Conclude the following
Starbucks international strategy relies on low integration and high responsiveness (multi-domestic), which is best reflected in Entry Modes and Pricing Strategies. The goal is to spread Starbucks’ coffee culture while adapting to local tastes and preferences. Instead of competing with global brands, Starbucks establishes itself as a friendly choice among the many food and beverage options in the host country. This has endeared the brand to the local people and allowed it to enjoy global success. Following the Starbucks Company 1992 IPO, the number of Starbucks coffee shops increased nine-fold and the company was thus prepared to enter global markets. With already 700 coffee shops across the United States, Starbucks opened its first overseas coffee shop in 1995 through a joint venture with a local Japanese retailer, Sazaby Inc. Through this agreement, both of the two companies held an equal 50% stake in “Starbucks Coffee of Japan,” which received a license to the Starbucks format and a $10 million direct foreign investment from the Starbucks Company. Whereas many sceptics doubted that Starbucks would be able to replicate its North American success overseas, but by the end of 2009 Starbucks’ had some 850 stores and a profitable business in Japan.
When it comes to local approach Starbucks made it a point to carry out extensive research on the history, culture and the locals’ taste preferences before it decides to partner with coffee companies and participating stores available locally. Their market research is done before they start to build their participating stores in the target location. Starbucks formulates their menu to fit the needs of the locals without compromising their signature brand. Its localization strategy is a mix of local products with innovative store designs, so they are able to fully adapt to the culture of the location. Starbucks maintains 18 design centres worldwide, which work to understand and conceptualize store designs to reflect the local market. For example, In Japan, local buildings have low roofs and most of them have indirect references to Shintoism, which is the country’s religion. The company hired local designers in order to create the right atmosphere in participating stores. Furthermore, in In Saudi Arabia, the logo of Starbucks in participating stores and overall branding had to be changed because the topless mermaid in the company’s logo was viewed as improper. Therefore, the logo was changed into a crown with waves, foregoing the mermaid. The stores also have separate sections for men, while the women are served in the family section.
Starbucks is all about building relationships with its customers. Starbucks’ target audience comprises both gender customers. These are primarily higher-wage professionals, business owners, or other high-end customers in the age group of 22-50. The brand is aimed at customers who desire a relaxing environment to drink coffee and unwind. They are mostly urban, health-conscious, and class-conscious customers. People who live fast-paced lives often look for quality coffee and some space to unwind after a hectic day. Starbucks provides all of these benefits at one convenient location. So how do they persuade people to spend that much money, when they could just have a cup of coffee at home? They provide an experience for the target audience who visit their stores. They make the expense of the drink worth it to their customers by focusing on the third place and providing a place for their customers to be and interact. It’s soothing to order a good cup of coffee and be encouraged to sit in the café with your laptop and talk to friends while you work. That’s the kind of experience Starbucks gives you.
In conclusion, Starbucks' international strategy of low integration and high responsiveness has allowed it to successfully expand globally while adapting to local tastes and preferences. The company has achieved this through careful market research, partnering with local coffee companies, and creating innovative store designs that reflect the local culture. Starbucks' target audience comprises urban, health-conscious, and class-conscious individuals who are willing to spend more for the experience of enjoying quality coffee in a relaxing environment. By focusing on creating a welcoming atmosphere and providing a "third place" for customers to unwind and interact, Starbucks has been able to differentiate itself from competing coffee brands and enjoy global success.
Conclusively, Starbucks international strategy is based on low integration and high responsiveness, allowing it to adapt to local tastes and preferences while spreading its coffee culture. This strategy is reflected in its entry modes and pricing strategies, wherein Starbucks establishes itself as a friendly choice among other food and beverage options in the host country. The company has successfully entered global markets through joint ventures and partnerships, such as its joint venture with Sazaby Inc. in Japan. Contrary to skeptics' doubts, Starbucks has achieved global success with profitable business operations in Japan.
In terms of local approach, Starbucks conducts extensive research on the history, culture, and locals' taste preferences before partnering with local coffee companies and opening participating stores. The company formulates its menu to cater to the needs of the locals while maintaining its signature brand. Starbucks also pays attention to store design, incorporating elements that reflect the local market. For instance, in Japan, Starbucks hired local designers to create an atmosphere that resonates with the country's culture, while in Saudi Arabia, the logo and branding were adapted to cultural sensitivities and gender segregation norms.
Starbucks primarily targets higher-wage professionals, business owners, and urban, health-conscious customers in the age group of 22-50. The brand seeks to provide a relaxing environment for customers to enjoy quality coffee and unwind. To persuade customers to spend money on their drinks rather than making coffee at home, Starbucks focuses on providing an experience for its target audience. The company emphasizes creating a "third place" where customers can socialize, work, and enjoy their time in the café with amenities like comfortable seating, free Wi-Fi, and a welcoming atmosphere. This focus on creating a unique experience is what sets Starbucks apart and justifies the premium pricing.
The conclusion can be drawn that Starbucks' international strategy focuses on low integration and high responsiveness, which is reflected in their entry modes and pricing strategies. The company aims to spread their coffee culture while adapting to the local tastes and preferences of each host country. Instead of competing with global brands, Starbucks positions itself as a friendly choice among the numerous food and beverage options available. This approach has helped the brand gain success globally.
To expand internationally, Starbucks initially entered the Japanese market in 1995 through a joint venture with a local retailer, Sazaby Inc. This joint venture allowed them to establish Starbucks Coffee of Japan, with both companies holding an equal 50% stake. Starbucks also made sure to conduct extensive research on the history, culture, and taste preferences of the local population before partnering with local companies and opening participating stores. They formulate their menus to cater to local preferences while staying true to their brand. Additionally, Starbucks maintains design centers worldwide to create store designs that reflect the local market, such as incorporating elements of Japanese culture into stores in Japan. In some cases, the branding and logo had to be modified to respect cultural sensitivities, like in Saudi Arabia where the logo was changed to a crown with waves.
Starbucks also focuses on building relationships with its customers. Their target audience consists of both genders, primarily higher-wage professionals, business owners, and individuals aged 22-50. These customers value a relaxing environment to enjoy quality coffee and unwind. Starbucks persuades customers to spend money by providing an experience that goes beyond just the drink itself. They focus on creating a "third place" for customers to work, socialize, and relax. This experience includes amenities like comfortable seating, encouraging customers to spend time in their stores.
In conclusion, Starbucks' international strategy emphasizes adaptation to local preferences, building relationships with customers, and creating a unique experience that sets them apart from competitors. This approach has allowed Starbucks to enjoy global success and establish a strong presence in various countries.