International Marketing For Global Brand: A Case Study Of Starbucks In China

Explanation of the Strategies Adopted by Starbucks for the Chinese Market

Discuss about the International Marketing for Global Brand.

This report aims to give an account on the international marketing for a global brand. International marketing has become a serious concern since globalization has influenced the socio-economic factors to take a sharp turn from the previous scenarios. The concept of the globalization has helped brands to expand their market outside the parent country. This report has tried to make a paper that evaluates how global brands manage the situation when they are introducing their products or services in a foreign country. For this report, Starbucks has been selected to discuss how this country has expanded its business worldwide.

Starbucks is an American coffeehouse chain; since the opening of the business in 1971, Starbucks has successfully expanded its market across around 50 countries. Till this date, Starbucks operates almost 17000 shops worldwide. Several types of research have revealed that Starbucks follows different strategies for different geographical divisions so that this giant chain can grab the maximum of the market (Hutt, 2016). In this report, China has been selected as the host country. This report has considered many aspects Starbucks have taken for the appropriate positioning of its products in Chinese tea drinking culture. Analysis of the influencing factors for the market expansion of Starbucks in China can be helpful in the establishment of a valid and approachable document.

Starbucks has successfully placed their products in different countries easily; however, it was different when the organization thought to enter the Chinese market in 1999; because Chinese culture only encourages drinking tea. Moreover, where other western food chains like Burger King, Dunkin Donut have failed to trace a market in China, it seemed difficult for Starbucks to establish a successful and steady market in that strong tea-drinking culture (Verbeke, 2013).  However, Starbucks has become successful in China due to their strategic implementation of the customized ideas in China. As mentioned by, Smith Maguire and Hu (2013), the young generation has more inclined towards the western culture of leaving their culture and this factor is helping Starbucks to grow in the Chinese market. In addition, Wang (2012), mentioned that having coffee from Starbucks has become a symbolic status of  the middle-class people in China; thus, Starbucks is gaining popularity among the majority of the Chinese population. Apart from that, Starbucks has also taken another approach to achieve their goal in the Chinese market; Starbucks has emphasized on the Chinese culture during its business set up in this country rather just plucking the entire western culture from its parent country that is America and implant it in the Chinese background (Burkitt, 2012). The management of the Starbucks has researched the economic and social context prior to setting up of their business in such critical country. Presently, Starbucks has 200 running stores in China; however, it is looking forward to expanding its business further here in spite of tough competition from the internal competitors and other situational factors.

Preferences to social concern

Here, different strategic approaches, taken by Starbucks, have been discussed below to understand the reason behind the successful business of the organization in China.

Preferences to social concern: As mentioned by Peterson (2015), while an international organization determines to establish a business in a foreign country it should respect the social aspect of that country. This step is recommended because it helps that organization to be acknowledged with the demand of the community as well as the organization will be able to identify what measures are appropriate for the successful business expansion. Reports have revealed that Chinese people have grown a preference for Starbucks as it offers the environment they have wanted. Peaceful ambiance of Starbucks has attracted young people to meet their friends, office executives to hold a meeting; it has become a place for family gathering too. People in China want to have a coffee and sit for a while when they are drinking it rather having it in a rush hour as in America (Rein, 2012). To fulfil such demands Starbucks has focused on the larger pacing of their stores.

Strategic market positioning: Positioning of the products is highly critical as it is the main measure that introduces the products to the consumers (Qian & Xing, 2016). In this regard, Starbucks has adopted a smart strategy to place their coffee in tea drinking culture of the China. Starbucks has never optioned for any promotional campaigns and advertisements for their products as it would have been perceived as a threat to the local culture of drinking tea. Starbucks went for the option to locate their stores in such a position where it can fetch higher visibility and crowd to enjoy their service (Jang & Jung, 2013). An important note must be shared in this context that is offering local drinks in their stores. Starbucks has introduced green tea and other local beverages along with treats like mooncake, customized for only the Chinese market; this step has helped Starbucks by turning the potential threat of rupturing the tea drinking culture of China into favour for the Starbucks.

Smart pricing strategy: The economic conditions fluctuate in different countries to make any international project feasible global organizations are required to revise their pricing strategy as per the host country in such a way that it helps the brand to earn their expected revenue. In this concern, Starbucks has adopted a smart pricing strategy. The price of the Starbucks products is costlier in China than that of the America. Such higher pricing strategy has helped Starbucks to hold a profitable business in China in spite of the fact that a number of stores are not sufficient (Zhang, 2012).  Apart from that, Starbucks roll out specialty products such as gift sets with the higher margin. Reports have revealed that Starbucks charge almost 20% more in China rather other countries; thus, it has become successful to yield the maximum revenue from the market.

Strategic market positioning

Partnership with local brands: It is important for an organization to understand the local business strategies and the trend of the market; thus, an organization can tie up with the local companies in that particular industry so that even minute and complicated issues can be solved easily (Wen, 2016). For China, the business scope is not same for each part of the country. The culture of the Northern part is not same as the culture of the Eastern China; moreover, the spending trend also differs from the coastal regions and island population (Hutt, 2016). To overcome such problems Starbucks has signed an agreement with three different local partners. In  the northern part, it has entered a joint venture with Beijing Mei Da Coffee. In the eastern part, it has gone with the Uni-President and for the southern part; it has tied with Maxim’s Caterers from Hong Kong. This strategy has proved beneficial for the Starbucks as each partner has brought different expertise as well as strengths of local business so that Starbucks can easily give an insight into the preferences and taste of the local Chinese consumers.

Employee management: This aspect cannot be overlooked while an organization is setting a business in a foreign country. Employee satisfaction is recommended as it is responsible for delivering the standard service and better performance. Employees are provided with adequate salary packages, healthy working environments, and prospering career paths. Meng and Wang (2015), suggested that there are many international companies where Chinese are treated as the second class citizens and given less important position in the overseas operations in China. However, Starbucks has given equal importance to each employee and appropriate position as per their capabilities. Apart from that, Starbucks management has given importance to the families of the workers; the families are invited to have interaction with the senior authorities of the company. As Chinese culture praises family involvement, this process helped to establish a reliable relationship with the employees (Jianfei, 2014). Establishment of an interactive and practical relationship with the employees has helped the organization to possess a strong working culture that has, in turn, assisted in successful business expansion in China.

This part has described few promotional and advertising strategies that Starbucks has adopted to make their business more approachable to the Chinese community.

The opening of web account: Starbucks has opened a web account on the social platform of Weibo. This platform is very popular among the young generation and thus Starbucks can easily interact with maximum consumers with minimum time.

Smart pricing strategy

Figure 1: Web account in Weibo

(Source: Marketing China, 2017)

Variation in the products and merchandise: Starbucks offer diverse products to meet the requirement of the Chinese market. It has customized its merchandises with brighter color contrast and Chinese graphics embedded in their merchandises.

Figure 2: Customized merchandise for Chinese market

(Source: Marketing China, 2017)

Innovative campaigning: Starbucks has launched an innovative digital promotional campaigning with WeChat. The main agenda behind this strategy is to reach out around 500 million users of WeChat. Service users are given QR codes that they can get exciting coupons and gifts from Starbucks. QR codes are even printed on the coffee cups.

Figure 3: Digital campaign with WeChat and QR code on the coffee cup

(Source: Marketing China, 2017)

Hence, it can be said that Starbucks has taken all possible steps to achieve the maximum popularity and success in the Chinese market. Starbucks has set its vision to capture the greater market for long terms; thus, these steps are appropriate in the current context.

Conclusion:

This report has given an overall explanation of the factors that have influenced the successful business set up of Starbuck in China. It was tough for a coffeehouse retail to establish a successful business in a country like China where people are fascinated with the tea-drinking culture. However, strategic management for the pricing of the products, positioning of the products, cultural embracement and employee management has boosted the business of Starbucks to expand their market share eventually. In a conclusory sentence, it can be said that Starbucks is required to focus on the long-term commitment to achieving massive success across the entire country.

Reference List:

Burkitt, L. (2012). Starbucks plays to local Chinese tastes. Wall Street Journal.

Hutt, R. W. (2016). Reputation on the line: the Starbucks cases. Journal of Business Strategy, 37(1), 19-26.

Jang, Y. J., & Jung, E. C. (2013, July). Studies on the Design Marketing Strategies in the Experiential Economy through the Case Study of ‘the Starbucks Company.’ In International Conference of Design, User Experience, and Usability (pp. 30-36). Springer Berlin Heidelberg.

Jianfei, X. (2014). Analysis of Starbucks Employees Operating Philosophy. International Journal of Business and Social Science, 5(6).

Marketing China,. (2017). How Starbucks is different in China – Marketing China. Marketing China. Retrieved 4 January 2017, from https://marketingtochina.com/how-starbucks-is-different-in-china/

Meng, Y., & Wang, F. (2015). Chinese consumer perceived on experiential marketing approach used by Starbucks.

Peterson, H. (2015). Ways Starbucks is Different in China.

Qian, Y. A. N. G., & Xing, T. U. (2016). Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China. International Business and Management, 12(1), 29-32.

Rein, S. (2012). Why Starbucks succeeds in China and others haven’t. Retrieved from USA Today website: https://usatoday30. usatoday. com/money/industries/food/story/2012-02-12/cnbc-starbucks-secrets-of-china-success/53040820/1.

Smith Maguire, J., & Hu, D. (2013). Not a simple coffee shop: local, global and glocal dimensions of the consumption of Starbucks in China. Social Identities, 19(5), 670-684.

Verbeke, A. (2013). International business strategy. Cambridge University Press.

Wang, H. H. (2012). Five things Starbucks did to get China right. Forbes: Business.

Wen, S. (2016). Marketing strategies: Starbucks in China.

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