Case 2-1 – Starbucks Keeps it Brewing in Asia 1. There are several barriers facing Starbucks as they try to “teach” people to change their consumption habits from tea to coffee. The most obvious being that tea is the most common drink in China. The Chinese view tea to be both medicinal and beneficial, whereas coffee does not have the same value to the Chinese. In addition to this, one has to take into consideration the vast area of China; it would be very difficult to get coffee to the more rural areas of the country.
Not only that, they have less familiarity with coffee and don’t have as much money to spend on the more expensive beverage. Lastly, the vast majority of the Chinese market who drink coffee are accustom to instant coffee. Having them change to brewed coffee could prove to be a long and arduous task. 2. Starbucks could customize or remake some of their existing products to make them less expensive and more attune to China’s taste, which would be sweeter beverages. They may even want to look into making their own form of instant coffee to go along with their individual bag of beans they sell for consumers to brew at home.Order now
Perhaps they could also look into creating and adding more emphasis on their tea beverages because they don’t just sell coffee. By expanding their tea products, they could lure more customers in who may be interested in trying coffee. However, the risk of customization can affect the quality of their product and cause their products to be more expensive. They need to make these changes without losing their Starbucks image. 3. There are many values that one can call the Starbucks “experience”. I think Starbucks takes special considerations upon themselves with particular values that they strive to uphold.
The first one that comes to mind is status, they are thought of as higher end coffee than other brands, which also factors in quality and freshness. The atmospheres of the shops are a huge factor in the Starbucks experience. They want to have you feel invited and at home. They do this by providing couches in most stores, tables with electrical outlets for people to use portable electronics, free internet access and friendly people behind the counter to help you with your order. It is these values that Starbucks abides by to allow their customers to feel the Starbucks “experience”. 4.
Type of Group – Target innovators in the group as well as the younger population Type of Decision – Make it a one on one experience Marketing Effort – Regional promotions and coffee’s benefits Fulfillment of Felt Need – Raise customer value, coffee benefits, cultural connection Compatibility – Offer more tea products Relative Advantage – Store location Complexity – Sell ready-made coffee, so customers don’t have to brew their own (when then buy and bring it home). Observability – In collaboration with the marketing effort, show people enjoying the coffee. Trialability – Free samples, promotions.
Perceived Risk – Eliminate this with the trialability. 5. With the 10 factors that influence the spread of innovations stated above, there are many things Starbucks could do to successfully encourage greater coffee consumption. Firstly, they will want to gain acceptance from the Chinese market as coffee being an acceptable substitute for tea. To get their name out there, they could sponsor large events that not only focus on the younger generations, but all generations. In addition to that, by giving out free samples and good promotions, such as buy a cup, get a pastry free, they allow the customer to see no harm in trying their product.
By eliminating this perceived risk, Starbucks could penetrate into this market, not only with coffee, but tea products as well. 6. To develop an effective marketing strategy for taking Starbucks into smaller Chinese cities and communities, we have to look at the 4 P’s; Product, Price, Place and Promotion. For the product, they should emphasize on great taste as well as several tea options. As far as price is concerned, Starbucks needs to lower their prices, have good promotions and more regional focus. Location is most important for placement, so setting up stores in areas with a lot of traffic would be ideal.
Lastly, for promotion, they need to stress awareness of coffee and heavily advertise the product. Even with an effective marketing strategy, there could still be several barriers. These barriers would be the price of the product itself, operating on lower profit margins and the potential lack on people willing to try coffee. With all of this in mind, there is still potential for success in smaller Chinese cities and communities. However, they would have to prove to be successful in larger cities and areas before committing to such an extensive operation in more rural areas. 7. There are many demographic, cultural and media factors that ake India more attractive for Starbucks to pursue rather than China. Although there are similarities, such as tea having a larger consumption rate over coffee, the Indian and Chinese markets are very different. India has a large coffee drinking population and has more acceptance of western ideas, products and industry in general. Taking back into consideration the 10 factors that influence the spread of innovation, it would be much easier to penetrate into the Indian market, both in large cities and smaller communities. Although it would still be a difficult market to get into, it would be a more successful venture than China.