perjantai 24. helmikuuta 2012

Recommendations for Starbucks

It’s time for my final blog post (sniff). After extensive analysis of the target market and Starbucks’ marketing strategy and capabilities, and an amount of coffee that will surely keep me awake for the rest of 2012, it is time to reveal my ultimate plan for Starbucks’ entry to Finland.

*anticipative drumming*

And here it is!

Market entry strategy – Starbucks in Finland


Entry: My recommendation for Starbucks in entering the Finnish market is to use a combined joint venture and licensing strategy, as I earlier mentioned in my blog, since this structure has been proven very effective for Starbucks in the past, and it minimizes risks.

Brand strategy: Starbucks brand is known worldwide and people go to Starbucks for its brand. That is why the neighborhood store concept that I talked about earlier would not work in a new market like Finland where the name Starbucks is likely to attract people most. Starbucks needs to establish itself here as a strong well-known brand before considering “unbranded” stores.

Product portfolio: Starbucks should introduce some localized products from the beginning already. Finns are fond of their rye bread sandwiches and cinnamon buns, and this is what Starbucks should offer in its store as well. Regarding drinks, a basic selection of special coffees, Frappucinos and teas is good in the beginning. Of course, for Starbucks, a basic selection means around 30 items. This is the usual number of products offered in other European Starbucks stores that I have visited. A small selection of Starbucks branded mugs and coffee tumblers should be introduced in addition to drinks and food, since merchandise is a solid part of Starbucks stores worldwide. Once Starbucks has established itself in Finland with more stores it can expand its selection.

Target group: My recommended target group for Starbucks in Finland is young urban adults, Starbucks’ “core customers”, as previously mentioned in my market segmentation post. An interesting group within this segment is students, as my survey also revealed, and Starbucks should keep this in mind when considering locations. Oh wait, I already did the thinking for them!

Locations: Considering our target customers, Kamppi shopping center would be an excellent choice for the first Starbucks store in Helsinki city. University of Helsinki and Aalto School of Economics are located in the city center and in addition many other students and young adults traffic through Kamppi every day. Another store could be opened in the renewed fashionable Kluuvi shopping center, where many urban adults and students spend their time. Furthermore, it’s just next to the Helsinki University main building. The Central Railway Station would also be a good location with its steady stream of commuters as well as travelers. Other locations in Helsinki could be the Esplanade park (popular among locals and tourists in the summer) and a seasonal store Linnanmäki theme park (young adults, students as well as tourist enjoy this amusement park in the summer time).

Outside Helsinki, potential store locations could be in Espoo and Vantaa (the satellite cities of Helsinki), Turku and Tampere (both student cities), and the big ski centers in Lapland such as Levi, Ylläs and Ruka.

Communication channels: Starbucks should continue in its path of utilizing social media in communicating with customers. As I wrote in my blog post, the interactive social media strategy does not work without all the elements (Facebook, blog, “My Starbucks Idea”) in it. This is why my recommendation for Starbucks is to use all these elements in building its communication strategy in Finland.

Distribution channels: Since Starbucks already has airport locations in Norway and Sweden, Starbucks should establish a centralized warehouse for all Nordic countries in order to reduce costs. As the company is known for using multiple distribution channels, this would also be the case in Finland. They would import coffee and other products to the centralized warehouse and then further distribute them to be sold under the Starbucks brand in their own stores. However, Starbucks could also make distribution agreements to sell their products in grocery stores and shopping centers as well. If things go well, distribution could be further developed to sell their products in hotels and office buildings as well in Finland.

Conclusion: Considering all the above mentioned aspects, my overall recommendation for Starbucks is to use a standardized strategy in Finland.

There you go.

*applause*


You’re most welcome, Starbucks. Now get in here quick!!

*************************************************************


As final words I want to say that I have enjoyed writing this blog and I hope you have enjoyed following it. My work here is done.

Over and out (for coffee).

Love, Kosti.

11 kommenttia:

  1. Hi!

    Well done team! You have done a great job at summing it all up.

    I agree with those potential store locations that you mentioned. One question that still comes to my mind is: what is the real market size? The segment young urbal adults is still a bit vague to me. How many people actually fall under this profile and are likely to be willing to pay a lot of the Starbucks brand. Kamppi is an interesting idea. I personally visit the Johto cafe on the top floor quite frequently because KY students get a 20% discount. The question is, is the Starbucks brand big enough to make me want to pay 20% more at one of their stores? Mmmmm....maybe.

    Another question that came to my mind is: how many stores do you recommend Starbucks to open (now, 5 years, 10 years)? What do you see as the maximum store number?

    Furthermore, what localized products do you recommend?

    Answer these and I will be overall pretty impressed with your project ;)

    VastaaPoista
    Vastaukset
    1. Hi Karoliina!

      Regarding your question about the market size, you should check the answer from the market segmentation post later!

      About the number of stores, I answered in the second post that I think a maximum of 5 stores in Helsinki would be good so that Starbucks doesn´t lose its brand appeal. In Turku, Tampere and Lappeenranta I would suggest 1-2 stores only, since they´re a bit smaller cities and the biggest demand is most probably in Helsinki region. Espoo and Vantaa have big shopping malls such as Jumbo and Sello, and those would be good targets for Starbucks (one store each).
      After opening the stores at the airport, the first store in Helsinki city center could be expected in early 2013, depending when Starbucks will be able to find a good location. I would recommend them to progress rather slowly, so no more than 1 store per year. Of course, as they would be opening another store in Helsinki, they could gradually open stores in Espoo, Vantaa, Turku, Tampere and Lappeenranta.

      Localized products we recommended for Starbucks are rye bread sandwiches and cinnamon buns (korvapuusti). This rather important information slipped our recommendations part, it should have been there, apologies for that! They were, however, mentioned in the brand strategy post, though maybe not as clearly.

      Poista
  2. Hi! Congratulations on your blog, it was very interesting and i like the way you conclude it in this post.

    It was interesting to see that you suggest a seasonal store in Linnanmäki. I am not quite sure if this would be a good idea since the majority of Linnanmäki customers are young chilren with their families and Starbucks is targeted more towards young adults, or people commuting to and from work, in my opinion.. However, it is an interesting idea and could be popular among young teenagers who hang out at Linnanmäki :)

    Well done!

    VastaaPoista
    Vastaukset
    1. Thank you for your comment Jonna!

      The seasonal store in Linnanmäki was an idea one of us came up with. I actually don´t know if Starbucks has these kind of seasonal stores anywhere else, but amusement parks do have a lot of customers in the summer time and apart from teenagers quite many young adults also enjoy Linnanmäki.

      Furthermore, since there isn´t any entrance fee to Linnanmäki, some people come to the area for a stroll and visit the restaurants there, and can also visit the Starbucks if they would have one (or even enter the park for that reason).

      Poista
  3. Good job Starbucks team :)

    I have enjoyed reading your blog posts and I'm ready for Starbucks to come to Finland now...

    I have to agree with Jonna, I don't really see Linnanmäki as the best option for Starbucks as majority of the visitors are children, who are not specifically Starbucks' target segment.. Kamppi, however, sounds like a good place for the first store because there's so many people commuting from there and also is close to Aalto University. I would maybe even suggest that they open a store next to Aalto and Hanken so the students are reached.

    Thanks for the nice blog!

    VastaaPoista
    Vastaukset
    1. Thanks, Jenni! We are also ready for Starbucks to come!

      Your idea about placing a store closer to Hanken and Aalto is interesting, however, there isn´t that many places to set up a store. Kamppi is still relatively close, as you said, and occupied by people through out the year, whereas the university area might be a bit quieter during the summer time (in spite of the hard working thesis writers ;)).

      Poista
  4. Hi,

    Thank you for a very nice summary! I like the layout here and I like the fact that you have made this “conclusions” post so reader-friendly. Regarding the location choices, I agree with you that central location is key. Especially Esplanadi might prove quite successful. Forum shopping centre also has a pretty central location in Helsinki and might be a great alternative as well! I too do not think Linnanmäki is necessarily the best choice for a location.

    Do you think the communication channels would have to include print media or “traditional advertising” as well to reach the older-end of your target segment?

    All in all, you have made a great blog. You have so much information here and it shows that you have put a lot of effort into this. I’m glad I got to be your group’s consultant because I love Starbucks too ;)

    VastaaPoista
    Vastaukset
    1. Hey Isa! Forum is a good suggestion, hadn´t actually thought of that :)

      About advertising, according to my knowledge Starbucks doesn´t really advertise in the usual media such as prints and TV. It is a good point that to attract more mature people it might be necessary. However, social media isn´t just a thing for younger people anymore; at least I know many 40-65 years olds who have a Facebook account for example (another thing is, if they know how to use it). Starbucks brand is also so well known, that I believe they would be able to reach their target customers even without traditional advertising. However, when opening a new store it might be good to use some advertising so that people know to go to the new store. Since Starbucks is a big international brand, I am quite sure that the Finnish media including Helsingin Sanomat, which is read by people from all ages, would also make known to people when Starbucks is opening a store here.

      Poista
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