Starbucks Coffee Goes to Japan
Recently, Starbucks Coffee opened its first store in Japan. Starbucks'management believes that Japan's coffee market is on the verge of a revolution similar to what has occurred in the United states. Unlike other American food chains such as Mc-Donald's or Kentuky Fried Chicken, Starbucks hasn't altered anything for the international market. Kentuckt Fried Chicken, for example, sells noodle dishes as well as chicken in its stores. A starbucks excutive says, "Hopefully if you walk into a Starbucks in Los Angeles, San Francisco, or Tokyo, you wouldn't notice any difference." The only concession to global marketing y Starbucks is a joint venture with a Japanese company rather than going it alone.
Starbucks may not be any difference in Japan, but market is very difference from the United Staes Rent on the Tokyo store is $35,000 a month, which is three times more expensive than its most costly American location. Workers are paid about$10 an hour. To this, Starbucks must add shipping costs of bringing mugs and other merchandise over from the United States. To make money, the company says it needs 30 to 40 percent more transactions than in a typical American Starbucks store.
One of Starbucks' major competitors is Pronto. Its sales have skyrocketed from 500 million yen in 1989 to 8.4 billion yen in 1995. This growth was not dependent on coffee alone. Thea shops sell sandwiches and pasta during the day. At night. Pronto belives that, without the evening restaurant and alcohol sales, it would be impossible to cover its costs for rent and employees.
Starbucks fells that it can make it on coffee alone. It notes that, in 1995, Japan imported 380,000 tons of coffee beans. This is 40 percent more than only a decade ago, making Japan third in the world for coffee imports, behind only the United States and Germany. Starbucks plans to rely on its exotic lattes and cappuccinos to gain market share. Yet competitors are more labor intensive than simply pouring a cup of coffee out of a machine. This will further drive up Starbucks' costs.
1.Do you think that Starbucks will be successful in Japan without altering its Americanized marketing mix?
2.If you were going to alter the marketing mix, what variable would you change first? Why?
3.Discuss how each of the uncontrollable variable in the external environment might affect Starbucks doing business in Japan