‘‘What I saw was the unique relationship that the Italian people had with the ubiquitous coffee bars around Italy. People used the local coffee bar as the third place from home and work. What I wanted to try and do was re-create that in North America.’’
- Misinterpretation of Research finding due to cultural differences
- Fast growing strategy implies high political and economic risk.
- Creation of new products and reevaluation of current offering requires time
Starbucks
- 1971 - Starbucks Coffee Company was founded by three coffee aficionados.
Opened its first store in Seattle’s Pike Place Public Market.
- 1987 - Howard Schultz, a former Starbucks employee, acquired the company.
- 1983 - A business trip to Milan’s famous coffee shops opened Schultz’s eyes to the rich tradition of the espresso beverage.
Schultz convinced executives to have Starbucks’ stores serve coffee by the cup. And the rest is history!
- 1993 - Starbucks went public in and has done extremely well in turning an everyday beverage into a premium product.
The green and white mermaid logo is widely recognized
The brand is defined not only by its products, but also by attitude.
Starbucks Corp. is the leading retailer, roaster, and brand of specialty coffee in the world.
- Sells whole bean coffees through its specialty sales group, mail-order business, supermarkets, and online.
- 7,958 company-owned stores in the Americas and 2,036 elsewhere.
- 9,215 licensed stores worldwide
Starbucks Time Line
Solution
Important Concepts
- Joint Ventures
- Licensing
- GDP
- Political Risk
- Economic Risk
- Primary Data
- Currency
- Culture & Acculturation
- Customer Relationship Management
- Marketing Research
Starbucks' Financial Highlights
Conclusions
Starbucks Products
- Implementing marketing research on the basis of primary data is fundamental when entering a new market
- Joint Ventures and Strategic Partnerships could contribute to the marketability and global expansions of a company.
- Customer Relationship Managment allows a company to adapt and respond to changes in market trends.
Pause growth and go back to customer and the betterment of the Starbucks Experience.
- Improving the Starbucks Experience
- Smartphone Rewards App - Marketing Campaign
Starbucks Amarillo
Contingency Plan
- The Starbucks on Soncy brought 1.3million in revenue alone last year.
- On average, there are more than 900 transactions per day.
- On average 30,000 profits a day.
The combination of the First and Second alternative were found to be the best solution to create a strong brand and engage in customer relationship management in the Asian markets.
- Social Responsibility Engagement & Promotion Plan Development.
- Joint Venture with Asian Airlines & Implementation of Marketing Research
Coffee is a 30billion market but tea is a 90billion market.
Teavana
Advantages
- Growing Strategy - Ability to determined prospective market partners and Join Ventures
- Understanding Cultural differences -Means to create a Customer Relationship Management program
- Great marketing research tool
- Unlike Starbucks, where the culture is more about drinks-on-the-go, at Teavana, the aura, design and mood is all about lingering.
- The contemporary-designed chairs are padded and comfy. The lighting is low.
- The sheer variety of teas and munchies seems to require time to sit and savor.
Disadvantages
• Growth Strategy
Low dividend yield 1.3%
Growth stock.
• A++ rated – Low level of debt (9% of Cap’l)
• Market Cap: 53.1 Billion (Large Cap)
β
Beta = 1.10 ^ Safety = 2
Case Problem
Starbucks International Expansion
After analyzing the different components of the case study, it can be seen that as the company continues to expand, Starbucks current concern in the Asian market is:
- The need for strong brand equity that will relate the company to its customers in the different Asian economies.
- Its ability to achieve this is highly tight to finding the right partner in each market to negotiate local regulations and different country-specific traits found in the Asian economies.
Starbucks’ international strategy is to utilize two expansion strategies — licensing and joint- venture partnerships.
Alternative # 4
Alternative # 2
Smartphone Rewards App - Marketing Campaign
Joint Venture with Asian Airlines & Implementation of Marketing Research
Using an App instead of a card offers broad advertising and promotion opportunities while creating a channel of communication with customers and engage in marketing research.
Through Joint Ventures with Asian Airlines, Starbucks can implement a research program to better understand the cultural differences and the country-specific market trends.
Target Audience
Disadvantages
Advantages
Disadvantages
Advantages
- High end Asian communities
- To be able to integrate the 4 P's according to their research
Product (Tea-consuming is high in Asia)
Promotion (Initial Product Awareness)
Price (Determine right price strategy for each country)
Distribution (High end Asian airlines)
- Better understanding of cultural distinctions, which allows to create customer loyalty.
- Use of the App as an advertising channel to better inform customers about Starbucks community engagement.
- Meet the Technologically-Innovative trends of major Asian economies
- Time and Resource demanding
- Significant promotional costs
- The ability to determine the receptivity of current products.
- Trial method to determine the effectiveness of new product development.
- Better understanding of cultural difference in the Asian economies
- It implies reducing the fast expansionary rhythm followed by the company
- Significant marketing research costs
Alternative # 1
Alternative # 3
Innovative Atmosphere
Social Responsibility Engagement & Promotion Plan Development.
Customers in the different Asian economies emphasize the whole purchase experience and the atmosphere of the establishment. Larger stores and better Wifi connectivity are just some of examples of how Starbucks can create a more appealing and valuable experience in Asia
Starbucks has a commitment for the social well being of its shareholders. Creating an advertising campaign that informs the commitment of the company in Asia will aid the creation of strong brand equity.
References
Disadvantages
Advantages
Disadvantages
Advantages
- Better understanding of cultural distinctions, which allows to create customer loyalty.
- Create/engage in socially responsible projects will give Starbucks a positive ethical image
- Positive Socially-Responsible positioning resulting in better brand receptiveness.
- Better understanding of cultural distinctions, which allows to create customer loyalty.
- Higher customer retention
Customer Relationship Management (CRM)
- Promotes Starbucks' High Quality positioning.
- Time and resource demanding
- Long run effectiveness - results
- It implies reducing the fast expansionary rhythm followed by the company.
- Less awareness - Less aggressive strategy
Competition could represent an increasing market threat
- Abhisheck (2010, April 9). Starbucks - Modes of international business. Retrieved from http://www.slideshare.net/Brijeshdholakia/starbucks-3676573
- Marketing research - Wikipedia, the free encyclopedia. (2013, September 24). Retrieved October 19, 2013, from http://en.wikipedia.org/wiki/Marketing_research
- Suttle, R. (n.d.). How to treat employees respect to increase productivity. Retrieved from
http://smallbusiness.chron.com/treat-employees-respect-increase-productivity-31072.html
- Narrowing Asia's gap between rich and poor. (n.d.). - Inside Story. Retrieved October 25, 2013, from http://www.aljazeera.com/programmes/insidestory/2013/02/20132610392698167.html
- Quarter, G. (2013, July 14). China GDP growth slows to 7.5%. CNNMoney. Retrieved October 25, 2013, from http://money.cnn.com/2013/07/14/news/economy/china-gdp/
Starbucks Coffee: Expansion to Asia