Nicole Sanchez ADV 4411

Nicole Sanchez – ADV 4411
The Contemporary Hispanic Market: Challenges and Opportunities for Starbucks Coffee
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Nicole Sanchez
ADV 4411
Fall 2014
Florida State University

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Introduction
Starbucks Coffee is an international coffee retailer that originated in Seattle,
Washington in 1971. The company has become a global cultural staple, with 21,000
stores in over 65 countries worldwide (Starbucks, 2014a). With approximately four
decades of corporate experience, Starbucks has demonstrated the company’s ability to
successfully enter foreign markets and appeal to consumers from a variety of cultural,
social, economic, religious, and political backgrounds.
In terms of the contemporary Latin-American/Hispanic market, Starbucks has
recently opened several locations within the Caribbean and the Americas. Starbucks is
present in over eleven Central and South American countries, and has entered the markets
of the top three Latin American economies: Mexico, Brazil, and Colombia (Starbucks,
2014b; Mallen, 2014). In the United States, Starbucks is present in all major cities and
geographic areas where Latin-American communities reside.
Despite these successes, there is ample room for improvement for connecting the
Hispanic consumer to the Starbucks brand, and for boosting sales among Hispanic/Latino
markets. This paper will propose a marketing strategy that can be used for further
connecting Starbucks to the purchasing power of three powerful Latin-American markets:
Ecuador, Panama, and the Hispanic/Latino population within the United States of
America.
Marketing Objective

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Simultaneously addressing three large-scale markets is a formidable task.
However, Starbucks has the personnel and company infrastructure to realistically
approach this proposal. Three parallel marketing objectives are offered, each with its own
unique set of challenges and opportunities. The three target populations are: Ecuadorian
consumers, Panamanian consumers, and Hispanics/Latinos living in the United States.
Out of all Latin American counties, Ecuador has the eighth largest GDP, and
Panama has the ninth largest GDP per capita (World Bank, 2014a; CIA, 2014). Despite
the effects of the global economic slump of the late 2000s and early 2010s, Ecuador has
experienced modest economic growth and has a democratically elected president who has
demonstrated progress in reducing income inequality and poverty (World Bank, 2014b).
As a neighbor to Colombia, where new Starbucks locations have recently opened
(summer 2014), Ecuador is in close geographic proximity to Starbucks personnel and
coffee sourcing and manufacturing.
Panama has the ninth largest GDP per capita in Latin America (World Bank,
2014a; CIA, 2014) and has a strong financial and tourism industry (Klytchnikova &
Dorosh, 2013; Kandell, 2014). Sharing a border with Colombia, it is the bridge between
Central and South America, and a Starbucks bridge between their locations in Costa Rica
and Colombia. Panama has been using the US Dollar as its official currency since 1904,
and the country is considered both a retirement haven for United States citizens and an
international banking center (Peddicord, 2013). For a company that has been attaining a
steady growth into Latin American markets, Panama is a logical location in which to
expand. Not surprisingly, Starbucks is reported to have plans to open a Panama location
in 2015 (Gonzalez, 2014).

In terms of the Hispanic/Latino market within the United States, it is important to
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recall that Latinos constitute approximately 17% of the US Population, or 53 million
people (Census Bureau, 2012). This means that there are more Latinos in the United
States than there are people in all individual Latin American countries except Brazil and
Mexico. This is an enormous and multifaceted market with different generations, income
levels, countries of origin, immigration status, etc. While Starbucks originated in the
United States and has a strong domestic presence, there are still several marketing
objectives that can be considered in order to boost sales and brand affect.
These three Hispanic markets are multidimensional, and much nuance is needed
in order to understand what the specific cultural needs are of each market and its
subpopulations. In an increasingly global society, it is important for a company like
Starbucks to connect with Hispanics across all sociological variables and characteristics
in order to court new consumers. Census data shows the Hispanic/Latino population
steadily growing within the United States, and with increased travel within the Americas,
Starbucks should have a marketing plan that consistently appeals to Latinos whether they
are Panamanian, Ecuadorian, North American, or some combination thereof.
In terms of competition, Ecuador has produced and exported coffee for decades.
The Consejo Cafetero Nacional is an association that promotes the coffee industry, and
there are three major coffee companies and trade groups that hold the lionshare of the
industry. Starbucks would have to successfully navigate entering a country where they
may not be welcomed by existing companies and tradegroups. The company would have
to find strategic ways to forge partnerships, or at least minimize the amount of pushback

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that they might receive upon planning for their first location in Ecuador. There is plenty
of opportunity for collaboration, since Starbucks sells the coffee drinking experience as
opposed to being a predominately manufacturing/packaging/exporting company. There is
no large-scale high quality coffee shop in Ecuador that rivals what Starbucks offers.
Panama has a Specialty Coffee Association that promotes the environmentally
conscious growth of boutique and specialized production styles. However, Panama’s
coffee industry in terms of production is not part of its comparative advantage, so any
pushback from competing companies will be less pronounced than Ecuador. With
Panama being known as a finance, banking, and trade capital of Central America,
Starbucks will be able to speak the same language more easily with investors, regulators
and potential partners as they plant new roots in the country. Again, Starbucks has the
opportunity to source their coffee from existing boutique growers and production sites,
and help connect Panamanian-grown coffee to the consumer in one of their new and
upcoming stores.
In the United States, consider the various ethnic enclages of Hispanics/Latinos
throughout the country. The west coast is home to many Latinos of Mexican and Central
American heritage. Cuban culture permeates South Florida, and the Caribbean (Puerto
Ricans, Dominicans, etc.) are present in many major Mid-Atlantic and Northeastern
cities. Let’s not forget certain neighborhoods in Orlando, which can feel like a second San
Juan. Neverthehless, Starbucks has not exhausted its resources in connecting to the
Latino consumer. A lesson can be learned from McDonalds, which has advertising
campaigns in Spanish designed to culturally connect with the Latino consumer living in

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the United States. Or consider that the coffee and food options fail to reflect the local
Latin culture that surrounds the coffee shop, like having pastelitos and a cortadito on the
menu in South Florida, or having staple Mexican baked goods or designs in certain shops
in Southern California.
The end goal for this marketing plan is to not only boost sales, but to create
positive cultural associations between the Latino consumer and the Starbucks brand.
Consistency has to be balanced with cultural relativism, and the dynamic nature and
evolving meaning of what it means to be Latino needs to be reflected in how Starbucks
markets their products. If you are at a Starbucks in New York City, it should be a similar
experience to a Starbucks in Panama City, or Quito (Ecuador), in terms of quality and
expectations. But an essential part of those expectations should be that the food and
beverage menu, store design, and product offerings should reflect the local
Hispanic/Latino culture in a way that promotes Latin heritage and solidifies the notion
that “Starbucks understands us”.
Getting Specific: Target Subpopulations & Justifications
Starbucks can be arguably labeled as a luxury (or overpriced) coffee shop. The
baked goods and the drinks that are prepared are sold for much higher than what the
actual materials (and perhaps even labor) are worth. The counterargument is that you are
not paying for the physical product alone; you are paying for the experience and
consistency that can be found in all Starbucks locations. Your beverage is made just the
way you like it, and if it does not satisfy you, it is remade and perfected to what you want
it to be. Starbucks is a successful brand because it made coffee – the practice of drinking

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coffee, or being in a coffee shop, and of buying coffee-related products and merchandise,
a hip and enjoyable social activity.
Consequentially, Starbucks is not for everyone. Starbucks would be naïve to
assume that it can connect with all Ecuadorians, or all Panamanians. The prototypical
Starbucks customer is between the ages 25-40, with relatively high incomes, education
levels, and a socially progressive/environmentally-friendly consciousness (O’Farrell,
n.d.). With income inequality (or the large disparity between the highest income earners
and the lowest) being a large-scale problem for most of Latin America, it is
understandable why it has taken Starbucks so long to enter into countries south of the
border. Fortunately for countries like Panama and Ecuador, elected officials and
policymakers have made reducing income inequality a priority so that there is a
sustainable growth of the middle class (World Bank, 2014b; Oxord Business Group,
2014).
Starbucks strategically places its stores in areas where their target subpopulation
is likely to travel to. Capital cities (Quito and Panama City) and their wealthier districts
and neighborhoods are prime locations for a new Starbucks location. The Western and
now increasingly international Starbucks logo is appealing because it is a status symbol
of class and wealth, and the brand would do well in these kinds of middle and upper
income areas (O’Farrell, n.d.).
Starbucks needs consumers who can afford to pay the equivalent of $3-7 USD for
their coffee beverage, and who have smartphones (and corresponding data plans) and
other technological devices to further connect with the Starbucks brand. Recall that

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Starbucks offers their iTunes Pick of the Week, which is a longstanding partnership with
Apple. They have a rewards program and a rewards app. These types of coffeehouse
“amenities” go beyond what you would expect from a standard bakery/coffeehouse in a
developing country, and it requires that the consumers actually know and have access to
iTunes and smartphones and other devices. Owing such devices and having the
disposable income to afford a $3-7 beverage are correlated of middle and high income,
which is in turn associated with social class. In other words, whether it is Ecuador,
Panama, or cities throughout the United States, new locations must be chosen on the basis
of whether this prototypical customer is present in sufficient quantities to sustain a store.
Media Resources & Strategy
In the U.S., Starbucks can seamlessly add a new item to their menus. A great time to
pilot this would be during Hispanic Heritage Month (HHM), which runs from mid-
September to Mid-October. In select stores nationwide, they can offer a limited edition
HHM menu that contains the coffee beverages and baked products that are based on
cultural staples from different Latin American countries. This would serve two purposes:
a) connecting with Latin consumers and other community organizations by showing that
Starbucks participates in Hispanic Heritage Month and b) piloting new products in a less
risky manner to see which items might be sustained in the long term after HHM. Imagine
if Cuban-style coffee or Mexican-inspired pastries are strong sellers. Starbucks might
then be inclined to incorporate new items into its menu. Furthermore, it seems
appropriate for Starbucks to participate in HHM because most of their coffee is sourced
from Latin America anyway. What better way to further demonstrate sustainable and fair

trade practices by also celebrating the culture of the people who produce the coffee beans
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for your products?
McDonalds posts advertisements in the Spanish language across a variety of
mediums in the United States. They put signs in public transit buses, and they have
commercials that feature Spanglish and clear Latino cultural symbols. Starbucks might be
able to adopt some of these practices. Starbucks can have Spanish advertisements that
target Latin communities in the U.S.
For Ecuador and Panama, it is likely that their target population is already aware
of the Starbucks brand, especially if they have traveled to other countries. With the target
brand being higher income earners and adults with above-average education, it is likely
that they have traveled and have some experience with the Starbucks brand. Prior to
opening the first store in Quito or Panama City, Starbucks should purchase television ads
that announce its pending opening, as well as direct invites to other existing corporations,
trade associations, and chambers of commerce. The individuals within those
organizations will be high-income earners that may live and/or work in the area where the
new Starbucks location will open. Lastly, advertisements should be placed in whatever
the leading business magazine or leading newspaper, which should also be the magazine
or newspaper that is preferred by middle and high income earners. Doing all of this
would ensure that the target population has the opportunity to a) see an ad on TV, b) read
about the upcoming grand opening via the newspaper that corresponds to the tastes of the
target audience, and c) hear about it through their employment channels.
Another marketing strategy for all three markets is the placement of culturally
relevant advertisements in airport terminals. Panama City and Quito have international

airports that are likely to be frequented by the target population; high-income earners are
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more likely to travel by plane versus lower income earners. Also, certain major cities
have specific terminals with patterns of where the flights go. If it is an international
terminal with frequent service to the Americas, the Hispanic-oriented ads within the
United States terminals will further solidify the connection between Starbucks and the
needs of the Latino consumer, especially if a Hispanic/Latino traveler is moving between
a U.S. terminal and another Latin American country where Starbucks is present.
Positioning and Message Strategy
In terms of the United States, “Hispanics have a hunger for consumption, but
prefer brands that speak their language and embrace their cultural heritage” (Llopis,
2012). Hispanics are such a large group in the United States that is very difficulty to
generalize and refer to “the average Hispanics consumer in the US”. However,
recognizing our cultural roots and culinary heritage is important, particularly when the
very production and act of drinking coffee is itself a social and economic institution
within many of our home countries. Starbucks must move beyond simply branding itself
as a fair trade and environmentally conscious coffee partner; it must also demonstrate that
is a culturally conscious partner as well. Hispanics in South Florida who fit the target
population criteria should expect some sort of cultural validation when they enter the
Hialeah Starbucks location (a neighborhood with a huge Cuban and Latin American
population, where many people speak Spanish as a normal part of business).

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After interviewing several Latino colleagues and older friends, I have the
following insights that illustrate how Starbucks should consider positioning itself as it
expands into these three markets. An interview with a South Florida small business
owner in Miami provides the following data:
“I don’t understand why “espresso machiatto” isn’t listed as a cortadito at
my local Starbucks. I work in Medley, a town close to Hialeah with a huge
Latin population, where Cuban, Caribbean, and South American culture
permeate business practices and social life. I just think it is funny that the
Starbucks in this area, despite being staffed by Cuban-Americans, visited
by Cuban-Americans, and frequented by Cuban-Americans, fails to have
Latin-American items on its menu. I’m not expecting empanadas or Pony
Malta imported sodas, but consider that everyone where I work knows
exactly what a cortadito is, and my guess is that very few colleagues of
mine know what an espresso machiatto is. Think about that. (Villalba
2014)”
The above excerpt represents a desire for Starbucks to speak the same language as the
Hispanic consumers that represent the bulk of customers. Quite literally, the interview
respondent desires a specific linguistic connection by simply acknowledging the
culturally relevant title of a beverage that Starbucks already sells.

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Another one of my interviews was with a Colombian business owner, who reported the
following.
“If I’m in Bogota and I’m at a mall where I have the option of going to the
Juan Valdez café or the Starbucks café, there has to be something that
Starbucks offers beyond the quality of their coffee or the consistency of
their menu. I want to know that Starbucks has more than their profits in
mind, and more than simply pleasing the consumer in mind. I would like
reassurance that Starbucks also has the entire coffee industry in mind and
the people who work in it. I would go to Starbucks over the Colombian-owned
Juan Valdez chain if I knew, for example, that Starbucks donates a
certain percentage of its sales to a philanthropic or environmentally
progressive cause that looks after the environment, or perhaps a fund that
keeps the interests of the farmer and laborer in mind. Then and only then
would I consider actually going to Starbucks over Juan Valdez, assuming
they are right next to each other (Ortiz 2014)”
The above interview data represents the intersection of social and cultural
conscience that can help Starbucks connect with Hispanic consumers. Starbucks will face
competition in foreign countries, and they need a marketing strategy that will appeal to
the sensibilities of the target population. Incorporating a philanthropic or
socially/environmentally conscious element to their new stores will make consumers

more likely to choose them over traditional, exiting coffee businesses. Panamanians and
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Ecuadorians should know that Starbucks makes it a priority to give back to the
communities where it sources its coffee, and not simply to take their money for their
company profits.
A traditional marketing strategy involves conducting a needs assessment of the
target population, as well as a risk analysis and identification of partners, challenges, and
opportunities. All of the conventional approaches to marketing and market expansion
apply to this Starbucks objective, but with certain caveats and idiosyncratic differences.
Implementing three marketing strategies simultaneously is difficult, but it would be part
of a larger mission of solidifying a relationship with Hispanics in an increasingly global
and virtually borderless society. Starbucks needs more than a 3-5 year marketing plan,
but rather a 10 year or 20 year vision for what it means to be the chosen coffee company
of the Americas, as opposed to the leading coffee company in individual countries.
Therefore this is a macro-level plan that ultimately seeks to gain the favor of Hispanics
across all of the western hemisphere, and with Latinos being the larger segment of that
population, this marketing strategy contributes to that mission.
Applicability to Other Markets
While this marketing strategy is exclusively focused on connecting with Latinos
across several Latin American countries, this approach can be exported to other regions
of the world. With each decade, the world becomes increasingly smaller as more groups
interact and blend together. Starbucks might try a similar approach in Asian markets by
keeping in mind that one day there might be a Pan-Asian political and economic reality,

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or a European Union style model of economics and politics. Entering new markets and
improving their status in existing markets will help ensure that Asian consumers across
countries and languages recognize the Starbucks brand and continue to desire it due to the
company’s ability to speak to their cultural needs. In other words, the same vision that
applies to Starbucks’ plan for the Americas can apply to other similarly situated regions.
Evaluating Effectiveness
The ultimate goal of this marketing strategy is to increase sales. In the United
States market, participating in HHM by introducing new product packages is an
appropriate way to assess whether the items are economically sustainable. Careful sales
tracking must be conducted across time to check whether sales at locations in Hispanics
communities are increasing. The same sales tracking must be applied to new Ecuadorian
and Panamanian locations, with comparisons to Latin American stores in neighboring
countries.
Econometric methods and statistical analyses would be needed to account for the
differences and nuances in each market. What are the product preferences of Ecuadorian
consumers versus Mexican consumers? What kinds of items sell well in Los Angeles
versus Miami? In Latin America, are sales higher in locations closer to high income
residential areas or in stores located in or nearer to business districts? These are questions
that can be answered once econometric methods are applied to existing stores, and new
data is carefully and continuously analyzed at new locations.
Conclusion

Starbucks Coffee is a successful coffee company with a proven record of success
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in entering new markets in international contexts. Latinos within the United States
continue to grow as a demographic group with significant purchasing power and an
evolving sense of identity. Ensuring that the company brand perpetually connects with
domestic consumers should be a priority, given the high proportion of people that meet
the target population of Starbucks: middle and high-income earners who are
technologically savvy and socially and culturally conscious.
In terms of Latinos in other countries, Panama and Ecuador are geographically
important places in which to locate new stores. Both countries share borders with
Colombia, which is a major source of coffee, and both countries have promising
economic and political indicators that are supporting of business and private enterprise.
And Starbucks is already making moves: Starbucks aims to open a store in Bolivia and
Panama in 2015 (Gonzalez, 2014). With a coffee-saturated North America, Starbucks is
driving into Latin American markets that have a growing middle class that is hungry for
globalization (Gonzalez, 2014). The drive into Latin America represents a paradigm shift:
Latin American countries are being asked to purchase the beverage that they have been
exporting for decades, and to pay several times more than what they are used to. With the
expansion of the middle class and economic progress allowing more Latin Americans to
meet the criteria of the Starbucks target population, the time is ripe for opening new
locations, bridging together the presence of the brand across Hispanic markets, and
appealing to Latinos throughout all of the Americas.
• Marketing Objective & Need for Plan: 3-4 pages
o Why does this product need a marketing plan

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o Why Hispanics?
o Who are the competitors and what are they doing?
o What are we trying to accomplish? Why are these appropriate goals?
• Target segment & justification: 1-2 pages
o Language, age, sex, class, etc of target population and sub-population
o Why this group?
• Identification of media resources and strategy: 2-3 pages
o How will we reach them?
• Positioning and message strategy based on consumer insights: 3-4 pages
• Applicability of this marketing strategy to other populations: 1-2 pages
• Evaluating effectiveness: 1-2 pages
References
Census Bureau. (2012). Most children younger than 1 are minorities, Census Bureau
reports. United States Census Bureau.
(http://www.census.gov/newsroom/releases/archives/population/cb12-90.html)
CIA. (2014). Country comparison: GDP per capita. World Factbook.
(https://www.cia.gov/library/publications/the-world-factbook/
rankorder/2004rank.html)
Gonzalez, A. (2014, May 14). Starbucks to open stores in Bolivia and Panama. The
Seattle Times.
(http://seattletimes.com/html/businesstechnology/2023605327_starbucksboliviax
ml.html)
Kandell, Jonathan. (2014, March 12). Panama’s investment and banking boom.
Institutional Investor.
(http://www.institutionalinvestor.com/Article/3318322/Banking-
Archive/Panamas-Investment-and-Banking-Boom.html#.VHyTXKTF9aY)
Klytchnikova, I. & P. Dorosh. (2013). Tourism sector in Panama: Regional economic
impacts and the potential to benefit the poor. National Resources Forum 37: 70-
79.

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Llopis, G. (2012, May 14). Don’t sell to me! Hispanics buy brands that empower their
cultural relevancy. Forbes.
(http://www.forbes.com/sites/glennllopis/2012/05/14/dont-sell-to-me-hispanics-buy-
brands-that-empower-their-cultural-relevancy/)
Mallen, P. R. (2014, March 25). Colombia surpases Argentina as Latin America’s third
largest economy due to inflation, currency changes, GDP growth. International
Business Times. (http://www.ibtimes.com/colombia-surpasses-argentina- latin-americas-
third- largest-economy-due- inflation-currency-changes-gdp)
O’Farrell, Renee. (n.d.). Who is Starbucks’ target audience? The Small Business
Chronicle. (http://smallbusiness.chron.com/starbucks-target-audience-
10553.html)
Oxford Business Group. (2014). Helping hands: the growing middle class is expected to
sustain growth – Panama: Construction.
(http://www.oxfordbusinessgroup.com/overview/helping-hands-growing-middle-class-
expected-sustain-growth)
Peddicord, K. (2013, August 20). 8 things to know about retiring in Panama today. U.S.
News: Money. (http://money.usnews.com/money/blogs/on-retirement/
2013/08/20/8-things-to-know-about-retiring- in-panama)
Starbucks. 2014a. Our history. Starbucks Website. (http://www.starbucks.com/about-us/
our-heritage).
Starbucks. (2014b). Locations. Starbucks Website. (http://www.starbucks.com/site-selector)
World Bank. (2014a). Countries and economies. The World Bank Website.
(http://data.worldbank.org/country)
World Bank. (2014b). Ecuador: An Overview. The World Bank Website.
(http://www.worldbank.org/en/country/ecuador/overview)
NOTE: Interview data were collected from four people, but only two of the respondents
are included in the paper. Interviews were conducted either by person or by
phone, and were conversational in nature.
Respondents:
Carlos Eduardo Ortiz
Victoria Villalba

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