An Over View Of The Coffee Chain Starbucks Marketing Essay

The purpose of Starbucks was to give the client more than merely a cup of great java. They wanted it be a life experience, an experience that clients would wish to go on and do it one of their everyday maps. Upon this singularity they managed to capitalise as a trade name and set up themselves as one of the universe ‘s most recognized and respected trade names.

To be a premium merchandise in the java trade, they aim at high criterions, debut of advanced merchandises and supplying first-class service combined with unforgettable experience. Its product-mix expanded from 8 chief classs of drinks types and 7 nutrient classs ( Starbucks web ) to maintain up with the impulse and to fulfill more client demands. They have been invariably presenting new merchandises, such as four new “ VIA flavored javas ” ( Erin V, 2010 ) , and seeking to pull tea drinkers by presenting “ Tazo Tea ” . Identifying client particular needs they introduce fat-free milk to their merchandises. They have seasonal offerings such as strawberry, pick Frappuccino in the summer and gingerbread latte in Christmas ( News, Starbucks web ) . Traveling small beyond, they besides offers Starbucks java and cappuccino shapers for client who wish to buy them ( Starbucks shop ) . To guarantee trade name profusion, besides conveying the best ingredients and quality control, they assure that all company ‘s employees are invariably involved and cognizant of its overall mission and aims.

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Starbucks forte is its “ forte ” to turn to peculiar demands. China is known for its tea history and good routed traditions, which goes beyond thousand old ages. Starbucks needed to turn to this peculiar sensitive topographic point while presenting their batting order to China. Though they were late in presenting tea in their mercantile establishments, they adopted trade name localisation or “ travel Glocal ” as Brand Source would wish to province ( May 2010 ) from origin. In China java entirely would non make – it must travel with nutrient ( Bolt, K. 2005 ) . Establishing its “ ice zongzi ” and be aftering to let go of local merchandises such as Dragon Dumplings with 5 gustatory sensations and colourss are aimed to ease Starbucks merchandises to the clients along with a Chinese touch.

Monetary value

Normally monetary value and quality determines the value of the merchandise. Starbucks ever tried to present high value to the consumers by purchasing quality beans, guaranting that their staff got effectual & A ; efficient preparation, and largely, making an environment to bask java. For this, Starbucks ‘s client had to pay more ; it was expensive.

To maintain the competitory border, the company besides began to offer $ 1 bottomless cup of java, which can be refilled any figure of times and 50 cents less than any other Starbucks merchandises ( Nico, H. , 2008 ) . As the Starbucks intelligence site sates, the company is besides seeking to implement other value added services like, presenting $ 3.95 “ breakfast couplings, ” which includes breakfast points along with a java ( 2010 ) . This is to aim the monetary value witting clients.

In China, by local criterions, Starbucks is a luxury. They ne’er wanted to diminish their monetary values to China when they started. Coffee is non grown in China at big graduated tables – at least non the Arabica beans. When comparing monetary values to USA, it varies between merchandises depending from where the stuffs were obtained ( locally or imported ) . For illustration, a “ tall latte ” sells for $ 4.50 in China where it is $ 3.50 in the US ( Dan, 2010 ) . A “ grande latte ” costs $ 3.75 in US and $ 4.10 in China ( Rabinovitch, 2009 ) . Rabinovitch continues stating that these monetary value difference are besides subjected to Yuan being undervalued and US $ fluctuating often ( 2009 ) . All these justify Starbuck ‘s high pricing and demo how such placement supported their merchandises to derive and keep upscale image attached to its trade name.

Topographic point

Largely Starbucks is in to direct supply channel ( manufacturer to consumer ) . With their line of vision such pattern is of import and it helps to maintain a personal relationship with the client. In US, peculiarly Starbucks can be found in any vicinity where there is a possible high traffic for its shops – particularly with “ Coffee saloon ” constructs. Mercantile establishments can be found in assorted big ironss. Their primary end is to turn up them in extremely seeable locations and opened them in bunchs. It was the ideal topographic point for the persons who are on the spell, who enjoy music or even looking for a interruption in a busy life style.

By opening “ stealth mercantile establishments ” – street names alternatively of Starbucks, they attempt to transport out their “ place ” undertakings further ( McLaughlin, 2010 ) . Along with the turning demand, they were able to pull off the increased traffic and to maintain their competitory border. Starbucks invested to a great extent on developing their staffs – ensuring and taking high on client satisfaction.

In China it was bit hard undertaking. Though the shops have the same features as in US, China being a civilization oriented and holding negative reactions towards java, they had to put their shops in more open countries – such as Beijing, where local people would hold being exposed to foreign elements compared to suburbs. As China opens up its economic system, Starbucks strategically tries to spread out its concatenation to suburbs every bit good.


Their chief scheme was non to pass money mostly on advertisement. In 2007 merely 16.6 million compared to McDonald ‘s 727.7 Million ( Brand Autopsy, 2007 ) . Alternatively, they used the excess hard currency on geting the best musca volitanss. Before opening a new shop, they organize large community events foregrounding each locations personality ( Community service, Starbucks web ) . Further such information was imprinted on mugs and jerseies as publicity activities.

They besides established “ smart partnerships ” with already known local representatives who would move as local ‘ambassadors ‘ to advance their trade name ( Vote for us )

They introduced Starbucks Cards ; taking their valued clients to advance its merchandises. While purchasing a gift card, the client is non merely shows trade name trueness, but it besides provides free advertisement, pulling new clients. They do present their services to offices without size limitations ( Starbucks web ) . Expanding their merchandise mix, they guarantee that they are appealing to a diverse client base. Starbucks besides contributes to non-profit organisations as a manner to better trade name image and consciousness in local communities.

Apart from the above, Starbucks scheme in China concentrated to capitalise on their localisation methods, Xingbake – the Chinese name given for them ( Loveland, G. 2010 ) . Producing points with local influence, like firedrake dumplings with 5 colourss and gustatory sensation meaning 5 approvals, and presenting Tea was in line with the said scheme. Internet publicity such as “ Meet me at Starbucks ” were besides introduced ( Loveland, G. 2010 ) .

Additionally they tried to make a “ 3rd topographic point ” construct for Starbucks, a topographic point between place & A ; office for the clients ( Harrison, J. ait Al, 2005 ) .

Kotler, P. , Keller, K. , Koshy, A. , & A ; Jha, M. ( 2009 ) Marketing Management. 13th erectile dysfunction. Delhi, Dorling ( India ) Pvt. Lt.d. , Licensees of Pearson Education in South Asia.

Erin, V. ( Oct 2010 ) ‘Perfect Your Starbucks VIA Flavored Coffee Experience ‘ ,

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‘Super Automatic Gran Dama Espresso ‘ , The ultimate place expresso machine,

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‘Starbucks continues trade name localisation in China ‘ ( May 2010 ) , Brand Source,

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‘What Chinese tea at Starbucks means for Western trade names in China ‘ ( April, 2010 ) , Brand Sources, hypertext transfer protocol: // [ accessed 16th Oct 2010 ]

Hines, N. ( 24 Jan 2008 ) , ‘Starbucks onslaughts competition with the $ 1 bottomless java ‘ The Sunday Times.

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‘Coffee and Breakfast Make a Great Pair ‘ ( Mar 02, 2009 ) , Fact Sheet: Breakfast Pairings for $ 3.95 hypertext transfer protocol: // [ accessed 17 Oct 2010 ]

Starbucks Marketing Strategy Unconventionally Effective,

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‘Starbucks Market Share and Media Spend ‘ ( Jan 2007 ) , Brand Autopsy Marketing Practice

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Lee, S. ( Nov 2007 ) ‘Are Starbucks ‘ Monetary values Too High? ‘ , Customer Think

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Dan ( 18 Mar 2010 ) ‘The China Price. Low, Lower, Lowest And Incredibly High ‘ , China jurisprudence web log

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Rabinovitch, S. , ( 25 Sep 2009 ) , ‘Starbucks and the overvalued Yuan, Changing China – giant on the move ‘ Reuter, hypertext transfer protocol: // [ accessed 17 Oct 2010 ]

McLaughlin, M. , ( 28 July 2010 ) ‘American-style java houses: Out of steam? ‘ The Scotsman,

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Loveland, G. , ( 2 Julm2009 ) , ‘Starbucks China launches internet publicity to enticement clients ‘ ,

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Harriosn, J. ait Al ( May 2005 ) , Exporting a North American construct to Asia: Starbucks in China,

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Bolt, K. , ( 16 Jun 2005 ) ‘Starbucks adjusts its expression in China ‘ Seattlepi Business, hypertext transfer protocol: // [ accessed 17 Oct 2010 ]

Lee, H. , ( 29 Jul 2004 ) ‘Coffee brews a hereafter in China? ‘ Euromonitor Archive,

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Q2 – Cleavage

“ Coffee is a Western construct to most Chinese consumers, who associate it with Western life styles ” ( Lee, H. 2004 ) . Hence, it is understood why java ingestion is extremely concentrated in big metropoliss where the consumers are most open to Western influences and tendencies.

Customer Sections:

Westernized Young Professionals ( WYP ) – Who are immature, adventuresome, open-minded, earns good wages, urban consumers. I believe this is the chief mark for Starbucks. An article by Xinhua News Agency reveals that in the twelvemonth 2007 Chinese college pupils were estimated to be 25 million where most of them would hold started traveling to occupations by now. Even if you consider 5 % of this to fall under WYP class, which consequences to 1.25 million, is a immense figure. Members who fall into this section admire western civilizations and attempts to use the same to their life styles. Starbucks decidedly provides a certain degree of category linked to western civilizations.

Returnees from West ( RFW ) – Peoples who are returning from western states ( workers, pupils ) . They could be coming for a holiday or even on lasting footing. Harmonizing to Lam, out of the 270,000 pupils expected to travel for foreign instruction this twelvemonth 25 % is expected to come back. Nationalmaster reveals that 0.294 % immigrants as a per centum of entire population to China ( 2010 ) . These people are accustomed to imbibing java and even Starbucks. They ( would ) like to go on with the same experience even they have returned to China.

Foreign Ex-pats ( FEX ) – China ‘s high turning economic system attracts many investors ( particularly from west ) who will be in China on a long or short term footing. Harmonizing to a survey by Sirva in 2006, approximately ( estimated ) half a million expatriate population exists in China – which is expected to increase 50 per centum in the undermentioned twelvemonth. Most of these exiles are besides familiar with imbibing java in cosy environments. Traveling to a Starbucks in China would give them the homely experiencing though they are far from it.

Lam, W. , ( 10 Aug 2010 ) ‘China ‘s minds battalion and travel ‘ China Business

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Bolt, K. , ( 16 Jun 2005 ) ‘Starbucks adjusts its expression in China ‘ Seattlepi Business,

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Greater China, Starbucks News room,

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‘A study on Western Expatriate Livability ‘ The China Urban Index,

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Lee, H. , ( 29 Jul 2004 ) ‘Coffee brews a hereafter in China? ‘ Euromonitor Archive,

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Immigration, China,

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‘Expatriates in China ‘ Chinese Society,

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Kotler, P. , Keller, K. , Koshy, A. , & A ; Jha, M. ( 2009 ) Marketing Management. 13th erectile dysfunction. Delhi, Dorling ( India ) Pvt. Lt.d. , Licensees of Pearson Education in South Asia.

‘China has 25 mln college pupils ‘ ( 18 Oct 2007 ) Xinhua News Agency,

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Q3 – Merchandise place map

For this peculiar exercising I would wish to see a cosy, relaxed environment factor with monetary value.

Starbucks ( i‚? ) : Is going the most dominant java concatenation in China. Average cost per individual: CNY 35 ( Cafes in Beijing, 2010 ) . But held the eleventh topographic point in market portion by Mintel ( 2010 )


Coffee Bean & A ; Tea Leaf ( i‚? ) : Average cost per individual: CNY 40 ( Cafes in Beijing, 2010 ) . It was topographic point 3rd by Mintel when market portion is considered ( 2010 ) .

U.B.C. Coffee ( i?± ) : Mintel placed this Chinese concatenation at 12th place when it comes to market portion. Average cost per individual: CNY 55 ( Cafes in Beijing, 2010 )

Perceptual Map

China being Tea state ( Still ) , java companies have to supply something particular to capture the market. It is clear when you look at the above map that most of the companies have to offer forte service to derive clients.

Tea is inexpensive compared to coffee. It is impossible to vie with tea with forte java. That ‘s why instant javas take a major topographic point ( market portion ) in China. They serves bulk of the population where the mark is low monetary value and with slightly quality to vie with tea.

The earning of the FEX ( Foreign exiles ) is high and they are looking for quality life style. Mercantile establishments that represent something from west – a homely touch would decidedly pull them. Hence they are prepared to pay excess, thought the quality of the java could be same. It justifies why they are placed at both high terminals.

Though the immature professionals who prefer western tendencies, they are non every bit good off with wages when compared to exiles in same scope. Hence, monetary value factor plays a spot of a function here – though they seek same position and place. China ‘s governmental statute law promotes merely one kid per twosome, this allows twosome with high buying power.

Returnees of class are monetary value witting, they are cognizant that they will non stay to the same luxuries they are used to while they were in the West. But they are accustomed to such luxuries. While seeking to equilibrate between re-adjusting themselves to populate in China, they wo n’t mind chances to re-familiarize their cosy experiences one time in a piece.

CRE, ‘China ‘s Biggest Supermarket Chain Operator, Purchased 80 % Stake in Pacific Coffee for $ 42 Million ( 29 June 2010 ) Can Pacific Coffee Out-Brew Starbucks In China? ,

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Kotler, P. , Keller, K. , Koshy, A. , & A ; Jha, M. ( 2009 ) Marketing Management. 13th erectile dysfunction. Delhi, Dorling ( India ) Pvt. Lt.d. , Licensees of Pearson Education in South Asia.

Cafes in Beijing ( 2010 ) , Travel China Guide,

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[ accessed 17th Oct 2010 ]

Coffee Shops in China ( 2010 ) Mintel, hypertext transfer protocol: // [ accessed 18th Oct 2010 ]

Q4 – Scheme

Officially China became a member of World trade Organization in 2000. It opened China to foreign investings. Having said so, investors – particularly from west faced many obstructions – peculiarly cultural barriers. China being a communist state prevented people from encompassing western civilizations and moralss with unfastened custodies. Since China represents one fifth of the universe population, and with dual digit GDP rate, investors foresee huge chances in China ( Trading Economicss, 2010 ) . This is the cardinal factor for Starbucks every bit good. How you convert a Tea state bind with long history, is another inquiry.

Is China for Starbucks? Yes, I believe so. Sing my immediate mark sections above, one can conceive of the possible market size.



Entire Polulation ( Jul 2010 est. )



Age 15-64

72.10 %


Net migration rate



Urban Population ( 2008 )

43 %



91.60 %


* Source – World Fact book: China

Whilst supplying new schemes, it is of import to understand and heighten their current schemes besides ; whether Starbucks is presently making things right or non in China.

They locate themselves in the right topographic points pulling the mark markets, which is the alone characteristic of Starbucks. But they have to be careful ; it is non the topographic point most people would be hanging about. Their mercantile establishment in Forbidden City was closed due to immense protests from Chinese as they believed it was “ treading on Chinese civilization ” ( BBC, 2007 ) . The same resources reveal that it attracted 9 million visitants a twelvemonth – and Starbucks could hold continued if they were willing to sell other material as good. From my point of position this could hold been a strategic move – though Starbucks refused. In China you are looking at the volumes and hard currency flow. Starbucks could hold adopted a name to suite Chinese civilization and accompany other materials within their mercantile establishments. This could hold reduced any direct impact or rejection on their trade name name.

Localization. I ‘m 100 % with this thought. When we are rejected or barely accepted due to cultural barriers, the best thing to make is to add local spirits and put the tone to ease in. Besides offering localized nutrient, they could host cultural events in an active manner.

Keeping the quality of service. This helps any company regardless of the state you are in. Courtesy is one of the cardinal characteristics in Chinese civilization – which can be adapted to Starbucks ‘s every bit good. We could develop the staff within these lines every bit good.

Serving Tea. This is another great move by them – but they were bit late to present tea in their mercantile establishments ( Yang, C. 2010 ) . Harmonizing to the same beginning, merely few assortments are introduced. Since China is used to tea, I believe it will be easy to experiment with assorted assortments of tea than java. There are many known, quality teas ( besides Chinese ) they can present. For illustration, Sri Lanka offers one of the universe ‘s finest teas with many assortments and blends. Sri Lanka & A ; China holding similar civilizations, the Chinese would accept such merchandises much more easy than western merchandises. Additionally they could heighten the merchandises mix by presenting fresh herbal drinks – linked with Ayurvedic wellness benefits.

In China Starbucks is non the largest concatenation ( yet ) . China, holding the universe ‘s largest population, is more focussed on making things fast. If we can turn to this audience, it could be really good for the overall turnover. Alternatively of big and cosy java bars, they can present smaller take-way type mercantile establishments in strategic locations ; for the people who want, but do n’t hold the clip halt and enjoy.

No direct advertisement. In China a study reveals that 48 % relay on word of oral cavity when it comes to choosing and buying ( Jamsa, P. 2010 ) . Hence the best manner is to affect your clients to make the advertisement. As they do in the US, they could easy associate themselves to cultural events ; lend to local and welfare undertakings. Chinese are known for their artistic and creativeness, we could utilize the same to host competitions linked with Starbucks fortes and service.

China GDP Growth Rate ( 17 Oct 2010 ) , Trading Economicss,

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China and World Trade Organization ( WTO ( 15 Nov 2000 ) , Ministry of Foreign Affairs of the Republic of China, hypertext transfer protocol: // [ accessed 20 Oct 2010 ]

‘Forbidden City Starbucks closes ‘ ( 14 July 2007 ) , BBC News,

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Yang, C. ( 10 Mar 2010 ) , ‘Starbucks pours on Chinese tea, McDonald ‘s goes coffee smart ‘ Global Times hypertext transfer protocol: // [ accessed 20 Oct 2010 ]

Kotler, P. , Keller, K. , Koshy, A. , & A ; Jha, M. ( 2009 ) Marketing Management. 13th erectile dysfunction. Delhi, Dorling ( India ) Pvt. Lt.d. , Licensees of Pearson Education in South Asia.

Jamsa, P. ( 19 May 2010 ) . ‘Word of Mouth bigger than advertisement in China and the US ‘ , When digital selling goes international,

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