Daily necessities or luxury? Starbucks differentiated position in China.

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Product positioning has to meet consumer demand, match up to their needs, in order to establish the positive image of the product, and finally to promote the purchase behavior.

 

Product positioning has to focus on basically four areas: products, companies, consumers and competitors. Which involve the characteristics of the product, the sense of innovation of the enterprise, consumer demand preference and the market position of competing products, after the four factors well-coordinated, it can correctly determine the product status.

 

ee9a6d69a26d03efa73b5aff946c45c0Since opened the first store in China 20 years ago, Starbucks has successfully opened more than 570 stores across 48 Chinese cities.

When Starbucks entered China in 1999, many people suspect that Starbucks will not be successful. Traditionally, Chinese people like to drink tea, it seems impossible that Starbucks is capable to break into this market.

But Starbucks did not let this questioning hinder their own pace. A meticulous market research shows that every major street in the Chinese coastal cities, you can find a Starbucks coffee shop.

The price of Starbucks coffee in China is the highest in the world, which costs less than $4 a cup of latte but sell ¥27 in Beijing,¥3 expensive than London, and more expensive than India nearly doubled.

Starbucks explained that the price of coffee is indeed higher than the other place of the world, because of the different customer behavior. According to the investigation, most of the Starbucks store in China is much larger than other countries. It is interest that, most Chinese customers prefer to stay in the store, and some of them will stay for a few hours, but in western countries, their customers often just took away. Thus, Starbucks’ victory has to thanks to differences in positioning. Beyond the traditional stereotype of the company, they positioning for different countries, different customers and different consumer behavior.

Starbucks make their company’s products and services significantly distinguish with other companies in the industry in China, they transmission to the client a clear philosophy that Starbucks is a high-end brand, coffee is different here, the freshest and most palatable.

Starbucks is positioning itself as independent the “third space” from the home and working place. Starbucks’ price positioning is “most people affordable luxury” and adhering to the value proposition that “hard work and enjoy life”.

Thus, in addition to provide exquisite Starbucks coffee drinks and pastries, they are also provide consumers with live piano music, classical European music background, fashion magazines and newspapers, it seems very complicated, but positioning is quite clear – provide higher value enjoyment place to middle and high income level people.

Starbucks provide the first-class environment, the best service. This is the place where successful people come to enjoy their high quality of life, so customers will finally forming a kind of concept in their brain that Starbucks coffee has the best quality. In this case, customers will naturally be willing to pay a little more for something can take them more enjoyment.

 

 

Reference

Kotler, P., & Armstrong, G. (2012). Principles of Marketing. Pearson Prentice Hall.

Hunt, S. D., & Arnett, D. B. (2004). Market Segmentation Strategy, Competitive Advantage, and Public Policy: Grounding Segmentation Strategy in Resource-Advantage Theory. Australasian Marketing Journal (AMJ), 12(1), 7-25. doi:10.1016/s1441-3582(04)70083-x

 

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