1 AIT Asian Institute of Technology

Lubricant distribution channels in Cambodia : a case study of total lubricants (Cambodge)

AuthorTep Virak
Call NumberAIT RSPR no. SM-99-12
Subject(s)Lubrication and lubricants--Cambodia

NoteA research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management
PublisherAsian Institute of Technology
AbstractThis 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.
Year1999
TypeResearch Study Project Report (RSPR)
SchoolSchool of Management
DepartmentOther Field of Studies (No Department)
Academic Program/FoSMaster of Business Administration (MBA) (Publication code=SM)
Chairperson(s)Speece, Mark W.;
Examination Committee(s)Bechter, Clemens; Swierzeck, Fredric William;
Scholarship Donor(s)Government of Switzerland;
DegreeResearch studies project report (M.B.A) - Asian Institute of Technology, 1999


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