Paper instructions:
Students will write a paper identifying and demonstrating how the socio-cultural environment affects and influences consumer behavior. Write about a US product and related socio-cultural factors that would affect consumer-purchasing decisions in another country. The product would be coffee, and the brand is Starbucks. Student should make suggestions for marketers to be successful in the new market and assess whether the product would succeed in the new market.
The paper will be based on information from secondary sources, company web sites, as well as professional experiences and insights.
Evaluating Starbucks’ Market Entry into China
The liberalization of trade prompted companies to set up subsidiaries in other states. The entries are often marked with uncertainties of how the host country would receive the product. Since the subsidiaries’ success depends on the positive reception of the target market, it is viable for firms to evaluate factors such as host state culture. The consumers’ beliefs, attitudes, and behavior determine the marketing strategy in a market entry. Starbucks’ access to China was marked by socio-cultural aspects that support and hinder its success simultaneously. The paradox can be understood through an evaluation of socio-cultural alignment in China. Without a comprehensive analysis of the intended markets’ culture, firms face the risk of failure; therefore, it is crucial to consider the target markets’ culture.
The Presence of Starbucks in China
Starbucks corporation specializes in the production of coffee. The firm was established in 1971 in Seattle, Washington, USA, and has grown to be one of the leading beverage companies in the world (Khan et al., 2018). The company extended its production to China in 1999 (Qian& Xing, 2016). Qian & Xing (2016) elucidate that the Chinese market boosted Starbucks sales in Asia, noted by a 30% year-over-year jump in revenues. The returns were associated with college students who adopted coffee as their standard drink, making coffee rise 15-20% annually (Qian & Xing, 2016). Indeed, Starbucks expanded its production to the Chinese market.
Socio-Cultural Factors in China
The Chinese culture affects consumer behavior. Bartikowski & Cleveland (2017) depict that Chinese consumers are driven by their culture when making purchases. They purchase products based on their social identity and cultural alignment. Assouad & Overby (2016) affirm the analogy and offer five tenets of depicting the culture of a state as; individualism/collectivism, power distance, uncertainty avoidance, femininity/masculinity, and high/low contest. These factors determine consumer behavior within specific states. Indeed, the Chinese culture affects the trends in product consumption.
Individualism/Collectivism
Individualism/collectivism depict how consumers behave to meet their goals. Individualist cultures inspire consumers to focus on achieving their satisfaction (Assouad & Overby, 2016). In such states, consumers care solely about how the product affects them. Collectivist culture focuses on the overall impact of products on the whole community (Assouad & Overby, 2016). Consumers recognize themselves as an integral part of society. Assouad & Overby (2016) pinpoint that consumers focus on acceptable products in the community in these states. Zhu et al. (2018) highlight that China is a collective state. Therefore, firms should focus more on products that meet the taste and preference of the host state. Its services should reflect the local dynamics. Summarily, individualism/collectivism reveals consumer behavior towards products and services.
Uncertainty Avoidance
Uncertainty avoidance reveals the basis of consumer behavior. Assouad & Overby (2016) describes it as the tolerance level of states to risks and vagueness. While some states have a high tolerance, others prefer set structures and norms. The reception of products depends on whether individuals are likely to explore new products or dependent on their everyday purchases. China is one of the states with low uncertainty avoidance. Their high tolerance for new products implies that they are risk-takers and aligned to entrepreneurship (Assouad & Overby. 2016). Qian & Xing (2016) affirms the analogy by revealing that although the Chinese are accustomed to drinking tea, they are slowly adopting coffee. Summarily, uncertainty avoidance helps in analyzing consumer behavior.
Femininity/Masculinity
States’ femininity/masculinity influences consumer behavior. Assouad & Overby (2016) explain that the two factors are related to competition and consensus-building within a society. Masculine states focus on success and are highly competitive. On the other hand, feminine countries stress corporation and nurturing relations (Assouad & Overby, 2016). China is a masculine state that relies on achievements. Bartikowski & Cleveland (2017) reveal that most Chinese purchase luxury products that depict their high societal status. They strive to own expensive products, demonstrates their willingness to spend on top-notch products. Indeed, femininity/masculinity helps in understanding consumer purchase patterns.
High Context/ Low Context
High/low context demystifies consumer behavior. Assouad & Overby (2016) elucidates that consumers from high context states are less likely to provide direct information in products and services. On the other hand, low context states are more explicit in offering information, analysis, figures, and communicating (Assouad & Overby, 2016). China being one of the Asian states, is an implicit state. The Chinese customers make decisions based on intuition and beliefs (Assouad & Overby, 2016). Therefore, high/low context cultural factor determines consumer behavior.
Power Distance
Power distance determines consumer behavior within states. Assouad & Overby (2016) describes the factor as the tendency of citizens to question authority. States with a high power distance index have centralized power with controlled communication (Assouad & Overby, 2016). These states adhere to tradition, and consumers are less likely to make inquiries before making purchases. On the other hand, low power distance index states have equalized systems that allow accessible communication and relations. China is a high-power distance state. Zhu et al. (2017) depict that the Chinese are less likely to question their authorities. The behavior is reflected in their purchase patterns. They are less likely to make inquiries about the products and services in the market. Indeed, power distance culture reveals consumer behavior.
Recommendations to Ensure Starbucks’ Success According to China’s Culture
Starbucks should offer its customers more information on its product lines to upsurge its sales. Since China is a high-power index state, consumers are likely to make coffee purchases without inquiring about the product that meets their tastes. They might purchase the wrong drink; thus, hating the brand. Offering more information on the different product lines helps them to understand what they need. As a result, Starbucks will satisfy consumers’ needs while boosting its sales. Indeed, providing information helps in optimizing sales.
Starbucks should offer products that meet communal needs and standards. With Chinese being tea lovers in a collective state, the firm should expand its tea varieties in the state. The strategy would ensure that the community is satiated with its services. Equally, the corporation should establish more outlets on campus grounds with the upsurge in college students’ coffee intake. With these aspects, the firm would boost its sales while meeting the community demands.
Conclusion
In conclusion, Starbucks is one of the leading retailers of coffee globally. It made its entry to China in 1999. From evaluation, the Chinese market was highly receptive to its entrance. The cultural setting of the state offers an opportunity for the firm to increase its sales. With the information that China’s culture is collective, masculine, has low uncertainty avoidance, low power distance, and implicit, it can boost its performance. It should take advantage of its low uncertainty avoidance and introduce more innovative concepts.
References
Assouad, A., & Overby, J. (2016). The Impact of Culture on Customer Expectations. Journal of Management Policy & Practice, 17(2).
Bartikowski, B., & Cleveland, M. (2017). “Seeing is being”: Consumer culture and the positioning of premium cars in China. Journal of Business Research, 77, 195-202.
Khan, S. K. B. N. Z., Yusop, Y. B. M., & Baharudin, F. B. W. (2018). Starbucks Market Segmentation and Targeting. International Journal of Business and Management Invention (IJBMI).
Qian, Y. A. N. G., & Xing, T. U. (2016). Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China. International Business and Management, 12(1), 29-32.
Zhu, D. H., Ye, Z. Q., & Chang, Y. P. (2017). Understanding the textual content of online customer reviews in B2C websites: A cross-cultural comparison between the US and China. Computers in Human Behavior, 76, 483-493.
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