Starbucks in Kenya: A Brand Extension Strategy - MG412 Marketing

This report examines Starbucks' potential brand expansion into the Kenyan market. It provides a background on the company, followed by a situation analysis using the PESTEL framework, highlighting the political instability, economic growth, social diversity, technological advancements, legal system, and environmental challenges in Kenya. The report proposes a new product with revised packaging targeting the urban upper and middle class (ages 25-40). A competitive analysis assesses the bargaining power of customers and suppliers, existing rivalry, and threats from substitute products. The analysis suggests that while the bargaining power of customers is low and suppliers are readily available, threats from substitute beverages are high due to the presence of popular soft drink brands. The report concludes with a reference list and bibliography.

Starbucks brand
expansion in
Kenya market

Background on the chosen
brand
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).

Market trends
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).
Economic With increasing financial opportunities, Kenya is slowly moving towards stable economy with the
estimated per capita income of $1,790 (Throup 2017).
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).
Environmental Environmental issue and deforestation are the major environmental challenges faced by the
country, which degraded the water quality and brought industrial as well as domestic pollution
(Miller 2018).

New product and proposed
target market
Packaging of the products will be changed for grabbing the
attention of the customers.
Target market
Age: 25-40
Sex: male and female
Income: Upper class and middle class
Area: urban area

A Visual Image of the Brand
Extension

Competitive 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 products
Threats of substitute products are high as popular soft drink
manufacturing companies are ruling the beverage market.

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]
• 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.