marketing management evaluating the effectiveness of the coffee houses customer loyalty programs

The study focuses on evaluating the effectiveness of The Coffee House’s customer loyalty programs.. ABSTRACT This study evaluates the effectiveness of customer loyalty programs at The Co

NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL

MASTER OF BUSINESS ADMINISTRATION IN ENGLISH

II

Marketing Management Evaluating the Effectiveness of The Coffee House”s

Customer Loyalty Programs

Member

Lecturer Department

1 Le Minh Khang (EMBA 22032)

2 Nguyen Xuan Manh (EMBA 22040)

3 Le Tran Trung (EMBA 22049)

Assoc Prof Dr Le Thi Lan Huong Business School

National Economics University

AUTHOR NOTE

This research paper demonstrates my understanding and application of principles

learned in the Marketing Management module at the Business School, National Economics

University The study focuses on evaluating the effectiveness of The Coffee House’s customer loyalty programs While the analysis is comprehensive and based on publicly available information, it’s important to note that real-world implementation would require a more extensive approach and research to ensure the effectiveness of the customer loyalty programs Due to the scope of this research, the primary focus is on evaluating the effectiveness of The Coffee House’s customer loyalty programs, with limited reference to other aspects such as public relations

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ABSTRACT

This study evaluates the effectiveness of customer loyalty programs at The Coffee House, a leading coffeehouse chain in Vietnam Despite the brand’s success and popularity, maintaining and enhancing customer loyalty remains a challenge in the highly competitive coffee industry This research provides a comprehensive analysis of The Coffee House’s current loyalty programs, assessing their effectiveness in enhancing customer loyalty, and proposes recommendations for improvement The expected outcome is a set of actionable insights that can assist The Coffee House and other businesses in the coffee industry in enhancing customer loyalty through effective loyalty programs

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TABLE OF CONTENTS

I Introduction

1 Background of The Coffee House

2 Mission and Vision

2.1 The announcement to the public 2.2 The activities of The Coffee House

3 Products

4 Market Positioning

4.1 Product (Product Strategy) 4,2 Price (Pricing Strategy) 4.3 Place (Distribution Strategy) 4.4, Promotion (Promotion Strategy)

5 Competitors

II Current Situation Analysis

1 Examination of Customer Loyalty Indicators

1.1 Definition and Significance of Customer Loyalty Indicators 1.2 Review of Key Customer Loyalty Indicators

2, Analysis of Current Customer Loyalty Initiatives at The Coffee House

2.1 The Coffee House’s Customer Loyalty Program 2.2 The Impact of The Coffee House’s Customer Loyalty Program on Business Performance

2.3 Potential Impact of The Coffee House’s Activities on Key Customer Loyalty Indicators

3 Future Prospects and Potential Challenges for The Coffee House

3.1 Future Prospects 3.2 Potential Challenges III Recommendations to enhance The Coffee House Loyalty Program

1 Enhancing Personalization Through Advanced AI Integration

2 Implementing a Tiered Rewards System

3 Emphasizing Sustainability

4 Shifting to Experience-based Rewards

5 Enhancing Digital Integration

6 Building Community Engagement

IV Conclusion

V References

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I Introduction

1 Background of The Coffee House

THE COFFEE HOUSE

Figure 1 The Coffee House's logo

The Coffee House is a Vietnamese coffeehouse chain that was created in 2014 It is

based in Ho Chi Minh City The company was founded by Nguyén Hai Ninh, who initially started with the first store chain Urban Station The inspiration to start a coffee business came

after meeting Dinh Anh Huan, the founder of Seedcom investment fund, who shared the story

of building the Mobile World chain

Nguyén Hai Ninh, announced plans to open as many as 700 outlets across Vietnam By 2022, the company had achieved year-on-year sales growth of 53% to reach VND 564 billion ($22.7 million) in the first nine months of the year The coffee chain currently operates more than

150 outlets across Vietnam

In terms of leadership changes, as of December 2021, the legal representative and

CEO of The Coffee House is Ngô Nguyên Kha

Figure 3 Ngo Nguyen Kha - CEO of The Coffee House The Coffee House has also made strategic changes over time to adapt to the market For instance, despite the popularity of food delivery apps, The Coffee House initially chose not to appear on these platforms Instead, they focused on selling through their own app, which had been in operation since 2016 However, they later changed their strategy and started appearing on food delivery apps like Baemin

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UTTAR

The Coffee House chính thức xuất hiện trên Baemin

The Coffee House officially appears on Baemin

Figure 4 The Partnership between Baemin and The Coffee House

In 2023, The Coffee House launched a new ‘exclusive and upscale’ coffee shop brand

— SIGNATURE by The Coffee House This new concept was designed to cater to the increasing consumer appetite for premium products and experiences across the country

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Figure 5 Signature by The Coffee House landscape

2 Mission and Vision

2.1 The announcement to the public

Mission: The Coffee House aims to become a leading coffee brand in Vietnam and globally They are committed to creating a closed process, from supply to product delivery to customers The Coffee House places customers at the center of their operations, striving to provide the best products and services

Vision: The Coffee House envisions itself as "I Am Quality — You Are Healthy!" They aspire to become a top coffee brand in Vietnam and expand globally The Coffee House seeks

to combine traditional and modern designs to create its unique identity They aim to be a gathering place for coffee lovers

2.2 The activities of The Coffee House

Partnerships: The Coffee House has formed strategic partnerships to enhance its operations and reach For instance, they have cooperated with LG, a global electronics corporation,

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marking the first instance of such a partnership in Vietnam They also have a significant partnership with Seedcom, an investment fund Seedcom plays a crucial role in The Coffee House’s ecosystem, providing services like AhaMove for delivery

Employees: The Coffee House has a strong focus on its employees As of 2024, they have around 282 employees They provide a flexible, challenging, dynamic, and friendly work environment The company values honesty and passion in its employees and offers opportunities for rapid learning and sustainable career development in the F&B industry They also provide benefits such as insurance and vacation policy

Community Involvement: The Coffee House plays a significant role in the local community They have launched their own mobile application since 2015, which serves as an effective member care channel2 They also focus on educating customers about the journey of the coffee bean through their new concept, SIGNATURE by The Coffee House6 Furthermore, they have made efforts to elevate the Vietnamese coffee industry through initiatives like acquiring Cau Dat Farm, an agricultural business based in Da Lat

3 Products

Figure 5 The Coffee House’s menu The Coffee House offers a diverse range of products, each carefully developed to cater

to different customer preferences Their coffee options range from traditional Vietnamese

coffee like Phin Sita Tuoi priced at 49,000 VND, Cả Phê Việt Nam Đường Đen Sữa Đá at 45,000 VND, to modern espresso-based drinks like Marble Latte and Caramel Macchiato,

both priced at 55,000 VND

In addition to coffee, The Coffee House also offers a variety of cold brews, tea and

fruit drinks, and milk tea Their cold brew options like Cold Brew Phúc Bồn Tử and Cold Brew Sita Tuoi are priced at 49,000 VND each Their tea and fruit drink offerings include Oolong Ta Quy Kim Quat Tran Chau and Oolong Tir Quy Vai, both priced at 49,000 VND They also offer a variety of milk tea options, including Tra Stra Oolong Ti Quý Sen Sương

Sao priced at 65,000 VND and Tra Den Macchiato at 55,000 VND

Complementing their beverage offerings, The Coffee House provides a selection of

pastries and snacks, such as Banh Mi Que Pate priced at 15,000 VND, Banh Mi VN Thit Nguội at 39,000 VND, and Croissant trứng muối at 39,000 VND

For customers who prefer to enjoy their coffee at home, The Coffee House offers a range

of products such as Ca Phé Den Da Tu priced at 110,000 VND for a pack of 30 bags and Ca Phé Rang Xay Original | 250g priced at 60,000 VND

4, Market Positioning

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4.1 Product (Product Strategy)

Types of coffee to drink

Vietnamese traditional are popular among local stores The ratio of

Italian coffee (Cappucino, Moca etc) are popular among chain

C8Ne

Figure 6 Vietnamese popular type of coffee to drink The Coffee House offers a diverse range of products to cater to different customer preferences Their offerings include a variety of coffee options, cold brews, tea and fruit drinks, milk tea, pastries and snacks, and home coffee products Each product is carefully developed and curated to meet the diverse tastes and preferences of their customers For instance, their coffee options range from traditional Vietnamese coffee like Phin Stra Tiroi to modem espresso-based drinks like Marble Latte and Caramel Macchiato This blend of tradition and modernity is a unique selling proposition of The Coffee House, setting it apart from many other coffee chains in the market

4.2 Price (Pricing Strategy)

The Coffee House implements a diverse pricing strategy, providing multiple value options for customers Their products are priced competitively, offering good value for money while ensuring high quality For instance, their Phin Sita Tiroi is priced at 49,000 VND, Ca

Phê Việt Nam Đường Đen Sữa Đá at 45,000 VND, and The Coffee House Sita Da at 39,000

VND Despite the competitive pricing, The Coffee House does not compromise on the quality

of its products They source their coffee beans from local farmers, paying a premium price to ensure the quality of their coffee

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4,3 Place (Distribution Strategy)

Số lượng cửa hàng tại thời điểm cuối tháng 11

Leaf

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Figure 7 The Coffee House’s opened stores The Coffee House has a strong presence across Vietnam, with over 100 stores serving over 40,000 customers a day These stores are strategically located in high footfall areas, making them easily accessible to customers In addition to their physical stores, The Coffee House has a strong online presence They have their own mobile application, which has been

in operation since 2016 This app serves as an effective sales channel, allowing customers to order their favorite coffee with just a few taps on their phone

4.4, Promotion (Promotion Strategy)

The Coffee House employs a variety of promotional strategies to attract and retain customers They run regular campaigns and offers, especially during special occasions like Tet Holiday These promotions not only attract new customers but also encourage repeat purchases, thereby enhancing customer loyalty The Coffee House also uses its mobile application as a member care channel, providing personalized offers and rewards to its

members

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Két qua kinh doanh cua The Coffee House

aDomhthu Lợi nhuậnsauthuế CAFEF

Figure 8 The Coffee House’s sales report

In conclusion, The Coffee House’s market positioning is characterized by its focus on quality, customer-centric approach, innovative selling strategy, and unique store ambiance This positioning has allowed The Coffee House to carve out a significant market share in the highly competitive coffee industry in Vietnam

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Highiands tcc i 339,

Trung Nguyen Coffee TK 40%

The Coffee House TSS 26%

Trung Nguyen Legend: Trung Nguyen Legend is a well-established coffee brand in Vietnam In 2022, it was the coffee-shop chain with the highest earnings in Vietnam, having revenue of around 6.2 trillion Vietnamese dong (VND)

Highlands Coffee: Highlands Coffee is another major player in the Vietnamese coffee market It is known for its continuous innovation and has a significant presence across the country In 2022, Highlands Coffee generated approximately 3.6 trillion Vietnamese dong in revenue It was the leading coffee shop chain based on the number of stores in Vietnam with

609 shops as of March 2023

Phuc Long Coffee & Tea: Phuc Long Coffee & Tea operates nearly 100 standalone stores and approximately 750 kiosks, most of which are in Vietnam’s capital, Ho Chi Minh City

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Starbucks Vietnam: Starbucks accounted for just 2% of Vietnam’s $1.2bn coffee-drinking market in 2022 It had 92 stores, which works out to less than one for every million people

II Current Situation Analysis

Given the critical role of customer loyalty in the competitive landscape of the coffee chain market, it is imperative for businesses such as The Coffee House to effectively engage their customers and foster loyalty The Coffee House, with its diverse range of products and commitment to quality, has managed to secure a significant market share in the highly competitive coffee industry in Vietnam However, to sustain its growth and success, it is essential for The Coffee House to continuously evaluate and enhance its customer loyalty program

In the subsequent sections of this essay, a detailed analysis of The Coffee House’s customer loyalty program will be conducted This will involve an examination of their current loyalty initiatives, an evaluation of their effectiveness using key customer loyalty indicators, and an identification of challenges and opportunities for improvement This analysis aims to provide valuable insights into The Coffee House’s customer loyalty program and offer recommendations for enhancing customer loyalty

1 Examination of Customer Loyalty Indicators

1.1 Definition and Significance of Customer Loyalty Indicators

Customer loyalty indicators are metrics used to measure the loyalty of customers towards a brand These indicators are significant as they provide insights into customer behavior, preferences, and satisfaction levels They help businesses understand how well they are meeting customer needs and expectations, and identify areas for improvement

Customer loyalty is a crucial aspect of any business, especially in the coffee industry Loyal customers are not only more likely to repeat purchases, but they also bring their friends and family, expanding the customer base Furthermore, loyal customers are less likely to switch to competitors, making them a valuable asset for any business Therefore, coffee chains like The Coffee House invest heavily in initiatives aimed at enhancing customer loyalty

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