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However, it seems that this is a necessary cost in 4. The Australian retail coffee industry order to deliver a superior product. Did they overestimate the value consum- widely in the s. Australians did not need to be introduced to the concept and think that operating in Australia was a license to print money? Savouring a morning cup of Did they simply see Australia as the next logical step to global coffee was already a ritual for many consumers.

However, in Australia, the competitive landscape is coffee shops, with people willing to travel out of their way for a fa- different. For Australians, coffee is Shoebridge, Growth grinds to a halt. For every cup of coffee consumed out of home, two cups Starbucks.

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Internationally, company earnings declined as cash- are consumed at home AustralAsian Specialty Coffee Association, strapped consumers faced record petrol prices and rising interest Per capita consumption is now estimated at 2. More than 1 billion cups of coffee Even be- of revitalising the business. Customer-oriented initia- d. There is also a trend towards larger takeaway sizes, with tives have included the addition of more food, the launch of the ml cups increasing in popularity Euromonitor, d. One Starbucks card and Starbucks express, and the provision of high- might argue that Starbucks drove these trends, especially in re- speed wi-fi internet access Hota, Notably, Schultz acknowl- gards to larger sizes.

Number of Year Business model Price of an espresso coffee Performance highlights and lowlights stores in established in e.

Subway (restaurant)

However, it seems that these measures were too late for the Whilst the troubled economy might seem an easy scapegoat, with Australian operation. On 29th July , Starbucks announced that people tightening their belts and eating out less, it is unlikely that it would be closing 61 of its 84 Australian stores i. All of these stores had of their competitors. This decline of Starbucks daily routine. But this begs the question: can after trying it, many Australians quickly found that it failed to offer a store chain be viable for the brand in the long-term?

Its point of dif- to be much lower.

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This may not make much commercial sense as it ference in Australia, where a coffee culture already existed, had to will be difficult to achieve economies of scale in terms of marketing be in its supplementary or value-adding services — i. But was this worth a premium price, espe- the US, Japan and China. Starbucks has since been harshly criticised by Austra- ever close its Australian business entirely. Even the idea of the third place has come global workforce affected Mintz, So what went wrong?

When the company engage with customers. But with more than ethnici- competitors seeking to imitate the brand, and thus gain a slice of ties speaking more than languages and dialects, companies the ever growing lifestyle coffee market. For the Australian 6. Declining service quality consumer raised on a diet of real espresso, this was always going to be a tough sell The brand has also come under fire for declining customer ser- vice as it continued to expand. For example, the quality of baristas Mescall, is said to have declined as Starbucks widened its pool of applicants in order to meet demand at new stores.

Now, with so make it easy for them to crack the local market. Furthermore, while customers were offered pro- ing the community, having relationships with the people you buy motional rewards for returning to Starbucks, the card-based from, and supporting ethically-minded businesses. Furthermore, some And as noted earlier, one of the things that set Starbucks apart would argue that Starbucks has become a caricature of the from the competition — i.

The imposition of these targets plus an ever widening range and complexity of coffees to remember and make to perfection, meant 6. Expanding too quickly and forcing themselves upon an unwilling staff morale and inevitably customer service levels declined. Before long, Starbucks had become a de- their core promise of serving superior coffee in comfortable sur- mand-driven phenomenon, with everyone wanting a Starbucks in roundings, thus justifying its premium price.

By switching to vac- their local area. The switching of traditional coffee ma- to meet demand — thus creating an almost artificial scarcity, which chines to automated espresso machines which can make coffees created huge buzz around the brand experience. In-store, it has been noted that there are fewer adopting the US-model of expansion through store clusters. It order coffee in sizes and gave the coffees weird names.

They took the Coca-Cola strategy of being available wher- every corner — whilst still charging a premium. Their expansion did not hurt their competitors so much as themselves, 6. Starbucks ignored some golden rules of international marketing and they found themselves cannibalising their own stores. Further- more, by becoming too common, the company violated the eco- Ironically, it seems that the very thing that made Starbucks suc- nomic principles of cultural scarcity and the novelty wore off.

By cessful in the first place, its ability to adjust the original European having too many outlets, becoming too commercial and too widely business model and coffee tradition to local US conditions, is the used, it began to lose its initial appeal of status and exclusivity. It thing that let it down.

Howard Schultz Biography: Success Story of Starbucks CEO

In Australia, it was simply use a franchise model, preferring to lease and fit-out its own out- another player. But adopting a franchise model would have numerous other advantages than just minimising this. It From Day 1, Starbucks got off on the back foot. They lacked the would mean that local investors, with a good sense of the local first-mover advantage they had in the US and Asia, finding them- market, put their own money into the business and take an active selves the late entrant in an already very developed, sophisticated role in running it and shaping its direction.

2. Be borderless in your marketing

Indeed, the competitive landscape in the Australian retail coffee market is very different to that of other 7. What are the main lessons from this case study? Significantly, they were also the last of the major chains to gain a presence in Australia. Crossing international borders is risky and clearly Starbucks did not do their homework, or ignored their homework 6. Failing to communicate the brand Well conceived market research involving both primary and Worldwide, Starbucks rarely employs above-the-line promo- secondary data, including qualitative and quantitative approaches, tion, and this was also the case in Australia.

It do not need to build the brand through advertising or promotion. As a late market entrant, Star- sage. Alterna- give consumers reasons for patronising Starbucks. This may or may with many people unable to articulate why they should be loyal not have been due to some arrogance on the part of Starbucks, or to Starbucks.

Research had clearly shown the American over the nuanced tastes and preferences of local cultures Klein, way of consuming and socialising over a coffee was an anathema to ; Clark, Unsustainable business model 7. Sometimes This familiar maxim in international marketing should be well a new product idea will be developed, such as the Frappucino, but understood.

As noted summer sales, but recently sales have been down, suggesting that earlier, all the evidence suggests that it simply tried to transplant customers are already bored with it Kiviat, Furthermore, in the American experience into the Australian market without any the instance where other products were offered, people failed to adaptation. In particular, it failed to adapt either its core product purchase them as they only really associate Starbucks with coffee or its supplementary services to create the intimacy, personalisa- and generally seek food elsewhere.

Establish a differential advantage and then strive to sustain it Hence the average transaction value at Starbucks is lower than its competitors, and therefore more customers must pass through A question of strategy that Starbucks perhaps failed to address its doors to reach the sales and profit levels of its competitors. Finally, questions have to be raised about Starbucks funda- and in some cases inferior. It was these supplementary services, such as its unique ser- vicescape and excellent customer service, that they used to justify a premium price.

However, as competitors e. Australian Coffee Market: Key Facts tary services, ambiance, etc. In other words, their key points of difference could be eas- Bawden, T. Starbucks reports first loss in 16 years. Times Online, 31 July. BBC News, China central to Starbucks growth. BBC News, 14 February. Starbucks hopes growth abroad will save its bottom line. ABC through its communications. News, 31 July. Burritt, C. Bloomberg, 11 September.

Cebrzynski, G. Charles, E. In the trenches: Coffee. In the Black, May, 28— Starbucks: The brand we love to hate. Marketing, 2 April. Starbucks reports first loss since , frontline staff including baristas to increase store productivity. Bloomberg, 30 July. Starbucks to go. Guardian, 30 July. The Australian, 31 July. Starbucks Ups Expansion Plans. Euromonitor International. As more pressure was placed on staff to have Euromonitor, Starbucks Corp — Consumer Foodservice — World.

Euromonitor higher throughput, this meant that baristas and other employees International. Euromonitor, a. In other words, Starbucks Euromonitor International.


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Euromonitor, b. Coffee — Australia. Euromonitor, d. Services as theater. In: Swartz, T. Now, Starbucks is faster to introduce new products, only in introduced 7 kinds of new drink to increasing attraction to young people. Starbucks continue to play the brand force to find new channel to sell more kinds Starbucks. On the other hand, brand image and product standardization are also the competitive advantage of Starbucks.

The name of Starbucks is one of the main reasons why millions of customers buy coffee from Starbucks Cateora et al, Johnasson had stated several reasons why product standardization can benefit one company. Cost Reduction, increase global customers, enhance global segments, enhances customer preference and Improved quality. Those are the advantages of product standardization.

In promotion aspect, according to Borden in , promotion includes policies and procedures that associate with coming up with special sales plans and form of devices for customer promotions. Starbucks in North America and Europe launched online and mobile phone pre-ordering services in , nearly two thousands Starbucks sticker a small antenna affixed on the door to marked there is high-speed wireless internet in store, this is Starbucks cooperation with German telecommunication company to provide new service. Except these Starbucks also introduced delivery service, some stores offer delivery service, deliver drinks and pastries Laura, Above examples are how Starbucks adapts local culture or specific needs in order to meet its market efforts.

There are many marketing features of Starbucks, for example, in Taiwan, unlimited supply of sugar, whipping cream, cinnamon, vanilla powder, cocoa powder, cardamom powder.


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Offers a wide range of coffee brewing equipment and coffee subscription service. The reason for that is within Taiwan society, there is relatively high cultural identity toward western culture such as American culture Mathews, Starbucks also encourages environmental friendly, if customers bring their own cups that have cash discount.

In conclusion, marketing across culture plays an important role for those multinational companies when they expand abroad. Most multinational companies have been struggle on how to balance product standardization and localization. However, we can hardly say that witch strategy is best for some specific area or cultures.

There is still needs for a period of marketing observation and survey then decide which strategy is suitable for that market. The reason why McDonal and Starbucks are such successful global companies is that they identify the cultural difference and local requirement. Only when marketers who can identify the cultural difference and issues so that the company can smoothly manage its market efforts.

Abramowitz, R. Los Angels Times. Borden, N. Burca, S. Cai, D. Cateora, P. International Marketing. New York: McGraw-Hill. Eckhardt, G. Journal of International Marketing. Johansson, J. Laura, R.

Why Starbucks Failed In Australia

Caribbean Business. McDonald Vignali, C. British Food Journal.