| Abstract | This research study is dealing with redesigning lubricant distribution channels in
Cambodia and the corresponding promotional supports to the channels for a petroleum
company total Cambodge. The key objectives of this research was to find out and understand
the existing lubricant distribution channels, the channel members buying/selling behavior
(out-network only), the consumers buying behavior, total Cambodge strategies and policies
towards lubricant distribution channels, and finally to recommend the distribution channels
with promotional supports.
Both primary and secondary data have been taken into consideration. The information
have been collected from all main three actors of the market e.g. Total Cambodge itself,
lubricant channel members (wholesalers and retailers), and final consumers (individual
vehicle/generator consumers and industrial users) through interviews, in place observation,
questionnaires, companies and other publication. Two geographical areas (Phnom Penh and
Bttembang) had been chosen to conduct the survey of individual lubricant consumers and
retailers. The sample size of 135 end-users and 70 retailers had been used for the surveys.
Lubricant retailing markets in Cambodia though it is small but an extremely
competitive market. More than three thousand tons of lubricant are yearly imported from
outside Cambodia by petroleum companies, trading companies, and smugglers. Lubricants (in
bottle and drnm) are distributed through two main distribution channels: network and outnetwork channels. The network channel contains more than 300 service stations. The Outnetwork channels include the channel responsible by suppliers sales representatives to sell to
industrial users, and the other channels selling through wholesalers and retailers (of more than
1,200 selling places throughout the country).
Individual vehicle/generators owners buy only bottled lubricant. According to the
result of the data analysis 70 percents of retailers are supplied fully or partially by
wholesalers. Wholesaler channel is thus the most important distribution channel of bottled
lubricant to individual consumers. Wholesalers not only provide small lot of many brands but
also agree more favorable term of credit than other kinds of suppliers to retailers.
There is no any government regulation or any restriction on creating lubricant
distribution channels. The transaction between supplier and customer is not fixed by any
exclusive contract. Customers -- industrial users, wholesalers and retailers -- have many
suppliers and at the same time can change freely from one to another. This implies that
suppliers can always approach to all customers.
Wholesalers, not belonged exclusively to any supplier, have all brands to sell with
very small margin to retailers and to some industrial consumers. Good relationship between
company supplier and wholesaler is a very important factor to encourage the wholesaler to try
to sell a particular brand of the supplier. Wholesalers can be motivated through profit margin,
sales contest, and certificate of performance. Retailers give "price" of product followed by "quality" and "profit margin" the most
important criteria when choosing supplier. In contrast, supplier chooses retailer using three
essential criteria: business size, size of outlet, and payment ability. Retailers can be motivated
firstly using profit margin through offering product for free if they buy to the amount fixed by
supplier, and secondly using credit term of 30 days and if they are able to pay immediately
they pay less around two percent a carton. Finally, one kind of year-end rewards according to
their sales performance (sales contest) is another important criterion to encourage them to sell
the product.
Industrial customers used most lubricant imported. They choose suppliers using four
main criteria: image and size of the company supplier, specification of the product offered,
price of the product, and finally after-sales services. Some industrial users however have
many suppliers.
,Most individual lubricant consumers usually buy lubricant at the service station.
However, another one-third likes to buy at the sidewalk-selling outlet. To them, the services
provided at the selling place by seller are the most important criterion when choosing
lubricant shop. Shell, Caltex and Total are the three brands well known and most used in that
order by final consumers. The consumers when choosing lubricant give the perceived quality
of product the most important criterion followed by price, and brand name. So it is not true
finding in the pilot interview that individual lubricant consumers gave 'price' the most
important criterion when choosing to buy a particular brand of lubricant. As a matter of fact
they are value oriented. They can be convinced to buy a particular brand by using TV ads,
poster or displaying the brand at the shopping places; and followed by sales promotion such
as lottery containing valuable thing, raincoat, and T-shirt.
To conclude, lubricant retailing market in Cambodia though it is small, many
suppliers, extremely competitive, and customers getting more and more sophisticated but still
profitable. Total Cambodge thus have to make more efforts and more thinking on the business
if the company really wants to be a challenger in the market. |