Marketing in a Global Economy
Starbucks has built a reputation of being the best coffee has to offer. From starting out as a small market coffee store to becoming a top of the market coffee distributor, Starbucks has built a reputation that may be hard to take down. Entering into the Italian market could be a very risky move since it is the country that is considered by some to be the coffee originator. Starbucks entering the Italian market is considered to be a reputational risk and one that they may be able to afford but will bring some challenges.
This paper will discuss some of those challenges along with determining if there is a strategic advantage to entering the Italian market as well as explaining how it’s competitors marketing strategies influence Starbuck’s entry into the Italian market. This paper will also discuss whether Starbucks should consider entering Italy at all. Italy has nearly 140,000 bars and cafes across the country in which Italians drink coffee the way New Yorkers once took cigarette breaks (Faris, 2012).
The need for a company like Starbucks is there but the rich history of coffee in Italy is the biggest obstacle stopping Starbucks from making that move. Starbucks prides itself on using expensive Arabica coffee beans with complex flavors. In Italy, because of cost and market demand, many roasters mix in significant quantities of bitter Robusta beans (Faris, 2012). Starbucks would have the challenge of satisfying the coffee culture of Italy why adapting its taste to the customers.
The people may not approve the current taste used by Starbucks as they consider it to limit the taste of the coffee beans. This would not be a big challenge to overcome as Starbucks could easily handle learning the culture and coffee styles of the people prior to making the move. Starbucks has the reputation of being a hang out for people to go and do homework or converse amongst each other. This is something that is needed in Italy, as most of the coffee shops are places to go purchase coffee instead of places to sit and enjoy the coffee.
Competition is very limited in Italy as only a few places offer what Starbucks does and there is no reason not to believe that Starbucks could not succeed in Italy. Starbucks competition in Italy is a company who has modeled their business and is capitalizing on its absence from the market. Just like Starbucks they cater to the young adults and offer a socializing place instead of a store atmosphere. The fact that other companies are modeling the business practice of Starbucks shows that they have influenced the market and would be a great fit to venture into Italy.
After reading about the success of others like Starbucks in Italy it is hard to believe that they would not be able to be successful entering into the Italian market. People in that market love to drink coffee and probably are open to many different options that Starbucks would offer. The competition would not be hard to overcome, as Starbucks would offer everything they do plus the brand and marketing that has made them a success in America. The ability to purchase goods in the local economy and the ability to offer numerous jobs to the local economy would be a welcome.
What Starbucks can provide that the other competitor could not is the international success that it has had. People in Italy would be able to purchase coffees and drinks that others in neighboring countries love. Being successful in the biggest coffee market in the world would do nothing but wonders for the corporation that based its work on the experiences in Italy. In Conclusion, Starbucks would be facing a reputational risk when entering the Italian market but it is one that they could do and be able to overcome all the challenges thanks to the success of its soon to be competitors.
The strategic advantage would be to keep its current marketing success as well as understand the culture of the market. The benefits of entering the market far outweigh the risks that they could encounter. The biggest risk they would be taking is failing in a market that is known for drinking coffee, but it is apparent that the people of Italy would be welcomed to the arrival of Starbucks. What I also believe is holding them back is the problems it had in Australia in which led to three quarters of the stores being closed in 2008.
Several reasons for these closures are described and examined, including that: Starbucks overestimated their points of differentiation and the perceived value of their supplementary services; their service standards declined; they ignored some golden rules of international marketing; they expanded to quickly and force themselves upon an unwilling public; they entered late into a highly competitive market; they failed to communicate the brand; and their business model was unsustainable (Patterson, Scott, & Uncles, 2010). Starbucks should enter the market with open arms and embrace the international success that it has had.