The objective of this paper is to perform market research for Starbucks’ President, Charles Shultz to ascertain the possibility of establishing new coffee houses in China. The preliminary research and design for presentation to Mr. Schultz includes: 1) Two to three alternative target customer segments; 2) the types of secondary research used; 3) the problem statement; 4) research questions used to guide the study; 5) major competitors for this market; and 6) the cultural, economic, and political factors that need to be considered in China. Keywords: China, coffee, market, Schultz, Starbucks, Starbucks Marketing Research Design in China Market Starbucks is one of the most recognizable and successful coffee brands in the world. Starbucks believes in serving the best coffee possible. Starbucks’ international market that was expanded into China in 2002, still has only a tiny part of the Chinese beverage market (Harrison et al., 2005). The company President, Charles Shultz is ascertaining the possibility of establishing new coffee houses in China. Starbucks Coffee, Tea, and Spice opened its first store in April 1971 in the Pike Place Market in Seattle, by owners who had a passion for dark-roasted coffee that was popular in Europe, but hard to find in the U.S. (Harrison et al., 2005; Venkatraman & Nelson, 2008). The company’s mission was to provide Seattle with the best access to dark-roasted coffee, and sought to educated customers about the product. As a matter of customer education and acceptance of the product, Starbucks grew and expanded into the successful domestic market it is today. Much of this success can be attributed to a focus on the total customer experience and s... ... middle of paper ... .... Hoboken: John Wiley & Sons. Biederman, P. S. (2005). Commentary on exporting a north american concept to asia: Starbucks in china. Cornell Hotel and Restaurant Administration Quarterly, 46(2), 288-290. doi: 10.1177/0010880405275536 Harrison, J. S., Chang, E., Gauthier, C., Joerchel, T., Nevarez, J., & Wang, M. (2005). Exporting a north American concept to asia: Starbucks in china. Cornell Hotel and Restaurant Administration Quarterly, 46(2), 275-283. doi: 10.1177/0010880404273893 Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2008). Crafting & executing strategy: The quest for competitive advantage (16th ed.). New York: McGraw-Hill Irwin. Venkatraman, M., & Nelson, T. (2008). From servicescape to consumptionscape: a photo-elicitation study of Starbucks in the New China. Journal of International Business Studies, 39(6), 1010-1026. doi: 1535534671.
After all thousands of years of traditional tea drinking cannot easily be broken, for example, instead of offering flavored frappacinos and caramel macchiatos like we have here in the united states, Starbucks developed a range of Chinese tea’s flavors, such as green tea-flavored coffee drinks, that appeal to local tastes and began selling traditional desserts like Mooncakes. Another reason why Starbucks in China has become so successful is the cultural difference between American and Chinese consumers. The American consumers is always on the go and have the need to get their food and beverages as quickly as they can, Starbucks now lets consumers order their coffee with a mobile app and have ready to pick up in the store without waiting in the line. And the clients who do decide to have their coffee in the store are in a corner working on their laptops as a "Do Not Disturb Sign" going on with their business without interruption. In China however, Starbucks has a become a ideal social setting to meet up with friends and family. With chic modern interior, comfortable seating, and upbeat music, their locations appeal to the younger
It is a well-known fact that Starbucks is expensive, and it is not only coffee the company sell but status. In today 's developing countries Starbucks represents a status symbol that separates the rich consumers from the masses especially in the continent of Asia. A cup of Starbucks cappuccino coffee costs more than 6 dollars in China and is even more expensive in other developing countries in Asia, but the same cup of coffee may only cost half that price in the US. The American coffee and chain company of Starbucks Corporation sets an example and explanation of how global hospitality companies can implement price discrimination.
In 2002, unexpected findings of a market research showed problems regarding customer satisfaction and brand meaning for Starbucks customers. The situation was unacceptable for a company whose overall objective is to build the most recognized and respected brand in the world. Starbucks was supposed to represent a new and different place where any man would relax and enjoy quality time, alone or with others. But the market research showed that in the mind of the consumers, Starbucks brand is viewed as corporative, trying to expand endlessly and looking to make lots of money. This huge gap between customers' perception and Starbucks' values and goals called for immediate action.
Starbucks have tried to blend in with the Chinese traditions and cultures, but could not. They took long term measures for the greater China like having Corporate Social Responsibility Programs like having invested 5 million US dollars in the China Education Project. They wanted to be perceived as” a different kind of
In terms of machinery or technological suppliers, suppliers to the restaurant industry enjoy moderate power, as suppliers are few. This applies to suppliers of coffee, latte and espresso machinery as well due to the small number of organizations servicing the industry. Due to their success in differentiating themselves as providers of premium coffee, Starbucks faces little bargaining power from their customers around the globe. However, a lesson from their entry into the Chinese market has been that an organization needs to clearly understand their target consumers and price their products accordingly to avoid demand challenges.
This case study revolves around Starbucks ability to launch an aggressive expansion in China, a coffee frontier steeped in nearly 5,000 years of tea, Starbucks location-scouting skills and marketing savvy will be put to the test. This case study involves three questions: 1) Should Starbucks continue its expansion in China? 2) Will the Chinese be persuaded to drink coffee instead of tea after 5000 years of no consumption of coffee? 3) Will Starbucks current marketing plan work in China without advertising?
Koehn, N., Besharov, M., & Miller, K. (2008). Starbucks Coffee Company in the 21st century. Boston, MA: Harvard Business School Publishing. Retrieved from http://custom.hbsp.com/b02/en/implicit/viewFileNavBeanImplicit.jhtml?_requestid=36673
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
When people walk into a coffee shop the powerful aroma of coffee beans and delicacies fill their nostrils. The monotone walls and chestnut brown tables fill their sight. Soft hushed whispers heard above smooth jazz music fill their ears. Millions of people enter a coffee shop in the morning to function throughout the day. Amongst the shops where the coffee lovers go to, Dunkin Donuts and Starbucks are by far the most popular. Dunkin Donuts and Starbucks are two largest chains that specialize in coffee. They have many competing factors that compel customers to purchase coffee and food items at each place. Overall, Dunkin Donuts is less superior in its products, appearance, and services compared to Starbucks.
This paper will provide an argument for diversification to be presented to board of directors for Starbucks. A strategy for diversification indicating the products and industries for diversification and how synergies may be gained will be provided. The identification and the discussion of the foreign market Starbucks should enter will be presented, along with the strategy it should use to enter the market. Challenges Starbucks may face in the foreign market will be discussed, as well how it might respond strategically to minimize the impact of these challenges.
Starbucks has large goals to grow even more internationally. Currently, Starbucks has approximately 21,000 different locations in 65 countries (Starbucks, n.d.). When a company is international such as Starbucks, there is a concern risk over the reporting of financial statements. Auditors must audit the financial statements to ensure they are followed by IFRS. According to Starbucks Going Global Fast, “Yet cup by cup, Starbucks really is caffeinating the world, its green-and-white emblem beckoning to consumers on three continents. In 1999, Starbucks Corp, had 281 stores abroad. Today, it has about 7,000-and it’s still in the early stages of a plan to colonize the globe.” Although Starbucks is already a global company, Starbucks wishes to expand internationally and bring beverages that are offered abroad to the United States. It reduces the audit risk to see that Starbucks maintains their business successfully over the years. However, it also intensifies the material misstatement
Starbucks is the biggest coffee shops network with over 19000 stores all over the world. The company has gained consumer by providing new perspective on coffee drinking. Coffee consumption as a cultural experience allowed Howard Schultz to create truly new market and became a monopolist. However, time passes and competitors evolve as well. Although Starbucks Company has managed to pass 2008 crisis successfully that is proven by stock market indicators (Starbucks Corporation (SBUX) stock price), some specialists predict loosing marketing positions due to economic troubles and rise of competitors such as McCoffee or DD. Small coffee stores and other competitors all over the world started to copy Starbucks model (interior, music, etc.) so wherever you go to drink coffee the place will look alike. Moreover, modern coffee machines brew excellent drinks so the taste will also be very similar. In such situation the company needs to look for new ways of keeping consumer. So the question is: can Starbucks sustain its business model and place in the market? The paper examines Starbucks business from the point of organizational structure and management.
Starbucks has identified high value opportunity in China, India, Brazil and Japan. The large expansion opportunity of twelve billion in China alone is enough to drive Starbucks to expand globally. The organization has planned to double its footprint to 3000 stores in China by 2019 ("Starbucks Details Five-Year Plan to Accelerate Profitable Growth", 2014). Starbucks realizes that eventually there will be a diminishing return on their existing market within the US due to market maturity and there are only two ways to expand through diversification in their offerings and entering new markets. Given the international opportunity for growth and expansive tea market in Asia, the company will enjoy the benefits of the growth opportunity. Management’s decision to continue to grow globally is a driving force that has yielded
Starbucks started in 1971 as merely a single coffee shop, but has grown over the last forty-three years into a multinational company with over 19,000 stores in over sixty countries (Starbucks, 2014). Only two years after opening their first drive-thru store, they opened their “first international coffeehouse in Tokyo back in 1996” (Starbucks, 2014).
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.