Marketing plan for Trung Nguyen coffee company.

Executive Summary

Trung Nguyen is the premier brand of coffee in Viet Nam- the second largest exporting coffee country in the world after Brazil and the world's biggest producer of Robusta coffee beans. Our strategy is to spread the reputation of our coffee label well beyond Vietnam's borders. Hence, having taken the domestic market by storm with over 400 outlets, Trung Nguyen is looking to go global. In the present, our company has dipped the toe in more than 40 nations in America, Europe, Asia, Oceania; accounting for 20% of output such as United States, Germany, Australia and Canada, Taiwan, Russia, Hong Kong, China, Japan, Thailand.

In part company’s strategy to become a competitive brand in the world coffee market, we are on the brink of launching our products into a lucrative market in a dynamic economy- South Korea. The current trend towards an increase in the number of entrepreneurs and competition amongst existing companies presents an opportunity for Trung Nguyen to penetrate the market. Our Trung Nguyen’s goal is to become the leading brand of coffee by selling the finest quality coffee and by providing each customer a unique “Vietnam Experience”. Primary target markets will be students, yuppies, professionals and retail stores. Coffee chain Trung Nguyen’s products will be positioned at the high end of the market in terms of both quality and price.

Our marketing strategy will be based mainly on Trung Nguyen’s most special coffee formula: Good material, modern technology, Oriental secret and new concept of coffee. Hence we intend to implement a market penetration strategy that will ensure that we are well known and respected in our respective industry in Korea. The marketing effort will convey the sense of quality and satisfaction in every picture, every promotion, and every publication.

Trung Nguyen is primarily targeting a market share of 15% in our initial year. Trung Nguyen forecasts a modest net profit in the first three years. The commensurate modest profit margin will be achieved from sales.

STIUATION ANALYSIS

MARKET ANALYSIS

Market Demographics: the population of South Korea population (2008) was estimated at 49,232,844 (CIA World Factbook). People ages 15-64 make up the largest percentage of the population (72.1% -Source: CIA World Fact book), and therefore will have greater control of the market than any other sector. This implies that the most important target market for Trung Nguyen is people within this age group.
Market Needs: Koreans need quality coffee and comfortable coffeehouses to sit and socialize.
Market Trends: Korean is going away from traditional coffeehouses to franchise coffeehouses with specialty coffee. People like the variety and quality. This is a long-term trend.
Market Growth

South Korea's still at the early stage of development when it comes to quality coffee. So there's still huge room for growth. The Information Center for Agriculture and Rural Development (AGROINFO) forecasts that Korean will continue to increase its coffee import turn-over and the country is included in the list of high potential coffee importing countries in the year 2009. While the world economic context is declining leading to the diminishing tendency of the demand for coffee consuming in the main markets of coffee, Korea is considered as one of good markets for the world exporting coffee industry.

Source: (AGROINFO)

Describe the macro environmental trends that affect the market

Economic: according to International Monetary Fund (IMF) GDP Growth rate in 2008: (IMF) 5.0%, estimated GDP growth rate in 2009: 4.1%. The growth rate of GDP suggests that the economy is growing, and therefore there is opportunity for Trung Nguyen to expand business.
Technological: High-technology information system upgrades will improve all aspects of business, especially inventory control, tracking of shipments, and communication with clients in import countries.
Social/ Culture: For the first time, Korean women are fully in the workforce. They enjoy meeting with friends and co-workers to socialize in trendy coffeehouses. There is also a gradual shift from a six-day to a five-day workweek in Korea. Now, with the five day work week, Koreans have more time to go out. Besides, more Koreans traveled and studied abroad, and became exposed to coffeehouse culture. In addition, the younger generation is also more westernized. They prefer better quality coffee, a comfortable place for social time with friends and having taste choices.

Identify opportunities and threads in Korean market and environment.

Opportunities:

Korea has a dynamic economy and is one of the world’s industrial emerging powers. Coffee consumption is, however, still not very widespread, since annual per capita consumption is around 1.8 kg and tea is still the main hot beverage consumed. Nonetheless, consumption has been increasing stably, according to ICO (international coffee organization) since the year 2000, consumption has grown at an average annual rate of 2.4%. Moreover, over 70% of the population is in the 15-64 age group and this offers a promising prospect for coffee consumption ...

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Identify opportunities and threads in Korean market and environment.

Opportunities:

Korea has a dynamic economy and is one of the world’s industrial emerging powers. Coffee consumption is, however, still not very widespread, since annual per capita consumption is around 1.8 kg and tea is still the main hot beverage consumed. Nonetheless, consumption has been increasing stably, according to ICO (international coffee organization) since the year 2000, consumption has grown at an average annual rate of 2.4%. Moreover, over 70% of the population is in the 15-64 age group and this offers a promising prospect for coffee consumption since young people tend to assimilate Western lifestyles, particularly in relation to eating habits, by moving away from the tea drinking tradition in favour of coffee, especially, of specialty franchise coffeehouses.

That Vietnam and Korea are the membership of World Trade Organization (WTO) gives the company a great chance for exporting our coffee to Korean in term of lower trade barriers, including tariffs, import quotas and excessive regulations. Furthermore, after official visit of Vietnam Prime Minister Nguyen Tan Dung to South Korea in June, 2009, Vietnam and South Korea have agreed in principle to set up strategic partnership to widen bilateral cooperation to almost all fields, leading to more favorable conditions for Vietnam to boost exports to South Korea.
In harder times of economy, coffeehouses in Korean are even busier. People want to go out for coffee and network.

Threads: The market is still growing. Most everybody drinks coffee. But many players have come here. Hence, it takes a big investment, and it's a challenge to get good locations. It's tougher to come in now as a new player.

COMPETITOR ANALYSIS

Key foreign players in Korea

* Starbucks is currently the leader. About 100,000 people frequent 282 Starbucks outlets across 30 cities a day. Korea Starbucks has said it will be adding another 50 outlets during 2009. The Starbucks in Seoul's Myung-dong district is the largest Starbucks in the world--five stories, 5,750 sq, ft., and 190 seats. The success of Starbucks in South Korea can also be put down to the free internet access in its many outlets.

* Coffee Bean & Tea Leaf has 163 outlets in Korea including 138 franchise outlets in Seoul. Their mild coffee is tailored to Korean tastes.

* Cafe Nescafe has 25 outlets in Korea, and is planning to expand to 90 in five years. They have several small take-away outlets, and serve 45 different drinks, plus a selection of pastries.

* Java City Coffee, which opened in October 2002. They feature espressos, ice blended, and tea, as well as muffins, bagels, and fresh sandwiches. Their biggest coffeehouse in Seoul has four stories, each with a different theme, and rooftop seating. It's a setting for two popular television dramas and provides free space for musicians, visual artists, and movie clubs.

* Canterbury Coffee has 26 coffeehouse kiosks in Korea, mostly inside large department stores. Branching out to other locations like hospitals, the Canadian firm wants to add 12 outlets per year for the next few years.

* Local Strong Korean Franchises: Holly’s, Rosebud, and Prowstar.

Analyzing the strongest direct competitors- Starbucks strengths and weaknesses:

Strengths:

Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2007.The company generated revenue of more than $5000 million in the same year.
It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.
Starbucks was one of the Fortune Top 100 Companies to Work For in 2009. The company is a respected employer that values its workforce.
The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all facets of their business.

Weaknesses.

Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.
The organization is dependent on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

COMPANY ANALYSIS

Mission Statement

“Creating the leading brand is carried out by bringing to everyone dirking coffee a source of creative inspiration and pride of Trung Nguyen’s style being rich in Vietnamese culture”

Company objectives

1. Market Share Objectives: To gain 15% of the market share by August 2010.

2. Profitability Objectives: To achieve a 10% return on capital employed within first 3 years.

3. Promotional Objectives: To increase customer awareness of different available coffee products on the market.

4. Objectives for Survival: To survive the current market war between competitors.

5. Product quality leadership with consistent quality and good taste, beautiful aroma- perfume.

6. Open 7 outlets over Korea during the first year, strive to give more franchises.

Product description: premium and differentiated coffee products served with Vietnam style.
Strengths

1. Employees are committed and talented with strong national spirit. Mr. Dang Le Nguyen Vu- the CEO of the company won ASEAN Youth Award 2004 – Theme “Youth and Entrepreneurship”

2. Trung Nguyen is a coffee manufacturer receiving certificate of EUREPGAP- the world's most widely implemented farm certification scheme.

3. Best brand of Coffee and biggest exporter of processed coffee in Vietnam – the world leading country of exporting Robusta coffee beans and the second largest coffee exporter in the world after Brazil.

4. High production capacity: Trung Nguyen coffee company owns 1 processing plant reconstructed on October, 2003 with capacity 10,000 tons per year and1 instant plant began to operate on October 18, 2005 with capacity of 3,000 tons per year in Vietnam.

Weakness: marketing budgets are tiny compared with established players.

Lack of brand awareness: Our brand and image have not yet established in Korea.

IMPLICATION OF SITUATION ANALYSIS

Key success factor: offers customer a cozy, comfortable aesthetic ambience to sit and socialize, high quality coffee and Vietnam coffee culture. We believe playing up their Vietnamese origins sets us apart. Yet in a crowded market, having a strong national image may be a good thing.

Establishing franchising and maintaining partnership with Korea coffee wholesalers.
Bringing our facilities to maximum production within three years of operation.
Increasing our profit margin with the use of improved technology in the facilities.

Critical issues:

There are so players, including well-known brand such as Starbucks and Coffee Bean &Tea Leaf in Korean. The Competition among coffee brands in Korea is more and more fiercely.

OBJECTIVES
MARKETING OBJECTIVE

Marketing objectives:

In the first year of operations in Korean, the company would focus on building a world-class coffee brand- name.

In the first year, Trung Nguyen strives to achieve 15% market share.
Products: offers product line that satisfies different age groups.
We offer customers new concept of coffee: coffee is not a normal drink, but a drink of energy for the brain-power and a source of creativity. It is fuel for the knowledge economy, just like oil is fuel for the industrial economy.

MARKETING STRATEGIES
MARKETING SEGMENTATION, TARGETING AND POSITIONING

Segmentation: The Trung Nguyen customers are consumer customer and business customer. Customer side mainly includes middle to upper class, university students, and professionals. Business side includes retail stores such as supermarkets, hypermarkets, convenience stores, and hotels, restaurants.

Target 1- University students, who are accustomed to coffeehouses, drink coffee to stay awake, have energy and socialize. They influence each other a lot. The key issue is how to convince these consumers that coffee is a beverage to be drunk regularly rather than just a passing fad. The company targets those grocery stores, coffee house close to university campuses to maximize the profit and scope.

Target 2- Professionals: Their strong earnings mean that they can afford to pay a premium price for a lifestyle to which they aspire. Besides many of them have time pressure. They do not have time to make their own coffee so Trung Nguyen’s G7 instant coffee can serve them.

Positioning Trung Nguyen is positioned as coffee brand with a premium and differentiated products. In addition, Trung Nguyen built experiential positions: we offer a special space for people to meet and experience coffee culture, honor spiritual and cultural values and inspire creativity and the unique experience of giving Korean the time in Vietnam.

Marketing Mix

Product

Premium Product Strategy: Trung Nguyen has been committed to sourcing the highest quality coffees. Our coffees have been grown and processed by strict environmental, social, economic, and quality standards.
Broad Product Differentiation: Depending upon competence and innovation, Trung Nguyen will establish its long lasting and profitable competitive advantages by broadly differentiating its coffee. Trung Nguyen introduces a wide range of products for different tastes of consumers such as “creative series” coffee, weasel coffee with a flavor similar to that of the rare and expensive civet coffee, Legendee, blends coffee products, Espresso, Cappuccino, mocha, etc. Each product intends for specific groups of consumers. For example, we introduce “creative series”: a collection of five types of coffee numbered 1 to 5. Those rich in caffeine coffee intend for customers who usually do their work at night like architects, music composer, students who work for exams. Customer may start with the lowest level, number 5 but gradually try all ways up and stick at the most satisfied level. Passiona has a light taste with low caffeine for new coffee drinkers and women.
Brand image: The Company’s brand image is “an ambassador” which comes from the second largest coffee exporting country in the world, a coffee brand that offer high quality coffee product with Vietnam coffee style.
Along with coffee, Trung Nguyen’s franchise shop also serves customers with Vietnamese food such as steamed rolled rice pancakes. In addition, in several outlets, Trung Nguyen plan to offers rental services of “ao dai”- Vietnam traditional costume, accompanying photograph service. These services target Young Korean ladies who are excited with novel experiences and interested in the design of “ao dai”. Trung Nguyen will align with Vietnamese brands of “ao dai” such as “Miss Ao Dai ” Ltd company to provide this costume.

Price

Because Trung Nguyen adheres to premium quality standards and with fresh coffee, company offers the unique experience of giving the customers a period in Vietnam; our coffee is priced up about 15% to 25% higher than the market average but fair enough for the high quality, unique experience offered. According to Trung Nguyen pricing strategy, price range from 4,109 KRW (about $3.20) for a cup of Vietnamese Robusta to 14,000 KRW (about $10.90) for a top-of-the-line cup brewed from beans foraged by wild weasels.

Distribution (Place)

Distribution channels: comprise food service sector such as franchises coffee shop, Trung Nguyen’s coffee houses, restaurants, hotels and retail store such as grocery stores, hypermarkets, and supermarkets.
Location criteria: near university campuses, shopping center, and high traffic location or in airport. University campuses can be crucial beachheads in Korea when marketing budgets are limited compared with established players.
Coffeehouse décor: the outlet conforms to international standards of franchising; the difference lies in its distinctly Vietnamese appearance with typical products of Vietnam including rattan and bamboo, ceramics, brocade products and bronze drums.
Trung Nguyen will distribute products mainly through franchises with local companies to distribute the products.
Coffeehouses’ time open: Koreans work long hours, resulting in many people socialize late. Thus, Trung Nguyen’s outlets are opened late until midnight like other coffeehouses in Korea.
Order can be taken online through website, thus enhancing our e-commerce activities.
Logistic: consignments are sent by sea route. General purpose 20 feet containers are used.
Motivating the channel Trung Nguyen will introduce its products at 20% off the wholesale price during the first month to promote supermarkets and stores to buy the product.

Promotion

Trung Nguyen gets closer to its customers by the means of sponsoring, sampling events, and print advertising.

Sampling events at Trung Nguyen’s coffee shop owned or franchise by Trung Nguyen’s coffee. This kind of sampling should be used to show the distinct relative advantages of the fresh coffee of Trung Nguyen coffee. In addition, premium should be offered in some period when introducing a new coffee product. A free- with purchase premium like a branded set of coffee cups or branded coffee should be offered to the consumers. As well in- and- on-pack premiums are mediums to affect the customer behavior to buy Trung Nguyen’s coffee.
Trung Nguyen will not use any price- offs promotion because it will lower the image of the brand and can change the loyal customer opinion toward the brand.
Trung Nguyen participates in Korean social events when the elite people of the community attend. This is where the company will be able to reach new customers, enhance its public relationship with Korean markets.
We also conduct promotion by print advertising such as magazine, newspaper.
In addition, Trung Nguyen will create a sophisticated website by Korean language to improve communication capabilities, and provide information about Trung Nguyen. Our website also allows the customer a place to post and share idea about Trung Nguyen.

BUDGET
Forecast Sales:( 1$= 1285.44 KRW on 10/7/2009)

Sale Forecast:(KRW)

Direct Cost of sales forecast:(KRW)

Forecast Profitability: 20,110,250 KRW per month.

IMPLEMENTATION AND CONTROL

Action Program: To meet local tastes or preferences, Trung Nguyen can act local, for example, by introducing alcoholic beverage for special happy hour set. Traditionally Korea is huge alcohol consuming culture as well as coffee. High margin of beer, wine or cocktail may help Trung Nguyen match local tastes and preferences, most importantly, can boost our revenue. Besides, we align with local company to distribute product and increase franchise. Employees will be trained to understand our products and consult customers about kinds of coffee.
Control: We are planning special control activities to monitor quality and customer service satisfaction. This will enable us to react very quickly in correcting any problems that may occur. We are also monitoring customer service communications to detect any signs of customer concern or confusion. Other early warning signals that will be monitored for signs of deviation from the plan include monthly sales (by segment and channel) and monthly expense. In addition, we are tightly controlling marketing schedules to assure timely implementation of planed program.

References:

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