MG412: Starbucks Brand Expansion Strategy in the Kenya Market

This report provides an analysis of Starbucks' brand expansion strategy in the Kenyan market. It begins with an overview of Starbucks, its existing brand values, and target market segmentation, including demographic, psychographic, and geographic considerations. The report assesses the Kenyan market's political, economic, social, technological, legal, and environmental factors using a PESTLE analysis. It also examines the competitive landscape, identifying potential threats from substitute products like tea and analyzes Starbucks' competitive advantages and disadvantages. Applying the Ansoff matrix, the report suggests a diversification strategy for Starbucks' entry into Kenya, focusing on new products and packaging, and a distinctive taste strategy. The report concludes that Starbucks can successfully expand its brand in Kenya by leveraging its brand reputation and adapting its products to local preferences, despite existing environmental and competitive challenges. Desklib offers a wealth of similar marketing reports and resources for students.

Running head: MARKETING
Starbucks brand expansion in Kenya market
Name of the student
Name of the university
Author note

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Executive summary
In this study, it has been identified that the aim of this study to shed light on the brand
extension strategy of Starbucks in Kenya market. In order to conduct the research on Kenya
coffee industry, both the primary and secondary data will be collected. Secondary data will be
collected using the books, journals, articles and authentic websites and Primary data will be
collected by surveying on 100 customers by using the random sampling method. Analyzing
the result, it has been identified that by using its packaging, diversification and distinctive
taste strategy Starbucks will be successfully expand its brand in the Kenya market.

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Table of contents
Introduction......................................................................................................................................
Methodology....................................................................................................................................
Findings...........................................................................................................................................
Existing brand values of the company and target market................................................................
New market analysis........................................................................................................................
Expansion of new product...............................................................................................................
Competition.....................................................................................................................................
Conclusion.......................................................................................................................................
Reference list and bibliography.....................................................................................................

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Introduction
Branding plays an influential role for understanding the needs and demands of the
clients can be analyzed (Athanasopoulou, Giovanis and Avlonitis 2015). Depending on the
branding initiatives, it becomes easier for the organization to create memorable impression on
customers mind. Depending on the good brand work, the organization gets the chance to
significantly identify thee potential customers. The purpose of this study is to develop an
analytical research on Starbucks, which is a famous coffee making chain in America. The
company aims expand its brand in Kenya market. In order to gain the attention of the
customers in Kenya market, Starbucks wants to introduce health drinks in its menu. In the
year 1971, Jerry Baldwin, Gordon Bowker and Zev Siegl founded Starbucks (Starbucks.co.uk
2019). In the year 2017, the annual growth revenue of the company reached $22.39 billion. In
the end of this year, the company had 27339 numbers of stores (Statista.com 2019). After
gaining high popularity in different countries in all over the word, the company aims to enter
in the Hungary market. Analyzing the coffee market, it has been identified that coffee
industry is the major contributor in the Kenya economy since 1963. Being a significant earner
of foreign exchange, the industry has brought various opportunities in the market. It has been
identified that near about 300 acres area are ebbing used for coffee farming. In that case it can
be assumed that due to high economic value in Kenya market, it will easier for Starbucks to
expanding its brand in Kenya market.
Methodology
Research and development play essential before introducing any brand expansion
strategy in the market. In order to enter in the Kenya market, market research will be done
depending on the both the primary and secondary data. Primary data will be collected by
surveying on 100 customers by using the random sampling method. On the other hand,

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secondary data will be collected using the books, journals, articles and authentic websites.
Using deductive research approach, the entire research will be developed. On the other hand,
collecting detail information on the brand expansion strategy, the descriptive research design
will be followed.
Findings
Existing brand values of the company and target market
Figure: Kapferer brand identity prism
(Source: Zwakala, Steenkamp and Haydam 2017)
In the above diagram, different components brand identity have been mentioned. As per
Kapferer, developing strong brand value, a brand needs physical specifications and qualities.
Depending on brad personality and brand culture, its service gets improved. The strong brand
relationship reflects through its image on customers mind. Analyzing the brand value of
Starbucks, it has been identified that the approx. value is $44.5 billion, which can prove that
all the criteria of Kapferer brand identity prism is highly being followed by Starbucks
(Statista.com 2019). Target market of the organizations are being developed depending on
different segmentations such as demographic, psychographic and geographic (Barjolle et al.
2017). In the demographic segment, income level, age and gender of people are being

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Low Quality
High Quality
Low price High price
highlighted. In order to expand its business, Starbucks will target both the male and female
customers in between the age group of 25 to 40 years. It is true that Starbucks mostly targets
the premium customers, however, in case of Kenya market, upper class and middle class
people will be targeted by the company. Depending on the psychographic segmentation,
depending on the interest of people, mainly coffee lovers and health conscious people will be
targeted by Starbucks. In order to grab large numbers of customer attention, stores will be
placed in the urban areas, where the company accessibility and networking advantages can be
gained by the company. Researching on the Kenya market, it has been identified that in the
market, Starbucks will not face any kind of threats from others coffee selling companies.
However, it is true that the tea selling companies like Coca cola Bottling Co of nairobi
Limited. and Pepsi- Cola (EA) Ltd. can create substitute threat for Starbucks in Kenya
market.
Figure: Positioning map
(Created by author)
In the above positioning map, Starbucks and Pepsi- Cola (EA) Ltd. has been placed in
the high quality and high price. On the other hand, Coca cola Bottling Co of nairobi has also

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been placed in low price and high quality. In that case, it can be said that Starbucks can face
high threat from Pepsi- Cola (EA) Ltd.
New market analysis
PESTLE
Situation Analysis
Political Due to higher level of corruption and domestic tensions, the
political situation in Kenya is not in Stable situation
(Store.mintel.com 2019). In that case, it can be assumed that
Starbucks will face challenges for expanding its brand.
Economic With increasing financial opportunities, Kenya is slowly moving
towards stable economy with the estimated per capita income of
$1,790 (Throup 2017). In that case, it can be assumed that
Starbucks will be able to easily enter in the Kenya market.
Social Due to diversified culture in Kenya, it will be easier for Starbucks
for expanding its business.
Technological Kenya has become one of the popular technical hub in Africa,
which will be easier for Starbucks to adopt its digital marketing
strategy.
Legal The Kenya legal system is highly influenced by the British
common law (Throup 2017). Employment law, customer service
law and others trade laws in Kenya will help to make the foreign
invest process easier for Starbucks.
Environmental Environmental issue and deforestation are the major
environmental challenges faced by the country, which degraded

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the water quality and brought industrial as well as domestic
pollution (Miller 2018). In this case, developing business in this
country can create crisis of 6raw material for the company.
(Created by author)
Ansoff matrix
Figure: Ansoff matrix
(Source: Dawes 2018)
Analyzing the Ansoff matrix, it can be said that Starbucks will follow the
diversification strategy for entering in the Kenya market as the company will enter in the new
market with new products.

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Expansion of new product
In the year 1979, the brand extension strategy was developed by Edward M. Tauber.
Analyzing the brand extending effects, it can be assumed that in case of Starbucks the
company will be able to gain ‘more good’ effect that can help to enhance its brand name.
Analyzing 7 different approaches introduced by Tauber such as Companion product, same
product in new packaging, customer franchise, expertise, designer, distinctive taste and
benefits, it can be said that packaging and distinctive taste can be beneficial for the company
to grab the attention of the customers (Athanasopoulou, Giovanis and Avlonitis 2015). In
order to enter in the market, Starbucks needs to focus on improving it pricing strategies and
introduce the health drink products, so that large numbers of people will be able to purchase
the products. In that case changing the packaging of the products and introducing distinctive
taste, it will be able to make the products more attractive.
Competition
Porter’s five force analysis
Situation Analysis
Bargaining power of
the customers
Numbers of Coffee shops are very less in Kenya market, in that
case, bargaining power of the customers is low (Muriithi, Horner
and Pemberton 2016).
Bargaining power of
the suppliers
Coffee beans are health drink raw materials are available in
Kenya market, which has decreased the bargaining power of the
suppliers.
Existing rivalry Starbucks has not any competitor in the market, as Kenya is a
new market for developing coffee shop (Mengo 2017).
Threats from substitute Threats of substitute products are high as popular soft drink

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products manufacturing companies are ruling the beverage market.
Threats from new
entrants
The beverage market is slowly growing that can increase
opportunities for new entrants.
(Created by author)
Conclusion
In this study it can be concluded that although all the elements in external
environment are not in favorable condition for Starbucks, but in the competitors analysis, it
can be said that it will be easier for Starbucks for extending its brand in Kenya market by
using its packaging, diversification and distinctive taste strategy.

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Reference list and bibliography
Athanasopoulou, P., Giovanis, A.N. and Avlonitis, G.J., 2015. Marketing strategy decisions
for brand extension success. Journal of Brand Management, 22(6), pp.487-514.
Barjolle, D., Quiñones-Ruiz, X.F., Bagal, M. and Comoé, H., 2017. The Role of the State for
Geographical Indications of Coffee: Case Studies from Colombia and Kenya. World
Development, 98, pp.105-119.
Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems.
Mengo, M.T., 2017. Impact of Rebranding on Financial Performance: A case sturdy of new
Kenya Cooperative Creameries Limited and National Bank of Kenya (Doctoral dissertation).
Miller, N., 2018. Kenya: The quest for prosperity. Routledge.
Muriithi, P., Horner, D. and Pemberton, L., 2016. Factors contributing to adoption and use of
information and communication technologies within research collaborations in
Kenya. Information Technology for Development, 22(sup1), pp.84-100.
OPIYO, L.A., 2017. ADOPTION OF BRANDING PRACTICES BY SELECTED
POLITICAL PARTIES IN KENYA.
Starbucks.co.uk 2019. Retrieved from: https://www.starbucks.co.uk/ [Accessed on 27th Jan,
2019]
Statista.com 2019. Retrieved from: https://www.statista.com/topics/1246/starbucks/
[Accessed on 27th Jan, 2019]
Store.mintel.com 2019. Retrieved from: https://store.mintel.com/coffee-market-global-
review-2016 [Accessed on 27th Jan, 2019]

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Store.mintel.com 2019. Retrieved from: https://store.mintel.com/regions/africa-middle-east-
market-research [Accessed on 27th Jan, 2019]
Throup, D., 2017. Crime, politics and the police in colonial Kenya, 1939–63. In Policing and
decolonisation. Manchester University Press.
Zwakala, K., Steenkamp, P. and Haydam, N.E., 2017. Brand identity: Theory versus practice
in the South African banking sector. The Retail and Marketing Review, 13(2), pp.1-14.