On Wall Street, that is, where its shares have been heading south in recent months, bucking the market trend. A regular customer, an electronics salesman Do Thanh Tung, said he is eager to see if Starbucks coffee really is different from the Vietnamese blends he has been drinking since he was 10 years old. From just a narrow storefront, Starbucks offered some of the world’s finest fresh-roasted whole bean coffees. Starbucks wanted to turn all Starbucks employees into partners, give them a chance to share in the success of the company and make clear the connection between their contributions and the company’s market value (Thompson& Strickland, 2009). FILE – This Oct. 27, 2020, file photo shows a sign at a Starbucks Coffee store in south Seattle. Unlike China, where tea is the caffeinated drink of choice, Vietnam inherited a coffee culture from French colonizers in the 19th century. To bring people together, inspire change and make a difference in people’s lives are all part of being a good neighbor. Customer demand can be seen in the number of people purchasing bottled mixed vegetable and fruit drinks, seeking dietary reparation or preventative health measures against a wide array of illnesses. Marketing (“Starbucks enters entrenched Vietnam coffee market | SeacoastOnline.com”) There is a strong demand among youth in Hanoi and Ho Chi Minh City for branded goods and services. Local chains such as Trung Nguyen Coffee and Highlands Coffee have more experience catering to the Vietnamese love of strong coffee. Members also enjoy complimentary slice of cake on birthday month. 1st Jan 1970 Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. A study was conducted on Starbucks's regular customers reveals that they have a unique cultural experience with the company (Talpau & Boscor, 2011). Do you have a 2:1 degree or higher? The chain’s 60 shops across the country serve Vietnamese-style individually brewed cups, along with varieties including Italian espresso and Turkish-style coffees, a mix which Vu expects to sell well in the United States as well. Intention–Behavior Discrepancy of Foreign versus Domestic Brands in Emerging Markets: The Relevance of Consumer Prior Knowledge.Â, Ta, N. (2020). Compared with other Asian markets which Starbucks has recently entered, the Seattle-based company faces a unique scenario in Vietnam, where French-inspired coffee culture rules supreme, two homegrown chains have established presences and family-run sidewalk cafes are as many as noodle shops. He had commented on an email to The Associated Press that Starbucks is looking forward to growing with Vietnam’s already vibrant coffee industry and making a positive impact in the communities where they operate. (NaturalNews) Starbucks, the coffee shop that is renowned for its seemingly limitless coffee varieties, is opening a new chain of juice bars in response to the growing health trend towards unprocessed and whole foods. (2020). (“Starbucks enters entrenched Vietnam coffee market | SeacoastOnline.com”) Starbucks will have to battle entrenched tastes, local brands, international rivals and the thousands of neighborhood coffee shops that dot Vietnam’s streets. We've received widespread press coverage since 2003, Your BusinessTeacher.org purchase is secure and we're rated 4.4/5 on reviews.co.uk. So who is Starbucks’ targeted customer in Vietnam? Other internal threats would include the effect of supplier’s power and the buying power of the customer. Vietnam is also the world’s second-largest exporter of coffee behind Brazil. Today, with more than 17,400 stores in 60 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world. With registered card, you can manage your card and balance in a variety of ways online, collect Stars and earn rewards, like a free drink, with every purchase. Starbucks think the market demand is high enough to justify its own set of chains, not just an extra few fruit options on the menu at their coffee shops. Due to selling low-prices coffee, low-end coffee shops usually do not have stores and excellent services. Son Group member: Le Quynh Anh Nguyen Phuong Uyen Le Thi Truc Ly Quach Minh Thanh 3. Besides, providing excellent service quality and top quality products, high-end customers appreciate fast service for their busy schedule and quite environment where they can discuss business. Laos, a landlocked country bordered by Thailand, Myanmar, Cambodia, Vietnam and China, has so far reported only 24 COVID-19 infections, according to a tally kept by the Johns Hopkins University. Starbucks card members enjoy Starbucks Rewards which include complimentary handcrafted beverage of customers’ choice, brewed coffee and/or whole bean coffee. Business model development: a customer-oriented perspective.Â, Workman, D. (2020). Starbucks will be seeking to compete with local rivals in a country known for its strong cafe culture. Vu even visualized Starbucks opening up to a hundred cafes in Vietnam in the next 10 years, but it remains questionable whether people in a country with such a low GDP per capita, and a different taste in coffee, would really accept Starbucks. Senatore further added that Starbucks doesn’t compete directly with the local coffee shops, just the same way that McDonald’s or KFC doesn’t compete directly with the local fast-food vendors. They said they came to see if there is any difference between Starbucks Vietnam and in other nations. The company also offers Chinese dishes to blend in with its beverages, such as moon cakes and Chinese puddings, to associate with Chinese festivals. Their stores are a neighborhood gathering place for meeting friends and family. While this is reassuring to some, others remain concerned, especially those who’ve come from areas where large coffee chains have pushed smaller operations out of business. Starbucks’ stability and expansion in Vietnam will be determined by external sources which include potential entrants which may also want to venture into the Vietnamese market, also by internal and external threats which include pre-existing local brands and industrial rivalries and by threats of substitutes whereby another type of beverage or service may replace Starbucks coffee and beverages. (2018).  Weak Starbucks may allow Trung Nguyen to regain footing.  Retrieved from https://www.vir.com.vn/weak-starbucks-may-allow-trung-nguyen-to-regain-footing-60405.html, Vietnam: Coffee Annual | USDA Foreign Agricultural Service.  (2019).  Retrieved from https://www.fas.usda.gov/data/vietnam-coffee-annual-4, Wirtz, B. W., & Daiser, P. (2018). Starbucks has some equally impressive statistics with 41 years of experience and 3,300 stores in 12 countries in the China and Asia-Pacific region. This business strategy successfully connects tea and coffee, and cultural conflicts can be transformed into creative advantages. Due to a steady growth economy in the last couple of years, a part of the population sees a significate increase in their income. This will become a weakness when the company expands to other countries including Vietnam. According to the company, Starbucks already purchases a “notable amount” of high-quality arabica coffee from Vietnam and are working to buy more. The Vietnam Starbuck has announced the plan to close some stores in the next few years due to poor performance (Vietnam Investment Review, 2018). Their merchandises include coffee and tea‐brewing equipment, mugs and accessories, packaged goods, music, books and gifts. Laos marks Starbucks 17th market in the region, where it continues to accelerate locally-relevant retail innovation in more than 10,000 stores within the region. The name evoked the romance of the high seas and the seafaring tradition of the early coffee traders. The market is heating up due to strong economic growth, especially in the three largest cities in Vietnam. Cà phê espresso của chúng tôi, latte của bạn. Coffee Exports by Country. Financing: Total net revenues increased 5% to $22.4 billion in fiscal 2017 compared to $21.3 billion in fiscal 2016. Retrieved 26 January 2020, from https://www.worldbank.org/en/country/vietnam/overview. This includes responsible purchasing practices, supporting farmer loans and forest conservation programs. Culver said Starbucks will price its products in a premium position that is competitive. Our academic experts are ready and waiting to assist with any writing project you may have. A level of value must support the competitive advantage to the customer that is at least compatible to the competitors. Free resources to assist you with your university studies! Retrieved from http://www.worldstopexports.com/coffee-exports-country/. If you need assistance with writing your essay, our professional essay writing service is here to help! Although the company's success is well-known around the globe, Starbucks is struggling in Vietnam.  After eight years of entering the Vietnam market, Starbucks only has a total of 34 stores.  Additionally, the company has announced the plan to close some stores in the next few years due to poor performance (Vietnam Investment Review, 2018). Vietnam is the world’s second-largest coffee producer and it has dozens of local chains as well as small coffee shops on nearly every street corner which present a major challenge for Starbucks to break into the crowded market. Ralf Matthaes, a regional managing director at market research and consultancy firm TNS said that Local consumers will be drawn by the Starbucks name and young people desire that modern, hip culture. Do you have a 2:1 degree or higher in business or a related subject? (“Starbucks Coffee Company”) Starbucks have always believed in the importance of building a great, enduring company that strikes a balance between profitability and a social conscience. Starbucks is attempting to slowly expand in a market where it was once shunned.. The grand opening of the HCM City store marked Vietnam as Starbucks’ 12th market in the Asia Pacific, and adding up to its chain of some 3,400 stores in the area. Vietnam Coffee Chain Market describes an in-depth evaluation and professional study on the present and future state of the Vietnam Coffee Chain market across the globe, including valuable facts and figures.Vietnam Coffee Chain Market provides information regarding the emerging opportunities in the market & the market drivers, trends & upcoming technologies that will boost … The Vietnam coffee market is price-sensitive.  Foreign brands have been struggling to profit from this market as local Vietnamese chains offer very competitive prices. One Vietnamese, Nguyen Tien Tam, 35 had been quoted as preferring Vietnamese coffee, which is stronger than Starbucks and that as a Vietnamese, he only love local coffee. All work is written to order. Starbucks offers the finest coffees in the world, grown, prepared and served by the finest people. She confirmed that Vietnam with a population of over 90 million people is a large market and provides opportunities for many coffee brands to develop. Starbucks is the world's number one brand in coffee and coffee-related products.  The company has 30,626 retail locations around the globe.  Entering the Vietnam market in 2013, Starbuck has brought its dominant coffee culture to the country that is well known for its passion for coffee.  Despite the high expectation of the company's success, Starbucks has also moved slower than expected.  Eight years after its entry, the number of Starbucks stores reaches just 34, which is much lower compared to 4,100 Starbuck stores in China, 326 in Indonesia, and 330 in Thailand.  Local coffee chains are challenging the giant with lower prices, convenience, and localization experience.  The Vietnam Starbuck has announced the plan to close some stores in the next few years due to poor performance (Vietnam Investment Review, 2018).  Starbucks is struggling in a coffee market that worth more than $5.9 billion (USDA Foreign Agricultural Service, 2019).  The purpose of this paper is to examine the challenges that Starbucks is facing in the Vietnam market, learn the company's strategies to overcome difficulty, and analyze factors that influence the company's future business. Highlands Coffee stores, with overhead music and Wi-Fi Internet, are located in prime retail and landmark locations in Vietnam’s largest cities. Well, it has happened – Starbucks has finally. John Culver, president of Starbucks China and Asia Pacific, tells AsiaLIFE that Starbucks is deeply respectful of Vietnam’s long and distinctive local coffee culture and they know coffee is a national pride for many Vietnamese and as such, Starbucks look forward to contributing and growing Vietnam’s already vibrant coffee industry. Coffee is not just coffee but more a way of life in Vietnam. Coffee chains in Vietnam can be divided into three categories base on the income of consumers: low-end, medium-end, and high-end coffee chains.  Vietnam is the second-highest dollar value worth of coffee export in the world, with 3.3 billion total coffee export (Workman, 2020). TC Motor also had a successful year when it sold more than 63,000 cars under the Hyundai brand, one of the three brands with a largest market share in the Vietnamese automotive market. Real Estate: According to Bloomberg, in the year of 2018, Vietnam's real estate market is increased by 17% (Lee & Chau, 2019). Dang Le Nguyen Vu, whose Trung Nguyen Group owns 55 cafes in Vietnam, said he welcomes Starbucks and doesn’t view the American newcomer as a threat. Health foods now represent a $50 billion industry, and Starbucks has been very open about their intention to expand into the market and establish themselves as a major player. (“Starbucks opens chain of raw vegan juice bars”) (“Starbucks opens new blend of juice bars”) (“Starbucks to open first Evolution Fresh juice store – USATODAY.com”) New markets for coffee and healthy beverages are beginning to emerge and that can be retailed in their cafes. Registering your Starbucks Card at https://card.starbucks.vn or mobile application signs you up to enjoy Starbucks Rewards™ Program in Vietnam. The juice bars will offer fruit and vegetable options which can be blended according to customer preference, or in sampled and true menu options to produce natural fruit juices that are high in dietary fiber, vitamins A, C, and E, and antioxidants. In 2010, Starbucks first introduced nine different types of tea drink selections, including both Chinese and exotic teas. Starbucks has acquired this market with its localization and personalization strategies. Md Isa, A., Subhan, M., & Saud, M. (2017). (“Starbucks opens first store in coffee-loving Vietnam”). STARBUCKS IN VIETNAM 2013 1. He plans to increase the number of cafes in Vietnam to 200 in the next two years. STARBUCKS IN VIETNAM 2. Starbucks is more than Coffee, they are passionate sources of coffee and everything else that goes with a rewarding coffeehouse experience. Retrieved from https://www.vn.undp.org/content/vietnam/en/home/countryinfo.html, Baidya, M. K., Maity, B., & Ghose, K. (2019) Innovation in Marketing Strategy: A Customer Lifetime Value Approach.  Retrieved from http://jbm.nccu.edu.tw/pdf/volume/2502/JBM-vol-2502.pdf#page=80, Dao, K., & Heidt, T. (2017). Their coffee buyers travel personally to coffee farms in Latin America, Africa and Asia to select the highest quality beans. One local coffee store owner, Nguyen Phi whose shop is located in the chaotic traffic in the roundabout just west of the New World Hotel and of Phi’s newest neighbour and competitor, Starbucks commented that they don’t operate on the same battlefield and belong to two different businesses. John Culver, president of the company’s China and Asia Pacific region, said in a telephone interview that Starbucks will grow aggressively in Vietnam and there will be hundreds of stores for Starbucks though he didn’t give a time frame for the expansion. The company has strong ethical values and ethical mission statement. A customer, Nguyen Phuong said many in Vietnam know of Starbucks and want to be fashionable. Retrieved from http://repository.vnu.edu.vn/handle/VNU_123/67911, Qian, Y & Xing, T. (2016) Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China.  Retrieved from http://dx.doi.org/10.3968/8197, Rajasekaran, R. (2015). (“Starbucks opens first store in coffee-loving Vietnam”) (“Starbucks has seen mixed reactions in AsiaLIFE HCMC”) John Culver, president for China and Asia Pacific said that Starbucks plans on showing up in a way that doesn’t currently exist in the market in terms of the premium products and the experience they offer. He further explained that people in Vietnam drink their coffee very strong and Starbucks coffee is very light. Starbucks already operates more than 3,300 stores across 11 countries in the Asia-Pacific region, and its entry into Vietnam marks the latest round in a campaign to attract Asia’s emerging middle classes despite a stagnating U.S. economy. They also offer a selection of premium Tazo® teas, fine pastries and other palatable treats to please the taste buds. You can view samples of our professional work here.. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of BusinessTeacher.org. Starbucks Coffee Company Starbucks began in 1971 as a roaster and retailer of whole bean and ground coffee, tea and spices. (“Starbucks Coffee Company”) In 1983, Howard travelled to Italy and became fascinated by Italian coffee bars and the romance of the coffee experience. GROUP 3 - KAKAKA Lecturer: Mr. Coffee becomes a part of their daily life.  The market for specialty coffee in Vietnam is worth more than $5.9 billion in 2020 (USDA Foreign Agricultural Service, 2019).  That makes Vietnam become an attractive target for global cafe chains.  The domestic coffee market has fierce competition with well-known foreign coffee brands such as Starbucks, Highland Coffee, Gloria Jeans, and Coffee Bean competing against each other and with local chains, such as Phuc Long, Chot Nho Cafe, and Trung Nguyen Coffee.  The five largest coffee chains represent 15.3% of the market share, of which Highlands Coffee takes 7.2%, while Starbucks holds about 3%.  Foreign brands have been struggling to reach this potentially profitable market as local Vietnamese chains offer low prices, adapt more quickly with new trends, and have more significant quantities of stores and perform better than their foreign chains. 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