highlands coffee market research report 2012

Then in order to deal with these problems, we apply both quantitative and qualitative research methods which are survey and focus group discussion respectively to generate accurate and r

HIGHLANDS COFFEE MARKET RESEARCH REPORT 2012

tg dettiiond tute H watt

Facilitator: Mr Moulik Zaveri Authors: Nguyen Truong Minh Hien | Nguyen Lam Quoc Trung | Tran Thi Kim Mail

Nguyen Thi Phuong Thao | O Quoc Vinh

® RMIT UNIVERSITY a” ee san i)

COFFEš VIETNAM PLUS

RMIT INTERNATIONAL UNIVERSITY

VIETNAM

RMIT International University Vietnam

BP181 Bachelor of Commerce Program

ASSIGNMENT COVER PAGE

Student e-mail address:

Learning Facilitator in charge:

Assignment due date:

CONTENTS

EXECUTIVE SUMMARY 4 IBACKGROUND 5

| THE COFFEE MARKET IN VIETNAM, ccscsseessssseesssseesssseesensee on 6

I COMPANY PROFILE .scsscsscssescsssescsssessssssessssseesssseeeessseeesaneee 7 PIPROBLEM DEFINITION, PURPOSE &HYPOTHESIS 9

A — MARKETING PROBLEM se ssssesssssesssssssscsssesesssecessseecsssecessseee 10 B RESEARCH PURPOSE, OBJECTIVES, HYPOTHESIS 10 ALTERNATIVE METHODS, CHOSEN METHODS & TIMELINE 13

II QUANLITATIVE RESEARCH - 22252222 Steeczrverserreo 37

CONCLUSION, RECOMMENDATION & LIMITATION 40

I CONCLUSION oo ccccceceecesceeceeceeaaeceeeeeaeeeeeseseeeaeeseseeeaeeneng es 41

II — RECOMIMENDATION SG SH HH ng khu 41

II — LIMITATION., SH ng ng kh 45 REFERENCE - - - - - -G nọ Em 46 APPENDICES - Q nọ BE 48

EXECUTIVE SUMMARY

This report is conducted to help Highlands solving some problems that are occurring in their business Firstly, based on the determinant attributes, Higlands can improve its marketing to meet the consumer’s needs and compete with the competitors Next, some effective PR strategies will be suggested to build trust and credibility through the analysis of favorable publicity state Finally, it will help Higlands to understand buyer behavior then they may propose a more powerful 360 degree marketing and distribution to capture awareness and stimulate sales

The report firstly introduces the background of the company and the marketing problems which are some difficulties in understanding the consumer determinant attributes for purchasing R&G products in local market; remaining favourable publicity state of the brand after its several severe scandals and exploring buyer behaviours of R&G products as well Then in order to deal with these problems, we apply both quantitative and qualitative research methods which are survey and focus group discussion respectively to generate accurate and reliable results In the sampling methods, we choose non-probability methods which are convenience and quota sampling because of time and human resources constraints Next, we assign the work to each member and set up a detail schedule As soon as the survey is designed completely, we start to conduct the survey and collect the data Putting these data into SPSS and analysing them, we can test for the hypothesis we established from the beginning Moreover, this report will provide some recommendations that are PR strategies to rebuild the trust, refreshment with innovative package and diversified trade marketing Along with these recommendations, some limitations will be discussed as well These are unconscious misinterpretation, deliberate falsification, targeted population and shortage of time as well Finally, the report will end with a conclusion which summarizes all the key points we discussed

CHAPTER

BACKGROUND OF HIGHLANDS

world with 31%, from 1.208 million bags in 2009 to 1.583 million bags in 2010.The research

of IAM in the habit of using coffee shows that there are 65% of consumers have used Vietnam- consumers’ coffee drink coffee seven times a week, in favour of males (59%); while about 21% of consumers use instant-coffee from 3 to 4 times a week and slightly leaning consumer groups are women (52%) The usage rate of coffee at home and outside is equal to 49%-50% (Tran 2010)

The graph above shows that the growth of Vietnam’s coffee production over 16 market years

is very enormous However, from 2009 to 2011, there was a fluctuation in the production of Vietnam’s coffee

Coffee Exports, 2010 and 2011

exported-countries increase output in 2010 and 2011 with Brazil Although there is increasing the production, the exportation coffee and number of coffee drinkers, in general, the coffee consumption in Vietnam decreases slightly compare with other countries According to International Coffee Organization (ICO), “Vietnam’s domestic coffee consumption is only 3.6% of total production, the lowest of all exporting countries” “Vietnam's rising living standard has contributed to restructuring the group of coffee drinkers, with more young people in cities picking the bitter beverage now while it was the choice of elderly people and rich families in the past” (Reuters 2008) In recent years, many foreign coffee brands like The-Coffee-Beans, GloriaJean or Illy have entered into Vietnam while domestic coffee brands like VinaCafé, TrungNguyen or Higlandshave been able to maintain its strong positions in the market In fact, Higlandshas been in the market for several years producing high quality coffee products for both Vietnamese and foreign consumers

Higlandsis a coffee brand of VietThai Company (VTI) In 2002, the very first Higlandscoffee shop was opened Up till now, it has over 70 coffee shops in six provinces including Hanoi, HoChiMinh, HaiPhong, DaNang, VungTau and DongNai Higlandsbelieves in serving people rich experiences, based around coffee which come from doing everything well Packaged R&G coffee products of Highlands are quite diversified, contain both international and Vietnamese flavoured styles For international coffee blend, there are Espresso-Full City Roast, Espresso-Cinnamon Roast, Espresso-Arabica Supreme, Espresso-Decaffeinated For traditional Vietnamese blends, there are Gourmet, traditional and Heritage

Recently, Higlandshas been suffered from severe scandals like having a dead mouse inside the cupcake several years ago or reprinting new expiry date for over 31,000 coffee cans Hence, many consumers really worried and do not believe about the quality of Highlandss’s products anymore Those scandals make Highlands’s image less value in consumers’ perception in brand image

Therefore, this marketing research aims to help Higlandsto realize its target market’s determinant attributes and buying behaviour of purchasing R&G product and its brand favourability in consumer mind-set

CHAPTER

PROBLEM DEFINITION, PURPOSES & HYPOTHESIS

0 First problem: Higlands needs to understand the consumer determinant attributes for purchasing R&G products in local

QO Second problem: They have to figure out the favourable publicity state of the brand after its several severe scandals

QO Third problem: To explore the buying behaviours of “R&G” consumers

IL Research Purpose-Objectives-Hypothesis

to promptly modify its

marketing mix strategy

How do these attributes influence the consumers’

decision for R&G products?

Which attribute is the most significant one?

To determine major factors influence consumers’

purchasing process in R&G market

Ho: The taste of the R&G coffee brandi the highest importance for the consum H1: The quality of the R&G coffee bran: the highest importance for the consum

2 The analysis of

favourable publicity

state will help Highlands

to come up with effective

How well Highland is positioned inside consumer mind?

How do consumers perceive Highland relative to its key competitors, Trung Nguyen and VinaCafe?

How does favourable publicity determine the relationship between consumer-level perceptions

of brands and their purchasing process? And how do promotional tools impact consumer preferences?

To obtain ratings and rankings

in term of brand awareness between players in R&G market

To determine the Highland position in consumers mindset and to measure the gap to reach the desirable brand image

To identify whether favourable publicity play a significant role

in decision-making of R&G consumers

H1: Less than 50% of the qualified respondents are able to recognize Higl

‘promotion and marketing activities

different attitudes and

usages in the process of

buying decision

(pcople’s attitude

toward information, the

choice of the purchase

place, getting aware of

the price ), Highland

may propose a more

Ilow often do they shop?

Ilow much are they willing to spend per purchase?

Is it more likely that consumers buy R&G products from their favourite coffee shops?

Are consumers buying decision process influenced by other end-users references

such as friends, family, co- worker ?

Who is the purchaser and who

is the end users?

110: Consumers normally sper

IH: There is a strong connect coffee store and R&G goods of gourmet brand

Ilo: There is a_ significan’ between purchasers of R&G end-users

II1: There is no a significant r end-users

IIO: IHighland is in the top 3 m brand for R&G products IH1: Highland is not in the top :

CHAPTER

ALTERNATIVE METHODS, CHOSEN METHODS & REPORT TIMELINE

I Alternative Methods

1 Qualitative research methods

According to Belk (2006), qualitative research is the method for the researchers to gather all information, opinions and data collected from focus group discussion, in depth interview, secondary data analysis and projective technique to understand deeply the consumer’s behaviour, their attitudes and beliefs toward a specific product of one brand Furthermore, the most important element that we concerned about is what the answers of the respondents are in words not just the number of respondents In our research, by applying these methods for R&G coffee of Highlands, we want to know what are the factors that influence Vietnamese coffee drinkers and their attitude with the R&G coffee in general and specifically for Highlands

METHODS

INTIS CH y PCat ie) This is an unstructured and free-flowing 1 Developed in the short time, using FG

interview with one moderator and six to discussion, designed topics for ten participants, who together discuss a respondents and get their opinions in an particular subject (Zikmund et al 2011) hour of discussion

Similarly, in a study by Morgan (1997), 0 Effective technique for idea generation, focus group, which is a method because lack of new ideas, instead of included in qualitative research, gathers trying to find it out, asking for data via group interaction respondents’ opinions to improve the

product

O Flexibility, it is really easy to find participants and switching the time for the convenience with respondents

LI The interviewees are willing to answer the questions without hesitation because they are put under no pressure

O Snowballing: a comment by one individual often triggers a chain of responses from the other participants

a generally undisguised

al 2011) Another similar perspective, Minichiello et

al (1990) defines in-depth Interview is face-to-face questioning answenng between interviewer and respondent, exploring

(Zikmumd et al 2011) At the same with

Zikmund, Gray et al (2007) defines these data, which

a different marmer from the

original purpose

tiggers a chain of responses from the other participants

Researcher can explore ® deeper imsights of the problems Good for understanding se unusual behaviours

Respondents’

independence in providing the answers, no pressure

Providing a quick means to assess buyer behaviour

Availability of

various sources that we foumd to support our e research such as books, data analysis, e-joumals in the Intemet

Time saving, we are lack

of time so we used trusted

Low cost, it save more money for us for using the data that collected from the already sources

Requimng a _- skilled interviewer

Expensive Analysis and interpretation

of results are highly subjective

Out-dated information Different units of are a lot of sources on the intemet and some of them are not reliable

2 Quantitative research methods

Quantitative research, which is including survey questionnaires, mail survey, Internet survey and personal interview, are the basic methods that required researchers to collect the statistics and data and based on what researchers receive to analysis the main problem of the research Moreover, in this quantitative research, we mainly focus on the numbers and the statistics to determine the respondents’ beliefs In addition, using these tools for our research, we have found out the determinants that affect the purchasing power of customers though R&G products

by communicating with a representative sample of individuals (Zikmund et

al 2011)

Mail survey is a self- administered questionnaire that researcher can build a list

to respondent through email (Zikmund et al 2011)

This is a face-to-face and two-way conversation in which an interviewer asks a respondent to answer questions (Zikmund et al 2011)

Large sample is feasible

so the sample’s result is more likely to close to the population

Geographic flexibility, Oo

do not concern where respondents coming from, as long as they have an email is enough

Low cost

Respondent convenience Oo Anonymity of respondent > sensitive problems are solved

Providing the Oo opportunity to give Oo feedback to the respondent H Completeness of questionnaire H High participation

Probing complex answers

Length of interview perhaps up to minutes ®* more in- depth information collected

Disadvantages

Variety of errors Questionnaires may be

structure, with limited choices, or unstructured, to allow

open-end responses

Absence of interviewer

> respondent cannot question the interviewer when they have problem in understanding the questionnaires Response rate > it isa significant obstacle because respondents consider these emails are spam Interviewer influence Expensive for each interview

Possibility of interviewer’s bias Respondents are unwilling to speak truthfully because of sensitive reasons or lacking of anonymity

Chosen Methods

By applying a mixed-model of both Qualitative and Quantitative Research Method, our

team believes that it could help to generate more accurate, credible and reliable results than utilizing just one amongst two most common methodologies

1 Quantitative Research

In order to learn more about coffee preferences, brand awareness, and attitude of the

getting responses from different sampling sub-groups Known as cost- effectiveness, less time-consuming and highly geographical flexibility, it helps to generate a broad view of the whole R&G coffee market consumption with the sampling size of 127 consisting of students, office workers, households and so on Moreover, the detailed sampling plan is clearly demonstrated on how the sample is chosen for the use of this study’s research methodologies and techniques in the following section of this report Qualitative Research

Primary data generated from the use of self-administered questionnaires technique is insufficient for the market research team to understand thoroughly all-marketing problems that have been raised Therefore, a focus group discussion will be conducted

by professional moderator leading discussion for groups of 6 homogeneous consumers, aged from 18 to 35, class A, B, and living in HCMC In fact, having a focus group discussion does not require lots of money or valuable incentives for the interviewees as compared to in-depth interview while still being able to carry on the expectation of providing an in-sight into the consumption of Vietnamese coffee products

Determine the marketing problems, Trung

research purposes, research

questions and research objectives

and hypothesis of the research

Choose appropriate methodologies Hien

(including quantitative, qualitative)

Submit the proposal and get

feedback from teacher All members

Make appointment with

interviewees by emails and prepare

questions for focus group discussion

Mai

Run 1 hour of Focus group

discussion within 10 interviewees Hien

Develop to the real surveys by both

emails & papers directly to

respondents in 5 days with 100

Integrated information and make

conclusions and recommendations

based on the final data

Trung, Hien

Finish the whole project and waiting

for teacher’s feedback

All members

Review, printand submit the final

project All members

CHAPTER PROPOSED SAMPLING

& ACTUAL SAMPLING

product with many potential domestic competitors such as TrungNguyen and Vinacafé, Highlands started from the very last brands in the coffee market and it is a big disadvantage for Highlands to complete with the strong built brands In addition, this project mainly focuses on the Roast & Ground coffee of Highlands, which is allotted in almost entire super markets and markets around Vietnam Moreover, Vietnamese usually use coffee every morning before going to work as a habit and on average; they drink every 2 cups per day Therefore, the population that we obviously target on is the coffee drinkers who are from 18 to 35, 38 to 55 and above 55, only consumers who live in Ho Chi Minh City However, because the price of each R&G’s Highlands package is higher than other brands so we aim at people with the middle and high income Normally, the coffee drinkers that we want to seek for the project are business woman/man, employees and employers

Otherwise, the target population size of R&G coffee is quite large, including all of the purchasers and coffee drinkers From the report, we use survey and focus group to apply for our research For the survey, we prepared specific questions and choose 130 random respondents that

we found in the super markets, markets and office but only 127 responses However, the research team had to eliminate 10 respondents who don’t drink coffee Hence, there are only 117 qualified respondents for our research, it took us nearly 1 week to collect the answers and 1 week to classify all of 150 answers For the focus group discussion, firstly we designed a full 9 topics in 9 different questions for the respondents and decided to find 10 people but to the very last minutes, there are only 6 people who are willing to help us, 3 of them are housewives and 3 of them are coffee drinkers Thus, proving a camera recording, it is easier for us to follow the conversation

CHAPTER

SAMPLE STATISTICS

Gender structure of Respondent

In the survey that we made, including more than 20 different questions with 4 sections and there are 130 respondents, because some of the respondents are not reliable so it is remaining only 110 surveys that we collected, it is nearly 86% of the total surveys Moreover, the number of female respondents is more than 27% and there is 64% number of male‘s respondents, it can be explained

by our random selection of the respondents Thus, coffee is a daily-consumed product and it is not

a separated product that is only for male or female, with this product we don’t distinguish the gender between male and female Therefore, most of the female‘s respondents are students and employees who need to drink more coffee to save more energy for their activities

Age Structure of Respondent

From the information that we have found, there are 4 groups of age in the survey In addition, the group with the highest portion is age from 18 to 25, it take approximately 66% of the total population The second group is age from 26 to 35 with 20% and standing in the third place is age from 36 to 45, only 8 % out of 100% respondents Finally the fourth group age from 46 to 55 is respectively 6% Therefore, there is no one above 55 and under 18

Overall, Age from 18 to 25 is largest; it is because they are mostly students and young office workers who are dynamic and hardworking, that’s why they need to consume more coffee than other groups

Age Structure of Respondents

8# From18to25 §From26to35 §@from36to45 From65to55

8% 6%

Income Structure of Respondents

Only focusing on the middle and high class In this survey, the income is calculated for the whole family not for one person Though the chart below, more than 50% income of the total family is over 20 million VND From 10 million VND to 19 million is 29% and from 5 million to 9 million, it

is constantly 9% With 2 % is for the income under 5 million Furthermore, we did the survey in several of international universities and some international high schools like Raffle and RMIT University where we can find students who live in family with high income

Income Structure of Respondents

2%

Below 5 million VND

5 million - 9 mllion

10 million - 19 million Above 20 million

Occupation Structure of Respondents

Based on the chart below, it reflected that more than 50% people are students while number of employees (office workers) reached to 33% Constantly, there are only 8 employers (owners of organizations) out of total 130 respondents and remaining with a modest percentage 6% Thus, unemployed and people who are looking for jobs are 6 out of 130 surveys, about 6% of the total population The lowest percentage is 1% for housewife and 0% in retirement By tracing following the occupation, we know exactly who we should target on based on the total occupation structure

Occupation Structure of Respondents

@Students mEmployees Employers mUnemployed Retired

0%

Frequency Coffee Purchasing of Respondents

Observing from the shopping habit of customers in our survey, we figured out that 39 consumers go

to super markets or markets to buy coffee for each half month, with hold 31% of total frequency purchased coffee Moreover, 29% people buy coffee more than three weeks, with every three week, there is 14%, it take longer time for each purchase and by watching their frequency coffee purchasing times, we should provide a package of coffee that contain more coffee than the usual one to be more convenient and save time for consumers Otherwise, some of the customers who have more time spending on shopping, usually buy coffee each week, coffee is one of important drinks for these consumers and the number purchasing times is quite high 18% with 23 respondents

Purchasers & buying decision makers in family

In general, consumers answered that they often buy coffee by themselves for their personal purposes, about 43% of customers while the person who usually buy coffee for the whole family is the mother or father, remaining at 33% Staying equally, respondents who often buy coffee in the family are husband or wife and brother or sister with 4% for both In many Vietnamese, there are maids who work in as helpers who usually do house works in the family; these maids are the persons who often go to the markets or super markets to buy coffee for their bosses, by 9% of total purchasers

Sometimes the purchasers are not always the end users of a product, they may buy for their husbands, wives, sons or daughters and it is hard to observe the actual decision makers of a product like coffee In some cases, purchasers buy coffee and they made decision to choose a coffee brand by themselves but in some other case like wives who buy coffee based on the brands that their husbands used and their husband’s decisions

Purchasers of Coffee in the family

@ Purchasers of Coffee in the family Maids

CHAPTER l6

ANALYSIS & FINDINGS

™ Packaging 3.40% 9.40% 23.90% 27.40% 35.90% mBrand 3.40% 5.20% 12.80% 34.20% 44.40% mTaste 6.80% 6.80% 29.10% 2.80% 34.10% mPrice 6% 16.20% 27.30% 30% 20.50%

Based on the research, the amount of respondents chose “Brand” attribute which occupied 44.4% It is one of the most important factors when purchasing coffee Perhaps, when people believe in quality of the brand, it is quite easy to prevent them switching to another brand Next, “Packaging” has 35.9% of respondents It is likely that having nice packaging design can attract more people to buy the products “Taste” and “Price” occupy 34.1% and 20.5% respectively These figures demonstrate that not so many respondents can exactly differentiate between the tastes and flavour Therefore, consumers might think that taste and price are not one of the important attributes when purchasing coffee products Based on the analysis, it is sufficient to conclude that the hypothesis 1 is accepted as brand is the most important attribute that have an impact on the consumer choice for R&G coffee products

Marketing Problem #2: Higlandshas to figure out the favourable publicity state of the brand after its several severe scandals

™%& Research Question 1: How do consumers perceive Highlands relative to its key competitors, TrungNguyen and VinaCafe?

Hypothesis 1: Highlands is in the top 3 most preferable brand for R&G products Null hypothesis HO: Highlands is in the top 3 most preferable brand for R&G products Alternative hypothesis HI: Highlands is not in the top 3 most preferable brand for R&G products

The respondents were asked to rank five roasts & ground coffee brands based on their level

of satisfaction including Higlands and its competitors such as TrungNguyen Café, Vinacafé, Nestle and The Coffee Been & Tea Leaf In order to generate data for this finding, the research team was design a scale from 1 to 5 (/ for the least satisfaction and 5 for the most satisfaction) each brand name for the respondents to rank based on their perception and experiences with each particular coffee brand The results are critically analysed as below

™& Research Question 2: To what extent do the customers get to know

HiglandsR&G coffee products?

HiglandsR&G products, the respondents were asked to recall their past memories of knowing any of Higlandsmarketing & promotion activities

Percentage of people have been recognized any

of Highlands's promotions and advertising

of 18% of the objects, many of them could not exactly indicate the name of its activities or campaigns

The method of Chi-square goodness of fit is utilized to verify the above hypothesis The proportion of “Recognition of Highlands’ promotion and marketing strategies” is a variable

to be verified against the hypothesis proportion of 50% “YES” and 50% “NO”

Recognition of Highlands’ promotion and marketing

strategies Observed N Expected N Residual]

Yes 1¢ 5 2.7

Total 57