INTERNATIONAL UNIVERSITY (IU – VNU)

SCHOOL OF INDUSTRIAL ENGINEERING MANAGEMENT

GROUP 7
COURSE: RETAIL MANAGEMENT
ADVISER: DR. NGUYEN HOANG HUY

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Table of Content

1.Introduction .................................................................................................................................. 4
2.Target Market............................................................................................................................... 5
2.1 Long Chau market share in pharmaceutical market ............................................................. 5
2.2 Customer definition .............................................................................................................. 8
a. Segmentation .................................................................................................................... 8
b. Overall strategy ................................................................................................................ 8
2.3 Trade area............................................................................................................................. 9
3.Location Analysis ...................................................................................................................... 10
3.1 Size of the trade area ........................................................................................................... 10
3.2 Accessibility and Visibility ................................................................................................. 12
3.3 Type of lease ....................................................................................................................... 13
4.Retail Channel ............................................................................................................................ 14
4.1 Store channel ....................................................................................................................... 14
4.2 Non-store channel ............................................................................................................... 15
5.Merchandise Mix ....................................................................................................................... 18
5.1 Variety and Assortment of products sold at Long Chau Pharmacy: ................................... 18
5.2 Product strategy of Long Chau pharmacy: ......................................................................... 20
5.3 Private brand of Long Châu pharmacy: .............................................................................. 22
5.4. Competitive advantage for products: ................................................................................ 23
6. Price Policy ............................................................................................................................... 25
6.1 Pricing ................................................................................................................................. 25
6.2 Competitive strategy ........................................................................................................... 26
7. Marketing Communication Mix ............................................................................................... 27
7.1 Building brand equity: ........................................................................................................ 27
7.2 Implement communicating programs: ................................................................................ 28
8. Customer Service ...................................................................................................................... 31
8.1 Before purchasing: .............................................................................................................. 31
8.2 During purchasing ............................................................................................................... 31
8.3 After purchasing.................................................................................................................. 33
9. Store Design .............................................................................................................................. 34

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 9.1 Layout Design ..................................................................................................................... 34
9.2 Customer Traffic flow......................................................................................................... 35
9.3 Types of fixtures ................................................................................................................. 35
9.4 Lighting ............................................................................................................................... 36
10. Reference ................................................................................................................................ 37

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1.Introduction
Specialty stores are retail businesses that focus on specific product categories, such as
office supplies, men's or women's clothing, or carpet. It isn't the product they sell that determines
if a company is a specialty store, but rather the breadth of their product offering. If a company
could be considered an expert in a certain type of good, it is a specialty store. Located on Hai Ba
Trung Road, one of the busiest streets in District 1, Ho Chi Minh City, Long Chau Pharmacy is
the city's largest pharmacy chain with five main pharmacies. With hundreds of items on the internet
and thousands of other products distributed directly to pharmacies, Long Chau Pharmacy
guarantees a total supply of prescription products, such as:
• Medicinal goods (domestic and imported drugs)
• Functional foods, most of which are imported from overseas, such as: USA, Australia,
France, Denmark, etc..
• Medical devices and equipment
• Nutritional milk
• Cosmetics
In addition, Long Chau also provides personal and home appliances, food and beverages
to create the variety of products for sale.

Figure 1: Some types of product of Long Chau for sale

Long Chau operates under the model of a pharmacy, which only focuses on selling drugs
and health care products. This model is ideally suited to Vietnamese people who are influenced by
French pharmacies. Reality reveals that people are also unfamiliar with the pharmacy supermarket
model (integrated with many fast-moving consumer goods) that is well known in North American
countries, for which the Pharmacity chain is an example.
An exceptional advantage that Long Chau is presently having is the assortment of items
and Long Chau predominant SKUs of 6500 units compared to other retail drug stores’ 1500 SKUs
is another advantage. Long Chau chain as of now concentrates prescription and therapeutic drugs
to extend store deals. These prescription drugs produce higher income for the chain as a single
medicine can be worth a few hundred to a few million dong, whereas non-prescription drugs are
usually low-value basic drugs that don't bring much revenue.
Comparable to other retail divisions, the location of shops is of crucial significance to
shopper activity. Hence, Long Chau has just opened large stores in key areas such as convergences,
numerous fronts, close markets, hospitals or residential areas to gain public success. More satellite
stores on a smaller scale are only to be opened after this period.

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2.Target Market

2.1 Long Chau market share in pharmaceutical market

According to Business Monitor International (BMI), total pharmaceutical market sales in Vietnam
is 5.3 billion USD. However, the hospital channel accounts for 70% of the market share. Therefore,
only 30% of sales of pharmaceutical products, equivalent to $ 1.6 billion, are shared by about
57,000 pharmacies and drugstores across the country. FPT Retail has ambitious that Long Chau
will take 30% market share of the whole market, or 10,000 billion in revenue and contribute 40%
of FRT's revenue.

Figure 2.1.1: Distribution diagram of pharmaceutical products in Vietnam

Besides the thousands of pharmacies established by pharmacists, Long Chau pharmacy chain are
facing many other pharmaceutical products retailers under the model of drugstore chain. Long
Chau’s big competitors in the current market are Pharmacity, Eco Pharma, An Khang, and
Phano.

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Figure 2.1.2 : Monthly average sales in a pharmacy in pharmaceutical chain (Unit: ‘000 USD)

Ms. Nguyen Bach Diep, Chairman of the Board of Directors and General Director of FPT Retail,
said that Long Chau pharmacy chain has a higher average monthly revenue compared to other
chains. Specifically, on average monthly, each Long Chau drugstore has turnover of 136,000 USD,
while Pharmacity chain is 11,000 USD, Phano is 18,000 USD, Eco is 25,000 USD and An Khang
is 32,000 USD.
The reason why Long Chau pharmacy has higher than average sales than other general
pharmacies and pharmacy chain can will be listed as below:

Success factors General pharmacy Long Chau pharmacy

Quantity and Only items in basis
variety that category are available
meet
customers'
demand
Price and The sources and quality
quality have not been verified,
therefore price can be
lower
Service Quality Some pharmacies are
established by
pharmacists but drugs
are sold over retail staff.
These staff are not
qualified enough.
The number of SKUs outperforms other
general pharmacies and pharmacy retail chains.
Long Chau pharmacy is famous for selling
drugs according to the hospital's
prescription. Long Chau has almost all kinds
of drugs, including therapeutic drugs
The origin of the medicine is well verified, the
quality is guaranteed. The price may be higher,
but Long Chau is trying to reduce it by
purchasing on a large scale from the
manufacturers.
Employees have a pharmacist degree and are
trained to follow the chain's standards. They are
expertise in products therefore can give
customers advise wholeheartedly.

Table 2.1.3: Comparison between Long Chau and general pharmacy

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 Success factors Other pharmacy chains
Quantity and Focus on the basis
variety that categories and functional
meet customers' foods. Pharmacity chain
demand also offers customers with
cosmetic products.
Location On main street, on the
corner street, in residential
areas
Price Price is stable, there is not
much difference between
retailers
Long Chau pharmacy
Diversified product portfolio, the chain
currently focuses on drugs, especially
prescription drugs and therapeutic drugs to
increase store sales.
The demand for drugs from customers from
hospitals near by is usually larger than general
customers (demand for 1 or 2 months).
Therefore, the sales of Long Chau is relatively
higher than other chains.
On main street, on the corner street, in
residential areas
Besides, Long Chau tries to cover as many
hospitals as possible. Having a thorough
location strategy helps FPT retail earn more
profit each year.
Compared to other retail chains, Long Chau's
price is relatively lower (about 20%)

Table 2.1.4 : Comparison between Long Chau and other pharmacy chains

Figure 2.1.5: Number of drugstores of pharmaceutical products retailers (2020)

By 2021, Long Chau pharmacy chain is expected to reach about VND 2,100-3,100 billion in
revenue and VND 60-90 billion in profit after tax, accounting for 25% -30% proportion of
revenue and about 10% of FPT Retail's profit.

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2.2 Customer definition
To achieve the target market share, Long Chau must clearly define its target customers in order to
have appropriate retail strategies.
At the overall level, their target patients can probably be defined as anyone who needs prescription
medication or other health-related products. But the more specifically they can define who those
people are, the more detailed they can be with a marketing strategy to get members of your target
audience into their pharmacy’s door.

a. Segmentation

To get a firm handle on Long Chau pharmacy’s target audience, they will need to identify the
different types of customers who make purchases at their pharmacy and consider the following
factors. A community pharmacy's target market is defined more by geography than
demographics, psychographics or behavioristics.

Method Factor Target Audiences

Geographic Population Mainly focus on big cities such as Ho Chi Minh and Ha Noi city
density which have high population density and potential customers.
Location Surveys show that 64% of customers will choose the pharmacy
based on the distance to their house. Therefore, Long Chau
pharmacy chain try to cover as many as residential areas and
hospitals as possible. Their target customers are local habitants by
and patients from nearby hospital.
Behavioral Habitual Pharmaceutical customers do not require much involvement, they
buying mainly focus on the use of the drug instead of who the retailer is.
Occasion Long Chau customer’s buying behavior is rare personal occasion.
(timing) Drugs purchases are made when customers feel sick, and it’s
irregular and difficult to predict.
Usage This category can be a strong predictive indicator of loyalty of
Long Chau. Long Chau’s target customers also include customers
from nearby hospitals. They are considered as heavy users whose
demands are for one or two months. To fulfill these target
customers, Long Chau focuses on widening a variety of
therapeutic drugs.
Table 2.2.1 The segmatation market

In conclusion, Long Chau’s customers are anyone who needs prescription medication or other
health-related products. However, target customers have been analyzed in the table above.
Knowing the target customers, retailers will easily come up with specific strategies to attract and
make them become loyal customers.

b. Overall strategy
It always requires multiple factors for retailers to be able to survive in the pharmaceutical
retailers market especially when 70% of the market share belongs to hospitals. Long
Chau not only need to improve quality but also enhance customer service:

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 • Quality: create a professional, reputational image specializing in selling high quality
products with reliable origin for Long Chau to customers.
• Customer service: improve service quality, create a familiar feeling for customers
• Merchandise: provide a wide variety and assortment, therefore customers feel
convenient when shopping in the pharmacy. They can buy drugs and pharmaceutical
related products easily at one stop.

2.3 Trade area

Long Chau pharmacy aims to increase the accessibility to customers by expanding the number to
retail stores. Long Chau wants to cover as many target customers as possible. In large scale, Long
Chau’s primary trading area can be considered as two main big cities in Vietnam: Ho Chi Minh
City and Hanoi City. In specific scale, trading areas can be defined as follow.

Figure 2.3.1: Primary trade area of Long Chau pharmacy

• The primary trading area: Customers in the radius of 1 km, in hospital and residential
areas nearby derives 50 to 70 percent of target customers.
• The secondary trading area: In the radius of 3km generating about 20 to 30 percent of
the site’s customers.
• The tertiary trading area or fringe (the outermost area) includes the remaining
customers who shop at. They can be passengers who stop by on their route to home.
By defining trade areas clearly, FPT retail can propose appropriate expanding strategies. That is,
a new store’s location will bi outside of the primary trading area or secondary trading area of an
existing one. Therefore, Long Chau’s target customers in different areas can easily get access to
the store.

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3.Location Analysis

Long Chau pharmacy system is a chain of drugstores of FPT Retail (FRT). With the strategy of
increasing coverage of Long Chau pharmacy nationwide, after more than two years being taken
over by FRT, the Long Chau system has reached approximately 200 pharmacies in more than 45
provinces and cities nationwide until now. Moreover, according to Rong Viet Securities Company
(VDSC), FPT Retail is planning to open 400 more pharmacies by the end of 2021.
With the great success of the first Long Chau pharmacies in Hai Ba Trung pharmacy street,
the newly opened stores in the local areas where the brand name of Long Chau is unknown are
accompanied by the message: “Long Chau Hai Ba Trung is present at …”.

3.1 Size of the trade area

Similar to other retail sectors, store location plays an important role in attracting customers.
Therefore, unlike Pharmacity’s mass opening, Long Chau has initially opened large stores in
strategic locations such as intersections, fronts, near markets, hospitals, or residential areas to find
public success. After this period, the new chain continues to open more satellite stores on a smaller
scale. FPT Retail can also support premises by converting several FPT Shop stores into Long Chau
if necessary.

Figure 3.1.1: Customer traffic survey of some stores in one peak hour from VDSC

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 Long Chau Pharmacies is usually located at:
+ at the corner of the street or eye-catching location
+ in a residential area, nearby hospitals

Figure 3.1.2: Long Chau Pharmacy stores in Ho Chi Minh City

Figure 3.1.3: Customers’ criteria for choosing a pharmacy

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 From the above survey, placing stores in a residential area will bring about a lot of profits for
FPT Retail. Moreover, nowadays, Long Chau pharmacy system’s coverage has extended from
North to South with over 45 provinces.

Figure 3.1.4: Quantity of Long Chau pharmacies opened in outstanding provinces and cities

From the above chart, it is clearly seen that the two biggest cities such as Ho Chi Minh and Ha
Noi specifically have plentiful quantities of stores with 77 stores and 12 stores, respectively.
Whereas other smaller cities such as Hai Phong, Da Nang and so on have less quantities of sites.
According to the above charts and VDSC, the scalability of Long Chau pharmacy system is
estimated:
+ On average, each district in the city has room for the development of about 2-3 big stores and 5-
6 local stores.
+ Revenue of big stores can fluctuate from 2.5 billion – 3 billion VND per month, while local
stores can reach about 400 million VND per month.

3.2 Accessibility and Visibility

Since Long Chau pharmacies cater to convenience shoppers, location is one of the top criteria
for this type of business. The location of the pharmacy must be convenient for customers who need
to buy prescription drugs and medical supplies quickly. Criteria to locate Long Chau stores
including:
+ Located in the corner of streets or on the main streets where many passengers cross by so
that customers can get easy access and conveniently stop to shop. With this criterion to offer
convenience to customers, they do not have to search for hospitals to purchase medicines and
medical supplies anymore. Moreover, the store has attracted a lot of customers for themselves at
this location.
+ Located in residential areas, near hospitals or schools with the added convenience of a
buying-through window for pharmacies, more space, or better access for receiving merchandise
since Long Chau targets customers who need to buy medicine quickly without having to wait like
in hospitals.

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 Figure 3.2.1: Long Chau Pharmacy in Ha Noi city and Cu Chi province

In some cities such as Ho Chi Minh, Ha Noi, Da Nang where there has been fierce competition,
the model of the compact convenience store with an area of about 100 m2 goes into residential
areas will have more advantages. However, with such a small area, Long Chau usually does not
have enough space for parking, customers often stop to buy their products and then leave but
cannot stay long. Thus, they can make use of all space for product storage and sales stalls.

3.3 Type of lease

Typically, when retailers select a location, they either must make a substantial investment to
buy and develop the real estate or commit to a long-term lease with developers. Although there
are advantages to owning a store site (such as free to lease covenants or stable mortgage payments,
etc), most retailers don’t wish to tie up their capital by owning real estate because of percentage
leases and fixed-rate leases.
Similarly, in the pharmaceutical retail industry, all Long Chau stores are leased by the landlord.
Long Chau commits to a long-term lease for 5 years with occupancy costs ranging from over 40
million VND per month or more for an area of over 100 m2 in some districts such as Tan Binh,
Binh Thanh, District 3, etc. They choose locations that are on main streets, residential areas, and
nearby hospitals or schools.

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4.Retail Channel

Figure 4: Distribution channel of Long Chau Pharmacy

Long Chau warehouse is located in Long Thoi ward, Nha Be district, HCMC. Goods are
transported directly from the warehouse to each Long Chau pharmacy store. Stores are responsible
for both store channel and nonstore channel, which is responsible for distributing drugs to
customers using their own shipping service

4.1 Store channel

In fact, in Vietnam, the pharmaceutical retail industry is divided into 3 channels - hospital channel,
clinic channel and pharmacy channel - in which FPT Retail is expected to account for about 30%
of the market share of the pharmaceutical channel through pharmacy stores

The vast majority of sales of Long Chau are made through the store channel. Accordinto the report
of the board of FPT, in the year 2019, Long Chau gains the revenues of 16,634 billion VND which
increases 9% in comparison with the year 2018.

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 Figure 4.1.1: The annual revenues through in-store and online channel (billions)

Because all products of Long Chau pharmacy stores are sensitive products such as prescription
and over-the-counter medicines, functional foods, cosmetic pharmaceuticals and healthcare
products, customers tend to make purchases at stores instead of online. These products contain
many risks such as counterfeit goods, expiry dates, skin and health concordance level when
providing through the Internet. Therefore, customers usually prefer to buy directly at the store to
check the safety of products.
In addition, there is a huge advantage over other channel types that customers can receive useful
advice from well-trained salespeople or staff. They explain the products and promotion programs
in detail, share experiments face-to-face in a convenient location. This service will easily increase
customer gratification. Interaction with customers in the stores can reduce shipping fees for both
customers and Long Chau stores. Moreover, customers can receive their goods directly in the shop
by avoiding waiting time during the shipping period. Other customers are concerned about security
and identity theft and thus prefer to use their credit card or debit card in person rather than
electronically sending the payment information via the Internet

4.2 Non-store channel

Aside from the in-store channel, Long Chau tends to create online channels, including websites,
to ease shopping for the purpose of improving sales. The arrangement is planned for building a
multichannel retailing network.

The non-store channel also accounts for significant sales. Remarkably, the online revenues reach
3,899 billion VND, which increases sharply 60% compared to the previous year and accounts for
23.4% total revenues of the firm. This is due to the fact that Long Chau pharmacy chain has gained
a reputation in the pharmaceutical retail industry and they had built customers' trust in recent years.

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In the rise of e-commerce, FPT Retail also promotes online sales to meet the demand of customers.
Although non-store channels have some disadvantages, it outperforms store channels in some
specific aspects. The company offers many promotions and discounts to best suit the method of
selling online to ease making purchases with a click of mouse. Specifically, products with
equivalent quality and with the same warranty policy, when sold on the website, will have a
cheaper price than when sold at the store. Moreover, through the website, they offer online free
consultation through a hotline to improve customer gratification.

Figure 4.2.1: Long Chau website with hotline

FRT said that the Company has focused on promoting online sales, especially in the Covid-19
epidemic period, online sales in the first quarter of 2020 reached VND1,107 billion, accounting
for 27% of total FRT sales.

Long Chau warehouse is located in Long Thoi ward, Nha Be district, HCMC. Goods are
transported directly from the warehouse to each Long Chau pharmacy store. Stores are responsible
for distributing drugs to customers.

In order to promote the supply of medications to customers, Long Chau pharmacies are situated in
locations near hospitals and clinics, physiotherapy centers. If the hospital does not have the drug,
the medicine that the patients purchase in Long Chau could be the hospital prescription. Or the
patient only has common illnesses and, without getting to see a doctor, they can buy medication
for themselves. Two or three shops are distributed in a wide area in the case of drugs bought via
the internet, so that customers can pick them up at the store. Those shops also have the
responsibility to supply drugs to the customers in case they are bought online.
For instance, in Tam Phu ward, Thu Duc district, 2 Long Chau pharmacies lie in the middle of an
area where a physiotherapy center, a hospital and a clinic are located

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 Figure 4.2.2: The store allocation

Customers are engaged in more ways to buy medicine, either it is a direct pickup from the store or
online, Long Chau has made it more accessible and easier. Customers can make orders via Long
Chau’s official website, it is well designed so that all the products can be viewed easily and
informatively. They can also buy medicine directly from Long Chau’s facebook page by direct
messages. Long Chau has released a mobile app called LC Pharmacy for better personal
experience. Finally, Long Chau also provides clients with a hotline phone number to make orders
and get support.

Figure 4.2.3: Omichannel

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 5.Merchandise Mix

With hundreds of products introduced on the website and thousands of other products sold
directly at Long Chau pharmacy, Long Chau pharmacy ensures a full supply of
pharmaceutical products such as: Drug (domestic and imported drugs), Dietary
Supplement, Cosmeceuticals, Medical Instruments, Personal Care Tools… In each
category, there are many different products to help Long Chau pharmacy quickly meet the
needs of customers.

Always ensuring safety and reputation for customers, Long Chau pharmacy imports drugs
from reputable sources and abroad: the US, Australia, France, Denmark, ... and attached
with full certificates.

5.1 Variety and Assortment of products sold at Long Chau Pharmacy:

Dietary Supplement
- Medicine - Physiological and
endocrine
- Medicines - Improved
functional enhancement
- Medicine - Weight control
exercise
- Medicine – Beauty
- Medicine - Herbal

Figure 5.1.1 - Sunscreen pill Figure 5.1.2 - Hair growth

stimulants

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Cosmeceuticals:
- Skin care: Toner / Lotion ...
- Body care: treatment of
cracked skin, limbs, ...
- Intensive skin care: skin
whitening, scar treatment, skin
pigmentation ...
- Hair and oily skin care
- Eye care skin

Figure 5.1.3 - Eucerin Body Cream Figure 5.1.4- Eye Care Cream

Personal Care
Products:
- Teeth care
- Personal hygiene
- Sexual assistance
- Shaving tools
- Food, drinks (toothache,
sore throat,…)
- Mosquito repellent.
Figure 5.1.5 - Green tea mouthwash Figure 5.1.6 - Shaving
tool

Drugs :
- Cough medicine, cold
medicine
- Headache medicine
-Analgesic
- Medicine for stomach pain,
indigestion

Figure 5.1.7 - Medicines to treat the flu Figure 5.1.8- Panadol for
pain relief

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Medical Instruments
- Medical tools: tools for
cleaning the nose, belt, ...
- Masks: medical masks,
fabric masks, ...
- Monitoring tools:
thermometer, blood pressure
monitor, ..
- First aid tools: medical
bandage, alcohol, antiseptic
water, ...
Figure 5.1.9- Nasal sanitary tube for children. Figure 5.1.10 - First aid
tools

5.2 Product strategy of Long Chau pharmacy:

• A wide variety of product lines, with many different brands in each line, aiming to
take care of customers' needs fully and best.

Figure 5.2.1 – The abundance of product lines that Long Chau pharmacy carries

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 • Long Châu pharmacy also imports a lot of brands so that customers can freely
choose what they like, customers ask what kind of products carry which brands,
our pharmacies can all respond quickly.

Figure 5.2.2 Effervescent tablet Multi-Vitamin Figure 5.2.3 Effervescent tablet Vitamin C
Effe r-Vescent Tablets Haas - Swiss Energy

Figure 5.2.4 Effervescent tablet - Altapharma

Figure 5.2.5 Effervescent tablet -
Pharmaton Fizzi

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 ● Moreover, Long Chau pharmacy always wants to take care of customers the best,
so they satisfy both taste and preferences of the product. Long Chau Pharmacy
imports many different flavors for a product line, in order to meet customers'
needs, as well as hope that customers are more and more loyal.

Figure 5.2.6 - Different flavors with the same effervescent line of Altapharma

5.3 Private brand of Long Châu pharmacy:

In addition to the above diverse products, Long Chau pharmacy also has a product with
its own brand name such as:

Long Chau Medical Bag is a handy bag used

to store all kinds of medicines, medical
supplies and personal care products needed
for traveling or while traveling.

Figure 5.3.1 – Medical Bag of Long Châu

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5.4. Competitive advantage for products:

Long Chau pharmacy is one of the retail stores with the highest average revenue per
store. According to market statistics, the average monthly revenue of other pharmaceutical chains
is about 260-750 million VND while Long Chau is 3.15 billion VND (in 2017).
One of the main reasons for Long Chau to achieve this revenue figure is because Long Chau owns
6-7 times more SKUs (the amount of drugs in stock) than other pharmacies.
This directly affects the psychology of consumers when they often choose to buy drugs at a
variety of product lines and types, especially when buying by prescription of a doctor
including many combination drugs. In addition, Long Chau also sells imported Drugs and
Dietary Supplement, which its competitor sells less. These imported products are usually Long
Chau with its own strategy to bring them back, so the price is cheaper than other businesses.

Figure 5.4.1 : The pie chart shows the percentage of revenue that categories bring to the
pharmacy.

Note in Pie chart:

Dietary Medicines - Improved functional enhancement , Medicine - Weight control

Supplement exercise, Medicine – Beauty, Medicine - Herbal….

Medicine Cough medicine, cold medicine, Headache medicine,....

Other Other merchandise such as Cosmeceuticals, Personal Care Products, Medical

merchandise Instruments Products.

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 Figure 5.4.2: Top ten best-selling medicines
From the above chart, we can give some analysis as follows:
o For popular medications such as anti-allergy medicine, painkillers, vitamin pills,
cough suppressants, cold medicine, aspirin, fever reducer, etc., they should always
have substantial availability in stores because their demand to customers is very
high. Therefore, this type of medicine should not be allowed to be out of
stock.

o For dietary supplement, That group should be invested but can stock out
ocassionaly. And if the demand increases, it is easy to stock out. But we will
consider investing more in products with high inventory turnover and GMROI. In
addition, we should invest in products with high GMROI to make a more profit
instead of only high inventory turnover.

o For other merchandise such as sphygmomanometer, sling, thermometer, scales,

blood pressure monitor, etc., they are usually stock in slightly significant
quantities in the storage room since their demand is quite low. This product line
can be stocked out and invested a little.

Long Chau Pharmacy must consider the details of GMROI and Inventory
Turnover on previous statistical data to avoid not making much profit.

Depending on the amount of profitable revenue and the statistics of the drugs that
are used a lot, Long Chau pharmacy must make an appropriate investment strategy,
so it is not advisable to run out of stocks of commonly used drugs in Vietnam.

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 6. Price Policy

6.1 Pricing
The competitive price strategy is still the key strategy of Long Chau, especially in the
provincial market, whereby Long Chau does not apply a unified price policy throughout the system
but will sell at a cheaper price in the provinces where people have low average income. This is
considered as a suitable strategy because Long Chau's main competitor will be private pharmacies
with very competitive prices. Although this will reduce margins in the first place, efficiency will
increase with economies of scale.
Long Chau's secret of having Long Chau's sales to be always higher than competitors is 2
points: The number of products in each pharmacy is very much and the price is always 20% lower
than the market.
In terms of price, Long Chau has used a price-based pricing method which means they are
based mainly on competitors’ prices, with little emphasis on costs and demand that companies can
value lower, equal or higher than competitors' prices. And in this case, medicine in Long Chau is
always 20% lower than the market because in the past, Long Chau's stores were individual
businesses, so they had to sell at such prices to compete with other pharmaceutical businesses.
other individual products. In addition, Long Chau wants to position itself in the hearts of customers
as drug stores with affordable prices, to create deeper relationships with customers. In terms of
morality, if they sell medicines to patients at a too high price, they also feel displeased.
Besides owning many pharmacies in many different provinces across the country, Long
Chau offers different price policies in each province instead of applying a uniform price policy
across the system. With the same product, the provincial pharmacy will have a lower price than
the pharmacy in Ho Chi Minh city. And products in Long Chau are also sold at cheaper prices in
provinces where people have low average incomes. Although this will reduce profit margins in the
beginning, efficiency will increase with scale advantage.

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 Products/Long Chau Ho Chi Minh City Soc Trang Province
Stores

88,000 VND 83,600 VND

Vitamin E

130,000 VND 123,500 VND

Omega-3 Fish Oil US

Figure 6.1: The difference in price of Long Chau pharmacy in HCMC and Soc Trang province

6.2 Competitive strategy

Long Chau is considered as one of the largest retail drugstore chains in Vietnam.
Currently, Long Chau pharmacy is gradually expanding the scale and number of branches across
the provinces and cities nationwide. And at each milestone on the way to expand its brand, Long
Chau pharmacy chain has launched many promotions as a thank you from the staff of the
pharmacy to its loyal customers:
➢ Promotional vouchers and discount codes for items of specific brands such as: discount
up to 5% of VitaDairy products, discount 8% for all cosmetics from Eucerin.
➢ The Privilege Program Buying Price 1000 VND is a special promotion program for loyal
customers of FPT Long Chau Pharmaceutical Joint Stock Company
➢ All customers who buy products at FPT Long Chau system or website of Long Chau
drugstore chain with a purchase invoice value of 150,000 VND or more will have 01
chance to participate in the lucky draw of 200 million VND and many products up to
20% off or Samsung Air Purifier AX34R3020.

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7. Marketing Communication Mix

7.1 Building brand equity:

Long Chau Pharmacy has built brand equity thanks to create brand awareness and offer high
associations
• Brand awareness:
Firstly, Long Chau builds top-of-mind awareness thanks to the reputation of FPT retailers they
have gained for a long time. It is evident that Long Chau Pharmacy has received the trust of
customers after the establishment.

Figure 7.1.1: The article about Long Chau Pharmacy

Besides, Long Chau does very little advertising but has high awareness because of the large
number of stores it has in great locations and the allocation of these stores around the
country . Long Chau stores are located in the main road and some locations which the
customers can access effortlessly

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 • Associations:
There are some of the associations that consumers might have with Long Chau Pharmacy
o Merchandise category: Long Chau would like to have consumers associate its
name with pharmaceutical products. Therefore, they provide a wide range of
prestigious products about pharmacy. Then when a need for pharmaceutical
products arises, consumers immediately think of closest Long Chau stores
o Quality: Long Chau wants to be associated with offering high quality products at
affordable prices with high commitment.

7.2 Implement communicating programs:

• Online Marketing
+ Website: Long Chau established the website https://nhathuoclongchau.com/ to communicating
with customers. Long Chau use their Web sites to build their brand images; inform customers of
store locations, special events, and the availability of pharmaceutical products in local stores;
provide advice and knowledge on the drugs; and sell merchandise online.
+ Social media: Long Chau has its own Fanpage Nhà Thuốc FPT Long Châu on Facebook which
allows them to communicate with customers and track their behavior through comment and reacts
on the post. This also a place where Long Chau share healthy tips and their promotion banner to
customers.

Figure 7.2.1: The promotion of Long Chau Pharmacy.

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 • Directs marketing:

+ Mobile Application: The application supports searching for medicines, diseases, pharmacies
online & offline easily. It also helps to transform physical prescription to digital prescription, and
helps customers easier for creating & managing prescriptions with OCR technical service.

Figure 7.2.2: The promotion of Long Chau Pharmacy

Figure 7.2.3: The app of Long Chau Pharmacy

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 • Sales promotion:

+ Coupon: Long Chau offers customers with 50,000 VND coupon for a total bill above 500,000
VND. This help Long Chau stimulate the demand and repeat the business (increase customer’s
return).
• Advertising

+ Television: Long Chau has built an image of a reliable drugs store to television viewers by
implementing TV advertising spots. Although the high production cost and broadcast time for
national TV advertising is expensive. Spots are good means for Long Chau to approach customers
of middle age who rarely use the internet and other social networks.

Figure 7.2.4: The promotion of Long Chau Pharmacy

+ Online advertising: To raise the brand awareness among customers, Long Chau has implemented
the pop up advertisement on the web that people are surfing. They also use sponsored facebook
advertising to reach millions of Facebook users.

• Public Relation

+ Event Sponsorship: The image of Long Chau pharmacy is not only promoted through brand
advertising, but also enhanced through the reputation of FPT retailers since the more reputable the
FPT's image, the more customers trust to use Long Chau's medicinal products. To build the image,
FPT has sponsored for many event as listed below:
FPT-IS is gold-sponsor to the National Network Safety and Security Forum
FPT-Telecom sponsor and responsible for promoting Violympic contest
FPR-Telecom is gold-sponsor for “Who am I?” – A program prepared for welcoming freshmen in
Ha Noi Bach Khoa University. FPT pays attention to the main goal of the program: Reducing
waste, limiting the use of plastic products, and protecting the environment.
Those activities help FPT to brand their image as a reputable, environmental-concerned, and social
concern.

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8. Customer Service

8.1 Before purchasing:

Offer advice for purchasing: It will be very easy for customers who enthuse and have the
knowledge or have already made research about the types of drugs they are getting in terms of self
medication to purchase them. However, with some customers who have no prior knowledge or at
least never used any products at Long Chau before, it could be supplements or functional foods,
they can visit the store's website and get advice from salespeople by sending direct messages to
the page. In real life, when visiting the pharmacy, customers can get advice directly from sales
staff which will contain full information including: market retail price, dosage, usage, side effects
and accompanying services

8.2 During purchasing

Salespeople
In customer service, salespeople play a very important role. The store always trains them
carefully to get a good team of salespeople before they can begin working. Listening and
comprehending customer psychology, understanding Long Chau's pharmacy products and the
ability to solve problems are four things an excellent salesperson needs to have. Here are a few
approaches we have used to train salespeople.
• Defining codes of ethics and providing careful professional instruction while servicing
customers.
• Open dialogue and research sessions: It is important for salespeople to understand the
goods in order to be able to provide recommendations and satisfy consumer demands. We
will commonly have discussions as the pharmacy purchases and distributes new goods to
understand product specifics and increase sales trust. A wide selection of functional items
and associated documentation will be offered by the discussion.
• The bonus style of target completion: giving goals and rewarding salespeople to boost job
morale.
When clients complain, both salespeople need to be able to fix issues. In order to respond
to customers after getting complaints, we have set certain expectations. First of all, try listening to
grievances thoroughly and do not disturb them. Secondly, always apologize first and embrace
transparency. Thirdly, inquire what they want and give the fastest response possible. Lastly, query
whether they are happy or not.

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 Various methods of purchasing and paying

Long Chau also certainly has an online shopping method for consumers who can not come
to the store. Free shipping is a service correlated with online shopping. Customers who shop online
within 5km will get free shipping, even if they live further than that, the delivery cost will not be
too high. Long Chau also attempts to support orders with delivery within 3 hours to meet the needs
of customers, help customers feel secure and confident when they need treatment or health care.
The mode of payment would also correspond to the method of purchasing, including cash, credit
card and e-bank transactions.

Order characteristics Distance Delivery cost Delivery time

Orders from 300,000 or Less than 5km Free From 8am - 8pm all days of
more the week
5km or more 20,000

Orders under 300,000 Less than 5km 20,000

From 5km - 10km 25,000

10km or more 30,000

Interprovincial orders Less than 200km Apply according From 2-3 working days
to the policy of
200km or more the carrier Viettel From 3-5 working days
Post
Commune route Increased by 1-2 days

Figure 8.2.1: Delivery policy of Long Chau Drugstore Chain

Customer loyalty policy

If consumers order goods in large amounts via the website, they will be charged to the
previously generated account. Customer preferential prices will be classified into three levels,
which are silver, gold, and platinum. When ordering the items, buyers will get a discount for each
level as follows: Silver- 3% discounts for each order; Gold- 5% discounts for each order; Platinum-
7% discounts for each order. The client can earn 1 point on the scorecard for each commodity
bought from the store (regardless of price). Customers who receive 50, 150, 300 will obtain silver,
gold and platinum certificates, respectively.

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8.3 After purchasing
Free goods return and exchange
One of the most common services for consumers is that if the items are defective, out of
date or found to be counterfeit, they can refund the products for free within 1 week after purchase.
For clients who purchase drugs to cure ailments or supplements, this would be very crucial.

Tips for better treatment

After purchasing the medicines or nutritional foods, customers will get advice from Long
Chau’s health experts on how to optimize their treatment if they only tend to self-medicate for
common diseases like allergies, flu or stomach aches. And if customers are aiming to gain/lose
weight, replenish the micronutrients that the body lacks or skin care, they will get tips on how to
make the best use of the supplement products and functional foods by practicing good diets and
healthy lifestyles.

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9. Store Design

9.1 Layout Design

Long Chau is a pharmacy model in the form of traditional drugstores for prescription and
selected non-prescription drugs. In this type of design, Long Chau is designed in such a manner
that its entire area is exposed to customers. There are pharmacy personnel who would deal directly
with customers or patients. It has responsibilities including compounding, counseling, checking
and dispensing of prescription drugs to the patients with care, accuracy, and legality. The success
of the drug store depends upon the convenience and friendly service of the personnel at the service
counter.
Most Long Chau pharmacies are designed in GRID LAYOUT. Their products are displayed in
straight and parallel lines and aisles are set in straight-line grid arrangements to attract a large
number of customers and minimize the movement of customers within the premises of the store.
A selected assortment of the fastest selling non-prescription drugs, dental products, and toiletries
are displayed on the main wrapping counter while the prescription department is located in the rear
and adjacent to the main wrapping counter. Moreover, there is an adequate waiting area with
comfortable chairs and health related reading materials provided near the prescription department.

Figure 9.1.1: The Layout Design of Long Chau Pharmacy

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9.2 Customer Traffic flow

Traffic flow is the movement of customers through the store. Since Long Chau pharmacies cater
to convenience shoppers, grid layout can help them to minimize the movement of customers within
the premises of the store. Moreover, the aisles are also wide enough that the customers could feel
comfortable when they are shopping in the store.

9.3 Types of fixtures

Long Chau pharmacy uses a traditional drug store model, these types of drug store are designed
in such a manner that the entire area of the drug store is exposed to customers which has pleasing
and professional appearance and is convenient for both workers and customers and also provide
for maximum sales. As the picture below, the fixtures of Long Chau pharmacy is surrounded by
medicine cabinets divided into different categories with the table at the centre for customers can
ask for help or advice about the medicine.The cashier and the also located at the table in the
centre for interact with customers easily.

 Cabinets of Long Chau pharmacy:

Each type of drug in Long Chau pharmacy is divided into separate cabinets and place around the
store to display and store drugs for buyers to contact and exchange information about
drugs.Besides, it also help worker can easily know exactly where drugs placed the cabinets,
counters, shelves are firm, smooth, easy to clean, convenient for selling and storing drugs, and
ensuring aesthetics.

Figure 9.3.1: The fixture of Long Chau Pharmacy

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9.4 Lighting

Long Chau pharmacy using Highlighting Merchandise, a good lighting system helps create a
sense of excitement in the store which helps customers have a visual of all kinds of drugs. Good
lighting in a store involves more than simply illuminating space. Lighting can highlight
merchandise, sculpt space, and capture a mood or feeling that enhances the store’s image. There
should enough light to ensure manipulation, ensure the checking of information on drug labels
and avoid confusion. Combine with the traditional drug store model, Long Chau pharmacy
should increase visual for both customers and workers.

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10. Reference

Michael Levy. Barton A.Weitz. [ Retailing Management ] 8th ed. New York: McGraw-
Hill/Irwin; 2012

Hải Yến ( 2020 ). FPT Retail: Mở mới 220 nhà thuốc Long Châu, kỳ vọng doanh thu mảng
dược phẩm sớm đạt 5.000 tỷ đồng. [online] available at
https://baodautu.vn/fpt-retail-mo-moi-220-nha-thuoc-long-chau-ky-vong-doanh-thu-mang-
duoc-pham-som-dat-5000-ty-dong-d123158.html

Tường Vy ( 2019 ). Hé lọ tình hình kinh doanh chuỗi nhà thuốc Long Châu: Phục vụ
25.000 lượt khách mỗi ngày, doanh thu gần 500 tỷ đồng từ đầu năm. [online] available at

http://mp.edu.vn/details-3741-HE-LO-TINH-HINH-KINH-DOANH-CHUOI-NHA-
THUOC-LONG-CHAU-PHUC-VU-25-000-LUOT-KHACH-MOI-NGAY-DOANH-
THU-GAN-500-TY-DONG-TU-DAU-NAM.html

Hùng Vỹ (2020 ). Nhà thuốc Long Châu FPT vượt mốc 200 cửa hàng. [ online ] available
at
https://vietnamnet.vn/vn/kinh-doanh/he-thong-nha-thuoc-fpt-long-chau-vuot-moc-200-cua-
hang-694723.html

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11. CONTRIBUTION

NAME ID CONTRIBUTION
Nguyễn Thị Xuân Hân IELSIU18035 100%
Trần Thị Thanh Mai IELSIU18076 100%
Nguyễn Ngọc Minh IELSIU18083 100%
Trần Thị Hoàng Ngân IELSIU18092 100%
Trần Bảo Trâm IELSIU18151 100%
Võ Thị Cẩm Vân IELSIU18174 100%

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