Starbucks Failure in Australia for Production - MyAssignmenthelp

Question: Discuss about theStarbucks Failure in Australiafor General Production. Answer: Introduction A company success is based on the prior strategies which should be evaluated, examined, tested and proven to work in a specific geographical, economic or even social phenomena. Service marketing as well as product marketing are aspects where principles and theories pertaining the customer, marketing environments and general production factors are laid on ground to avoid failure and frustrations as in the case of Starbucks. Starbuck as a big company which came to the market and had been there for so long did not observe much of the marketing theories and principle (Honack et al., 2017, p.14). The basic principles that supports business ideas in relation to the consumers were ignored. The results of this was a fail. The marketing theory that says that, a company must put its products in position and services in the market place in a way that their consumers believe they need a particular product for service or a product needed by the customers has an added or a unique benefit (Hunt, 20 14, p. 411). The background of the business was not conducive. The conditions that were in the prevailing market were not supportive to the business. The conditions of the market were unfriendly from the fact that there were no well strategized moves towards approaching the market for coffee shops in Australia as it had happened in USA and Asia (George Anandkumar, 2015, p. 106). Creating an Image or the brand becomes a challenge I the competitive market in Australia, most specifically for coffee and other brews. Background of the Business Starbuck has been one of the greatest company which had penetrated into the market from the year 1971 to the year 1972 where it has monopolized the coffee shops in most parts of the United States of America. On its expansion to many countries in the globe, Starbuck thrived so much as a premium coffee shop. In many parts of Europe, Starbucks also held the market needs in Europe from the fact that, it Americanized the European coffee tradition and therefore taking control of the market in the prevailing Europe. However, the case did not persist that way. Though having a big trademark and having the monopoly in the market, that did not seem to work in some countries. Australia was one of the places where Starbucks was unable to succeed. The CEO, Howard, attested one of the basic theory in marketing when he says that the company sells not only coffee but also experience. According to the reviewed information, the company would command about 62% of the specialist coffee shops market in Un ited States of America by 2007, while in Australia the things where contrary to that. In the year 2000, the Starbuck company was making its way in Australia (Honack et al., 2017, p.13). Australian were used to coffee traditions even before the Starbuck entered in their market. Unlike many other countries who were experiencing coffee for their first time, Australian were no way excited by the coffee in the market. The report will therefor e be examining the progress of Starbuck from how it was formed and how it failed in penetrating in Australian market. The marketing principles, theories and activities will be used in analyzing the case study of Starbuck five-star coffee shop stores. Marketing Conditions The marketing conditions can be understood in terms of, packaging, labelling, publicity, construction products and product-supplier registration. The condition of Starbucks market in Australia was variant. The packaging of the coffee to the Australians by Starbucks. The company has a proper company retail experience and packs the coffee in very authentic bags which distinguishes its brands. The labeling of the product is unique, perfect and consumers can easily locate the products owned by Starbucks. In Australia, the company was labeled from USA where it had originated from. This however, did not credit oi as much in a coffee lovers zone, Australia (Beverland, Gemser Karpen, 2017, p.86). Marketing Positioning The efforts of Starbucks to influence the brand it had raised in the market can be identifies in marketing positioning in relation to other brands which were competing with the same product. Starbuck strived in many countries to subdue others and emerged successful in many states. In reaching Australia, its objective to occupy and create a unique and an advantageous consumer mind seemed to deteriorate in Australian Market. Other brands in Australia caught the consumers mind as they were used to them before Starbucks introduced theirs. Target Market Starbucks aimed at establishing coffee shop market in different parts of the globe. It had started in USA and then to other continents like Asia, Europe, South and North America until it targeted Australia. In Australia the response was not as expected. There was frustration and drawbacks as a result of poor planning and false sense of brand security (Virgin, 2016, p.93). Discussion Competition from Australia For the service that Starbuck would offer in hospitality services, competition was unbearable. For the case of other countries, Starbuck was able to grasp the control of the service marketing. Some stores which were already established like the Gloria Jeans stores, McCafe, The Coffee Club, Wild bean Caf and Hudsons caf had already dominated in the marker since the year 1996. Gloria Jeans was on top with 500 stores by the year 1996 while Starbucks could only be able to maintain 23 stores in Australia. According to the principles of marketing, the Starbuck stores could have a diversity of service or even offer a different product that could be unique so that it would create a new market for the consumers. Starbuck experienced harsh competitors. Again, Australian History proves that for many years, there was coffee and better brews that were in their disposal long before companies like Starbuck could bring their services to Australia. Since the company had enough resources from the exis ting markets, it made a lot of investments in expanding its market and improving the conditions of the coffee shops (Solomon, 2014, p. 328). For this reason, Starbuck forgot the theory of consumer service that purports consumer segment. The company focused so much on their brand and expansion and forgot that their business was to sell services. In Service marketing and product marketing, the company should have an equilibrium in its practices. This means that a company cannot underestimate or ignore service delivery and keep on improving its product, definitely the customer segment will be broken. This was what Starbucks did. Remember that Australia coffee lovers had a very strong taste of coffee. The internal marketers of coffee could offer as good coffee as the one that the one the customers would like but, the services would be different. Star buck was not in a position to capture this taste, for the product they offered, it was nice, but, their services were unbearable to capture the Australian coffee lovers. These are not the best practices of a service industry. The hospitality strategies to the customers should be selected in a pleasant, unique and to the customers expectations in a new competitive market. Failure to which, the company ends up losing its market. For a company to take services to a new environment, there should be a thorough assessments of the target customers, risks, uncertainties and how to adjust to them and evaluation of the new market to avoid frustration in its service. Segmentation Approach to Service Marketing All the products and the services that the company brings in place are meant to meet the needs and the market demands of the customers. However, the interests of the customers are different. Not all the customers will be interested with similar product and this results to the need for segmentation. The demographic segments, segments based on behavior, segments based in history of the products and relationship with the products and services are to be held on a top priority. After the company such as Starbucks is in a position to evaluate these factors, it can therefore proceed to introducing the services and products to the desires population. The marketing mix strategies can therefore be extended to the consumers as per their need and profitability (Hollensen, 2015, p. 371). Starbucks did not observe this this principle. On its earlier reputation in Asia and Europe, the company thought that the same response would be applied in any other segment. There was generalization of facts which were not necessarily true. This leads to Starbuck opening new stores everywhere in Australia only to find that the response was not as in other cases. The segment analysis was not carried out appropriately as the company would have seen the existing ground for the coffee business and responded as per the marketing norms and principles (Hollensen, 2015, p. 372). The craft of presenting the coffee product to the segments that would like it and who can afford it as well as who would access it is a key element in segmentation in marketing. Starbuck coffee would not be accessible to low level consumers. Only the middle and top consumers accessed it, therefore, seems like an overlook to some economic strata or segments (Lusch Vargo, 2014, p.37). Endorsement in service and product market as per the case of Starbuck stores The testimonials from the past customers or the prominence of a product and services assures other, or the new customers about the product. According to James Burrow (2014), the importance of designing effective endorsements is to use testimonials from a person that the target consumers can identify and recognize. In a new demography, Starbucks would have employed this strategy to sell out the new product. As a result, the company would have picked the customers who would be driven towards the senior citizens who would have reviewed the product. Word of Mouth and Personal Selling Principle of Marketing Word of mouth and personal selling are principles that should be held with a lot of care in service marketing. The customers need servers and attendants who are able to speak nicely and address the customers concerns with a lot of care. For this reason, the service providers should cultivate on grasping the customers mind and taking all their attention to create likelihood and rapport. Through the word of mouth, a customer can be driven to liking the product. Conclusion All in the nutshell, the marketing theories principles are primary contributors to the success of any company. Any organization that has its future have to embrace all these strategies in marketing. Starbuck company is an example of companies which once felt the joy of monopolizing the market and at the same felt the loss of market and stores from its competitors. Underestimating the competitors, slow response to the risks and uncertainties as well as wrong marketing strategies would cost a lot to the company and its products (Hollensen, 2015, p.105). Starbuck is such a company. However, the company still exist. It can still proceed with expansion internationally in places that exhibit Australian business and marketing environment. Recommendations Amidst the existing market competition, the Starbucks can still make it through a change of marketing strategies. A strategy which seems fail in its application should be done away with. There is in no way that a company should proceed with medieval principles in a changing global economy. A strategy for change should be carried out every now and then after serious deliberation. Secondly, Starbucks company need to carry on out need assessment and segmentation approach before indulging in a new business environment. This will help the company to have the correct information of the environment where the marketing strategies and practices are going to take place. In this case, different segments should be examined and evaluated at first. Instead of the company to introduce the product to the market at once, it should take time with controllable investment stores which could not lead to heavy loses as the ones witnessed in Australia (Lovelock Patterson, 2015, p.61). Thirdly, the company should meet the psychological contract of its customers. The company had promised the people that it would be in a position to deliver superior coffee in comfortable surroundings in Australia. These words of mouth sticks to the consumers minds. The consumer builds very high expectations of the products prospected to be introduced only to find that it is not as natural as it was expected. This brings about the issue of frustration and breaking the psychological contract between the producers and the consumers. Another issue is the product-cost relationship. Service marketers can use the tactic of offering competitive pricing and giving frequent buyer discount to catch the interested customers. According to the principal of considerations, there are very many customers who are at many times in dilemma of the products. Starbucks can adapt this strategy, may be, once per week by offering a free breakfast to all customers. References Baron, S., Warnaby, G., Hunter?Jones, P. (2014). Service (s) marketing research: developments and directions. International Journal of Management Reviews, 16(2), 150-171. Beverland, M. B., Gemser, G., Karpen, I. O. (2017). 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