TRUNG NGUYEN COFFEE

Last year, a new player came to Roppongi, the pulsating, neon-lit nightclub district in the heart
of Tokyo. Once the playground of yakuza gangsters in postwar Japan, Roppongi has become a
high-rent residential and entertainment district located near Tokyo’s financial, political and
diplomatic hubs. The area still boasts its rough edges, with lap dancing clubs for American
military personnel, hostess bars for Japanese salarymen and gangsters on the prowl. This is the
environment in which a café with humble origins in the forested highlands of central Vietnam
opened on a prime piece of real estate this year. With bamboo posts at the door, rattan flooring
and conical hats for lamp shades, the café, Trung Nguyen, looks like something out of a
mythologized vision of colonial Indochina.1 That a coffee franchise from a poor, developing
country could sprout up in the world’s most expensive city is testament to the forces of economic
transition in Vietnam, to the sudden, startling arrival of Vietnam on the international coffee scene
and to globalization in general. Most of all, though, it focuses attention on a little coffee start-up
from a developing country that is chasing Starbucks dreams.
Less than six years after it opened its first café in 1996, Trung Nguyen had expanded to more
than 400 franchises.2 That alone is a significant achievement, for regulatory and financial
barriers have restrained private enterprises in Vietnam.3 There are no other franchises, with the
exception of the octopus-like businesses of the People’s Army. Vietnam is one of the last
countries where one still cannot buy a Big Mac. It is remarkable, then, that a small firm started
by four medical students from downtrodden Daklak province could grow so large so quickly.
What makes the case of Trung Nguyen (pronounced choom win) intriguing and far-reaching in
scope is its counterintuitive global strategy. Typically, successful enterprises from the developed
world reach a saturation point in their home countries and begin targeting locations similar to
theirs (other developed economies) or places aspiring to be like theirs (emerging markets). Think
of Coke, McDonald’s, Pizza Hut, Unilever. As Theodore Levitt writes in the Harvard Business
Review: There “is a new commercial reality—the emergence of global markets for standardized
consumer products on a previously unimagined scale of magnitude” (1983). These consumer
products typically come from the West, the United States in particular. The flip side has been
unexplored for the simple reason that there aren’t many examples of commercial globalization
emanating from a poor country. The barriers to entry are many, but primarily financial:
Companies from emerging markets typically have neither the capital nor the expertise to move
into a foreign market, replete with differing consumer tastes, regulatory issues and currency
considerations. So far, there are but a few examples. Jollibee, the only fast-food outlet in the
world to sell more hamburgers in a local market than McDonald’s, has expanded from its home
base in the Philippines to 28 other countries, including the United States, but with mixed results
(The Economist 2002).
To believe that a developing country’s brand name can indeed go global—that Trung Nguyen
can become as ubiquitous as Starbucks—requires more than a suspension of disbelief; it also
requires an ability to overcome considerable hurdles. It’s not an easy proposition. Four years
after opening eight outlets in California, Jollibee has sales that are 30 percent below the original
targets (Ballon 2002). To be sure, some obstacles, as well as opportunities, match those of
multinationals expanding in the traditional, developed-world-to-developing-world configuration.
Success may depend on the nature of the product or service; those that satisfy needs shared
across borders are deemed to have the greatest potential for success (Lovelock 1996). The
determinant factor can be how the characteristics that differentiate a product—and a firm’s
strategy for selling it—match new markets that are geographically, culturally and economically
distinct from the firm’s home base.
The cultural and economic gaps between Trung Nguyen’s Vietnam and Tokyo’s Roppongi could
not be wider. But Dang Le Nguyen Vu, the young entrepreneur behind this fledgling empire,
said, “I want to have the Vietnamese brand name of Trung Nguyen well-known in the world. Our
coffee is good. There’s no reason we can’t do it” (Associated Press 2002). His confidence is
admirable. But is it realistic? Like the country where he was born, he is up against considerable
odds. However, I am confident that Trung Nguyen coffee will become much more powerful in
the future with your significant assistance and our astute commercial tactics.

1. BUSINESS OVERVIEW
a. Featured Products
A highlight of Trung Nguyen's business strategy is that the company participates in all stages of
the global coffee value chain and only focuses on developing its core strength of coffee and has
each marketing campaign specific to each product.
The common feature of G7 coffee products is that they come from the legendary basalt land of
Buon Ma Thuot combining different secrets of fresh coffee and the most modern production
technology. From those things, Trung Nguyen brings customers delicious and tasty G7 instant
coffee. G7 is the only instant coffee product chosen to serve the heads of state at ASEM 5. In
addition, Trung Nguyen also organized the program "G7 Summit" to promote the brand that has
attracted thousands of participants and marked by the blind test to directly vote for their favorite
instant coffee products between G7 and the major coffee brand in the world. As a result, 89% of
people choose G7 as the most favorite product.
Passiona instant coffee - this is a new type of coffee for women with the criteria of using diet
sugar and supplementing with collagen, Vitamin PP and rare oriental herbs to help beautiful skin,
good for health. Therefore, it is a special product only available in Trung Nguyen.
b. Services
Trung Nguyen's customers are mainly individual customers, who buy goods at retail points or
enjoy coffee in Trung Nguyen's chain of stores. At Trung Nguyen's high-class chain system, in
addition to roasted nuts, customers can buy a hand coffee grinder so that when they want, they
can only grind the right amount of beans for a coffee filter and enjoy whole experience as a true
barista. Trung Nguyen also built a coffee village in Dak Lak for tourists to visit and enjoy coffee
in a space close to nature.This is a quite unique model that Trung Nguyen built to create a new
image in the hearts of its customers. Trung Nguyen is always looking for ways to best meet its
customers. Besides, for institutional customers who buy in bulk will receive the company's
discounted prices and other incentives for long-term ones.
c. Customers
2. CORE COMPETENCIES
Core competency is the one of strong points to overcome the competitors.
Clear and distinctive product that focus on customer group is one of core competencies helping
Trung Nguyen has a firm position in coffee market. With various types of coffee, Trung Nguyen
gives more choice for their customers.Trung Nguyen created G7 instant coffee to counter the
biggest multinationals – Nescafe – the most widespread foreign coffee in Vietnam. In “G7
Instant Coffee Festival” in 2003, 89% of 13000 coffee testers voted in favour of G7 while 11%
selected Nescafe (16. Bùi, 2010). What is more, Passionate coffee which is the coffee for women
appeared the first time in Vietnam has added collagen and vitamin P. It attracts the interest of
many women. Now, women can drink their coffee comfortably without worry about the harm of
coffee a lot. Weasel coffee for the rich class who wants to discover the unique favour of the King
of coffee (25. Lê, 2010). It is clear to say that Trung Nguyen sastisfiy their customers from all
classes with different jobs.
Difficult to copy that means the company has a unique difference to conquer customers and can
decrease the risk of the new entrants. Trung Nguyen has various types of coffee that has focused
on the wide ranges of customer. With the rapid expansion, Trung Nguyen has closely saturated
the market. Therefore, it is putting the brakes on further domestic expansion and has more
protection itself from the new entrants to market. It is also difficult for copycats to imitate the
Trung Nguyen imagine because copycats cannot persue customers easily when they are familiar
with Trung Nguyen’s name and flavour.
3. COMPETITIVE ADVANTAGES
Product differentiation
To be more competitive, Trung Nguyen designs their coffee shops with the style of Tay Nguyen
where coffee is derived from. When customers come to Trung Nguyen shop, they can expose
into the original coffee environment and try the different tastes of coffee. Moreover, they can
compare and give recommend about the tasty coffee. By this point, customers feel very
interested in Trung Nguyen brand. That marks the success of Trung Nguyen when they want to
expand in market.
Service differentiation
Besides the unique Tay Nguyen style to drink coffee, Trung Nguyen makes the flexible way to
sever customers. Each coffee has a distinct style and atmosphere that reflective of the local
community and region. For example, café shops in the center of Ho Chi Minh City are decorated
with colour. Because it aimed at the young, pop music in trend are played loudly. In
comparision, café in conservative city – Hanoi is designed in traditional style. Waitresses dressed
in the traditional flowing tunic of Vietnamese women – Ao Dai. The music atmostphere is in soft
flute music and bamboo and rattan décor. This service difference can sever customers’ favour
relevantly, giving them the interest and comfort in drinking coffee.
Quality
It seems that the coffee market is now saluted when customers nowadays have many brand
names to choose. As a result, they are ready to give up Trung Nguyen to taste other coffee
brands. Therefore, quality becomes very important when it is one of factor to conquer customers.
Trung Nguyen (2010) states that they “chooses four different regions where the most delicious
coffee growed: Robusta in Buon Ma Thuot, Vietnam, coffee from Ethiopita, Arabica from
Jamaica and coffee from Brazil. With the support of the cutting-edge technology and the secret
of Oriental making coffee in grounding, Trung Nguyen coffee products are so special and
different from another one”. That makes Trung Nguyen coffee more competitive and gain more
benefit.
With both the love and the passion for coffee, the most original and best coffee beans in the
world have been carefully selected and carefully combined with mysterious Eastern roasting
secrets. Trung Nguyen sends to lovers and connoisseurs more than a cup of delicious coffee, the
most attractive but also a special energy. The source of energy for the onset of the brain for
inspiration of creative ideas and for success. Today, along with the continuous development of
science and technology, the life of the Vietnamese people is constantly improving, the demand
for consumption is increasing. In particular, the demand for coffee is increasing rapidly. The
only modern technology only in the process of producing instant coffee of Trung Nguyen is the
unique extraction ability, taking only the most delicate parts only in each coffee bean to produce
coffee products. Instant coffee with distinctive, concentrated and captivating flavor. Because of
these specialities, they have been making a difference for instant coffee that no other instant
coffee product on the market has.
4. OPERATIONAL PLANNING
Besides, Trung Nguyen has also implemented specific campaigns through community oriented
programs, thereby contributing to enhance the brand value as well as promote the image of the
company to become more familiar with customers. Including campaigns that is exploiting free
advertising capabilities on virtual social networks such as facebook. Moreover, Trung Nguyen
also chose to buy the copyright of a song that was suitable for the mainstream value that Trung
Nguyen wanted to convey and put into advertising. This ad will be broadcast regularly during the
prime time on television, the melody will become the soul for the ad as well as the brand and
impress the viewers.
Advertising activities of Trung Nguyen are not many, the true effect that Trung Nguyen achieved
is thanks to PR - public relations based on the core values that the company directed to Trung
Nguyen has inspired national soul into its logo and slogan, upholding the national pride in each
product. Trung Nguyen has carried out propaganda campaign to mobilize the spirit and call for
the support of agents, distributors and consumers. The company opened the open letter to
consumers with the phrase "Dear fellow citizens" and the words are very earnest to evoke the
national spirit. Therefore, Trung Nguyen has quickly gained consumers' trust and achieved many
significant successes such as the program "Innovation and Vietnamese Brand" - Trung Nguyen
coordinated with Youth Newspaper, Youth Union Vietnam launched and cooperated with
Vietnam Television to set up the "Innovative source" Investment Fund to finance the winners of
the VTV3 Startup program. This activity aims to encourage and create opportunities for the
young generation of Vietnam to implement innovative business projects and ideas, thereby
contributing to nurturing young business talents for the country. On the other hand, Trung
Nguyen participated in sponsoring programs such as "Connecting big arms", supporting the
victims of Agent Orange Vietnam in the humanitarian program of TV "We are not insensitive.
 Although behind foreign brands in terms of franchise, but at that time, Trung Nguyen
coffee was really famous and popular in Vietnam. The taste is very good, suitable for
Vietnamese taste, cheaper and especially it is the coffee of inspiration and success.
 The success of Trung Nguyen coffee has become an inspiration for many, especially
poor students who want to start a business. One of the slogan that brings great success
for Nguyen Coffee is "KHƠI NGUỒN SÁNG TẠO" (inspired creativity). When
translated into English, maybe people can not fully understand the profound meaning
of this slogan.
 What does “KHƠI NGUỒN” mean? when it is sunny for a long time, without rain,
without a drop of water, people go looking for water everywhere by all means. When
finding a water source, they have to “KHƠI NGUỒN” to allow water to flow out into
wells, ponds, streams, rivers, etc. Trung Nguyen Coffee has inspired the idea for many
people who want to start a business or create something. There are many people who
have worked in the coffee shop, marketing coffee, growing coffee, processing and
packaging coffee, opening coffee shops, etc.
 Until recent years, Trung Nguyen coffee was once again famous for the divorce and
property division of the couple, the two founders of the company. Trung Nguyen
coffee has been downhill since then.
 With the appearance of many coffee brands in Vietnam market, now Trung Nguyen
coffee shops are no longer popular and famous.
 In Vietnam, not only Trung Nguyen Coffee is unique, there are many quality and long-
standing brands of Vietnam. However, Vietnamese people in the past used to like
Trung Nguyen coffee.
 So many Vietnamese drank Trung Nguyen coffee like drinking the creativity and
success of a poor student who is passionate about coffee and have created tremendous
success. for Vietnamese coffee.