Canterbury

Institute of
Management

HOW
STARBUCKS
MISSED THE
MARK IN
AUSTRALIA

Case
Study
Report Prepared By:
Hardeep Singh

Student ID
CIM7761

CIM Email [email protected]

 COMPANY BACKGROUND
In 1971, the world was introduced
In July 2000, Starbucks opened
to Starbucks, a coffee company
Its first Australian store in
that would revolutionize the way Sydney's Hyde Park. The
people consume and perceive
Organization s e r v e d
coffee. The first Starbucks store
2 8 ,2 18
opened its doors in Seattle, USA,
locations globally as of 2018.
marking the beginning of a
The shops are all business-
remarkable journey.
owned, not franchised.
An influx of Italian and Greek immigrants in the early
1950s helped Australia adopt espresso drinking as a
social lubricant considerably earlier than the US. While
Starbucks introduced Americans to a European Lite
version of coffee shop culture, it arrived late in
Australia. When Starbucks arrived, Australia already
had a strong espresso culture. It had to compete with
cafes that offered a similar or better product. Unlike
practically every other developed country, Australia
has little or no Starbucks. In 2000, the multinational
coffee giant opened its first Sydney Cafe, followed by
84 more around Australia's east coast. After eight
years, it had lost $143 million and had to close 60
locations.
 V ISION

To establish Starbucks as the

premier purveyor of the finest
coffee in the world while
maintaining our uncompromising
principles while we grow.

MISSION

To inspire and nurture the human

spirit - one person, one cup
and one neighborhood at a
time.

Starbucks was passionate about

ethically
sourcing the finest coffee beans,
roasting them with great care,
and improving the lives of
people who grow them. We care
deeply about all of this; our work is
never done.
 SWOT ANALYSIS
Strengths (S)
1-Strong brand reputation – popular and growing population of
loyal consumers.
2-Large global supply chain – the global network of suppliers to
supply the finest and quality coffee beans.
3- Market Diversification – minimize the effects of market and industry risks.

Weaknesses (W)
1-Premium price
2-Generalized criteria for its processed beverages minimize the
cultural alignment of these products with local target markets
and related customer preferences.
3- Products are capable of being imitated or copied.

Opportunities (O)
1-Expansion in developing markets
2-Business diversification
3-Collaborations with major distributors, for example, boost the
distribution and market share of consumer products of the
group, such as ready-to-drink coffee.

Threats (T)
1-Competition against local café and major restaurant chains
that offer low-cost coffee products
2-Australia’s matured coffee culture (special and unique taste
palate)
 THE PROBLEMS
Customer segmentation analysis:
Geographically - Australia is a good coffee industry with ideal weather to
enjoy a good cup of coffee (at least in most parts of Australia).

Demography – Starbucks coffee is affordable for average Australian coffee

drinkers who live around the major cities. Plus the increasing of popular café
culture among educated working-class people

Competition in Australia Coffee Market

Starbucks was not a big enough brand to gain sufficient advertising through
word of mouth that they relied on so their promotion strategy also failed. It is
contradictory to some extent to target the high-end Premium Coffee drinkers and
open many stores within a short period of time.

Coffee Culture
Australians are also known to be consumers who have a special taste in
espresso-based coffees (Mercer). So it would obviously be a hard thing for an
American coffee brand to penetrate such a market.

Growth Strategy
Starbucks was not at all scarce and had too many outlets. It turned out to be
a disaster as Starbucks did not give the Australians the opportunity to get to
know the brand well and develop that "need and "loyalty.

Taste and Pricing

Australian tastes are very different from American tastes as they experience
the culture of coffee before Starbucks. The main thing that Starbucks failed to
do is to make the pricing of their product market suitable and perfect.
 STARBUCKS
SHOULD
UNDERSTAND
LOCAL MARKET
NEEDS AND WORK
TOGETHER
If you work in global marketing:
Investigate the markets and familiarize
yourself with the international teams.
Trust them to know the local etiquette.
And use
their expertise to make your global
marketing campaign a success. Starbucks
Should Create an Early Global Marketing
 Plan So you've built critical contacts,
investigated local markets, and
established global marketing programs
that address local demands.
 SOLUTIONS AND
RECOMMENDATIONS
Starbucks should not only Starbucks Needs a M ore
rely on its great brand. Enthusiastic Workforce

A significant thing for Shop where the employee is

businesses to do, when they passionate and provides you
start a new product or enter a with everything with experience,
new market, is to let go of their and one where the employee is
egos. People won't let you do a teenager who lacks knowledge
what you want just because you of what they are making and
say you want to be the world's what they are using.
most powerful person.
Australians don't like it when
people bang their chests
 CONCLUSION
Starbucks misunderstood Australian culture. They entered
an unwelcoming market. Worse, they failed to recognize
their failure. Sadly, Starbucks grew its unstable business
until calamity occurred. If Starbucks wants to succeed
globally, it must recognize that convergence does not
apply everywhere. Starbucks must be flexible when
entering new markets. Starbucks should perform local
market research and strengths, weaknesses, opportunities,
and threats analyses for each new region. Contrary to
management's beliefs, Starbucks' expansion plainly shows
divergence. Most international businesses cannot use a
one-size-fits-all strategy. Coffee culture has not been
“McDonaldized” into a unified global culture yet. Today's
global coffee market lacks convergence, and cultural
attachments to tradition may prevent it from ever
occurring. Starbucks may use globalization to show local
cultures that they regard their values, norms, and
traditions.
If they do this, they will succeed.
 REFERENCES
General Statistics on Starbucks (n.d.). Retrieved March 16, 2022 from
https://www.statista.com.

Starbucks Coffee Company (2022). Company Timeline – Starbucks

Coffee Company

Company background, Vison and Mission Statement,

https://www.starbucks.com.my

Starbucks Lessons From Australia https://mvmm.com.au/

lessons-from-starbucks-failure-in-australia/

Starbucks (Failure in Australia Market), 13 December 2017,

http://www.businessstudiesqa.com/2017/12/starbucks-failure-in-
australian-market.html
Canterbury Institute of Management

Thank
You

Submitted to: - Amandeep Sehni

Unit title: Marketing Management and Research Methods
Unit code: MGMT403