Canterbury Institute

of Management

HOW
STARBUCKS
MISSED THE
MARK IN
AUSTRALIA

Case
Study
Report Prepared By:
Hardeep Singh

Student ID CIM7761

CIM Email CIM7761@ciom.edu.au

COMPANY BACKGROUND
In 1971, the world was introducedto Starbucks, a coffee company that would revolutionize the
waypeople consume and perceive coffee. The first Starbucks store opened its doors in
Seattle, USA,marking the beginning of a remarkable journey …
Starbucks' opening of its first Australian store in Sydney's Hyde Park in July 2000 marked the
beginning of a new era for the company. The Organization served 28,2 18 in 2018, the global
location of the world's population was estimated to be 328 million. The shops are all owned
by businesses, not franchised, and all of them are business-owned, without any franchising.

Why Starbucks Fail in

Australia

According to study of Starbucks article - Early 1950s immigration from Italy and Greece
helped Australia adopt espresso consumption as a social lubricant much earlier than the US.
Starbucks arrived in Australia much later than it did in America, where it helped popularise a
European Lite version of coffee shop culture. Australia already had a vibrant espresso culture
when Starbucks came.
It had to contend with coffee shops that provided a comparable or superior product.
Australia has few or no Starbucks, in contrast to nearly every other developed nation. The
international coffee giant debuted its first Sydney Cafe in 2000, and 84 more followed
around Australia's east coast. It had to close 60 outlets after eight years and had lost $143
million.

Reference: - Starbucks (Failure in Australia Market), 2017,

http://www.businessstudiesqa.com/2017/12/starbucks-failure-in-australian-market.html
VISION
Starbucks as the premier purveyor of the finest coffee in the world while
maintaining our uncompromisingprinciples while we grow.

MISSION
Inspire and cultivate the human spirit by inspiring and nurturing one
person, one cup, and one neighbourhood at a time.

Notes: - Starbucks is committed to sourcing the best coffee beans in an

ethical manner, roasting them with great care, and improving the lives
of those who grow them.

Reference: -Company background, Vison and Mission Statement,

https://www.starbucks.com.my

SWOT ANALYSIS
Strengths (S)

1-Strong reputation of the brand - popular and increasingly popular.

loyal consumers.

2-Large Global Supply Chain – the global network of suppliers to supply the finest, quality
coffee beans.

3-Market diversification is a way to minimize the effects of market and industry risks

Weaknesses (W)

1-Premium price

2-The generalized criteria for its processed beverages minimise the cultural alignment of
these products with local target markets and associated customer preferences.

3-Products are capable of being duplicated or imitated.

Opportunities (O)

1-The expansion of developing markets

2-Business diversification

3-Collaborations with leading distributors, for example, increase the distribution and
market share of the group's consumer products, such as ready-made coffee.

Threats (T)
1-Competition against local cafés and major restaurant chains that offer low-cost coffee
products.

2-Culture of mature coffee from Australia (special taste and unique palate)

Reference: -Starbucks Coffee Company (2022). Company Timeline – Starbucks

Coffee Company.

THE PROBLEMS
Customer segmentation analysis:

Geography - Australia is a good coffee industry with a great time to enjoy a good cup of
coffee (at least in most parts of Australia).
Demographics – Starbucks coffee is affordable for average Australian coffee drinkers who
live around the major cities. More popular coffee culture growth 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

Coffee Culture

Australians are known to have a particular liking for espresso-based coffees (Mercer). So it
would obviously be hard for an American coffee brand to penetrate such a market.

Growth Strategy

Starbucks was not very scarce and had an abundance of outlets. Starbucks' failure to give
Australians the chance to become familiar with the brand and develop their "need and
loyalty" was a disaster.

Taste and Pricing

Australian tastes are very different from American tastes because they experience the
coffee culture prior to Starbucks. The main thing Starbucks has failed to do is to make the
price of their product market proper and perfect.
STARBUCKS SHOULD
RECOGNISE LOCAL
MARKET NEEDS AND
PARTNER WITH
COMPANIES THERE,
If you work in international marketing, research the markets and get to know the foreign teams.

You can rely on them to be familiar with the customs there. And employ their skills to make your
international marketing strategy successful. Starbucks needs to have an early global marketing
strategy.
You've therefore developed significant contacts, researched regional markets, and created
international marketing strategies that take local needs into account.

SOLUTIONS AND
RECOMMENDATIO
NS
According to all the evidence at hand, Starbucks not only overestimated the size of its
competitors but also the extent of the Australian coffee culture, failing to tailor its product to
the local market. Additionally, with the development of superior barista training, the
accessibility of premium coffee beans, and the technology to make high-quality cups of
coffee (at a reasonable cost), lone proprietors who knew their customers by name were able
to establish themselves as viable competitors. Although Starbucks may have been the
driving force behind the expansion of the premium coffee market, Gloria Jean's, The Coffee
Club, and McCafé—a high-end coffee shop integrated into McDonald's restaurants—all
emerged as significant competitors. Finally, there must be inquiries made.

CONCLUSION
According to all the evidence at hand, Starbucks not only overestimated the size of its
competitors but also the extent of the Australian coffee culture, failing to tailor its product to
the local market. Additionally, with the development of superior barista training, the
accessibility of premium coffee beans, and the technology to make high-quality cups of
coffee (at a reasonable cost), lone proprietors who knew their customers by name were able
to establish themselves as viable competitors.

Although Starbucks may have been the driving force behind the expansion of the premium
coffee market, Gloria Jean's, The Coffee Club, and McCafé—a high-end coffee shop
integrated into McDonald's restaurants—all emerged as significant competitors. Lastly, there
should be investigations.

REFERENCES

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/
Koehn, N. F. (2002). Howard Schultz and Starbucks Coffee Company. Harvard Business
School.

Starbucks (Failure in Australia Market), 2017,

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

General Statistics on Starbucks (n.d.). Retrieved, 2022 from

https://www.statista.com.

Starbucks Coffee Company (2022). Company Timeline – Starbucks

Coffee Company
 Thank
You

Submitted to: - Amandeep Sehni

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