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

Executive Summary Currently, there are many famous drink brands in Vietnam that are popular withyoung people, not to mention the Starbucks brand.. - Vietnamese young people today are ver

OPEN UNIVERSITY – HCMC MARKETING MANAGEMENT

_

STARBUCKS MARKETING PLAN PROJECT

Class: BA203C

Lecturers: PhD Nguyễn Hoàng Sinh

Implementers:

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 withyoung people, not to mention the Starbucks brand And this is why we have chosenStarbucks 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 Vietnameseperson uses 500g of coffee per year

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

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

The main topic of this report is to create a marketing plan to help Starbucks boostsales, and come up with marketing strategies to sell products in the most reasonableway This plan is expected to be implemented in the future, when the world hascompletely resisted the Covid-19 epidemic The report will rely on the SWOT tool

to indicate strengths, weaknesses, opportunities and threats for this plan We willanalyze the situation based on factors like company, customer, competitor, andcontext In addition, there are still limitations of the main plan are the marketingbudget 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 novelMoby-Dick by Herman Melville After a period of establishment and development,the company had more profits and expanded many new branches Mr HowardSchultz - former president of Starbucks, he used to be in charge of the marketingdepartment of the store and also bought the brand later His leadership hasallowed Starbucks to thrive and become a globally popular brand, the brand'sstock value is among the top in the stock market, Howard Schultz serves aschairman and CEO of Starbucks from 1986 to 2017 The brand's main products arecoffee, 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 andruns 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 chainsinternationally

Starbucks serves hot and cold drinks and product lines of Starbucks includescoffee, espresso, latte, tea (Teavana tea products), evolution fresh juices, bakedgoods, frappuccino smoothies, snacks as chips, crackers, other foods andbeverages Customers have many choices to choose from many options that aregiven by Starbucks when they enter the store Moreover, it not only brings freshlybrewed 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 usetechnology to connect with customers, for example, the Starbucks Rewards loyaltyprogram, 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 followconventional wisdom, they follow ethical and sustainable sourcing practices, whichmay lead to higher prices As well, the company follows through on commitments

to invest in employees and local communities Starbuck uses their strategy to gaincompetitive advantages: cost leadership, product differentiation and focus It hasused these strategies with great success, as it’s come to be associated withpremium products and a welcoming space where customers can sit in comfort todrink their coffee, study, work or meet friends Sarbcuks’s mission “to inspire andnurture the human spirit”, having a cup of Starbuck specially coffee isn’t justhaving a cup of coffee normal, that’s having an experience belonging to service,wireless, Internet, soothing music, and lounging areas, customers can enjoytotally

Vietnam is a potential market for Starbucks Vietnam, where population is largeand growing over time, in 2017 population reached 96.2 millions people, includingthe 15-64 age group and accounted for 70,54% (CIA 2017) Furthermore, thecoffee consumption market aims to reach 287.34 million USD in 2012 and ispredicted to become top 5 of coffee consumption in Asia-Pacific Finally, Asia is thesecond largest market including China, Japan, South Korea, so Starbucks wants toenter 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 accountingfor the revenue, this age is the student, the student, which is suitable forteamwork, 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 highereducation (rafii, 2013).

Special coffee is about 75% of Starbucks revenue (Luong Hanh, 2021) The currenttrend 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'sdistributed at supermarkets, convenience stores that can easily be used, and alsohelps store a lot of new experiences and have more new customers They have ascorecard, a coupon for customer tags Just as many promotions have students,making collections of water glasses, maintaining seasonal heat to attractcustomers, and bringing up peer - to - peer products Since then, they havepotential customers, certain customers

Coffee is produced in the world and also most commonly used in vietnam So whenstarbucks enters the market that needs to expand the product The store plans tolaunch various coffee lines, suitable for each specific customer group At the sametime, 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 appliedthis order Online purchases help customers save time, don' t need to move butuse the products you love Also, Starbucks encourages use of a shop at the store toprotect 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 isjust helping customers with the benefit of making the store a funeral, creating aconsumer habit for customers In addition, the current trend is now payingconsumers quickly through electronic apps, so Starbucks has also applied this tosales Customers can use various payment methods, suitable for all consumerbehavior In 2019, the revenue of the Starbucks chain reached more than VND 780billion, an increase of more than 32% compared to the previous year thanks to

faster system expansion After 7 years in Vietnam, Starbucks chose thedevelopment path "slowly but surely" This chain has recently expanded to morethan 60 stores, present in 4 cities: Hanoi, Hai Phong, Da Nang and Ho Chi MinhCity, 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 inevitablethat 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 rapidgrowth that spanned the past several years of cryptography

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

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

● Highlands Coffee

Highlands Coffee is one of the famous competitors to Starbucks It has about 300stores in Vietnam with revenue of about 2,140 billion VND (Sun Office, 2021).However, Highlands focuses on lower age customers and different marketing goalsthan Starbucks This brand focuses on coverage instead of changing tastesaccording to customers, focusing only on simple drinks The strength of Highlands

is having an pleasant price, Vietnamese taste, familiar, easy to drink And theweaknesses is the shop uses plastic cups even when sitting at the shop or takingaway, which affects the environment (Misa Amis, 2021)

However, Highlands and Starbucks are still direct competitors, the level ofcompetition is quite fierce when both stores are constantly changing positions foreach other on the rankings

● Coffee beans & tea leaves

Starbucks' indirect competitor is Coffee bean & Tea Leaf, with about 28 goods inVietnam In 2018, Coffee Bean brought in a revenue of 108 billion VND and wasalso used in the top 10 coffee shops with the highest revenue in the market (AnhHoa, 2019) Mr Andrew Nguyen said that The Coffee Bean & Tea Leaf did not paytoo much attention to the aspect of opening stores What he wants is conveniencefor customers in the central area and opening stores corresponding to the increase

in income of Vietnamese people.The streght is the flexible production according tocustomer 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 withcustomers.

● The Coffee House

Although The Coffee House has just launched over 7 years Nevertheless, TheCoffee House is one of the brands earning the largest market share It stillmaintains position about the revenue after Highlands and Phuc Long throughoutthe Covid-19 pandemic in 2020 It was also successful in creating a friendly andpolite brand image The different strategy of this brand is not to invest in the goldlocation but instead the diverse menu However, this brand is also a coffee chain'shighest loss in the first group, with a negative profit of 80% The highest grossprofit 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 Nguyenfranchising Most of the store systems focus on the city center, therefore it still hasnot customers in more remote areas In recent years, The Coffee House has alwaysencouraged customers to experience the product app along with attractive offers

In fact, The Coffee House app downloads on the Google App Store have surpassed100,000, far behind other coffee chains on the market

● Phuc Long

Phuc Long is famous for delicious drinks with traditional tea & coffee and blended drinks, high quality service, energetic and modern space The prices ofPhuc Long's products are appropriate and reasonable for customers' income It has

ice-a wide system ice-and more thice-an 30 retice-ail stores in big cities Phuc Long’s prices ice-areindependent because they are suppliers It also applies raw materials such ascoffee and tea leaf to make their product flavor The coffee chain goes along withmilk tea Phuc Long reached revenue of nearly 780 billion VND in 2019, raising65% compared to previous year The speed of revenue growth accelerated when it

expanded to The South However, Phuc Long’s service quality was uneven amongbranches, and some customers complained about the quality of drinks andservices Moreover, it was not focused on evaluating marketing activities Theexchange profit to expand the market and raising revenue just make their chainstill a few billion dong in recent years Phuc Long's gross profit margin is about35%, 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 macroenvironment in Vietnam, including the Political, Economic, Social and Technologyfactors In the sphere of this essay, the Environmental and Legal factors areignored 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 theeconomy to develop, the Vietnamese Government created many policies to attractthe Foreign Direct Investment (FDI) into Vietnam Therefore, Starbucks can enterthe Vietnamese market without any difficulties

On the whole, Vietnam has a stable political situation Although there are stillseveral political problems in Vietnam, both Government and citizens are trying tosolve 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 adeveloped country in 2030 According to the World Bank, the gross domesticproduct (GDP) in Vietnam will be increasing in 2022 Beside, per capita incomealso 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 isgrowing which is an ideal place that makes Vietnam a good destination forStarbucks 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 educated graduate workers Beside, the labor cost in Vietnam is cheap It will besimple to hire and train employees

well-In addition, because the economy in Vietnam is developing, the inhabitants willhave a high standard of living: as a result, Vietnamese will be willing to spendmore Beside that, the taste of Vietnamese also changes, and the demand foreating out increases, so the number of restaurants and coffee shops increases

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

In sum, both the current situation and the trend of changing in Vietnamese societyare advantageous for Starbucks because they provide opportunities to exploit thismarket.

Technological factor

Information technology in Vietnam is developing According to the report ofWeAreSocial and Hootsuite, until June 2021, there were about 68,72 millionspeople using the Internet Vietnamese spend nearly 7 hours using the Interneteach day According to the report, the people in Vietnam take about 3 hours towatch TV Streaming and use social networks

In brief, the technology in Vietnam is gradually improving It can be a good toolthat 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 andbeverage industry Starbucks has a well-regarded brand value with a coffee tastethat is loved by many In 2019, Starbucks had a brand value of $11.7 billionaccording to Interbrand's ranking

Business approach towards people and the environment: Starbucks products areevaluated as having excellent quality, environmentally friendly productionprocesses, and similarities in business locations

Large global supply chain: Starbucks has an extensive international supply chainacross 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 astandardized process that makes the coffee taste of great quality consistent in any

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

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 towork by Fortune

Strong financial foundation: In 2019, Starbucks posted about $26.5 billion inannual sales and approximately $3.6 billion in profit This is truly a record businessresult, 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 Althoughpremium 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 anyunique 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, onlyaccepts joint venture, self-trade or operating license and control

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

4.3 Opportunities

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

video advertising This activity helps Starbucks reach out to more potentialcustomers and expand the customer network compared to traditional marketing.

A large number of young people are ready to absorb new and modernconsumption trends

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

Diversifying business types: The COVID-19 pandemic has caused consumers tohave 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 Inaddition, this brand is also expanding its product portfolio to suit the taste ofcustomers

4.4 Threats

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

Impact due to the Covid-19 pandemic: In 2021, Starbucks had to temporarily closeabout 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 coffeebean that accounts for more than 60% of the world's output Due to the impact ofCovid, the war in Russia and Ukraine caused gasoline prices to increase, leading toincreased operating costs, affecting the production and supply chain of Arabicacoffee beans This affects the storage and purchasing of Starbucks, along with theincrease 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, theinflation situation makes people also have to consider when they have to spend alot 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 theCovid-19 pandemic

- The increase in the price of

- Diversifying business types raw materials

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

The demographic segmentation by Starbucks is between 25 and 40 years of agewith high incomes, the second target group is 18 to 24 year of age and belongs toricher families Most Starbucks customers belong to the Generation Y which wasborn 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 todesign products/services that appeal to clients of all age groups, incomes, andoccupations For instance, the occupation of the customers will determine if theshop will have a meeting area or offer packaged takeaways that patrons canconsume in their offices Their income level will inform the pricing strategy for our

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

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

There are three groups in geographic segmentations People have different tastesand quantities of food in different countries Also, climate and seasons vary due togeographical features Therefore, First of all, the company can make a group ofseasonal products It can develop special products for the certain period Secondly,food preferences among people are important in the market Some people wanthealthy and nutritious food while others want favored food even though it is notgood for health The criteria of deciding food are different by people Finally, theamount of food per person can be one of groups It is apparent in the size ofStarbucks drinks In venti sized iced americano, it is 591ml in Korea while it isalmost 709ml in USA

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

The other psychotropic variables, such as customer styles and tastes, to segmentthe market The patrons’ music and food tastes will indicate the type ofentertainment 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 thatreflects 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 variabledietary content to cater for different tastes and preferences Its menu containsnutritional 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 theconsumption behavior of customers and therefore, useful in market targeting Thewriter will use loyalty cards to reward loyal customers based on the number oftimes they visit the shop In contrast, usage rates will indicate the level of coffeeconsumption 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 onsegmented groups

First of all, Starbucks provides ‘local delights’ which shows cultural characteristicsamong people For example, in Singapore, there are menus like ‘Sedap lah’ pandangula melaka cake and ‘mai hum’ chicken laksa pie These are the products thatcombine traditional foods with bread People can buy these products only inStarbucks 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 atStarbucks so that they can try the country’s local food in special ways

Secondly, there are seasonal products that customers can only get in specificseasons 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 thatpeople can choose with their preferences For people who think the nutrient is themost important, Starbucks shows the tables of food and drink nutrition likecalories, fat, fiber, protein, and sodium in its website Also, it summarized productsthat are under 200 calories and 350 calories People who don’t want to have heavycalories can refer to this information Additionally, There is dairy-free optionswhere customers can choose soymilk, almond milk, and coconut milk with extrapay

5.3 Positioning

Starbucks has developed a unique market position for their products because if aproduct is to be exactly the same like the others on the market then consumerswould have no reason to buy it Starbucks has positioned themselves in themarket as a highly reputed brand (Kotler and Armstrong, 2006 Starbucks has adescriptively simple statement to inspire and nurture the human spirit-“oneperson, one cup, and one neighborhood at a time” Starbucks positioning strategywas customer base so that it can give the best service more than what thecustomers expect Starbucks has gained a competitive advantage over customersatisfaction and employee satisfaction as Starbucks had developed its positioningstrategy based on the customer and provided the utmost facility in terms oflayout, 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 toparticipate 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 thecustomer needs Besides producing great coffee, it promotes a good reputation toits target market through excellent store ambiance, environmental protection, andsocial commitment As a result, customers will feel that they also contribute tonature 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 ofveterans and military and giving career and education opportunities to itsemployees It may not be that evident to everyone, but the company alsoparticipates in environmental protection initiatives

In terms of environment protection, Starbucks positions its brand by adapting theLEED (Leadership in Energy and Environmental Design) approach to structurebuildings Starbucks utilizes recycled coffee grounds on their tables and materialslow in harmful chemicals for adhesives, paints, coating, and sealants