Starbucks Keeps It Brewing in Asia

Case 2-1

Consumer Behavior: Building Marketing Strategy

Chenona D. Artis

Dr. Hossein Kamarei

January 14, 2012

1. What are the barriers facing Starbucks as they try to "teach" people to change their consumption habits from tea and instant coffee?

Starbucks is the world's leading specialty coffee retailer with total net revenues reaching a record $3.0 billion, an increase of 7% from the 14-week period in 2010 and an increase of approximately 15% on a comparative 13-week basis (http://news.starbucks.com). Starbucks founder and chairman Howard Schultz and his management team have used a variety of market entry approaches to create an empire of more than 12,000 coffee cafes in 35 countries (Green & Keegan, 2010). As Starbucks continues its quest to pursuit new market opportunities globally they will be faced with many challenges in formulating a market entry strategy into countries such as Asia.

Starbucks has faced several different barriers within the Asian market. One challenge is that government regulations forced the company to partner with local firms (Green & Keegan, 2010). By building this type of partnership, companies that have already established businesses in Asia can provide expertise on the intended market, while the multinational firm is better able to accomplish general management and marketing tasks (www.referenceforbusiness.com). Another challenge that Starbucks faces is that tea is the beverage of choice in China. Tea is a part of China's national heritage, and is strongly embedded in their culture (Hawkins & Mothersbaugh). Tea offers medicinal qualities that coffee does not and those who have tasted coffee are only familiar with the instant variety and have not developed an appreciation for the taste of regular coffee. Economically, China's population of 1.3 billion people reside in the low-income and rural areas. Coffee is expensive and not familiar to the majority of the Asian population, therefore the thought of spending $4 or...