FRANCHISE ASIA JAN 2016

Franchise Viewpoint
While this means that revenue per
square meter is less than in the U.S,
Starbucks offset the relative lack of
revenue in China’s outlets by positioning
the company and its products as
aspirational purchases. However, the
average coffee sold in China is far more
expensive than in the U.S. Starbuck’s
high pricing strategy of specialty drinks
allows it to have its Chinese outlets be
more profitable per store in China despite
the lower sales volume.
Through smart positioning, it did not
use any advertising and promotions
that could be perceived by the Chinese
as a threat to their tea-drinking culture.
Instead, it focused on selecting highvisibility
and high-traffic locations to
project its brand image.
as brand ambassadors to help establish
the Starbucks culture in new locations
and ensure that service at each local
store meets their global standards.
In China, Starbucks partner locally to
address the complexity of the Chinese
market, Starbucks partnered with three
regional partners as part of its expansion
plans. They understand the meaning of
long term commitment and have done
an excellent job in recruiting and training
its employees. This is a win-win strategy
because employees are at the heart of
delivering the “Starbucks Experience” to
customers. They are the best marketing
ambassadors for the company.
While this means that revenue per square
meter is less than in the U.S. (average
revenue per outlet in China is one third to
two thirds of those in the U.S.), Starbucks
offset the relative lack of revenue
in China’s outlets by positioning the
company and its products as aspirational
purchases. The average coffee sold in
China is far more expensive than in the
U.S. Carrying a Starbucks cup is seen as
a status symbol, a way to demonstrate
sophistication and the capability to afford
a personal luxury for the up-and-coming
middle class in China. Starbuck’s high
pricing strategy of specialty drinks allows
it to have its Chinese outlets be more
profitable per store in China despite the
lower sales volume. Overall in Asia, its
operating margins are 34.6% in 2011
versus 21.8% in the United States.
So What Do Successful Brands Have
in Common?
Consistency - When consumers come
back to a business for repeat sales,
they usually expect to receive the same
level of quality as they did the first time.
No one wants to deal with a company
they can’t rely on for consistency. With
so many industries being saturated
with competitors, inconsistency is often
enough of a reason for consumers to
take their business elsewhere. That’s
why it’s so important to adhere to a
certain quality standard with a product or
service e.g. McDonald’s.
Starbucks also believe in branding
themselves globally via maintaining brand
integrity. One of Starbucks’ best practices
is to send their best baristas from
established markets to new markets and
train new employees. These baristas act
12 Franchise Asia • 2016 Vol 29