Ineffective pricing strategy of the prepared food category at the alpha jsc

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

HUYNH THI THUY DUNG

INEFFECTIVE PRICING
STRATEGY OF THE PREPARED
FOOD CATEGORY AT THE ALPHA
JSC.

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2021

1


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

Huynh Thi Thuy Dung

INEFFECTIVE PRICING
STRATEGY OF THE PREPARED
FOOD CATEGORY AT THE ALPHA
JSC.
MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR. LE THI THANH XUAN

Ho Chi Minh City – Year 2021

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Contents
LIST OF FIGURES ..............................................................................................................................5
EXECUTIVE SUMMARY...................................................................................................................6
I.

INTRODUCTION ......................................................................................................................8
Introduction to business nature .................................................................................................. ...8
1.1 Company Overview ............................................................................................................. ...9
1.2 Organization structure ......................................................................................................... .10

II.

PROBLEM CONTEXT ...........................................................................................................12
2.1 Overview about The Alpha‟s businesses ............................................................................. .12
2.2 Overview about Vietnam prepared food market ................................................................. .17

III. PROBLEM IDENTIFICATION ...................................................................................................19
3.1 Symptoms analysis .............................................................................................................. .19
3.1.1

Low Revenues ..............................................................................................................19

3.1.2

Lost Orders ...................................................................................................................20

3.2 Problems Analysis ............................................................................................................... .21
3.2.1

Problem Mess ...............................................................................................................22

3.2.1.1 Manpower Shortage ................................................................................................... 22
3.2.1.2 Low awareness of customer about the company's product portfolio in Prepared Food
category ............. ........................................................................................................ 22
3.2.1.3 Limited customer network ......................................................................................... 24
3.2.1.4 High price.......... ........................................................................................................ 25
3.2.1.5 Wrong Competitor Analysis ...................................................................................... 27
3.2.1.6 Delivery Time too long .............................................................................................. 28
3.2.2 Problems Validation ......................................................................................................... .29
3.2.2.1 – Poor Human Resource Planning .............................................................................. 29
3.2.2.2- Poor Communication ................................................................................................. 29
3.2.2.3- Ineffective Pricing Strategy ....................................................................................... 30
3.2.2.4 – Poor Position Strategy .............................................................................................. 31
3.2.2.5 – Ineffective Supply Chain Arrangement.................................................................... 32
3.3 Main Problem Justification .................................................................................................. .33
3.4 Problem consequences ........................................................................................................ .35
IV. CAUSES ANALYSIS ..................................................................................................................39
4.1 Causes Validation ................................................................................................................ .39
4.1.1

Potential Causes ...........................................................................................................39

4.1.1.1 – Just reacting to the price competition....................................................................... 40

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4.1.1.2 - Failure in price positioning ....................................................................................... 41
4.1.1.3 – Ineffective price segmentation model ...................................................................... 42
4.1.1.4 - Ununited Stakeholders On-board.............................................................................. 43
4.1.1.5 – Lack of pricing capability ........................................................................................ 44
4.2 Validating Causes ................................................................................................................ .46
V. ALTERNATIVE SOLUTIONS .....................................................................................................49
5.1 Solution 1 – Mapping customers into segments, based on relationships and levels of
customer values, so that company can target their price as the costs of customer to incur.53
5.2 Solution 2 – Grouping and configuring product solutions into different levels of delivered
values ................................................................................................................................... .57
5.3 Action Plan .......................................................................................................................... .60
VI.

CONCLUSION ........................................................................................................................64

VII. SUPPORTIVE INFORMATION ................................................................................................65
VIII. REFERENCES ...........................................................................................................................87

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LIST OF FIGURES
Figure 1: General organizational structure of The Alpha JSC
Figure 2: General organizational structure of The Alpha JSC in Vietnam
Figure 3: Processing Unit organizational structure of The Alpha JSC in Vietnam
Figure 4: Chart for sale result of the Alpha JSC from 2017 to 2019
Figure 5: Sales results of Processing categories from 2018 to 2020

Figure 6: The company’s processing sales department categories
Figure 7: Retail market value of table sauces in Vietnam from 2013 to 2021.
Figure 8: Market size of top ten Sub- segment of prepared food in Vietnam in 2019
and predict for the next 5 years.
Figure 9: Retail market value of table sauces in Vietnam from 2013 to 2021.
Figure 10: The Value – based pricing model: Price-to-benefits map
Figure 11: The Value-based pricing framework.

LIST OF TABLES
Table 1: Sale result of the Alpha JSC from 2017 to 2019
Table 2: Sales result of Processing department from 2018 to 2010
Table 3: Gap between sales target and Actual report from 2018 to 2020
Table 4: Total loss of the company for this category
Table 5: Data of some loss projects for this category
Table 6: Customer relationships and value levels
Table 7: Products and value levels

LIST OF DIAGRAMS
Diagram 1: Diagram of Problem Mess
Diagram 2: The Preliminary Cause – Effect Tree
Diagram 3: The Updated Cause and Effect Tree
Diagram 4: The Final Cause and Effect Tree

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ACKNOWLEDGEMENT
First of all, I would like to express my deep gratitude and high appreciation to
Doctor Thanh Xuan for her valuable guidances for me to complete this final thesis. She
has also motivated me to overcome crestfallen at the beginning to complete the essay

within the allotted time. Without her advices, my thesis would not be completed in time
and with quality.
Secondly, I also want to express my respects and thanks to Mr. Tony, Mr. Vi
Nguyen, Mr. Tu Le, Mr. Tuan Tran, and Ms. Hoa Nguyen at The Alpha JSC, who have
spent much of their precious time answering the interview questions, as well as supported
to provide information needed for my thesis. Without that precious help, I certainly would
not be able to build up a strong and convincing thesis.
Also, I would like to thank ISB for giving me the opportunity to do this thesis, as a
great exercise of my education. This thesis has helped me apply the knowledge learned
during the program in solving a real business problem. This experience, even within the
framework of a education program, will be an important addition to my competent profile
and will help me in my current and future work as well.
Finally, I give love and gratitude to my loved ones in my family who have always
been by my side to encourage me, share household chores to give me more time and
positive energy to complete this memorable thesis.

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EXECUTIVE SUMMARY
Nowadays, price is a key element for any business and can be critical to the
business's survival. If the price is not set in accordance with the target market, it could
have a negative impact on the company's market share and profitability. As such, pricing
can be considered as an important aspect affecting the success of a business or an
organization. However, setting up a pricing strategy is becoming a difficult task for
managers. An effective pricing strategy will help the company increase its revenue and
profitability. Therefore, developing the right pricing strategy is both important and
complex. And, the price determination is likely to succeed if the business has good
management of the factors of the pricing strategy. Therefore, if the firms do not fully
understand the impact of their pricing decisions, that will often lead to missed

opportunities and ultimately reduced profits and sales. However, this happened with
particular Prepared food category of The Alpha company, they have been experienced
lost orders as well as low sales for several years due to ineffective pricing strategy.
By using different literature reviews and conducting in-depth interviews among
employees in the Processing business unit of The Alpha, this research has defined what
the main problem is, why it is the main problem, how important it is and how it affects to
business performance in their Prepared food category. Furthermore, the findings show
that a company's pricing strategy includes plans for price positioning, price segmentation,
competitive price reaction, and pricing capability. It is necessary for the firms to define
and develop an effective pricing strategy. Nowadays, among the three models: valuebased, market-based and cost-plus pricing, the pricing experts is more preferring to
execute value-based pricing, as it has been shown to gain the extra revenues from the
„value‟ of products offered to customer.
In short, this research will help the managers to find the central problem occurring
in the department, what main causes of the problems and how to make the good solutions
to solve that problem, to enhance the competitive advantages, increase profits and
decrease loss of orders to the competitors.

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I. INTRODUCTION
Introduction to business nature
The Alpha is the company about food industry. However, not like the B2C
businesses who sell food products to end consumers, this company is a B2B business. Its
customers are producers in food and beverage (F&B) industry. For more details, this
company does not produce and sell food products, but it provides machinery equipment
and line solutions to produce food products.
The three main businesses of the company are packaging, processing, and services.
Processing is understood as the process to handle the food materials into end-use
products. The processing solutions are either standalone equipment, machinery or several

equipment connected inline together to be provided for the customer to execute food
processing. And, The Prepared food is one of the six categories of processing business,
referred to the solutions for producing food products such as table sauces, mayonnaise,
instant soup, nutrition foods and more.
The basic operations of The Alpha in Vietnam, specifically mentioning for
processing business, is more about trading operation type. The sales and marketing teams
are at center of the model, while other teams are supporting for operation. Once the
customer orders are received, it activates the internal procurement process to prepare or
manufacture the equipment accordingly from the company‟s factories located in other
countries.
This company is a typical B2B company, but it is also specially in selling
machinery and engineering solutions. The selling process is normally started from
proactive approaching customers for potential sales opportunities; it is a long process
required many efforts of marketing, sales, engineering to prepare the solution for
offerings; the decision-making process of customers normally go through either
appointing supplier or bidding. To make a multi-million dollar deal, it usually takes a lot
of negotiating efforts and is bound by a tight commercial contract.

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1.1 Company Overview
The Alpha global company is one of the world leading companies in supplying
food processing and packaging solutions. They have been established for more than 70
years, presented in over 160 countries, and had more than 25,000 employees around the
world. By working as the partners, The Alpha targets to help its customers to provide
safe, innovative, and environmentally food products that everyday meet the needs of
hundreds of millions of people all around the world. Their vision is to commit for
ensuring foods are safe and available everywhere.
Considering in the network of food producers, The Alpha brands are well-known

in providing the equipment and line solutions for food processing and packaging, also
with the carton packages in food industries. They can provide complete machinery and
engineering solutions from processing to packaging and service afterwards of food
productions. Those solutions are uniquely designed and configured to be as resource
economical as possible. Milk, beverage drinks, ice-cream, cheese, and prepared foods are
examples of end-used products that can be processed or packaged on The Alpha‟s
processing and packaging lines. Furthermore, The Alpha is also capable of providing
solutions for food powdering, with its end-used products such as milk powder, coffee
powder.
In Vietnam, The Alpha JSC was established in 2003, on the basis of transforming
the operation of the representative office since 1994. The company has two offices in Ho
Chi Minh city (main office) and Hanoi (representative office), and about 200 employees
for both offices. With the support of technology and expertise from the parent company,
The Alpha Vietnam is currently considered as one of the most prestigious enterprises
specializing in providing liquid food packaging solutions. With a history of development
for more than 25 years in Vietnam, The Alpha has affirmed the brand "developing in
association with the community and environment". 100% of the wood fibers that make up
the Alpha carton box are extracted from regenerated forests and managed responsibly and
certified by FSC as the logo on the box. Besides, The Alpha processing and packaging
systems are also trusted and favored by manufacturers thanks to their simple operation,

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reduced equipment costs, and economic distribution. As a result, The Alpha Vietnam's
sales and business profits have been stable and growth over the years. In 2019, The Alpha
Vietnam is honored to receive two sustainable development awards from the European
Chamber of Commerce (Euro Cham) and the Business Council for Sustainable
Development (VBCSD).
1.2 Organization structure

About global company‟s organization, The Alpha structures their main operation
units into Processing Solutions & Equipment, Packaging Solutions & Commercial
Operations, Services, Development & Engineering, and Supply Chain Operation; other
functioning departments are Finance & Business Transformation, Human Resources,
Legal Affairs & General Counsel, and Communications; also, they build 4 regional
Clusters in according to four geography areas: Europe & Central Asia, Americas, Asia
Pacific and Greater China, Middle East & Africa.

Figure 1: General organizational structure of The Alpha global company
Source: Company Website.

For the Cluster Asia Pacific, it includes 6 Market Companies: Greater China,
Japan & Korea, Malaysia-Singapore-Philippines-Indonesia (MSPI), South Asia, Thailand,
and Vietnam.
Under Vietnam market company, the market leader is Managing directors, and
other several directors and executive assistant report to him. Each of directors will lead a

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functional team, such as marketing, processing sales, business development, service, and
key account management. Furthermore, the other supportive teams as per the global
organization, such as finance, HR, legal, communication, engineering, and supply chain
also have their presences in Vietnam office to support the company‟s operation.

Global support functional
units

Managing
Director

finance/ HR/ legal/
engineering/ supply chain

Executive
Assistant

Marketing

Processing
sales

Business
Key Account
Development Management 1

Key Account
Management 2

Key Account
Management 3

Services

Figure 2: General organizational structure of The Alpha JSC in Vietnam
Source: Summarized by author

Processing Sales department structure
In terms of organization, the head of the Processing Sales department of The
Alpha Vietnam is the processing director, reporting directly to the managing director.

There are five other headcounts of sales under the processing director and are assigned for
different business tasks. (i) one Processing sales manager in charge of Dairy and
Beverage, (ii) another Processing sales manager in charge of Prepared food, Cheese, and
Ice cream; (iii) one Processing key account manager in charge of the key customers: VM
& Nes. (iv) One Key component sales manager in charge of selling major standalone
equipment. In addition, there is a Processing assistant that supports operations and sales
tasks of the entire department.

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Processing Director
Vietnam
Mr. Tony

Processing Assistant
Ms. Hoa

Key Component Sales
Manager

Processing Key Account
Manager

Mr. Linh

Mr. Vi

Processing Sales Manager

Processing Sales Manager

Mr. Tu

(vacant - acting by Mr. Vi)

Figure 3: Processing Sales Unit organizational structure of The Alpha JSC in Vietnam
Source: Summarized by author

II. PROBLEM CONTEXT
2.1 Overview about The Alpha’s businesses
To have an overlook firstly about the business results of the company recent
years, as well as relative correlation in the sizes of contributions made by relevant
departments, the following charts can illustrate some views.
During the years 2017 – 2020, the averaged total revenue of the company in
Vietnam is 280 million EUR. Overall sales increased through years, but not stable.
Among the three businesses (packaging, processing and service), processing is the lowest
contributed department. Annual sales result of this department was only 10 million EUR
averagely, in equivalent to 4 percent on total sales of the company.
2020

Unit: 1000 EUR

2017

2018

Packaging

221,000

253,580

244,488

231,100

Processing

10,400

21,420

3,512

6,400

Service

28,600

29,000

34,000

36,000

Total revenue

260,000

304,000

282,000

273,500

2019

Table 1: Sale result of the Alpha JSC from 2017 to 2020
Source: Internal report

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Sales results - The Alpha Vietnam (1000 EUR)
350,000
300,000
250,000
200,000

Packaging

150,000

Service

100,000

Processing

50,000
0
2017

2018

2019

2020

Figure 4: Revenue of the Alpha JSC from 2017 to 2019
Source: Internal data

Despite its meager sales contribution to the company, maintaining and
developing the processing business is still valued for the company. Along with Packaging
and Service, Processing helps The Alpha introduce to customers an effective investment
plan, a unique end-to-end line solution, with commitments to quality and attentive aftersales service. Therefore, the development of processing business, increasing market share
and strengthen competitive advantages in the market is being oriented by the company.
Looking into the business of processing, it consists of 6 categories: Dairy,
Beverage, Prepared Food, Ice-cream, Cheese and Powder. The absolute biggest portion
was Dairy, contributed averagely 87 percent of total processing sales. Other categories
were at very minor positions: Beverage occupied around 12%, Ice-cream and Prepared
Food below 1%, and no sales recorded for Cheese and Powder.

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Unit: 1000 EUR

2018

2019

2020

Dairy

18,860

2,985

5,500

Beverage

2,527

431

681

Prepared food

0

47

83

Ice Cream

33

49

136

Cheese

0

0

0

Powder

0

0

0

Total

21,420

3,512

6,400

Table 2: Sales result of Processing department from 2018 to 2020
Source: Internal Data

Sales results of Processing categories
20,000

15,000

10,000

5,000

0
Dairy

2018
Beverage

Ice Cream

2019
Prepared food

Cheese

2020
Powder

Figure 5: Sales results of Processing categories from 2018 to 2020
Source: Internal Data

Regarding Prepared food, after analyzing the above data, it is able to see that
while the market has had a significant size and growth, the company's business results
was at very low achieved.
Following are some more clarifications on six processing categories.

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Figure 6: The company’s processing sales department categories
Source: Company’s internal information

In six categories above, Dairy is the category that earns the highest revenue; it
occupied the best market share in Vietnam. It is truly the core processing business of the
company. As stated by Mr. Tu Le, Processing Sales manager:
“The company has many advantages in Dairy application, they infiltrated early
and has successfully dominated the market. The company's end-to-end solution is an
advantage to apply in Dairy, as they can supply not only processing solutions but also
packaging solutions and carton materials. It is superior to the competition, because the
competitors must go in separate segments, or other suppliers have to go hand to hand
with other competitors to form a chain. In addition, the knowledge, expertise, quality and
experience in the Dairy industry are at the leading positions”
Meanwhile, for Beverage category, the market size is also good. However, the
market share of the company for this category is not really good due to the fierce
competition over the others that have had stronger presences in Vietnam for a long time.
“The Beverage market is quite large and growing well during years. However,
the Alpha does not have the full solutions and equipment portfolio in this beverage
industry. In addition, the Vietnam market has already had a strong presence of well-

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known beverage solution providers (such as Krones, GEA, …), and they have been
penetrated the market for a long time. On the other hand, the characteristic of the
Beverage industry is that equipment investment does not need to be too high, as well as
the difficulty in technology and solutions is not required too high. Those lead to the
tendency for customers to choose providers with cheaper solutions, so it is not the
company's strong point of focus” (Mr. Tu Le, Processing Sales Manager)
For Ice- cream, thriving in Europe due to the good market growth and consumer
preference towards premium quality – which is the strength of The Alpha equipment.
Commenting for the local market, the Sales manager argued: “In Vietnam, Ice – cream
market size is still small, and consumers have no high demand for premium and high –
quality products”. Therefore, expected Sales for this segment is not significant. Cheese
and Powders are also mainly thriving in Europe, the US and Australia where there is a
large amount of fresh milk and big milk-powder producers. Powdered milk projects often
require a huge investment and a very large capacity. Concluding for above, the Processing
Key Account Manager for Nest said that: “In Vietnam, projects of that size are not many,
therefore The Alpha is not targeting for the powder category in this market. For Cheese,
Vietnam's market size is also very small, because that is not a strongly consumed
product”.
For the Prepared Food category, Vietnam market has had good growth in recent
years, with major brands continuously reaping successes such as MS, Nest, NaD. The
Alpha has a full portfolio of processing equipment and solutions to meet their
requirements, but its cost is high, and it is mainly suitable for high quality product
orientation, so the competitiveness in the market is low. Most Vietnamese consumers are
not aware of the quality of food products, with or without preservatives, clean labels or
non-clean labels, high quality ingredients or poor quality, food safety assurance processes,
etc. Consumers have not set high expectations for quality products either. Therefore, the

access of The Alpha to sell its processing equipment and solutions to the prepared food
manufacturers faces many difficulties. Manufacturers are willing to choose cheaper

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solutions to invest. Those are the barriers that are very difficult to overcome for The
Alpha‟s growth in this segment.
In addition, Mr. Vi - acting Processing Sales manager - also stated that although
the prepared food category has potential but still not growth.
Based on the above analysis and information gathered in the processing sales
department, the Prepared Food is considered to be one category that has signs notable.
Therefore, this thesis will focus on analyzing and proposing solutions to problems related
to the Prepared Food category of The Alpha in Vietnam.
2.2 Overview about Vietnam prepared food market
Consumers in Vietnam are loyal to traditional Vietnamese flavors but enjoy
discovering the country's regional tastes as well. Food safety and health are some of the
top concerns connected to food products. In addition, consumers are increasingly
interested in new and trendy flavors.
Provided by Mintel Market size, The Vietnamese table sauce market has been
experiencing solid double-digit growth and is expected to continue rising over the forecast
period 2017-2021, with a retail market CAGR of 10% (USD). With MS accounting for
almost two thirds of the market, it is challenging for new players.

Figure 7: Retail market value of table sauces in Vietnam from 2013 to 2021.
Source: Internal data

Vietnam's table sauce market reported an increase of 10.7%, from US$685m in
2017 to US$758m in 2018. This market will reach US$995m in 2021, a 31% growth

17


compared to 2018. The largest categories of table sauces in Vietnam are fish sauce and
chili sauce, holding an 81% of market share. Between the two categories, fish sauce
accounts for around 92%. Fish sauce is used for dipping as a table sauce as well as for
cooking.
In addition, according to the data, which is provided by GlobalData, the top ten
Sub- segments of prepared food in Vietnam are as following:

Figure 8: Market size of top ten Sub- segment of prepared food in Vietnam in 2019 and predict for
the next 5 years.
Source: Internal data

Based on this chart and matching with their solution portfolio, The Alpha is
implementing business development plans for Prepared Food category corresponding to
the sub-segments: Chilli/Hot sauce, Mayonnaise, Baby Wet Ambient Meals, Frozen
Puddings/ Deserts, Ambient Soup and others.

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III. PROBLEM IDENTIFICATION
3.1 Symptoms analysis
According to Marlon Wayne3, recognizing and distinguishing symptoms to
identify the problem is the critical thing. From the collected and provided information by
company‟s manager after the first intake meeting, there are some symptoms which are
identified as following: (1) Low Revenue, and (2) Lost orders. The symptoms of Prepared
Food category are analyzed as hereby:
3.1.1 Low Revenues

Based on the market data provided above, the company assessed that as
the market grows and has such considerable size, it will correspond to the demand for
prepared food producers in the prepared food industry. These producers will expand their
production capacity and scale. That is, the company expects a growth in investment in
machinery, equipment and technology from manufacturing investors. The company
outlined forecasts about sales target every year as follows:
Unit: 1000 EUR

2018

2019

2020

Forecast

1,200

1,350

1,650

Actual

0

47

83

Gap

100%

97%

95%

Table 3: Gap between sales target and Actual report from 2018 to 2020
Source: Internal Report

As illustrated in Table 1, compared to the forecast figures from 2018 to
2020, there is a huge discrepancy between the actual figures and the forecast figures.
Although comparing figures between years with no significant growth, and shows the
problem in the company's plan, for more information on this issue, the author conducts
the Processing Sales manager interview to get more information about this situation.
"At first glance, the sales figures for the Prepared food category have
grown. However, that figure does not reflect the real business situation and is very
incompatible with market demand. Because, normally a standalone equipment for

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processing in general as well as prepared food in particular has its price of more than
100,000 EUR " (Mr. Vi, acting Procesing Sales Manager for Prepared Food)
The data showed achieved revenue under 100.000 EUR annually, which
is suggesting that the company only sold a few small equipment, or plant components.
Overall, Low Revenue can be considered as a symptom of this department
portfolio needs to be analyzed.
3.1.2 Lost Orders

The revenue brought in the company is based on the orders from
customers. Over the years, apart from unsuccessful outreach to customers, there are client
companies that already knew The Alpha, and sent their requisitions for quotation to the
company, requesting for the prepared food equipment and solutions. However, from the
data provided for sales results of The Alpha recent years, in the Prepared Food category,
one notable data is the total value of orders which has been lost to competitors. It shows
that, the business in this category is mainly in the direction of price competition.
2018

`
Total projects
Number of projects were lost
Total order value lost to competitor

2019

2020

6

5

7

6

5

6

2,000

2,410

2,616

Table 4: Total loss of the company for this category
Source: Internal data

There are some detailed data of loss values been shared (the sales manager
also explained that, most of the cases of competition, customers required bidding
submissions, and normally if loss, the company could not know accurately the winning
prices of competitors):

Project Names & Customers
Nutrition drink project, Nest,
2020
Chilli sauce line project, MS,
2019
Coco cream line project, PCA,
2018

Price of
Winning
The Alpha
price
(1000EUR) (1000EUR)

Price gap
(%)

2,180

1,700

22%

1,300

1,170

10%

1,600

1,400

13%

Lost to

TBJ
Frym.
AEG

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Table 5: data of some loss projects for this category
Source: Internal data

The Alpha‟s acting Processing sales manager has expressed regret for this
loss. Also as explained by the sales manager:
“The Prepared Food competitors of the company have won from The
Alpha with a significantly lower price than them. The company's price gap compared to
its competitors has, in most cases, become a barrier for the company to win orders, even
though their solutions may have better quality than others”.
So, Loss of orders to competitors that can be considered as a symptom of
this organization and needs to be analyzed further.

The link between Loss orders and Low sales
To a B2B company, the sales result is recorded annually, but it normally results
after a long period of time, even longer than a year. Each of won project is contributed by
sales efforts and competing hardly. Any of loss to competitor will reflect soon to the
revenue of that year. For the business in food & beverage like The Alpha being, the sales
project usually has its value more than 0.5 million US Dollars, while the annual forecast
of the company for Prepared Food business was being at around 1.4 million US Dollars
only. And so, with the recent Loss of a few orders per year, they reflected immediately to
Low Sales, as its consequences. Among the two symptoms (Lost Orders and Low Sales),
it can be concluded that the main one is Lost Orders, and the other is linked to it.
3.2 Problems Analysis
As above mentioned, Lost orders and Low sales are two symptoms, found in
Prepared food category of the Processing department at present time. Those findings are
based on data from the Processing department's report as well as information got from the
related personnel interview. The interview form can conduct through some of social tools
such as: Skype, Zalo and in-depth interviews to understand more about the situation of the

21

department as well as get more information about causes to these two symptoms, which
are found with details as following:
3.2.1 Problem Mess
3.2.1.1 Manpower Shortage
According to the processing organization chart, it shows that
currently there is one position vacant. That is Processing Sales Manager who is assigned
to care businesses in Prepared Food, Ice-cream and Cheese. This position is not only
encompassed to grasping and developing the strategy, but also responsible for hunting
new customers in those categories. Hunting a new customer is a required skill and target
of the team of business development. Currently, this position has been short of people for
nearly a year, and temporary cum by the Processing Key Account manager. For more
information on this, Mr. Vi also explained more:
“Turnover - The position of Processing Sales manager handling
Prepared Food - Ice Cream - Cheese has been changed on average once a year. The
typical job in this position is that the human resources must have skills and strategies for
hunting new customers, which is a skill and target of the business development team. But
due to the low business in the past 2 years, the company did not approve the headcount to
recruit new employee"
3.2.1.2 Low awareness of customer about the company's product
portfolio in Prepared Food category
In addition to the existing customers in Prepared Food category, the
company still has many other customers in other processing categories (mainly in Dairy
and Beverage), as well as customers in packaging solutions, which are well maintained
the relationship through the account teams, and brings the main part of revenue for the
company. These large enterprises have become longtime and loyal customers of the
company. Normally, when they want to invest new plants, or expand capacity, or improve
line performance and that demand match with their awareness about The Alpha‟s product
portfolio, they will inform or send the requisition for quotation to the company. But, the
issue at The Alpha is that, not all of the existing accounts are being aware about full

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portfolio of this company, even for main businesses or main categories. Therefore, it is
highly possible that, the customers want to invest equipment for their new production line
in prepared food, but do not know that The Alpha can supply. Consequently, The Alpha
misses to receive the enquiry. It is showing that, there is a low customer awareness of the
company's product portfolio in Prepared Food category.
During interviewing, the Processing Key Account manager- Mr. Vi
also shared for a typical case:
“In 2019, our account customer, Nes, decided to invest a new
production line for their new product of high-quality chili sauce. They sent the RFQ
(request for quotation) to several solution providers, both in domestic and oversea, but
not to The Alpha. That is because they did not know that we are well capable to supply
the equipment solution in this product application. We missed them at that time. Now we
see that problem and will need a plan to educate them about our portfolio in Prepared
Food category”.
As far as we know, The Alpha maintain their business with existing
customers through building up customer relationships. Once a customer bought a
company‟s product, it become „account‟ and then the company‟s business with that
customer is under care of an account team. Therefore, lack of a clear understanding of the
account customer about the prepared food solution portfolio suggests that the
transmission of information to them as well as the introductions of the catalogs, leaflets
and portfolio are insufficient and ineffective. In addition to the above account customers,
the unbought customers called prospective customers. Those customers are also separated
into 2 groups: the prospects s that sales - marketing staffs have attempted to reach through
certain communications but have not made any transactions with the company; and the
prospects that are completely new to the company. For the second group, The Alpha may
had their name already on the list through market information and reporting, but had not
yet reached them, but it is also possible that their names had never known by the company

before. Mr. Linh- Key component Sales Manager shares:

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“When a customer is not the account, the mechanisms for
communications between the two parties are quite limited, and thus efforts to fully
introduce the equipment portfolio to these customers are also difficult to achieve
efficiency".
In addition, conversations with those customers, if including
packaging needs, are often led by the Business development (BD) team of the company.
According to Mr. Vi – Processing Key Account manager: "Unfortunately Business
Development team was targeting mainly for packaging, they also had very limited
knowledge about processing solutions to present to customers". If being handled only by
processing salesforce, then efforts for Prepared food business development were often
made solely, and lacking orientation and consistence in message, for example with
marketing messages, to better impress customers. For the completely new customer
group, marketing efforts will be needed to actively introduce the equipment portfolio in
Prepared Food through available communication channels, in order to let the brand of The
Alpha‟s Prepared food solutions appear and occupy gradually in mind of customers. The
Alpha currently has Prepared food's own website. But, according to Mr. Vi,” not many
new customers know this website address”. In addition, for solution sales, it is important
that the solution concept is communicated to the customer before they have made an
investment decision. Otherwise - Mr. Vi also emphasizes – “if you know the project only
when the customers invite you to the bid, you will just be the background for competitor's
victory. Unfortunately, it seems that not many new prospects out there aware about our
prepared food equipment and solution portfolio”.
3.2.1.3 Limited customer network
All businesses want to expand their customer network as wide as
possible. The Alpha is also showing efforts to increase the number of existing customers.

At the Alpha, customers are divided into the groups of accounts, Example, existing
customers, who have purchased the company's products, and the group of prospects,
whom the company is pursuing to sell. Existing customers are assigned to account teams,
led by Account managers, responsible for building customer relationship and sales

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growth, "but mainly for packaging business", as said by Mr. Vi, the acting Processing
Sales manager. Through building relationship, account teams can aim to get updated
information, customers' investment plans, from which they can actively program and
introduce products, tailored solutions and services for customers. In a variety of fields,
customer data is regarded as a company's most valuable asset. Exploitation, research,
outreach, collection, and customer data storage are all important components of capturing
customers' hidden needs.
According to Mr. Vi – processing key account manager, “the
company currently has 3 accounts in the prepared foods category, they are MS, ViF,
NaD. Although these are all established brands in the market, they do not have a
significant market share in the prepared food industry”.
For the prospect customers, The Alpha has set a target of reaching
and selling products into seven other customer companies, which own the top 10 brands
of market share, along with the three accounts mentioned above. There is a lack of a plan
to reach those prospects through more popular channels.
As the acting Processing Sales manager stated that:
“The company's current customers have 3 accounts in Prepared
Food. But they themselves do not hold a large market share in the industry. In addition,
the contracts signed with the company are not significant value. The company has a
market analysis that lists the main players in the market, but the outreach was not
successful.”
3.2.1.4 High price

Nowadays, there are mainly two kinds of competition, about price
and quality among many competitors in the same industry. Every customer wants their
suppliers to provide a high-quality equipment system at a reasonable price. Same as their
customers, called consumers, they will always expect to pay less money for more value of
products. Not liking in B2C where the firm A can simply come to supermarket or try
some shopping to check the price of their competitors and assist for their price policy, in
B2B model, most of the customer orders are through bidding, or competitive quoting.

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