Buyer Behaviour and Integrated Marketing Communication-Starbucks goes to India - Literature review Example

BUYER BEHAVIOUR AND INTEGRATED MARKETING COMMUNICATION (Starbucks goes to India) The American Association of Advertising Agencies (AAAA) defines IMC as: 'a concept of marketing communication planning that recognizes the added value of a comprehensive plan that evaluates the strategic role of a variety of communications disciplines - for example, general advertising, direct response, sales promotion, and public relations - and combines to provide clarity, consistency and maximum communication impact (Schultz 1993a)'. Key Situational Factors: Starbucks is indeed an Internationally acclaimed brand of coffee and some other beverage products. Founded in 1971 in Seattle's Pike Place Market today it has its presence in 36 countries outside United States, Offering more than 30 blends and single origin coffees, hand-crafted espresso and blended beverages. The mission statement says, "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow." And towards this goal, Starbucks has decided to explore the Indian market. Having established itself in many parts of the world, the company now wants to expand its network in India. To go ahead with this task, a detailed customer profile is required depending on the targeted segments because in general, as a long term strategy, customers are segmented based on their demographics, marketing habits etc. India is the largest democracy and has the 'distinction' of having population levels second only to China. Present youth profile gives a clear impression that the youth of the day believes in hanging out with the friend circle after a day long school/ college/ work. The burgeoning IT enabled services sector, outsourcing, and the call centre phenomenon is giving plenty of opportunities as well as good amount of spare bucks to spend, to the youth of the day. Call centres have been one of the growth triggers as far as an increase in coffee consumption is concerned. Earlier a coffee house's customer was limited to individuals who worked daytime hours, but no more, now we've the night life as well in coffee houses, religiously followed by the neo-rich group of professionals who work a night-time shift. Need for a venue to socialize with others of their age who share their interests comes in handy for a coffee house. Besides the youth, other working class and couples can also be a target market for Starbucks in India. There are competitors like Barista, Cafe Coffee, Cafe Mocha etc. And some of these brands do have good international presence as well. Having well familiarized themselves with the Indian terrain and coffee habits, these brands will prove to be a force to reckon with. Moreover, at times, for a change, the customer in India relishes to enter a coffee house and look for beverages other than coffee and some other eatables. Therefore Starbucks needs to plan its strategy accordingly. May be it can think of having a tie-up with some other established brands like Pepsi, Coke etc. for the presence of their products within its premises. Company-operated retail stores accounted for approximately 84% of net revenues during fiscal 2004. Possible Target Markets Vs Objectives: Starbucks Coffee shops sells a variety of coffee and tea beverages along with different types of pastries, confections, and baked goods, coffee-related accessories and equipment. The coffee shops provide customers with a pleasant place to come and relax, study, work, or have business meetings. Starbucks goal is to become a leading retailer and brand of coffee in each of its target markets by selling the finest quality coffee and by providing superior customer services. It therefore needs to take stock of Internal as well External factors which drive its urge for entering Indian Coffee space. Internal factors are of course the strengths of the company while external factors are compiled after doing an environment analysis. Factors must not be looked into 'in isolation', but one particular factor may have a spillover effect on couple of other factors and vice-versa. All such permutations and combinations need to be taken into account while preparing for an expansion strategy. Youth: This segment is the most lucrative one for any coffee house. Starbucks has a two fold challenge at its hand, first, to popularize itself amongst the youth and second, to wean away a chunk of market from competitors. While inviting the loyal customers of other brands the company must keep in mind the sensibilities and must respect the marketing ethics expected of an international brand. This particular segment is the biggest segment of coffee lovers. Easy accessibility and customer service excellence are the key driving forces behind any successful business. Families: Indians believe in having a joint-family system. In such a system, head of the family is an elder person, who is respected by other members within the family. Contrasting it with a nuclear family, a joint family comprises of the couple, their parents kids, brothers, sisters etc. The family at times feels the need for a day out. Therefore some thought must be given to this segment as well. While youth and young couples prefer to have some private moments in the coffee house, a family requires an open area for kids to have a look around. The Starbucks Coffee Company must customize their menu to fit the tastes of the Indians. While catering to this segment it is very important to take note of local sensitivities like, days of fasting in a week, not much emphasis on non-vegetarianism. Some eatables which people relish in Europe and USA might be taboo in India because of religious sensitivities. The Formal class: It comprises of top company executives planning a deal around a coffee table. This segment prefers a silence zone separate from other party animals as they are supposed to talk/ negotiate/ discuss couple of complicated issues. This segment requires utmost attention and playing with their sensibilities may prove to be costly. This class would like to have wireless Internet connection as well, so that the laptops become office like companion. There is also a class of customers who prefer to be called intellectuals and they keep discussing any issue under the sun, with a sip of coffee. They keep sitting on the coffee tables for long duration and talk and talk. Tourists: Besides the above-mentioned primary markets, the secondary target market comprise of tourists in the subcontinent. A Tourist when discovers his/ her favorite brand in a foreign land he the nostalgic feeling brings him closer to the brand. Many of the tourists are from Europe and America, therefore Starbucks can definitely plan for this segment as well. While targeting the respective customer segment the following six guiding principles of Starbucks will help in their endeavor; Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success. How to go about it: Having planned the foray into Indian market, now comes the all important part of actually getting on to the mission. To start with; Starbucks must start locating the latest on the part of competitors: For a successful venture the company must have all the relevant details and strengths and weakness of the competitors. Knowing one's own strengths is quite an easy job but keeping tab of opponent's strengths is equally important. Areas were the competitors have faced difficulty helps in figuring out opportunities. File an application with the Govt. of India for seeking necessary clearance: A liberalized and open economy since 1991, Indian market has become quite easier to access, but still there are certain laws of land, which need to be fulfilled. In fact any such expansion requires a go ahead from home country as well. Therefore necessary clearance from US agencies is also a must. There are certain environmental undertakings that have to be given. Starbucks already has a environment mission statement in place will help the matters. File a request with the respective state/ city administrative agencies: The city or state administration where Starbucks plans to start has to be taken in confidence as well. The fact that Starbucks main target customers happen to be youth, makes it all the more necessary to start the business near a happening place. For example there are a number of outsourcing agencies in Delhi, Mumbai, Bangalore, Hyderabad make these locations much more suitable. So, a nod is required from respective city administrators. Starbucks plans to target the software/ call centre professions working round the clock therefore, additional permission is required for night time operations as well. Keep judging the strategies of competitors: All this while Starbucks must keep an eye on the next move of competitors, for the simple reason that once they come to know about the landing of Starbucks in India they'll behave differently. Identifying the suitable media and methods: Print and Electronics are the two potent sources of publicity. Though an internationals brand, yet Starbucks is not known widely in the Indian market. To establish a brand amongst prospective customers, media is a potent weapon. Print media helps when the company has sufficient time for actual launch. Company can look for an to coincide with the launch. Print media campaign could be started when all preparations are on and the company has about a month to go. As part of print media campaign, it helps to start some familiarization contests, quizzes etc in couple of English dailies as well as some vernacular dailies. This way the company gets to know the initial feedback as well. Approaching directly to the prospective too helps. For this the company will have to coincide the launch with some youth festival, college festival etc and not to make it during the examination season. Electronic media, a very potent weapon, has to be used judiciously. Too much exposure in the beginning itself may not be from strategy point of view. Unlike Print media campaigns, Radio jingles and Television commercials consume lot of time in preparing the actual media copy. At the same time, electronic media campaign must have a foresight to it, for example the commercial indicating a winter season must not be released after the winter season is over. This makes the media copy outdated. It always helps to invite journalists and explain to them 'why Indian customer should go for a change now' and rely on Starbucks for a coffee break. Pricing strategy: Pricing is indeed a very crucial factor for any product. It cannot be priced too high as compared to competitors, for obvious reasons and it cannot be priced too low for the fear of being termed a low quality product. Some of the pricing strategies for a product like coffee are; Penetration Pricing: The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is suitably increased. Economy Pricing: This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. It helps in gaining an easy access Promotional Pricing: Keeping low Prices to promote a product is a very common application. This is also called invitational pricing. It will be better for Starbucks to start with promotional pricing as the company is readying itself to play a long innings here. Planning Media Campaigns: To leave a message in the minds of prospective customers the messenger has to be someone with whom the prospective customer can identify himself. Youth basically loves to identify himself with Sports stars and Film Stars. India is a cricket crazy country. There are a number of cricket players who have established themselves in the cricket arena. The latest one's are Sachin Tendulkar, Mahendra Singh Dhoni, Yuvraj Singh, Rahul Dravid etc. These criketers have plenty of work already in their hands, so they are quite costly as well. But as brand ambassadors they can play a lead role. There are other sports stars too who have a huge fan following like Sania Mirza (Tennis), Narayan Karthikeyan (F-1 Car Racing) etc. Sporting personalities from other countries too can help sending across the message. Indian Film industry is known world over for the sheer number of films produced every year. Some of the film stars are quite popular. For example ShahRukh Khan, Amir Khan, Hrithik Roshan, Aishwarya Rai etc are a rage amongst the film-lovers in general and the youth brigade in particular. Some of the evergreen stars like Amitabh Bachchan who is well over 60, has his fan following not only amongst the youth but almost all segments. Therefore, the advertisement campaign has to be planned accordingly. The strategists at Starbucks must keep in mind that the first impression happens to be a long lasting impression. Hollywood films too have a keen and dedicated following amongst Indian film lovers. So, this option can also be explored depending upon the budget of the company. Besides this, without taking the help of any film or sport star, the company can plan an advertisement campaign with common characters only but with a unique and innovative campaign. To this end the dialogue can be a very funny or with a message which appeals to the masses. This task is better entrusted to some local media house/ advertisement maker. Resources: http://www.sbe.csuhayward.edu/sbesc/1bp04.pdf http://bschool.washington.edu/gbc/2003%20Presentations/Concordia.pdf http://www.starbucks.com/ Read More