This research paper aims to provide a basis for the effect of Starbuck Corporation’s international marketing policy in its global expansion into China and the UK by looking at market share, competitiveness and productivity-based management strategies. As a result, this paper will discuss the way Starbuck Corporation in China and UK was created and how it changed over time especially with increased competition in a marketing environment based with cultural differences. More significantly, this study wants to emphasize the strategic thinking about all the factors involved in applying and analyzing the increasingly enthusiastically satisfied customers served by Starbuck’s management unlike its competitors in the international market. More considerably, the main debate on this subject is on the impact faced by Starbucks Corporation in its expansion globally into china and UK based by regulations, international marketing strategy to increase profitability and increased competition.
History of Starbucks
As a remarkable company, Starbucks Coffee Company has grown into a global brand since its founding in 1970 in Seattle, the United States, concentrating on increasing customer satisfaction by treating each customer with respect and dignity. Starbucks Coffee Outlet, which focused on building its market share, competitiveness and efficiency, started in the 1970s as a single shop offering high-quality coffee and brewing goods. However, Starbucks Coffee Outlet has grown to be the largest international roaster with more than 19,000 outlets, as it offers a high standard of excellence in all areas of buying, fresh coffee distribution and roasting, as it provides improved customer satisfaction. Over the years, Starbucks has enriched its service in offering roasted coffee sold out to customers its enriched Italian style espresso coffee beverages in all Starbuck stores and branches along with pastries and other coffee-related products.
More remarkably, the chain of outlets seek to give its consumers increased service reliability, high product quality, and management of operations as it seeks to increase its business growth and sustainability. As a result, Starbucks promotes cultural diversity in different regions through its workers who aim to connect with different cultures and thus grow consumers with that enthusiasm. Unlike its competitors, Starbuck’s management always seeks to provide high quality products in all their international market with increased provision of their products based on affordable cost, timely delivery and flexibility. Uniquely, Starbucks as a business entity seeks to attract more customers as it provides the community an opportunity to share in the coffee drinking experience and variety of choices in services at its stores.
Starbucks Experience and Global Expansion
As a business entity that seeks to continuously attract more customers and grow its market size and profitability, Starbuck Corporation choice of innovation of some of their coffee products in the market to suit its customers needs as compared to their competitors remain essential. Considerably, the increased selection based on the right approaches in making decisions based on choice of suitable markets have made Starbuck Corporation one of the most recognised and respected brand in the world. This is because, the choice of the coffee outlet by the customers is based on the variety of coffee offered, the experience gained in the stores and the employees who give the customers exceptional services.
As a result, Starbucks strategy seeks to reduce cost and increase customer accessibility as the management selection of their location of coffee shop ensure they remain accessible to its customers. Considerably, the choice of market by Starbucks is based on the suitability of the location, which depends on the favourable nature of the business and strategic location for customers to access products and services. More so, the organization’s strategies have seen Starbucks Corporation expand to the Far East and United Kingdom being the key business driver as it established a foothold in China. More especially, Starbucks management focuses on its increased convenience to attract market share, based on the increased levels of capacity and flexibility, operating costs, revenues, operations, competitive advantage, and importance to supply chains.
Starbucks in China and the UK
Indeed, Starbucks remains exemplary in its wide expansion as the exportation brand of international coffee worldwide. More so, Starbucks management both in the UK and China mark seek to reduce cost and increase customer accessibility by exploring suitable market mix strategies applicable in different locations. Certainly, Starbucks choice of location remains an essential factor just as other entities in the food and beverage industry as exhibited in the Chinese and UK market thus influencing consumer choice of specific coffee shop. As a result, majority of Starbucks coffeehouse are strategically located within the reach of its customers especially in distinct locations within, Taiwan, Beijing, Hong Kong, and Macau in China within shopping malls and areas near the commercial centres. Notably, Starbucks expansion into UK has been successful as a leading retailer, roaster it remains focused on providing costa coffee in the world the choice of location at Lambeth, London in 1971 lead to the rapid expansion into Vauxhall Bridge Road in London in 1978 with the opening of first Starbucks Costa espresso bar. Indeed, increased rapid expansion of Starbucks in the UK and China allows the business enterprise to become the number one choice of the coffee shop as compared to its competitors because customers choose to go to the coffee bars to relax from busy lifestyles.
As a company that seeks to remain competitive in the beverage industry and ensure marketability, Starbucks shifted focus to Chinese buyers, who had been interested in good quality coffee as a norm led to shop extensions all over China. Considerably, as the fastest growing brand in the food and beverage industry Starbucks Coffee, management establishment in China seek to maintain its unique and modest brand in the market. With increased profitability in Chinese market the focus shifted from expansion in the US to China leading to continued store openings and establishing new coffee bars in Beijing, Tianjin, Shanghai, Guangzhou and Shenzhen as the largest market outside of the US (Starbucks Corporation 2014). As a result, Starbucks focus has been moving from being a profit-making business as it engages in corporate social responsibility within China in corporation projects in the country and district parts.
As a result, Starbucks has increase market opportunities as it invested five million US dollars in the year 2005 spent on China Education Project through corporate social responsibility in China western and central areas in September 2005. More so, Starbucks market strategies seek to attract an increased number of customers considering that it targets those from both the wealthy elite high class customers and middle class consumers. More so, Starbucks Association meet community needs through promotion across China through coffee ground environment program, construction of school buildings and participating in beach cleaning. The figure below shows the number of Starbucks stores in China from 2005 to 2013.
Figure 1.4: Number of Starbucks stores in China from 2005 to 2013 (The Statistics Portal 2013)
Notably, in 1998 market entry of Starbucks showed increased accomplishments in the European market which lead to take over of 65 Seattle Coffee Company shops in the UK. More significantly, both companies focused on cultural promotion of selling coffee based on its unique brand and gaining competitive advantage over its competitors (Starbucks Corporation 2014). Indeed, Starbucks expansion in the UK ensured that the global brand remain competitive in the beverage industry as, Starbuck’s management always continuously seek to provide high quality products with increased provision of affordable cost, timely delivery and flexibility amongst its competitors.
Starbuck’s main market is the UK is influenced by the company offers employees who are considered partners in the well structured company stock plan even as Starbucks coffee shops management offer increased as job opportunities in the UK. Remarkably Starbucks plans to expand its coffee shops through its ambitious expansion to sustain marketability and market share by creating more jobs and increasing revenue. Notably, there has been increase in number of Starbucks stores in the UK from 2005 to 2013 as shown in the figure below.
Figure 1.5: Number of Starbucks stores in the United Kingdom from 2005 to 2013 (The Statistics Portal 2013)
Research Aims and Objectives
This research study focuses on Starbucks’ ambitious goals focused on international market expansion research on the international marketing entry strategies used by Starbucks both in its successful China and UK market to remain essential.
Ho: No changes with the international marketing strategies used by Starbuck Corporation internationally.
H1: There are changes with the international marketing strategies used by Starbuck Corporation internationally.
Ho: No expected changes with Starbucks competition in its expansion
H1: There are expected changes with Starbucks competition in its expansion globally in China and UK.
Ho: No impact can be learnt from model of Starbucks ideas in its expansion globally in China and UK.
H1: There has been an impact learnt from model of Starbucks ideas in its expansion globally in China and UK.
- Carry out research on Starbucks international marketing entry strategy used both in China and in the UK?
- Carry out research on competition faced by Starbucks in China and UK market?
- Describe Starbucks use of international marketing strategies to gain competitive advantage in the new markets?
- To literally investigate Starbucks international marketing entry strategy used both in China and in the UK.
- To compare the marketing entry strategy that gives competitive advantage to Starbucks over its competitors in China and in the UK.
To be successful in running an international business, there is need to focus on quality operations management through strategic critical decisions in the product and design decision. Without a doubt, the issue of cultural influences that affects all aspects of life ranging from social, political, and economic perspective in nature affect company global expansion. With the existence, of international companies including Starbucks Corporation that operate globally there is an upsurge in increased challenges experienced based on different cultural issues that influence company growth as it tries to manage cultural peculiarities. Notably, Starbucks Company focus on using viable marketing strategy, management of quality, service reliability, and efficient operations. As differences in geographic location, culture, tradition and other factors affect market profitability, it is necessary to adjust and adapt diversified strategy in each country. However the results have sometimes, unexpectedly appeared to be more challenging thus, it is worthy to examine the causes and their effects. Indeed, market expansion of Starbucks in China and the UK is a great opportunity to learn how embracing cultural diversity leads to increased success and expansion.
As a company, focused on building increased customer satisfaction the operations of Starbucks Coffee outlet internationally seeks to provide great work environment and treat every customer with respect and dignity. More notably, the chain of outlets seeks to use the right market mix based on the price, product, location and promotion to ensure market profitability. Considerably, the approach used at Starbuck seeks to reinforce the concepts of control and management of quality, service reliability, and efficient operations in action as its key strategic aspect in operations management.
Kotler (2000), explains how marketing mix ensures use of product, price, promotion and price as marketing tools to engage target consumers ensures successful market growth. More significantly, the marketing mix based on pricing, promotional, placement and product of the marketing environment ensures increased market accessibility as the products and services are sold to final consumer. Considerably, the decision making process in use of marketing tools is influenced by prevailing market conditions, degree of competition, economic conditions, growth targets and interactions with its subsidiaries in order to meet customer demands.
Kotler (2000), defines product as tangible and intangible product produced to fulfil the needs of consumers. As a result, a distinctive feature based on unique products offered by individual companies seeks to attract consumers in the highly competitive market. More significantly, affordable resources and innovative ideas remain suitable in marketing as it seeks to improve the quality of products offered to consumers, based on product layout, brands, packaging, as well as post-purchase benefits. Considerably, increased value based on distinctive elements offered in products including unique packaging and designs to suit varied customer specification attract consumers to use a product.
According to Kotler (2000), price is the only component that gives monetary value of the product as it used for exchange purpose. Furthermore, price is an adjustable component of marketing because it can increase or decreased based on the break even point and quality of product offered. Notably, price remains as an essential component that gives the firm an opportunity for a competitive advantage because choice of suitable pricing strategy from competitors achieves increased market presence. As a company that seeks to establish strong international market, Starbucks Corporation has a pricing strategy that makes its products affordable for its consumers ranging from high level income and low level income earners in their different market segment.
Kotler (2000) describes place as the final location of the goods to the end consumer. More so, distribution channels influence placement of products through retailers wholesalers, as the end consumers access the goods easily. In most cases, it is necessary for business to consider the selection of their location to ensure that it is easily accessible to its customers. Considerably, the choice of market location depends on the nature of the business based on proximity and strategic location for customers to access products and services. According to a study by Kotler (2000), distribution channels influence placement and distribution of products in the market thus influence sales level depending on marketing channel that products remains accessible and available to target market.
Promotion is describe as a marketing communication concept used by marketers that influences the information about a product in convincing customers to shift their consumer behaviour. More so, use of promotion seeks to establish increased market presence through personal selling, direct marketing and promotion (Mullin 2010). More considerably, promotion uses public relationship campaign as a way to build strong brand as it seeks to influence customer choices from competitor brands through sales promotion strategy. Promotion through advertisement introduces brand awareness and induces consumers as a way of retaining its customers and attracting new customer (Kotler, 2000).
Saunders et al. (2007) explains the necessity of using an effective method in research methodology as being critical in achieving reliable and authentic findings of the investigation. More significantly, this research seeks to provide a critical explanation on the international marketing strategies used by Starbucks in its expansion in China and UK. Considerably, choice of relevant research methodology gives an in-depth appraisal of diverse research methods that suitably seeks to achieve the study’s aim and objectives. Remarkably, research can focus on seeking varied opinions on the research questions, thus allowing for consequent conclusions based on the research objectives thereafter based on level of qualitative, informant or quantitative.
Research Methodology Framework
More significantly, the use of semi structured research methods in carrying out this research would be feasible as compared to other research methods in analysing of the international marketing strategy of Starbucks in China and in the UK. Nonetheless, the use of research study based on secondary sources assists in exploration of new insights, through carrying a detailed deductive and explorative study that can be structured more suitably to suit the research. More so, research on the global international marketing strategy of Starbucks using semi structured method focus on seeking varied opinions on the research questions, whilst allowing for consequent conclusions based on the research objectives thereafter of research carried out on the markets.
Cooper and Schindler (2003), indicate that positivism research philosophy is suitable as it remains factual based on law about the relationships between different extremes. Notably, use of positivism research philosophy ensures that research information used can be quantified because researcher ensures adequate evaluation of different methodologies and methods so as to identifying the limitations of different approaches during research. Through use of research philosophy the researcher remains creative and innovative in choice of research method based on knowledge arising from human experience and including use of discrete quantifiable objects. On the other hand, research interpretivism remains more aligned to social science as it is based on the assumption that reality is created inter-subjectively, thus requires the better understanding of different variables and entities (Saunders et al. 2007).
In research studies the choice of interpretivism in research philosophy determines the research approach, because it can be classified as either deductive or inductive research approaches. More importantly, the use of secondary data analysis in carrying out this research would be viable as compared to other research methods. This is because, the use of secondary data analysis in this research will explore the international marketing strategies used by Starbucks; through an explorative study that suit the research. As a result, the entire research will focus on marketing strategies thus allowing for consequent conclusions based on the research questions. In addition, qualitative secondary research study remains favourable in the collection of quantifiable data than quantitative comparative analysis of the research as it gives more in depth information (Saunders et al., 2007).
Saunders et al. (2007) indicate that research strategy based on the choice of interpretivism, influence the achievement of the aim and the objectives of the study. More so, in-depth research on Starbucks expansion provides further analysis of the inductive approach based on use of secondary sources is relevant. Considerably, the inductive approach is suitable because it involves development of theories by increasing understanding of a particular topic. Additionally, research shows the inductive approach is mostly used in exploratory studies, because it provides more understanding of a successful marketing mix used by Starbucks in the UK and Chinese markets. Indeed, it is choice of suitable strategy determines reliability and feasibility of the study as multi-method strategy, remains the best strategy for the nature of this study.
For the purpose of achieving qualitative analysis of internalisation and market entry strategy, the research on Starbucks expansion to China and UK has used the case study methodology. More significantly, case study research methodology give a high degree of depth of research as it is conducted on feasibility of focused data analysis of the research. Saunders et al. (2007) defines case study methodology as one suitable such research study as it gives an in-depth understanding of Starbucks international market entry strategy. Furthermore, the study case methodology also provides an opportunity for providing recommendations to the managers on research carried out because Starbucks is one of the successful multinational companies, and it is a premier, as well as a speciality of coffee. As a company that seeks to establish a strong regional market, research on Starbucks Corporation is based on its consumers ranging from high level income and low level income earners.
As a topic that has been reviewed, research case study on Starbucks Corporation marketing strategy using secondary research would deem suitable to carry out this research, because it give explanatory study by focusing on marketing strategies applied in China and UK. Considerably, use of secondary research, remain viable in this research as it gives valuable information in the marketing strategies used by Starbucks. Indeed, an analysis on secondary sources for the purpose of understanding the topic of this research meets the aim and objective of the study, as it critically analyses best practices of market entry strategy used by Starbucks in its internal and the external business environment.
Notably, use of qualitative secondary research study is more suitable over the collection of quantifiable data in this research as it uses quantitative comparative analysis of the research thus providing depth information (Saunders et al., 2007). Indeed, focus on relevant marketing strategy used by Starbucks that has contributed to the company’s strong financial performance and the company’s enhanced competitive advantage among its competitors in its global expansion. In this research, secondary research gives
Limitation of the Research
Research studies always increases the reliability of the findings and improve authenticity of the research finding thus, the choice of research methodology leads to research limitation. Considerably, use of multi-method research strategy focuses on use of different strategies in the research ranging from, case study and secondary research. As a research study, which seeks to be rational on seeking an independent opinion on the international marketing strategies used by Starbucks, the research methodology and procedure should remain unbiased. More significantly, the conducting of research based on secondary sources and case study the research is likely to face limitations as it is based on previous findings. It is therefore essential to use research data collected comes from peer reviewed journals because they are audited before publication, and this improves the reliability of the research. Notably, there are peer reviewed journals that focus on Starbucks expansion market strategy in China and UK, which has led to the creation of competitive advantage.
In carrying out of research it is essential to ensure that the entire research process is conducted in an ethical manner to suit the research topic. More essentially, the entire research will focus on peer reviewed secondary sources from officially audited publications based on Starbucks international marketing strategies. More notably, use of secondary research, remain viable in this research as it gives valuable information based on research studies conducted in an ethical manner as per Coventry University guidelines to avoid cases of plagiarism. As a result, proper referencing of the information within the texts will be cited to avoid cases of plagiarism.
Analysis and Findings
Indeed, the objective of this study is to examine critically Starbucks operations in China and the UK based on designing an international marketing strategy by undertaking comparative analysis. More so, analysis of Starbucks management in China shows adoption of market mix strategies focused to reduce cost and increase customer accessibility in different locations. As a result, case study on researchers focus on Starbucks coffeehouse strategically located within the reach of its customers especially in distinct locations within, Taiwan, Beijing, Hong Kong ensure an easy analysis of the study findings.
Starbucks Marketing Entry Strategy in China
Fackler et al. (2003), describes Starbucks entry into China has one influenced by increasing disposable income leading to viable competitive leads in the intermediate to prolonged term. More significantly, combination of localisation of Chinese national characteristics and the U.S corporations provides suitable products because Starbucks business enterprise’s success is based on the high quality, reliable products and service. Despite increased criticism in 1999 during Starbucks entry embracing of strategies to handle cultural and structural issues lead to fulfilment of the company’s mission, vision and objectives. Notably, there is establishment of over 570 business stores, in different cities within China depict Starbucks use of most successful market access approaches it has ever applied.
Speciality coffee is an example of one of the key products offered by Starbucks as it seeks to offer it services at a high standard of excellence in all aspects of purchasing, fresh delivery of coffee and roasting in all its outlets worldwide. However, there are also some other related products dealt with by the company such as handcrafted beverages and foods available in their coffee houses’ menu. Han and Zhang (2009) explain how China changed its culture of consuming tea as Starbucks’ tussle enter the country food and beverage market in 1999. As Starbucks struggled with its entry into China it focused on attracting more customers as it offer increased outstanding roast of high quality whole coffee beans that was highly recommended by its consumers. More so, its baristas offered the roasted coffee to customers with enriched Italian style espresso coffee beverages together with confections and pastries and other coffee-related products (Fackler et al. 2003). Considerably, Starbucks marketing efforts, increased customer satisfaction in the Chinese market and made consumers choose Starbucks as the coffee outlet of their choice. As a result, there was a change in the Chinese culture, the middle class used coffee as a better substitute to tea as it was brewed by highly trained baristas who bring the product to life from high-quality gourmet coffee beans, as they are able to make a coffee drink, understand and explain the diverse coffee varieties.
More than often, Starbucks Company’s pricing strategy is discretionary to suit individuals from both the low and high income earners. Notably, Starbucks is the only global brand that has dedicated itself to the expansion within China and has focused greatly on offering favourable prices for their different coffee flavours (The Wall Street Journal 2010). Even so, Starbucks Corporation seeks to carry out pricing differentiation because of its varied target market as it faces increased strong price competition from the other competitors and substitute. As a result, Starbucks Corporation seeks to effectively compete with its competitors by brewing the best coffee that is retailed to its consumers at an affordable and competitive price. Considerably, the increased levels of demand for coffee in China has established a strong brand loyalty for Starbucks coffee that allows for the company to sustain competitive advantages as compared to its competitors thus have a market opportunity to charge a premium price for its coffee products to their clients. More so, Starbucks operates globally through it branches and store that are widely distributed using standardized prices while it offers services that suits its promise of providing high quality and increased value of its coffee products and service through suitable price strategy towards its goods.
More than often, Starbucks considers the placement of the coffee outlet in its growing market to be influenced by its sales level in China as it can easily reach its consumers who are widely distributed. More significantly, it is through the establishment of marketing channel that the company seeks to make its products accessible and available to its consumers in the growing market. As a result, suitable location makes business more efficient and effective as it ensures that the increasingly growing company achieves increased level of customer satisfaction because they can gain access easily to the coffee shops within different locations. Considerably, Starbucks management decision to locate in high footfall and high visibility regions in China’s major cities is based on customer accessibility, rent costs, transportation cost, as well as human resource accessibility within the area. More significantly, location decisions in China remain closely tied to expansion to the Southern and Northern areas based on organization’s strategies, especially the increased convenience to attract market share, based on the increased levels of capacity and flexibility, operating costs, revenues, operations, competitive advantage, and importance to supply chains (Fackler et al. 2003). As a result, the operations manager of Starbucks not only takes into consideration the availability of supply but also consider cost-effective as well as product placements, time efficiency and storage approach in the achievement of the enterprise’s achievements to become one of the most recognized coffee market industry. Remarkably, Starbucks management have been able to introduce a relaxing and friendly environment for its clients away from workplace and home wherein their can relax or conduct business. More importantly, it has attracted customers by introducing broad-band internet access within its prestigious coffee lounges to enable people to keep in touch with their business or hold meeting while enjoying in their coffee offers.
More significantly, Starbucks penetration to Chinese market seeks to establish increased market presence through increased customer awareness as, the company carries out advertisement of its product in its diverse target market to increase its market presence. As a globally recognised coffee outlet brand, Starbucks seeks to enjoy a high level of brand awareness and recognition even for its newly innovated products in its Chinese markets as it is set to grow its market. Plog (2005) explains how Starbucks in China has levelled the tea and coffee drinking culture by increasing the number of coffee drinkers and using the company’s worldwide branding, despite the critics’ assumptions of the company’s collapsing after its introduction into the market.
With the increased use of promotional strategy, Starbucks Corporation has created a brand image to differentiate itself from its competitors, through internet advertisement and coffee shop advertisement where it gains access to internet users as the increased technology makes it the best channel to introduce and increase sales levels of new and existing products and service. Indeed, Starbucks has won over the young and old perception of the coffee drinking culture in the country known for tea (The Wall Street Journal 2010). More significantly, as Starbucks Corporation seeks to establish increased market presence of its products, the company carries out advertisement of its product in its diverse target market so as to create high level of brand awareness and recognition even for its newly innovated products in its key markets as it is set to grow its market.
Notably, the analysis above shows that the Starbucks Company seeks to focus on marketing strategies used in the Chinese market through efficient marketing mix that have a high degree of standardisation, localisation achievement to influence values of quality and economical purchasing behaviour. The summary of the market strategy entry regarding the overall standardisation degree is shown below.
Figure 4.1: Marketing Mix Quantified of Starbucks in China (Author 2014)
Starbucks Marketing Entry Strategy in the UK
The Starbucks Company has adopted consumers user-friendly, reasonably priced and enjoyable coffee products that remain affordable and available to its consumers at all its regional locations using same market entry strategy in the UK Market a (Thompson and Arsel 2004). More so, the UK market uses a prototype strategy used in Starbucks within North American markets as opposed to one used in European countries. As a result, Starbucks successful entry into the UK market gave an increased expansion of Starbucks international market as the company entered the UK market in May 1998. The company’s strategy to enter the UK market can be described as one that provide latest trends in the coffee market to meet changing needs and demands of their consumers through Starbucks adopted marketing mix in the UK.
The establishment of a unique product as Starbucks expanded its operation into the UK was essential even as it maintained its main product which is premium blended coffee. Even as, the management decided to maintain its standardised coffee blends as it faced competition from Costa coffee as it introduced other flavours than the Americanised coffee drinks (Witkowski 2005). More considerably, Starbucks operations management consider the use of sample different varieties of coffees from the free sample the baristas as a way to give the customer a chance to judge its advancements based on the experience they just had as their feedbacks give an opportunity for suggestions on new products. More so, Starbucks management offers a guaranteed promise to its customers giving them samples before making a choice on their preferred flavor to fully satisfying their customers as they promise a coffee drink the way they want it. Increased success was achieved through company efforts to introduce coffee drinks faced stiff competition from tea consumption, which is an immediate substitute for coffee. During the company entry into the UK market, the market was highly potential as Britons prefer coffee contrary to alcoholic drink thus, Starbucks gave a suitable substitute to the market (MacDonald 2007).
Over the years, coffee consumption has significantly gained popularity in the UK as Starbucks stands out as a distinct outlet that allows various people in the different choose freely from the stores broad range of coffee products. The company aimed at creating a standardised coffee that is of high quality by designing an integrated supply chain management to ensure that customers will enjoy the best coffee in the market especially the roasted coffee with enriched Italian style espresso coffee beverages. Notably, the product variation strategy favoured Starbucks as it faced competition from its competitors perceived to have the best Arabica coffee beans in the market. Unlike its competitors, Starbucks acquisition of Narino supreme Bean Corporation in 1992 led to high standard of excellence in all aspects of purchasing, fresh delivery of coffee and roasting in all its outlets in the global market. In addition, increased customer satisfaction in Starbucks roast of high quality whole coffee beans lead to increased sales of enriched Italian style espresso coffee beverages that are sold at all Starbucks stores and branches along with confections and pastries and other coffee-related products (Pierterse 2009).
As a company that seeks to establish strong international market, Starbucks entry into UK uses a pricing strategy that makes its products affordable for its consumers ranging from high level income and low level income earners. As a result, the company seeks to increase its revenue through adoption of different strategy that makes its brand as premium in the market. Depending on its target market in the location use of strong price competition in competitive areas saw Starbucks price the speciality coffee at a premium price varying as a way to effectively compete with its competitors Costa coffee that retailed coffee to its consumers at an affordable and competitive price.
Notably, with company acquisition of Seattle Coffee Company the company decided focused on blending its prices to its speciality coffee by not to increase the price of its products. More significantly, the company’s new pricing was decided during the rebranding of the coffee stores as it faced competition within the popular Kings Road, and Chelsea area in London. More significantly, Starbucks Company priced its blended speciality coffee at an affordable price that is lower thus affordably both low and high income earners as compared to that offered in competitor’s shops at an average mark price of £2, (Farra and Bell 2006). Notably, the firm adopted a pricing strategy that was highly competitive against its competitors as a way of achieving increased market presence in the UK market thus gaining favourable competitive edge.
Considerably, company’s successful market entrance into the UK was vital as it played a significant role as it led to increased establishment of more than 500 stores for the Starbucks Company in Europe. More than often, the placement and distribution of Starbucks stores in its worldwide market as a global brand influence its sales level as it can easily reach its consumers who are within the market locality. More significantly, existence of French and Italian coffee markets made it essential for suitable location it is through Starbucks Corporation marketing channel in the UK that its products in the conveniently located stores remained accessible and available to its consumers in the UK market (Giddens 2002). Nevertheless, the establishment of clear distribution channels with more efficient and effective order processing time limit ensures that the Corporation achieves increased level of customer satisfaction because Starbucks gain easy access through its coffee shops within different locations. With increased strong link with the local coffee production, effective management within Starbucks lead to the expansion of the company operations to the rest of the Europe as it found market location effectively and efficiently without depending on the consultancy of local third party assistance.
Noticeably, the choice of market location by Starbucks in the UK depended heavily on the high degree of management control based on the nature of the business as it determines the most critical aspects for business enterprise success in highly competitive market based proximity and strategic location for customers to access products and services. More significantly, Starbucks depended on independently developing its own network, within the local market because of established similar operation to Starbucks while developing a strategic alliance with a local partner (Evans et al. 2006). As a result, the operations manager’s decision in the choice of an outlet location in the entire UK market was also influence by operations management costs, rent costs, transportation cost, as well as human resource accessibility within the area.
More than often, use of promotional strategy ensures attraction of new customers and maintenance of the continued customers especially as Starbucks seeks to be service-scape offering experience and quality service. As a result, Starbucks outlets in the UK offer exceptional customer experience considered one way of providing exceptional services as a uniquely branded coffee service provider. As an entity with increased exclusive culture open to innovation, creativity and quality management and employees considers its customers as esteemed, because each Starbucks store ensures that it gives customer satisfaction as they use comments availed through customer comment cards available at the condiment stations. More so, Starbucks management offers a guaranteed promise to its customers to offer fully satisfying services as its promise states that the customers can get a coffee drink the way they want it (Knowles 2000). As a result, Starbucks management and staff portray very strict principles of service delivery and quality management has flexibility to suit customer satisfaction because it allows for the customer to receive full satisfaction.
Deresky (2006) indicates the company’s general promotional strategy based on increased low and high participation in the market using transformational motivation. As the leading coffee outlet in the UK, Starbucks enjoys a high level of brand awareness and recognition even for its new coffee brands to suit customer needs. More signicantly, Starbucks market entrance involved public relations through increased use of promotional strategy, leading to improved market position. More considerably, Starbucks Corporation uses public relationship campaign and promotion to increase its strong brand as it seeks to ensure customers understand the products that the company is offering in the UK market. In addition, the company has developed a positive effect on its clients by influencing customer choices from its brands as compared to that of other competitors in the industry by use of the sales promotion strategy thus retaining its customers and attracting new customer. Kotler (2009 uses the Rossiter and Percy grid in describing the company’s promotional mix during entry into the UK market.
Figure 4.2: Rossiter and Percy grid – Starbucks (Kotler 2009)
With the analysis of Starbucks entry into UK we can conclude that Starbucks has used top-notch standardisation of the marketing mix in order to achieve increased market expansion. Indeed, Starbucks uses the cost of the products, location, promotion and packaging in targeting the consumers as it increases the company’s capacity and capability process. More considerably, Starbucks seek to serve diverse customers from its changes in packaging, pricing, special offers besides the establishment of convenient stores that provide latest trends in the coffee market to meet changing needs and demands of their consumers in different countries. As a result, Starbucks Coffee globally has been able to competitively stay as a preferable brand in business catering specifically to middle-class to high class consumers in UK.
More so, Starbucks Coffee consideration of the availability of supply but also consider cost-effective in its different market locations as well as product placements, time efficiency and storage approach has led to its achievement of increased market expansion and profitability. As a result, Starbucks remains highly considered as an entity that focus on its niche market based on the values of quality and purchasing behaviour. Considerably, Starbucks stands out as a distinct outlet internationally that allows various people in the different market segment to choose freely from the stores broad range of coffee products.
Figure 4.3: Marketing Mix Quantified of Starbucks in the UK (Author 2014)
Considerably, Starbucks has shown the company’s ability to have competitive advantages and translation of its capabilities are core to achievement of standardised marketing mix aspects. Indeed, Starbucks remain as one of largest and most recognized coffee industry in the global scale because of its efficient expansion and management approach, specifically in their market mix to suit the locations. More significantly, the company has used competitive market mix strategy of market entry into the markets in China and the UK. As a result, it remains a priority for the company’s operations management to focus on the creating a highly preferable brand so as to give its consumers increased service reliability, high product quality, and management of operations as it seeks to increase its business growth and sustainability.
More so, Starbucks will always increase in market share, profitability and productivity as it provides suitable products because of its business enterprise’s success based on the high quality, reliable products and service leading to fulfilment of the company’s mission, vision and objectives. Indeed, there will be an increased market performance even as Starbucks strive to remain competitive in the beverage industry and ensure marketability, by providing high quality products with increased provision of affordable cost, timely delivery and flexibility amongst its competitors. More so, Starbucks both in China and UK remains focused in meeting to the needs of their clients, as a way of increasing the greater possibility to gain customer loyalty. More remarkably, the increased levels of establishing a strong brand loyalty allows for the company to sustain competitive advantages as compared to its competitors and give them the market opportunity to charge a premium price for its coffee products to their clients.