Starbucks Target Market Selection

Starbucks Target Market Selection

Nowadays, the world is going to be flat, and we live in economic globalization.   Many multinational corporations want to extend market internationally especially, food chain companies. Recently, many food companies are trying to extend into the potential market such as Asia, Southern America, etc. China is one of the potential market and China’s economic situation is stable, and its economy has been developed. The number of growth rate is increased rapidly. The China has opened countries more than 30 years. This could lead China to become one of the largest word’s trading nation. Western culture has been influencing many new generations in China. Much Chinese have been learned and thought in western style. They have more desire and are able to enjoy the western food. Then, many multinational foods companies, such as KFC, Starbucks, and companies see the opportunities in the Chinese market. The sizes of market and growth rate of the economy in China bring many multinational companies, and they implement many strategies to attract Chinese customers. However, as one of oldest countries and China has a long history. It is not easy for western to adapt and do business in a complicated situation. There are many companies fail in Chinese market due to wrong strategy and lack of understanding the culture such as Dunkin, Burger King, etc. There are few companies could service, and they could extend market successfully. Starbucks is one of most successful coffee chain companies. It was founded in 1970, Seattle, US. Starbucks sell many types of coffee and other related beverages. Starbucks firstly expanded market internationally into Japan, Tokyo in 1997. In 1999, Starbucks entered into the Chinese market. After more than 12 years, Starbucks has successfully opened more than 700 stores in 48 cities. As this data present, Starbucks is reasonable to achieve their success. This paper would explain why Starbucks such successful in China by researching present environment and background in the 90s in China. The approach would base on PEST and SWOT analysis.

Starbucks is an American coffee company and coffeehouse chain. It operated in Seattle’s Pike Place Market, Washington in 1971 by three partners Jerry Baldwin, Zev Siegl and Gordon Bowker. They got the idea from Alfred Peet. The three were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans (Sacks, 2014). The store initially sold just coffee beans and coffee making equipment rather than the drinks they have become so famous. At the start, Starbucks logo was originally woodcut style image of a two-tailed mermaid, but it changes a lot over time. The original traditional design is the mermaid with bare breasts, but now it is more stylized, and her hair covers her body. The name comes from Captain Ahab's first mate in the classic novel Moby Dick, who was named Starbuck (Coffee, n.d.). Starbucks actually developed from the 1980s. During the 1980s, total sales of coffee in the US were decreasing, but sales of specialty coffee increased forming 10% of the market in 1989, compared with 3% in 1983. Starbucks operated six stores in Seattle and had only just begun to sell espresso coffee in 1986 (Mark, 1989). At the same year, Howard Schultz was hired as director of retail operations of Starbucks and he came out an idea to sell drinks rather than just selling coffee bean and coffee making equipment. However, he did not convince the owners. One year later, Schultz stars Giornale chain of the coffee bar on his way. The owner of Starbucks sold Starbucks chain to Schultz; he renames Giornale coffee outlets as Starbucks. Starbucks began building their goal empire since Giornale acquired Starbucks Corporation, it is an important event for Starbucks and has a great influence on Starbucks expansion. Over the course of its history, Starbucks has bought or acquired companies like Peet's and Seattle's Best Coffee, and took over many locations of Coffee People and Diedrich Coffee stores (Coffee, n.d.). ‘In the 1990s, Starbucks started their rapid expansion throughout the United States. They expanded their headquarters in Seattle, built new roasting plants, and started opening new stores in major cities nationwide. They took steps to grow the business by negotiating contracts to serve Starbucks coffee with United Airlines, Nordstrom, Barnes & Noble, and Sheraton Hotel. They also made efforts to expand beyond the continental U.S., opening locations in Hawaii, Great Britain, Japan and Southeast Asia” (Hubpapers, 2012). It was offering stock options to employees and went public, and a star to enter the stock market in 1992. Starbucks became to enter into the foreign market since 1996, The first Starbucks location outside North America opened in Tokyo, Japan. Two years later, Starbucks entered into the Europe market; It entered the U.K. market with the $ 83 million USD acquisition of the then 56-outlet, UK-based Seattle Coffee Company (Nytimes, 1999). In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia (Christine, 2013). However, Starbucks failed to enter into eateries and converted to Starbucks cafes. At the same year, Starbucks made a decision to enter the Chinese market, it opened the first store in Beijing, China. In September 2002, Starbucks opened Latin America marker. Its first store in Latin America is in Mexico City. Currently, there are over 500 locations in Mexico. Now Starbuck opened more than 2,100 stores in more than 100 cities and had over 25,000 partners. Starbucks makes a great success in the Chinese market; there are some important events that how Starbucks expand to the Chinese market. Starbucks star to enter into Chinese market since 1999, and it launched a local product, green tea frappuccino, which was a hugely successful product. It established a base development for Starbucks company in the Chinese market. The company launched the first local coffee bean product after celebrating the tenth year of entering the China market. One year later, it launched nine kinds of Starbucks Tea. Starbucks take part in a lot of charitable atrocities in China which makes the band well known to the public. Now it opened more than 2,100 stores in more than 100 cities and had over 25,000 partners (Starbucks, 2016).