Market Entry Challenges: Starbucks' Adaptation in Asia

This document presents a comprehensive analysis of Starbucks Corporation's entry strategy into the Singapore market, focusing on the adaptation of its core 4Ps (Product, Price, Place, Promotion). The study begins by assessing Starbucks' overarching goals in Southeast Asia, emphasizing strategic expansion to establish a robust regional presence. It then explores how these objectives translate specifically within Singapore’s unique consumer landscape and business environment. Key aspects include product localization, competitive pricing strategies, efficient distribution channels, and targeted promotional activities that resonate with the local populace. The analysis further evaluates cultural influences, economic conditions, and regulatory factors impacting Starbucks' operations in Singapore. By integrating insights from established marketing principles and strategic management theories, this report offers a nuanced understanding of how Starbucks tailors its global strategy to thrive locally, ultimately providing actionable recommendations for ongoing success.

Running head: MARKETING PLANNING AND RESEARCH
Marketing Planning and Research
Name of the Student
Name of the University
Authors Note
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Table of Contents
Introduction:...............................................................................................................................2
Macro Environment Analysis:...................................................................................................2
Micro Environment Factors:......................................................................................................4
Competitive Strategy:.................................................................................................................5
Marketing Strategy:....................................................................................................................6
Marketing Segmentation, Targeting, and Positioning:..............................................................7
Marketing Research:..................................................................................................................8
Major Discover and Findings:....................................................................................................8
Illustration of the Primary Data:................................................................................................8
Marketing Mix:..........................................................................................................................9
Detailed Strategy for one element of the marketing Mix:..........................................................9
Controls:...................................................................................................................................10
Contingency Planning:.............................................................................................................10
Reflective Statement:...............................................................................................................11
Primary Data Collection:..........................................................................................................13
Conclusion:..............................................................................................................................15
Reference List:.........................................................................................................................16

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Introduction:
Starbuck is an American Company that is founded in Seattle and currently it is
considered as the premier marketer and retailer of the special coffee throughout the world.
The company has around 182,000 employees with more 19,500 outlets throughout the world
in 62 countries. Starbucks offers variety of products and their range of products comprises of
high quality coffee of premium price, tea, and wide range of food items with other beverages.
The company also provides wide variety of tea products with license and trade through their
channel of distribution (Armstrong et al., 2014). The report is based on proposal of new
market strategies in Singapore for Starbucks so that the company can expand its products
throughout Singapore outlets.
Macro Environment Analysis:
Starbucks possess macro-environment of macroeconomic nature, which can be
attributed to the constant economic recession internationally that has lowered the purchase
powers of the consumers (Ali & Talwar, 2013). The following macro-environment would
offer information regarding Starbucks macroeconomic conditions.
Market Demographics: Starbucks will be focusing its marketing of products among the
customers that are adult aged. This is because such age group does not have higher demands
for coffee beans and coffee creamer but these products serve as the necessary means of
purchase. Additionally it will also target the age group of students ranging from 18-24 years
since they are the most likely consumers of the coffee creamers.
Political: One of the most important concern of Starbucks is the sourcing of the new raw
materials by attracting the politicians of the Asian countries like Singapore. The enables the
company to remain reliant on the social and environment conditions and follow the strategy

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of sourcing in compliance with mutually agreed fair trade policies of the international firms
and national government of Singapore (Ahmed, 2014).
Economic: The important economic constraint is constant recession that has been impacting
the profitability of the company. Starbucks faces the difficulties related to rising labour cost
and operation in the market.
Social: The social factor that affects Starbucks is the rising demand of the customers is
Singapore is for the cheap price products (Kotler & Armstrong, 2013). This becomes
challenge for Starbucks. Starbucks can easily provide products at cheaper but then the
company faces problem of lower product quality due to cheaper pricing of the products. This
may be a challenge in expanding and acquiring new customer in Singapore,
Technological: Starbucks is presently using the technological advancement by collaborating
with Apple to provide discount coupons for customers (Armstrong et al., 2015). Starbucks
might offer new method of payment through mobile application, which the company is
testing and practicing in USA.
Environmental: International advocacy, activist and customers present concern for
Starbucks. Therefore, the company needs to be aware of such concerns in order to enjoy
continuous success in Singapore.
Legal: Starbucks should be make sure that is aware of the legal environment of Singapore
where it intends to expands since it has to source the raw materials in the home markets
(Lilien et al., 2013).

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Figure1: Micro Environmental Analysis
(Source As Created by Author)
Micro Environment Factors:
Supplier: One of the vital inputs for Starbucks is the beans of coffee along with the high
quality Arabic coffee in specific regions, which offers less cost in switching amid the
substitutes (Ebert et al., 2014). Along with the size and scale, Starbucks has the power of
seeking advantage of the suppliers and simultaneously maintaining fair trade in Singapore.
This result in lower bargaining is supplier.
Channel Member: The coffee industry of Singapore is moderately saturated with a structure
of monopoly competition. The channel of the coffee industry in Singapore is already filled
with potential channel members and it would be difficult for new firm to enter into the
market.
Competitor: There prevails a monopolistic rivalry in the industry and Starbucks has wider
market share (Gupta, 2013). There are also different competitors in Singapore that creates
Social
Political
Economic
Technological
Environmental

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regular pressure on the Starbucks. The company is therefore suggested to maintain a
competitive strategy of product differentiation and service to result in medium extent of the
intensity within the company.
Customers: The coffee industry possess numerous customers and no single buyer can
influence the demand for concession in price. Starbucks can offer differentiated coffee
products under the varied base of customers that makes comparatively lower volume
purchase and lowers the purchasing power of customers.
Figure 2: Micro-Environmental Factors
(Source: As Created by Author)
Competitive Strategy:
The competitive strategy for Starbucks for expanding in Singapore is providing new
unique, innovative and upscale atmosphere that could differentiate the products from its
competitor (Johnson et al., 2014). The company should establish a community hub for
socializing its customers and entertaining them simultaneously. It is further recommended
Channel
Member
Supplier
CustomerCompetitor

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that Starbucks should also make their presence felt through social networking and other
mediums. The key to competitive strategy for Starbucks is introducing coffee creamer that
can provide new experience to the customers. The company can introduce coffee creamers
based on the seasonal preference together with the traditional year round flavours to the
customers in Singapore.
Marketing Strategy:
Marketing Objective: The marketing strategy of Singapore is to make the wide range of
coffee products available to the customers including the new Coffee Creamer. To accomplish
such strategy, Starbucks will be promoting the affordability along with the convenience take
home facilities for its customers in Singapore (Volberda et al. 2013). In continuance to the
growing relationship with the targeted corporation, the company would be offering product
that is exclusively made for the shoppers. The new coffee creamer would be available in
Starbucks stores of Singapore.
Financial Objectives: The financial objectives of Starbucks is to gain the market share of
15% in the coffee creamer products inside the first year of operation in Singapore. The
company is intended to increase the corporate net income by 3% from the introduction of the
new coffee creamer in the Singapore market and increase the company share by $30 million
in the span of one year (Baker, 2014).
Social Objective: The social objective of Starbucks is to increase the customer service by
creating a better working relationship with the customers through Customer relationship
management. The company social objective is to create and maintain a working relationship
with the targeted corporation. The Starbucks Corporation is planning to continue honouring
its working relationship with the customers by offering products of better quality.

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Marketing Segmentation, Targeting, and Positioning:
Segmentation: Unlike any other company, Starbucks is making the use of the market
segmentation as one of the key marketing strategy that makes the use of the demographic
segment. Starbucks fall under the category of market segmentation is because the company
fall under the target market of ethnicity and generation. Large parts of the customers in
Singapore is college goers and possess higher income with high social life. Therefore,
Starbucks is looking forward to target the group of customers that are generally professionals
and prefer enjoying higher lifestyle (Frynas & Mellahi, 2015). The customers in Singapore
are generally the consumers of gourmet coffee and this would make Starbucks a prestige for
their company by introducing coffee creamers with new added flavours. Starbucks would be
aiming for behavioural segmentation and such segmentation would offer company with the
vital understanding in the areas of customers, tastes and preferences along with uses, attitudes
or response towards the products.
Targeting: To target its customers, the target market strategy of Starbucks would be of
undifferentiated marketing of its coffee products. By introducing undifferentiated marketing
strategy in Singapore Starbucks will be able to ignore the difference in segments and would
be able to target the entire market with one offer. Such strategy would help in focusing the
common needs of the customers.
Positioning: The competitive edge of Starbucks will help in positioning the brand awareness
and consumer loyalty in Singapore (Stead & Stead, 2013). Although there are some different
coffee creamer and other brands of products but the company is positively looking forward to
position its products through undifferentiated marketing strategy to attract more potential
customers.

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Marketing Research:
In order to understand the marketing situation of Singapore marketing research has
been conducted to better understand the taste and preference of customers. Because of the
market segmentation, Starbucks has introduced wide range of coffee products including the
coffee creamers. This was done by understanding the purchasing patterns of the Singapore
coffee consumers and changing demands of the consumer’s needs. The coffee industry
suffered a big slowdown in 2009 by 6.6% because of the economic crisis (Tapp &
Spotswood, 2013). However, the industry gained pace with the low annual rate of 0.9% from
2010 to 2016 and the present industry revenue stands, around $29 billion The research has
been conducted keeping in mind the increasing consumer base in Singapore that is mainly
driven by the improving economy.
Major Discover and Findings:
The major discover and findings in the marketing of the coffee products is the focus
balance between the consumer base that primarily comprised of the collage age, post-
graduation and young family. One of the effective way that helped in the marketing of coffee
product and its pricing is that large portions of the coffee consumers were the high-end
consumers that prefer brand (Festa et al., 2016). As a result, such group of coffee consumers
almost made up 60% of the survey, which consisted 18-32 years old coffee consumers.
Illustration of the Primary Data:
In Singapore 54% of the population are beyond the age of 18 years and consume
coffee averagely on daily basis with total drinking population 30 billion dollars on this
beverage annually. As per the statistics, there is a large market potential in Singapore for
coffee products especially in the service and marketing. Therefore, Starbucks and several

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other competing firms have seized the opportunity to innovate the market of Singapore based
on the primary data.
Marketing Mix:
The marketing mix of Starbucks is focused on placing higher emphasis on the
channels since the company is already established brand. Using this channel the company is
anticipated to attain growth in the new markets of Singapore.
Product Mix: The product mix of Starbucks will be focussing on the endless possibilities of
introducing new products in the home of the Singapore market (Akgün et al., 2014). The
company would be selling the experience and prestige with its brand name and package in the
coffee creamer.
Promotion Mix: The promotion strategy of Starbucks would be getting the word out to the
right consumers. The focus of the company would be to assure that consumer appreciate the
Starbucks products and must know how to locate the product.
Place: If the consumers would like to purchase the products of Starbucks, they would be able
to purchase at selected locations. The company has selected two main outlets for distribution
namely its target stores and Starbucks retail outlets in Singapore (Hill et al., 2014). The
quality and value of the Starbucks products are represented through such channel.
Price: Starbucks would price its products by using the differentiated strategy to attract
consumers. A cappuccino would cost around $2.50, a hot chocolate would cost
approximately $2.35, and this would not make the consumer to spend more on coffee
products.

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Detailed Strategy for one element of the marketing Mix:
The detailed strategy of the marketing mix would help the company in understanding
the central activity undertaken by the Starbucks for its marketing plan in Singapore targeted
market. Price is considered as the main issue for the Starbucks coffee products. Captive
pricing was used by Starbucks, which would always propose an extra spending for the
consumers. The company faced much criticism due to its higher pricing of coffee products
(Peppard & Ward, 2016). With the adoption of the differentiating product, pricing strategy
would help in enhancing the marketing mix of the company as this would enhance the
promotions and would increase the sales of Starbucks in targeted market of Singapore.
Controls:
The industry of coffee products is increasing and bearing this in mind a marketing
plan in Singapore has been planned that would seek to expand in the targeted market. Below
stated are the control plan for the company.
Implementation:
Starbucks would begin in the summer of 2018 by continuing to strengthen then
working relationship with the Targeted Corporation. Currently the company has several mini
Starbucks café inside the targeted superstore location (Eden & Ackermann, 2013). This forms
an exciting opportunity for the company to expand its new coffee creamer products by
advertising its new line of products. This would comprise of several collaborative
advertisements with the targeted corporations.
Metrics: The chairperson of Starbucks is in-charge of everything that occurs in the company.
The company would measure the marketing, operations, finance creation and human resource
as the metrics to assess the performance of its wide range products in targeted market of
Singapore (Wheelen & Hunger, 2017).

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Contingency Planning:
The Starbucks products along with the coffee creamer would stand out in the targeted
market because of the organic ingredients. A possible challenge that the company is
anticipated to fac is the similar flavour for coffee creamer and organic ingredient at lower
price. As a contingency the company would trademark its Coffee Creamer from other brands
as an attempt to distinguish its flavour from the rival firms (Rothaermel, 2015). Consumers
seeking exotic flavours would be turned off since the products of the Starbucks would be a
trademark product. In spite of the fact that the company is entering late in the market but
Starbucks established brands would offer consumer with quality products.
Reflective Statement:
To begin with the feedback gained from the formative group presentation helped in
gaining an understanding of the marketing plan. The marketing plan provided me with the
opportunity of preparing the research report based on the marketing plan of Starbucks. I was
able to learn about the several macro environmental and micro environmental factors that are
involved in the promotion of the product. The dynamics involved in preparation of the report
enabled me t undertake an extensive amount of research in the areas of economics,
technology, legal and environmental factors that are involved in the marketing of the
products. I was able to understand the factors that enables a company to remain dependent on
the communal and environment circumstances and follow the approach of obtaining in
compliance with commonly agreed fair trade policies in a nation. With the help of these
factors, I gained an insight that helped in understanding of the economic constraint that
effects the profitability of the company.
Moving towards the collection of data, an important assertion I would like to bring
forward is that the data collection was the challenging aspect of this marketing plan. The
reason behind these challenging aspects was the collection of the reliable data formed an