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IB7013 Global Marketing Environment

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For this task, you will write a paper that addresses the following:

Identify and research a brand that has expanded globally, and critically evaluate the brand’s current competitive marketplace. For example, before Starbucks entered China,

what other coffee shop offerings existed, and how did Starbucks compete with China’s traditional cultural preference for tea?

Discuss the adjustments you intend to make in the 4Ps to respond to customer needs and cultural differences of the country/location of new business venture.

What are the key drivers that today’s international marketer must understand in planning for the international marketplace?

What is the role of each international driver in implementing each of the strategic efforts?


Which of the international drivers and strategic efforts are likely to change more often and more rapidly?

Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course by providing new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Be sure to adhere to Academic Integrity Policy.

Answer:

Introduction

The current business scenario demands the foreign market expansion for the business organizations. Thus, more organizations are opting for expanding their business beyond the national boundaries. However, it is also important for the business organizations to have the proper understanding about the local market trends to have the proper and effective marketing strategy in the host country (Akaka, Vargo & Lusch, 2013). In addition, the marketing mix strategies should be designed accordingly and the strategic efforts should be made in accordance to major marketing drivers in the international scenario. This essay will discuss about the factor considerations for Starbucks in entering in the Indian market. In addition, the marketing mix strategies for them will be amended in accordance to the Indian business situations. The key drivers in the international market will also be identified and the role they played in implementing the strategic efforts (Skarmeas, Zeriti & Baltas, 2016).

Expansion approach of Starbucks

It is reported that Starbucks entered in the Indian market in 2012 through the joint venture entry mode strategy with Tata Global beverages. Initiation of the joint venture strategy further helped Starbucks to have the lower involved risks in foreign business operation. In addition, they also got the expertise of Tata in the Indian market for their host market business expansion (Gopalahrishna, Victor & Fleischmann, 2016). However, one of the major advantages being gained by them in entering in the Indian market is largely untapped market. This is due to the reason that prior to the entry of Starbucks in the Indian market, an only few coffee chains were operating with having low penetration. At that point of time, the concept of coffee chains was not much popular and India is traditionally a tea drinking country. It is identified that prior to the entry of Starbucks in India, home grown brands such as Café Coffee day and Barista were the major players. In addition, the Indian Coffee House was there with their traditional and old school service concepts (Berger & Balke, 2016). Thus, Starbucks faced a moderate intensity of competition in their Indian operation in the initial stage. However, in the following stage till now, they are facing huge onslaught of the major competitors in terms of product and market development strategy.

One of the major trends being identified in the coffee chain business in India is majority of the brands are being positioned as premium in the market. However, it is also identified Starbucks is having the position of most premium brand in the Indian market (Kolah, 2014). Though this positioning strategy is restricting their sales volume, but the coffee chains in India are limited only in the urban areas. Thus, the premium positioning is acceptable for Starbucks in doing business in India. On the other hand, in dealing with the popularity of tea in India, Starbucks is having own brand of Tea named Teavana (Rajasekaran, 2015). Under this brand, there are different varieties of tea being sold by them. This helped them in catering to both coffee and tea drinking population.

Recommended marketing mix

Product

It is already identified that Starbucks is already having both tea and coffee brands in the Indian market. However, it is recommended that the taste and approach of the products of Starbucks should be made more applicable to the Indian customers (Dutta et al., 2014). This is due to the reason that it is identified that majority of the flavors of Starbucks in India are in accordance to their global portfolio and is not adhering to the mainstream social trend and patterns of the Indian society.  Thus, it is suggested that product adaptation strategy should be initiated over the current standardization strategy. This will help Starbucks to have more products aligning with the local taste and preference patterns of the market (Mahobia & Jain, 2015). This will also help them to increase the diversity in the product range of Starbucks, which will in turn cater to more customer segments.

Price

Starbucks is having premium pricing strategy in place in their Indian operation. This is helping them to maintain their premium brand image in the market along with enhancing the profitability from the sales. However, it is also recommended that they should initiate duel pricing strategy in place with having the provision for both the premium and mass market pricing strategy. In this case, the pricing strategy of Apple should be followed by them. According to this strategy, premium pricing is being initiated for the newly introduced products by means of pricing skimming strategy and older products are being priced less (Honack & Waikar, 2017). Thus, it is suggested that Starbucks should have premium pricing for their newly introduced brands and market penetration pricing for the older brands and which are not yielding enough revenue. This will help them to have larger target segments along with extended life cycle of their brands. This is due to reason that older brands of Starbucks, which are not yielding enough volume in the recent time, will be regenerated with the help of lowering the price. Thus, the average rate of generation of revenue will be increased.

Place

Currently, Starbucks is having exclusive distribution strategy as of now in the Indian market. This refers to the strategy of offering their services through only the authorized retail chains of them. This strategy is ideal for them due to the reason that all their competitors are following the same strategy. However, it should be noted that online food delivering services are gaining popularity in the recent time and thus it is recommended that Starbucks should have the strategic partnerships with these vendors to increase their availability in the market. In addition, it is also recommended that Starbucks should also initiate the market adaptation strategy for their retailing also due to the reason that this will help in having the entire service delivery process in accordance to the Indian social and cultural considerations (Marques, Camillo & Holt, 2015). This will ensure the brand recall among the Indian customers will be more.

Promotion

Currently, Starbucks is having majorly online marketing and promotional mediums for their services in the Indian market involving different social media platforms. This is also helping them to gather the feedback from the side of the customers regarding their services. However, it is also recommended that traditional mediums such as television commercials should also be initiated for the Indian market. This is due to the reason that in the above section it is identified that mass market customers should also be targeted (Sam & Cai, 2015). Thus, these mass market customers should be targeted through the traditional mediums such as by television commercials. This will ensure that the visibility of Starbucks as a brand will get increased and it will reflect in increasing footfalls of the new customers. Thus, they should have Omni Channel promotional strategy in place to cater to larger customer sections.

Key drivers for international marketer

Some of the major drivers for the international marketers are level of competition, cost involved and market factors. Competition is an important driver for the international marketer due to the reason that intensity and level of competition in the target country will determine the approach of strategic management for them. If the intensity of competition is more in the target country, then the marketer will focus more on marketing and promotional terms and will focus on product strategy also (Boso, Cadogan & Story, 2013). On the other hand, if the target market is having lower set of competition, then the international marketer will more focus on developing the new markets and covering the maximum locations. In addition, they will more focus on increasing the revenue from the target market. Another major driver is involved cost. This is due to the reason that if the cost involved in the target market is high then the operation for the foreign investor will be lower and it will get increased in gradual process based on the viability (Gerschewski, Rose & Lindsay, 2015). On the other hand, if the cost involved in the target country is less, then the strategic intent of the marketers will be more in increasing the operations as much as possible and making it the global hub for them. This will help them to reduce the cost of their operation in the business.

Market factors such as the market trend and customer preference patterns are also important for the international marketer. This is due to the reason that if the target market is having favorable trend and patterns and opportunities for the business, then only the marketing activities will be initiated. The more will be the market demand for the particular product in the target market, the more focus will be given in tapping new customer segments and expanding the business (Rauter, Jonker & Baumgartner, 2017). On the other hand, if the target market is having lower level of demand, then the focus will be given more retaining the existing customers over acquiring the new customers. In addition, it should also be noted that marketer should also have the knowledge about the future trends of the international marketplace. This is due to the reason that it will help having effective marketing efforts according to the requirement of the target market.  

Marketing factors such as taste and preference patterns of the customers are likely to change more often due to the reason that expectations of the customers are changing with the change in the market scenario. Thus, it is important for the business organizations to have the required flexibility to cope up with the change in the market and offer products accordingly. On the other hand, it will also pose challenge for the marketers to frequently change the approach of the marketing activities (Musteen, Datta & Butts, 2014). Another driver that is likely to change rapidly is competition in the market. This is due to the reason that emergence of new competitors in the market will increase the intensity of competition and will affect the profitability of the organizations. On the other hand, the marketers will also face the challenge to increase the effectiveness of the marketing and promotional activities to fend off the competition and staying ahead in the business.

Conclusion

This essay concludes that Starbucks is having a high level of competitive environment in the Indian market but in their initial stage of operation, they were having lower level of competition to face. It is also identified that current marketing approach of Starbucks is effective and applicable but there are some changes being recommended in this essay. These changes will help Starbucks to have more effective business situation in doing business in India. This essay also discussed about the major drivers, which should be considered by the international marketers in planning for the international marketplace. There are numbers of drivers as well as their intensity being discussed in this report.

Reference

Akaka, M. A., Vargo, S. L., & Lusch, R. F. (2013). The complexity of context: A service ecosystems approach for international marketing. Journal of Marketing Research, 21(4), 1-20.

Berger, K. A., & Blake, L. J. (2016). Starbucks Enters India: The Indomitable Competitor or Underdog?. Journal of Case Studies, 34(2), 75-91.

Boso, N., Cadogan, J. W., & Story, V. M. (2013). Entrepreneurial orientation and market orientation as drivers of product innovation success: A study of exporters from a developing economy. International Small Business Journal, 31(1), 57-81.

Dutta, K., Parsa, H. G., Parsa, R. A., & Bujisic, M. (2014). Change in consumer patronage and willingness to pay at different levels of service attributes in restaurants: A study in India. Journal of Quality Assurance in Hospitality & Tourism, 15(2), 149-174.

Gerschewski, S., Rose, E. L., & Lindsay, V. J. (2015). Understanding the drivers of international performance for born global firms: An integrated perspective. Journal of World Business, 50(3), 558-575.

Gopalakrishna, P., Victor, R., & Fleischmann, D. (2016). Starbucks In India. Journal of Case Studies, 34(2), 92-101.

Honack, R., & Waikar, S. (2017). Growing Big While Staying Small: Starbucks Harvests International Growth. Kellogg School of Management Cases, 1-22.

Kolah, A., 2014. Collaboration is the number one strategy for reaching ‘bottom of the pyramid’customer segments in emerging global markets. Journal of Brand Strategy, 3(1), pp.18-20.

Mahobia, H., & Jain, T. K. (2015). Starbucks: Adapting in the Indian Market. Indian Journal of Marketing, 45(8), 37-47.

Marques, J., Camillo, A. A., & Holt, S. (2015). The Starbucks Culture: Responsible, radical innovation in an irresponsible, incremental world. In Handbook of Research on Business Ethics and Corporate Responsibilities (pp. 302-312). IGI Global.

Musteen, M., Datta, D. K., & Butts, M. M. (2014). Do International Networks and Foreign Market Knowledge Facilitate SME Internationalization? Evidence From the C zech R epublic. Entrepreneurship theory and practice, 38(4), 749-774.

Rajasekaran, R. (2015). Starbucks' Entry into Tea-Drinking India. IUP Journal of Brand Management, 12(3).

Rauter, R., Jonker, J., & Baumgartner, R. J. (2017). Going one's own way: drivers in developing business models for sustainability. Journal of Cleaner Production, 140, 144-154.

Sam, Y., & Cai, Y. (2015). A Study on the Use of Social Media to Understand Consumer Preference: The Case of Starbucks. International Journal of Management and Business Research, 5(3), 207-214.

Skarmeas, D., Zeriti, A., & Baltas, G. (2016). Relationship value: Drivers and outcomes in international marketing channels. Journal of international marketing, 24(1), 22-40.

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