design an optimal marketing channel strategy of trung nguyen coffee

2016 Launched Trung Nguyen Legend Café — The Energy Coffee That Changes Life space, becoming the largest coffee shop chain in Southeast Asia... œ Weasel weasel coffee Legendee mink coff

VIETNAM GENERAL CONFEDERATION OF LABOUR

TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION

TON DUC THANG UNIVERSITY DESIGN AN OPTIMAL MARKETING CHANNEL STRATEGY OF

TRUNG NGUYEN COFFEE

SUBJECT: MARKETING CHANNEL

Lecturer: Pham Van Phat

Members group

Nguyêên Thị Minh Thư - 720H1414 Nguyêên Thị Phương Thảo - 720H0176 Nguyêên Hoàng Yên 720H0261 Trâân Thảo Nhi - 720H1399 Đôê Thị Bảo Trân - 720H1420 Mai Lý Thảo Trang - 720H1026 Nguyêên Phúc Hưng Thịnh - 720H0182 Điêân Gia Ân - 720H0865

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MAJOR: MARKETING CLASS: 01 (THURSDAY, SHIFT 3)

Ho Chi Minh City, 15th December 2022

INDIVIDUAL TASKS

Nguyêên Thị Minh Thư 720H1414 | - Market background and context 100%

- Task divider

- Final check

- Report format Điêân Gia Ân 720H0865 | - Recommendations for optimizing 100%

the marketing channels system (Part F)

Tran Thao Nhi 720H1399 | - Needs and Problems identification 100%

- Powerpoint maker

ACKNOWLEDGEMENT

First of all, we want to express our gratitude to the faculty and administration for providing conducive learning environments that allowed us to finish this last essay To facilitate our study, the school has developed a contemporary learning environment and curriculum

Our principal is Pham Van Phat He is a highly significant individual who puts in a lot of effort in the acquisition of knowledge and learning each day He gladly advised and assisted us so that we could successfully complete the essay Every time we study with him, he not only imparts knowledge from textbooks but also gives real-world examples that are incredibly helpful in the process of learning

These are the emotions we had while studying with him and at the conclusion of the Marketing Channel course More than half of the course has already been finished; the last assignment is to properly complete this essay At that time, he was quite eager and committed to helping us finish it If we had any urgent issues, we would always ask for his help, and he was always willing to help You have our sincere gratitude and appreciation for it

Last but not least, we'd want to thank all of the marketing program instructors at Ton Duc Thang University They are the teachers who have supported and guided us throughout our entire college experience, and that gives us more zeal to move forward and carry out the following steps outside of school

Thank you, all teachers!

LECTURER’S COMMENTS

CONTENTS

INDIVIDUAL TASKS 1

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A.Market background and COTt€XE - QQ HH TH Hi ng 2 1 Manufacturer & prodUCtS”Ố OVEFVÏĐW ng He 2 PIN Lá nh ố 5

3 Environmental ÍaCEOIS - - - HH 6 E Ho he ctllcddddtdỎtầdỎ ỐỐ 6

3.2 TechnoÌOBV HH HH cv và 6 E9: ion 7

3.4 SOCial-CUlEUFG - SH HH nọ ni v 8 3.5 GOVETnIRII cọ nọ nà và nh và 8 B Needs and Problems identificatÏOrn LH HH nen 8 ÂN 8

' xa se e 8

- 9

1.30 PROMOTION ẻằ.ằe - 10

"ăn: 11

2 From manufacturer / producer’s perSDECtÏV€S Làng ng khe, 14 3 From the intermediaries” DerSD€CÏVS: - Q QQ LH HH ng ng v 15 4 From the customers” DeFSD€CẨÏV©S: LQ HH ng gen và 15 C._ How to approach the needs and problems - - xnxx 17 1 SeCORarV 4fA - Ặ Q QQ SH HH Ho Tre 17 1.1 Product situation on E-commerce pÏatÍOrrms - - à sSnn ng y 17 1.2 Price Segimen[ - - «Họ HT nếp 18 1.3 Statistics of stores that are distributing Trung Nguyen Cappuccino products 19

2 Primary data Via research StUCIES cceecceeserssececeeeccceseeeeceeeaeeeceeceeeceeeeeeeeeees 19 2.1 Necessary infOrrnatÏOn - con ng 19

2.2 Data CONOCtION cccceeeceeecccecccceecceccececceucceusscussessssesceeecceuscceesceeseeseeeeuceeenscees 23

D (Cân a 30

E COPICÏUSÏOPS - nọ Họ vi 31

F Recommendations for optimizing the marketing channels system - 32

1 Channel structure [Channel strat€gy] - - - cà S s1 nh ng nh nhe 32

2 Optimal marketing/distribution channel [Channel motivation] .‹-« 33 2.1 Vertical COrIfÏÏCfS << SH HH vu ngư 33 VCYNN ¡oan ho on ae c 34

Pa ha ố 35

G LimitatiOns & CaVGAS cọ ni c9 0v 9 4 86 2 36

1

A.Market background and context

Manufacturer & products’ overview

“` TRUNG NGUYEN LEGEND

TAP DOAN CHUYEN CA PHE NANG LUONG - CA PHE DOI DOI

Bom 1n the middle of 1996 - Trung Nguyen is a fledgling coffee brand of Vietnam Within 10 years, from a small coffee company located in the heart of Buon Ma Thuot coffee capital, Trung Nguyen has risen to become a famous coffee brand in Vietnam a powerful corporation with 6 member companies: Trung Nguyen Joint Stock Company, Trung Nguyen Instant Coffee Joint Stock Company, Trung Nguyen Coffee Co., Ltd., G7 Trading and Service Joint Stock Company and the company 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 Trung Nguyen was present in Hanoi, implementing the franchise model

2001 Successful Franchise Company in Japan

2002: Successful franchising in Singapore

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

e 2017 Trung Nguyen Legend officially opened a representative office in Shanghai (China); Launch of E-Coffee Model

e@ 2018 Inauguration of World Coffee Museum at “Global Coffee Capital” Buon Ma Thuot

Field of activity

Trung Nguyen Group is an enterprise operating in the fields of coffee production, processing and trading; franchise; distribution services, modern retail and tourism Vision:

The great organization through serving humanity

Product:

The No, Coffee

4 TRING NGUYEN TAP QOAN CA Pe 141 SANG TAO

5 œ

Weasel weasel coffee

Legendee mink coffee

Coffee Roasters

Popular roasting product group

Pure coffee beans

G7 instant coffee

Brothers sweetened condensed cream

— 2 Nguyên cao cấp EE

Ca phé Chén weasel Ca phéchén legend Ca phé sang tao8

Chir I, Sva House Blend Tel

GT tan den tint, den da 2 int, g7

sửa 3 In1, G7 cappuccino, G7

passiona

Group of processed products 1, 2,3, 4,5

Group of innovative products 1, 2, 3, 4, 5

2 Market overview

VIETNAM: COFFEE MARKET

Market Size 2015-2019, in million US$

Share of Product Types Consumption per Capita

2019, of total value in % 2019, in US$

62.94 50.99

Vietnam Asia

mm CAGR** 2015-2019 | | Instant Coffee Pacific

BB Market Value (in RSP*) GE Roast Coffee RA

WAS

*Retail Selling Price **Compound Annual Growth Rate WMStrategy

The coffee market in Vietnam was valued at 2.96 billion USD in 2015 (calculated

in retail prices) From 2015 to 2019, it grew at a compound annual growth rate (CAGR)

of 13.55% to reach 4.93 billion USD The market is segmented into roast coffee and instant coffee In 2019, the segments recorded shares of 86% and 14%, respectively

In 2015, the per capita consumption value of coffee in Vietnam was 31.98 USD (in retail prices) Until 2019, the consumption grew at a CAGR of 12.37% to reach 50.99 USD That was lower than the average value for Asia Pacific, whose per capita

consumption of coffee was equal to 62.94 USD

With the impact of Covid-19, the global supply of coffee is restrained drastically which impacted the relative coffee prices at consumer end The consumption of coffee also increased with the work pressure and working population increase in the country in

2020, but with the supply chain disruptions, the market has seen halted growth in COVID situations

Vietnam is the world’s second largest producer and exporter of coffee The country’s coffee industry is expected to grow strongly over the forecast period 2027, as the population continues to expand at a rate of about one million people a year

High annual growth in sales of Vietnamese instant coffee paints a favorable picture for the future of the coffee industry as a whole 74.8% of domestic coffee consumption is roast and ground coffee products, and 10.2% are instant coffee products Increased demand for consumer products and foodservice industry from local and international players is another factor that is expected to fuel the market’s growth

is a good sign for the coffee industry

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

The current economic growth rate of our country is quite high, creating many opportunities for Trung Nguyen to invest in expanding production and business activities However, at present, Vietnam's economy is quite good unstable growth rate, but accompanied by rising inflation and currency devaluation, made it difficult for Trung Nguyen's business activities, especially in raw material procurement

3.2 Technology

Trung Nguyen understands how important technology is, nowadays, if they want

to conquer the café market in the world With technology they would have the capacity of increasing the yield as well as enhancing the quality of product, moreover cost would be cut down and they could reach the efficiency of scale etc

Therefore, CEO Dang Le Nguyen Vu came to Europe with an aim to seek the world’s leading partner in manufacturing technology and processing café Neuhaus Neotec company (German) — the company specializes in manufacturing coffee processing equipment in Hakenkamp — was visited and Neuhaus Neotec chose Trung Nguyen to be

the exclusive partner for providing the most modern coffee processing technology in Vietnam

Trung Nguyen not only cares about coffee processing technology but also notices the quality of raw materials so that in April, 2010 Trung Nguyen invested in

drip 1rigation combines with fertilizing through a water model This model increased the yield from 1.6 tons/hectare (2009) to 4 tons/hectare (2011) and also enhanced the quality

of coffee beans

3.3 Competition

Competitor Advantages Disadvantaged

Nescafé of Nestle e Isa famous and long- e The price is higher than

standing coffee brand in the Trung Nguyen's similar world (1938) products

Diversity of coffee products e Because it belongs to a Know how to adapt and foreign company, it is develop products, difficult to approach producing products that are customers with the suitable for Vietnamese mindset of tastes "Vietnamese people

e Distributed across the use Vietnamese country so consumers can goods"

buy easily e Haven't used a modem

distribution system yet e@ Only selling packaged and ready-to-drink coffee, but no instant coffee shop system

Vinacafe of Bien e Isa long-standing and e@ Weak facilities, Hoa Joint Stock prestigious brand in the outdated technology Company Vietnamese market e Roasted coffee

Product variety occupies a small

Qn? i , L OF @ Cheap price, suitable for market

-ElQ, , Vietnamese consumers e Adventurous

e Strong distribution system Marketing Strategy makes products easy for

consumers to access e@ To be the exclusive partner

to supply products for all flights of Vietnam

Globalization makes a big impact on Trung Nguyen Trung Nguyen faces very strong competitors which are from developed countries Starbucks is a perfect example Beside Starbucks, there should be emphasized some common, popular coffee brand names such as: Highland coffee, Gloria Jean’s, Angel In Us, Coffee Bean & Tea ILLY ete which can make the coffee industry in Vietnam is more dynamic and unpredictable

3.4 Social-culture

Communication culture in Vietnam is remarkable, throughout a cup of coffee they can show their kind, friendliness, and respect to the others Throughout a cup of coffee they can share their happiness or difficulties in life Coffee in Vietnam is not only the drinks but also the bridge which brings people together Hence, that probably makes the demand in coffee climbs up and enlarges However, in various regions it has dissimilar tastes in enjoying coffee so Trung Nguyen’s managers should notice those differences in order to fulfill their clients

Vietnam has a long tradition in agriculture and coffee is one of them hence the government puts lots of attention on this “key product”

provided by Trung Nguyen that will probably help the coffee export industry gain $ 20 billion and create5 — 6million jobs.

B Needs and Problems identification

1 4Ps Analysis

1.1 Product

Trung Nguyen targets a diverse group of customers: from young people to the elderly Each group has a different taste in coffee Therefore, the company has launched many products in accordance with the tastes of consumers

Based on the Vietnamese cultural identity, Trung Nguyen Legend gives customers a very different feelmg about how to enjoy coffee that they have not known for a long time With the strategy of product diversification, Trung Nguyen has researched and developed

30 distinct flavor combinations, creating many different flavors for its products Clear, distinct products, focusing on customer groups are one of the core values that help Trung Nguyen have a solid position in the coffee market

In particular, Trung Nguyen Legend launched a product line of Cappuccino instant coffee with Italian style - a pioneer in technology

For many coffee drinkers, especially in the morning, a cappuccino is the perfect choice Cappuccino instant coffee helps consumers without going to the shop can still enjoy a delicious, gentle and delicate cup of coffee with the aroma of coffee, the attractive taste of milk and the sweetness of cream, combined with foam layer This is a solution to save time and still meet the enjoyment needs of consumers in a busy life

Trung Nguyen's cappuccino product line has famous aromas and flavors ranging from mild to strong Trung Nguyen launches 3 different flavors to suit different needs of customers: Mocha, Hazelnut and Coconut This is the combination of taste and the best quality coffee beans

Each box of Trung Nguyen Cappuccino instant coffee includes 12 packs with a weight

of 18g Convenient to carry and prepare anytime, anywhere

1.2 Price

Price is an important factor in the strategic marketing mix model, especially in developing countries like Vietnam, the price sensitivity of consumers is quite high Being aware of that, Trung Nguyen always focuses on keeping the average price in order to have a competitive advantage in the market

The pricing for a new product is also very interesting in Trung Nguyen Legend The price of Trung Nguyen cappuccino instant coffee is aimed at the affordable segment of customers who do not want to spend too much money for a cup of coffee but still want to enjoy the excellent taste of Italian coffee Prices for each product are as follows

Product Weight Price

Trung Nguyén Legend 18gr 55.344 a

1.3 Promotion

Communication activities of Trung Nguyen to introduce a new product line, Cappuccino instant coffee, have been implemented effectively Trung Nguyen breathes life into its slogan that is also reflected in each product The slogan “The energy coffee that changes life” helps people to remember and impress In addition to emphasizing the origin of this cappuccino, Trung Nguyen also affirmed that this is "The masterpiece of Italian coffee - The energy for success”

In addition, Trung Nguyen is also a very hard-working brand to invest in advertising TVCs Especially shown in the prime time frame on national television channels such as VTVI, VTV3 The success like today can be achieved, in no small part due to the results of the activities of "communication and promotion "

The promotion strategy of Trung Nguyen coffee also implements promotions that are both suitable for each period as well as suitable for long-term campaigns, such as: Discount programs, sales hunting on stores e-commerce platform

In addition, Trung Nguyen also exploits social platforms such as Facebook, Youtube, to carry out free advertising campaigns that bring very high reach

Tiki 10-10

errors FREESHIP scm

20% MỖI NGÀY

Trung Nguyen Coffee has applied 3 levels to bring products to consumers:

in Vietnam, 7,000 points of sale and 59,000 retail stores

=> Consumers can buy Trung Nguyen Legend Cappuccino Instant Coffee anywhere

E-commerce channel

With a prominent trend in recent years is to do online business and put products on e-commerce sites, Trung Nguyen Legend has officially launched "Trung Nguyen Legend Coffee store” on Amazon This is a milestone marking an important step for the Group on the journey of coffee export by leveraging the cross-border e-commerce platform

The variety and quality of products, along with the strong development of e- commerce, have helped Trung Nguyen Legend Cappuccino instant coffee conquer the coffee lover community and resonate in the international market Selling on Amazon is Trung Nguyen Legend's wise direction to exploit a potential and sustainable new sales distribution channel in the direction of current and future development activities Wise distribution strategy has helped Trung Nguyen Legend Cappuccino instant coffee product line become more and more popular in the Vietnamese market In addition, Trung Nguyen also uses an online Store with the name: "Trung Nguyen Coffee store” - a form especially suitable for the consumption behavior of young people today

Trung Nguyen online store covers famous E-commerce platforms in Vietnam and the U.S

=> Realizing the goal of expanding the domestic market in the direction of online retail, demonstrating the strategic vision and ambition to dominate the domestic market and reach out to the world

An energy coffee that activates the hidden energy for creativity!

When implementing this system, Trung Nguyen wants to increase brand awareness and build a new and convenient retail model

2 From manufacturer / producer’s perspectives

As a manufacturer, supplier, Trung Nguyen with 4 factories in operation, every small change in the market also brings many problems and losses Especially the recent covid pandemic has seriously shaken the manufacturing economy There are three aspects that are directly negatively affected:

- The global supply chain is disrupted locally, the global circulation of goods, services and labor is no longer the same, making it impossible for all economic, trade and investment activities to be smooth and efficient Trung Nguyen Legend has difficulties in importing and exporting raw materials, finished products.,

- The Covid-19 pandemic has reduced consumption of people and society, affecting the tourism and service sectors the most As a result, service-based economies as the backbone and engine of growth are being hit the hardest and most negatively

by this pandemic Coffee is considered a non-essential product line, so consumption during the epidemic period also decreased

- The Covid-19 pandemic has reduced the enthusiasm of investors, and entrepreneurs are also hesitant to step up production and business activities Trung Nguyen Legend also stopped its plans to expand its business and market share This has a strong impact on economic growth, trade and investment

In addition, there are also difficult problems that producer Trung Nguyen Legend has

to face, which is the unstable gasoline price With the rapid increase in gasoline prices over the past time, many other commodities have increased in price, causing businesses

to increase costs If the cost of input materials is high, Trung Nguyen may have to make a

decision to change the product price This is quite a difficult thing because the Vietnamese coffee market is diverse, the level of competition as well as the price sensitivity of consumers is also very high

In addition, the environmental temperature that affects the development of coffee is also very important Both Trung Nguyen producer and investors are concerned that the prolonged dry weather may adversely affect the output for next year's coffee crop

3 From the intermediaries’ perspectives:

Distribution intermediaries are all individuals and organizations involved in acting as

a bridge between manufacturers and consumers in product distribution Distribution intermediaries are an important link for products to reach consumers and at the same time provide more support to manufacturers to reduce costs and limit risks

The coffee retail market in Vietnam is flourishing with many domestic and foreign brands competing fiercely In this race, many brands have had to "bitterly" leave the market under the pressure of space rent and operating costs, while revenue is not enough to cover costs

One of the problems that intermediaries face is that they often operate in a flexible environment, where the demand for what they do can change Where the functions of intermediaries and other players may duplicate Therefore, they want to find a source of goods with good policies such as public debt policy, discounts or publications that support in-store promotion so that they can ensure that they sell profitably and maintain their sales? maintained in the market

In addition, Trung Nguyen coffee encountered conflicts between official stores in different places or conflicts between e-commerce platforms such as Shopee, Lazada and Tiki These channels will compete with each other through pricing policy, promotions and customer service

4 From the customers’ perspectives:

Consumers' purchasing decisions

Consumer behavior model assumes that consumer buying behavior usually goes through 5 stages before and after purchase, including need recognition, information search, evaluation of alternatives, and purchase decision products and buying behavior

Information Search Evaluation of Alternatives Purchase Decision Post-Purchase Evaluation

Consumer buying behavior is divided into 4 main categories: Complex Buying Behavior, Variety-seeking buying behavior, Habitual buying behavior, Dissonance- reducing buying behavior Trung Nguyen Legend Cappuccino instant coffee product line

is a special case when target customers often make purchasing decisions in the following ways: Variety-seeking buying behavior, Habitual buying behavior

Habitual buying behavior decisions take place with everyday, essential consumer products For a certain set of customers, they are loyal to the coffee brand they have chosen Because each type of coffee will have its own unique flavor For this buying behavior, customers usually do not take too much time and effort to make a decision However, instant coffee consumers also need to decide on Variety-seeking buying behavior In this behavior, customers will often seek variety by buying a variety of coffees from different brands They love to discover new characteristics of different coffees, or simply, they are people who like to change to refresh the palate

At the same time, coffee is a product that is currently in high supply, has many substitutes, and is relatively price sensitive Therefore, the price of the product will have a great influence on the purchasing decision of consumers

In addition, the changing needs of consumers will influence their decisions After the Covid-19 epidemic, shopping on e-commerce platforms became one of the familiar and key forms of consumers However, Trung Nguyen coffee's products have not been promoted on e-commerce platforms