Starbucks in the Philippines
Liang Yu Chen
The Market Environment
The Philippines is a country located in Southeast Asia. Its 7,107 islands experience 8 months of summer every year. During the summer, the hottest possible temperature to be recorded is 41C. These show just how warm the weather in the Philippines tends to get.
Also, the Philippines was colonized by many Western countries, but the most influential colonizer was the United States. In fact, 82% of the population speaks fluent English. These prove that the Filipino culture is greatly influenced by Western culture. It is also customary for Filipinos to drink coffee everyday. Coffee is drank during breakfast and is served whenever guests are around.
All these factors about the Philippines make it the perfect environment for Starbucks to compete in. Starbucks in the Philippines
In 1997, Starbucks opened its first branch in the Philippines. This was a significant move for the country as it is Starbucks’ third market outside North America.
Starbucks’ main target market includes adults, young adults and teenagers belonging to the upper middle class to the upper class. The company’s unique selling proposition includes a personalized service and a discrete environment. The problem with opening up in the Philippines, however, is that only 20% of the population belongs to the target market. But despite this fact, Starbucks remains the market leader in the country’s café and bar industry. The chart below illustrates Starbucks’ market share relative to its competitors.
Figure : Market Share of Starbucks Relative to Competition
But what is the reason behind Starbucks’ mysterious success? One of the reasons is the fact that Starbucks’ promoted values are a perfect match with the Filipinos values, like warm hospitality, the need for connection and the love for coffee. Also, the company’s success can be attributed to the company’s efforts to balance standardization and localization in its marketing mix. Product
Starbucks uses a globalized product strategy around the world. This means that their products are standardized internationally. In addition to its products, the services that Starbucks provides for customers are similar all over the world. This is due to the fact that Starbucks wants to maintain the same image for its customers all over the world. The Philippines was an exception, however. In this case, Starbucks introduced certain products based on the Filipinos’ diet habit. The company came up with some products that only sell in the Philippines. Filipinos love intense tastes. They love extremely sweet or salty food. Also, because the weather in the Philippines is really hot, cold drinks are very popular. For these reasons, Starbucks introduced flavors like salted Caramel Mocha Frappuccino, Salted Caramel Mocha and Caramel Espresso. The Filipinos are also heavily influenced by Western culture. They enjoy services that are Americanized; thus, Starbucks in the Philippines sells hamburgers and salads. The company also designed a breakfast and lunch series in the Philippines. Its first ever Diver-thru branch is also located in the Philippines. Filipinos love to celebrate, making holiday-oriented products very popular. Majority of the population are Christians. This is why Christmas is highly celebrated by the Filipinos; thus, limited Christmas edition merchandise sell very well. It is a growing trend in the Philippines, especially in the upper classes, to care more about the environment. Starbucks makes it known to the public that its products are eco-friendly and that they practice fair trade. Price
Starbucks has a similar strategy all over the world. They define themselves as a high-quality, upper-middle class coffee brand; thus, the company sets prices based on the country’s purchasing power. This is in line with Starbucks’...
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