International Marketing Report EXEMPLAR
International Marketing Report EXEMPLAR
MIDTERM REPORT
INTERNATIONAL-EXPANSION MARKET STRATEGY
FOR CỘNG CÀPHÊ
Ha Noi, 2023
Table of contents .......................................................................................... Page
Executive Summary ............................................................................................5
1. Background information on Cộng CÀPHÊ .................................................5
1.1. Overview ....................................................................................................5
1.2. Marketing and International Marketing ...............................................5
2. Export Market Screening ...............................................................................6
2.1. Preliminary screening ..............................................................................6
2.1.1. GDP, PPP ...........................................................................................6
2.1.2. Political Stability ...............................................................................8
2.1.3. Coffee consumption per capita ........................................................9
2.1.4. Bureaucratic delays.........................................................................10
2.1.5. Cultural distant ...............................................................................10
2.2. Fine-grained screening ..........................................................................11
2.2.1. Market attractiveness .....................................................................11
2.2.1.1. Market size ...............................................................................11
2.2.1.2. Market growth .........................................................................12
2.2.1.3. Buying power of customers .....................................................12
2.2.1.4. Government regulations ..........................................................13
2.2.1.5. Consumer behaviors ................................................................14
2.2.1.6. Summary...................................................................................16
2.2.2. Competitive strength.......................................................................16
2.2.2.1. Price...........................................................................................16
2.2.2.2. Origin of coffee beans ..............................................................17
2.2.2.3. Cultural fit ................................................................................18
2.2.2.4. The number of outlets .............................................................18
2.2.2.5. Variety in coffee drink options ...............................................19
2.2.2.6. Summarizing evaluation criteria and scoring .......................20
2.3. Models for market selection ..................................................................21
3. Market entry mode .......................................................................................22
3.1. Market entry criteria .............................................................................22
3.1.1. Internal factors ................................................................................22
3.1.2. External factors ...............................................................................22
3.1.3. Desired mode characteristics .........................................................22
3.1.4. Conclusion ........................................................................................23
3.2. Mode of entry..........................................................................................23
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4. Marketing Mix (4Ps) .................................................................................25
4.1. Product ....................................................................................................25
4.1.1. Main product line ...........................................................................25
4.1.2. Side product line..............................................................................26
4.1.3. Brand & Other components ...........................................................26
4.2. Price .........................................................................................................26
4.2.1. Internal Factors ...............................................................................26
4.2.1.1. Firm-level ..................................................................................26
4.2.1.2. Product ......................................................................................27
4.2.2. External factors ...............................................................................27
4.2.2.1. Environmental..........................................................................27
4.2.2.2. Market .......................................................................................28
4.2.3. Price Policies: Geocentric...............................................................29
4.2.4. Price Strategy: Market Pricing .....................................................29
4.2.5. Price changes: Price Increases .......................................................29
4.3. Distribution .............................................................................................30
4.3.1. Factors that influence channel decisions ......................................30
4.3.1.1. External determinants .............................................................30
4.3.1.2. Internal determinants ..............................................................31
4.3.2. Final channel decisions ...................................................................32
4.4. Promotion................................................................................................33
4.4.1. Review of the Communication Process .........................................33
4.4.2. Final direction for promotion ........................................................35
5. Conclusion and recommendations ...............................................................38
References ..........................................................................................................39
Groups members and contribution .....................Error! Bookmark not defined.
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List of Tables ................................................................................................ Page
Table 1. Top 20 countries with the highest GDP (PPP) in 2022 .....................7
Table 2. Aforementioned countries ranked from high to low in terms of
political stability index........................................................................................9
Table 3. Aforementioned countries ranked from high to low in coffee
consumption per capita ......................................................................................9
Table 4. Market Attractiveness - Scoring .......................................................16
Table 5. Competitive Strength - Scoring ........................................................20
Table 6. Final MACS Scoring ..........................................................................21
Table 7. Advantages and disadvantages of Licensing ...................................23
Table 8. Advantages and disadvantages of Franchising ...............................24
Table 9. Advantages and disadvantages of Joint Venture ...........................24
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Executive Summary
In recent years, Vietnamese coffee has emerged as a standout player in the global coffee
market, known for its unique flavors and brewing techniques. As the flagship of the
Vietnamese coffee chain, “Cộng CÀPHÊ” has an important place in bringing Vietnamese
coffee culture to international markets. This essay will explore the possible markets and
suggest marketing strategies to penetrate in the most feasible and profitable market.
Cộng CÀPHÊ, a distinctive and culturally rich Vietnamese coffee brand, has been making
waves in the coffee industry since its establishment in 2007. This brand stems from Vietnamese
coffee culture and a nostalgic, communist-themed ambiance, making it a fascinating subject
for international marketing analysis.
Its journey is emblematic of a brand that transcends traditional coffee experiences. The name
“Cộng CÀPHÊ” derives from the Vietnamese word "Cộng," which was taken from “Cộng” in
“Cộng hoà Xã hội Chủ nghĩa Việt Nam” meaning Republic Socialist of Vietnam, and
"CÀPHÊ," which translates to coffee. The combination of cultural and historical elements has
allowed Cộng CÀPHÊ to carve a niche for itself, not only in Vietnam but also in international
markets.
Regarding internationalization, Cộng CÀPHÊ has increased beyond the borders of Vietnam by
establishing locations in several Asian countries, including South Korea, Japan, Cambodia,
and Laos. Their approach to penetrating these markets includes adapting to local tastes even
while maintaining their center values. For instance, in South Korea, where there is a stronger
café lifestyle with one-of-a-kind taste options than in Vietnam, Cộng CÀPHÊ added new menu
items such as matcha-flavored beverages and bingsu (Korean shaved ice cakes) to cater to
Korean’s tastes. This flexibility has allowed them to effectively penetrate special markets and
entice a diverse client base.
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In terms of worldwide marketing, Cộng CÀPHÊ has additionally been a success in adapting
its menu to cater to worldwide tastes at the same time as nevertheless staying true to its
Vietnamese roots. They offer a wide range of beverages, along with traditional Vietnamese
coffees like “cà phê sữa đá'' and “cà phê trứng”, as well as greater westernized options like
espresso-based beverages and flavored lattes. This versatility allows them to enchant both local
clients who respect conventional flavors and vacationers who are seeking out something
familiar but particular.
Furthermore, Cộng CÀPHÊ has made use of social media and digital marketing to promote its
emblem the world over. They have an active presence on platforms like Instagram and
Facebook, in which they showcase their specific coffee offerings and engage with clients
through visually attractive content material. This has helped them reach a large variety of
audience, not simply amongst Vietnamese customers but also among coffee lovers globally
who are curious about the Vietnamese coffee way of life.
GDP, PPP means gross domestic product based on purchasing power parity. It helps convert
nominal GDP into a number more easily compared between countries with different
currencies. The index provides a way to compare levels of growth and standards of living
in various nations, each of which has its own currency, hence becomes our first criterion
in the preliminary screening. As the higher standards of living are in those countries, the
more profit Cộng CÀPHÊ can make with our business.
The World Bank has reported the world's 20 largest economies in 2022:
China 30,327,320 1
US 25,462,700 2
India 11,874,583 3
Japan 5,702,287 4
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Russia 5,328,855 5
Germany 5,309,606 6
Indonesia 4,036,901 7
Brazil 3,837,261 8
France 3,769,924 9
UK 3,656,809 10
Turkey 3,180,984 11
Italy 3,052,609 12
Mexico 2,742,903 13
Korea 2,585,011 14
Canada 2,273,489 15
Spain 2,181,968 16
Egypt 1,674,951 18
Australia 1,626,940 19
Poland 1,625,236 20
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2.1.2. Political Stability
Institutional indicator that shows the stability in political and governmental issues in the
countries. For a company to operate and run its business smoothly in a foreign country, the
country itself must be politically stable. According to the Global Economy, here comes the
aforementioned countries ranked from high to low by the political stability points:
Japan 1.03 1
Canadia 0.94 2
Australia 0.85 3
Germany 0.76 4
Korea 0.66 5
Italy 0.58 6
Spain 0.58 6
UK 0.54 8
Poland 0.51 9
France 0.37 10
US 0.00 11
China -0.48 12
Brazil -0.49 13
Indonesia -0.51 14
Saudi -0.58 15
Arabia
India -0.62 16
Mexico -0.64 17
Russia -0.65 18
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Egypt -1.02 19
Turkey -1.1 20
Table 2. Aforementioned countries ranked from high to low in terms of political stability index
The authors have decided to choose the top 11 from the list to be analyzed in the next criteria.
According to different sources, here comes the aforementioned countries ranked from high to
low by coffee consumption per capita:
Canada 6.5 1
Germany 6.5 1
Italy 4.72 3
Spain 4.5 4
US 4.4 5
Japan 3.4 6
France 3.4 6
UK 2.8 8
Poland 2.4 9
Korea 2.3 10
Australia 1.91 11
Table 3. Aforementioned countries ranked from high to low in coffee consumption per capita
The authors have decided to choose the top 7 from the list to be analyzed in the next criteria.
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2.1.4. Bureaucratic delays
Bureaucratic delay refers to the time it takes for a government agency or organization to
process paperwork, applications, or requests due to the bureaucracy and red tape that often
accompanies these processes. It can occur for a variety of reasons, including outdated or
inefficient procedures, understaffing, lack of resources, and complex regulations.
Bureaucratic delays can have significant negative impacts on businesses and organizations,
such as delaying the start of projects, impeding economic growth, and causing frustration and
lost opportunities. As a brand trying to penetrate a foreign country, Cộng CÀPHÊ find the need
to investigate the bureaucracy in other countries necessary for us to successfully go through all
the legislative procedures.
In our research through the bureaucracy of the 7 chosen countries, Cộng find the bureaucracy
in Italy and Spain extremely complicated.
For Italy, The Life in Italy website wrote “If there is one thing people always complain about
in Italy, it is bureaucracy. From a foreign perspective, Italy appears to be an unorganized
country, motherland of useless and long procedures.” Bureaucracy is notoriously difficult in
Italy, and it appears that things are no different when it comes to creating a business from
scratch, as potential business owners face up to 86 bureaucratic steps and hefty expenses.
For Spain, the andalucia.com website described the bureaucracy of the country as “Spain is a
fairly bureaucratic country, with a red tape tradition going back centuries. It is inevitable that
you will encounter numerous paperwork projects while you are living here.” It seems like the
bureaucracy here is not ideal for business as well.
For Japan, in “A Look at Coffee Culture in Japan”, the Coffee Business Intelligence wrote “As
hot beverages go, tea tends to be the one most associated with Japan. Coffee is more often
linked to the Middle East or Europe.” Japanese people prefer drinking tea over drinking coffee,
and they already have a rich and traditional culture of serving tea. In addition, the market’s
considerate over brands, as they have high expectations with quality. Consequently, the market
is not ideal for Cộng CÀPHÊ to penetrate.
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For the US, the communist theme served as a niche, or USP, for our company to win over other
brands do not seem to be friendly to the United States of America. Immigrant Viet community
absolutely does not have a preference toward Communism as the old generations are still
affected by the Vietnam war.
Market size is made up of the total number of potential buyers of a product or service within
a given market, and the total revenue that these sales may generate. This is crucial for a
company like Cộng Cafe, as expanding into markets with substantial size can lead to higher
sales and profitability.
According to information provided by Statista, we can have an overview of the market size of
the 3 target markets as follow:
Canada: The Canada market size in terms of coffee in 2023 is estimated to be US$3.0 billion
in terms of revenue, according to Statista.
Germany: The Germany market size in terms of coffee in 2023 is estimated to be US$6.8
billion in terms of revenue, according to Statista.
France: The France market size in terms of coffee in 2021 was estimated to be US$2.4 billion
in terms of revenue, according to Statista.
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(billion dollars)
Score 2 3 2
Market growth is considered the ability to sell products in a specific region or area in the
future. Annual percentage growth rate at market prices based on constant local currency. It is
an important factor to consider because it gives out the idea of the potential for future growth.
According to information provided by Statista, the potential market growth in 3 target countries
is predicted to rise:
Score 5 5 3
Buying power of consumers is the amount of money that consumers have to spend. It is an
important factor to consider because it gives an idea of how likely consumers are to be able to
afford your products or services.
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According to aggregate sources, the buying power of customers in 3 target countries may come
as follows:
Canada: The purchasing power of each person in Canada varies depending on several factors,
such as income, location, and age. However, according to Statistics Canada, the average
purchasing power per capita in Canada in 2023 is approximately CAD$27,000 (CAD$27,000
is equal to US$20,140.68).
Germany: The buying power of customers in Germany is relatively high. Germans will have
€26,271 per person for consumer purchases, living expenses, recreation and saving in 2023.
France: The average purchasing power per capita in France in 2023 is €16,344 (€16,344 is
equal to approximately $17,195.60)
Score 3 3 2
According to aggregate sources, the government regulations in 3 target countries may come as
follow:
Canada: Government regulations on coffee in Canada have allowed the coffee industry in
Canada to innovate and offer a wider range of coffee products to consumers. However, all
coffee sold in Canada must be labeled with its country of origin and its caffeine content.
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Germany: Germany has some strict regulations regarding food and beverage safety, including
coffee - country of origin labels and roast date. The use of coffee additives and flavorings is
also regulated by the German Coffee Association (DCA).
France: The French government has several regulations in place to protect the traditional
French coffee culture. First, the use of coffee additives and flavorings is regulated by the
French government. Second, all coffee products sold in France must be labeled with their
caffeine content.
Also, the products in Germany and France must meet certain EU sanitary and safety
requirements that prohibit the sale of food that is dangerous to health or unfit for human
consumption as well. In this regard, the EU has strict sanitary rules that must be met at all
stages, from production to consumption.
Score 4 3 3
Canada:
Coffee Preferences: Canada has a diverse coffee culture. They both enjoy traditional and
modern coffee drinks.
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Frequency of Consumption: Canadians are known for their love of coffee, with a high
percentage of the population consuming coffee regularly.
Willingness to Try New Coffee Experiences: Canadians show a growing interest in unique
coffee experiences.
In short, Canadians have a high frequency of coffee consumption and a willingness to try new
coffee experiences, including specialty coffee.
Germany:
Coffee Preferences: Specialty coffee shops and cafes are becoming increasingly popular in
Germany, with a growing demand for high-quality and unique coffee experiences.
Willingness to Try New Coffee Experiences: In Germany, especially young consumers show
the most interest in innovative new coffee offerings.
To sum up, the growth of the specialty coffee scene has introduced innovative ways of enjoying
coffee. Germans have a high coffee consumption rate and are open to trying new coffee
experiences.
France
Coffee Preferences: France is known for its love of traditional coffee. Espresso is the most
common coffee choice, and traditional French cafés serve it in small cups. Café au lait (coffee
with milk) is also popular.
Willingness to Try New Coffee Experiences: French consumers are quite open to trying new
coffee experiences, although they have a strong attachment to their traditional café culture.
To conclude, France has a strong coffee tradition with a high frequency of consumption, but
the preference is often for traditional coffee styles.
● Only drink traditional coffee - Limited coffee consumption - No willingness to try new
coffee experiences: 1 = Very poor
● Prefer to traditional coffee - Low coffee consumption - Reluctant to to try new coffee
experiences: 2 = Poor
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● Prefer traditional coffee - High coffee consumption - Not open to try new coffee
experiences: 3 = Medium
● Increasingly demand for specialty coffee - High coffee consumption - Open to try new
coffee experiences: 4 = Good
● Increasingly demand for specialty coffee - Among the highest coffee consumption
countries - Strong willingness to try new coffee experiences: 5 = Very good
Score 5 5 4
2.2.1.6. Summary
2.2.2.1. Price
This criterion accounts for 20% of the final score.
Indicator: Cộng CÀPHÊ’s average price (1.57$) vs Theirs. If this average price is lower than
the biggest competitor in one country, Cộng stand a higher opportunity for market entry.
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Germany: AVG coffee price: 2.38$
Score 5 5 5
Indicator: Cộng’s single-origin coffee bean (Vietnam) vs The multi-origin coffee beans in the
biggest competitors in each country. For coffee lovers, single-origin coffees are considered
more concentrated and flavourful coffee, which claims more premium to the coffee quality and
the brand.
Canada: In 4 of the world’s most renowned coffee regions. The brand seemingly has their
investment plan in producing single-origin coffee. However, this has not been their main target
since these plans are still part of the Partnership Programs.
Germany: In 3 coffee origins: Honduras, Peru and Brazil and no single-origin coffee.
France: In 3 coffee origins: Honduras, Peru and Brazil and no single-origin coffee. A selection
of the finest beans from South & Central America and India.
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Country Canada Germany France
Score 3 5 4
Canada: Tim Hortons is Canadians' national pride and the most trusted brand there in several
years (Morning Consult), making it harder to compete.
France: The sustainability trend is driven by increasing consumer demand for specialty coffee
alongside traditional boulangeries and pâtisseries. This trend has a lower cultural fit.
Score 2 5 2
Indicator: Cộng CÀPHÊ’s total number of outlets (currently 75) globally vs theirs in their
country. The larger the number of outlets in the biggest competitor in these countries, the
lower chances Cộng can compete with them.
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Germany: 749 outlets in total
Score 1 1 1
Score 1 1 2
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2.2.2.6. Summarizing evaluation criteria and scoring
Country
Criteria Weight
Canada Germany France
Price 20% 5 5 5
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2.3. Models for market selection
Figure 1. MACS
Using the MACS matrix figure to investigate the countries, the authors have decided to
choose Germany for Cộng CÀPHÊ to penetrate.
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3. Market entry mode
3.1. Market entry criteria
3.1.1. Internal factors
Sociocultural distance between home country and host country: The perceived
distance between the home country (Viet Nam - Asia nation) and host country
(Germany - Europe nation) in terms of culture, economic systems and business
practices is indeed great. Therefore, the firm should shy away from direct investment
in favor of intermediate and export entry modes.
Market size and growth & intensity of competition: As mentioned in the previous
part of analyzing market attractiveness, Germany is among the highest appealing
markets in the world in terms of coffee. Cộng CÀPHÊ should consider committing
resources to its development in Germany. However, the more attractive the host
country gets, the more competitive the market is. Without a doubt, the German coffee
market is fierce, with key players dominating the market and accounting for significant
shares. The market is dominated by players like Nestle SA, JAB Holding Company,
and Tchibo GmbH Coffee Company, among others. Hence, Cộng CÀPHÊ should avoid
deep internationalization and favor entry modes that involve moderate resources
commitments.
Risk-averse: Since Cộng CÀPHÊ is a SME and on the way of growing, risk-averse is
a desired mode characteristic of our. Therefore, we prefer export modes and
intermediate modes as they entail low levels of financial and management resource
commitment.
Control & flexibility: Mode of entry decisions also need to consider the degree of
control and flexibility that management requires over operations in international
markets. To ensure our products' quality, we prefer entry modes with fairly control and
flexibility over the conditions - intermediate modes in particular.
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3.1.4. Conclusion
The authors decide to choose intermediate modes after analyzing several entry mode
criteria.
Intermediate
Advantages Disadvantages
entry mode
- Increases the income on products already The licensees prove less competent than
developed because of expensive research expected in marketing or other management
- Requires little capital investment activities.
- A valuable spin-off if the licensor can sell - The licensee may not fully exploit the
other products or components to the licensee. market
- The licensor can take immediate advantage - The danger of the licensee running short of
of the licensee’s local marketing and funds
Licensing
distribution organization and existing - Lack of control over licensee operations.
customer contacts. - Negotiations with the licensee, and
- Protects patents sometimes with the local government, are
- An advantage in securing government costly.
contracts. -Governments often impose conditions on the
transferral of royalties or on component
supply.
Table 7. Advantages and disadvantages of Licensing
Conclusion: Licensing is suitable for well-established businesses with some special products
that can demonstrate that they are in a strong position to operate the license in question which
is not suitable for SME service - beverage chains like Cộng CÀPHÊ.
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Intermediate entry
Advantages Disadvantages
mode
- A greater degree of control compared - The search for competent franchisees can be
with licensing. expensive and time-consuming.
- Low-risk, low-cost entry mode - Lack of full control over franchisees'
- Using highly motivated business operations
contacts with money, local market - Costs of protecting goodwill and brand
knowledge, and experience. name.
Franchising - Ability to develop new and distant - Problems with local legislation, including
international markets relatively quickly transfers of money, payments of franchise
and on a larger scale. fees, and government-imposed restrictions on
Generating economies of scale in franchise agreements.
marketing to international customers. -Risk to the company’s international profile
A precursor to possible future direct and reputation if some franchisees
investment in foreign markets underperform
Table 8. Advantages and disadvantages of Franchising
Conclusion: Franchising is a low-risk and low-cost method that is well suited to service and
people-intensive economic activities, particularly where these require a large number of
geographically dispersed outlets serving local markets
Intermediate entry
Advantages Disadvantages
mode
- Access to expertise and contacts in local - Contributions to joint ventures can
markets. become disproportionate.
- Gain access to the other partner’s skills and - Loss of control over foreign
resources. operations
- Reduced market and political risk. - Transfer pricing problems
- Economies of scale by pooling skills and - The importance of the venture to each
resources partner might change over time.
Joint venture / - Overcomes host government restrictions. - Cultural differences
Strategic Alliance -Shared risk of failure. - Loss of flexibility and confidentiality.
- Possibly better relations with national -Problems of management structures
governments through having a local partner and dual parent staffing of joint
ventures.
Conclusion: Joint venture/Strategic Alliance is suitable for companies that want to reduce
manufacturing costs and develop and diffuse new technologies rapidly. Joint ventures are also
used to accelerate product introduction and overcome legal and trade barriers expeditiously.
Therefore, this method is also not suitable for Cộng CÀPHÊ.
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Based on the comparison, the authors decided to let Cộng CÀPHÊ enter the German market
by franchising.
Advantages:
● In Germany, there are no specific laws or government agencies that regulate the offer
and sale of franchises
● The franchise industry has had another strong year in Germany. According to the
German Franchise Association, sales rose in 2022 by almost 5% to EUR 142 billion
● As Cộng CÀPHÊ is a SME coffee-serving brand, is suitable for using a low-risk and
low-cost entry mode but still has a great degree of control
● Franchising is also the firm's preferred entry mode, which has been applied to its 12
foreign branches in Korea and the Philippines
● Franchising is well suited to service, particularly where these require many
geographically dispersed outlets serving local markets. Therefore, franchising is a
suitable method for Cộng CÀPHÊ when the main goal of the company when entering
a new market is to expand its business quickly
Disadvantages:
Germans are cautious investors and prefer to see new concepts tested and proven successful in
Germany before investing in them, even if a business has already been successful in its home
country so the company might have a hard time searching for competent franchisees.
● Coffee:
Cộng CÀPHÊ’s coffee product line is diverse with Vietnamese signature coffee and
also successfully Vietnamisation European coffee such as Vina-cappu, Vina-cano and
Vina-latte. Based on that success, we have decided to make Vietnamese version of the
03 most familiar drinks in Germany:
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01. Pharisäer Kaffee
02. Eiskaffee
03. Hheiße Schokolade
We propose changing ingredients into fruits which are easier to access and accepted
in Germany.
Except for T-shirt, Handbook and Porcelain, the rest of the side product line will mainly
be used as decoration to strongly represent Vietnamese culture in the 1970s based on
its historical appearance and value.
Brand name: We continue to keep Cộng CÀPHÊ brand name for the franchise
in Germany for two reasons:
For the German public, directness is the key. Germans tend to value direct
and straightforward communication. Adapting Cộng CÀPHÊ brand name
into the country’s language may cause ambiguity.
The theme of Cộng CÀPHÊ is all about cultural experiences. Keeping the
brand name is crucial in communicating Cộng CÀPHÊ’s cultural aspects
and values as a Vietnamese brand.
Decoration: Cộng CÀPHÊ will still using items such as bike, handbook,
clothing... from the “Golden area” of Vietnam to expressing the same vibe of
the 1970s.
Service: Regular training will be offered for staff to maintain the best service
quality and be able to deliver fully Vietnamese cultural value not only from its
product but also from Cộng staff.
4.2. Price
4.2.1. Internal Factors
4.2.1.1. Firm-level
Firm Positioning: Cộng CÀPHÊ consider themselves to be in the premium market segment.
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On average, the target profits would be 25-35% of the revenue.
4.2.1.2. Product
There are several substitutes for coffee drinks in Germany. Some of the most popular
substitutes include Starbuck, McCafe, Five Elephant, and a number of independent coffee
shops.
Authentic Vietnamese coffee experience: Cộng CÀPHÊ offers a wide variety of authentic
Vietnamese coffee drinks, such as coconut coffee, egg coffee, and iced coffee with condensed
milk.
Comfortable and inviting atmosphere: Cộng CÀPHÊ coffee shops are typically decorated with
a unique vintage style.
In Germany, the tax rate for one kilogram of roasted coffee is 2.19 euros. A tax rate of 4.78
euros per kilogram applies to soluble coffee and green-bean coffee imports are duty-free
regardless of country of origin.
Price control: The German “price brake” is currently scheduled to run through April 2024.
The exchange rate between Vietnamese Dong and Euro has been stabilizing in recent years.
The inflation rate in Germany despite an increase during 2020 and 2021 due to COVID – 19
is stabilizing and tend to go down.
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Figure 3. Inflation Rate of Germany
4.2.2.2. Market
The coffee market concentration level in Germany is just over a fragmented level. This
market could be considered as a monopolistic competitive market.
One notable trend in the coffee market is the growing demand for specialty coffee - unique and
high-quality coffee experiences.
Market Diversity: Germany's coffee market is diverse, with various competitors. Geocentric
pricing allows Cộng CÀPHÊ to tailor its pricing to compete effectively with these diverse
rivals.
Premium Positioning: Geocentric pricing enables Cộng CÀPHÊ to maintain its premium
image by considering local market conditions and setting prices accordingly.
Tariff and Tax Variations: A geocentric pricing approach allows Cộng CÀPHÊ to adapt its
pricing strategies in response to these tariff and tax variations, optimizing its profitability.
Price Control and Consumer Sensitivity: Geocentric pricing allows Cộng CÀPHÊ to set
prices that align with local market dynamics, considering factors like the "price brake" while
satisfying consumer preferences.
Specialty Coffee Trend: Recognizing the growing demand for specialty coffee, geocentric
pricing enables Cộng CÀPHÊ to price its unique Vietnamese coffee offerings competitively in
line with consumers' focus on quality over price.
Specialty Coffee Trend: Cộng CàPhê can justify premium pricing while satisfying customer
preferences.
One way to set prices is to use a market pricing strategy. This means looking at the prices of
other coffee brands in Germany and setting their prices accordingly.
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Figure 5. Prices for new menu
4.3. Distribution
4.3.1. Factors that influence channel decisions
4.3.1.1. External determinants
● Customer characteristics:
● Nature of product:
● Nature of location:
For the location choices, to serve the younger segmentation that we target, there are
several key factors to note: Convenience, Unique coffee experiences, Offline
services, Sustainability.
→ Cộng CÀPHÊ could select and screen some of the most famous and crowded
streets in big cities in Germany: Berlin, Hamburg, and Munich.
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● Competition: Cộng CÀPHÊ would choose the same channels as our competitors.
● Legal regulations: Cộng CÀPHÊ obey the customs procedures and taxation required
for importing coffee into Germany.
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● Facilitating factors
After choosing one KEY franchisee, follow-up franchisees are selected by the
same criterias, but under close screening and observation from our brand team
and the KEY foreign franchisee.
o Contracting
After analysis and consideration, here are the final channel decisions.
● Direct channel:
Offline stores:
Cộng will use a direct sales model. By locating in attractive spots located on famous
streets in big cities (Berlin, etc.), Cộng can attract many young German people with
unique experiences and crowded atmosphere. In the middle of busy streets, a cafe with
a nostalgic Vietnamese vintage style appears, which is the difference, can attract most
of our target customers and create the success of Cong Cafe in Germany.
Besides distributing through traditional store models, Cộng also distribute pop-up store
models at railway stations and shopping mall, shopping centers, which attract a lot of
our target customers and get them to try and indulge in the distinctive flavour of our
product.
● Indirect channel:
"Coffee and Cake" is a huge cultural and cuisine pattern in Germany, which has lasted
for years and influenced largely our customers' choices and preferences. Therefore,
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Cộng CÀPHÊ will partner with big bakery brands like Du Bonheur, Anneliese
Backtechnik, etc. to introduce our products along with their delicious cakes and breads.
Cộng will not be their competitors but their partners to at first introduce the taste of
Cong Cafe to Germans.
Supermarkets and hypermarkets are the dominant distribution channel, accounting for
more than 60% of the market’s revenue. Therefore, to get into this channel, in
particular, packaged coffee products can be introduced into the supermarkets,
hypersupermarkets, and big local convenience store chains by Cong Cafe. Moreover,
our side products (bags, shirts, ...) that are only limited in Germany would also be
distributed to these channels.
4.4. Promotion
4.4.1. Review of the Communication Process
A. The sender
Cộng Cà Phê is a culturally rich Vietnamese coffee brand, which leads to its distinctiveness
in the foreign German market. Cộng Cà Phê is nostalgic, communist-themed and
reminiscent of Vietnam's urban cultural landscape in the 20th century. Cộng Cà Phê’s
vision is to evoke imagination among their customers and bring about diverse emotional
experiences with Vietnam.
B. The receiver
We defined our target audience for promotion into 2 main groups with the following persona:
3. Common Traits:
- Open-mindedness
- Environmental consciousness
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4. Behavior & Psychographic:
- Lifestyle developer
- Tech-savvy
- Exploration enthusiasts
5. Media Habits:
- Prefer streaming services like Netflix, Amazon Prime, and Spotify for their entertainment
needs
- Stay informed through online news portals, news apps, and social media. Prefer news sources
that provide unbiased and fact-based reporting.
6. Coffee Preference:
- Coffee culture: Coffee plays a significant role in the daily lives of young Germans. Appreciate
the art of coffee-making and enjoy exploring different coffee flavors and brewing methods.
- Specialty coffee: Appreciates high-quality coffee and often seeks out specialty coffee shops
that offer a wide range of coffee beans and brewing techniques.
3. Common Traits:
- Cultural fusion
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- Cultural preservation: Values preserving their cultural heritage
5. Media Habit
- Members of the German-Vietnamese community can consume media in both German and
Vietnamese languages.
- Social media platforms like Facebook, Instagram, and YouTube are popular
- Prefer streaming services like Netflix, Amazon Prime, and Spotify for their entertainment
needs
- Stay informed through online news portals, news apps, and social media. Prefer news sources
that provide unbiased and fact-based reporting.
6. Coffee Preference:
- Cultural coffee preferences: Appreciates both German and Vietnamese coffee traditions.
- Coffee as a social ritual: Coffee serves as a social bonding activity within this community.
- Cultural coffee shops: Seek out coffee shops that offer a blend of German and Vietnamese
coffee options.
C. The message
After aligning with Cộng Cà Phê’s vision and theme, we came up with a strategic message for
Cộng Cà Phê in Germany: Cộng Cà Phê is the SCENT and TASTE of Vietnam's golden era
with the brand idea for Cộng Cà Phê in Germany: BEYOND COFFEE - "Beyond Coffee, Cộng
is a whole experience of taste, scent and culture"
We defined Cộng Cà Phê’s strategic approach as to get (1) German young people and
Vietnamese- German community to (2) experience Cộng Cà Phê by (3) communicating Cộng
as an exquisite experience with an USP: Vietnamese high-quality coffee in taste and scent
enriched with cultural values. .
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B. The tone and mood
1. Advertising
We use TVC, Billboard and Print Ads to brand Cộng Cà Phê ultimate quality and showcase
Vietnamese heritage and culture to the German Public. While maintaining the eye-catchiness
of the advertisement to fit the dynamic settings of Germany, we also subtly incorporate the
vintage and nostalgic vibe of Cộng Cà Phê to stand out and communicate Cộng Cà Phê’s USP.
We also target our audiences via non-traditional Ads like activational booths and interactive
billboards focusing on the scent and the taste of Cộng Cà Phê - an unique offering with strong,
pungent flavors as compared to German coffee. .
2. Public Relations
The German public is known to be open, so to capture their attention, we will utilize News,
Events, Special events, Buzz Marketing, Social Networking to build the image of Cộng Cafe
as a well-rounded experience of scent, taste and culture. .
3. Sales Promotion
As a franchise, Cộng Cà Phê will mostly use customer promotion to build good relationships
with the customer and develop their loyal customer base, mostly targeting Vietnamese-
German communities. We will combine Coupons, Patronage Rewards, Points of purchase
display, Advertising specialties, Premiums.
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4. Direct Marketing
We will use Direct Mail Marketing and Kiosk Marketing to capture the audience’s attention.
Additionally, with a young market and the dynamic, open characteristic of German young
people, Cộng Cà Phê will also make the most of podcast marketing to link the auditory
experience to Cộng Cà Phê’s scent, taste and culture experience. We will target Spotify users
with vintage, nostalgic music taste and the ASMR-lover community with our “Vietnamese
Coffee Shop Environment” theme.
5. Celebrity Endorsement
We use this tactic specially to target the Vietnamese-German community by partnering with
Vietnamese-German KOL like Trọng Hiếu, Thảo Nhi Lê and Vietnamese exchange students
working as influencers like Thạch Trang, Yo Bae Maya…
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5. Conclusion and recommendations
It is indeed obvious that an effective foreign growth strategy is critical to a company's future
and development ambitions. Companies aim to expand into new areas by effectively utilizing
their resources and generating extra long-term revenue streams. As a result, there are numerous
chances both in rich countries, where demand is higher and in emerging countries, where
demand is expanding. Therefore, a successful market penetration strategy enables the most
appropriate and efficient use of corporate resources, assisting businesses in their growth.
We then came up with this proposal for the company's international-expansion entry mode
when entering the Germany market. Our group conducted research and proposed a marketing
mix-strategic plan for Cộng CÀPHÊ to penetrate this new market in the report. The franchising
entry mode, we believe, is the most appropriate for the organization to consider when initially
entering a new market. The proposal is based on our own opinions and knowledge, and it is
just meant to be used as a guideline.
We would like to express our gratitude to Ms. Phạm Thị Minh Châu for her invaluable
assistance in completing our research. Due to time constraints, limited understanding, and
limited access to pre-existing data, this study will undoubtedly have flaws and limitations. We
want to get helpful thoughts and recommendations in order to improve our report.
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