Strategic Planning Illy Espressamente
On the other hand, coffee culture in Vietnam is established and strong since colonial time. Globalization and economic growth bring about two main growing segments that Supersaturates should target: Globalizes (well- educated, CARS-focus, globally influenced) and Brand Chasers (novelty, status-seeking). There are several deferent options for expansion but after careful consideration and analysis we come to the conclusion that Supersaturates should reintroduce Itself In Vietnam. In order to capture these segments, we propose offering inspirational value and theatrical performance as new elements of a Blue Ocean.
Additionally, we also come up with strategies for two other potential markets, Germany and India. The strategy is to make Supersaturates Vietnam a wholly-owned subsidiary and establish 11 outlets in Ho Chi Mini, Vietnam in the next 6 years, offering superior Italian coffee service by providing high quality and ethically grown coffee with artistic Italian ambiance to two targeted segments Globalizes (experts and Vietnamese who care about the environment and arts) and Brands Chasers (people who value superior brands), through 5 Italian city-theme designed outlets (Aroma, Venetian, Annapolis, Florence and Milan) with exhibition of local artworks, high-end cafe bars located in shopping malls and art galleries, associated with visible theatrical performance by the baristas and stopping collaborating with Lien Dhal Blah Dong. The implementation plan In the next 6 years for this strategy (research, operation plan and taking care of relevant necessary documents) suggests penetration of the market in 201 5 by entering the market as a wholly-owned subsidiary. In 6 years, the total expense cost is estimated to be USED 1235,000 for preparation, opening new outlets, communication plan and operation plan. This implementation plan will ensure the success of the proposed strategy.
Introduction
Lily Supersaturates is a franchise chain by Lily, stretching over 34 countries and purely of coffee-based drinks made from the finest Arabica beans processed with Lily machineries and technique. It has been a stunning success in its home market, Italy and others such as France and Germany, generating millions of revenues.
Lily aims to maintain its leadership in the market for authentic Italian cafe©s by building relationships with suppliers, increasing the number of outlets and differentiating itself from its competitors in term of quality and coffee-drinking experience. However, the launch in Vietnam has been a fiasco as 3 out of the 5 stores in the country have been closed after 4 years of operation. They now face the decision whether to pull out of the country and move to one of the countries in the case or reintroduce itself in the Vietnamese coffee market with a different strategic approach. . 0 Goals and Objectives Business Goals Expand the brand name to global market as the authentic Italian superior coffee service and premium service for transit customers. Business Objectives Achieving $1 50,000 revenue per outlet. In the existing markets, increase the total number of outlets by 5% as well as reinforce the operation of the opened one to achieve 20% increase in profitability in the next 5 years. To stand out from competitors by Italian coffee service experience (e. G. Italian-themed superior outlets, Italian coffee styles, bringing artistic value to the service experience). Marketing Goals To be sustainable in the current market and become top-of-mind brand when consumers search for superior Italian transit coffee. Marketing Objectives Increase the availability of Lily Supersaturates by opening at least 8 stores in each country. Offering superior and artistic Italian service environment to attract 40% more customers, generating 20% more profit in the next 5 years.
Problem Identification
From the ACS analysis, Lily Supersaturates is currently facing 2 main problems: lack of customer-oriented offer and lack of exposure in the Vietnamese coffee market. Firstly, the product and service offer is inappropriate as it is perceived to be overpriced and too conservative in making Italian authentic coffee by the Vietnamese customers – ho prefers their traditional black and milky coffee made from Robusta beans. Secondly, Lily Separateness’s image could not be seen anywhere except from their outlets.
Both of these problems demonstrate the lack of customer insight and marketing campaign coming from Supersaturates collaborator – Lien Thai Bin Dong Pity. Ltd. This master franchisee has shown inefficiency in investigating the customer’s wants and needs and what Supersaturates offers. Besides, the company is incapable in managing coffee chained shops as well as running effective marketing campaigns (Appendix E for more details). Situation Analysis existing chained coffee brands but also new entrants, mainly due to low market barriers and high concentration.
Moreover, the Vietnamese customers are not familiar with the taste of Arabica coffee beans. High threats of substitutes (fruit Juice/ smoothie bars) and low coffee consumption per capita combined with high price have a negative impact on Lily Supersaturates. However, acting in the company’s favor is its Italian brand name that is well perceived by the Vietnamese consumers. Apart from this, there are segments that pursue higher social statues via branded reduces.
In addition, the impacts of globalization as well as the development of sophisticated taste in coffee bring significant opportunities for Lily Supersaturates to penetrate the market. With these come increased concerns for ethics and sustainability coming from the growing segment of globally influenced people. Lily Supersaturates weaknesses lie in understanding customer insight leading to key problems and the lack of integrated marketing communication strategies to promote the brand in such high concentrated market like Vietnam.
However, having one the est. quality coffee in the world, enabled by strong relationships established by conducting ethical works with suppliers, the brand still has the capabilities to overcome those difficulties and expand their market share. Direct competitors Highland Trunk Nagy©n Cataracts Coffee Bean & Tea Leaf Gloria Jean’s Angel-in-us Indirect competitors Medium-large Independents Street vendors Strengths (S) High quality coffee beans Strong control over the production chain Expertise in processing Italian coffee Strong relationship with suppliers Foreign brand name – preferred by Vietnamese Lily has conducted Corporate Social Responsibility via its supply chain by remunerating the farmers higher compensation for higher quality Weaknesses (W) Lack of expertise in processing Vietnamese coffee as in growing, harvesting, roasting and filtering Unnecessary cost due to inefficient logistics Small outlet capacity Lack of market exposure Lack of sales promotion Large debt Transit model does not fit with Vietnamese culture Opportunities (O) Admiration for Italian brands Growing segment of status-conscious people, who like to be seen in a branded environment.
Growing segment of ethics-conscious people who are educated abroad Vietnamese has adopted to a coffee-drinking culture ever since Customers have been developing a sophisticated taste in coffee Vietnam is the 2nd largest coffee producer and Arabica production is growing (5% to 8%) SO Strategies Maintain high quality coffee served to match with the increasing sophisticated taste of Vietnamese people.
Penetrate the market by being the leader in high quality product Utilize the strength of foreign brand name in communication Target the growing segment of ethics-conscious and internationally educated people by stating the company’s CARS (care for farmers) WOO Strategies Sourcing part of the production chain to Vietnam To penetrate on growing segments to increase in sale to make up in debts by having high-end outlets.
Threats (T) Fierce competition between chained coffee shops High threat of new entrants High threat of substitutes Low supply of Arabica in Vietnam Low consumption of coffee, compared to global scale Novelty seeking Vietnamese people are not familiar with Arabica coffee beans SST Strategies Penetrate the market by focusing on premium quality, rather than competing on price Focus on relationships with Vietnamese Arabica growers to consolidate local apply WET Strategies Avoid in going into a price-war with other competitors to increase sales by keeping premium price for premium quality Avoid introducing Robusta coffee beans but bring new taste in the market Differ to other competitors in term of having small capacity yet high-end outlets
Strategic Solutions and Situation Scenarios
- Strategy 1: To achieve $500,000 revenue per store by 2018 by offering a holistic package of high-quality and ethically-grown Italian coffee as well as an aesthetically and intellectually stimulating coffee experience to a segment of well-educated and episcopate Germans in transit, who are concerned for CARS and appreciative of modern arts, through outlets adorned with arts, glassware and merchandises showing Separateness’s efforts in improving the environment and the growers’ living condition. Description: Cups and dishes will have artworks from modern artists and a piece of information on how sustainable the product is made or how Lily contributes to help the farmers in its supply chain printed on them. However, everything will be kept minimal and sleek, adhering to the current theme. They might be modified in the preparation period as ell as in the middle and end of the 5-year plan to be updated. Merchandise sales, either on separate notice or on the design, will state clearly that part of the profit will go to people in need, R helping lessen the product’s carbon footprint and impact on the environment. Potentials Higher sales, not only from food and drinks but also from merchandises Reinforce the image of Supersaturates in customer’s mind Higher profit margin since Germany is close to Italy (approve. 500 kilometers between Rome and Berlin) The extreme costs of acquiring artworks and fancy decoration The messages come out as pretentious.
- Strategy 2: To establish 5 outlets in India in the next 5 years, offering a high quality Italian coffee and prestigious experience to a segment who seeks for a higher social status and novelty of the population, through luxury-designed outlets on Rajah Street, New Delhi, India. Description: Prestigious experience: Customers visiting Lily Supersaturates will experience the luxury service environment designed base on Italian interior style as well as well- trained waiters serving at the table. The superior coffee service given can place significant impression on the customers and spread the brand value proposition as he authentic Italian cafe©. Higher social status and novelty seeking segment: Since India has very high power distance (Hefted 2013), it is indicated that people want to confirm their status and be recognized using premium product/ service brand. Figure Hefted value of India (Hefted 2013) Rajah Street, New Delhi, India: this street is considered to be “The Royal Street” of India in which many luxurious retailers and hospitality ventures located. By setting Lily Supersaturates outlet in this area, the level of exposure to target customers is higher. Potentials Risks Huge market of growing middle class First mover advantage as the market has low level of competition Lack of acceptance from a tea-drinking population Banking system and bureaucracy may hinder business.
- Strategy 3: To become wholly-owned subsidiary and establish 11 outlets in Ho Chi Mini, Vietnam in the next 5 years, offering superior Italian coffee service by providing segments – Globalizes (expatriates) and Brands Chasers (people who value superior the baristas and stopping collaborating with Lien Thai Bin Dong. Description: Stop collaborating: Lien Thai Bin Dong does not do well in term of marketing for its partners (Appendix E). Hence, Lily should end the collaboration and take full control over the new outlets operation and communication. Vietnam government will allow foreign wholly owned subsidiary from January 201 5 (distinguishing 2013); hence, Lily Supersaturates has one year for taking care of legal documents and business preparation. Globalizes: we chose this segment because they are well educated as well as leaning toward healthier, more ethical and artistic lifestyle. Hence, they will appreciate the value propositions of Lily Supersaturates, which is high quality and ethically grown coffee alongside with the artistic ambiance. Moreover, this segment also wants self-identity; hence, fitting with Lily Supersaturates offers. Brand chasers: this segment prefers to be seen using superior brand name product/service. Therefore, it is sufficient for Lily Supersaturates target this segment. By establishing 5 Italian city-themed outlets, 1 high-end bar in shopping mall and 5 high-end bars in the art galleries with mentioned tactics, Lily Supersaturates can get closer to the targeted customers and transfer the image of superior Italian experience to them. Potentials Lily Supersaturates can be more active in marketing campaign and have more control ever the business by stop collaborating with Lien Thai Bin Dong Co. The preparation time increases Lily Separateness’s likelihood to success.
More in-depth research for the market can be made in this period. The artistic and ethical value will attract globalizes and superior value will attract the Brand Chasers. By providing the Italian city themed outlets, Lily Supersaturates can emphasize on the Italian experience provided to its customers. The high-end bars located in galleries require less financial investment. However, the customers the galleries bring to Lily Supersaturates. Lily Supersaturates will have more work to do in terms of market researching to understand the local consumption behavior and handling with Vietnam regulations. The 5 Italian city themed outlets required heavy financial investment. 6. Recommended Strategy and Justification In terms of per capita coffee consumption, Germany ranks the highest across the three countries. Although Vietnamese taste differs from Indian taste of coffee, across all walks of life. India on the other hand, is a low-competition, untapped market. On the contrary, Germany is a saturated market with various different established competitors. The ease of doing business in Germany is the lowest, while Vietnam comes second and India is the hardest with high barriers of bureaucracy. Three strategies above aim to penetrate different markets. Although each market has their potential, the first two markets can cause some problem for Supersaturates.
The first one to be eliminated is India market. Although there are less coffee industry concentration and the match of taste between Indian people and Lily Supersaturates product, India has a tea-drinking culture with the slow switching toward coffee. Moreover, since Supersaturates currently does not possess any outlets in this neutron, it is very hard for the firm to establish their business due to the nation baking system and bureaucracy. In fact, India ranked 17th out of 189 countries in term of starting business (The World Bank 2013). Therefore, Supersaturates should not open its store in India. Secondly, Lily may also face difficulties penetrating Germany market.
Despite the substantial coffee drinking market, Germany’s coffee industry has very high level of concentration and saturation, which leads to fierce competition. Hence, it is tremendously hard for Supersaturates to stand out from the clutter to be successful. The recommended strategy is strategy 3, penetrating Vietnamese globalizes and brand chasers by offering premium and ethical-grown coffee as well as authentic Italian service with artistic and novelty value. Although there are high threats of substitution and fierce competition, about 64% Vietnamese people have positive sentiments toward Italian brand and about 58% people link Italian brand with luxury (Miami and Memorial 2012).
Hence, the value proposition of Supersaturates to Vietnamese market is appropriate and has a high chance of success in this market. Eliminate Price Reduce Raise Ambiance Availability Augmented products Social status Promotion Create Inspirational Value (Arts) Theatrical Performance (Baristas’ coffee-making process) ambiance. By conducting a blue-ocean strategy, which includes avoiding price competition and adding an element of inspiration, Lily Supersaturates separates itself from the current competition and carves a new niche for premium coffee. (Refer to Appendix H for details)
Bibliography
- Alone I and Leasers M 2012, The Espresso Lane to Global Markets, Richard Vive School of Business, Ontario, Canada.
