© Daxue Consulting, Daxue Conseil, Daxue Consulting HK, Daxue Consulting China. The table below lists the SWOT (Strengths, Weaknesses, Opportunities, Threats), top Starbucks competitors and includes Starbucks target market, segmentation, positioning & Unique Selling Proposition (USP). Double 12 2020: Winners and a dying trend? As of 2020, Starbucks is one of the leading brands in the food & beverages sector. Marketing Research Plan: Starbucks in China 1269 Words | 6 Pages. In 2018, Starbucks (NASDAQ: SBUX) set ambitious plans for growth in China, its second-largest market. Our consultants have been quoted in media such as the Wall Street Journal, Forbes, The Financial Times, the New York Times, South China Morning Post, China Daily, Reuters, Le Monde, Les Echos. Starbucks' massive presence in China could make the company a target. Target Markets During the initial years, the target market of Starbucks included: Affluent customers Well educated customers White Collar Patterns The age of the target market was between 25 and 44. First of all, Starbucks choose a good local partner to form a joint venture which can help it better understand the local laws and negotiate better with the authorities. The fifth level of China screening was focused on competitive forces. What they did with their coffee shop changed the way people look at coffee. Created on the campus of Beijing Daxue in 2009, Daxue Consulting has strong roots on Chinese market but also an international vision and team. The fourth level of screening involved socio-cultural forces. Starbucks launched voice ordering in China in the fourth quarter. This success is partly because Starbucks caters to the Chinese market effectively. In summary, Starbucks in China employed a very successful marketing strategy when entering the country. Starbucks has approx. It was observed that the Chinese also liked to have some food along with their drink. Tea and coffee compete directly in the Chinese drinks market. Cups of Starbucks are broadly classified into two categories, tumblers, and mugs. Starbucks is one of the largest coffee chains in the World. Amid this, China is the fastest growing market for Starbucks outside the U.S. and the second largest market overall; there were 4,292 stores in China … Company’s managers were aware that Chinese Gross Domestic Product (GDP) continuously grew approximately 9 % on an average and a GDP per capita was US$3.800. Starbucks entered the Chinese market in 1999. The stores were also larger in area than the ones in the US, as the idea was to make the customers feel at home, relax and spend more time there. Secondly, local partners know Chinese market condition better than Starbucks; therefore, it is effective and efficient method for Starbucks to adopt a few localization strategies to satisfy different regions of customers. But from the second year onward, Starbucks combined the mid-autumn festival theme with its coffee culture, creating a new kind of mooncake called the coffee mooncake. @daxueconsulting Starbucks started by projecting the stores as a place for social gathering. To evaluate Chinese market the company used several steps of analyses. The main target group is the younger consumers who are seeking different chatting environments as Starbucks are at all corners now. Moreover, Starbucks could also maintain a high standard on the control of production, and achieve a ideal revenue in Chinese market. All rights reserved. This also led to success for the company. In order to avoid these challenges the company built and maintain firm relationship with Chinese local partners as well as government officials. It was mostly depended on the people to spread goodwill through word of mouth than commercial advertisements and media products. Case Study on Marketing Strategy: Starbucks Entry to China, Case Study: Success of Starbucks Mobile Payment Application, Push and Pull Factors in International Business, Country of Origin Effect in International Marketing, Steps in Conducting a Foreign Market Analysis, Case Study of Starbucks: Creating a New Coffee Culture, When Your Company Should Seek Help From The Outside, Case Study: Corporate Social Responsibility of Starbucks. Starbucks entered China’s market through franchising and joint ventures. At times if the customers did not enjoy the sample, the store employees asked them to come back again later for another ‘tasting’ session or they offered them some other drink that they enjoyed. Starbucks marketing strategy in China was base on customization in response to diverse Chinese consumer target segmentation. According to analysts, compared to other countries in which Starbucks operated this task was more difficult in China because of the age old tradition of tea drinking in the country, where coffee was seen as nothing less than a kind of Western invasion. Small changes were made in the texture, menu and store layout just to match with Chinese culture and food preferences. Starbucks uses the highest quality coffee beans from ideal coffee producing climates. on twitter. Therefore, according to the market needs they had to square bigger stores. China is highly bureaucratic country with difficult processes of getting permissions and sanctions to start and run business. Many big cities like Shanghai, Hong Kong, and Beijing designed their own mugs and mini cups. To enhance the name of “Starbucks” they had different strategies. There are some advantages for Starbucks with joint venture to enter Chinese market. and they have already established good relationship with local government, so it was easy to obtain the permissions and sanctions required to start and operate business in a bureaucratic country like China. Focus on CAP segment. “We want our customers to recognize that we’re not coming to China just to make money, we are coming to China to build an enduring company that they can trust and they can view as one of their own”. As regards local competitions, it was a well-known Chinese brand Li Shen and Japanese brand Zhen Gou Coffee. In addition, the young generation was enchantment by brands and products from the West. So they decided different menu for different stores in China. The objective of this paper is to perform market research for Starbucks’ President, Charles Shultz to ascertain the possibility of establishing new coffee houses in China. He also shared with the… It can also be classified by themes, which are charm-logo cups, city cups, thematic mugs, etc. Shares of Starbucks, which has a market value of $93.2 billion, were down 1.5% in afternoon trading … Its tumbler cups and coffee mugs are very popular in China, which is often sold out in couple weeks. This initiative indicated that there was a strong demand for their products, particularly among foreigners in China. Luckin missed one of the 3 key points to succeed in China. (2007) explains the necessity of using an effective method in research methodology as being critical in achieving reliable and authentic findings of the investigation. The company is expected to rapidly expand its mobile and loyalty ecosystem in China. It is beneficial for Starbucks to obtain required permissions and sanctions so that it can be opened easily. For example, they spoke about how drinking coffee helped to change their mood and how it was good to have coffee in the morning. In the first year of its existence, the mooncake did not sell very well. The second was to combine Chinese tastes with products from Starbucks to give Chinese consumers something new while maintaining a level of familiarity. It showed the biggest challenges for Starbucks, because of the old tradition of tea drinking in China. The company chose to opt for its own culture and sell the idea of the ‘Coffee drinking experience’. With a reputation as a coffee brand, Starbucks faced a serious crisis. In Shanghai and westernized, the stores a standard menu where they served coffee. Starbucks in China. According to market research provider Euromonitor International, Starbucks has seen its market share in China grow from 60.5 percent in 2012 to 74.6 percent in 2016, topping the coffee shop industry. More significantly, this research seeks to provide a critical explanation on the international marketing strategies used by Starb… In 2000, Starbucks entered into a joint venture with Mei-Xin International Ltd, it also called “Coffee Concepts Ltd”. But in the case of China it adapted some strategies influenced by local culture and market conditions to gain Chinese people’s trust and confidence. That was undoubted advantage for entering Chinese market for Starbucks. They helped Chinese farmers, made good relationships with their workers and they also made a good reputation in the supply market .As a result of good reputation, good quality and high price they were able to attract people and also maintain their luxury appeal. In September 1998, Starbucks entered China under a licensing agreement with Beijing Mei Da Coffee Co.Ltd, which was as their first partner. Thus, the company decided to open some tea shops in addition to its regular coffee shops. Coffee culture is exploding in China, and clearly Starbucks expects this trend to continue. The customers were willing to pay a higher price for the brand name. Their knowledge, organized way of business left a good impression on customers’ mind. Joint venture Started in the early 1970's, it hasn't taken long for Starbucks to go from a single storefront to a global phenomenon. Starbucks formed a joint venture with different partners at different times when it entered into Chinese market. To promote themselves in China the company chose a different way. Chinese people were familiar only with one international brand which was Nestle’s Nescafe. From professional to students they had different ways to attract them. When Starbucks started in China, one of the biggest challenges it faced was to make the consumers accustomed to drink and appreciating coffee. to attract more people. After 1978, the country’s economy were underwent dramatic changes which involved such relief as permission for entrepreneurs to start up their own business and opening the country for foreign investment. The same way the company taught customers about different flavors and types of coffee. STARBUCKS VS LUCKIN COFFEE. Understanding the customer and how they behave is at the heart of marketing research (Aaker, Kumar, & Day, 2007). To introduce the Starbucks brand the company begun to distribute coffee for free to guests in several Beijing’s hotels in 1994. Our newsletter delivers information on the Chinese market as well as the innovative data-collection methods. China accounted for 10% of Starbucks' revenue during its first quarter. They also spoke to the customers about the positive effects drinking coffee. Store In January 1999, Starbucks entered the mainland China market by opening the 1st store in the China World Trade Building, Beijing. 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In its fiscal fourth quarter, … So licensed agreement was a optimal option for Starbucks to enter into a booming China’s market in the mid-1990s. “For 20 years, we’ve pioneered the Starbucks Experience for customers in China, and today through our alliance with Nestlé, we’re unlocking new premium coffee experiences to better suit our customers’ daily lives outside of our Starbucks retail stores,” said Belinda Wong, chairman and ceo, Starbucks China. Daxue Consulting is a China-based market research and strategy agency. In response to that Starbucks started offering some popular Chinese foods like, curry puffs, moon cakes, and traditional cookies. As China develop so fast now, most families start to get better living standards and can have extra money to buy some luxury stuffs. Starbucks accepted the reality that maximum people in China like tea more than coffee though young generation is more likely to go for coffee. The company targeted young consumers in China and it predicted that the changing lifestyle of young people in the country would increase their demand for coffee. Never mind that China … Our team has worked with over 300 international brands in the last 5 years, including industries such as F&B, education, luxury, cosmetics, digital and high-tech, but also industrial projects in B2B sectors. Business Week and Interbrand have listed the top 100 global brands (market study in China) and Starbucks Coffee ranked in at 91st overall thanks to its $3 billion brand value. Follow We chose China because it is the world’s most populous country with over 1.3 billion people live there and second-largest country by land area. It is obviously that Starbucks managers decided to take advantage of such opportunity to expand their business into new region. The monthly report will allow you to keep track of the most important upcoming events about China around the world, as well as not to miss useful articles and reports. Starbucks' sales in the United States and China, its two largest markets, have been rebounding faster than expected. Although Starbucks encountered several challenges in the process of entering into Chinese market. As a result young, urban Chinese, who solely started to associate visiting Starbucks or being seen with a Starbucks cup, as a symbol of social status. 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Your email address will not be published. Therefore, these people are considered to be Starbucks target market. Similarly the company took initiatives to teach the customers about the different types of coffees and how to distinguish between flavors. Your email address will not be published. Local people, who strived to imitate the Western lifestyle, also showed interest for coffee drinking. While the weekly newspaper will talk about the daily business cases of China, important local events and news. (Starbucks in China still considered to be high value product). Starbucks achieved considerable knowledge about the Chinese market conditions and then began to open Starbucks stores in China. They also changed their marketing and pricing strategies based on needs for the Chinese market. Starbucks Corp. SBUX, -2.27% is building on its line of cold beverages, which the global coffee company says has already driven $1 billion in sales over the … As we mentioned before China is a tea country and the share of coffee was low. Little or no competition for Starbucks was considered as an advantage. The astonishing achievement owes to its careful marketing assessment and various marketing strategies in different periods. 24500 with major outlets in USA, China, Canada, Japan, and South Korea. The company adopted a strategy of having three different partners to enter different regions in Chinese market. The company targeted young consumers in China and it predicted that the changing lifestyle of young people in the country would increase their demand for coffee. ... Starbucks lacks a comparable alternative market. In the US a normal size of Starbcks store is about 1,200 to 1,500 square feet whereas in China they started opening stores bigger than 2,000 square feet. This site uses Akismet to reduce spam. If Starbucks China becomes a victim of deteriorating U.S.-China … All these factors led to rising income of middle class. Starbucks realized that local partners can have the best understanding of local cultures customers and some related laws. In 1998, Starbucks adopted the mode of licensing agreement to license its Chinese partner (Beijing Mei Da), a wholesale distribution company to supply coffee beans to some selected hotels and restaurants. They started selling latest DVD’s, free access of internet and also use to provide different wireless services so people can feel it like their 3rd home. But if somebody markets a coffee shop, then he/she must target a specific kind of people with distinct preferences and interests like Starbucks does by targeting Naysaysers.Freelance workers are a great target for any kind of coffee shops which provide calm and enjoying atmosphere. These factors led Starbuck’s managers to learn and understand more about business climate in that Asia country. The O2O food delivery market in China 2019 | Daxue Consulting, Chinese Real Estate Market between 2012 and 2013, Awakening the dragon of rural consumption in China: How to tap into this Blue Ocean consumer base, Keys to nostalgia marketing in China: Qualitative research on what makes Chinese millennials and gen Z nostalgic, Movies in China: The nation soon-to-be the world’s largest box office. To introduce the Starbucks brand the company begun to distribute coffee for free to guests in several Beijing’s hotels in 1994. Next step for Starbucks was to determine financial and economic conditions of China. The three entrepreneurs were Gordon Bowker (writer), Zev Siegl (history teacher) and Jerry Baldwin (English teacher). The monthly report will allow you to keep track of the most important upcoming events about China around the world, as well as not to miss useful articles and reports. In order to enter the festival market in China and satisfy the taste and demanding of Chinese consumers, Starbucks released Starbucks mooncakes and Starbucks zongzi in recent years. So licensed agreement was a optimal option for Starbucks to enter into a booming China’s market in the mid-1990s. All throughout China, cups with the Starbucks logo are everywhere. “In China, what you see is the consumer base in China is much more digitally savvy than any other market … They tried to build their reputation in terms of, product quality, customer service, employee relationship, etc. Daxue Consulting is a market research company providing tailored strategic advisory, fieldwork solutions & full-length reports on your market of interest. They know that moving forward entails flexibility and, like their favourite coffee store, they welcome the changes that arise with growth. Local people, who strived to imitate the Western lifestyle. We also post daily on Western and Chinese social media up-to-date articles on various markets in China and we have been regularly quoted in many media such as The Financial Times, The Wall-Street Journal, South China Morning Post or China Daily. China is currently the second largest market for Starbucks outside of the U.S. Required fields are marked *. Chanel in China: Digital strategy and standing up to counterfeiters, Coach in China: A fast-growing affordable luxury brand, Hello Kitty in China: Case study of an iconic character, Louis Vuitton in China: The king of luxury brands in China, The 10 most epic China marketing campaigns of 2019, China Paradigm 121: Advertising in China with transparency and precise targeting. Starbucks started as a small coffee shop in Seattle in 1971, founded by three university students. The company has a unique style and atmosphere in their coffee houses. We conduct all research methodologies internally with a full coverage of Mainland China to provide market sizing, consumer research, promotion and distribution plan design, competition benchmark et others. "China is our 'second home' market outside of the U.S.," says John Culver, Starbucks Group President of China and Asia Pacific, in a phone interview. At the third level of screening Starbucks faced with political restrictions. The market for Starbucks’ cups has already spread from white-collar workers to students. The company currently have locations in 90 Chinese cities and employ over 25,000 people in China. Starbucks is mainly famous for its dark roasted coffee accompanied by taste, customer experience and quality, and they are popularized as “second wave coffee” representatives. Even though Luckin coffee is a Chinese brand and offers several services like discounts, delivery, and had a specific target market, compared to Starbucks, it failed. Culture come first. By 2014, Starbucks emphasized the rapid growth of its operations in China, where it now has 2,204 stores and plans to roll out another 500 stores within three years, making China by far the second largest market for Starbucks behind the U.S. Learn how your comment data is processed. While the weekly newspaper will talk about the daily business cases of China, important local events and news. Saunders et al. It managed the operations in the region of Hong Kong, Shenzhen, Macau, Guangzhou, and other parts of southern China. They were inspired by the owner of the Peet’s Coffee and Tea, which was near the University of San Francisco. Daxue Consulting now has offices in Beijing and Shanghai and its team is composed of local and overseas-educated Chinese and China-educated foreign project managers. Starbucks’ target audience is flexible to change. We especially auction traditional methodologies as well as technology-driven tools. The customers were given some samples to smell as well as sip and then describe their experience. Starbucks not only sells coffee, tea, coffee beans, and mooncakes but also sells cups. daxue consulting is owned by Ever Access trading Limited, Ever access trading owns 博圣轩投资顾问有限公司上海分公司. These strategies mainly refer to 2 different modes of entering foreign markets: licensed agreement and joint venture. Starbucks gets what most brands and retailers don't in China. In order to implement these strategies, Starbucks has opened new stores in both existing and new markets (Willmott et al, 2010). Last but not least, joint venture is a good way for Starbucks to reduce operation expenditure, and it also helps to reduce risks in Chinese market. In 1999, Starbucks formed a joint venture with the Taiwan based Uni-President Group and opened stores in Shanghai. Starbucks had successfully expanded its business in over 20 large or medium sized cities of China, and opened about 560 storefronts in these cities by 2012. The corporation has plans to open 500 new stores in China by the end of the year. Starbucks modified their menu and tried to localize its brand name by selling some food items according to the choice of the Chinese people and selling different kind of tea. Slick technology and great products are a must, but putting family, community and … It was creative and innovative enough to successfully integrate a foreign brand into Chinese culture. In 2004, Starbucks released a type of city cup with designs based on Chinese cities. Starbucks incorporates another localize strategy in every country they go, by modifying the name of Starbucks to suit the local language, like in China they Changed the name to ‘Xing Bake’ where ‘Xing’ represents ‘Star’ and ‘Bake’ was pronounced as ‘bucks’. Within few months of opening the coffee stores, the company started observing that coffee culture is different for Chinese people than US, where people are very busy in their daily lives and they just grab their coffee and leave, but in China coffee stores were more like a place for social gathering where they can sit and talk for hours with their friends and families. But why? Normally Starbucks follows a high standard technique to maintain its stores worldwide. To acquaint employees and Chinese executives with coffee drinking experience Starbucks provided different training programs for them in which they learned more about coffee and Starbucks’ culture. Starbucks should also aim for the Chinese white-collar workers between 25 and 40 years of age. Our team leverages a multiple-methodology approach in order to provide the most tailored knowledge to our clients. 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