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Case Study

Starbucks Entry into Tea-Drinking India


Revathy Rajasekaran*
Starbucks is the worlds largest coffeehouse company with a presence in 65 countries around the globe.
As coffee shops were nearing saturation in the US and Europe, Starbucks identified the potential for
expanding in emerging markets like China and India. Though China is mainly a tea-drinking nation,
Starbucks won over this market with its localization and customization strategies. Starbucks believed that
India provides a good business opportunity, given the size of its economy, rising spending power of the
people, and the growth of caf culture. In 2012, the company set up its first store in India. Initially,
Starbucks stores received good response, but then faced challenges such as competition from organized
and unorganized coffee (and tea) shops, high pricing of its products, getting the right store location and
talent pool. The present case aims to analyze the challenges and opportunities that Starbucks face in the
Indian market, and the marketing strategies that it should follow in the Indian market. Analysis suggests
that Starbucks should adapt to the peculiarities of the Indian market. Glocalization strategy can be
adopted, which would use the successful Starbucks strategy used around the world, at the same time
taking into account the changes required to suit the Indian context.

Introduction
Starbucks is the worlds largest coffeehouse company with a presence in 65 countries
around the globe. As coffee shops were nearing saturation in the US and Europe, Starbucks
identified the potential for expanding in emerging markets like China and India (Agrawal
and Sharma, 2012). Though China is mainly a tea-drinking nation, Starbucks won the
Chinese consumer with its localization and customization strategies. Starbucks success in
China encouraged the company to enter India, which too is primarily a tea-drinking
nation. India is one of the emerging markets where personal disposable income per capita
doubled between 2000-01 and 2009-10, resulting in vastly improved purchasing power
(Deloitte, 2011). The upper and middle class segments in urban India were spending more
money in coffeehouses. Moreover, Starbucks believed in the size of the Indian economy,
the rising spending power of Indians and the growth of caf culture among the Indian youth,
which would hold strong potential for its growth. The company had been planning to enter
the Indian market since 2006, but FDI restrictions had dissuaded it from doing so.
Eventually, in 2011, the company signed an MoU with Indias Tata Group to tap the
Indian market potential. In January 2012, it formed a 50-50 joint venture with the Tata
and established its first outlet in October 2012. By March 2014, the number of stores had
increased to 50. Initially, Starbucks received good response; but then, the company faced
several challenges in achieving sustained growth, such as competition from other coffee
*

Coordinator, Entrepreneurship and Talent Development Cell, Department of Management Studies, V V


Vanniaperumal College for Women, Virudhunagar, Tamil Nadu, India. E-mail: reva6887@gmail.com

2015
IUP. All Rights Reserved.
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(and tea) outlet chains, high prices of its products, and obtaining appropriate retail
locations and talent pool.

Starbucks The Global Coffee Retailer


Starbucks Coffee Company is the premium roaster and retailer of specialty coffee in the
world. It was started by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971 in Seattle,
USA. It is the No. 1 branded coffeehouse chain in the world. Starbucks grew from 17 coffee
shops in 1987 to 23,305 stores spread across 65 countries in 2014.
Starbucks became the worlds largest coffeehouse chain, serving both hot and cold
beverages. More than the offerings, the company focused on providing a third place
experience, and the stores became places for relaxation, reading newspaper, chatting with
friends, conducting business meetings, or browsing the Internet. The experience factor
brought tremendous success and reputation, which in turn made it easier for Starbucks to
launch itself in new markets (Kapferer, 2008).

Starbucks Success Formula


Starbucks owes its success to its introducing a new way of drinking coffee, and its nurturing
of the coffee culture. Some of the secrets of its success are:

Starbucks mission is to inspire and nurture the human spirit one person, one
cup, and one neighborhood at a time. Starbucks aspires to establish itself as a
place after home and office a third place concept, and describes itself as the
neighborhood location where people can drop by to have a cup of coffee and
chat with their family and friends.

Starbucks has its own coffee farms, roasters and carefully followed recipes to
provide the universally acclaimed Starbucks experience to its customers.

Starbucks outlets maintain an elite and exotic ambience, which is also changed
in accordance with the season.

Customer service has always been a top priority for starbucks. A manager at
Starbucks receives at least 80 h of training, while a barista receives 40 h of
training before being allowed to make drinks.

Starbucks believes that there is a direct relationship between the financial


performance and the manner in which the customers are treated. Thus, human
resource activities to improve partner (the term used for employees in
Starbucks) relations with the company are given high importance (Flamholtz,
2001).

Starbucks attracts both coffee and non-coffee customers by offering a wide


variety of products including pastries, tea (Tazo and Teavana) and other
refreshing drinks. The outlets also sell drinkware (cups, mugs and tumblers),
equipment (grinders, coffee makers, teapots and kettles), varieties of gift
products and also the Starbucks gift card.
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It follows sensory branding by way of the consistent and distinct smell of freshly
ground coffee beans at its stores.

Free unlimited wi-fi connection is available in all Starbucks stores.


Thus, Starbucks created an uncontested market space through the Starbucks
experience in terms of its store ambience, product range, customer service and employee
relationship.

Background
Here, we discuss Starbucks business strategies and the companys penetration into foreign
markets. These are relevant to the present case study because they provide an overview
regarding the beginning and struggle of Starbucks as a foreign brand, in a market with a
different environment. They also demonstrate the marketing strategies employed by
Starbucks in order to enter a non-coffee-drinking market. Although these references do
not specifically discuss Starbucks in India, they are useful because they provide the
necessary background and insights.

Starbucks Philosophy and Approach


Hayes (1999) in his study examined the Starbucks experience and stated that customers
are willing to pay higher prices for Starbucks coffee as they are not buying just a beverage,
but also making a social statement at the same time. The customers are buying an
experience, a lifestyle and an attitude. Whilst these intangibles can be extremely difficult
to measure, nonetheless, their importance is quite evident from the crowds that swarm
Starbucks cafs in large numbers.
Michelli (2006) pointed out that Starbucks has followed five principles, which
have led directly to its success. These are: (1) make it your own; (2) everything
matters; (3) surprise and delight; (4) embrace resistance; and (5) leave your mark. The
principles are all focused on differentiating from other coffee shops and creating a
special coffee experience for the customer. The key to this special experience is to
create a connection between the partner (i.e., Starbucks employee) and the customer,
and through this connection create a relationship that emotionally attaches the
customer to the brand.
According to Park et al. (2006), Starbucks is a good example of a brand, which is built
upon a set of visually and aurally pleasing atmospheric factors, which allow relaxation and
self-indulgence. This aesthetic/hedonic experience gratifies the self and thus evokes an
emotional connection with the brand.
Koehn (2001), in the chapter on Starbucks, explains why Starbucks has become a
successful brand. She argues that Starbucks gained considerable success and set industry
standards by introducing a whole new concept at the right time in the American context.
Furthermore, she links Starbucks success to socioeconomic factorschanges in both
income and lifestyleswhich in turn led to changes in consumer behavior. The 1980s
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spurred economic growth resulting in higher disposable incomes, which made consumers
demand luxury goods. Since Starbucks was perceived as an affordable luxury, it became an
almost instant success.
Luttinger and Dicum (2006) also spotted out reasons for Starbucks being successful. They
pointed to the fact that Starbucks emerged at the right time, thereby meeting cultural needs
in society to become a successful brand. Apart from the fact that Starbucks was leading the
way in introducing high quality specialty coffee to the masses, it is also stressed how
Starbucks was able to meet a cultural need in society, identified as the need for the so-called
Third Place. The third place is an informal public place between home and work, where
people can meet and gathera place which encourages customers to relax and linger.
Thompson and Arsel (2004) highlighted that the root cause of Starbucks success is
its use of a multiplex communication strategy, which is linked strongly to its branding
strategy as well. This strategy not only relates to the rational mind of the consumers and
influences their rationale behind preferring Starbucks, but also appeals to the consumers
values and beliefs. In this way, Starbucks has differentiated itself from competitors who
have not applied a multiplex strategy, and have hence left the leading role in the speciality
coffee business to Starbucks.

Starbucks Entry into China


Janet (2006) examined the motive for Starbucks to enter the Chinese market, and declared
that Starbucks was trying to draw in Chinese consumers by positioning itself as a new type
of informal gathering place. It was hoped that the brands appeal and the unique
experience of the store would be strong enough to draw Chinese consumers to Starbucks.
Today, Starbucks is targeting the new generation of Chinese with growing spending power
and an appetite for high-status brands.
Bradsher (2005) analyzed the Starbucks effect in the Chinese market, and concluded
that for attracting Chinese consumers to Western culture, Starbucks made some
departures from its normal practice, by combining Chinese tastes with Western culture.
Starbucks also entered Hong Kong, a tea-drinking market. With 51 stores in Hong Kong,
Starbucks has already become a part of the local culture there and is not seemed to be
regarded as an American import. The companys market research shows that customers
in China tend to come in initially just to find a place to meet, and then begin to buy coffee
as they become regular customers.
Fowler (2003) highlighted that Starbucks counted on consumers who would view
coffee as an affordable luxury. China, the country with a history of 4,500 years of tea, had
been closely monitored by Starbucks. Starbucks location-scouting skill was the key to
success, which enabled it to implement its plan of opening hundreds of cafs in just two
years. Starbucks believed that it could build hip hangouts that would deliver new tastes
for Chinas emerging middle class, without hurting the customers wallets. She also stated
that the China push may be the ultimate test of the brands low-budget marketing. The
company selected high-traffic caf locations. The main advertising media was the store
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itself. Along with being in prime locations, Starbucks also adjusted the furniture, store
layout, artwork and menu to appeal to Chinese customers. The Starbucks proposition in
China was impressive. But the people did not go there for the coffee. They went there to
present themselves as modern Chinese in a public setting. The local Chinese customers
who made up 70% of the chains business came for business meetings, dates, or to relax
during shopping breaks. Therefore, Chinese Starbucks provided extra seating to
accommodate customers who wanted to linger.
Rein (2012) explained the advertising strategy followed by Starbucks as once
Starbucks decided to enter China, it implemented a smart market entry strategy. It did not
use any advertising and promotions that could be perceived by the Chinese as a threat
to their tea-drinking culture. Instead, it focused on selecting high-visibility and hightraffic locations to project its brand image. It mostly depended on the people to spread
goodwill through word of mouth.

The Indian Caf Market


India is predominantly a tea-consuming country, and coffee has been a luxury drink here.
Though India is the sixth largest producer of coffee, it represents only 1.4% of global coffee
demand with a per capita consumption of coffee of just 85 g as compared to 4.5 kg in
France, 4.6 kg in Japan, and 6 kg in the US.
However, the coffeehouse culture has caught on to a significant extent in urban areas,
due to increasing incomes, changing lifestyles and western influence. Coffee has turned
out to be a trendy beverage for the younger generation, who form a substantial percentage
of the total population. The coffee shops turn out to be convenient locations to hang out
for youngsters. According to the data from the International Coffee Organization, coffee
consumption in India increased from 95,000 tons in 2008 to 125,000 tons in 2013.
According to India Coffee Shops and Caf Market Forecast and Opportunities, 2017,
the coffee shop/caf market in India is expected to witness a phenomenal growth during
the five-year period from 2012 to 2017. It is forecasted that the coffee shop/caf market
in India will cross 5,600 cr by 2017. Caf Coffee Day (CCD) is the biggest player in the
coffee shop/caf market in India, followed by Barista Lavazza and Costa Coffee. According
to experts, the caf market in India is eyed by global caf retailers as it is under-penetrated
and has huge growth opportunity for the future. Table 1 presents a snapshot of the number
of outlets of the leading players in this industry.
Table 1: Coffee Shop Retail Presence in India
Coffee Shop

No. of Outlets in India as of December 2014

Caf Coffee Day

1,480

Barista

168

Costa Coffee

82
Source: Technopak

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Competition in the Indian Caf Market


In the Indian market, Starbucks would have to withstand competition from established
players like Barista Lavazza and CCD. These competitors have entered new territories with
their cafs on highways, in hospitals and college campuses and are trying out new formats
like kiosks and coffee carts. They have also marked their strong presence by strengthening
their supply chains, enriching their menus, and providing improved experience to the
Indian customers.
CCD can be said to be Indias favorite coffee shop. It is an Indian company established
in 1996, and is the first choice among the youth and college students as a meeting place.
CCDs mission is to be the best coffee chain by offering a word class coffee experience
at an affordable price. CCD started on a small scale and now has around 1,500 cafs in
various cities of India. It has gained high visibility in the Indian market through extensive
advertising. The availability of numerous outlets in close proximity of almost every place
(especially in the major cities) has also been a contributor to its popularity and business
growth. CCD finds customers; customers do not find CCD (Balasubramanyam, 2011).
CCD has a wide menu in both food and beverages. It also modifies the menu based on
the season and to keep in tune with consumer preferences. CCD grows coffee in its own
plantations, makes coffee machines and also some of the furniture used in its outlets. This
contributes towards reducing costs and keeping its prices affordable. CCD has positioned
itself as a fun place where one can go anytime of the day and enjoy with ones friends.
CCD has three outlet formats providing different levels of experience, which target
different customer segments. These are: Caf for youth and college students, Lounge for
office-going crowd and families, and Square for high profile business executives (Mishra,
2013). In contrast, Starbucks will have only one store format and one price across India.
Any difference will mainly be in terms of size of the store. That is how Starbucks operates
everywhere else in the world and it will be the same in India (Gopalan, 2014).
Lavazza, the Italian coffee retailer, entered India in 2007 by acquiring the Barista coffee
shop chain. It aims to offer a truly Italian caf experience to Indian consumers. Barista had
a pan-India presence, and due to Baristas brand equity, it was not difficult for Lavazza to
fortify its position in the market. The visibility gained by Barista Lavazza is mainly by word
of mouth. Also, it associates itself with various events organized by premium educational
institutions and corporate houses (Gholap, 2011).
CCD and Lavazza Barista pose the greatest challenge to Starbucks in terms of customer
acquisition and market share. CCD being the most dominant player is the prime
competitor, but the category also includes tea service brands like Chai Point. These
competitors enjoy the advantage of having a better understanding of local tastes and
preferences. Further, they have a wider network of outlets and their prices are more
affordable. All these make them a preferred choice for Indian consumers.
Starbucks, in turn, can leverage on its stronger brand image and experience in
delivering an excellent overall customer experience to attract customers. Starbucks has
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years of experience and knowledge about various cultures across the world, which gives it
an edge in international operations. Its success in tea-drinking countries like China and
Japan has to be given due credit; and the company will surely benefit from these
experiences when it enters the Indian market.
Against this backdrop, the case study aims to analyze the challenges and opportunities
that Starbucks would face in the Indian market, and the marketing strategies that it should
follow in the Indian market to replicate its astounding international success in India.

Starbucks Entry into India


As the Indian caf market is under-penetrated and has huge growth opportunity, Starbucks
wanted to enter India as far back as in 2006 itself. Finally, in 2012, Starbucks stepped into
India with a local partnerTata Global Beveragesand co-branded the stores and
products as Starbucks A Tata Alliance. Tata Starbucks Ltd. is owned by Starbucks
Corporation and Tata Global Beverages as a 50-50 joint venture. Starbucks also entered
into an agreement with Tata Coffee to serve coffee that is 100% locally sourced and
roasted. The first store was opened in Mumbai on October 19, 2012. As of April 2015,
Starbucks operates 72 outlets in seven cities of India.
Initially, Starbucks opened standalone outlets at malls, airports, metro stations and
commercial complexes. The company plans to expand its retail footprint in India by opening
outlets in hospitals, near gyms or health stores, educational institutions and corporate
campuses, similar to the strategy employed by its competitor CCD (Kuila, 2013). Apart from
the flagship products offered internationally, Starbucks in India has some Indian style
product offerings such as Tandoori Paneer Roll, Elaichi Mawa Croissant and Murg Tikka
Panini to suit Indian customers (Bose, 2012). Free wi-fi is also available at all Starbucks
stores. Table 2 presents a comparison of the marketing elements of Starbucks and CCD.

Challenges for Starbucks in India


Though Starbucks has extensive international experience, Starbucks has to face certain
challenges in the Indian market.
Tea Culture: India is predominantly a tea drinking country. It is one of the largest tea
producers in the world, and over 70% of the production is consumed within the country.
Tea is culturally rooted in India and many Indians think that Coffee is not my cup of tea.
Competition from Local Players: Intense competition can be expected from wellestablished Indian coffee chains like CCD with 1,500 outlets and Barista Lavazza with over
200 outlets. CCD has the first-mover advantage. This brand with A lot can happen over
coffee tagline is cherished by the youth and is a preferred hangout.
Pricing: The Indian consumer is price-sensitive. While CCD may charge around 60 for
a cup of coffee and the roadside shops charge 10, Starbucks 120 would seem to be very
expensive. Price is the most important competitive advantage that CCD would score
against Starbucks. Fixing the right price would be a key challenge for Starbucks.
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Table 2: Starbucks vis--vis Caf Coffee Day


Marketing Element
1.

Products

Starbucks

Caf Coffee Day

30 items on menu (coffee

80 items on menu

and non-coffee beverages,


pastries and savories)

(coffee and non-coffee


beverages, tea, pastries,
savories)

2.

Market Segment

Niche market (Premium)

Mass market

3.

Target Customers

Business executives

College going students


young professionals

4.

Target Customer Age Group

30-45 years

16-30 years

5.

Price

Premium

Affordable

6.

Pricing Strategy

Standard pricing

Differential pricing

7.

Location

72 outlets in 7 states
across India

1,500 outlets in 28 states


across India

8.

Store Format

Single format

Multiple formats
(Regular caf, Premium
Lounge, CCD Square,
Kiosks and Vending
Machines)

9.

Promotion

Starbucks Card

Caf Citizen Card

10. Brand Positioning

Aspirational Brand

Affordable Brand

11. Brand Equity Advantage

Internationally renowned brand Pioneer brand in the


Indian market

12. Investments in Ambience

High

Medium

Real Estate: Though more and more malls are coming up in Indian cities, high streets will
continue to remain important, and getting the best locations at the right price is a huge
challenge.
People: Recruiting high quality baristas and front-end staff is difficult as these jobs involve
a rigorous process-driven approach.

Tatas Support to Starbucks


Starbucks has entered India in joint venture with the most socially responsible and
respected business house in India The Tata Group. A strategic alliance with a group
of such stature provides Starbucks with a head start in developing its branding
strategy. Starbucks enjoys the following support and advantages from the Tata group
of companies:

Tata Coffee, Indias largest coffee producer, has rich expertise in the bean-to-cup
value chain, with a strong focus on quality. It has an internationally certified
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(ISO: 22000) roast and ground unit at Kushalnagar in Karnataka. Thus, sourcing
of coffee beans from Tata Coffee reduces cost by saving on import duty, while
maintaining consistent quality.

The other major advantage of the alliance is the knowledge and understanding
of the Indian market brought in by Tata Global Beverages (Vasudha, 2011).

Tata also has local knowledge of the real estate market and provides
opportunities to leverage on capabilities in this area.

The Tata Groups considerable retail presence through Westside, Croma,


Landmark, Star Bazaar, Titan and Tanishq offer scope for shop-in-shop
Starbucks outlets.

Tata would also be of help to Starbucks in dealing with the local bureaucracy and
politicians.

There is scope for integrating Starbucks into Taj Hotels, and the possibility of
bringing food from the Taj into the Starbucks stores.

Also, Tata Tea is a prominent player in the tea market, with 18.4% share.
Starbucks will also benefit from Tatas experience in the Indian market regarding
different tastes in different regions, thus making sure that it offers the most
preferable blend of both tea and coffee to customers.

There would also be opportunity to serve Starbucks coffee in the Tata alliance
airlinesAir Asia and Vistara.
Certainly, the joint venture with the Tatas will benefit Starbucks in several ways,
from sourcing and roasting coffee beans to customizing offerings and dealing with local
bureaucracy.

SWOT Analysis of the Starbucks-Tata Deal


The strengths, weaknesses, opportunities and threats pertaining to the Starbucks-Tata deal
are outlined in the following.

Strengths
Both Starbucks and Tata Global Beverages have a strong brand image.
Both companies are adept at delivering product innovation and premium quality
experience to customers in different parts of the world.

Starbucks has experience in providing incomparable customer service along


with sophisticated atmosphere, music, interior design and artwork.

Weaknesses
High prices which cannot be afforded by many.
High rental and real estate cost.
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Opportunities
The coffee consumption in India is expected to grow at a compound annual
growth rate of 6%.

Increased interest of Indians in Western brands.


Immense and rapidly growing youth population that is interested in caf culture.
Through this deal, Tata Coffee can lower its dependence on commodity market
and move on to the branded coffee retail market.

Threats
Intense competition from the established Indian coffeehouses like CCD.
Threat of substitute products, especially of tea.
Increasing health concern regarding the negative effects of coffee.

Marketing Strategy for Tata Starbucks


Marketing strategy assists companies in accomplishing marketing objectives. Marketing
objectives help achieve corporate objectives, which in this case are driven by the need to
achieve competitive advantage over rival organizations. Here some suggestions and
observations are made regarding the marketing strategy that may be followed by Tata Starbucks.

STP1 Strategy for Tata Starbucks


Market Segmentation: Apart from demographic characteristics, marketers should also
consider psychographic variables such as consumers interests and lifestyles. In general,
Indias coffee culture has changed the way young Indians socialize. In a country where there
is a limited bar culture and drinking alcohol is still not allowed in many circles, the coffee
culture has provided an acceptable and safe outlet for people, particularly young Indians
to share a drink (Vaidyanathan, 2012).
Target Market Selection: Starbucks has higher prices as compared to other coffee shops.
Therefore, it attracts mostly high-class business executives and foreign customers. Relatively
few college students or youngsters go to Starbucks. As Starbucks price is higher, it will be
difficult for it to attract youth who would normally visit CCD. Thus, Starbucks can initially
establish its outlets in premium locations in the metros and aim at business executives who
have high disposable income and can engage with friends at an expensive caf.
Product and Service Positioning: It is essential to have a unique selling point to position
Starbucks as the worlds best coffee. Customers should be able to rely on excellent service,
pleasant ambience and an aromatic cup of premium coffee every time.

Marketing Mix Strategies for Tata Starbucks


Product: Starbucks should have a clear product strategy for the Indian market to suit the
taste of Indian customers. It should adapt its drinks to satisfy the local taste.
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Ice coffee can be included in Starbucks menu as Indians have a preference for
it because of high temperatures during summer.

The taste preferences of Indians are very different as compared to the people in
the West. Competitors like Costa Coffee are offering apple and coconut flavored
products such as coconut hot chocolate suiting Indian taste. Likewise, Starbucks
should supplement its menu with local flavors and varieties.

A majority of Indians drink tea much more than coffee. Since Tata Tea is the
second biggest tea brand in the world, Starbucks can leverage on this advantage
and offer tea-based products in addition to the premium Starbucks coffee.

Catering to the North Indian taste, paneer-based and non-vegetarian items can
be introduced in the menu along with flavors based on Indian spices.
Price: Pricing plays a crucial role in the successful reach of the products to customers. Indian
consumers are perhaps among the toughest lot in the world to convince on the price-value
relationship. They are very cost-conscious and look for value in whatever they pay for.
Therefore, Starbucks pricing strategy should match with the Indian consumer behavior.

Historically, Starbucks has retained its US pricing model in almost every market
that it has entered, i.e., Starbucks has only one format of stores and one
approach to pricing in all countries where it operates. However, in India, to
target different segments of customers such as college students, business
executives and foreign travelers, Starbucks should have different formats of
stores and follow differential pricing strategy.

Starbucks should follow a premium yet affordable pricing strategy to compete


with others so as to increase its customer base.
Place: A brands success largely depends on selecting the right place for selling the product
or service.

Starbucks being a premier coffee brand, whose target market includes people
with higher disposable income, the location of the stores can be in hypermalls,
in multiplex theaters, and near IT parks and cultural venues.

CCD and Barista Coffee are primarily targeting the major cities. Therefore,
Starbucks could aim to enter smaller cities which have market potential, as people
there are more likely to be brand-loyal as opposed to customers in the large cities.

Starbucks can open in-stores in Croma, Star Bazaar, Trent and also in the hotels
belonging to the Tata Group.

As the real estate cost is shooting up within the cities, Starbucks can
concentrate on motels to target travelers along popular national highways.

As coffee chains are seen as places to socialize and people aged 25-40 years are
mainly the target group, Starbucks may consider opening a new type of outlet
to target this group.

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Promotion: Promotion is extremely important for drawing the attention of the consumers
and thereby gaining market share.

In India, celebrity endorsement is quite common and is chosen as a route to


success by many brands. Starbucks too can have an Indian icon as its brand
ambassador to enhance its appeal in its target market.

Starbucks can also take to social media marketing in a big way. Through
communications via e-mails, Facebook, etc., customers can be encouraged to
engage with the brand and gift Starbucks mugs with personalized name and
message to their loved ones.

Starbucks card can be promoted a convenient way to pay for ones drinks and
also earn rewards for ones purchase.

Starbucks has adopted a unique sampling strategy in India by distributing free


coffee in small cups in front of its outlets. Starbucks believes in word-of-mouth
publicity, that a satisfied and happy customer could be the best source of
publicity, and this could help in generating increased business in India.

Brand loyalty can be increased by creating a community of like-minded


customers, which can work for the promotion of Starbucks.

Starbucks can have karaoke nights at its outlets on Fridays or Saturdays to


attract more youngsters.

Starbucks should get involved in CSR activities, as it does in China, to gain


consumer confidence and maintain a socially healthy brand image.

Starbucks can leverage on the Tata network for promotion. Tata owns
enterprises such as Taj Hotels, Westside, Landmark Bookstore and Air Asia,
which focus on premium category customers, and these can be used to reach out
to the targeted segment.
Starbucks long-term success in India will call for a presence in many more cities and
in several different formats. This would mean expanding into smaller cities such as
Chandigarh, Guwahati, Indore, Jaipur, Kochi and Ludhiana, where disposable incomes may
be high but the willingness to hand over a three-figure sum for a cup of coffee may be yet
to develop. To become a success, Starbucks will have to widen its appeal with a pan-India
presence. However, if it adopts premium pricing to recover at least a part of the exorbitant
real estate and other costs that it would have to bear, it runs the risk of alienating a
significant portion of prospective customers (Gopalan, 2014).

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The IUP Journal of Brand Management, Vol. XII, No. 3, 2015

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