Market entry mode is the process of arranging company’s products, technology, human skills,

management or other resources to enter into a foreign country. This helps companies to
determine goals, resources and policy in order to channel their international activities toward a
sustainable international expansion.

Selecting the entry mode

When choosing the entry mode, we consider the choice of the following factors. First, is the
division of these factors into internal and external factors. Both groups helped Starbucks in
making the decisions. However, the degree of influence is different in each case

Partnership

This is the most utilized entry mode by Starbucks in South Africa. The first step to entering the
South African market was having a licensed partnership with South Africa’s Taste Holdings,
which was founded by entrepreneur Carlo Gonzaga. This industry was dealing with Food &
Beverage. This was one of the many reasons why the launch in South Africa was successful as
Taste Holding and Starbucks we able to work together efficiently due to have common goals and
morals. This form of market entry was also useful for Starbucks as partnering with a well-known
brand that is Taste Holdings in South Africa. This supported the expansion of the coffee chain in
South Africa.

Partnerships can speed up market like in the case of Starbucks and Taste Holdings; this alongside
Taste Holdings good brand image being a leading licensor of food and retail brands in South
Africa, previously helping Dominos launch in South Africa also provided Starbucks a smooth
entry reducing the risk for Starbucks.

Another advantage gained from the partnership between Starbucks and Taste holding is that they
came together to ensure that there was a big focus on localization in terms of empowering the
locals and elevating employment levels. Through the expansion of both industries, there was
creation of employment where people were employed to work in the industries which later
improved the living standards of people in the region.
Market segmentation and target market

Market segmentation. This is the process of grouping customers into relatively similar sets or
groups such that customers within a segment are similar to one another in the way they respond
to the marketing effort directed toward them.

Target market is simply a specific group of people which a producer is trying to reach to sell his
or her products to, where a producer focuses his or her marketing efforts on. This is an essential
element since there are types of products which can be sold in plenty to a certain group of people
depending on the demand and purpose of the product. Before choosing a market it is useful to
evaluate environmental factors that is looking at micro and macro global environments such as
international industry structures and politics. During the time, the South African currency was
plunging to an all-time low against the U.S. dollar and British pound. (BBC News, 2018).
(https://www.bbc.com/news/uk-46566544). This could have acted as potential challenge for
Starbucks.

In order to make these two effective, a segmentation, targeting and positioning analysis should
be done. From the knowledge of Starbucks’s strategy, Starbucks reduced their prices by 30%
((Johannesburg, South Africa by Lynsey Chutel April 22, 2016 ),However, although Starbucks
watered their prices down, some reports highlight that their prices are still too high leading some
individuals in South Africa to assume that Starbucks is only targeting the upper-middle class
population which is the majority.

Target market segmentation I prefer in my country is demographic segmentation whereby if the

product produced is for kid then age will be the major concentration, gender will be for items
like types of clothes among others.

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