Hoàn thiện hệ thống kênh phân phối sản phẩm dịch vụ vinaphone trả trước tại ban khách hàng cá nhân

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

NGUYỄN PHƯƠNG NGA

COMPLETING THE SYSTEM OF DISTRIBUTION CHANNEL
OF PRE-PAID VINAPHONE SERVICES IN THE PERSONAL
CUSTOMER BOARD

HOÀN THIỆN HỆ THỐNG KÊNH PHÂN PHỐI SẢN PHẨM
DỊCH VỤ VINAPHONE TRẢ TRƯỚC TẠI
BAN KHÁCH HÀNG CÁ NHÂN

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019


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

NGUYỄN PHƯƠNG NGA

COMPLETING THE SYSTEM OF DISTRIBUTION CHANNEL
OF PRE-PAID VINAPHONE SERVICES IN THE PERSONAL
CUSTOMER BOARD

HOÀN THIỆN HỆ THỐNG KÊNH PHÂN PHỐI SẢN PHẨM
DỊCH VỤ VINAPHONE TRẢ TRƯỚC TẠI

BAN KHÁCH HÀNG CÁ NHÂN

Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. TRẦN HUY PHƯƠNG

HÀ NỘI - 2019


WARNING
I, Nguyen Phuong Nga, graduate student of MBA15 course 2017-2019 of the
Faculty of HSB, Hanoi National University, thesis "Completing the system of
distribution channel of prepaid Vinaphone services in the Personal Customer
Departement” by me under the guidance of Dr. Tran Huy Phuong.
I guarantee that all data used, research in this thesis is honest and the result
of my own research. The data and information in this thesis have not been used to
protect a degree, the information cited in the thesis is clearly stated.
Hanoi, May 30, 2019
The reassurer

Nguyen Phuong Nga


THANK YOU
With deep affection and sincerity that allow me to deeply thank all
individuals and collectives who have facilitated the process of studying and
researching this thesis.
In particular, I would like to express my deep gratitude to Dr. Tran Huy

Phuong, who directly guided and helped me a lot during the research and
completion of the thesis.
I would like to express my gratitude to all HSB faculty members of Hanoi
National University for teaching and encouraging and facilitating me during my
studies at the University as well as the completion of this thesis. .
I would like to express my sincere thanks to the Board of Directors,
colleagues of the Personal Customer Department, the Sales Control Center for
facilitating and helping me to complete this thesis.
Although the author has made great efforts, the thesis is difficult to avoid
certain limitations and shortcomings. Due to time limits and professional
qualifications, the thesis is inevitable. We hope to receive the sincere advice and
contributions from teachers, teachers, friends and colleagues to make the thesis
more complete. Once again, thank you!
Hanoi, June 20, 2019
Implementer

Nguyen Phuong Nga


CATEGORY
LIST OF ABBREVIATIONS
LIST OF TABLES, MODELS, TABLES
INTRODUCTION............................................................................................................... 1
1. The urgency of the topic ........................................................................................ 1
2. Research overview ................................................................................................. 2
3. Research objectives ................................................................................................ 3
4. Research methods................................................................................................... 3
5. Subjects and scope of research ............................................................................... 4
6. Contents of the thesis ............................................................................................. 4
CHAPTER 1: OVERVIEW OF DISTRIBUTION CHANNEL ..................................... 6

1.1. Distribution channel ............................................................................................ 6
1.1.1. Concept ...................................................................................................................... 6
1.1.2. Roles and functions of distribution channels........................................................... 6
1.1.3. Distribution channel classification ........................................................................... 8
1.1.4. Distribution channel structure ................................................................................ 10
1.1.5. Member of distribution channel ............................................................................. 14
1.2 Management of distribution channels ................................................................ 19
1.2.1. Concept of distribution channel management ....................................................... 19
1.2.2. Role of distribution channel management ............................................................. 21
1.2.3. Content of distribution channel management........................................................ 22
1.3. Factors affecting distribution channels ............................................................. 33
1.3.1. Group of internal factors ......................................................................................... 33
1.3.2. Group of external factors ........................................................................................ 34
1.3.3. Evaluating actors participating in the distribution channel system ...................... 36
1.4. Criteria for evaluating distribution system system ........................................... 38
CHAPTER 2: CURRENT SITUATION OF DISTRIBUTION OF PREPAID
VINAPHONE SERVICES IN THE PERSONAL CUSTOMER BOARD. ................ 41
2.1. Overview of personal customer board .............................................................. 41
2.1.1. The process of formation and development of enterprises .................................. 41


2.1.2. Organizational structure of individual customer committee ................................ 42
2.1.3. Business results of the Personal Customer Division for the period 2015-2018 .. 45
2.2. Current situation of distribution channel of vinaphone prepaid products at the
personal customer department.................................................................................. 52
2.2.1. VinaPhone mobile service distribution channel structure .................................... 52
2.2.2. Members in the distribution channel of the Personal Customer Department ..... 55
2.2.3. Contribution of distribution channel members...................................................... 57
2.2.4. Overall assessment of distribution channels.......................................................... 59
2.3. Current situation of distribution channels of vinaphone prepaid products at the

personal customer department.................................................................................. 60
2.3.1. Select member of distribution channel .................................................................. 60
2.3.2. Encourage members in the channel to work ........................................................ 61
2.7 Commercial discount rates for channels ............................................................ 62
2.3.3. Evaluate channel members .................................................................................... 63
2.3.4. The impact of the network transfer campaign to maintain the MNP number to the
distribution channel ........................................................................................................... 64
2.4. General evaluation on the organization of distribution channel in the personal
customer board ......................................................................................................... 66
2.4.1. Advantages .............................................................................................................. 66
2.4.2. Defect ....................................................................................................................... 67
2.4.3 The development of distribution channels of competitors. ................................... 68
2.4.4. The cause exists in the management of distribution channels.............................. 69
CHAPTER 3: SOME SOLUTIONS TO COMPLETE OF DISTRIBUTION
CHANNELS OF

VINAPHONE PREPAID PRODUCTS AT THE PERSONAL

CUSTOMER BOARD...................................................................................................... 72
3.1. Orientation in business of personal clients ....................................................... 72
3.1.1. Forecast of influencing factors ............................................................................... 72
3.1.2. Business goals and orientations of the Personal Customer Department ............ 77
3.2. Some solutions to complete the distribution channel in the personal customer
board. ........................................................................................................................ 78


3.2.1. Complete the model to provide services ................................................................ 78
3.2.2. Create close relationships with members in the distribution channel .................. 78
3.2.3. Adjust incentive policies......................................................................................... 80
3.2.4. Promote mixed promotion policies ........................................................................ 83

3.2.5. Some other support solutions ................................................................................. 85
CONCLUDE ..................................................................................................................... 82
REFERENCES .................................................................................................................. 84
Appendix 1: Table of evaluation criteria for quality of Retail points care .................... 86
Appendix 2: Questionnaire survey and assess customers' distribution channels
VinaPhone. ......................................................................................................................... 88


LIST OF ABBREVIATIONS
VTTT:

Provincial and City Telecommunications

VNPOST:

Provincial and Municipal Post Offices

DVGTGT:

Value-added services

DVGT:

Value service

DBL:

Retail point

P&T:

Post and Telecommunications


LIST OF TABLES, MODELS, TABLES

Figure 1.1: Types of distribution channels ...................................................................... 8
Figure 1.4: Direct distribution channel format.............................................................. 13
Figure 1.5: Indirect distribution channel format ........................................................... 13
Figure 1.6: Mixed distribution channel format ............................................................. 14
Figure 1.7: Members of the distribution channel .......................................................... 14
Figure: 1.8. Administration distribution channel .......................................................... 22
Figure 1.9: Manage distribution channels ..................................................................... 23
Form. 1.10. Select channel members ............................................................................ 23
Figure 2. 1: Organizational structure of the Personal Customer Department ............... 44
Table 2.1: Successful call setup rates in recent years ................................................... 45
Table 2.2: Data on performance of yearly targets of the Personal Customer Department ..... 47
Figure 2.2: Subscription on the Personal Customer Department network for the period
2015-2018...................................................................................................................... 48
Figure 2.3: Revenue from Personal Banking Department for the period 2015-2018 ... 49
Figure 2.4: Market share of the Personal Customer Department compared to the whole
Company. ..................................................................................................................................... 51
Figure 2.5: Market share of the Personal Customer Department compared to other
networks ........................................................................................................................ 51
Figure 2.6: Diagram of distribution channel system at the Personal Customer
Department .................................................................................................................... 52
Table 2.4: Statistics of distribution channels of the Personal Customer Department ... 56
Figure 2.7: Number of stores over the years ................................................................. 57
Table 2.5 Revenue contribution from channels (only for prepaid service revenue). ........... 57
Table 2.8 Discount rate for level 1 agents .................................................................... 62

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

Market share of the Personal Customer Department compared to other
networks
To gain the market share of lost Vinaphone, first of all, it is necessary to perfect
the system of distribution channels of Vinaphone prepaid products at the Personal
Customer Department.
Distribution system with the role of linking manufacturers with consumers, it
affects profit, price, as well as other benefits for consumers when choosing quality
products, Price is suitable for demand ... Therefore, the distribution channel becomes
one of the effective means of competition
VinaPhone is one of three mobile service providers with the largest market
share in Vietnam, in which the Personal Customer Department manages the northern
region. Recognizing the role of distribution channels in modern business, in the past
time, the Personal Customer Department has paid much attention to this issue. To
ensure the mission and business of distribution system of VinaPhone services are
covered widely, meeting the demand of using social services.

1


However, the application of the theory of distribution channels in practice is
inadequate in view of marketing, the system of distribution channels is still inadequate,

the organization of distribution channels is overlapping, taking advantage of the old
distribution channels VNPT has many shortcomings, not keeping up with the current
situation after dividing the Post and Telecommunications. Moreover, the direct
competitor is Viettel Telecom Company of Military Telecom Group which has joined
the market since the end of 2007 and now has more than 50% market share of mobile
services in Vietnam. This shows that units that organize well the distribution channel
will achieve high business results. Therefore, the study of perfecting management of
VinaPhone service distribution channel is an urgent requirement now.
For this reason, I chose the topic "Completing the system of distribution
channels of Vinaphone prepaid products at the Personal Customer Department" as the
research topic.
2. Research overview
Distribution channels and management theory of distribution channels in
business of product and service suppliers have been mentioned a lot in documents and
research works in many countries in the world as well as in Vietnam. .
In the curriculum of marketing management, it is mentioned the distribution
channel. For example, Philip Kotler, who is considered the father of modern
marketing, said that the product distribution channel is one of the four variables of
mixed marketing that businesses need to build to deploy marketing efforts to the
market target. The development and good organization of distribution channels help
businesses build and maintain a competitive advantage in the long term. Because,
distribution channel is a collection of external relations between independent
businesses in business. Creating and developing a distribution channel system requires
a lot of time, effort and intelligence so it is not easy for other businesses to follow.
In Vietnam, in recent years, there have been some researches on distribution
channels of some products and services such as:
- Topic: "Improving the distribution channel system of Vietnam Post
Corporation" by Nguyen Thi Thanh Hai analyzed and synthesized theoretical issues

2

related to the management of distribution and distribution channels. The actual price of
distribution channel of telecommunications products of Vietnam Post and
Telecommunications Corporation including VinaPhone's mobile products. The author
has proposed a model of distribution channel system and sales mechanism applied in
the distribution channel system of Vietnam Post Corporation, but has not focused on
specific research on VinaPhone mobile products.
- Subject: "Business development of mobile service enterprises in Vietnam",
Doctoral thesis of Hanoi National Economics University in 2008 by Le Ngoc Minh.
The thesis has assessed the current business situation of mobile information enterprises
in Vietnam, applying business theories of enterprises to propose solutions for business
development, however, does not specifically address the specific characteristics of the
mobile product's distribution.
Along with many other topics that mention distribution channel management,
however, the organization of distribution channels for a specific product, VinaPhone
mobile service, has no topic. With the desire to have organized research and improve
the distribution channel of specific products, I chose this research topic.
3. Research objectives
The general objective of the thesis is to propose solutions to improve the system
of distribution channels of products and services at the Personal Customer Department.
Specific objectives include:
- Synthesis of the theoretical basis of distribution channels.
- Evaluate the status of the system of distribution channels of Vinaphone
prepaid products at the Personal Customer Department
- Proposing solutions to complete distribution channels of Vinaphone prepaid
products at the Personal Customer Department
4. Research methods
The thesis using main research methods is:
Research methods at the table: This is a common method to carry out initial

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

3


economic overview, market survey report, company profile, sales tracking data, trade
statistics, consumer survey ...
Field survey method: Is the method of direct observation on the object of the
survey right at the place where the processes that the researcher can use as an
argument. This is a method that requires sophisticated observation of the researcher.
The observation of survey objects is divided into many types: according to the level of
preparation, according to the relationship between the observer and the observed,
according to the purpose of grasping the nature of the observed object, according to
the purpose of treatment information, according to the continuity of observation and
ultimately according to the means used in the observation.
Expert method: Expert method is the method of using the intelligence of a
team of highly qualified experts to consider and identify a complex scientific or
practical event, to find make the optimal solution for such events or evaluate a
scientific product.
5. Subjects and scope of research
Research subjects:
System of distribution channels for Vinaphone prepaid products at the Personal
Customer Department
Research scope:
- About time: The thesis focuses on research on organization of distribution channels,
management of distribution channels in the period of 2015-2018.
- About space: The scope of 28 northern provinces is managed by the Personal
Customer Department.
Regarding content: Focus mainly on researching the organization and

management of prepaid channel system of VinaPhone service in the Northern region.
6. Contents of the thesis
In addition to the introduction and conclusion, the dissertation is structured into
3 chapters including:
Overview of research situation
- Chapter 1: Overview of distribution channels.

4


- Chapter 2: Current situation of distribution channels of Vinaphone prepaid products
at the Personal Customer Department
- Chapter 3: Some solutions to complete of distribution channels of
prepaid products at the Personal Customer Department

5

Vinaphone


CHAPTER 1
OVERVIEW OF DISTRIBUTION CHANNEL
1.1. Distribution channel
1.1.1. Concept
From a marketing standpoint, a distribution channel is a collection of
independent, interdependent businesses and individuals involved in the process of
bringing goods from producers to consumers. In other words, this is a groups of
organizations and individuals that carry out activities make products or services
available to consumers or industrial users so they can buy and use. Distribution
channels create a flow of goods from producers through or through trade

intermediaries to end consumers. All participants in the distribution channel are
called members of the channel. Trading intermediaries located between producers
and end consumers are important members in many distribution channels.
Distribution channels exist outside the enterprise, it is not an internal
organizational structure of the enterprise. Distribution channels include businesses
and individuals who are involved in the negotiation process of bringing goods or
services from producers to end-users who have the function of negotiating, buying
and selling, transfer of ownership of goods and services. Other companies such as
transport companies, banks, warehouses, insurance companies, advertising agencies
... implementing auxiliary functions are not members of the channel.
1.1.2. Roles and functions of distribution channels
1.1.2.1. The role of distribution channels in business operations of
enterprises
The distribution channel plays a very important role in bringing products from
the place of production to the end consumers so as to satisfy customers' needs and
wants in terms of quantity and type of products, time and time. space and place
provided, the quality of the product and the price that customers can accept. [6]
The distribution channel has become an important competitive tool in the long
term when it becomes a part of corporate assets, creating a competitive advantage
that distinguishes between businesses. Achieving advantages of superiority of

6


products is becoming more and more difficult. Strategies to cut prices are not only
quick and easy to be copied by competitors but also lead to a reduction and loss of
profitability.
The distribution channel enhances the ability to link and cooperate among
individuals and organizations operating in the areas of production and distribution
of consumption in a common purpose. Providing products and services to end-users

and satisfying their own goals.
1.1.2.2. Function of distribution channel
The most common basic function of all distribution channels is to help
businesses deliver products to consumers at the price they can buy, the right
category they need, at the right time and at the location they require. The
distribution channel has seven basic functions [6]:
Exchange and purchase functions: This is the most common function of the
distribution channel and the essence of this function is the conduct of trading
activities. The purchase function involves the search and evaluation of the value of
goods and services while the selling function is related to the consumption of the
product. It includes the use of personal sales, advertising and other marketing
methods.
Standardization and sorting functions: This function involves arranging
goods according to categories and quantities. This makes trading easier because it
reduces the need for testing and selection.
Transport function: Goods are moved from one point to another, thereby
resolving the spatial conflict between production and consumption.
Storage and reserve function: It is related to storage of goods and services in
warehouses and yards, providing goods and services to customers quickly and
conveniently. At the same time, this is also a function to maintain a stable
distribution for customers in volatile market conditions.
Financial functions: Concerning the provision of cash and credit needed to
transport, store and promote sales.
Risk sharing function: Solving uncertainty in product distribution process in

7


the market.
Information function: Is providing information from all channel members

and opinions from customers outside the market.
Distribution channels are the way in which products and services are
circulated from manufacturers to consumers. As a result, it overcomes the barriers
of time, location and ownership of products and services between producers and
those who wish to use them.
1.1.3. Distribution channel classification
Channel 1
Direct channel
Producer

Customer
Indirect channel

Channel 2
Producer

Retailer

Customer

Wholesale

Retailer

Customer

Wholesale

Retailer

Customer

Channel 3
Producer

Channel 4
Producer

Agency

(Source: Management of distribution channels - Associate Prof. Dr. Truong Dinh
Chien)
Figure 1.1: Types of distribution channels
There are two types of distribution channels: direct distribution and indirect
distribution:
1.1.3.1. Direct distribution channel
Direct distribution channel is the distribution channel that members of the
channel only include producers and end consumers (Figure 1.1, channel 1). In this
distribution channel, the manufacturer directly performs the distribution function to
the end consumer. Manufacturers provide services through their direct selling points

8


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

Manufacturer, service provider
Sales at production sites,
shops, representative office
valves ...

Phone
Internet
Letter

Final customer

(Source: Management of distribution channels - Associate Prof. Dr. Truong
Dinh Chien)
Figure 1.2: Types of direct distribution channels
1.1.3.2. Indirect distribution channel
Indirect distribution channel is a form of distribution channel in which the
manufacturer or supplier of the sales service gives the final buyer through
distribution intermediaries (channels 2, 3, 4, Figure 1.1).
Types of intermediaries in indirect distribution channels
In the indirect distribution channel, there are the following intermediaries:
agents, brokers, wholesalers, retailers, distributors ...
Choosing the right types of intermediaries in the distribution channel will
bring high efficiency in business, minimizing the risks that businesses face. In

9


contrast, mistakes in the selection of distribution centers often have severe
consequences in business operations and need a long time to overcome. The fact has
shown that many "dead" products are due to mistakes in distribution strategies,

choosing the wrong distribution center. Depending on each business and
distribution intermediary, some evaluation criteria can be selected:
- Doing business in the same market that the business is targeting;
- Having the ability and conditions to exploit the market that businesses are
targeting;
- Having a full sales force with qualified training skills and sales;
- Having an independent distribution network;
- Having policies to promote trade in accordance with the policies of
enterprises;
- Having strong financial ability;
- Ability to provide after-sales service;
- Product development policies in line with the policies of enterprises (suitable
in franchising business);
- Do not trade in competitive products.
- Having enough conditions for warehouses and yards to store necessary
quantities of goods;
- Having treasures suitable to types of goods;
- Essential market coverage conditions;
- Having a financial reputation;
- Provide appropriate management for businesses;
- Prestige and position in the market;
1.1.4. Distribution channel structure
The process of distributing distributions is also the process of deciding who
will participate in the distribution stages and as a result a channel structure will
form. Therefore, the distribution channel structure is a group of members of the
distribution channel whose collection of distribution is divided among them.
Different channel structures have a way of dividing distribution jobs for different

10

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

Length of distribution
channel

Distribution channel
width

Intermediate forms

Figure 1.3: Distribution channel structure
1.1.4.1. Length of distribution channel
- The length of the distribution channel is first determined by the number of

intermediate levels present in the channel. One-level channel has one intermediate
level, two-level channel has two intermediate levels, three-level channel has three
intermediate levels. In addition, there are channels with more intermediate levels.
However, from the manufacturer's point of view, the more levels of the channel, the
less likely it is to control its operation. Based on the structure of the parts of the
channel, the number of channels is classified as follows:
- Non-level channel (also known as direct channel): is the channel that

producers sell their products directly to consumers. The sales method also has many
types: organizing stations, representative offices, by mail, by phone and right at the

production place (channel 1, figure 1.1);
- One-level channel: is a channel with an intermediary between producers and

consumers (retail) (channel 2, figure 1.1);
- Two-level channel: is a channel with 2 intermediaries between producers

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

and consumers (usually there is a big wholesale agent sold to small wholesale
agents, then to retailers) (channel 4, figure 1.1 ).
11


1.1.4.2. Width of the channel
- The width of the channel is expressed in the number of intermediaries at each

level of the channel. In order to achieve the best market coverage, access and
exploitation, businesses must decide the number of intermediaries at the distribution
levels in the channel. Enterprises can research and apply one of three distribution
methods:
- Centralized distribution: is a policy that a business uses for a product

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

number of resellers to distribute products. Enterprises can use a moderate number of
resellers in an area. This type of distribution aims to combine channel management

with creating a solid image with high sales volume and profitability.
- Separate distribution: is a policy by which a business assigns a single

wholesaler or retailer to sell its products in a given geographical area.
1.1.4.3. Commercial intermediaries in each level.
- Commercial

intermediaries at each level are the forms of trade

intermediaries. Wholesale intermediates include specialized, general wholesale,
agency, brokerage, wholesale of rose-fed goods ..., retail intermediaries have
general retail, specialized stores, self-service ... Each type intermediaries have
different strengths, weaknesses, scales, business methods and perform certain
distribution tasks. In contrast, each type of product is only suitable for certain types
of trade intermediaries. The types of intermediaries in the market are always
changing, the distribution channel manager must analyze the existing intermediaries
in the market to be able to use the appropriate types of intermediaries in the
distribution channel system of the enterprise. career.
- With three basic characteristics, we can see a great number of channel

structures. However, there are major types of channel structures: direct distribution
channels, indirect distribution channels and mixed distribution channels:
12


- Direct distribution channel (non-hierarchical channel): is the type of channel

that the manufacturer sells directly to the end consumer. Since there is no
commercial intermediary, the manufacturer must perform all functions of the
distribution channel. The sales force of the business is responsible for direct sales to

consumers (Figure 1.4).
Enterprise

Consumers

Figure 1.4: Direct distribution channel format
- Indirect distribution channel: is the type of channel that the enterprise does

not sell its goods directly to the final consumer but through commercial
intermediaries (wholesalers or retailers). Depending on the situation, businesses can
choose the number of intermediate levels to join the channel. A one-level channel is
a manufacturer channel that sells goods to consumers through retail trade. Twolevel channel is a channel with two wholesale and retail intermediaries. Three-level
channels with three intermediaries are first-class wholesalers, second-class
wholesalers and retailers. There are also more level channels, but the level of
acquisition of end-user information and the level of channel control decreases as the
number of intermediate levels in the channel increases (Figure 1.5)
Enterprise

Commercial intermediaries

Consumers

Figure 1.5: Indirect distribution channel format

13


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

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

Enterprise

Commercial
intermediaries

Consumers

Figure 1.6: Mixed distribution channel format
1.1.5. Member of distribution channel
Three basic members of the distribution channel are producers, intermediaries
and end consumers (Figure 1.7).

Member of distribution
channel
Producer
Businessman
Intermediary
Retailer
Consumers

(Source: Management of distribution channels - Associate Prof. Dr. Truong
Dinh Chien)
Figure 1.7: Members of the distribution channel

14


1.1.5.1. Producer
Producers include many types of industries ranging from industry, agriculture,
forestry, construction ... to the service industry and many scales from a producer to

a giant enterprise with thousands of workers. dynamic. Although there is such a
difference, in general it all coexists with the aim of offering products to satisfy
market demand. [11]
The majority of manufacturing enterprises are not favorable subjects to
distribute products directly to the market for consumers because they lack both
necessary and effective experience to perform the direct distribution. to consumers.
By transferring distribution jobs to other members of the channel such as
wholesalers and retailers, producers can achieve relative savings. The reason is that
these intermediaries distribute products of many different businesses and therefore
can spread high fixed costs of implementing distribution functions for larger
volumes of distributed products. This allows them to operate close to the optimal
point on the average cost road for producers' distribution jobs.
1.1.5.2. Wholesale and retail intermediaries
- Wholesale and retail middlemen are primarily independent organizations

that have their own needs and desires with specific goals other than the
manufacturer.
- Wholesale intermediary:
- The wholesaler includes businesses that buy goods for sale to the rest or

business users such as retailers, industrial companies, industry organizations or
state agencies as well as sellers. Other merchants.
- Wholesale intermediaries are categorized into three main groups:
- Real goods wholesale: are enterprises with independent ownership, they

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

15


satisfy market demand (covering the market), making sales contacts, keeping
inventory, place orders, receive market information, help customers.
- Brokers and agents: these are wholesale organizations and individuals

that do not own goods but only perform certain distribution functions. Their
main function is to facilitate the purchase, thereby receiving income in the form
of commissions on sales. They operate under names such as brokers, import and
export agents, consumer agents, buying agents, and wholesalers of roses.
- Branches and representative offices of enterprises: they are owned and

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

customers. They can identify a target group of customers by size, type of
customer, or other standards;
- Decision on product and service categories: wholesaler's products are

their products. Wholesalers are always under pressure to sell all types and
maintain sufficient stock to be able to deliver immediately but this can lead to
loss of profits. Therefore, they try to calculate how many types of goods should
be sold and only select products that are beneficial to them. Wholesalers also

consider what services need to be provided, which services need to be charged to
customers;
- Price decision: wholesalers often set selling prices based on purchase

price plus cost and profit for them. In addition, wholesalers also incorporate
many other valuation methods such as discounts and discounts, promotional
pricing, geographic pricing;

16