Starbucks is an American coffee company founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker. The company has a chain of coffee shops which started in Seattle Washington. It is one of the largest coffee companies in the Fast foods industry. The company operates in more than 20,000 locations worldwide mostly in America, Canada, China, Japan, and South Korea among other places. Starbucks shops serve cold and hot drinks, whole-bean coffee, caffe latte, microground instant coffee, espresso, loose-leaf teas. The company also serves juice, snacks, Frappuccino beverages, and pastries. The company has been very successful in the countries it operates in. However; the company has also failed in some countries. This paper will be looking at Starbucks failure in Australia.
Starbucks entered the Australian market in July 2000 through its subsidiaries the LLC and Starbucks Coffee Company Pty. Ltd and Starbucks Capital Asset Leasing Company. Immediately after entry, the company operated retail stores all over in quick succession. However, the company brand was not accepted by the Australian people. At its peak, the company had 81 stores but ended up exiting the market (Baid, 2015). Unlike the Americans, the Australian consumers like their coffee stronger without any additives such as sugar syrups. In addition, Starbucks entered a highly competitive market and failed to communicate their brand.
Starbucks used the product and promotional marketing strategy in the Australian market. The company extended the practices in America and practiced the same in Australia. Once in the market, the company opened many shops in succession. I believe this method was infective since the company failed at last. The Australian people have different tastes than the American people when it comes to coffee (Baid, 2015). While the American likes flavored tea, the Australians like stronger tea with no additives. Instead of creating a unique marketing strategy for the Australian market, Starbucks came in with the American strategy.
The product decision implemented by the company was to sell the same products sold in the American market. The company did not customize its products to fit the Australian market. The outcome was that the company could not compete with the local companies regarding quality products. Their coffee was weaker as compared to the consumers in Australia are used to.
The company still has a chance to re-enter Australia again. The major problem was not a rejection of the brand rather was a rejection of the products. Something the company can do better when re-entering is customizing the products (Mescall, 2010). The company should first study the market and customize their products to fit the market. Again, instead of opening so many shops in succession, the company should first build a brand. Opening of shops should be guided by demand.
There are three things that I have learnt from this lesson. First, before entering any market, there is a need to study the market and identify the appropriate strategy for entry. Had Starbucks studied the Australian market, the company would have customized the products to fit the market. Another thing I have learnt is that the domestic marketing strategy cannot always be use as a global marketing strategy. Starbucks used the same strategy in Australia as the one for the American market and failed. Lastly I also learnt that it is not possible ti impose a brand on people rather one should communicate a brand to the consumers. Starbucks failed because they imposed their brand to the Australian people instead of brand communication.
Baid, V. (2015, April 29). How and Why a Global Brand Starbucks failed in Australia. Retrieved April 12, 2016, from http://www.slideshare.net/virenbaid/how-and-why-a-global-brand-starbucks-failed-in-australia
Mescall, J. (2010, September 29). Starbucks in Australia: Where did it go wrong? Retrieved April 12, 2016, from http://www.abc.net.au/news/2008-08-07/32188
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