

DCL has 3 main offerings in its product portfolio:

 Pharmaceutical: Antibiotics, vitamins, pain relief, anti-inflammatory, respiratory etc

 Medical instruments: Syringes, needles, injection pumps and bandages

 Capsules: Empty capsules of various sizes

3.1.2 Infrastructure

DCL currently owns 4 factories: 2 pharmaceutical factory following GMP – WHO standard and 40 hectares pharmaceutical farms in Binh Phuoc and 1 medical equipment factory; 1 capsules factory named Vicancap This is the only factory in Vietnam which manufacturing and supplying all type of capsules All of DCL factories now is working with full capacity, with advanced technology imported from Canada and South Korea

3.1.3 Product

DCL has 3 product lines and the main product is medicine that divided into 15 groups such as analgesic, anti-biotic, anti-histamine, anti-inflamatory, anti-virus, cardiovascular, contraceptive, corticosteroid, cough, dermatology, erectile dysfunstion, gastrointestinal, musculoskeletal, tonic, vitamine This product line has got more than approved 250 types The second line is medical equipment with 20 different types encompass bulk needle, infusion set, single use syringe from 1cc to 50cc The last product line is capsule with diversified sizes, types for the demand of pharmaceutical and nutrition products

3.1.4 Distribution

DCL distribution is cover all over Vietnam It is also a prestige pharmaceutical supplier for major hospitals in Vietnam Currently, DCL has expanded its distribution network with 13 branches and more than 55 distributors

Since QI/2015, DCL has officially become a member of FIT Group Being a strategic sector in the investment structure of FIT, DCL has been invested in both capital and human resources Accordingly, along with the comprehensive restructuring

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plan, DCL has been recruited key personnel in management activities, operations, manufacturing, sales etc It aims to develop company business, together with better control company's debt In parallel, DCL continue to be to expand and upgrade plants and factories for increasing capacity With the investment from FIT, DCL has set a goal to become one of the top pharmaceutical company in Vietnam through consecutive research and new product development, with modern systems, and professional human resources Besides production activities business, DCL has and continues to implement social responsibility: to share value with the community, protecting the environment, building corporate culture that is match with company and

FIT core value [23]

3.2 Organizational structure

Figure 3 1 DCL’s organization structure

Figure 3 3 Annual production volume of non-antibiotics factory

Source: 2017 Report of Investment Division of F.I.T Group

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3.3.3 Vikimco (Medical Instruments)

Construction & floor areas: 2,358 sqm and 3,209 sqm*, respectively In operation since 1999 Figure 3 4 The annual production volume of Vikimco medical instruments factory

Source: 2017 Report of Investment Division of F.I.T Group

3.3.4 Capsule

Construction & floor areas: 5,677 sqm and 9,180 sqm* respectively In operation since late 1990s

Figure 3 5 The annual production volume of capsule factory

Source: 2017 Report of Investment Division of F.I.T Group

3.4 Overview of production and business activities

3.4.2 Product segmentation

3.4.1.1 Pharmaceuticals:

Products portfolio: Anti-biotic, Vitamin, pain-relief, anti-inflammatory, Respiratory system medicines, etc (appx.150 permit) Pharmaceutical products represented approximately 67.4% of the revenue in FY2016, of which the top 10 products accounted for 58.8% of the pharmaceutical revenue

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Figure 3 6 Pharmaceutical products

Source: 2017 Report of Investment Division of F.I.T Group & http://pharimexco.com.vn

3.4.1.2 Capsules:

Capsules accounted for approximately 22.1% of revenue in FY2016 The capsules are manufactured in 5 different sizes and a variety of colors, as requested by customers Cuu Long is the only authorized local manufacturer to produce the empty capsules based on the exclusive license granted by the Ministry of Health in Vietnam Figure 3 7 Empty capsule with various sizes

Source:2017 Report of Investment Division of F.I.T Group & http://pharimexco.com.vn

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3.4.1.3 Medical instruments:

Products portfolio: Syringes, Infusion wires, Others equipment (over 20 products types) Produced using Korean technology, there are more than 20 types of self-manufactured syringes and component parts which Cuu Long sells The syringes are classified under 5 different sizes, with the varying capacity of 1, 3, 5, 10 and 20 cc Figure 3 8 Syringes, Infusion wires, Others equipment

Source:2017 Report of Investment Division of F.I.T Group & http://pharimexco.com.vn

3.4.2 Distribution network:

There are 13 branches and 55 distributors Cuu Long distributes its products to the distributors and branches from 3 main warehouses in Hanoi, HCM and Vinh Long A fleet of 13 trucks with capacity ranging between 1 ton to 14 tons comprise of 7 trans-province trucks and 6 inter-province trucks [23] Larger trucks (8 & 14 tons) operate for the routes to the Northern region

OTC channel: 122 salesman, 17 ASM, 2 Supervisors and 2 RSM take care of 22,000 customers ETC channel: 31 salesman, 4 ASM and 1 product specialist monitor all bidding

3.5 Development orientation:

MISSION: “To connect and improve the lives of our community through superior healthy solutions.”

VISSION: “Be the most valued Vietnamese pharmacy company by our patients, employees

and partners for greatest innovation, accessibility and caring products and services.”

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CORE VALUES

“We understand that, the success of any business is rooted in the core values of that business Since becoming a member of the FIT Group, with a strategic orientation from the parent company, DCL has built its core values, which is the guiding principle for the Board of Directors and all the staffs of the company are concentrating on building the company to become a prestigious pharmaceutical company, evaluated by patients, employees and partners.” (Source: Website of DCL - http://pharimexco.com.vn)

Figure 3 9 DCL’s development orientation

Source: DCL Human resource – Admin Department

3.6 The DCL’s growth in total assets, charter capital and turnover

According to DCL’s financial results was cited in annual report in 2017 The DCL’s total assets as of 31 December 2017 reached VND 1,221,155 billion, an increase of 3.7% compared to that of 2016, achieved 84% of objective set at the

2017 General Meeting of Shareholders; Profit before tax was reported at VND 765,3 billion; total funding up by 3.7% while outstanding loans rose 18% compared to the year before NPL ratio was kept at 0.9% Profitability ratios inc luding ROA and ROE ratios were 6% and 11% respectively The profit from operating activities reached VND 88,321 billions, a decrease of 17% in turnover compared to that of

2016 This decreasing came from M&A between DCL and Euvipharm in February,

2017 and the company invested a lot of money to reconstruct Euvipharm Moreover, DCL also strongly invested in expanding distribution channel netwwork, developing branding and software of manage sale system [25]

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Chapter 4: THE STATUS OF THE BUSINESS

4.1 SWOT analysis for enterprises:

- The products of DCL are evaluated positively in both its quality and design This

is a result of a small customer survey conducted by the Customer care department by visiting 35 pharmacies in Hanoi and Can Tho province in late 2017

- It is the only company which owned a hard capsule factory in Vietnam

- Being the 2nd largest company in producing and supplying needles and

syringes in Vietnam (Source: BMI Report Quarter 4 - 2017)

- Its staffs have got deep expertise and long experiences in the pharmaceutical industry, especially R & D officers

4.1.2 Weakness

- The machinery system of factories are old, so lead to their low efficiency

- Lack of tightly coordination among functional departments

- Customer data is not systematized and updated periodically

- Customers have not been adequately taken care of on the occasion of big holidays in the year

- Sales and promotion programs have not been fully updated to customers

of developing and building the pharmaceutical industry to concentrate investment

on the development of the production of generic medicines; quality, reasonable

- Must compete with many imported pharmaceutical products

- Before becoming a subsidiary of FIT, DCL is a SOE Therefore, most of its employees are high age and limited capacity, especially workers

- The relationship with these management agencies plays an important role in the existence and development of pharmaceutical enterprises

4.1.5 Rival analysis

Currently, Vietnamese pharmaceutical companies mainly serve the domestic market, so competitor determining would be based on their market share in Vietnam pharmaceutical industry According to statistics of the Vietnam Drug Administration, Hau Giang Pharmaceutical Company and Cuu Long Pharmaceutical Company are two leading pharmaceutical companies in Vietnam and ranked sixth and seventh among the top 10 pharmaceutical enterprises with top revenue (5 other leading enterprises are foreign enterprises) DCL’s competitors in the domestic market are all companies active

in the pharmaceutical industry in Vietnam such as Hau Giang Pharmacy, Domesco, Imexpharm, Traphaco etc Among them, Hau Giang is leading with its market share of 14% (in the fourth quarter of 2017) and it is also DCL's biggest rival Hau Giang pharmaceutical company also owns the strongest distribution network in the industry with 18 subsidiaries, 28 branches, 67 pharmacies in hospitals in all over country The company's development objective is to become one of the top 10 leading South East Asia listed companies with revenue of 300 million USD by 2020 DHG will become a humanity symbol in contributing to society and improving the quality of life

In the customer care strategy, DHG does not use discounts, commission as the major criteria, but it used the sharing of benefits, quality products and prosperity as the long-term attachment goals Besides the cooperation principle of together prosperity, marketing activities such as support sales for customers, maintaining and building trust and friendly relations with customers are DHG’s competition advantages These activities are always maintained, monitored by daily activities The DHG opened a club,