Marketing a New Product: Starbucks - Case Study Example

 A B S T R A C T This report focuses on one single product which can be introduced in a completely new market where it does not exist yet. This means that the product must be able to attract the market through different marketing strategies and cater the needs accordingly. The research involves around studying Starbucks Coffee in detail and formulating marketing strategies which would aim to cater the needs of a new market in India. (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 a new market it must have multiple uses and must be able to satisfy the needs of the markets in which it is entering. 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 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 market of India is 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. Indian markets, with an ever increasing population give all the businesses an opportunity to expand their operations because of the increasing demand for every kind of commodity. Not only this Indian markets tend to prefer coffee over tea but some youngsters irrespective of their social economic class prefer spending on coffee rather than on other goods. On the other hand the Asian counterpart of India, Pakistan 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 market quoted above, the masses tend to look for some social interaction amongst each other rather than enjoying a kicked back environment. As far as the Indian market is 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 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 Starbucks will not have strong competition like other multinationals there. Moreover, Starbucks can also become a famous hang-out spot for the youth of this Indian market, 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 the country, it would show us that these niche markets would turn out to be a population of millions because the market has 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 India. 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. (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. (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 Indian market, 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 spotp. 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. (Michelli 2007 & Starbucks Coffee Company 1994). Bibliography Top of Form ALAM, M., & KARIM, M. (2006). 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