Starbucks coffee a case study Essay

1. Introduction OF STARBUCKS COFFEE

The company. Starbucks Coffee was ab initio incorporated in the twelvemonth 1971 by 3 enterprisers in Seattle where the concern of the company is chiefly selling whole bean java. Throughout the old ages of 1990s. Starbucks Coffee under the leading of Howard Schultz. the company had expanded and growing quickly with several attempts done. Starbucks java started its planetary enlargement from twelvemonth 1996 opening its first shop outside of North America in Japan. Opening globally made Starbucks Coffee Company to enter entire net grosss of USD 9. 8 billion for its concern gross revenues and operation. One of the Starbucks Coffee Company globally enlargement market is Malaysia Food and Beverages Industry.

Starbucks Coffee Company expanded to Malaysia in twelvemonth 1998. The manner of entry of Starbucks Coffee Company to Malaysia spread outing and runing its concern through the manner of licensing. Berjaya Corporation Berhad is the company that obtained the licence to run Starbucks Coffee Company locally. Berjaya Starbucks Company Sdn. Bhd. Is formed and jointly owned by Starbucks Coffee International and Berjaya Corporation Berhad. Starbucks Coffee Malaysia opened its first shop on 17th December. 1998 at KL Plaza Bintang. Kuala Lumpur.

The concern of Starbucks Coffee Malaysia fundamentally are selling of espresso and java drinks. non-espresso and java drinks. coffee-related accoutrements and equipment. gift and ware. keepsakes. pastries and confessions. To day of the month. in Malaysia itself. Starbucks had more than 141 shops runing the java concern. and more than 700 shops across six Southeasterly Asiatic markets. including Indonesia. Malaysia. the Philippines. Singapore. Thailand and. most late. Vietnam.

2. WHAT IS MARKET SEGMENTATION

Market cleavage is a procedure of spliting a market into distinguishable groups of purchasers with different demands. features. or behaviour that might necessitate separate merchandises or selling plans ( Kotler and Armstrong. 2006 ) . Initially Starbucks was based as a Socio-Economic cleavage base in consumer markets as it has concentrated on societal category peculiarly the concern category people. those who are working at the office and wanted to hold a cup of java with good ambiance and installations. Starbucks besides had segmented his market by geographic and demographically by choosing the shop location where they can happen the educated and java lovers ( Dibb and Simkin. 1996 ) .

2. 1 SEGMENTATION OF CONSUMER MARKET OF STARBUCKS COFFEE

2. 1. 1 GEOGRAPHICAL SEGMENTATION

Starbucks in Malaysia is operated by Berjaya Starbucks Coffee Company Sdn Bhd. . a joint-venture between Starbucks Coffee Company and Berjaya Group Berhad. From its first shop gap in Kuala Lumpur on 17 December 1998. It has expanded to Sabah and Sarawak and surpassed the 140 shops milepost in January 2012. Now into our 14th twelvemonth operation. Starbucks has grown non merely to go the favourite java topographic point for Malaysians but besides a productive member of communities across the state. In its attempts to accommodate as the universe quickly evolves. Starbucks Malaysia introduced the new drive-thru construct shops with consistence in head. This new platform gives clients the option to bask their favourite java on the spell. or at the shop should they prefer to stretch their legs and relax. In Malaysia. Starbucks drive-thru construct shops are located in Johor Bahru. Shah Alam. Cyberjaya. and Petronas Kajang along the main road every bit good as Penang. the northern part of peninsular Malaysia.

2. 1. 2 DEMOGRAPHIC SEGMENTATION

This divides the market into groups based on variables such as age. gender. household size. household life rhythm. income. business. instruction. faith. race. coevals. and nationality. Demographic factors are the most popular bases for sectioning client groups. Starbucks targets both males and females. chiefly 18-44 twelvemonth olds. but truly does cater for everybody’s demands. And because immature kids don’t normally drink java. Starbucks offers a scope of non-coffee drinks to provide for the whole household. Starbucks history has shown that they place a immense accent on merchandise quality. Their java. even if priced somewhat more expensive than expected is ill-famed for fulfilling clients with its rich. delightful gustatory sensation and olfactory property. Local sensitiveness must be taken into history. as there difference in Ethnicity in Malaysia. the Chinese. Indian-Malays. and Malays. It is indispensable for Starbucks to understand the civilizations and norms of Malaysia in their promotional run.

2. 1. 3 PSYCHOGRAPHIC SEGMENTATION

Basically. it is the procedure of spliting the market based on the manner people think. Psychographic cleavage includes variables of personality. motivations. life styles. and societal category. Psychographics are based on the customer’s activities. involvements and sentiments. so it’s fundamentally how they spend their clip. what their penchants and precedences are and how they feel about events and issues. In Malaysia. Starbucks has gone a great length in supplying day-to-day inspiration for all their clients one twenty-four hours. one minute. and one cup at a clip.

Starbucks organize exciting events such as Halloween and Holiday parties every bit good as clasp regular new merchandise launches to further beef up the Starbucks experience. Starbuck spouses know their regular clients by name. direct them birthday salutations. and retrieve their favourite drink. During major gay such as the Chinese New Year and Hari Raya Aidilfitri. Starbucks celebrate with their clients by offering drinks that appeal to local market. Starbucks integrated elements of these festivals in the manner they greet their clients and adorn their shops to raise up the gay spirit.

2. 1. 4 BEHAVIORAL SEGMENTATION

Consumer decides on which trade name they want to take based on the functional benefits. the emotional benefits. or both ( Jobber and Fahy. 2006 ) . The map or public presentation benefits of the trade name are of import to consumers. but they besides choose peculiar trade names because it can be used to show their personality. societal position. or association ( symbolic intents ) or to carry through their internal psychological demands. such as the demand for alteration or newness ( emotional intents ) ( Solomon et al. . 2002 ) . Some research workers present buying as a job and are frequently presented as the purchaser decision-making theoretical account: job acknowledgment. information hunt. rating of options. purchase. post-purchase rating ( Jobber and Fahy. 2006 ) . For high engagement merchandises. such as high priced products/services ( economic hazard ) and products/services seeable to others ( psychological and societal hazard ) . the consumer frequently goes through an drawn-out decision-making procedure that includes all these stairss.

However. with the monetary values runing from RM12 for a basic espresso to over RM22 for hot lattes. Starbucks’ monetary values are among the highest in the Malaysia. but in the general strategy of things java is a low-involvement merchandise. This means that consumer are frequently engaged in a limited determination doing procedure. or they may see java purchasing as an impulse purchase or a everyday purchase. Additionally. if consumers are loyal to a specific trade name. they would be given to purchase java without much information hunt or rating of options ( Jobber and Fahy. 2006 ) . Starbucks is seeking to acquire consumers to acquire more involved in the merchandise in several ways. First. Starbucks is marketed as a position point and so it is more high engagement ( has more economic. psychological. and societal hazard ) than unbranded java or cheaper java from Subway or McDonalds.

Second. the company is utilizing assorted runs. such as ‘Bold Coffee’ run and the ‘Via’ gustatory sensation challenge late conducted in the UK to acquire consumers to come into the shop continually and seek its merchandises. This is a good usage of purchaser behaviour theory. which predicts that clients may exchange trade names merely to seek something new ( Jobber and Fahy. 2006 ) . By supplying clients with a new spirit to seek each hebdomad. Starbucks actively manages customers’ natural disposition to seek new things. And by stressing its socially responsible behaviour. Starbucks is besides supplying consumers with more benefits on which to measure its merchandises. Starbucks is besides doing good usage of consumer purchaser behaviour theory by constructing a truly loves java strong trade name to which clients are loyal. significance that these clients do non even see other trade names when they are traveling for java. they will instantly take Starbucks because it is the java for anyone who truly loves java.

2. 2 Placement STRATEGY FOR STARBUCKS COFFEE COMPANY.

Harmonizing to Mullins and Walker ( 2010 ) . trade name placement can be defined as the image that the marker intends to set into the consumer mentality comparing with other trade names and the ways the trade name is placed in the consumer mentality. It can be said as the manner a company would wish the consumer to see of its company merchandise or service. In the instance of Starbucks Coffee. the company had positioned the trade name into the mentality of its consumer as “Third Place” environment. The “Third Place” environment refers as the topographic point other than workplace and place that an person can see to loosen up. gather or socialise with friends and household.

Therefore. Starbucks shop is frequently decorated and filled with warm and comfy clime such as nice couch. Wi-Fi services. music and books offered to consumer. Additionally. Starbucks besides positioned its trade name of a quality-oriented merchandise and services. Quality merchandise refers to its finest java drinks and service refers to its environment. professionalism of its barista in brewing the finest java and the manner its dainty the client. Starbucks Coffee understand the of import of trade name placement in the consumer head as the client will non revisit if the merchandise or service offered would non fulfill their gustatory sensation and penchant on java.

2. 2. 1 MICHEAL PORTER GENERIC COMPETITIVE STRATEGIES

Starbucks Malaysia is runing its concern in the local nutrient and drink industry by following the Michael Porter Generic Competitive Strategies which intends to stipulate the company game program to vie in the industry while keeping its competitory advantage over its competition. The company in Malaysia is practising the distinction scheme. Normally. Starbucks is good known for its quality of java. It has its high quality beginnings of java bean and plantation. These made the company different from the local company that does non function quality but monetary value as they chief advantage. The company is distinguishing the nature of the concern from local java company such as Old Town White Coffee.

Starbucks developed the construct of Third Place to prolong its consumer by infixing the perceptual experience of Starbucks Coffee shop as their 3rd topographic point other than working environment and place. It intends to bring forth the sense of belonging of its stakeholders and therefore heightening the relationship with them. retaining them and pulling new possible non-coffee market. In brief. Starbucks Malaysia is runing the concern in Malaysia utilizing the distinction scheme in term of quality of the java provided and the comfort environment offered to its consumers to bask the life other than working and place environment.

2. 2. 2 Corporate SOCIAL RESPONSIBILITIES STRATEGY

Today. operating in the dynamic concern environment. company has to response shortly to consumer gustatory sensation and penchant. Environmental issues have now going a concern for consumer before doing purchase determination. They are now more cognizant and watchful than before seeking environmental information about a company’s merchandise lending their attempts to continue the environment. Starbucks. as one of the universe taking java company. is confronting contention of java towards the wellness of human being. For this ground. Starbucks Malaysia. has adopted the corporate societal duties schemes as one of their selling direction patterns before the issue is highlighted widely. Starbucks Malaysia has its decaf java pulverization to cut down the impact if caffeine towards the wellness of its consumer. Consumer can order java brew from caffeine or decaf java pulverization. Additionally. Starbucks Malaysia is besides offering its consumer pick of milk to brew the java.

Consumer can either order their java utilizing low fat milk or low fat soya milk. In term of stakeholder involvement. Starbucks Malaysia handle their employees as spouse by offering them comfort working environment. The employees can take a short interruption after a on the job hr of 5 hr. free drinks to honor its employees daily up to 5 cups of drinks. Starbucks Malaysia besides is committed to the beginning of the java merchandise. the environment and the communities. Lots of attempts done to recognize the corporate societal duties scheme to guarantee the assurance of consumer towards the company such as Coffee Sourcing Guidelines. Conservation Coffee. Fair Trade Certified Coffee. Organic Coffee. Starbucks and CARE every bit good as their planetary corporate societal duties describing which farther address the stakeholder’s involvement of environment and community in inside informations.

It is clear that Starbucks widest usage of marketing tool is through word of oral cavity selling as client will assist the company to portion and spread the quality merchandise offered. However. for the ground of java wellness and environmental and communities concern today as a consequence of globalisation. consumer presents demand more on the merchandise that they purchase. They demand more on intrinsic value that they could bask purchasing a company’s merchandise while extrinsically basking the merchandise of the company.

In the instance of Starbucks. to supply finest quality of java signify that the premium monetary value placed for its java and this will easy weaken down its competitory place in the market particularly during planetary fiscal meltdown. To get the better of or slower the procedure. the company exchange the focal point of the consumer on monetary value but to raise their consciousness on Starbucks attempts done to the environment and community in reflect on their premium java monetary value comparison to the rivals. As a consequence. corporate societal duties scheme is today a good selling direction patterns that a company can follow to prolong its market place and portion in the industry.

3. THE ROLE OF MARKETING MIXES OF STARBUCKS COFFEE TO ACHIEVE THE RIGHT COMPETITIVE ADVANTAGE.

The selling construct of 4Ps was formulated by McCarthy in 1975. The 4Ps is an component used to stand for merchandises. monetary values. publicity and topographic point in the selling mix. For over decennaries. these elements have been adopted as the root from which selling programs are developed. In any instance. with recent attending offered to serve selling in recent old ages. theoreticians have developed excess Ps to the basic construct. Fifield and Gilligan ( 1996 ) are the writers who recognized the demand to include over variables – procedure. physical. and people to organize the 7Ps of service selling – . but merely the initial 4Ps will be used to exemplify how selling mix stimulations in Starbucks influence cognitive procedure. affectional and behavioural response of clients as the company deals more on merchandises instead than services. These 7Ps are:

1. Merchandise – characteristics. quality and measure
2. Topographic point – the location where the merchandises are sold. figure of mercantile establishments. 3. Price – scheme. determiners. degrees.
4. Promotion – advertizement. gross revenues publicity. public dealingss 5. Peoples – measure. quality. preparation. publicity.
6. Procedure – rules. mechanization. control measures. 7. Physical- cleanliness. decor. atmosphere of the service


3. 1 Merchandise

Firenze ( 2013 ) stated that one of the chief corporate aims of Starbucks is to make standard gustatory sensation. irrespective of the state or location where they operate in. The company is of the position that while standardisation is indispensable for cut downing operation cost. accommodating to the local environment they operate in is of import for concern success. As such. there construct of “Its mission is to animate and foster the human spirit – one individual. one cup and one vicinity at a clip. ” has been the establishing rule of concern direction in Starbucks. Although Starbucks offers the same blend of java in footings of ingredients and gustatory sensation criterions across the universe. their merchandises are designed to have the civilization. culinary art and imposts of Malaysia. Therefore. this is why the java store is still the most preferable across state.

These illustrations are how the company has designed its concern scheme to concentrate on the local demands of its market. alternatively of following an international bill of fare. By concentrating on the local demands. the company is communicative a cognitive head of value which the clients no affair where they might be across the Earth will utilize in treating their purchase determination. As the company offers drinks and nutrients that are locally made. the client value is increased in the sense that client can be certain of holding repasts that meet their local gustatory sensation.

In that instance. the affectional behaviour is increased and this led to increase in client trueness and repurchase determination. When clients travel abroad every bit good. there might be a sense of knowledge that Starbucks is the topographic point to be – for tasking quality java internationally – as this is the value the company invariably communicates to its client. For case. the sells locally made white java in Malaysia. while they sell the pure black java in Brazil. The bites are besides different and tailored to the market’s gustatory sensation with local Malayan ingredients used in Malayan eating houses and the local ingredients of other states used in their several mercantile establishments in those states.

3. 2 Topographic point

Presently. Starbucks has 18. 000 restaurant mercantile establishments in 60 states across the Earth ( Florence 2013 ) . The company still continues its focal point on direction of capital. which is an illustration of its effectual. prudent and strategic enlargement. The addition potency for growing in the international market has been learned from its operation in the USA. This scheme has created a benchmarking spread between the company and its rivals. However. there is a demand to understand the importance of looking back and utilizing the past experience to construct on even more moneymaking eating houses. Such local and planetary presence of the company is used in pass oning the message of handiness.

While the company is focused on concern enlargement as a agency of increasing profitableness. the enlargement procedure is pass oning to the market that Starbucks is easy available and accessible. As such. the clients can be assured that no affair where they might be. there is ever a opportunity of holding Starbucks about. This signifier of marketing communicating enhances the cognitive processing in the sense that clients can easy visualise Starbucks whenever they fell like traveling out to hold some repasts as the company is pass oning that they can easy be found around their places.

In that instance. it increases the affectional behaviour with a strong mental image of handiness and handiness. In some of their mercantile establishments around the provinces such as Kuala Lumpur. Sabah. Sarawak. Melaka. and Penang. Starbucks map 24/7 and this farther enhances convenience on the customer’s side. As such. it can be seen that the company has been successful in heightening positive behaviour and attitude towards its trade name. Starbucks is readily available in most of the major shopping promenades and airdromes in Malaysia. every bit good as side corners across certain residential countries in the state and this makes them extremely accessible.

3. 3 Monetary value

Firenze ( 2013 ) besides stated that the company has realized that notwithstanding its cost economy attack that is inbuilt its standardisation procedure. success can merely be gettable by being able to accommodate to economic conditions in the different markets they maintain concern operations in. This is really what is go oning with the company’s execution of its pricing scheme which is focused on localisation alternatively of globalisation. This is besides in line with the company’s concern theoretical account of think planetary and act locally. For each state. there are strict pricing constructs that can be used to find the right monetary value for such market. These procedures have been described as:

1. Choosing monetary value aims ;
2. Determining demand ;
3. Estimating cost ;
4. Analyzing competitor’s cost. monetary values and offer ;
5. Choosing appropriate pricing method ; and
6. Choosing the unequivocal monetary value.




The above procedures are the model which the company uses in planing monetary values for its merchandises across states. The overall pricing aims of Starbucks is to increase market portion in each of the states it operate in and this is the barometer used in puting monetary values for each of these market ( Florence 2013 ) . Such an attack whereby the company sets monetary value harmonizing to market value is the best option. This is because. there are fluctuations in net incomes across the Earth. and standardising the pricing procedure wills an uneffective step. For case in the USA. the wage for 1 hours could be $ 5. and the same sum could be the wage for 3 hours in Malaysia or 6 hours in the Philippines. and even higher in some of the underdeveloped universe.

Therefore. while the US employ can afford to pass $ 5 on a repast. this might be possible in the states where the wage is really lower. In position of that. Starbucks is pass oning value per monetary value by following a localised pricing option in Malaysia. This is because. the international clients will comprehend high value for the merchandises offered in relation to the American market. but will be paying a batch cheaper for the same quality. Overall. this will increase their affectional behaviour towards the trade name and offer them legion grounds to take Starbucks over its rivals like Oldtown White java and Coffee bean companies. As such. it can be stated that it is important to observe that the company has been following legion localised schemes in relation to the selling mix discusses. and the ground behind such is to increase trade name trueness and later increase their planetary market portion. The company besides adopts pricing to pass on value in the sense that its high monetary value is a representation of higher quality over other trade names.

3. 4 Promotion

The concluding context that will be discussed is the issue of how promotion influences cognitive. affectional and behavioural attitudes of clients towards Starbuck. Promotion is besides known as the selling communications mix. and it was developed. who besides stated that it comprises of five major tools as:

1. Ad ;
2. Direct selling ;
3. Gross saless publicity ;
4. Public relation ; and
5. Personal merchandising ( Kotler 1994 ) .



By following these tools. Starbucks besides localizes its selling communications scheme. as the company seeks to run into the tremendous demands of cultural and environmental differences that exist across Malaysia. It was Florence ( 2013 ) who stated that it would naive of the company or any other company to disregard the fact that differences exists amongst markets in relation to civilization and clients. as the ignorance or recognition will hold high influence of the public presentation of trade names. Although the company focuses on advancing its corporate image planetary. it advertises its merchandises by following the Maxim of “branding globally. advertisement locally” ( Sandler & A ; Shani 1991 ) as it’s promotionally scheme. For case. in Starbucks UK advertizement. English football player such as Alan Shearer are used as the company’s front man in publicity of its merchandises. while the company besides uses Fabien Barthez ( the international goalie of France ) for its advertizement in France.

In footings of puting. the environment of Starbucks in China characteristics largely large unit of ammunition tabular arraies which is a representation of communism in China – leting clients to dine with their households. while the American scene is more of individual and scenes. which represents the American position of individuality. Overall. the promotional scheme adopted in Starbucks is giving the same consequence as other marketing mix discussed above. The fact from this analysis can be stated that. the company has been able to develop the right attack towards strategically pull offing its operations across the Earth by believing globally and moving locally at the same clip.

The effects of such is that it provides clients with quality and positive information in which they can utilize for their cognitive processing and this will positively act upon their affectional behaviour. The ground for that is that clients will see Starbucks as esteeming their values in footings of civilization. clients and culinary arts. every bit good as being caring by pricing their merchandises to suite their economic status in their state. In that instance. the clients will be positively affectional towards the trade name and this is the chief ground behind its planetary success.

4. Have THE MALAYSIAN KOPITIAM RESTAURANTS ACHIEVED SUSTAINABLE COMPETITIVE ADVANTAGE IN THE BREWING INDUSTRY?

Malayan Kopitiam eating houses has achieved sustainable competitory advantage in the brewing industry particularly Starbucks Coffee as it has successfully franchised in many provinces in Malaysia every bit good as globally. Malayan Kopitiam eating houses ( Starbucks Coffee ) has achieved sustainable competitory advantage by so many ways. First. Here at Starbucks. they have groom gifted spouses ( employees ) with their outstanding preparation and development plans. Most of their shop spouses are nutrient service professionals and college pupils. and what they all have in common is their passion for great java and quality client service. which finally helps them bond as a household and construct fulfilling callings at Starbucks. The committedness of Starbucks’ spouses is a major ground why they are recognized as the taking forte coffeecompany and the industry benchmark across Malaysia.

Second. in Malaysia. Starbucks has gone to great lengths toprovide day-to-day inspiration for all their clients one twenty-four hours. one minute. and one cup at a clip. Starbucks organize exciting events such as Halloween and Holliday parties every bit good as clasp regular new merchandise launches to further beef up the Starbucks experience. Their spouses know their regular clients by name. direct them birthday salutations. and retrieve their favourite drink. For clients who prefer their drink with a personal touch. Starbucks besides provide wireless internet entree at all their shops nationwide to do visits to Starbucks a truly relaxing and gratifying experience.

Third. Starbucks is besides really proud to hold a collaborated with Persatuan Kebajikan Hope worldwide Kuala Lumpur. for the gap of a free pediatric clinic in May 2005. The clinic. on the Island of Penang. purposes to supply specializer paediatric attention to kids from urban hapless households who non be able to afford specialised medical audience and intervention for these kids. Consultations are provide baby doctors and child specializers on a voluntary footing. while our spouses volunteer their clip in the disposal and upkeep of the clinic.

Starbucks organizes the Charity Movie showing and Charity Gold Championship yearly to assist prolong the costs of running this clinic. Last. in its attempts to accommodate as the universe quickly evolves. Starbucks Malaysia introduced the new drive-thru construct shops with consistence in head. This new platform gives clients the option to bask their favourite java on the spell. or at the shop should they prefer stretch their legs and relax. In Malaysia. Starbucks drive-thru construct shops are located in Johor Bharu. Shah Alam. Cyber Jaya. Petronas Kajang along the main road every bit good as Penang. the northern part of Peninsular Malaysia.

5. Decision

Starbucks claim their leading in Malaysia Kopitiam eating houses by concentrating on a scheme of new merchandises. a stronger connexion with clients as the 3rd topographic point and spread outing shop locations in Malaysia. They ne’er compromised on their quality and service criterions and maintain their client relationships with extreme attention. Starbucks is commited to offering the world’s finest java while enriching Malaysian’s lives one cup at a clip. Today. Starbucks Coffee is metropoliss all over Malaysiaand in 48 states. The degree of success achieved by Starbucks holds some much needed inspiration to the concern universe.

6. REFRENCES

1 ) Dibb. S. . Simkin. L. ( 1996 ) . “The Market Segmentation” . New York: Routledge Ltd. 2 ) Filfield. P. & A ; Gilligan. C. ( 1996 ) . Strategic Marketing Management. Butterworth-Heinemann Oxford. 3 ) Firenze ( 2013 ) . “Starbucks: International merchandises branding analysis” . 4 ) Jobber. D. and Fahy. J. ( 2006 ) . Foundations of Marketing. Berkshire: McGraw-Hill. 5 ) Kotler. P. & A ; Armstrong. G. ( 2006 ) . ‘Principles of Marketing’ . ( 11 ed. ) . New Jersey: Prentice Hall International. Inc. 6 ) Sandler. D. M and Shani. D. ( 1991 ) . “Brand globally but publicize locally? An emperical investigation” . International Marketing Review. vol. 9 No. 4. pp. 18-29. 7 ) Solomon. M. . Bamossy. G. . and Askegaard. S. ( 2002 ) . Consumer Behavior: A European Perspective. Harlow Essex: Pearson Education Ltd.

7. BIBLIOGRAPHY

World Wide Web. starbucks. com. my/Starbucks Coffee company
World Wide Web. ukessays. com/company analysis of Starbucks java Malaysia World Wide Web. ukessays. com/marketing portfolio for Starbucks
World Wide Web. ukessays. com/the java and the Malayan consumers marketing essay World Wide Web. Shimworld. wordpress. com/Starbucks Malaysia