1TABLE OF CONTENTS

SUMMARY................................................................................................................................................. 2

INTRODUCTION...................................................................................................................................... 3

A. CURRENT SITUATION...................................................................................................................... 1

1. ENVIRONMENTAL AUDIT: .............................................................................................................................4

1.1 External Environment:............................................................ Error! Bookmark not defined.

a. Maro Environment: ..................................................................................................................................8

b. Micro Environment: .................................................................................................................................8

1.2 Internal Environment: ............................................................ Error! Bookmark not defined.

1.3 SWOT Analysis: .......................................................................................................................................14

2. DIFFERENTIAL ADVANTAGES:.................................................................................................................... 15

B. RECOMMENDATIONS: ................................................................................................................16

1. SEGMENTATIONTARGETINGPOSITIONING: ......................................................................................... 16

1.1 Segmentation:..........................................................................................................................................16

1.2 Targeting:..................................................................................................................................................17

1.3 Positioning: ...............................................................................................................................................18

2. MARKETING OBJECTIVES:........................................................................................................................... 23

3. MARKETING MIX: ........................................................................................................................................ 24

a. Product: ........................................................................................................................................................24

b. Place:..............................................................................................................................................................25

c. Price:...............................................................................................................................................................27

d. Promotion ....................................................................................................................................................27

CONCLUSION .........................................................................................................................................29

APPENDICES..........................................................................................................................................30

REFERENCES..........................................................................................................................................34

2SUMMARY

This report involves research and analysis about instant coffee market in which G7

Coffee by Trung Nguyen Corporation is the chosen brand.

Firstly, analysis about internal and external environment that affect the company and

the coffee itself will be mentioned in Current Situation part using PESTEL and SWOT.

Besides, competitive advantages of the G7 Coffee will be discussed. Then, 4Ps will be used

for the Recommendation part including setting SMART objectives and giving out

segmentation, targeting and positioning methods.

3INTRODUCTION

Trung Nguyen was established in 1996 by Mr. Dang Le Nguyen Vu, who is regarded as

Vietnams Coffee King. After only 9 years, Trung Nguyen has now been expanding its

market share to 53 countries and territories with fast speed and even dominates many

regional markets inside and outside Vietnam.

Among them, G7 Coffee is considered the most successful product of Trung Nguyen.

Launched in 2003, G7 instant coffee immediately won over the leading position of a global

brand Nescaf - in domestic market and crossed national border to reach the worlds

consumers.

4SWOTAnalysis

A. CURRENT SITUATION

1. Environmental Audit

Auditing the marketing environment consists of internal environment and external

environment is integral for every company before it comes to the marketing plan to

determine how it should market its product in Vietnam.

Since the company cannot run themselves without outside factors; there are many forces in

surrounding environment affecting to it. External factors are divided into two kinds: macro

factors and micro factors which determine opportunities and threats while internal

environment determines strengths and weaknesses of the company. In general, the

auditing process and techniques to be applied can be illustrated by the below graph:

Figure 1: Environmental Auditing Process

Macro Environment

Micro Environment

Internal Environment

PESTEL Analysis

Five-Forces Analysis

Internal Audit

51.1 External Environment

a. Macro Environment

Firstly, Political and Legal factors are analyzed together as they have tight relationship

with each other. Vietnam has a stable political background with only one party that

regulates all the country. Besides, the Government always has the motivation to increase

the consumption of domestic products among people. That is a good sign for Trung Nguyen

a Vietnamese company in term of government policy. Besides that, the import tax rate for

coffee products is quite high as 16-20% for green bean coffee, 35% for roasted coffee and

43% for instant coffee (Department of Tax Policy, 20011). In case of G7 Coffee, as being

produced in Vietnam, Trung Nguyen is not subjected to import tax that can help the

company lower the price to compete better with imported coffee.

Economic factors are very important. According to International Monetary Fund, the

growth rate of Vietnam is predicted to be around 5.1% in 2012 but likely recover and rise

to 5.9% in 2013. Besides that, Consumer Price Index in 2012 is restrained at a low rate as

6.81% but quite uneven and complicated to be forecasted. To be able to adapt to this

situation, Trung Nguyen will have to have a very flexible marketing plan for every time the

price rises or falls, the target market of Trung Nguyen will, even just very slightly, also

change.

6Figure 2: Vietnam Economy in the period 2007-2013 (Source: Vina Capital, ANZ)

Social factors also play an important role in determining the success of Trung Nguyen.

Most of Vietnamese people have the habit of drinking coffee as that Vietnam has of a strong

culture of drinking coffee. According to IAM, 65% of Vietnamese consumers drink coffee 7

times a week. In case of instant coffee, 21% of consumers drink coffee 3-4 times a week.

Drinking coffee in house accounts for 49% of the total consumption of coffee. All these data

approves that Vietnam coffee market is so promising.

In addition, technological factors in the macro environment are also very crucial if they

are utilized correctly.

8.50%

6.20%5.30%

6.78%5.80%

5.10%5.90%

12.65%

19.89%

6.52%

11.75%

18.13%

6.81%7.80%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2007 2008 2009 2010 2011 2012F 2013F

GDP Growth Consumer Price Index

7Figure 3: Rate of internet users over the population (Source: GSO)

Since, the number of Internet user in Vietnam has increased significantly as over 30% of

people (GSO, 2010) use it regularly, Internet is going to be a very useful tool for the

marketing and sale activities of Trung Nguyen as the online shopping movement is

blooming in Vietnamese consumers and Vietnamese are becoming more and more

technological savvy. Hence, it will be enormously effective if Trung Nguyen is able to make

use of the internet for many cheap yet efficient advertising, promoting and communicating

channels such as websites, forums, podcasts, online sale.

Lastly, Environmental factors may seem less important but still needs to be mentioned.

Vietnamese people are raising the concern towards environment protection as 70% urban

Vietnamese prefer to buy brands which take care of the environment, even more expensive.

(Kantar World, 2012) Besides that, if their organizations have any un-ethical practices, the

3.87.69

12.9

17.6721.05

24.426.55

31.11

2003 2004 2005 2006 2007 2008 2009 2010

Uni

t: %

ove

r the

pop

ulat

ion

8laws which are made will be restricted them. Hence, Trung Nguyen should invest in a

modern waste treatment system to take a responsible in protecting the environment.

b. Micro Environment

The mirco environment involves factors within the particular industry that the company

operates in, in this case, coffee industry. To have a clear analysis, Five Forces by Michael

Porter is applied.

Threat of new entrants

Each new entrant to instant coffee market brings new threat of reduce the market share of

the existing companies in the industry based on strategy of price, taste and so on. However,

the threat of new entrants to the industry to compete with Trung Nguyen is quite low as

the market is highly saturated. Besides that, it requires a quite large amount of financial

resources to setting plant or building factory in order to enter into this industry.

Threat of substitute

Vietnamese use coffee to enjoy the distinctively rich and earthly flavor, relax, enjoy with

friends and family or just avoid being sleepy. Coffee containing significant amount of

vitamins and minerals also satisfies the nutritional needs such as reducing the risk of

gallstones, colon cancer and so on. There are a range of products which can satisfy the

9same customer needs to meet the demand of customers such as tea, energy drinks, juices,

soft drinks or so on. Hence, the threat of substitute products is substantial in case of Trung

Nguyen.

Bargaining power of customers

There is minimal or even no switching cost for customers. Instant coffee is not expensive

thus customers can easily make buying decision. Besides that, there is a range of brands

available for customers to choose apart from Trung Nguyen. Hence, in case of Trung

Nguyen, bargaining power of customers is high.

Rivalry among existing competitors

Figure 4: Market share of Vietnam instant coffee market in 2011 (Source: AC Nielsen)

10

Trung Nguyen is doing well on its path to become the dominant brand in the local instant

coffee market as in 2011, G7 coffee of Trung Nguyen held a dominating market share of

38%, followed by Nescaf, Vinacaf and Passiona (another product of Trung Nguyen).

Competitors are always the main force for association to do their business well because

their market share could be lost by these rivals. In case of Trung Nguyen, the rivalry

amongst current competitors is not very high but it still has to be careful in every actions.

The bargaining power of suppliers

The main input in case of Trung Nguyen is green coffee bean. Trung Nguyen has fix

suppliers to ensure stability of resources as well as stable cost. Trung Nguyen has co-

operated with farmer households to build up and develop coffee material areas. Such effort

will create and maintain the win-win and long-term relationship with suppliers. Hence, the

bargaining power of suppliers is quite low.

1.2 Internal Environment

a. Internal Audit

According to Fifield P., 1994, internal strength and weaknesses of the company can be

determined through four aspects: Land, Labor, Capital and Enterprise.

11

Figure 5: Internal environment factors (Source: Fifield P., 1994)

Land (Physical Resources)

In 2012, the fifth coffee factory in the most modern coffee production system which

belongs to Trung Nguyen Coffee Group is officially opened. (Trung Nguyen, 2012) The total

investment for this system counts about 110 million USD. Besides that, all machineries of

Trung Nguyen are totally new and each production line is an optimum combination of

modern machineries exported from well-known manufacturers in the world to ensure

products to meet all strictly requirements in not only local but also foreign market.

INTERNAL AUDIT

Land

Labour

Enterprise

Capital

12

Labor

In todays increasingly competitive environment, Trung Nguyen should regard human

resources as a determinant of its success. To acquire the best people, Trung Nguyen works

with many head hunters and diversifies its recruiting resources. With the desire to make

Trung Nguyen the second home where everyone strives to achieve a common objective,

Trung Nguyen has, for several years, put its effort to build an ideal working environment,

promote creativity and encourage innovations to improve performance. However, while

Trung Nguyen has a strong management, the blue-collar labor is not officially trained with

skills and knowledge.

Enterprise

Trung Nguyen was established in 1996 by Mr. Dang Le Nguyen Vu, who is regarded as

Vietnams Coffee King. After only 9 years, G7 has now been expanding its market share to

53 countries and territories with fast speed and even dominates many regional markets

inside and outside Vietnam. Now, Trung Nguyen is the largest domestic coffee brand within

Vietnam and has high rate of customer loyalty.

Capital

Trung Nguyen has a strong financial capacity. The total revenue reaches $250 million in

2011 and is expected to reach $1 billion in 2015. (Trung Nguyen, 2012) As the revenue of

Trung Nguyen has been increasing gradually, refers to a stable financial background for the

13

company. Besides that, Trung Nguyen has been stimulating and planning a big push to the

foreign markets that can help the company to strengthen financial resources.

b. Value Chain

The value chain model which was developed by Michael Porter offers a birds eye view of

the firm and what it does.

Support

Activities

Firm infrastructure

Head office is located in Ho Chi Minh City

5 factories in the most modern coffee production system in Asia

Human resource management

Advanced training mechanism.

Retaining policy.

Allowance policies

Appropriate job transferring policy, position promotion policy.

Technology development

Always being modernized.

Each production line is an optimum combination of modern machineries

exported from well-known manufacturers in the world

Procurement

Closely co-ordinate with suppliers of input

14

Primary

activities

Inbound

Logistics

Operation Outbound

Logistics

Sales and

Marketing

Servicing

Establish

strategic

relationship

with

suppliers

Latest

technology

Product quality

is monitored

closely via ISO

standard

9001:2008

Wide-broad

distribution

channel

Affordable

price

Personalize

and prestigious

brand

Advertisement

Consulting

service

1.3 SWOT Analysis

Strengths- Prestigious and well-know brand- Good distribution system

- Strong management

- Strong finanicial resource - Supply chain

Weaknesses- Workers are lack of skills- Lack of market research and change in customer behaviour

Opportunities- Government incentive towards domestic products

- Strong coffee culture

Threats- Increasing number of substitute products

- Intense competition - Change in tases

SWOT

15

2. Differential Advantages

The most successful competitive edges that Trung Nguyen has built is the quality. Trung

Nguyen coffee have unique taste apart from other brands. Trung Nguyen flavor is suitable

with Vietnamese people, especially in the North area as G7 brand accounts for 75.8% of

market share in this region. According to an IPSOSs research on consumers of G7 coffee

brand, 92% explain the main factor leading to the choice of G7 coffee is the unique taste.

With the competitive advantage of quality, Trung Nguyen instant coffee can be

differentiated. However, to get more customers, it is necessary for Trung Nguyen to target

on the right customers and bring up an appropriate marketing mix which are discussed in

the next part of the report.

16

B.RECOMMENDATION

1. SegmentationTargetingPositioning

1.1Segmentation

Segmentation is important because rarely can a company afford to be all things to all

people (Malcolm McDonald. M, 1005). Segmentation enables firm to divides customers into

groups that share the same characteristics and concentrate its effort on the most promising

opportunities. There are many ways in which the company can segment the consumer

market so as to identify the most suitable and profitable market segment and target

customers.

In case of G7 Coffee, the segmentation can be carried out base of demographics criteria

including age, gender, income status, geography.

Group Proportion Buying

possibility

Reason

Age

0-14 25% Low - Undemand

15-50 46% High - Higher Income

- Drink in house, workplace to

relax or drink with friends,

family

>50 29% Low - Demand nutritional beverage

17

Gender Female 48.5% Medium - Prefer other beverage such as

juice, tea

Male 50.5% High - Suit the males taste

Income

Low $300/month Medium - Prefer drinking coffee in stores

or seek for more expensive

brand

Geography North 36.4% High - Suit the taste

Middle 14% Medium - Low income

South 49.6% Medium - Prefer iced coffee with much

milk

1.2 Targeting

After market segmentation process, Trung Nguyen needs to choose its target markets to

build up the most effective strategy to attract customers.

As it can be seen from above table, the target that Trung Nguyen should aim at for G7

Coffee are customers from 15-50 years old of medium income group in the North

area. This age group that occupies for the majority of population. This is the age when

18

people can have many occasions to use instant coffee as drinking in house or workplace,

enjoying with family, friends or inviting visitors to drink. Besides that, the convenience of

instant coffee is also regarded by people who still go to work.

While high-income people demand for more luxury coffee brands such as Legendee, Weasel

(other brands of Trung Nguyen), G7 coffee is more suitable and affordable for most of

medium-income people.

In Vietnam, people in different geography area have different coffee taste. While in the

South, people like to drink iced coffee including little coffee but much milk, North

consumers mainly drink brewed coffee or dense coffee with no or little milk. In case of G7

Coffee, it tastes as rich, full and satisfying as a brewed cup, thus, its taste is more suitable

for North consumers.

Overall, in order to have better competition, G7 Coffee should target on women and men

from 15-50 years old of medium income group in the North area as well as come up

with the most appropriate strategy based on the buying behavior of those groups.

1.3Positioning

Positioning is the act of designing the companys offering and image so that they occupy a

meaningful and distinct competitive position in the target customers minds. (Kotler. P,

1997).

19

Firstly, it is important to understand what the nature of the competition in the market is

and what attributes customers look for when buying instant coffee:

Figure 6: Factors affecting buying decisions of instant coffee

According to Deng et al, 2009, customer satisfaction is very important in todays business

world as the ability of a service provider to create high degree of satisfaction is crucial for

product differentiation and developing strong relationship with customers. Hence, G7

Coffee must try to improve all above factors that may lead toward competitiveness and

success.

Buying Decision Ingredient

Package

Taste

Brand

Price

20

Result of the research about customers satisfaction on G7 Coffee in 2010 will be illustrated

as below:

Figure 7: Customers satisfaction on the quality of G7 Coffee

Figure 8: Customers satisfaction on the price of G7 Coffee

The quality of G7 Coffee has satisfied most of customers at a high level as the percentage of

customers feel very satisfied and satisfied on G7 Coffee quality is 60% and 33%

60%

33%

1%

Customer's satisfaction on the quality of G7 Coffee

Very satisfied

Satisfied

Neutral

Unsatisfied

30%

41%

24%

5%

Customers' satisfaction on price of G7 Coffee

Very satisfied

Satisfied

Neutral

Unsatisfied

21

Low price High price

High quality

Low quality

respectively. Besides that, Customers satisfaction on the price of G7 Coffee is lower but still

positive as only 24% and 5% feel neutral or unsatisfied respectively.

Lastly, a perceptual model shows clearer the position of G7 Coffee and other brands:

Figure 9: Perceptual mapping of instant coffee market in Vietnam

With the competitive advantage of good quality, it is not difficult for Trung Nguyen to

compete with main competitors in the market. Even the price of Trung Nguyen is a little

higher comparing to the other brands such as Nescafe and Highland Coffee but it is still

affordable and does not exceed how customers are willing to pay for as customers are still

22

satisfied. With the target customers as defined above, Trung Nguyen should keep

maintaining not only the good quality but also the affordable price in order to compete.

Besides that, Trung Nguyen must keep building a good image of the brand.

23

2. Marketing objectives

2013

Increase sale revenue by 25% at the end of the year

Expand the distribution network to 200 retailers

Make 70% of targeted customers aware of G7 Coffee

2014

Increase sale revenue by 30% at the end of the year

Occupy for 3% more of market share

24

3. Marketing mix

In this report, 4Ps is applied in order to build a better path to achieve marketing objectives.

a. Product

According to the analysis above, the product itself is the strongest competitive advantage of

G7 Coffee in term of quality.

Besides keeping maintaining the quality, Trung Nguyen should also make more market

research on the change of customer behavior and customer tastes, especially in the South

area which is quite a potential market accounting for about 50% of population.

Moreover, according to Kantar Worldpanel Vietnam (2012), nowadays 73% of Vietnamese

urban drinkers prefer beverages that they can drink straight from the container. Not only

time-saving but also-saving needs in urban is raising. Trung Nguyen can come up with new

type of products which bring more convenience to consumers. A bottled coffee drink may

be a good idea for Trung Nguyen. This product can help customers to enjoy coffee every

time and everywhere. As this product will be more suitable for young consumers hence

Trung Nguyen should also should put effort on designing the package to make it look more

attractive.

25

b. Place

Firstly, the current distribution system of Trung Nguyen is described as following:

Figure 10: Current distribution of Trung Nguyen

According to Kantar Worldpanel (2012), modern trade (including department Store,

Hypermarket, Supermarket, Minimarkets and Wholesales) growth is expect to accelerate in

the coming years that is described as following:

Figure 11: The development of modern trade in Vietnam (Source: Kantar World, 2012)

Hence, Trung Nguyen should focus expanding on the kind of distribution. Moreover, the

year 2012 witnessed the huge emerging of minimarket and convenience stores that are

promised to be new potential distributors for G7 Coffee.

Trung Nguyen

Distributors WholesalersStreet Shop, Wet Market,

Supermarket,.

Trung Nguyen coffee shops

G7 Convinience Shop

26

Figure 12: The emerging of ministore (Source: Kantar World, 2012)

Besides that, according to Kantar Worldpanel (2012), 10% of urbaner has shopped Fast-

moving Consumers Goods online since the habit of shopping online is also gradually

formed as it very convenience. Hence, Trung Nguyen should take advantage of Internet and

set up online store for customers to browse.

Combining all above, the suggested distribution system is shown as following graph:

27

Figure 12: Suggested distribution system for Trung Nguyen

c. Price

Thought price is not a competitive edge of G7 Coffee, there is no need to reduce the price

because it is quite affordable now. Hence, Trung Nguyen must try to maintain price at a

current level.

d. Promotion

A range of different promotional activities that can be applied for Trung Nguyen to capture

the awareness of customer will be shown in the following graph:

Trung Nguyen

Distributors

Wholesalers

Street Shop Wet market Supermarket + Minimarket

Convenience stores

Trung Nguyen

coffee shops

G7 Convience

Shops Internet

28

Figure 13: Promotional activities for Trung Nguyen Coffee

(Details will be shown in Appendix)

WORDS COUNT: 3216

PROMOTION

ADVERTISING

TV

Magazines

Internet

Street Banner

PUBLIC RELATION

Sponsorships

Public event

Scholarship

Social media

Trade show

SALE PROMOTION

Discount

Promotion program

29

CONCLUSION

In the years to come, Trung Nguyen should also focus on expanding its distribution and

improving its promotional activities to increase the revenue and achieve the objectives.

Besides that, by contributing to the social scene, Trung Nguyen can have a good chance to

increase consumers trust and loyalty.

30

APPENDIX

The promotional plan for Trung Nguyen Coffee

Advertising

Nowadays, advertising is the one of the most effective way of promotion. This is a vital tool

that enables the company to introduce the product to customers and enhance the

competitive advantage. Besides the tradition advertising channels, such as press, radio, and

TV in the age of computers and telecommunications, the fastest growing area is online

advertising.

31

Magazines

Most magazines have a very specific readership based on factors such as interests, age, and

gender. By leveraging readership demographics, it is instantly ensured that G7 Coffees

message is being seen by the right people - the ones most likely to buy our product. In this

case, Trung Nguyen will place our advertising in some magazines which are close with the

men or white collar employees such as Him Magazine, Auto Magazine, Marketing Magazine

and so on.

Television

Trung Nguyen can bring G7 products to some game show on TV, like Choose the right

price or Secret Door. They are all shows with very high watching rate, which not only

entertain audience but also are place for advertising different products. Besides that, Trung

Nguyen should consider creating a special advertising clip which is distinctive enough to

attract target market, then; we are going to show it on some popular channels VTV1, VTV3,

HanoiTV, InfoTV etc.

The Internet

Trung Nguyen should launch a Facebook ad campaign or create a pan page in Facebook

which boasting somewhere in excess of 400 million users and growing. That is a really free

easy way to update customers about our products, sales, and events.

Public Relations

32

Sponsorship

Trung Nguyen can give the scholarship to excellent students that can be a good human

resource for Trung Nguyen in the future. Besides that, this action will help to build up a

good brand image as contributing in the society.

Social Media

Trung Nguyen can use many kind of social media such as Twitter, Facebook, Youtube and

so on to connect to the customers more easily. Besides that, that is a really free easy way to

update customers about our products, sales, and events.

Trade Show

Trung Nguyen can take part in the trade show in the rural area. People in rural area have

less change to go online or by magazines, thus, joining in the trade show will be a good idea

to raise the brand awareness in these area. In the trade show, G7 Office can also offer the

free trial coffee cup to visitors.

Sales promotion

Discount

In the special occasions such as Lunar New Year, Trung Nguyen can offer a discount or

special promotion for customers. For example, in the Vietnamese Women Day, Trung

Nguyen can offer a discount for women who visits Trung Nguyen coffee shops.

33

Schedule for Promotional Activities of Trung Nguyen in 2013

Advertising Public Relation Sale Promotion

Q 1 TV Advertising Article on magazine

Launch a Facebook fan

page

Special promotion program

for Lunar New Year

Q 2 Banner on popular

websites

Scholarship for fresh

graduate

No promotion program

Q 3 Promote in Choose the

right price game show

CEO takes part in the talk

show

Discount for Trung Nguyen

Coffee Shops female

visitors on Vietnamese

Women Day

Q 4 Promote in the HIM

Magazine

Trade show for domestic

products in the rural

areas

No promotion program

34

REFERENCE

Malcolm McDonald M., 1995. Marketing Plan. Oxford: Butterworth Heinemann

Fifield P., 1994. Marketing Strategy. Oxford: Butterworth Heinemann.

Kotler. P, 1997. Marketing management: Analysis, planning, implementation, and control. 9th

ed. New York: Prentice Hall.

Kantar World, 2012. Spotlight on Vietnam November 2012 [pdf] Available at

[Accessed 10 December 2012]

Pham A., 2012. Vietnam macro issues in 2011 [pdf] Available at

[Accessed

15 December 2012]

Trung Nguyen Corporation, 2012. Press Release. Available at

[Accessed 15

December 2012]

General Statistics Office, 2010. Demographics research [Online] Available at:

[Accessed 02

December 12].