Joint Venture Vietnam Global Gateway VGG.Formation history ● On June 16, 1996, Trung Nguyen was established in Buon Ma Thuot city.● 1998 The first store opened in Ho Chi Minh City.● 2000
Market background and context
Manufacturer & products’ overview
Founded in 1996, Trung Nguyen has quickly evolved from a small coffee company in Buon Ma Thuot, Vietnam's coffee capital, to a renowned brand within a decade Today, it stands as a powerful corporation comprising six subsidiaries, including Trung Nguyen Joint Stock Company, Trung Nguyen Instant Coffee Joint Stock Company, Trung Nguyen Coffee Co., Ltd., and G7 Trading and Service Joint Stock Company.
● On June 16, 1996, Trung Nguyen was established in Buon Ma Thuot city.
● 1998 The first store opened in Ho Chi Minh City.
● 2000 Trung Nguyen was present in Hanoi, implementing the franchise model.
● 2001 Successful Franchise Company in Japan.
● 2003 Trung Nguyen's G7 instant coffee brand was born.
● 2008 The company established an office in Singapore.
● 2012 Trung Nguyen becomes the most favorite coffee brand of Vietnamese consumers.
● 2014 Trung Nguyen launches Coffee Supermarket.
● 2016 Launched Trung Nguyen Legend Café – The Energy Coffee That Changes Life space, becoming the largest coffee shop chain in Southeast Asia.
● 2017 Trung Nguyen Legend officially opened a representative office in Shanghai (China); Launch of E-Coffee Model.
● 2018 Inauguration of World Coffee Museum at “Global Coffee Capital” Buon Ma Thuot.
Trung Nguyen Group is an enterprise operating in the fields of coffee production, processing and trading; franchise; distribution services, modern retail and tourism.
The great organization through serving humanity.
Build the unified humanity under the value system of the enlightened lifestyle for success and true happiness
Trung Nguyen Group targets a diverse range of coffee enthusiasts globally, encompassing all ages, genders, and income levels Their customer base includes young individuals, traders, freelancers, the unemployed, office workers, high-income earners, and seniors, reflecting a broad spectrum of coffee lovers.
Group of processed products 1, 2, 3, 4, 5 Group of innovative products 1, 2, 3, 4, 5
Market overview
The Vietnamese coffee market, valued at 2.96 billion USD in 2015, experienced significant growth, reaching 4.93 billion USD by 2019, with a compound annual growth rate (CAGR) of 13.55% This market is primarily divided into two segments: roast coffee, which accounted for 86% of the market share, and instant coffee, comprising 14%.
In 2015, Vietnam's per capita coffee consumption was valued at $31.98, and by 2019, it had increased to $50.99, reflecting a compound annual growth rate (CAGR) of 12.37% However, this figure remains below the Asia Pacific average of $62.94 per capita for coffee consumption.
The Covid-19 pandemic has significantly restricted the global coffee supply, leading to higher consumer prices Additionally, rising work pressure and an expanding workforce have contributed to increased coffee consumption.
2020, but with the supply chain disruptions, the market has seen halted growth in COVID situations.
Vietnam ranks as the second largest producer and exporter of coffee globally With a population growth of approximately one million people annually, the country's coffee industry is poised for significant expansion through 2027.
The Vietnamese coffee industry is poised for a bright future, driven by a significant annual increase in instant coffee sales Currently, 74.8% of domestic coffee consumption consists of roast and ground products, while instant coffee accounts for 10.2% The growing demand for consumer products and the foodservice sector from both local and international markets is anticipated to further accelerate market growth.
Environmental factors
The economic component is significantly important, any changes in this area may affect to the decisions of Trung Nguyen’s managers.
Over the past decade, the Vietnamese coffee industry has experienced significant growth and development Recent trends indicate a recovery in export levels, driven by rising global coffee prices, which bodes well for the future of the sector.
Vietnam is on the rise with many new opportunities for cooperation and integration, which has a great impact on businesses in our country Specifically with Trung Nguyen.
Vietnam's economy is experiencing significant growth, presenting numerous opportunities for Trung Nguyen to expand its production and business activities However, this growth is accompanied by instability, characterized by rising inflation and currency devaluation, which pose challenges for Trung Nguyen, particularly in sourcing raw materials.
Trung Nguyen recognizes the crucial role of technology in dominating the global café market By leveraging advanced technology, they can boost production yields, improve product quality, reduce costs, and achieve greater economies of scale.
CEO Dang Le Nguyen Vu traveled to Europe to find a top-tier partner in coffee manufacturing technology During his visit, he met with Neuhaus Neotec, a German company renowned for its coffee processing equipment As a result of this collaboration, Neuhaus Neotec has selected Trung Nguyen as its exclusive partner to introduce the most advanced coffee processing technology in Vietnam.
In April 2010, Trung Nguyen made a significant investment in advanced drip irrigation technology combined with a fertilization system, emphasizing the importance of high-quality raw materials in coffee production This innovative approach led to a remarkable increase in coffee yield, rising from 1.6 tons per hectare in 2009 to 4 tons per hectare by 2011, while also enhancing the overall quality of the coffee beans.
Nescafé of Nestle ● Is a famous and long- standing coffee brand in the world (1938).
● Know how to adapt and develop products, producing products that are suitable for Vietnamese tastes
● Distributed across the country so consumers can buy easily
● The price is higher than Trung Nguyen's similar products
● Because it belongs to a foreign company, it is difficult to approach customers with the mindset of
"Vietnamese people use Vietnamese goods".
● Haven't used a modern distribution system yet
● Only selling packaged and ready-to-drink coffee, but no instant coffee shop system
● Is a long-standing and prestigious brand in the Vietnamese market
● Cheap price, suitable for Vietnamese consumers
● Roasted coffee occupies a small market
● Strong distribution system makes products easy for consumers to access
● To be the exclusive partner to supply products for all flights of Vietnam
Globalization significantly influences Trung Nguyen, as it encounters fierce competition from established brands in developed countries, notably Starbucks Additionally, other well-known coffee brands such as Highland Coffee, Gloria Jean’s, Angel In Us, and Coffee Bean & Tea ILLY contribute to the dynamic and unpredictable nature of Vietnam's coffee industry.
Vietnam's communication culture is deeply intertwined with its coffee-drinking habits, where sharing a cup fosters kindness, friendliness, and respect among individuals Coffee serves as more than just a beverage; it acts as a bridge that connects people, allowing them to share their joys and challenges This cultural significance contributes to the increasing demand for coffee across the country However, as coffee preferences vary by region, Trung Nguyen's management should pay attention to these differences to better meet their customers' needs.
Vietnam has a long tradition in agriculture and coffee is one of them hence the government puts lots of attention on this “key product”.
Generally in 2001, the Prime Minister approved the Export Support Fund to assist coffee businesses which reduced 70% interest rate and reduced land use tax.
Trung Nguyen Company plays a vital role in advancing coffee production in Vietnam through training techniques, treatments, harvesting, and preliminary processing (Thuvienphapluat, 2013) The Vietnamese government recognizes Trung Nguyen's significant contributions to both agriculture and the economy During a visit on March 17, 2012, President Truong Tan Sang praised the company's innovative model, which is expected to boost the coffee export industry by generating $20 billion and creating 5 to 6 million jobs.
Needs and Problems identification
Product
Trung Nguyen caters to a wide range of customers, spanning from young adults to seniors, each with unique coffee preferences To meet these varying tastes, the company has developed a diverse array of products tailored to consumer preferences.
Trung Nguyen Legend offers a unique coffee experience rooted in Vietnamese cultural identity, allowing customers to rediscover the joy of coffee Through a strategy of product diversification, Trung Nguyen has conducted extensive research and development to enhance its offerings.
Trung Nguyen stands out in the coffee market by offering 30 unique flavor combinations that cater to diverse customer preferences Their commitment to clear and distinct products, tailored to specific customer groups, reinforces their strong market position and core values.
In particular, Trung Nguyen Legend launched a product line of Cappuccino instant coffee with Italian style - a pioneer in technology.
For many coffee enthusiasts, especially in the morning, cappuccino instant coffee offers a convenient way to enjoy a rich and aromatic cup without the need to visit a café This delightful beverage combines the enticing flavors of coffee, milk, and cream, topped with a frothy layer, making it an ideal solution for busy individuals seeking both quality and efficiency in their coffee experience.
Trung Nguyen's cappuccino line features a range of renowned aromas and flavors, catering to diverse customer preferences with three distinct options: Mocha, Hazelnut, and Coconut Each flavor is crafted to deliver a unique taste experience, utilizing only the highest quality coffee beans for an exceptional coffee blend.
Each box of Trung Nguyen Cappuccino instant coffee includes 12 packs with a weight of 18g Convenient to carry and prepare anytime, anywhere
Price
In developing countries like Vietnam, price plays a crucial role in the strategic marketing mix, as consumers exhibit high price sensitivity Trung Nguyen recognizes this dynamic and prioritizes maintaining competitive average prices to enhance its market advantage.
Trung Nguyen Legend offers competitively priced cappuccino instant coffee, targeting budget-conscious customers who desire high-quality Italian coffee without the hefty price tag The pricing strategy ensures that coffee lovers can indulge in an exceptional taste experience at an affordable cost.
Promotion
Trung Nguyen has effectively executed communication activities to launch its new Cappuccino instant coffee line, embodying its slogan, "The energy coffee that changes life," which leaves a lasting impression By highlighting the cappuccino's origins, Trung Nguyen positions it as "The masterpiece of Italian coffee - The energy for success," reinforcing its commitment to quality and innovation.
Trung Nguyen is a dedicated brand that invests significantly in advertising, particularly through TV commercials aired during prime time on national channels like VTV1 and VTV3 Its current success is largely attributed to effective communication and promotional strategies.
Trung Nguyen coffee's promotion strategy effectively combines timely promotions with long-term campaigns, featuring discount programs and targeted sales initiatives on e-commerce platforms.
In addition, Trung Nguyen also exploits social platforms such as Facebook, Youtube, to carry out free advertising campaigns that bring very high reach.
Place
Trung Nguyen Legend Cappuccino instant coffee has implemented a strategic distribution approach, effectively targeting the right customers at the optimal time This strategy has brought the brand closer to its goal of dominating the domestic coffee market in southern Vietnam, while also paving the way for future expansion into international markets.
Trung Nguyen Legend Cappuccino coffee is currently available on three main distribution channels including:
The brand effectively delivers medium and mass coffee products to consumers by utilizing wholesalers and retailers, ensuring these offerings are available at moderate prices for easy accessibility to a broad customer base.
Trung Nguyen Coffee has applied 3 levels to bring products to consumers:
● Retailers (supermarkets or retail stores such as grocery stores)
According to updated statistics by 2022, Trung Nguyen currently owns 4 roasting coffee factories and 2 instant coffee processing factories Network of 1000 coffee shops in Vietnam, 7,000 points of sale and 59,000 retail stores.
=> Consumers can buy Trung Nguyen Legend Cappuccino Instant Coffee anywhere.
In recent years, the rise of online business and e-commerce has become a significant trend, and Trung Nguyen Legend has embraced this shift by launching the "Trung Nguyen Legend Coffee Store" on Amazon This launch represents a crucial milestone for the Group as it enhances its coffee export journey through the utilization of cross-border e-commerce platforms.
Trung Nguyen Legend Cappuccino instant coffee has gained significant traction among coffee enthusiasts and made a mark in the international market, thanks to its diverse product range and high quality, coupled with the rapid growth of e-commerce By strategically selling on Amazon, Trung Nguyen Legend has tapped into a sustainable new distribution channel that aligns with its current and future development goals This effective distribution strategy has further enhanced the popularity of Trung Nguyen Legend Cappuccino in Vietnam Additionally, the establishment of the "Trung Nguyen Coffee Store" online caters to the consumption habits of today’s youth, reinforcing the brand's relevance in the modern marketplace.
Trung Nguyen online store covers famous E-commerce platforms in Vietnam and the U.S
The objective of enhancing the domestic market through online retail reflects a strategic vision and ambition aimed at not only dominating the local market but also expanding reach on a global scale.
Trung Nguyen once again pioneered in the Vietnamese coffee market when it applied the business model in the form of domestic and international franchising since
1998, just two years after its presence in the market.
When implementing this system, Trung Nguyen wants to increase brand awareness and build a new and convenient retail model.
From manufacturer / producer’s perspectives
Trung Nguyen, a manufacturer and supplier with four operational factories, faces significant challenges due to market fluctuations, particularly exacerbated by the recent COVID-19 pandemic, which has severely disrupted the manufacturing economy This situation has negatively impacted the company in three key areas.
The global supply chain has faced significant disruptions, affecting the local circulation of goods, services, and labor, which hampers the efficiency of economic, trade, and investment activities Trung Nguyen Legend is experiencing challenges in importing and exporting both raw materials and finished products.
The Covid-19 pandemic has significantly decreased consumer spending, particularly impacting the tourism and service sectors As a result, service-based economies, which are vital for growth, are experiencing severe negative effects Additionally, coffee, categorized as a non-essential product, has seen a decline in consumption during this challenging period.
The Covid-19 pandemic has dampened investor enthusiasm, leading to hesitance among entrepreneurs to increase production and business activities Trung Nguyen Legend has also paused its plans for business expansion and market share growth, significantly impacting economic growth, trade, and investment.
Trung Nguyen Legend faces significant challenges due to the instability of gasoline prices, which have risen sharply recently, leading to increased costs for various commodities As input material costs rise, Trung Nguyen may need to consider adjusting product prices However, this poses a challenge in the highly competitive Vietnamese coffee market, where consumer price sensitivity is notably high.
The environmental temperature plays a crucial role in coffee development, and prolonged dry weather raises concerns for Trung Nguyen producers and investors regarding its potential negative impact on next year's coffee crop yield.
From the intermediaries’ perspectives
Distribution intermediaries play a crucial role in connecting manufacturers with consumers, facilitating the effective distribution of products These intermediaries not only help ensure that products reach their intended audience but also assist manufacturers in minimizing costs and mitigating risks associated with distribution.
The coffee retail market in Vietnam is experiencing significant growth, with a competitive landscape featuring both domestic and international brands However, many companies are struggling to survive due to high rental and operational costs, leading some to exit the market as their revenues fail to meet expenses.
Intermediaries often navigate a dynamic environment where demand for their services fluctuates, leading to potential overlaps in functions with other players To sustain profitability and maintain market presence, they seek reliable sources of goods backed by favorable policies, such as public debt strategies, discounts, and promotional publications that enhance in-store marketing efforts.
Trung Nguyen coffee faces challenges from conflicts among its official stores and competition with e-commerce platforms like Shopee, Lazada, and Tiki These platforms engage in rivalry through pricing strategies, promotional offers, and customer service initiatives.
From the customers’ perspectives
The consumer behavior model outlines five key stages that individuals typically experience before and after making a purchase: need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase evaluation Understanding these stages is essential for analyzing consumer buying behavior and optimizing marketing strategies.
Consumer buying behavior is classified into four primary categories: Complex Buying Behavior, Variety-Seeking Buying Behavior, Habitual Buying Behavior, and Dissonance-Reducing Buying Behavior The Trung Nguyen Legend Cappuccino instant coffee product line exemplifies a unique scenario where target customers predominantly engage in Variety-Seeking and Habitual Buying Behaviors when making their purchasing decisions.
Habitual buying behavior is common among consumers of essential products, such as coffee, where many customers exhibit brand loyalty due to the unique flavors offered by their chosen coffee brand This loyalty typically results in quick and effortless purchasing decisions Conversely, instant coffee consumers engage in variety-seeking buying behavior, actively exploring different brands to discover new flavors and refresh their palate This desire for variety reflects a preference for novelty and experimentation in their coffee choices.
Coffee is a widely available product with numerous substitutes, making it highly price sensitive; consequently, price significantly impacts consumer purchasing decisions.
The evolving preferences of consumers significantly impact their purchasing choices, especially in the post-Covid-19 era where e-commerce has emerged as a primary shopping method Despite this shift towards online shopping, Trung Nguyen coffee has yet to effectively promote its products on e-commerce platforms, missing out on a vital market opportunity.
Trung Nguyen's franchise stores in international markets focus on adapting their layouts to suit diverse cultural preferences, ensuring that the store design aligns with local consumer desires and expectations.
How to approach the needs and problems
Secondary data
Secondary data refers to information gathered by others for purposes distinct from the original research intent, allowing researchers to repurpose this data for their own studies In addressing specific issues, the team focuses on user experience research related to the Trung Nguyen Cappuccino Mocha product.
1.1 Product situation on E-commerce platforms
A market research report on Trung Nguyen Cappuccino highlights its performance on major e-commerce platforms, including Shopee, Tiki, and Lazada, from November 2021 to October 2022 The report reveals that Trung Nguyen Cappuccino generated a revenue of 1,000,000,000 VND over the year, marking an impressive increase of over 59% in the last quarter Furthermore, Trung Nguyen Cappuccino is recognized as a leading product, with its distribution and sales being primarily managed by Trung Nguyen Legend.
Picture 1 Market Report Trung Nguyen Cappuccino Mocha (November 1, 2021 -
Picture 3 Product market situation on E-commerce platforms
The report shows that the number of products Trung Nguyen Cappuccino Mocha sold in 12 months reached 22,000 products
Update market situation Trung Nguyen Cappuccino Mocha has more than 58 retailers on the E-commerce platforms.
● Shopee accounts for 58.5% of total sales and 71.9% of volume
● Lazada accounts for 28.4% of total sales and 14.1% of volume
● Tiki accounts for 13.1% of total sales and 14.0% of volume
Sales of Trung Nguyen Cappuccino Mocha products in October 2022 reached the highest level with 164,000,000 VND and 2,000 products.
The market size of Trung Nguyen Cappuccino Mocha in October 2022 reached 164,000,000 VND in sales and grew better than September 2022 at 12.2%.
Mid-term review in the last 6 months, Trung Nguyen Cappuccino Mocha's revenue grew by 18.8% compared to the last 6 months.
Pictire 4 Price segment of Trung Nguyen Cappuccino Mocha
In the past 12 months, Trung Nguyen Cappuccino Mocha market segment usually buys mainly at prices around 50,000 VND - 100,000 VND.
Popular price segments of Trung Nguyen Cappuccino Mocha are 50,000 VND - 100,000 VND and 500,000 VND - 1,000,000 VND.
1.3 Statistics of stores that are distributing Trung Nguyen Cappuccino products
Trung Nguyen Cappuccino Mocha generates its revenue primarily from 10 Shop Malls, which contribute 25.3% of total sales, while over 48 Shops account for the remaining 74.7% Among the top 10 best-selling shops, Trung Nguyen Legend Official leads with a revenue share of 15.52% Following closely are Minh Quan Shop 2015 and Ben Thanh Luxury Mart, with revenue shares of 14.81% and 13.56%, respectively.
Primary data via research studies
Primary data refers to information gathered directly by researchers from original sources through techniques like surveys, interviews, or experiments The team selects customer surveys as their primary data collection method, as this approach yields the most precise and valuable insights for effective analysis.
The purpose of conducting survey questions related to age, income level and place of residence to better understand the research subjects.
This allowed the team to determine the level of awareness among the people in the study area.
1 How old are you? 18 - 30 years old 76,5
4 In which city/province do you live? Ho Chi Minh City 90,2
The question is related to the perception of Trung Nguyen's coffee lines.
The questionnaire was used to better understand the level of coffee use of Trung Nguyen, and to better understand the coffee consumption habits of consumers.
5 Have you used any product lines of
G7 Instant Coffee 74,5 Coffee Roasters 11,8 Pure Coffee Beans 15,7
6 Why do you choose Cappuccino
Convenient for use 60,8 Eye-catching design 23,5
Easy to find in the market
7 Where do you usually buy
8 How often do you use Cappuccino
Part 3: Distribution channel development goals
This section aims to explore users' feelings and opinions regarding Cappuccino Mocha products The team seeks insights into consumer behaviors and perceptions, which will help identify areas for improvement in the product's distribution channels.
9 You rate the convenience when buying
10 Quality of service and customer care at Cappuccino Mocha distribution points:
11 How often does the appearance of
Cappuccino Mocha coffee products at the point of sale make you feel?
12 The location of the chain stores that distribute Cappuccino Mocha makes you feel?
13 How do you rate the display of
14 How would you like Trung Nguyen to promote distribution of this product in the future?
This study utilized primary data collected through a Google Form over a period of two days, yielding 51 valid responses The subsequent analysis of this data provides valuable insights and an overview of the findings.
After surveying 51 consumers from different provinces about Trung Nguyen Cappuccino Mocha product, in which Ho Chi Minh City is the main area, our team has collected:
- There are about 39 people aged 18 - 30 years old, 7 people aged 30 - 40 years old and 5 people aged over 40 years old.
- There were 25 female, 24 male and 2 other genders.
- The income level of these people is different with most of them earning less than 3 million/month with 24 people and over 8 million/month with 11 people.
Trung Nguyen's Cappuccino Mocha products attract a diverse customer base, appealing to individuals of all ages, genders, and income levels These beverages serve as an ideal refreshing option for those enduring long working hours, making them a popular choice among potential and target customers alike.
Trung Nguyen's most popular products are the G7 Instant Coffee and Cappuccino Mocha Coffee, receiving 38 and 37 votes respectively, showcasing their strong appeal among consumers.
When considering brand awareness, customers prioritize the quality of Cappuccino Mocha products, with design being less significant, as evidenced by only 12 out of 51 votes highlighting its appeal Despite the design not being particularly eye-catching, it does not detract from the overall quality that these products offer to consumers.
In today's fast-paced digital age, consumers prioritize quick, convenient, and cost-effective products to maximize their time and earnings Trung Nguyen's offerings have gained significant popularity due to their effectiveness, as evidenced by a survey where 31 out of 51 respondents preferred Cappuccino Mocha for its convenience and high quality This strong preference indicates that consumers are willing to overlook design and pricing when a product delivers exceptional quality and ease of use.
Trung Nguyen's Cappuccino Mocha products are well-regarded for their quality and usage; however, the company faces challenges in effectively distributing these products to consumers While customers can easily purchase them at supermarkets and Trung Nguyen stores, sales on e-commerce platforms remain low, with only 5 out of 51 surveyed individuals opting for online purchases This indicates a strong preference for direct purchases at physical locations, highlighting that Trung Nguyen has not fully leveraged online sales channels to expand its distribution network.
As coffee consumption continues to rise among Vietnamese consumers, Trung Nguyen prioritizes making its products increasingly accessible A recent survey revealed that the average individual drinks coffee at least 4-5 times a month, with 22 respondents consuming it daily This trend underscores coffee's significance as an essential beverage in the daily lives of Vietnamese people, presenting Trung Nguyen with a valuable opportunity to enhance its brand presence in the near future.
Part 3: Distribution channel development goals
Trung Nguyen's distribution strategy has not fully leveraged its diverse locations, resulting in limited convenience for customers seeking its products Most shoppers perceive the accessibility of the chain stores as average, with nearly half of the respondents rating the convenience of purchasing Cappuccino Mocha coffee as just satisfactory, indicating a need for improvement in the brand's retail presence.
The success of a brand heavily relies on its service quality and customer care Trung Nguyen excels in this area, as evidenced by a survey where 49 participants expressed positive feelings towards the service quality and customer care at Cappuccino Mocha coffee distribution points.
Trung Nguyen strategically selects store locations after thorough research, ensuring they align with both micro and macro environments to enhance customer satisfaction Each coffee shop provides a comfortable atmosphere, contributing to a positive experience for patrons, as evidenced by 35 votes expressing appreciation for the ambiance of Trung Nguyen locations.
Trung Nguyen's Cappuccino Mocha coffee products are not prominently displayed in supermarkets and retail stores, leading to a lack of customer awareness Experts suggest that brands need to engage customers at least 21 times to make a lasting impression This indicates that Trung Nguyen has not effectively promoted their Cappuccino Mocha line across retail locations nationwide.
The strategic placement of Cappuccino Mocha coffee products is crucial for Trung Nguyen's distribution channel development A survey of 51 participants revealed that 33 respondents expressed a positive sentiment towards the product display, indicating a strong consumer impression and preference for Trung Nguyen's offerings.
To successfully establish a distribution channel for Cappuccino Mocha coffee products, Trung Nguyen must enhance its presence on E-commerce platforms, as nearly 50% of consumers support this initiative This trend reflects a significant shift in consumer shopping behavior, accelerated by the Covid-19 pandemic and the rapid growth of E-commerce, leading to a growing preference for online shopping over traditional retail.
Key findings
Analyzing Trung Nguyen's strategies through a SWOT framework reveals key insights into its brand development To enhance and solidify the Trung Nguyen coffee brand, the implementation of a franchise strategy is deemed appropriate in the current market landscape However, effective management of these franchises is crucial for restoring the brand's image Several methods can be employed to achieve this goal.
● It’s necessary to expand the diversification of product markets to increase competitiveness.
● Strengthen monitoring and development of the franchise system Setting a uniform standard of image and service for franchise stores to create the unique style of Trung Nguyen coffee.
● Focus on trademark registration, product design, image identification of Trung Nguyen coffee
- Limiting the growth rate of the managers but the right in the Vietnamese market Because at the current rate of growth, 1 thousand people cannot control their franchises
- Building a stricter transfer contract, with strict regulations and high profit margins, will stimulate the franchisee's owners to strictly comply with the provisions of the transfer contract
To enhance the effectiveness of transfer managers in Vietnam's emerging franchising sector, it is crucial to provide comprehensive training that expands their knowledge and experience Given the complexity of this role and the novelty of franchising in the country, many company staff members may lack the necessary expertise Investing in targeted training programs will equip them with the skills needed to navigate this challenging landscape successfully.
To ensure the procurement of high-quality products, Trung Nguyen should establish a strong partnership model between enterprises and farmers, fostering positive relationships that enhance farmers' confidence during the product consumption phase.
To ensure the Trung Nguyen brand remains prominent in customers' minds, it is essential to actively promote it through various channels such as images, newspapers, magazines, and radio broadcasts Consistent brand visibility across these platforms will help prevent the brand from fading into obscurity.
Expanding into the global market, particularly targeting China, presents a significant opportunity for Trung Nguyen As the most populous country in the world, China boasts a rapidly growing economy and a vibrant, youthful population This dynamic demographic creates a substantial market potential for Trung Nguyen to tap into and thrive in a developing landscape.
- Trung Nguyen can apply the Showroom model, which is a place to show and introduce coffee specifically as a grape-collecting fair to attract interested customers and a lobby for coffee.
Conclusions
Trung Nguyen Joint Stock Company has made significant strides in recent years, achieving impressive growth in revenue and profit while solidifying its market presence Originally a small coffee brand in Vietnam, Trung Nguyen quickly gained recognition among domestic and international consumers Through innovative business practices, it transformed from a modest company in Buon Ma Thuot into a robust corporation comprising six subsidiaries, including Trung Nguyen Instant Coffee Joint Stock Company and G7 Trading and Service Joint Stock Company The company's main activities encompass the production, processing, and trading of tea and coffee, as well as brand empowerment and modern retail services Looking ahead, Trung Nguyen Group aims to expand its success across various industries through its member companies.
● It’s necessary to expand the diversification of product markets to increase competitiveness.
● Strengthen monitoring and development of the franchise system Setting a uniform standard of image and service for franchise stores to create the unique style of Trung Nguyen coffee.
● Focus on trademark registration, product design, image identification of Trung Nguyen coffee
Recommendations for optimizing the marketing channels system
Channel structure [Channel strategy]
Distribution system diagram of Trung Nguyen Coffee
Trung Nguyen effectively reaches consumers through a three-tiered distribution strategy that includes wholesalers, such as distributors and both large and small supermarkets, followed by retailers, which encompass small shops and grocers, ultimately delivering products directly to the end consumer.
Trung Nguyen currently has 3 coffee factories across Vietnam, 121 exclusive distributors, 7,000 points of sale, and 59,000 retail stores.
Trung Nguyen has developed an extensive distribution system, making the company's products always available for customers to choose from.
Difficulties for Trung Nguyen's distribution channel structure:
• Trung Nguyen has to spend a large amount of money from investing in supporting suppliers and supporting coffee growers, to investing in building factories and shops.
• Control the chain of franchise stores when it grows too fast
• Trung Nguyen has problems with disputes over its properties
• Multi-channel management is a large and complex management activity
Optimal marketing/distribution channel [Channel motivation]
Vertical conflict arises between members at various levels within a distribution channel In today's marketplace, manufacturers utilize multiple simultaneous channels to sell their products, leading to competition among these channels for the same customer base.
The distribution channel for Trung Nguyen encompasses both retailers and distributors Selecting the right retail distributor is crucial; improper choices can lead to excess inventory, hindering product sales and complicating the import of goods and new shipments.
Choosing a retail store in a rural area may result in low demand for instant coffee, particularly Cappuccino, leading to increased costs In contrast, thorough market research and selecting a retail location in central or office areas can significantly enhance the product's sales potential.
Trung Nguyen's multi-channel system, which integrates both offline and online platforms, may create conflicts regarding its product promotion policy Typically, manufacturers allocate more budget towards advertising and communication efforts, resulting in heightened visibility for products sold through e-commerce channels and official stores Consequently, this trend has led to a decline in revenue for traditional retail outlets and supermarkets.
Horizontal conflict occurs among intermediaries operating at the same level within distribution channels When Trung Nguyen Legend engages with its retail partners, it establishes price agreements to ensure consistent pricing across different locations, thereby preventing discrepancies.
For example, retail stores → Mega Market sells Trung Nguyen Legend instant coffee with a spoon, but buying at convenience stores is not promoted.
Trung Nguyen is currently facing significant challenges due to the impact of Covid-19, which has led to the closure of many physical stores The surge in e-commerce usage presents a more cost-effective alternative to traditional retail, as it eliminates the need for physical premises Recent data indicates that Vietnam's e-commerce market reached $11.8 billion, reflecting an impressive growth rate of 18% This shift has created potential conflicts between in-store shopping and online purchasing, particularly in the absence of a price preservation policy To remain competitive, e-commerce platforms must prioritize promotions and marketing campaigns.
Shopee and Tiki serve as retail platforms for Trung Nguyen Legend Online, yet varying promotional strategies influence customer preferences, resulting in a greater tendency for consumers to choose Tiki over Shopee This scenario exemplifies horizontal conflict in retail channels.
Some solutions to complete Trung Nguyen's supply chain:
• Be cautious in expanding the scope of production and recruitment
• Linking with distributors to reach consumers
• Channel managers should focus on expanding products in store shelves at all distribution channels to create the most convenience for customers
• Actively reduce the comparison between brands and promote more habitual buying behavior of customers
• Proposing many promotions at the point of sale to increase the price sensitivity of customers to easily increase profits for businesses
• Create new values, and promote consumer buying behavior.
Limitations & caveats
Trung Nguyen Legend has established a significant presence in the Vietnamese coffee market and is experiencing growth on the global stage, driven by its unique qualities Despite this success, consumer surveys reveal ongoing challenges and limitations that the Trung Nguyen Legend brand must address to enhance its market position.
Trung Nguyen's current business model primarily revolves around franchising, which presents unique challenges for franchise stores that rely heavily on the parent brand Any significant influence or unresolved issues at the parent level can directly affect these franchises, leading to potential damages Even minor mistakes made by the parent brand can have a substantial negative impact on the franchise stores.
The communication process of Trung Nguyen Legend is still not fully optimized.
In today's digital age, a single customer complaint regarding quality or service can rapidly circulate on social media, leading to significant public criticism Trung Nguyen has struggled in this regard, as evidenced by the persistent negative rumors and unfavorable information that frequently appear in news outlets and social media communities.
Effective communication is crucial for preventing the spread of false information and minimizing potential issues for store chains It is essential to handle communication with care to avoid unfortunate situations Given that every aspect of a brand's communication is closely monitored, addressing current crisis situations promptly is imperative.
Trung Nguyen Legend is losing market share to more established brands, highlighting its slow and inflexible innovation in menus and products The Vietnamese market is witnessing a surge of alternative coffee options, including Nescafe, Vinacafe, Phuc Long, and Cong, alongside coffee shops that offer convenient customer spaces.