Case Study #1: Starbucks
Case Study 1: Starbucks
1. What are the barriers facing Starbucks as they try to “teach” people to change their consumption habits from tea and instant coffee?
a. China is country with a population of about 1.3 billion people. It is considered a tea-drinking nation rather than a coffee-drinking nation. This is partly due to the benefits that tea is believed to offer, which include medicinal qualities that coffee does not have. As a result, Starbucks has the barrier of tradition in their way. Chinese people are set in their ways with drinking tea and it will be difficult to sway them towards drinking coffee. There is also the barrier of competition including the “fresh-ground” market including coffees from Hong Kong, Canada, the Philippines, and McDonald’s. The Chinese have not appreciated the taste of coffee yet explains one report. At the moment, cheap mixes are popular for time-constrained professionals. Overall, Starbucks will come across many barriers, but how they confront these barriers will determine their success in the Chinese market.
2. To what extent can/should Starbucks customize their offerings to local tastes and preferences? What are the risks of extreme customization?
a. Starbucks needs to find a happy medium for customizing their offerings. Their products need to appeal to the prospective Chinese buyers so there will not be an immediate withdrawal of interest. By conforming to the “yin and yang” concepts, Starbucks can have better success in reaching the market. The product should stay relatively the same, maybe a couple of different flavors matching with the local tastes, but the main alteration should come from the advertising and labeling. This is because certain colors represent different meanings in China then in the United States. Extreme customization presents a risk because altering the product, coffee, completely to the society without intense cultural research could present a large loss for Starbucks. They will have to create new
1. What are the barriers facing Starbucks as they try to “teach” people to change their consumption habits from tea and instant coffee?
a. China is country with a population of about 1.3 billion people. It is considered a tea-drinking nation rather than a coffee-drinking nation. This is partly due to the benefits that tea is believed to offer, which include medicinal qualities that coffee does not have. As a result, Starbucks has the barrier of tradition in their way. Chinese people are set in their ways with drinking tea and it will be difficult to sway them towards drinking coffee. There is also the barrier of competition including the “fresh-ground” market including coffees from Hong Kong, Canada, the Philippines, and McDonald’s. The Chinese have not appreciated the taste of coffee yet explains one report. At the moment, cheap mixes are popular for time-constrained professionals. Overall, Starbucks will come across many barriers, but how they confront these barriers will determine their success in the Chinese market.
2. To what extent can/should Starbucks customize their offerings to local tastes and preferences? What are the risks of extreme customization?
a. Starbucks needs to find a happy medium for customizing their offerings. Their products need to appeal to the prospective Chinese buyers so there will not be an immediate withdrawal of interest. By conforming to the “yin and yang” concepts, Starbucks can have better success in reaching the market. The product should stay relatively the same, maybe a couple of different flavors matching with the local tastes, but the main alteration should come from the advertising and labeling. This is because certain colors represent different meanings in China then in the United States. Extreme customization presents a risk because altering the product, coffee, completely to the society without intense cultural research could present a large loss for Starbucks. They will have to create new