Highland Coffee Marketing Analysis [PDF]

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HIGHLAND COFFEE marketing analysis Essay on Marketing Management (Đại học Kinh tế Quốc dân)

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INTRODUCTION This is our second assignment about Marketing Essentials. We chose THE COFFEE HOUSE for our research. The reason why we chose this organization is that “The Coffee House” is one of the F&B brand and also one of the most famous coffee chains in Vietnamese market and in the developing process. The Coffee House established in 2014 by CEO Nguyen Hai Linh. The growth rate of this organization is what many startups dream of, especially in the F&B industry. There are 3 values that make The Coffee House: Giving happiness, excellent coffee quality, respecting human beings. Every decisions and actions in The Coffee House start from the mission “ Deliver happiness”. The Coffee House confirmed that they want to contribute to make sustainable changes to the Vietnamese coffee industry. In The Coffee House, they don’t look for special coffee but they find someone who makes coffee become special. We decided to choose HIGHLANDS COFFEE to compare with THE COFFEE HOUSE about ways in which organizations use elements of the Marketing mix (7Ps) to achieve overall business objectives.

Then we came up with a marketing plan for The Coffee House. First, we will mention about vision, mission and achievement of The Coffee House and talk about SWOT analysis. After that, we make a marketing plan for new product “ Banh Mi”. Then we will do analysis about Segmentation – Targeting – Positioning, Allocation of resources. And Evaluating and monitoring marketing mix is an important step of marketing mix. Finally, we concluded about Marketing Strategy of The Coffee House and Highlands Coffee.

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MAJOR FINDING Task 1: Compare marketing Mix (7Ps) and how company achieve overall business objective

Product

 Vietnamese coffee Vietnamese tradition coffee with 70% Robusta and 30% Arabica taste and smell. Use with or without condensed milk Size: small / medium Price: 29,000 vnd/39,000 vnd Benefits: keep you awake and stay focus

 Special Tea Variety of tea combine with other fruit such as peach, guava, oranges to create flavor and mix with milk foam on top or with ice Size: Small / Medium Pricce: 42,000 vnd/ 48,000 vnd / 55,000vnd (signature tea) Benefits: fresh, good for health, fit with customer who can not drink coffee  Ice blended drink Ice blended drinks combine with other flavor like green tea, hazelnut, caramel… add whipping cream on top. Size: Medium Price: 59,000 vnd Benefits: cold drink, suit with hot summer days

 Vietnamese Coffee An unique mix between Robusta and Arabica coffee beans, slow drip brewed through a Vietnamese traditional “Phin” filter. Add ice and condensed Size: Small/Medium/Large Price: 29,000 vnd/35,000 vnd/39,000 vnd Benefits: Keep you awake, bring a slower pace of life and enjoy conversation in a slowly way.  Tea Made from Vietnam’s rich tea heritage, add fresh fruit and topping, serve with our without milk Size: Small/Medium/Large Price: 39,000 vnd/49,000 vnd/55,000 vnd Benefits: Fresh, good for health, for customer who can not drink coffee  Freeze Natural Vietnam ingredients with blended with ice and add jelly Size: Small/Medium/Large Price: 49,000 vnd/59,000 vnd/65,000 vnd Benefits: cold drinks, a good way to indulge your day

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 Smoothies Fruit smoothies and juice Size: Medium Price: 59,000 vnd / 65,000 vnd

 Banh Mi Vietnamese traditional bread Size: small

Price: 19,000 vnd  Packaging: The Coffee House starts with Benefits: provide a wider choice ordinary plastic paper cups, about food for customers. which are common to all products  Packaging Most recently, a large plastic lid, Highlands coffee start with glass cup and heart cap, suitable for customer then switch to plastic cup with Highlands use Macchiato product. coffee logo and pattern. (The Coffee House, 2018)

(Highlandscoffee.com.vn, 2018) Price

The coffee house price range now Highlands coffee price range now oscillate oscillate from 30,000 vnd – 60,000 vnd. from 30,000-60.000 vnd Price strategy: The coffee house put themselves into customer mind and came up with many questions like: is the money spent is reasonable ? or if they able to get to that coffee shop often? ... The coffee house use penetration pricing, set the price range at 30,00040,000vnd to enter competitive market and then raise it later. (Tomorrow Marketers, 2018)

Price Strategy: Highlands coffee use Market-skimming pricing, set the high price with an aim to high-end coffee brand, coffee for business man and women and then lower the price to serve more customer (Ttvn.vn, 2017) Factor influencing: Highlands coffee pricing influent by many factors, those are internal factors like

-Cost: Salaries, rent at famous place, raw Factor influencing: there are many materials factors influence pricing strategy at The coffee house. Those are internal factor -Marketing objective: leading in market like: Cost: Rent, salaries, raw materials. Marketing objective: Open 200 stores on 2020 (Cafebiz.vn, 2018)

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Place

The coffee house has both Highlands coffee distribute channel direct at distribution channels are: direct at the the store. store and indirect through The Coffee Highlands coffee usually can be found house application on smartphone. around big street or historical sites like: The coffee house can be found at Hanoi Flag tower, Hanoi opera house … or many big cities, location fits with target around big shopping mall like Vincom Ba customer. The Coffee house store are Trieu, Bitexco , Sai Gon center , Ham Ca easy to find, center facade where have Map …. And under many buildings (Brands eye catching street view like: Hai Ba Vietnam, 2018). Highlands coffee want to Trung , Ba Trieu , Tran Dai Nghia street. reach officer, tourist …so they put their store (Tomorrow Marketers, 2018) at those places

Promotio n

Advertising: internet

Advertising: Internet

Sales promotion

Sales promotion:

-Buy 2 get 1 on Halloween day

-Green tea Freeze promotion program

-Sale 20-30% at new store

-Collect 3 stamps, get 1 Phin sua da free

-Get 1 free drink every 8 drinks

-Free upsize for women on 20/10 or 8/3

-Combo new drink Ten Ren tea with -Combo tea and pastry for afternoon 79.000 dong (Highlandscoffee.com.vn, 2018) Public relations: -Not just focus on product, The Coffee House’s content always takes the customer's story centered to listen and to share. -Humans of The Coffee House, share story from The Coffee House employee to customer. (Deltaviet, 2017)

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People

Store manager

Store manager

Cashier

Barista

Store supervisor

Server

At The Coffee House, staff always try their best to make you feel like home and serve with smile, and very thoughtful. The Coffee House focuses on training friendly, enthusiastic staff, always willing to chat, share with customers (DoanhnhanPlus.vn, 2016)

Barista

Cashier

Expo

Server

At Highlands Coffee, the staff always try to make you feel welcome, when the customer walk in, staff will smile and open the door, always gentle and respect the customer in order to give the best service. Staff at Highlands coffee will be trained in 3 days about coffee and specific skills for specific position

Physical evidence

-Logo: logo The Coffee House design -Logo: Highlands Coffee logo is a simple with black color, two special combination of 4 colors red, white, black, brown. Highlands logo look like a coffee letter O. bean in the middle, represent for mountain, -Space: The space in The Coffee House land and water flow with black and white mainstream design so that you fell comfort like you are at -Vibration card home. Yellow light and high-rise Highlands Coffee with red and black architecture combine with the use of mainstream and have some unique design. glass, windows, and with wooden Chairs in Highlands coffee are made from furniture bring you a comfort and cozy different materials (wood, cushioned sofa, felling. At some store also have long rattan….). Furniture combine with small table to create co-working space and landscape such as plants, wooden shelves,… details like sockets are place everywhere will create a romantic space. In Highlands in the store. (Deltaviet, 2017) coffee we usually recognize yellow decorate light made from bamboo rattan create cozy and comfort fellings.

Process

Step1: open the door and guide customer Step1: open the door and guide customer to to order order Step2: Cashier receive order and cash Step3: Cashier pass order to Barista

Step2: Cashier receives order, cash and give customer vibration card.

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Step4: Barista make the drink as order

Step3: Cashier pass the order to Barista

Step5: Server bring the product to Step4: Barista make the drinks as order customer table Step4: Pass the drink to Expo to décor and press the vibration card number Step5: Customer claim order at the bar

1. The Coffee House: What makes The Coffee House famous actually comes from the success of how skillful they are in finding the needs of customers and applying the marketing mix 7P to follow the market properly. The Coffee House is becoming the winner of the “Top-of-mind” in the hearts of customers. To suit every tastes and needs of customers, The Coffee House constantly improves its menu to increase competitiveness and retain its customers. The shop offers a wide selection of products, from tea, coffee, macchiato, smoothies or even product packaging. Those who have experienced the space and service of The Coffee House must remember the “Orange Peach Tea” was the “best seller” of this chain. This drink attracts customers from lively poster that placed before the store, with the beautiful presentation, great taste and different from other drinks in the shop. The Coffee House uses a reasonable price for their own products, customers are provided with a spacious, comfortable and sophisticated space that is not inferior to large enterprises like Starbucks, The Coffee Bean, etc.. According to Mr. Phu - Director of Marketing, although he didn’t talk about revenue, The Coffee House serves about 300,000 customers every month (Lữ Ý Nhi, 2016). The more customers come to The Coffee House, the more money they earn. The Coffee House has been opening new settlement every here and now, appearing densely in the big cities, locations where are suitable for the target customers, has become a mark printed in the mind of customers, and also become a feature that stimulates people’s curiosity. The stores of The Coffee House are always located in the easy location, central facade; moreover, they own view street that is very eye catching. That makes the shop attract many customers, make them pay attention to the space and appearance of The Coffee House as well as make them come to the shop. In the context of fierce compertition between coffee brands, The Coffee House has confirmed the level of sustainable development by opening more stores across the country. On July 6 2018, The Coffee House reached 100 stores nationwide after it established 4 years ago. To continue that success, The Coffee House also have a plan to increase from 100 to 200 stores in 18 months (A.D, 2018). "Home" is not the place to go and chat, "home" is where you are listening and sharing. Small pieces, thoughts and feelings of customers are respected and spread to more people. This mode of communication really touches on customers' insights and "turns" them into loyal shoppers (Banme Agency, n.d). In addition, The Coffee House officially owns the coffee department with processing and

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refrigerating coffee store of the Cau Dat Farm Company in January 2018. Besides, the company lauched a new coffee chain – The Coffee House Signature. Customers can experience the selection of coffee, including the mix of strange coffee in the world such as Kenya, Ethiopia (Minh Ng, 2018). Not only The Coffee House does sell coffee or beverages as many other shops, but also they focus on the service. In the period of industrialization, people go to the coffee shops not because of drinking coffee, they also want to spend time and money to buy luxury space and ideal work space. Therefore, The Coffee House understands the needs of customers and provdie what customers expect to the shop. And The Coffee House has achieved remarkable results and brought great experience to customers by using marketing mix strategy. 2. Highlands Coffee: The marketing mix strategy of Highlands Coffee has attracted a lot of potential customers for this brand. First of all, Highlands Coffee's products are very diversified and suitable for many people. The customers that the firm was looking for are office workers and millennials, so besides the traditional flavors, Highlands Coffee has created more international Arabica flavors. As a brand name, Highlands Coffee places great emphasis on providing customers with the finest coffee experience. To do that, everyone must strictly follow the standard. Highlands Coffee can be the most successful coffee shop chain in Vietnam with appearance in almost any major buildings and commercial center in Hanoi and Saigon. The enterprise runs business by manufacturing coffee in Hanoi in 2000, then Highlands Coffee developed rapidly and expanded into the coffee chain. In 2002, Highlands Coffee opened its first two stores in Hanoi. After 16 years of operation, it has 200 stores in Vietnam. In addition to the growth in scale, the growth of revenue also overwhelms the other competitors. In 2017, Cao Nguyen Coffee Service Joint Stock Company – owner of Highlands Coffee recorded its revenue of VND 1,237 billion, up 47% year on year, four times higher than Phuc Long, eight times The Coffee House, and about three times Starbucks (Thi Hà, n.d). This is a sign of strong growth after 5 years of changing the new look. Besides, in 2011, Jollibee spent $25 million to buy 49% of Viet Thai and 60% of Business Department in Hong Kong of Viet Thai International Group – the parent company of Highlands Coffee. Nowadays, Highlands Coffee operates a total of 269 stores, including 234 stores in Vietnam and 35 stores in Philippines. In 2017, Highlands Coffee topped the list of the world’s fastest growing coffee chains with sales up nearly 50% and profit growth of 106%. In 2018, Highlands Coffee plans to open 100 stores, mainly in the Vietnamese market (Bạch Lộc, 2018). Highlands Coffee also becomes one of the coffee chains with the highest sales on the market and surpasses many other competitors.

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Task 2: Develop and evaluate a basic marketing plan  Company overview History of The Coffee House Launch in August 2014 by CEO Nguyen Hai Ninh. Nguyen Hai Ninh left the position of managing director of urban coffee and start up The Coffee House. The Coffee House vision and mission -

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The Coffee House was created with vision to open a space where people can connect and develop relationships. CEO Nguyen Hai Ninh implied “Retail is all about detail “ , The Coffee House notice to every single details with a mission to bring comfort and feel like they are at home. Besides that, The Coffee House would aim itself to rank as 2 nd most known café shop all over Vietnam, just behind Starbucks. Moreover, the main core vision “Deliver Happiness” has been with them ever since their first time introduced to the Vietnamese market, aiming at delivering satisfaction to everyone – from staff members to anyone whose order was made to get to that blissful environment. A place where everyone can share a mutual happiness - to The Coffee House, that is the most important thing.

Achievement  From 2014 to July 2018 , The Coffee House has develop and open the 100th store. - In 2018, The Coffee House Signature has been opened, providing a luxury place for top-notch quality coffee with ready-at-hand brewing coffee (or “cà phê phin”) instead of a regular menu which could be find in any The Coffee House’s franchise all across Vietnam. - Back in 2015, The Coffee House has managed to set its foot all over Hanoi’s most important districts up to 14 physical stores, spread across the city. - A dedicated coffee farm with over 1,650 square meters on top of a valley to help bringing its dream of Vietnamese coffee going abroad one step closer. - Not just Hanoi alone, The Coffee House now extended to the southern part of Vietnam, including Da Nang, Bien Hoa and Vung Tau.

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 SWOT Analysis Strengths: are positive internal factors which are part of your company’s asset. These things are under the organization’s control, they are tangible or intangible. (Lekh Bhatia, 2015) Weaknesses: are negative internal factors which put the organization at a competitive disadvantage. (Lekh Bhatia, 2015) Strengths

Weaknesses

Nguyen Hai Ninh has experience when he Nguyen Hai Ninh has to do marketing, opened Urban Station and he knows pay commission to find managers. factors that are attract customers. The Coffee House is proactive in raw Imitable product (other brands can easily material – coffee roasting product packed. imitate that makes their products become less competitive) Until now, The Coffee House is the Technology advancement is not The fastest growing brand.

Coffee House’s strongest asset while we are entering the era of Marketing 4.0

Corporate with Ahamove to deliver their products to customers. To be listed as Runner up in 10 most influential places “Shall we go to the coffee shop?” – core

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value of the brands as well as Vietnamese culture

Opportunities: are positive external factors to the organization and outside its control. They exist for the business to flourish and prosper. (Lekh Bhatia, 2015) Threats: are negative external factors to the organization and outside its control. Company should monitor potential risks so that they would know how to respond to them. (Lekh Bhatia, 2015) Opportunities

Threats

The Coffee House can expand their Facing with other brands from foreign business to other countries because of countries. international economic integration. Vietnam’s coffee consumption go up in Other coffee shop brands also have the recently years and young population is same target demographic therefore the The Coffee House’s target customer.

benefits are divided.

Technological advancement enables The The Coffee House is too familiar with a Coffee House to improve customer portion of customers therefore they want service.

to find other interesting places.

Arabica and Robusta coffee has the ideal weather to grow up.

 Self-developed marketing plans:

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To launch our new product which is “Banh Mi” to the competitive market all over Vietnam, we decided to align our goals for the marketing plan with S.M.A.R.T objectives. What we have come up for our made-up product in 2019 would be: 1. “Banh Mi” would be commercialized at the first beginning of 2019 when National Holiday is over and The Coffee House is back in business at the first Quarter. Special combos would come with it including one “Banh Mi” and one drink of choice that are in Medium size (less than 35.000 VND) until a specific sale target has reached. The end for this promotion would be at the last of Q2 with at least 1000 combos sold. This promotion happens specifically in Hanoi only to test the reaction of the customers. Specific: In this marketing scheme, we’ll entirely focused on reaching the sales target for the combo “Banh Mi” by pushing our advertisement agenda on every stores located all over Hanoi to make sure that every customers who comes into the store would see that combo on every banner, screens that located within the store. Measurable: The end goal for this promotion would be at the end of June 2019 (the last Q2) so the sales can be easily tracked whether it could meet or not. Achievable: 1000 sold combos within 180 days ( 2 Quarters) equal to 180 days of opening for The Coffee House therefore, a minimum of 6 combos sold per day can be easily met as The Coffee House does have a steady amount of customers getting to and fro, especially on weekdays. Realistic: Our product “Banh Mi” is a easy to made and easy to consume within a preferable time frame and our goal which is to reach 1000 combo sales within our designated time is also easy to attain. Timely: We have set up this promotion to last about 6 months until the end of June (end of Quarter 2) therefore a plentiful amount of time to help the brand reached its goal.

2. After running the promotion of combo ‘Banh Mi” with a preferred choice of drink last until the end of Quarter 2, we will then opened up this campaign to further down branches (in Da Nang and many other store branches down South of Vietnam) with a bigger goal of 5000-10000 combo at the end of Quarter 4 (the end of December 2019) given that the first campaign is a success. The price and quality would still be kept the same to deepen our customers’ belief that The Coffee House can maintain its customer’s satisfaction and our brand’s ethic. Specific: This campaign’s agenda will be further expanded to outer regions not just in Hanoi but far down South to implement our new idea to a broader audience.

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Measurable: The end goal for this promotion would be at the end of December 2019 (the last Q4) with a bigger sales goal of 5 to 10 times larger than the first goal of Quarter 1 to the end of Quarter 2. Attainable: With a bigger goal in mind, we have calculated that the minimum of 5000 combo (maximum 10000) sales equal to 180 days (from Quarter 3 to the end of Quarter 4) means that a minimum of 28 combo sales (maximum 56) per day from every store across Vietnam can be attained as this time, our market has significantly opened up much bigger than ever. Realistic: The product would still be kept the same quality and quantity to make sure that it is an easy consumable item for everyone at every age to enjoy. It is also easy to attain this aspect as our product still the same. Timely: Another 6 months for this promotion to last (from July 2019 to the end of December 2019) to see whether this product of ours can be successful within domestic market.  Segmentation – Targeting-Positioning Segmentation: Geographic Country region

Vietnam: Ha Noi, Ho Chi Minh City, Bien Hoa, Vung Tau, Da Nang, Hai Phong.

Density

Urban, suburban

In geographic segment, The Coffee House is mostly located in these regions, especially in Ho Chi Minh City. That is the reason why customers living near stores or not too far from the location can come to buy and try the product. Moreover, living in urban and suburban areas, people are more likely to have leisure coffee-time than in other areas.

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Demographic Age

15 – 35

Gender

Male, Female, Others

Family life cycle

Young, single/married

Income

Under 1.500.000 VND

Education

Academic level: grade 8-12/12, College student, Worker

Religion

None

Nationality

Vietnamese and other nationalities

Demographic segment is all about people. ”Banh Mi” is easy to enjoy with affordable price for everybody but our group focused more on students and workers. They require a quiet working space so that they will choose our coffee shop. Sometimes, they work through daytime and if they go out and have lunch, it will interrupt their work. Got ahold of this insight, “Banh Mi” in The Coffee House will be the best choice for these people. With an affordable price, both students and workers can buy “Banh Mi” and it is suitable for lunch.

Psychographic Social class

Underclass, Working class

Lifestyle

Sustainablers

Personality

Adaptable

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This criteria allows to divide the market based on social class, personality and lifestyle. Banh Mi is suitable for those who prefer convenience and easy to adapt to new kinds of food. The sole advantage of The Coffee House’s Banh Mi is that customers just have to walk to the order counter and they can instantly buy it without waiting in line. Most likely people of underclass and working class would be pleased by the price as it does not cost too much money. The range of customer will be bigger, from underclass to middle class or even higher class because one price fits all.

Behavioural Occasion

Regular occasion

Benefits sought

Quality, convenience, fast

User status

1st-time users, potential users, frequent users, nonusers, ex-users

User rate

Light user

Loyalty status

Medium

Attitude towards the product

Positive, demand for product with better quality and price.

Behavioral market segmentation has some criteria related to knowledge, attitudes, responses to the product and uses. These factors - in which a customer takes into consideration – contribute to consumer decision making and it is also affected by his/her behavior. Banh Mi can be served every time in the year and the flavor would be changed

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and customized according to which season we are in. Also, this product has the benefits that every customer seeks within a product: the convenience, how quickly it can be consumed and also the quality of Banh Mi. User status and user rate are segmented into every user status, because The Coffee House wants to bring a good experience in a coffee shop and create a habit for customer in the long-term; light users often hold a large percentage of the market and they ready to pay a small amount of money - that is our target customer. In addition, the strategies to get ahold of loyal customers aim at retaining old customers and acquiring new customers. The Coffee House focuses more on service, in this case, service is the best way to provide the experience that could retain our customers. Because The Coffee House’s Banh Mi targeted towards students and workers therefore it should be affordable as well as in good quality.

Targeting: Differentiated (Segmented) Marketing With The Coffee House’s Banh Mi, our group target more than one specific target in the market that is called Differentiated (Segmented) Marketing and some offers will be designed for each part of the segments. This allows us to increase potential customers, sales, revenues as well as profits. Focusing on more than one target means that the costs will be increased because we need to use tactics such as offering other products (our team came up with a combo The Coffee House’s Banh Mi and Peach Tea Mania) and creating marketing messages (“No more hunger with The Coffee House Banh Mi”) for the customers. Choosing differentiated marketing will bring more sales potential to The

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Coffee House because it pursuits different types of customers. In turns, customers will choose our product if those products match with their needs, which will increase our profits and customers’ satisfaction. On the down side, if The Coffee House chooses differentiated marketing, it means the company will also have to emphasize the quality and the service to keep the customers. In addition, the company will also have to compete directly with other companies that offer low-cost products, some struggles may appear such as copy-cat product. Because of this, The Coffee House has to use marketing to sell quality and value, to be diligent in product designs to discerning customers. Positioning  Competitors: The Coffee House is a retailer in F&B market, so that they will have a lot of competitors like : Starbucks, Highlands Coffee, etc… with different price and each competitors will have its own products: Price

Quality of product

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The Coffee House and Highlands Coffee has the same taste, according to thecoffeehouse.com and highlandscoffee.com.vn , both brands use Arabica and Robusta coffee beans but the quality of Highlands Coffee is more appreciated, leads to Highlands' profit were eight times higher than The Coffee House and about three times higher than Starbucks (Cafef.vn, 2018). Starbuck Coffee has a high price but the quality of cafe is not good. Vietnamese people favor traditional coffee taste than Starbucks taste. Maintaining the traditional taste is the key to remain the most loyal and dedicated customer (Soha.vn, 2014). Also according to Mr. Le Nguyen Vu, General Director of Trung Nguyen Joint Stock Company, who is considered "coffee king" of Vietnam implied that : “ "Whatever Starbucks is doing, is not right. They do not sell coffee but, they sell coffee flavored with sugar” (Cafebiz.vn, 2013). With all reasons above , i have created a perceptual map to evaluated coffee market.  Allocation of resources Item name

Quantit

Amount

y Lemon tart

01

29,000

Highlands Banh Mi

01

19,000

Peach tea mania

01

55,000

Vietnamese white coffee

01

39,000

Total

142,000

 Evaluate and monitoring marketing mix Evaluate and monitoring marketing mix is an important step of marketing strategy. This step helps the company to realize problems in near future and how the company can improve situation due to the market changes. Evaluating and monitoring is a way to help company realize efficiency of marketing strategy without costing too much time and money. Evaluating and monitoring can be done through many methods.

Surveys: Surveys are created as an effective way to understand customer satisfaction, what or how they think and feel about company products or company marketing strategies. Customers are the ones who purchase company product so what’s on their mind about the product or the marketing strategies is important. Surveys consist of many questions with an aim to

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gather information about customers: it can be done through phone calls, emails, online surveys …

Online tools: We are living in 4.0 industries, where internet is evolving. We can use online tools such as Google Analytics to analyze data and Facebook or any social network to calculate the number of people reach your product through likes, views ….

Return on investment: Return on investment or ROI is crucial in business and marketing. ROI helps the company to check the money putting into marketing plan whether it would bring profit or not.

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CONCLUSION From start to the end, our team has managed to cover all aspects that we have learnt during our Marketing Essential course and applied them to this final assessment of the semester for this case study that we decided to pick: The Coffee House versus Highlands Coffee. Mainly focused on The Coffee House, our team has relentlessly researched and provided many ample evidences on what path The Coffee House has taken ever since their first appeared on the market in 2013 until our very moment – in 2018. Not just covering what they have done, we also came up on our own some new ideas and new hypothetical plans for the firm to look up to in 2019 and so on. We believe that, through this Marketing course, we could understand the deeper mechanism inside each company’s marketing strategy and therefore, to develop our common sense of what’s going on in this world, especially with our main target for this assessment, The Coffee House.

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Appendix Micro – environmental factors: -

Company: The microenvironment consists of aspects close to the company. Branches in the company such as top manager, finance, R&D etc are affect customer relationship and value. Founder and CEO Nguyen Hai Ninh has to do all the things from commissioning, marketing to managing because he determined not to follow the franchise model. According to Nguyen Hai Ninh, three factors to attract customers are: spacious area, employees’ attitude and utilities of the coffee shop. This is heavily emphasized through the opening of 100 th store in 1st Thai Ha, Dong Da District, Ha Noi on July 6 th 2018 and in the future, the 200th store will be opened in the next 18 months.

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Suppliers: Now, The Coffee House has been trading coffee roasting product packed from the company and the brand also has invested 50 hectares of land to grow coffee in Cau Dat, Lam Dong Province. The company has invested the grinding mill in Ho Chi Minh City and the maximum capacity is 20 tons/month. According to Nguyen Hai Ninh (Founder & CEO), because he wants to be proactive in the quality of raw materials, next he wants to provide clean food from the model “Farm to the table”. [ CITATION Ema17 \l 1033 ]

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Competitors: have a direct impact on the organization’s strategy. According to Nikkei, Nguyen Hai Ninh intends to open up to 700 stores in Vietnam in the next five years, with an average of 10 new business launches per month. Cong Cafe is one of many competitors that attract customers with their special decorations. After 8 years, Cong Cafe has launched 50 stores and expanded 1-2 store(s) per month. In addition, they have opened a Cong Cafe in Korea and in the near future, the business will increase. Highlands Coffee also has about 200 stores and most of them located near shopping malls. Since of all these brands are main threats to The Coffee House’s market share, they always expand their business and they know Vietnamese customers’ insight to make sure their businesses are flexible together with marketing strategies [ CITATION Phú18 \l 1066 ]

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Marketing intermediaries: According to CafeF, The Coffee House has recently started to move its business online – predominately physical offline store now the franchise is in partnership with Ahamove (a transportation company) to evolve into another method of business called Offline-2-Online (O2O) which each physical store will now become a storage of itself for shippers and logistics partner to deliver the products to its customers. In this way, The Coffee House has become both as a Merchant Wholesaler and as a main Distributor

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Customer: The Coffee House’s revenue is contributed mostly from Vietnamese individual. The brand geared towards customers who have gone to work, have traveled, enjoy experiencing classy cafes with localized prices, those that are in low – middle income range. They based on customers’ insight to create new

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products. Besides coffee, The Coffee House also brings out others products such as ice-blended, milk tea, etc and recently, “Macchiato”, which is popular with young people. This has brought alternatives to customers which largely contributed to the retention of customers. -

Public: The Coffee House has brandished itself to be listed as runner up in 10 most influencing places for millennials and everyone alike to gather and socializing as well as a commonplace for group of friends or colleagues to work and together working towards a common share value[ CITATION Anh18 \l 1066 ]. This coupled with their most recent plan of expansion to reach a wider audience of both inside Vietnam (reach down further to the Southern part of Vietnam) and outer region (their plan for 2018 is to have one settlement in China) that had attracted a surging amount of press releases and media coverages to further bring this brand name up to a whole new level. Social media is not out of their reach as few months ago, the firm has hired a creative agency called “The Purpose Group” to help them advertised their next movement called “Hành trình đam mê từ nông trại đến tách cà phê” (The Coffee House, 2018)

Macro – environmental factors: -

Political environment is clearly influenced by the pressure of public opinion, the pressure and media groups. Now, Vietnam has entered in international economic integration. This process also has strong impact on contributing socio-economic

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development, enhancing production capacity and expanding the market in the fields of industry, services, commerce, etc. Also, the enterprise can improve their competitiveness with more brands in the world, by this way, the product can get better and better[ CITATION Ngu17 \l 1066 ]. It could bring a promising chance for The Coffee House to expand their stores not only in Vietnam but also in other countries. On the other hand, the international intergration also has some difficult for The Coffee House when competitors are increased. If The Coffee House does not have the strategy for long-term goals, it will diminished by itself in the market. -

Economic factors consist of factors that affect consumer spending and purchasing power. The economic cycle is the natural fluctuation between the growth and the recession. In this cycle, Vietnam is in a Boom position. Some characteristics of a boom include falling unemployment as well as more job are created. According to “laodongthudo.vn”, comparing two periods between Q1 2018 and Q2 2018, the rate of employment has increased 1,16% in the whole country. GDP growth in 2018 is forecast more than 7%[ CITATION Phạ18 \l 1066 ]. In addition, BMI Research in 2017 shown that in period 2005-2015, Vietnam’s coffee consumption went up from 0,43kg/person/year to 1,38kg/person/year. It evaluated the highest rate among coffee exporters in the world. In short, The Coffee House opened their store in 2013, Starbucks Vietnam and Phuc Long also showed up and made the coffee shop market really boomed even famous brands such as Trung Nguyen coffee and Highlands from 2013 to now and these brands are still planning to expand their stores in the future[ CITATION HàY18 \l 1066 ]. The economic

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environment is booming because Vietnamese comes to a coffee shop not only “drinking coffee” but also working, dating or meeting their friends. Therefore, more and more coffee shops are opened to meet customers’ demand. -

Demographic factors: is the study of statistics such as age, gender, size, and other statistics, which illustrate the changing of human populations. Demographic environment is important because it relates to people – market distributors.

Age

0-14 years: 23.55% (male 11,909,326/female 10,735,324)

structure

15-24 years: 16.23% (male 8,098,019/female 7,509,021) 25-54 years: 45.56% (male 22,087,095/female 21,719,615) 55-64 years: 8.55% (male 3,798,928/female 4,419,837) 65 years and over: 6.12% (male 2,281,923/female 3,601,075) (2017 est.)

Figure 2: Vietnam’s age structure Source: [ CITATION CIA18 \l 1066 ]

According to a statistics from CIA World Factbook, age structure was calculated in 2017, 23,55% of Vietnamese were aged less than 15 years old, the percentage of people from 15 to 64 years old is nearly 70% and the rest of the chart belongs to people 65 years old or older. It means that Vietnam has young population because the labor force consists of a population aged from 15 to 64. The target customer of The Coffee House is young people, who is studying or working so that they created a co-working space for this segment in the coffee shop. Furthermore, the

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literacy rate was estimated up to 94,52%, which means people are more educated and the workforce in the future is becoming white-collar. They required a place where they can not only drinking coffee but they can also doing their paper-work with other people. -

Technological factors: We are in the midst of a transformation that it is being called Marketing 4.0. In marketplace, a commitment with Internet helps finding out customers’ insight, channel selection, etc. First of all, instead of one way – the brand communication for sale, now it has changed a multi – faceted conversation between the brand and customers. Newspapers lose their ability to navigate customer so that social media such as Facebook, Instagram, Twitter, etc are replacing it. Secondly, the brand in the era of Marketing 4.0 brings the shape of a real person – a customer’s companion, not only have emotions, humanistic actions but also it aligns corporation social responsibility with business strategy and product development. Yet, it also has two angles: the brand has an opportunity to communicate with public by influencer marketing but on the other hand, the risk of public opinion, bad comments about products and services can be dangerous to a business [ CITATION Tạm18 \l 1066 ] . In addtion, most enterprises in Vietnam still embarrassed to follow the technology of “4.0 era” (79% of enterprises do not have any movement) according to a survey from the Association of medium and small enterprises [ CITATION Thu17 \l 1066 ]. In this case, The Coffee House has already joined in this marketplace but as deep when compared to the mid-autumn

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of 2018, they have decided to incorporate the most advanced intelligence (Artificial Intelligence) into its product and it was evaluated as a success campaign at that time [ CITATION Thắ18 \l 1066 ]. In short, technology is like two sides of a coin and if The Coffee House considered to have a foot ahead in this factor, a major change could take place in the near future for the brand. -

Culture factors: Consist of forces that affect the behaviors, society’s values and perceptions. In Vietnam, the sentence “Mình đi cà phê nhé” (“Shall we go to the coffee shop?”) is familiar with Vietnamese people because it means you do not come to just drink coffee but also come to meet friends, workers. The Coffee House has created a coffee shop where simple decorations, quiet atmosphere are enough to get the conversation going and easy to find it anywhere. Those factors are found in The Coffee House by customers, moreover, most of core messages and values from The Coffee House heavily emphasized on the culture of “Shall we go to the coffee shop?”. Therefore, this culture is related to customers’ behavior and the core value of The Coffee House.

-

Natural factors: This refers to the physical environment: it comprises the lack or the available of natural resources that hinder the output. The Coffee House is using Arabica and Robusta as the main sources of coffee. Arabica is planted in Da Lat, where the climate is temperate throughout the year, the highest temperature does not exceed 33 degrees Celsius and the lowest temperature is 5 degrees Celsius – an ideal weather for Arabica to grow. The higher the terrain, the colder the weather brings the most quality Arabica[ CITATION Pha18 \l 1066 ]. In contrast, Robusta

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is planted in Tay Nguyen – a highland area in Vietnam and the largest exporter of Robusta coffee in the world. Robusta coffee is suitable for elevation below 1000m, the temperature range from 24 to 29 degrees Celsius and no need to use herbicides, pesticides[ CITATION Bìn12 \l 1066 ]. In short, The Coffee House has sustainable resources because Arabica and Robusta are in abundance because it is supported by the weather in Vietnam.

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Tạm chí Gam7, 2018. Marketing 4.0 - Thay đổi hoàn toàn cách làm Content. [Online] Available at: http://www.brandsvietnam.com/congdong/topic/10231-Marketing-40-Thaydoi-hoan-toan-cach-lam-Content [Accessed 16 November 2018]. Thắng Nguyễn, 2018. Chiến lược Marketing mùa Trung thu: Khi bánh trung thu trở thành “đứa con cưng”. [Online] Available at: https://marketingai.admicro.vn/chien-luoc-marketing-mua-trung-thu-khibanh-trung-thu-tro-thanh-dua-con-cung/ [Accessed 16 November 2018]. Thu Phương, 2017. Xu hướng Marketing 4.0. [Online] Available at: http://marketingreview.vn/xu-huong-marketing-4-0.html [Accessed 16 November 2018]. The Coffee House (2018). Hành trình đam mê từ nông trại đến tách cà phê. [video] Available at: https://www.youtube.com/watch?v=xVYQc4FLhVk [Accessed 28 Nov. 2018]. The Coffee House. (2018). MENU. [online] Available https://www.thecoffeehouse.com/collections/menu [Accessed 28 Nov. 2018].

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Deltaviet. (2017). Customer Insisht đã giúp The Coffee House thành công như thế nào. [online] Available at: http://deltaviet.vn/customer-insight-giup-coffee-house-thanhcong.html [Accessed 21 Nov. 2018]. DoanhnhanPlus.vn. (2016). Chiến lược thông minh giúp The Coffee House thành công. [online] Available at: http://doanhnhanplus.vn/chien-luoc-thong-minh-giup-coffee-housethanh-cong-197205.html [Accessed 21 Nov. 2018]. Cafef.vn. (2018). Trở thành chuỗi cà phê “bá chủ” trên thị trường, Highlands Coffee thu về hơn 1.200 tỷ trong năm 2017. [online] Available at: http://cafef.vn/tro-thanh-chuoi-caphe-ba-chu-tren-thi-truong-highland-coffee-thu-ve-hon-1200-ty-trong-nam-201720181028201319717.chn [Accessed 28 Nov. 2018]. Soha.vn. (2014). 3 điểm yếu của 'gã khổng lồ' nổi tiếng thế giới Starbucks tại VN. [online] Available at: http://soha.vn/kinh-doanh/3-diem-yeu-cua-ga-khong-lo-noi-tiengthe-gioi-starbucks-tai-vn-20140805154959863.htm [Accessed 28 Nov. 2018]. Cafebiz.vn. (2013). Chê Starbucks là ‘nước có mùi cà phê’ nhưng ông Đặng Lê Nguyên Vũ phải học tập Howard Schultz ‘dài dài’. [online] Available at: http://cafebiz.vn/chestarbucks-la-nuoc-co-mui-ca-phe-nhung-ong-dang-le-nguyen-vu-phai-hoc-tap-howardschultz-dai-dai-20160719085935064.chn [Accessed 28 Nov. 2018]. Vanessa Phuoc, n.d, “ Chiến lược thương hiệu của Highlands Coffee”, Acadamia. Available from: < http://www.academia.edu/15294388/130661597-Bai-Word-HoanChinh-Highlands-Coffee > “ Chiến lược marketing 5P thành công của the coffee house”, n.d, Banme Agency. Available from: < https://dma.banme.com/chien-luoc-marketing-5p-thanh-cong-cua-thecoffee-house/ > A.D, 2018, “Sau 4 năm ra mắt, The Coffee House chính thức cán mốc 100 cửa hàng trên khắp Việt Nam”, Kenh14. Available from: http://kenh14.vn/sau-4-nam-ra-mat-the-coffeehouse-chinh-thuc-can-moc-100-cua-hang-tren-khap-viet-nam-20180706122429929.chn [06 July 2018] Lữ Ý Nhi, 2016, “ Lực hút lợi nhuận từ kinh doanh cà phê chuỗi”, Doanh Nhân Saigon online. Available from: https://doanhnhansaigon.vn/chuyen-lam-an/luc-hut-loi-nhuan-tukinh-doanh-ca-phe-chuoi-1074992.html [03 December 2016] Minh Ng, 2018, “ The Coffee House – Nơi hội tụ của người yêu cà phê”, Vietcatera. Available from: http://vietcetera.com/vn/the-coffee-house-noi-hoi-tu-cua-nguoi-yeu-caphe/ [24 April 2018] Thi Hà, n.d, “ Những chuỗi cà phê đang kiếm tiền nhiều nhất”, Brands Vietnam. Available from: http://www.brandsvietnam.com/16938-Nhung-chuoi-ca-phe-dang-kiemtien-nhieu-nhat

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