ASSIGNMENT 1 FRONT SHEET

Qualification BTEC Level 5 HND Diploma in Business

Unit number and title Unit 22. Product and Service Development

Submission date 02/07/2022 Date Received 1st submission

Re-submission Date Date Received 2nd submission

Student names & codes Final scores Signatures

1.Luu Hoang Van

2.
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3.

4.

5.

Class GBS200453 Assessor name Tien Gia Tri

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I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that making a false declaration is
a form of malpractice.

P1 P2 P3 P4 P5 M1 M2 M3 D1
 OBSERVATION RECORD
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Introduction

Highlands Coffee is a Vietnamese coffee shop chain, as well as a coffee grower and distributor, founded
in Hanoi in 1998 by Vietnamese American David Thai. The Highlands Coffee Firm was the first private
Vietnamese firm to be registered in Vietnam. Highlands sold half of its stock to Jollibee, a Philippine
international business, for $25 million in 2012. In 2018, the company operated 230 coffee shops around
the country.

My responsibility as the head of Highlands Coffee's Product Research & Development Centre is to carry
out a project from the board of directors to analyze and improve the present product portfolio, as well as
develop a new product/service to help the firm extend its market share and profit.
General review

Product line summary

Highlands divides the menu into two main groups: food and drink. The drink group of Highlands is
divided into 6 groups: Café, Phindi, Café Espresso, Freeze, Tea and other drinks.

But there are 3 main groups:

 Group 1: Café (Café, Phindi, Café Espresso)

 Group 2: Tea (Lotus tea, fruit tea, green tea)
 Group 3: Freeze (Grounded Ice)

And each main group will have 1 representative product

 Iced milk filter represents Café

  Yellow lotus tea represents Tea
 Freeze green tea represents Freeze
 These products are commonly featured in Highlands marketing and publications. Highland
explicitly focuses all of its efforts in 2019 and 2020 on producing core items for the three
groups above and shaping key products.

The food group included Banh Mi, Cake, … this is the connecting product for the customer to have
something accompany with his/her drinks

Another product category of Highlands is Beverage & consumable, you can find these products
available in the supermarket, convenient store, grocery store, Highlands owned store, …

Below are the chart detailing the product line

Highlands Coffee marketing strategy

Define the main product in the store menu first. The fundamental products must be delectable,
appealing, and well-received by a large number of clients.

Second, avoid putting too many items on a single menu. Customers will become "dizzy" if there
are too many options and will not know which drink to buy to meet their demands.
Third, concentrate your marketing efforts on a single core product, and build many core goods to
represent each set of dishes. It's critical to separate the menu into several groups, each with its
own representative products. Customers will be able to select drinks more easily as a result of
this.

Fourth, do not disperse marketing operations, since this will result in a loss of focus on
fundamental principles. To increase earnings, focus your marketing on the store's basic principles.

Target market need

The Vietnam’s coffee market size has increased 13.55% over the past 4 years from 2015 to 2019.
And it expected to grow 8.07% over the next 5 years.

86% of the coffee market share came from Roast Coffee and only 14% came from instant coffee
market.

Vietnam is one of the leading coffee consumption per capita in the Asia Pacific area.

16% go to the coffee stores daily. The ratio is higher as Saigonese males, and high income class.

Female and HCM people rely more on chain coffee shops.

Those with higher income tend to visit chain coffee stores.

Trung Nguyen, Highlands, and the Coffee House are the stores visited most in both HCM & Hanoi.
Average pricing that Vietnamese feel expensive for coffee is 41,000 VND.

Starbucks user is willing to pay the highest, followed by Highland, The coffee house and Trung
Nguyen.

Currently, Highlands coffee is the leading coffee chain in Vietnam with 478 local shop across the
nation. This is an advantage of highlands, people can find there store easily anywhere in Vietnam.
Highlands focused on 3 main segments:

 Middle Class consumer

 Youth and Offices
 Foreigners in Vietnam

Company capacities
VTI (Viet Thai International JSC) was founded in 1998 and has since evolved to become one of
Vietnam's top consumer marketing and multi-unit retail operators. The Company's mission is to
make a substantial contribution to raising the standard of living for Vietnam's growing middle
class. VTI has played a key role in developing the country's modern retail and branding
environment during the last decade. Highlands Coffee, Meet & Eat Food Courts, Bounce Night
Club, and 1911 Restaurant in the Hanoi Opera House are among the Company's owned brands.
Hard Rock Cafe, Emporio Armani, Swarovski, La Vie en Rose, Nike, Debenhams Department Store
(Britain's favorite), ALDO Shoes & Accessories, Coors Light beer, and Grey Global Group are
among the multinational companies represented by VTI (advertising).

Jollibee Foods Corporation (commonly known as Jollibee after its main fast food brand) is a global
Filipino corporation headquartered in Pasig, Philippines. JFC is the parent company of the Jollibee
fast food chain.

JFC bought some of its fast food competitors in the Philippines and internationally, including
Chowking, Greenwich Pizza, Red Ribbon, and Mang Inasal, as a result of the success of its flagship
brand. JFC had more than 5,900 outlets worldwide as of October 2020, with system-wide retail
revenues of 82.1 billion pesos during the 2011 fiscal year.
 Jollibee lent Viet Thai International an extra $35 million at 5% interest in exchange for shares in
the company.

Jollibee's purchase of half of Viet Thai International's (VTI) commercial division, which owns the
Highlands Coffee brand, is part of their ambitious ambition.

As a result, a Philippine-based organization paid $25 million for a 49 percent stake in the Vietnam
business and a 60 percent stake in the Hong Kong business of the VTI firm, which is headed by
tycoon David Thai.

In exchange for shares in Viet Thai International, Jollibee extended a $35 million loan with a 5%
interest rate.

Jollibee's purchase of half of Viet Thai International's (VTI) commercial division, which owns the
Highlands Coffee brand, is part of the company's ambitious growth strategy.

As a result, a Philippine-based company paid $25 million for a 49 percent investment in the VTI
firm's Vietnam business and a 60 percent stake in its Hong Kong business, led by David Thai.

The reason for the investment is that both David Thai and Jollibee believe Starbucks would soon
enter the Vietnamese market.

Review of current product line

Life-cycle stage of the products or services in a company’s portfolio

Considered as a market full of potential and growing opportunities for development, the coffee
and tea chain market in Vietnam has a size of about 1 billion USD (according to Euromonitor
assessment in April 2019). The most recent World Bank studies show that the potential for
domestic coffee consumption in Vietnam is very large, which can reach a consumption of 70,000
tons/year, or about 10% of the production output. 700,000 - 800,000 tons of coffee per year.
However, according to the World Coffee Association, domestic consumption of Vietnamese coffee
is currently only nearly 3.6% - the lowest level among coffee producing and exporting countries.

Coffee chain brands are attempting to expand market share and establish a strong foothold in the
hearts of customers by grasping the market condition and the developing trend of people's
demand. However, the coffee chain industry confronts numerous challenges, as brands such as
The Coffee House, Starbucks, Trung Nguyen, and Phuc Long have all struggled to maintain their
market positions in recent years.

Highlands Coffee was no exception, currently, the product line of Highlands has reached the
maturity state. They had tried to increase the number of store, promotion and other campaign
but the effective is minor.
Despite dominating the market in terms of sales, Highlands Coffee generated enormous revenues
in 2019 of about 2.2 trillion VND, up 35% from the previous year. There were highlands
everywhere. Large shopping centers with prominent location facades offer a straightforward and
simple menu. Finding a Highlands store or selecting a cup of coffee doesn't take customers very
long. However, Highlands' pre-tax earnings fell from 129.2 billion dong in profit in 2018 to 83.8
billion dong in 2019, a reduction of 35%.

Despite the fact that the market for coffee chains is active, brands like Highlands, The Coffee
House, Phuc Long, Starbucks, and Trung Nguyen Legend only have 15% of the market share, with
the remaining 85% being divided between brands, retailers, and other newer coffee chains.

Product management recommendation

In 2020, Highlands has introduce new product line called Phindi. Phindi is a product group

upgraded from Café, with a combination of coffee and Milk foam, coffee and almond milk, coffee
and chocolate.

Phindi focuses on young people (18 years - 23 years old), this can be considered a customer group
that Highlands has not yet approached well.

The result was quite promising. The product had attracted a lot of younger audience, which is
currently is the main target customer of Highlands Coffee. Overall, it is the right first step in the
goal of renew itself and for the people to try new product from Highlands
 Not to satisfy with the result, my recommendation for Highlands moving forward is to
continue to develop new product. Advocate to younger audience.

New product development plan

Overview of the new product line

Upon researching new product line for the company, I see a growth in drip coffee and manual
coffee making process.
 Basically, after all the research, I conclude that people treat the coffee making process as a ritual
in the morning. They treat them as a long tradition and worship the way that coffee is handmade
instead of machine made. To them, they are the life style and something that they wouldn’t live
without.

But not many people are willing to have the time to do all that work like roasting the coffee bean
in the morning, then rinse it then pour the coffee, … Some of them have a lot of work and they
are very busy so they don’t want to deal with all the intricacy.

 So i propose new product for the company which base on these insight. An instant drip
coffee for people who are very busy, don’t have time to make their own coffee or not have
accessible to a coffee shop.

Analysis

Market demand

Empathy mapping

Say Think
I want to make coffee Why does coffee have so many steps?
I want delicious coffee Why does it take a long time?
I don’t have time to make coffee In inflation time like these, should I save money
I want to find a coffee product for my company on coffee?
I can’t find a local coffee shop near my place Where do I find a good cup of coffee?
What is the product value to my company?
Is this coffee taste good?
Feel Does
Frustrating Check review
Sleepy Ask neighbor
Confuse Taste test
Worry Price comparasing
  Insight: Young entrepreneur or strong personality person who is active and very busy need
coffee from a reputable brand, delicious, fairly price in order to start their
day/activity/work

Benefits Physically  Stay hydrated

 Improve physical performance
 Help to stay awake
Mentally  Coffee is an essential drink to boost your productivity

 Pain point:

 Need caffeine everyday

 Don’t have access to local coffee shop

 Don’t have time to make traditional coffee

 Don’t like instant coffee taste

Target audience

Geometric
Persona
 Segment

Traditionalist Explorer The value The busy The Adult The Youngster
seeker
Traditionalist is The explorer is The value The busy as The adult The youngster
the type of someone who seeker is the the name represented is someone
customer who want to try one who buy implied, they the old target who new to
always choose new things, gift or product are someone customer of the market,
traditional they embrace for others, who is very Highlands. they may or
product over new product they may buy time constraint They have may not know
the newly rather than it for the and can’t modest Highlands and
introduction stick with company or make coffee so income and our product,
on the market traditional one buy it as a gift they need a had been with they still love
for someone product that Highlands coffee though
they can make since the and can
quick or take beginning become future
with them customer.

Competition

Perceptual Mapping
 Competitor Audit

Highlands Coffee The Coffee House Trung Nguyen

Have a diverse sale channel Yes Yes Yes
both online and offline
Have the infrastructure to Yes No Yes
manufacturing new product
Popular Yes Yes Maybe
(Young Audience) (Adult Audience,
business)
Accessible everywhere Yes In major city Yes
Loyal audience Yes Maybe Yes
(Young Audience)

Technical and machinery

 Investment

Stage Description Cost

Internal Testing Testing the product in term of taste, durability, 70.000.000.000 VND
packaging, … internally.
Soft launch Launching campaign product in major city like Ho 1.000.000.000 VND
Chi Minh, Ha Noi, Da Nang, Hai Phong, …
Launch Full Launch event in all over the country. 3.000.000.000 VND

Profitable
We target 2 trade channel, general trade and modern trade. With over 47% GT channel and over 46.2%
MT channel, we hope to penetrate the market deep and wide.

With 77% people interest in non-alcoholic

beverages, it is promising for Highlands new
product to find a place in consumer.

The average customer per day: 33

Highlands will target 1/3 of the customer to buy

our new product. Which is 11 people.

Number of time people coming back at the store

in a month is 4 times. But we only target that
people will comeback for our product twice a month. So in a month the target we decide to sell around
11x2=22 products in a month

We have 1.011.115 in total but we only target around 300.000 store can sell our new product, we
multiply for 300.000 store in the nation so we have 6.600.000 unit sold in a month in whole country.

We multiply for 12 months and the price of travel size we have …

Product development process

Stage 1: Idea Screen

Strategic fit Yes, the goal of introducing a new product in G&R is to diversify Highlands
product line and solidify the brand image in every segment of product
Market The instant coffee market in Vietnam was equal to 473.70 million USD
attractiveness (calculated in retail prices) in 2015. Until 2025, the coffee market in Vietnam
is forecast to reach 1.21 billion USD (in retail prices), thus increasing at a
CAGR of 9.86% per annum for the period 2020-2025. This is an increase,
compared to the growth of about 9.79% per year, registered in 2015-2019.
Technical  Highlands Coffee is a top 3 café chain and producer and distributor of
Feasibility coffee products.
 Being the owner of the supply chain, Highlands can proactive
in the industry
 Coffee beans from Vietnam’s highlands
 Highlands Coffee commits to uses 100% coffee on the fertile
highland areas of Vietnam. Like Buon Me Thuoc
 Utilizing existing supply chain, logistic, and machinery
 By using existing resources, Highlands had cut most of the cost
of creating new product
 Investing in new machinery
 New product needs new machinery, we only need to invest in
the coffee presser due to the product attribute is the powder
need to be as smooth as possible
Killer variable
Second screen

Preliminary Market Assessment

U&A
 Interest

Travel behavior
Market
Other value
 Preliminary Financial & Business Assessment

Jollibee Food Corporation NPV

Product Description
Ingredients Robusta beans, preservative
Packaging By using eco-friendly packaging like ink from soy milk, and recyclable
cardboard material. This help create a good brand image in the eye of
customer
Size Based on the U&A data above, Highlands decided to have to size to served 2
different customer. One size is for traveling or trial kit, with 10 pcs per box.
The other size is Zumbo which is for business owner or someone buy as a gift.
Price 90.000 vnd for travel size => 9.000 per cup
250.000 vnd for zumbo size => 8.300 per cup
Testing and Validation

Coffee making process comparison

Usability testing
 4P

Highlands Coffee The Coffee House Trung Nguyen

Product N/A

 Robusta beans
 Attractive package
 Small and compact for
 Arabica
travel size
 Professional package
 Attractive pricing
 Big package for illusion
 Delicious
 High price
 Strong auroma
 Strong auroma
 Delicious
Price 90.000 vnd (10pcs) N/A 110.000 vnd (10pcs)
250.000 vnd (30pcs)
Place Highlands café N/A Trung Nguyen Legends
Supermarket Supermarket
Groccery store Groccery store
Convenient store Convenient store
Promotion Focus on busy people, business N/A Traditional promotion focus on
man who want to buy for their high-class customer
company, people who want to
explore new option
Launching/Commercialization
Key message

“Đậm đã quá đi !!!”

The message hit all the benefit of the product, resolve the customer concern that instant product
usually taste mild and less flavors. Doesn’t have a strong auroma, and the coffee is not strong
enough.

KOL information
The Vietnamese people are accustomed to seeing Tran Thanh, and statistics indicate that 2020 will be a
prosperous year for him. The new film "Bo Gia" gives the acting industry a fresh resonance, and most
significantly this year, the public was made aware of Tran Thanh's significant advancements through the
Rap Viet entertainment program.

Sale Channel

360 Marketing

Above the line

Below the line

Social Ads
Review

POS
Implementation plan

Customer Journey Mapping

Product placement

Life cycle model

Control and evaluation

KPI

OOH OTC
VAC
Social post Reach
Engagement
Comment
Like/Dislike
TVC View
Comment
Like/Dislike
Internet Ads CTR
CPC
% Top Google search
POS Number of people sign up
OTC
 VAC
Review View
Comment
Like/Dislike
Reach
Engagement

Reference

https://rocketreach.co/viet-thai-international-profile_b5c13dd7f42e0887

https://smar.vn/chien-luoc-kieng-ba-chan-cua-highlands-coffee/

https://vnexpress.net/ly-do-highlands-coffee-ve-tay-jollibee-2730793.html

https://en.wikipedia.org/wiki/Jollibee_Foods_Corporation

https://www.brandsvietnam.com/congdong/topic/1648-Quyen-luc-cua-kenh-thuong-mai-truyen-thong