Global Marketing

Starbucks in China (2/2)

Some weaknesses

Firstly, the efficiency of organizational structure is not sufficient. For any enterprise, it is a challenge to manage so many stores uniformly and efficiently in China. Moreover, Starbucks relied on getting the original agent to unify and integrate the Starbucks stores in the Chinese market. At present, Starbucks still does not achieve 100% of the equity control of Chinese Starbucks stores. It just has the operational management rights of most of China. It can be imagined that Starbucks needs to take more effort to coordinate and manage in different regions, when it faces to different joint venture partners. In addition, because the expansion of Starbucks's global model has four different parts of the business model, which lacks a unified management model and operational platform. And Starbucks's management team, come from the United States, is obviously not fully familiar with the Chinese economic and legal environment, it will take considerable time to adapt these differences.

Secondly, the supply chains management. Starbucks intends to use its own unified logistics center to manage the original suppliers and transportation, which is a huge challenge for Starbucks logistics center. Most challenges are not only on the efficiency, accuracy and professionalism of the cluster management, but also on integration pressure of different inventory management approaches in different parts of the market.

Thirdly, the pressure of capital chains management. The speed of opening additional stores too fast will inevitably affect the Starbucks’ capital chain, which also will affect the company's cost control and financial decisions.

Coffee, tea and ice cream competition

In China, the speed of the revival of the tea house is equally amazing, although it has not produced a giant chain brand. Some cities inherit a traditional tea cultural heritage, such as Guangzhou, Chengdu and Suzhou. For “Western” Shanghai, all kinds of the tea house were booming in the past 15 years.

Ice cream shops also have charm to attract the young. For instant, Haagen-Dazs, a very general ice cream brand in the USA, becomes the consumption of high-end ice cream brand after entry into China. Although the taste is not really consistent with Chinese taste buds, some people also choose it to show fashion. Every summer and mid autumn, these ice cream stores always introduce some innovative products and mooncakes to attract a large number of consumers and stimulate their purchasing power.

The future strategies

Enhance the training of employees and the influence of culture. Because Starbucks’ marketing strategy core is culture, it means emotional marketing. One of Starbucks's foremost competitive strategies is to communicate with customers in the coffee shop. As the public face of the Starbucks, the employees are media between the enterprise and the customers, so communicating between the staff and the customers is the most important. Service persons should know the customers’ needs, when staff explains the different tastes and aroma of coffee, a bold eye contact with buyers is needed.

In addition, Starbucks could strengthen the relationship with customers through the customers’ comments. Howard Schultz said “We are not in the coffee business serving people, but in the people business serving coffee. The equity of the Starbucks brand is the humanity and intimacy of what goes on in the communities… The Starbucks environment has become as important as the coffee itself.”

Moreover, Starbucks should continue to spread and experience, increase consumer awareness and professionalism of coffee, and word of mouth to bring new customers.