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ANALYZE STARBUCKS
MARKETING STRATEGY IN
VIETNAM MARKET
Contents
I. Introduction.............................................................................................................................................................1
1.1 Company history..............................................................................................................................................1
1.2 Products............................................................................................................................................................1
1.3 Vietnamese Market..........................................................................................................................................1
II. Macro-environment Analysis...............................................................................................................................2
2.1 Political factor...................................................................................................................................................2
2.2 Economic factor................................................................................................................................................3
2.3 Social factor......................................................................................................................................................3
2.4 Technological factor.........................................................................................................................................3
III. Micro-environment Analysis...............................................................................................................................4
IV. Starbucks market segmentation and target market selection.........................................................................4
4.1 Market Segmentation......................................................................................................................................4
4.2 Characteristics of the target market..............................................................................................................6
4.3 Positoning: Define company’s USP for your chosen target market............................................................7
V. Marketing Mix.........................................................................................................................................................7
5.1 Product..............................................................................................................................................................7
5.2 Price...................................................................................................................................................................8
5.3 Place..................................................................................................................................................................9
5.4 Promotion.........................................................................................................................................................9
5.5 People, Processes, Proves (For services).....................................................................................................11
Conclusion.................................................................................................................................................................11
References.................................................................................................................................................................13
I. Introduction
This is a market report of Vietnamese market which Starbucks Company aims to enter in
order to expand global market.
Overall, Vietnamese market is a potential for Starbucks because of some primary reasons.
Firstly, the company has much inside strength, such as good market share, strong financing and
quality of products. Secondly, Starbucks’ market is large, and Asian market has highest increase
in revenue, which is a good side for the company. Thirdly, the company sees that most
microenvironment and macro-environment are beneficial in order to enter Vietnamese market.
1.1 Company history
Starbucks Corporation - the largest coffee and Coffeehouse Company in the world, is based
in Seattle, Washington. It was found by Jerry Baldin, Zev Siegl, and Gordon Bowker in 1971, and
currently, Howard Schultz is the chairman and chief executiveofficerof Starbucks. Starbucks has a
variety of brands, namely Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh and La Boulange,
but Starbucks Coffee is the most famous brand. Our objective is “to inspire and nurture the human
spirit – one person, one cup, and one neighborhood at a time” so that people come to Starbucks to
chat, meet up and work. To achieve this, the company is continuing to open new global stores in
the U.S, China and some potential countries in Asia. Through 45 years of rapid development,
Starbucks Corporation achieves remarkable success.
1.2 Products
Starbucks operates in different fields with different customer segments, and coffee is the
main business. Starbucks offers roasted and handcrafted high quality coffee, tea, a variety of fresh
food items and other beverages. Besides, the company also sells equipment types, such as grinder,
specialty brewing and coffee maker. In all these products, coffee makes up 73% in the percentage
of products (Starbucks fiscal report, 2015).
1.3Vietnamese Market
Overall, after doing analysis of industry and market, Vietnamese market can be potential
for Starbuck for 3 main following reasons.
Firstly, it is a potential big coffee consumption market. Vietnam’ population is large and
increasing over time. According to the General Statistics Office, Vietnam’s population reached
96.2 million people in 2017, including 15-64 age group, and accounted for 70,54% (CIA, 2017).
Secondly, coffee consumption market reached 287.34 million USD in 2012. Mintel predicts
this figure would reach 573.74 million in 2016 which made Vietnam become be top 5 of coffee
consumption in Asia-Pacific.
Thirdly, Asian market is the second largest market of Starbucks, and Starbucks is now
presenting in 16 countries in the China/Asia Pacific region and having remarkable achievements.
First of all, this segment has the highest revenue in four main segments in 2015, reached more
than 2300 billion USD. Besides, among Asian countries, China, Japan and South Korea are three
markets that have the largest number of stores in Asian market. From these success in Asia,
Starbucks has desire to enter Vietnamese market. John Culver, president of the China and Asia
Pacific region said: “We’ve been in the region going on 16 years, and given our success in Thailand,
Singapore and Malaysia, as well as our overall financial performance, we see Vietnam as the next
natural entry point,”.
II. Macro-environment Analysis
This section applies PESTEL analysis tool to indicate the most important factors of the macro
environment in Vietnam, including the Political, Economic, Social and Technological factors. In the
sphere of this thesis, the Environmental and Legal factors are ignored as they do not have
considerable effects.
2.1 Political factor
Vietnam is one of the most politically stable countries in South East Asia. In Vietnam,
Vietnamese Communist Party is the only party which takes the lead the country in order to keep
political, social and economic stability. Mr. Victoria Kwakwa, the World Bank’s Country Director
for Vietnam said “Vietnam has done well in ensuring macroeconomic stability over the past year,
which has been underpinned by moderating inflation and strengthening external accounts”(The
World Bank, 2013). In addition, to encourage the economy to grow, Vietnam Government creates
many policies to attract the Foreign Direct Investment (FDI) into Vietnam. Therefore, Starbucks
can enter Vietnamese market without any difficulties.
On the whole, Vietnam has a stable political situation. Although there are still several
problems about political in Vietnam, both Vietnamese Government and citizens are trying to
solve them. Therefore, Vietnamese market is still a good choice for Starbucks.
2.2 Economic factor
Vietnam is one of the Southeast Asia’s fastest-growing economies and has aim to be a
developed country in 2020. According to the World Bank, the gross domestic product (GDP) in
Vietnam is increasing. Besides, per capita income also increases. In addition, Vietnam Consumer
Price Index (CPI) also rises in recent years. According to the report of General Statistics Office of
Vietnam, just in 2016, CPI increased from 100.17 Index points in January to 103.31 Index points
in September.
From these data, it is safe to say that Vietnam is a potential market for any business. The
economy is growing which is an ideal trend that makes Vietnam becomes a good destination for
Starbucks to extend their business.
2.3 Social factor
Vietnam has a large and young population. In addition, the labor force in Vietnam is
growing with 1.3-1.5 million new workers per year, especially skilled and well-educated graduate
workers. Besides, the labor cost in Vietnam is cheap , just equal 1/3 of that in China. It will be
easy to the company to seek and hire employees.
Additionally, because of developing of economy, Vietnamese has a higher standard of
living; as a result, Vietnamese 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.
In brief, both the current situation and the trend of changing in Vietnamese social are
advantageous for Starbucks because it provides opportunities to exploit this market.
2.4 Technological factor
The information technology in Vietnam is developing rapidly. In 2012, there were about 7
million desktop computers and laptops were used which means of every 100 inhabitants, there
were around 7.86 computers. In 2013, the numbers of mobile phone subscribers was about 124
million and more than 33 million people which was around 37% of population is connected to the
internet. In 2014, Vietnam ranked 20th in the world for the number of internet users and 20% of
the total internet users have already made purchases online (VETICA, 2014).
According to this data, it is clear that the technology in Vietnam gradually improve. It can
be a good tool that helps Starbucks to advertise, distribute and consume their products.
III. Micro-environment Analysis
Vietnamese coffee market has been almost saturated with market share divided equally
for many big brands such as Nescafe (32%), Trung Nguyen coffee (23%), Vincafe (38%) etc.
Besides the street coffee store, Starbuck has to emulate the international brands such as Coffee
Beans, Dunkin Donut, Gloria’s Jean coffee so on, the domestic brands that have already had a
certain place as Trung Nguyen coffee and Highland coffee, and some coffee shops are emerging
recently as Phuc Long coffee or The coffee house. However, among these competitor there are two
main rivals of Starbuck when entering Vietnam:
-
Trung Nguyen coffee: most common brand, 1000 coffee stores in Vietnam, provide
traditional Vietnamese coffee with strong flavor. Their product are attract to small
segment of adults and and cultured tourists.
-
Highland coffee: Highlands Coffee has nearly 100 shops, mostly in large cities. Since the
very beginning, it has been positioned as the coffee for businesspeople and highincome earners. Market surveys show that customers choose Highlands Coffee because
of the “good drinks and large space”, “good service attitude” and “diverse products”.
IV. Starbucks market segmentation and target market selection.
4.1 Market Segmentation
With the rapid expansion, Starbucks targeted customers of every age group and expanded
to include rural communities, ethnic neighborhoods, and others. A large portion of coffee
drinkers is found in urban areas where most of educated, employees and working professionals
live in.
Target customers of Starbucks range from the age of 16 to 40 in both females and males
but female customers account for the majority of sales customers. The company focuses on the
middle and upper social class who want to enjoy quality coffee with free-connected wifi, in
relaxing atmosphere, chat with friends or relatives or even be a place to work. Starbucks
segments their customers into three groups:

Young and teenagers (16 – 24 years old) who live in rich families or they have a
good background.

Adults (25 – 40 years old)who are working, have high income or professional
careers.

Tourists (Foreigners come to Vietnam) also become target customer of Starbucks in
Vietnam. Following Viet Nam National Administration of Tourism, the number of
international visitors come to Vietnam in 2017 reached 12,922,151 visitors, this
result shows that tourists can be a feasible target customer in Vietnam.
Starbucks focuses on expanding its market share to those with stable incomes from 19
years old and over in urban or major cities in Vietnam such as Ho Chi Minh City and Hanoi and
then expanding to other locations due to the average coffee price. According to data of the
Statistics Department of Ho Chi Minh City and Hanoi, the average income per capita reached
5,428 USD and 3,600 USD respectively, this is a good reason for Starbucks to expand market into
Vietnam. More important, Hanoi and Ho Chi Minh City defined as national central cities to
become potential places for Starbucks open stores in. First of all,Hanoi is not only the capital of
Vietnam but also the cultural and political center of the country whereasHo Chi Minh is the
largest city in Vietnam in terms of population and economy; the second in terms of size and one
of the most important economic and cultural centers in Vietnam. Besides, Da Nang, Hai Phong,
Can Tho inherently attract so much attention from tourists, passers as well customers and always
crowded of people.
To determine the number of potential consumers on the market, we should start from the
number of citizens in two main cities which are Ho Chi Minh and Hanoi and from them take only
number of the falling into our target group of customers.
According to General Statistics Office of Vietnam and The Central Intelligence Agency, the number
of population in Ho Chi Minh City and Hanoi are 8,61 million and 7,82 million respectively.
Following The Central Intelligence Agency (CIA), the population of Vietnam in each group
age structure in 2017 are:

15-24 years: 16.23%

25-40 years: 44.56%
Having in mind that we have total population in Ho Chi Minh city and Hanoi, we can calculate the
number of people in each group of these two cities below:
Age
Young and teenagers
(16 – 24)
Adults
(25 – 40)
Tourists
Ho Chi Minh City
1,4 million
Hanoi
1,27 million
Total
2,67 million
3,84 million
3,49 million
7,33 million
6,1 million
4,95 million
11,05 million
Following Vietnam Chamber of Commerce and Industry, the percentage of the middle class of
Vietnam in average is 30%, so we can calculate the number of people in the middle class in Ho Chi
Minh city and Hanoi:
Ho Chi Minh City
Hanoi
1,15 million
1,05 million
According to Vietnam Trade Promotion Agency, the domestic consumption rate for coffee is 10%
so the consumption people for drinking coffee in two cities are 115,000 people in Ho Chi Minh
city and 105,000 in Hanoi.
As General Statistics Office of VIET NAM, the percentage of foreigners visitors come to Vietnam
and enjoy drinking coffee is 10%, so we got the amount of people is about 1,1 visitors.
In conclusion, the market potential is the number of potential buyers, an average selling price and
an estimate of usage for a specific period of time. By applying the general formula for this
estimation, we have:
MP = N × MS × P × Q
Where:
MP = market potential
N = total number of potential consumers
MS = market share—percent of consumers buying from you
P = average selling price
Q = average annual consumption
We got the result of number of potential consumers: 1,325,000 x 0,12 x 3,1 x 0,1 = 49,290
4.2 Characteristics of the target market
Starbucks has segmented their customers into three groups: young adults-teenagers (1624), adults (25-40) and tourists.
Young adults are usually students and teenagers. With money to spend, they choose
Starbucks as a place to meet up, study and hang out. Starbucks appeals to this segment as a cool
and fancy brand. This segment is also very sensitive with new products advertised on Starbucks
social media channels.
Adults are primary customers here at Starbucks, accounts for nearly 50% of its total sale.
They are urban residents educated and affluent. This segment considers Starbucks as a place to
have professional meeting and enjoy quality coffee and relaxing atmosphere into work.
Furthermore, this segment also has diverse tastes and interests and they are well aware of their
needs.
Having advantage is a well known worldwide brand. Starbucks in Vietnam has a small
segment for tourists. Coming to a foreign Asian country, many tourist opt for Starbucks as a safe
choice of beverage. Moreover, Starbucks store are easily accessed if they are located in the areas
where tourists reside in Hanoi and Ho Chi Minh City.
4.3 Positoning: Define company’s USP for your chosen target market
The USP of Starbucks is a relatively simple one: premium coffee. It has never claimed to
offer the cheapest coffee, but by offering their own style of an enriched upscale coffee experience.
They have managed to carve out a large niche of coffee loving people.
The premium coffee experience that Starbucks claims to offer is what makes it stands out
from its peers and this includes not just the high quality coffee, but also employee-customer
interactions, environment and ambience offered, compete with various conveniences.
The motivation is customers when buying at Starbucks is more than just purchasing and
enjoying quality coffee. The reason they are willing to pay more is not simply about good catering
service, it is about the feeling of pride prestige and self-esteem when they buy from a cool and
trendy worldwide coffee brand. Each cup of Starbucks purchased is customized by the buyer
themself from customizable drink menu to having their own names written on cups giving the
customers control on their own orders creates a sense of belonging. Therefore the feeling of
consuming Starbucks products makes them feel unique and special.
V. Marketing Mix
5.1 Product
Starbucks offer a range of exceptional products that customers enjoys at store, at home
and on the go. Starbucks brings the customers the experience of Italian freshly brewed coffee.
Besides traditional menu of espresso, latte, TAZO tea, smoothies, ice blended, Frappuccino, hot
chocolates and variety of cake such as muffin, cookie, sweet cakes, sandwiches so on, Starbuck
coffee also offer different types of roasting coffee (Blond roast, medium roast, dark roast) and
grain coffee.
Entering Vietnamese market, Starbucks wants to keep its own flavor and uniqueness of
Arabica coffee to differentiate with Vietnamese coffee which mainly is Robusta coffee (It has a
slightly bitter taste that usually is offset by sweetened, condensed milk). However, Starbuck can
customize the products to suit Vietnamese consumer taste. It would be a good idea to add more
types of coffee drinks that illustrate Vietnamese style like Asian Dolce Latte và Dolce Misto. These
two kinds of coffee was inspired by traditional milk tea coffee of Vietnam which are familiar with
Vietnamese.
With strong brand name of Starbucks as the world largest coffee house chain. According to
Starbucks “Exceptional coffee can only come from exceptional beans”. They want to make sure
their beans meet the highest standard of quality. Starbucks taste more than 1000 cups of coffee a
day to verify the superior taste that all of consumers have come to expect. A batch of coffee is
tasted at least three times before it’s approved, so every time customers take a sop of Starbuck
coffee, it’s a sip that they will love.
Starbucks is also noted for the continued placement of its easily identifiable logo front and
center of its coffee cups and pouches. Packaging of take-away coffee are simple, elegant plastic
cup and paper cup with outstanding Starbuck mermaid logo. Drink ware (mugs and tumblers) is
favorite by many eco-friendly consumers. Plus discount are applied on purchases when customer
bring their own Starbuck drink ware to the stores. It is a brilliant way to keep customers engage
with the brand. Customer’s enjoyment of food and drink are enhanced by eye-catching packaging.
Starbucks offer consumers excellent services and focus on personalization to keep direct
emotional engagement with customers. Starbucks recognizes that it's not just about the product,
it's also about the experience. Each Starbucks location you walk into has the same look and feel.
Baristas serve your coffee to you by name. And if it isn't exactly what you ordered, they make sure
to correct it and ask how they can make your experience better.
5.2 Price
Starbucks has a simple price strategy: High price, high quality. This pricing strategy takes
advantage of the behavioral tendency of people to purchase more expensive products on the basis
of the perceived correlation between high price and high value. If customers feel they are getting
a good deal, they are willing to pay more.
A single cup coffee in Vietnam costs from 35,000
VND to 80,000 VND ($1.6 – $3.5), while tea and
the other drinks cost from 55,000 VND to
105,000 VND ($2.5 - $4.6)
Starbucks has always believed to serve the best
coffee possible with the best design cup in the
best place. Starbucks stores are usually in prime
locations at a neighborhood gathering place for
meeting friends and family. Therefore, it can
charge a higher price for bringing customers the best experience to cover the costs of marking its
products.
Through this pricing strategy, the company maintains its high-end specialty image
5.3 Place
Seattle-based coffee chain Starbucks has seen expansion on a large scale in recent years,
more than doubling over the last decade to more than 27 thousand in 2017, cover in many
countries all over the world. In Vietnam, they can sell their products through direct stores with
beautiful coffee-space and retail partners at the central lines have many facades, near offices, in
central malls or supermarkets where a number of customers will come, for example: District 1,
Tan Phu Districts, Binh Thach Districts are some main districts in Ho Chi Minh City; Hai Ba Trung
District, CauGiay District, HoanKiem District in Hanoi; even in big buildings like President Place,
SC Vivo City, mPlazza, Pearl Plazza. Airport is also an ideal place for Starbucks in order to open
store.
The company has an obvious vision to both directly and indirectly spread their products
from producers to customers.
5.4 Promotion
First of all, Starbucks mainly sells their products direct to customers at stores that means
personal marketing. Starbucks approaches directly with the customer and determines a
customer’s wants and needs. The company also organizes events in which people of the regions
will be asked to visit the venue and interact with its workforce. The visitors will be given free
samples of the products so that they can test their quality and taste.Besides, Starbucks gives
discount for customers on special days such as: “50% off on any summer beverage”, “Enjoy 30%
off on opening celebration”. Starbucks also organized meaningful campaigns like: Challenge
"Starbucks Moments” or “Experience the First Starbucks Reserve Store” to attract more
customers. The company also has many other promotional activities, which included printing
information on tee shirts, mugs or phone case.
Vietnamese, especially young people, will be strongly attracted by social networking sites.
In addition, the presence of Starbucks on Facebook, Instagram or Pinterest will turn coffee into a
hobby that consumers can easily share with friends and family. For example: Starbucks regularly
offers preferential treatment through the form of like, share, comment on social networks,
thereby increasing the interaction rate as well as the coverage of the product to the users. Easy to
see one of the strongest channels are through social media like Facebook, which has 334, 024
people like and 332, 441 people follow page; Instagram with 56,5 thousand followers and so on.
5.5 People, Processes, Proves (For services)
Together with providing the coffee products, Starbucks also offers customers excellent
consumer services and benefits. Coming to any Starbucks stores, customers can have direct
emotional engagement with staffs.
Quality is the key factor to attract more loyal customers and good services keep customers’
satisfactory in order that they would raise high perception about Starbucks, hence adding more
value to the company. Understand the important of services, before lauching new stores,
Starbucks had hired their staff and trained them for months to ensure an excellent front-end staff
that will serve not only high quality cups of coffee but aslo cautions and comfortable
environment.
The company really takes attention to Human Resources Management and Strategy
because they believe that happy employees will produce higher efficient result, bringing higher
satisfactory for customers. The staff are encouraged to remember loyal customers’ names, be
friendly, and always try to help customers choosing the best coffee or drink according to their
own taste. Starbucks has a training and rewarding strategy that would motivate employees, and
at the same time would attract talented people.It is no wonder why everyone wants to frequent to
Starbucks that much and become a loyal member.
Being a loyal member comes with a lot of benefits. To reward for loyal customers,
Starbucks give membership cards called “Starbuck reward”. Customers buying at Starbucks will
receive Star point and be able to upgarde to a higher membership level.
Another reason that customers should drop by a nearest Starbucks store to enjoy a
comfortable atmosphere called the third place. Starbucks is neither home nor work but a
community space where people can meet. Purchasing a cup of Starbucks also means that
consumers get a pleasant, cozy workplace with free Wi-fi and charging stations (elcectronic
socket).
Conclusion
In conclusion, Vietnam is an ideal place to do business for some reasons. Firstly, Vietnam
has a stable social with many policies, which creates favorable conditions for the company.
Secondly, the Vietnam’s economy is quickly growing during recent years. It means that the income
of Vietnamese also increases; as a result, they willing to spend more money to buy goods and
services. This will be a good condition that helps the company to get more revenue. In addition,
when Starbucks enters to Vietnamese market, they will not need to worry about the labor
because it is a one of strong point of Vietnam. Besides, the developing of technology is also an
advantage of Vietnamese market. This not only is a tool which helps the company to advertise and
distribute their goods, but also helps to keep quality up and price down. Last but not least, the
coffee industry in Vietnam is fast-growing with several strong competitors, so the company can
have changes to compete and assert their brand.
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