Distribution channel management is always a matter of concern for the manufacturing Enterprises because it gives them distinct competitiveness on the market. Moreover, the lubricant industry has unique characteristics that lead to the distribution channel of this industry is largely different with other industries.
The distribution system is determined to be the determinant of the success or failure of a lubricant brand. Being a civilian product but with technical characteristics, the business strategy of the lubricant manufacturers that appear earliest in Vietnam is based on the passivity of customers. On the buying psychology of “knowing nothing” or “ entrusting to sellers” Vietnamese consumers have given the opportunity for brands to have a broad coverage, and from there the distribution channel of a lubricant manufacturing enterprises is considered the path to bring the product directly to the consumer.
One of the reasons leading to this market and industry’s shortcomings and limitations is due to weak organization and management of the distribution channel in Vietnam Enterprises. The initial difficulties are from the distribution policy of the Enterprises, the resources of the Enterprises and the location of each distributor.
It is very difficult for manufacturers to maintain their distribution system. Due to this group’s particularity they are very little loyal, because they have financial potential, customers, market insight and before the fierce competition from the current oil firms, they are willing to choose the brand with higher profits, taking care of them better, bringing them more benefit.
When the product comes to the distributor, there are many disadvantages such as:
Technology is changing continuously and rapidly, especially in the era of industrialization, the technology 4.0 is introduced to change the competition in this industry.
The Enterprises have seen the change of technology and trend, some large Enterprises in the industry have identified to change to effectively manage distribution channels.
Applying new technologies to production and business has helped Enterprises to efficiently manage budgets, debt is no longer inaccurate between the distributor and the company, has support the rapid control of goods in the warehouse, accurate statistics of each kind of products to help distributors decide whether to buy more or not.
The importance of managing the distribution channels for Enterprises is to grasp the market structure and easily distribute the goods to each distributor to avoid the “monopoly” of the product. Evaluate the effectiveness of each distributor sales potential, thereby preferential policies are given to help increase their loyalty.
Distribution channel is always a hard-to-solve problem for Enterprises, but with the software solution based on cloud computing, it will be a powerful assistant to help Enterprises increase competitiveness, reduce costs and maximize profits