China is too big a market for U.S.-based companies to ignore. While it presents a very different culture – along with marketing challenges that accompany that culture – many companies have been working hard on expansion into the growth market. Among the companies working on reaching China’s 1.3 billion consumers is Starbucks. With 700 stores already in place, the company has been in China for 13 years and is about to ratchet up its efforts to get the Chinese people embrace its products. Starbucks plans to double its store-front locations to 1,500 in the next three years and the company expects China to become its second-largest market by 2014.
Although coffee sales increased 20% in 2011, China is not known for its coffee consumption. Starbucks has been adjusting its menu to carry more tea drinks as well as local food items such as Hainan chicken and rice wrap, shredded ginger pork panini, and red bean frappaccios.
In addition to food changes, the company also has to address cultural issues in China. For example, while the U.S. has a “grab and go” mentality to coffee, Chinese customers tend to linger for hours over food and drink. Starbucks is viewed as a place to socialize; most Chinese visit in large groups or pairs, requiring larger community tables, couches and armchairs. Starbucks’ baristas also need to teach customers about the products and drinks.
Group Activities and Discussion Questions:
- Discuss the need for U.S. firms to expand into new global markets.
- What attributes do companies need to successfully navigate different cultures?
- Divide students into teams. Have them examine the U.S. offerings from Starbucks.
- Next, have teams develop a marketing research plan for examining Chinese customs and tastes.
- Finally, what should a Starbucks store in China look like? How should employees act?
- Discuss key issues that need to be handled with international expansion.
Source: Wall Street Journal, Ad Age Daily, Brandchannel.com, other news sources