Starbucks Internationalization in Recent Years

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With the first coffee shop opened in Sydney CBD, Starbucks entered into Australian market in July of 2000 and then expanded rapidly to 85 coffee shops in the following years. However, in August of 2008, Starbucks Coffee Company Australia announced to shut down more than 60 of its 85 coffee shops and to date it has scaled down to 22 opened in Sydney, Brisbane, the Gold Coast, the Sunshine Coast and Melbourne (Starbucks 2010).

This writing will focus on the analysis on the attributes of Starbucks’ products and marketing, and identify the opportunities and threats facing the Starbucks Australia. The second part of the analysis also draws attention to the changes in social economy, competitors’ move and the main trends in the hot drink market. Based on the findings, recommendations are offered, aiming to help Starbucks gain competitive advantages in Australian marketplace and long run sustainability in a larger social context.

In terms of coffee products and service quality, the cafe market in Australia is extremely mature and competitive. It is understandable that consumers’ expectation towards the newly-introduced coffee brand has been exalted high, especially when they are charged with premium price (Marketing Lessons 2010). However, the exotic coffee brand does not bring specialty to the local coffee culture as expected, the consuming experience stay mediocre. Meanwhile, products do not suit Australians' coffee tastes (Marketing Lessons 2010). Starbucks’ positioning in Australian cafe market has departed from the consuming needs and patterns of the local customers. Dismantled with the uniqueness it possessed and its success in the US and other Asian countries, Starbucks Australia seems to be as ordinary as one of the numerous choices for customers in Australia (Coffee Break and review 2008), and people never genuinely felt the necessity to go to a Starbucks shop. Evidently, Starbucks overestimates its points of difference, as well as the customer-perceived value of its services (Marketing Lessons 2010). To compete out in Australian Cafe market, Starbucks needs to find new ways of creating competitive advantage to differentiate itself from local market competitors. What could make Starbucks special? It could be the menu including items catering customers’ special needs in coffee tastes, or the store environment which makes customer feel comfortable to sit in and enjoy the time, or the excellent service offered by people. Or it could be the combination of all the specialties makes the consuming experience unique. Datamonitor (2010) points out that the core competence of Starbucks is the quality of products. However, it is far from enough, because the best coffee and best equipment in the world could only make 20 percent of success, just as Ed Charles (2007) describes that success of product and service is 80 percent due to the performance of staff, and they must be trained to perform at their best both on products and service to maximize the perceived value of customer. More specifically, customers’ perceived value is related to both tangible benefits such as price, product quality, service, convenience and price, as well as intangible benefits concerning reputation, aesthetics, social and emotional needs like self-enhancement and sensory pleasure needs. Quality service performed by staff could highlight both tangible and intangible benefits of customers.

The attributes of the quality service in coffee shop can be demonstrated by thinking of the best consuming experience you could ever imagine. When entering a clean, well-furnished coffee shop with attractive decoration and cozy ambience, customers are recognized by friendly employees and greeted by own names. Order is made in an attentive manner, and fulfilled accurately and timely. Coffees with appealing aroma are served at moderate temperature and they are great and unique in taste.

Market players could acquire some of the attributes depicted in the scenario to...
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