BU7411 International Marketing Strategy Assignment Sample

Introduction

Effective strategy on international marketing helps an organization to enhance customer engagement and establish an organizational presence across the host market effectively.

Thus, the following report will highlight the effectiveness of international marketing by considering global food and drink company, Starbucks. The challenges that the company has witnessed while expanding across Australian market will be highlighted by determining its future opportunities within the target market.
Cultural models will be considered to analyse the persistence of cultural difference among US and Australia will be illustrated briefly.

Findings and Analysis

Evaluation of potential target market

Cultural model

Understanding the gaps or differences in cultures between home and target market can help an organisation to develop strategic marketing plans that foster their chance to expand its existing business across the target market (Song et al. 2018).http://BU7411 International Marketing Strategy Assignment Sample In the context of Starbucks in Australia, Denison Cultural Model and Hofstede’s Cultural Dimensions Theory can be interlinked to identify cultural differences effectively.

Figure 1: Denison Cultural Model

(Source: Afkhami et al. 2020)

Denison Cultural Model highlights the organizational needs that are required to enhance performance and sales growth within the host market. In the Denison Cultural Model, it is composed of four key drivers such as mission, consistency, adaptability, and involvement that has the potential to improve overall organizational operations.

For example, in case of adaptability, while expanding across Australia, Starbucks launched their coffee brand and tried to grab a strong customer base without identifying or analysing the demands or expectations of Australians (Afkhami et al. 2020).http://BU7411 International Marketing Strategy Assignment Sample

Denison’s Cultural Model only emphasizes the internal capabilities of an organization to enhance their performance without highlighting the persistence of cultural difference among customers between two countries that requires to be considered while expanding in a new market.

In this context, Hofstede’s Cultural Dimensions Theory can be compared to interlink with the actual reason of Starbucks’ failure in Australia accurately.

Figure 2: Hofstede’s Cultural Dimensions Theory

(Source: Hofstede-insights, 2021)

In the context of the above figure, Australia scores low in “power of distance” as compared to the US. This highlights that in Australian organizations, hierarchy is being followed for convenience. On the other hand, Australia is found to be more individualistic as compared to the US. This signifies that before taking any kind of organisational design, managers focus upon the needs and perspective of their employees along with their clients against the services or products offered by the company (Hofstede-insights, 2021). In addition to this, the model also highlights the fact that Australian shows their respect towards traditions and tries to maintain country’s heritage in front of other countries. Considering this concept in the case of Starbucks, it can be mentioned that the company fails to meet the expectation along with the cultural aspect of Australia that leads them to face business failure across the country.

Cultural difference between home and target market

In Australia, Starbucks started its journey in the year 2000, and within 2008; the company opened about 90 stores across the region. It is identified that without analysing its popularity among Australians, Starbucks continued its expansion rapidly in Australia.

The thriving coffee culture in Australia has already generated threat to the American brand to foster within the market. Starbucks failed to provide its target customer in the Australian market with an opportunity to analyse why they should purchase coffee offered by Starbucks over others. Due to this reason, the company lost about $105 million leading to the closure of its existing coffee shop at 61 locations (Turner, 2018).http://BU7411 International Marketing Strategy Assignment Sample

Another new report published in 2019 highlights the fact that Starbucks failed to identify the coffee culture preferred by Australian. For example, it is seen that Australian are accustomed to special menu items like Australian or flat white macchiato.

In addition to this, Australian cafes play a key role for the local meetings and this can be considered as another reason due to which Starbucks introduced American Coffee Culture as they failed to get support from Australian customers. It is seen that Australian consumers are more concerned about their health and prefer to consume healthy drinks (Arora, 2019).http://BU7411 International Marketing Strategy Assignment Sample In the case of Starbucks, they offered mostly sugary drinks that did not match the tastes of Australia. Coffee products offered by Starbucks are found to be expensive as compared to the local cafe.

Due to these reasons, Starbucks failed to grab attention from Australian after introducing coffee shops. However, the mentioned company has the potential to enhance their sales growth in Australia by introducing organic food and drink products in the future. The reason behind this statement is underlined in the adjoining paragraph.

Market potential and potential problem

Figure 1: Market growth of the organic food market

(Source: Mordorintelligence, 2021)

With the growing concern towards consuming healthy food and drink products, the organic food market has been expanding rapidly. Organic food and beverage sector is expected to increase at a CAGR rate of 16.44% from 2020 to 2025 respectively (Mordorintelligence, 2021).http://BU7411 International Marketing Strategy Every business organization operating across food and drink sectors are focusing upon including organic food products in its existing menu items to enhance their sales growth across the target market.

These growing consumer demands can serve as beneficial for Starbucks to enhance their growth and profitability rate in Australia in the future. However, Starbucks would be required to offer some unique organic-based food and drink items that could serve as beneficial in terms of gaining attention from target customers over its existing market competitors (Bai et al. 2019). http://BU7411 International Marketing StrategyAdditionally, Starbucks need to change their marketing strategy in such a way so that they could serve as beneficial for them in terms of promoting their service and products in front of Australian customers before they expand in the future.

Conclusion

In relation to the above discussion, marketing strategy is found to be an effective way to analyze the cultural difference along with customer behaviours across the target market before expanding product, service, or business.

The discussion also highlights the certain reason for which Starbucks failed to gain success across the Australian market. In addition to this, it has also been seen that Starbucks needs to change their marketing strategy as the coffee culture in the US is found to be completely different from Australian culture.

It can be recommended that Starbucks can adopt the cost leadership strategy in terms of meeting demands and expectations of Australian customers at an affordable price in the future (Refer to Appendix).

References

Afkhami Ardakani, M., Rajabpour, E., & Mollaei, A. (2020). Investigating and Explaining the Relationship between Organisational Culture Evolution Based on Denison Model and Entrepreneurship in R&D Organisations. Journal of Standard and Quality Management, 10(2), 1-18. Retrieved on 21 May 2021 from http://www.jstandardization.ir/article_120884.html?lang=en

Arora, A., (2019). 3 Reasons Starbucks Failed In Australia. [Online]. Retrieved on 21 May 2021 from https://medium.com/@arora.abhi/4-reasons-starbucks-failed-in-australia-f9efb125faeb

Bai, L., Wang, M., & Gong, S. (2019). Understanding the antecedents of organic food purchases: The important roles of beliefs, subjective norms, and identity expressiveness. Sustainability, 11(11), 3045. Retrieved on 21 May 2021 from https://www.mdpi.com/2071-1050/11/11/3045/pdf

Hofstede-insights, (2021). What Is The Relationship Between Strategy And Company Culture?. [Online]. Retrieved on 21 May 2021 from https://www.hofstede-insights.com/country-comparison/australia,the-usa/

Mordorintelligence, (2021). Organic Food And Beverages Market – Growth, Trends, Covid-19 Impact, And Forecasts (2021 – 2026). [Online]. Retrieved on 21 May 2021 from https://www.mordorintelligence.com/industry-reports/organic-food-and-beverages-market

Song, R., Moon, S., Chen, H. A., & Houston, M. B. (2018). When marketing strategy meets culture: the role of culture in product evaluations. Journal of the Academy of Marketing Science, 46(3), 384-402. Retrieved on 21 May 2021 from https://www.researchgate.net/profile/Reo_Song/publication/314347217_When_Marketing_Strategy_Meets_Culture_The_Role_of_Culture_in_Product_Evaluations/links/5be5b1f192851c6b27b29334/When-Marketing-Strategy-Meets-Culture-The-Role-of-Culture-in-Product-Evaluations.pdf

Turner, A., (2018). Why there are almost no Starbucks in Australia. [Online]. Retrieved on 21 May 2021 from https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-failure.html#:~:text=Starbucks%20didn’t%20fit%20Australians,company%20to%20close%2061%20locations.