Assignment Sample on U26197 International Marketing
About the company
- Starbucks is the multinational organisation who has the services of coffee houses across the world.
- The organisation has been found to be operating since 1971 (Starbucks, 2021).
- Starbucks has started their business by opening their first store in the streets of Seattle.
- The multinational coffee chain has found to be serving the consumers with coffee beverages, baked goods, smoothies, tea, ice-creams and sandwiches (Starbucks, 2021).
- They have their brand named as Starbucks Coffee Company.
- They are operating internationally and among them the most important three counties in which the company has a maximum number of stores besides their home country are China, Japan and Canada (Macrotrends, 2021).
- Starbucks is a completely consumer-oriented company as they offer products to the consumers along with assisting them if required.
- The organisation has found to be attaining revenue of $26.509 billion in 2019, $23.518 billion in 2020 and $29.061 billion in 2021. Furthermore, in 2018 the company has grabbed a profit of $17.982 billion, $15.823 billion in 2020 and $20.322 in 2021 (Macrotrends, 2021).
- Yes, the organisation is operating internationally. The company has been found to be operating in almost 80 countries in the world (Starbucks, 2021). Moreover, the United States, China, and Japan are the three most important countries for Starbucks as they have the maximum number of stores in those respective countries (Macrotrends, 2021).
About the selected product and services
- The products and services that have been considered are the coffee beverages they serve.
- As Starbucks’s coffee is one of the most famous beverages when it comes to relaxing and relieving stress. The culture and the environment they portray are being loved by the consumer along with the high-level experiences as well.
- Starbucks coffee is being purchased by the consumers who are majorly from the middle-to-upper class population.
- Starbucks has their own stores in different cities across the world and the products are being served directly from there to the consumers.
- The freshly brewed coffee cost $1.85 and iced coffee cost about $2.25 along with this the most loved pumpkin spice latte cost $4.25 (NDTV Convergence, 2021). However, the price of the respective item differentiates as per the size that is being ordered.
- The company sells their product directly to the consumer through their stores.
- The key consumers of the Starbucks product and services are mostly the population who are at the age group of 20-40 years (Auerbach, 2017).
- Starbucks tends to utilize mobile advertising and in those advertisements they offer the specific product which lures the consumers. Starbucks several advertisements follows with several different tagline of “It Starts with You”, “#MorningYes”, “Possible is Just the Beginning” and many more. Their main massage is to inspire the world through their revitalizing cup of coffee.
- The target customers are the middle to upper class people and the reason is that the prices of the products are relatively high and cannot be offered by lower middle-class people.
- In 2019, the company has seen to be increasing their sales by 7.21% but in 2020 it has decreased by -11.28% the reason behind the downfall is due to the rampant of covid-19 pandemic. The population was not allowed to violate the rules of government during that period of time whereas, in the year 2021, the outrage was somehow decreased which has resulted in a growth of sales with 23.60% (Dow Jones & Company, Inc, 2021).
- The upper-class population along with the white-collar professionals is the consumers who are buying the Starbucks products. The company wants its consumers to be educated with an average income of $90,000 (Bowman, 2018).
- The organisation market gets proper due to the target audience which is being constant over the years. With the girth of technology, the Starbucks has attained the audience of 22-60 years that are growing fast (Mellinger, 2019).
- The organisation serves the mode of stress reliever and relaxation with its each cup of coffee. The ambience across the stores is very interactive in compassion to the other competitors. Furthermore, their mission is to inspire the spirit of humans along with nursing them with one cup, one person at a time (Starbucks, 2021).
- SWOT analysis
| Strength
● Brand image ● Growth of respective stores ● Acquisitions
● Quality and efficiency |
Weakness
● High price ● Recall for the products ● Procurement practices ● Imitability in products |
| Opportunities
● Business diversification
● Partnership ● Strengthening challenges in online ● Business expansion internationally |
Threats
● Low-cost coffee sellers as a competition ● Imitation ● Rising coffee beans prices ● Pandemic |
About the Country
- Croatia has been chosen as the target country.
- The population of Croatia is 4070491. It is falling.
- During 2018, the GDP of Croatia was USD 61.38 billion which became USD 60.7 5 in 2019. 2020 recorded USD 56.17 billion GDP which came up to USD 63.4 billion by 2021 (O’Neill, 2021).
- The demographic profile has been stable with slight change over online shopping behaviour over the last 3 to 5 years.
- Per capita income of Croatia was $15014 during 2018 which slightly came down to $14944 during 2019. The previous year recorded $13828 per capita income (Macro Trends, 2021). Wealth distribution is also going down in Croatia with 29.7 during 2018.
- The country is a democracy.
- The main religions include Roman catholic, orthodox Christians, Eastern Orthodox, Muslims, protestants, agnostics, and others.
- The political trend of Croatia is defined with a parliamentary framework with the feature of a representative democratic republic.
- The technology trends reflect mobile technology and mobile commerce, information technology and others.
- Coffee is chosen in this case which is a prohibited and restricted item for importing in Croatia.
- No restrictions are discussed.
- A 25% import tax is charged that could affect coffee imports in Croatia.
- The ownership rule is to comply with the expanded market culture.
- PESTLE
| Political factors | ● Democratic republic features with political stability
● Government restrictions on coffee import |
| Economic factors | ● Rising GDP with USD 63.4 billion by the end of 2021 (O’Neill, 2021)
● Rising inflation rate from 0.7% in 2020 to 1.98 % in 2021 |
| Social factors | ● Unique coffee culture
● Online shopping trend |
| Technological factors | ● Growth of e-commerce technologies
● Preference for information technology |
| Legal factors | ● Occupational Health and Safety act
● The Companies Act 2019 (Legal500, 2021) |
| Environmental factors | ● Environmental welfare through ethical sourcing
● Maintenance of sustainability |
About the Customer and Consumer
- The revenue of the coffee segment in Croatia is estimated to be US$1,152 million. Along with this the market is expected to grow by 4.84%. Moreover, it has been estimated that 76% of the spending will be on coffee by 2025. Furthermore, the coffee segment is expected to grow by 5.3% by the year 2022 (Statista, 2021). Moreover, Starbucks directly deals with their respective consumers, which reveals that the demographic segmentation is B2C.
- Customer persona
| Name of the persona | ● Filip Horvat |
| Background | ● Sales Manager
● Head of the sales management team at ABC Ltd. ● Business oriented person ● Married with two children |
| Demographics | ● Gender: Male
● Income around 25,200 HRK to 32,100 HRK ● Age range: 40-45 years ● Suburban or Urban |
| Identifiers | ● Outgoing and social
● Constantly trying to be active during the office hours ● Active on social media platforms like Twitter, Facebook, Instagram, YouTube ● Addicted to coffee |
- The media habits of the population are quite impressive as 47% of the population is internet users. Moreover, in 2020, there is a sudden growth of 88% in internet usage in Croatia (Gjeri, 2021).
- They have several different coffee shops in their country such as Divas Cafe Bar, Botanicar and many more.
- The Croatian population buys coffee and their culture of cafes connects people along with measuring the value and quality of life.
- The purchasing habits of Croatians are found to be increasing in terms of coffee. The growth of 1.19% has been witnessed in each year from 2015-2019 (Market Research, 2021). The reason behind the growth is the sacred and secret meaning of Croatian culture.
- The price will be much costlier.
- The customer is not different from the consumer.
Competitive landscape
- The main rivals of the coffee market in Croatia include Franck, Anamarija Company.
- Franck has been operating with a 27% market share with cost optimised selling price. Anamarija Company is serving with around 10% market share with cost leadership selling price.
- The market share has been increasing with the positive influence of consumer purchasing behaviour to coffee products.
- Starbucks follows both premium pricing and cost optimised pricing in their home market. The premium pricing should be optimised furthermore by Starbucks in Croatia.
- The rivals are promoting their products through online channels and digital presence.
- The key messages highlight to attract customers by positively influencing their purchase intentions that are almost similar to Starbucks. It is providing an indirect impact to enlarge the credibility of their services and offerings across the Croatian coffee market.
- Porter’s 5 Forces diagram
According to Porter’s Diamond model, the organisational strategy is to comply with both B2B and B2C market segment with a hierarchical structure. Increasing rivalry can be seen in the market with the existence of renowned competitors like Franck and others. The demand conditions have been moderate throughout Croatia for coffee products. The related and supporting industries, in this case, highlight the coffee vending machine manufacturing sector, coffee beans production sector and others. The factor conditions for the Croatian coffee market reflect the existence of unique coffee culture.
Local culture
- The Croatian culture reflects the existence of high power distance and collectivist culture. Femininity has been followed across Croatia with a high uncertainty avoidance index. The long-term oriented culture is adequately followed in Croatia which eventually reflects the existence of a pragmatic cultural belief throughout the society. Moreover, Croatia is also recognised as a restrained country where people’s behaviour is restrained by social norms (Hofstede-insights, 2021).
- The Croatian culture is different to a large extent as compared with the US market. The prime differences, in this case, reflect the existence of masculinity culture in the US with an individualistic approach. The US market also follows a low uncertainty avoidance index with short term oriented culture.
- It has impacted by making a prolific difference in the coffee consumption culture of Croatian consumers.
- No such cultural or religious issues are found that might provide an adverse impact upon the product or service.
- The marketing promotional messages should be used by highlighting a profound commitment from the organisational perspective to comply with the current market consumers’ preferences and current market trends. The establishment of profound communication should be emphasized through the promotional campaign or techniques to be utilised by Starbucks in Croatia.
Marketing mix
- Current route to market
- This is not required to change in the chosen country as both B2B and B2C approaches are noticed.
- 7Ps analysis
| Product | Different types of coffee products |
| Price | Cost optimised and premium pricing strategy |
| Place | Casual brand positioning in the market |
| Promotion | Both traditional and online promotional campaign |
| People | Skilled workers associated with the production of coffee beans and others |
| Process | Ethical sourcing of raw materials and sustainability framework maintenance |
| Physical evidence | Store based existence and online services |
- The product is currently priced with the combination of both premium and cost optimised pricing strategy. This is required to be transformed into only a cost optimisation strategy in Croatia.
- The provision of coffee products is likely to comply with the Croatian consumers’ preferences and tastes with the existence of diverse menu options.
- The product is currently promoted through online channels. This is not required to be changed in Croatia. The context of traditional holdings and paid advertisements might also be considered in this case.
- No such restrictions are found.
Market entry
The attributes of joint venture market entry method are suggested for the expansion of Starbucks in Croatia based on the Doole & Lowe model as it will help the company to control their business and reduce the risk in the new market (Lowe et al. 2020). In this aspect, the company might be able to utilise the resources and consumer base of their partner organisation and nearby positively establishing their market presence. In accordance with IMS model, distinctive chances can be reflected from the perspective of Starbucks by entering into the Croatian market with regards to their operational activities. The preliminary screening and industrial potential of Croatia highlights extended preference of coffee products with a unique coffee culture. Complying with that culture might be beneficial for Starbucks to enlarge their profitability due to which Croatia has been chosen for their expansion.
Reference
Auerbach, R, 2017.How to Reach Your Target Audience: A Lesson from Starbucks and #PSL. [Online] Available at: <https://insights.sternstrategy.com/reach-target-audience-lesson/> [Accessed on 18 November 2021]
Bowman, J, 2018. Who Is Starbucks’ Favorite Customer?. [Online] Available at: <https://www.fool.com/investing/2016/06/16/who-is-starbucks-favorite-customer.aspx> [Accessed on 18 November 2021]
Dow Jones & Company, Inc, 2021. Starbucks Corp. [Online] Available at: <https://www.wsj.com/market-data/quotes/SBUX/financials/annual/income-statement> [Accessed on 18 November 2021]
Gjeri, M, 2021. New media consumption behavior in Croatia: Internet consumption skyrocketed. [Online] Available at: <https://www.dentsu.com/see/en/media-landscape-croatia-2021#top> [Accessed on 18 November 2021]
Hofstede-insights, 2021. WHAT ABOUT CROATIA? [Online]. Available at: <https://www.hofstede-insights.com/country/croatia/> [Accessed 18 November 2021]
Legal500, 2021. Doing Business In: Croatia. [Online]. Available at: <https://www.legal500.com/doing-business-in/croatia/> [Accessed 18 November 2021]
Macro Trends, 2021. Croatia GDP Per Capita 1995-2021 [Online]. Available at: <https://www.macrotrends.net/countries/HRV/croatia/gdp-per-capita> [Accessed 18 November 2021]
Macrotrends, 2021. Starbucks Gross Profit 2006-2021 | SBUX. [Online] Available at: <https://www.macrotrends.net/stocks/charts/SBUX/starbucks/gross-profit> [Accessed on 18 November 2021]
Macrotrends, 2021. Starbucks Revenue 2006-2021 | SBUX. [Online] Available at: <https://www.macrotrends.net/stocks/charts/SBUX/starbucks/revenue> [Accessed on 18 November 2021]
MarketResearch, 2021. Croatia: Instant Coffee Market and the Impact of COVID-19 on It in the Medium Term. [Online] Available at: <https://www.marketresearch.com/Williams-Marshall-Strategy-v4196/Croatia-Instant-Coffee-Impact-COVID-13620175/> [Accessed on 18 November 2021]
Mellinger, B. B, 2019.Who Is Starbucks’ Target Audience?. [Online] Available at: <https://smallbusiness.chron.com/starbucks-target-audience-10553.html> [Accessed on 18 November 2021]
NDTV Convergence, 2021. Starbucks Menu, Starbucks Menu with Price List. [Online] Available at: <https://food.ndtv.com/restaurants/starbucks-prices-and-menu-1793130> [Accessed on 18 November 2021]
O’Neill, A., 2021. Croatia: Growth rate of the real gross domestic product (GDP) from 1993 to 2026. [Online]. Available at: <https://www.statista.com/statistics/348869/gross-domestic-product-gdp-growth-rate-in-croatia/> [Accessed 18 November 2021]
Starbucks, 2021. About Us. [Online] Available at: <https://www.starbucks.co.uk/about-us> [Accessed on 18 November 2021]
Statista, 2021. Coffee. [Online] Available at: <https://www.statista.com/outlook/cmo/hot-drinks/coffee/croatia> [Accessed on 18 November 2021]
