Answer Question #1
Starbucks Café is the world’s largest coffeehouse with over 27,339 stores worldwide scattered across 75 countries. The organization decided to penetrate the country of Turkey in 2003. This nation has a rich history of coffee drinking as the world’s first coffee shop was establish in Turkey in 1475 in Constantinople. Similarly, to the U.S. consumers the ritual of drinking coffee is visualized as more than a casual experience as consumers in Turkey consider coffee drinking as an opportunity to share time with friends and family to socialize. The Starbucks experience concept caught the attention of local customers in Turkey, thus the new stores that were open in Turkey gained popularity fast. Instead of using its standard menu as the company does in any country it penetrates Starbucks decided to adjust its drink and food menu to offer a local food menu. The population of the country is large at 72 million inhabitants. There is a high density of population in the nation’s capital of Istanbul. Turkey has a relative young population as the median age is 28 years old. The median population of the country is aligned with the target market of Starbucks which is customers between the age of 25 and 40 years old. The success of the company in Turkey has been driven by its CEO, Can Ikinci, whose expertise were instrumental in the growth of the firm in this country. Also, Starbucks was smart in the entry strategy it used. The company gave the franchising for expansion in Turkey to firm that has vast experience doing business in Europe and the Middle East called Al Shaya Group. The Al Shaya Group leveraged its regional expertise and local market knowledge to guide the growth plan of Starbucks in Turkey.
Answer Question #2
Starbucks Café realized that Turkey has a culture in which coffee is ingrained in the traditions of the inhabitants of the country. The Starbucks Coffee Turkey division of the company provides benefits to the population of Turkey that differentiates its normal approach to global expansion. The coffee its sells in Turkey is adapted to local flavors. Starbucks Turkey is the only place in which Starbucks offers a customized special menu for the clients. The customers of the country also received augmented benefits in the form of the exceptional customer service it provides to clients and the fact that the company offers in its locations a special atmosphere that entices Turkish customer to visit its store and stay to hang out. The franchising of Starbucks Turkey is managed by local investors which have a better understanding of the local customs than Starbucks managers in the United States.
Answer Question #3
The marketing strategy used by the organization is mainly a localization strategy, but it does have some hybrid elements the company is using. Evidenced that the firm is applying a localization strategy is the adaption of food menu at its stores in Turkey. The company is expanding rapidly in this market since in 2006 and 2007 the organization opened 29 and 30 stores respectively. A hybrid aspect of the company’s marketing strategy is the use when entering a new city of a series of public relations announcements, marketing strategies and advertising, and creation of promotional sales events to build awareness in Turkey cities that the company penetrates. These marketing approaches are like what Starbucks does in the U.S. when it opens a new store. Another aspect of its hybrid marketing strategy is that Starbucks chooses locations in Turkey in the same manner as the U.S. regarding selecting locations with high traffic of potential customers. The company targets cities in Turkey with high population densities.
Answer Question #4
The product/market expansion grid shown in figure 2 illustrates four potential strategies Starbucks café could use to expand in Turkey which are market penetration, product development, market development, and diversification. The best strategy that Starbucks can implement to achieve further expansion in Turkey is market development. A market development strategy involves the isolation of a target market segment, a set of clear-cut goals, performing extensive consumer research, and implementing initiatives amid at getting the word out about the company’s products and services (Morello 2018). The other three growth strategies can also be used in a smaller extend achieve further penetration into Turkey. The market penetration strategy can be implemented by opening more stores in Turkey. The product development strategy can be applied by further adding more coffee drinks and food items that are aligned with local cuisine. A diversification strategy can be used by penetrating the Turkish food retail market with unprepared Starbucks coffee items. The firm can also apply diversification by investing in some other businesses in Turkey not related to its industry.
Answer Question #5
The potential to achieve further growth by Starbucks Café in Turkey is viable. When the company in 2006 and 2007 faced harsh times, which caused the firm to close over 600 stores the panorama in Turkey was much different as the firm did not close a single store during its downsizing round. The economy of Turkey has experienced growth which led to a growing and booming retail market as the country has many construction projects for new malls. The total gross domestic product of Turkey in 2007 was $888 billion or $13,000 per capita. The possibility of forming a strategic alliance with other food vendors is a potential strategy for growth but is not the only one the company should apply. Starbucks Café has a line of unprepared packaged coffee and other products that are sold in the United States in supermarkets and other retail stores. These products could sell very well in Turkey since this country has cero agricultural production of coffee. All coffee that is consumed in Turkey is imported from other countries.
The introduction of unprepared coffee and other products such as tea and chocolate beverages must be heavily advertised by the firm using traditional channels such as television, radio and the written press. To achieve greater overall growth for Starbucks requires the company investing more in new marketing channels that are gaining popularity within the youth. Two of those marketing channels are online marketing and mobile marketing. Both marketing channels are cheaper than traditional channels and its utilization is spreading in the business world due to its low cost and quick results. For example, a Starbucks Café located in a mall can send SMS messages to customers shopping at the mall offering special prices on certain products if the customer visits the store. It is projected that the size of the mobile marketing industry worldwide will reach $158.55 billion by the end of 2018 (Emarketer 2014). Another strategy that the firm should use to improve the brand value of the organization in Turkey is by increasing its investment in training and development on its employees to increment the level of service that its baristas offer to its customers. Turkey has a large population, thus its number of stores as of 2007 of 80 represents a very small figure. The company should establish a long-term target of opening 500 stores in Turkey since the country can easily support that many stores without saturating the marketplace. The organization has hired an energetic, young, and talented CEO to lead the Turkey Starbucks division. Even though the CEO is very competent he has no prior experience in the coffee industry. I recommend that human resources prepare a short online course for him to increase his level of knowledge of the coffeehouse industry.
- Emarketer.com, 2014. Advertisers Will Spend Nearly $600 Billion Worldwide in 2015. [Online] Available at https://www.emarketer.com/Article/Advertisers-Will-Spend-Nearly-600-Billion-Worldwide-2015/1011691 [Accessed 21 June 2018]
- Morello, R., 2018. What is Marketing Strategy Development? [Online] Available at: http://smallbusiness.chron.com/marketing-strategy-development-58521.html [Accessed 21 June 2018]