Product Strategy
Starbucks, a well-known global coffee chain, is about to enter the dynamic Nicaraguan market. To respond effectively to local culture and consumer preferences, Starbucks will adopt a customized product strategy with a wide range of coffee:
- Espresso;
- Cappuccino;
- Latte;
- Americano;
- Macchiato;
- Flat White;
- Hot Chocolate;
- Frappuccino;
- Iced Coffee.
There will be a strong focus on Nicaraguan coffee beans in recognition of the country’s rich coffee heritage. To cater to the unique tastes of Nicaraguan consumers, local coffee blends will be featured, such as:
- Nicaraguan Coffee (with local coffee beans);
- Mango Passion Fruit Frappuccino;
- Caramel Macchiato;
- Green Tea Latte;
- Cold Crème Frappe.
Considering the popularity of tea in Nicaragua, Starbucks will offer a wide variety of high-quality teas, both hot and iced. The selection will include local herbal teas from traditional Nicaraguan recipes to appeal to a broad audience.
- Classic Black Tea;
- Green Tea;
- Lemon and Honey Tea;
- Hot Chocolate with Vanilla;
- Herbal Tea;
- Raspberry Syrup Tea.
Starbucks will partner with local bakeries to offer an assortment of traditional Nicaraguan pastries and snacks, including Rosquillas and Tajadas. In addition to these, will be provided
- Croissants (snack);
- Egg and Bacon Sandwiches;
- Oatmeal with Fruit and Nuts;
- Cinnamon Buns;
- Cheesecake.
Starbucks will encourage customers to personalize their orders by allowing them to choose the type of milk, degree of sweetness, and coffee size according to their preferences. A “Create Your Coffee” option will allow customers to create unique coffee shakes. Starbucks will introduce a range of salads, fresh fruit cups, and yogurt parfaits to cater to the health-conscious.
Price Determination
In a market teeming with both international coffee giants and local coffee establishments, Starbucks must be judicious in its pricing. While maintaining the premium brand image for which Starbucks is globally recognized, the company must also ensure its offerings are competitive in the local market. The pricing policy depends, among other things, on competitors, most of which are small independent coffee shops offering a wide range of espresso-based drinks and local coffee specialties.
Prices for lattes and cappuccinos range from $2.50 to $5.50. Other international coffee shop chains operating in Nicaragua, such as Dunkin’, McCafé (McDonald’s), or Coffee Bean & Tea Leaf, may be considered competitors. Prices for similar drinks can also range from US$2.50 to US$6.50 (Richey & Ponte, 2021). Thus, the price range at Starbucks will be average and affordable for every resident.
Starbucks’ espresso-based specialty drinks, including lattes and cappuccinos, will be positioned as an affordable treat. Their prices will be attractive, just below those of their international competitors in the $2.50 to $4.50 range. Moreover, Starbucks will unlock the rich tapestry of Nicaraguan flavors by introducing coffee drinks created from local ingredients and preferences. These offerings will be competitively priced at $2.50 – $3.50, ensuring affordability without sacrificing quality.
Starbucks Reserve and specialty coffees will be premium offerings for discerning coffee connoisseurs. They will be priced around $5.00 – $7.00 to reflect their unique qualities. Starbucks sources coffee beans from Central American countries (Tien et al., 2020). They can range from $1,000 to $5,000 per shipment, depending on distance, volume, and mode of transportation.
Starbucks has a fleet of trucks and contracts with local transportation companies, so monthly transportation costs can range from $10,000 to $20,000 for fuel, labor, maintenance, and infrastructure. Meanwhile, annual material handling costs can range from $50,000 to $100,000, including warehousing, packing materials, labor, and quality control (Richey & Ponte, 2021). Furthermore, given the country context, Starbucks should invest in comprehensive insurance for its operations, ranging from US$5,000 to US$20,000, including a post-implementation risk assessment.
Promotion Strategy
In its marketing strategy, Starbucks in Nicaragua will resort to short-term promotions and irregular menus, thus creating a sense of urgency in customers’ minds. It is essential to set time frames for special offers (Ren et al., 2023). For example, if the establishment does not have many customers in the morning, the cafe will put a time-limited promotional price on breakfasts.
Incredible content that attracts customers and piques their interest is at the heart of Starbucks’ marketing strategy. It has an exceptional quality, look, and feel, conveying a premium brand image. Starbucks uses unique principles in addition to stunning photos and creative advertising slogans to make the content memorable.
For example, the company will offer bonuses to customers who agree to try a new item on the menu. Starbucks will utilize popular social media platforms like Facebook, Instagram, and Twitter to reach Nicaraguan consumers. Engaging content, including visually appealing images of Starbucks products and stories about local coffee suppliers, will be shared to create a strong online presence.
Starbucks stores in Nicaragua will create a unique atmosphere that reflects Nicaraguan culture. It includes showcasing local artwork, featuring traditional Nicaraguan snacks alongside Starbucks products, and organizing events celebrating local traditions and holidays. Active involvement in the local community is one of Starbucks’ priorities. Therefore, sponsoring local events, supporting charitable initiatives, and organizing coffee tastings to integrate Starbucks into the local community is essential.
Distribution Strategy
Starbucks’ distribution strategy will emphasize local sourcing and sustainability. Starbucks will source coffee beans from local coffee farms in Nicaragua to emphasize the freshness and authenticity of the coffee offered. Partnering with local fresh produce, dairy, and bakery suppliers will ensure consistent product quality and contribute to the local economy (Ren et al., 2023). Moreover, it will centrally distribute branded products such as cups, napkins, and merchandise. Starbucks will prioritize environmental sustainability by using eco-friendly packaging materials and encouraging in-store recycling, which aligns with the values of Nicaragua’s environmentally conscious consumers.
References
Ren, Y., Choe, Y., & Song, H. (2023). Antecedents and consequences of brand equity: Evidence from Starbucks coffee brand. International Journal of Hospitality Management, 108. Web.
Richey, L. A., & Ponte, S. (2021). Brand Aid and coffee value chain development interventions: Is Starbucks working aid out of business?. World Development, 143. Web.
Tien, N. H., Jose, R. J. S., Mai, N. P., Van Thoi, B., & Van Hai, T. (2020). Analysis of Starbucks’ entry strategy into Vietnam market. International journal of multidisciplinary education and research, 5(3), 44-48.
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