While exploring the new market segment in the Asian region, particularly the one located in China, Starbucks company has faced several difficulties due to the discrepancies in cultural values between the Western and Eastern markets. Specifically, China is regarded as a tea-drinking country because this is a traditional beverage that is associated with many customs and rituals. A strong preference for tea is also explained by its medical value, whereas coffee does not have any qualities contributing to health (Hawkins, Mothersbaugh, & Best, 2010). Chinese customers’ expectations are attained to five major factors characterizing the product – high quality, fair price, good for health, customer care, and conformity with self-image. These values contradict entirely the values introduced by Starbucks’ philosophy because the product is strongly associated with the Western lifestyle, fashionable status, prestige, and wealth. At this point, the new brand will fail to penetrate to the Eastern market unless shifts in cultural orientation are introduced.
The success of Starbucks’ penetration to the Chinese market could have been enhanced, provided the networks of cafés had been oriented on meeting the tastes and preferences of local consumers. For instance, instead of imposing Western values, the company could pay attention to the local cultural values through the introduction of new coffee brands of higher quality. The company could also launch an advertising policy that would enlarge the healthy qualities of coffee. The company was confident that such values as prestige, wealth, and pleasure from drinking coffee could attract more consumers. Additionally, orientation on fashion trends in drinking was also prioritized (Thomson & Martin, 2010). However, these values meet strict opposition on the part of the Chinese consumers who are more conservative in their choice of beverages. Known as a tea-drinking nation, Chinese consumers are reluctant to visit coffee bars because of high prices as well since most of the population is of low-income status. Hence, the brand values dictated by Starbucks did not work in this region.
About the above difficulties, the major barriers to product development and commercialization are cultural issues, economic instability, and demographic issues. The latter relates to the prevalence of the rural population that rarely visits Starbucks shops and bars. More importantly, although the company launched the brand of instant coffee in 2009, its spread and popularity cannot be guarantee even though China is a 1.3 billion-populated country. Some of the problems relate to the diverse orientation and choices of Chinese people because not all of them prefer drinking coffee with milk and sugar, which is highly popular among consumers all over the world.
While considering the issue of economic instability, it should be stressed that Starbucks’ idea of instant coffee will not be successful in the region because Chinese people will not sacrifice high quality for the possibility to receive an instant coffee. As a proof, Schultz (2011) explains, “this is one of those products where the added convenience just does not make up for taste…No aroma, no real coffee flavor, and for about a buck each – no sale” (n. p.). As a result of this challenge, Chinese market penetration will not be successful unless the high quality and genuine tests are the priorities among the consumers in the region.
Although Starbucks concerns with the spread of Western lifestyle through coffee, its customization policy in China still takes place. The Chinese coffee market is currently expanding, and, therefore, there are many opportunities for Starbuck as well. However, while developing the policy of local branding, there are serious challenges in terms of target consumers. Specifically, because the average consumer refers to low-income, adult individuals rather than to youth, which can be more inclined to drink coffee, the company’s penetration is problematic. Moreover, there is a significant difference between Western and Eastern habits of consuming coffee. Hence, American consumers prefer drinking coffee by adding ingredients of their own (Lingbo, 2011). They can order a pure coffee beverage and complement with all necessary elements, including milk and sugar, making it more customized and up to consumer’s tastes.
In contrast, Chinese consumers order coffee as it is described in the menu, with no specific requests since most people are not familiar with thins product. Yet, some of the menus in Chinese cafés provide instructions for ordering coffee properly. The localization process involves the use of local flavors to meet Chinese’ food preferences (Lingbo, 2011). As such, a coffee with grass jelly has been introduced, but it did not have success among Chinese due to high price and inappropriate taste. Extremely expensive muffins and coffee products also discourage consumers and make Starbuck less competitive as compared to other coffee-making companies. The case, therefore, demonstrates a great number of risks related to customization, including extreme deviation from the genuine brand description. Consumers could also be attracted to the authenticity of the product proposed at Starbucks and, therefore, the brand should not be assimilated completely in a local context.
To reduce the influence of local culture, as well as attract more consumers in China, the primary emphasis should be placed on the evaluation of consumer behavior to predict future trends in consumption. Specifically, Starbucks should not focus on changing behavioral patterns; rather, it is highly necessary to expand an innovative technique that can enhance the company’s competitive potential. Indeed, continuous innovation and adjustment of new advanced styles of managing business provide minor changes to behavior but contributes to the expansion of the consumer segment. Second, Starbuck should change its pricing policies because they do not correspond to the economic level of the majority of the Chinese population. Hence, highly expensive coffee and muffins will not be in high demand, particularly in rural areas.
To reduce the price of the product, the company should pay attention to the distribution and delivery of coffee. For instance, it is possible to find other locations of coffee beans that can be used in the production of coffee but are far closer to China. In such a way, the company can reduce costs on delivery and transportation. Third, Starbucks should rethink the quality of services provided at cafés. Hence, sales assistants and waiters should be more aware of cultural peculiarities and must respect Chinese traditions and language. Therefore, Starbuck should ensure the employment of Chinese workers who are more knowledgeable of all peculiarities of local culture. It contributes both to higher demand and an increased level of employment. Finally, there should be a balance between brand loyalty development and customer satisfaction because extreme focus either on consumers or on the brand will not provide tangible results. All these strategies could be regarded as long-term objectives because some of the changes cannot be carried out immediately.
References
Hawkins, D. I., Mothersbaugh, D. L., & Best, R. J. (2010). Consumer behavior: Building marketing strategy, (11th ed.). Boston: McGraw Hill
Lingbo (2011). Starbucks in China: The Good, the Bad, and the Sugarfree. Web.
Schultz, E. J. (2011). How Via Steamed Up the Instant-Coffee Category. Advertising Age. Web.
Thomson, & Martin, F. (2010). Strategic Management: Awareness & Change. US: Cengage Learning EMEA.