A proper approach to mom pop shops market for metro cash carry master project in business and marketing management

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Chapter 1: Introduction
1.1.

Background:

Metro Cash & Carry (MCC) Vietnam is a subsidiary of Metro Cash & Carry group
originated in Germany. This is a typical supermarket specializing in wholesales
business. MCC Vietnam classifies customers into three groups: HoReCa (HotelRestaurant-Caterer), trader (retailers and wholesalers), and CBU (Corporate Business
Units including Services Providers, Companies and Offices), in which the trader
accounts for 44% of the total business (with subgroup, food trader: 31%, and non-food
trader: 13%), while HoReCa’s and CBU occupy 15% and 51%, respectively. To trader,
there are many types of customer, such as a big grocery, Mom & Pop (M&P) shop1,
Minimart, supermarket, fruit grocery, etc. The main function of MCC has played a
distributor to distribute products of manufacturers to wholesalers, and retailers. MCC
was held in Vietnam since 2002, and has been popular then. Evidently, the turnover of
the M&P shops conquered by MCC annually grows about 30% on average from 2005 to
2009, with its share of 13% in total, and of 39% in trader group. Accordingly the sole
sale of M&P shops in 2007 is 733 billion VND. As a result, M&P shops are really
worthy of taking into account, they are quite potential market for MCC.

1.2.

Problem statement

Due to being a wholesale company, MCC Vietnam concentrates on customers who buy
a big amount per visiting, e.g. wholesalers and big retailers. In order to attract
customers, MCC usually gives promotions, e.g. discounts to customers and particularly
put them on a top priority to get a big quantity whenever attractive trade promotions
run. Besides, MCC is expected to attract customers to come to MCC’s stores rather than

MCC must go to them directly to ask the purchasing contract. Although MCC already
set up the delivery department, it only serves for the selected HoReCa and traders
while the M&P shop is not included. It means that MCC has not yet derived any
1

See its definition in section 3.3


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strategy to approach M&P shops, while other suppliers do. Based on the internal report
of MCC, the visiting frequency and average sales per visit of the M&P shops are not
interesting enough. The initially preliminary rationale behind is that the M&P shops are
normally quite busy for their business, so it is not easy for them to manage time to visit
MCC. This is also a disadvantage for the M&P shop to get sale promotion programs of
MCC. Besides, MCC has not concerned delivery services from its business place to
M&P shops, while its competitors, such as wholesalers and monopoly suppliers do it. As
a result, MCC itself loses opportunities to pick up its share of wallet of M&P shops.
Based on problems just mentioned, objectives of thesis are shown as follows. Findings
of thesis will be helpful for MCC toward appropriate business strategies to explore the
M&P shop market.

1.3.

Objectives
− To find out perception of M&P shops on MCC
− To identify M&P shops’ need and expectation to be a partner.
− To suggest strategies with respect to the main supplier of M&P shops,
pulling M&P shop more frequently visiting, and pushing M&P shops taking
account of purchasing more products when visiting MCC.

1.4.

Research issues and questions
Based on problem statements already mentioned and objectives concerned, some

questions are as follows

1.5.

-

Why is the M&P shop important for MCC?

-

How does MCC attract the M&P shop?

-

What disadvantages and advantages do MCC have?

-

What are MCC’s competitors doing to approach the M&P shops?

-

What kind of services does the M&P shop expect from MCC?

-

What is the best solution to improve the business performance of MCC?

Data collection


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In order to meet objectives, secondary and primary data are concerned. Secondary data
is sourced by the internal reports, website. Additionally, journals are also searched to
look for relevant researches done and then select appropriate approaches consistent
with the objectives of thesis. To primary data, in depth interview was conducted on five
persons who are specialized in the sector, e.g. some ones involved in marketing
department, operational department, and big and representative M&P shop owners.
Questions engaged in this term pay attention to discussing with those five persons about
their business, together with disadvantages, advantages that they got from MCC. In
general, the purpose of the in-depth interview is basic to develop the questionnaire for
directly interviewing. Yet, based on the in-depth interview, the questionnaire is
produced after that. The pilot survey was then conducted on ten M&P shop owners,
which to look for the final and complete questionnaire. Respondents who are
interviewed must be M&P shop owners, must have their business time at least one year
already started. The survey is conducted in Ho Chi Minh city, where District 2, District
6, and District 12 are mainly concerned and respondents are randomly selected. The
sample size expected is 100 observations. Because most of M&P shop owners are quite
busy, not easy to contact. 100 hard copies of questionnaire were directly sent to them.
There are 80 samples returned, completely filled, and sufficient.

1.6.

Scope of research

The research conducted in Ho Chi Minh City, respondents interviewed are mainly
responsible for their business, e.g. owners, managers, who have engaged in business
above one year. Because of time limitation and unwillingness of M&P owners and
managers to accept the questionnaire for interviewing, the number of samples is not so
big, just 80 samples. Hopefully the result is partly a representative voice for the project.

1.7.

Methodology

Descriptive analysis is used to analyze the raw data collected, together with secondary
data. Additionally, SWOT analysis is also applied.


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Chapter 2: Literature Review
2.1.

Introduction

As we know, the business function of MCC plays a business store with self service as a
supermarket. So literature reviews in this section will discuss issues relevant to
supermarket. Supermarkets are generally viewed as providing outputs superior to those
of traditional formats (Goldman, 1981). However, some consumers may view
supermarkets as providing similar or inferior outputs than traditional stores (e.g. higher
prices). Currently, there are positive changes in consumers. Consumers think that
shopping in supermarkets is quite helpful to save their time. At the same place as the

same time consumers can buy a lot of items or product categories. Also they partly
accept reasonably high price because they are compensated by an attractive internal
environment, such as cool air, free looking and selecting, etc. Evidently, during study
how different between supermarket buyers and retail store buyers, Goldman (2005)
argued that a higher opportunity cost of time is making multi-stop shopping in many
small stores more costly than the one-stop shopping associated with the supermarket.

2.2.

Distribution definition

According to (Stern and El-Ansary, 1982), a distribution system is a network of
organizations liking a supplier to its various customer segments. Distribution decisions
are subject to the challenge of dealing with a concurrent pressure to promote
distribution efficiency and at the same time ensuring that the corporate identity is
communicated properly (Parment, 2008).
To manufacturer, the distributor provides physical distribution services as one of the
four P elements (e.g. product, price, place, and promotion) of marketing mix, and
support the manufacturer to transfer goods to consumer directly or indirectly. A good
distributive system must be combined the manufacturer’s support services, retail outlet,
advices, location, etc. Services are consisting of tangible and intangible actions. (i)
Tangible actions directed at people bodies such as transportation services, delivery


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services, repairmen and maintenance, etc; (ii) Intangible actions are mental stimulus
processing that are services directed at people’s mind or information processing.
To retailing distributor, the distribution is based on information gathered through
marketing intelligence. The retailing distributor plays an important role to transfer

product information message to consumers. If the retailers can get the client to perceive
the establishment and its offer as superior to the competition, it will be probable that
satisfaction is increased when making the purchase. The retail distributor offers variety
in product categories can improve the convenience of purchase, in this way increasing
consumer’s satisfaction (Dellaert et al., 1998).
Albrecht and Zemke (1985) argued that the distribution services are based on three
components combined, e.g. strategy, system, and people. Strategy means how the
company positions itself in the customer’s mind. System means the way of deploying
sources, and people present the manpower force of the company interact its services to
customers.

2.3.

Service quality management

The concept of perceived service quality has been developed in the services marketing
literature during the past decade. In order to keep a strong position in the market place,
the service quality has played an important role for retailing and wholesale companies.
In an attempt to analyze the aspects of service quality perceived those companies can
meet customers’ expectation. There are various approaches as to the concept of quality,
which are summarized in figure 2.1. According to Vazquez, et al. (2001), the service
quality is based on the demand approach, recognizing that quality of a service depends
on its evaluation by the consumer.
Figure 2.1: Approaches to the concept of quality
Objective quality
Subjective quality
+ Internal view of quality
+ External view of quality
+ Production/Supply approach
+ Marketing/demand approach

+
Adapting
to
pre-established + Customer real judge of quality
specification
+ Error-free service transaction, lowing + Company’s ability to determine


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costs and avoiding deviations from the customer needs and expectations
set standard
+ Appropriate for standardized activities + High customer contact activities
Source: Garvin (1988)

The concept of service quality is linked to the concepts of perceptions and expectations.
Service quality perceived by the customer is the result of comparing the expectations
about the service they are going to receive and their perceptions of wholesale and
retailing companies’ actions (Parasuramand et al., 1988). If perceptions exceed
expectations, the service provided by those companies will be considered excellent; if it
only equals the expectations it will be regarded as good or adequate; if it does not meet
them, the service will be classed as bad, poor or deficient. Therefore, perceived service
quality is frequently referred to as the comparison between the customer's expectations
and his/her perceptions of the service provider's performance. Parasuraman et al.
(1988) have also suggested that service quality consists of five generic dimensions:
tangibles, reliability, responsiveness, assurance, and empathy.
Customer satisfaction, which according to the dominating expectancy-disconfirmation
paradigm is defined as a function of the customer's expectations and perceptions of
performance (Tse and Wilton, 1988; Anderson and Sullivan, 1993), is a phenomenon
closely related to perceived service quality. According to Anderson et al (1994), two

major conceptualizations of customer satisfaction can be identified: transaction-specific
and cumulative satisfaction. The causal link between perceived service quality and
customer satisfaction, and which of the constructs has a direct impact on customer
loyalty, has been debated in the literature (Cronin and Taylor, 1992, 1994; Teas, 1993;
Parasuraman, 1994). This debate emanates largely from differences in how the two
constructs are defined. The viewpoint taken here is that perceived service quality,
which is defined as the consumer's perception of a firm's offering, or performance, is an
antecedent of customer satisfaction, which in turn is positively related to customer
loyalty. As Cronin and Taylor (1992) argue, it seems reasonable that customer


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satisfaction is affected not only by the quality of what the customer receives, but also by
price and convenience. We also agree with Anderson et al (1994) that from a firm
performance perspective, cumulative satisfaction is the more adequate study object.

2.4.

Attributes characteristic to the grocery store identified

In a traditional way, price has been considered as an important element at the moment
for determining the perception that the consumers have on a store (Ruiz, et al., 2010).
Thus, frequently, retail distributors use price as a key aspect to their commercial policy
with the purpose of obtaining a certain image in the markets. For this reason, they
design and carry out strategies oriented generally to obtain a positioning of discount
prices. With the purpose of achieving this objective, sometimes fixed prices are
specially reduced on those products and product categories (loss leaders) that are
important to the consumers.
For a large arrange and assortment, understood as the variety of products and the

number of different items that are offered by a retail distributor (Levy and Weitz,
1995). Certainly, a greater variety not only helps the retail distributors attract more
consumers, but can also stimulate them to make more purchases while they are in the
establishment. Additionally, a retail distributor who offers greater variety in product
categories can improve the convenience of purchase, in this way increasing consumer
satisfaction (Dellaert et al., 1998)
To analyze supermarket buyer decisions, Montgomery (1975) conducted a survey on
one hundred twenty four new products with 18 variables: (1) Promotion; (2) company
reputation; (3) Quality; (4) Newness; (5) Introductory allowances; (6) Competition; (7)
Packaging; (8) Gross margin; (9) Advertising; (10) Private label; (11) Guarantee; (12)
Distribution; (13) Broker; (14) Sales presentation; (15) Category volume; (16) Category
growth potential; (17) (Shelf space; (18) Cost.
2.5.

Study approach

Based on the literature review argued, together with internal report, and in depth
interview, some information is selected to be designed in the questionnaire. We can see


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that information depicted in figure 2.2. Accordingly, the M&P shop is interviewed
through the questionnaire available. Besides what the M&P presents its consideration
when buying product categories, it also expresses its mind of how attractive to think of
MCC.
Figure 2.2: Consideration and evaluation of M&P shop for MCC
Consideration
How attractive
Product

Assurance of product quality
Well-known brands/products
Availability of products
Wide variety of product categories
High hygienic standards on all items
Fresh products
Price
Competitive Pricing
Consistent Pricing
Customer Specific Pricing (Based on
volume/quantity of operation or other factors)
Fixed Pricing
Everyday low prices
Promotion
Regular Specials and Discounts
Promotion gifts or gifts from manufactures
Value added offers (trips, show, etc. ,,,)
Delivery
Free home delivery
Quick and on time delivery
Payment
Late payment
Rolling payment
Customer services
Friendly, helpful, understanding and informative
staff
Offer salesman to support the business
Knowledgeable salesman
Good after sales services
Strong personal relationship

Ease of return guarantee
Ease of return products
Order by telephone/fax

Service
Clean Floors
Large displays
Friendly Sales Associates
Regular visits by Customer Consultants
Fast check-outs
100% in stock conditions
Ease of parking
Product
Assurance of product quality
Range of/diversity of categories
Range of well known local brands
Range of well known international
brands
Exceptionally hygienic fresh
departments
Communication
Regular communication of promotions
via Metro Post
Regular communications of promotions
via staff
Price
Pricing clearly marked on shelves and
displays
Promotion
Promotion campaigns

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We need information just mentioned, because it is helpful for this project meeting
objectives. The study approach framework presented in figure 2.2 is applied to find out
how the M&P shop perceives MCC’s services, as well as to evaluate the M&P shop’s
thinking. In parallel, a customer service quality measurement is also concerned,
together with looking for what the M&P shop wants from MCC giving them a perfect
service.
Figure 2.3: The study approach framework

Product
Price

Metro
supermarket
(MCC)

Promotion

Consideration

Delivery
service

Evaluation and
expectation

Mom & Pop

shop (M&P)

Payment
Quality
customer
service

What MCC provides

What M&P shop thinks of


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Chapter 3: Market and Performance of Metro Cash & Carry
Vietnam
3.1.

Introduction

MCC Vietnam is a subsidiary of Metro Cash & Carry Group with more than 670 stores
in 31 countries, being the internationally leading self-service wholesaler. It was found
in 2002, which Ho Chi Minh City is the first place concerned by MCC for its business.
MCC is one of the largest trading companies in Vietnam, pioneering the concept in
Vietnamese market. MCC offers an assortment of over 15,000 products, with over 300
staffs per store and over 90,000 registered customers. Currently, MCC has a sales force
of over 100 staffs to canvass businesses and to maintain customer relationships across
Vietnam.
MCC is a leading model of wholesale business in Vietnam. Year by year, then, it
expands through the whole country e.g. Hanoi in 2003, Cantho in 2004, Hai Phong in

2005Hai Phong, and so on, (see figure 3.1)
Figure 3.1: Revolution of MCC in Vietnam
March, 2002

Found in Ho Chi Minh city, the south of Vietnam

December, 2002

Second MCC found in Ho Chi Minh city, the south of Vietnam

July, 2003

Found in Ha Noi, the north of Vietnam
Found in Can Tho, the Mekong Delta in the south of Vietnam

December, 2004
October, 2005

Found in Hai Phong, the north of Vietnam

December, 2005

Found in Da Nang, the middle of Vietnam

December, 2006

Third MCC found in Ho Chi Minh city

September, 2007

Second MCC found in Ha Noi

July, 2009

Found in Bien Hoa, in the south of Vietnam

September, 2010

Found in Long Xuyen city, An Giang Province in the Mekong


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Delta, the south of Vietnam
October, 2010

Found in Quy Nhon City, Binh Duong province, the south of
Vietnam
Source: MCC’s internal report, 2010

Due to the market expansion, a number of buying traders of MCC have a significant
growth. As depicted in figure 3.2, three classes of traders, e.g. big trader2, trader3, and
M&P shops4, are defined by MCC, the average growth rate from 2002 to 2009 is about
35%, but 36% for M&P shops solely. Consequently the value or the sales achievement
of MCC increases as well (figure 3.3), in which the annual average growth rate of the
whole value of the trader is 67%, solely for M&P shops is 64%.
Figure 3.2: An increase in a number of buying traders
Number of buying traders (unit)

350

300
250
200

Traders

150
100

Big traders

50
0
2002

M&P shop
2003

2004

2005

2006

2007

2008

2009

Source: MCC’s internal report, 2010

2

For big traders, they are wholesalers buying from monopoly distributors, manufacturers, Metro Cash &

Carry and then selling to M&P shops; average sales per month ranging 130-420 million VND; payment
when buying by cash without credits; distribution channel based on wholesaling; sales force about 2
salesmen together with 2 deliverymen; transportation means of 2 trucks and 1-2 warehouse
3

For trader, generally consisting of retailers and wholesalers; in specific, traders include Generalist

Food, Specialist Food, Petro Station, Kiosk, Street Market, Wholesale / Buying coop, Non-Food traders
and others.
4

For M&P shops, mentioned above


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4334

Figure 3.3: Sales achievement of MCC from trader group.

4000

M&P shop

854

2004

439
370

2003

2005

2006

2007

Big traders

1293
1097

791
644

2002

635
606
1304

0

277

500

135

1000

152
135
297

1500

249
562

2000

1561

2500

1868

3000

2115

2601

3500

73
54

Sales Achievement (billion VND)

4500

2008

2009

Traders

Source: MCC’s internal report, 2010

In sum, the significant growth of traders is proving the M&P market still attractive for
MCC. However, how to win that market is still questionable. Yet, in order to retain and
increase the market share of MCC, the M&P shop should be studied and concerned by
appropriate strategies, due to the fact that M&P shop has a high growth rate, and
seriously contributes into the sales achievement of MCC.
3.2.

Business function of MCC

MCC is very much interested in
principles: (1) focusing on professional

customers; (2) one stop shopping; (3)
efficient store concept designed for
professional
customer
customer’s

needs;
service;

(4)

advanced

(5)

enhanced

competitiveness;

(6)

excellence in supply chain and quality
management; (7) strengthening of local suppliers; (8) development of national
infrastructures; (9) career opportunities; (10) internationally transferable concept.


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There is a variety of products that MCC is concerned in business. The most popular
categories for most shops across cities are body care products, cooking materials,

washing-up liquids, confectionary and milk, stationary, batteries or tissues / nappies.
Moreover, Metro supermarket is the top choice for hair care products and washing up
liquids purchase, whereas monopoly suppliers and wholesale markets share the major
sales for drinks (beer/alcoholic drinks, milk), noodles of all types, confectionary and
spices.
Business type of MCC only accepts customers who registered a business card.
Customers can use the business card by which as a means to access and pay directly by
cash at MCC’s stores. Unlike other supermarkets, e.g. Coopmark, MCC has not been
responsible for delivering services from supermarket to customer’s home after buying
products, even a big amount (just for big traders). As mentioned, the business card can
be a specific strategy to present a typical supplier. However, the home delivery ignored
can be disadvantageous to attract M&P shops, because the other competitors
(wholesalers, monopoly distributors) as dynamic suppliers are willing to provide
products to M&P’s orders with delivering services.
3.3.
Every

Definition of Mom and Pop shop
unit

presents

its

different

concept. For MCC, the definition, in
term, M&P shop is conceptualized as
small scaled grocery shop selling a
wide variety of products, such as

personal care products, dried food,
beverages, confectionery, and so on.
Other criteria of M&P are follows
− A floor space of around 10-20 squared meters on average located at the owners’
house,
− A monthly turnover of around VND 10 million,


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− Mainly run by 1-2 people who, most of the time, are the store owner and/or the
spouse with/without help from some other family members,
− Focused on day to day business, supply and demand,
− Unaware of market issues and current and future challenges in retail - happy to
simply survive,
− Very price sensitive and focused on margins - looking for the best possible price in
all situations,
− Business open for seven days in a week between 07:00-22:00 hours is implemented.
Consumers of M&P are anyone who has their private demand. Mostly they are
families, students, workers, etc. living around where M&P is doing business.
Consumers are not close to the shop, accounting for a small rate. These consumers buy
because of on way going to somewhere and have unplanned demand.
3.4.

Why is the M&P shop important for MCC?

As mentioned in previous section, the M&P shop plays an important role in MCC. In
addition, M&P market size is still large, evidently, due to the fact that there are above
300,000 outlets nationwide. However, the MCC is just taking account of a small share
of wallet.

Additionally, MCC gets an average margin ranging 4-5% when selling products to the
M&P shop, while it takes from 2% to 3% if selling to the wholesalers5 (big trader).
Conclusion is that the M&P market is more benefit than the wholesale market.

5

According to the internal report of MCC, the delivery cost accounts for 1%.


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Chapter 4: Analysis and Empirical Results
4.1. Overview of survey description
Qualitative is concerned because it is helpful to identify and understand attitudes,
behaviors of respondents. It also contributes into producing a reasonable questionnaire.
Therefore, through a group discussion done, the questionnaire is developed and
completed. Then, the survey is conducted on the 80 respondents who have been
selected for interview earlier.
Based on the descriptive analysis, most of M&P shops in the sample have years in
business less than five years accounting for 38%, and from 5 to 10 years accounting for
36% (figure 4.1). However, for the class of less than five years must be understood, the
years in business of the M&P shop is between one and five years. Because as
previously mentioned, we accept sufficient samples when the M&P shop had already
run its business for at least one year. We are strict for that due to avoiding bias
information and looking for a right strategy.
Figure 4.1: Years in business of M&P shops

More than 10
years
26%

Less than 5 years
38%

5 - 10 years
36%

Source: Own survey

The size of M&P is popular from 10 to 20 squared meters, accounting for 43% of the
total sample, and from 20 to 30 squared meters accounting for 20% (figure 4.2). But not


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much percent for the large size with more than 30 squared meters, due to high cost to
buy land or to rent the comfortable location.
As shown in figure 4.3, M&P shop mostly has monthly average revenue of less than 10
million VND/month, accounting for 56%, and between 10 million and 20 million
VND/month accounting for 22%, more than 30 million VND/month accounting for
12%, and above 20-30 million VND/month accounting for 10%.
Figure 4.2: Size group of M&P shops
Less than 10
squared
meters
19%

More than 30
squared
meters

16%

Above 20 - 30
squared
meters
22%

10 - 20
squared
meters
43%

Source: Own survey

Figure 4.3: Monthly average revenue of M&P shops
More than 30
million VND
12%
Above 20 - 30
million VND
10%

10 - 20 million
VND
22%

Source: Own survey

Less than 10
million VND

56%


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M&P mostly has its own storage, due to the question “does your shop has a storage
area?”, its answer presents that 58% of M&P shops has storage at its shop, and 5% of
M&P shop has storage nearby its shop (figure 4.4). As a result, the M&P market is
dynamic, because more than 60% of the M&P shops have their own storage. Besides,
the M&P shop wants to prepare a dynamic business with a speculative concept when
changes in market happened.
Figure 4.4: Storage of M&P shops
I don't have
storage at my
shop but near
my shop
5%

I don't have
storage area in
my shop
37%

I have storage
at my shop
58%

Source: Own survey

However, if looking at figure 4.5, the storage size of the M&P shop is not so big, and

popular for the class from 5 to 10 square meters, accounting 58%.
Figure 4.5: Storage size of M&P shops
More than 20
squared meters
6%
Above 10 - 20
squared meters
12%

Less than 5
squared meters
24%

5 - 10 squared
meters
58%

Source: Own survey


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4.2. Input and output market of M&P shop
The M&P shop’s function plays an intermediary actor. Its business is based on
procurement and selling with a profitable expectation of a big margin. The Input and
output channel system of M&P shops are shown in figure 4.6, which four suppliers, e.g.
wholesale market (21.3%), wholesalers (28.8%), monopoly supplier (23.8%), Metro
supermarket (26.3%), are concerned by the M&P shop’s procurement.
According to MCC’s definition, wholesale market consists of suppliers doing business
at market, for example, Cho Lon market, Saigon market, etc. Wholesalers who are not

located at market, they play an intermediary actor specializing in wholesale distribution
system. Monopoly suppliers are distributors under manufactories or companies, for
example Unilever, Vietnamese Beer Company, etc…
Figure 4.6: Market channel of M&P shop
Wholesale
Market

22.50%
21.25%
18.75%

Wholesaler

Monopoly
suppliers

23.75%

26.25%

Metro
supermarket

15.00%

28.75%

Mom& Pop
shops
(M&P)

27.50%

6.25%

6.00%

4.00%

Neighbourhood
family
Passing
customers
Worker
Student and
Pupil
Drink shop/coffee
shop
Other M&P shop
Nearby eatery

Source: Own survey

The share of those four actors are not quite different from each other, in which the
wholesaler and MCC are little bit more important suppliers over the others for the M&P


19

shop, respectively occupying 28.8% and 26.3% in the total procurement of the M&P

shop. As a result, the M&P shop market for MCC is a big potential, and MCC’s image
is located in the customer’s mind, this is a good signal for MCC. However, in order to
explore that chance, MCC must be dynamic for its strategy.
The output market of the M&P shop is mainly individual consumers, who are students
and pupils (27.5%), neighborhood families (22.5%), and passing customers6 (18.8%).
There are many items or product groceries concerned by the M&P shop, in which the
five items were ranked as leading ones, such as both of instant noodles/vermicelli and
household care products (powder/washing up liquid/floor detergent), ranked as the first;
shampoo/conditioner/hair lotion ranked as the third; both of cakes/sweets/chewy and
apices/seasonings, ranked as the fourth (appendix 1).
If looking at table appendix 2, MCC has the highest share in the M&P shop’s
procurement for product categories, e.g. Soap/shower cream accounting for 36%,
Shampoo accounting for 40%, washing up liquid accounting for 41%, Spices accounting
for 30%, Roll paper/tissue accounting for 35%. All of them almost belong to product
groceries leading in the M&P shop’s procurement as mentioned appendix 1. In
conclusion, the market of the M&P shop is quite potential for MCC, because the most
product categories concerned by the M&P are bought from MCC.
Depending on a type of suppliers, the M&P shop has a different way to contact when
buying items. As mentioned in appendix 3, the M&P shop normally goes to the
suppliers directly for procurement. In term of that, MCC accounts for 92%, being a
popular supplier. Next ones are wholesale market (58%), and wholesaler (46%).
Because the monopoly supplier under the manufacturers, who normally has a salesman
force to directly contact the M&P shop, so the M&P shop wants to get the product
through salesman. As a result, the M&P shop seemly prefers to contact the monopoly
supplier by salesman (41%) and by telephone (36%), due to comfortable for saving
who are not living around the M&P’s business place, sometimes shopping because of urgent demands,
and rarely repeated
6

20

shopping time and transportation cost. In sum, unlike other three suppliers, MCC mainly
concentrates on self services at the stores, does not care of customers’ order by
telephone, by fax, by e-mail, and not interested in sending its salesman to the M&P
shop for the sales contract, while the M&P shop, in terms of buying, seeks comfortable
things to save time and transportation cost,. Based on that buying frequency in week of
the M&P shop is denser for wholesale market, wholesaler and monopoly suppliers than
MCC (Appendix 4), and normally visiting MCC once a month (35%). Despite the
unusually buying frequency from MCC, the M&P shop has a big amount of
procurement from this supplier for each visiting, with the buying value between 1
million and 5 million VND per visit occupying 71% (Appendix 5), while that of
wholesale market, wholesaler and monopoly supplier, take into account less than one
million VND per visit. Although the M&P shop pays more attention to buying a big
amount with an unusually buying frequency from MCC, it must be responsible for itself
carrying (95%) (Appendix 6), not provided free home delivery, but must pay by cash
(Appendix 7). However, this is completely different, if the M&P shop buys product
groceries from wholesale market, wholesalers and monopoly suppliers, it could get a
beneficiary from the service of free home delivery of those suppliers, and can get late
payment and rolling payment.

4.3. Consideration, evaluation and expectation of the M&P shop
a. Consideration
Note that variables concerned in this section are measured by a five point scale, with 1
= not worried at all, 2 = not worried, 3 = neutral, 4 = somewhat worried, 5 = extremely
worried. As a result, the smaller score value is the less worried.
Consideration on product
As depicted in figure 4.7, we can get a clear picture how much the M&P shop pays
attention to product when buying product categories from four suppliers. With seven
variables, such as assurance of product quality, well-known brand/product, product

available, wide variety of product categories, high hygienic standards on all items, all of


21

them have mean values less than 3. Conclusion is the M&P shop does not have so much
worry with regard to products provided by the four suppliers. However, if comparing
among the four suppliers, MCC is a key point, whose reliability is highly evaluated by
the M&P shop.
Figure 4.7: M&P shop’s consideration on product
Wholesale mark et
Assurance of product quality

Fresh products

Wholesalers

4.0

Monopoly supplier

3.0

MCC

2.0

Well-known brands/products

1.0

.0

High hygienic standards on all
items

Availability products

Wide variety of product categories

Source: Own survey

Figure 4.8: M&P’s shop’s consideration on price
Competitive price
2.5

Everyday low prices

Wholesale market
Wholesalers

2.0

Monopoly supplier

1.5

MCC

1.0
.5

Consistent pricing

.0

Fixed pricing

Source: Own survey

Customer specific pricing
(volumne)


22

Consideration on price
Similarly, five variables, e.g. competitive pricing, consistent pricing, customer specific
pricing, fixed pricing, everyday low price, shown in figure 4.8 mostly have mean values
less than 3. This means that the M&P shop does not have much of worries when buying
product categories from suppliers, in which MCC is thought as reliability to present its
competitive pricing and its fixed pricing.
Consideration on promotion
According to the M&P shop, MCC presents good regular specials and discounts, and
promotion gifts for them, so the M&P shop does not need to suspect the promotion
program under MCC. However, monopoly suppliers are better than for promotion
programs relating to value added offers, e.g. trips, shows, etc., said by the M&P shop
(figure 4.9).
Figure 4.9: M&P shop’s consideration on promotion
Wholesale mark et
Regular specials and

discounts

3.0

Wholesalers
Monopoly supplier
MCC

2.0
1.0
.0
Value added offers (trips,
show, etc.)

Promotion gifts from
manufacture

Source: Own survey

Consideration on delivery and payment
As shown in appendix 8, most of the M&P shop is not worried what wholesale market,
wholesalers, and monopoly suppliers offer delivery service and payment, due to the


23

fact that they are supported a lot. In contrast, the M&P shop wants to have a support of
those services from MCC.
Consideration on customer services
Although MCC has reliable services with respect to personal communication of staffs,

such as friendly, helpful, and dynamic, together with knowledgeable salesman (figure
4.10), the M&P shop do have so much of worries from others services of MCC, such as,
good services after sales, strong personal relationship, ease or return guarantee, ease of
product return, order by telephone. Unlike MCC, the other three suppliers do so well for
taking care of customers, keeping in strong tough, accepting products or guarantee that
the M&P shop wants to return, willing to take order by telephone or fax. In sum,
customer services of MCC are less dynamic than that of wholesale market, wholesalers,
and monopoly suppliers.
Figure 4.10: M&P’s consideration on customer services
Wholesale market
Wholesalers
Monopoly supplier
Friendly, helpful, dynamic staff

MCC

4.0
Order by telephone/fax

3.0

Offer salesman to support the
business

2.0
1.0
Ease of return products

.0

Ease of return guarantee

Knowledegeable salesman

Good service after sales
Strong personal relationship

Source: Own survey

b. M&P shop’s evaluation on MCC
Mostly the M&P shop has a quite positive evaluation on MCC, in which the services are
seemly good, except to fast check-outs due to a small value of 3.4 (appendix 9). This
can be caused by a lot of customer online, so waiting time for the M&P shop is too long.


24

In general, elements mentioned in appendix 9 are attractive for the M&P shop, because
their value scores are larger than 4.
c. M&P shop’s expectation
Based on the question asking the M&P shop’s expectation, the answer is resulted in
appendix 10, in which the supply price is ahead concerned. This means that the M&P
shop wants MCC’s offering a reasonable, due to acceptable profit margin. This is not
big surprising because any actor in the market channel always wants to get high profit
margin. An increase in enough investment is also concerned in the M&P shop’s
expectation.
d. M&P shop’s ranking for elements in future.
As depicted in appendix 11, the product quality is always the best of other elements.
The second one is competitive price. This ranking is consistent with the M&P shop’s
expectation. The third one is free home delivery service, which MCC has not do so well

to attract the M&P shop. As a result, three above elements should be kept in mind for
the business strategy of MCC.

4.4. SWOT analysis
The SWOT is a combination of four elements: Strengths, Weaknesses, Opportunities
and Threats. The SWOT analysis is a tool for auditing an organization and its
environment. It is the first stage of planning and helps marketers to focus on key issues.
Strengths and weaknesses are internal factors. Opportunities and threats are external
factors. Based on analysis results of the research, together with secondary data and,
SWOT analysis is summarized in figure 4.11 as below


25

Figure 4.11: SWOT analysis
Strengths

Weaknesses

-

-

-

MCC Group's expertise and traders -

Uncovered by on-field sales force ( Key

approach

Account Executives)

Wide range of products including -

No delivery and credit

popular and international brands

Feel

-

-

Regularly

run

sales

-

promotion

prioritized

particularly on fast-moving items
-

Reliability: promotion, price, product

Opportunities
-

-

since

wholesalers

Metro

just

before

whenever big promotions taking place
-

Taking time to pay online

-

Bad service after sales

Threats

Avoid taking risk as dependent on -

M & P shop number will decrease due

wholesalers

to the development of Modern Trade

M&P shops’ margin is ranging 10-15%

and consolidation of trader business

against that of wholesalers 1-2%
-

distrustful

-

An increase in competitive services of

Accounting for a large part of universe

other suppliers

retailers in Vietnam (approximately -

An increase in Consumer Price Index

300,000)
-

Increase in M&P shop’s investment

-

Increase in market demand