Starbucks International Marketing

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Table of Contents

Introduction
Starbucks background information
Theoretical framework
Analysis-application of theory to evidence
Conclusion
Recommendations
References

Introduction

International marketing strategy is the act of identifying the needs of customers in foreign countries, and supplying them with the required goods or services. This may also entail consideration of the right place, at an affordable price that is favorable to the customers. International marketing strategy involves communicating and handling customer relationships. This is to ensure the business remain beneficial to customers as well as the stakeholder (Khanh, 2009).

To some extent, some multinational corporations are lucky to use the same strategy in domestic and international marketing. For instance, a company such as pen manufacturing organization has a slogan that can be globally applied “finest writing in the world” (Isobel & Lowe, 2008). It has always been a beneficial aspect of any organization in understanding the importance of international marketing concepts. Most international companies offer goods and services targeting global audience.

Starbucks background information

This discussion below will focus on Starbucks International Corporation and its international marketing strategies that have made it succeed globally. Starbucks is the largest coffee house corporation globally, based in Seattle Washington. The company has ventured in more than 55 countries with most of its stores in United States, Canada and United Kingdom (Onkvisit & Shaw, 2008).

The company has a history of expanding rapidly through the sale of its main products such as beverages, pastries, whole coffee beans, and merchandise. Most of the company’s products are sold seasonally, while some are made specifically for a certain locality.

In addition, to breakfast component that star bucks sells, the company has an entertainment division and listen music brand. Marketing books, music and the film are also part of their products in the market. The most intriguing part of Starbucks marketing expansion is that it started as a single small store in 1971.

The company has expanded and attained a level of 21st century coffee giant. This change of size is managed through marketing strategies. The company has put some measure to ensure that, its growth and development does not affect its culture, as well as its leadership goals. Through the application of marketing strategies globally, star bucks has also encountered several challenges, some of which it developed some solutions.

Just like any other company, the marketing of star bucks in the international market has not been so easy, but it managed to withstand several challenges. The key issues that have been focused on by star bucks include the urge to expand its profitability in Japan, managing the markets threats, maximizing in advertising as well as in research and development (Svend, 2007).

The company has also made extra efforts in enhancing its corporate strategy to ensure its global marketing has run smoothly. Just like any other corporation, the main objective of star buck is to increase its profitability. The company has adopted various strategies to ensure it maintains a competitive edge.

Theoretical framework

International marketing strategy entails several processes, which any multinational company has to follow. It is evident that some companies have tried to adopt international marketing, but they fail. Some of the major concepts of international marketing strategy are market assessment, and the consideration of the four ps of marketing (Kurtz, 2009). The four ps are the product, price, place, and promotion aspect.

The market assessment concept is the new factor and entails many other factors when a company is adopting an international marketing strategy. The first part of marketing assessment involves background identification of the customers’ requirements in the readily available market. This is the point where a company would be required to list all the countries, where its products or services can best serve.

A whole country cannot be a target, so groups that can best utilize the goods or service are identified. The second part of market assessment is to cut down the list prepared in the first part, depending on the finances and economic factors of various markets segments.

The principal financial factors that may need to be put in place are the prevailing interest rates, inflation rates, and other monetary policies within a given country (Pride, 2010). Economic factors include the magnitude, intensity, and growth potential of a certain market segment. This analysis would help an organization to eliminate unfavorable countries from the original list. The third step involves the company in question to determine the legal and political forces of the left countries in the list.

This is crucial, as it is advantageous to ensure that the laws of a certain country would protect the business rights. It would be a significant mistake for any company to plan to venture in a politically unstable nation like Iran. The fourth step is in considering the socio-cultural forces of the potential country.

The moral and cultural values of the country would profoundly affect the progress and operation of the business (Ferrell, 2010). It would be advisable to determine what is allowed and what is not. For instance, some religious beliefs do not allow the consumption of caffeine, which is a vital component in coffee and tea. In a country where, such religion is dominant, there would be no need of extending the coffee business there.

At this level of market assessment, the company would be left with a choice of two or more countries to venture. It would be appropriate stage to consider the competitive factors in the remaining countries. This decision depends on the policies of the organization; some would prefer where there is less competition, while some may prefer where there is stiff competition (Lussier, 2008).

For instance, where there are so many companies of selling breakfast components, it is evident that there are potential customers for the products. This would lead to another company to extend its products there. The final step of market assessment is doing the practical evaluation of the chosen countries through a field trip. The result of such trip gives the final solution concerning the most appropriate goods or services to be offered in the found market.

The product strategies are at times different, depending on the product or the intended target group. There are products that may not require any form of modifications, while some must be modified to meet the requirements of the customers. For instance, a company manufacturing pens does not require any modifications.

However, some products must be modified depending on the culture and local laws of the country. For instance, the companies that manufacture chewing gums usually pack them in 10 to 20 pieces for their United States customers, who have high purchasing power (Thomson & Fuller, 2010).

However, in countries with weak purchasing powers the pieces packed goes up to five, to match the requirements of the customers. The promotion strategy, as well takes a different move, depending on a country. Most of multinational enterprises make use of advertisement, when promoting their products in other countries. There are several options of promotion, which a company may adopt depending on the products or services.

For instance, similar products may take similar promotion slogan, or similar products with different promotion slogans. A company may decide to use the same promotion slogan for different products, or else, different products with different selling slogans. The pricing strategy also depends on several factors such as government laws, and legal forces. Most of the countries have put a maximum and minimum prices on the commodities sold there.

Place strategy depends on the customers. Multinational enterprises should always place their products at the most convenience position for their customers (Daily news, 2008). The use of distribution channels should assist the customers to obtain the product or a service at an affordable price. The used distribution channel has an effect on the price of the product, and this should also be considered, depending on the affordability of the customers.

Analysis-application of theory to evidence

The marketing strategy of star bucks has motivated most of the companies towards their success. Its history and rapid expansion have made this company act as a role model for other multinational enterprises. From its single store in 1970s, the company has grown to a great empire in United States and other foreign countries. Globally, star bucks have acted as a motivation for many businesses of all sizes, because it started as a small business (Dawson, 2002).

Several business schools have studied the unique marketing strategy of star bucks, in their efforts of determining how such strategies work out. The international marketing strategy is referred to as unique, as the company makes use of unconventional strategies. Starbucks does not promote its products in billboards, spaces or a newspaper. Most of the large and famous companies make use of such methods to promote their products.

According to the market research that Starbucks conducted, it made a decision of using unconventional methods to promote its products domestically, and internationally. Most of the leading promotion strategies that Starbucks used included, “perfect cup of coffee” this is one of its strategies of promoting the company’s coffee (Kembell, 2002).

This slogan emphasizes on the quality of the product. Despite the high prices of its coffee, the company has tried to provide customers with a satisfying product. Starbucks coffee is a rich product with delicious flavor and aroma. Another strategy is “third place”, from the beginning; the marketing strategy of star bucks has focused on creating an extra place for customers between home and work. This strategy attracted most customers, due to its relaxing and unique experience.

The concept of the third place is strongly attached to this company, and customers seem to appreciate. Starbucks have also invested considerably on ensuring customer satisfaction. It is evident that, from the store entrance to the last drop of their coffee, customers are made to feel the goodness of enjoying Starbucks products.

The company has also come up with a community around its brand. This is created through their website, where customers are given an opportunity to air their experiences with star bucks (Kembell, 2002). The company, in turn, participate in customers views, to ensure they feel catered for by the company. By smart partnership, star bucks have managed to venture into various countries, and thrive well in business. This strategy has enabled the company to increase its sales in most of its stores.

This was a clear demonstration that even successful businesses need assistance for them to achieve their set goals. This strategy started in 1993, when Starbuck collaborated with Barnes and Noble bookstore in America. The main theme of this partnership was to ensure the availability of its products to bookstore customers. In 1995, Starbucks collaborated with Canadian Bookstore Company with the same purpose of products expansion.

Moreover, in 1996, the company still collaborated with Pepsi-cola Company, with the aim of initiating a business called North American coffee partnership (Kembell, 2002). Among many more, the company has also collaborated with Hyatt Hotels Corp, to ensure its customers receive the best product at the right place. Through partnership strategy, Starbucks was able to achieve its goals, venture into new markets, and increase its financial base. Companies working together and sharing financial risks may achieve targets easily.

The products and services of Starbucks have been always modified through creative and innovative ideas, to meet the requirements of the customers. For instance, the company introduced various flavors to its coffee, and new foods on its menu. Moreover, Starbucks was among the first companies to enable Internet services in its stores (Onkvisit & Shaw, 2008).

Brand marketing is another crucial strategy that Starbucks uses. This entails, word of mouth promotion and letting outstanding features of its products and services speak for themselves. The current success of the company has been enhanced by its unique marketing strategies.

The use of diversified revenue stream is another international marketing strategy that Starbucks has adopted. The company understands the risks of putting all eggs in one basket. According to Data Monitor, in 2003 the sales of Starbuck comprised of 75% beverages, 13% food products, 6% coffee beans, and 6% were made of coffee making tools (Kembell, 2002). The company is still in the plan of searching for extra chances in distribution channels for its products.

In 2005, the distribution outlets in star bucks increased from 20000 to 31200. These outlets were selling their products such as Wal-Mart, Target, and several grocery stores (Nugroho, 2006). The increase of outlets was approximately 50% increment, which expanded their capability to serve as many customers as possible (Onkvisit & Shaw, 2008).

The introduction of new retail stores, and the increased cash flow from the existing stores led to increased company profitability. The introduction of new outlets was associated with the introduction of new products. In 2005 when the company increased its outlets, the net revenue was $6, 369,300 that was an increment from $5,294,247, which was the net revenue for 2004(Nugroho, 2006).

The history of star bucks gives an evidence of diverse channels of distribution for its products. The company has a unique strategy of reaching and serving customers in their working places, when travelling, and even when dining.

This has been made possible through the incorporation of competent third parties, which understands better value and quality commitment of star bucks. For instance, through the assistance of food service companies, star bucks managed to distribute whole bean and ground coffees to offices, restaurants, and even in health care facilities.

For instance, according to the company financial reports, it was evident that, in 2001, the company had more than 5500 food service accounts, which managed to contribute more than 30% of the total revenues of the company in the same year (Nugroho, 2006). This was a clear show of how the third party companies are assisting the company to reach out to its customers. The company has made extra efforts in ensuring its products reach the intended customers at the right place and condition.

Star bucks have ventured in more than fifty countries with so many outlets. The company has even introduced online selling of its products, whereby the customers can purchase the products anywhere, and anytime. This has created much convenience for those customers, who are always busy (Kembell, 2002). They also have a tendency of reaching the customers by concentrating their outlets at one point.

Star buck is known to promote its product both nationally and internationally levels. They have used various media services to reach the customers through placing adverts for their quality products. Severally, they hold promotion for their products, where people are given chances to taste their coffee, as an effort of building brand loyalty to the customers.

In 2010, when Starbucks were celebrating its 40th anniversary, the key theme was to facilitate the development of their brand image. The company introduced new images for coffee cups, cups holders, as well as for the shopping bags (Grant, 2010). During this period, the company also introduced a new coffee blend to the public, which they named Tribute. All these new modifications to their products were for ensuring the constant development of their brand image.

The new identity was marked by a bright green color that showed vibrancy of the products. The company wanted to portray the act of evolution for their products. The main theme was to re-energize their customers, both existing and new ones. Any change to the brand image of the company should be carefully handled, as it may end up confusing the customers.

The understanding and acceptance of customers are particularly crucial factor that need to be considered first (Grant, 2010). The change may also act as a limitation of widening the product line, as they may end up losing the new customers, who may not be so familiar with the company.

Conclusion

The management of star bucks has tried to ensure the achievement of the most crucial aspects of the company. The company was in dire need of expanding its profitability in Japan. This was to be achieved through increasing its outlets up to 1000 in 2007. The company managed to achieve this number, and eventually its profitability started increasing (Zatorska, 2009).

Another crucial issue was to manage its threats in the market. The company has been facing stiff competition from big companies such as Folgers, Kellogg, general mills, and post. The unique strategies of international marketing for Starbucks have enabled it to compete effectively.

Starbucks has always looked forward to maximizing its advertisement coverage, to reach as many customers as possible (Onkvisit & Shaw, 2008). This has been made possible through the establishment of online interaction of the company with its customers. Through online advertisement, the company can reach wider market coverage.

Although it has also participated in thorough research and development programs, there is also much to be discovered about the local customers’ tastes and preferences. Understanding customers more, would mean better services, hence increment of customer base and profitability.

Recommendations

Currently, people globally are becoming health conscious; hence, the Starbucks Corporation should introduce organic food products and health drinks. Most of the products currently are focusing on the healthy of their customers. Through the provision of such items, the company can improve its image, as well as increased customer base.

On their catering department, the company can also offer office or home delivery at some incidences (Knorrl, 2009). Through this service, star buck would end up attracting more customers such as big companies, who can rely on coffee delivery to their offices. The service has a higher possibility of resulting to long-term contracts, between star bucks and potential clients.

Although Starbucks have expanded in foreign countries, the company has not exploited all the available opportunities. The company has portrayed a trend of depending extremely on its domestic stores success. As it ventures into other countries, the company should conduct thorough market assessment.

Recently the company was forced to terminate its services in three outlets, in Singapore. A thorough analysis especially on social and cultural aspects of the country is very crucial. Despite that, the company has developed a community with its brand; it should also improve its corporate image.

Another opportunity, through which Starbucks can increase its sales, is by increasing bottled drinks. Most of its bottled drinks are sold in supermarkets and in special stores, which requires to be expanded. Several suggested products are considered as favorite by the customers such as seasonal drinks and iced tea, and can increase its sales. The expansion of bottled drinks in most of its stores globally would also improve the customers’ awareness of the product.

It has also been suggested that, if Starbucks could extend its services matching culture preferences, this would increase its customer base globally (Onkvisit & Shaw, 2008). For instance, it is well known that Chinese are more interested in tea than coffee, and so the market for tea would do well in china. More market research concerning the local tastes and preferences should be done, to ensure the customers’ satisfactions are well met. Research on local culture internationally should be done to ensure wide market coverage.

References

Daily news, 2008, Starbucks takes coffee break. Daily News. Web.

Dawson, C., 2002, Losses climb as starbucks Japans growth grinds Down. International Asian business. Web.

Ferrell, C., 2010, Marketing Express. Minnesota: Cengage Learning.

Grant, R., 2010, Contemporary strategy analysis. New York: Wiley-Blackwell.

Isobel, D., & Lowe, R., 2008, International marketing strategy: analysis, development and implementation. New York: Cenage Learning.

Kembell, B., 2002, Catching the Starbucks fear. Business Marketing. Web.

Khanh, P., 2009, Marketing strategy of Starbucks coffee. New York: GRIN Verlag.

Knorrl, L., 2009, International commerce. Michigan: Cengage Learning.

Kurtz, D., 2009, Contemporary Marketing. Michigan: Cengage Learning.

Lussier, R., 2008, Management Fundamentals: concepts, Applications, skill development. New York: Cengage Learning.

Nugroho, D., 2006, Starbucks strategy.Starbucks global quest. Web.

Onkvisit, S., & Shaw, J., 2008, International marketing: strategy and theory. New York: Taylor & Francis.

Pride, W., 2010, Foundations of Marketing. Michigan: Cengage Learning.

Svend, H., 2007, Global marketing: a decision-oriented approach. New York: Financial Times Prentice Hall.

Thomson, N., & Fuller, C., 2010, Basic strategy in context: European Text and cases. New York: John Wiley and Sons.

Zatorska, M., 2009, Strategy of starbucks in Japan. International Marketing. Web.

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