HO CHI MINH CITY UNIVERSITY OF FOREIGN LANGUAGES
- INFORMATION TECHNOLOGY
FACULTY OF BUSINESS ADMINISTRATION
---------***--------
PRICING STRATEGY FINAL REPORT 2022
Class: KM1901
Instructor: Phạm Thị Mộng Lành
Student’s name ID Number
Lê Nguyễn Thanh Phong 19DH480324
Nguyễn Tri Tân 19DH480268
Hà Hoàng Thuận 19DH480295
TABLE OF CONTENT
1. Introduction of Highlands Coffee...................................................................................1
1.1 Highlands Coffee introduction...............................................................................1
1.2 Problem of Highlands Coffee.................................................................................2
2. Finding........................................................................................................................... 3
2.1 International and Domestic pricing of Highlands Coffee.......................................3
2.1.1 Domestic pricing..........................................................................................3
2.1.2 International pricing.....................................................................................4
2.2 Pricing strategies....................................................................................................4
2.2.1 New products................................................................................................4
2.2.2 Experience curve pricing..............................................................................5
2.2.3 Pricing across product..................................................................................6
2.2.4 Pricing across countries................................................................................7
2.3 Implications of the internet for pricing across borders for Highlands Coffee........7
2.4 Terms of sale and delivery.....................................................................................7
2.4.1 Delivery........................................................................................................7
2.4.2 Sale............................................................................................................... 8
3. Conclusion.....................................................................................................................9
References.......................................................................................................................... 9
1. Introduction of Highlands Coffee
1.1 Highlands Coffee introduction
Highlands Coffee is one of the most well-known coffee brands in Vietnam, especially for
young people and office worker. Daivd Thai, a Vietnamese living abroad, inspired by
Starbucks success, launched Highlands Coffee in 1999. Daivd Thai had a deep love for
his own country and willing to leave his family in the United States to return to Vietnam
to establish Highlands Coffee. More than 4 million coffee cups were provided to 5
million Vietnamese by the end of 2008 (Sun, 2021). This is a decent amount for a
Vietnamese coffee brand. Highlands Coffee offer their customer a diversity menu, from
coffee to tea, blended drinks, bread stick and cakes.
Vietnamese coffee is the origin of Highlands. Vietnam was one of the top 3 coffee
exporters in the world at the time Highlands Coffee was founded, therefore its citizens
concentrated their efforts on exporting goods to other markets rather than creating a
national coffee culture. To create a Vietnamese coffee brand for Vietnam and provide a
place where people can sit and chat with their friends, while sipping a cup of coffee
(ASP, 2020). Highlands Coffee consistently put great effort in finding supplier process to
ensure that the brand has the most authentic cultural identity of Vietnamese coffee. They
visited every coffee and tea hill in Vietnam to search for reliable and high-quality
providers to make sure that every drink that they serve to their customer are the finest and
from the most carefully chosen coffee beans or tea leaves.
While Highlands Coffee are well-known in the domestic and international coffee
markets, in Vietnam at the time Highlands Coffee was founded, they have gained their
name for having its own origin, and story. With several "big guys" from across the world
congregating in Vietnam and possessed a large client base, Highlands Coffee must face
with many inconveniences to be successful in both Vietnam market and international
market.
Pricing strategy is crucial element that all company must have and carefully plan, to draw
in customers as well as encourage them to make purchase. Businesses that participate in
the market competition need to have price advantages over their rivals. Having an
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appropriate pricing strategy is crucial since it contributes to the stability of both income
and profit. Highlands Coffee have their products priced from 29,000 VND to 65,000
VND. For those who are students, and office workers, this is an appropriate price range in
the Vietnam market. When compared to the common ground, this price range is not too
high it is acceptable. 35,000 VND is the price for the classic coffee product line, which is
substantially less expensive than other lines. Thus, customers who wish to experience
Highlands' amenities and coffee at the same time considered this is affordable, while the
costs are ranged from 49,000 VND to 59,000 VND for other product lines targeted at
consumers with middle class incomes. Highlands Coffee additionally broadens its client
base by targeting young people with several new products that both convenient and
diversify. Besides, Highlands Coffee also has packaged coffee product line with the
lowest prices from 42,000 VND to the highest price of 425,000 VND.
1.2 Problem of Highlands Coffee
Many prominent coffee brands were compelled to raise their product’s price as a result
from the impact of the recent increase in fuel prices and inflation. Highlands Coffee is not
exception; the Vietnamese coffee chain has recently announced a price change for its
products. According to the news, the price increase for Highlands’s product will be raise
from 4,000 to 10,000 VND/product, depending on which type of product and their sizes.
Highlands Coffee increased their drinks price 10-15%, to some products the percentage is
18%. Tea like Golden Lotus Tea has a general price increase of 10,000 VND per large
cup, from 55,000 VND to 65,000 VND; Vietnamese black coffee has an increase from
4,000-6,000 VND per medium and large sizes; for Espresso, it increased by 10,000 VND
in different sizes, etc.
Highlands Coffee have answered the question for why such increase in price by stating
that “it was necessary to preserve and enhance the quality of Highlands Coffee products”,
services, and for maintaining their customer best experiences. Customers who frequently
use Highlands Coffee products, on the other hand have different viewpoints about this
explanation. Some believe that because Highlands Coffee is primarily served at store so
customers should not negatively be impacted by logistical expenses.
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2. Finding
2.1 International and Domestic pricing of Highlands Coffee
2.1.1 Domestic pricing
Highland has their first store in 2002, at that time there are not too many coffees brand
and their biggest competitor at that time is Trung Nguyen Legend which is the target
segment is upper class and using premium pricing which higher prices are implied, by the
very virtue of them being higher, to be an indicator of quality needs to be matched with a
great deal of other tactics in the marketing mix to give that “premium” flavor, but in the
other hand Highland with their segment is in middle class by penetration pricing market
penetration policies aim to capture a large market share of an established market by using
low prices or lower prices than their competitors pricing to attract a large portion of
consumers to the given product. (Elizabeth, 2020). Because of that the price they have
use is quite high at that time but if compared to Trung Nguyen it is still lower. The main
product of both brand is coffee but with lower price Highland want to attract the
customer. Their target customer is the office staff so at that time Highland have an
average price about 30.000 VND to 60.000 VND and their store is near company or in
contribution building. Highland has an adjustment in the price when more competitors
show up, it is when Phuc Long and The Coffee House have their first store, they decided
to lower the price to attract the consumer, Highland also focus more on their product to
be only three types of products including coffee, tea, freeze which is suitable for anytime
in the days, coffee for morning freeze for noon and tea for night, so that make them
unique and that action increase their product quality to improved experience, beside that
they want to keep loyal customers stay with them too. Basically, the pricing of goods and
services in domestic market depends on the govt policies of tax & subsidies and the
factors of production and recently Highland had a slightly adjustment in the price which
increase from about 10-18% but except the product they proud of is coffee (Size S only),
this make Highland have a price that equal or higher than other brands the reason because
the tax is rising. But have an overview of Highland that they didn’t change the price so
often or over years. They only change price a few times last two decade.
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2.1.2 International pricing
Highland have expanded their business market to other country that is Philippine when
Jollibee buy 49% share of Highland company. Highland use standardization price
strategy in Philippine so when exchange to VND it approximately about 1.000 to 2.000
VND in home country. The pricing in international market is mainly determined through
the dominant foreign exchange rate and the value of own currency in terms of gold & US
dollars, the exchange rate from VND to PHP is not too far and with the GDP of
Philippines people, the price of Highland with the famous of Viet Nam coffee is very
interesting and reasonable, it can be considering a daily drink. And the decision choosing
Philippine is a very smart move because both Viet Nam and Philippine are in ASEAN, it
makes the tariff being removal then make all other fee being reduce and easy to entry the
Philippine market. When pricing the product like is in Viet Nam the consumer will
approach it easier and more market coverage, the taste, style is the same from Viet Nam
making the familiar to Vietnamese living in Philippine or Philippine people want to
trying the coffee and culture of Viet Nam.
2.2 Pricing strategies
2.2.1 New products
On August 24, 2020, Highlands Coffee proudly presented it new at-store drink type
Phindi with three distinctive drinks: Almond Phindi, Creamed Milk Phindi, Choco
Phindi. Phindi are the combination of coffee with milk foam, coffee with almond milk,
and coffee with chocolate sauce, with the same price range from 39,000 VND for small
size to 49,000 VND for a large one. With Phindi, Highlands Coffee focus on the youth
from 18 to 23, but the triad was loved by all ages from teenager to middle-age for its
sweet and richness as well as strong scent of Vietnam coffee. (Phuc, 2021)
Compared with all products listed on Highlands Coffee store’s menu ranging from
29,000 VND to 75,000 VND, Phindi are priced in the middle range which is a good price
for a ‘spearhead’ product. As a result, Phindi have increased revenue of Highlands Coffee
for quite a while, due to their acceptable price and deliciousness.
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Highlands Coffee recently launched their summer special, which is another triad:
Tropical Mango Tea, Apricot-Cherry Tea, and Pink Guava Tea. They are the
combination of tropical fruit, tea, and specially the chewy crunch jelly pearl, the triad was
promised to refresh their customer from the heat of summer. The Tropical Tea was priced
from 55,000 VND, and right after the new product announcement, Highlands Coffee
immediately launched a discount program. To collect one 10,000 VND voucher for a cup
of Tropical Tea, customers can easily access a link in the comment section from
Highlands Coffee Facebook advertising post, and click one “get voucher” button, which
will automatically generate a e-voucher, then the customer just need to screenshot it.
When use, they just need to show the e-voucher for the staff at the counter (Highlands
Coffee, 2022). Due to Highlands Coffee recent price change, that the Tropical Tea was
priced a little bit higher when compared to the old menu in June 2022.
2.2.2 Experience curve pricing
Highlands Coffee follow the price strategy of keep their price stable and standardize in
their coffee store. They frequently give out promotion and discount program on nearly
every occasion and special event, with the discount rate from 10-20% of the price.
For example, Highlands Coffee celebrated the Vietnamese family day with the ‘family
combo’ priced 69,000 VND for 2 medium size tea drinks. This promotion only last for
four days from June 27 to July 1 st, most Highlands promotion only last for couples of
days but some last for months like “Làm gì thì làm, cà phê cái đã!". During this
promotion campaign, Highlands Coffee give their customer 20,000 VND discount when
purchase 2 medium size coffee type drinks.
Upon announcing their recent price increasing, Highlands Coffee offer their customer
tons of discount, voucher and promotion. When customer bring with them their old
Highlands bill from the recent three days, they can have a free up-size for one drink of
choice. This encourages people to come back and make purchases.
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Compared to Phuc Long, another Vietnam well-known brand, their price ranged from
32,000 VND to 68,000 VND. Highlands Coffee is a bit cheaper, a small size milk coffee
priced 29,000 VND when Phuc Long milk coffee priced for about 34,000 VND. For
other products like blended drink, Highlands matcha freeze only cost around 49,000
VND compared to Phuc Long matcha blended priced about 59,000 VND. In conclusion,
Highlinds Coffee is more affordable to their targeted customer than Phuc Long.
Highlands Coffee was successful with their pricing strategy as the brand have growth
constantly since their ‘reconstruct’ in 2013. Even though the new price increase might
create some difficulties for the brand, but with their vision and thoughtfulness of the
market, Highlands Coffee can overcome it.
2.2.3 Pricing across product
The product can be divided into three type products serve at the store, material, and fast
product, with each type of segment will have different target and come with it will be
different pricing strategy. With the product serve at store can considers a bit high but it is
including lot of cost like the manufacturing, the employee, the internet, electric, fresh
water, etc., so the product they serve can be higher than material you buy to home, it
suitable for people working on laptop like freelancer, student or who want to find a place
have all utilities and sitting for hours to chit chat. The raw material is packaging powder
product like coffee or tea and it been selling in store or on other platform like E-
commerce, web, it has a lower price with more amount of product than the product serve
at store, example one packaging of coffee can made 5 cup of coffee but have a price just
higher than 1 cup coffee at store a bit and of course it fit for whom love making coffee to
go. The last is fast product that we can often see in the convenience store, kiosk,
supermarket the thing that make it different from the others is product have been made
and packing into can or take away cup with a reasonable price, it is fast and very
convenience for busy people when to use it just open and brink, i0t don’t take too much
time for choosing, pay, take, and go.
Highlands Coffee price approach strategy can be considered as the same as Starbucks has
done in their home country the United State and other neighbouring countries. They
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provided high quality coffee and other tea and blended drinks, targeted at middle income
class. Highlands Coffee price standardization policy works well in the Vietnam market.
This help Highlands gained their succeed and keep on growing, despite the high
competing from many foreign competitors try to conquer the Vietnam market.
2.2.4 Pricing across countries
At home country, at first Highland use penetration pricing to their product but later they
have adjustment the price to be more suitable with the market and keep that pricing until
now, they only do the adjustment price if it necessary. Like recently the policies of
government change make they must increase the price if they want to keep maintain their
business. But whenF pricing of good can be different at other countries. When across
countries, firm often adjust the price to fit many things at those countries like living
standard, GDP, material, etc. Although Highland have used the standardization strategy
in Philippine.
2.3 Implications of the internet for pricing across borders for Highlands Coffee
2.4 Terms of sale and delivery
2.4.1 Delivery
Delivery area: 5 kilometers around the chosen business. Based on the distance traveled
that determined by the system, and the shipping fee is determine by the delivery distance.
Delivery method: through Highlands Coffee's delivery company such as Grab, Ahamove
or other partners.
Delivery time: After the order's payment has been completed, delivery is anticipated to
occur within 30 minutes. However, the order may take longer to deliver if it is placed
during busy times, inclement weather, or due to problem.
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Location of delivery: The chosen Highlands Coffee branch and its delivery partners
guarantee to deliver items in accordance with the address and other details the customer
provides when placing an order, but they have the right to refuse delivery if they discover
that the address is incorrect or another issue. Highlands Coffee has the right to decline to
ship the order at the request of the Customer if it is difficult and risky for the delivery
team. Highlands Coffee will contact consumers by phone call or direct message on the
application if a delivery request is declined.
Delivery fee: Fixed delivery fee of VND 15,000 for each order within a radius of 5 km
from the selected store.
2.4.2 Sale
Highlands Coffee has decided to use Shopee as their online storefront, and Shopee has
put out several requirements that Highlands Coffee must abide by. Shopee defines a few
terms: Must not transgress the law, the rights of third parties, or the Shopee product
prohibition or restriction policy; It is against the law to post, advertise, or otherwise
spread harmful, illegal, or threatening content; Post it, send it, or otherwise make it
known that it contains information on a non-juvenile person's presence, or use the service
to harm non-juveniles in any way. (Highlands Coffee, 2021)
The Shopee Site does not allow the removal of any proprietary notices. Without Shopee's
specific consent, you may not cause, accept, or approve the modification, composition,
derivative works, or adaptation of the Service. Besides that, Shopee also request
Highlands Coffee must perform their responsibility of seller. The seller must manage and
ensure the security and all information related to the price and product details, the
number of products in stock as well as the terms and conditions of sale have been updated
in the list. Seller's products and may not post inaccurate or misleading information.
Except for items that are priced by a reputable organization, product prices are set at the
Seller's sole discretion. Shopee may post goods offered by seller to external websites to
encourage customers to buy them.
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Seller understands and agrees that seller is in charge of paying taxes, customs fees, and
any other costs associated with selling goods. Shopee does not give legal or tax advice.
3. Conclusion
From the beginning, Highlands Coffee have use suitable pricing strategy to enter the
market when there is only one Vietnamese coffee competitor Trung Nguyen Legend.
Through time, Highlands have adapted to change their strategies when new foreign
coffee brand competitors came to compete in our Vietnam market. Since then, they have
maintained their price with only few changes to shown that Highlands Coffee is a
professional coffee brand and to keep their price affordable to Vietnamese customer.
With this pricing strategy, Highlands Coffee have gained the heart of Vietnamese coffee
lovers. Highlands always seek for creative and stand out new drinks as well as
promotions to attract new customer to come and enjoy high quality drinks, while give out
lots of new and value discounts to maintain their regular customer. Highlands Coffee is
currently on the right track to be the top coffee brand in Vietnam as well as to be able to
enter foreign market.
References
ASP. (2020, November 5). 15 năm tăng từ 2 lên 180 cửa hàng: Không phải chiến lược “bình
dân hóa”, đây mới là điều làm nên thành công cho Highlands Coffee. https://asp-
nuke.info/15-nam-tang-tu-2-len-180-cua-hang-khong-phai-chien-luoc-binh-dan-hoa-day-
moi-la-dieu-lam-nen-thanh-cong-cho-highlands-coffee.html
Elizabeth, P. (2020, April 15). 4 global pricing strategies for selling internationally.
https://weglot.com/blog/global-pricing-strategies-selling-internationally/
Highlands Coffee. (2021, August 26). ĐIỀU KHOẢN VÀ ĐIỀU KIỆN ÁP DỤNG CỦA ỨNG
DỤNG HIGHLANDS COFFEE. https://www.highlandscoffee.com.vn/vn/dieu-khoan-va-
dieu-kien-ap-dung-cua-ung-dung-highlands-coffee.html?
fbclid=IwAR0AzJkGa3Qa1RKoijTCBIsA_ehU4hTlBWQadCf-
s5pITM3ZJVMj_HFINAk
Highlands Coffee. (2022). HIGHLANDS COFFEE. https://uudai.highlandscoffee.com.vn/
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Phuc. (2021, January 29). Tổng hợp các sản phẩm của Highland Coffee đang kinh doanh.
https://www.bachhoaxanh.com/kinh-nghiem-hay/tong-hop-cac-san-pham-cua-highland-
coffee-dang-kinh-doanh-1403590
Sun, O. (2021, June 30). Highlands Coffee là gì ? - Highlands Coffee của ai ?
https://timvanphong.com.vn/highlands-coffee-la-gi-highlands-coffee-cua-ai/
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