Starbucks in China
With Starbucks’ recent hire for their new COO, Rosalind Brewer to oversee the operations in the US, it’s a good opportunity to take a look at Starbuck’s objectives and plans moving forward, and some of the success they’ve had with entering into the China market since 2012.
How did a coffee company manage to get a strong foothold in a market where tea has been the dominant beverage for literally, the past thousands of years?
When Starbucks entered the market in China in back in 1999, many saw the move of going into a country with a long history of tea drinking to be a risky move.
However, fast forward to today, Starbucks has not only successfully created the demand for coffee in China, but they also created a revolution in how the Chinese has adopted the coffee drinking culture, an effort that has reinforced Starbucks’ mission to maintain as one of the most recognized and reputable global brand.
They have announced this year that by 2021, there will be 5000 Starbucks locations in China alone. A heavily invested move not only with the speed that the new stores would have to open at (which would require opening an average of a store a day at minimum to achieve), but their strategic move with doubling down in the urban markets within China, while some other chains like McDonald’s and KFC have been quietly cutting back and exiting China as the tastes and desires of this country evolves.
One of the visible tactical moves as a part of the overall strategy done successfully by Starbucks was to partner with China’s tech phenomenon, WeChat.
Through WeChat, Starbucks launched a social media campaign for one of their new products, Refresha, back in 2012.
Starbucks placed QR codes on convenient places such as their cup sleeves, and posters in their stores for their customers to scan. By scanning the QR code, customers can add Starbucks’ Official Channel on WeChat (similar to “Liking” a company page on Facebook).
Once the customer joins the official channel, they were prompted to select from WeChat’s 26 different emoticons to express their mood, thoughts and feelings. When an emoticon has been selected, Starbucks then engaged with the customer by replying with one of the 26 songs from their list that matches their mood.
- In the 4 weeks that the campaign was running for, Starbucks:
- Gained 130,000 new followers on their WeChat Official Channel
- Sales volume for Refresha hit 7.5 million RMB, which is equivalent to approximately 1.12 million USD
And this may be a shocker to you… they were able to achieve all of that with a marketing cost of less than $40,000 USD!
Fast forward to today where WeChat’s user base has grown from 100 million to close to 1 billion in just a few years, it is not surprising to see that many companies, but in particular luxury brands, have been dedicating themselves to connecting and engaging with their audience on this platform.
Author: Victoria Mui, Managing Partner at AffluentChinese.com