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Australia is among the major coffee consumers of the Oceania region. The preference for instant coffee over freshly brewed makes Australia unique in the coffee market. Statistics show that 75% of Australian coffee consumption in a year is instant. Over the past few years, the Australian market has seen tremendous growth in the café and coffee shop sector (Coffee Market. n.d). This growth has been attributed to the quality and vibrant coffee culture.
However, despite this, a strong growth prospect, Starbuck which is a major industry player in the coffee sector has not performed well in the Australian Market. Failure by the American giant coffee chain to crack the Australian market has been attributed to various reasons such as flop to impress the Australian by their coffee culture (Mescall, 2008). Starbuck as multinational did not take into consideration the unique cultural and preference in the coffee sector of Australian market (Chen & Hu, 2010). The market is characterized by a strong espresso-based coffee culture. The other problem that Starbucks faced in the Australian market is staff difference. Many Australian saw them as lacking sufficient product knowledge. Other factors that have contributed to the brand poor performance in the market include product taste and pricing, advertisement, market understanding and coverage (Mescall, 2008). Given the current situation, Starbuck needs a new marketing plan to gain more market share in the Australian coffee Industry.
II. MARKETING GOAL
Starbucks vision is to be a premier purveyor that serves the finest coffee in the entire world while maintaining a set of principles that guides it in achieving this vision. It also aims at growing in the coffee sector sot that this value is replicated across the world (Hartmann, J. 2011). It is evident that Starbuck has achieved some of this component of its marketing goals in various markets. However, in the Australian market, Starbucks is set to become the finest coffee provided in the country. Also, the firm is yet to attain the coffee culture of the country that will give it market leadership. Regarding growth, the brand needs to grow have sold some of its shops in the market. This means that the firm lost a considerable portion of its market share that needs to be regained. The aim is to achieve 50% market share in the country by the end of the year 2022. The current percentage held by coffee chains stands at 5% with 95% being held by independent shops and cafes (Patterson, Scott & Uncles, 2010). Starbuck aims to change these statistics.
III. MARKETING STRATEGY
To succeed in the Australian market, Starbuck will refocus energy on three segments namely: the young generation, middle-aged working class, and children & allergens clients (Wong, 2014). However, the main target segment will be middle-aged working class. This class is made up of young adults who have just cleared university and started working to those in the early forties. They have little responsibility for leaving them with a considerable amount of income to spend. They like their coffee on the go in the morning but can create time to sit down with friends after work. This segment has enough disposable income to spend and therefore is the backbone of the Economy. By developing products that meet the need of this segment, the company will not only grow its market share but also revenue value.
Starbuck should develop coffee shops that will cater for those busy executives who like their coffees on the go. They should have an express counter where they orders will be served in less than five minutes. On the other hand, those who want to hang out with friends or family should also find the shop friendly and with great ambiance. They should have enough waiter staff that is knowledgeable regarding products. The kitchen staff must be able to meet the specific demands of the customers and even exceed their expectation.
This hybrid approach will enable Starbucks to serve both on the go customers as well as the sit-in ones.
The other strategy that Starbucks needs to succeed in the Australian market is a culture change, by targeting the young generation; the company should be able to position its product as an alternative to the much liked espresso-based coffee that is popular in the market (Wong, 2014). Young people are known to like experimenting with new products, which gives Starbuck the opportunity to break the dominant coffee culture and penetrate the market with its unique products.
IV. MARKETING TACTICS
Regarding marketing tactics, the firm should use the four Ps approach. According to the model, Product makes the first P. According to Starbucks product philosophy, the firm is out to inspire and nurture humans. This is supposed to be achieved through offering quality products that lift up their spirit. This attitude is supposed to be implemented by targeting one person with one cup with the aim of capturing the whole neighborhood (Patterson, Scott & Uncles, 2010). Starbucks strategy of achieving its guiding principles of creating a spirit-lifting experience is achieved through its different products. These products include both hot and cold beverages, healthy snacks that are meant to be taken with coffee and the other cold beverages. For hot beverages, the company must adapt to the coffee culture of Australia and provide instant coffee as one of its options. This will ensure that it has a competing chance in a market that is culture-specific regarding products. The instant coffee product will help the firm to penetrate the traditional Australian coffee market (Adams, 2012). The company will use its other products to attract the young people who are always eager to try out new products in the market. For those customers who are health conscious, Starbucks will reach out to them through low calories beverages and snacks. Also, the company serves its customers who are allergic to any ingredients used in its products through its Food Allergens section. The young children will be served through the kid’s menu that takes into consideration their special health and tastes. This will allow it to serve all its customers without putting their health at risk.
In various markets, Starbucks has operated under the premium brand that comes with its reputation as a market leader. However, in Australia, the premium brand tag led to its rejection, as the market preferred independent coffee shop to the established chain brands. This means that the company faces stiff competition from these shops whose prices are affordable (Gargano, 2014). The company also needs to fairly price its products so that it can effectively compete with the other brands. There must be a balance given that the firm targets both the established middle class and young adults who are mostly students. This will demand drastic adjustment given that the company operates as a premium in most of the markets across the world. The company should further use its economies of scale to ensure that its prices are very competitive in the market (Chernev, 2015). This will help it to deal with the stiff competition that is present in the market.
For Starbucks to succeed in the Australian market, it must get its outlet location across the country right. Given its target market of the middle class, the best places to establish outlets would be malls and, main markets and entertainment centers (Mescall, 2008). This will help the company to serve high-end families that frequent these places. The other target market should be industrial parks or office building. The company should locate an outlet in one of these areas that will serve the executives that work in these areas and would love to have coffee and a bite on the move. It will also cater for those who would like to sit down after work to relax and enjoy the ambiance that the environment provides. The company should consider using stores under license to help it take advantage of the independent stores that are already established in the market. The company should further take advantage of areas that have high student population such as universities and other colleges to establish outlets that offer products that are gear towards the students.
One of the reasons why Starbucks has not been able to capture the Australian market is lack of aggressive promotion. The company relied on its international reputation and failed to take deliberate measures to promote its presence in the Australian Market. The company will develop a robust promotion campaign that will include the use of different media platforms to create awareness among consumers (Adams, 2012). The company will use print media, TV and radio to offer its unique products as an alternative to the popular Australian coffee culture. It will also use the platform to reach out the young people to try out its products that offer them a different taste than what they are used to enjoying. Also, the company will ensure that its employees are highly trained and they understand the Australian culture that is different from other countries where the company operates.
Adams, B., Hayes, R., & Lampe, R. (2016). Unmoved by Chains: Entry and Exit of Australian Coffee Shops.
Adams, J. (2012). Australia's American coffee culture. Australasian Journal of Popular Culture, 2 (1), 23-36.
Chen, P. T., & Hu, H. H. (2010). The effect of relational benefits on perceived value abo ut customer loyalty: An empirical study in the Australian coffee outlets industry. International journal of hospitality management, 29(3), 405-412.
Chernev, A. (2015). The marketing plan handbook. Cerebellum Press.
Coffee Market. (n.d.). Retrieved Jan 6, 2018, from http://www.maketradefair.com/assets/english/CoffeeMarket.pdf
Gargano, S. (2014). Cafes and Coffee Shops in Australia. IBISWorld Industry Report H4511b.
Hartmann, J. (2011). Starbucks and the third wave. Coffee: Grounds for Debate, 166-183.
Mescall, J. (2008). Starbucks in Australia: where did it go wrong? Unleashed, 7 August.
Patterson, P. G., Scott, J., & Uncles, M. D. (2010). How the local competition defeated a global brand: The case of Starbucks. Australasian Marketing Journal (AMJ), 18(1), 41-47.
Wong, V. (2014). Starbucks Has An Australia Problem'. Businessweek.com.
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