CX554101 Marketing Report: Starbucks Bubble Tea in NZ Market

This report provides a comprehensive marketing analysis and strategy for Starbucks' introduction of Bubble Tea in the New Zealand market. It begins with an executive summary and situational analysis, exploring market size, customer needs, and competitor analysis. The report then delves into market segmentation, target market profiles, and product positioning, followed by measurable marketing objectives and detailed marketing strategies. It includes a SWOT analysis, PESTEL analysis, and discusses coordination and control strategies. The report identifies geographic, demographic, and behavioral segmentation factors, targeting young students and office workers in urban and coastal areas. The report analyzes the internal and external factors affecting the product launch, including political, economic, social, technological, environmental, and legal factors. Finally, it provides a detailed analysis of the target markets and the positioning of the product in the competitive landscape, along with a conclusion that outlines the marketing objectives and strategies required for the successful launch of the product in New Zealand.

Starbuck’s Bubble Tea in New Zealand

Contents
1.0 Executive Summary...............................................................................................................................2
2.0 Situational Analysis...............................................................................................................................3
3.0 Market Segmentation, Target Markets’ Profile and Positioning of the Product.....................................9
4.0 Measurable Marketing Objectives.......................................................................................................13
5.0 Marketing Strategies............................................................................................................................14
6.0 Coordination and Control....................................................................................................................17
References.................................................................................................................................................19

1.0 Executive Summary
Bubble Tea is a quite popular non-alcoholic drink of Taiwan and Hong Kong. One can find a
number of Bubble Tea shops at every corner of Asian countries. The increasing popularity of this
product in Asian markets has encouraged Starbucks to introduce this product under its brand
name for the people of New Zealand. Starbucks has been in New Zealand since 1998 and at
present there are around 22 stores across the country. The following report is a market analysis
of the New Zealand markets as the new product is being introduced. Various portions of the
report will discuss about the market size, current and future needs of the customers and the
Internal and External factors affecting the decision making process of the Starbucks. There will
also be a discussion about the segmentation factors in the market, the prime target markets and
the position of the product with respect to the other strong competitors. The measurable
marketing objectives of the company will also be discussed along with the marketing strategies.
The last segment of the report will talk about the coordination and control strategies that will be
required by the firm while launching this new product.

2.0 Situational Analysis
Market Size
Bubble Tea has been received so well in the New Zealand Markets and is even growing around
20% per year. This tea market is likely to have a competitive edge in future growth momentum
and the sales volume will also increase through 2019 and beyond. However, NZ is ranked the 13
largest consumer of coffee across the globe, but the men and women equally loves tea also. As
this concept is new and Starbucks already has a brand name, hence it will be able to attract a
good customer base (ITA, 2019).
Kaikoura is a coastal town on the South Island of New Zealand and tourists visit this place
throughout the year for amazing wildlife experiences. This place is situated in a 3 hours drive
North from Christchurch. A number of Asians visit here for relaxing and hence could serve as a
great target market for Bubble Tea.
Customer Needs and Changes in Market
There is no doubt that New Zealanders are some of the biggest coffee drinkers, yet coffee hasn’t
always been the most preferred drink of all the inhabitants. Till 1960s, the traditional (black) tea
was popular among the tea drinkers and an average tea drinker consumed more than 3 kg per
year and then came the tradition of drinking tea with the tea bags. The café culture in the 1990s
changed the behavior of the customers towards tea and even their drinking habits. There was a
jump of 316% in the price of the tea and this jump was considered as the highest as compared to
any other non-alcoholic beverage in the New Zealand.

The market is also responding positively and there are a number of competitors against Starbucks
in today’s era. All the companies have been welcomed by the customers and the tea drinkers are
responding positively towards any new experiments with their regular tea. Bubble tea has been
accepted by a number of customers in the Asian Countries and hence the tea lovers in the New
Zealand will also accept this new product and contribute readily towards its sales (Dobush,
2018).
Competitors’ Analysis
Bubble Tea is entirely a new concept and with this unique product idea Starbucks can easily
outperform the other competitors in the markets. However, there are a number of competitors for
different products from Starbucks. For instance, in the case of soft drinks, Coca Cola and Pepsi
are the leading competitors. McDonald’s and Dunkin’ Doughnuts offer fast food along with
coffee, but they are not able to provide the ambience like Starbucks and hence their coffees are
low priced. The competitors in the markets are inventing ways which are quite innovative and
are even more important in this economic environment where people are concerned about
spending in a more conscious manner (MADS Team , 2019).
Bubble Tea is not so common in Kaikoura Town, hence Starbucks can easily open a new outlet
in this area to target the tourists and other loyal customers of Starbucks who would love to try
this new experiment with their regular tea. Here the competition is quite less, so there are sure
chances that the product will gain easy popularity.

Internal Environmental Factors
To evaluate the internal factors, SWOT Analysis will be conducted for Starbucks:
SWOT Analysis
Strengths
 The company has an extremely
diversified business model.
 The staff members and the leaders can
easily adapt to the unique coffee and tea
drinking sensibilities of people across
the world.
 The stylish image of the brand has
already made it extremely popular
among young generation.
 Loyalty scheme of the firm has given a
number of advantages to the company
as the customers are not frequently
purchasing beverages through the use of
their loyalty cards.
 Starbucks is a socially responsible and a
sustainable brand, hence customers are
Weaknesses
 The financial difficulties are proving as
a hindrance in the development of new
products.
 The poor performance has declined the
stock value and hence the investors are
feeling reluctant to invest in the brand.
 The company has the “youth market”
as the prime target market and hence if
there is a drastic change in their
behavior then the profit rates will
automatically decline.
 The ambience of the Starbucks’ outlets
has a risk of getting copied quite easily
(Lombardo, 2019).

attracted more easily.
Opportunities
 Diversification in the overall product
offering may target new customer bases
other than the regular ones.
 Exploring scopes of partnership with the
local coffee and tea houses and food
cafes.
 A caffeine free alternative may attract
the consumers who are concerned about
health risks related to too much of
caffeine.
 Starbucks has a competitive advantage
over others as it has always adopted
ethical practices.
 Globalization has given numerous
opportunities to Starbucks as it spreads
into new markets.
Threats
 Most of the people of New Zealand
prefer coffee over tea so there are
chances that this experiment and that
too with the original tea will not be
easily accepted.
 There is a fierce competition in the
local markets as other brands are
offering similar products at a lower
rate.
 The increasing awareness among
people about healthy lifestyle is
reducing tea intake and they are
shifting towards healthier drinks.
 The agriculture production and factors
like heat waves and rainfall dictate the
price of tea in New Zealand or in any
part of the world (Jurevicius, 2018).

External Environmental Factors
For the analysis of external environmental factors, the PESTEL Analysis could be conducted:
PESTEL Analysis
Political Factors  The government is stable and strong rules and
regulations give greater chances of success to business.
 Political Changes occur after every three years.
 The lending rates are high; hence the companies have to
pay more taxes.
 Business and Trade freedom has been given to all the
foreign entrants.
Economic Factors  The economy is quite stable and per capita income is
excellent.
 Rates of products and raw materials are economical and
hence everyone can afford them easily (Smithson,
2017).
 The inflation rate is quite less and the unemployment
rate is also low.
Social Factors  The literacy rate in the country is 100% and the life

expectancy is around 80 years, which is a great sign of
good health.
 The government is spending a good amount to promote
tourism activities which will eventually increase the
sales of the new products of Starbucks.
 As the country has less population and the employment
rates are also good so the people are leading a content
life where they can easily spend on drinks and food
(Starbucks, 2014).
Technological Factors  IT Technology and the use of the Internet has increased
dramatically in both urban and the rural areas.
 Mobile companies are providing their services at
reasonable rates so companies like Starbucks can also be
reached through an app and website using phones.
Environmental Factors  The country has a unique ecological system.
 The people are highly educated and hence aware of
increasing pollution levels.
 The people have adopted a number of technological
ways to treat the garbage produced from cafes and other
food stalls (Greenfield, 2018).
Legal Factors  The crime and corruption rates are quite low in the
country.
 The rules and regulations for international companies

are quite flexible.
 The profit margins for the companies are low because of
high lending rates.
 The international business companies are provided with
a full legal cover in New Zealand (Patterson, Scott, &
Uncles, 2010).
3.0 Market Segmentation, Target Markets’ Profile and Positioning of the Product
Segmentation Factors
Here the prime three variables of market segmentation will be considered and these are
Geographic, Demographic and Behavioral.
Geographic: This variable divides the market on the basis of geography.
 Density: Starbucks is a premium brand; hence the major urban areas of New Zealand
could be targeted. This includes Auckland, Hamilton, Tauranga, Wellington and
Christchurch (Santamaría, 2008). Climate: As Auckland is the warmest, Christchurch is the driest and Tauranga is the
sunniest hence, the markets of these three cities could be targeted on the basis of the hot
climate. A coastal town Kaikoura will also be considered due to its humid weather. City Size: Starbucks could even open its new outlet exclusively for this new product and
various other supporting ones and good land could be available in the larger cities of New
Zealand like Auckland, Christchurch, Wellington, Hamilton, etc.

Demographic: This variable divides the market into groups based on age, gender, family size,
income, occupation, education, religion etc.
 Age: Bubble tea will attract mostly the young aged groups ageing between 12-25 years. It
may also attract people ageing from 30- 45 years.
 Income: As Starbucks cater the needs of elite customers with its premium products, hence
it will target people earning good who can spend their money on lavish food and drinks.
A New Zealander earning an average of $15- 30,000 a year can afford such products.
 Occupation: Students, office goers and homemakers all could be targeted for this new
Bubble Tea.
Behavioral: This variable divides the buyer based on their knowledge, attitude and response
towards any new product or service. These variables are the best starting point to build any new
market segment.
 Occasions: Bubble Tea can be served on all types of occasions whether it is regular or
special. Its sales will automatically increase on holidays and during summer season
(Clampitt, 2009).
 Loyalty Status: As this is entirely a new concept, hence it may attract the customers with
strong and absolute loyalty towards the brand. They can take the risk to try this new item
just because they have been loyal to the company’s taste for so long. The people who are
not much loyal to the firm may not put their money in such experiments.
 Use Rates: The heavy to medium user may buy this item as it will be premium prices just
because of its ingredients and positive health benefits (Lemus & Feigenblatt, 2015).

Three possible Target Markets
The three possible target markets are for Bubble Tea in New Zealand are:
1) The young school and college students of the cities and Kaikoura coastal town could be
targeted and to attract them Starbucks could pack Bubble Tea in eye catching cups with
colorful straws (TATA, 2016).
2) The office people of the coastal town and other urban cities who visit such cafes to
reduce their stress and have good food and beverages could also be one of the prime
targets of the firm.
3) Young couples residing in urban cities and the ones residing in the Kaikoura coastal
town, who generally visit such cafes for good food and to spend some quality time can
also be attracted towards this product.