Marketing discussion Essay Example

  • Category:
    Marketing
  • Document type:
    Essay
  • Level:
    High School
  • Page:
    1
  • Words:
    606

4INTERNATIONAL MARKETING

Marketing Discussion

Starbucks enters Chinese market successfully

Starbucks is one of the largest US coffee chains in the world established in 1971. As the pioneer of coffee culture in the USA and the world, the company used to handle coffee beans and equipment only. Starbucks began its international expansion in 1995 by entering Japan then into other countries. Brady (2014) argues that firms undertake extensive studies to get knowledge about the local business activities of the new country, its cultural norms and the regulatory and economic environment in the new market. Star bucks entered Chinese market to tap into the growing population and introduced its service to the Chinese nation (Hayoun, 2013). Through Foreign Direct Investment, Starbucks moved to China and opened stores across the country. Starbuck did a greater market research that strengthened its entry into the Chinese markets. The company not only faced the weak intellectual property right laws but also paid a lot of fees and charges not pegged to local firms. Starbucks identified and selected the Chinese market for various reasons. First, the large population that is more than 1.3 billion people and a bigger geographical area in the world than any other nation; its market is very different from any other market in the world. Second, the openness to international companies offers a greater market place for international companies dealing with diverse goods and services (Hayoun, 2013). Third, an international firm can easily find out where the opportunities lie in the vast geographical area and how to identify them. This further tells why a local understanding of the local area is important. However, the high taxes levied on imported goods forces the company to buy locally.

While Starbucks had been known to maintain strict standardization techniques, its strategy in China changed into an adaptation of the local culture and the local market aspects of the Chinese people. Firms are involved in various localization mechanisms to acquire the trust of the people (Vasudeva, 2006). They positioned their stores in high traffic and high visibility locations against the aspect of capitalizing in adverts and promotions which could have been seen as attacking the Chinese culture of drinking tea. In China it adopted the strategy of having different partners to access the vast Chinese land mass. The company used the simultaneous approach of operating under high risk to gain economies of scale in China. Whitelock (2002) observes that firms further expand the business in the country due to the several economic changes and reforms that were made and the relaxation of the strict business laws that was a hindrance to business expansion. Starbucks used its “Starbucks Experience” brand in its promotions to market their store ambience, product quality and customer service as well as employee relationship.

With a concentrated approach, Starbucks has been able to reduce costs in its supply chain and concentrated in the larger Chinese market through its various strategies; it is also noted that it experienced several challenges. The Chinese people were against the western influence because they were used to the drinking of tea and coffee was a new thing to them (Hayoun, 2013). In conclusion, Starbucks successful entry into the Chinese market was largely contributed by its various strategies that include its global brand strategy, long term commitment and partnering with the local companies.

References

Brady, D.L. (2014) Essentials of International Marketing. Routledge.

Hayoun, M. (2013) China takes on Starbucks, biting a hand that feeds it,analysts say. Economy. October 22, 2013.

Vasudeva, P.K. (2006) International Marketing. Excel Books India.

Whitelock, J. (2002) Theories of internationalization and their impact on market entry, International Marketing Review, Vol. 19(4):342 – 347.