Marketing Strategies for Starbucks Coffee in Pakistan and India - Case Study Example

Independent Research Study A B S T R A C T This report focuses on one single product which can be introduced in two different markets which do not exist yet. This means that the product must be able to attract these two separate markets through different marketing strategies and cater their needs accordingly. The research involves around studying Starbucks Coffee in detail and formulating two different marketing strategies which would aim to cater the needs of two separate markets of Pakistan and India, hence creating two different perceptions (McQueen 1992, Alam & Karim 2006) Independent Research Study With an aim to provide the best quality product to its customers, who are placed before the product itself in the eyes of the company, Starbucks coffee has the reputation of serving the best coffee worldwide. Since it was established, is has developed into more than just a coffee outlet. It is now available at local grocery stores at its home country and its stores have evolved from traditional cafés into a place where one can work and as well as relax during work. It even incorporates the concept of music stores, cyber cafés and entertainment spot where one can here one can sit back and not just have coffee but also freshen up.. With its aim to keep their customers entertained, Starbucks has remained successful in retaining its customers (Starbucks 2008 Fellner 2008, Goldstein & Behar 2007). For a product to enter two markets it must have multiple uses and must be able to satisfy the needs for both the markets without changing or altering the product itself. Moreover, the product itself must be so strong that it manages to create the need for itself and stimulate a whole new market, satisfying not only a given set of needs but also creating new ones and satisfying them too. Likewise, the markets of Pakistan and India remain untouched by Starbucks mainly because it might not have noticed that the need for such a place where people can sit back and relax over a cup of coffee and also enjoy various diversities, exist. The markets of India and Pakistan are such that the majority of the population belongs to the Social Economy Class C, D and E. The existing fast food chains in both the markets such as McDonalds, K.F.C, Subway etc, are traditional restaurants which only tend to serve food and do not offer what Starbucks stores do worldwide. These two different markets differ from each other in their preferences of coffee over tea. Indian markets, with ever increasing population gives all the businesses an opportunity to expand their operations because ever increasing demand for every kind of commodity in the near future would be safe to assume. Not only this Indian markets tend to prefer coffee over tea especially the young generation irrespective of what Social Economic Class they belong to (which is the majority of India’s population). Pakistan however does not have a market as such. There are only niches whose needs are satisfied by local cafes or through home-made coffee. Moreover, the coffee trend in Pakistan is somewhat uncommon among the majority of the market. This could be one of the reasons why Starbucks doesn’t have any outlets there. Starbucks did however plan to expand to India in 2004 which clearly shows that there is a potential for Starbucks to enter the scenario and create its market there. (McQueen 1992, Alam & Karim 2006). Currently, Starbucks tends to attract those people who look for some sort of leisure or escape during work, which they can find at their stores. In the markets quoted above, the masses tend to look for some social interaction amongst each other rather than enjoying a kicked back environment. As for the niche markets in these two different markets are concerned, they have the perception close to the western markets. They therefore, with the absence of something like Starbucks, are not able to satisfy their need of such a place which can help them relax and forget about their work for some time. Moreover, these niches are the rest of the people belonging to Social Economic Class A, B and C in some cases who usually prefer coffee over tea on a daily basis (McQueen 1992, Chandra 2008 & United States 1990). This need is not recognized by the locals there who have not done anything about it so far, leaving that segment of both the markets untouched. Even though there are some local small cafes which serve coffee but none of them have market offerings which Starbucks possesses. Coffee with fun and giving importance to the customer on a personal level which makes him/her emotionally attached to it and come back for the friendly environment. There is an immense opportunity for Starbucks to enter these markets. Not only would it be able to help people realize their need of such a product but would also be the first one to do so hence giving them a better chance to create a market of Starbucks on their own and gain and retain loyal customers. (Alam & Karim 2006, McQueen 1992, Coale 1982 Chandra 2008, United States 1990 & Gilbert 2008). Starbucks can ensure a stable market in both Pakistan and India especially if it starts placing its outlets in commercial areas and near the offices where people would stop by to take some time off form work or shopping or just to have coffee. Moreover, Starbucks’ enormous worldwide Brand Equity would enable it to attract coffee buff people who would prefer to have Starbucks coffee on a daily basis. The target market will not be as strong as it is in other countries but Starbucks can secure a larger market as compared to other multinational fast food chains already operating there, such as McDonalds, K.F.C, Dunkin Donuts etc. This is because e Starbucks will not have strong competition as such and the most it can face would be from Café Coffee Day and other local cafés. Moreover, Starbucks can also become a famous hang-out spot for the youth of these two markets, who would not only enjoy coffee but would also find source for some entertainment, which no other coffee place or a café has been able to offer. Although this market seems to be niche, but when we look at the demographics of these two countries, it would show us that these niche markets would turn out to be a population of millions because both the markets have almost 60% of its total population belonging to the age group 15 to 45. This means that there is a huge market left un-catered (Peck 1999, Nash 2000, Cadogan 2009). What seems to be the basic reason for Starbucks not entering such lucrative markets is the security threat imposed by the environment of these two countries. Moreover, Starbucks had delayed its plan to open its retails stores in India due to non-compliance with Indian Foreign Investment Promotion Board and Commerce Ministry’s requirement of proposed Equity Structure. However, there hasn’t been any development after Starbucks’ application was rejected in the year 2007. India, emerging as a vibrant free-market economy, rejecting its conventional Socialist attitude has allowed many private businesses to flourish. Business seems to be growing and India can now be termed as one of the fastest growing economy of the world. Pakistan on the other hand, has a greater number of workforce working in the tertiary sector than ever before, hence leaving more disposable income for the people. With non-availability of international standard products, leaves a wide market for Starbucks to capture (Ferrell 2004, Yannopoulos 2007, Schnaars 1991 & Starbucks 2008). As Starbucks is already a giant in the worldwide coffee market, its logo and the name would be enough to attract huge number of people. Starbucks need to make its advertisements in such a way that would appeal the consumers. Its advertisements must create the need first. As quoted above, there is no such place for people to enjoy coffee and a vibrant environment where many things are going on to keep the customer entertained; its advertisements must aim to portray the need for people to be able to enjoy what Starbucks is actually offering (Michelli 2007 & Starbucks Coffee Company 1994). The most suitable advertisement would be which would contain the message of peace and some time out from work. Moreover, Starbucks would need to analyze what sort of target market it aims to attract. If they want the working class people to get attracted towards Starbucks, its brand image in that market would have to portray the brand personification of a working class individual. If there are more youngsters in the market, the advertisements must have a brand personification of young people. Secondly, as both the markets appear to be homogenous, they are not. Coffee trend is more famous in India as compared to Pakistan. Most people in Pakistan, excluding Social Economy Class A and B, tend to have coffee only occasionally. The advertisements in this situation need to be more aggressive if it tends to come under the Top Of Mind category of Brand Awareness. Secondly, what other way for Starbucks is that it can position itself as a brand for the whole family, advertisements of which would show a happy family going on to have coffee especially at Starbucks during any given evening (Thorelli & Becker 1980, Walker 2008, Melewar 2010). Other promotional activities Starbucks can undertake is by placing billboards and tickers, through print media and televised advertisements.The marketing strategy for Starbucks would be to generate Primary demand in Pakistan as there isn’t a coffee trend as such which would lead the consumers to automatically go for Starbucks. With a huge market and moderate awareness, Starbucks would need to create a market for their product hence making sure that the message which they plan to convey to the audience is effectively received and understood. The Indian market however, which is already neglected, just needs to have access to the product. Starbucks just needs to make it available for the people in India. The four Ps of the Marketing Mix of Starbucks marketing strategy would revolve around the Place, Promotion and Price factor when it comes to positioning itself amongst the less affluent (Peck 1999, Cadogan 2009 & Starbucks 2008). Placing Starbucks would be according to the geographical location of the target market. Market research needs to be carried out to make sure that the market consists of working class who’d look for Starbucks to relief their tiredness (India most likely) or youngsters or families looking for a nice hang-out spot (Pakistan most likely). Starbucks can even open multiple outlets to cater both the segments stated above in both the markets and make it available near offices, commercial areas or malls etc. The Promotion would include dealing with Media Buying houses for advertisements, placing billboards and tickers to make people aware of the presence of Starbucks (Dann & Dann 2007, Fifield 1998 & Constantin et al 1976). The pricing would be the major determinant of the type of market Starbucks need to cater. A moderate price would imply that people belonging to the middle class would most likely be visiting the stores whereas a high priced product would attract the elite. Moderate prices in India would be most feasible because of the presence of a high coffee trend. This would result into more people showing up at the stores. Low prices in Pakistan however cannot be feasible because the coffee drinkers are less in number. A high price would attract the elite to the stores but prevent youngsters and students from visiting the stores with a total of $1027 per capita income of the country. Like the franchises already operating in Pakistan, such as K.F.C, McDonalds, Pizza Hut etc, the prices should be slightly lower than high because this would enable the youth at some extent to afford Starbucks on a regular basis (Michelli 2007 & Starbucks Coffee Company 1994). Bibliography Top of Form ALAM, M., & KARIM, M. (2006). Changing Demographics, Emerging Risks of Economic-Demographic Mismatch and Vulnerabilities Faced by Older Persons in South Asia: Situation Review in India and Pakistan. ASIA PACIFIC POPULATION JOURNAL. 21, 63-92. 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