HIGHLAND COFFEE marketing analysis PDF

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Summary

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. ...

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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.

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

 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)

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)

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 order to order Step2: Cashier receive order and cash Step3: Cashier pass order to Barista

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

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

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.

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.

 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

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

 Self-developed marketing plans:

to find other interesting places.

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) ...