Strategic Planning Illy Espressamente
Executive Summary
This report addresses Illy Espressamente’s failure in the Vietnamese coffee shop market and the underlying reasons by analysing the Vietnam market, the 5Cs model. From said analysis, we conduct a SWOT analysis showing the situation Illy Espressamente is facing.
The problems are twofold: the lack of customer insight that the master franchiser, Lien Thai Binh Duong Pty. Ltd. was supposed to supply but did not and the lack of marketing communication from the very beginning. The high level of competition and presence of other brand named chains only aggravate Espressamente’s position.
On the other hand, coffee culture in Vietnam is established and strong since colonial time. Globalisation and economic growth bring about two main growing segments that Espressamente should target: Globalizers (well-educated, CSR-focus, globally influenced) and Brand Chasers (novelty, status-seeking). There are several different options for expansion but after careful consideration and analysis we come to the conclusion that Espressamente 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 Espressamente Vietnam a wholly-owned subsidiary and establish 11 outlets in Ho Chi Minh, Vietnam in the next 6 years, offering superior Italian coffee service by providing high quality and ethically grown coffee with artistic Italian ambience to two targeted segments – Globalizers (expats and Vietnamese who care about the environment and arts) and Brands Chasers (people who value superior brands), through 5 Italian city-theme designed outlets (Roma, Venetia, Napoli, Florence and Milano) with exhibition of local artworks, high-end café bars located in shopping malls and art galleries, associated with visible theatrical performance by the
This report addresses Illy Espressamente’s failure in the Vietnamese coffee shop market and the underlying reasons by analysing the Vietnam market, the 5Cs model. From said analysis, we conduct a SWOT analysis showing the situation Illy Espressamente is facing.
The problems are twofold: the lack of customer insight that the master franchiser, Lien Thai Binh Duong Pty. Ltd. was supposed to supply but did not and the lack of marketing communication from the very beginning. The high level of competition and presence of other brand named chains only aggravate Espressamente’s position.
On the other hand, coffee culture in Vietnam is established and strong since colonial time. Globalisation and economic growth bring about two main growing segments that Espressamente should target: Globalizers (well-educated, CSR-focus, globally influenced) and Brand Chasers (novelty, status-seeking). There are several different options for expansion but after careful consideration and analysis we come to the conclusion that Espressamente 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 Espressamente Vietnam a wholly-owned subsidiary and establish 11 outlets in Ho Chi Minh, Vietnam in the next 6 years, offering superior Italian coffee service by providing high quality and ethically grown coffee with artistic Italian ambience to two targeted segments – Globalizers (expats and Vietnamese who care about the environment and arts) and Brands Chasers (people who value superior brands), through 5 Italian city-theme designed outlets (Roma, Venetia, Napoli, Florence and Milano) with exhibition of local artworks, high-end café bars located in shopping malls and art galleries, associated with visible theatrical performance by the
Bibliography: Market Size and Market Growth: The total population of Ho Chi Minh City (above 15-year-old) was recorded as5,785,782 in 2009 (General Statistic Office of Vietnam 2013) Depending on the size and location of the ventures, capital requirement can be medium to high, VND 60 – 100 million (Coccoffee 2013). One coffee service brand has many outlets and each outlet needs heavy investment The profit margin is quite low due to the high operation cost, normally 10 – 14million/month (Coccoffee 2013). The profit margin of chained coffee firms is fairly low