Services Marketing for Pike Place Market - MyAssignmenthelp.com

Question: Discuss about theServices Marketing for Pike Place Market. Answer: Introduction Starbucks was established in 1971 in Seattle in a place called Pike Place Market. it had around 140 stores and was expanding at a great pace before being publicly listed in the year 1992. It was estimated that the growth of the company was around 60 percent. It was seen that the company was opening a store per day and at least seven stores on a worldwide basis. Currently, it has more than 15,000 stores in over 44 countries and accounts for around 39 percent of the total sale of coffee on a global scale (Chua Banerjee, 2013). Background of the Business The business flourished because it revolutionized the idea of drinking coffee. Taking cue from the European nations, the company started to make lattes, frappuccinos and many other different varieties that was previously unknown to the customers in the United States. The company made the customers go through an entire experience while selling their coffee products. This helped the company in gaining a customer base and expanded at a faster rate. The company made it a point to make business with the people by serving coffee. This helped the company to greet the customers by making eye contact with them before serving them their products. The company created a space between home and work amongst the people as they spent a certain amount of time within the company (Lang, 2015). The company was expanding at a fast pace and had around 44 markets overseas excluding Paris, which was the birthplace of coffee for the European consumers. The company wanted to open stores in Asia, which included places like China, Thailand and Japan. The company opened its first outlet in Tokyo in the year 1996 as it wanted to capture the Asian market. It made changes in its product such as the introduction of green tea as the Asian consumers loved it. This helped the company to gain an insight in to the local tastes of the market, which helped the company to expand its business (Ling, 2014). The scenario in Australia was very different with the coffee industry. The country already developed a taste of coffee after the Greek and Italians migrated to the land post World War II. The people of that country has experienced better and sophisticated coffee over a period of years. The people in Australia were already familiar with the coffee as they used to consume it daily. The coffee culture in Australia was superior and sophisticated in nature when Starbucks entered the market for the first time in 2000. The consumers in Australia had developed a sophisticated palate for coffee, which was simple and stronger without the need of any flavors unlike the Americans or the Asians. The coffee market in Australia was estimated to be around $3 billion and around $2 billion in the retailing industry for coffee. The country was one of the highest consumers of coffee globally as there were almost 14000 cafes that served different types of coffee to the consumers (Brien Adams, 2012). Marketing Conditions The conditions in Australia is favorable for a good coffee market due to the ideal weather conditions, which helps the consumers to enjoy good coffee. After entering the market, Starbucks wanted to simply rely on its name to sell coffee in the country. This did not however work out because the company failed to define what they wanted to sell to the customers. The market already had an existing caf culture for the educated class in the society who after work enjoyed a good time with their coffee from the demographic point of view. The company did not make any changes in the product that would be in accordance with the coffee culture in the country, which made their product fail in the market because the country already had a rich heritage with its coffee experience (Nair Weber, 2015). The company did not take note of the already existing cafes in the country that could be competitors to the firm. Companies such as Gloria Jean dominated the market with respect to high-end consumers whereas McCafe dominated the market with respect to the low-end consumers. The other competitors were Coffee Club, Wild Bean Caf and Hudsons Coffee that offered strong resistance to Starbucks. Post 2007, these companies and McCafe in particular adopted the strategies of Starbucks and offered the consumers the same experience but at a lower price. These threats were not taken in to account by the company when they decided to enter the market. The competitors were serving coffee according to the tastes and preferences of the Australian consumers for many years and they knew that they had a strong base of customers (Lovelock Patterson, 2015). The political factors that affected the company came from the various international trade regulations and the tariffs associated with it. These factors blocked the trading opportunities for the company and since the company is big, its operations were majorly affected by it. There was an imposition of high taxes for the importing of the coffee beans from the best areas of the world. These factors helped the competition in the market to grow, which directly affect ted the sales of the company. From the economic point of view, the dollar rates were unstable because of the monetary policy that was weak in Australia. This factor affected the imports of the goods for the company. The major supplies of milk, sugar and the coffee beans that were imported from different countries had to be done by incurring huge costs. These factors made the company to push the costs to the end consumers in the markets, which made their coffee costlier that the other companies that served the consumers with the coffee that was available locally (Honack et al., 2017). Market Positioning Positioning helps a business to understand the kinds of products or the services that it wants to serve to the customers in a particular market. It helps in the creation of a brand image through its products to the target customers. It is done by using promotional activities in the particular place, which will help the brand of the company to be more effective in the market (Reinhard, 2015). The company did not use any promotional strategies to advertise its brand in the Australian market as it relied on its brand image and the way in which it served the different customers on a global scale. This made the company fail as the consumers were not aware of the type of coffee that the company wanted to serve to them. Pricing was considered to be a huge factor as the company charged more than the other existing companies in the market. the quality of coffee that was served was according to the Australian consumers very highly priced (Perrone Wodonga, 2015). The positioning strategy of the company was one of the attributes that led to the failure of the global chain in the market. Due to the lack in the promotional activities and relying on the word-of-mouth policy the company thought of surviving in the market. This policy did not work as the customers themselves were not well aware of the products that they wanted to serve in the market (Zhang, 2012). The locations of the store were in poor places and the poor quality with overpricing served as a major factor in the failure of the coffee chain. The other companies that were present in the market was successful because they knew the market better than Starbucks and the type of coffee that was liked by the consumers. The company could have opened a store and analyzed the taste and preferences of the consumers rather than opening multiple chains at the same time. this made the company incur huge expenditure without getting a proper knowledge of the marketing conditions in Australia (Adams , 2012). Another major disadvantage of the firm was the wrongful use of human resources. The company did not hire local personnel that would have provided valuable insights about the market to the top management of the company, instead they bought along their own people who could not rise up to the challenges of dealing with the local Aussie culture. These factors all attributed to the failure of the company (Morris, 2013). Target Market Target market helps the company in identifying the potential customers that are present for its products and services in a particular market. this identification is done through proper research methods and hiring the local people who have a better knowledge of the markets. They provide valuable knowledge to the company based on which the company decides to innovate its product for the particular market (Perera et al., 2012). The company targeted the wrong section of consumers in the market. They targeted the niche drinkers of coffee who were willing to pay the premium price for their products. These coffee drinkers did not get impressed with the products that the company was serving them. They found that it was useless to pay premium price for the coffee that was being served by the other companies at a less price (Sharp, 2013). The company in order to survive in the market, should have targeted the average coffee drinkers with a price that was competitive enough in the market. earlier, the company had ventured in new place where the culture of drinking coffee was relatively new due to the expansion of the brand, for example China. The Chinese consumers were willing to pay premium price for the coffee as they were basically tea drinking nations. But the scenario in Australia was different, the consumers in the market already had a developed taste for coffee due to the already existing caf culture. On tar geting the average drinkers and placing the products at a competitive price, the company would have survived in the market and ensured that they were being able to earn profits (Shin, Kashima Laham, 2014). The company underestimated the competition and overrated their own brand in the market. the company relied on the word-of-mouth policy, which did not turn out to be successful for the company. Opening a number of stores and targeting the high-end customers amongst the coffee drinkers made the company go in to huge debts from where it was hard to recover. The company tries to dictate these customers through their brand name and not through the products that were being served them. These differences took a huge toll on the company whereas the rival companies thrived successfully in the market (Taylor Richardson, 2014). Recommendations The failure of the company in the Australian market served as a moral lesson for many businesses around the globe. The company wanted to dominate the market without proper knowledge of the marketing strategies that were required to survive in those conditions. The target market was duly setup by the company so that they could sell their products to the consumers. This made the consumers shift their focus to the other companies for quenching their thirst for coffee, which had an affordable range of prices. For the company to succeed in the Australian market, they have to make huge changes in its approach to target the proper customers. This can be done by extensive research of the market and understanding the local needs of the customers. The company needs to divert their attention from brand image and shift their focus on quality products that will help them in gaining a competitive advantage over the rival firms. Improvement in their customer care and after sales services has to be done by thinking on a global basis but acting on a local basis. Conclusion Thus, it can be concluded that the company failed from all aspects of marketing strategy in Australia. They should have hired local people in their stores who had better knowledge of the products and the tastes of the customers, which could have helped the company in maximizing its profits. The overpricing of the products was another factor that led to the failure in the market as the customers felt that the quality of the product did not match up to the prices that they were paying for the product. The competitive factor in the market needed to be analyzed by the company rather than depending on the brand image to pull the customers towards their products. 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