IKEA and Starbuck’s view China and India as the countries that will contribute to their profitability in the future, because they are the most populous countries in the world and their economies have been on the rise. Nevertheless, when entering the Indian and Chinese markets the global companies, including IKEA and Starbuck’s, should take into account various local factors and adjust their marketing strategies.
Starbuck’s main risk was that there are many tea drinkers in China and India, but the company did not hesitate much and opened its locations in both countries where it sells the products that are adapted to the local tastes. By the end of 2014 there were 4,624 stores in the CAP market that includes China and India. Starbuck’s is applying two different strategies in China and India. In China, there are 823 stores and most of them are licensed stores. The first Starbuck’s store opened in China in 1999. In turn, in India Starbuck’s has been working as joint venture with the Indian company Tata Global Beverages since 2012. There are 71 stores in India (Starbuck’s Annual Report).
The main cultural challenge for Starbuck’s is low coffee consumption in the Asian countries. In India and China, people drink approximately 80g of coffee per capita a year. This is about 5-6 cups per year. In the large cities people drink around 2 kg of coffee a year and still it is much lower than in Europe or Northern America (Lewis). So Starbuck’s has been opening its stores in the cities where there is demand for coffee. In addition, there are some differences in the interior and menu. In China, the stores are spacious and the coffee is more expansive than in the other markets. Customers can also buy tea and local sweets. There is a label with the country where the food was produced on the food products, because Chinese people are concerned about food safety (Peterson).
In India, the Starbuck’s stores are also different, because there is relaxed café culture in India. What is more, customers like to order food products in Starbucks’s. The menu was also adjusted and 20% of the food products are local offerings. Finally, the customers can order different kinds of tea (Mitra).
In terms of IKEA, China was the company’s fastest growing market in 2014, despite the fact that the Chinese are confused with the IKEA’s DIY concept. IKEA entered the Chinese market in 1998 and had to adjust its market strategy immediately. First of all, IKEA targets the young people as the key customer group (a generation that was born when the One Child Policy was introduced in China). Such people usually live in the big cities, earn enough money for living and like the foreign brands. Moreover, IKEA has to change the displays in the stores a lot, because the customers like to go shopping often. The room settings correspond to the Chinese apartments. Nevertheless, the product range is more or less similar to the one in the Western IKEA stores. There are also some differences in the ways how IKEA promotes its products (Burt, Johansson, Thelander).
IKEA does not work in India despite the fact that it has been sourcing products from there for almost 30 years. The problem is that the Swedish company prefers to have a complete control over their stores. Such an approach was impossible in India where until 2012 the foreign companies could not own 100% of shares of the retail ventures (Shurma). Now the situation is different and IKEA has already declared its intentions to enter the Indian market. IKEA will have to adjust its marketing strategy in a country where 40% of the people live in poverty. Moreover, there will be many cultural differences that IKEA will have to consider. Probably the company will use the marketing strategies that are used in China and will target the affluent and middle class people who can afford to buy new furniture.
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