MKT 9764 INTERNET MARKETING & GLOBAL BUSINESS (Spring 2020)

Baruch College, Zicklin School of Business Department of

Marketing & International Business

Student Name:_____Maria Li ________________

Case Study Assignment - Starbucks – Going Global Fast

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 MKT 9764 INTERNET MARKETING & GLOBAL BUSINESS (Spring 2020)
Baruch College, Zicklin School of Business Department of
Marketing & International Business

Provide answers to the questions below:

1. Identify the controllable elements that Starbucks has encountered in

entering global markets.
Controllable elements are resources that are under control of the marketing
manager. For Starbucks in the global market those would be: products they sell
(coffee drinks, teas, food items – could be altered depending on region), the
location, amenities and number of stores, pricing policy and different
promotional campaigns.

2. Identify the uncontrollable elements that Starbucks has encountered in

entering global markets.

The uncontrollable elements are the elements of the domestic or foreign

environment that could have impact on the success of the company. They could
not be controlled by the marketing manager, however they need to be evaluated
in order for a company to adapt to them. In case of Starbucks some examples
would be: cultural differences in coffee drinking, labor laws in France or other
countries, cultural, political forces (Israel-Palestine conflict), local competitors,
poor infrastructure and economic climate (could be faced in Africa).

3. What are the major sources of risk facing the company? Discuss potential
solutions.

There are a few sources of risks for the company. First, employees are not satisfied
with work conditions. Some of the staff’s complaints include low wages, unpaid
overtimes, minimum or no perks. Employee discontent, in turn, causes decline in service
due to the low motivation. Some of the solutions could be introducing wider employee
benefits (for example: 401K, transit benefits, health insurance), reworking scheduling
system, increasing the salaries.
Second, oversaturation in the home market. Starbucks struggles with growth due to

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 MKT 9764 INTERNET MARKETING & GLOBAL BUSINESS (Spring 2020)
Baruch College, Zicklin School of Business Department of
Marketing & International Business

the law of large numbers. The company also faces self-cannibalization of its stores. To
overcome strong competition in the home market Starbucks needs to be better in
everything. They could bring innovation, such as different new recipes, fast checkout
lines etc. They could initiate marketing research to identify main competitors, their
strengths and possible points for improvement for the company. Another option would
be to concentrate on its global strategy, reaching more and more markets all over the
world.
Third, Starbucks isn’t popular among younger generation. They don’t feel
comfortable in the stores and they also think that prices are too high. A marketing
research could help to identify trends and likes/dislikes of the younger generation.
Some of the ideas could be: playing different music, launching collaborations with local
artists could help to attract people of 20-30 years old to Starbucks.

4. What advice would you have for Starbucks in Africa? In China?

First and foremost, Starbucks needs to do an extensive marketing research before

expanding further in both of these countries. Without doing so the company designs
itself for failure. For Africa I would recommend trying out a different pricing strategy
since the disposable income of the population of most African countries is low. For
China Starbucks could introduce different drinks with “local” flavors as well as desserts
that are familiar to the Chinese people. The company needs to adapt to local cultures
and tastes.

5. Visit the Starbucks.com website and describe their current global reach and
strategy.

Starbucks strives to find itself in every part of this world. As of June 30, 2019 the
company had total of 30,000 stores across 80 markets. The company sets on expanding
to more and more countries every year. Starbucks’ mission is to inspire and nurture the
human spirit – one person, one cup and one neighborhood at a time. From the current
size of the company we can conclude that it is successful in staying true to the mission.

Watch the video below and provide answers the following questions?

Why Starbucks Failed In Australia

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 MKT 9764 INTERNET MARKETING & GLOBAL BUSINESS (Spring 2020)
Baruch College, Zicklin School of Business Department of
Marketing & International Business

1. List all the mistakes you hear in the video that Starbucks made when
entering Australia?

In general, Starbucks launched too rapidly, opening too many stores without adapting
and adjusting its business model to local culture. For instance, Starbucks failed to see
that Australians adapted coffee (espresso) culture much earlier than Americans did. In
the way, Australian were “pros” in the coffee matters. Coffee drinking culture is also
different for this country. Starbucks also failed to adapt to local tastes - Australians
didn’t like sweet coffees, leaving preference for more sophisticated and trusted espresso
drinks. Overpriced items also scared Australians away.

2. What does “too available” mean? Isn’t that a good thing for a brand to
have its product widely available? Please explain.

When Starbucks just entered the Australian market, it opened too many stores in the
very short time. It is possible that for some people it was still a new brand that they
wanted to learn about step-by-step. However when they saw too many stores opening
everywhere, they lost their interest. It is in human’s nature to appreciate things more
when they are exclusive. It could have had an impact on Starbucks’ business in Australia.
Starbucks should’ve tried out the land and then continue expanding. I think at certain
point the brand just scared people away with its ubiquity.

3. How could a digital marketing campaign have helped in Australia to change

the perception of the brand being too expensive? What kind of campaign
would you recommend?

Starbucks could’ve cooperated with local artists, bloggers, influencers to hype up the
opening of the stores. Through different channels online this company could’ve started
introducing some of the specialty items, something that competitors didn’t have. Digital
campaign could’ve helped to raise brand awareness and introduce Australians to this
American company.

4. Why was Gloria Jean’s Coffees more successful than Starbucks in Australia?

Gloria Jean’s Coffees adapted to local tastes, introducing a coffee menu that is preferred
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 MKT 9764 INTERNET MARKETING & GLOBAL BUSINESS (Spring 2020)
Baruch College, Zicklin School of Business Department of
Marketing & International Business

by Australians.
Watch the video below and provide answers the following questions?

How Starbucks Became An $80B Business

1) What is the role of marketing in the success of Starbucks?

I think one of the main things that helped Starbucks to grow is its focus on customer
experience. All employees go through training, that helps them to improve customer
service. In the recent years, Starbucks also opened its high-end Starbucks Reserve stores
to bring more attention to the brand. Those stores are completely different and
concentrate around various roasting methods, drink recipes etc. From a marketing
standpoint is it a great idea and a magnet for tourist. It also brings something fresh and
new to a Starbucks brand in my opinion.

Starbucks Manners from Ellen

1) Is this a good example of digital marketing for Starbucks? Do you think the
Starbucks marketing team would be happy or unhappy with this YouTube
video?

Starbucks is known for certain things and people like to joke about it. I think it has
become a part of the brand. I don’t necessarily think that it is a bad marketing for the
company. For instance, Starbucks known for misspelling names on the cups, but imagine
how many people post pictures with misspelled names on their social media. It creates a
media buzz, that spreads really fast and costs $0 to the company!