Consumer Behavior Assignment

Starbucks Corporation is an American coffee company and coffee house chain, which was
founded in 1971. Starbucks is considered to be world’s largest coffeehouse chain because of its
good reputation in flavor. On 1 February 2013, Starbucks opened the first store in Ho Chi Minh
city, Vietnam. Until September 2018, Starbucks reached 27,339 locations all over the word in
which 34 stores in Vietnam. (Knoema, 2018)

Question 1:

Decision making process is divided into three types are habitual decision making, limited
decision making and extended decision making. Beverage is basically considered as a low-
involvement product, however, the price of Starbucks beverage is higher than other coffee shops.
Therefore, Starbucks customers will often go through five steps of limited decision making
before buying their products namely problem recognition, information search, evaluation of
alternatives, purchase decision and post-purchase behavior. (Cox et al,1983)

Problem recognition
At first stage is the recognition of demand, when people thirsty they need to response the sense
which is absent and also at this time the actual state is lower than the ideal state. There are two
kinds of stimuli will appear in customers’ mind such as internal and external. Internal stimuli is
from their thirst and the external is from advertisement or reviewer they have seen. Moreover,
when people mention about coffee brands for connoisseurs, they often think about Starbucks
because this brand successfully build a trust in consumers’ mindset for a long period of time and
this will make them easy to choose Starbucks. Beside the physiological need, customers who
choose Starbucks also have a demand of esteem (such as self-esteem, recognition, status)
(Maslow, A.H, 1943) . By its word of mouth reputation, people who holding or drinking a cup of
coffee from Starbuck make them seem to have a high income. After that consumers will step into
hesitating what beverage they will choose to buy in Starbucks.
Information search
Consumers will search information about the products and services of the brands that they have
chosen in the problem recognition stage. Because the price of Starbucks is moderately high for
average income so the customers tend to seek out the information more deliberately. Consumers
engage in external and internal information search. Internal information is from the memory they
had experienced before. They will retrieve in their mind the fragrance of roasted coffee beans,
skillful customer service, the airy atmosphere or even brilliant color scheme in the coffee shop
that they had went to in the past. Whereas, word of mouth and advertisement are considered as
external information. However, regarding to food and drink field people often have a tendency to
trust on suggestion or recommendations from consumers who have experienced Starbuck
products and services. Because these information bring more real feeling and trust. Many people
hold the viewpoint that commercial information exaggerate the real value of products or services.
Because Starbucks aware this customer behavior, so they somehow avoid investing in
advertisement in multimedia means such as magazine, newspaper and television. Consumers can
share their feedbacks or suggestion on their site called “My Starbucks Idea”, which brings more
trust to the one who has never gone to Starbucks.

Evaluation of alternatives
After finishing the period of searching information, consumers will make a comparison and
evaluating the information they get according to their needs and wants for ensuring the money
they spend is worthy. Various aspects is set in customers’ mind when evaluating like quality,
flavor, customer service, etc. Outstanding from others, Starbucks had asserted their high-quality
coffee flavor long-ago so consumers will not doubt about their quality. Atmosphere inside one
coffee shop plays a key role in retaining consumers beside quality of the beverage. Starbucks has
an alluring ambiance with rich warm color scheme (green, brown and white) and hand-drawing
looking art on walls which brings natural and relaxing feelings to consumers while they are
doing work or chatting. Starbucks also build the sincere relationship with and consumers. For
examples, on 23 October 2018, Starbucks open the first signing store in Washington, D.C, USA
where the staff using American signing language (ASL). Starbucks not only takes an initial in
breaking the language barrier among consumers and staffs but also shows their concern on
various kind of consumers. Instead of investing much money on advertising, Starbucks have
opened many stores, and many of them are nearby each other and the positions which Starbucks
choose are close to universities, offices and shopping malls, and this might makes it easy for
consumers to access.
Purchase decision
After evaluating streams of information, consumers will come into purchasing stage.
This stage is considered to be the most important among other stages in decision making process
of the consumers which affects directly to the purchasing of consumers. Planned purchase,
partially purchase and impulse purchase are considered as three types of purchasing (Kacen,
2002). Starbucks has in-store enticing advertisement of popular or new products which stimulate
the desire of consuming their products in customers’ mind. Obviously, Starbucks is an
coffeehouse chain, so there is hardly to happen the situation that the customers step into the
coffee shop because of their thirsty, but then go out without buying things to response their
stimuli. Even if the customers don’t have any idea of what kinds of beverage they will drink, the
staff will introduce them different type of drinks that are the best-seller of their store.

Post-purchase behavior
Last but not least, post-purchase behavior stage happens after consumers purchasing so not many
company pay attention on. However, this stage is essential in affecting the consumers decision
making in the future. The more satisfaction is given to consumers, the more continuous of sales
will occur. Starbucks train the staffs carefully to bring the professional feelings to consumers,
and this might make them repurchase. Regarding consumers who have “Starbucks Rewards™”
will receive incentives when they reach green rank and gold rank for retaining and stimulate
them to experience their products and services again. If “My Starbucks Idea” have a function for
new consumers to know more about Starbucks in evaluating stage, in this stage consumers use it
to give their own comments. “My Starbucks Idea” help consumers to believe that Starbucks has a
concern on consumers’ opinion.

Question 2:
Since long times ago, coffee is the most popular kind of drink throughout the world with the
value of international coffee market is predicted to reach a peak of 5.5% CAGR
(Mordorintelligence, 2018) . Hence, coffee market is considered to be one of the most attractive
markets. To build a successful and outstanding among the advent of various coffeehouse brands,
Starbucks had done a lot of unique strategies in different aspects to attract their consumers and
prospective buyers such as quality of supply source, various choices, society concerned
campaign, location and marketing strategy.

Quality of supply source

Starbuck target is medium high income consumers, so they study deliberately about the
characteristic of coffee beans and seek for the high quality ones. Starbucks connects with
different coffee beans storages all over the world such as Latin America, Africa and Asia- Pacific
(Starbucks, 2014) to meet consumers’ satisfaction. Because of high-quality source, Starbucks
make a deep impression on consumers especially connoisseur.

Various choices
Starbucks serve different kinds of coffee to extend choices for consumers namely hot brewed
coffee (the method that use hot water to balance between the acidity and sweetness of coffee),
cold brew coffee (the method that use cold water and brew the coffee in plunger pot to make the
coffee sweeter and less acidity), straight-taste coffee like Espresso, and diluted-taste drinks by
using hot steam milk or whipped cream like latte or ice-blended. Beside the basic drink like
coffee, Starbucks also supply another beverage like fruit juice or healthy drinks for who can’t
drink coffee and on diet. Moreover, Starbucks also have breakfast, pastry, protein boxes or
yogurt make more range of choices for consumers who don’t have a favor on coffee or want to
drink coffee and eat breakfast at the same place.

Society concerned campaign

In 2012, Starbucks not only gives special welfare for same-sex couples but also shows distinct
attitude in supporting same-sex marriage and lesbian, gay, bisexual, and transgender (LGBT+)
community. Although after that Starbucks didn’t reached revenue as expected because a group of
homophobia people appeal to boycott Starbucks, however, Starbucks still claims sincerely that
there decision had not for commercial, they want to sympathize with those people who from
LGBT+ community (NghiaDuc, 2013). On 9 July 2018, Starbucks announce that they will
replace all plastic straw by a cup has a lid part allow consumers drink without straw by 2020
(NaceTrevor, 2018). Starbucks impressed consumers by taking an action in protecting
environment which will create a positive image in consumers’ mindset.

Location
Number of Starbucks stores increase yearly and reach 27,339 locations until September 2018
(Knoema, 2018), which means Starbucks has a high accessibility . The higher
accessibility of them, the more demand from customers. Because every cities or countries
consumers passed all have Starbucks store, so consumers don’t need to go far to get a cup of
coffee of their favorite brand. In addition, the coffee fragrance from the stores stimulate people
to consume coffee.

Marketing strategy
After pleasing consumers, Starbucks use their websites “My Starbucks Idea” and page on social
networks to spread the positive comments to others people. Word-of-mouth marketing strategy
contribute to the successful of Starbucks. This strategy not only increase trust in consumers’
mind but also let the consumers know that Starbucks care about consumers’ feelings and
opinion.

Question 3:

Starbucks segments its market according to three segmentations namely demographic,

psychographic and geographic segmentation.

Demographic segmentation
Demographic is divides a population based on gender, age, family size, income, etc. The most
obvious variables that Starbucks use are income and age. Starbucks set a target forward medium
high consumers who are willing to pay higher price for a cup of daily coffee (average cost for a
Starbuck beverage is $3.15 in New York and $12.30 in Russia). Basically, not many low income
consumer want to buy a drinks for resolve their thirsty with that level of price. Besides, working
adults especially office worker occupied largest market share in Starbucks consumers because
they not only need to drink coffee but also a space for checking e-mail or finishing their work.

Psychographic segmentation
Psychographic segmentation divide consumers by using consumers’ lifestyle, activities, interests,
opinion, etc. Regarding to office worker, people all know that Starbuck is a high-class coffee
brand, its gourmet flavor and elegant ambiance are claimed for lifelong. Thus, office workers
will choose Starbucks to make a meeting with their counterparts or clients. About students, they
tend to curious about new things and also concern about appearance. Starbucks invests
intensively in designing new model for their products and new promotion. For example,
Starbucks tumblers are designed and changes according to seasons and various themes which
attracts them to collect these.

Geographic segmentation
Finally, Starbucks also use geographic segmentation by placing stores in central areas or near
schools, offices, and shopping mall where people can access there easily. And in those places
where gather most of their target consumers such as students and working adults.

Question 4:
The appearance of superb information technology, people tend to do a lot of things on the
internet because of its convenience. Starbucks make their own application on mobile phone
which available on both app store and google play to order to order and accrue point without
bringing along the member card. The application also has nutrition information of products
which enable people control their diet. The numbers of people who use social networks increase
dramatically, Starbucks utilize this behavior by creating their own page and account, new
products and promotion will appear whenever consumers suffer the internet. Lifestyle of
majority of people nowadays is very fast, they don’t want to waste much time on responding the
stimuli, so that Starbucks has open Drive-through stores for busy consumers all things they need
to do are click on the sensor menu and wait for their coffee at waiting area without leaving car.
People are more concerned about environment problem. Each years 175 millions of plastic straw
are wasted, so Starbuck decide to remove the plastic straw at their store by using new cup of
coffee that enable consumers drink without using straw by 2020. On 13 September 2018,
Starbucks claim to open 1,000 environmentally friend stores by 2025. (RosenbergLizzy, 2018)

Reference:

A.H. Maslow. (1943). A Theory of Human Motivation, Psychological Review 50 [Article]

Duc Nghia. (2013) . Top 7 famous company that support same-sex community. NDH, [Online].
Available at:

http://ndh.vn/7-cong-ty-noi-tieng-vi-ung-ho-nguoi-dong-tinh-2013102407467847p146c158.news
[Accessed at 24 October 2013]

Knoema. Number of starbucks stores globally 1992-2018 (2018) [Online]. Available at:

https://knoema.com/kchdsge/number-of-starbucks-stores-globally-1992-2018 [Accessed at 30
July 2018]

Lizzy Rosenberg. (2018). What Is The "Starbucks Greener Stores" Framework? It Is Very Eco-
Friendly. Elitedaily, [Online]. Available at:

https://www.elitedaily.com/p/what-is-the-starbucks-greener-stores-framework-it-is-very-eco-
friendly-11920916 [Accessed at 31 October 2018]

Mordorintelligence. Coffee Market - Growth, Trends and Forecasts 2018 – 2023 (2018)
[Online]. Available at:
https://www.mordorintelligence.com/industry-reports/coffee-market [Accessed at March 2018]

Starbucks, Discover the exceptional taste of Single Origin coffee (2014) [Online]. Available at:
https://www.starbucks.com/promo/origin [Accessed at 2014]
Trevor Nace. (2018). Was removing plastic straw of Starbucks effective to protect environment?
Forbes VietNam, [Online]. Available at:
https://forbesvietnam.com.vn/tin-cap-nhat/starbucks-loai-bo-ong-hut-nhua-co-thuc-su-giup-bao-
ve-moi-truong-4108.html [Accessed at 16 July 2018]