Case 2-1 Starbucks keep it brewing in Asia
Starbucks is an American company who try to expend its business to other country around the world. However, each country owned and has an identity, a history, and culture. This requires to Starbucks to analyze the current market and adapt his offers according to the needs and mores (usages). There are several barriers facing Starbucks to the “teaching” people to change their consumption habits from tea and instant coffee. First of all, the major problem is that a cultural problem. In fact tea is still the number one beverage in China because it is a part of China’s national heritage. China has 1.3 billion populations, and the potential 1.3 billion populations is largely based in rural area. There is a rupture between the big city where the economy is growing and with the rural area with lower income. The general idea is definitely that the China is considered a tea-drinking nation rather than a coffee-drinking nation. They believed in medicinal qualities of tea and think the coffee does not have some. It is very difficult to change this idea received even more for the population in rural area who do not necessarily believed an international company installed in the major cities such as Guangzhou, Beijing, and Shanghai. The barrier of tradition is very strong even more in this culture. Moreover, according to one report Chinese don’t yet appreciate the taste of coffee or the difference among types of coffee. One other fact is the competition. Beyond tea there is also the barrier of competition of the “fresh-ground” market from Hong Kong, Canada, Philippines and Mac Donald’s coffee house. In fact the “fresh-ground” makes a big differences in terms of taste, and according to a survey there are five factors in choosing a brand and “high quality” is one of them. Furthermore, Nescafé holds, actually, nearly half the market share. And the biggest issue for every one who wants to introduce him in this market is that the Chinese generic term for coffee is Nescafé, a Nestlé brand. Currently cheap mixes are popular because of time constraint. Overall, how Starbucks will confront these barriers will determine how their success in Chinese market.
Starbucks have to find a just middle between customize their offerings to local tastes and keep production costs reasonably. They must adapt the product line to local taste to hope succeed in a market with a lot of barrier and mores (usages). It represent some large survey, marketing analyze. They should ask to a local company at the International Coaching, to advice you, and to be aware about this new market. It represent a large initial investment of survey but it is these survey who are going to determine the way to adopt and how to customized the product line. It could take time to get return on investment. The most important thing is to adapt their offers to the “ying yang” concepts. Indeed, Frito-Lay (North America is the division of Pepsi Co that manufactures, they markets and sells corn chips, potato chips and other snack foods) had an experience about this concept. If Starbucks conform its product line and its packaging to this concepts, they can have better success in enter the market. The product should correspond to the local taste. Adapt the flavor, and above all the colors of the beverage, the cup, the billboard, work clothing, and may be rethink the way “order, paid, take away”. They should adapt all the procedure and all corporate images. I believed that the main alteration should come from the advertising and the labeling. Extreme customization presents risks because modify and create a new flavor for a new market without intense cultural research may present a large loss. With such a cultural gap, Starbucks should rethink all its strategy, and it represents a large cost. They should invest largely into the research because the potential market is huge, and the interest could be interesting. May be at...
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