Starbucks identifies its primary demand by using brand appeal in its marketing strategy. It acknowledges and respects the desire of people to pay for luxury products for the sense that the brand generates the forms of value, prestige, and quality. This essay will evaluate factors affecting the expansion of Starbucks in China, by looking at its basic appeal, and steps the company will take before entering the new market.
Internationally, when Starbucks analyzes China’s national market climate, the company takes into account different factors. The first one is the political forces, which include export policies, environmental and legal regulation, and government involvement in taxation policy. Second is the cultural forces, which entail the Chinese lifestyle and their preferences (Namada, 2018). Last is the economic forces, which include inflation, growth, both interest and exchange rates.
Starbucks calculates and chooses its market position on the basis of demographic factors such as age, gender, and ethnic background. It also uses regional segmentation, such as countries, market density and size, and environment. The firm selected China because it recognized that entering the region is not about selling coffee, but about revitalizing the country’s ancient ‘tea’ culture, which has existed for thousands of years.
In selecting new market sites, Starbucks could use Porter’s Five Forces Model. Here, the organization understands the public pressures and prospects through its competitors. It also uses both primary and secondary research methods in its evaluation. The secondary method is through social media, whereby it is able to find out the customer’s viewpoint regarding the brand and, thus, collects various feedbacks which could improve the brand. In contrast, the primary approach is the “My Starbucks Idea” platform created in 2008. All stakeholders can visit the website and submit their ideas and suggestions.
In this industry, McDonald’s and KFC are some of the prominent competitors with similar opportunities (Kang & Namkung, 2018). The main reason for this international opportunity is that these enterprises recognize, understand, and evaluate the political, economic, and cultural factors of various countries.
Having analyzed Starbucks’ global market expansion, it is evident that business-wise the company is headed in the right direction. Its success is pegged on its formidable marketing strategies. By conducting comprehensive research and taking time to analyze and evaluate the findings, Starbucks was able to understand different opportunities and challenges which awaited it in China, and this eventually contributed greatly to their overall success.
Kang, J. W., & Namkung, Y. (2018). The effect of corporate social responsibility on brand equity and the moderating role of ethical consumerism: The case of Starbucks. Journal of Hospitality & Tourism Research, 42(7), 1130-1151. Web.
Namada, J. M. (2018). Organizational learning and competitive advantage. In Handbook of research on knowledge management for contemporary business environments (pp. 86-104). IGI Global.