Starbucks entered the Indian market in 2012 through a joint venture with Tata Global Beverages, called Tata Starbucks. This allowed Starbucks to leverage Tata's local knowledge and supply chain to source, roast, and distribute coffee within India. The primary target market for Starbucks in India is young, educated urban professionals aged 16-38. Starbucks focused on opening stores in premium locations in major cities to attract this demographic. While India only represents a small portion of global coffee demand currently, the market is growing rapidly as coffee culture spreads. Partnering with Tata helped Starbucks mitigate risks associated with entering the new and complex Indian market.
Starbucks entered the Indian market in 2012 through a joint venture with Tata Global Beverages, called Tata Starbucks. This allowed Starbucks to leverage Tata's local knowledge and supply chain to source, roast, and distribute coffee within India. The primary target market for Starbucks in India is young, educated urban professionals aged 16-38. Starbucks focused on opening stores in premium locations in major cities to attract this demographic. While India only represents a small portion of global coffee demand currently, the market is growing rapidly as coffee culture spreads. Partnering with Tata helped Starbucks mitigate risks associated with entering the new and complex Indian market.
Starbucks entered the Indian market in 2012 through a joint venture with Tata Global Beverages, called Tata Starbucks. This allowed Starbucks to leverage Tata's local knowledge and supply chain to source, roast, and distribute coffee within India. The primary target market for Starbucks in India is young, educated urban professionals aged 16-38. Starbucks focused on opening stores in premium locations in major cities to attract this demographic. While India only represents a small portion of global coffee demand currently, the market is growing rapidly as coffee culture spreads. Partnering with Tata helped Starbucks mitigate risks associated with entering the new and complex Indian market.
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