A business plan of viva star coffee franchise in ho chi minh

FENG CHIA UNIVERSITY
COLLEAGE OF BUSINESS

GRADUATION THESIS
A BUSSINESS PLAN OF VIVA STAR COFFEE
FRANCHISE
IN HOCHIMINH CITY

INSTRUCTING LECTURER: PROF. WEN HSIANG LAI

STUDENT’S NAME: PHAN NGUYEN HUU PHAT– JOHNNY
STUDENT ID: D0610145
CLASS ID: 10620031

TAI CHUNG CITY 28th June , 2018


ACKNOWLEDGEMENT
I would like to send sincerely thank to both the teachers of Ton Duc Thang University
and Feng Chia University. By the cooperation of both universities via international short-term
program, it has created good condition for having the opportunity to study at Feng Chia
University. in particularly, I sincerely thank Professor. Wen-Hsiang Lai who enthusiastically
instruct me to complete graduation thesis. The knowledges are acquired during the learn
process not only is the basis for the research process, but also the precious knowledge to enter
firmly and confidently in my life. In the process of learning and completing graduation thesis,
by my theoretical lectures as well as practical experience are limited. That lead to the imperfect
reports is an unavoidable thing. Hopefully, I will receive Professor's comments in order to
improve better my experiences through mistakes. Finally, I wish teachers all the best and
succeed in career.
Sincerely,

EVALUATION OF SUPERVISOR
Student’s name: Phan Nguyen Huu Phat
Student ID: D0610145
Class ID: 10620031
Academic Year Code: 2017-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Taichung City, Date 28th June 2018
Supervisor

Prof. Wen-Hsiang Lai



TABLE OF CONTENT
ABSTRACT .............................................................................................................................. 1
CHAPTER 1: INTRODUCTION........................................................................................... 2
1.1

Overview of the concept coffee in Vietnam................................................................ 2

1.2

Big brands and the big picture of retailing coffee market ........................................... 2

1.3

Viva Star Coffee – A new comer of coffee franchise in HCMC ................................ 3

1.4

Essential elements for the developing model more attractive effectively. .................. 5

CHAPTER 2: LITERTURE REVIEW ................................................................................. 6
2.1

Family hanging out value at weekend ......................................................................... 6

2.2

What are coffee lover want?........................................................................................ 6

2.2.1

The role of music on coffee drinking behaviour .................................................. 6

2.3

Food & Beverages service (F&B) ............................................................................... 7

2.4

The state of art ............................................................................................................. 7

2.4.1
2.5

The innovation through technology - technology platform ................................. 7

The playing in children ............................................................................................... 9

2.5.1

The role of toys .................................................................................................. 10

2.5.2

Sandplay area ..................................................................................................... 10

2.6

The Poter’s Five Forces Model ................................................................................. 12

CHAPTER 3: MARKET ANALYSIS ................................................................................. 14
3.1

Consumer Market Data ............................................................................................. 14

3.1.1

Demographics .................................................................................................... 14

3.1.2

Psychographics .................................................................................................. 15

3.2

Industry environment ................................................................................................ 16

3.2.1

Defining Industry Boundaries ............................................................................ 16

3.2.2

The structure of the industry .............................................................................. 17

3.3

Porters Five Forces Analysis of the Retail Coffee and F&B. ................................... 17

3.3.1

Bargaining Power of suppliers: Low ................................................................. 17

3.3.2

Bargaining Power of customers: Low to Moderate ........................................... 18

3.3.3

Threat of Substitutes: Moderate to High ............................................................ 18

3.3.4

Threat of New Entrants: Low to Moderate ........................................................ 19

3.3.5

Intensity of Competitive Rivalry: High ............................................................. 19

3.4

Competitor Analysis.................................................................................................. 19

3.4.1

Assessing Competitors ....................................................................................... 19

3.4.2

Selecting competitors ......................................................................................... 23

3.4.3

Competitive Strategies ....................................................................................... 23

CHAPTER 4: DISCUSSTION ............................................................................................. 25


4.1

Identifying Radically Potential Problems from Existing Viva Star Coffee System . 25

4.2

Solutions .................................................................................................................... 25

4.2.1

Improving business model canvas of Viva star Coffee ..................................... 25

CHAPTER 5: CONCLUSION ............................................................................................. 28


LIST OF FIGURES
Figure 1.1: Awareness of 17 Popular Coffee Brand in Vietnam 2016. ..................................... 3
Figure 1.2: Business model canvas of Viva star Coffee ............................................................ 3
Figure 1.3: The current cost structure of Viva star coffee ......................................................... 4
Figure 2.4: Using iPad as a menu card ...................................................................................... 8
Figure 2.6: Santray with playing object ................................................................................... 11
Figure 2.7: The Poter’s Five Forces Model ............................................................................. 12
Figure 3.1: Drinking Coffee Rate – Age .................................................................................. 14
Figure 3.2: The Price Sensitively Measurement (PSM). ........................................................ 15
Figure 3.3: The Popular Coffee Shop Types. .......................................................................... 16
Figure 3.4: The popular chain coffee stores in Ho Chi Minh .................................................. 17
Figure 3.5: The customer's satisfaction in coffee chains ......................................................... 21
Figure 3.6: The customer's satisfaction at Viva star coffee ..................................................... 22
Figure 4.1: The improving business model canvas of Viva Star Coffee ................................. 25


ABSTRACT
A business plan of Viva star coffee franchise in ho chi minh city examines the
possibility in using competitive advantages of business that is franchising Viva Star brand in
the retailing coffee market. It specifically examines the shortcoming in meeting the customer's
need of franchise system which are the quality service and playing background music by using
technology platform via IPad and Spotify’s music supplier. In addition, it also examines and
fingers out a good solution for the family hangout at the weekend by using a complex playing
room for children’s customer who has an ability to influence to their family in making different
decisions depending on the product kind of interest (Foxman et al., 1989; Swinyard and Sim,

1987). These solutions not only create the customer value propositions but also enhance the
competitive advantages and gain more profit for business that is franchising Viva Star brand
among competitors in the coffee retail chain market within Ho Chi Minh City.

1


CHAPTER 1: INTRODUCTION
1.1 Overview of the concept coffee in Vietnam
Coffee is one of the most popular beverages in many countries around the world. But
each country has a different coffee culture. For example, American like take away and Italian
sit for a few hours with their coffee, while the French tend to sit and drink coffee to watch the
girls walk on the street. So how about the Vietnam, especially impressive is the people’s Ho
Chi Minh city
Vietnam - known for its coffee culture - has become one of the most diverse beverage
markets in Asia with the scale of global giants, local chains and small coffee. The coffee in Ho
Chi Minh city has a unique culture, at first glance, it looks bumpy and bustling. But in fact, it
is incredibly stylish and seductive local’s people as well as the travellers. At the morning, there
are not difficult to see many people who are middle-aged and officers siting on the chairs at a
simple coffee shop. It is a traditional way of Vietnamese starting a new day. For them, Coffee
not only is a material helps people come over sleepiness but also a spiritual food of many
people living Saigon. In addition, drinking coffee is also a good occasion to hang out with
friends and colleagues. According to AIM (Academy Institute Marketing) research, 65%
domestic consumers tend to drink coffee 7 times for a week and the male occupied 59%. The
retailing market in Vietnam has reached $278,34 million in 2012 and then continually increase
$573,75 million at 2016. It can be seen in this figure that the consumption of coffee market is
significantly potent for many coffee chains of the domestic brand and international brand which
are really want to enjoy this large size market. However, the market size of coffee is also
gradually becoming smaller and more competitive for many businesses enjoying this sector.
This problem has led to the question that how a new brand coffee can be surviving and

developing at the moment which is called red ocean.
1.2 Big brands and the big picture of retailing coffee market
In 1/02/2013, the Starbucks coffee chain has opened the first business at Ho Chi Minh
and marked into a new moment of franchise coffee market with lots of customer queue a long
line at the mid-day to just bought a cup of coffee. Patricia Marques - owns the right of Starbucks
franchise in Vietnam said: “Starbucks has stirred up the market in a unique way”. After three
and half years, Starbucks has laid a foundation for the introduction of new coffee chains. The
competition is getting harder between domestic and international brands. No one brands really
want to lose for this market size, typically Trung Nguyen and highland coffee.
That chart shows that the awareness of 17 top Coffee brands in Vietnam. As we can see,
Trung Nguyen and Highland are leading about coffee chains in Vietnam with 80% and 79%
Awareness while Viva Star brand only 38% awareness. We must to care particularly because
the people awareness is so large and the Viva star business is facing these big brands which
have covered everywhere from the favour locations to the central of city.
Whether is it not the most concerning problem because every coffee chains have a various
customer segments and unique structure. For examples, Trung Nguyen and Highland Coffee
most aim to coffee aficionados and mobile professionals but Viva star is another thing. That
why the market is still potential for many coffee chain changing and growing up in the near
future.

2


Figure 1.1 Awareness of 17 Popular Coffee Brand in Vietnam
2016 Source: Dream Incubator Inc.

1.3 Viva Star Coffee – A new comer of coffee franchise in HCMC
In 2013, with thousand established companies, star-up company as well as international
corporation is growing up within HCM. A million job was created and big unemployed trouble
was solved. To understand, I have chosen a good coffee for many officer workers, and

freelancer who are looking for relaxing spaces. My mission is on the way bringing the best
products to the customer, contributing to develop Viva star brand to become the Vietnam's
premier coffee franchise focused on convenient foods and beverages.

Figure 1.2 Business model canvas of Viva star Coffee

In addition, the eating habits of Vietnamese is gradually changing. Food and food halls
are blooming a potential and abundant future for F&B industry. Foreseeing the opportunity
3


from the market, Viva star also quickly expands its business in food and beverages at the favour
locations in the big cities and continues to grow in other developing provinces such as (Binh
Duong, Dong Nai, Ben Tre, …etc.). We always upgrade, improve the image of brand so that
customers can identify easily about Viva Star that is not only coffee but also food and beverage.
Thought out Five years, it is quite a long time for Viva star to do business the right way.
During that time, they totally opened 60 outlets Viva star coffee shops with fully structure from
small to big facilities. In additions, food and beverage qualities are also the primary problems.
That why they always looking for the best supplier of fresh and high quality to fit with
customer. Officer and middle-aged are one of the customers extremely strictly in the way that
they enjoy coffee. Just only take a sip, they also immediately can recognize the coffee good or
not, original coffee or fake. Those are reasons that make Viva star must improve gradually their
quality beverages, especially is coffee. If not, they are going to lose for this market size.
The business model canvas shows that officer and middle-aged are currently the main
costumers of viva start who have a work day from Monday to Friday or eventually Saturday.
When coming viva star that means customer have a right choice. With existing business system
of Viva star, they provide to customer the best services of food and beverages combine with
high quality suppliers such as (co-op mart, Masan… etc.). In addition, along the professional
chef and bartenders good at the field of cooking combine will bring to customer the verified
food and beverages. Besides that, they also offer to customers many interesting combos food

and beverage which are best choices for officers and middle-aged at lunch. The customer
doesn’t need to take so much time to order separately for all kind of food or beverage. With
some flexible choices in combo, they can choose immediately what they need at a reasonable
price and more convenient. In addition, as we can see from fig 1.2, the business model of viva
star is quite well for customer from Monday to Monday or Saturday. However, what happen
to the weekends and holidays? whether they will come viva star or not? Or they have a tendency
to leisure activities with their children. That is a really difficult question for Viva star, and what
should they do to keep these loyal customers.

Figure 1.3 The current cost structure of Viva star coffee- source: Viva Star coffee

4


The Figure 1.3 shows that the cost structure of Viva star coffee is attractive for
investors, in particularly, the franchise fee. However, this seems to a viva star’s suggestion for
a basic business and there are not much customer’s value propositions as well as the net profit
is not actually high per a moth. Therefore, I want to improve this model up to a higher level
which is more attractive and created value for customer. By using improved model, it not only
boosts the net profit but also enhance the competitive advantages for business that is
franchising Viva Star brand.
1.4 Essential elements for the developing model more attractive effectively.
To tackle the problem with regard to the weekend of officer and middle-aged who are
generally already have kids, I need to understand that did Viva star customer segments
optimum? And are there any alternatively better solutions? Which balance both the coffee
hobby of parent and their kid at the weekend. Unfortunately, I figured out that there is still have
more a segment that is mentioned. “Families”.
The costumers and their children who is needed to be care, that why the model of a high
level including family segment is decided to upgrading. Instead of spending particularly care
entire coffee structure, I focus on activities that can promote the personal development in

children. Creating an enough space for children where they can be learning through playing
free and unstructured (Sutton – Smith 1997). Children can learn easily from themselves and
the others through playing.
By generating a children complex playing room with many kind of construction toys and
the sandplay, the coffee would be more attractive to children as well as their parents.
Construction Toys and sanplay can stimulate and prolong the playing time in children. Children
will spend more time and energy to play it perfectly. That would be useful and more convenient
for parents or adults instead of bringing their children to center malls or kid leisure zone which
is too large and inconvenient for moving. On top of that, by this complex structure of the coffee
shop, the parents or adults can enjoy the coffee and observe their children as well that without
any dangerous problems from the children. By building this kind of complex model, it not only
satisfies the pursuit leisure of drinking coffee of parent but also the children leisure’s activities.
Besides that, I also particular care about the other elements for the developing model.
Sound system and fast & accuracy services are one of salient features in the coffee shop. Which
one is the best innovation for meet the customer needs at the moment. The IPad device is an
important component in shop which helps customer to reduce almost wasting time in ordering
food or coffee. Just only a touch by waiter’s finger, the list of order can transform from the
table to kitchen area. There is no longer missing information, the process will be smoother in
system coffee shop. And for more element, the music has ability to resonance and filling the
atmosphere surrounding. It benefits for the private conversations between customers together
(Areni, 2003). Therefore, the customer will fell more enjoyable by playing a classic music
along good sound system.

5


CHAPTER 2: LITERTURE REVIEW
2.1

Family hanging out value at weekend

The development of economy in the modern life, most people tend to swamp with their
work. Only through 40-hours weekly work, it seems a long time for many husband and wife.
There are some questions that how long have you hanged out each other, how long have your
kid been home with the television and iPad. It is an interesting question which is needed
particularly to concern. Instead of spending more time with family, many people have a
tendency to work overtime at workplace. This cause has led to the nonstandard work schedules
including weekend.
The weekends usually are a special day for people who tend to spend their free time on
hanging out, meeting together socially, sports and leisure activities (Presser et al., 2008).
Spending this valuable time with family is really important for us to relaxation and rest after
hard working week. If we do not have these activities, workers are likely to feel more isolated
and then lead to the problem with regard to mental health than the other people and it may
reduce performance in the company as well as their workplaces (Han & Miller, 2009; Presser,
2000). Therefore, people need to balance effectively between their work and leisure. They need
to know clearly and adjust for their body in order to fit with the jobs. Reducing limited stress
as well as the burden in their life. For more, family hanging out at weekend also a great moment
for their kid can promote its both physically and mentally in social activities. Children will no
longer be afraid with nature environment like they used to. They can solve easier the daily
problem and more friendly with the others. Parents should encourage children go outside as
much as possible in order to integrate with the society instead of letting them at home.
Many family psychologists have noted that the benefits of families and couples in hanging
out together. It is shown that sharing time of couple is crucial for marriage quality, cementing
the relationship and relationship satisfaction (Shaw & Dawson, 2001) Therefore, family
should spend more time together outdoor to get a better relationship as well as good condition
for development in children in the future.
2.2 What are coffee lover want?
2.2.1 The role of music on coffee drinking behaviour
Nowadays, the hustle and bustle of the hochiminh city has contributed to many
problem of pollutions such as air pollution, sound pollution and that makes people feel noise,
stuffy and headache. It has been suggested that most of customer just need a comfortable place

where can relax and enjoy music after finishing their hard work. Background music plays a
pivotal role in our everyday lives: we encounter it in daily activities like working, reading,
eating, drinking, shopping, driving, and more. Besides that, people in the modern life is tending
to spend more time and money in a restaurant, coffee shops or retail environment as well as
the music being played which is considered appropriate with their emotions (Radocy & Boyle,
1997). They will feel more friendly and familiarly at coffee shop. Only through a cup of coffee
along with a classic song, customer can psych themselves up after hard working time. There
are no weariness and boring once getting music.
Listening to music is amazing and their brain also loves it by the way that affects their
brain chemistry and moods. Music is constantly mentioned as a language of emotions and is
widely recognized as one of the most effective tool for arousing emotions and feelings in
human beings. It distracts the brain from registering the body's fatigue and increases endurance
while improving the heart and muscles performance, giving music both a psychological and
physiological impact on our body. At its core, music is the combination of audio frequencies
and intricate patterns floating through the air and clashing together in our ears. On top of that,
music also generates a comfortable atmosphere surrounding coffee shop that can filling the
empty atmosphere to protect perfectly the private customer’s conversation (Areni, 2003). You
6


will free more free to take a conversation without bother from others. And for more, when
felling comfortable, it will stimulate your emotions as well as it easily helps you to focus and
catch up on the topic which you are talking about.
Unfortunately, in order to choose a true type of background music for customer’s daily
moods is very complicated thing. It requires the owner of coffee shop must have a taste for
music through his music selection because music has many different characteristics and types
of music (e.g., tempo, volume and genre) that affect directly to customer’s behaviour (Duncan
Herrington, 1996; North et al., 2000). The middle-aged is one of strict customer segment in
the way of enjoying coffee. In particular, they most concern about the quality of background
music because the people from 36 to 50 years’ age groups could feel the lyrics of music well

and comprehend the poetry of music (Bhatti, 2016). Only through a small mistake with regard
to types of choosing inappropriate background music that could be a bad thing for coffee shop.
Whether classical music leads to greater purchase intentions than does either pop music or no
music. What kind of music that customers willing to hear at the morning, afternoon or
eventually at mid-day.
Few recent researches have proved that type of music can affect directly different
consumer’s behaviours. For example, Areni and Kim (1993), the two experimental conditions
of using classic and pop music in a wine cellar. The figure of wine bottles is still the same both
music conditions. However, the customer’s behaviour tends to consume for expensive wine
rather than casual wine. In addition, a new recent experiment about the effect of musical style
in a British restaurant over the course of 18 evenings (Adrian C. N., 2003) with regard to all
393 customers who ate at restaurant. There were around equal figure of females and males.
The result of survey indicated that playing of background classic musical makes customer
willing to spend more and higher actual spending. It can be seen that classic music promotes a
more upmarket cognition and atmosphere. According to the provided data of North and
Hargreaves (1998) indicated that classical music led to their shop as being perceived as more
upmarket than did other musical styles. People will fell themselves more formal and level.
Therefore, they will have a tendency to consume more product or expensive category.
2.3 Food & Beverages service (F&B)
There not only is about the coffee but also the convenience in food & beverages.
According to Statistical Office in Ho Chi Minh with, GRDP has raised 8,25% compared to the
previous year. That means the living standard condition is on the way improving. The eating
habits of Vietnamese is gradually changing. More and more people tend to feel more
comfortable in expenditures for food & beverages out of their home. To understand, we always
think about value proposition for our customers in convenient f&b. I will create a different kind
of f&b with reasonable prices, various type of combo as well as vouchers and coupons. By
using combos, many officers will have more multiple choices for their lunch after the shift
work in the morning. There are not much distant expenditures of food between shop and street
vendor, because the cost for meal has improved with a reasonable price.
2.4 The state of art

2.4.1 The innovation through technology - technology platform
In the context of modernize, the company need to think about the innovation in order
to can survive among competitiveness. There are many kind of innovation methods such as
idea, human and management innovations. But the most important innovation is technology.
The development of 4.0 industry is growing up rapidly, it creates a lot of changes for many
businesses which are looking for competitive advantages. Appropriate chosen technology does
wonders for both company and customer. According to Dixon 2009, the application to modern
technology can improve “service-time perceptions, reduce cost, and increase productivity”. In
addition, it helps company can gain the market share easier. The customer will be served more
perfection and that lead to the satisfaction inside themselves (Dixon, 2009).
7


Benefits to Customer
The convenience to customer: a faster service through applying innovative technology that is
the best way of system optimization. The processes will be smoother than ever and the
customer will no longer wasting the time as well as their effort for waiting order. It will increase
the customer’s satisfactions (Berry, 2002). In addition, the innovative technology is also helps
customer who wants to control exactly the time that they do not want to be waited too long.
Customers prefer to a meeting that they can recognize and have a significant control over the
time of that meeting (Ariely, 2000). Therefore, by using innovative technology in business can
make the customer’s satisfaction. The company can predict exactly the time for customer and
that makes the process is more professional.
Benefit to business
The fast and accurate services: the service speed affects directly to an amount of customer.
If the service can be speed up, the more customer will be served. That lead to the customer’s
satisfaction and the company’s revenue also increase as well. Technology can optimize service
by reducing the ordering time, giving advanced information, and reducing the costs for
business, in particular is labour costs (Dixon, 2009). Therefore, by applying technology, the
business can make an impressive sense into customer and more and more people will come to

company automatically.
IPad is a tablet developed by Apple Inc. Announced on January 27, 2010, this device
creates a new classification between smartphones and laptops. After that, the iPad was sold out
like a hot cake with 3 million items in 80-days (Report from Apple Inc. 2010). That was an
impressive sale which generate a chance of real business as well as iPad opportunities come at
potential customers. iPad touch screen as its primary user interface. Unlike traditional touch
screen technology, the processes that iPad interact with people is more friendly in many
restaurants and shops. With an optimized iOS system, there not really hard to ordering meals.
Customers and staff no longer have to walk to the system to get things done. In addition, while
traditional touch screen computers give people instant access by ‘touch’ only, the iPad allows
customers to ‘write’ information through built-in finger writing recognition. This is easier for
restaurants to collect customers’ responses and comments. No need complex and expensive
technology, just an iPad combine with verified application we can easily install a smooth
internal system. On top of that, this internal system will enhance the speed and precision of
making dishes. There will no longer serve the wrong table and the customer will not waste so
much time for ordering dish. Creating more free time for customers professionally and
effectively at break time.

Figure 2.4: Using iPad as a menu card

8


Mobile payment
Nowadays, by the explosion of E-commerce and advances technology has laid a strong
foundation for online payment, especially impressive is mobile payment which supports a
range of convenient services in the human life. Mobile payment is also a payment method.
Only with a cell phone, people can easily do lots of mobile transitions with an optimized
handing (bill payments, closeness payments at the point of sale, transfer to the other accounts,
person to person transfers… etc.) (Oliveira, 2016). This kind of mobile transitions not only

changes the way that people have a payment together but also generating and supporting to the
new business. It gradually changes the people’s shopping behaviour at the moment. More and
more people in the modern life gradually use cell phone as an essential device which is
extremely important to daily life. We cannot live without cell phone which we grab at every
beginning morning and before getting sleep. By the widespread use mobile devices as well as
its closeness with people is a primary cause that make them acceptable for mobile payment
situations (Mallat, 2007). Therefore, mobile payment is like a new hot trend of transitions in
young people as well as adults. It can optimize effectively the speed of payment that do
wonders for both traders and consumers from significant operation time going down.
Therefore, people can easier control their account balance than the other traditional payments
(credit card, cash or ATM). There will be no longer scenarios of card fraud, safer and more
secure. People will not worry too much about forgetting credit card or cash because mobile
will take over all of this type of payment.
Samsung Pay
In 13/09/2017, after contracting with National Payment Corporation of Vietnam
(NAPAS), Samsung has launched a new solution in mobile payments which is called Samsung
pay (news.zing.vn). It uses a new platform of technology in mobile payment and modern
security system. With Samsung pay, I will no longer need to bring along credit card or ATM
because it integrated in Samsung pay. Only a cell phone you can easily flexible using payment
cards. Until now, Samsung is available with most of banks in Vietnam at the moment
(Vetcombank, Citibank, Sacombank, BIDV, Agribank, etc.), Vietnamese will have various
choice in payments through point of Sale (POS).
National Payment Corporation of Vietnam (NAPAS) is currently administering and
operating a switching system interconnected more than 17,000 ATMs, 270,000 POS machines.
(napas.com.vn). It can be seen form the figure, Samsung pay is on the way to approaching most
of POS machines which is placed on many point of sales (restaurant, hotel, shops, etc.) over
the Vietnam as well as HoChiMinh city. This is a good signal for payment because we can pay
money anywhere at any time.
2.5

The playing in children
Playing may laid a foundation of social behaviours because it needs a communication
and cooperation among many people surroundings with different type of roles at the same preagreement. It also stimulates awareness and melioration in the efficiency of thinking as well as
problem solving. All kind of play from imagination to physicals is very important for children’s
development. According to play theorist Brian Sutton-Smith, the children is born with a very
big neuronal over-capacity. They can also be learning through the process of playing, how to
connect with the other people and think abstractly (Sutton – Smith 1997). That means, at this
term of kid’s developing neuronal, parents or adults need to support them as much as they can
in order to stimulate the imagination about the world. Helping them recognize exactly what is
the most important necessary for themselves.
Playing in children have a various style, sometime they can play alone or with others,
outdoor or even lying on the floor. In order to motivate children can prolong the playing time,
9


parents or adults should encourage and support them. Creating a wide enough space inside the
home’s garden or supplying a playing objects to enable the broadest range of play possibilities
will help most of neural system of children’s brain are improved and enhanced, and leading to
the great work of imagination are shown up (Goldstein, 2012).
2.5.1 The role of toys
Toys are not only the stuff which is built for kid’s play but also something can
stimulate children playing preferences and help children spend more time for a prolong play.
The children are going to play longer with the play objects which is suitable for them, and
willing to gain the best benefits that play has to offer. The available of toys in period of early
childhood affected directly to the kid’s IQ at 3 year-olds. The children approach with numerous
kind of toys that can be got a better level about intellectual achievement than normal kid even
the sex, race or social class (Elardo et al., 1975)
Unstructured play toy is known as any interest activity taken by a kid without the
conduct of parents. This game tends to focus on doing task rather than its result. Unstructured
toys are an important object for the children’s development because it connects the

communication among many children together in order to enhance social interactions
Construction toy is usually played by children in 3 and 4-year-old. When children enjoy
this game, they tend to use objects with a predetermined shape and size to create their ideas
and creation. This kind of game is called construction play, stimulates the play in children with
many blocks and Legos to generate a great product which is appeared in children’s mind before.
In addition, children can effectively learn mathematics and numbers through playing this game.
The children can practice the use of complex skills as well as the ability to envision and connect
images that things are available in children’s mind before playing (Henniger, 1987). For
example, when building a fortress with blocks or Legos, they will have many opportunities to
practice as well as learning mathematics skills. They have to choose correctly the difference
between shapes and sizes blocks or Legos. After that, they carefully must measure length,
width, and height in order to suitable with the fortress that the children imagine before
(Henniger, 1987). On top of that, when the children play with blocks and Legos, that means
they also play with spatial configurations. and Spatial science is an important aspect of
geometry and mathematical achievement (Casey, Pezaris and Nuttal 1992). In generally,
children are doing mathematics through the way that they are playing construction games.
Therefore, parents should encourage and support them in order to get a better thinking as well
as community skills.
2.5.2 Sandplay area
Sandplay (or Sandspiel) was developed by Swiss Jungian analyst Dora Kalff (19041990) in the mid-20th Century. Sandplay introduced in many countries around the world by
Kalff. By her ability in speaking languages, she can communicate with many audiences from
French, Dutch, Italian, German and English by their negative languages. From bottom of her
heart, she stimulated the imagination of audiences by the pictures and experiences of sandplay.
Apparently, sandplay meets the need of therapists who are looking for nonverbal methods After
the trip with a lot of success, many psychotherapists and Jungian analysts have integrated
Sandplay into their work in Europe and North America (Mitchell and Friedman, 1994, p. 77).
In sandplay, the children have got all kinds of figures to choose from numerous
miniature worlds. They can create what is going on that reflect thoughts, struggles and concerns
inside or outside them by choosing whatever or anything object within limited size of sandtrays
(Boik & Goodwin, 2000). In the miniature worlds of children, parents can easily more

understand about the children’s thinking and how does the children integrate with their own
worlds. Parents or adults can ask children several question with regard to their miniature worlds
(what is type of world or country you are going to create, or look at the miniature world, can
you tell me your felling about this… etc.). Since then, parents and adults can support exactly
10


non-verbal communication for children. Because, children cannot verbally express themselves
as adults do (Landreth, 1991).

Figure 2.5: The space of sandplay

In addition, sandplay not only the interest game which creating the own worlds for
children but it also a therapy. It is like a type of indirect play therapy and the therapist act as a
supporter who helps children can express their emotions through its soul (Nasab and Alipour,
2015). In a therapist, whatever their orientation, this type of sandplay therapy seems to a special
and valuable resource. For a long time, sandplay therapy has been found and developed. In the
treatment world, sandplay therapy has found a new position for treatment of children
(Abdollahi et al., 2010).

Figure 2.6: Santray with playing object

Sanplay therapy can help children get away negative emotions and suppressed emotions
by the way that children express directly to their inner thoughts (Kim & Kim, 2013). It is also
a special experiences and appropriate development for children that can connect and express
their emotions directly to friends. By using available materials, the children can invent a range
of concepts which is related to their life. For example, boys pick up army materials to set a
miniature battle while the girl will tend to choose dolls to set a beach view with castles and
miniature forest combine with many animals. When playing together in the same sandtray, it
will change the way that children learn each other. A group play therapy influences many kinds

of the advancement in social skills: self-acceptance, acceptance of others, self-respect and
respect each other (Baggerly và Parker 2005). That is extremely an important thing which
regarding to the personal development of children’s cognitions as well as thinking in the future.
In addition, it helps children to control positively themselves as well as enhancing their good
11


moralities and conducts to become a better person. Those are reasons, sandplay stimulated the
creative play in children, that helps them can play freeways in order to get a better thinking.
2.6

The Poter’s Five Forces Model
The world is always changing and the business environment is influenced by outside
factors. What if in someday, you want to analysis the competitiveness of company in order to
make a final decision. Which one marketing tools would you use to optimize profitable
company. In 1979, The Porter's Five Forces model was first published in the Harvard Business
Review by Michael E. Porter. since its introduction, this kind of model helped a thousand
company overcoming many economic crises over the world. This poter’s analytical tool,
company can easily determine the intensity of rivalry as well as levels of profitability among
industries. In addition, Poter’s model is also used to determine the ways by which an
organization can develop strategies and defend itself from competitive forces in the industry.
The results of five forces model analysis help assess the level of completion of an industry, and
the ability of firms within that industry to make profits. Porter’s five forces model of
completion has five elements, namely, the threat of entrants, threat of substitutes, bargaining
power of buyers, bargaining power of suppliers, and intensity of completive rivalry.

Figure 2.7: The Poter’s Five Forces Model

The bargaining power of suppliers:
The different scales and sizes of supplier will create to many kind of power of supplier.

The amount of supplier will directly affect to their competitiveness and the powerful
negotiation to industry. If there are a several suppliers which is large scale in the industry, the
powerful supplier will increase and affect to the entire business activities of the industry.
Powerful suppliers capture more of the value for themselves by charging higher prices, limiting
quality or services, or shifting costs to industry participants (Porter, 2008). For example,
The bargaining power of buyers:
Customers are also a competitive pressure that can directly affect to business activities
of industry. In generally, customer is divided to two group that single buyers and distributor.
For singer buyers, they are hardly any critical problem. The power of singer buyers group is
12


low. However, for distributor (Intermediate customers), the bargaining of this customer is so
high. “Intermediate customers gain significant bargaining power when they can influence the
purchasing decisions of customers downstream” (porter, 2008). Therefore, If the scale and size
of distributor is so big, they can control the industries easily. They can generate the rules by
their own. That will be a threat for organizations or companies which is enjoying to sector.
For example, Walmart is one of the biggest contributor over the world, Walmart's distributing
system can affect directly to many industries such as food, electronics, consumer goods.
Walmart have a strong enough to discuss the other businesses with regard to prices, quality
products as well as the marketing policies to bring merchandise into Walmart’s system.
Threat of new entrants:
According to Porter (2008), new entrant is a competitor which does not exist in the
market at the moment and want to gain the market share by the way that they put a pressure on
prices and costs to compete in the near future. Once threat of new entrants is high, incumbents
must reduce their prices or increase investment to deter new competitor. For the retail market
of coffee, the entry barrier is low to moderate. Therefore, company or enterprise must invest
strongly in modernizing stores and menus in order to have a good preparation when new
competitor enter the industry.
Threat of substitute products or services:

The substitute product is a different kind of shape but it can perform the same or similar
feature as a product of industry by others means (porter, 2008). We always see a present of
substitutes surrounding, but somehow, it can be given a miss of overlook because its
appearance is very different from the industry’s product. For example, bronze is a substitutes
for silver, email for express mail and train is a substitutes for airplane…When a threat of
substitute products or services is gradually increase, industry profitability will be affected. It
strongly disrupts to the profit of industry at the moment by placing a ceiling on prices. “It offers
an attractive price-performance trade-off to the industry’s product. The better the relative value
of the substitute, the tighter is the lid on an industry’s profit potential” (Porter, 2008). For
example, in Taiwan, the highway speeding train is a substitute for airplane which sever for
domestic market. Instead of having many complex processes when check-in for airplane,
people choose highway speeding train for a substitute transportation because the moving time
is nearly with the moving time of airplane.
Rivalry among existing competitors:
Businesses in the same industry will directly compete each other. It not only put a strong
pressure back to industry but also enhancement in the intense competitiveness. The rivalry
among existing competitors have many common shapes, including discount, an introduction of
new product, service improvements and marketing (porter, 2008). If there are many
competitors offer the similar kind of product or service, the company will less power because
people can choose the other competitor if they do not have a good deal. The more competitors
will make the market share smaller, and this contribute to the intensity of rivalry greater.

13


CHAPTER 3: MARKET ANALYSIS
3.1 Consumer Market Data
3.1.1 Demographics
Vietnam is one of the countries with large population (almost 95 million) in 2017. There
are many big cities with large population in Vietnam (Ha Noi, Hai Phong, Da Nang, etc.). The

biggest city is Ho Chi Minh which is also called Saigon. The population of Ho Chi Minh is
difficult to determine exactly because the hustle and bustle in this city has made a lot of people
over the country migrate to looking for a job or chance that can improve their current living
standard. According to statistical office in Ho Chi Minh in the end of 2017, the population rate
was 8,611,100 people and the density was 11,000 people per every square mile and accounts
for 9% of all inhabitants of Vietnam.
There are there factors affect directly to the coffee market in retailing chain coffee as
well as coffee shops within Ho Chi Minh:
The sex factor: According to statistical office in Ho Chi Minh in the end of 2017, the
ratio between male per female are 48.88% (4,041,641 people) and 51.12% (4,400,261 people).
In addition, according to AIM (Academy Institute Marketing) research, 65% domestic
consumers tend to drink coffee 7 times for a week and the male occupied 59%. It can be seen
from the figure, there is no vastly different among genders. It may a good signal and a
favourable for retailing coffee market because they will easily accompany with their coworker, friends or family. Their interest of coffee is alike, that makes them can feel comfortable
when hanging out.
The age factor: The age is an important factor for the retail market of coffee because it
is closely related to customer segments. Every business in coffee chain must to determine
exactly and carefully each customer segments in order to have a true competitive strategy for
a long time. According to statistics from the website danso.org, the average age of people is 31
years old. This is actually a young population who are officer workers and middle-aged. In
addition, for the most part, this average age often drinks coffee most compared to others

Figure 3.1: Drinking Coffee Rate – Age (Source: Vinaresearch – Top online research in Vietnam)

14


The Figure 3.1 shows that the drinking coffee rate with the sample of 306 people. It can
be seen, the people of drinking coffee in 23-29 age and 30-40 age occupy highest rate with
50.8% and 58.3% for 1-2 time/day. Therefore, basing on this data, the retail market of coffee

chain need to consider to focus on this potential customer segments.
The median income factor: There are many different average wage levels around big
cities in Vietnam. In particular, Ho Chi Minh city has an averagely highest wages in the
country. According to VietnamWorks Online Job Portal in 2017, every worker in Ho Chi Minh
has reached 456 USD for a month. This kind of median income is higher 38% compared to the
median income of labor over the country (285usd/month). It can be seen from the figure of
median income; the people will tend to be more comfortable to spending expenditures in leisure
daily activities as well as the cost for the drinking coffee. Only from 1 to 2 dollar of daily
expenditures for coffee, there is no any problems with regard to their income at the moment.
(15.2 USD/day).

Figure 3.2: The Price Sensitively Measurement (PSM)in 2018 – By Profile
Source: Q&Me is operated by Asia Plus Inc.

The Figure 3.2 shows how the people interact with different prices. The male and
female seem similar at optimal pricing. The low, mid and high income are comfortable at prices
from 1.48 USD to 1.66 USD. In overall, when the price change, there are not different price
gap related to sex. The gender is not influenced by price. In addition, there are also not vastly
different price gap between the level incomes. Therefore, the company can easily choose the
same optimal pricing for customer’s sex and income levels.
Three factors of Demographics have contributed to clarify the target customer segments
in the retail market of coffee chain. Office workers and middle-aged living in Ho Chi Minh
city are affect directly to revenue and profit of company. On top of that, the density is 11,000
people per every square mile has contributed to larger market size. Therefore, this marker share
is currently extremely potential for company which tend to enjoy in the retail market of coffee.
3.1.2 Psychographics
The coffee products have influenced both taste and stylish of people living in ho chi
minh city. Coffee is not only a fast beverage to come over sleepiness but also is a unique culture
of people here. Most people always enjoy coffee at the shop unlike the other countries which
have a taking away coffee. They like to drink coffee with their friends, co-worker and family.

Only a cup of coffee together, people can share information and emotions each other. They talk
everything topic in the world with related to their job, career, kids and family.
15


In addition, the other people also tend to enjoy coffee alone. They like to sit an hour to drink
coffee along with a few newspaper and book. They love the view of coffee shop as well as the
peaceful relaxation. So, to understand customers, company need to consider particularly to the
structure of coffee shop in order to fit with the culture of drinking coffee in Ho Chi Minh city.

Figure 3.3: The Popular Coffee Shop Types in 2018 (Source: Q&Me is operated by Asia Plus Inc.)

The Figure 3.3 shows that people prefer to go the chain coffee shop most with 41%.
Instead of going to local coffee shop or street takeaway, people have a tendency come to chain
coffee shop. It can be seen; this kind of business model has stirred up the retail market of coffee
chains in Ho Chi Minh City. And for more, the business model chain is extremely potential for
company which is going to enjoy this industry.
3.2 Industry environment
3.2.1 Defining Industry Boundaries
According to many recent articles at Dak Nong province which is one of the big
provinces supplying raw coffee material to the south of Vietnam, the market of coffee in
Vietnam have faced a critical trouble. In 16/04/2018, a family business of processing coffee at
Dak Nong province was caught by the environmental police with regard to processing “fake
coffee”. This business mixed a dozen tons of coffee with soil, lime and impurities that is
extremely dirty and is not good for people. It can say that this problem has made a big concern
of consumer behaviour. It left a big stain in the retail market of coffee. That makes consumers
becoming more cautious in ensuring their health. They always put their health criteria on the
top. Therefore, once giving products to consumers. Enterprise or company makes sure that
products must absolutely hygiene and original coffee.
To infiltrate this retail market of coffee chains, company or enterprise must meet some

criteria. Firstly, Say no to “fake coffee”. That is the primary thing for company that is really
enjoy this market. The coffee products must be absolutely hygiene and clearly origin and
extracted from natural. Secondly, company’s products must be issued a certificate of origin
and certificate food hygiene and safety (VSATTP) by the competent authority. But the most
important thing, company need to create strongly value trust in each customer in order to more
and more customer having a satisfaction of products.

16


Finally, the most important thing is the brand. Let look at the changing of world at the
moment, you will understand that why is the brand so important. The brand is a combination
both psychological and scientific. It is a communication of quality, reputation and experience
to customers (Brandsvietnam.com). For the present, the intensity of existing competitors in the
coffee retailing are expands and mushrooms. A lot of brand appear on the market. Therefore,
to compete with the other rivals, the company need to have a strong brand which is easily
recognized. In addition, when facing to an economic crisis, the brand will useful than it ever.
It helps company overcome scandals which damage the company’s profits. The company will
capture more value for themselves by building and developing brand. Therefore, it is a
compulsory condition if company desire to enter this market share.
3.2.2 The structure of the industry
In some recent years, number of coffee shop in Vietnam raising quickly with a lot of
international brand come to Vietnam such as Starbucks, Coffee Bean & Tea Leaf and many
Vietnamese coffee shop chains like Passio, Urban Station, Thuc Coffee, so on. They become
direct and indirect competitors of Highlands Coffee in domestic market. Business model of
coffee chain is considered extremely attractive and "super profit". With the cost of only 2025% maximum. Through only the price is 2-3 USD / cup of coffee, the brands like Starbucks,
Dunkin Donuts, Caffe Benne, Trung Nguyen ... are "picking gold fruit.". With such attractive
profits, these coffee brands continue to "expand" to expand their market share although the
market is extremely competing fiercely. The new brands have continued to grow with the everexpanding chain model.

Figure 3.4: The popular chain coffee stores in Ho Chi Minh in 2018
Source: Q&Me is operated by Asia Plus Inc – n=526

The Figure 3.4 shows that the chain coffee stores are visited in Ho Chi Minh. Trung
Nguyen, Highland and The Coffee House are leading this coffee retailing. Although Starbucks
coffee is one of most famous international coffee brand but it still stays at fourth position in
the Ho Chi Minh market. That is an interesting point in the retail market of coffee at the
moment.
3.3 Porters Five Forces Analysis of the Retail Coffee and F&B.
3.3.1 Bargaining Power of suppliers: Low
Coffee was introduced to Vietnam in 1857 by the French and slowly grew as producer
of coffee in Asia. By the late 1990s, Vietnam had become the world's #2 coffee producer after
17


Brazil. The coffee tree is very easy to grow in the highland of Vietnam. That results in a rage
of distributor at the moment and company have more choices in supplier. By the numerous
outlet of many coffee chains, it has made the power of a new supplier lower that is pretty hard
for them to enter coffee retailing. Are those reasons, a new supplier has to suggest a moderately
bargaining power that is not high.
3.3.2

Bargaining Power of customers: Low to Moderate
Nowadays, the development of internet helps people closer. People can easily
communicate each other or everyone around the world via social networks. Only through a
smartphone or laptop, people can know everything that happen in the world. The news spread
wildly with an unlimited speeding. For recently example, a homeless was kicked out after
customer buys him food at Myrtle Beach, S.C., McDonald’s because the manager of
McDonald’s doubted the homeless bothering others. But unfortunately, the solving problem
of presentative Mc Donald has been recorded by customer. Instead of accepting the mistake,

manager of Mc Donald kicked the customer out the store who recorded video as well. Five
minutes later, the video was uploaded on Facebook account of customer with a statute
“something I hate the world”. The video reached 16 million views, 222,000 interactions and
480,000 shares within almost 24 hours. Its pervasive speed created a wave of indignation in
the community on social networks by the behaviour of the police, as well as the management
of the store. The outlet at Myrtle Beach, S.C., McDonald’s has been reviewed 1 star with
14,000 times and a lot of negative comments. In addition to that, all outlet of McDonald’s store
within the Myrtle Beach area have also been downgraded from 1 to 1.5 stars.
It can be seen from the article, the power of single buyers in the industry 4.0 is
extremely high. They can affect directly to the company’s revenue, sales and especially critical
is brand. Mc Donal’s was a typical example of the F&B industry as well as coffee chain.
Customers are having more choices among existing brands as well as the other branches. Only
a few small issues, the brand may decline rapidly. That lead to worst consequences which is
not worth for company. Therefore, the buyers are always primary and business need customer.
Respecting them as much as possible to keep these loyal customers.
3.3.3

Threat of Substitutes: Moderate to High
In 2002, bubble tea was introduced into Vietnam. At first, the method of making bubble
tea is very simple, and there is no impression for Vietnamese people. Until 2012, there is a big
shift in the market of bubble tea with a lot of brands come from Taiwan. It was invested with
a larger scale and size of chain form along with modern stores. According to a report by
Euromonitor, Vietnam's bubble tea market is worth $ 282 million by 2016, with an annual
growth rate of 20%. Although the market of bubble tea has just influenced the young people at
present, but in the near future when it can approach to senior people, especially in office
workers. the customers will have more choices and it can be a high threat to coffee retailing.
In addition, with the development of internet, the methods to making a delicious cup of
coffee is easier. Instead of go to the coffee chain shops, they can make their own coffee product
with household premium coffee machines and the business can also have coffee machines in
their company to cater for office workers. It makes a relatively moderate threat.

And for more, the development of convenient stores within Ho Chi Minh city has
become a bit threat. Instead of coffee, people can the other kind of alternative beverages which
are tea, water, energy drinks, fruit juices cans, etc. They are everywhere and the customer can
easily see them anytime when felling thirsty.

18