PRINCIPLE OF MARKETING REPORT CHAPTER SEVEN: CREATING VALUE FOR TARGET CUSTOMERS

Instant coffee market segmentationThe growth of robusta is not enough for Vietnam.. With four segmentations: geographic segmentation, demongraphic segmentation, psychographic segmentatio

PRINCIPLE OF MARKETING REPORT

CHAPTER SEVEN: CREATING VALUE FOR TARGET CUSTOMERS

MINISTRY OF EDUCATION & TRAINING

HOA SEN UNIVERSITY FALCUTY OF ECONOMICS AND COMMERCE

<October 2015>

ACKNOWLEDGMENTS

I would like to thank our supervisors in this subject for having opened our mind with many valuable lessons in studying marketing principles and also gave us the opportunities to develop our knowledge in real product research

Besides, we would like to thank all our classmates, especially those groups who have presented, for giving us many useful experiences

Many thanks for all your help and best regard

ACKNOWLEDGMENTS ii

MEMBER iii

CONTENT iv

1 Introduction to Nescafe 3in1 1

1.1 Background 1

1.2 Product categories 1

2 Instant coffee market segmentation 2

2.1 Geographic segmentation 2

2.2 Demographic segmentation 2

2.3 Psychographic segmentation 3

2.4 Behavioral segmentation 3

3 Selecting target market segments 4

4 Potential Customers 4

5 Positioning Map 6

6 Competitive advantages 7

CONCLUSION 9

REFERENCE 10

1 Introduction to Nescafe 3in1

1.1.Background

Nescafé is a brand of instant coffee made by Nestlé Nestlé’s coffee powder was introduced in Switzerland in 1983 after being developed 8 years by Max Rudolf Morgenthaler

Nescafe 3in1, which is sweet white coffee with comfortable aroma and full-flavour taste, is one of best-selling coffee products of Nescafe Nescafe 3in1 has come to Viet Nam since 1997 It has 2 types of coffee: regular and rich Nescafe 3in1’s main slogan is: “It all starts with a Nescafe” In the last few years, its TVC in Vietnam also stresses in “100% made from coffee beans of Viet Nam”

1.2.Product categories

These are 2 types of Nescafe 3in1 in Vietnam: regular and rich

2 Instant coffee market segmentation

The growth of robusta is not enough for Vietnam It is mean the demand for instant coffee has growth faster than production

We have collected and managed information about coffee market in Vietnam in internet based on the theory that we learned in the last period With four segmentations: geographic segmentation, demongraphic segmentation, psychographic segmentation and behavioral segmentation, coffee market became much easier to understand

2.1.Geographic segmentation

Geographic segmentation is a segmentation divided on the basis of geography Coffee market in Vietnam can be divided by geographical area, such as Hanoi Capital region or Ho Chi Minh city area It also can be divided into urban or rural segments

2.2.Demographic segmentation

Demographic segmentation is a market segmentation according to age, race, gender, religion, income, family size, occupation, ethnictity and education These factors make the standard for recognizing customers and estimating the market size effectively even when other segmentations change for some reasons

In coffee market in Vietnam, we only do research in age, gender, income and occupation

Age: Consumer needs and wants change with age These are 4 stages that have the

need in intant coffee: Age 18-22, 23-29, 30-40, 40-50

Gender: Dividing the market into smaller group based on sex There are some kind

of strong coffee which usually used for man (like Nescafe Viet) and coffee with collagen for woman (like G7 Passiona)

Income: Dividing the market into different groups based on how much money one

person (family) makes a month There are three groups:

Low: 2.1 – 2.9 million dong/month

Medium: 4.3 – 5.1 million dong/month

High: 7.5 – 8.7 million dong/month

Occupation: Drinking hobby is affected most by consumer jobs There are: Student,

Employee, Employer, Worker, Peasant,…

2.3.Psychographic segmentation

Psychographic segmentation is divided according to personality characteristics, lifestyle, or social class

Instant coffee intended for younger and busy people They like convinience and quickness, who is officer and students or stress working people Besides, people also drink coffee to finding relaxation and motivation for a fresh new day There are some kind of coffee that is produced only for man, showing high class and strength or only for woman, with beauty factors Whenever we are happy or sad, we can have a cup of coffee to calm ourselves down and make the right decision

2.4.Behavioral segmentation

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product

Occasions: the buyers need buy coffees when they have demands, times and moneys

to pay them So, the company should produce much more coffees in the end of year Because this time is that they focus on Tet’s holiday and their demands buy the coffees are more than all other days in year

Benefits sought: needless to say, drinking a lot of coffees that contains much cafein

will affect to skin, eyes and makes them stress So, the company will show new product which contains less cafein for woman

User status: identifying the customers will make them more maximum

advertisements For expamle, for coffee roasters, they sometimes use on home and are nearly man who like strong coffee and coffee 3 in 1 that sometimes be used by students, officers, girls who want to faster and more convinient

Usage rate: the company researches markets in order to innovate products which are

different with others on market For instance, the coffee company creates a lot of product with different tastes which contains smell typical Vietnamese They divide many groups that usually buy their product Man are potential customers of Coffee market So, the company should more advertise for man than others

3 Selecting target market segments

Market segmentation is divided into smaller group with distinct needs, characteristic,

or psychographic who might require separate products or marketing mixes

The target market is a set of buyers sharing common needs or characteristics that the company decide to serve

Depend on the market segmentation the target consumer of Nescafe 3in1 are: Urban consumer and core audience aged 18-40 It means the target aim at people who are young and busy with work, do not have time to enjoy a cup of coffee but also with those who are looking for relaxation and want to enjoy their days This target is suitable for people living in the city Because in the city, lives are always busy and stressful so that people want things to be served quickly, especially the youth nowadays, only like things served fast But on the contrary, when people have freetime, they would rather drink coffee and chat with their friends for hours, even for

a day In Vietnam, Nescafe 3in1 succeed in taste and aroma of the coffee Gout of Vietnamese people is more charming than others

The strategic objective is developing worldwide supplying net of corporation The strategy that helps Nescafe 3in1 succeed is "When in Rome, do as the Romans do" The company understood the consuming habit of Vietnamese people and also the lifestyle of them to make the product become suitable

4 Potential Customers

In psychological:

Vietnamese people would prefer products imported than product made in Vietnam So Nescafe can focus on activities related to the pride of Vietnamese history like it used

to do such as introduction to the North of Viet Nam the new product named 1000 years Thăng Long anniversary, 12/2008 nestle impressed people when the show the biggest VietNam map made from coffee bean at Buon Ma Thuat coffee festival,… Convenience: introduced a new product that coffee is canned which woule be not strange to VietNamese people

In geographic:

Nescafe understood that people in the middle and the South are easier to be affected

by promotions and advertisement, after that, the company noticed and attacked the North because its higher growth of market share and consumers there have preferred coffee than tea which is traditional drink)

General director – M.rPierre gave Viet Nam map made from coffee bean to

commerce department of tourism in Dak Lak province

Nescafe Cans in Malaysia

 Potential customers: those who really want to have Nescafe 3in1and their financial

capacity is enough to buy it Besides, demographic, behaviours are the two main segments, the company based on the 2 others to attrached consumers in the North having patriot well and so do the men having strong lifestyle

5 Positioning Map

Product posittion is the way the product is defined by consumers on important attributes-the place the product occupies in consumer’s mind relative in competing products, including perception, impression and feelings Positioning map also help us identify where organization can position a new brand

To draw positioning map, first we had to point out Nescafe 3in1’s main opponents: G7 3in1 and Vinacafe On the whole relevant attributes, we decided to take two dimension price and taste which showed us the differences apparantly to evalutate the products After that we conducted a survey by using an online form We asked our friends

to rate from 1 to 5 to scale how good the taste of the product and how suitable the price of them This is the result that we received.

We used the number received through the survey to make a map with two axis, one is price and the other is taste As we can see, Nescafe 3in1 has been placed in the highest position of all three That means it has not only reasonable price but also taste good G7 3in1 and Vinacafe are close to each other and both are placed below Nescafe 3in1 All of them have been placed in the second square of the map

Positioning map of Nescafe 3in1, G7 3in1 and Vinacafe

Reasonable price

Unsuitable price

Tast

e goo d

Tast

e

bad

6 Competitive advantages

Competitive advantage in an advantage over competitors gained by offering consumer greater value, either through lower prices or by providing benefits that justify higher prices

First of all, we shall take a look at some opponents of Nescafe 3in1: G7 3in1 and Vinacafe 3in1 These two have been shared the coffee marketshare with Nestcafe 3in1 Compare to them, Nestcafe 3in1 have the advantage of being a well-known brand all over the world

Second of all, Nestle coporation first allowed to produce product in 1998 and since then it has strongly become more and more familiar with many Vietnamese families, the reason for this is because they know how to fit in in Vietnam, Nestle has always been trying to reach customer’s satisfaction with its slogan: Number one brand in the world, VietNam’s taste Showing their try to compare with G7- a VietNam’s coffee brand

The third advantage of Nestcafe 3in1 is the recognition of nutition quality and various flavor Compare to Vinacafe it has two different flavor which make customer prefer their product to Vinacafe

It also has loyal customer for Nestle’s products so whenever it comes to make a coffee choice among them three, Nestcafe always came as the first choice

The marketing agency of Nestle is very stong and understanding VietNamese, that’s why they’ve come up with the plan using VietNamese pride of their country into their product marketing campaign

Going through the research, we got many helpful knowledge and experiences for ourselves, especially we can understand more thorough about Nescafe 3in1 product We not only had chance to put theories learning at university into practice, but also got many lessons about how to worked with others, which were important in life and career

Diên Vỹ (30/04/2014), Cà phê hòa tan và cuộc chiến tranh giành thị phần, edited October

20th, 2015, from http://songmoi.vn/kinh-te-thi-truong/ca-phe-hoa-tan-va-cuoc-chien-tranh-gianh-thi-phan

‘Chapter 7: Creating value for target customer’, in Kotler, Philip & Armstrong, Gary,

Principles Of Marketing 14 edition, published by Bookshop-Loc, page

Positioning map-Marketing thought, edited in Ferbruary 25, 2013, from

http://neilbendle.com/category/competition/positioning/positioning-maps/