report group assignment group 3 highlands cofe

This report will introduce about Highlands Coffee in detail, analyze the currentsituation of Highlands according to Business context, SWOT, competitor and PESTLE.Then, research on Highla

P R E P A R E D B Y :

Table of Contents

EXECUTIVE SUMMARY

"From the love of Vietnam and the passion for coffee, in 1999, the Highlands Coffee®brand was born with the aspiration to elevate Vietnam's long-standing coffee heritage andspread the spirit of pride and harmonious connection between traditional with modern"(Highlands Coffee, 2021) However, Highlands Coffee is still facing some marketingproblems This report will introduce about Highlands Coffee in detail, analyze the currentsituation of Highlands according to Business context, SWOT, competitor and PESTLE.Then, research on Highlands's target customers, Key Insights and the challenges andproblems that the coffee shop chain is currently facing In addition, Highlands Coffee'scurrent 7Ps marketing strategy will also be analyzed in this report and give somerecommendations.

Highlands Coffee is currently a coffee brand with a huge revenue of VND 2,200 billion a year andhas the highest profit margin today (iBar, 2021) The reason why Highlands Coffee attracts a largenumber of customers is the design of the space In addition to the drinks with rich flavors, customersare also impressed with the luxurious, polite and cozy design With the main color is warm and cozyred, along with the interior are mainly wooden tables and chairs with traditional Vietnamese style,combined with sofas to create a variety of styles, which is the intersection between traditional andmodern features (iBar, 2021).

Highlands Coffee is not only attractive because of the main color and interior, but also because thecontext is in harmony with the space of the shop "Usually, Highlands Coffee will decorate withdecorative lights made from rattan, knitting, bamboo, with a country style, or truncated ceiling lights,made from pleated fabric." (iBar, 2021).

Besides these factors, the quality of drinks and quality of service are still the leading factors thatdetermine the success of Highlands Coffee "Highlands Coffee is famous as a brand that alwaysfocuses on using clean ingredients, selecting coffee beans by hand, combined with unique recipes,giving Highlands a menu of drinks rich and suitable for all types of customers" (iBar, 2021).Highlands Coffee always tries to give customers the best service experience Customers coming toHighlands Coffee are warmly welcomed, advised to choose drinks and served enthusiastically.

C O M P A N Y C O N T E X TINTRODUCTION

Highlands Coffee was founded in 1999 by an overseas Vietnamese businessman named DavidThai (SunOffice 2021) "Starting with packaged coffee products in Hanoi in 2000, HighlandsCoffee has rapidly grown and expanded into a famous coffee shop brand and has continuouslyexpanded domestic and international operations since 2002" (Highlands Coffee, 2021).

In 2012, Highlands Coffee was sold to fast food company Jollibee of the Philippines(retailnews.asia, 2018) and so far Highlands Coffee has more than 300 stores across 20 provincesand cities across Vietnam and is number one franchise brand in Vietnam (SunOffice 2021).

S.W.O.T ANALYSIS S T R E N G T H S

T H R E A T SO P P O R T U N I T I E S

W E A K N E S S E S"Highlands Coffee has a clear and consistent

positioning from the beginning, with strong imageassociations as 'coffee for businessmen' and 'coffee forhigh-income intellectuals' (Dieu, 2015).

"Highlands Coffee has the strongest brand associationwith their customers at a rate of 100% (understood asan 'on spot' coffee shop chain, excluding 'coffee-to-go'or 'take away')” (Dieu, 2015).

Good products and services.

"Highlands Coffee is one of the few brands that canexploit traditional cultural values into products"(lynhuasaigon.com, 2020).

Located in prominent locations such as shoppingcenters, universities, etc., helping customers improvethe brand identity of Highlands.

The market share is still very large: The market value ofVietnamese coffee and tea is approximately 1 billionUSD, but no brand has won an overwhelming marketshare The total market share of popular brands such asStarbucks, Highlands Coffee, The Coffee House, PhucLong and Trung Nguyen is less than 20% of the marketshare (Nhan and Anh, 2021).

"More and more people are giving priority to enjoyingcoffee in the chain of stores and branded cafes ratherthan spontaneous, roadside shops Because the productorigin can be traced, safety is ensured food"(VietnamPlus, 2021).

"The chain of stores and cafes has become a familiarplace and a cultural routine of people in their lives.People come to chain stores and cafes to entertain, meetfriends; work, exchange change jobs" (VietnamPlus,

There are many domestic competitors with fiercecompetition such as Cong Ca, Phuc Long, The participation of foreign competitors such asStarbuck (USA), The Coffee Beans & Tea Leaf(USA), Gloria Jeans Coffee (Australia), Caffe Bene(Korea),

Taxes in Vietnam are relatively high.

The Covid-19 pandemic has impacted the globaleconomy.

Drink prices are quite high, not suitable for manyclasses of customers.

There are no stores in the countryside, areas outsidethe city center.

Service performance is not high.Didn't pay much attention to marketing.

High cost of premises and employees affectsrevenue.

"The quality of products and services is on adeclining trend" (academia.edu, 2016).

"The franchise system does not guaranteeuniformity in quality" (academia.edu, 2016).

✦Trung Nguyen coffee can be a chain of restaurants providinggood service and a strong competitor to Highlands Formed in1966 at Buon Me Thuot Trung Nguyen is currently one of theleading coffee brands in Vietnam.

Trung Nguyen also has brands in many countries around theworld such as China, Singapore And in terms of instant coffee,Trung Nguyen is quite successful with the G7 coffee product lineand now expanding in many countries and Trung Nguyen has theadvantage to hit the pride of Vietnamese people.

✦ About customers: Trung Nguyen provides services to allcustomers, but mainly customers with low income AndHighlands provides services focusing on customers with higherincomes and business people.

✦Regarding the location of Highlands, only choose places withbeautiful facades in the city This shows both classes and helpsHighlands Coffee to position itself as a luxury and stylish coffeecompany As for Trung Nguyen, you can find them anywhere ifyou want.

✦ For the cultural part, coffee itself is a cultural feature and theFounder of Trung Nguyen is Nguyen Vu has books on themeanings of coffee expressing the desire for power and nationalspirit, enhancing cultural levels Therefore, Trung Nguyen issuperior to Highlands in this regard.

As for service quality: Highlands has a very high quality ofservice, friendly staff, professional way of working with theadvantage of Wifi and Jazz music, so it is very popular withcustomers, but Trung Nguyen has not done it yet Do this well.✦ In terms of price: Trung Nguyen will cost less because the useof service supply is not much, so it can reach more customers.✦ About product service: Highlands Coffee will diversify thissegment more because they serve coffee and fast food and

Currently, Highlands Coffee restaurantservice chain is the second largest in theVietnam market and behind Trung Nguyen Itcan also be understood that Trung Nguyen isthe strongest competitor of HighlandsCoffee

Or just like in recent times, the giantcompetitor Starbucks in the US haspenetrated the Vietnamese market and isconsidered a formidable opponent of theHighlands.

Moreover, there are also competitors suchas The Coffee House or Phuc Long thatHighlands must consider carefully.

Starbucks is very good at processing andserving customers: within 3 minutes, 2receptionists and 1 waiter can serve up to220 customers/hour, the drinks are verydiverse and delicious Eye-catching, showingthe modern and unique personality of thisbusiness.

With such professional style advantages,Highlands also needs to pay attention to thisopponent.

COMPETITORANALYSISThrough a formidable competitor, Trung Nguyen,we can't help but mention that Starbuck is also aserious competitor when it comes to Vietnamfrom the US market.

PESTLE ANALYSIS

There are many factors that have a dramatic impact on a business Those long-term factors will be Economic,Social, Technological, Legal, and Environmental or we can call them PESTEL analysis (Cheverton, 2005, p, 72).PESTEL will help us in analyzing all external factors that influence Highland Coffee.

P O L I T I C A L F A C T O R S :E C O N O M I C A L F A C T O R S :✦Vietnam's accession to the WTO in 2007 has offered up

new commercial prospects.

Implementing policies to discourage monopolistic behaviorand create favorable conditions for the coffee industry'sdevelopment.

✦To combat inflation, the government chose to institute atight monetary policy in early 2015.

✦In 2012, the government published Resolution No 13 ona number of initiatives to alleviate production andcommercial issues and to strengthen markets.

✦Vietnam has now joined the international economicintegration process In addition, the company canstrengthen its competitiveness by partnering with moreglobal companies, allowing the product to improve overtime It might provide Highland Coffee with a goodopportunity to expand its stores not only in Vietnam butalso in other nations International integration, on the otherhand, poses certain challenges for Highland Coffee as thenumber of competitors grows.

✦From 2011 through 2022, Vietnam's GDP is expectedto increase at a rate of 6.2% per year on average.Meanwhile, the F&B market alone will increase at acompound annual growth rate of roughly 10% per year by2022, outperforming the total growth rate (DTQV, 2021)✦The Covid-19 pandemic will have a detrimental impacton high-end coffee chains like Highland, Starbuck, andTrung Nguyen, which operate in the industry However,by adopting the mindset of an emerging market, oureconomy will have more room to grow in the long run Asa result, the Highland still has a bright future.

✦In Vietnam, there are presently 540,000 food andbeverage outlets, 22,000 coffee shops and bars, and over80,000 chain restaurants In 2019, revenue was 200billion dollars, increasing 34.3 percent from 2018 By2023, it is expected that this industry would generate$408 billion in sales Highland is a high-class coffeebusiness that caters to high-income clients, with averagesales increasing by 32 percent every year HighlandsCoffee has the most outlets in Vietnam, with 240locations and sales of 1,628 billion VND The economicclimate in this field is favorable, which provides manyopportunities for enterprises to grow Large revenue,particularly for Highland, allows them to have a largercash source in the future year However, because theyoperate a huge number of stores, and because the storesare strategically positioned around major large roads andintersections, the chain's input costs are also relativelyexpensive (Foodnhotelhanoi, 2021)

PESTLE ANALYSIS

S O C I A L F A C T O R S :T E C H N O L O G I C A L F A C T O R S :✦With 96.46 million populations in 2019, Vietnam is the

world's 15th most populous country, with a populationgrowth rate of 1.14 percent According to 2020 figures,people between the ages of 20 and 34 make up themajority of the population The workforce is vast, allowingfor the exploitation and production of coffee As a result,firms should seize this opportunity to redirect their growth.✦However, while some studies have concluded that coffeeis not "unhealthy," it does contain a significant amount ofcaffeine Many people are choosing to give up caffeinatedbeverages as part of the health consciousness trend inorder to improve their mood, sleep, and other aspects oftheir lives This could lead to a decrease in coffee demand(and equally, a greater demand for decaffeinated coffeeproducts) (Tuoitre, 2019)

✦Another significant change in the coffee industry is theintroduction of new coffee-specific equipment Everyelectronics store now sells coffee grinders, drippers, andespresso equipment These machines make it easier thanever to enjoy coffee, encouraging people to brew theirown at home This will have little effect on the total sizeof the coffee industry, but it may encourage more peopleto brew and enjoy coffee at home There will also befewer customers drinking coffee outside of HighlandsCoffee outlets, as well as other coffee companies.

E N V I R O N M E N T A L F A C T O R S :L E G A L F A C T O R S :

✦Vietnam is confronted with a slew of environmentalconcerns While some of these challenges aren't directlytied to the food and beverage industry such as car CO2emissions others are Unsustainable farming practices, inparticular, can lead to deforestation

✦Other concerns about farming include the usage ofpesticides and fertilizers, as well as water consumption Inthe end, this is likely to increase consumer costs, therebyharming the coffee business.

✦Highlands produces coffee drinks for the developmentof restaurant services and consumption and is alwayssubject to the regulations on food and beverages thatmust be legal according to the Vietnam Food Safety andHygiene Control Department This means that many lawsmust be followed regarding storage, transport, andincubation

✦Moreover, coffee has a large amount of caffeine As aresult, these standards only get tighter over time, but safecoffee handling is so easy to get right that it shouldn't betoo much of a problem for Highlands Coffee.

In which, 74.3% of survey respondentsare in the age group of 19 to 25.18.3% of people under the age of 18completed the survey.

6.4% of people between the ages of26 and 35 completed the survey.the remaining number of surveyrespondents over 36 years old is notsignificant.

There are 109 survey respondents:

Of the 109 people who completed thesurvey, 72.5% of the respondents werestudents

30.3% are self-employed

26.6% are sales people, small businesses.

19.3% are people who produce services,trade business.

Office workers for 7.3% of the insignificantnumber.

Through the survey, it can be seen that the ratio of maleand female sex is not too different

More than 80% of customers care about product quality when coming to HighlandsCustomers care about service quality more than 65%

More than 50% of customers choose reasonable prices

Customers who sometimes use Highlands coffee products up to 73.4%.Rate of regular visitors accounted for 22%.

The remaining 4.6% are customers who often use Highlands Coffee's products.

The rate of using Highlands coffee products in chain stores over 5 times accounts for 37.6%From 1 to 5 times accounted for 62.4%

=> Therefore, it can be seen that the number of customers returning to use Highlands Coffee'sproducts is not too much.

90% of respondents prefer to drink coffee immediately after waking up orduring breakfast

The majority of respondents prefer to drink hand-made coffee at thestore