Starbucks has been a leading company in globalizing their brand and products. Few have done it as well as Starbucks has the past few decades. They went from humble beginnings in Seattle, WA to expanding across the country, and eventually, now have over 16,000 outlets in 50 different countries. In fact, some wonder if they have any room left to grow with how rapidly Starbucks have been popping up around the globe. Some argue that new Starbucks stores and kiosks in fact hurt surrounding establishes Starbucks stores because they are too close together and might be taking away some of their customers. Growth has slowed down a bit in the late 2000’s however due to the recession and the problems surrounding marketing their products to the 20-30 year olds from Generation X. Many people find that when it comes to cutting back on consumer spending, $3 coffees is an easy way to do it. Also, they have faced difficult challenges in entering global markets, as there is a considerable learning curve when it comes to marketing to a foreign culture. However, for the most part they have been very successful and popular in the global expansion.
Relevant textbook concepts:
Advertising Strategy: (ch. 16 pg 462): Starbucks has a very unique advertising strategy in that they barely market their brand at all. They only spend about $30 million per year on advertising compared to the industry average of about $300 million. They rely mostly on word of mouth to market their products, which is actually pretty effective because it seems like there are Starbucks everywhere, especially in the United States. They typically only use advertising to market new products or new promotions, such as summer time specials or a brand new flavor of coffee. Other than that, they let satisfied customers and their marquee green mermaid logo do the talking for them. With how much they’ve grown over the years, it seems to be working.
Elements of Culture: (Ch. 3 page 109): One of the major tasks at hand when it comes to globalizing your brand or product is the various elements that make up a culture. What Americans like isn’t necessarily going to please the taste buds of Japan, for example. In order to be effective in marketing your product to foreign countries is learning and developing and understanding of their cultural norms. How strong do they like their coffee? How much do they drink coffee? How sweet do they like it compared to Americans? What do they typically like to eat and do while they drink their coffee? These are just a handful of questions that Starbucks needs to find specific answers to in order to be effective overseas like they have been so far.
1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.
Controllable: Products selection, location (what countries to enter into, and what parts of the country), how much to charge for their products according to the countries average for that product mix, and how to market their products, such as promotions and advertising, if any.
Uncontrollable: Cultural norms, what people do and don’t like compared to other parts of the world, political differences among the various nations such as regulation and taxation, the scope of technology overseas