IB-7013: Analyzing Starbucks' Global Marketing Environment in India

This report analyzes Starbucks' entry into the Indian market, focusing on the global marketing environment and strategic adaptations. It examines Starbucks' joint venture with Tata Global Beverages and the competitive landscape, noting the shift from limited competition to increased market rivalry. The report recommends adjustments to the marketing mix, including product adaptation to local tastes, a dual pricing strategy, expanded distribution channels through online partnerships, and a comprehensive promotional approach using both online and traditional media. Key drivers for international marketers, such as competition, cost, and market factors, are discussed, emphasizing the need for flexibility and responsiveness to changing customer preferences and market dynamics. The report concludes that while Starbucks' current marketing approach is effective, these recommended changes will further enhance its business performance in India. Desklib offers a variety of resources, including past papers and solved assignments, to support students in their academic endeavors.

Running head: GLOBAL MARKETING ENVIRONMENT
Global marketing environment
Name of the student
Name of the university
Author note

1GLOBAL MARKETING ENVIRONMENT
Introduction
The current business scenario demands the foreign market expansion for the business
organizations. Thus, more organizations are opting for expanding their business beyond the
national boundaries. However, it is also important for the business organizations to have the
proper understanding about the local market trends to have the proper and effective marketing
strategy in the host country (Akaka, Vargo & Lusch, 2013). In addition, the marketing mix
strategies should be designed accordingly and the strategic efforts should be made in accordance
to major marketing drivers in the international scenario. This essay will discuss about the factor
considerations for Starbucks in entering in the Indian market. In addition, the marketing mix
strategies for them will be amended in accordance to the Indian business situations. The key
drivers in the international market will also be identified and the role they played in
implementing the strategic efforts (Skarmeas, Zeriti & Baltas, 2016).
Expansion approach of Starbucks
It is reported that Starbucks entered in the Indian market in 2012 through the joint
venture entry mode strategy with Tata Global beverages. Initiation of the joint venture strategy
further helped Starbucks to have the lower involved risks in foreign business operation. In
addition, they also got the expertise of Tata in the Indian market for their host market business
expansion (Gopalahrishna, Victor & Fleischmann, 2016). However, one of the major advantages
being gained by them in entering in the Indian market is largely untapped market. This is due to
the reason that prior to the entry of Starbucks in the Indian market, an only few coffee chains
were operating with having low penetration. At that point of time, the concept of coffee chains
was not much popular and India is traditionally a tea drinking country. It is identified that prior

2GLOBAL MARKETING ENVIRONMENT
to the entry of Starbucks in India, home grown brands such as Café Coffee day and Barista were
the major players. In addition, the Indian Coffee House was there with their traditional and old
school service concepts (Berger & Balke, 2016). Thus, Starbucks faced a moderate intensity of
competition in their Indian operation in the initial stage. However, in the following stage till
now, they are facing huge onslaught of the major competitors in terms of product and market
development strategy.
One of the major trends being identified in the coffee chain business in India is majority
of the brands are being positioned as premium in the market. However, it is also identified
Starbucks is having the position of most premium brand in the Indian market (Kolah, 2014).
Though this positioning strategy is restricting their sales volume, but the coffee chains in India
are limited only in the urban areas. Thus, the premium positioning is acceptable for Starbucks in
doing business in India. On the other hand, in dealing with the popularity of tea in India,
Starbucks is having own brand of Tea named Teavana (Rajasekaran, 2015). Under this brand,
there are different varieties of tea being sold by them. This helped them in catering to both coffee
and tea drinking population.
Recommended marketing mix
Product
It is already identified that Starbucks is already having both tea and coffee brands in the
Indian market. However, it is recommended that the taste and approach of the products of
Starbucks should be made more applicable to the Indian customers (Dutta et al., 2014). This is
due to the reason that it is identified that majority of the flavors of Starbucks in India are in
accordance to their global portfolio and is not adhering to the mainstream social trend and

3GLOBAL MARKETING ENVIRONMENT
patterns of the Indian society. Thus, it is suggested that product adaptation strategy should be
initiated over the current standardization strategy. This will help Starbucks to have more
products aligning with the local taste and preference patterns of the market (Mahobia & Jain,
2015). This will also help them to increase the diversity in the product range of Starbucks, which
will in turn cater to more customer segments.
Price
Starbucks is having premium pricing strategy in place in their Indian operation. This is
helping them to maintain their premium brand image in the market along with enhancing the
profitability from the sales. However, it is also recommended that they should initiate duel
pricing strategy in place with having the provision for both the premium and mass market pricing
strategy. In this case, the pricing strategy of Apple should be followed by them. According to
this strategy, premium pricing is being initiated for the newly introduced products by means of
pricing skimming strategy and older products are being priced less (Honack & Waikar, 2017).
Thus, it is suggested that Starbucks should have premium pricing for their newly introduced
brands and market penetration pricing for the older brands and which are not yielding enough
revenue. This will help them to have larger target segments along with extended life cycle of
their brands. This is due to reason that older brands of Starbucks, which are not yielding enough
volume in the recent time, will be regenerated with the help of lowering the price. Thus, the
average rate of generation of revenue will be increased.
Place
Currently, Starbucks is having exclusive distribution strategy as of now in the Indian
market. This refers to the strategy of offering their services through only the authorized retail

4GLOBAL MARKETING ENVIRONMENT
chains of them. This strategy is ideal for them due to the reason that all their competitors are
following the same strategy. However, it should be noted that online food delivering services are
gaining popularity in the recent time and thus it is recommended that Starbucks should have the
strategic partnerships with these vendors to increase their availability in the market. In addition,
it is also recommended that Starbucks should also initiate the market adaptation strategy for their
retailing also due to the reason that this will help in having the entire service delivery process in
accordance to the Indian social and cultural considerations (Marques, Camillo & Holt, 2015).
This will ensure the brand recall among the Indian customers will be more.
Promotion
Currently, Starbucks is having majorly online marketing and promotional mediums for
their services in the Indian market involving different social media platforms. This is also
helping them to gather the feedback from the side of the customers regarding their services.
However, it is also recommended that traditional mediums such as television commercials
should also be initiated for the Indian market. This is due to the reason that in the above section it
is identified that mass market customers should also be targeted (Sam & Cai, 2015). Thus, these
mass market customers should be targeted through the traditional mediums such as by television
commercials. This will ensure that the visibility of Starbucks as a brand will get increased and it
will reflect in increasing footfalls of the new customers. Thus, they should have Omni Channel
promotional strategy in place to cater to larger customer sections.
Key drivers for international marketer
Some of the major drivers for the international marketers are level of competition, cost
involved and market factors. Competition is an important driver for the international marketer

5GLOBAL MARKETING ENVIRONMENT
due to the reason that intensity and level of competition in the target country will determine the
approach of strategic management for them. If the intensity of competition is more in the target
country, then the marketer will focus more on marketing and promotional terms and will focus
on product strategy also (Boso, Cadogan & Story, 2013). On the other hand, if the target market
is having lower set of competition, then the international marketer will more focus on developing
the new markets and covering the maximum locations. In addition, they will more focus on
increasing the revenue from the target market. Another major driver is involved cost. This is due
to the reason that if the cost involved in the target market is high then the operation for the
foreign investor will be lower and it will get increased in gradual process based on the viability
(Gerschewski, Rose & Lindsay, 2015). On the other hand, if the cost involved in the target
country is less, then the strategic intent of the marketers will be more in increasing the operations
as much as possible and making it the global hub for them. This will help them to reduce the cost
of their operation in the business.
Market factors such as the market trend and customer preference patterns are also
important for the international marketer. This is due to the reason that if the target market is
having favorable trend and patterns and opportunities for the business, then only the marketing
activities will be initiated. The more will be the market demand for the particular product in the
target market, the more focus will be given in tapping new customer segments and expanding the
business (Rauter, Jonker & Baumgartner, 2017). On the other hand, if the target market is having
lower level of demand, then the focus will be given more retaining the existing customers over
acquiring the new customers. In addition, it should also be noted that marketer should also have
the knowledge about the future trends of the international marketplace. This is due to the reason

6GLOBAL MARKETING ENVIRONMENT
that it will help having effective marketing efforts according to the requirement of the target
market.
Marketing factors such as taste and preference patterns of the customers are likely to
change more often due to the reason that expectations of the customers are changing with the
change in the market scenario. Thus, it is important for the business organizations to have the
required flexibility to cope up with the change in the market and offer products accordingly. On
the other hand, it will also pose challenge for the marketers to frequently change the approach of
the marketing activities (Musteen, Datta & Butts, 2014). Another driver that is likely to change
rapidly is competition in the market. This is due to the reason that emergence of new competitors
in the market will increase the intensity of competition and will affect the profitability of the
organizations. On the other hand, the marketers will also face the challenge to increase the
effectiveness of the marketing and promotional activities to fend off the competition and staying
ahead in the business.
Conclusion
This essay concludes that Starbucks is having a high level of competitive environment in
the Indian market but in their initial stage of operation, they were having lower level of
competition to face. It is also identified that current marketing approach of Starbucks is effective
and applicable but there are some changes being recommended in this essay. These changes will
help Starbucks to have more effective business situation in doing business in India. This essay
also discussed about the major drivers, which should be considered by the international
marketers in planning for the international marketplace. There are numbers of drivers as well as
their intensity being discussed in this report.

7GLOBAL MARKETING ENVIRONMENT
Reference
Akaka, M. A., Vargo, S. L., & Lusch, R. F. (2013). The complexity of context: A service
ecosystems approach for international marketing. Journal of Marketing Research, 21(4),
1-20.
Berger, K. A., & Blake, L. J. (2016). Starbucks Enters India: The Indomitable Competitor or
Underdog?. Journal of Case Studies, 34(2), 75-91.
Boso, N., Cadogan, J. W., & Story, V. M. (2013). Entrepreneurial orientation and market
orientation as drivers of product innovation success: A study of exporters from a
developing economy. International Small Business Journal, 31(1), 57-81.
Dutta, K., Parsa, H. G., Parsa, R. A., & Bujisic, M. (2014). Change in consumer patronage and
willingness to pay at different levels of service attributes in restaurants: A study in India.
Journal of Quality Assurance in Hospitality & Tourism, 15(2), 149-174.
Gerschewski, S., Rose, E. L., & Lindsay, V. J. (2015). Understanding the drivers of international
performance for born global firms: An integrated perspective. Journal of World Business,
50(3), 558-575.
Gopalakrishna, P., Victor, R., & Fleischmann, D. (2016). Starbucks In India. Journal of Case
Studies, 34(2), 92-101.
Honack, R., & Waikar, S. (2017). Growing Big While Staying Small: Starbucks Harvests
International Growth. Kellogg School of Management Cases, 1-22.

8GLOBAL MARKETING ENVIRONMENT
Kolah, A., 2014. Collaboration is the number one strategy for reaching ‘bottom of the
pyramid’customer segments in emerging global markets. Journal of Brand Strategy, 3(1),
pp.18-20.
Mahobia, H., & Jain, T. K. (2015). Starbucks: Adapting in the Indian Market. Indian Journal of
Marketing, 45(8), 37-47.
Marques, J., Camillo, A. A., & Holt, S. (2015). The Starbucks Culture: Responsible, radical
innovation in an irresponsible, incremental world. In Handbook of Research on Business
Ethics and Corporate Responsibilities (pp. 302-312). IGI Global.
Musteen, M., Datta, D. K., & Butts, M. M. (2014). Do International Networks and Foreign
Market Knowledge Facilitate SME Internationalization? Evidence From the C zech R
epublic. Entrepreneurship theory and practice, 38(4), 749-774.
Rajasekaran, R. (2015). Starbucks' Entry into Tea-Drinking India. IUP Journal of Brand
Management, 12(3).
Rauter, R., Jonker, J., & Baumgartner, R. J. (2017). Going one's own way: drivers in developing
business models for sustainability. Journal of Cleaner Production, 140, 144-154.
Sam, Y., & Cai, Y. (2015). A Study on the Use of Social Media to Understand Consumer
Preference: The Case of Starbucks. International Journal of Management and Business
Research, 5(3), 207-214.
Skarmeas, D., Zeriti, A., & Baltas, G. (2016). Relationship value: Drivers and outcomes in
international marketing channels. Journal of international marketing, 24(1), 22-40.