International Marketing – Starbucks

Keywords: Marketing Environment and Strategy, Cultural issue in global business, Global Business Environment, International Marketing Mix, Marketing assignment writing services

In this paper, international marketing strategy and activities, cultural management, global operations as well as marketing mix of the Starbucks is critically reviewed, analysed and evaluated.

Introduction

According to Banalieva and Dhanaraj (2012), international marketing involves different perspective and company perform marketing activities based on the difference in culture, social attributes, languages or religion. The differences create number of barriers for the company in terms of marketing communication.

Usunier and Lee (2015) explained that there is range of strategies companies pursued in order manage the international marketing which involves export marketing strategy, global marketing strategy, as well as an intercultural marketing strategy.

In export marketing strategy company transfer the domestic marketing practices to another country. In global marketing strategy, the company follow the policy of standardized marketing communication as it considers the global market as homogenous customers (Christiansen, 2014).

At last, not least, intercultural marketing strategy involves the adoption of marketing practices based on the culture and other factors. The company adopts a range of marketing strategy based on their needs. However, the fundamental objectives of the marketing are to satisfy the needs of the customer along with customer retention (Czinkota and Ronkainen, 2016).

Starbucks Profile

Starbucks started its operations as speciality coffee house in 1971, through offering premier roasted coffee. The company is an international coffeehouse along with more than 21,000 stores in 66 countries and is one of the biggest coffeehouse globally. Starbucks purse differentiation strategy and provide high-quality coffee to its customer through unmatched customer service.

The mission statement of the company is ‘commitment to premium quality of coffee served while putting in the centre of company’s activities the special “Starbucks experience”. To inspire and nurture the human spirit – One person, One cup, and One Neighbourhood at a time.”

The company have a diverse products range which includes beverages (soda, juices), Whole coffee beans as well as Pastries.  In addition, many of the company offerings are seasonal or adapted to the condition of the specific country (Starbucks, 2015).

Starbucks — International activity

Starbuck has taken premium coffee experience beyond united states (US) and Company’s largest global market include japan (490 stores), China (125 stores), Taiwan (120 stores) as well as England with more than (375 stores).

Despite the fact, that company products are adapted to local taste but it ensure that customer experience the distinctive Starbucks coffee acquaintance. Company corporate strategy involves the policy of market penetration and offering customer high-quality products through attractive and relaxing atmosphere.

The company have most of its operations in developed or emerging market. Nevertheless, company operation is limited in the developing countries because of pricing of the product (Starbucks, 2015).

(Starbucks Annual Report, 2016)

Marketing environment and Location

Hogan (2016) analysed that Starbucks has adapted to local cultures and meet the unique needs of customers through offering high-quality products, great customer service and adaption to local culture. It is important company should build its international marketing strategy in order to gain competitive advantage and meet the need of the customer.

According to Lee and Carter (2015) during the process of internalization, the company needs to manage three types of activities which involve adaption or standardization, coordination along with strategic integration in the local market. The dimension of adaption or standardization involves a decision on products and services, pricing as well as marketing to deliver the need of the customer.

Moreover, coordination involves management of relationship and activities of the company. Furthermore, strategic integration involves how company respond to the needs of the stakeholders at global level (Dawson, 2014).

According to Benet-Martínez and Hong (2014), Starbucks manage the cultural diversity has played an important role in the international expansion of the company. The company has firmly believed in the involvement of the local community, managing the human connection as well as the integration of the local cultures.

Starbucks takes the diversity very serious and company deliver its passion for coffee through surpass culture, great customer service as well as the integration of the community. Globally, company believe in adaption and respect for local culture as well as it believes in building partnerships with local community and suppliers (Hogan, 2014).

International expansion

According to Banalieva and Dhanaraj (2015) the company has pursued a strategy of rapid expansion which involves an approach of Starbucks everywhere. The company managed its expansion through company-operated stores and licensing. The reason behind company internationalization is that US market is saturated and has reached the maturity, i.e. it aggressively pursues the strategy to expand globally.

In order to expand globally company follows joint ventures, franchise systems, licenses as well as foreign direct investment (FDI) to enter the international markets. Company entry strategy includes clustering small area, buying out the competitors as well as deploying a pricing strategy of loss leader to capture the market (Loeb, 2015).

Cultural issue, trading conditions and environment

Lin (2015) studied that company has faced multiple problems in different countries which involve cultural issues, local taste and preferences, competitors, weather and geographical demand. The first country company was entered was Japan and company faced the critics that Japanese are not used to carry the coffee in the paper cups, as well as they, are used to smoke in the coffee shop.

Consequently, Starbucks has to adapt according to local taste and preferences. Nevertheless, the company has proved the critics and managed to sell the coffee in the paper cups and deployed the interior non-smoking policy (Morgenstern, 2015).

In France, company faced enormous resistance from the local café tradition and people did not like the paper cup coffee experience. However, company rebrand itself among the young coffee drinker through offering innovative products such caramel coffee in the tourist areas (Christiansen, 2014).

According to Peterson (2014), China has long tradition of tea. In order to successfully enter the market and capture the market share company target the young population through offering lifestyle beverages at the affordable prices.

Another issues company were across was Italy, where company has to adopt the policy of lower pricing rather premium brand as well as deliver according to the need of the demand of the local customer which was serving coffee with the food (Dawson, 2014).

According to BBC (2016), England is the second largest market for the Starbucks and company has faced hug competition in the country. The imitators have tried to reduce the market share of the company and one of the biggest competitors of the company in the country includes costa coffee and café Nero. According to the statement of the CEO, ‘Starbucks respects the local tradition and culture of countries in which company operates.

The cultural diversity is managed by the company through considering employees as partners, focusing on the needs of the customers and understanding their preference, investing the local communities to offer development opportunities as well as building strong relationship with supplier. (Venkatesh Shankar et al., 2014)

International Marketing Mix

Morgenstern (2013) examined that Starbucks has adopted hybrid marketing strategy which involves selling the same product throughout the world, but offering are adapted to local taste and preference. The company has purse advertising strategy which is based on the local experience and differentiation technique which has played an important role for the company to be successful.

Richter (2012) added that The marketing mix for international marketing involves making decision on adaption according to need of the market, how to successfully coordinate with stakeholders as well as achieving strategic objectives of the company.

7P marketing mix

Market segmentation

According to Kotler (2012) the success of the company marketing strategy is dependent upon the company ability to identify and understand the customer in the specific market. However, in order to effectively identify, analyse and understand the need of the customers it is important that company deploy segmentation, position and targeting methodology.

Segmentation involves the dividing the market into a group of customers which are homogenous. The fundamental of segmentation include sustainability and action ability to deliver the needs of customers in a particular segment and generate profits.

Furthermore, targeting involves deploying the marketing strategies to address the needs of these customers. Nevertheless, posting plays an important role to influence the perception of customers in the international markets (Kotler and Armstrong, 2014).

Starbucks deploy the marketing segmentation based on psychographic as well as demographic factors. The target customer of the company is men and women who are aged between 20-45 years. The customer profile is based on middle and upper class as well as college students.

The positioning approach used by the company is a mix of concentration as well as a differentiated strategy. For differentiation strategy company targets rich and wealthy people aged 24-42 as they have a tendency of higher disposable income (Michelli, 2016).

Product

According to Mooij (2016) the product is defined as the offering of the company to satisfy the needs of the market. The main product of the company is coffee which is made freshly and available in wide range of options. The company offer 25 different types of coffees with number of variants (milk, syrup, black) and in different size of 350ml to 590ml.

Starbucks follows the policy of introducing the full product range to international customers which include coffee, tea, juices and other retail products. Moreover, company introduce specific products according to the taste of the local people such as cold tea in Asia (Richter, 2014). The company follows the policy of international adaption and customized or added products based on the need of the local customers.

The examples of product customized include espresso shots in England, black sesame green tea in the chain as well as chocolate sweet ‘Brigaderio’ in brazil (champagne and Iezzi, 2015).

Pricing

Morschett, Schramm-Klein and Zentes (2016) stated that the rule of pricing the products in the international market is complex scenario compare to local market. There are ranges of factors which influence the pricing decision trade barriers, economic conditions, and financial risk and taxation issues in the country.

The question for many companies whether to standardize the pricing policy or differentiate according to the market. The range of prices companies could charge include premium pricing, cost-based pricing or even predatory pricing. However, the vital factors to determine the pricing include demand, cost along with competition in the local market (Buss, 2013).

Christiansen (2015) elaborated that Starbucks follow the policy of premium pricing which is adjusted according to the need of local people. Company has managed the pricing of its products based on the location and product. In certain countries like and Italy, it projects itself as low-cost coffee shop whereas in US and UK it charges premium prices through offering high-quality products. For example, for tea, company charge the prices based on the number of tea bags because water is free or low cost.

Promotion

Mueller (2015) explained that promotion activities involve a range of activities to target the customers through sharing the information about the products and service of the company. The promotion is also known as marketing communication which helps to influence the customer perception and attitude about the company offerings through increased brand awareness and change attitude. Promotion involves a range of activities which are advertising, public relations, as well as personal selling.

Banalieva and Dhanaraj (2015) explained that Starbucks has managed its promotional activities through a wide range of programs such as newspaper, websites, posters as well as billboards. The advertising emphasis is given on the quality of the product rather pricing along with company offer loyalty cards and reward programs.

The company built its customer service program based on the feedback from the customer.  Nevertheless, the surprising fact is that a company spends just 1 % of its revenues on the marketing activities and its does not rely on the mass market. The company uses the social media to market conduct viral marketing campaigns or use guerrilla marketing techniques (Nargundkar, 2016).

Place

The place is the location where customers are likely to receive the products of the company. The key decisions companies are facing include location, availability and accessibility to the company offering. To make distribution Decision Company needs choose the premises and intermediaries (partners) to effectively deliver the service. Accessibility is the reacted of the customers to company products whereas availability is how the effectively customer is receiving the product (Albaum, Albaum and Duerr, 2015).

Michelli (2016) mentioned that company stores are located in the area of high visibility and populated places. Company stores are located in retail centres, university, airports, high street and railway stations. Company products such as whole coffee beans and other retail items are also available in supermarkets in more than 6000 international supermarkets. The company uses a range of distribution channels to market its products such as grocery stores, supermarkets as well as retail agents (Christiansen, 2013).

People

According to Zou, Xu and Shi (2015), human interaction in the delivery of quality service plays an important role. The fundamental factors are competence, attitude and behaviour of the customers who are involved in the delivery of the service. The company which heavy rely on the customer to offer the product, employees are a most critical factor for the success of the company. The employees are used to deliver the marketing message of the company and i.e. in order to effectively deliver the product through building strong strategy in terms of employee selection, training along with internal marketing.

In addition, internal marketing is referred as promotion of the company activities and culture in the organization. The customer staffs at star bucks are known as baristas and company services largely dependent on services deliver by these people. Therefore, the company is focused on the training and recognition of its employees (Pham-Gia, 2016).

Macalister (2014) added that there are effective systems to recruit and train staff through effective screening. Nevertheless, after hiring company is spending a lot of time in training and development of the employees. The employee recognition involves both reward and award for the employees on the monthly basis as well as it does recognize the efforts of its suppliers.

The company gave specific training to each employee who is based on 25 hours coursework which deliver detail knowledge to the employee on the company products, services, and experience.  In addition, before company open any of its new stores employees are usually given 6-8 weeks training to ensure the Starbucks experience globally (Czinkota and Ronkainen, 2016).

Process

Hogan (2012) stated that processes include all methodologies, mechanism, procedures and activities which are critical to deliver the product of the company. The operating environment is important in order to consistently deliver the service of the company. The standardization of the process helps the company to deliver the same quality of service each time.

The careful management of company processes through reviewing operating environment helps to decide and plan for quality of service. The range of activities involve in the delivery of service include employees attitude, discretion as well as involvement in delivery of the service. The company operates through joint ventures and licensing as well as agreement with a local business (Dawson, 2014).

The different type stores include retail stores and food services which offers a full range of services. Moreover, the company does not use readymade products to its customers such as coffee beans are grinded in store to preserve aroma and taste.  Starbucks has displayed all types of drinks available along with food are available within the customer. They can pick the items and walk to the cashier to pay. However, coffee has to order to the cashier before it delivers to the customer (Zou, Xu and Shi, 2015).

Physical Evidence

It represents the environment in which company deliver its products and interact with the customers. The environment for the service delivery is an important tool in the marketing mix which shows culture and positioning policy of the company. The design of the store plays an important role and company focus on everything things in the store. Stores are in such way that it meet the Starbucks experience as well as local traditions  (Michelli, 2006)  .

Benet-Martínez and Hong (2014) added that the physical location plays an important role for the company through selecting the location of the store, a broad range of design of the store, careful planning as well as retain the global ambiance of the store. The company follows the policy of opening a store in the location where there is high visibility, as well as popular location. The examples of the location company prefer to operate includes airport, stations, and high street markets.

The core concept in the design of the store involves is that everything matters and company conduct regular assessment of its store (Peterson, 2014). Employees in the store wear specific dress code, aprons, and store ambiance environment through offering specific style sitting, Wi-Fi, design, and environment.

Nevertheless, the company have a range of merchandising to sell in store which includes t-shirts, mugs and variety of other items which are usually purchased by the customer to take these items as souvenirs (Starbucks, 2015).

Ethical Consideration

There are number of ethical issues associated with Starbucks. In the past, company has sold genetically modification food items in the dairy products which have attracted huge critics’. This has resulted in six year-long campaigns by pressure groups to remove the products. Nevertheless, the unethical practices as company not paid taxes for continuous three years. In US company have poor working conditions and low cost health insurance of its employees (Macalister, 2013).

Conclusion

Starbuck has managed to deliver its passion for coffee around the world through deploying tis core competencies, as well as an adaption to the local environment of each country. Starbucks has successfully expanded its operations globally through pursuing active expansion strategy and development of detailed marketing plans.

Company position itself to offer the high quality product at premium pricing and target the middle and upper-class segment of the market. The company focus on the quality in terms of products offering and customer services to which people get attract and value these offering.

The company is highly focused on the training of its employees; build a strong relationship with local stakeholders, as well as respect and adaption to the local culture. Company management firmly believes in the strong positioning strategy and there is greater room for the company to expand globally especially in the emerging markets.

 

 

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