"My first encounter with Starbucks may offer to give you not an entirely unbiased answer, but an answer, nevertheless. I had traveled to Mumbai to visit a friend. He said he wanted to give me the best coffee experience ever, and took me to the Starbucks in Fort, Mumbai. I had heard a lot about Starbucks, and the word ‘costly’ would emerge now and then. Consequently, the image I had formed of Starbucks was not altogether a great one as I had considered it to be ‘just another expensive café.’ From before I entered the colonial building to when I had my first sip of my caffé misto, proved my initial image to be false. It was expensive, granted but not just another café. The building chosen to house the café was spectacular, instantly cutting you away from the noise of Mumbai’s streets once you shut the door. As I entered the room, the aroma of fresh coffee beans hit me. I was already sold. I didn’t care how costly the coffee was going to be. I needed to experience this. I needed to taste the coffee for myself, for the smell that invited all my senses in, was, to put it in mere words, exquisite. Every aspect of the interiors seemed handpicked to perfection, to provide the ultimate experience to its customers. The rustic curtains draping the long windows overlooking the streets, the hardwood flooring, the high ceiling, lights dangling from the ceiling designed to be aesthetically pleasing, all of it added to the charm of this rustic café. Beside my table was a sack filled with coffee beans. I felt like the coffee was not the only thing I’d paid for when I walked out of Starbucks. The coffee, needless to say, was brewed to perfection and came in an exotic-looking glass. My friend had ordered an iced latté and it had his name written on the cup. A small yet meaningful gesture sure to capture the hearts of many, and win many long-term customers. As I sat in that Starbucks, sipping my coffee, engaged in light conversation with my friend, I felt the warmth of the surrounding and was totally sold." One of the Starbucks customers shared her experience with Brand Koncept.
The aesthetically pleasing ambiance, design customers prime location, divine coffee, wonderfully warm feeling… This is the Starbucks experience.
Starbucks is one of those multi-national companies, which has succeeded in creating a name for itself, and brand reliability do not come easy. Many multinational companies have resorted to joint ventures with local companies to ease into the local market, and in time, have failed to make a mark. Starbucks chose its alliance wisely with Tata Company, adding to itself many advantages. Hassles of paying an exorbitant amount of taxes and scrounging for prime locations have been eased with this alliance. Taxes have been subsidized to such a great extent that the taxes they pay and Café coffee day(CCD) pay, are comparable.
“One day India will be one of the top five markets that Starbucks operates around the world,” says John Culver, group president, Starbucks International after inaugurating the 100th store in the country.
Coffee Industry Overview India:
However, local brands like Café coffee day, international brands such as Costa Coffee and Barista are fervent competitors in the Indian market. International brands such as Costa Coffee have been established since earlier times, and have dedicated customers. Café coffee day, on the other hand, offers the same services that Starbucks offers at highly compelling prices. There is a café coffee day in every street and is one of the favorite hangout spots for college students. Starbucks, in this way, does lose out on a major section of the population merely due to its high prices. Some people enjoy going to cafes and spending time there, chatting with friends, and sharing the same through social media. However, a majority of the population likes low-priced coffee and they don’t want to spend too much time waiting for their food. They want it fast. Starbucks does run the risk of losing their customers to local shops and restaurants. One example is the results of a survey taken in Delhi, where the popular opinion is that Starbucks is always too crowded, standing in long lines waiting for their turn. This is a definite disadvantage for the company, and they run the risk of losing many customers this way. It was found that many potential customers refused to go to Starbucks simply because the prices were too high.
Despite the disadvantages, Starbucks seems to be thriving in India, with plans of expanding to more cities. Much of the reason why this has been possible is that of their immaculate marketing strategy, product positioning, and clever customer targeting. In this article, we aim to brief upon these strategies that have worked in favor of this multinational company.
In recent times, the trend of hanging out with friends at cafés and posting pictures of places and food is on the rise. However, there are so many cafés that have sprung up recently. How does one rise above the competition and prove to be extraordinary? This is precisely why positioning your product cleverly, makes a difference. Surveys were conducted to understand what attributes customers prioritize while choosing a coffee shop.
Starbucks has successfully created sections of the customers and identified their target. According to our research, they were able to single out taste connoisseurs, the trendy folk, Students, and the high-status folk as their target. Taste connoisseurs are the coffee experts who visit a place only if the coffee is at par with their expectations. The trendy folk tends to splurge money for the sake of the exterior look, and because it’s trending, and are often seen with a huge group of friends and constantly update their lives on social media. These automatically become a high target, as there is a high potential for sharing on social media. The high-status folk do not really care about coffee, and don’t really have an opinion, but like to show-off by taking their friends to expensive places.
Customer targeting is crucial to understanding how to devise a smart marketing strategy. Unlike other brands, they have understood at an early age that customer buying will ultimately depend on their lifestyle. They have adopted an “EGO” strategy. Instead of placing themselves as a brand open to all, they have positioned themselves as a reward for those who appreciate quality coffee. Starbucks hence positioned itself as a “premium coffee experience for a premium customer.” Their impeccable service, great ambiance, good washrooms, sumptuous food, portraying a ‘cool’ coffee shop all added to the essence of this brand, along with the smell of roasted beans that wafts through one’s nose as they enter a Starbucks.
Starbucks Challenges:
Furthermore, their alliance with Tata has also opened them to the option of selling Tea. It is not a surprise that their collaboration with Tata Tea has owed to the production of their very own Tata Tazo tea.
Many other innovative ideas have led to establishing brand loyalty. One example of this can be seen in their ventures to bring like-minded people together, such as Entrepreneur Saturdays.
Starbucks also places a strong emphasis on their employees. They make them feel at home by providing them with a range of opportunities such as frequent promotions, health insurance, housing allowance, etc. As they say, a happy employee leads to a happy business.
The company also places location as one of its prime responsibilities. Starbucks is often located in the more elite locations in metropolitan cities such as Mumbai, Delhi, and Bengaluru. This is a deliberate decision undertaken to attract people of the elite class. They are almost always located near an international high-priced brand to attract the right kind of customers.
Clever marketing coupled with creating an ‘emotional appeal’ may aid Starbucks in gaining loyal customers, who do not mind buying their expensive coffee granted they be treated as a premium customer, bestowed upon them lavish ambiance and an absolutely ‘premium experience.’ Starbucks may yet have a long way to go, but their expertise and strategies to date have aided them in coming this far. With the proper instruments, mindset, planning, and marketing, Starbucks may indeed meet its goal of creating a stronghold in the country, something many multinational companies before have failed to do.
Tata is on the driver seat of Starbucks business in India. But Tata is also coming into the same segment which is Tata Cha. This is kind of business overlapping..
