MASTER IN MARKETING, SALES AND SERVICES

CFVG

“Brand Management and Building Strong Brand”

Géraldine MICHEL

Professor at IAE Paris-Sorbonne

________________________________________________________

Starbucks case study

1. Do a diagnosis of the Starbucks brand.

What is the Starbucks identity ?
What is the Starbucks image in Vietnam ?

2. What is your analysis of the Starbucks internationalisation in Vietnam? Specifically,

what do you think about their brand management, their products offer and their
communication?

3. Suppose that you are a renowned marketing consultant in Vietnam. Starbucks

Corporation, the famous American coffee and coffeehouse chain, contacts you.
They are considering increasing its business in Vietnam and ask for your advice.
Looking on the internet, you collect the documents in appendix. Based on them,
what are your advices for their brand strategy, their product policy and their
communication? Be synthetic and justify your answers
Doc. 1: ABOUT STARBUCKS
Source: official website of Starbucks

Mission Statement
Our mission is to inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time. Here are the principles of how we live that every day:

Our Coffee
It has always been, and will always be, about quality. We’re passionate about ethically sourcing
the finest coffee beans, roasting them with great care, and improving the lives of people who grow
them. We care deeply about all of this; our work is never done.

Our Partners
We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity
to create a place where each of us can be ourselves. We always treat each other with respect and
dignity. And we hold each other to that standard.

Our Customers
When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers –
even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but
our work goes far beyond that. It’s really about human connection.

Our Stores
When our customers feel this sense of belonging, our stores become a haven, a break from the
worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life
– sometimes slow and savored, sometimes faster. Always full of humanity.

Our Neighborhood
Every store is part of a community, and we take our responsibility to be good neighbors seriously.
We want to be invited in wherever we do business. We can be a force for positive action –
bringing together our partners, customers, and the community to contribute every day. Now we
see that our responsibility – and our potential for good – is even larger. The world is looking to
Starbucks to set the new standard, yet again. We will lead.

Our Shareholders
We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our
shareholders. We are fully accountable to get each of these elements right so that Star-bucks – and
everyone it touches – can endure and thrive.
Doc. 2: STARBUCKS ACCORDING TO WIKIPEDIA

Founding
The first Starbucks was opened in Seattle, Washington, on March 30, 1971 by three partners:
English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker. The three
were inspired by entrepreneur Alfred Peet (whom they knew personally) to sell high-quality
coffee beans and equipment. The name is taken from Moby-Dick; after Pequod was rejected by
one of the co-founders, the company was named for the first mate on the Pequod, Starbuck.
During their first year of operation, they purchased green coffee beans from Peet's, then began
buying directly from growers.
Entrepreneur Howard Schultz joined the company in 1982 as Director of Retail Operations and
Marketing, and after a trip to Milan, advised that the company should sell coffee and espresso
drinks as well as beans. Seattle had be-come home to a thriving countercultural coffeehouse scene
since the opening of the Last Exit on Brooklyn in 1967, the owners rejected this idea, believing
that getting into the beverage business would distract the company from its primary focus. To
them, coffee was something to be prepared in the home, but they did give away free samples of
pre-made drinks. Certain that there was money to be made selling pre-made drinks, Schultz
started the Il Giornale cof-fee bar chain in April 1986.

Sale and expansion

In 1984, the original owners of Starbucks, led by Jerry Baldwin, took the opportunity to purchase
Peet's (Baldwin still works there). In 1987, they sold the Starbucks chain to Schultz's Il Giornale,
which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks
opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia,
and Chicago, Illinois, that same year. At the time of its initial public offering on the stock market
in 1992, Starbucks had grown to 165 outlets.

International expansion
Currently Starbucks is present in more than 55 countries. The first Starbucks location outside
North America opened in Tokyo, Japan, in 1996. Starbucks entered the U.K. market in 1998 with
the $83 million acquisition of the then 60-outlet, UK-based Seattle Coffee Company, re-branding
all the stores as Starbucks. In September 2002 Starbucks opened its first store in Latin America, in
Mexico City. In August 2003 Starbucks opened its first store in South America in Lima, Peru. In
November 2010, Starbucks opened the first Central American store in El Salvador's capital, San
Salvador. On March 17, 2011 Starbucks opened its third restaurant in Central America and its first
in Guatemala City, Guatemala.

Corporate governance
In January 2008, Chairman Howard Schultz aims to restore what he calls the "distinctive
Starbucks experience" in the face of rapid expansion. Analysts believe that Schultz must
determine how to con-tend with higher materials prices and enhanced competition from lower-
price fast food chains, including McDonald's and Dunkin' Donuts.

Recent changes
In March 2008, Schultz made several announcements to Starbucks shareholders. Schultz
introduced Starbucks' "state of the art espresso system", the Thermoplan AG manufactured
Mastrena, which replaced their previous superauto, the Thermoplan Verismo 801 (known
internationally as the Thermoplan Black & White). Starbucks also announced that the company
hopes to enter the energy drink market. Pre-ground beans will no longer be used, so that the
grinding of whole bean coffee will "bring aroma, romance and theater" to American stores. The
company also announced the acquisition of The Coffee Equipment Company, the manufacturer of
the Clover Brewing System. They are currently test marketing this "fresh-pressed" coffee system
at six Starbucks locations; three in Seattle, and three in Boston.

In May 2008, a loyalty program was introduced for registered users of the Starbucks Card
(previously simply a gift card) offering perks such as free Wi-Fi Internet access, no charge for soy
milk & flavored syrups, and free refills on brewed drip coffee. Free Wi-Fi Internet access varies in
different regions. US & Canadian card holders can access 2 hours of Internet access through
AT&T in the United States and through Bell Canada within Canada. In Germany customers can
get 1 hour of free Wi-Fi with a voucher card, and in Switzerland and Austria customers can get 30
minutes the same way (through T-Mobile).

In June 2009, the company announced that it will be overhauling its menu and selling salads and
baked goods without high-fructose corn syrup or artificial ingredients. The move is ex-pected to
attract health- and cost-conscious consumers and will not affect prices. At least three stores in
Seattle were "debranded" to remove the logo and brand name, and remodel the stores as local
coffee houses "inspired by Starbucks." The first, 15th Avenue Coffee and Tea, opened in July on
Capitol Hill after Starbucks employees visited local coffee houses to look around. It serves wine
and beer, and plans to host live music and poetry readings. The practice has been criticized as
"local-washing", similar to greenwashing.

In September 2009, Starbucks in the UK rolled out free Wi-Fi at most of its outlets, working with
its Wi-Fi partner BT Openzone. Customers with a Starbucks Card will be able to log-on to the
Wi-Fi in-store for free with their card details, thereby bringing the benefits of the loyal-ty program
in-line with the United States. Beginning in July 2010, Starbucks plans to offer free Wi-Fi in all of
its US stores via AT&T and information through a partnership with Yahoo!. This is an effort to be
more competitive against local chains, which have long offered free Wi-Fi, and against
McDonald's, which began offering free wireless internet access in 2010. On June 30, 2010,
Starbucks announced it would begin to offer unlimited and free Internet access via Wi-Fi to
customers in all company-owned locations across Canada starting on July 1, 2010. A store in
Seattle known for its use of the corporation's new ideas will reopen in the fall of 2010 with
modifications to the interior decorating and the addition of wine from Pacific Northwest
vineyards. The espresso machines will be in the middle of the store to create what Starbucks calls
a "coffee theater".

VIA "Ready Brew" instant coffee

Starbucks introduced a brand new line of instant coffee packets called VIA "Ready Brew", in
March 2009. It was first unveiled in New York City with subsequent testing of the product also in
Seattle, Chicago and London. The first two VIA flavors include Italian Roast and Co-lombia,
which were then rolled out in October 2009, across the U.S. and Canada with Star-bucks stores
promoting the product with a blind "taste challenge" of the instant versus fresh roast. Many people
could not tell the difference between the instant and fresh brewed coffee. Some analysts theorized
that by introducing instant coffee, Starbucks will devalue its own brand.[45] After the VIA was
successfully launched, they introduced the Decaf Italian Roast as well as a sweetened version
called "iced". In October 2010, Starbucks expanded the VIA selection by introducing four new
presweetened flavored versions: Vanilla, Caramel, Cinna-mon Spice and Mocha. With the holiday
season in mind in 2010, Starbucks also introduced the Christmas Blend and Decaf Christmas
blend. Also as a celebration of their 40th year anni-versary Tribute Blend VIA was introduced in
March 2011.
 Store closures
In 2003 Starbucks closed all six of its locations in Israel, citing "on-going operational challenges"
and a "difficult business environment."

On July 1, 2008, the company announced it was closing 600 underperforming company-owned
stores and cutting U.S. expansion plans amid growing economic uncertainty. On July 29, 2008,
Starbucks also cut almost 1,000 non-retail jobs as part of its bid to reenergize the brand and boost
its profit. Of the new cuts, 550 of the positions were layoffs and the rest were unfilled jobs. These
closings and layoffs effectively ended the company’s period of growth and expansion that began
in the mid-1990s.

Starbucks also announced in July 2008 that it would close 61 of its 84 stores in Australia by
August 3, 2008. Nick Wailes, an expert in strategic management of the University of Sydney,
commented that "Starbucks failed to truly understand Australia’s cafe culture."
On January 28, 2009, Starbucks announced the closure of an additional 300 underperforming
stores and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had
received board approval to reduce his salary. Altogether, from February 2008 to January 2009,
Starbucks terminated an estimated 18,400 U.S. jobs and began closing 977 stores worldwide.
In August 2009, Ahold announced closures and rebranding for 43 of their licensed store Star-
bucks kiosks for their US based Stop & Shop and Giant supermarkets. However, Ahold has not
yet abandoned the licensed Starbucks concept; they plan to open 5 new licensed stores by the end
of 2009.

Logo
In 2006, Valerie O'Neil, a Starbucks spokeswoman, said that the logo is an image of a "twin-tailed
siren". The logo has been significantly streamlined over the years. In the first version, which was
based on a 17th-century "Norse" woodcut, the Starbucks siren was topless and had a fully visible
double fish tail. The image also had a rough visual texture and has been likened to a melusine. In
the second version, which was used from 1987–92, her breasts were covered by her flowing hair,
but her navel was still visible, and the fish tail was cropped slightly. In the third version, used
between 1992 and 2011, her navel and breasts are not visible at all, and only vestiges remain of
the fish tails. The original "woodcut" logo has been moved to the Starbucks' Headquarters in
Seattle.
At the beginning of September 2006 and then again in early 2008, Starbucks temporarily
reintroduced its original brown logo on paper hot-drink cups. Starbucks has stated that this was
done to show the company's heritage from the Pacific Northwest and to celebrate 35 years of
business. The vintage logo sparked some controversy due in part to the siren's bare breasts, but the
temporary switch garnered little attention from the media. Starbucks had drawn similar criticism
when they reintroduced the vintage logo in 2006.

Original brown logo, Green logo used Redesigned logo

used from 1971–1987 from 1987-2010 used from 2011-
present
The logo was altered when Starbucks entered the Saudi Arabian market in 2000 to remove the
siren, leaving only her crown, as reported in a Pulitzer Prize-winning column by Colbert I. King
in The Washington Post in 2002. The company announced three months later that it would be
using the international logo in Saudi Arabia.

In January 2011, Starbucks announced that they would make small changes to the company's
logo, removing the Starbucks wordmark around the siren and enlarging the siren image itself.

Criticism and controversy

Some of the methods Starbucks has used to expand and maintain their dominant market position,
including buying out competitors' leases, intentionally operating at a loss, and clustering several
locations in a small geographical area (i.e., saturating the market), have been labeled anti-
competitive by critics. For example, Starbucks fueled its initial expansion into the UK market
with a buyout of Seattle Coffee Company, but then used its capital and influence to obtain prime
locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to
drive out small, independent competitors, who could not afford to pay inflated prices for premium
real estate. In the 2000s, Starbucks greatly increased its "licensed store" system, which permits
Starbucks licenses only if they contribute to less than 20% of the licensee's gross income, are
inside other stores or in limited or restricted access spaces, as to not dilute the brand image.
License agreements are rare in volume and usually only made with Fortune 1000 or similar sized
chain stores. The licensed store system can create the illusion of 2 or more Starbucks cafes in the
same shopping plaza, when one is a standalone company owned, and the others are licensed. The
menus of licensed stores can be the same or trimmed or modified versions of the cafes, or be
positioned as independent cafes that happen to sell Starbucks products (ex. Barnes & Noble).
Doc 3 - Starbucks celebrates 5th anniversary (by Doanh Doanh)

Photos: Starbucks Vietnam, February 1 anniversary celebrated with special promotions at

stores in Vietnam.

Starbucks celebrates its fifth anniversary in Vietnam today, February 1, and has announced it
will open its first store in central Da Nang city on February 3.

“Five years ago, most people were excited to see Starbucks arriving in Vietnam and were
mostly curious about what it is,” Ms. Patricia Marques, General Manager of Starbucks
Vietnam told VET. “Now, our customers know the brand, know our products, and, more
importantly, they know our partners [staff]. We have been well received, as proven by our
strong business performance and expansion.”

Starbucks entered Vietnam in February 2013 with the opening of its first store in Ho Chi
Minh City and currently has 34 stores in Ho Chi Minh City, Hanoi, and Hai Phong.

“We have been asked many times about when Starbucks will set its footprint outside of Ho
Chi Minh City and Hanoi, and now it’s time,” Ms. Marques said. “And not just this first
opening in Da Nang, as 2018 will continue to be a remarkable year for Starbucks Vietnam, I
believe. There will be more exciting plans executed this year.”
In celebration of Starbucks’ five years in Vietnam, on February 1 customers can enjoy a
special price of VND50,000 for any tall-size beverage at all Starbucks stores in the country.
Moreover, Starbucks Rewards members can get five times the normal stars earned when
making any purchase.

At its first store, at 76 Le Lai in Ho Chi Minh City, the first 500 customers on February 1 will
be given a small gift to mark this special day.

Since 1971, the Starbucks Coffee Company has been committed to ethically sourcing and
roasting high-quality Arabica coffee. Today, with stores around the globe, the company is the
premier roaster and retailer of specialty coffee in the world.

Starbucks’ milestones in Vietnam:

2013: - First Starbucks store opened in Ho Chi Minh City on February 1.

2014: - Starbucks store in Hanoi opened in July.

 Starbucks Vietnam partnered with Room and Read to help encourage primary school
students to read as part of its commitment to serving the community.
 Starbucks Vietnam graduated the first eleven coffee masters, with over 60 coffee
masters now, offering an elevated customer experience.
2015: - Starbucks offered Dolce Misto, a Starbucks Vietnam exclusive beverage that matches
the flavor preferences of Vietnamese customers.

 Starbucks Reserve launched the Vietnam Da Lat single-origin coffee in the US and
shortly after in Asia.
 Starbucks Vietnam began to take partners to Da Lat for an annual origin experience in
the region, where they purchase single-origin Reserve coffee from Vietnam.

2016: - Starbucks Reserve Vietnam Da Lat introduced in Vietnam for the first time.

 Starbucks Vietnam also played an active role in the local community and was fully
committed to supporting Opportunity Youth initiatives in Vietnam. In December, in
partnership with the Asia Foundation in Hanoi, Starbucks Vietnam announced a
sponsorship program for 50 youths who will receive professional and life skills
training in order to succeed in the retail sector.

2017: - Starbucks Rewards loyalty program launched in Vietnam, providing a great

experience to loyal customers.

 First Starbucks store opened in Hai Phong, the third city with the Starbucks
Experience.
 Two Starbucks Reserve Coffee Bars opened in Hanoi and Ho Chi Minh City, creating
an immersive experience that brings customers closer to their coffee and Starbucks
baristas than ever before

2018: - First store opened in Da Nang.

 Return of the Starbucks Reserve Vietnam Da Lat coffee.

Doc4: Starbucks continues to promote Vietnam Da Lat coffee (by Linh San)

Photo: Starbucks Vietnam, Popular limited-quantity coffee again available at all Starbucks
stores around Vietnam.

Global icon Starbucks has announced the return of Vietnam Da Lat coffee to its motherland,
Vietnam. The limited-quantity coffee is now available at all Starbucks stores in the country.

“They will be sold very quickly,” Ms. Patricia Marques, General Manager of Starbucks
Vietnam, believes. “We actually had to have a long conversation with the coffee department
to get more, because the allocation was too little. I just received a large order for Tet boxes.
Customers very much appreciate our products.”

Starbucks has been sourcing Vietnam Da Lat coffee since 2015 as part of the Starbucks
Reserve portfolio. Starbucks Reserve coffee is the company’s line of rare, small lot coffees
available only in limited quantities. Each is a one-of-a-kind coffee from coffee-growing
regions across Latin America, Africa, and Asia-Pacific.

Starbucks Reserve Vietnam Da Lat whole-bean coffee was first introduced in early 2016 and
was widely welcomed by customers and partners, as Starbucks refers to its staff. To mark the
return, Starbucks Vietnam is also offering a special giftset of Vietnam Da Lat coffee,
including one Starbucks Reserve® Vietnam Da Lat whole-bean pack (250grams) and one
Logo Mug (16oz) for VND370,000 (about $16).

“Vietnam Da Lat is a widely popular coffee among partners and customers and is versatile in
many brewing applications,” Ms. Marques said. “Great as a brewed coffee in the morning or a
delicious espresso option, we are excited by its return.”
From the cool and mist-shrouded pine forests of Vietnam’s central highlands comes a rare
offering - only the second Starbucks Reserve® coffee from Vietnam. Anchored by the city of
Da Lat - nicknamed “The City of Eternal Spring” - the serene environment of Lam Dong
province offers an escape from the heat and is an ideal environment for the cultivation of
high-quality Arabica beans. The fertile volcanic soil, constant cool temperatures, and
seemingly ever-present mist culminate in a coffee every bit as distinctive as the land from
which it came.

These one-of-a-kind beans deliver a vibrant acidity that highlights the notes of kola nuts,
coffee, and vanilla.

Although Vietnam today is one of the world’s leading exporters of Robusta coffee, its
specialty-grade Arabica coffee has thrived in its mountains for more than 150 years. Now,
Starbucks is offering its first single-origin coffee from the country with Starbucks Reserve®
Vietnam Da Lat.

Ms. Marques remembered that in 2013 there were a couple of international brands in Vietnam
and on the domestic side, but nobody had Arabica because Robusta dominated. She now sees
the potential of Arabica because she visits Da Lat every year. “I see how much more interest
there is from farmers about turning to Arabica because there is demand, and I think it’s a great
opportunity to showcase Da Lat coffee to the world. It’s so rewarding because our partners
are so proud,” she said.

Starbucks now works with farmers in introducing the Da Lat brand. “After the first launch of
Starbucks Reserve Vietnam Da Lat in 2016, we were very happy that customers loved the
coffee and it made the name of Cau Dat in Da Lat become popular,” she said with evident
pride. “We expect this year will be the same, because the coffee crop is even better.”

By purchasing coffee, Starbucks has also helped local farmers. “Da Lat has only one crop per
year,” she explained. “Now the quantity is fine, but we need double next year. That challenge
will be interesting, because when we need double production and even better quality, farmers
will need to improve their quality. Now when we go to Da Lat, the farmers are very interested
in showing us the quality of their beans. They talk about how beautiful the cherries are. They
are ready to talk and they are ready to pass the level of quality. They want to be in the
business of consistently selling good quality coffee in larger quantities.”

In addition to coffee purchases, Starbucks has also invested in the coffee-growing community
in Da Lat by supporting education for the children of coffee farmers. Introducing Da Lat
coffee to the world is one of interesting features of Starbucks’ journey in Vietnam.
Doc 5- Vietnamese coffee scene heats up while Starbucks takes its time

New chains target millennials in one of Southeast Asia's youngest markets

August 14, 2018

The Coffee House caters to young Vietnamese consumers looking for an affordable yet trendy place to
relax. (Courtesy of The Coffee House)

HO CHI MINH CITY -- Dozens of homegrown Vietnamese coffee shop chains are rapidly
expanding their networks in a market that analysts say local operators understand better than
international names like Starbucks can.

The fastest growing of these startups is The Coffee House, based here in Ho Chi Minh City.

"We aim to open as many as 700 outlets across Vietnam in the next five years, at an average
of 10 new stores each month," founder and CEO Nguyen Hai Ninh told the Nikkei Asian
Review.

Cong Ca Phe, another newcomer headquartered in Hanoi, already has expanded overseas.

The chain opened its first shop in Seoul last month and plans two more in the South Korean
capital. In Vietnam, Cong Ca Phe has grown to more than 50 locations since 2007, and
intends to add one or two stores monthly through 2020.

Cong Ca Phe attracts customers with its unique decor modeled on Vietnam's command-
economy period of the late 1970s and early 1980s.
 Cong Ca Phe cafes sport a retro-Vietnamese look. (Courtesy of Cong Ca Phe)

The owners of these emerging chains possess a good understanding of Vietnamese culture and
consumers. They set clear targets for the kind of customers they cater to, and develop unique
content for their spaces geared toward trendy young consumers, said Phuong Nguyen,
a market researcher based in Ho Chi Minh City.

The affordable and varied drink menus are gaining popularity among students and young
working-class people in cities. The chains provide a place where customers can spend hours
without the internet connection being interrupted -- a problem at other cafes.

These characteristics let new Vietnamese chains compete strongly against foreign brands that
have better management and services, Phuong said.

International giant Starbucks has moved slower than expected into Vietnam. Five years after
its entry, the number of Starbucks stores stands at only 38. By contrast, Thailand has over 330
Starbucks, while Indonesia boasts more than 320 and Malaysia has over 190.

Another startup ranks as the most popular chain in Vietnam in terms of outlets and brand
awareness. Established in 2002 by a Vietnamese-American, Highlands Coffee offers an
atmosphere designed to attract young consumers aspiring to fashionable Western lifestyles.
Highlands Coffee, Vietnam's biggest cafe chain, has grown to more than 200 locations now from 60 in
2014.

After being acquired by Philippine-based restaurant group Jollibee Foods in 2012, the chain
has expanded to more than 200 stores from 60 in 2014, located mainly inside shopping
centers. Highland's service has changed to target younger customers with affordable prices
rather than the business class.

Newer chains including Thuc Coffee, Urban Coffee Station and Phuc Long, all of which have
debuted during the past decade, are experiencing revenue growth estimated at 7% yearly. By
contrast, older brands such as NYDC, Australian-owned Gloria Jean's Coffees and South
Korea-based Caffe Bene -- and even new local chains The KAfe and Saigon Cafe -- are
scaling down or closing their businesses.

High operating costs, including for rent, and a difficulty finding locations are among the main
reasons for these cutbacks. A 200-sq.-meter Starbucks store in Ho Chi Minh City requires an
initial investment of around $215,000, while a Coffee House shop requires $86,000, a local
cafe shop owner estimates.

Many older brands were slow to adapt their business models to changes in customer tastes,
which now closely follow new trends around the world, Phuong explained.