Analysis on the Development Strategy of Starbucks' Layout in Third and Fourth Tier Cities in China

Research Article
Open access

Analysis on the Development Strategy of Starbucks' Layout in Third and Fourth Tier Cities in China

Daiqi Li 1* , Bai Sun 2 , Shixiang Zhou 3
  • 1 Shijiazhuang Foreign Language Education Group    
  • 2 Shanghai University of Electric Power    
  • 3 Beijing No.4 High School International Campus    
  • *corresponding author 1811000728@mail.sit.edu.cn
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/36/20231775
AEMPS Vol.36
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-093-6
ISBN (Online): 978-1-83558-094-3

Abstract

Recent surveys found that the stores of Starbucks are mostly located in first and second tier cities in China and its objective customers are high income earners. However, in its 2025 expansion plan, the main objective of Starbucks is to enter low tier cities in China due to the high consumption potential in those cities. In order to help Starbucks achieve its plan, this paper will use the SWOT model to analysis internal strength and weakness, external opportunities and threats of Starbucks. The paper found that Starbucks has high user viscosity, strong monopoly power and financial capacity. Besides, the economic conditions in low tier cities are also beneficial to Starbucks such as low cost on daily life bringing out higher level of disposable income and increasing demand for coffee. In the contrast, we found that Starbucks has several problems such as inefficient chain of command, cost pressure due to large investment on digital technology and poor product differentiation. What’s worse, there is fierce battle among other brands and undeveloped consumption concept in the low tier cities. According to the analysis above, we suggest that Starbucks should adopt some strategies such as price discrimination strategy, making product differentiation, increasing investment in digitization and new retail, enhancing the brand influence, seeking for new suppliers with lower prices, shutting down underperforming stores and making improvement on quality of product, service and environment.

Keywords:

Starbucks, third and fourth tier cities, SWOT analysis, development strategies

Li,D.;Sun,B.;Zhou,S. (2023). Analysis on the Development Strategy of Starbucks' Layout in Third and Fourth Tier Cities in China. Advances in Economics, Management and Political Sciences,36,121-130.
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References

[1]. Zhou Hui. Starbucks in China development present situation and the marketing strategy study. Journal of modern business, 2019.

[2]. SHI JING.Starbucks focuses energy on lower tier regions[N]. China Daily, 2023.

[3]. Feng Suhang. Starbucks brand relationship marketing research [D]. Hunan normal university, 2020.

[4]. Wu Xiaomei, Lu Chenyue. Gamified Marketing and its Impact on Corporate Financial Performance: A Case study of Starbucks China [J]. Journal of Putian University,2022.

[5]. Qin Suxiang, Chen Canyue, Zhou Yanping. Analysis of wechat public account marketing strategy under OTO background A Case study of Starbucks [J]. Inner Mongolia Science and Technology and Economy,2022.

[6]. Li Zaiying. Starbucks' service marketing strategy optimization in lanzhou research [D]. Lanzhou university, 2022.

[7]. ChenLu.Beijingstarbuckscoffeeco.,LTD.Marketingstrategyresearch[D].Zhengzhouuniversity,2020.

[8]. Shi Yishao, Yang Fenglong. The spatial distribution characteristics and influencing factors of Starbucks coffee shops in Shanghai [J]. Economic Geography,2018

[9]. Li Weimin, Ding Yinan. Market status and development trend of imported coffee [J]. Modern Food,2018.

[10]. Chen Shu. Analysis of Chinese Coffee Industry Chain and Its Development Strategy [D]. Hainan University,2013.

Cite this article

Li,D.;Sun,B.;Zhou,S. (2023). Analysis on the Development Strategy of Starbucks' Layout in Third and Fourth Tier Cities in China. Advances in Economics, Management and Political Sciences,36,121-130.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-093-6(Print) / 978-1-83558-094-3(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.36
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Zhou Hui. Starbucks in China development present situation and the marketing strategy study. Journal of modern business, 2019.

[2]. SHI JING.Starbucks focuses energy on lower tier regions[N]. China Daily, 2023.

[3]. Feng Suhang. Starbucks brand relationship marketing research [D]. Hunan normal university, 2020.

[4]. Wu Xiaomei, Lu Chenyue. Gamified Marketing and its Impact on Corporate Financial Performance: A Case study of Starbucks China [J]. Journal of Putian University,2022.

[5]. Qin Suxiang, Chen Canyue, Zhou Yanping. Analysis of wechat public account marketing strategy under OTO background A Case study of Starbucks [J]. Inner Mongolia Science and Technology and Economy,2022.

[6]. Li Zaiying. Starbucks' service marketing strategy optimization in lanzhou research [D]. Lanzhou university, 2022.

[7]. ChenLu.Beijingstarbuckscoffeeco.,LTD.Marketingstrategyresearch[D].Zhengzhouuniversity,2020.

[8]. Shi Yishao, Yang Fenglong. The spatial distribution characteristics and influencing factors of Starbucks coffee shops in Shanghai [J]. Economic Geography,2018

[9]. Li Weimin, Ding Yinan. Market status and development trend of imported coffee [J]. Modern Food,2018.

[10]. Chen Shu. Analysis of Chinese Coffee Industry Chain and Its Development Strategy [D]. Hainan University,2013.

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