Marketing Case Study

Case Study: One

The case study for chapter four is called Starbucks: Selling Coffee in the Land of Tea. The article begins with stating the year that Starbucks opened its first franchise in China, which was 1999 in Beijing. Over the years, the franchise has grown to have hundreds of locations all around China, including one in the Great Wall. Even with the large growth of Starbucks in China in the past several years, China is only considered to be 10% of the company's global sales. According to Chairman Howard Schultz, "the country will someday be the company's largest market outside North America. The market response has exceeded our expectation."

The main way Starbucks can expand in China is to understand the external environment. If the marketing department in a corporation does not understand the external environment, they cannot adequately plan for the future. The solution to this problem reached by many organizations is to assemble a group of specialist to perform environmental scanning. The goal of environmental scanning is to collect and evaluate information and to recognize future market opportunities.

Many of the Chinese population did not know what coffee was until a powdered version first became available in the 1980, by Nestle. The older generations of Chinese are known for drinking tea. Starbucks hopes they can win over the younger generation of Chinese by effectively marketing to them that drinking coffee is a new change towards China's Sophistication. This younger generation is Starbucks' target market. A target market is "a defined group that managers feel is most likely to buy a firm's product." Starbucks' marketing techniques will dictate how well the company does in the future.

According to a study done by Starbucks in China, the number one reason the Chinese people go to cafés is to congregate with friends and family. The reason the Chinese people go to cafés to visit with family and friends is because the typical house in China is small and restricted. It has been suggested that one of the reason for the success of Starbucks in China is it gives the people a place to congregate besides at work or at home.

Starbucks in China are known for having a variety of foods and a large seating area. In 2006, Starbucks in China bought out its partner and acquired over 60 stores. Starbucks expects much growth and expansion in China in the years to come. Since their economy is continually rising the amount of disposable income is also increasing, which gives the Chinese people more money to spend at Starbucks.

There are many environmental factors Starbucks had to consider before expanding to China. The first consideration of the company in expanding internationally is to decide who their target market would be. Since the Chinese culture is known for drinking tea, Starbucks would have to find a generation of people to market to who would also drink coffee. In order to be effective, management would have to continually reshape their marketing