SALES FORCE MOTIVATION IN THE CONSUMER GOODS MARKET IN VIETNAM: A CASE STUDY OF THE TOILETRIES AND BEVERAGES INDUSTRIES. by Luong Vu Quang A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration Examination Committee Dr. Mark W. Speece (Chairman) Dr. Lalit M. Johri Dr. Clemens Bechter Nationality Vietnamese Previous Degree(s) Bachelor of Economics Hanoi National Economics University Hanoi, Vietnam Scholarship Donor Government of Switzerland Asian Institute of Technology School of Management Bangkok, Thailand April 1999 Abstract There is no doubt that motivation to the sales force is very important in sales management, especially in Vietnamese today’s conditions, where selling as a career is in its infancy stage. The conditions impose difficulties for sales management to determine what motivates salespeople and how to motivate them effectively. Thus, this paper aims to make clear these issues in two sectors: joint ventures (JVs) and state owned enterprises (SOEs). With in-depth interviews with nine representative companies of the two sectors, the research finds that, though in the same macro-economic conditions, salespeople in JVs place more value on high order rewards such as training, recognition, promotion. Meanwhile their SOEs counterparts show more interest in low order rewards such as salary/commissions, fringe benefits, job security and stability. This is mainly because sales and sales force management in JVs are more professional, systematic than in SOEs. To improve, JVs need to fine tune current practices while SOEs need fundamental changes. Specifically, the research suggests that, JVs should employ a multi-ladder sales system and SOEs should replace their centrally-planned minded sales managers by market-oriented ones. Acknowledgement For the completion of this research, I would like to express my deepest gratitude to Dr. Mark Speece – Chairman of the Examination Committee – for his continuous guidance and encouragement throughout the research period. I also would like to express my profound gratitude to Dr. Lalit Johri and Dr. Clemens Bechter –Committee Members of the Examination Committee – for their continuous comments and advice during the conduct of this research. Great thanks to my friends, the sales people and the companies that have helped to collect valuable information which is essential for the completion of this research. I also wish to express my thanks to the Switzerland Government for providing the scholarship in AIT. Sincere thanks to all of my friends at SAV and AIT, who have been sharing with me the studying and living during the program. I am extremely grateful to my beloved brothers and sister for their understanding, supporting and inspiration through my life. And, no word could possibly express my gratitude to my parents. Their loving encouragement and many sacrifices could never be forgotten. Table of Content Chapter Title Page Title Page i Abstract ii Acknowledgement iii Table of Content iv List of Tables vi List of Figures vii 1. INTRODUCTION 1 1.1 RATIONALE OF THE RESEARCH 1 1.1.1 Role of motivation to the sales force 1 1.1.2 Selling as a new career in Vietnam 1 1.2 PROBLEM STATEMENT 1 1.3 RESEARCH OBJECTIVES 2 1.4 INFORMATION NEEDS 2 1.4.1 From the sales reps 2 1.4.2 From sales managers 3 2. LITERATURE REVIEW 4 2.1 MODEL OF SALESPERSON MOTIVATION 4 2.2 PREVIOUS FINDINGS ON MOTIVATION OF THE SALES FORCE 5 2.2.1 Expectancy estimates 5 2.2.2 Instrumentality estimates 6 2.2.3 Valence estimates 6 2.2.4 Fairness 7 3. RESEARCH METHODOLOGY 8 3.1 DATA COLLECTION 8 3.1.1 Companies investigated 8 3.1.2 In-depth interviews 9 3.1.3 Interviewing and data processing 10 3.2 SCOPE OF THE RESEARCH 11 3.3 RESEARCH FRAMEWORK 12 4. FINDINGS 13 4.1 INTRODUCTIONS TO THE TWO SECTORS: JVS AND SOES 13 4.1.1 State owned enterprises (SOEs) 13 4.1.2 Joint ventures (JVs) 13 4.2 BACKGROUND FINDINGS 14 4.2.1 Channels 14 4.2.2 Recruiting 15 4.2.3 Orientation 18 4.2.4 A typical sales rep’s profile 19 4.3 MOTIVATIONAL PERCEPTIONS 20 4.3.1 Effort – Performance Relationship 20 4.3.2 Performance – Rewards relationship and Fairness 22 4.3.3 Valence of rewards 22 4.4 MOTIVATIONAL PRACTICES 31 4.4.1 Setting up motivational policies, incentive packages, or/and campaigns, programs 31 4.4.2 Communicating these program to sales reps 33 4.4.3 Monitoring and facilitating implementation 33 4.4.4 Evaluating, reinforcing and improving the programs 34 4.5 LIMITATIONS AND DIRECTIONS FOR FUTURE STUDIES 34 5. RECOMMENDATIONS 35 5.1 TO JOINT VENTURES: CREATING A PARALLEL MULTI-LADDER SALES SYSTEM 35 5.1.1 A parallel multi-ladder sales system 35 5.1.2 Benefits of a parallel multi-ladder sales system 36 5.1.3 Disadvantages of a multi-ladder sales system 37 5.2 RECOMMENDATIONS TO SOES: RECRUITING A NEW SALES HEAD 37 5.2.1 Prerequisites and feasibility of the suggestion 38 5.2.2 Why does recruiting a new sales head help? 40 5.3 CONCLUSIONS 40 REFERENCE: 42 APPENDIX 1: GUIDELINE QUESTIONS FOR INTERVIEWS 44 APPENDIX 2: RANKING OF THE IMPORTANCE OF REWARDS 45