Analyzing Marketing Environment Of The Starbucks Coffee Company.pdf

Full name: Nguyễn Thị Quỳnh ChiClass: MKT101.E

Student ID: HS160965

Lecturer: Bùi Thị Hạnh Thảo

Course: MKT101 - Marketing principlesDate: Summer2021

MARKETING PRINCIPLES

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ABOUT THE STARBUCKS COFFEE COMPANY:

In the late 90s, no one knew about Starbuck in the US 20 years later, Starbuckwas in top 100 most valuable brands in the world according to the 2011 ranking ofboth the most prestigious global organization for annual brand rankings, Interbrandand Millward Brown (Nguyen Duc Son, 2012) [1] Today, Starbuck is world’s largestcoffee company with a stock market value of $51.6 billion; 151.000 full-timeemployees in 65 countries around the world On average, Starbuck open 2 neestores a day (Huong Na, 2014) [2].

With Starbucks's partners, their coffee andcustomers at our core The first value Starbucksdemonstrates is creating a warm culture whereeveryone is welcome Next, face challenges withcourage to improve the company Finally, offer thebest price(Starbucks Coffee Company, 2019 [6] To inspire and nurture the human spirit – oneperson, one cup and one neighborhood at atime' (Starbucks Coffee Company, 2019) [3].

Starbucks Coffee’s corporate vision is “toestablish Starbucks as the premier purveyorof the finest coffee in the world whilemaintaining our uncompromising principleswhile we grow ” (Lawrence Gregory,2019)[4].Starbuck's aim to become the leader ofproviding coffee with the best quality,become one of the largest coffeehouses inthe world, addresses the "uncompromisingprinciple" and continuing global expansion(Lawrence Gregory,2019) [5].

Starbuck's focus on 2 kinds ofcustomers:

Young adults- college student(18-24 years old) and people inworking age (25-44 years old)(Ashish Khatter,2013)[7]

Customers in the age of 18-24:

Starbucks targets this group through thedevelopment of technology and innovativeideas They positions themself as a placewhere college students can hang out,study, write, and meet people.(Ashish Khatter,2013)[8].

Customers in the age of 25-44:

Starbucks targets this group by offering a number of beverages that appeal tothem, creating a “third place” to go between home and work by creating thisunique and relaxing “experience” and “atmosphere” for customers in the region.This micro tends to have high income and professional careers.

(Ashish Khatter,2013)[9].

H o t c o f f e e sH o t T e aH o t D r i n k s

F r a p p u c h i n o B e n d e d B e v e r a g eC o l d C o f f e e s

I c e d T e aC o l d D r i n k s

H o t B r e a k f a s tB a k e r yL u n c h

S n a c k s & S w e e t sO a t & Y o g u r t

At Home Coffee

W H O L E B E A NV I A ® I N S T A N T

C O L D C U P ST U M B L E R SW A T E R B O T T L E SO T H E R

Microenvironment consists of the actors close to thecompany that affect its ability to serve its customers-the company, suppliers, marketing intermediaries,customer markets, competitors, and public

(Philip Kotler & Gary Armstrong, 2012)[11]2

The Microenvironment

2 3 5 1 8

F r o m 2 0 0 3 u n t i l n o w , S t a r b u c k s ’ s w o r l d w i d e r e v e n u e h a si n c r e a s e d s t e a d i l y b u t d e c l i n e d i n 2 0 0 9 B y 2 0 1 0 t h e y h a d a s l i g h tr e c o v e r y , r i g h t a f t e r t h e l a u n c h o f a n o n l i n e o r d e r i n g a n d p a y m e n ta p p l i c a t i o n I n 2 0 1 1 , S t a r b u c k s ’ s s a l e s g r e w d r a m a t i c a l l y B e f o r et h e d i g i t a l t r a n s f o r m a t i o n , S t a r b u c k s o n l y a c h i e v e d r e v e n u e o f l e s st h a n 1 1 b i l l i o n U S D A f t e r 8 y e a r s o f d i g i t a l t r a n s f o r m a t i o n ,S t a r b u c k s ' r e v e n u e h a s d o u b l e d c o m p a r e d t o 2 0 1 1 R e v e n u e i n 2 0 1 9r e a c h e d a r e c o r d o f $ 2 6 b i l l i o n B u t o n J a n u a r y 2 6 , t h e w o r l d ' sl a r g e s t c o f f e e c h a i n w a s r e p o r t e d a d e e p d r o p i n q u a r t e r l y r e v e n u em a i n l y d u e t o t h e c o m p l i c a t e d s i t u a t i o n o f t h e w o r l d ' s C O V I D - 1 9e p i d e m i c , w h i c h f o r c e d m a n y c u s t o m e r s t o s t a y a t h o m e ( V i e t t i m e ,2 0 2 0 ) [ 1 2 ]

A f t e r 7 y e a r s i n V i e t n a m , S t a r b u c k s c h o s e t h e d e v e l o p m e n t p a t h" s l o w l y b u t s u r e l y " T h i s c h a i n h a s r e c e n t l y e x p a n d e d t o m o r e t h a n6 0 s t o r e s , p r e s e n t i n 4 c i t i e s : H a n o i , H a i P h o n g , D a N a n g a n d H o C h iM i n h C i t y , w i t h t h e r e a s o n t o e n s u r e t h e s t r a t e g y a n d b u s i n e s sm o d e l T h e n u m b e r i s f a r b e l o w t h e s i z e o f t h i s c h a i n i t s e l f i n t h ew o r l d a n d n e i g h b o r i n g m a r k e t s , s u c h a s T h a i l a n d w i t h 3 3 6 s t o r e s o rI n d o n e s i a w i t h m o r e t h a n 3 2 0 s t o r e s ( V n E x p r e s s , 2 0 2 0 ) [ 1 4 ]

C o m p a r e d t o i t s c o m p e t i t o r s i n t e r m s o f r e v e n u e s c a l e , S t a r b u c k s 's c a l e i s k i n d o f m o d e s t , s u c h a s H i g h l a n d s C o f f e e c h a i n c u r r e n t l yh a s 3 3 6 s t o r e s o r m o r e t h a n 1 5 0 s t o r e s o f T h e C o f f e e H o u s e T h ei n c r e a s e o f A v e r a g e i n c o m e h a s m a d e S t a r b u c k s ’ s c u s t o m e r b a s en o w m o r e e x p a n d e d , b u t s t i l l n o t t o o l a r g e , b e c a u s e t h e p r i c e i sa l r e a d y m u c h h i g h e r t h a n t h a t o f d o m e s t i c c o f f e e c h a i n s T h eb u s i n e s s p h i l o s o p h y o f b r i n g i n g a u n i f o r m p r o d u c t l i n e a r o u n d t h ew o r l d , i n s t e a d o f c h a n g i n g l o c a l l y , m a k e s S t a r b u c k s s p e c i a l b u t a l s om o r e p i c k y T h e m a c h i n e c o f f e e p r o d u c t l i n e , w i t h i t s l i g h t t a s t e a n dh i g h c a f f e i n e c o n t e n t , i s a l s o n o t t o o s u i t a b l e f o r t h e m a j o r i t y o fV i e t n a m e s e w h o a r e f a m i l i a r w i t h s t r o n g c o f f e e ( V n E x p r e s s , 2 0 2 0 [ 1 5 ]

The Microenvironment

B e i n g a l e a d i n g b i g b r a n d i n t h e w o r l d b u t S t a r b u c k s s e e m s t os t r u g g l e t o c o m p e t e w i t h d o m e s t i c c o f f e e s i n V i e t n a m S t a r b u c k sc h a i n o n c e r a n k e d s e c o n d a f t e r H i g h l a n d s , b u t w a s s u r p a s s e d b yT h e C o f f e e H o u s e t h r e e y e a r s a g o a n d i s n o w c l o s e l y f o l l o w e d b yP h u c L o n g I n 2 0 1 9 , t h e r e v e n u e o f t h e S t a r b u c k s c h a i n r e a c h e dm o r e t h a n V N D 7 8 0 b i l l i o n , a n i n c r e a s e o f m o r e t h a n 3 2 % c o m p a r e dt o t h e p r e v i o u s y e a r t h a n k s t o f a s t e r s y s t e m e x p a n s i o n T h i s

n u m b e r h e l p s S t a r b u c k s s t a n d i n t h e g r o u p w i t h t h e h i g h e s tr e v e n u e , b e h i n d H i g h l a n d s C o f f e e , T h e C o f f e e H o u s e B u t r i g h ta f t e r S t a r b u c k s , P h u c L o n g ' s r e v e n u e a l s o f o l l o w e d q u i c k l y w h e nt h e c h a i n i n c r e a s e d t o 6 5 % i n 2 0 1 9 ( V n E x p r e s s , 2 0 2 0 ) [ 1 3 ]

STARBUCKS INVIETNAM

A s fo r th e Vi et na me se m ar ke t, a fte r 7ye ar s en te ri ng V ie tn am Th is c ha in h as j us tre ce nt ly e xp an de d to m or e th an 6 0 sto re s,pr es en t in 4 c it ie s: H an oi , Ha i Ph on g, D aNa ng a nd H o Ch i Mi nh C it y, f ar b eh in d thesc al e of t hi s ch ai n in t he w or ld a ndne ig hb or in g ma rk et s l ik e Th ai la nd w it h 33 6st or es o r In do ne si a is m or e tha n 32 0(V nE xp re ss , 20 20 ) [1 8]

THAN 60stores

IN 4 CITIESHa Noi, Hai Phong, Da Nang, HCM

In it s 47 -y ea r h is to ry, St ar bu ck sha s gr ow n f ro m a h um bl e Se at tl eco ff ee sh op to a gi an t b ra nd wi thne ar ly 30 ,0 00 st or es ar ou nd th ewo rl d Un de r t he ca re fu l su pe rv is io nof H ow ar d S ch ul tz - F or me r pr es id en tan d CE O of St ar bu ck s, St ar bu ck spu rs ue d a str at eg y of ag gr es si veex pa ns io n in the lat e 80 s an d e arl y90 s I n 1 99 2, t he c om pa ny on ly h ad16 5 st or es Fo ur yea rs lat er , th eyop en ed th ei r 1, 00 0th s to re , i nc lu di ngov er se as b ra nc he s su ch a s Ja pa n and B ut i t se em s St ar bu ck s is s pre ad in g ou t to o mu ch No w, w it h mo re t ha n 14 ,0 00st or es i n th e US a lo ne , St ar bu ck s i s co ns um in g it s ow n re ve nu e T hi s ma de t heco mp an y' s ma na ge r to r et hi nk a bo ut bu si ne ss e xp an si on Th ey a re e xp ec te d tocl os e 15 0 un de rp er fo rm in g st or es i n 2 01 9 - a nu mb er t hr ee t im es h ig he r th an u su al In a dd it io n, c on su me r’ s ch an gi ng p re fe re nc es i s a ls o a pr ob le m th at b ri ng sSt ar bu ck s ma na ge rs h ea da ch e I n 20 15, t he ir F ra pp uc ci no s sa le s ac co un te d fo r14 % of S ta rb uc ks 's t ota l sa le s B ut b y th e fi rs t ha lf o f 20 18 , th is f ig ure w as o nl y11 % ( NĐ H, 2 01 9) [1 7]

The Microenvironment

b r a n c h e s s u c h a s J a p a n a n d S i n g a p o r e T h e g r o w t h w a s s o r a p i d t h a tj u s t t w o y e a r s l a t e r , S t a r b u c k s o p e n e d i t s 2 , 0 0 0 t h c o f f e e s h o p T h ei n c r e a s e i n t h e n u m b e r o f s t o r e s h a s h e l p e d b o o s t i t s s a l e s o v e r t h ep a s t t w o d e c a d e s ( N Đ H , 2 0 1 9 ) [ 1 6 ]

The Macroenvironment

Vietnam began its current period of growth and industrialization in 1986, whenHanoi began a series of economic reforms known as “Doi Moi.” Between 2000 and2010 Vietnam more than tripled its per capita GDP Of the Association of SoutheastAsian Nations (ASEAN-5), which includes Cambodia, Indonesia, the Philippines,Thailand, and Vietnam, Vietnam is expected to be hit hardest by technologicalsubstitution, with 70 percent of its current overall workforce at high risk of beingdisplaced in the near future (Csis.org, 2010) [48]

But Starbucks have taken the advantage of the modern industrialization to inventand research the most advanced scientific technologies like Artificial Intelligent,Iot, to develop their brand name Beside that, they also want to prove thatStarbucks not only working on Coffee Field but also in Technological Field Withtheir care for the environment, Starbucks researched and developed their chainstores with environmental-friendly technology, for example: Saving water by usinghigh pressure blower to clean the cups instead of using water (Starbucks CoffeeCompany, 2019) [49].

The political and social

P o l i t i c s : V i e t n a m i s a p o l i t i c a l l y s t a b l e c o u n t r y T h i s h a sg r e a t l y c o n t r i b u t e d t o V i e t n a m b e i n g a b l e t o p e r s i s t i n i t se c o n o m i c d e v e l o p m e n t p o l i c y V i e t n a m h a s a n e c o n o m i c p o l i c yi n t h e d i r e c t i o n o f g r a d u a l l y i n t e g r a t i n g i n t o t h e w o r l d

e c o n o m y , m a i n t a i n i n g m a c r o e c o n o m i c p o l i c i e s i n r e c e n t y e a r s ( V O V V N 2 0 2 1 ) [ 5 0 ] V i e t n a m h a s a l w a y s b e e n o p e n a n d

e n c o u r a g e d t o w e l c o m e f o r e i g n i n v e s t o r s t h r o u g h a c t i o n s t ou p d a t e a n d a d j u s t i n v e s t m e n t r e g u l a t i o n s V i e t n a m c o n t i n u e s t oi m p l e m e n t p r e f e r e n t i a l p o l i c i e s t o a t t r a c t f o r e i g n i n v e s t o r ss u c h a s c o r p o r a t e i n c o m e t a x e x e m p t i o n a n d r e d u c t i o n , i m p o r tt a x e x e m p t i o n f o r a n u m b e r o f g o o d s , l a n d r e n t a l e x e m p t i o n ,e t c T h e g o v e r n m e n t a l s o c o m m i t t e d t o c o n t i n u e r e f o r m i n ga d m i n i s t r a t i v e p r o c e d u r e s t o c r e a t e f a v o r a b l e c o n d i t i o n s f o ri n v e s t o r s ( G l o b a l V i e t n a m L a w y e r s 2 0 1 8 ) [ 5 1 ] I t c a n b e s a i dt h a t V i e t n a m ' s p o l i c y i s a n a t t r a c t i v e i n v i t a t i o n t o f o r e i g nb u s i n e s s e s i n g e n e r a l a n d S t a r b u c k s i n p a r t i c u l a r A t t r a c t i v ep o l i c i e s a n d s t a b l e p o l i t i c s a r e p r e r e q u i s i t e s f o r s u s t a i n a b l ea n d l o n g - t e r m d e v e l o p m e n t

S o c i e t y : T h r o u g h t h e C o v i d - 1 9 p a n d e m i c , w e c a n s e eV i e t n a m ' s a n t i - e p i d e m i c e f f o r t s t h a t t h e w h o l e w o r l d h a s t ol o o k a t V i e t n a m h a s s h o w n c l e a r r e s u l t s , i t s a b i l i t y t o r e s p o n dw e l l t o t h e g l o b a l c r i s i s R e c o g n i z e d b y l e a d i n g i n t e r n a t i o n a lo r g a n i z a t i o n s s u c h a s t h e W o r l d B a n k ( W B ) , t h e I n t e r n a t i o n a lM o n e t a r y F u n d ( I M F ) a s a m o d e l o f c r i s i s r e s p o n s e i n t h ei m p a c t o f t h e C o v i d - 1 9 e p i d e m i c a n d t h e r e s i l i e n c e o f

b u s i n e s s e s K a r m a V i e t n a m i s v e r y g o o d ( N h a n d a n 2 0 2 0 ) [ 5 2 ] T h e A m e r i c a n I n s t i t u t e o f S o c i o l o g y l i s t s 1 0 q u a l i t i e s o fV i e t n a m e s e p e o p l e : i n d u s t r i o u s n e s s , d i l i g e n c e ; s m a r t , c r e a t i v e ,p r o a c t i v e ; s k i l l f u l ; b o t h r e a l a n d d r e a m y ; e a g e r t o l e a r n , l e a r nq u i c k l y ; h o s p i t a b l e ; w a s t e o n t h i n g s o f d i g n i t y ; h a v e a s p i r i t o fs o l i d a r i t y , r e c i p r o c i t y a n d l o v e ; L o v e s t h e p o t , i s p a t i e n t a n dl o v e s t o g a t h e r ( P h a p l u a t N e w s p a p e r 2 0 1 2 ) [ 5 3 ] I n t e r m s o fh o w a f o r e i g n b u s i n e s s p e n e t r a t e s t h e V i e t n a m e s e m a r k e t a n ds p e c i f i c a l l y S t a r b u c k s , t h e a b o v e s o c i a l f a c t o r s a b o u t

V i e t n a m e s e p e o p l e a r e c o m p l e t e l y b e n e f i c i a l B u t o n e p r o b l e mi s t h a t V i e t n a m ' s i n c o m e i s m o s t l y l o w - m i d d l e - c l a s s s oS t a r b u c k s n e e d s t o o f f e r c h e a p e r p r o d u c t s b u t i t

s a c r i f i c e q u a l i t y T h i s i s t h e m a i n s o c i o c u l t u r a l cs t a r t u p s f a c e I t w i l l e x p a n d t h e c o n s u m e r b a s e tb u y e r s f r o m t h e l o w a n d m i d d l e i n c o m e t i e r s