The Effect of the Current External Environment on the Marketing Management of a Company or an Organization Within the Hospitality or Tourism or Leisure Industry

3321 Words Jun 24th, 2008 14 Pages
By now, most Americans must have heard or be familiar with a chain of coffeehouses, named Starbucks. Established in 1971 as a local coffee bean roaster and retailer, Starbucks has expanded rapidly. By successfully adopting Italian coffee culture into a variety of beverages such as brewed coffee, espresso, teas, Frappuccinos and related products such as music CDs, pastries or ice creams, the Seattle-based company has reported USD 7.9 billion in revenue with 22 percent annual growth (Starbucks, 2006) . Operating 13,168 stores in 41 countries, Starbucks has, inarguably, become one of the largest and most recognizable coffeehouses all over the world (Harrison & Enz, 2005). Meanwhile, the company still targets for operating 30,000 stores …show more content…
In contrast, beverage items which are rarely consumed by Chinese people such as bottled water, alcohol like brandy and vodka, vegetable juice and coffee are highly elastic to income (ibid). Therefore, the combination of Starbucks’ price factors, strong tea-culture and high elastic in demand for coffee may turn many Chinese customers to local coffee shops or lower price coffee providers such as McDonalds and KFC.
To cope with strong tea-culture and high elasticity of demand, Starbucks has redefined its target market. Since China is a country where tea-culture usually associates closely with old people, promotion activities directed to young people who are more open to change and learn from Western culture will be most likely to succeed. Therefore, the company bets its entire marketing effort on targeting the new Chinese generation, the so-called “petty bourgeoisie”, whose ages range from 18 to 44 with higher spending power and being attracted easily by high-status brands (Adamy, 2006). In China, due to its high population, the Chinese government has enacted the one child policy which prohibits having more than one child. This later resulted in what is known as the “six pocket syndrome”. The syndrome refers to the new Chinese generations who have been pampered and receive much more attention from their parents and have
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