V.

STRATEGIC ISSUES

To gain more customers’ insights, we have conducted a survey collecting

approximately 400 respondents of people who have already purchased at least one
time Starbucks’ products. From that, we come to some possible strategic issues that
this brand is coping with in Vietnamese market.

1. The survey

We created an online survey and used social channel network to call for responses
from February 22 to March 15, 2020. Here is the link to the survey and here is the list
of answers. After 3 weeks of collecting, we have got roughly 409 answers.

This survey to analyze the attitude of the customers who have purchased Starbucks’
products and what factors drive them the most to buy, as well as what factors they
think Starbucks should modify to improve the customers experience

1.1 The demographic factors of the customers:

Ages & Gender:

Employment status & monthly income

The number of female customers outnumbers that of the male. Women may spend
more money on the brand than their counterpart, while a portion of male still prefer
sitting on the pavement drinking coffee.

The employed adults older than 24 take the largest proportion in the graph, which
somehow matches the result in monthly income of more than 8,000,000 VND. It can
be explained by the relatively high price of the brand, which followed by this group.
Students with income less than 3,000,000 VND take up a smaller proportion. This can
be attributed to the fact that Starbucks target customer is not mainly student, it is
urban and affluent, often on-the-go white-collar employed people.

Frequency of purchasing:

The answer of not being regular visitors take the largest percent. This raises a
question, what factors prevent customers from regularly purchasing in Starbucks
stores?

1.2 What customers think about Starbucks’s products

We believe that the responses of customers’ opinions about Starbucks collected from
the survey can partly help answer the question.

Sources of acknowledgement
The largest percentage goes to the inherent popularity with nearly 50% and
recommendations of friends and family (46.2%) (this question allows multiple
answers).

Starbucks Vietnam seems to inherit from the existing brand name of Starbucks
international and they also have a solid foundation of reputation so that their
name can be well spread through “words of month”.

On contrary, we can see a strategic issue here that the advertisements of Starbucks do
not work very effectively when there is a small fraction of customers knowing
Starbucks through this channel.

Starbucks’ value positioning

Customers can tell Starbucks products from other brands due to their well-known
reputation, which implies that customers believe that going to Starbucks can give
them a title – the drinker of an internationally famous brand.

Starbucks’ products:
Most of Vietnamese customers (67.8 %) say that they agree or totally agree that they
prefer Vietnamese coffee.

It is consistent with some foreseen barriers to Starbucks’ entrance to Vietnam – a

different taste and style of drinking coffee.
Starbucks’ price

A few customers agree that the price Starbucks charges is reasonable compared with
other competitors in the market.

Promotion, advertisements & method of payment

Customers are not very appealed by the promotion and advertising campaigns that
Starbucks are offering.

Also, the number of customers who feel satisfied with using the cards to pay the bill is
not significant, which indicates that they do not really enjoy this method of payment.

The crucial factors to the customers’ visiting

These factors are the decoration, the atmosphere and the space in Starbucks, followed
by the quality of the products. As analyzed from the chart, the customers give the
highest points (8 and 9) for these factors, while price and promotion receive the lowest
points.

This can be explained that although customers do not really enjoy the American tastes
of Starbucks, they do believe in the quality of the products, as promised by the
company. They come to Starbucks for the services and the space Starbucks offer,
which is the augmented product, as discussed in the previous section

Customers suggestions

Starbucks should do something to make them feel the price more worth their payment,
by promoting their promotion, advertisements and do some modifications in their
product line.
VI. RECOMMENDATIONS

Here are some recommendations based on our research to help facilitate this
competition in Vietnam.

1.1 Localization strategy - Product localization

From what we have observed, even some customers who believe in Starbucks still
want a familiar Vietnamese coffee taste. As we know. There are two main species of
coffee beans in the world, Coffee Arabica, and Coffee Robusta.

Vietnamese coffee drinks are brewed with robusta beans, which have a sharper, bitter
flavor and higher caffeine content (1.7–4%) than Starbucks’ mild arabica beans (0.8–
1.4%). For example, while Vietnamese customers who are familiar with the traditional
coffee often prefer a stronger dose, the robusta beans in the cà phê sữa đá can give
them the energy boost with a whopping 2.7% caffeine content.

Therefore, diversifying the menu so that they can provide customers with an option to
choose between robusta and arabica drinks can be a solution. Also, they can add
some local beverages and bakery to their menu. For example, Vietnamese enjoy
lemonade and especially Bánh Mỳ due to their richness in nutrition and convenience.
Developing more locally-relevant products to appeal to the local customers can help
Starbucks to increase market size.

1.2 Offering more seasonal drinks or special events that to justify its premium
price point

Being a worldwide brand well-known for its premium coffee and other products,
Vietnamese Starbucks’ average coffee price is higher than the local. This does not
stop customers from visiting Starbucks. However, the frequency of their visits is
certainly affected.

The solution is not to adjust their price (because we know that adjusting price range of
a brand requires to consider many factors) but to make use of special events to justify
its price. There are plenty of special occasions in Vietnamese calendar each year.
Occasional promotion’s effectiveness is proven through the reactions and shares on
Facebook posts whenever Starbucks launches a promotion.

To make these programs more viral, Starbucks should have some influential and
popular cuisine fanpages and KOLs talk about them.

Picture. A Starbucks’ discount program on a famous cuisine page. (Accessed on February

13th, 2020).

1.3 Improving limitations of Starbucks Rewards Program

We can not deny Starbucks Rewards Program is a good marketing personalization

strategy; however, it must go with the conveniences at the same time.

Based on social media complaining comments from loyal customers, we found the
following limitations of the New Rewards Program:

- Once the value is loaded in the card, customers cannot request a refund.
 - Customers can only earn Stars (Stars here equal to accumulated points) when
they pay with a registered Starbucks Card. Other forms of payment cannot
be awarded.

For example, if you purchase a Starbucks product by cash, you can not get Star but
you have to buy a card for 100,000 or 500,000 VND.

Generally, this causes customers no longer feel a sense of achievement and

causes differentiation from getting to the gold level. Instead, they feel they are
bound and ‘appropriated’ to some extent.

Therefore, Starbucks needs to adjust the policy so that customers can reload and
withdraw money whenever they want. Also they should allow customers to
accumulate points in all forms of payment.
 (Picture. Complaining comments from many customers on Starbucks Facebook Fanpage)

1.4 Adaptation to new trends

Starbucks needs more flexibilities to adapt both product trends and social trends. For
example, when milk tea and peach tea have become favored in Vietnam in recent
years, Highlands Coffee and The Coffee House have quickly updated the two drinks
on their menu to attract more customers.

Besides, social media is a good way to release viral content related to social trends.
Especially in Vietnam, the number of Facebook users is 7th in the world. Making use
of this channel by creating more viral content is an effective way to increase brand
identity. Provenly, Durex Vietnam is a successful case becoming ‘top of mind’ brand
in Vietnam by their marketing strategies.

1.5 Promoting advertising programs

Most of Starbucks’ advertising activities rely on social media networks such as

Facebook and Instagram whereas their competitors are doing really well in other
platforms such as partnership with the third parties, celebrities and KOLs to target
customers. For example, The Coffee House and Highlands Coffee spent money on
video clips to celebrate Tet holiday, which draws attention of many audiences and
helps to promote the image of the company.
 (Image. Videos of The Coffee House and Highlands to celebrate Tet holiday.)

Therefore, Starbucks should also do some viral campaigns to enhance their coverage
to a larger area and customers, which helps to make their image closer to customers.