1

TABLE 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. MicroEnvironment:.................................................................................................................................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
2
SUMMARY
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.
3
INTRODUCTION
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.
4
SWOT
Analysis
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 thecompany 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
5
1.1External 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.
6
Figure 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 hasof 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
approvesthat 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
7
Figure 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 andcommunicating
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
3.8
7.69
12.9
17.67
21.05
24.4
26.55
31.11
2003 2004 2005 2006 2007 2008 2009 2010
U
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r

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8
laws 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
theexisting companies in the industry based on strategy of price, taste and so on. However,
the threat of new entrantsto the industryto 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 thisindustry.
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
9
same customer needs to meet the demand of customers such as tea, energy drinks, juices,
soft drinks or so on. Hence, thethreat 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.
1.2Internal 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
1.3SWOT 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.
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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 <$100/ month Low - Unaffordable
Medium $100 - $300/
month
High - Affordable
- Preferable
High >$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
1.2Targeting
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 Highprice
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 Coffeeand 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
areawhich 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 focusexpandingon 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 Wholesalers
Street 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 inthe 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 takepart 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 showfor 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. 9
th
ed. New York: Prentice Hall.
Kantar World, 2012. Spotlight onVietnam November 2012 [pdf] Available at
<http:/ / www.kantarworldpanel.com/ global/ News/ Spotlight-on-Vietnam-November-
2012->[Accessed 10 December 2012]
Pham A., 2012. Vietnam macro issues in 2011 [pdf] Available at
<http:/ / www.vinacapital.com/ userfiles/ file/ Investor_Update_2011_Macro.pdf>[Accessed
15 December 2012]
Trung Nguyen Corporation, 2012. Press Release. Available at
<http:/ / www.trungnguyen.com.vn/ 945/ 5/ baochinoive-trungnguyen.cafe>[Accessed 15
December 2012]
General Statistics Office, 2010. Demographics research [Online] Available at:
<http:/ / www.gso.gov.vn/ default.aspx?tabid=417&idmid=4&ItemID=11138>[Accessed 02
December 12].