1. i
Lecturer: Mr. Tran Tuan Anh
Tutor: Mr Tran Tuan Anh
Tut 1 BA10
Group members:
Hoàng Diệu Linh 0804000055
Tô Thanh Loan 1004000044
Phạm Thị Yến 1004000101
Phan Thị Hoàng Yến 1007040216
Hanoi University
Faculty of Management and Tourism
HIGHLANDS COFFEE
Service Marketing Report

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ACKNOWLEDGEMENT
In the process of doing this assignment, we highly appreciate the contributions and suggested
ideas of many people. Without their help, we could not have accomplished this report.
Our great gratitude firstly goes to Mr. Tran Tuan Anh – our lecturer and our tutor of Service
Marketing for their dedication and enthusiasm in teaching and guiding us in every
single lecture and tutorial. All the interesting examples and precious instructions they provided
have helped us very much in finishing our assignment.
We would like to express my thankfulness to staffs and customers of Highlands Coffee for their
co-producing our service experiences and their helpful information.
We also thank our tutorial-mates in Tutorial 1 – BA10 for all their meaningful helps and
timely exchange of information, as well as knowledge relating to the course.
Finally, we also owe a great deal to the authors of many websites and books, especially the
author of our current text-book Services Marketing – Lovelock,C., Patterson,P., Walker,R. for
providing us fundamental concepts and techniques which are really necessary for the
completion of this assignment.

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Executive Summary
Highlands coffee is a brand of Viet Thai international Joint Stock Company (VTI) and was
established by David Thai with the objective is the leading high-grade retail industry in Vietnam.
Highlands coffee not only gives the customers the feeling of traditional value in Vietnam but also
make them experience the part of modern active lifestyle. Especially, the shop located at number
6, Nha Tho street, Hoan Kiem, Ha Noi is one the famous shop of Highlands coffee attracting
many customers from Vietnamese to foreigner. According to that shop, our report draws attention
to the external factors including the situation, market description and buyer behavior and finds out
how these factors affect Highlands Coffee’s strategy; particularly positioning strategy, service
blueprint, physical evidences, pricing strategy, promotion strategy and internal marketing.

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Table of Contents
1. Situation analysis ........................................................................................................................................1
2. Target market description ...........................................................................................................................2
2.1. Highlands coffee’s target customers....................................................................................................2
2.2. Customer expectations regarding service performance .......................................................................2
3. Buyer behavior............................................................................................................................................3
3.1. Customer’s perceived risks and strategies ...........................................................................................3
3.2. Customers’ perceived benefits, motivation & involvement.................................................................3
3.3. Level of customer-provider interaction................................................................................................3
3.4. Services description .............................................................................................................................4
4. Positioning strategy.....................................................................................................................................4
4.1. The place the firm currently holds in customers’ mind .......................................................................4
4.2 The place the shop wants to hold..........................................................................................................5
5. Service blueprint.........................................................................................................................................5
6. Physical evidences ......................................................................................................................................7
6.1. Logo.....................................................................................................................................................7
6.2. Store decoration ...................................................................................................................................8
6.3. Staffs ....................................................................................................................................................9
7. Current Pricing Strategies...........................................................................................................................9
8. Promotion strategy....................................................................................................................................10
9. Analysis of service quality, satisfaction, perceived value and customer retention efforts........................11
10. Internal marketing...................................................................................................................................11
11. Conclusion ..............................................................................................................................................12
References.....................................................................................................................................................13
Appendix.......................................................................................................................................................14

5. 1
Viet Thai International Joint Stock Company (VTI) was established in 1998, the main
activities are in the service sector and coffee production. With the rapid development, VTI has
owned about 60 coffee shops with a famous trademark Highlands Coffee all over the country.
Proud to be a Vietnamese brand, Highlands’s philosophy is to combine the modern world with
traditional, classical values of Vietnam.
1. Situation analysis
In this quick-changing world, along with the busy working pace and dynamic style, the way
Hanoi people enjoy life is much different from the past. Consequently, the service section,
includes coffee shops, has many improvements to fit this trend.
According to AIM research about coffee drinking habit, 65% Vietnam consumers use coffee 7
times a week, men account for higher rate (59%). Regarding instant coffee, 21% Vietnamese
consumers use it 3 to 4 times a week, female group is slightly more (52%). The rate of drinking
coffee at home and outside is equal 49% - 51%. Coffee shops in Vietnam can be found in every
corner to create the most convenience for customers. Hanoi has a huge number of coffee shops
but not all cafés are attractive to everyone. The most popular cafés are consistent with the unique
style. Hence, though quite fussy business environment, there are still many opportunities for this
type of business which should be provided in a professional manner.
Higher living standard leads to higher demand and expectation from customers. They are
willing to pay more for products that give them technical, functional, or emotional benefits.
Today, people coming to the cafés is not just for drinking but to seek interesting experience with
impressive space, beautiful design and professional service delivery. As a result, adding
determinacy attributes to customers is extremely essential. When dynamic, modern trends
overflow into Hanoi streets, coffee shops gradually renovate in attempt to meet demand diversity.
And specialization is a rising trend in this industry.
Some coffee shops bring the comfortable atmosphere by the decorations. Instead of formal
tables and chairs, they use only small and short tables with many buffers for sitting. Some others
are designed in ancient Hanoi style or country style. Bar-coffee is a good choice for those who are
interested in live music. They can also give some shows. Other kinds of coffee shops are “Cat”

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café like Ailu Cat, game coffee (Dice) and “Book” café such as Tùng book, Lollybooks, AIM,
Sách which are a mix of coffee serving with another utility.
It can be seen that the market for coffee shop is becoming more and more competitive, and
threats to Highlands café come from both their direct and indirect competitors.
Highlands’s target customers are 18 to 45 year-old people. Clearly, its core rivals are other
luxurious cafés which serve the same target customers like The Coffee Bean & Tea Leaf
restaurant chain, The My way coffee and restaurant chain, Ibox or ILU coffee. However,
Highlands holds the strength of delicious coffee and good reputation.
Besides, the growth of substitutes like tea shops (Lipton, Dilmah, Taiwan milky tea) or yogurt
shops also raise the risk for Highlands. Although these kinds of shop target customers are
teenagers, Highlands and other coffee shops are still under the risk of losing customers if they
cannot manage their business well.
2. Target market description
2.1. Highlands coffee’s target customers
The target customers Highlands coffee has been serving are the middle class, the office staffs
and the active young generation because drinking coffee here with the prestigious coffee brand
helps them confirm their status in the society. Moreover, Highlands coffee always focuses on
creating the comfortable and exciting atmosphere for customers to enjoy coffee every day.
Therefore, this is an appropriate place the office staffs who want the quiet and less luxurious
space to discuss with their friends and enjoy coffee with pastry-the Western style. In addition,
Highlands also targeting customer group are young businesses who used to study abroad so they
are familiar with the style of European-American like drinking coffee at a chic restaurant that
impress the style of the place they used to live. Another, the customers of Highlands coffee are
foreigner living and working in Vietnam.
2.2. Customer expectations regarding service performance
Expectations occur at the pre-purchase stage of a service which have much affected on
customers’ satisfaction evaluations. To Highlands coffee, it is always evaluated as high quality
coffee shop. Consequently, customers who choose Highlands usually have formed this prior
attitude toward this coffee shop. Furthermore, Highlands also has done very well in using
marketing communications. Customers know Highlands through words of mouth, blogs,
magazines and TV interviews. Thanks to the good service quality, it aids to build a very
outstanding image in customers’ mind. All those things contribute to enhance customers’
expectation regarding Highlands’s service performance. Before they come to this coffee shop,

7. 3
they expect to receive good drinks, affirm their status and enjoy a quiet space for relaxing or
talking to their friends. The more expectation they have the more dissatisfied they are if
Highlands can not satisfy their requirements. Therefore, it is not an easy job for Highlands coffee
to please customers constantly.
3. Buyer behavior
3.1. Customer’s perceived risks and strategies
When the customers going to Highlands coffee are overcrowded, there will be no longer blank
tables for them and the mixing drink unit may overload which make the waiters of the restaurant
serve slowly then the customers wait for them and feel anxious. Moreover, Highlands is equipped
the cool air so some customers sense too cold. Therefore, Highlands coffee has some strategies to
reduce customer risks. Firstly, as the customers are crowded and the restaurant has not enough
tables to serve Highlands coffee prepare additional tables and chairs to guarantee that the
customers will have enough seats. However, if customers are overcrowded with large numbers
and the Highlands does not have ability to serve, the Highlands coffee does not make customers
wait too long with a bad impression. Therefore, the staffs are willing to notice the overloaded of
the restaurant and then introduce them to other Highlands coffee at discounted price so that they
do not go to the restaurant of competitors. Another, Highlands always follows the sale of drinks
that were best-selling in order to estimate in case of overload. Additionally, Highlands Coffee
also bases on the sale of previous periods to make predictions about period that will have the
largest customers to pre- mix drinks in the bottles or cups and increase the number of the staff to
serve customers on the peak hours.
3.2. Customers’ perceived benefits, motivation & involvement
Highlands coffee will give the precise experiences to customers when they drink coffee
because it is created by finest coffee beans. Whereby, they feel differently from other coffee shop
because of combining the quintessence of the modern world with the charming and traditional
values of Vietnam. Especially, Highlands creates the comfortable, cheerful atmosphere, warm
style of service, friendly smile and enthusiastic of staffs to customers.
3.3. Level of customer-provider interaction
Since coffee shop services belong to high contact that involves much contact between
provider and customers. If customers have any problems or complaints, most of them will be
solved through face to face. So, there is an implication for Highlands coffee that building up a
good team to solve the problems that happen at times.

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3.4. Services description
According to four characteristics of a service, Highlands coffee’s service can be described in
terms of intangibility, heterogeneity, perishability and inseparability. Firstly, to intangibility
feature, customers do not obtain ownership of the drink or food they order. What’s more, different
customers may perceive Highlands’s services in different levels of performance quality. Since the
quality of services are varied by many factors, not only originating from customers themselves
but also from employees. Maybe one employee is very gentle or helpful in answering the
customers’ complaints but another may be arrogant or unhelpful. Those factors make it hard for
Highlands to control their quality and offer a consistent service. In term of perishability feature, in
time when the demand of customers is very high, normally it’s hard for them to go into Highlands
coffee since the shop uses up all their capacity and no vacancy. A very important point is that
customers are a part of the service performance. When Highlands coffee provides services,
customers also need to take part in process by ordering the drinks and cakes.
4. Positioning strategy
Clearly drawing up the positioning strategy at the very first stage of developing a business
project plays a critical role in enhancing the business success. The positioning strategy focus on
the two important questions: which place the firm is currently on the customers’ mind and which
place they want to hold on the market.
4.1. The place the firm currently holds in customers’ mind
Interviewing customers in Highlands Coffee shop and collecting judgments from many
forums, we found out that in customer’s mind, Align offers a rendezvous, a good coffee and a
beautiful view. Located at the first floors of Asian Tower, Highlands Coffee is an ideal place for
officers coming during their time break or even for business meeting. During our interview time
we also took notice that nearly half of the customers were the youngster, which is rare comparing
to other Highlands coffee shops. Phong, a young customer explained that because this Highlands
coffee shop is located on the centre of the city, it would be more convenient to him to meet his
friend here. The supplementary services such as toilet, music and food are also highly rated
(Foursquare, 2012)
However, there are many complaints regarding to the service quality at Highlands coffee 6
Nha Tho, mostly about the long waiting time or the noise. “The serving is too slow”, “I normally
have to wait about half an hour to enjoy my coffee”, “This place has the most annoying blender
machine on earth”, said the customers.
From some information from customers that the reporters collected during the shop visit and
websites, it can be seen that Highlands Coffee shop is really a special coffee shop to customers,

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since they offers high quality core product to customers and has the variable supplementary
services; however they needs to professionalize the staff to build better image on customers’
mind.
4.2 The place the shop wants to hold.
Highlands Coffee Shop positions itself as a high price, high quality coffee shop. The shop
owners want to emphasize that, the high price means high service quality as well. Since customers
are enjoying a more special service, so they should also pay a higher price for what they are
getting.
5. Service blueprint
Highlands Coffee’s service is of high contact one. Almost activities are visible to the
customers. Business is done through face to face communication. For example, the waiter brings
the menu to the table, the customer read the menu then order foods or drinks, if they have any
question or any request, they speak immediately. These characteristics put pressures on the setting
up a clear blueprint in which stages in service production and delivery are shown. The blueprint
on the operation of Highlands Coffee cafe is represented as follows:
Trung Nguyen Coffee High priceLow price
High quality
High price
Low quality
“Bệt” Coffee
Highlands Coffee
Coffee

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The coffee shop’s document determines that the customers are welcome at the gate by the
guards who are required to say greeting to visitors, keep the motorbike and guide them to come
into. Then, the waiter staff opens the doors for customers, say hello and give the menu. After
taking note the order from customers, they go into the bar and pass that order to kitchen staff for
preparing. Then, the drinks or foods are brought to customers. When customers want to go, they
ask the waiter to take the bill and pay money afterward. The very clear and detailed description on
the tasks, duties, responsibilities make it easier and quicker to deliver the services.
Highlands coffee

11. 7
Located on one of Hanoi’s centre old street, with a small front space, sometimes, especially
peak time like weekends, there is no vacancy to park the motorbike and the car. In that case, the
staff has to apology the customer that they are full. Moreover, the service delivery process seems
to take place in short time period, almost time is spent on producing the services. Therefore,
critical and potential bottlenecks likely occur in this phase. For instance, at weekend, customers
have to wait a long time for their drinks and the service is poor due to the limited capacity. Kurtz,
a foreign customer complained: “It took 45 minutes to get a menu, 20 minutes more to get served.
Nobody seemed to care”. In some extents, it is unavoidable for a coffee shop. To reduce the
bottlenecks and critical incidents, Highlands Coffee should have the policy to increase the number
of waiter when the shop is too crowded for better services.
In summary, Highlands Coffee cafe is one successful service business, the clear blueprint has
helped its staff implement their tasks easily and effectively. However, the issues including are the
time consuming in the producing process, always full in weekends and poor services are the main
factors that can lead to the customer losing. So, it is suggested that the shop manager should pay
more attention in improving the system that will help it to deal more quickly and effectively with
the situation.
6. Physical evidences
Physical evidences are the environment in which the service is delivered and where the firm
and customer interact. It includes any tangible commodities that facilitate performance or
communication of the service. To Highlands Coffee, physical evidence plays a key role. It is
represented by logo, store decorations and staffs.
6.1. Logo

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Highlands Coffee’s logo is a quite eye-catching design with 2 main colors: red and white.
White letters are put on red background which is easy to recognize. Logo’s shape is oval and
quite Western style is. At first, Highlands Coffee chose red as their identified color to differentiate
themselves with other coffee brands which often attach with brown- the color of café. It also fits
with their positioning strategy which brings not only coffee products to customers but a friendship
space as well. Later, when Highlands had acquired a certain position in customer’s minds,
Highlands added ecru curve representing wave in a cup of coffee. It helps to identify Highlands as
a specialized coffee brand deeper and deeper. (Thanh Van, 2007)
6.2. Store decoration
Highlands Coffee focuses lots on placement. Highlands Coffee stores are located at center of
city or famous shopping malls, which are all crowded areas.
The first impression when coming to a Highlands
Coffee store is a luxury space with two main colors:
red and black. The red lanterns which are strongly
attached to Highlands Coffee store network createthe
warmness and orient. Besides, HighlandsCoffee
brings Western values to their stores through the
wooden tables & chairs, large armchairs. With
outdoor stores, HighlandsCoffee put emphasis on the
big white umbrellas, which reminds of outdoor coffee shops in Italia or France. Tables & chairs
of such stores are smaller and easy to move. However, they are still wooden and in consistent
style with the indoor stores. Especially, when coming to Highlands stores in luxury buildings such
as Vincom, Parkson, customers may notice Highlands Coffee with wooden floor separate from
the surrounding area. In particular, the indoor stores are also equipped with high tables with
swivel chairs like bar, facing the street, to serve those wishing to contemplate the streets. The
Eastern-Western layout is a distinct feature of Highlands Coffee. Visitors to the restaurant, in
addition to the drinks and delicious food, also receive value from the comfortable, luxurious and
high class space. The allocation of different areas at Highlands Coffee is quite reasonable. The
preparation counter is placed at store’s center. Therefore, customers can easilyobserve the
preparation process, hygiene etc. As for Highlands’ staff, it helps them to capture customer’s
needs and serve quickly. The preparation counter is equipped with modern coffeemakers, which

13. 9
makes the area professional. There are also nearbyshop windows full of various types of cakes
and other food.
6.3. Staffs
Highlands Coffee’s staff all wears uniform which includes red clothes and black aprons.
Different people may experience different serving in different Highlands Coffee stores. My group
experience in Highlands Coffee at 6th
NhaTho street is general delighted. The staff was young,
dynamic, polite and helpful. When entering the store, we were greeted with gentle smile. Then a
waitress guided us to the appropriate seat, brought menu. We got our drinks five minutes after
ordering. It was quite quickly comparing to other coffee shops that we had come by. While
waiting, we were served a glass of cold water. The staff was all around the stores and quite near
customers. When we leave, they do not forget to enclose a thank you and see you next time. We
observed that the staff could communicate rather well in English with foreigners. However, staffs
receive some negative feedbacks from customers. Some complain that the store is too crowed and
serving is too slow.
7. Current Pricing Strategies
It is obvious that formulation a price strategy in a service organization is a difficult decision
which requires careful consideration about many issues. And Highlands price approach is the
same as the way Starbucks has done in the US and other markets in the surrounded region. It is to
provide high quality coffee in a special atmosphere for medium income class. Highlands price
standardization policy works very efficiently. This helps Highlands set a clear position in

14. 10
customers’ mind. And customers seeking for a cozy and comfortable place can be satisfied with
Highlands. They select Highlands as a reasonable price in Western-style place.
In Highlands, price of coffee and other beverages fluctuates from 25,000 to 50,000 VND, as
shown in the appendix. It is not cheap in comparison with other coffee shops. But Highlands’s
target customers are middle class, office workers and youngsters, so setting a high price based on
customers’ feeling is acceptable. At 45% operating capacity, Highlands has total cost of
6,500,000 VND per day which means 18,000 VND per cup. Therefore, a Highlands shop gains
average revenue about 7 millions per day. In addition, the cost of making a cup of coffee and
service is not low, so Highlands charges that level of price, on the one hand, to cover the cost, on
the other hand, to assert brand against other competitors. Furthermore, Highlands coffee shop
chain applies a price strategy which depends on place of the shop. The shop located at big
commercial centers charges a different price with the shops on the street. Similarly, the shop has
nice view charge differently.
8. Promotion strategy
Information about Highlands Coffee is updated and publicized on the website of company
www.Highlandscoffee.com.vn. In addition, advertisements of new products like Espresso Full
City Roast are put on e-newspapers such as on VnExpress, Zingme, Dantri. A Facebook Page
Community Coffee was created to post information about coffee, event or discount promotion.
Highlands Coffee delivers customers that information through e-mails and SMS as well. Besides,
Highlands Coffee sold voucher on the website: www. Nhommua.com. With the expansion of
large-scale stores and to develop brands, Highlands Coffee made a wide variety of occasion
promotions. On 3rd
September, the Board of Directors of the Mercure- new brand of International
Hotels group Accorhad announced collaboration with Highlands Coffee on co-brand advertising.
Customers when drink Jelly Freeze coffee product have the opportunity to win many awards such
as vacations at one of three Mercure hotels in Dalat, Hue and Ha Noi. The prize package includes
airline tickets,airport shuttle,golf service, spa service, and city tour. To celebrate 11th
birthday of
Highlands Coffee on November, customers get a promotion of 22.000đfor milk coffee and ice
coffee (regular prices are respectively 33.000đ and 35.000đ. In addition, Highlands Coffee is also
an active sponsor of a series of charity, culture, and sports events. The list of programs that

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Highlands Coffee has been funding can be named as American Independence Day, Australia Day,
Canada Day, Terry Fox Run, Fun Run for Charity, International School Charity, French Dinner
Charity, Soccer for The Streets, Saigon Cyclo Challenge, Saigon Ultimate Frisbee Tournament.
9. Analysis of service quality, satisfaction, perceived value and customer
retention efforts.
Highlands coffee is running its business well, is one of top coffee store chains in Hanoi. There
are more and more new as well as loyal customers coming to Highlands for its appealing services
cape and good service quality. This partly indicates high customer’s satisfaction with Highlands.
However, as we observed, there is no confidential box for customer’s feedbacks at any Highlands
store. The waiter also said that they rarely deliver evaluation sheet to customers. On Highlands’
website, there is no separate section for customers to complain or communicate with Highlands
their problems. In conclusion, the measures of quality, satisfaction; perceived value of Highlands
is so limited. To improve the situation, it is suggested that company should adjust the website to
make it easier for customer to give their inquiries. Besides, they should have periodic assessment
from their customers through survey or confidential box. To build customer relationship,
Highlands has currently offer 2 kinds of cards: VIP card with price-offs, free goods, gifts, rewards
etc. for VIP customers and discount card for loyal customers or on special occasions. To make
customers feel more closely with Highlands and want to come back to it more frequently,
employees should be encouraged to be more tactical in handling customers’ urge for drinks.
Waiters and waitresses should improve their English as well. The services cape should be
changed according to different times of the year to create new, romantic and classical feeling to
the customers. The quality of drinks must be maintained as good as possible.
10. Internal marketing
According to the information provided by one of the waiter, Highlands’ culture pays quite
much attention on the customer orientation. As being aware of the fact that Highlands is a popular
place of foreign customers, Highlands implement English course to their employees. Employees

16. 12
in the stores are young and dynamic. Therefore, they perform well in greeting and better at
serving. Employees’ wages consists of two parts. One is the fixed salary and the other is bonus
which is based on the total revenue of the month. The managers find it very hard to tie the bonus
to customer satisfaction or loyalty since there is no clear criteria to base on. As long as Highlands
has a clearer evaluation of customers’ satisfaction, they can tie the bonus to customer satisfaction
to improve employees’ serving quality.
11. Conclusion
In summary, with the shoestring budget and the enthusiasm of young Hanoians, the owners’
dream of a chain of coffee shop has become true. Its big success today is a fruitful reward for their
efforts in creating not just another coffee shop but building a place for the businessman to gather.
They come to Highlands Coffee not only to have a drink but also to deal with their clients, chat
with friends, to think about life and to find a quiet space of their own after a stressful working
day. Understanding this customers’ need and providing them with a very good service, Highlands
Coffee deserves to be one of the best choice for its customers.

17. 13
References
 ThanhVan. 2008. Mạn đàm về thương hiệuViệt- những cuộc trò chuyện thú vị với một
Doanh nhânViệt trẻ. [ONLINE] Available at:
http://www.slideshare.net/ThanhsBrading/cafe-ban-tron-thuong-hieu. [Accessed 01
November 2012].
 Vi.scribd. 2012.Highlands Coffee. [ONLINE] Available at:
http://vi.scribd.com/doc/75872466/Highland-Coffee. [Accessed 01 November 2012].
 Bút chì, 2009. Chấm điểm 10 quán café ngon tại Hanoi. [Online] available at:
http://afamily.vn/an-ngon/cham-diem-10-quan-cafe-ngon-tai-ha-noi-
20090101102544884.chn. [Accessed 04 November 2012]
 Highlands Coffee 6 Nha Tho Street_Customers’ comments. [Online] available at:
https://foursquare.com/v/highlands-coffee/4b52d944f964a520358927e3 [Accessed 02
November 2010].

18. 14
Appendix
 Highlands Coffee menu

19. 15