You are on page 1of 5

The Strategic Entry of Starbucks in India

Marketing Strategy Assignment



A Marketing Strategy Assignment
[Date]
Presented by:

Mohammad Imad Shahid Khan
Section A, 3
rd
Semester
Bachelor of Business Management (2013-2016)


Marketing Strategy Assignment
Strategic Entry Overview

Tata Starbucks Ltd. is a 50:50 Joint Venture Company announced in January
2012 and debuted in October of the same year, is owned by Starbucks Corporation
and Tata Global Beverages that operates Starbucks outlets in India. The outlets are
branded Starbucks "A Tata Alliance". Starbucks, through an agreement with Tata
Coffee, serves coffee that is 100% locally sourced and roasted in its Coorg facilities.
The joint venture that occurred under Avani Davda, the youngest CEO in TATA
Group, had recently celebrated opening its 50
th
outlet in India.

The Seattle-based Starbucks Corporation under its CEO Howard Schultz is eyeing a
big slice of India's $300 million cafe chains market that's growing annually by 20%
and is currently dominated by the local chain Cafe Coffee Day that operates more
than 1,000 outlets nationwide.

Starbucks had previously attempted to enter the Indian market in 2007, with a
joint venture involving its Indonesian franchise and Kishore Biyani of the Future
Group. However back then, the joint venture had withdrew its foreign investment
proposal with the Indian government. Starbucks did not cite any reason for the
withdrawal. Besides Future Group, Starbucks was also in talks with Reliance and
Jubilant for an entry into India, but none of those discussions fructified.
Marketplace

Target market
The Primary target market for Starbucks in India is the young both male and
female from the ages of 16-38. This market is well educated and comes from
middle class to elite class population. Therefore, the locations are close to the urban
areas where well educated and highly paid consumers work. The secondary target
markets are the tourists in the areas.

Geographic Positioning
The demography of the target market are mainly consumers who live or work
in the vicinity of the proposed locations for the Starbucks Coffee shops.

It has opened stores in premium locations like Horniman Circle, Colaba and
Bandra in Mumbai; Connaught Place in Delhi and Koregaon Park in Pune;
Phoenix Market City, Whitefield and Kormangala in Bangalore where it will
have high visibility to customers.

Starbucks wanted its stores to be as appealing as possible while giving
consumers a unique "Starbucks experience", as according to it, most
consumers spend about 45 minutes in a cafe, using it as a spot to meet
friends and relatives rather than to order takeaways.
Marketing Strategy Assignment
Major Competitors

Caf Coffee Day
Barista Lavazza
Costa Coffee
Coffee World
Small-time Cafs
Situation Analysis
Strengths
Strong Market Position and Global Brand Recognition.
Products of the Highest Quality.
Location and Aesthetic appeal of its Stores.
Strategic relationship with Suppliers.
Effective utilization of Technology. (Starbucks App)
Weaknesses
Expensive Products.
Laisse-faire management style.
Starbucks refuses to guarantee that its products are free of GMO
ingredient.
Expensive to maintain a varied set of outlets differing in aesthetics from
place to place.
Negative large corporation image. (Tighter scrutiny related to Labor practices
and CSR)
Opportunities
High consumerism in emerging markets.
Easier to penetrate market because of Starbucks Experience hype.
Has a strong venture partner in the form of Tata Group.
Expansion of retail operations.
Has the potential to diversify its product line in near future.
Threats
Able and seasoned Competitors.
India like China and UK, has a strong substitute beverage in the form of Tea.
Government regulations regarding FDI and like legislations.
Price volatility in the global coffee market.
Increasing consumer consciousness towards the potential hazards of Coffee.


Marketing Strategy Assignment
Business value
Market demand
India, a traditionally tea-drinking subcontinent has doubled its coffee consumption
over the last 10 years, according to NPR, as young Indians with more money to
spend are lured by the coffee house culture.

Market growth potential
While India only represents 1.4% of global demand, the subcontinent's coffee
market is forecast to grow almost 9% to $486.6 million this year, according to
market-research firm Euromonitor International. That would follow growth of
almost 80% over the past five years.


Conclusion

Due to India being one of the largest coffee drinking nation in the world, Starbucks
entry into the Indian market was an effective expansion strategy. Allying with the
Tata Group as a strong and reliable venture-partner, Starbucks has reduced the
potential threat of the new market, as well as reduced the cost of importing roasted
coffee-beans.

New market penetration is a challenging and uncertain area of business. Hence, for
Starbuckss effective market entry, a great emphasis should be given to market
analysis. The culture and corporate strategy must also be maintained for success.
This will ensure the health of the organization throughout the expansion.



Reference

Starbucks eyes huge growth in India, China markets. The Economic Times
Starbucks Comes to India, Selling Coffee and Atmosphere. Knowledge @ Wharton
India's Coffee Consumption Doubles Over Last Decade. NPR
India's Taste for Coffee to Affect Bean Prices. The Wall Street Journal
Why India's yuppies want Starbucks (it's not about the coffee). The Guardian
Soon, Starbucks at hospitals, schools, corporate campuses. Business Standard


Thank You

You might also like