(Tiểu luận) test bank for marketing management 15th edition by keller and kotler

1 Nguyễn Ngọc Lan Anh 2 Lâm Duy Bảo

3 Trần Lê Mai Khanh 4 Nguyễn Thị Hương Giang 5 Trương Phúc Nguyên 6 Nguyễn Phú Quý

Ho Chi Minh City, April 2021 1 Executive Summary

Currently, there are many famous drink brands in Vietnam that are popular with young people, not to mention the Starbucks brand And this is why we have chosen Starbucks company to create this marketing plan:

- Vietnam is the second largest producer and exporter of coffee in the world.

- The demand for coffee in Vietnam is very high On average, each Vietnamese person uses 500g of coffee per year.

- Vietnamese young people today are very fond of and often buy coffee from many different shops, among them, Starbucks is already very famous for its coffee It’s widespread popular not only in Vietnam but all over the world from previous decades.

- Finally, because the Starbucks brand has enough information on the Internet so that we can complete this plan well.

The main topic of this report is to create a marketing plan to help Starbucks boost sales, and come up with marketing strategies to sell products in the most reasonable way This plan is expected to be implemented in the future, when the world has completely resisted the Covid-19 epidemic The report will rely on the SWOT tool to indicate strengths, weaknesses, opportunities and threats for this plan We will analyze the situation based on factors like company, customer, competitor, and context In addition, there are still limitations of the main plan are the marketing budget and sales forecast.

2 Introduction

Starbucks was born in 1971 and has its headquarters located in Seattle, Washington, USA Starbucks was co-founded by three friends, Jerry Baldwin, an

English teacher, Zev Siegl, a history teacher, and Gordon Bowker, a writer Initially, the brand intended to be named "Cargo House" in the opinion of Gordon Bowker After some discussion, they decided to take the name Starbucks from the novel Moby-Dick by Herman Melville After a period of establishment and development, the company had more profits and expanded many new branches Mr Howard Schultz - former president of Starbucks, he used to be in charge of the marketing department of the store and also bought the brand later His leadership has allowed Starbucks to thrive and become a globally popular brand, the brand's stock value is among the top in the stock market, Howard Schultz serves as chairman and CEO of Starbucks from 1986 to 2017 The brand's main products are coffee, tea and snacks.

3 Situational [Marketing]3.1 Company analysis

Starbuck is the largest coffee house in the world It has over 32,000 stores and runs in 80 countries It is well-known for its premium roaster and unusual coffee Its journey started in 1971 Starbucks target market focus on middle to high-income office employees looking for premium quality products It also has chains internationally.

Starbucks serves hot and cold drinks and product lines of Starbucks includes coffee, espresso, latte, tea (Teavana tea products), evolution fresh juices, baked goods, frappuccino smoothies, snacks as chips, crackers, other foods and beverages Customers have many choices to choose from many options that are given by Starbucks when they enter the store Moreover, it not only brings freshly brewed coffee and tea to consumers but also sells bottled drinks in its stores Starbucks has lots of competitive advantages as high high quality products, customers must pay higher price for premium products with their quality, or use technology to connect with customers, for example, the Starbucks Rewards loyalty program, which customers can join online or by downloading the Starbucks mobile

app Their competitors have been top of the king for several years like Dunkin’ Donuts and McDonald’s But the uniqueness of Starbucks is that it doesn’t follow conventional wisdom, they follow ethical and sustainable sourcing practices, which may lead to higher prices As well, the company follows through on commitments to invest in employees and local communities Starbuck uses their strategy to gain competitive advantages: cost leadership, product differentiation and focus It has used these strategies with great success, as it’s come to be associated with premium products and a welcoming space where customers can sit in comfort to drink their coffee, study, work or meet friends Sarbcuks’s mission “to inspire and nurture the human spirit”, having a cup of Starbuck specially coffee isn’t just having a cup of coffee normal, that’s having an experience belonging to service, wireless, Internet, soothing music, and lounging areas, customers can enjoy totally.

Vietnam is a potential market for Starbucks Vietnam, where population is large and growing over time, in 2017 population reached 96.2 millions people, including the 15-64 age group and accounted for 70,54% (CIA 2017) Furthermore, the coffee consumption market aims to reach 287.34 million USD in 2012 and is predicted to become top 5 of coffee consumption in Asia-Pacific Finally, Asia is the second largest market including China, Japan, South Korea, so Starbucks wants to enter the Vietnamese market.

3.2 Market [Customer] analysis

The main group in starbucks is the object of about 25 to 40 years of age ( the age of high income at the age of), is attracted through the quán with modern design, quiet, easy to focus on.The second group is about 18 to 24 years of age accounting for the revenue, this age is the student, the student, which is suitable for teamwork, study, chat, Starbucks attracts this audience (Minh Son, 2020) Starbucks defines the target audience to serve In general, the generation y from 1997 to 2000, this is the segment that generates profits such as fromm, 2014 It

also shows that consumers are located between the upper class and higher education (rafii, 2013).

Special coffee is about 75% of Starbucks revenue (Luong Hanh, 2021) The current trend focuses on the sale of raw coffee, so the store creates a pre - existing coffee (such as coffee beans, sẵẵn coffee, coffee prepared) to buy directly or online It's distributed at supermarkets, convenience stores that can easily be used, and also helps store a lot of new experiences and have more new customers They have a scorecard, a coupon for customer tags Just as many promotions have students, making collections of water glasses, maintaining seasonal heat to attract customers, and bringing up peer - to - peer products Since then, they have potential customers, certain customers.

Coffee is produced in the world and also most commonly used in vietnam So when starbucks enters the market that needs to expand the product The store plans to launch various coffee lines, suitable for each specific customer group At the same time, they also expand products like alcohol, cake, etc (Admin, 2021) Since then, there's customer satisfaction, creating good relationships with customers In recent years, a more popular online purchase model, Starbucks, has also applied this order Online purchases help customers save time, don' t need to move but use the products you love Also, Starbucks encourages use of a shop at the store to protect the environment, they have promotions for these customers In addition, they use paper materials to protect the environment To improve your presence, Starbucks uses media channels, social networks such as facebook, instagram Typically, they create interactions like, sharing the post to get a promotion This is just helping customers with the benefit of making the store a funeral, creating a consumer habit for customers In addition, the current trend is now paying consumers quickly through electronic apps, so Starbucks has also applied this to sales Customers can use various payment methods, suitable for all consumer behavior In 2019, the revenue of the Starbucks chain reached more than VND 780 billion, an increase of more than 32% compared to the previous year thanks to

faster system expansion After 7 years in Vietnam, Starbucks chose the development path "slowly but surely" This chain has recently expanded to more than 60 stores, present in 4 cities: Hanoi, Hai Phong, Da Nang and Ho Chi Minh City, with the reason to ensure the strategy and business model.

3.3 Competitor analysis

In a year where the COVID-19 pandemic has affected the economy, it is inevitable that the business results of the F&B industry will be negatively affected.

Picture 3.3: Revenue after tax of coffee chains in Vietnam in 2019,2020

Sales of all major Vietnamese coffee chains saw a decline A period of rapid growth that spanned the past several years of cryptography.

Constraints, chain approvals are subject to unexpected blows, causing the coffee supply to decrease rapidly, requiring businesses to find ways to quickly adapt to the new situation (Dong A, 2021).

It is impossible not to mention Starbucks' competitors such as Highlands, Phuc Long, The Coffee House, The Coffee Bean & Tea Leaf, and so on The following is an analysis of some prominent Starbucks competitors:

● Highlands Coffee

Highlands Coffee is one of the famous competitors to Starbucks It has about 300 stores in Vietnam with revenue of about 2,140 billion VND (Sun Office, 2021) However, Highlands focuses on lower age customers and different marketing goals than Starbucks This brand focuses on coverage instead of changing tastes according to customers, focusing only on simple drinks The strength of Highlands is having an pleasant price, Vietnamese taste, familiar, easy to drink And the weaknesses is the shop uses plastic cups even when sitting at the shop or taking away, which affects the environment (Misa Amis, 2021)

However, Highlands and Starbucks are still direct competitors, the level of competition is quite fierce when both stores are constantly changing positions for each other on the rankings.

● Coffee beans & tea leaves

Starbucks' indirect competitor is Coffee bean & Tea Leaf, with about 28 goods in Vietnam In 2018, Coffee Bean brought in a revenue of 108 billion VND and was also used in the top 10 coffee shops with the highest revenue in the market (Anh Hoa, 2019) Mr Andrew Nguyen said that The Coffee Bean & Tea Leaf did not pay too much attention to the aspect of opening stores What he wants is convenience for customers in the central area and opening stores corresponding to the increase in income of Vietnamese people.The streght is the flexible production according to customer groups However, this company is in danger of being recalled by larger

chain stores because of the high price but has not yet been impressed with customers.

● The Coffee House

Although The Coffee House has just launched over 7 years Nevertheless, The Coffee House is one of the brands earning the largest market share It still maintains position about the revenue after Highlands and Phuc Long throughout the Covid-19 pandemic in 2020 It was also successful in creating a friendly and polite brand image The different strategy of this brand is not to invest in the gold location but instead the diverse menu However, this brand is also a coffee chain's highest loss in the first group, with a negative profit of 80% The highest gross profit margin among coffee chains, the reason for this loss chain is the high costs of selling Compared to the top 5 coffee brands that have the largest revenue in 2020, the Coffee House is the 2nd most capital-losing brand after Trung Nguyen franchising Most of the store systems focus on the city center, therefore it still has not customers in more remote areas In recent years, The Coffee House has always encouraged customers to experience the product app along with attractive offers In fact, The Coffee House app downloads on the Google App Store have surpassed 100,000, far behind other coffee chains on the market.

● Phuc Long

Phuc Long is famous for delicious drinks with traditional tea & coffee and ice-blended drinks, high quality service, energetic and modern space The prices of Phuc Long's products are appropriate and reasonable for customers' income It has a wide system and more than 30 retail stores in big cities Phuc Long’s prices are independent because they are suppliers It also applies raw materials such as coffee and tea leaf to make their product flavor The coffee chain goes along with milk tea Phuc Long reached revenue of nearly 780 billion VND in 2019, raising 65% compared to previous year The speed of revenue growth accelerated when it

expanded to The South However, Phuc Long’s service quality was uneven among branches, and some customers complained about the quality of drinks and services Moreover, it was not focused on evaluating marketing activities The exchange profit to expand the market and raising revenue just make their chain still a few billion dong in recent years Phuc Long's gross profit margin is about 35%, which is the average level in the beverage industry.

Highlands Coffee Pleasant price

Flexible production High price and being recalled by larger chain stores

Phuc Long The prices are appropriate Service quality was uneven among branches

The Coffee House Not invest the gold location, diverse menu

Not be able to reach customers in more remote areas

3.4 Macro environmental [Context] analysis

● Macro environment analysis

This section uses a PESTEL analysis tool to indicate the most factors of the macro environment in Vietnam, including the Political, Economic, Social and Technology factors In the sphere of this essay, the Environmental and Legal factors are ignored as they do not have considerable effects.

● Political factor

Vietnam is one of the most politically stable countries in the world In Vietnam, the Vietnamese Communist Party is just the only party which leads the country so as to keep political, social and economic stability In addition, to encourage the economy to develop, the Vietnamese Government created many policies to attract the Foreign Direct Investment (FDI) into Vietnam Therefore, Starbucks can enter the Vietnamese market without any difficulties.

On the whole, Vietnam has a stable political situation Although there are still several political problems in Vietnam, both Government and citizens are trying to solve them Therefore, the Vietnamese market is still a good choice for Starbucks.

● Economic Factor

Vietnam is one of Southeast Asia’s fastest-growing economies and aims to be a developed country in 2030 According to the World Bank, the gross domestic product (GDP) in Vietnam will be increasing in 2022 Beside, per capita income also increases In addition, the Vietnam Consumer Price Index (CPI) has increased in recent years According to the General Statistics Office of Vietnam, in 2022, CPI in Vietnam increased from 106,33 points in February to 107,08 points in March.

From these data, Vietnam is a potential market for any business The economy is growing which is an ideal place that makes Vietnam a good destination for Starbucks to invest their business.

Picture 3.4: The Vietnam Consumer Price Index (CPI) in April 2021 to March 2022

Social factor

Vietnam has a large and young population Additionally, the labor force in Vietnam is growing with 1,3 – 1,5 million new workers per year, especially skilled and well-educated graduate workers Beside, the labor cost in Vietnam is cheap It will be simple to hire and train employees.

In addition, because the economy in Vietnam is developing, the inhabitants will have a high standard of living: as a result, Vietnamese will be willing to spend more Beside that, the taste of Vietnamese also changes, and the demand for eating out increases, so the number of restaurants and coffee shops increases.

However, most of the citizens are expeditious They just want a take-away coffee and don’t care about the smell of this Some native people like using sidewalk coffee This is an old habit in Vietnam Otherwise, if we have a nice marketing plan, this habit can be changed.

In sum, both the current situation and the trend of changing in Vietnamese society are advantageous for Starbucks because they provide opportunities to exploit this market.

Technological factor

Information technology in Vietnam is developing According to the report of WeAreSocial and Hootsuite, until June 2021, there were about 68,72 millions people using the Internet Vietnamese spend nearly 7 hours using the Internet each day According to the report, the people in Vietnam take about 3 hours to watch TV Streaming and use social networks.

In brief, the technology in Vietnam is gradually improving It can be a good tool that helps Starbucks to advertise, distribute and consume their products.

4 SWOT Analysis

4.1 Strength

Strong brand image: Starbucks has become a well-known brand in the food and beverage industry Starbucks has a well-regarded brand value with a coffee taste that is loved by many In 2019, Starbucks had a brand value of $11.7 billion according to Interbrand's ranking.

Business approach towards people and the environment: Starbucks products are evaluated as having excellent quality, environmentally friendly production processes, and similarities in business locations.

Large global supply chain: Starbucks has an extensive international supply chain across the globe Starbucks supplies its beans from three coffee-producing regions, Latin America, Africa, and Asia-Pacific, which have the best quality beans Rich coffee taste: Starbucks is famous for its exceptional taste thanks to a standardized process that makes the coffee taste of great quality consistent in any

store, under any circumstances Just like Starbucks coffee, it must be made with the utmost care, according to a standard to maintain the unique flavor of the brand.

Good Employee Treatment: Starbucks has long been known for treating hundreds of thousands of employees very well and is ranked one of the top 100 places to work by Fortune.

Strong financial foundation: In 2019, Starbucks posted about $26.5 billion in annual sales and approximately $3.6 billion in profit This is truly a record business result, further highlighting the performance of Starbucks.

4.2 Weaknesses

High prices: Starbucks is considered a beverage of the "luxury" brand However, when many coffee shops appear, the competition is quite fierce Although premium quality comes with good business ethics, it cannot appeal to middle-income customers.

Products can be imitated: Starbucks menu is quite diverse but does not own any unique products to create outstanding product strengths for the brand Currently, other coffee shops also offer the same products as Starbucks, at lower prices.

Business form restriction: Starbucks Coffee does not accept franchising, only accepts joint venture, self-trade or operating license and control

Drinks not suitable for local customers: Starbucks has a common beverage catalog for all markets in many countries This simplifies management and reduces production costs, but it also brings with it a weakness that it doesn't match the beverage preferences of local guests.

4.3 Opportunities

Digital Marketing: Starbucks has invested in paid online advertising, as well as building various marketing platforms such as blogging, social networking, and

video advertising This activity helps Starbucks reach out to more potential customers and expand the customer network compared to traditional marketing A large number of young people are ready to absorb new and modern consumption trends

Expanding on developing markets: In countries like China, India, etc., building a foundation for a brand may take a long time The demand for local exchanges is high, so once a solid foundation is established, the Expanding more stores is an investment opportunity

Diversifying business types: The COVID-19 pandemic has caused consumers to have certain changes in their lifestyles Therefore, Starbucks must make changes in the type of business to suit the market For example, increasing online sales, expanding takeout service, linking with Grab Food, Baemin for delivery In addition, this brand is also expanding its product portfolio to suit the taste of customers.

4.4 Threats

Competitors: Competitors such as Highland, The Coffee House are willing to reduce prices to attract customers, which will be a threat to the stability of Starbucks In addition, Starbucks products are easy to imitate.

Impact due to the Covid-19 pandemic: In 2021, Starbucks had to temporarily close about 2,000 stores in China, many in Vietnam due to the global pandemic The increase in the price of raw materials: Arabica is the most produced coffee bean that accounts for more than 60% of the world's output Due to the impact of Covid, the war in Russia and Ukraine caused gasoline prices to increase, leading to increased operating costs, affecting the production and supply chain of Arabica coffee beans This affects the storage and purchasing of Starbucks, along with the increase in the purchase price of raw coffee beans, affecting Starbucks' profits Recession: During previous recessions, Starbucks revenue and profit plummeted, and the same thing happened in fiscal 2020 in Q2 2020 when revenue fell 5% and

Q3 fell 38%, partly due to the effects of the Corona pandemic Besides, the inflation situation makes people also have to consider when they have to spend a lot of money on luxury goods.

- Strong brand image - Business approach towards

people and the environment - Large global supply chain - Rich coffee taste - Good Employee Treatment - Strong financial foundation:

- High prices

- Products can be imitated - Business form restriction - Drinks not suitable for

local customers

- Apply Digital Marketing - A large number of young people

are ready to absorb new and modern consumption trends - Expanding on developing markets

- Competitors like Highland, The Coffee House - Impact due to the Covid-19 pandemic - The increase in the price of

- Diversifying business types raw materials - Recession

5 Segmentation, Targeting and Positioning

5.1 Segmentation

The early years of Starbucks focused on the well-off market, which was mainly composed of educated customers and those with white-collar jobs However, they discovered opportunities for growth in the industry, setting strategies to accommodate a broader scope of a market segment.

Starbucks classifies its market based on demographic, geographic, behavioral, and psychographic Demographics will include the company's target market's age, occupation, and income level Meanwhile, the psychotropic variables include customer tastes and styles to provide authentic products for diverse customer needs The behavioral elements in Starbucks' market segmentation can tackle consumer loyalty and consumption behavior.

The demographic segmentation by Starbucks is between 25 and 40 years of age with high incomes, the second target group is 18 to 24 year of age and belongs to richer families Most Starbucks customers belong to the Generation Y which was born between 1977 and 2000.

The demographic factors that will be useful in segmenting the market include age, level of income, and occupation The reason for using these demographics is to design products/services that appeal to clients of all age groups, incomes, and occupations For instance, the occupation of the customers will determine if the shop will have a meeting area or offer packaged takeaways that patrons can consume in their offices Their income level will inform the pricing strategy for our

products Age will determine the type of in-house entertainment, music, and internet facilities that the business will offer Counter and table services will be available to patrons of all ages The shop will also offer free birthday drinks to appeal to clients of all age groups.

It not only uses demographic segmentation in terms of gender, income, age, and ethnic background but also employs geographic segmentation drawing upon the country or region of the world and its market size in that specific region and climate.

There are three groups in geographic segmentations People have different tastes and quantities of food in different countries Also, climate and seasons vary due to geographical features Therefore, First of all, the company can make a group of seasonal products It can develop special products for the certain period Secondly, food preferences among people are important in the market Some people want healthy and nutritious food while others want favored food even though it is not good for health The criteria of deciding food are different by people Finally, the amount of food per person can be one of groups It is apparent in the size of Starbucks drinks In venti sized iced americano, it is 591ml in Korea while it is almost 709ml in USA

In psychographic point, lifestyle is the key to forming groups Some employees such as office workers, entrepreneurs have coffee every morning before they go to work These kinds of people regularly have coffee so they can get a free drink with reward service And for the people who want to protect the environment and use their own bottles, Starbucks sells limited edition tumblers Most tumblers have different designs and it’s hard to get them after selling season So, there are many people who collect tumblers with unique designs Some people even queue to get them before they are sold out.

The other psychotropic variables, such as customer styles and tastes, to segment the market The patrons’ music and food tastes will indicate the type of entertainment and products to offer Different coffees of variable dietary content to suit diverse customer tastes and characteristics will be available to our clients Additionally, the shop’s interior design and decor will be made in a manner that reflects the different local styles The reason for using these psychotropic variables is to provide products that meet diverse client needs.

The company also provides a broad range of teas and baked goods with variable dietary content to cater for different tastes and preferences Its menu contains nutritional information that clients can read before placing an order.

The behavioral variables that marketers use to segment markets include “consumer loyalty, occasion, benefits, user status, and usage rates” (Porter & Claycomb, 1997, p 65) The writer will use these variables because they reflect the consumption behavior of customers and therefore, useful in market targeting The writer will use loyalty cards to reward loyal customers based on the number of times they visit the shop In contrast, usage rates will indicate the level of coffee consumption among the different groups.

5.2 Targeting

As I mentioned, there are many groups that Starbucks made to target customers It can make new products using cultural sources or seasonal fruits focused on segmented groups.

First of all, Starbucks provides ‘local delights’ which shows cultural characteristics among people For example, in Singapore, there are menus like ‘Sedap lah’ pandan gula melaka cake and ‘mai hum’ chicken laksa pie These are the products that combine traditional foods with bread People can buy these products only in Starbucks in Singapore If there are people who are not used to other food, they

can try ‘local delights’ because these are made with ingredients familiar to them In addition to this, people who are traveling to other countries can have these at Starbucks so that they can try the country’s local food in special ways.

Secondly, there are seasonal products that customers can only get in specific seasons For example, Korea has all seasons like spring, summer, fall, and winter Therefore, fruits that can be cultivated a lot in the certain season are different Also, Starbucks thinks about which food ingredients will suit each season.

Lastly, according to the various criteria of customers, it has a lot of menu that people can choose with their preferences For people who think the nutrient is the most important, Starbucks shows the tables of food and drink nutrition like calories, fat, fiber, protein, and sodium in its website Also, it summarized products that are under 200 calories and 350 calories People who don’t want to have heavy calories can refer to this information Additionally, There is dairy-free options where customers can choose soymilk, almond milk, and coconut milk with extra pay.

5.3 Positioning

Starbucks has developed a unique market position for their products because if a product is to be exactly the same like the others on the market then consumers would have no reason to buy it Starbucks has positioned themselves in the market as a highly reputed brand (Kotler and Armstrong, 2006 Starbucks has a descriptively simple statement to inspire and nurture the human spirit-“one person, one cup, and one neighborhood at a time” Starbucks positioning strategy was customer base so that it can give the best service more than what the customers expect Starbucks has gained a competitive advantage over customer satisfaction and employee satisfaction as Starbucks had developed its positioning strategy based on the customer and provided the utmost facility in terms of layout, furniture to the music, and in terms of employee satisfaction Starbucks

make employee as a partners and gave them a personal security with a freedom to participate in the every decision of the business and make it successful (Porter & Miller, 1985, Porter, 1998).

The company's positioning strategy is customer-based, giving more than what the customer needs Besides producing great coffee, it promotes a good reputation to its target market through excellent store ambiance, environmental protection, and social commitment As a result, customers will feel that they also contribute to nature and society by using the products Starbucks offers.

As has been previously mentioned, the positioning of Starbucks is customer-based, allowing the company to provide the best customer service Besides its customers, Starbucks also promotes its social commitment by hiring refugees and families of veterans and military and giving career and education opportunities to its employees It may not be that evident to everyone, but the company also participates in environmental protection initiatives.

In terms of environment protection, Starbucks positions its brand by adapting the LEED (Leadership in Energy and Environmental Design) approach to structure buildings Starbucks utilizes recycled coffee grounds on their tables and materials low in harmful chemicals for adhesives, paints, coating, and sealants.