Situation Analysis Report

Nestlé Vietnam – Nescafé 3in1 cà phê

rang xay hoà tan đậm đà hài hoà

Vũ Đức Hoàng – s3807081 – Leader

Nguyễn Khánh Linh – s3870398
Nguyễn Hoàng Phúc – s3777209
Nguyễn Trí Hà Giang – s3823896
Trần Nguyễn Xuân Lan – s3818457
Đặng Phạm Hoàng Nam – s3836600
Situation Analysis Report

TABLE OF CONTENTS
1. INTRODUCTION ..................................................................................................................2
1. Company description..................................................................................................2
1.1 Company .....................................................................................................2
1.2 History .........................................................................................................2
1.3 CEO .............................................................................................................2
1.4 Mission Statement .......................................................................................2
2. Product description .....................................................................................................3
2.1 Features and Function ....................................................................................3
2.2 Market share ...................................................................................................3
2.3 Style and Design.............................................................................................3
2.4 Brand Awareness............................................................................................3
2. MARKETING ENVIRONMENT..........................................................................................3
1. Microenvironment ......................................................................................................3
1.1 Company .....................................................................................................4
1.2 Suppliers ......................................................................................................4
1.3 Competitor ...................................................................................................4
a. Direct competitors ..............................................................................4
b. Indirect competitors............................................................................4
1.4 Customer .....................................................................................................5
1.5 Intermediaries ..............................................................................................5
a. Reseller ...............................................................................................5
b. Marketing service agency...................................................................5
1.6 Public ...........................................................................................................6
2. Macroenvironment .....................................................................................................6
2.1 Demographic ..................................................................................................6
2.2 Economic ........................................................................................................6
2.3 Natural ............................................................................................................7
2.4 Technological .................................................................................................7
2.5 Political...........................................................................................................8
2.6 Cultural ...........................................................................................................8
3. SWOT ANALYSIS ................................................................................................................8
1. Strengths .....................................................................................................................8
2. Weaknesses ................................................................................................................9
3. Opportunities ..............................................................................................................9
4. Threats ........................................................................................................................9
STDP ....................................................................................................................................10
a. Segmentation..........................................................................................................10
b. Targeting ................................................................................................................10
c. Differentiation ........................................................................................................11
d. Positioning .............................................................................................................12
CONCLUSION ....................................................................................................................12
REFERENCES .....................................................................................................................13
APPENDICES ......................................................................................................................17

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I. INTRODUCTION
1. Company description
1.1 Company:
Nestle is
as a Switzerland milk company, established in 1866. Until recently, they always ranked in high
places in the top 10 biggest FMCG companies and has been in highest place since 2016. Nestle
producing wide range of products such as chocolate, cereal, baby food, etc. They have expanded
globally and entered Vietnam in 1995. Nestlé respects the local community and traditions,
truthful in conversation, and upholds good eating patterns. Nestle constant betterinNo, VX 2006,
“OF BUSINESS STUDIES,” , vol. XXVII, no. 2.
g its products by reducing sugar, salt and other unhealthy fats, promoting a nutritious diet and a
healthy lifestyle (Vietnam and Vu 2014). Nescafe was created in 1938 when the coffee experts
were trying to show an enormous quantity of coffee being in excess in Brazil (Nestle VN) .

1.2 History:
1912 Established the first Nestle represented office in Sai Gon (Nestle VN)
1990s La Vie Company was founded and is a joint venture between Perrier
Vittel (under Nestlé Group) and Long An trading company. Inaugurate
Nestle factory in Dong Nai.(Nestle VN)
2002-2018 Construction of Nestlé Tri An Factory began, and Gannon acquired
Nestlé Binh An Factory. And continue to expand and inaugurate many
other factories. (Nestle VN)
10/2019 A new and innovative workspace at Ho Chi Minh City Office was
opened (Nestle VN)

1.3 CEO:
The current Chief Executive Officer of Nestlé Vietnam is Binu Jacob, who has recently become
the new General Director since April 2020. He used to be a Senior Vice President and Regional
Sales Administrator, who take the responsibility to manage the sales of Nestlé Group’s Nutrition
for Children located in China. Moreover, Binu has conducted the business for Nestlé Groups in
America, Asia and Europe for more than 22 years (‘Nestlé Việt Nam có Tổng giám đốc mới’
2020).

1.4 Mission Statement:

Jacob (2020) proposes the company's mission statement stating that ‘Nestlé Vietnam is committed
to improving the quality of life and contributing to a healthier future, and this becomes more
important than ever’. He also said ‘To us, people are at the center of all business activities. We
place high priority on the health and safety of all employees, partners and the communities in
which we operate and are committed to doing this in the process of ensuring smooth supply to the
market’. Due to the huge effect of Covid-19, Jacob has put great emphasis on the importance of
health and safety of consumers in general and employees of Nestlé Vietnam in specific following
the Vietnamese Government advices. Besides, Jacob does not forget to bolster the supply chain in
order to guarantee the products are as much safe and fresh as possible for the consumers.

2. Product description

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2.1 Features and Function

NESCAFÉ 3in1 cà phê rang xay hoà tan đậm đà hài hoà uses the new technology to combine
between the flavor of roasted coffee with instant coffee and truly deliver the appealing scent of
roasts coffee. The premium Robusta coffee beans are grown in Vietnam through the Nescafe Plan
with the mission to improve the quality of coffee which is the tool for differentiating, compared
with other coffee brands. (‘NESCAFÉ 3in1 ĐẬM ĐÀ HÀI HÒA | Nescafe Vietnam’ n.d.)

Ingredients in Nescafe 3in1 cà phê rang xay hoà tan đậm đà hài hoà
Sugar, coffee cream powder containing milk - containing milk (glucose, vegetable
oil, sodium caseinate, ground coffee (0.2%), salt), instant coffee (12%),
maltodextrin, iodized salt, synthetic flavor used in foods, an acidity regulator 500
(ii). (‘Hộp 20 Gói Nescafe Đậm Đà Hài Hòa (17g)’ n.d.)

2.2 Market share

Despite being a foreign player, Nescafe is leading the coffee industry in Vietnam with 35.2%
market share in 2019 leaving its two main competitors far behind, Vinacafe 21.9% and Trung
12.2% (Appendix 2).

2.3 Style and Design

Nescafe 3 in 1 has an eye-catching red package design capturing attention of new buyers and pick
up this product on the shelf first (Morris 2013). Right in the middle of the package is Nescafe’s
iconic red coffee cup to trigger the smell of tasty coffee in consumers’ brain (Weiss 2019).
Furthermore, Nescafe applied the same design to all form of product, this helps return consumers
to find their go-to product easier, whether buyers buy a box, bag, or a single coffee stick, they will
instantly recognise the product they are looking for.

2.4 Brand Awareness

Nescafe ranked second after Trung Nguyen in overall brand awareness with 34% Brand recall and
94.2% Brand recognition (MarketIntello 2017). This shown that Nescafe has done well over the
last 25 years competing in Vietnamese market. Nescafe is recognized throughout unique
advertisements and campaigns. Especially, their current campaign is Nescafe Plan which supports
farmers and recommends solutions, activities aim to increase the value of coffee beans industry in
Vietnam (Minh L 2019). This extends their brand awareness to new customers and creates more
loyal customers.

II. MARKETING ENVIRONMENT

1. Microenvironment:
1.1 Company:
Nestle Vietnam has been honoring medal and certificate for the National Grid environment 2014
awarded by the Vietnam Environment Administration Vietnam Association for the protection of
the natural environment. According to Chris Johnson (2019), Vietnam is the world's second-largest
manufacturer of coffee. He stated “We have spent over $600 million into the economy by
purchasing and selling coffee”. In Vietnam four factories in Dong Nai and Hung Yen provinces
that produced food and beverage. In the beverages market, Nescafé stands in 2nd place in the rural
area and 3rd in the urban area includes 4 major cities (Ho Chi Minh City, Ha Noi, Da Nang and

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Can Tho). However, in the coffee market, Nestlé Vietnam maintains its lead in both rural and
urban areas with 30.09 million and 6.72 million consumer reach points in respectively (Appendix
1).

1.2 Suppliers:
Nescafe Vietnam’s suppliers are from farms at Central Highlands Vietnam. Since 2011, Nescafe
Vietnam have also implemented its Nescafe Plan project to five provinces of the Central Highlands
to help increase the quality and quantity of coffee seeds. Throughout this project, Nescafe invested
36 million high yielding and disease-resistant coffee plantlets, rejuvenate more than 27,000
hectares of aged coffee farms and equipped 240,000 farmers with knowledge to sustain high
quality bean (Nescafe VN 2020).
Nescafe Plan project helped them to have control and improve quality of the supply. Nescafe is
currently the leading coffee buyer in Vietnam, purchasing 20-25% of country’s total coffee output
yearly (Nescafe VN 2020).

1.3 Competitor:
a. Direct competitors:
With the advantage of the mother company -Nestle- is a global company with over years of
experience, high quality products and affordable prices, Nescafe continued to hold the leading
position since 2017. (Appendix 2)
Local brand: G7 (Trung Nguyen) and Vinacafe ( Vinacafe Bien Hoa)
G7 (Trung Nguyen) was first found on November 23, 2003 and introduced in the “G7 Instant
Coffee Festival” at The Independence Palace. They attracted people's attention by holding an event
called “Blinded Test” coffee, which allows testers to compare the taste of G7 and a world leading
brand of instant coffee. Turns out, G7 won with 89% of votes (Trung Nguyen Vietnam). In most
of marketing campaigns, G7 uses the spirit of Vietnamese use Vietnamese products to gain
popularity. Vinacafe, the first company that inroduced instant coffee to Vietnamese in 1977. After
the scandal mixing soybeans into their products, in 2012, Vinacafe launched a brand-new line of
product called “Wake up Sai Gon” which also contained caffeine in it. Nevertheless, it is still
struggling building brand reputation upon Vietnamese customers. Unfortunately, after losing its
leading position into Nescafe hands, Vinacafe still cannot regain it back. Currently, Nescafe is
leading Vietnamese coffee industry with a brand share of 35,2%, Vinacafe and G7 are slightly
decrease but still hold second and fourth places with 21,9% and 6.8% respectively. (Appendix 2)
Although G7 and Vinacafe are two very strong competitors, Nescafe knows how to take the
advantages to their side by releasing products and marketing campaigns in the right way and at the
right time to achieve targeted customers.

a. Indirect competitors:
Vinatea and Lipton yellow label could be considered as competitive indirect rivals with Nescafe
since it also provides drinks that are convenient and keep consumers awake. Vinatea was founded
in 1958. Its targeted customers are slightly different from Nescafe, Vinatea targets customers from
the age 40-60 with its classical packaging and original flavour. They also produce a premium tea
product line which serves customers in the high-income segment market. A small disadvantage is
that "the brand has been absent from the domestic retail of tea products for too long" (Vinatea
Vietnam). Nevertheless, Vinatea took up 8.1% of the total hot drinks market in Vietnam (Appendix
3). Lipton yellow label share the same benefits with Vinatea but the price is cheaper. The variety

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of firms (teabag, canned, bottles etc.) and benefits (detox, less sugar etc.) make the brand more
popular to the youth. Lipton aims at drinkers whose are concerned about wellness and organic
product from a self-contained process manufacturing (Lipton Vietnam). In Vietnamese market,
Lipton yellow label accounted for the total of 4.2% (Appendix 3). The caffeine degree of Nescafé
3in1 and Lipton tea are both moderate, in which the caffeine level of Lipton tea is 31.7 mg/100
ml, while Nescafé 3in1 is 28.2 mg/100 ml (Caffeine in Lipton Natural Energy Tea n.d.; Caffeine
in Nescafe 3 in 1 Instant Coffee n.d.). From these data, it is clear that the Lipton tea’s caffeine
level is slightly higher than Nescafé 3in1 by 3%.

1.4 Customer:
Customer market: Nescafe is a drink that contains Caffeine so it cannot be consumed by
adolescents. Equally, its customers range from 18-40 years old with different levels of income due
to its affordable price. When it first focused on Vietnamese market, men that had not traditional
phin cafes were the main target for easy pursuit (Nescafe VN). Besides that, young men are also
more open to experience new things. Nescafe has found that Vietnamese men do not only drink
cafe because of the interest but they are also eager to assert themselves (Thong C 2016). In
addition, Nescafe also produced diverse tastes such as milk cafe, latte, chocolate for women
respectively.

1.5 Intermediaries:
a. Reseller:
It is easy to find the Nescafe products on the shelf at every big supermarket chains in Vietnam
such as Co.op Mart, Vinmart, Lotte Mart and also in many convenience store chains such as Circle
K, Family Mart, 7eleven, etc. Moreover, the product is also sold on e-commerce platforms such
as Shopee, Lazada, Tiki, etc. It can also be found in grocery stores even in urban or rural areas. At
the same time, Nescafe 's policy for selling to retailers is to "increase discounts on high productive
capacity” (Thang 2018).

b. Marketing service agency:

With the resounding success of the national football team across Southeast Asia, Nescafe unveiled
a COURSE ACTIVITY CEREMONY WITH NESCAFE with 4 styles of coffee for 4 groups of
besties to stir the moment of football in each match. From 5 years ago, Nescafe started to launch
TVC advertisements itself without collaboration with outside Marketing agencies. Their too
general TVC still has not made huge impacts upon consumers besides its own coffee believers.
Since 2014, Nescafe has decided to have a long-term collaboration with Dong Nhi - one of the
most famous female and multi-talented singers in Vietnam (Appendix 4). Every Tet, Nescafe
managed to release a music video which Dong Nhi and other artists perform in order to celebrate
Tet and bring the brand name closer to the audiences in general. In 2017, the music video named
“ Nhạc Tết Khai xuân đón lộc 2017” with the participation of Dong Nhi and Isaac - also a famous
male singer was evaluated in top 4 popular advertisements in Vietnam for Tet (Junkie 2017).

1.6 Public:
Nescafe is one of the first multinational organisation entered Vietnam. Growing with Vietnamese
consumers since 1995 through beautiful and difficult times, many local have considered Nescafe
as a brand of their own. This love and support from the local is crucial for any business to success
operating in foreign country.

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In general public’s eyes, Nescafe’s presence is clearly defined. In a survey on Vietnam’s coffee
consumer behavior, Nescafe ranked second with 94.2 % brand recognition and 34 % brand recall
(MarketIntello 2017).
In Media Public, Nescafe utilized rapidly-developing Internet and TVC platforms to advertise
Nescafe 3 in 1 through numerous social media channels. In 2023, it is forecasted that the number
of Vietnanese social media users will reach around 75.7 million (Statista 2020). Deloitte (2019)
reports that social media platfroms are where Vietnamese buyers and sellers form connections and
Nescafe excel in this field with 37 millions followers on their Facebook page (2020) is a clear
answer to their success in engaging with audience.
In October 2016, Nescase launched a marketing campaign called “Tôi yêu Việt Nam”, starting the
advertisement video with a big question “Ta yêu gì nơi hai tiếng Việt Nam” which means what do
you love about the two words Việt Nam. Throughout the video, Nescafe showed all the essence of
Vietnam, different landmarks, traditional music instrumentals and cultures of Vietnam with several
questions asking whether the viewers love the vibrant nature, the food, or the people. The answer
is not important since everyone have different point of view, but the question that sparked the
discussion all over Vietnam making the video the top 9 most viewed video of the year is the most
important after all for Nescafe.
This campaign scored a huge point in the hearts of Vietnamese, raised consumers’ positive
awareness about the brand and showed local consumers that Nescafe actually grow with Vietnam
through all the years and understand the culture.

2. Macroenvironment:
2.1 Demographic
About Vietnam population trend in 2020, it ranked the world’s 15th most populous country which
is approximately 97.3 million people and is expected to reach to 100 million in 2024 (Vietnam
Population 2020 (live) 2020). There is a large proportion of people at the working age, accounting
for 70.46% whom in the 15-64 age group (MarketLine 2017). This is a lucrative market for
Nescafé because most of the target customers in the 15-64 age group are under pressure of studying
and working creates a high demand for a wake-up drink. Hence, Nescafé has boosted more
advertising in the cinema to directly aim for young consumers because this is a popular place for
entertainment (Euromonitor International 2019).

2.2 Economic
The transformation of Vietnam after the reform in 1986, Vietnam has become a lower-middle-
income country. Vietnam's GDP increased sharply reaching over US$2,700 in 2019 which leads
to an increase in customer demand. (The World Bank In Vietnam 2020) The disposable income
is higher and boosted the demand of high-quality coffee and tea. (Euromonitor International 2019)
Moreover, the proportion of middle-class in Vietnam accounted for 13 percent and forecast to
reach 26 percent in 2026 (The World Bank In Vietnam 2020). These key trends have positive
effect on Nescafé products because Vietnamese buyers are more quality-sensitive than price-
sensitive which means they are willing to pay for high-quality products. According to the Coffee
in Vietnam report, the retail value and volume sales of coffee saw a growth in 2019, accounting
for 6% and 3% respectively.
On the other hand, due to the COVID-19 pandemic, the GDP growth rates in 2020 are 3.8 percent
in the first quarter which is less than the expected about 2.7 percent (The World Bank In Vietnam
2020). According to the Vietnam C19 pessimistic3 scenario forecast, the hot drinks market is

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expected to grow nearly 15 percent which means Nescafe may not face negative impacts during
the pandemic. (Euromonitor International 2020) (Appendix 5)

2.3 Natural
According to international organizations, Vietnam ranked 17th in the world’s ocean plastic waste
pollution with 13 million tons of plastic released every year (approximately 80 ton per day). Only
27 percent of plastics are recycled, but there are 1000 plastic bags are used per minute (Việt Nam
takes action to reduce plastic waste 2019). Beside revenue, Nescafé also concerns about the
environment by creating the NESCAFE Plan and the sustainable packaging roadmap. The
campaign has started since December 2018, and has had many positive impacts to the environment,
saved about 40% of irrigation water; declined 20% off chemical fertilizer and pesticide; a new
intercropping model income is introduced and applied that improves the quality of the land,
increases the farmer's (NESCAFÉ Plan Gắn Kết Với Nông Dân Vì Chất Lượng Cà Phê Việt
2018). Furthermore, in 2020, Nescafé has achieved some points in its sustainable packaging
strategy. A minimum of 140 000 tones of packages is refrained from using during the period 2015
to 2020. The cooperation with other stakeholders from 10 different markets is to tackle waste
management and marine littering. Additionally, Nescafé is deploying future strategies for R&D
mono-material such as paper and bio-based plastics to reduce unnecessary packaging that takes
lots of effort to recycle. The “one tone in, one tone out” principle is applied to recycle all the
amount of plastic that the company is used. Nescafe is going to organize the global volunteering
program and the community engagement programs by collaborating with the governments,
community groups, and NGOs to raise awareness and have a long last impact on the environment.
(Improve packaging performance n.d.)

2.4 Technological
As we are living in the fourth industrial revolution, technology is a necessarily tools for doing
business. Currently, among approximately 95millions of Vietnam’s population, there are 55,19
million internet users and 35,4 million people use e-commerce as a method of shopping (Shira
2019). Partnering with e-commerce giants such as Tiki, Shopee, Lazada, open up a huge
opportunity for Nescafe to reach more customers and potentially sell more products. Besides that,
Research and Development (R&D) is another important factor. Companies invest in R&D because
they want to grow by creating newer better product (CNBC 2014). It is almost impossible for any
company to stay in competitive market without staying ahead of the technology curve. Discovering
new ingredients, new roasting technology and packaging to improve product quality and cut down
producing cost are all part of this process. To prolong the leading position in the industry, Nestle
invested 4 million CHF to their Centre of Research and Development in Singapore to keeping on
developing and improving their products (Nestle 2012).
On September 2017, Nescafe Vietnam introduced a new Nescafe 3 in 1, applied with their new
exclusive licensed grinding technology called MRC - Micronized Roasted Coffee (Nescafe VN
2020). This new technology grinds coffee into smaller particle that will dissolve completely in hot
water leaving no coffee ground at the bottom of the cup whichs enhance comsumers’ drinking
experiences.

2.5 Political
The National Assembly promulgates a policy of building and industrialized and modernized
economy in Vietnam is a perfect opportunity for forein corporations like Nestle to invest and

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develop their products to the Vietnamese market. In more detail, Investment Law (National
Assembly) (2005) 59/2005/QH11 2019 passed by the National Assembly of the Socialist Republic
of Vietnam dated 29 November 2005 to ensure investors' legitimate rights and interests, investment
incentives for investment in Vietnam, and investment from Vietnam to abroad (National Assembly
of the Socialist Republic of Vietnam 2005). Furthermore, Vietnam’s political stability has been
seen as stable scoring 0.2 on political stability index in 2018 (World Bank 2020). This helps
foreign companies to confidently invest in Vietnam.

2.6 Cultural
In Vietnam, food and non-alcoholic beverages have the largest percentage of household spending
from 2012 to the present and forecast in 2022 will be doubled (80.6%). (The Future of Asean:
Viet Nam Perspective n.d.) (Appendix 6) Hence, Vietnam is a potential market for Nescafé.
Futhermore, the packaging design is major reason that affects the purchasing decisions of the
Vietnamese consumers because the appealing packaging delivers the feeling of Premium product
and brand (Euromonitor International 2019). The Nescafé 3in1 packaging is modern with the
signature red color and provides the highlight information that the consumers look for a cup of
coffee.
The health consciousness of Vietnamese coffee consumers is significantly increasing, in which
people living in urban regions care more about their health over the amount of caffeine contained
in Nescafe 3in1 than rural coffee consumers (Euromonitor International 2020). There are some
common negative impacts that Nescafe in general and Nescafe 3in1 in specific could cause to its
consumers, such as fast heart rate, high blood pressure, insomnia and so on. Thus, Nestlé VN’s
customers and market share can be reduced dramatically if the amount of caffeine is not going to
be modified appropriately regarding the consumers’ health.

III. SWOT ANALYSIS

1. Strengths
• Public: According to the previous public analysis, Nescafe has a high brand recognition to
Vietnamese consumers as well as having a strong media public, in which there are more
than 37 million followers on their Facebook page. By having this, Nestlé VN can collect
their customers’ demographics and receive valuable feedbacks from their consumers,
which helps understand where to improve and maintain sustainable relationships, gaining
loyal return customers.
• Supplier: Nescafe Vietnam has a good and large supplier - Central Highlands Vietnam, in
which the Nescafe Plan project has been implemented to boost the quality and quantity of
coffee beans by having high yielding, disease-resistant coffee plantlets, high-experienced
farmers, and enriching the soil of coffee farms. In short, Central Highlands Vietnam helps
Nescafe to achieve efficiency and economies of scale.
• Brand share: Nescafe is currently leading in sales, account to one-third of total brand
share in Vietnamese coffee market. This brings them higher revenue, therefore having
more resource to put back into R&D as well as advertise to gain positive awareness.
• Marketing intermediaries: Nestlé VN can approach more customers and being able to
sell their coffee more easily, quickly and conveniently to their consumers’ location due to
lots of substantial resellers like Vinmart, Circle K, Shopee and other grocery stores in both
urban and rural regions.

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2. Weaknesses
• Lack of focus on younger customers: Since Nescafe contains caffeine, it is hard for them
to target under 18 which have strong buyer power.
• Caffeine degree: Even though Nescafe 3in1’s caffeine degree is evaluated as moderate; it
still has an impact on the coffee consumers to a certain extent. There will always have some
sensitive-caffeine consumers. Thus, this is considered as a basic weakness of Nescafe that
needs to be considered.

3. Opportunities
• Political support: Since the National Assembly of the Socialist Republic of Vietnam
promulgates the policy of building, modernized and industrialized economy, which
facilitates the investment between Vietnam and abroad for businesses in general and Nestle
VN in specific. Therefore, Nestle VN can get more budget to operate successfully in the
Vietnamese coffee market. Moreover the score of political stability in Vietnam is very low,
only about 0.2 points, meaning the laws, regulations will not likely change, so it will not
affect negatively and hugely on Nestle VN’s business operation.
• Population size: According to the previous demographic analysis, the Vietnamese
population is predicted to increase 2.7 million people by 2024. People whose age from 15
to 64 occupy approximately 70.5% of the total Vietnamese population. Since this age range
(15-64 years old) is in the target consumers of Nescafe, this is a great opportunity for Nestlé
VN to capture more customers and enlarge their brand share in the future.
• Economic growth: Based on the previous economic analysis, Nescafe’s sales, revenue and
market share can be increased sustainably due to the rise of Vietnamese citizens’ disposable
income and the proportion of middle-class customers from 23% to 26% by 2026. These
positive impacts can lead to higher chance for Nescafe to accomplish a strong bargaining
power (also known as buying power) in terms of coffee price because the customers are
more likely to purchase high-quality products regardless the price.
• Technological development: According to the previous technology analysis, the number
of internet and e-commerce users in Vietnam is significantly high, which are 55,19 million
and 35,4 million people respectively. Moreover, Nestlé VN also collaborates with other
popular e-commerce such as Shopee, Tiki and Lazada, which helps Nescafe to achieve a
larger customer base and increases their sales, revenue as well.

4. Threats
• Alternative: Based on the previous indirect competitor analysis, Lipton tea can be
considered as an alternative product apart from coffee that can indirectly capture a potential
number of Nescafe’s customers who want to purchase beverage, which helps them to be
more awake and productive in work or study. Moreover, Lipton tea’s ingredients is also
organic like Nescafé 3in1. Therefore, the customers of Nescafé 3in1 can switch to buy
Lipton tea at anytime with the same benefits, resulting in Nescafe 3in1’s decreased sales
and revenue.
• Health issue: According to the previous cultural analysis, the health awareness in Vietnam
is rising sustainably, especially in urban areas. This can lead to increased demand of
organic coffee and other plant-based hot drinks, which might be the potential threat for the

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instant coffee of Nescafé. Therefore, Nestlé VN must ensure that the amount of caffeine
contained in their coffee in general and Nescafe 3in1 in specific is safe for the consumers.

IV. STDP
1. Segmentation
Segment Geogra Demographic Psychographic Behaviour
ation phic
Teenage Urbano -Gender: Male and -Lifestyle: an active -Occasion: day and night
r r Rural Female lifestyle and busy, shift (Huu P 2020)
-Age: 18- 24 need to concentrate -The benefit sought:
-Family life cycle: and be awake time saving, affordable
young, single -Personality: coffee prices
-Generation: young to lover, active -Loyal status: low
middle age generation - Social class: low- -User status: regular
-Occupation: college/ middle class & user
university students, fresh middle class -Usage rate: Light to
graduates, young medium.
employees.
- Income: No to medium
income
Office Urbano -Gender: -Personality -Occasion: break-time,
workers r Rural Male & Female characteristics: day & night shift
-Age: 20-40 dedicated to work, -User status: Regular,
-Education: University, flexible, proactive, heavy user.
Graduated independent, open- -The benefit sought:
-Income: medium- minded, well convenient, time-saving,
medium high (about 5-20 organize. keep them awake,
million VND/month). -Lifestyle: busy, reasonable price.
-Marriage status: single usually work indoor, -Usage rate: medium to
and married prefer convenient and heavy.
affordable drink.
Parents Urban -Gender: Male and -Lifestyle: busy, - Occasion: Daily
or Female spend time take care -The benefit sought:
Rural -Occupation: of the family, concern fast, convenient coffee
Varies (not limited) about product’s keep them awake,
-Age: 25-35 quality, settle in work reasonable price.
- Family size: 4-5 and family. -User rate: medium to
people. -Characteristic: heavy user.
-Income: Middle to High Gentle, open-minded,
income (20 million family-oriented,
VND/month and above) realistic, caring.

2. Targeting
The early demographic that Nestle chose was male because they are the segmentation who willing
to try and change from the traditional phin coffee. The slogan that Nestle company use from the

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beginning was “are you strong enough to try” (Thong C 2012) and unsurprisingly that instant
black coffee was very successful. Confront the test to show how manly they are, obviously there
is no way young males can refuse it. That was a big success, the impactss big enough that
Vietnamese think instant Nestle coffee was for male. An evidence for that is, phin coffee
dominated the coffee market in Vietnamese 2008 with 60% market share but after Nestle launched
instant coffee, it drops down to 48% (60-12 years old) (Thong C 2015).
When Nescafe 3in1 instant coffee is doing well, the company wanted to expand and target other
segments such as women (young women) (Thong C 2012). That was a good strategy for because
it shown that women also doing office work like men and need a drink to keep them awake and
going (Appendix 7). Women who drink coffee take upa1% of the whole market, targeting both
genders is a brilliant move, it increased a huge number of customers. The bigger the market the
bigger the revenue, especially when they are the leader of this industry

3. Differentiation
Product differentiation: Nescafe has created many different coffee products based on consumers’
demographic (UKEssay 2018). Nescafe 3in1 is instant coffee that serves people who are always
busy and aim for quickness but still want a taste similar to Vietnamese filter coffee. Nescafe used
MRC (Micronized Roasted Coffee) technology and produced in Vietnam to create soluble coffee
to meet Vietnamese demand (Thanh L 2017). Nescafe 3in1 has a stronger and more bitter flavor
than others compared to G7 from Trung Nguyen and Wake Up from Vinacafe (An B 2018).

Service differentiation: Nescafe Hub provides special menu with drinks called ‘Mixology’ from
Nescafe products with freeship code on Grab, NOW in a certain time. Besides that, they also
recommend many creative formulas for consumers can do by themselves at home (Nescafe VN
Facebook).

Channel differentiation: Nescafe 3in1 is distributed and delivered through many different
channels. For example, supermarkets such as CoopMart, Vinmart; online platforms such as Tiki,
Shopee; convenience store such as Circle K, Ministop, etc. Nescafe is currently operating Nescafe
Hub which uses products from its brand to create many drinks to serve consumers. Customers can
experience directly or order by GrabFood, Delivery Now or (Nescafe VN).

Image differentiation: Nestle appeared in Vietnam since 1995, they are an extremely familiar
brand with Vietnamese both in rural and urban areas through unique advertising videos and known
as the high-quality product brand. Besides that, the Nescafe Plan is known to aim to increase the
value of Vietnamese coffee beans (Vietnam Investment Review 2018).

4. Positioning

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 Situation Analysis Report

Positioning Map 1: Amount of caffeine and price

The figure 1 above illustrates the comparison between the price and the amount of caffeine in
instant coffee from three brands in Vietnam. Coffee is known as an energy drink. This depends on
how much caffeine in the products which is enough to help consumers awake and increase their
concentration as long as possible. This is a factor that consumers consider buying a product. Nestle
and its competitors have prices not too different, just only ranges from 10,000 VND or less (Tiki
VN). Nescafe has a slightly higher price than two other competitors but the amount of caffeine is
lower than G7 from Trung Nguyen. On the other hand, Wake Up from Vinacafe has a lower price
than Nescafe but has nearly same amount of caffeine (Science & Technology Development 2015).

Positioning Map 2: Capacity and Calories

Nescafe 3in1 (17g) 74 calories (Fitbit.com n.d)
Wake Up (19g) 80 calories (Fitbit.com n.d)
G7 (16g) 71 calories (Fitbit.com n.d)

The table and figure 2 above show a comparison between the capacity and calories of three soluble
coffee brands. It clearly states that Nescafe 3in1 has a similar capacity and amount of calories to
Wake Up coffee. Calories is one of the factors that consumers consider to purchase, especially
people who are in diet. Calories is known as reserve energy and it can transfer to fat, so consumers
often consider the number of calories in each product they consume.

Value proposition: According to two maps above, it can be seen that Nescafe has brought to
customers a high-quality product with a taste similar to traditional filter coffee in Vietnam. Their
value proposition is more for more in Vietnam instant coffee market. Aim to keep people more
satisfied by having a suitable amount of caffeine and calories needed. Moreover, they use
innovative formula and MRC technology to distinguish themselves from competitors in Vietnam.

V. CONCLUSION
In conclusion, Nescafe has done well providing high-quality products to Vietnamese market. They
contribute to the fast growth of Vietnamese economy, as well as play a huge role in saving the
environment. Nescafe Plan project helps revive aged coffee farms, improve quantity and quality
of Vietnamese coffee industry. Eye-catching packages, attractive advertisements, right targeted
segments and differentiation are all parts of the company’s fruitful result.
A leading position in market share, a second place in brand awareness, and appraisal from
Vietnamese government are well deserved rewards for everything Nescafe has done over the past

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 Situation Analysis Report

25 years operating in Vietnam. Nescafe’s mission now is to keep thriving to protect their position
from two dangerous competitors Vinacafe and Trung Nguyen.

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Situation Analysis Report

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 Situation Analysis Report

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VII. APPENDICES

Appendix 1: Top 10 Brand owners in Urban 4 Cities and Rural Vietnam

Anjoubault, D., 2019, “Vietnam's Most Chosen FMCG Brand Owners And Brands 2019 -
Vietnamese - Kantar Worldpanel”, viewed 3 August
2020<https://www.kantarworldpanel.com/vn/news/Vietnams-most-chosen-FMCG-brand-
owners-and-brands-2019>

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Appendix 2 : Brand shares of Coffee in Vietnam ( Euromonitor International 2019)

Euromonitor International 2019, ‘Vietnamese Coffee Market”, table, Coffee in Vietnam, country
report, Euromonitor International, Accessed August 3 2020, Passport Database.

Appendix 3: Brand shares of Hot Drinks in Vietnam ( Euromonitor International 2019)

Euromonitor International 2019, ‘Vietnamese Hot Drinks Market”, table, Hot Drinks in Vietnam,
country report, Euromonitor International, Accessed August 3 2020, Passport Database.

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Situation Analysis Report

Appendix 4: Nescafe commercial - featuring Dong Nhi

VpopFan (2015). Đông Nhi Shakes It for Nescafé. Available at:
http://vpopfan.com/2015/09/16/dong-nhi-shakes-it-for-nescafe/ [Accessed 7 Aug. 2020].

Appendix 5: Vietnam C19 Pessimistic3 Scenario Forecast (Euromonitor International

2020)
Euromonitor International 2020, Coronavirus (COVID-19): Understanding the Impact, country
report, viewed 26 July 2020, Passport database.

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Situation Analysis Report

Appendix 6: Spending on
consumer goods – the
fastest growing items, US$
billion (The Future of
Asean: Viet Nam
Perspective n.d.)
Pwc.com. n.d, “The Future
Of Asean: Viet Nam
Perspective”, viewed 30 July
2020

<https://www.pwc.com/vn/en/publications/2018/future-of-asean-vietnam-perspective.pdf>

Appendix 7: Milk coffee for Women.

NESCAFE cà phê sữa đá-quyện vị sữa đậm vị cà phê 2019, Youtube, Nescafe Việt Nam, viewed
22 July 2019, <https://www.youtube.com/watch?v=rMv5hcxcFNg>

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