Luận văn thạc sĩ improving personal selling activities a case of nordic car company in ho chi minh city vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
---------------------------------

Trinh Duy Bang

IMPROVING PERSONAL SELLING
ACTIVITIES: A CASE OF NORDIC
CAR COMPANY IN HO CHI MINH
CITY – VIETNAM

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2018

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
-------------------------------

Trinh Duy Bang

IMPROVING PERSONAL SELLING
ACTIVITIES: A CASE OF NORDIC
CAR COMPANY IN HO CHI MINH
CITY - VIETNAM
MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2018

2

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EXECUTIVE SUMMARY
When global automobile market gets a remarkable resilience, especially concentrating
in emerging nations, and Vietnamese economy started to integrate deeper into global
trade, there were many luxury brands distributed mainly in Ho Chi Minh city and Ha
Noi capital. Coming along with this trend, premium cars such as Roll-Royce, Porsche,
Maseratti, Mercedes-Benz, Lexus, Audi, BMW and so forth were retailed in Vietnam
with higher numbers recent years.
Although luxury car segment is always a potential market for car-retailing investors,
there are only few brands which have performed well for years and become top of
mind when customers decide to buy a premium car. Their success could be easily
explained by having effective ways in operating sales force. This fenced off the
penetration of other famous luxury brands which tried to attack this lucrative market.
In August 2016, Nordic Car Joint Stock Company (in short, it would be called Nordic
Car in this thesis) decided to distribute Volvo cars as a dealer with two branches in Ho
Chi Minh city and Ha Noi capital. However, sales results have been too low since
Nordic Car in Ho Chi Minh city was established. This research will explore the causes
of low sales results of Volvo in Ho Chi Minh branch. The findings of the study
revealed that ineffective personal selling activities played the most important role in
low sales results comparing to other factors from August 2016 to Dec 2017.
Moreover, some reasonable solutions would be suggested in order to improve
personal selling activities of Nordic Car company in Ho Chi Minh branch.

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ACKNOWLEDGEMENT
Without the encouragement, guidance and support of Prof. Nguyen Thi Mai Trang
and other teachers, the entire master-level project would not be possible. I would like
to send my appreciation to my advisors. It has been a pleasure working with you on
this project.
I would like to thank my friends and family for greatly supporting me while I was
working on my research. Your patience, understanding and respect were greatly
appreciated.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY ......................................................................................... 3
ACKNOWLEDGEMENT........................................................................................... 4
LIST OF TABLES ....................................................................................................... 6
LIST OF FIGURES ..................................................................................................... 6
1. INTRODUCTION ................................................................................................ 7
1.1.
1.2.

Saigon General Service Corporation ......................................................................... 7
Nordic Car Joint Stock Company .............................................................................. 8

2. PROBLEM CONTEXT ....................................................................................... 8
2.1.
2.2.
2.3.

Global automobile market.......................................................................................... 8
Vietnamese automobile market................................................................................ 11
Volvo global business results and Nordic Car company situation in Vietnam........ 13

3. PROBLEM IDENTIFICATION ....................................................................... 17
3.1.
3.1.1
3.1.2
3.1.3
3.1.4
3.1.5
3.1.6
3.2.
3.2.1
3.2.2

Potential Problems ................................................................................................... 20
Unsuitable products for Vietnamese ........................................................................ 20
Inconvenient business place ..................................................................................... 21
Inefficient advertisements and PR activities ............................................................ 23
Unattractive direct sales promotion ......................................................................... 24
Ineffective personal selling activities....................................................................... 25
Uncompetitive price ................................................................................................. 28
Problem Validation .................................................................................................. 29

Eliminating product, place, promotion and price as the main problem ................... 30
Illuminating ineffective personal selling as the main problem ................................ 34

4. POTENTIAL CAUSES ...................................................................................... 35
4.1.
4.2.
4.3.
4.4.
4.5.

Lack of professional customer relationship management system............................ 36
Disregard of technical guide on Volvo functions .................................................... 38
Weak team selling accessory, insurance, finance and service ................................. 39
Cause validation ....................................................................................................... 40
Cause - and - effect tree ........................................................................................... 43

5. ALTERNATIVE SOLUTIONS ........................................................................ 44
5.1. The first alternative solution: Using a basic customer relationship management
software ................................................................................................................................ 47
5.2. The second alternative solution: Using a modular customer relationship
management software .......................................................................................................... 49

6. ORGANIZATION OF ACTIONS .................................................................... 56
7. CONCLUSION ................................................................................................... 58
8. SUPPORTING INFORMATION ..................................................................... 59
APPENDIX ................................................................................................................. 80
REFERENCES........................................................................................................... 82

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LIST OF TABLES
Table 1: Top 10 best-selling car brands in 2017
Table 2: Volvo retail sales on over the world in 2016 and 2017
Table 3: Top 07 luxury car brands have positive change from 2016 to 2017
Table 4: Sales volume of luxury dealers around Volvo Ho Chi Minh in 2016 and 2017
Table 5: Statistics of prospects, buyers and closing ratio between Volvo Ho Chi Minh
and Volvo Ha Noi in 2017
Table 6. Evolved selling process
Table 7: Estimating cost of using CRM Viet software in a year
Table 8: Estimating cost of using Azsoft software in a year
Table 9: Action plan
LIST OF FIGURES
Figure 1: Savico investment structure
Figure 2: Global cars and light-commercial vehicles sales between 2016 and 2017
Figure 3: Global cars market share by segments between 2016 and 2017
Figure 4: The number of sold cars in Vietnam from 2014 to 2017
Figure 5: Volvo global retail sales from 2013 to 2017
Figure 6: The number of sold luxury automobile in Vietnam from 2014 to 2016
Figure 7: Reason why prospects refuse to buy Volvo cars
Figure 8: Selling funnel
Figure 9: Cause - and - effect tre

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1. INTRODUCTION
1.1. Saigon General Service Corporation

Figure 1. Savico investment structure
(Source: Savico website)
Saigon General Service Corporation (Savico) was established in September 1982 with
the initial idea is focus on services activities. The company was formally converted
into a joint stock company on 4 January 2005. Savico was listed on the Hanoi Stock
Trading Center (HNX) on 21 December 2006 and transfered listing status to
Hochiminh City Stock Exchange (HOSE) on 1st June 2009. Over 30 years of
experience in business operations, Savico’s strategy for 2015-2020 and the vision to
2030 is to continue to develop under the form of investment corporation focusing on
three areas: Trading and Services, Property Services and Financial Services. Savico
has been setting up and developing the car dealership and motorbike dealership
network of prestigious manufacturers such as Toyota, Ford, GM Daewoo... through
the system of 13 subsidiaries and 5 associates across Vietnam. Savico now is the
leading car distributor of Vietnam Automobile Manufacturers’ Association (VAMA),
the market share of Savico system achieved 8.5% of VAMA in 2016.

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1.2. Nordic Car Joint Stock Company
Nordic Car Joint Stock Company is a member of Savico’s automobile dealer network.
Nordic Car is the unique representative for import and retail of Volvo Cars
Corporation in Vietnam. Its operations are import, retail, marketing, supplying aftersales services for luxury cars branded Volvo in Vietnam. Besides, it has authority to
appoint agency and service center on nationwide. In August 2016, Nordic Car opened
two branches, Volvo Phu My Hung in District 7, Ho Chi Minh city and Volvo Long
Vien in Long Bien District, Hanoi capital, and all facilities were invested according to
the newest standard of Volvo Cars Corporation. Service system was fully equipped
with machines, modern technology equipments, and technical teams were trained
methodically and intensively by Volvo Cars Corporation. With more than 60 billion
Vietnam Dong of investment, Nordic Car Joint Stock Company is expected to become
one of the strongest premium car retailers in Vietnam which brings the unique and
attractively Scandinavian values to Vietnamese customers. Both two branches have a
similar structure as follow: a managing director, a sales and marketing department
with about 35 salesman divided into 2 teams, a human resources department, a finance
department and a workshop.
2. PROBLEM CONTEXT
2.1. Global automobile market

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Figure 2. Global cars and light-commercial vehicles sales between 2016 and 2017
(Source: JATO global car and LCV sales press release in 2017)
3

According to JATO – a prestigious company of car comparison and automotive
market research, global car sales had a resilience with 86.05 million units selling out
in 2017 and up 2.4 % comparing to 2016. Global car and light commercial vehicle
(LCV) sales from 2016 to 2017 witnessed a decrease of traditional market like Korea
and South America, but a remarkable increase in Asia Pacific and South America. In
the early months of 2017, Chinese government implemented a policy of limit car
purchase, but from the second quarter, giant demand for the whole population revived
then it boosted the growth rate at 2.3% to the end of the year. Despite crisis of diesel
fuel, South America showed the strongest development of automobile demand. Brazil,
Argentina and Chile contributed mostly in this region’s growth. South East Asia
region witnessed a powerful growth of Thailand due to tax policies in Asean Free
Trade Area agreement.
Table 1. Top 10 best-selling car brands in 2017

Cars and Pick-up
TOYOTA
VOLKSWAGEN
FORD
HONDA
NISSAN
HYUNDAI

2017
7,843,423
6,639,250
5,953,122
4,967,689
4,834,694
3,951,176

Growth Rate
+5%
+3%
-2%
+7%
+5%
-9%

Ranking
1
2
3
4
5

6

CHEVROLET
SUZUKI
MERCEDES

3,857,388
2,891,415
2,534,181

0%

7

KIA

+11%
8
+13%
9
-10%
10
2,511,293
(Source: JATO global car and LCV sales press release in 2017)

JATO3 pointed out that Toyota continued to maintain its position as the most popular
global brand with many top-selling models. The presence of Japanese brands was
shrinking in the United States and China, but that was offset by increased purchasing
power in potential markets such as Thailand and Argentina. Toyota sales are up 5% in
2017. Volkswagen, a direct competitor to Toyota, had a successful year of business

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beyond expectations. Despite fraudulent gas fraud scandal with billions of US dollars
in fines, especially in the United States, German car sales unexpectedly surpassed the
Japanese automaker to take the number one position. But if not counting the sub
brands, a single Volkswagen cannot beat Toyota. Nevertheless, the popular German
car – Mercedes Benz brand still finds its light in trouble thanks to good buying power
in the world's most populous market - China. Volkswagen also represented the
strength as the highest market share in Europe. Total sales in 2017, Volkswagen grew
3%. Mercedes, Suzuki and Honda were top three best performers of growth rate from
2016 to 2017.

Figure 3. Global cars market share by segments between 2016 and 2017
(Source: JATO global car and LCV sales press release in 2017)
Sport Utility Vehicle (SUV) was the largest drivers of growth which reached 27.85
million sold units, and 3.14 million units more than 2016. Nissan X-Trail/Rogue was
the best-selling SUV with 814,000 units in 2017 and raised 6.5% volume on over the
world. SUV divided into some subtypes like C-SUV (built from C car’s chassis), BSUV (built from B car’s chassis and smaller than C), and so forth. Obviously, SUV
have continued to take 34% market share away from traditional segments, and this

trend was not restricted to particular markets – it’s a trend that we’ve seen on a global

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scale and expect to continue in some next years. Compact cars, midsize sedan, wagon
and MPVs were impacted the most.
2.2. Vietnamese automobile market

Figure 4. The number of sold cars in Vietnam from 2014 to 2017
(Source: VAMA reports in 2014 to 2017)
The number of automotive vehicles selling out in Vietnam in 2014 was 133,588 units
and it was doubled in 2016 with 271.833 sold vehicles.4 VAMA divided automobile in
Vietnam into three types namely passenger cars (PC), commercial vehicle (CV) and
special-purpose vehicle (SPV). Total volume of sold passenger cars in 2014 was
79,813 units, and only after 12 months it passed over 117,000 units. In 2016, if only
counting PC, the sold-out vehicles increased 36% to reach 159,501 units. Vietnam
became one of the most attractive environment of automotive investment and the
second fastest growth of automobile countries among South East Asia region. In 2017,
the whole market decreased about 7.8% because 0% imported tax from South East
Asean countries created waiting psychology for entire Vietnamese buyers. However,

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when all automobile taxes could be completely clear in middle of 2018, the powerful
resilience definitely comes back.
In the report to Vietnamese government in November 2016 about the strategy for
automobile development of Ministry of Industry and Trade of The Socialist Republic
of Vietnam,5 by 2015, the automobile industry has more than 400 enterprises, mainly
in the South East and the Red River Delta. However, most businesses are small and
medium size. Total assembled capacity is just about 460,000 units per year, of which
47% is from foreign invested sector and 53% is from domestic. In the period 20012014, the average growth rate of automobile assembly is only 17% per year. Each
year, taxes alone, the automobile industry contributes over one billion US dollars to
the state budget. In addition, the industry has created jobs for about 100,000 direct
employees. Many types of trucks, passenger cars of 10 seats or more, specialized
vehicles manufactured in Vietnam have achieved high localization rates, basically
meeting the domestic market (07 tons truck meets about 70 % demand, with an
average localization rate of 55%, 10 seats passenger cars and specialized vehicles
meeting about 90% demand, with localization rates from 45% to 55%). Some kinds of
trucks have been exported to Laos, Cambodia, Myanmar, Central America. Otherwise,
the localization rate of vehicles less than 9 seats is still very low. Although
government understood that automobile assembly industry is important to Vietnam

economy, there is not enough good strategy to attract big corporations to invest
assembly plants in Vietnam. Economic fluctuations and policy changes, especially tax
and fee policies, are major factors affecting production and consumption of cars.
Vietnam has been recognized as the second-prioritized choice of big corporations in
Asean region producing and assembling passenger cars up to 9 seats (which help bring
higher value comparing to truck assembly). Before investing in car assembly plants in
Vietnam, big car corporations as Toyota or Ford have invested in large-scale car
production projects in other regions of South East Asia such as Thailand or Indonesia.
Furthermore, basic materials such as steel, rubber, and plastics of automotive
supporting industry depend on imported materials. All this makes the business
investment in the production of auto parts and components less competitive because
of the high production cost. Beside the subjective reasons, the level of Vietnamese
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enterprises is still limited, the assemblers are not interested in supporting industry, and
do not create conditions for domestic enterprises to participate in the supply chain of
production. To meet the significant demand in Vietnam, most of the investors chose
decreasing assembly and increasing import vehicles, especially focusing on luxury
segment.
2.3. Volvo global business results and Nordic Car company situation in

Vietnam

Figure 5. Volvo global retail sales from 2013 to 2017
(Source: Volvo Car Group annual report from 2014 to 2017)
Volvo Car Group annual reports respectively in 2013, 2014, 2015, 2016 and 2017
showed that6 the development with nearly 36,000 units every year from 2013 to 2017
has confirmed a strong development of Volvo with many new and wide-ranging
products. A robust 27.3% rise of operating profit from 11 billion SEK (Swedish
Krona) in 2016 to 14 billion SEK in 2017 was the new record that Volvo board of
directors responded to their stakeholders. Moreover, 2017 net revenue for the period
increased 16.5% to 210,9 million SEK compared to 180,9 million SEK in 2016 while
the operating profit margin improved from 6.1% in 2016 to 6.7% in 2017. These
significant figures were mainly underpinned by a strong increase in China and a

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substantial rise in the US, Volvo’s two largest individual sales markets. Mr. Håkan
Samuelsson, president and chief executive of Volvo Car Group stated in annual report
that Volvo is going from strength to strength. The new models are successful, sales
are at record levels and profits are up substantially reflecting the contribution of all

our employees. On the back of these achievements, he foresees that 2018 will also be
a record year in terms of sales.
Table 2. Volvo retail sales on over the world in 2016 and 2017
Volvo retail sales, number of cars sold
Western Europe
China
Other markets
US
Total

2016

2017

Change %

290,925
90,930
69,751
82,726
534,332

298,948
114,410
76,715
81,504
571,577

2.8%
25.8%

10.0%
-1.5%
7.0%

(Source: Volvo Car Group annual report in 2017)
For the full year 2017, Western Europe gave just 2.8% increase in sales and reported
retail sales of 298,948 units. Important markets, including Germany, UK and
Belgium, all delivered slight growth, while sales in Sweden and Norway reached
nearly 7,000 units. The XC60 SUV model was the best-selling model with retail sales
of 61,148 units, while the XC90 SUV model strongly supported the overall solid sales
performance with 29,086 units sold. If counting each single nation, China became the
biggest consuming market of Volvo from 2013. Enjoying benefits from the tax cut of
small engine, Volvo Cars in China reached 25.8 % growth rate and 114,410 sold units.
In the USA, one of the most competitive market on over the world, Volvo keep selling
81,504 cars and received small decrease at -1.5%. Clearly, Volvo catched up with
SUV trend of global market and Volvo are on the way to increase their presence at
fast-developing areas.
Table 3. Top 07 luxury car brands have positive change from 2016 to 2017
Luxury Car Brands Have Positive Change
GEELY (INCLUDING VOLVO)
MERCEDES
RENAULT
BMW
SUBARU
AUDI
PEUGEOT

2016
773,326
2,242,638

2,126,380
1,933,649
1,000,371
1,829,320
1,590,300

2017 Change %
1,245,055
61%
2,534,181
13%
2,275,227
7%
2,030,331
5%
1,050,390
5%
1,847,613
1%
1,590,300
0%

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

(Source: JATO global car and LCV sales press release in 2017)
3

According to JATO analysis of global top 25 brands, Geely stood at 1st position
among seven luxury car brands having positive change from 2016 to 2017. Actually,
when Volvo became member of Geely automobile corporation, Geely has
continuously remained success for 7 years, and in 2017 Geely remarkably achieved
61% growth rate with 1,245,055 units including Volvo. On global scale, Volvo has
been growing unstopably, and the number of sold Volvo cars in 2017 is equal to
22.5% Mercedes – the luxury market leader, 28.2% BMW, 30.9% Audi.
In contrast, Volvo business activities in Vietnam did not bring successful results as
they achieved on world-wide scale or China in particular. VAMA statistics within
three nearest years indicated4 that Mercedes, Lexus, BMW, Audi and Peugeot have
been five most popular brands in the segment of luxury cars in Vietnam. Mercedes has
become the first choice when people buy a luxury car with over 50% market share in
luxury segment every year.4 Nordic Car company was received 60 billion Vietnam
Dong to develop Volvo in Ho Chi Minh and Ha Noi, but 95 sold out units in 2016 and
160 sold out units in 2017 were big failures of the company after 17 months doing
business. The situation of Volvo in Ho Chi Minh branch has been worse since the
showroom was established in August 2016 in central area of luxury car dealers – Phu
My Hung town of District 7 of Ho Chi Minh city. Volvo Ho Chi Minh branch only
contributed 40 cars for 8 months of 2016 and 60 cars for entire 2017. The highest
monthly sales volume was just 8 cars still under the minimun sales target - 20 units
given by the branch managing director.
Table 4. Sales volume of luxury dealers around Volvo Ho Chi Minh in 2016 and 2017
Dealers

Y16

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Mercedes

930

102

54

92

94

106

121

118

93

89

82

71

64

1,086

BMW

279

45

26

37

32

36

31

12

0

0

0

0

0

219

Peugeot

Y17

78

5

1

6

6

7

7

7

8

8

5

4

5

69

Lexus

706

42

16

43

45

48

51

53

47

45

36

38

32

496

Audi

298

26

7

23

24

28

33

35

32

33

26

18

13

298

Volvo

40

4

0

3

5

7

8

7

7

7

5

4

3

60

(Source: Volvo Ho Chi Minh Branch Sales Department)

There are 5 nearest luxury car showrooms around Volvo Ho Chi Minh branch namely:
Mercedes Phu My Hung, BMW Phu My Hung, Peugeot Phu My Hung, Lexus Ho Chi
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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

Minh and Audi Ho Chi Minh. All of these competitors are located in District 7 and
District 1, and their monthly sales volumes are always impressive which make them
among the best luxury car dealers in the city. According to data from Volvo Ho Chi
Minh sales department, Mercedes Phu My Hung sold out over 90 units per month in
2017, Lexus Ho Chi Minh got over 40 units, BMW Ho Chi Minh and Audi Ho Chi
Minh had 18 and 24 units, Peugeot Phu My Hung also achieved 6 units per month
even though Peugeot Phu My Hung are only permitted to sell for customers living in
small areas around central districts of the city by Thaco corporation – mother
company. For entire 12 months of 2017, Volvo Ho Chi Minh only sold out 60 cars
that was equal to 87% sales volume of Peugeot and approximately equal to 66.7%
sales volume of Mercedes Phu My Hung in only one average month. This low sales
result are unacceptable for 30 billion Vietnam Dong investment to Volvo Ho Chi
Minh branch. Although both general market demands for automobile industry and
luxury segment in 2017 were lower than the previous year due to government decree
number 116/2017/ND-CP on requirement for manufacturing, assembly and import of
motor vehicle and trade in motor vehicle warranty and mantenance service, Volvo Ho

Chi Minh sales volume was still extremely low comparing to other dealers in the same
location after two years operation.
Table 5. Statistics of prospects, buyers and closing ratio between Volvo Ho Chi Minh
and Volvo Ha Noi in 2017
Ho
Chi
Minh

Ha
Noi

Jan

Feb

Mar

Apr

62
4

16
0

66
3

65
5

6.5
61
7

0.0
18
2

4.5
68
9

11.5

11.1

13.2

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Y17

72
7

81
8

82
7

72
7

71
7

58
5

52
4

51
3

748
60

7.7
65
9

9.7
71
10

9.9
85
9

8.5
81
11

9.7
39
4

9.9
86
15

8.6
62

9

7.7
61
8

5.9
61
7

8.0
758
100

13.8

14.1

10.6

13.6

10.3

17.4

14.5

13.1

11.5

13.2

Prospect
Buyer
Closing
Ratio (%)
Prospect
Buyer
Closing
Ratio (%)

(Source: Volvo Ho Chi Minh Branch Sales Department)
Statistical numbers of prospects, buyers from those prospects, and closing ratio
between Volvo Ho Chi Minh and Ha Noi showed that with similar numbers of
prospects, Volvo Ho Chi Minh generated only 60% buyers comparing to Volvo Ha

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

Noi. Obviously, Volvo Ho Chi Minh branch has low sales results not only in
comparison with other luxury dealers around Volvo Ho Chi Minh area, but also in
comparison with Volvo Ha Noi branch.
In the meeting of board of directors of Nordic Car company in December 2017, Mr.
Mai Viet Ha – chairman of Nordic Car concluded that
We need to accept that our sales results were too low comparing to other luxury
automobile distributors. Volvo has been stronger than ever before on over the world.
Volvo changed and succeeded with three famous commitments safety, technology and
environment. However, Nordic Car could not follow what Volvo did to succeed on global
scale. We need to review each aspect that influence our low sales: product, price, place,
or promotion, in order to find out the most effective solutions.

With the limit of time and cost of the solving problem project, this study will find the
main reason of Volvo Ho Chi Minh low sales results and suggest solutions and prove
them efficient in applying into company’s problem.
This study approach is based on qualitative method including secondary data from
JATO, VAMA, Ministry of Industry and Trade of The Socialist Republic of Vietnam
reports, data of Nordic Car sales and marketing departments, and in-depth interviews
from different groups of respondents such as: Volvo Ho Chi Minh salespeople, sales
and marketing managers in Volvo Ho Chi Minh and Ha Noi branches, showroom
managing directors, and customers who bought Volvo cars and another refused to
buy.
3. PROBLEM IDENTIFICATION
Based on the survey that Dealer Customer Relation Center (DCRC) of Volvo Ho Chi
Minh Marketing department conducted by calling and sending emails to Volvo
prospects, the results obviously showed reasons why Volvo prospects refuse to buy
Volvo cars. DCRC received prospects data from Sales and Marketing department.
Every month, both offline and online campaigns brought to Volvo Ho Chi Minh about
60 people who reached 4 criterion for Volvo prospect: having enough money to buy a
Volvo car with minimum price at 2.7 billion Vietnam Dong, having legal rights to buy

a Volvo car, intending to buy a Volvo car within one month, and providing clearly
enough contacting information such as emails, phone numbers, home addresses. In the

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

end of each month, DCRC employees would interview these Volvo prospects in order
to understand why or why not those prospects chose Volvo cars. There were 427
people among total 748 prospects gave their opinions about why they refuse to buy
Volvo cars in Nordic Car Ho Chi Minh branch in 2017.
Reasons Why Prospects Refuse To Buy Volvo Cars In 2017
0%

10%

20%

60%

70%

80%

17%
26%

No second-level agencies in provinces (PLACE)
18%

23%

Few ads appears offline (PROMOTION)
Boring public relations activities (PROMOTION)

50%

24%

No assembly plant in Vietnam (PRODUCT)

Few ads appears online (PROMOTION)

40%

28%

Few differentiated features (PRODUCT)

Inconvenient to visit showrooms (PLACE)

30%

33%

Less luxury than other cars (PRODUCT)

16%

Unattractive cash discount offers (PROMOTION)
Few gifts and tangible value (PROMOTION)

26%
32%
47%

Poor product practical guide (PERSONAL SELLING)

74%

Lack of customer regular care (PERSONAL SELLING)
68%

Weak team selling added value (PERSONAL SELLING)
35%

Extravagant price of sedan models (PRICE)
Expensive price for imported spare parts (PRICE)

29%

Figure 7. Reason why prospects refuse to buy Volvo cars In 2017

(Source: Dealer Customer Relation Center of Volvo Ho Chi Minh Marketing department)
By looking at the statistical numbers of DCRC interview, it showed many reasons
affecting low sales results of Volvo Ho Chi Minh: products less luxury than other
cars, product not having many differentiated features, product not having assembly
plant in Vietnam, inconvenient to visit showrooms, lack of second-level agents in
other provinces, few advertisements appearing online, few advertisements appearing
offline, boring public relations activities, unattractive cash discount offers, few gifts
and additional value, salespeople lack of product practical guide, salespeople lack of
clients regular care, weak team selling of accessory or finance or insurance or service,

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

extravagant price of sedan models, expensive imported spare parts. Actually, there
were other reasons also affecting low sales results of the company, but the ratio was
lower than 10% (it meant lower than 42 people raising those opinions in an entire
2017 year) slightly impacted on the issue. Therefore, they will not be mentioned in
this thesis, and 15 negative reasons above from actual customer’s view will be real
foundation for the research to find out the main problem and the crucial cause which
led to low sales results suympton of Volvo Ho Chi Minh branch.
In 1953, American Marketing Association addressed the term “marketing mix” as the

most fundamental concept of marketing which is a set of tools that companies use to
make desired response to in targeted markets.7(p1) Shoham8 concluded that marketing
mix elements including product, price, place, promotion, personal selling are primary
have strong effects on business performance. Moreover, in order to make the study
more convinced and clearer, together with the supporting theories about 4P’s factors
in marketing mix and statistical results from DCRC surveys, 8 in-depth interview
were conducted with four main groups as below:
-

The first group are two Volvo Ho Chi Minh sales consultants, one is
experienced and one is fresh.

-

The second groups are two Sales and Marketing managers in Ho Chi
Minh and Ha Noi branches.

-

The third group are two Showroom Managing Directors in Ho Chi
Minh and Ha Noi branches and they are also members of Board of
directors of Nordic Car company.

-

The fourth group are two customers used to come to Volvo Ho Chi
Minh branch, one refused to buy cars and one one accepted to buy a
Volvo car.

Considering 15 negative reasons of Volvo buying refusal from actual customers in

2017 together with 4P’s theories and in-depth interviews, there are 6 potential
problems leading to low sales results of Nordic Car company in Ho Chi Minh branch
as follows: (1) Unsuitable products for Vietnamese, (2) Inconvenient business place,
(3) Inefficient advertising and PR activities, (4) Unattractive direct sales promotion,
(5) Ineffective personal selling activities and (6) Uncompetitive price.
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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

3.1. Potential Problems
3.1.1

Unsuitable products for Vietnamese

Riaz and Tanveer9 stated that “Product is something or anything that can be offered to
the customers for attention, acquisition, or consumption and satisfies some want or
need”. Product is the main part between selling and buying. Volvo car is the first thing
that a Volvo prospect considers. In 2004, Kotler10 suggested that a product should be
viewed in three level: core product, actual product and augmented product. Core
product means that the core benefit that the product could offer like purchasing a
camera is buying memories. Actual product means that product could bring
differential advantage from its competitors. Augmented product means that nontangible benefit of possessing product like after-sales service or free delivery and so

forth.
Firstly, Volvo seems to be less luxury than other brands in Vietnam because 2016 was
the first year when Volvo officially distributed cars in Vietnam, so Vietnamese
consumers are not familiar to Volvo products and they tend to choose other luxury car
brands which have been operating business in Vietnam for decades.
Mr. Nguyen Thanh Tam – a prospect who used to come to Ho Chi Minh showroom
and decided not to buy Volvo stated that:
After considering Volvo and many different luxury cars, I decided to buy another brand
instead of Volvo because I think that I really need a famous luxury sedan in most of
people eyes to show my financial ability in business, not only for driving. I chose
Mercedes E250 at 2.45 billion Vietnam Dong lower than Volvo S90 about 200 million
Vietnam Dong, but I think that it’s more luxury because Mercedes has been famous for
luxury cars in Vietnam for many years when I was a teenager.

Kotler and Armstrong11 told that consumers view a brand as an important part of the
product, and branding can add value to the product. Volvo starts to distribute in
Vietnam too late comparing to Mercedes or BMW or Audi, so people with little
understanding about luxury brands who buying luxury cars for show-off purpose tend
to be discreet to immediately choose Volvo.
Secondly, Not many people in Vietnam have much knowledge about luxury cars and
they are familiar to use cars which are specialized design for Vietnamese condition.

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Thus, they criticized that Volvo in Vietnam does not have many differentiation
comparing to other luxury cars.
Mr. Nguyen Quang Huy – an experienced salesman in Volvo Ho Chi Minh stated that
Most of people who have enough money to buy a car with over 2 billion Vietnam Dong
but having little knowledge about luxury cars, it’s very hard to persuade them to buy
Volvo right after some meetings or discussions and it’s even harder when they finish their
testing drive. They always complain that they feel slightly different with other cars, while
with 2.7 billion Vietnam Dong they can buy a similar car plus a big set of gifts. Some
people immediately walk out the showroom when I refuse to give them better offers. It’s
so difficult to inspire Vietnamese customers by luxury Scandinavian values.

Lastly, Volvo features are assumed that they are unsuitable for Vietnamese users
demands because Volvo does not have an assembly plant in Vietnam to adjust these
features.
Mrs Luu Bao Huong – Marketing manager of Ho Chi Minh branch also gave her
comments on product that
All of Volvo models that we have right now in Vietnam are 100% imported from Sweden
and they are all designed for global use with international standards, not specialized for
Vietnamese. There are some people claimed that Volvo does not have assembly plant in
Vietnam, so Volvo cars has superfluous features which are unsuitable for Vietnamese
traffic situation such as automatic braking and vibrating the whole car when many
motorcycles ride across car’s head, or deeper tire groove for anti-slippery in snowy
weather.

3.1.2 Inconvenient business place
Kotler10 defined place “as a set of interdependent organizations that caters to the

process of making a product available to the consumers”. According to Goi12 and
Muala & Qurneh13 stated that distribution system is a key external resource. An
organization should pay attention to place decisions, because of the importance of the
product and consumption occurring at the same time and at the same place; a place
that provides all information of customer, competition, promotion action, and
marketing task. Normally it takes years to build, and it is not easily changed. It ranks
it importance with key internal resources such as manufacturing, research,
engineering, and field sales personnel and facilities. It represents, as well, a
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commitment to a set of policies and practices that constitute the basic fabric on which
is woven an extensive set of long-term relationships. All car corporations are alike in
distribution by opening networks of showrooms. Nordic Car company is not an
exceptional case, and Volvo South East Asia decided to locate two showrooms, one in
district 7 - Ho Chi Minh city and one in Long Bien district - Ha Noi capital. In Ho Chi
Minh city, there are some complaints from both customers and salespeople about the
location.
Mr. Nguyen Thanh Tam – a consumer used to visit showroom complained that Ho
Chi Minh branch is not a convenient place to visit
I think that a luxury car showroom need to locate in district 1 where luxury users usually

live and work, so they can see Volvo cars every working day. This Volvo showroom
located in district 7 which is too far from central area and Nguyen Van Linh is the
connecting road between western area and Ho Chi Minh city with many truck carrying
heavy goods, so many luxury guests won’t visit the showroom because they are afraid of
truck accidents.

Ms. Le Thi Phuong – a fresh salesperson in Ho Chi Minh branch thought that the
location has high retal price and there is high competition among many old luxury
brands.
In my own opinion, Volvo Ho Chi Minh locating in Phu My Hung town in central of
district 7 is inconvenient for selling Volvo cars. The rental price is a burden for finance
and we have to fight in old castles of Mercedes, BMW, Porsche, and Peugeot. Although
the number of daily visitors are up to 6 or 7 people in a same period of time, I usually
struggle with gathering all customer data and taking care of them after their visits. Many
of them already bought other cars before I call them again after few days.

Riaz and Tanveer9 also stated that “a company can adopt multiple channels to get its
product to the customers, these channels can be direct and indirect, and choice of
channel has strong effect on sales.
Mrs. Ngo Kieu Trinh – a consumer who bought a Volvo XC90 in Ho Chi Minh
branch complained that
My home town is in Long An province. On my way to work, I saw Volvo cars which
were carried from Hiep Phuoc – Nha Be seaport to district 7. I and my husband had to
take many off-working days and went to district 7 to visit Volvo showroom many times

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

to buy a XC90 Volvo car. It took a lot of time and effort for us to buy this car because
Nordic Car company does not have a second-level agency in Long An. If we did not love
this car too much, we would buy another brand.

3.1.3 Inefficient advertisements and PR activities
Based on statement of Bannett14 in Dictionary of Marketing Term book, modern
marketing is more than just developing a good product, attractive price and making
the product available to customers. Companies also have to communicate with their
customers, and the company communication program is called promotion mix.
Promotion mix consist of advertising, public relation (PR), sales promotion and
personal selling.
Mishra15 stated that promotion can be loosely classified as “above-the-line” and
“below-the-line” promotion. The promotional activities carried out through mass
media like television, radio, newspaper, search engines online, etc. is above-the-line
promotion. This kind of promotion is also devided into online and offline activities.
Firstly, Nordic Car Sales and Marketing department has conducted many programs for
offline advertising since establishment of the two showrooms, the consequence still
remains at lows sales numbers. Both two Sales and Marketing managers thought that
low supporting budget from Volvo South East Asia could not help them conduct
strong offline advertising activities enough to compete with other luxury brands.
Mr. Nguyen Quang Phong and Ms. Luu Bao Huong – Sales and Marketing managers
of Nordic Car company in Ha Noi and Ho Chi Minh both said that maintaining Volvo
image on multi-media channels in recent time costs much money and they tried many

times to argue with marketing managers in South East Asia headquarter of Volvo
corporation about increase budget of advertising support for Vietnam market, but
Nordic Car did not receive more money from Volvo corporation. Even though
marketing team of Volvo in South East Asia gave feedback that Volvo is already a big
and famous luxury car brand in Asia, and Vietnamese dealers should only carry out
their guidance in marketing campaigns without any more changes.
Secondly, Nordic Car Sales and Marketing department in Ho Chi Minh spent most of
budget to build Volvo brand online, while digital performance was not concentrated
on seriously.

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

Mr. Nguyen Anh Linh – Managing Director of Ha Noi showroom confirmed that
It seems like both Ho Chi Minh and Ha Noi marketing teams worried too much about
Volvo visibility online instead of finding potential customers from developed online
foundation. Renting many banners of Volvo brands on online automobile forums costed
us billions Vietnam Dong, but it not yet helps bring more contracts to our company.
Many online channels today such as Facebook, Google, or Instagram becomes effective
tools to bring direct customers for luxury car dealers with precisely tracking index of
efficiency.

Moreover, sales consultant also blamed that PR activities of Ho Chi Minh branch are
not helpful in creating more deals for salespeople.
Mr. Le Thi Phuong – a Nordic Car fresh sales consultant in Ho Chi Minh said that
I think that Volvo PR activities are not effective and waste too much money. Nordic Car
directors appearing on national TV in order to give gifts for orphans would never
stimulate any person to call us to have a meeting. These wasting activities could not help
us have more deals. Instead of wasting money like this, why don’t they increase our
commission in order to give us more motivation or lower price for customers?

3.1.4 Unattractive direct sales promotion
Mishra15 also said that above-the-line promotion is not effective with limited and
specific target customers, but direct sales promotion is effective. Luxury car buyers
are really specific-targeted consumers, and they are easy to be defined by some
criterion that luxury car retailers usually called standards of a luxury prospect such as
having money, having legal right to possess a car, having demand of a luxury car, and
having clear information to contact.
Doyle and Stern16 stated that sales promotion is commonly used to have sales increase
in short term by using money off coupons or special offers or free goods, and it is
used because results are quickly.
When the advertising give customer a rational or emotional argument for buying
product, sales promotion gives an economical argument. However, this kind of
promotion was not used as strength of Nordic Car to improve their sales results.
Firstly, while other companies successfully exploit customers by professional direct
approach with price reducing contents in letters, Nordic Car company seems spend

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C.33.44.55.54.78.65.5.43.22.2.4..22.Tai lieu. Luan 66.55.77.99. van. Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22. Do an.Tai lieu. Luan van. Luan an. Do an.Tai lieu. Luan van. Luan an. Do an

much money on branding activities, but superficial in professional direct discount
offers.
Mr. Nguyen Thanh Tam said that he knows Volvo brand because he used to watch
Volvo advertisements on TV last month and sees advertisements every morning on
advertising display screen at the ground floor of his working building. Nevertheless,
one of many reasons accelerated his decision to come to Mercedes showroom to buy a
car because he was obsessed by Mercedes test-drive invitation letters on his table
every month with professional design and attractive discount offer with Mercedes
director’s signature in the end of the letter. Volvo salesman only sent him a simple
quotation once without any attractive cash discount.
Secondly, Nordic Car hardness in gifts and additional value for customers is an
emerging topic that sales consultants and customers always talk about. Customers
compared that they suffered loss when they decide to buy Volvo cars, because other
brands like Mercedes, BMW, Audi, Lexus promise to give them many gifts or other
additional value if they agree to deposit money and wait for their cars.
Mrs. Ngo Kieu Trinh said that
I decided to buy a Volvo car because I really love the car. To tell the truth, before paying
money for Volvo, I and my husband investigated promotion and price of many car
brands. Most of luxury car brands have more gifts for the buyer than Volvo. Their better
offers make me visit Volvo showroom four times to deal with the sales consultants. We
nearly bought another car, but finally the sales consultant accepted to give us two more
years warranty and one-year free maintenance.

Managers and directors of Nordic Car also admitted that giving little budget for cash
discount and tangible gifts may cause some difficulties for salespeople , but they
believe that this way could keep the premium value of Volvo products in the initial
time appearing in Vietnam and this is also their calculated strategy.
3.1.5 Ineffective personal selling activities
Khan7(p101) called that personal selling is one kind of promotion that a representative of
a company meets customers personally to sell products. Personal selling can be
understood as a sub-function of promotion in marketing mix theory, but it plays a very
important role in the success of all companies. The task of advertising is to raise

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