Company background
LOTTE GROUP _ 4
LOTTE Corporation, one of South Korea's top five largest conglomerates, was founded by businessman Mr Shin Kyuk-ho in Tokyo on June 28, 1948 The company expanded its operations across South Korea by establishing a confectionery company in Seoul on December 18, 1959 Today, LOTTE has grown to become the largest business group in South Korea, comprising over 90 subsidiaries and employing more than 60,000 staff across diverse sectors, including confectionery manufacturing, financial services, alcohol production, resorts, health and beauty, retail, personal care, industrial chemicals, electronics, information technology, construction, publishing, and entertainment In addition to its domestic presence, LOTTE also operates businesses in Taiwan and the Philippines.
India, Indonesia, Vietnam, India, America, Great Britain, China, Russia, Philippines, Uzbekistan and Poland
• 50 years to develop LOTTE Confectionery to be a global business
• 1970: Develop of food industry and reinforce diversification of business
• 1980: Entry to the 10 Korean businesses
• 1990: Provision of foundation for global management
• 2000: Focus on the main capability to be a multi-national business
• 2010: Vision, the powerful development for multi-national business to leading company
Mission: “We enrich people’s lives by providing superior products and services that our customer love & trust”
Vision: Creator of Lifetime Value to develop strong growth over the upcoming 60
5 vision “Lifetime Value Creator” means our resolution to create LOTTE a brand that deliver our clients with the so real value into their lives
Core Values: The core value that all LOTTE employee must wish toward so that
LOTTE could finish practical mission and vision, those are Respect, Originality, Challenge
LOTTE fosters a corporate culture that emphasizes the importance of employees sharing their thoughts and feelings to create greater value By cultivating mutually beneficial relationships among stakeholders, LOTTE enhances social value while prioritizing employee well-being and respecting diverse lifestyles The company focuses on innovation and the consolidation of ideas to drive business value and generate a unique value-creating environment.
Diagram 1: LOTTE Group Core Values
LOTTE Mart Viet Nam 6
As a subsidiary of the LOTTE Group, we have been operating in Vietnam for over a decade, specializing in a diverse range of consumer goods, including groceries, fashion, and electronics Currently, we proudly operate 14 stores across major provinces, including Ho Chi Minh City.
Ha Noi, Can Tho, Da Nang, Vung Tau, Nha Trang, Phan Thiet,
Diagram 2: LOTTE Mart VN Catch Phrase 2020
In line with its strategic vision for 2023, LOTTE Mart Viet Nam aspires to be recognized as the leading innovative retail company and the top online fresh grocery mall in Vietnam through its Speed L online channel The 2020 catchphrase, “Think Fresher, Do Better,” serves to inspire and motivate all employees to foster a culture of creativity and innovation.
7 mindset will lead to better work performance and environment, upscaling in product quality, better service, and accordingly provide customer fresher and wonderful shopping experience
Figure 1: Profit & Lost Annual performance
Total net sale of 2019 achieved 105.4%, increased 18% comparing with 2018 While growth of profit gained 19.3% EBIDA is 4,545,100,000,000 vnd and achieved 107, 6% In general, performance of LOTTE Mart VN in 2019 compassed as expected
LOTTE MART NAM SAI GON (NSG) _ 9
LOTTE MART NSG, situated at 469 Nguyen Huu Tho in District 7, HCMC, is one of 14 stores in Vietnam It holds the largest sales share and plays a crucial role in driving the overall sales growth rate across the chain in the country.
Diagram 4-LOTTE Mart Nam Sai Gon Organization Chart
Symptom: Sales of membership declined 9% comparing last year 10
Rivals 13
Figure 4: Retailer analysis-AC Nielsen
Vingroup acquired a lot of brands such as Vien Thong A, Fivimart, GM Vietnam, Shop
VinMart, along with other brands like Go and Queenland Mart, has garnered significant trust from experts, indicating a strategic plan for leadership in the market On December 3, 2019, VinCommerce, the parent company of VinMart, announced its official integration into the Masan Group This merger will unite VinCommerce, VinEco, and Masan Consumer, aiming to create Vietnam's foremost consumer goods and retail conglomerate.
Two group leaders announced a strategic deal aimed at enhancing operational efficiency and creating a highly competitive consumer goods retailer in Vietnam This new venture encompasses a robust network of 122 VinMart supermarkets and 2,600 VinMart+ stores across 50 cities and provinces Additionally, Vingroup revealed the merger of VinPro and Adayroi.com into the VinID application, further consolidating its market presence.
Saigon Union of Trading Co-operatives (Saigon Co.op) is actively expanding its retail chain with various models, including Co.opmart, Co.op Food, and Co.op Smile In June, the company enhanced its portfolio by acquiring 15 Auchan supermarket locations Additionally, Saigon Co.op has launched a premium business model, Finelife supermarket, aimed at high-income customers residing in upscale urban areas Meanwhile, Thailand's MM Mega Market, which acquired Metro Cash & Carry, opened its first retail supermarket in Hanoi last year, further intensifying competition in the Vietnamese retail market.
Central Group, the owner of the Big C Vietnam system, has launched its first GO! MARKET supermarket in Hanoi, marking a significant expansion of its brand in Vietnam This follows the opening of the GO! Mall in My Tho (Tien Giang) in 2018 According to AC Nielsen's analysis, LOTTE Mart NSG faces strong competition from key rivals such as BIG C, Vinmart, and Coop Extra SC Vivo, which have also expanded their presence with multiple branches opened in 2018, particularly Coop Mart Extra SC Vivo and Big C.
Retail Market Trend: 14
According to Vietnam Report, the retail industry in Vietnam is set to experience significant trends over the next three years, including a shift towards environmentally friendly products, an enhanced focus on customer experience, and the increased use of AI technologies like chatbots and automated payment systems Additionally, social communication will play a crucial role, alongside the emergence of small and new retail units Key drivers shaping the industry will include supply chain optimization, innovative sales and marketing strategies, mergers and acquisitions, the expansion of existing product lines, and the targeting of new customer segments.
15 existing products Specially, Omni channels (Multi channels) will change totally retail in the next 10 years
LOTTE Mart seems to attract older shopper than CoopMart, Big C, VinMart & Aeon
According to business performance report 2019, Sale of member (customer loyalty) decrease 9% comparing last year (Unit: VND, Ea, times, %)
Figure 7: Loyalty Analysis by nationality
Gen B (40-59) 44,817 8% 29,400 6% Gen X (60-79) 180,520 32% 166,600 34% Gen Y (80-94) 252,095 45% 269,500 55% Gen Z (95-up) 84,032 15% 24,500 5% Total 560,212 100% 490,000 100%
Figure 8: Loyalty analysis by generation
Symptoms are analyzed as follows
In 2019, despite an overall increase in total sales revenue, membership sales at the NSG store decreased from 540 billion to 490 billion, reflecting a 9% decline Additionally, the number of loyal shoppers, measured by member invoices, fell by 8% compared to 2018 Furthermore, the frequency of customer visits to the store dropped from an average of 3.1 times per month last year to 2.8 times this year.
LOTTE Mart NSG has yet to fully address the diverse needs of its customers, especially as competitors rapidly introduce trendy products such as premium, eco-friendly, organic, and international items Additionally, the strong growth of e-commerce further highlights the urgency for LOTTE Mart to adapt and enhance its offerings.
LOTTE Mart customer loyalty is not enough engaged to retain current member & recruit new as well As the chart, sale share of Gen B is 6%, Gen X is 32%, and Gen
Y is 55% Especially, Gen Z is emerging expenditure generation, although rate of member is 15%, but sale only account for 5% comparing with total
As analyzed, Sale of member customer decrease 9% is symptom of LOTTE Mart
Nam Sai Gon As if member sale of LOTTE Mart NSG kept increasing trend, it would contribute growth rate remarkably in total sale performance of company
Problems Identification
Potential problem: 18 1 Products (assortment) does not adapt to membership’s needs _ 18
Accordance with research & survey report together with in depth interviewed members of LOTTE Mart VN, LOTTE Mart NSG, customers We recognized several following potential problems listed
3.1.1 Products (assortment) does not adapt to membership’s needs
Assortment in retailing refers to the variety and quantity of products available for consumers, significantly influencing their shopping decisions Research indicates that consumers prioritize product assortment as a key factor in choosing supermarkets, making it essential for retailers to optimize their offerings By enhancing product selection, retailers can establish competitive advantages and drive sales growth.
Research by Briesch et al indicates that the number of brands available in retail significantly influences consumer store choice However, factors such as the variety of assortments per brand, sizes offered, and the proportion of exclusive items, including private labels, negatively impact consumers' decisions when selecting a store.
However, customer seems to have negative responses to categories of LOTTE Mart Non-Active member Gen B, (membership but no sell in latest 9 months) Ms Trang Thi
Le, a resident of the Sky Garden Apartment in a high-income area, emphasizes the challenge of finding organic and natural products for his family He believes that LOTTE Mart needs to address this issue to attract and retain high-income customers effectively.
Mr Kim Jang Oh, a Gen X resident of the Sunrise City apartment complex near LOTTE Mart, expressed his concern about the lack of product diversity in the international zones, particularly in categories like wine and confectionery He emphasized that he often has to purchase essential items from An Nam Gourmet to meet his needs.
Dining utensils are gaining popularity among shoppers as they adapt to busy households and evolving health and lifestyle trends However, a recent category report reveals a significant decline in meal solution growth by 11.5% and a 27.6% drop in basket value This indicates that while customers continue to visit supermarkets, their options for convenient processed meals—such as ready-to-cook and ready-to-eat dishes—are limited A non-active Gen Y member, Mr Nguyen Hai The, expressed his concerns, stating, “LOTTE Mart has few delicious dishes that suit my quick meal needs for a modern family like mine.”
Figure 9: Category sale yearly report
3.1.2 Customer Loyalty’s benefits is unattractive
Membership is a vital asset that determines the sustainability of a corporation Customer loyalty significantly impacts key business metrics; without loyal customers willing to make purchases, a business cannot thrive New clients typically require more resources to acquire and tend to spend less compared to loyal, repeat customers Therefore, retaining clients and encouraging their return is crucial for the success of any business.
Loyalty programs are strategic initiatives by retailers aimed at boosting store traffic, increasing shopping cart sizes, and fostering deeper customer relationships (Allaway et al) These programs are vital for enhancing client loyalty, benefiting both consumers and companies (Luxton) However, feedback from members reveals dissatisfaction; for instance, non-active Gen X member Ms Le Thi Dinh noted that while she receives birthday discounts from Coop Mart, LOTTE Mart has never offered her similar perks Additionally, active Gen Y member Le Van expressed disappointment after five years of high spending at LOTTE Mart without being recognized as a VIP member.
Dried Food Meal Solution Non Food Fresh Food Fashion
Net sales growth rate (%) No of Invoice growth rate (%) Basket Value growth rate (%)
A recent AC Nielsen analysis reveals that only 24% of new shoppers express interest in becoming preferred members of LOTTE Mart, in contrast to competitors like Aeon, CoopMart, and Emart, which boast higher rates of 29%, 37%, and 36%, respectively This disparity is largely attributed to the extensive special offers available to loyal members at these rival retailers.
Ms Tran Nhu Y, a non-active Gen Z member who has not made a purchase in the last six months, expressed her dissatisfaction with the store's member policy, stating, "I have stopped shopping at your store because your member policy does not meet my needs, and I have switched to Coop Mart Extra."
Figure 10: Retail customer Analysis by AC Nielsen
Ms Nguyen Thu Phuong, a non-active Gen X member, expressed her preference for shopping at AEON Mall due to the numerous special benefits available on member days In contrast, active Gen Z member Mr Hung noted that Vinmart offers a 3% discount to its members, while LOTTE Mart provides only a 1% discount.
The future of retail hinges on enhancing customer experience, both online and offline, according to Palexy’s CEO In the coming year, prioritizing customer experience presents a significant opportunity for businesses, as those that focus on this aspect are likely to reduce churn and increase revenues, ultimately leading to greater profits.
Cruz et al (3) highlight that many customers often experience discomfort when trying to locate items in large stores Although these retailers typically provide visual signage to guide shoppers to specific products, such signage can sometimes be challenging to find.
Customer experience and customer service are often viewed as synonymous, yet they play distinct roles in a company's success Businesses thrive on their audiences, making it essential to focus on strategies that not only attract new customers but also retain existing ones According to a Bloomberg Businessweek survey, providing an exceptional customer experience has emerged as a primary strategic objective for companies aiming to enhance customer loyalty and satisfaction.
Non-active member Gen Z, Hoang Bach Hop said that “I like shopping experience in
VinMart by using Scan & Go, I come store, scan what I want by App and go back, staff deliver to my home”
Active member Gen Y, Mr Nguyen An commented that “Why store Nam Sai Gon does not pay by Grab Moca, It is so fast & convenient?”
A recent AC Nielsen report reveals that LOTTE Mart's shopping experience falls short compared to competitors, particularly in areas such as accessibility, ease of finding products, attractive product displays, and store cleanliness.
According to Song (4), as the quality of life improves and values change, shopping transforms into a multifaceted experience driven by various motivations This research redefines the factors influencing the buying experience, emphasizing happiness and value in shopping The primary experiences identified include Sensory, Affective, Intellectual, Behavioral, and Relational aspects Additionally, the shopping experience is viewed procedurally, encompassing Decision convenience, Access convenience, and Benefit convenience These factors significantly impact user engagement on shopping websites.
Figure 11: Retailer imagery Analysis by AC Nielsen
Validating problems 24
Lack of updated products (Assortment)
Supermarket customers develop loyalty through their interactions with the value of goods, as noted by Terblanche, N S Additionally, loyal customers of health, beauty, and lifestyle (HBL) retailers benefit from positive relationships with both the value of the products and the front office staff.
According to Singh and Kapoor, the assortment of a retailer refers to the variety of items they offer Selecting specific products from a broader list aims to enhance the retailer's objectives, such as maximizing profit, while also taking into account limitations like available space and budget constraints.
- Lack of special offers for member
25 of products and their SKUs, inventory will be met to meet the desired level of service, and ultimately, but not to the changing needs of consumers
Determining the best type to implement is one of the most central issues in retailing The key decisions are items to stock and how to price them
Loyalty programs, as noted by Gable et al., focus on specific target customer groups, particularly the retailer's most valuable patrons whose continued patronage is crucial for business success By catering to these regular shoppers, retailers can effectively integrate the benefits that consumers seek, enhancing their overall shopping experience.
According to García-Gómez B et al., VIP programs are the most effective in fostering customer loyalty; however, there is no significant difference in emotional loyalty between customers participating in loyalty programs and those using loyalty cards This suggests that loyal customers may not place high value on the intangible rewards or incentives offered by the store.
Loyalty programs positively influence customer loyalty, as noted by Wei-Ming, O et al However, short-term loyalty initiatives, such as minimum gift card purchases, do not significantly impact long-term loyalty Therefore, merely promoting short-term loyalty programs is insufficient to foster enduring customer commitment.
Končar, J et al (11) considered loyalty cards as a tactic to generate a long-term, beneficial relationship between seller and clients based on satisfaction
Loyalty programs are a fundamental strategy for retailers to boost revenue growth and are essential components of Customer Relationship Management (CRM) They enhance customer relationships, encourage product and service usage, and improve customer retention By creating more engaging advertisements, retailers can attract additional members, making loyalty programs a vital asset for their business.
Retailers managing large-scale store chains provide a wider variety of products, leading to greater customer satisfaction without the need to compete primarily on price According to Thirumalai, S (13), a focus on perceived satisfaction allows these retailers to implement personalized strategies that resonate better with consumers, ultimately enhancing their overall shopping experience.
Ganesh, J (14) emphasizes the importance of building and maintaining long-term customer relationships through effective relationship management across various channels Multi-channel customers hold significant value, and integrating these channels can enhance client loyalty and retention.
Iyer and Kuksov (2015) argue that when clients perceive a purchasing experience as unsatisfactory, its effect on retailer strategy parallels that of product quality Consequently, retailers that excel in providing a positive buying experience tend to implement more aggressive price promotions.
Kovač et al (16) emphasize that the relationship with employees is a key factor in fostering buyer loyalty programs Providing priority treatment, utilizing personalized approaches, and creating a sense of belonging are essential elements that significantly enhance customer loyalty.
Generating client satisfaction and loyalty is crucial for achieving a sustainable competitive advantage and distinguishing a business from its competitors, as highlighted by Kursunluoglu, E (17) Among the various elements that contribute to customer satisfaction and loyalty, exceptional customer service stands out as a key factor.
To address the decline in member sales at LOTTE Mart Nam Sai Gon, the author analyzed the primary issues and incorporated insights gathered from interviews, leading to the following conclusions.
Mr Nguyen Van Long, the Operation Director of LOTTE Mart VN, emphasized the need to enhance member benefits to remain competitive against rivals, suggesting a study to improve privileges for loyal customers Additionally, Mr Huynh Quoc Cuong, Store General Manager of LOTTE Mart NSG, echoed this sentiment, highlighting the importance of satisfying loyal members.
Our sales have declined due to a lack of member loyalty, with customers moving to competitors Ms Hoang Hai, the customer service supervisor, emphasized the need to enhance member engagement through more activities and festivals to foster loyalty Additionally, Ms Vu Nhu Van, the sales supervisor for the cosmetic category, pointed out that our pricing and product offerings are not compelling enough to retain loyal members.
LOTTE Mart lack campaign of personalized promotion, not target the offers that are appealing to the different segments store want to capture
A survey of 20 customers revealed that 65% of respondents cited unappealing member benefits as the primary reason for not shopping at LOTTE Mart NSG for an extended period.
Cause Validation
Potential causes _ 27
Based on data analysis, interviews, and personal experience & understanding, the author found following potential causes
4.1.1 Bad services of store staffs
When clients enter a store, their expectations are shaped by prior experiences and information received, as noted by Sparks, L (18) If retailers fail to meet these expectations, customers are likely to seek alternatives, leading to potential loss of sales, especially in competitive markets To foster long-term relationships, retailers must strive to align their offerings with customer expectations and ensure satisfaction.
According to Yuen et al (19), high-quality service fosters customer loyalty by improving clients' trust and satisfaction with the company Satisfied clients are more likely to engage in actions that benefit the strategic health of the business.
According to the LOTTE MART CRM report for the second half of 2019, customer service has significantly declined compared to the previous year, with up to 250 staff members being described as "unwelcoming" to loyalty program members Additionally, the average frequency of staff asking customers for their member cards has decreased At the point of sale, customers often forget to present their member cards, and if staff do not remind them, the sales associated with these members are not recorded in the system This oversight results in lost opportunities for the company to enhance member sales.
Loyalty sales promotions are essential for attracting new customers, retaining existing ones, and staying competitive by leveraging insights from market research However, clear communication is crucial; if customers are not adequately informed, they are unlikely to make a purchase Effective strategies include inviting customers to print temporary cards and actively promoting membership benefits.
“Staff mention benefit for member showed bad attitude under customer’s expectation as other stores
Tan Binh Go Vap Phu Tho
Invite customer to create loyalty card 80 88 93 94
Invites customer to print temporary card
Actively introducing promotion to membership
Staff mention benefit for member 70 99 75 80
Figure 13: LOTTE MART CRM report 2 nd half 2019
4.1.2 Low competitiveness of member benefits
According to Omar (20), the benefits of loyalty programs are linked to the perceived value based on customer experiences Mimouni-Chaabane highlights that saving money is a crucial factor in customer satisfaction, along with entertainment and discovery Unreg et al suggest that when a program is engaging, customers may develop a connection with it rather than just the brand itself Offering tangible benefits within loyalty programs can enhance customer acquisition; however, if competitors provide similar offerings within the same program, customers may remain loyal to the program instead Bolton emphasizes that the benefits of loyalty programs explain customer participation, fostering loyalty O'Brien and Jones further assert that well-planned reward strategies can lead to sustainable competitive advantages, rather than relying on short-term promotions Additionally, Yi and Jeon found that the value derived from loyalty programs positively influences customer satisfaction and loyalty behaviors.
Member Festival Accumulated point Special
Offers Member with Baby Intergrated
Tet Gift Coupon Frequent SMS
BIG C - 0.5% Gift Kid gift Go! Big C
Figure 14: Rivals analysis by author
LOTTE Mart's member loyalty points stand at only 1%, significantly trailing behind VinMart's 3% and Aeon's 5% VinMart leverages Vingroup's resources to provide attractive benefits, leading to customer perception that rival offerings are superior, prompting some to switch brands Coopmart also excels in customer loyalty initiatives, offering personalized promotions such as coupons and New Year gifts Research by Khairawati (21) indicates that member cards play a crucial role in enhancing customer satisfaction, while discounts do not significantly affect satisfaction or loyalty Overall, loyalty programs that utilize member cards or discount promotions directly influence customer satisfaction and foster loyalty.
Figure 15: Loyalty survey by Nielsen
According to Nielsen report, LOTTE Mart Loyalty Card lowered in both ownership
& perceived benefits, 2019 is 14, but this year is 8, while competitors with increasing trend and remarkably improved such as CoopMart 31-33, Big 28-31
Loyalty positively influences perceptions of fairness during low price increases, while this effect diminishes when prices rise Moreover, providing a valid rationale for price hikes enhances equity awareness at lower price points, but any justification during price increases amplifies awareness Client loyalty varies significantly when customers are strongly committed to purchasing a specific product or service from the same retailer in the future.
Tolbert, S L noted that past purchases indicate a monopolistic relationship with a retailer, where highly self-aware consumers exhibit low incentive value In contrast, individuals with strong individualistic tendencies find awareness beneficial for negotiating higher prices However, when consumers' previous purchases are divided among various retail partners, self-awareness does not significantly influence their perception of value.
Figure 16: AC Nielsen retailer pricing analysis
According to AC Nielsen's retailer pricing analysis, pricing satisfaction scores are 7/10, which is lower than Coop-Mart's 8/10 and Big C's 9/10, negatively affecting membership repurchase behavior Furthermore, price and perceived value play a crucial role in shaping customer behavior, accounting for 14% in customer perception.
Membership Phan Trung Thuan commented that “Almost product is higher other stores, I need better selection of items”
Figure 17: Derived important ranking by Nielsen
Validate cause _ 33
Base on previous analysis and in-Dept interview of employees & customers author identify Unsatisfaction of loyalty care lead to sale of member declined 9% comparing with last year
Customer satisfaction is crucial for evaluating the appeal of a product or service, as highlighted by Khairawati (24) By analyzing customer reviews, businesses can gauge satisfaction levels and ensure that products meet expectations In the retail sector, maintaining high customer satisfaction is essential for retaining customers, as satisfied clients are more likely to advocate for the brand and develop loyalty This positive relationship between customer satisfaction and audience loyalty significantly influences future purchasing decisions, encouraging repeat business even in the face of competing offers.
A study by Elif Akagün Ergin reveals that 73.5% of customers acknowledge that holding a loyalty card from a specific store does not deter them from shopping at other retailers Many shoppers prefer to visit various stores and utilize multiple loyalty cards, as they perceive greater benefits from diverse discount programs The ease of obtaining loyalty cards contributes to this trend, with most customers opting for multiple cards to maximize savings and enhance their financial gains through strategic shopping.
Nguyen Thi Hoa, a member, shared that her home is conveniently located near CoopMart, Big C, and LOTTE Mart She holds three loyalty cards and only shops at these supermarkets when they offer attractive promotions during specific periods.
Mr Kim Jong Yoo, Strategy Director, emphasized the urgent need to enhance membership benefits, warning that failure to do so could result in a gradual loss of customers This highlights the significant role that benefits play in influencing customer loyalty Additionally, Ms Le Thi Ly from customer service noted frequent complaints from customers regarding the unattractive LOTTE Mart membership policy, which fails to encourage repeat purchases.
At LOTTE Mart NSG, dissatisfaction with loyalty programs can hinder customer retention Research indicates that loyalty programs significantly influence business performance, with even a modest 5% increase in customer loyalty potentially boosting profits by 25%.
100% Loyal audience is admitted that 5x will buy again, around 7 times will try and
4times will invite person who they know
According to Cant, M C (26), loyal customers are more likely to remain committed if retailers prioritize delivering quality goods and audio services This highlights the importance of understanding and meeting the needs and expectations of the target audience, a fundamental principle in marketing By effectively addressing these requirements, retailers can foster customer loyalty and ensure long-term retention.
Non-active member Gen X, (membership but no sell in latest 3 months) Ms Le Thi
Hoa said that “I move to go shopping in CoopMart, because they often send SMS discount promotion to me, once or twice per month”
Bose et al (27) originally developed a loyalty program scale consisting of sixteen items that assess five perceived benefits: savings, exploration, entertainment, recognition, and social connection While the number of items remains unchanged, the dimensions of entertainment and recognition have been combined into a new category termed 'ego joy.'
Diagram 6: final Causes & Effect Map
Bad attitude of store staffs
Low competitiveness of member benefits
Symptom: Sale of membership decline 9% comparing last year
Impact to sale & profit performance of whole company
Alternative solution
Solution 1 Invite expert to train CRM skills for marketing staffs 35
Training is the process of acquiring knowledge and skills to enhance specific competencies, ultimately aimed at improving productivity and performance It is essential for employees to continually update and refine their skills throughout their careers Once employees are selected, effective training for their designated tasks becomes crucial Overall, training plays a vital role in the success of organizations.
Training and education are essential for enhancing workplace effectiveness, as noted by Du Plessis, A.J Entrepreneurs must thoroughly assess their training needs before modifying their programs Training involves structured activities aimed at improving knowledge, skills, and the ability to implement and manage tasks efficiently Additionally, education elevates the overall quality of entrepreneurs, contributing to their success.
Customer relationship management (CRM) encompasses the strategies and approaches a company employs to effectively manage and nurture its relationships with customers, partners, and prospects By focusing on optimizing these interactions, CRM aims to enhance customer retention and drive sales growth.
The CRM team at LOTTE Mart oversees all aspects of loyalty membership, including content design, benefits, and operations However, their skills and competencies are limited Mr Jang Song Ok, the Products Strategy Director, noted that the team's capabilities are insufficient to compete with rivals, emphasizing the need to bring in expert leaders to train the staff as soon as possible.
Customer Relationship Management (CRM) is essential for enhancing retail marketing and customer service, as highlighted by Kumar, M A Efficient CRM practices lead to increased customer satisfaction and retention In the context of shopping malls, effective CRM enables businesses to identify, develop, and integrate their capabilities to foster long-term, value-driven relationships with customers.
Customer Relationship Management (CRM) focuses on identifying, attracting, and retaining customers while fostering loyalty It aims to sustain strong business relationships that enhance customer satisfaction and encourage repeat business annually CRM teams oversee the entire customer interaction lifecycle, from initial leads to final acquisitions A well-executed CRM strategy is often fundamental to cultivating long-term customer loyalty.
Expert who understand deeply retail industry, update fastest Furthermore, they will have overall view so that they could consult tactics & marketing suitable with company
Improve knowledge of CRM Upgrade skills of customer loyalty Update marketing trends in retail
Figure 18: Cost benefit 1 by author’s synthesis
Solution 2: Personalized promotion to loyalty membership 37
According to Bhaskar, T (31) promotion are personalized in multiplexing by
RFM Analysis, which focuses on Recency, Frequency, and Monetary value, is essential for optimizing customer engagement in the competitive Indian multiplex industry To enhance customer loyalty, businesses should implement personalized promotions tailored to individual customer needs, fostering greater involvement and satisfaction However, a significant challenge in executing these personalized promotions lies in developing an efficient and effective strategy.
According to Ismană-Ilisan, C.M et al., multi-channel personalization is essential for effective retail customization This approach allows companies to ensure a seamless customer experience, as consumers no longer differentiate between channels and anticipate a consistent shopping experience.
Personalization in marketing leverages data to create targeted promotions, utilizing customers' buying histories to enhance revenue and boost consumer satisfaction This approach is crucial for managers aiming to thrive in the competitive retail landscape.
Research indicates that personalized promotions can significantly enhance sales performance, resulting in an average 1.6% increase in total monthly transaction amounts, a 3.2% rise in the number of items purchased per order, and a 2.2% boost in the likelihood of receiving a five-star rating compared to control stores.
Shocking price (Offer premium Items) Reward them (TET gift, Birthday Gift)
Shocking price (Offer medium item offer) Pwp, Amazing weekend, point redemption
Purchase more once Shocking discount ( Offer low value Items & Pb)
Lost No Purchase for a long time Plus member point (Fixed times)
Company separate 4 group of loyalty including Lead, Loyal, Low & Lost to design appropriate solution for each targeted audience group as above
Marketing Tactics Cost Benefit return
SMS sent 100 mil Approximately reach to 50,000 member
Network 200 mil Approximately Engage to 1,000,000 customer &
Coupon discount 500 mil Approximately Delivery to 30,000 customer, Sales
Stamp collection 1,000 mil Approximately 20,000 loyalty & Sales 50 billion
Freebies 500 mil Approximately offer to 15,000 active member & sales 20 billion
Figure 20: Cost benefits 2 by Author’s synthesis
Solution 3: Apply 80/20 rule to increase volume of top membership group
occupied highest (only focus on Lead group & Loyal group as mentioned above)
According to Pareto's "80-20" rule, a significant portion of sales—80%—is generated by just 20% of customers This principle emphasizes the importance of focusing on key customers, as 80% of membership sales typically stem from the top 20 highest-performing members Streamlining the sales strategy to target these essential contributors can enhance overall sales performance.
The Pareto principle, as noted by Sanders, R (33), is essential in marketing for analyzing salesforces, products, and customers to identify unusual sales distributions Despite advanced sales territory analyses, this principle emphasizes the need for management to focus on the few accounts that generate the majority of sales However, it's important to recognize that the Rule of 80/20 is a static concept derived from empirical observations and was not originally designed as a guideline for action While a Pareto diagram accurately reflects the data at the time of analysis, its validity may not persist over time.
Applying this rule on membership date, company will extract 20% top sale of membership and focus promotion to maximize sale volume Growth 20% existing to
30% As the chart, if 30% repeat shopping, rate will be 77-23 and increase sale 11,
30/37.50 In case, company optimize group, sale of membership will rise remarkably
To enhance customer loyalty and ensure ongoing business from high-value clients, firms can empower customers to create personalized lists of desired products along with their preferred prices Whenever possible, businesses should offer these items and prices as rewards for customer loyalty, fostering a stronger relationship with their most profitable customers.
To encourage existing customers to exceed the 20% threshold, it's essential to communicate the various membership levels and perks available for larger buyers or repeat customers By effectively sharing this information with top sales members, businesses can motivate qualified individuals to engage more deeply with the benefits of membership, ultimately enhancing customer loyalty and satisfaction.
Marketing Tactics Cost Benefit return
Print ads 150 mil Approximately reach to 20,000 VIP member
Network 200 mil Approximately engage to 30,000 VIP member
Product privilege discount 700 mil Approximately offer 20,000 VIP member, Sales 60 billion VIP Party 1,000 mil Approximately 90,000 loyalty & Sales 40 billion
Plus Member Point 1.000 mil Approximately offer to 30,000 active member & sales
Figure 22: Cost benefit 3 by author
Action Plan
Based on the current situation and marketing budget, the author has chosen Solution 3: implementing the 80/20 rule to enhance the membership volume of the highest-ranking groups, specifically focusing on the Lead and Loyal groups, to create an effective action plan.
Figure 23: KPIs estimation with solutions campaign
As estimated, target of June & July 2020, if company have special promotions, achievement will be 70% & 80%, however, when company have action plan, store
Step Description Person in charge
Extract member data from system, divided in 2 group 20% top sale
Analysis characteristic of membership (Purchasing behavior, sale amount, income, frequency, basket price & full personal information of customer
Base on analysis, brainstorm & select top sale items, special offer which membership is interesting (coupon, discount, gift, member point), VIP Party
Allocate reasonable budget for total campaign
Step 3 Design media plan to target this group including SMS, Facebook,
Zalo, Post catalogue Media Team
Step 4 Tracking effectiveness & analysis return on investment (ROI) KPI Team
Step 5 Performance review & improvement plan Marketing
Supporting information
No Full Name Position Working experience
1 Tran Thi Vi Front office staff
5 Vu Nhu Van Sales Sup 02 Year 19 Feb
7 Trang Thi Le Customer Customer 1 Mar 2020 Phone Call
8 Mr Kim Jang Oh Customer Customer 1 Mar 2020
9 Nguyen Hai Customer Customer 1 Mar 2020 Phone Call
10 Le Thi Dinh Customer Customer 1 Mar 2020 Phone Call
11 Tran Nhu Y Customer Customer 4 Mar 2020 Phone Call
Customer Customer 4 Mar 2020 LOTTE Mart
13 Hoang Bach Hop Customer Customer 4 Mar 2020 Phone Call
14 Nguyen An Customer Customer 7 Mar 2020 LOTTE Mart
15 Nong Thi Hai Customer Customer 7 Mar 2020 Phone Call
16 Le Hoang Hai Yen Customer Customer 7 Mar 2020 LOTTE Mart
17 Nguyen Thi Le Customer Customer 7 Mar 2020 Phone Call
18 Le Thi Hoa Customer Customer 7 Mar 2020 LOTTE Mart
Could you tell me customer service in your store?
Actually attitude of security guys, house keeper are so impolite when serving shoppers, categories staffs are not wholehearted to consult products to customers”
How do you think about of LOTTE Mart benefits?
“Our benefits to member is not enough competitive to capture customer comparing rivals, we should study to upgrade more privilege to satisfy loyal member”
Why sales of membership go down comparing last year?
Our sales declined because we our member is not loyal & move to competitor
You think what are our problems?
“I think that our problem is loyalty, we have few activities & festival to caring member, we should improve quickly
How do you think about of LOTTE Mart benefits?
Price & products for member are not attractive to retain loyal members”
Can you give me some ideas about
“We should improve benefits of membership as soon as possible, if not, we will lose customer day by day”
Do you often shop in LOTTE Mart NSG?
Living in the upscale Sky Garden Apartment, I prioritize quality over price, yet I struggle to find organic and natural products for my family LOTTE Mart must address this issue to attract high-income customers effectively.
How do you think products in store NSG?
“Products in International zones is not diversified as wine, confectionary, I must buy essential items in An Nam Gourmet
LOTTE Mart have few delicious dishes to adapt my quick meal for modern family like mine”
How long you not purchase in store NSG?
“I often get discount coupon or gift from Coop
Mart on my birthday, but LOTTE Mart is not ever” Active member Gen Y Le Van complained that “I have been a member of
LOTTE Mart for 5 year with monthly high expenditure, nevertheless, I am not considered as VIP member, I really disappointed”
Satisfaction Member policy Shopping behavior
“I stop shopping in your store anymore because your member policy did not meet my needs & and I moved to Coop Mart Extra”
“I like to shop in AEON Mall because they have a lot of special benefits on member day” Active member Gen Z Mr Hung added
“Member of Vinmart get back 3% discount, but LOTTE Mart only 1%”
“I like shopping experience in VinMart by using Scan & Go, I come store, scan what I want by App and go back, staff deliver to my home”
How do you think LOTTE Mart service?
“Why store Nam Sai Gon does not pay by
Grab Moca, It is so fast & convenient?”
I have always enjoyed shopping at LOTTE Mart; however, I've noticed a decline in the staff's attitude recently Unlike before, the employees seem less attentive and do not greet customers with smiles or a welcoming demeanor, leaving me feeling unsatisfied with my experience.
“I often go to your store, however, your staff almost introduced me about member card, also benefits when being members
Sometimes, customer is crowed, she had to wait more 10 minutes, but did not hear
Customer service excuse from store, I really disappointed about caring services
“I will never buy in LOTTE Mart anymore because house keeper abused her indirectly when I dropped items by mistake, although shopper excuse to house keeper
“I move to go shopping in CoopMart, because they often send SMS discount promotion to me, once or twice per month”
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The study by Omar et al (2010) investigates the relationship between program benefits, customer satisfaction, and loyalty within retail loyalty programs It emphasizes the importance of program trust and commitment in enhancing customer loyalty, suggesting that these factors significantly influence the overall effectiveness of loyalty initiatives The findings highlight how a well-structured loyalty program can foster deeper customer relationships and drive long-term retention in the retail sector.
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