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The Analysis Of Starbucks Indonesia Marketing Essay

✅ Paper Type: Free Essay ✅ Subject: Marketing

✅ Wordcount: 3529 words ✅ Published: 1st Jan 2015

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There are many organizations successfully expanded their companies into foreign market, however,
there are also some businesses facing failures of expanding. Wrong timing? Entering into wrong
market? Is the decision making so important? In fact, it really does. Before an international company
expand their business to other foreign countries, the company must take some factors into
consideration such as which foreign market to enter to, in what financial situation to enter and what
economic scale (“Modes of Entry”, n.d.)

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Starbucks Coffee Company was starts in Seattle in 1971 by Jerry Baldwin, Zev Siegl and Gordon
Bowker. Currently are the leading retailer, roaster and brand of specialty coffee in the world, with
more than 15,000 retail location around the world. Starbucks entered Indonesia through a joint
venture with the PT Mitra A Diperkasa in May 2002. By using joint venture strategy entering
Indonesia, Starbucks are able to access to the local partners’ knowledge easily and sharing
development costs and risks besides politically acceptable (Speiser, 2003).

The strong recognition Starbucks brand makes Starbucks developed easily in Indonesia market. In
Indonesia, Starbucks are being categorized in growth but nearly maturity, since it still expanding
their company, but it is the market leader in the coffee store industry. According to Farah Milda,
General Manager of Sari Coffee Indonesia, currently there are 125 outlets and they are aiming to
have 150 outlets in the country this year. The target market of expansion includes Surabaya,
Bandung, Jakarta and Surakarta. Besides the department store or entertainment area, a new branch
was opened at Cikampek highway as the first drive through in South-east Asian in year 2005.

Starbucks Indonesia customer is not price sensitive and high consumerism, this is an opportunity in
expanding their business. Starbucks see the opportunity in changing Indonesia citizen to consume
healthy coffee and make it as part of their life. Other than that, there are high economy growth and
market growth, especially in urban areas. The democratic economy policies make it easier for
Starbucks to expand their business in Indonesia. On the other hand, there are some of the Starbucks
coffee beans are harvested in Indonesia island of Sumatra and Sulawesi. Starbucks Indonesia is able
to purchase high quality coffee beans at a premium prices while helping the farmers to support their
families and invest in a sustainable production, it is a low cost strategy to expanding in Indonesia
(Starbucks Product Life Cycle, SWOT Analysis, Strategy and Tactics).

According to an article, Starbucks Product Life Cycle, SWOT Analysis, Strategy and Tactics, Starbucks
has a strong market based in Indonesia, there are several competitors in Indonesia, but the
competitors seem to hardly fight Starbucks domination. This is where Starbucks become star and a
fast growing brand in Indonesia. Starbucks Indonesia creates programs aim to build and maintain
relationship with the customer by arranging a seminar in the café or in the loyal customer offices. In
Jakarta, Indonesia, Starbucks has been part of metropolitan lifestyle. Indonesia citizen positioned
Starbucks places as one of the best meeting point.

2.0 Analysis of Starbucks, Indonesia

Starbucks Indonesia, whose coffee shops are a common sight across shopping and office areas in
Indonesia. Based on the survey conducted in 12 Asia-Pacific countries, Starbucks Indonesia has been
ranked the No. 10-brand in the country in The Nielsen Company and Campaign Asia’s Top 1000
Brands report on 2012. Starbucks is the only food and beverage (F&B) brand to make into the list,
making the coffee shop the most recognized F&B brand in Indonesia. (Jakarta, 2012)

Coming to the end of the year 2012, Starbucks Indonesia celebrate Christmas by launching a special
menu consists of three coffee drinks with combination of peppermint, chocolate and cranberry.
However, these three coffee drinks only available for specific period of time due to the limited
ingredients. Thus, many coffee lovers grab the chance before getting out of stock. Besides that,
paper cup with red colour or red cup becomes the special feature of Starbucks for celebrating the
coming of Christmas (Nelly, 2012).

Elsewhere during winter season, Starbucks Indonesia invites special guests to represent some of
their new products. Even Indonesia does not have winter season, Starbucks will still introduce new
products every season worldwide. The new products introduced during winter season include
Starbucks Fruit Toast which cost IDR 19,000, Mango Lychee Layered Cake which cost IDR 30,000,
Tokyo Cheese Danish which cost IDR 21,000, Chicken Ceasar Wrap and Tuna Tomato Wrap which
cost IDR 33,000 (citation). The price of the products is affordable and worthwhile for customers.
Thus, Starbucks Indonesia has large customers base (.V.L, 2012)

Starbucks Indonesia targets adult by organizing activities to support youth education. With
celebrating 10th anniversary, Starbucks Indonesia collaborates with Flink magazine in launching an
ongoing social program. This program had successfully fulfilled the wishes for 136 children, and
Starbucks Indonesia is planning to organize it the second time by granting the wishes of more
children. It builds up a good image and reputation towards Starbucks Indonesia (Drop of Hope –
Starbucks Indonesia helps fulfill the dreams of children, 2012).

In 2013 winter season, Starbucks Indonesia will bring back their “Hojicha” tea, but with a different
twist. It is good news for those non-coffee lovers but still want to hang out at Starbucks. The
products launch in this winter season not only include Hojicha, Green Tea Latte with Espresso,
Verona Cake with IDR 22,000, Smoked Chicken Croissant with IDR 23,000, Tuna Cheese Whole
Wheat Panini Sandwich with IDR 35,000, and the tumbler for celebrating Chinese New Year are
included too. Starbucks is using promotion strategy to attract more customers and this promotion is
only available during specific times (Natasha.V.L, 2013).

At June 2011, Starbucks promised that more aggressive expansion plan will be executed in the future
when International coffee and coffeehouse chain Starbucks celebrated the opening of its 100th
outlet in Indonesia (Christie, 2011). In conclusion, Starbucks decided to enter Indonesia in year 2002
was a smart decision as Starbucks gain a positive income and good reputation. Starbucks currently
has more than 125 outlets in Indonesia and aim to have 150 more outlets this year (Retail, 2012).

Besides the positive side of having Starbucks in Indonesia, there also face some shortcomings.
Starbucks faced country risks such as economic condition, government policies, political conditions
and security factor. It was observed that Starbucks was unable to earn more revenue from its
international operations due to its complex joint ventures with PT Mitra Adi Perkasa and licensing
agreements with PT Sari Coffee Indonesia. While the company invested huge amounts in imparting
training to the employees and promoting its products, it earned only a percentage share in total
profits and royalty fees. The company might not have any control over the operational costs.

One of the potential problems of expanding into other countries is overcoming the cultural barriers.
Different countries may have different traditions and practices forming different culture; thus,
Starbucks cannot predict accurately citizens’ preferences. Before getting involved in another
country, it makes sense to do some market research so that Starbucks can minimize this risk.
(Speiser, 2003)

When expanding into another country, Starbucks have to consider the financial risks as a business
owner. For example, the exchange rates between currencies could lead to an unfavorable return on
your investment. Starbucks may have a hard time in getting access to the supplies and products that
they need in any other countries. Some countries charge tariffs and fees to ship products in, which
could make your business less profitable. (Speiser, Business Internationalization, 2003)

Furthermore, Starbucks are just a new franchising organization in Indonesia and the growth needs
includes desires to be innovative, productive and effective in performing their tasks. Organizations
need their employees in increasing their sales and operation of the business. Employees’ needs are
prior to Starbucks as Starbucks provide training and education which include “coffee education”,
“learning of lead” and “business and communication”. The training and education cost to employees
is increasing because the employees always play important role for the success of organization
(Starbucks Motivational Principles, 2005).

Starbucks has to plan well with their strategies when they need to enter a new country and make
sure they have competitive advantages compare to other competitors. These competitive
advantages will be written on the recommendation part.