Reference no: EM133214401

The Vietnam market in 2013, bringing its dominating coffee culture to a country renowned for its passion for coffee. Vietnam, according to USDA (2019), is the second-largest coffee grower and exporter in the world in 2019, having produced more than 30,5 million bags of coffee. Over the following five years, it is anticipated that the annual growth rate would be greater than 8 percent. The Vietnamese are proud of their traditional, powerful, black coffee brew. Coffee is included in their everyday routine. In 2020, Vietnam's specialty coffee market will be valued at more than $5.9 billion (USDA, 2019). On the domestic coffee market, well-known global coffee brands like Starbucks, Highland Coffee, Gloria Jeans, and Coffee Bean compete with local chains such Phuc Long, Chot Nho Cafe, and Trung Nguyen Coffee. Foreign companies have struggled to penetrate this potentially lucrative market because local Vietnamese chains provide lower pricing, react to new trends more rapidly, have a greater number of locations, and perform better than their foreign counterparts.

Coffee chains in Vietnam may be split into three segments: low-end, middle-range, and high-end. Vietnam has the second-highest monetary value of coffee exports in the world, with total coffee exports of $3.3 billion (Workman, 2020). According to the World Bank (2018), the average local wage is only $148, and the majority of the population earns this amount. Consequently, the need for inexpensive coffee is significant. Due of their low-priced coffee, low-end coffee shops typically lack storefronts and provide poor service. Moreover, metropolitan middle-income residents have a significant desire for coffee. A cup of Vietnamese coffee from these espresso businesses typically costs between 20,000 and 40,000 VND. In response to the growing demand for medium-sized coffee chains, the local market is becoming increasingly saturated with well-known brands, such as Chot Nho coffee and Cong café. A portion of the population has seen a significant gain in income over the past several years due to the economy's consistent expansion. Companies that join the market for upscale coffee shops must remember that their target clients are young adults with solid incomes and a high level of education (Ta, 2020). In this attractive market, due to social-cultural effect and fierce competition, Starbucks is juggling to formulate an appropriate marketing mix and effective strategy to grow in the Vietnam market.

[Source: Starbucks, 2020; USDA, 2019 and Workman, 2020)]

1. Develop strategies for Starbucks to sustain itself in the stated environment. Then, analyze the environment mentioned in the above case to justify your answer.

2. Develop an appropriate marketing mix for Starbucks considering issues raised in the stated case. Elaborate on standardization and adaptation aspects. Provide appropriate suggestions.