Improving price management in washing machine business segment at Company A

TABLE OF CONTENT

Executive Summary

1. Introduction ……………………………………………………………………………………………………4

1.1 Company background…………………………………………………………………………………..4

1.2 Problem finding process ……………………………………………………………………………….6

2. Symptoms ……………………………………………………………………………………………………….6

2.1 Consolidated operating income (C.O.I) decrease……………………………………………..7

2.2 The immense situation of price dumping of WM products………………………………..9

2.3 The high rate of dealer’s complaint in WM price in the same distribution channel.10

3. Problem analysis …………………………………………………………………………………………….11

3.1 Problem identification …………………………………………………………………………………11

3.1.1 Initial cause and effect map ……………………………………………………………….12

3.1.2 Potential problems ……………………………………………………………………………13

3.1.2.1 Lack of Price Management…………………………………………………………..13

3.1.2.2 High Growth Requirement …………………………………………………………..15

3.1.2.3 Competitive Market…………………………………………………………………….17

3.1.2.4 Weak Marketing Strategy for WM………………………………………………..18

3.1.3 Updated cause and effect map ……………………………………………………………19

3.1.4 Updated possible problems………………………………………………………………..20

3.1.4.1 Lack of Price Management…………………………………………………………..20

3.1.4.2 High Growth Requirement …………………………………………………………..21

3.1.4.3 Competitive Market…………………………………………………………………….21

3.1.4.4 Weak Marketing Strategy for WM………………………………………………..22

3.2 Problem validation………………………………………………………………………………………23

4. Problem justification ………………………………………………………………………………………29

4.1 Main problem definition………………………………………………………………………………29

4.2 Problem existence……………………………………………………………………………………….29

4.3 Problem importance (consequences) ……………………………………………………………..30

5. Cause analysis ………………………………………………………………………………………………..31

5.1 Potential Cause …………………………………………………………………………………………..31

 

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5.1.1 Delegating Price Decision …………………………………………………………………32

5.1.2 Dynamic price promotion………………………………………………………………….34

5.1.3 Lack of price management process and procedure………………………………..36

5.2 Cause Validation ………………………………………………………………………………………..39

6. Alternative solutions……………………………………………………………………………………….41

6.1 Alternative solution 1: Redesign the price process ………………………………………….43

6.2 Alternative solution 2: Keep the organization to implement process………………….46

6.3 Alternative solution 3: Re-organization structure and establish Price Team to implement process ……………………………………………………………………………………..48
6.4 Solution Justification …………………………………………………………………………………..49

7. Change plan design…………………………………………………………………………………………50

7.1 Objectives …………………………………………………………………………………………………. 50

7.2 Target outcomes ………………………………………………………………………………………… 50

7.3 Action plan implementation ………………………………………………………………………… 51

8. Conclusion …………………………………………………………………………………………………….. 52

9. Supporting Information …………………………………………………………………………………. 54

9.1 Methodology……………………………………………………………………………………………… 54

9.2 Transcripts ………………………………………………………………………………………………… 54

10. Appendix ………………………………………………………………………………………………………. 61

11. Reference ………………………………………………………………………………………………………. 62

 

 

 

 

 

 

 

 

 

 

 

 

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LIST OF TABLES

Table 1: Dealer’s Complaint

Table 2: Cost for alternative solution 2

Table 3: Cost for alternative solution 3

Table 4: Action Plan (Author synthesis)

LIST OF FIGURES

Figure 1: Company structure of Company A

Figure 2: Sales Performance of WM division

Figure 3: Detail Sales Performance of WM division and Consolidated Operating Income

Figure 4: Initial Cause and effect map

Figure 5: Target Requirement of WM Business Segment

Figure 6: Updated Cause and effect map

Figure 7: The portion of the direct support scheme

Figure 8: The pocket price waterfall for example model

Figure 9: The contribution and investment ratio for seven typical dealers

Figure 10: The margin leakage for one model

Figure 11: Correlation between Retail sales and Net Sales

Figure 12: Fishbone diagram of main cause in company A (Author synthesis)

Figure 13: The net sales ratio of the typical model in company A Figure 14: The net sales ratio range of the typical model in company A Figure 15: The general analysis process for WM division (Author synthesis) Figure 16: Final cause and effect map (Author synthesis)
Figure 17: Redesign price management process (Author synthesis)

Figure 18: Price control analysis tools

List of Abbreviations

C.O.I Consolidated operating income

BOD: Board of Directors

PM: Product Manager

WM: Washing Machine

 

 

 

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Executive Summary

Currently, company A has confronted the decline of consolidated operating income when the sales volume still increases. The matter is that the development in sales performance did not accompany by profit growth. In the other words, the company has surfaced the trouble of revenue leakages, especially, the matter in price management. The purpose of finding the issues that company A are challenging, the author conduct meetings as well as in-depth interview with the Operational Head, Product Manager, Sales Managers, and some customers in 2019.

Through the interview of company A’s employees, using the figures and data from the organization, relevant literature, and advice from the Operational Head, the main problem was determined as lack of price management. In the direction of lacking price management, three possible causes have been discovered are delegating pricing decisions, dynamic price promotion, and lack of price management process and procedure. Following investigating and in-depth interviews, the key cause is identified to solve is lack of price management process and procedure. This study focuses on identifying the main problem and finding the key cause, whereby proposing solutions to help company A improve the business results.

1. Introduction

1.1 Company Background

Company A operates in the electronics industry in Vietnam is part of the Asia manufacturer company with approximately 1,000 employees. In Vietnam, it comprises four business units: Home Entertainment, Mobile Communications, Home Appliances & Air Solutions, Laptop, Monitor, and Beauty Care Product. Its’ headquarter is located in Hanoi and four nationwide offices in HCMC, Da Nang, Nha Trang, and Quang Ninh. Company A’s headquarter have many subsidiaries in all primary market worldwide, and company A is in charge of Vietnamese customers.

The company is structured by the business segment such as Home Entertainment (HE), Home Appliances (HA), Air conditioner (AC), Laptop-Monitor (ITP), ect…. The Home Appliance (HA) is the most critical business in Company A, accounts for the second-largest share of sales,
contributed 31.4% sales performance in 2019. In the Home Appliance business, the Washing

 

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Machine (WM) segment plays an important role, account for 25% sales performance in 2019. Therefore, the WM business will be the focus of this research.

 

Figure 1: Company structure of Company A

Five types of dealers:

Key Account Management: Dealer G, the principal account dealer with the direction of coverage expansion and penetration. The vital purpose of this kind of dealer is to obtain the No.1 market share.

North Traditional: Responsibility of selling a product to one wholesaler and then distribute to a small shop in the rural area in North and Middle.

North Modern: In charge of the dealer, which has a large number of stores in the market, which can deliver the products efficiently to some provinces. The chain of stores of this kind of dealer helps company A distribute products to regions and thus provide the consumer information, which is useful for identifying customer needs.

South Traditional: Responsibility of selling a product to one wholesaler and then distribute to a small shop in the rural area in the South.

South Modern: In charge of the dealer, which has a large number of stores in the market, which can deliver the products quickly to some province. The chain of stores of this kind of dealer helps

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company A distribute products to regions, and this provides the consumer information which is useful for identifying customer needs.

1.2 Problem finding process

To find out the main problem at company A with Washing Machine business segment, the author implemented the below steps:

– Based on the symptoms of the initial report, “sales profit” and “support rate” from the Sales

Department.

– Conducted an in-depth interview with Sales Manager, Product Manager, Salesperson, and key customers in company A to clarify the symptoms and explore potential problems.
– Referred to the literature to verify and update the cause-effect relationship between potential problems, variables, and symptoms. Furthermore, I rechecked the actual situation at company A to fully understand what has driven.
– Conducted an in-depth interview again to validate the existence of the main problem.

– Referred the literature to understand the consequences of the main problem (the essence of solving that problem) and continue using the in-depth interview to validate the practical importance of addressing it.

2. Symptoms

At the meetings with President, Operational Head, Sales Department Team, Cost and Profitability Management Team, the WM business segment was not good profitability from 2018 up to present. Secondary data and primary data will be analyzed and verify the existence of company A’s symptoms and find out negative symptoms. There are many symptoms for the problem that the company is confronting include the consolidated operating income (C.O.I) decrease, the immense
situation of price dumping of WM products, the high rate of dealer’s complaint in WM price.

 

 

 

 

 

 

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2.1 Consolidated operating income (C.O.I) decrease

As the data of primary sales from the Cost and Profitability Management Team and Operational

Head, we can see the general overview of the WM’s business from 2017 to 2019 in Figure 2 and

Figure 3.

 

 

250.000
Sales Performance of WM Division

14.000

200.000

150.000

 

134.845

180.463
196.705
12.000

10.000

8.000

100.000

50.000

77.467
104.012 104.889

6.000

4.000

2.000

– – Year 2017 Year 2018 Year 2019

Retail Sales Net Sales Operating Income

 

Figure 2: Sales Performance of WM division

Washing Machine The year 2017 The year 2018 The year 2019
Retail Sales 134,845 180,463 196,705
Net Sales 77,467 104,012 104,889
Operating Income 8,562 11,678 5,548
Net Sales/Retail Sales 57.4% 57.6% 53.3% Support Rate 42.6% 42.4% 46.7%
COI/Net Sales 11.1% 11.2% 5.3%

Figure 3: Detail Sales Performance of WM division and Consolidated Operating Income

The retail sales volume indicates the total amount of sales with the list price in case of without deduction for sales. Meanwhile, net sales are the actual revenue that the company gains after reduced by incentive support to customers (Net Sales = Retail Sales – Sales Support Promotion).
Company A records the actual performance based on the net sales figures.

 

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The retail sales indicate the total revenue of product earned by sales. The net sales are the yield that the company earns after support promotion to customers. The support promotion is used by company A to stimulate selling activities that reduce retail sales. Therefore, the support rate indicates the total support in percentage with retail sales.

WM’s retail sales performance has been a good trend in growth from the year 2017 to 2019, even though the growth rate was lower in 2019 compared to 2018. In detail, the growth rate of 34% in
2018 compared to 2017, and sales in 2019 increased by 16% compared with the year 2018. While retail sales were growing in 2019, net sales decreased significantly. Furthermore, the consolidated operating income was declined in 2019. That reveals the matter that the development in sales performance did not accompany by profit growth.

The fact is the retail sales were inversely proportioned with the operating income. One of the factors influencing profit decline when the high-level raise in sales is the enlargement in support budget for company A’s retail chains year by year, especially the last three years from 2017 to 2019. The growth in support budgets for the WM business segment is considered to be of the most worry in the Vietnam subsidiary. The data is pointed out that the significant increase in the support budget for company A’s retail chain. In 2017, the support level was 42.6%; in 2018, the support level decreased little to 42.4% and in 2019 reached 53.3%.

In general, in the WM market situation; currently, no brand has left the market due to the slump and saturation market. In other words, the market still has room for many manufactures could increase the product. However, the growth rate was not as strong as in previous years. Furthermore, the penetration of the new brand AQUA and the most development is that one more factory established for WM product in Vietnam in Jul 2019. Besides, According to market analysts’ estimates, the shift in consumer demand from top-load washing machines to front-load WM due to developed by technology that has shown the high demand from end-users.

In summary, the growth rate in sales of WM products each year is a good signal for the growing company. However, the accompanying is a remarkable increase in the support budget for retailers. Furthermore, the rate of the support budgets is going out of control in 2018 ~ 2019 and reaching
the highest level of the headquarter corporation break-even point of 50%. In other words, the more

 

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business of company A has, the lower the profit obtained. This negative ratio is a symbol that the business of this WM industry was not effective.

To conclude the first symptom from the Operational Information and Cost/Profitability

Management Team, the primary data showed that the WM segment was not positive in 2019.

2.2 The immense situation of price dumping of WM products

Vietnam subsidiary has a market price management policy, control the minimum price that dealers will apply following with company A’s requirements. The minimum price was used to enforce a dealer to buy a product to end-user. Regardless of how much company A supports dealers, the dealers must keep the market price of the product to stabilize the price. The purpose is to eliminate the price difference and unfair competition on WM product prices. However, the listing prices of WM products on the market are very different between the retail chains. This difference happened in a short time in each retailer stores, about 2-3 days, or in cases one week. Nowadays, with the high level of information transparent, it is not difficult for customers to know the prices of retailers.

On the other hand, comparing prices is much more comfortable, because retailers want to publish the prices and support programs to attract customers. The difference in price at retailers will lead to consumer purchasing decisions. To attract consumers, dealers are implementing lower price policies than competitors to sell out. The same situation in many retailers system for all WM product of company A, the WM products was effected to the decrease in price over time, making the price at retail dealers lower than the minimum price as company demand.

For instance, Dealer A had the golden week promotion to end-users, the price of WM product reduces significantly to attract consumers. Normally, the price reduced by 5%-10% per WM product. The negotiation between company A and dealer A about the market price failed. The result of that promotion is to affect other dealers, and company A receives a complaint from the rest of dealers, or the dumping price situation happened in all the markets.

The mechanism of price-setting between company A and dealers is in the contract that is the rule for both parties to implement and obligated to follow the commitment. However, not all

 

 

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commitments are carried out seriously and appropriately. Price terms have broken during selling execution, due to factors from dealers.

2.3 The high rate of dealer’s complaint in WM price in the same distribution channel

Based on information from the Sales Department, there are some issues from customer feedback and complaint. To collect the secondary data, the author interviews with Mr. TV, the Sales Manager who has the experience and worked for company A in 3 years and state that:

“Normally, we receive a huge number of dealer’s complaints about the price from other dealers. Comparing to the previous year, we realize that we are facing more feedback from dealers and the dealer forces us to balance the price in the market. I will give you some data that you have an overview of a dealer complaint”. (Mr. TV 45 years old)

To collect more clue, the author conducts an interview with Mr. VT, the KAM Sales Manager who has the experience and worked for company A in 7 years and state that:

“The situation of complaints of dealers in the market has increased, complaints take place weekly, with an average density every week receiving complaints from retail chains. Complaints from retailers are made by the evidence of special customer support programs, to provide customers with preferential prices, to attract customers by the low price policy. The dumping from dealers only takes a few days to sell out. The problem of dumping is problematic for electronics firms because the consequences bring suppliers challenging to solve”.

Based on the secondary data as displayed in Table 1, it can see that some main complaint from dealers as below:

1. Unbalance scheme to dealers

2. Complicated promotion

3. Unstable sales program to dealer

4. Not control price in the market

No. Date Complaint Made By Written Statement

1 5-Dec-
19
Dealer E – Buyer leader Contribution 14%
I concern about the sales program of company A, due to the complication in organizing them. We are facing short term promotion that makes us modify the scheme and price in the store.

 

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No. Date Complaint Made By Written Statement

2 6-Dec-
19

 

 

10-
3 Dec-
19

 

 

10-
4 Dec-
19

Dealer D – Buyer leader Contribution 10%

 

 

Dealer G – Buyer leader Contribution 36%

 

 

 

Dear F – Buyer leader
Contribution 17%
We usually compare our prices with other dealers to modify and adjust the same. We will find it hard if the gap in price with the other dealers. If we do not change, the consequences that we will lose customers.
I am worried about product price instability in the market because we feel we will lose our advantage of being the biggest retailer in Vietnam. Our customers already know the brands of washing machines. They trust in reputable brands, including company A., so every time customers come to the stores, they need us to give a little advice about the product, and their specific concern is the
price. Moreover, of course, in the Ho Chi Minh market, when there are many retailers, the end-users will compare prices. That leads us
to the business need to pay special attention to company A’s
policies and the correlation between other retailers in the same market.
Company A has a complicated promotion, sometimes increase the price that we could not sell out. Meanwhile, other dealers have a reasonable price, and we could not compete with them, even I had evidence for this gap. In some cases, we must complain and do the way to push sell out by cut the price to reduce inventory.

Table 1: Dealer’s Complaint

3. Problem analysis

3.1 Problem identification

Due to the limit of time and cost of the problem-solving project, this study identifies four possible problems leading to COI decrease in company A’s washing machine segment, then suggests solutions and proves them an efficient way to applying to the company to solve problems. After all of the above information, we determine the issue that occurs in the Sales Department and Product Management Department. Therefore, to find out four possible problems, the author uses the qualitative approach research includes the official business result reports of the cost and profitability analysis from Operational Head and Cost/Profitability Department and in-depth interviews from different groups of respondents working at the company such as Sales Managers, Salesperson, Product Manager, Operational Head, Business Analysis and key account customers.

We employ in-depth interviews to verify the potential causes of the “Consolidated Operating
Income Decrease of WM Department.” The discussion focuses on five people who are related to the symptoms and are insightful of the symptoms at company A as below:

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– Mr. CN – Operational Head, has been working in Company A for 15 years.

– Mr. DK – Product Manager, has been working in Company A in Head Quarter for 15 years, one year in company A, responsible for WM business, develop WM division, and in charge of revenue and profit of business segment.
– Mr. TV – Sales Manager, has been working for three years. He is responsible for the WM Segment Department. He is leading the growth of WM products and business leaders that drive the development of Modern Key Account customers. He controls and be in charge of sustainable market share advancement.
– Mr. VT – Key account Sales Manager, has been working in Company A for seven years, leader of top 1 key account customer (Dealer G), in charge of growth in the business result and develop market share, responsible for gaining market share.
– Mr. QH – Sales Manager, has been working in company A for over one year, leading the wholesales team, selling WM products.

3.1.1 Initial cause and effect map

Based on an in-depth interview with five people, the summary of the initial cause and effect map is showed as follows. Four potential problems lead to the symptom “Consolidated operating income decrease at WM segment”: lack of price management, high growth requirement, competitive
market, and weak marketing.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Figure 4: Initial Cause and effect map

3.1.2 Potential problems

3.1.2.1 Lack of price management

As the response of Mr. CN about the issue leading to C.O.I reduced in 2019, and he states that:

– The sales promotion and the price for dealers are complex and were short-term and seasonal responses with the market. Furthermore, I know that PM is lacked control price and sales promotion which provide benefits to dealers

– We have five sales team in charge of 5 kinds of dealers, the price structure of these dealers is different and not unified, leading to price conflict and uncontrollable sales program. The consequences are increasing customer complaints of price, and then they require compensation.

According to the responses of Mr. CN, he explained more about that situation. Sales Team and Product Manager has followed the seasonal scheme for dealers, which has been fluctuated twice per week or month to react with competitors. On the other hand, they have struggled with the complaint of dealers of price dumping of any dealer. They modify the price and support dealers into balancing the price of 5 kinds of dealers. It is complicated in comparing the price of each
model and the total support rate.

 

 

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According to the survey, Mr. DK deeply explained that:

– We lack control and deeply analyze the sales promotion and price structure of our dealers. We apply the different policies for each dealer, and sometimes we could not control all, and we act the support scheme case by case. Furthermore, we have depended on the sales team, which has knowledge and experience in the market. The fact is that the sales team makes market research and then we follow the price in the market. Besides, we feel confused and challenging to manage market price and price positioning.

Similarly, PM has the same viewpoint in difficulty to balance selling price and control support rate to dealers. While the company has many schemes and different levels of support, we still have to respond to continuous changes in the market, and with the dealers as well. This difficulty leads to the situation of not consider promotion carefully.

With the same opinion, from the conversation with Mr. TV, he stated that:

– Furthermore, our company is lacking in the control price and sales program. We provide a budget to customers differently, which makes the gap between them. The higher the gap, the higher the level the customers complain. We encountered when dealing with the fact of instability price in the market. For example, for the same product, we apply a selling price to our dealers that is higher than the prices of other dealers in the same market. They responded to us that they had the price list of that product; they also asked us for the new price list, and more importantly, when the new price applied, we had to protect their inventory. At that time, we must use more budget for those factors if this happens many times a year, the decline of C.O.I will be inevitable.

On the other hand, from the in-depth interview with Mr. VT, he shared that:

– PM gives sales promotion in the short-term period and changes them frequently, lead too hard to control the price and establish the strategy for customers.

– I give you an example of a lack of management of sales promotion and balance dealers’ support scheme. PM focuses on monthly achievement and supports special promotion to one customer for maybe one or two models. The consequence is that customers reduce the price to sell out those products. Our customer raises the complaint to me and requires compensation for their inventory. I need to solve the problem and response part of their demand to keep the relationship.

What is more in the in-depth interview with Mr. QH, he stated that:

 

 

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– One of the reasons I can mention that our company has a fluctuation scheme for selling products. We can imagine something changes quickly in selling price. As I know that many brands have the scheme or sales promotion and price structure each quarter, we have a sales program for months. Sometimes, we could not manage the price in the market and could not follow the changes in our company.

In terms of lack of price management, company A managed the C.O.I according to the business segment, lack of managing by each customer and by-products. Overall, they controlled revenue and expense based on the business segment. These factors allowed us to use the budget for sales which transfer from this customer to the others. Also, the problem of lacking price management happened due to not control each customer line and each product level. The term of lack of price management showed in point that company A focused on overall sales budget for the whole division without particularly analyzing and allocating budget for each customer and lacked price management in an individual product. The process of allocating and orienting for each customer plays an important role in balancing and directing for long-term development, however, there wasn’t any documentation for this part. While some complaints from customers came, company A tended to follow the dealers. Without the management of selling expenses on each customer will make dealing with dealers difficult. In other words, with the absence of price management, company A does not have the means or clear evidence, tools to respond to the claims from the dealers. Consequently, problems occurred such as price erosion, losing control of prices by losing control of market prices, the situation of unbalance between dealers within the same distribution channel.

From the analysis of the possible problem above, the issue of lack of price management and sales promotion look after the price conflict with many dealers, the fluctuation in the scheme, the over dealer margin rate, and is the higher rate of customers complaint and compensation. It is one of the factors that impact significantly on the high level of support budget used to the customer and directly leads to the C.O.I reduce.

3.1.2.2 High growth requirement

As the response of the leader of the WM division, they admitted that due to the high growth requirement of the company, it slowly results in their reaction to achieve the target. The
requirement of Company A for the growth was 135% in 2019. The target was set up based on the

 

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growth rate in 2018, which had significantly increased by 134% compared to 2017. The year 2017 was a period of the tremendous growth of numbers of retailers, especially the dealer G increased coverage on over province in Vietnam. This was the most important reason for the expansion of the manufacturer brand. However, the growth of the product will be slowed down when the system
of stores has been fully covered, the peak development period was over.

 

Business Segment
Y2017
Actual

Target
Y2018

Actual

Target
Y2019

Actual
Sales Sales vs PY Actual vs PY vs Target Sales % Actual vs PY vs Target
Washing Machine 134,845 161,814 20% 180,463 34% 12% 207,532 15% 196,705 9% -5%

Figure 5: Target Requirement of WM Business Segment

As Mr. JY mentioned that:

– With my division, the first reason is the pressure of high growth rate and the mission to secure the No.1 market share. For example, we focus primarily on dealer G, which has over 1,000 stores, and that helps us to maintain and develop the coverage of our product in the market. The growth rate was 175% and 205% in the year 2019 and 2018. As you know, the higher the growth rate, the more budget we spent, and the higher
level we depend on them.

Elaborating further, the leader of the WM division shared that, in case of the fail target in some customers, they have the pressure of achievement the whole segment, and they have to decide on the coverage of other customers. This situation still leads to the exchange of support promotion to the target accomplishment.

In addition to the Mr. PM above, he agrees with the challenge in gaining the target in the market with many competitors, and somehow company will depend significantly on some key dealers, especially dealer G, as well as accept their condition, as Mr. CN sharing:

We have the biggest dealer (dealer G) with the crucial role of gaining high growth and the No.1 market share, so we almost depend on this key dealer to push products to market and follow them to support the sales program.

In addition to the interview with Mr. VT below:

 

 

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– On the other hand, we depend on the most extensive dealer to push the product to the end-user. To overtake the rivals, the relationship and corporation with them are necessary. In some cases, we depend on them and accept their rule to achieve our target.

Besides that, Mr. TV point of view is that:

Our company focuses on one dealer to gain market share, which leads to the budget we spend so high. The bigger the dealer is, the higher the requirement they need, particularly, dealer G. We become dependent on them too much.

All things considered above, one of a potential problem can be defined as a high growth requirement that influences the higher support rate to the customer and makes the C.O.I reduced in
2019.

3.1.2.3 Competitive Market

According to the survey, Mr. JY deeply explained that:

– In the competitive market, we would instead focus on a competitive price strategy. To be honest, our product has many advantages benefits. However, we positioned price not equivalent because we are afraid of losing end-users.

Through sharing from the leader of the WM division, we are facing fierce competitors such as Electrolux, Sharp, Toshiba, LG and Samsung. The difference in benefits is not too much. Therefore, it is hard for a customer to realize the key attribute of each brand name. Due to that reason, the action of our company refers to set up a competitive price to attract customers and establish brand awareness in the consumer mind. As a consequence, we have received a lower income that affects our results in the last two years, especially in 2019.

On the other hand, from the in-depth interview with Mr. VT, he shared that:

– On the other hand, we depend on the largest dealer to push the product to the end-user. To overtake the rivals, the relationship and corporation with them are necessary. Besides the relations, we also use many
methods to push sell out, sometimes, setting the price lower than competitors to attract end-users.

The same opinion, collected the information from the in-depth interview with Mr. QH, he

mentioned that:

 

 

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Besides, as you know, in case we could not build up the awareness of the product to the customer mind, and we need to increase the target pushing product to a competitive market to gain No.1 market share, we need to make the price lower than competitors. Besides, we can gain and achieve the No.1 market share, a part of
the reason for our competitive quotation in the market.

For all the information collected in the in-depth interview, the problem of the competitive market and lower price definition are the part of reason impact on the C.O.I reduce.

3.1.2.4 Weak Marketing Strategy for WM

According to the responses of Mr. VT, he said that:

– Another point is that we have a weak marketing strategy and low brand awareness of WM products. We can see the advertisement for WM products, and our company does not focus on that. As you know, we have an advertisement on television broadcast for a TV segment and the KOL for TV, but we do not see it for the WM division in some public communication. Our relationship directly to end-user is the Facebook advertisement, and it targets to the high-class product such as high-end WM or Twin-wash, not mention the value of premium or basic products which contributes majority to sales performance. Therefore, weak marketing and low brand positioning also cause sales less favorable, and we could not set up the right market price.

– With the advertisement, we choose another way to do by ourselves in supporting the dealer to do it for us to promote our products and our campaign to end-users. Besides, one disadvantage is that dealer does it for us, but they would instead focus on their brand, not prioritize our product or sales promotion. In other words, we give them to budget more than we receive, that is the truth. Comparing with competitors, they do it by themselves and less rely much on dealers.

Regarding the response of Mr. QH, he shared that:

– With the WM division, we do not have a proper concentration for this kind of product while we have many benefits for customers. The benefits which cannot be conveyed to the consumer for gaining awareness of the company product line. In other words, we do not position our product well. For example, we have many advertisements for the Tivi division on the media, rich media such as ads in Television broadcast in golden time, whereas we do not have any social media ads like that, we have billboards or Facebook only. Furthermore, we focus on premium products such as high-end WM with the highest price and adapt so little consumer needs. When I interview our customers, I think that we have not reminded our customers of our products by remembering our advantages benefits. In my channel, I have to set up any ads by supporting
small stores to display our products in their space frequently.

 

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