1. Introduction

1.1. Research Background

Luckin Coffee was founded in 2017 and is based in Xiamen, China. This brand is the pioneer of a technology-driven new retail model to provide coffee and other products of high quality, high affordability, and high convenience to our customers. Their mission is to be part of everyone's everyday life, starting with coffee [1]. On August 1, 2023, Luckin released its financial statements for the second quarter of 2023, which showed an increase of 88.0% compared to $3,298.7 million for the same period in 2022. The number of stores increased from 7,195 as of June 30, 2022, to 10,836 as of June 30, 2023, in just one year. At the same time, the average number of customers transacted per month also increased significantly, from 20,712 to 43,070 [2]. This essay, it is analyzes how Luckin Coffee has successfully grown rapidly in the highly competitive Chinese market within 6 years through marketing strategy and thus influencing consumer behavior and psychology.

1.2. Literature Review

So far, Luckin Coffee has been very effective in its marketing strategy. Based on its successful example of rapid market share, many people have analyzed and studied Luckin as a case. Xiaocong Cao has analyzed the marketing strategies used by Luckin Coffee from a brand surrounded by financial fraud scandals to its current success in capturing a good reputation and market share in the fast-growing coffee market [3]. Luckin Coffee has utilized online marketing strategies to accurately position itself in the market, as well as to promote its brand and design products with style, thus increasing consumers' interest in its products. Luckin Coffee utilizes online marketing strategies to accurately target the market and skillfully promote the brand and design products with style, thus increasing consumer loyalty. Meanwhile, Luckin utilizes the new retail concept to innovate its marketing strategy by combining online and offline modes and becomes a fast-growing model for coffee brands under data and technology. Kexin Chen found that Luckin utilizes new media advertising and a variety of new marketing methods with a technological twist to allow users to access brand information more quickly. Moreover, Luckin has gained traction through cross-border co-branding marketing as a private label and co-brand. In a saturated market, it promotes unexpected co-branded products, rejuvenates the traditional image of branded coffee, and makes differentiation out of a homogenized product [4]. Chenghao Li compared Luckin Coffee with Starbucks and found that Luckin rapidly captured the Chinese coffee market through promotional tactics and mobile applications [5]. The 3Cs (Company, Competitor, Customer) and 4Ps (Product, Price, Promotion, Price) were used to analyze the reasons why Luckin was able to compete with Starbucks, which were strongly related to its market positioning, and to suggest strategic changes that need to be made to make the brand more profitable.

2. Consumer Psychology

Consumer psychology is the field of study that examines the psychological processes and behaviors of consumers as they purchase and use products or services. It focuses on how consumers perceive, evaluate, and make purchasing decisions and their post-purchase satisfaction, attitudes, and other factors related to subsequent repurchase matters. Consumer psychology is the basis for the development of marketing strategies, and it is only when companies have in-depth insight into consumer psychology that they can make products that satisfy the needs of consumers and lead them to buy their products consistently.

Luckin Coffee's rapid growth is closely linked to its marketing strategy, which is based on an in-depth study of consumer psychology. For example, in the 2022 Beijing Winter Olympics, the skier Eillen Gu achieved excellent results, and at a time when there is a high level of Internet buzz, Luckin Coffee chose to officially announce Eillen Gu as the brand ambassador, to allow consumers to see a professional, youthful, and energetic brand image. At the same time, by utilizing the effectiveness of sports stars, the "national idol" in a short period makes the exposure of Luckin Coffee very considerable in a short time.

3. Consumer Behavior

Consumer behavior refers to the study of how customers, both individuals, and organizations, satisfy their needs and wants by choosing, purchasing, using, and disposing of goods, ideas, and services [6]. Many external factors and internal can influence consumer behavior. Examples include social factors, differences in personal status, cultural differences, and many others. When companies can fully consider these elements in their marketing strategies, they can gain a more complete and comprehensive understanding of the market and help it grow.

Apart from the classic flavors traditionally found in coffee shops, Luckin Coffee innovates based on China's unique tea and culture, and coffee of Western origin, to inspire Chinese consumers who are interested in both. At the same time, this innovative behavior can make its brand image more positive, so that more people in the society can understand the oriental tea culture and knowledge about tea, which can arouse consumers' emotional resonance to Chinese culture and enhance the uniqueness of the brand.

4. The Marketing Theory of 7Ps

4.1. Correlation of the 7Ps of Marketing Mix with Consumer Psychology & Behavior

The Marketing Theory of 7Ps is a marketing model that is used to describe the key elements in a marketing campaign (product, price, promotion, place, people, processes, physical evidence). By considering these elements together, companies can develop more effective marketing strategies to meet consumer needs and increase brand awareness and value.

Product, price, promotion, place, people, processes, and physical evidence are the seven elements that are closely related to consumer psychology and behavior, and Luckin needs to consider these elements comprehensively and flexibly adjust its marketing strategy to adapt to the ever-changing consumer psychology and behavior. By utilizing these elements, companies can create a more positive consumer experience and a better brand image. This integrated approach helps Luckin Coffee achieve long-term success in the highly competitive coffee chain market with a large base of loyal consumers. The following section will briefly explain the ways of influence related to consumer psychology and behavior in these 7 elements.

4.2. Correlation of Each Element of Marketing Mix with Consumer Psychology & Behavior

The link between marketing mix elements and consumer psychology and behavior is an important aspect of marketing research and strategy. Consumer psychology and behavior will be oriented to influence based on the 7Ps of the marketing mix.

Although consumers are sometimes irrational, the vast majority of the time they will evaluate a product by its price. Consumers are sensitive to price, especially in highly competitive industries, and will make purchasing decisions by comparing the quality of products and brand reputation and selecting a product that meets the pricing they have in mind. Price will largely determine consumer behavior, especially the willingness to buy; the perception of the price is the consumer's psychological assessment of cognition. Consumers make product choices based on their preferences and needs, and when a product has an innovative design, convenient features, and other benefits, it can lead to a certain level of consumer identification with the product, which can lead to positive feedback both psychologically and behaviorally. There is a correlation between promotion and principles of persuasion. The principle of persuasion is used in the promotional strategy of product marketing to influence consumer behavior and purchasing psychology. For example, promotional activities use the principle of scarcity to emphasize the limited availability of a product or the duration of a promotion to stimulate a sense of urgency and motivation to buy. By incorporating the principles of persuasion into their promotional strategies, companies can more effectively guide consumers in their purchasing decisions. These principles help marketers potentially control consumer psychology and behavior to create more impactful and compelling promotions.

Products can influence consumer choices when purchasing a product through the convenience and accessibility of the distribution channel. For example, the extensiveness of offline stores will make the brand more memorable in the minds of consumers, a way to make them feel familiarity. As a result, when consumers are given a choice between the same product and an unknown brand, there is a high probability that they will choose that brand. Consumers' interactions with salespeople, customer service, and other employees affect their psychological connection to the brand and determine consumer behavior. And while communication between the two is direct, positive interactions can lead to higher levels of trust and loyalty. It's when a product has brand interactions with exceptional customer service and other meaningful interactions that can make for a positive consumer experience and help build a long-term relationship. The convenience and efficiency of the buying process largely affect consumer satisfaction. Consumers prefer a simplified process, thus avoiding the consumer behavior of abandoning a purchase outright due to the psychological unpleasantness caused by a cumbersome buying process. The overall physical presentation of tangible elements such as packaging and store décor helps consumers perceive the brand. Using visual and tactile influences to give consumers a certain level of perception in advance plays an important role in anticipation when it comes to consumer behavior. And well-designed packaging and well-organized offline store decoration can be used to create a positive first impression of the brand in the minds of consumers.

Before analyzing the performance of The 7Ps of the marketing mix in Luckin Coffee, data based on a small set of questionnaires (51 people) from the current Luckin Coffee will be presented.

5. Data Analysis

In this 51-person questionnaire, there were 12 males and 39 females. Most of the people in the sample are relatively young, with the percentage of juveniles even accounting for 56.86% of the total sample. Besides, 1/3 of the total sample are young adults between 18-25 years old. The data collected from the questionnaire show that the proportion of people who would drink coffee regularly is close to 75%. Among these people, they usually drink it once every two or three days or once a week, which shows that many people still have a demand for coffee.

5.1. Consumer Demand

Figure 1: Reasons for Purchasing Coffee.

Figure 1 is a survey on why consumers buy coffee. From the data feedback, it is clear that most people buy coffee because of its refreshing and revitalizing effects. Many others buy coffee because they like it or simply because they want a drink when they are out shopping. A few people buy coffee because they need a third-party space to work or socialize, or because they are influenced by their social environment and just because they are thirsty. It was also mentioned by others that coffee is drunk to burn fat and boost metabolism. From this, it can be seen that consumers buy coffee for a variety of reasons, which indirectly shows that there is a high demand for the coffee industry.

5.2. Consumer Considerations

Figure 2: Factors Influencing Consumers to Buy Coffee.

According to the data collected in Figure 2, many factors influence consumer purchasing decisions, but the determining factors related to consumer psychology and behavior are still related to coffee taste and price. In addition, more than one-third of the population is also influenced by the brand effect and awareness and thus makes the corresponding purchase decision behavior.

Luckin, as an extremely fast-growing coffee brand, is bound to influence consumer psychology and behavior by using several tactics closely related to marketing. Data suggests that more than half of people know Luckin as a brand because of its extensive offline store and social media promotion. And with close to half of the recommendations coming from friends, it is clear that the role of loyal customers from Luckin Coffee is also very influential.

In addition, Luckin also uses promotional strategies to influence consumers' psychology and behavior. According to the questionnaire, issuing coupons can attract consumers' purchase desire most, most people buy a cup of Luckin coffee in the range of 10-20RMB, compared with Starbucks and Costa, the average price of a single cup of coffee will be about 30RMB of international brands, Luckin can have a great advantage in price.

5.3. Consumer Preferences

Figure 3: Most Favorite Coffee Series.

Luckin Coffee also focuses on product innovation compared to other coffee brands. Its signature is not only the classic latte series but also the coconut series. As shown in Figure 3, 40% of consumers favor Luckin's Classic Latte series. But at the same time, the innovative Coconut Series is also favored by consumers, with 35% of consumers in this sample preferring this series the most.

Today, the Coconut range has become one of Luckin's hallmarks, appealing to consumers with a need for coffee and a curiosity for innovative drinks. Original Coconut Latte" has become synonymous with Luckin, and when people think of this product, they think of the Luckin brand.

5.4. Consumer Purchase Pathways

Figure 4: Consumers' Most Common Purchase Routes.

Luckin Coffee has also researched and developed its app and website to make it more convenient for both buyers and sellers and by publicizing it, more than half of the people choose to use this way to buy products. Having Luckin's app and website not only makes the order sequence clearer but also gives the consumer a relatively precise pick-up time, which saves time to a certain extent (Figure 4).

At the same time, it can reduce the time and labor costs that some offline stores spend on ordering, greatly accelerating the speed of food production, and consumers can pick up the products they ordered within 30 minutes. Therefore, for students or commuters, the speed of coffee completion is highly significant.

5.5. Consumer Expectations

Figure 5: Areas Need to Improve.

Figure 5 investigates the areas where consumers think Luckin Coffee needs to improve. It is worth noting that more than half of consumers agree that Luckin needs to offer more discounts and promotions. And nearly half want Luckin to be more affordable and have a wider variety of flavors that are more accessible to the general public.

Moreover, only 33.33% are completely satisfied with Luckin's offline stores. Therefore, to maintain the presence of loyal customers, there needs to be some adjustments in the layout and design of the stores so that consumers can feel more comfortable.

In conclusion, Luckin Coffee relies on effective marketing strategies to satisfy consumers' psychology and stimulate their purchasing behavior in a competitive industry, successfully penetrating the market in a short period.

6. The 7Ps of Marketing Mix Used in Luckin Coffee

6.1. Product

Product refers to a physical product or service for which a consumer is ready to pay [7]. Luckin has differentiated its product from other brands of coffee through innovation. It is the first coffee chain brand to fuse coconut with coffee and promote it across the board. As a result, on the first anniversary of the launch of the Raw Coconut Latte, it has been "certified" to have sold more than 100 million cups [8].

Consumers tend to try new and unique products. The "Coconut Series" will appeal to consumers who are curious and willing to explore new flavors. On a societal level, innovative flavors are talked about for a short period, and consumer tendencies are influenced by external factors, so consumers may be more motivated to try an innovative coffee if they see positive reactions to it from others.

In addition, Luckin Coffee has diversified its product lineup by introducing drinks related to the traditional Chinese "tea culture" through innovation. To meet the needs of different consumer tastes, some people like the richness of coffee, while others prefer the lightness of tea, this combination of products can attract a wider audience. Moreover, in a highly competitive industry, branded products need to be innovated to help Luckin Coffee stand out in the market, differentiate itself from competitors, and leave a deep impression in the minds of consumers.

6.2. Price

Many scientists believe that price is one of the most important elements in the market, which not only increases profits for the company but also increases market share [9]. Penetration pricing is a marketing strategy used by Luckin to attract customers to a new product or service by offering a lower price during its initial offering. The lower price helps a new product or service penetrate the market and attract customers away from competitors [10].

Luckin uses the penetration price strategy to enter the highly competitive coffee market by offering coffee at a low price, triggering consumer interest and changing their purchasing decisions. Customers desire affordable, high-quality products [11]. Low prices can attract price-sensitive consumers and motivate them to try new brands. This helps create brand awareness and build a base consumer base. Once consumers try it and are satisfied, they may turn into loyal customers, influencing the surrounding and even social groups that need coffee, thus strengthening the brand's position in the market.

Currently, Luckin offers a weekly coffee voucher, which allows them to enjoy a 9.9 RMB coffee once a week. In a coffee market where the average price of coffee is 20-30 RMB, it quickly attracts consumers' attention and purchase branded coffee products. Once consumers try it and feel satisfied, they may turn into loyal customers, influencing the surrounding and even the social groups that need coffee, thus consolidating the brand's market position.

6.3. Promotion

Promotions, as an element of the marketing communication process, is the continuous exchange of information that allows a company to communicate with its neighborhood and wider environment [12]. Luckin uses through-the-line promotion, which refers to promotional strategies that involve both above and below-the-line methods, enabling customers to engage with the product or brand in multiple ways [13].

Consumers can usually post Luckin Coffee advertisements in high-traffic areas such as office buildings and inside elevators in shopping malls, which not only increases brand awareness but also attracts the attention of potential consumers. In the previous data collection, it was also shown that most people buy coffee to refresh their minds and simply to drink it while shopping. Therefore, Luckin chose a place that fits their target audience group's frequent passages.

Meanwhile, word-of-mouth is also an effective promotional method that triggers consumers' emotional resonance; Luckin Coffee provides high-quality coffee and a pleasant consumption experience, which prompts customers to spread positive word-of-mouth, thus expanding the brand's influence. In addition, social media marketing is also very effective. Young consumers are often active on social media platforms, so it's a great way to interact directly with them, get their feedback and engagement, and build a connection between the brand and the consumer. Additionally, Luckin sends promotions and coupons to customers via email or text message.

6.4. Place

Place refers to the distribution of products [13]. The goods produced are to be sold to the customer; they must be ready in the right place for the customer to transact [14]. Luckin Coffee's strategies related to online ordering and delivery, and collaboration with takeout software (e.g. Meituan Takeout) are closely related to consumer psychology and behavior.

Online ordering and delivery offer convenience and comfort. By ordering coffee from their home or office through an online platform, consumers fulfill their need for convenience, reducing the time and effort required to travel to an offline store. And, in a fast-paced life, consumers expect immediate fulfillment of their needs. By ordering online, they can get the coffee they need quickly. Takeaway software is a platform in itself, and by partnering with takeaway software, Rejuvenate Coffee can market its products to a wider group of consumers. And on takeaway software, consumers can easily compare options and prices with other coffee shops to make better decisions. These strategies fit with the modern consumer's increasingly strong behavior of seeking convenience and quick fulfillment of their needs, and help Luckin Coffee maintain a competitive advantage in the market.

6.5. People

People are the employees who interact with customers, thereby delivering the service to customers [13]. They could influence both the quality of the provided service and the perception of the consumer [15]. Employees of Luckin Coffee have good attitudes, uniform work clothes, and high efficiency, which are closely related to consumer psychology and behavior.

Friendly and positive staff attitudes can enhance the consumer's in-store experience, and positive staff attitudes can enhance the consumer's in-store experience, leading to greater patronage and increased satisfaction. A good service attitude builds consumers' trust in the brand, increasing the likelihood that they will return, and thus increasing loyalty. The uniformity and professional image of Luckin's staff dress code can help build the professional brand image of Luckin Coffee and enhance consumer awareness and trust in the brand. Additionally, the efficient service of Luckin employees may lead to increased sales by prompting consumers to make quicker purchasing decisions and reduce wait times.

Through the attitude, appearance, and efficiency of its employees, Luckin Coffee can create a positive consumer experience that meets consumer demand for good service and a professional image. This helps to shape positive brand perceptions, enhance consumer loyalty, and set the stage for the brand's continued success.

6.6. Processes

Processes refer to how a service is provided or delivered [13]. Luckin Coffee accepts multiple payment methods, such as WeChat Pay, Alipay, and other digital payment methods. Convenient payment methods and shorter waiting times can increase consumers' motivation to buy, which in turn boosts their satisfaction. This strategy is in line with the growing behavior of modern consumers who are looking for a convenient and efficient shopping experience.

Luckin Coffee has widely promoted mobile payments in the Chinese market, especially through WeChat Pay and Alipay. This allows consumers to easily complete payments using their smartphones without the need for cash or credit cards. A digital membership card and points rewards program was also launched, which allows consumers to check their balance and points at any time through the app and use their points to get discounts when making payments or redeem them for branded gifts directly in Luckin malls, which is convenient to use.

Overall, Luckin's payment process is designed to be efficient and quick, allowing consumers to complete payments without wasting time. This is especially important for students or working customers who are in a hurry in the morning.

6.7. Physical Evidence

Physical evidence is the tangible aspects of a service. Luckin creates an experience that matches the brand's impression through the simplicity of the store's décor, which matches the color of the impression. The packaging, which is co-branded with famous IPs, attracts consumers' attention and plays an active role in their purchasing decisions.

Luckin's impression colors are blue and white, and the decoration of offline stores is also mainly blue and white, to deepen the visual impression of consumers and make them think of Luckin when they see the appearance of the color, hence establishing a unified brand image in the minds of consumers.

In addition, the IP image of Maltese, a line dog designed by Korean illustrator Moonlab studio, has recently become very popular on social media platforms, and Luckin has co-branded with it, creating packaging and cup sleeves, and even derivative peripheral products such as stickers. The co-branded packaging can inject more personality and creativity into Ruixing Coffee, creating a unique brand image. It strengthens the connection between the brand and consumers, which leads to greater attention and recognition in the market.

7. Conclusion

This essay discusses Luckin's marketing strategy as a case study by integrating consumer psychology and behavior into the 7Ps marketing mix theory. It explains the reasons for its success and analyzes how Luckin has been able to gain an edge in the highly competitive coffee market and achieve long-term growth. A questionnaire is also used to collect and analyze data based on the existing market and suggest areas for improvement.

The main section analyzes the importance of each component of the marketing mix in marketing one by one. Firstly, Luckin's innovative coffee products and reliance on the innovative raw coconut range to successfully enter the competitive market are presented. Nowadays, Luckin continues to innovate and even combines coffee with traditional Chinese tea culture, attracting many consumers who are curious about novelty and interested in tea culture. Luckin has successfully utilized its innovative power to occupy a huge place in China's coffee market. Then, the article also introduces Luckin's use of penetration pricing in its marketing strategy, showing that price is an effective way to enter the competitive market and an important factor influencing consumers' decisions. Compared with international coffee chain brands Starbucks and Costa, Luckin guarantees quality while offering value for money, and utilizes a penetration pricing strategy to attract a lot of loyal customers in the early stage. At the same time, Luckin also effectively utilizes the through-the-line promotion strategy to advertise in places with a large number of potential consumers or uses big data to identify the audience, quickly attracting the attention of potential consumers, thus increasing its popularity and sales. Meanwhile, Luckin also actively utilizes online platforms to develop its takeaway business, providing more convenient and time-saving services for both parties. It also focuses on the professional development of its employees, requiring them to be uniformly dressed and have a positive work attitude, aiming to provide consumers with a quality consumption experience and a pleasant consumption process. In the payment process of the payment methods, consumers can choose their own convenient to use, and also able to save a lot of time. Finally, the article also mentions a lot of marketing strategies about Physical policies, including the use of impression colors for decorating colors in physical stores, co-branding with famous IPs, and so on.

All of these marketing strategies help Luckin to satisfy consumers' needs and increase its brand appeal, Luckin's marketing strategy is based on consumer psychology and behavior to predict most of the rational behaviors of consumers, to increase the competitiveness of its brand effectively. This article analyzes Luckin's more successful marketing strategies from the aspect of data collection and theory and also gives some suggestions for Luckin's future development. In the future, the authors can collect more samples for more detailed and accurate analysis, so that it can be more persuasive and generalize.