BỘ TÀI CHÍNH

TRƯỜNG ĐẠI HỌC TÀI CHÍNH – MARKETING

KHOA MARKETING

TP HCM tháng 10 năm 2020

Topic : ANALYSIS OF THE COFFEE HOUSE ‘S

MARKETING FROM 2014 TO 2020

THE COFFEE HOUSE

INSTRUCTOR : MA . NGUYỄN THỊ MINH NGỌC

Member :

1. Hồ Nguyễn Thanh Trúc

2. Đặng Khánh Ngọc

3. Nguyễn Hoàng Long

4. Dương Mỹ Phụng

5. Nguyễn Hướng Minh

ANALYSIS OF THE COFFEE HOUSE ‘S MARKETING
FROM 2014 TO 2020
TABLES OF CONTENTS
TABLES OF FIGURES
A. INTRODUCTION
i. The reason to choose the topic

Vietnam has always been a promised land having a lot of opportunities for
service investors and entrepreneurs. In particular, the coffee shop business is
one of the most developed service industries today. For a long time, coffee has
become a familiar drink as well as indispensable habit of each Vietnamese
person. Living standards are increasingly improved, Vietnamese customers are
also increasingly interested in the quality of coffee as well as willing to pay
high price to enjoy a delicious cup of coffee. Not only that, the Vietnamese
people’s culture of enjoying coffee has also gradually changed. Nowadays,
going to coffee is not only drinking coffee but also meeting friends, working,
studying, reading, relaxing and so on. Therefore, no wonder more 50% of
Vietnamese people prefer drinking coffee at the coffee shops.
(maybanhang.net)

Because of grasping the potential of this service market, many domestic and
foreign organizations have appeared in our country. This makes this market
become one of the service industries with fierce competition, typically big-
name companies. According to the latest data from VIRAC, the top seven
coffee chains with the largest popularity and revenue in Vietnam include The
Coffee House, Phuc Long, Trung Nguyen Legend, Cong, Highlands Coffee,
Starbucks and Coffee Bean & Tea Leaf. In which, Highlands Coffee ranks first
in revenue with more than 299 stores, followed by The Coffee House with 160
stores. Starbucks is in third place with 60 stores and the remaining coffee
chains have more than 30 stores.

When the Coffee House entered the coffee market, there were a series of other
large enterprises dominating the market. Initially, it was thought that The
Coffee House would be difficult to beat old businesses because it was launched
to consumers quite lately. However, after only a few years, everything changed.
In 2017, Starbucks was the second chain coffee in terms of revenue while The
 Coffee House ranked a fifth place. Yet, the chart varied in 2018 when The
Coffee House grew nearly 100% in revenue with more than 669 billion VND.
It officially stepped into second place and beat Starbucks. Nikkei Asian Review
also evaluated that The Coffee House has been one of the chains with the
highest growth rate today.

So, how has The Coffee House implemented the Marketing Mix to compete
with other long-standing businesses and have a foothold in the market today?
To answer the above question, we decided to choose this topic ‘’Analyzing the
coffee house ‘s marketing strategy from 2014 to 2018’’.

ii. Objectives of the research

- Systematize knowledge learned about analyzing and orienting the
marketing strategy
- Analyze the Coffee House’s main marketing strategies in Vietnam
- Provide recommendations to improve current strategies as well as
develop a new strategy

iii. Object and scope of study

Research object Marketing Strategies of The Coffee House in 2014-2020
Research scope
- Space of research Vietnam
- Time period 2014 – 2020

Research time 1/7/2020 to 10/9/2020

iv. Content of research

-Systematize the basic theory of Marketing Mix strategy and related knowledge
to serve as a theoretical basis for the topic

-Understand overview of the size and demand of the coffee market in Vietnam.

-Analyze environmental factors and market trends that might affect the
business’s strategy.

-Analyze and evaluating 4P strategy that The Coffee House has been applying.
 -Make suitable proposals to develop marketing strategies,

v. Research method

- The research is studied by 3 main methods:

+ Desk research (Secondary research): analyze the market and the company by
using already existing data which is available on the Internet, newspaper,
and the public data of the company.

+ Observation method: observe the process that the company implements its
marketing strategy in order to evaluate and complete the strategy.

+ Statistical and Synthesis method: extract information from research data

which is collected from the Internet, data of the company and many other
resources.

vi. Structure of the topic

The main content of this topic includes three chapters
Chapter 1. Theoretical basis of marketing mix
Chapter 2. Analyzing the Coffee House’s marketing mix strategy- 4P
Chapter 3. Solutions and recommendations to enhance 4P strategy of The
Coffee House
B. CONTENT

CHAPTER 1. LITERATURE REVIEW

1.1. Overview of Marketing

1.1.1 Definition

Marketing covers many fields, so at different bases there will be many different
definitions, we will look at some basic definitions of marketing :

Marketing is building your brand, convincing people that your brand (meaning
your product/service/company) is the best and protecting the relationships you
build with your customers. Marjorie Cayman – Director of Client
Development, Clayman Advertising, Inc.

Marketing is meeting the needs and wants of a consumer. Andrew Cohen –

President,The A Team (Disclaimer: I’m not related to Andrew.)

Marketing is creating irresistible experiences that connect with people

personally and create the desire to share with others. Saul Colt – Head of
Magic, Fresh Books

To sum up , Marketing is the activity, set of institutions, and processes for

creating, communicating, delivering, and exchanging offerings that have value
for customers, clients, partners, and society at large.

1.1.1 Role

Marketing plays an important role in establishing relationships between

customers and the organizations offering to the market. It gives us the
confidence to want to try a new product in the market as opposed to situations
where the products enter the market without publicity. This makes the
marketing function critical in every organization irrespective of whether the
organization is a profit or non-profit centered. Marketing shapes the image of
the organization, how people associate the organizations products or services
and indeed give people the confidence about their products or services.

Meets consumer needs and wants

Needs pre-exist in market. Marketers identify the needs of the consumer and
adopt their marketing strategies accordingly. They influence wants, as these are
shaped by cultural and individual personalities. Their needs are satisfied
through the exchange process.

Ensures organization survival, growth and reputation

A business survives because of customer retention and increase in the market

share. Marketing helps companies achieve their objectives because it is
customer centric. Marketing helps in satisfying customers beyond their
expectations.

Widens market

A business survives because of customer retention and increase in the market

share. Marketing helps companies achieve their objectives because it is
customer centric. Marketing helps in satisfying customers beyond their
expectations.

Adapting the right price

Price is a critical element in the marketing mix of a producer because it

generates revenue. Marketing strategies help in setting fair prices,
incorporating appropriate changes, and preparing a right approach. The
exchange process moves smoothly when prices are fixed in a favorable manner.

Better product offerings

Most companies sell more than one product. Physical products, that is goods
have to be well packed and labeled. In contrast, services are characterized by
intangibility and inseparability. Thus, marketing plays an active role by
designing and managing product offerings.
Creates utility

Much of a product’s utility is created through marketing. Utility is the ability of

a product to satisfy wants. Marketing creates form, place, time, information and
possession utility. For example, a car fulfills the need to possess a vehicle and
ride it.

Management of demand

Marketers are skilled professionals who play a key role in influencing level,
timing and composition of demand. A demand can be a negative demand, no
demand, latent demand, declining demand, irregular demand, full demand or
overfull demand. Marketing helps in dealing with these varied levels of
demand.

Face competition

Competitive orientation is important in today’s global markets. Marketing

helps in maintaining balance of consumers’ expectations and competitor’s
offerings by monitoring the market closely. Superior services, premium
products and efficient dealership are used by marketers to retain their market
share.

Discharge social responsibilities

Rising customer expectations, government pressure and environmental

degradation have forced companies to practice higher levels of social
responsibilities. Here, social marketing plays an important role. Cause-related
marketing is widely used by big corporate houses.

Economic growth

Marketing creates demand. Increased demand encourages production and

distribution activities. As a result, industrial growth is boosted, and income
levels improve due to increased employment opportunities. This improves the
standard of living by offering superior and improved products. Thus, the
overall economic growth is boosted.
1.2. Marketing Process
1.2.1 Research

The marketing research process is a six-step process involving the definition of

the problem being studied upon, determining what approach to take,
formulation of research design, field work entailed, data preparation and
analysis, and the generation of reports, how to present these reports, and
overall, how the task can be accomplished

1.2.2 STP

The STP marketing process is a fundamental component of modern marketing.

Essentially, it identifies how brands and their product offerings will compete in
the marketplace. This is achieved through the identification of relevant and
attractive market segments for the organization, followed by the development
of a suitable product positioning (which is how the firm intends that consumers
will understand the brand’s key benefits).

Having an understanding of the STP model is an important foundation for

university students to be able to connect the relationship between market
segmentation, target market selection, and product positioning, (as these
concepts are interrelated and are connected to the organization’s marketing
strategy).

1.2.3 Marketing Mix

The marketing mix refers to the set of actions, or tactics, that a company uses
to promote its brand or product in the market. The 4Ps make up a typical
marketing mix - Price, Product, Promotion and Place. However, nowadays, the
marketing mix increasingly includes several other Ps like Packaging,
Positioning, People and even Politics as vital mix elements.

1.2.4 Implementation
Marketing implementation is the process that turns marketing plans into action
assignments and ensures that such assignments are executed in a manner that
accomplishes the plan’s stated objectives

1.2.5 Control

Marketing control is the process of monitoring the proposed plans as they

proceed and adjusting where necessary. If an objective states where you want
to be and the plan sets out a road map to your destination, then control tells you
if you are on the right route or if you have arrived at your destination.

A marketer follows the following steps while exercising control over the
marketing operation in an organization:

3 Comparing
1 Determining 2 .Establishing 5 Rectification
Results with 4 Analyzing
Marketing Performance and
Standard the Deviations
Objectives Standards Improvement
Performance

Mark
eting Control Process

1. Determining Marketing Objectives: The initial step in marketing control is

the setting up of the marketing goals, which are in alignment with the
organizational objectives.

2. Establishing Performance Standards: To streamline the marketing process,

benchmarking is essential. Therefore, performance standards are set for
carrying out marketing operations.
 3. Comparing Results with Standard Performance: The actual marketing
performance is compared and matched with the set standards and variation is
measured.

4. Analyzing the Deviations: This difference is then examined to find out the
areas which require correction, and if the deviation exceeds the decided range,
it should be informed to the top management.

5. Rectification and Improvement: After studying the problem area responsible

for low performance, necessary steps should be taken to fill in the gap between
the actual and expected returns.

1.3. Marketing Mix

1.3.1 Product
Product is something that can be offered to a market for attention, acquisition,
use or consumption that might satisfy a want or need. It includes physical
objects, services, persons, places, organizations and ideas - Kotler, Wong,
Saunders, Armstrong
Product Classification

Products can be classified into the following categories

Intangible Products. These are touchable and physical items, for example, a

mobile device, a marketing book, MacBook Pro laptop, a Car.

Intangible Products. These are untouchable and nonphysical items, but you

can feel it, for example, marketingtutor.net website, your bank account.

Consumer Products and Services These items are bought by end users for
personal consumption, for example, dairy items, shirts, motorbike. On the other
hand, consumer services include postal services, salon haircut, educational
institution etc.

Industrial Products and Services. Those items bought for further processing

or use in a business. for example, raw material, machinery, and parts.  The
industrial services include business advisory services.
Levels of Product that Create Customer Value & Benefits

Every marketer must understand the target market, in this way, he will know
what benefits to offer, how to position the product and what will be a unique
selling proposition.

Core Product. The core is not the physical product but consists of all the
benefits associated, that make the actual product more valuable. A good
example is speed, it can help you to travel quickly.

Actual Product. It is the physical and tangible product. In this stage, additional
benefits and customer value is added which can differentiate the product. there
are five characteristics i.e. product name, packaging, styling, features and
product quality. Take the example of a car you can test drive and buy. All these
five characteristics are carefully combined to provide core benefits. A
comfortable and safe drive.

Augmented Product. In simple words, augmented product means offering

after-sale benefits and services. For example, a watch manufacturer may offer a
warranty, blog forum, customer support.

Product Decisions

With an understanding of the basic product mix and benefits, a company can
now begin to make important product decisions. These include:

Design Decisions: The basic decision here to identify how strong the design
will be in the entire product mix. Will it be a supplement to the features, or will
the features be designed around a unique design?

Quality Decisions: The quality of the proud needs is kept with the other
elements of the marketing mix. A high price can be charged if the product has
superior quality.

Features Decisions: What will be the final features of the product? Will they
add to the perceived and actual benefits of the product? Here also, the company
can charge a premium price for additional desirable benefits from features.
 Branding Decisions: Branding decision remain some of the most important as
it turns a product into something beyond just a good. A brand can have the
power to generate instant sales as well cement confidence in the product’s
quality and reliability.

Product Life Cycle

An important consideration for any product is the logical stages of its lifecycle.
A typical product goes through the following stages:

1. Introduction – Slow growth period following product launch

2. Growth – Fast growth phase once the product is established

3. Maturity – A period of slowdown in sales as the product becomes ubiquitous

in the market

4. Decline – A downward sales as the product is no longer fulfilling a need or

there are better options.

A keen eye needs to be kept on the product’s journey through the lifecycle. A
close to reality prediction of this path may help the company relaunch or
redesign an existing product or work on introducing a new one to the market. A
detailed look at the product life cycle can be found here.

Product Strategy

A product strategy is a high – level plan describing what a business hopes to

accomplish with its product, and how it plans to do so. This strategy should
answer key questions such as who the product will serve (personas), how it will
benefit those personas, and what are the company’s goals for the product
throughout its lifecycle.

Role of Product Strategy

-Provide clarity for company

-Prioritize product roadmap

 -Improve team’s tactical decisions

In the process of implementing product strategy, businesses regularly analyze

and make decisions related to the development and marketing of individual
products. These decisions are:

Attributes: These product attributes are tangible and include quality, design,
features, and style.

Branding: It may be the name, logo, sign and symbol or combination of these.
These are used to differentiate products and services from competitors.

Packaging: This includes all the activities of wrapping a product that helps to
identify, protect, and display information that makes it marketable.

Labeling: It includes from simple tags to a product to a complex graphics. It

describes the important information about the product.

Product Support Services: It is one of the elements of the product decision

strategy. These services augment actual product

1.3.2 Price

Price is the amount of money that your customers have to pay in

exchange for your product or service

Pricing is one of the four main elements of the marketing mix. Pricing is
the only revenue-generating element in the marketing mix (the other three
elements are cost centres—that is, they add to a company’s cost). Pricing
is strongly linked to the business model. The business model is a
conceptual representation of the company’s revenue streams. Any
significant changes in the price will affect the viability of a particular
business model.

A well-chosen price should accomplish three goals:

Achieve the company’s financial goals (profitability)

Fit within the realities of the marketplace (customers are willing and able
to pay the set price)

Support a product’s positioning and be consistent with the other variables

in the marketing mix (product quality, distribution issues, promotion
challenges)

Factors Affecting Pricing Strategies

Let us discuss what factors to consider when companies setting prices.

Internal Factors Affect Pricing Decisions

Cost. It is the base for the price that can be charged for products and
services. When setting the prices, a company should cover both fixed and
variable costs.

Marketing mix strategy. Price is important marketing mix tool that

helps to achieve the marketing objectives. Price decisions coordination
product, placement and promotion decisions must be coordinated

Marketing objectives of your company like your target market and

positioning strategies

Product Life Cycle. Different stages of product life cycle affect the
pricing decisions

Image of the Firm. Another factor affects the pricing decision is the
image and goodwill of the company.

External Factors Affect Pricing Decision

Competition. When setting the product price, the company must

understand the level of competition in the market.
Consumers. When fixing the price keep in mind the consumer
purchasing power and price sensitivity.

Economic Conditions. The economic factors include interest rate,

inflation and economic boom and recession.

Government Controlled Economy is another factor to be considered.

A pricing strategy takes into account segments, ability to pay, market

conditions, competitor actions, trade margins and input costs, amongst
others. It is targeted at the defined customers and against competitors

There are several pricing strategies:

1. Market Penetration Pricing

Penetration pricing strategies can help new start-ups stand out and, as the
name suggests, penetrate the market.

Penetration pricing is when a business offers low prices on products and

services. It is typically used by new companies or to support a new
product launch to draw consumers away from the competition.

While the use of penetration pricing generally results in initial loss of

profits for a business, in the long-term the exposure gained can drive
profits up.

Businesses considering this pricing strategy should be able to afford to

sacrifice profit margin for a period of time; you will often find that most
companies that use this pricing strategy will have secured some funding
to give them a runway.

After they’ve successfully penetrated the market, a lot of businesses will

raise their prices to reflect their position within the market.

2. Premium Pricing
Premium pricing is when a business sets its prices higher than
competitors. For new businesses with an unusual or luxury product or
service, premium pricing often works best. The more unique your product
is, the more you should aim for a premium price segment.

However, there is a caveat to this.

For premium pricing to be a success, you need to shape your customer’s

perception of value (as highlighted by the sixth pricing principle). This is
achieved in the way you market and communicate your product or
service.

Consider the way you promote your business online and offline to
support a premium price point. For instance, if you own an independent
store premium pricing will only work if your store décor and website
supports your premium price point.

Alternatively, if you own a product business you should guarantee that

your packaging and design support your premium price point.

3. Economy Pricing

Widely used by discount retailers and low-cost food suppliers, economy

pricing is targeted at price-conscious consumers looking for a ‘no frills’
product or service.

Businesses can minimise the costs of marketing, packaging and

production in order to keep prices down.

To successfully use the economy pricing strategy and generate sufficient

profit from low prices, you will need to have large sales volumes.

4. Price Skimming
Price skimming is a pricing strategy whereby businesses set high prices
for their product or service during the introductory phase.

Intended to help businesses capitalise on sales on new products and

services, price skimming allows businesses to maximise profits from
early-adopters. As competitor goods appear on the market, the business
will then drop the price gradually to attract more price-conscious
consumers.

A way to make early profits, price skimming is also an effective tool to

make your product or service appear more exclusive or unique when it is
first introduced as it creates an aura of prestige around your product.

5. Price Anchoring

Price anchoring is a tactic which businesses use to capitalise on a

consumer’s cognitive bias. According to pricing expert Cauldwell it is
“one of the most powerful psychological effects relating to prices”.

Anchoring is when businesses place premium products and services near

standard options to give prospective customers the impression that the
less expensive option is a bargain in comparison, making them more
likely to make a purchase.

Anchoring works because consumers have an unconscious tendency to

rely on the first piece of information offered to them when making a
decision. For instance, if a store has three watches in its watch-front; one
at £10,000, one at £8,000 and one at £2,000 – research has shown that
consumers are almost always likely to perceive the £2,000 watch as being
good value.

Learn more about price anchoring and how to use it to increase the
attractiveness of your product or service here.
6.Psychology pricing

Psychology pricing is a strategy used by businesses to encourage

customers to respond on an emotional level rather than a logical one. It
seeks to create an enhanced illusion of value for the customer.

The ’99 effect’ is a good example of psychology pricing. It’s proven that
consumers are more likely to buy a product or service when it’s priced at
99p, rather than £1, or £9.99; rather than £10, and so on.

Researchers believe this is because consumers focus on the big

denomination rather than the small denomination and partly because there
is an emotional incentive – people feel like they are getting more value
for their money.

If your product or service is likely to be compared with a rivals then

cutting a penny off the price to make it ‘.99’ could make people more
likely to buy it.

7. Bundle pricing

Bundle pricing, otherwise known as product bundling, is when a business

sells multiple products for a lower rate than customers would face if they
purchased each item individually.

Bundle pricing is a great strategy for businesses that are able to offer
courtesy products. For instance, if you run a cosmetics brand you could
maximise on bundle pricing by offering a free eye liner with every
mascara purchased. Or, if you run a café you could offer a free muffin
with every coffee on a certain day of the week.

However, businesses using this strategy do need to ensure that they can
afford to make up for the losses on the lower-value product and must be
able to generate a good profit on the high-value product.
Bundle pricing is an effective pricing strategy for businesses for two
reasons:

It enables businesses to get rid of unsold stock

As the business is giving away something for free, the approach can
increase a customer’s value perception.

PRICING OBJECTIVES
Before any pricing decisions are made, a company must establish what it
means to achieve through pricing. Often, these objectives include:

1. Profit Maximization: Keeping in mind revenue and costs, a company

may want to maximize profits. Profit maximization objectives should be
long term and not focus only on the short term.

2. Revenue Maximization: With less focus on profits, a company may

focus on increasing revenues in order to increase market share and lower
costs in the long term.

3. Maximize Quantity: A company may want to sell a specific number of

items to decrease long term costs.

4. Maximize Profit Margin: Another objective may be to increase the

profit margin for each unit and not focus on the total number of units
sold.

5. Quality Leader: A company may want to use price to signal high

quality and establish itself as the quality leader.

6. Partial Cost Recovery: If an organization has multiple revenue

streams, it may not be too focused on recovering a hundred percent of its
costs.

7. Survival: Sometimes, the best a company may want to do is to cover

costs and to remain in the market. If the market is in decline or there are
too many competitors, survival may take temporary priority over profit.
 8. Status Quo: There may be a need to avoid price wars with competitors.
So a company may maintain a stable price to continue a stable profit
level.

1.3.3 Place

Place is the “home” where the product resides, and that “home” can live in
many different channels, such as a physical store display, a newspaper, radio
or TV ad, or a website or blog spotlight.

What is a Distribution Channel?

A distribution channel can be defined as the activities and processes required to

move a product from the producer to the consumer

Types of Distribution Channels

There are four main types of distribution channels.

Direct

 In this channel, the manufacturer directly provides the product to the
consumer. In this instance, the business may own all elements of its distribution
channel or sell through a specific retail location. Internet sales and one on one
meetings are also ways to sell directly to the consumer. One benefit of this
method is that the company has complete control over the product, its image at
all stages and the user experience.

Indirect

 In this channel, a company will use an intermediary to sell a product to the
consumer. The company may sell to a wholesaler who further distributes to
retail outlets. This may raise product costs since each intermediary will get
their percentage of the profits. This channel may become necessary for large
producers who sell through hundreds of small retailers.

Dual Distribution

In this type of channel, a company may use a combination of direct and indirect
selling. The product may be sold directly to a consumer, while in other cases it
may be sold through intermediaries. This type of channel may help reach more
consumers but there may be the danger of channel conflict. The user
experience may vary and an inconsistent image for the product and a related
service may begin to take hold.

Reverse Channels

The last, most non tradition channel allows for the consumer to send a product
to the producer. This reverse flow is what distinguishes this method from the
others. An example of this is when a consumer recycles and makes money from
this activity.

Types of Intermediaries

There are four main types of intermediaries:

1.Agents
The agent is an independent entity who acts as an extension of the producer by
representing them to the user. An agent never gains ownership of the product
and usually makes money from commissions and fees paid for their services.

2.Wholesalers
Wholesalers are also independent entities. But they actually purchase goods
from a producer in bulk and store them in warehouses. These goods are then
resold in smaller amounts at a profit. Wholesalers seldom sell directly to an end
user. Their customers are usually another intermediary such as a retailer.

3.Distributors
Similar to wholesalers, distributors differ in one regard. A wholesaler may
carry a variety of competition brands and product types. A distributor,
 however, will only carry products from a single brand or company. A
distributor may have a close relationship with the producer.

4.Retailers
Wholesalers and distributors will sell the products that they have acquired to
the retailer at a profit. Retailers will then stock the goods and sell them to the
ultimate end user at a profit.

Assessing Benefits of Distribution Channels

While making channel decisions, a company may need to weigh the benefits of
a partner with the associated costs. Some potential benefits to look out for
include:

1. Specialists – Since intermediaries are experts at what they do, they can
perform the task better and more cost effectively than a company itself.

2. Quick Exchange time – Being specialists and using established processes,

intermediaries are able to ensure deliveries faster and on time.

3. Variety for the Consumers – By selling through retailers, consumers are able
to choose between a varieties of products without having to visit multiple stores
belonging to each individual producer.

4. Small Quantities – Intermediaries allow the cost of transportation to be

divided and this in turn allows consumers to buy small quantities of a product
rather than having to make bulk purchases. This is possible when a wholesaler
buys in bulk, stores the product in a warehouse and then provides the product
to retailers located close by at lower transportation costs.

5. Sales Creation – Since retailers and wholesalers have their own stakes in the
product, they may have their own advertising or promotions efforts that help
generate sales.

6. Payment Options – Retailers may create payment plans and options for
customers allowing easier purchases.
7. Information – The distribution channel can provide valuable information on
the product and its acceptability, allowing product development as well as an
idea of emerging consumer trends and behaviors.

Different Types of Distribution Strategies?

Direct Distribution

Direct distribution is a strategy where manufacturers directly sell and send

products to consumers. There are a few different ways to implement this
method. Some organizations may opt to take a more modern approach and use
an e-commerce website where users can make a purchase online. This is an
effective option for companies with a client base that’s moderately
knowledgeable about technology, requests a specific solution to meet needs or
is devoted to a particular brand.

Another direct distribution method is through catalogs or phone orders. This

option may target an older customer base or users in specific industries that are
attuned to placing orders this way.

One important factor to consider when implementing a direct distribution

strategy is the amount of investment required. For example, manufacturers will
need to add warehouses, vehicles and delivery staff to their portfolio to
effectively distribute goods on their own.

Indirect Distribution

The term “middleman” often gets a bad reputation, but in the case of
distribution, these organizations can be helpful in getting goods to consumers.
Indirect distribution strategies involve intermediaries that assist in the logistics
and placement of products so that they reach customers swiftly and in an
optimal location based on consumer habits and preferences.

We will discuss the different types of intermediaries and their specific benefits
later in this article, but business needs, targeted clients and type of product are
typically behind the reasoning for using this strategy. Low commitment or
routine purchases are often something that customers grab absentmindedly in a
department store without any specific brand loyalty. A tube of toothpaste is a
good example of a routine purchase. For these types of products, an indirect
distribution method that places a large number of items in multiple retail
locations may be a company’s best bet.

Intensive Distribution

Products are put into as many retail locations as possible with the intensive
distribution strategy. For example, gum is a product that typically uses this
strategy. You can find gum at gas stations, grocery stores, in vending machines
and at retail locations like Target. This method hinges on making a large
number of goods available in multiple locations. These items don’t typically
necessitate an involved purchase decision where the customer does research
before making a purchase. Rather, these items are routine purchases that
involve very minimal effort to sell.

Exclusive Distribution

When manufacturers opt for exclusive distribution, they make a deal with a
retailer to sell a product through that specific storefront only. Businesses may
also sell goods directly through their own branded stores, which is another
example of exclusive distribution. For example, customers can’t buy a
Lamborghini at any location — they need to go to a Lamborghini dealership to
purchase new luxury vehicles.

An example of an exclusive distribution deal where a manufacturer and a

retailer teamed up is the previous agreement that Apple had with AT&T in
distributing iPhones. This agreement caused people to forgo their phone plans
with other companies so they could get their hands on this exclusive product.
This distribution strategy works especially well for highly coveted, exclusive
items.

Selective Distribution
Selective distribution is a middle-ground option between intensive and
exclusive distribution. With this strategy, products are distributed in more than
one location, but not as many as with an intensive distribution strategy. For
example, clothing from different brands may be offered selectively. A brand
like Gucci may choose to distribute its items to its own stores in addition to a
few selected department stores rather than placing its products in a range of
locations such as Walmart or Target. This can help craft an implicit high-end
brand message while also increasing the opportunity for shoppers to purchase
one of its products.

1.3.4 Promotion

Promotion: Promotion is the part of marketing where you advertise and market

your product, also known as a promotional strategy. Through it, you let
potential customers know what you are selling.

There are five methods that make up a promotional mix.

Advertising – This mode of promotion is usually paid, with little or no

personal message. Mass media such as television, radio or newspapers and
magazines is most often the carrier of these messages. Apart from these,
billboards, posters, web pages, brochures and direct mail also fall in the same
category

Public Relations & Sponsorship – PR or publicity tries to increase positive

mention of the product or brand in influential media outlets. These could
include newspapers, magazines, talk shows and new media such as social
networks and blogs. This could also mean allowing super users, or influencers
to test the product and speak positively about it to their peers

Personal Selling – Opposite of the one directional promotional method, direct

selling connects company representatives with the consumer. These
interactions can be in person, over the phone and over email or chat. This
personal contact aims to create a personal relationship between the client and
the brand or product.

Direct Marketing – This channel targets specific influential potential users

through telemarketing, customized letters, emails and text messages.

Sales Promotions – These are usually short-term strategic activities which aim
to encourage a surge in sales. These could be ‘buy one get one free’ options,
seasonal discounts, contests, samples or even special coupons with expiration
dates.

OBJECTIVES OF PROMOTIONAL ACTIVITIES

Different organizations have different expectations from their promotional

activities. These expectations are developed into objectives which then shape
the selection and execution of these activities. Some possible objectives of
promotion for any company may include:

Building Awareness

Often, a product or brand may need to create an identity within the market. For
the most part, this applies to a new company, a new brand or a new product.
But often it may also be needed in times of rebranding or building up a failing
product. The aim then is to select those promotional activities that help inform
the customer about the company and the product.

Creating Interest

If the customer is already aware of the product or has been made aware through
some activities, it becomes necessary to move them along to actual purchasing
behavior. The aim here is to identify a need that the product fulfills and make
sure that the customer recognizes this need as something that is unfulfilled for
them.

Providing Information
Sometimes, a company may just need to provide necessary information
regarding the product, its benefits, features or usage to the consumer. This may
be the case if a new product is introduced into the market.

Unique features or benefits may need to be explained. In other cases, a new

feature on an existing product may need to be highlighted. In some cases, such
as in instances where environmental impact or health scares may be in play,
information about a change in business practices and company policy may need
to be communicated.

Stimulate Demand

A company may seek to enhance its sales through promotion. If sales have
been lower than usual, then the aim may be to get them back up to target level
by re-engaging old customers and encouraging new ones to try a product out.
In other instances, the aim may be to increase sales further at certain times of
the year such as near a major holiday. Free demonstrations or special deals may
be used to reach these ends.

Differentiate product

In situations where there are many competitors in the market, a company may
seek to use promotional activities to differentiate its product in the market and
make it stand out from the crowd. The focus here remains on those features,
functionalities or benefits that may not be offered by a competitor or may not
be offered so well.

Reinforce the Brand

One basic aim of a promotional activity may be to further strengthen the brand
and its place in the market. This helps turn a first-time purchase into a lifetime
purchaser. This can also help create advocates for the product from within the
customer base.

Strategies and techniques for marketing promotion

The promotion in marketing requires a series of marketing techniques to
achieve specific objectives with diversified stimuli in a given time.

The main objective is to offer an incentive to the consumer to be stimulated to

buy a certain product or service, increasing the sales of the company.

But for that to happen effectively, we need to develop strategies and techniques
to make the promotion work. Let’s look at some of these types now:

1. Events

It is vital to have creativity at this moment since in many places this type of
activity can be carried out.

2. Contests

It is a marketing classic that still has effective results, as it requires the direct
participation of people.

3. Loyalty programs

The client is the central axis of the professional and commercial strategy,
where the program makes the person as part of a select group of the company,
which generates a type of importance for the client.

4. Economic promotions

This includes all developments that have some kind of financial reward:
discounts, vouchers or coupons, for example.

5. Product Promotions

These are promotions of a direct attraction to the product: Delivery of free

samples, higher delivery of the product with the same price, tastings, gifts, etc.

6. Social networks

It is an essential tool for everyone today, as it is free or low cost. In addition, it

is of little use and celebrated attraction. But here there is more to it than just
publishing and waiting for it to reach the client. You have to develop strategies
that help your business to reach the right customers.

7. Email Campaigns

Having clear the concept of a good email marketing (the one where the mail is
well explored, knowing which customers to reach and the best way to do it), we
select what best attracts the attention of customers, attending to our needs and
apply in the sending of mail.

8. Mailing

This strategy is in line with the previous one, but it is obsolete. Keep in mind
that this strategy will not always reach the person your company is looking for.

9. Be sympathetic

It’s not enough to publish a good text or add a good image: If you don’t
understand everything, any effort you make can go down. If a client is looking
for you with doubt, answer them.

Promotional Strategies

No one is going to buy a product or service they haven't heard of, nor will they
buy it if they don't know what your company offers. This is why a great
promotion strategy is vital to grow your business. Some companies use more
than one method, while others may use different methods for different
marketing purposes. Regardless of your company's product or service, a strong
set of promotional strategies can help position your company in a favorable
light, while opening the doors for future communication.

Contests as a Promotional Strategy

Contests are a frequently used promotional strategy. Many contests don't even
require a purchase. The idea is to promote your brand and put your logo and
name in front of the public rather than make money through a hard-sell
campaign. People like to win prizes. Sponsoring contests can bring attention to
your product without company overtness.

Social Media Promotion

Social media websites such as Facebook and Google+ offer companies a way
to promote products and services in a more relaxed environment. This is direct
marketing at its best. Social networks connect with a world of potential
customers that can view your company from a different perspective.

Rather than seeing your company as "trying to sell" something, the social
network shows a company that is in touch with people on a more personal
level. This can help lessen the divide between the company and the buyer,
which in turn presents a more appealing and familiar image of the company.

Mail Order Marketing

Customers who come into your business are not to be overlooked as they have
already decided to purchase your product. What can be helpful is getting
personal information from these customers. Offer a free product or service in
exchange for the information. These are customers who are already familiar
with your company and represent the target audience you want to market your
new products to.

Product Giveaways and Samples

Product giveaways and allowing potential customers to sample a product are

methods used often by companies to introduce new food and household
products. Many of these companies sponsor in-store promotions, giving away
product samples to entice the buying public into trying new products.

Point-of-Sale Promotion and End-Cap Marketing

Point-of-sale and end-cap marketing are ways of selling product and promoting
items in stores. The idea behind this promotional strategy is convenience and
impulse. The end cap, which sits at the end of aisles in grocery stores, features
products a store wants to promote or move quickly. This product is positioned
so it is easily accessible to the customer.

Point-of-sale is a way to promote new products or products a store needs to

move. These items are placed near the checkout in the store and are often
purchased by consumers on impulse as they wait to be checked out.

Customer Referral Incentive Program

The customer referral incentive program is a way to encourage current

customers to refer new customers to your store. Free products, big discounts
and cash rewards are some of the incentives you can use. This is a promotional
strategy that leverages your customer base as a sales force.

Causes and Charity

Promoting your products while supporting a cause can be an effective

promotional strategy. Giving customers a sense of being a part of something
larger simply by using products they might use anyway creates a win/win
situation. You get the customers and the socially conscious image; customers
get a product they can use and the sense of helping a cause. One way to do this
is to give a percentage of product profit to the cause your company has
committed to helping.

Branded Promotional Gifts

Giving away functional branded gifts can be a more effective promotional

move than handing out simple business cards. Put your business card on a
magnet, ink pen or key chain. These are gifts you can give your customers that
they may use, which keeps your business in plain sight rather than in the trash
or in a drawer with other business cards the customer may not look at.

Customer Appreciation Events

An in-store customer appreciation event with free refreshments and door prizes
will draw customers into the store. Emphasis on the appreciation part of the
event, with no purchase of anything necessary, is an effective way to draw not
only current customers but also potential customers through the door. Pizza,
hot dogs and soda are inexpensive food items that can be used to make the
event more attractive.

Setting up convenient product displays before the launch of the event will
ensure the products you want to promote are highly visible when the customers
arrive.

After-Sale Customer Surveys

Contacting customers by telephone or through the mail after a sale is a

promotional strategy that puts customer satisfaction first while leaving the door
open for a promotional opportunity. Skilled salespeople make survey calls to
customers to gather information that can later be used for marketing by asking
questions relating to how customers feel about the products and services
purchased. This serves the dual purpose of promoting your company as one
that cares what the customer thinks and one that is always striving to provide
the best service and product.

CHAPTER SUMMARY

Chapter 1 has built a solid theoretical foundation of knowledge of Marketing as

well as marketing mix - mix of 4P tools, namely Product, Price, Place,
Promotion. This creates a premise for us to research marketing strategy of The
Coffee House.

After summarizing the concepts related to Marketing – mix, we see that

through Marketing mix analysis businesses will be more active in the process
of planning their business strategies. Knowing the tools of the Marketing - mix
will create your own competitive advantage in the market.
In addition, businesses that want to win the market must satisfy the needs of
customers effectively with good products, reasonable prices, convenience and
clear messages to build customer loyalty.
 CHAPTER2. ANALYZE THE COFFEE HOUSE’S
MARKETING MIX STRATEGY

2.1 Overview of The Coffee House

The coffee house is a chain of coffee

shops founded by CEO Nguyen Hai
Ninh in August 2014. He used to be
co-Founder of the Urban Station
coffee chain but left because of a
desire to create a coffee world for
himself.

From the love of Vietnam and the passion for coffee, The Coffee House brand
was born with the desire to elevate Vietnam's long-standing coffee heritage and
harmoniously connect tradition with present. It can be seen that Nguyen Hai
Ninh has brought all of his thoughts and aspirations to create a coffee product
imbued with traditional Vietnamese values as well as uniquely combined with
the modern rhythm of Vietnam.

Launched in 2014, the expansion of The Coffee House has been growing
rapidly. After only 1 year, this chain had 11 stores in Saigon, with the average
turnover of each store reaching over 20 million VND / day. In addition, with an
average of 60,000 customers per day, The Coffee House has been the leading
Vietnamese coffee chain in Vietnam. In January 2018, The Coffee House
announced the successful merger of the Cau Dat Farm coffee department and
officially completed the process from farm to coffee cup. Not only in the coffee
industry, in November 2017, The Coffee House cooperated a famous
Taiwanese milk tea chain - Ten Ren's Tea and quickly opened 12 stores.

In just six years since starting to enter the market, The Coffee House coffee
chain has risen to the 2nd position in the coffee industry in terms of revenue
and profit. Although the Coffee House has had 160 stores currently, the
ambition of the coffee house does not stop there. CEO - Nguyen Hai Ninh
expressed that 150 stores is just a starting point for many interesting projects of
the business. Looking ahead, The Coffee House will focus on speeding up store
opening and is expected to reach 250 stores.

. Outstanding Achievements
2.2 The elements affect the strategies of The Coffee House’s marketing
strategy
2.2.1 Macro environment
2.2.1.1 Economic environment

The coffee industry is one of the most important contributions to the revenue of
Vietnamese agriculture in particular and for the entire national GDP in general.

It accounts for 3% of Vietnam's GDP, export turnover hasbeen over US $3 billi
on for several years.

 Over the years,although the world economy has a lot of time to have difficultie
s leading to decreased..purchasing power, our country still maintains the growt
h rate of coffee exports at an encouraging rate -8,2% per year with an average
turnover of 3.13 billion/year from 2011 to 2018, accounting for 15% of the
total export of agricultural products of the country.

After only 1 year, this chain has 11 stores in Ho Chi Minh city, with the
average turnover of each store reaching over 20 million VND / day. However,
by the end of 2018, the number one position in sales in the coffee business no
longer belongs to this brand.

According to the Vietnam Industry Research and Consulting Joint Stock

Company (VIRAC), Highlands Coffee is the leading coffee chain in terms of
the number of coffee shops in Vietnam. (Figure).
Ranked second in the number of stores in the market today, The Coffee House
chain with 160 stores nationwide, owns a gross profit margin of up to 69% in
2018, but the net profit that The Coffee House chain earns only reached less
than 2 billion. The direct reason for this low profit chain is the rapid increase in
the number of stores in the past year.

At the same time, many old stores of The Coffee House had to close for a while
for renovations, causing operating costs to increase. In 2018, The Coffee House
also spent money buying Cau Dat Farm's coffee production segment to
complete its ecosystem from coffee production to distribution.

2.2.1.2 The political environment

The State has issued many policies to promote Vietnam's coffee export.

As reported by the Vietnam Coffee - Cocoa Association (VICOFA), the

Ministry of Agriculture and Rural Development includes:
• Policy of integration and expansion of export markets Vietnam is a member
of the International Coffee Organization (ICO)

• The Vietnamese government also signed the International Coffee Agreement

(ICA) in 2008, contributing to making our country's coffee a link in the global
coffee chain. In addition, joining the World Trade Organization (WTO) and
other international and regional organizations also creates a large market for
our coffee industry. The policy of free circulation and the time market
development has developed the power of economic components in coffee
production and business. The association between domestic and foreign
markets creates favorable conditions for the coffee sector, expanding the
consumption canal in domestic and foreign countries. Although Vietnam
entered the world market much later than traditional coffee producing
countries, Vietnam has quickly dominated the market in many countries.
 Policies to encourage product quality improvement Decision No. 86/2007 / QD
- Ministry of Agriculture dated October 15, 2007 of the Ministry of Agriculture
and Rural Development, on the temporary use of national standards Vietnam
standard 4193 - 2005 in checking the quality of coffee beans for export .It is
very important to improving the quality of exported coffee and the prestige of
Vietnamese coffee in the world market. Currently, the government is aiming to
produce sustainable coffee or certified coffee.
2.2.1.3 The social environment

Business is also governed by social codes and rules of professional ethics.

 Ethics in coffee business contributes to employee conscientiousness

The more attention the investor cares about the staff, the more dedicated the
staff is to the shop. It can be a safe working environment; pay good wages;
Reward for achievements, even organizing small parties on employees'
birthdays, giving fair treatment ...and so on. With such an environment,
employees will be dedicated to the job instead of just finishing it without the
enthusiasm. When working in a community-oriented, social-oriented
environment, each employee will feel his or her work is more valuable. Since
they work more conscientiously and more loyal to the shop.

 Business ethics contributes to enhancing the image of the café

An investor interested in business ethics will not choose a dirty coffee for his
shop. The spread of the clean coffee model will certainly one day completely
replace the model of cafes using dirty coffee, mixing impurities, not meeting
food hygiene and safety standards. Therefore, it is better for businesses to
accept small profits but with guaranteed beverage quality to retain customers.
Since, building up a long-term trust with customers. This is not possible at all
cafes. And it's not that money is built.

 Ethics in coffee business increases the trust and satisfaction of

customers
Ethics in cafe business is not just a slogan to satisfy consumers. Coffee trading
is beneficial for both parties. Beneficial for customers is to drink coffee
according to their preferences. The benefit for the seller is to keep the customer
and still make a profit. If the cafe only uses good quality pure coffee, featured
with a content suits to the taste of most Vietnamese customers, they will surely
trust to come back for a second time.

2.2.1.4 Natural environment

• Natural geography

Vietnam is located in the tropical northern hemisphere belt. The climatic,

geographical and soil conditions suitable for the development of coffee have
given Vietnamese coffee a very unique and unique flavor.
Vietnam is located in the tropical belt. Every year, the climate is very sunny
and rainy. Rainfall is evenly distributed between months of the year, especially
the months when coffee grows. Vietnam's climate is divided into two distinct
regions. The climate in the south belongs to the hot and humid tropical climate
that is suitable for Robusta coffee. The climate in the north has cold winters
and drizzling rain, which are suitable for Arabica coffee.

• Land

Vietnam has red basalt soil suitable for coffee trees distributed throughout the
territory, which are concentrated in the Central Highlands and Southeast, with
an area of millions of hectares.

2.2.1.5 Technology environment.

In the age of digital technology and the general trend of the market, most stores
create their own application (App) on mobile phones.

In June 2016, The Coffee House launched its own mobile application which
was a "ahead of time" decision considering the customer behavior of the
Vietnamese market at that time- very few people buy or order through the app,
especially in the F&B industry. After more than 2 years, The Coffee House app
has been downloaded more than 100,000 times and received positive feedback
from users.

With the spirit of learning from big brands in the market such as Starbucks, ...
The Coffee House's mobile application integrates features such as push
notifications, membership accumulation, ordering and delivery, store locations,
coupon, etc…. For every 20 points, customers get 1 free drink and 10%
discount for loyal customers. Thanks to this technology, The Coffee House can
reach users quickly, economically, and stimulate the navigation of customers to
continue using The Coffee House's service (through promotions sent to
customers via push notifications or redemption programs.). This is also how
branding for the company, the application when downloaded and located on the
user's mobile device will "accidentally" save its brand name in the user's mind.

2.2.1.6 Demographic environment

Geographically: The Coffee House currently includes nearly 200 stores located
everywhere in major cities: Ho Chi Minh, Hanoi, Da Nang, Bien Hoa and
Vung Tau.

Consumer characteristics:

Gender: all genders

Age: The largest quantity and value of coffee consumed are in middle-aged
(35-50 years old) and old (over 50 years old) groups, but the younger group
(15-35) is a group that has a strong tendency to increase coffee consumption.
Occupation: diversity, mainly high school students, college students, office
workers, service workers, freelancers.
Income: High-income customers.

Consumer behavior:

Style and habits of each person when drinking coffee are not the same.
Some customers often drink coffee simply they have a habit of drinking coffee
to stay alert at work or study, they do not care much about the brand or variety
of coffee, as long as they have coffee to drink.
However, some people drink coffee for relaxation and entertainment after hard
work or simply enjoy the taste of coffee of a certain brand. Sometimes people
drink coffee because of the company's famous brand, they will feel more
stylish, have a professional style over drinking coffee from a famous brand.
 f. Cultural environment

• Vietnam has a population of nearly 90 million and 35% of which are under 35
years old. According to the World Bank (WB), Vietnam has achieved average
income in 2009 with GDP per capita increasing more than 10 times compared
to 1986. In 2011, the average income in Vietnam was 1,270 USD a year.
• According to IAM’s research on coffee consumption habits, 65% of
Vietnamese coffee consumers drink coffee 7 times a week, in favor of men
(59%). Particularly for instant coffee, 21% of consumers use instant coffee 3 to
4 times a week and slightly lean towards female consumers (52%). The rate of
using coffee at home (In home) and outside (Out of home) is equal to 49% /
50%. The most common time to drink coffee is from 7-8 am.

• Coffee drinking habits: The three main factors influencing the decision to
drink coffee at the café are taste, style and the brand of coffee used, 44.7% of
coffee drinkers claim to be taste (in particular, most consumers prefer bitter and
aromatic coffee), 39.9% responded to the style of the restaurant (quiet,
luxurious, stylish, easy to gather friends are characteristics that attract
drinkers), and only 15.4% choose because of its brand. Today's consumers are
also more sympathetic to coffee products made from clean ingredients.

2.2.2 Microenvironment
2.2.2.1 Company

The Coffee House coffee’s business chain model has developed rapidly in a
short time with the number of stores growing rapidly over the past 6 years. The
Coffee House that has found for businesses a niche in a red ocean. The
company has focused on investing in the quality of coffee products, service
quality and has known to apply technology to increase customer experience.
Enterprises have noticed every smallest detail in the design to bring familiar
values to customers

 Mobile application in business brings to customers a lot of interesting

experience
 Make a difference from the quality of service
 Smart operation and administration
 Create familiar values for customers

2.2.2.2 Supplier

From the first store, the coffee house has started a partnership with Cau Dat
Farm to grow coffee according to its own standards. This misty land located
1,650 m above sea level is the best place to grow Arabica coffee varieties in
Vietnam. It is the "golden height" that gives the Arabica coffee beans that are
fragrant, mild and sour.

In January 2018, Cau Dat Farm's Coffee department was officially merged into
The Coffee House team. This highland strip becomes the place where we sow
not only selected coffee varieties, but also have a big dream: bringing high
quality Vietnamese coffee to conquer coffee enthusiasts around the world.

In addition, the coffee house also cooperates with charities to promote the
image as well as fulfill community responsibilities.

2.2.2.3 Marketing intermediaries

In the current FnB industry, the franchise model is one of the most profitable
business models. But with its different thinking of business, The Coffee House
said no to the franchise business model.
 When asked whether The Coffee House is a franchise or not, CEO Nguyen Hai
Ninh is sure: We never intend to franchise. Franchising is like giving your child

to someone else. The original idea established The Coffee House with a dream.
With the staff of The Coffee House, they also have the same dream.

All the efforts of the collective have the same purpose to make that dream
come true. And the intangible franchising puts your future decisions, no longer
yours, into a situation where you lose control of your business. This does not
include conflicts between affiliates, then the fact that a small branch affects the
overall brand ...

The Coffee House has chosen a different path from current competitors in the
FnB industry such as Highland coffee, Starbucks ... If the Coffee House does
not franchise with rapid growth, how do they manage it? The only way is to
build enthusiasm for the employees. The person who has the most contact with
customers is none other than the CEO, how do they understand, they are
passionate about your cultural training story.

By applying technology to business models:

 The Coffee House makes their application to order food and beverage

 Facebook marketing: TCH's fanpage has nearly 500000 followers with

interesting posts about promotions, articles about new product launches or
 special wishes ... posted in Golden hours suitable for young people.

 YouTube:  With more than 2.87 thousand subscribers, and the creative
videos have captured the hearts of customers.

 Website: TCH has a beautifully designed and attractive website. Besides,

using tools like Google AdWords makes TCH easier to reach customers.
2.2.2.4 Competitor

Compared to the world market, the F&B market in Vietnam always keeps a
steady growth thanks to the young population structure, so consumption is
abundant. Especially in 2019, food, beverage, ingredients and flavoring
businesses will have the opportunity to coordinate with 4.0 technology and
modern applications to cover the Vietnamese market. This is a good
opportunity for the F&B market to have more opportunities to develop in
smaller niches such as catering.

The coffee chain market has been booming for nearly a decade, with the
presence of rising names from startups like Cong Coffee, The Coffee House, to
bigger names like Phuc Long, Highlands, Trung Nguyen or the introduction of
the "giants" of the world such as Starbucks, PJ's Coffee or Coffee Bean.

In the last four years, the rankings

have been shaped with names that
account for the majority of the
market share. The leading
position still belongs to
Highlands Coffee - a name that
has been too familiar and has kept
this position continuously for
many years, but the next positions
are currently an intense "battle"
between other names like Phuc.
Long, The Coffee House, Starbuck or Cong. In which the biggest surprise in
2018 was the rise of The Coffee House, overtaking Starbuck to occupy second
place in revenue. According to data from VIRAC, Highlands Coffee's revenue
in 2018 continued to grow 31% to over 1,600 billion VND - far ahead of its
competitors. However, second place in the ranking saw a big change as The
Coffee House, with nearly 100% growth, knocked out Starbucks. The Coffee
House's revenue in 2018 reached nearly 670 billion VND, while the Starbuck
was only less than 600 billion VND, although in 2017, Starbuck's revenue was
more than 100 billion VND higher than Coffee House.

2.2.2.5 Publics

From the beginning, The Coffee House always put people at the center of all
decisions and products. The Coffee House believes that a happy coffee space
starts with happy people and strives to bring the happiest things to society and
this life. Moreover, The Coffee House hopes to be the first foundation to help
all people, regardless of gender, religion, background, or background feel
happy, happy, and proud, self-confidence and endeavor to pursue his life's
dream.

Project the Coffee House Vulcan: Nurturing the dreams of people with
disabilities

At the end of June 2019, The Coffee House officially became the first strategic
output partner of the Uplift social project launched by startup Vulcan
Agametic. This is a project of producing and installing electric hands for free,
training community integration skills, working skills and providing jobs for
people with disabilities in Vietnam.

With the participation of Uplift, The Coffee House has started implementing
internal activities, including recruiting, training, and media to be ready to
welcome the "iron hand" warriors. After being trained, the "iron hand" warriors
can work at The Coffee House chain stores nationwide with the most frontline
positions, opening up communicating opportunities for people with disabilities,
sharing and transmitting, which inspires thousands of people every day.

2.2.2.6 Customers

• The Coffee House's target customers are student students and commuters.
They use coffee not just for drinking, they enjoy, socialize, network, build
networks, work.

• Customers are an indispensable factor in helping to spread the company's

brand. Customer satisfaction is the most important thing that marketing goals
aim at. If customers love the service and working style of The Coffee House,
they will come back and recommend to other customers.

• The Coffee House entered the F&B market in Vietnam quite late, it seemed
that this brand could be swallowed up by other famous coffee brands.
However, thanks to the right Customer Insight strategy and understanding of
the Vietnamese domestic market, The Coffee House has taken the right steps to
focus on customers, helping this brand quickly become one of the fastest
growing coffee chains in the market today.

• Realizing the change in the way Vietnamese people enjoy coffee: going to
drink coffee is not only to enjoy coffee, but also to meet and chat with friends,
enjoy the spatial experience, from there, The Coffee House has chosen "quality
of service" as its differentiator.
2.3 S – T – P Strategy
2.3.1 Market segmentation

Although the Coffee House is “a new kid” in F&B industry (Food and
Beverage service), it has an accelerated growth rate and this rate is a dream of
many startups. The key that lead to this success of this coffee chain is nothing
but understanding the market and then coming up with properly strategy.

Market segmentation includes all of the criteria below:

Criteria Segmentation Characteristics

15-18 The age of teenagers who
are in high school and have
no income. Their
expectation for life has not
been determined yet.
Age 18-25 This group have middle
income and they know
exactly the meaning of the
sentence “You get what
you pay for”.
>=25 At this stage, people have a
higher income, so they set
a higher living standard.
They believe that the
quality of life expresses
their social status.
Income <= 5.000.000 VND Low income, just only
manage enough for basic
need.
5.000.000VND – 10.000.000VND Medium income, be able to
pay for higher need but not
frequently, have to
consider much about
quality and price.
>=10.000.000 VND High income be capable of
paying for their need
frequently. When they
consider about a product,
they put the quality as their
 priority.
Geographic Urban People in this area have
higher living standard.
They take care of both
their physics and mental
status.
Countryside This area has a low quality
of life. Their condition
does not allow them to pay
for anything higher than
basic need.
Criteria of Market Segmentation 1

2.3.2 Targeting

The rate of market’s attraction (the scale is from 1-5, 1 is the lowest attraction
and 5 is the highest one).

Order Criteria Age

15-18 18-25 >=25
1 Market size 4 5 3
2 Market growth 4 5 2
3 Profit margin 3 4 2
4 Customer accessibility 4 4 2
5 Competitive level 5 5 3
Total 20 23 12

Order Criteria Income

<=5.000.000VND 5.000.000VND- >=10.000.000VND
10.000.000VND
Order Criteria Geographic
1 Market size 4 5 3
Urban Countryside
2 Market growth 4 5 3
1 Market size 5 2
3 Profit margin 3 4 4
2 Market growth 5 2
4 Customer 4 5 4
3 Profit margin 4 2
accessibility
54 Customer accessibility 5 24
Competitive 4 5
5 level
Competitive level 5 3
Total
Total 19 24 24 1118
The Coffee Hose is very diverse. They are able to serve everyone, every market
segmentation. However, their target customers are the young from 18 to 25 years old
who have medium income

2.3.3 Positioning

The Coffee House is a retailer in F&B market and their competitors are big
brands which have been familiar with customers for a long time (Starbucks,
Highland, Phuc Long, etc..). Each brand has its own specialty. According to
thecoffeehouse.com and highlandcoffee.com, the taste of Highland and The
Coffee Shop is as same as each other because both use Arabica and Robusta
coffee beans but the quality of Highland Coffee is more appreciated. This leads
to the profit of Highland Coffee was eight time higher than The Coffee House
and about three time higher than Starbucks (Cafe.vn,2018). The price of
Starbucks Coffee is the highest one in Vietnam market but the taste of coffee in
Starbucks does not satisfy the majority of Vietnamese. Vietnam people favor
traditional coffee than Western coffee. Maintaining the traditional taste is the
key to remain the most loyal and dedicated customers (Soha.vn, 2014). Also,
according to Mr. Le Nguyen Vu- General Director of Trung Nguyen Joint
Stock Company, who is considered as “king of coffee” in 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). Contrary to Starbucks, The
Coffee House is “a kid” was born by a Vietnamese so it has the country’s taste.
Besides that, The Coffee House never stops on the way “ improve themselves”
by combining Western and Eastern culture.
They hope to be “the first” in customer’s mind whenever they look for the best
service as well as the best price. With the idea “house of coffee” for everyone,
The Coffee House is step-by-step convincing their consumers that they deserve
to be the “champion” in F&B market. In 2019, The Coffee House is the
second-best in the competition between big brands. They achieve this position
just within 5 years- an incredible number.
2.4 Marketing Mix Strategy
2.4.1 Product
2.4.1.1 Types of product
 The coffee drinks

Like other coffee shops, the main product in the coffee house is coffee.
However, to meet the needs and preferences of all customers, the coffee house's
coffee is divided into two product lines:

 Vietnamese coffee

 Black coffee

 White coffee

 Bac xiu coffee

 Espresso

 Americano

 Cappuccino

 Caramel Macchiato

 Latte

 Mocha

 The other drinks

Product diversity and menu innovation for the F&B industry is always
essential. If the Coffee House only sold coffee, it would not be as successful as
it is now. During the development of the brand, The Coffee House found that it
could also attract a large number of non-coffee-liking customers. Therefore,
apart from the coffee, The Coffee House also sold other beverages to increase
the quantity of the customer going to the coffee shop. The development of a
wide variety of products has brought more options to customers.

 Cakes and snacks

Not only providing beverages, The Coffee House has also sold cakes, snakes,
sandwiches to serve different groups of subjects.
 The Coffee House's success comes not only from its wide range of products,
but also from its good quality. To have a delicious cup of coffee, they go
through many rigorous tests. From first stores, The Coffee House started a
partnership with Cau Dat Farm to grow coffee according to its own standards.
On the farm, they worked hard and meticulously to ensure that all ingredients
are strictly controlled and hygienic. In addition, a team of bartenders with full
of techniques and experience always brought to customers delicious, quality
drinks.

2.4.1.3 Packaging

The Coffee house also has developed its product packaging. They have
changed the packaging so many times to create convenience for customers. The
Coffee House’ packaging started from a plastic paper cup, used for all
products. Next, there is a glass cup combined with a plastic lid for hot products.
The most recent image is a plastic cup that suitable for customers using the
Macchiato line. Besides, all packaging printed the coffee house logo to help
customers easily remember their brand.

In other word, the advantage of this product strategy is that The Coffee House has
brought many choices to customers. In addition to coffee, customers can also enjoy other
drinks that suit each person's preferences. In addition, thanks to its focus on product
quality, The Coffee House has gained customers' trust. However, The Coffee House's
product variety isn't as good as other coffee chains, so the business needs to improve it.
2.4.2 Price

2.4.2.1 Penetration pricing strategy

When entering this service market, the coffee house has used a market
penetration strategy. To be able to compete with other long-standing businesses
such as Highlands, Starbucks, Trung Nguyen, the coffee house must explore
the market carefully as well as set the price reasonably.

The Coffee House found that when Starbuck, the coffee bean and tea leaf, or
NYDC entered the Vietnamese market, they priced the product quite
expensive. However, because they brought to Vietnam the novelty, luxury as
well as Western style, these businesses have attracted many customers. So,
what will it be like when customers are still sitting in Western-style spaces, but
the price of the product is reasonable?

Seeing that this market segment is still vacant, The Coffee House quickly
entered this segment, and thereby has become successful. Although the Coffee
House has used this method to attract the attention of customers, this pricing
strategy tends to lead to the initial loss of the business. However, The Coffee
House also gradually gained a reputation in the market and brought profits to
the brand.

BRAND
PRICE/ CUP

THE COFFEE HOUSE 30,000VND - 50,000VND

HIGHLANDS COFFEE 35,000VND - 50,000VND

STARBUCKS 60,000VND - 90,000VND

THE COFFEE BEAN & TEA LEAF 50,000VND - 90,000VND

NYDC COFFEE 55,000VND - 90,000VND

2.4.2.2 Bundle pricing strategy

 Going to The Coffee House, people can purchase drinks and food with separate
prices for each product. However, the stores offer combos in a much cheaper price
than buying separate products. This is a way for businesses to take advantage of the
value of revenue per customer. When consumers realize that buying a combo is
cheaper than buying each product separately, they tend to choose to buy combos.

2.4.2.3 Discount pricing strategy

To stimulate customers to buy products, businesses have used promotional policies

such as discounts, vouchers, coupons or gifts to price products.

2.4.3 Place

TCH uses direct strategy where manufacturers (The Coffee House) directly sell
and send products to consumers. An imprint on the minds of customers is the
continuous opening of TCH. The stores appear in big cities, considering the
location is always located in the easy-to-find locations such as the central
frontage. This brings comfort and convenience to customers. In addition, the
reason The Coffee House chooses prime areas is because the business wants
The Coffee House brand to go hand in hand with the country's developments.
Places where the population density as well as the living standards of the
people are increasing, enjoying the luxurious space is no longer a strange thing
for Vietnamese people.

Up to now, TCH has reached 160 stores covering 14 cities and provinces, often
big cities, most of which are concentrated in Ho Chi Minh City, and the rest are
scattered in cities such as Hanoi, Nha Trang, Vung Tau.

Also, the special thing that makes TCH

different from other coffee chains is that
TCH operates its delivery team from the
operator to the delivery staff, specifically
implementing delivery services. in the
inner city through the website
thecoffeehouse.com and the TCH mobile
app, cooperate with the only food delivery app Lala and only appear on the
Now app but only in places with low order traffic like Da Nang, Can Tho.

. Advantages

The Coffee House’s stores are always located in easy-to-find locations with
eye-catching street views.

. Disadvantages

Customers can only order on the TCH app, causing many inconveniences

Customers who only use apps Gofood, Grabfood, and Baemin will skip TCH’s
products

The stores are distributed where the rental costs are expensive

2.4.4 Promotion
2.4.4.1 . Advertising

- Facebook : TCH's fan page has nearly 500,000 followers with attractive posts
and rankings about promotions, new product launches or special wishes, ..
posted on golden hour frame, content attracts young people

- Youtube: with more than 2.870 subscribes and the creative videos have
captured the hearts of customers
- Website : TCH has a well-designed website. Besides, using tools like Google
AdWords makes TCH easier to reach customers

. Sale promotion

The Coffee House is very smart when launching promotions related to

prominent events like holidays, special events to stimulate the attention of
customers, resulting more consumption.
2.4.4.2 . Public relation activities 

From the beginning, TCH has always put people at the center of all decisions
and products, TCH believes that a happy coffee space starts from happy people
and makes efforts every day to bring the happiest for society and this life.

Moreover, The Coffee House wants to be the first foundation for all people,
regardless of gender, religion, origin, to feel happy, proud of themselves,
confident and chase their dreams

+ TCH x Library project: Children's

book library

In October 2016, TCH combined with the

library project to launch a project to build
children's libraries in An Giang and Cau Dat
(Lam Dong) with donation boxes located at
TCH stores.

+ The campaign to reduce the straw at TCH

‘’ Thank you for refusing to use the 'straw'. From October 2019, TCH will start
action to reduce disposable plastic straws in the entiresystem, instead, TCH
will use environmentally friendly rice straws. This is an initial step for TCH's
chain of Sustainable Environmental Protection activities in 2019-2020

+ Project TCH Sticker: Green Covering Cau Dat

Between 2018 fundraising program for planting trees ‘’ Gui trao tu ban – Tiep
suc tu Nha'' with the sticker' Coffee House '' was successful with the support of
everyone. The proceeds from the sale of stickers are 41,110,000 VND. Along
with that, TCH has contributed an additional amount to buy more than 5000
trees together. In which, 1000 trees are in charge of more than 60 TCH staff
and collaborate with farmers to plant in 9 coffee gardens here.

+ TCH accompanies UPRACE - Steps for the community.

On 8/2019 TCH official accompany withUPRACE - a free running event for
everyone, to raise funds to contribute to the community, particularly with 1km
is completed you have contributed to the organization 1,000vnđ to The society
includes GREENVIET, Newborns Viet Nam and VIETSEEDS Foundation.
More specifically, TCH also receives great attention and support from millions
of customers every day

. Advantages

Many promotion programs that access to the customers quickly

Charity activities easily get the empathy of customers

. Disadvantages

Management of promotion programs is not good.

The promotion campaigns are not as attractive as other big coffee chains
CHAPTER3. SOLUTIONS AND RECOMMENDATIONS
FOR IMPROVING MARKETING STRATEGY OF THE
COFFEE HOUSE

3.1 Proposal Basis SWOT

Strength (S):

Strengths of The Coffee House:

+ Nguyen Hai Ninh (CEO) has experience with his Urban Station before.

+ Reasonable price for customer segmentation.

+ Almost all stores be located in center areas.

+ High quality, good service and eye-catching packaging.

+ Many promotion programs have been launched.

• Weakness (W):

Weaknesses of The Coffee House:

+ The taste of their products is not “out-standing” enough.

+ Diverse menu but do not have the “highlight” which can confuse
customers.

+ The price does not suit students and low-income group.

+ Promotion programs are not accretive as other brands.

• Opportunities (O):

Opportunities of The Coffee House:

+ The chance to expand the business to other countries is much higher

because of international economic intergration.
 + Vietnamese’s coffee consumption has raised up in recent years and
coffee stores become the ideal place for everyone, especially is the young
generation.

+ Technological advancement enables The Coffee House to improve their

customer service.

• Threats (T):

Threats of The Coffee House:

+ Facing with not only domestic brands but also other foreign
organizations.

+ There are many other competitors who have the same target in a
market.

+ Especially in the time of epidemic (COVID19), running a business is

arduous than ever. The number of customers is less than before, and this
led to a decrease in revenue. Entrepreneurs even must stop their business
in a short time to prevent the spread of epidemic.

3.2 Recommendations
3.2.1 Product
 It is necessary to improve the packaging design more creatively, attracting
young people because the main customers of The Coffee House are students
and employees, these two objects are mostly young and dynamic people. Eye-
catching product packaging design plays an important role in stimulating
consumer demand of these audiences.
 Create and develop the app to satisfy customers who buy online.
 Environmental pollution is currently an urgent issue that deserves the most
attention. Environmental pollution includes waste agents, persistent garbage
such as plastics and nylon. Especially for the F&B industry, it can be seen that
a large amount of consumption and waste is mainly plastic such as plastic cups,
 straws, plastic spoons ... etc. Therefore, the optimal solution for The Coffee
House is to strive and creatively find alternatives to minimize plastic waste. For
example, materials that are friendly and protect the environment contribute to
the positive effects of reducing plastic waste in the environment, without
affecting the enjoyment and health of customers when coming to The Coffee
House
3.2.2 Price

The coffee house could use some of pricing strategies like

- Psychological Pricing is a method of assessing the consumer psychology

For example: The Cold Brew Cam Vàng item has a current price of
50,000VND. Enterprises when apply this strategy by replacing the price of the
product in the menu only 49,000 VND. Because when hearing the price of
49,000 VND, consumer will feel that it is not as expensive as the price of
50,000 VND.
- Promotional pricing: to stimulate customers to buy products, business can use
promotional policies (such as discounts, vouchers, coupons, or gifts) to price its
products.

3.2.3 Place

One of the factors that make customers choose to come to The Coffee House is
because of the space of the restaurant, the elements of facilities, interior, or
design of the restaurant have been and are stabilizing each day. It can be said
that this is the strong point of the restaurant.

 Problems with the physical factors mostly fall into parking, The Coffee
House should try to expand its parking lot or rent the parking area as close
as possible.
 Along with that, The Coffee House should focus on developing in small
cities to expand the brand
 Collaborate with multinational companies for opportunities to expand
markets around the world, especially Southeast Asia
3.2.4 Promotion
 Currently, the trend of ordering food at home is developing strongly, so TCH
should focus on promoting sales through apps like Grab and Goviet.
 More promotions for students, because this is one of the potential customers
that TCH wants to target.
 Finally, the coffee house should continue to promote the development of
community activities to promote the brand.
REFERENCE

https://www.brandsvietnam.com/16280-Xac-dinh-muc-tieu-Kim-chi-nam-cho-
chien-luoc-thuong-hieu-ben-vung

https://kenh14.vn/thanh-vien-dong-sang-lap-the-coffee-house-trong-thoi-diem-
sinh-ton-cang-phai-tu-te-va-dung-cam-de-moi-thu-bot-kho-khan-hon-
20200402172031986.chn

https://thicao.com/kien-thuc/10-chien-luoc-dinh-gia-san-pham-trong-marketing

https://www.thecoffeehouse.com/pages/cau-chuyen-thuong-hieu

https://mixme.vn/the-coffee-house-ke-den-sau-nhung-chay-da-tot