Analysis of Starbucks' Entry Strategy Into Vietnam Market: July 2020
Analysis of Starbucks' Entry Strategy Into Vietnam Market: July 2020
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Nguyen Hoang Tien1, Rewel Jiminez Santural Jose2, Nguyen Phuong Mai3, Bui Van Thoi4, Than Van Hai5
1, 2
Saigon International University, Vietnam
3
International School, Vietnam National University, Hanoi, Vietnam
4
Nguyen Tat Thanh University, Vietnam
5
T.L.T Sports Marketing Corp, Viet Nam, Vietnam
Abstract
Starbucks is one of the international F&B groups to enter the Vietnamese market at the latest while other competitors have
been present and successfully doing business in this market. This article re-analyzes a new and cautious market penetration
strategy like Vietnam in recent years and tries to answer whether such a slow and reliable strategy will ensure great success for
Starbucks in the future.
Keywords: Starbucks, entry strategy, foreign market, Vietnam, food and beverage
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International Journal of Multidisciplinary Education and Research www.educationjournal.in
promotion activities or increasing public relations efforts. established at Pike Place Market in Seattle, Washington on
Specifically, promotion (sales promotion) is a collection of March 30, 1971 by three people: English teacher Jerry
measures that can make customers buy now, buy more to Baldwin, history teacher Zev Siegl, and writer Gordon
increase sales immediately by providing additional physical Bowker. All three were inspired by the business owner, Mr.
or mental benefits to buyers. Public relations (PR) is a tool Alfred Peet to sell high quality coffee beans and other types
used to communicate products, people, places, ideas, of coffee grinders. After Pequod's name was rejected by one
activities, organizations, and even the whole country. People of its co-founders, the company was named after its first
use PR to build good relationships with customers, mate [4, 5, 17].
investors, the media and the community where businesses - In 1987, with the support of local investors, Schultz
operate. A market entry strategy can become a particularly bought Starbucks Coffee
effective competitive strategy in the following cases [6, 7, 8]: - In 1998, Starbucks Coffee entered the UK market by
When the current market is not enthusiastic about a acquiring 60 stores from the Seattle coffee company.
certain type of product or service. - In 2000, the annual Starbucks Coffee Christmas Bookdrive
When the product usage rate of existing customers can was published by the national truth publisher.
increase significantly. - In 2003, The Starbucks Coffee Master Program was
When the market share of main competitors is founded.
decreasing while the consumption of the whole industry - In 2006, two consecutive years Starbucks Coffee was
is increasing. awarded the Big Tick Award by the Business in the
When past sales and marketing costs are strongly Community association for excellence in CSR.
correlated. - In 2008, Starbucks Coffee announced it had served 87,000
When economies of scale increase, give businesses mixed drinks of all kinds.
basic competitive advantages. The number of employees working for Starbucks Coffee is
over 137,000. Starbucks Coffee is the first brand to reach 10
2.3. F&B market million likes on Facebook.
F&B (Food and Beverage Service) means restaurant and
drink service, a type of food and drink service for 3.2. Introduction to brands and products
customers. F&B is a part of the hotel which is responsible Starbucks Coffee says no to a franchise. Starbucks Coffee
for meeting the needs of dining when guests stay at the coffee shops fall into one of three business forms:
hotel. In big hotels, F&B is also responsible for some - The first (most), founded and managed by Starbucks
accompanying services such as organizing birthday parties, Coffee.
parties, buffet and banquets at the request of customers [1, 17, - The second: Starbucks Coffee joint venture with local
18]
. Company established and managed.
Meeting customers' eating and drinking needs: Catering - The third (very few) Starbucks Coffee licenses its
is an extremely important factor in every hotel unit. Not operations and controls under the strict conditions that
only helps improve the quality of service, but it is also accompany it.
one of the leading factors to increase the position of the With the slogan "Romanticizing coffee beans",
hotel and contribute to increasing revenue. That is the "Romanticizing customers", Starbucks CoffeeTM has made
reason why meeting the increasing demand for food and an unthinkable change in a whole culture. Among the many
entertainment of customers is the leading role of F&B factors that create the prominence in economic activities are
industry. 4 factors: mass, originality, advertising and marketing
Promoting revenue: Today, organizing parties at hotels capacity and Internal organizational strength. According to
is not too strange by professionalism, elegance and the assessment, the success of Starbucks CoffeeTM is
cleanliness. Undeniably this is a lucrative source of mainly due to the high mass popularity. CEO Howard
revenue, not small compared to other services in the Schultz said, we are not in the position of the coffee
hotel. business class, but on the side of customers drinking coffee.
Increase brand awareness: What do you think makes a
customer happy and comes back to the hotel? Space, Design
price or quality of service? In fact, these are 3 Most Starbucks Coffee stores appear modestly and
extremely important factors to conquer every customer. popularly, from colors, designs, furniture, exterior. All have
If a hotel has good prices, good food and great service a unique, simple, not too fussy, creating a cozy atmosphere,
quality, there is no reason that a passerby or a tourist friendly, irrespective of every class, social class when
will hesitate to leave positive feedback or reviews. entering any Starbucks Coffee shop.
Consumers often compare the quality of service
between hotels and this is the fastest way for you to Location
become the number 1 choice as well as successfully Even at the largest, most modern commercial center in a
bring your brand to the minds of customers. certain city, Starbucks Coffee is located in a very modest
position throughout the mall, almost at any corner. With a
3. Research results modest area, without decoration, Starbucks Coffee always
3.1. An overview of Starbucks Coffee affirms its attraction and always proves the high spirit of
Starbucks Coffee is a worldwide famous brand of coffee, Starbucks Coffee Group in psychology, technology, art and
headquartered in Seattle, Washington, USA with 17,800 culture.
stores in 49 countries, including 11,068 in the United States,
nearly 1,000 in Canada and more than 800 in Japan. and Mass service
Hong Kong, China, England, France. Starbucks Coffee was Starbucks Coffee has always been aimed at the masses,
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International Journal of Multidisciplinary Education and Research www.educationjournal.in
namely for "coffee" products for women and children who compared to the products of other brands. There may also be
never drink coffee. Therefore, from the people addicted to some brands that have good products with good packaging
home-grown coffee-drinkers "coffee silk" drowsiness "to (Illy, Gloria Jean Coffee) but still just coffee.
earn a cup of coffee with his level and taste to enjoy.
Research on coffee consumer behavior
3.3. Market analysis Vietnam is a country with coffee culture. In Vietnam, the
The first coffee tree was introduced to Vietnam in 1870 phrase "go to drink coffee" has become a habit when you
until the beginning of the 20th century and was developed in want to invite your friends to go to the bar to talk or gather,
some French plantations. But our country's coffee industry but when it comes to it, it is not the best. This means you
has made great progress. Coffee in Vietnam is most can drink coffee and you can drink other drinks. However,
developed in the Central Highlands, accounting for the the amount of coffee used per capita is only about 0.7kg /
majority of Robusta coffee. That is why coffee gradually person / year. According to IAM's study of coffee usage
becomes familiar with Vietnamese people. At work, when habits, 65% of Vietnamese coffee consumers drink coffee
meeting, talking with partners or chatting with friends, seven times a week, favoring men (59%).
relatives or when entertaining, Vietnamese people can sip a SWOT analysis
cup of coffee. Vietnamese people have their own style of Starbucks Coffee, when entering the Vietnamese market,
enjoying coffee, they do not consider coffee as a quick will face major competitors such as famous coffee shop
drink, have anti-drowsiness effect like Americans but enjoy chains such as Trung Nguyen, Highlands and Gloria jeans.
coffee as a culture: sipping and thinking. Southerners often An overview from these three brands in Vietnam, can be
wrap coffee in cloth and cook in pots, they prefer to drink seen as follows:
iced coffee rather than hot drinks. And the Northern people, Target customers: Highlands currently serving are
mainly drink coffee mixed with coffee, black or brown but middle-class consumers, office workers, young people;
all are very concentrated. Sitting by the cup of coffee, Gloria Jeans customers are young people under 35
sipping small mouth while reading the newspaper, listening years old, middle class, office workers; The customer
to music, chatting with friends, with business partners, or base of Trung Nguyen is quite rich with all subjects,
sitting at work, and also to ponder about life. Vietnamese from young people, traders, freelance, non-job people
people are: bold, bitter, fragrant almond, earthy. Depending to office workers, high-income people, elderly people.
on each type of coffee that gives the person the taste of the Coffee drinking habits: The three main factors that
sourness, the oilyness, and the scent of different fruits. A influence the decision to drink coffee in the cafe are the
good cup of coffee is a cup of coffee with a natural flavor, taste, the style of the cafe and the brand of coffee used.
with acidity, freshness, clean tongue; has a more intense and
special oil that emits almond, fruit, butter and earth. In terms of style, Highlands learns Starbucks CoffeeTM's
market-driven approach, offers exceptional specialty coffee
Instant coffee market and a coffee-making environment by combining classic and
The market is almost saturated and occupied by many big modern, Eastern and Western, offering guests The restaurant
players such as Nescoffe (Nestlé) (32%), G7 (Trung feels modern life in line with Vietnam's long-standing
Nguyen) (23%), Vinacafe (Vinacafe Bien Hoa) (38%), cultural tradition. Trung Nguyen's coffee philosophy with
Moment (Vinamilk) and a number of other brands. This is a the overarching message: Coffee develops creativity and
market with a high level of competition, requires large knowledge. However, the way of expressing this style
investment, and is unlikely to make a product difference. through the service, product development and design of
Trung Nguyen's shop is fading while these at Highlands and
Market of roasted coffee Gloria Jeans are well done.
Home-roasted roasted coffee, packed and sold at markets In terms of taste, Highlands chooses to harmonize domestic
and supermarkets with many brands. The products focus on and foreign flavors and styles, Gloria Jeans is a foreign style
some major types of coffee in Vietnam market such as and flavor, Trung Nguyen aims to define the taste of its
Arabica, Robusta, Cherry, Mink coffee plus some flavors coffee as coffee identity. Vietnamese coffee.
such as butter, salt, vanilla, cocoa. From there we have From these observations, the SWOT analysis for Starbucks
many brands such as Moka, Mink, Creativity, Legendee, Coffee can be made as follows:
Vanilla and Hazelnut. Strengths and weaknesses :
-Famous coffee brand, style of coffee is affirmed, with
Roasted and ground coffee at the restaurant presence in 55 countries.
Coffee shops appear everywhere, from popular to high-end - Rich coffee taste.
places. - Business mode towards people and the environment.
- Starbucks Coffee does not accept franchises, only joint
Coffee to go ventures, self-employment or operating and controlling
Vietnamese people do not have the habit of walking and licenses.
drinking coffee but often buying a cup of coffee and - The price is not really preferential
bringing it to the office or sitting somewhere to drink. Opportunities and challenges:
Therefore, this type of coffee is still new and has the - The majority of young people are ready to absorb new and
potential to grow even though it is not really clear. modern consumption trends.
In general, the market for roasted and ground coffee is huge - The to go coffee segment (which is an advantage of
and growing at a high rate. In Vietnam, although there are Starbucks Coffee) is still empty.
many brands of roasted coffee, but not many products are - Compete with some famous coffee brands present in
really breakthrough, really making a clear difference Vietnam.
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International Journal of Multidisciplinary Education and Research www.educationjournal.in
- The habit of drinking coffee with strong and bitter taste of has a global business strategy, but most of its foreign
Vietnamese people is not easy to change. affiliates are branded Baskin Robbins.
When Dunkin was first established, both Dunkin and
3.4. Competitive strategy Starbucks were in fact not rivals, because Dunkin served
Strategy: mainly Donut while Starbucks sold coffee. In 2006, Dunkin
- Business: continue to expand the brand to the world and officially announced becoming a direct competitor to
position in the market. Starbucks on the front of the chain of specialized coffee
- Marketing: change the logo, remove the word "Starbuck - shops. The interior of the Dunkin stores is also designed like
coffee". a fast food store and this is different from Starbucks. The
- Product: expand menu with tea and cake. The main Starbucks store chain also specializes in coffee but serves
competitor is the Dunkin ’Donuts brand in North America additional snacks for customers. The design of Starbucks
because the brand also sells coffee and quick drinks to serve branches is quite comfortable and suitable for customers
individual customers who come to eat cake and drink who want to relax, read or meet friends. Like Dunkin,
coffee. Starbucks is focusing more on products that cater to
Competitive advantage: customers who shop in the afternoon and evening.
- Specializing in fine product line targeting the high-end Starbucks built a more premium brand than Dunkin as the
customer market. menu of branch stores was more diverse and more selective.
- Starbucks has the advantage of quality coffee and space to Starbucks stores are quite comfortable and quiet with free
enjoy music combined. At the same time, Starbucks is a Internet, thereby attracting consumers to meet friends,
brand associated with coffee that has been developed and study, listen to music or surf the web while using its
has a longer standing position. products. In contrast, Dunkin implements a price-
Develop broadly with 3 positionings: competitive strategy and focuses on middle-income
- Premier coffee: serving excellent coffee with excellent customers. This retail chain chain always wants to lower
service quality and enjoying environment. input costs but still maintain the quality of its products and
- The third place: the goal of this strategy is that Starbucks services at a standard level. With the above differences in
will create customer loyalty, turning Starbuck stores into the quality and business strategy, the way Starbucks and Dunkin
third place behind the homes and offices of every citizen, advertise is quite different. However, before the rapid
especially in North America expansion of Starbucks, Dunkin is now increasingly focused
- Take away: before the strong rise of strong rivals such as on advertising through social networks or new media to
Dunkin Donuts and coffee companies small coffee shops, attract young people today.
domestic coffee shops and fast consumption trends around
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