Conclude the following
Starbucks international strategy relies on low integration and high responsiveness (multi-domestic), which is best reflected in Entry Modes and Pricing Strategies. The goal is to spread Starbucks’ coffee culture while adapting to local tastes and preferences. Instead of competing with global brands, Starbucks establishes itself as a friendly choice among the many food and beverage options in the host country. This has endeared the brand to the local people and allowed it to enjoy global success. Following the Starbucks Company 1992 IPO, the number of Starbucks coffee shops increased nine-fold and the company was thus prepared to enter global markets. With already 700 coffee shops across the United States, Starbucks opened its first overseas coffee shop in 1995 through a joint venture with a local Japanese retailer, Sazaby Inc. Through this agreement, both of the two companies held an equal 50% stake in “Starbucks Coffee of Japan,” which received a license to the Starbucks format and a $10 million direct foreign investment from the Starbucks Company. Whereas many sceptics doubted that Starbucks would be able to replicate its North American success overseas, but by the end of 2009 Starbucks’ had some 850 stores and a profitable business in Japan.
When it comes to local approach Starbucks made it a point to carry out extensive research on the history, culture and the locals’ taste preferences before it decides to partner with coffee companies and participating stores available locally. Their market research is done before they start to build their participating stores in the target location. Starbucks formulates their menu to fit the needs of the locals without compromising their signature brand. Its localization strategy is a mix of local products with innovative store designs, so they are able to fully adapt to the culture of the location. Starbucks maintains 18 design centres worldwide, which work to understand and conceptualize store designs to reflect the local market. For example, In Japan, local buildings have low roofs and most of them have indirect references to Shintoism, which is the country’s religion. The company hired local designers in order to create the right atmosphere in participating stores. Furthermore, in In Saudi Arabia, the logo of Starbucks in participating stores and overall branding had to be changed because the topless mermaid in the company’s logo was viewed as improper. Therefore, the logo was changed into a crown with waves, foregoing the mermaid. The stores also have separate sections for men, while the women are served in the family section.
Starbucks is all about building relationships with its customers. Starbucks’ target audience comprises both gender customers. These are primarily higher-wage professionals, business owners, or other high-end customers in the age group of 22-50. The brand is aimed at customers who desire a relaxing environment to drink coffee and unwind. They are mostly urban, health-conscious, and class-conscious customers. People who live fast-paced lives often look for quality coffee and some space to unwind after a hectic day. Starbucks provides all of these benefits at one convenient location. So how do they persuade people to spend that much money, when they could just have a cup of coffee at home? They provide an experience for the target audience who visit their stores. They make the expense of the drink worth it to their customers by focusing on the third place and providing a place for their customers to be and interact. It’s soothing to order a good cup of coffee and be encouraged to sit in the café with your laptop and talk to friends while you work. That’s the kind of experience Starbucks gives you.
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