Starbucks in 2017 hopes to maintain its leading position by expanding rapidly in China; while dealing with the challenging environment of China, increasing competition, and the revolution of the global trend, Starbucks manages to keep its high quality, cost efficiency, and brand value.

1. 1
Agenda
• Introduction
• Challenges and solutions
a. Quality control & Management of stores
b. Threats from competitive environment
c. Changes of consumption patterns
• Conclusion
Starbucks China:
Managing Growth through Innovation
500/year
in average
2,000 stores (2016)
3,400 stores (2019)
Rapid Expansion in China
• Population of 1.4billion
• Significant growth potential for the coffee market
→ China is a must-develop market
Build consumer loyalty
and preference
Goal
Maintain & Expand
Existing Customers
Stabilize leading position
as the pioneer of 4th
Industrial Revolution

2. Challenges of Growth
Quality control of stores and management
problems under rapid expansion
Potential threats from the competitive
environment of China’s coffee market
Changes of consumption patterns due to
4th Industrial Revolution
“Framework” is a structure underling a core value
as a direction of decision-making and
problem-solving to achieve a specific goal.
2
short-term
long-term
Innovation Framework
Core Value: “Coffee SHARING Experience”
4E Marketing Mix
Exchange Evangelism
Experience Everywhere
Establish reciprocal reward system
& Strengthen membership loyalty
Elevate Starbucks experience of
both Offline & Online
Embody Starbucks’ brand value
through digital technology
Enhance accessibility of
both Offline & Online
Leader of China’s coffee market
& Pioneer of global trend

3. Licensed
Company
-operated
Low Revenue per Store High
Low Operating Expense High
- Operating Margin -
Low
Demand of Expanding
Business Resources
High
• With low operating expense, opening more licensed
stores doesn’t directly lead to the decline of OM
• Soaring wages and rents in China leads to the
difficulty of opening more company-operated stores
Issue: Quality Control & Management of Stores
Solution: Strategic Planning & Management Control
Type of New Open Stores?
( Premise: Goal of Rapid Expansion )
Licensed Stores are More Cost-efficient
Application of Big Data
Keep investing in
Employee recruitment and Training programs
( as Starbucks Japan in 2014 )
long-term
Transfer the licensed stores
into company-operated stores
short-term
Expand more
licensed stores
a) Prospect for Target Audience More Accurately
b) Increase Potential Revenue
Big Data from
Delivery Market
cooperate with Lyancoffee
determine
• Selection of Strategic Locations
• Product Development Strategy
Quality & Management Control
3

4. Starbucks’ Brand Value
• The “Third Place” & “Fourth Place” experience
• High accessibility of brand
• Value proposition of “more for more”
Issue: Threats from Competitive Environment
Solution: Differentiation & Unique Customer Experience
Core Customer Group of Starbucks
4
Care about
Brand Value
Relatively High
Purchasing Power
Open to Western
Products & Customs
Good Taste
Young Urban Adults
( Workers & Students )
Awareness of
Social Status
a) Chain Coffee Shops: Starbucks is highly competitive
and way ahead of its major rivals.
b) Food & Beverage Franchises, Independent Stores:
Target audiences are different from Starbucks.
Starbucks should focus on Its Target Audience
Differentiation
Starbucks should strengthen Its Brand Image
Emphasize on its
Unique Experience
Make Use of
the “Third Wave”
Expand Membership
of Apps (online)
Rapid Expansion
in China (offline)
Strengthen the bond between “Coffee” & “Starbucks”
in consumers’ mind, so Starbucks could surpass all the
other competitors and become the order-winner.
→

5. Issue: Changes of Consumption Patterns
Solution: O2O Strategy & Reciprocal Reward System
5
Reward System
Digital Natives, Residents & Visitors
“Didi“, one of the largest taxi service in China, is mainly
used by office workers & students. Through connecting
the apps of both companies, the consumption in
Starbucks could be transferred into Starbucks Rewards
and feedback money of "Didi”.
Online
Digital Visitors
Starbucks’ App Owner
( the digital residents )
Exclusive Invitation Code
share to
download
and use
BOGO. Voucher
consume
in store
BOGO. Voucher
consume
in store
Incentive for sharing
Revenue↑
Starbucks Rewards
Incentive for using App more frequently
Offline
Can be used in both Starbucks stores and “Didi”
Starbucks Rewards
Digital Visitors ----> Digital Residents
Daily-drawing System: similar to McDonalds’ App
( provide incentives for continuously using App )
Digital
Residents
Digital
Natives
Native Visitors
• The difference between digital natives and digital
residents is considerable for Starbucks.
• Starbucks should focus on both groups, and provide
incentives to transfer digital visitors into digital residents.
The two groups have
dissimilar consumer
behavior, so various
incentives should be
provided.
“Coffee SHARING Experience”
Cooperation with “Didi”