Paper Example on Starbucks Australia Failure

Introduction

Starbucks opened its first cafe in Australia in 2000. By 2008, they had grown to about 90 cafes in the entire continent. In the same year, 2008, Starbucks closed more than 70 percent of its cafes in Australia leaving less than twenty-five stores in the entire continent. This is a really good marketing case study. Starbucks has almost concurred the globe in terms of retail coffee business. They are in virtually every continent in the world, and they are the first thing that most people think of when they think about coffee. Despite all these, they failed miserably to concur the Australian Market. The Australian market is one of the largest coffee markets in the world. There are several reasons that can be attributed to the failure of this worldwide brand while local coffee retailers succeed.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Problem Identification and Justified Recommendations

The main reason for the failure of Starbucks in Australia is using the same marketing strategy. Starbucks took the exact marketing strategy that had performed well in the other countries and continents and implemented it as it was to the Australian market. In Australia, coffee was not just coffee. Coffee cafes were intimate places that you met with your friends and caught up with each other. Coffee was just the product of the meeting. Drinking coffee was done with people you knew and in places that you were familiar with. Starbucks sold a different experience to what the Australian consumers were used to. They sold sophistication, good interior ambiance and grabbing a cup of coffee just for its sake. At first, people went to the cafe because of brand awareness. After all, it was a well-known global company. However, after some time, it the cafe had everything except that feeling of intimacy and friendship. So, people stopped going to Starbucks, and as a result, they closed more than seventy percent of their stores.

Another reason for their failure is the pace at which they launched. Starbucks launched their stores in Australia al a lightning speed as they did in other continents. It is estimated that a Starbucks location opens up every fifteen hours in China. If they opened up locations like this in Australia, they would not have time to study what the market wants and needs. This resulted in them having many stores that were not giving the customer the experience that they were looking for. As a result, Australians started associating the brand with a lack of the experience they were looking for, and as a result, more people avoided the brand. Another problem that they faced with growing too fast is that they did not give the Australian consumer enough time to adjust to the new brand in the coffee market. It was something new, and it was too available for them. This created some kind of notion that there was nothing special about the brand as it was everywhere.

Pricing was also one of the issues that turned customers away. Starbucks coffee was priced at a premium. The price was way higher than normal coffee cafes. The pricing was mainly because apart from buying coffee people were buying part of a worldwide brand when they bought the coffee. Starbucks took the same idea and used it in a place that no one had ever known what is so special about the brand. As a result, their premium price made the Australian customer feel like he was being ripped off rather than having the intended feeling of getting premium coffee. This made most people prefer their old coffee places that were regularly priced and offered the same thing as Starbucks. They would have started pricing like most local cafes or even lower but offer better services and slowly increase their prices. This would serve to show the Australian customer why they should pay a premium for a cup of coffee. This would ensure they have a loyal following before they pump their prices up to a premium.

Australians are heavy drinkers of coffee. On average Australian drinks a third of a cup of coffee daily. With this number of people being coffee lovers in the country, the bar for specialty coffee had been set very high when Starbucks was going starting off in Australia. Baristas were professionals and were very dedicated to their craft. Starbucks came in with a lower level than what the Australians were used to. They presented baristas that were not as professional and not that dedicated to their craft. Even though this might not seem like a big deal, customers feel this and shun away from the entire brand. Furthermore, in Australia, they had a different coffee culture than in the United States. In the US Starbucks was known for its drip coffee but in Australia, people preferred coffee culture based on expressos. Starbucks had to learn to produce better espressos to compete with local cafes that had been doing so for decades. This made the brand to be looked as a poor-quality brand at what Australians wanted and thus nobody when there for their coffee.

Another mistake that the brand made in the continent was pulling out more than two-thirds of their stores and this further reduced the trust in the brand. No one wants to be on the losing team and to most Australians Starbucks was that team. By pulling out of the Australian market, they were announcing defeat and telling the Australian customer that they were unable to provide what they wanted. Even the few customers that they had further left and thus the company incurred huge losses.

Another problem is that Australians preferred independently owned cafes to multinationals. This was because an independent cafe provided hands-on and a personalized touch to their coffee. You would be more likely to take all your friends to a cafe that was owned by someone you met at the subway and had a conversation with than to a multinational that you have no idea who runs it. It becomes a no-brainer if the independently owned cafe offers better services, friendship and also at a lower price.

Conclusion

It is evident that the lack of a proper market started can be the main source of a brand's downfall no matter how big the brand is. Care should be taken to ensure that the proper marketing strategy is adhered to when moving to a new location. People will not just buy from you because you think that you are the best without showing them what you are best at. The old saying that the customer is always right is evident here. People wanted their coffee in a certain way, Starbucks refused to offer that, they lost millions and closed up more than two-thirds of their shops in Australia.

References

Booker, L. (2018). Why Starbucks In Australia Was A Massive Failure. Retrieved from https://www.gizmodo.com.au/2018/07/why-starbucks-in-australia-was-a-massive-failure/

Hurst, P. (2018). This Is Why Australians Hate Starbucks. Retrieved from https://munchies.vice.com/en_us/article/4xb9gd/this-is-why-australians-hate-starbucks

Jager, C. (2018). Why Starbucks Failed In Australia. Retrieved from https://www.lifehacker.com.au/2018/08/why-starbucks-failed-in-australia/Patterson, P. (2018). Starbucks' Failure In Australia.

Patterson, P. G., Scott, J., & Uncles, M. D. (2010). How the local competition defeated a global brand: The case of Starbucks. Australasian Marketing Journal, 18(1), 41-47.

Starbucks. (2018). Starbucks in Australia. Retrieved from https://www.starbucks.com.au/Starbucks-in-Australia.php

Why Starbucks just can't crack the Australian market. (2018). Retrieved from https://www.sbs.com.au/news/thefeed/story/why-starbucks-just-cant-crack-australian-market

Turner, A. (2018). Why there are almost no Starbucks in Australia. CNBC. Available at: https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-failure.html [Accessed 23 Oct. 2018].