CEO of Starbucks Howard Schultz once said that “great companies have to innovate great strategies and in many ways must push the company for self-renewal, we need to be curious as possible to see around corners and make big bets.” As Starbucks is one of the biggest coffee chains in the world which started in 1971 in Seattle, US. It was in the 1980s when Howard Schultz became in charge of the marketing department of Starbucks and later the CEO. It was in 1995, the organization began growing broadly by first focusing on Japan, trailed by numerous other countries later in the year.( history) . Strategic planning is very important for a company to grow and prosper, it helps an organization to create more opportunities, and keeps the business proactive which would help the company in achieving its long-term objectives, a better strategic planning can also help the firm to avoid any kind of failure and can allocate the company’s resources in the most efficient manner. Strategic planning can also support the company to stay ahead of their competition and anticipate the plan for growth of cash conversion cycle (Pero, 2013).
Similarly, Starbucks also used many different marketing strategies to build its brand value in countries other than the United States and differentiated itself from other companies based on its extraordinary quality of coffee beans and food products. Starbucks has utilized its formula of quality based product which has led to popularity and loyalty. The company’s marketing strategy is not only limited to its products but it is also equally distinctive in its marketing tactics of partnering with other companies to reach each and every customer possible. The case study describes that how market investigation helped Starbucks to enter the Chinese market and be successful. The particularly Chinese market is considered as a hard market to crack for western companies and also the fact China has a tea drinking culture and with refreshment advertise transcendently controlled by tea. To enter a market they did not understand Starbuck conducted market research and collected information of Chinese market and the way it functions. As China holds a various regionally based market, it was crucial for Starbucks to inquire about the market to launch propelling new stores and establishments in China. China introduced the first store in 1999 in Beijing with a distribution business, before making a fully-fledged Asian Pacific Research Centre in Shanghai and retail stores. Starbucks have been in China for over 18 years and wasn’t really successful in its early 9 years but they never gave up, they waited patiently and introduced new products and improved their ambiance. Starbucks also partnered with Alibaba Group to expand its growth in China and opened the first biggest Starbucks store in China, where Howard Schultz himself and Jack Ma both visited on an opening day.
Starbucks had patience and deep commitment to locally relevant and understand the consumer better than any other coffee chain. Starbucks continuously partnered with different companies even local coffee shops to navigate itself through some of the issues which were difficult to understand and definitely Starbucks has the values to build a great company. Even though the Chinese consumers did not know much about coffee but they did understand customer service and love for the customer. In China people
Starbucks success in China
Nowadays it is very common for people to start their day with a good cup of coffee. Therefore, Starbucks have come up with a corporate organization which is acknowledged around the world for their variety of coffee beans and brew. Even though there are still some markets which are yet to be penetrated like China, where drinking coffee is permitted as an attack on their culture. Many companies western companies which prevails in their home country and in certain other international markets try to take a step forward and enter the Chinese market but the Chinese market is considered very tough to crack for such organization. It was even more difficult for Starbucks to succeed in China as it was a tea drinking nation and respected its tea drinking culture and most of the tea beverages market is predominantly controlled by China.
Therefore, a critical market study was done and an entry strategy was made that would help the organization to enter the dominant market of China without threatening the Chinese culture. Usually most companies try promote their product or service by advertising and sponsoring conventions where they talk about their product and services but in China Starbucks did not took such approach, instead Starbucks advertised it’s product by positioning their outlets in areas with high visibility and high traffic, which would promote their product by default. Deliberately Starbucks started to cross over the barriers between the tea drinking society and the coffee drinking society by introducing new products that included local tea-based ingredients. Starbucks wanted the people of China to experience what they referred as “the third place experience.” The Starbucks always try to keep the consistency of its taste and service constant by training their employees of the use of baristas which is important for their customers.
Different Strategies Used in China
As a growing organization Starbucks was not considered successful in China. But as Starbucks performed a market survey, it came across with new and different tactics. These new strategies helped the organization to grow and to keep up with their competitors.
· Growth Strategy: To grow the organization in the country after doing a market survey, the company came up with some new products like green tea Frappuccinos which was a huge success, nine types of tea and moon cakes. In 2005 Starbucks donated around 5 million dollars to the support China’s Education Program, in 2008 Starbucks also helped in the Sichuan earthquake disaster by donating 1.7 million, also in 2009 Starbucks propelled in starting the first local coffee bean product after celebrating the company’s ten years of functioning in China and in 2011 Starbucks announced VIA coffee brand, Starbucks Reward Cards and established the Asian Pacific Research Center in Shanghai. In Yunnan Province, China the first farmer’s support center was opened in 2012. In 2014 a Youth Leadership Program was also sponsored by a 3 year long non-profit investment by Starbucks. The company was also motivated to enter the sports drinks market so the signed a contract with Kangshifu. Starbucks was recognized for several awards and rewards such as 7-Star Food Quality, 100 trusted Brand Awards, top 50 Chains operating in Shenzhen, Beijing’s most Influential International Brand, Top 10 marketing campaign by business value magazine, 100 best Human Resource Management Company by 51jobs, CCFA employee’s most favorite company,Starbucks has used several different tactics like partnering with different organizations to introduce innovative products like in 1994 Starbucks and PepsiCo introduced a new drink called Frappuccino. Starbucks used the tactic of strategic partnership to get access to m