GEU 0411

Group 58

Success of the Starbucks in Hong Kong

Objective

Purposefind out the reasons for the success of Starbucks in Hong Kong Approach of analysis• find out the strategies in Hong Kong• consumers’ point of view

BackgroundDuring these years, Hong Kong has been suffering economic downturn, but Starbucks in Hong Kong has made dramatic progress in its business

•LINK1

IntroductionIn our presentation, we will discuss

A. General Background.Industry of specialty coffee.Starbucks in USA .Starbucks in Hong Kong

B. AnalysisStrategies for the success in HKBases on the six guiding principles stated in the

Mission Statement

Six Guiding Principles Stated in the Mission Statement

• (1) Provide a great work environment and treat each other with respect and dignity.

• (2) Embrace diversity as an essential component in the way we do business.

• (3) Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee.

• (4) Develop enthusiastically satisfied customers all of the time.

• (5) Contribute positively to our communities and our environment.

• (6) Recognize that profitability is essential to our future success.

1. Industry of specialty coffee

1. Industry of specialty coffee

• Most households had little knowledge of the concept of specialty coffee.

in the 1950s and 1960s……..

• educated buyers care about quality coffee and services, remained a fragmented niche of the larger market

1. Industry of specialty coffee

1970s

• the concept of specialty coffee:

special geographic microclimates produce beans with unique flavor profiles

• also called “gourmet coffee”

1. Industry of specialty coffee

• The coffee companies did not typically deal with mass suppliers

To ensure quality of coffee…. .

• They visited smaller farmers (coffee bean suppliers) to bought their coffee directly

1. Industry of specialty coffee

• the price of coffee can reflect the quality and quantity of a particular coffee.

• Early 1980s, $5 to $7 per pound that is twice for the traditional basic coffee !

1. Industry of specialty coffee

• Lots of consumers supporting this coffee although the it is expensive.

• Why does the popularity of specialty coffee would become higher at such a high price level ?

1. Industry of specialty coffee

• 4 reasons for supporting:

(1) the adoption of a healthier lifestyle to replace alcohol with coffee;

(2) coffee bars offered a place people could meet;

(3) affordable luxuries

(4) consumers were becoming more knowledgeable about coffee.

Starbucks in USA

Starbucks in USA• In 1981: the specialty coffee business captured

the attention and talents of Howard Schultz.

• in 1982:He joined Starbucks

• Since 1987:become Chairman and CEO.

• USA TODAY has called him

“ The Bill Gates of coffee”

Howard Schultz

Starbucks in USA

Coffee in USA

• Starbucks done much to popularize the latté and cappuccino.

• the obvious popularity of coffee-flavored, milk-based beverages gained much of its momentum

Iced-lattecappuccino

Starbucks in USA

• Main theme of Starbucks

• Starbucks is providing the memorable experience for enjoy coffee of Starbucks.

• LINK

Starbucks in USAStarbucks employees call

each other as partners

this is certainly a sign of respects towards everyone who are working in Starbucks.

Starbucks in Hong Kong

Starbucks in Hong KongBackground

• to cultivate a coffee appreciation culture in the Asian Society.

• acquaint and disseminate state-of-the-art coffee knowledge and skills to coffee professionals, entrepreneurs and coffee lovers.

Starbucks in Hong KongBackground

Before the arrival of Starbucks

• the concept of specialty coffee and coffee house was not well known in the local culture.

In 90’s

• the concept of specialty coffee only existed in hotels and several professional coffee shops.

Starbucks in Hong KongBackground

Later economy grew rapidly

• people were in the sake of quality life.

• coffee culture was well developed in the middle class.

Starbucks in Hong KongBackground

after the economic downturn in 1997…..

• Starbucks still showed great progress in profits

What make it so successful after 1997?

• Actually, this success was not easy to achieve.

Starbucks in Hong KongBackground

HK market in the 90’s1. suffered a setback with Hong Kong retail mogul Di

xon Poon’s collapse. do business and offer access to low-cost prime sit

e locations.

2. Until 2000 entered agreement with Host Marriott Internationa

l open the first store in locations in Hong Kong and Shanghai.

Starbucks in Hong KongBackground

In 2002• a new 50-50 joint venture called Coffee

Concepts (Hong Kong) Limited the Maxim’s Group

• further development in opening stores in Macau and Southern China.

Now

• 42 branches of Starbucks in Hong Kong, one in Macau, two in Shenzhen and one in Guangzhou.

Starbucks in Hong KongBackground

• Business Wire Starbucks Announce Plans for Southern China And Macau Celebrates

• Its 2nd Anniversary in HK and Store Opening at Admiralty MTR Station2-5-02

• Starbucks s named

“our stores locations”

Starbucks in Hong Kong

Next ……..

• a gigantic trading group with systematic management strategies

• bring concept of specialty coffee and coffee house to Hong Kong.

Specialty Coffee in Hong Kong

Starbucks plays an important role in bringing the concept of specialty coffee

• special beans grown in different places with unique flavors

• quality coffee with quality service and excellent experience in coffee shop.

Strategies for the success of Starbucks in Hong Kong

Strategies for the success of Starbucks in Hong Kong

We will divide into 6 parts for analysis

• Training of staff and working environment• Diversity in Starbucks• Customers’ satisfaction• Diversification in supplier• Quality of Coffee and Contributions for the

Environment and Community • Customers’ satisfaction

Strategies for the success of Starbucks in Hong Kong

Training of Staff and

Working Environment

Strategies: Training of Staff and Working Environment

• staff is the most valuable asset.• call each other "partners" (same as USA)• create a quality environment that can enhanc

e partners’ effectiveness and efficiency.• According to Fortunes, Starbucks is

100 Best Places to Work.

Strategies: Training of Staff and Working Environment

According to Mr. Chow, the Marketing Manager of Coffee Concepts (HK) Ltd :

“people business serving coffee” • 3 main criteria eager to achieve:- commitment to excellence among their partners- an emphasis on respect in how they treat their cu

stomers- a dedication to social responsibility• sincerity is in top priority in the

recruitment procedures

Strategies: Training of Staff and Working Environment

every staff must go on an 80 hours training within the first 3 months.

Training contains:

• characteristics of coffee

• the way to communicate with customers

• the pronunciation of the products names All these will be done in training center and

branch shops as field experience.

Strategies: Training of Staff and Working Environment

Interviewing with baristas

• quite satisfied with the working environment as well as the promotion prospect in Starbucks.

Strategies: Training of Staff and Working Environment

Ms Lee, assistant manager of Maritime Plaza:

• responsibility and sincerity are the most important things in the career

• taking value-added courses

Strategies: Training of Staff and Working Environment

for Hong Kong market, there is a Coffee Master Program:

about 50 masters will introduce…….. • the food that best fit different kinds of

coffee• the basic knowledge • characteristic of coffee to customers

Strategies: Training of Staff and Working Environment

Coffee Farm visit program in 2004 • Coffee Masters will be sent to the Coffee

Farms in different countries to have an insight about global market of coffee

• Outstanding partners will be awarded in the form of certificate, monetary, bonus or travel allowance

Strategies: Training of Staff and Working Environment

• All these have shown Starbucks’ great effort in training and retaining staff.

• The mission statement:

“Provide a great work environment and treat each other with respect and

dignity”

is achieved.

Strategies for the success of Starbucks in Hong Kong

Diversity

Strategies: Diversity

Diversity in Starbucks

• is a vital part in the operation and

management of Starbucks.• Starbucks in Hong Kong has shown its

diversity in various aspects

Strategies: Diversity

•seek suppliers of coffee beans from various different geographical areas

•very creative in promoting various special drinks and cakes - For example, special promotion in the coming winter and Christmas,

Strategies: Diversity

Local relevance is also an important feature in diversity

• actively seeks local companies to cooperate with

- a partnership with Hong Kong Land, the biggest landlord in Central business district

- collaborated with Sun Hung Kai Properties Ltd

• location selection targeted at different particular groups of consumers

Strategies: Diversity

• All these have shown Starbucks’ diversity, flexibility and creativity.

• The mission statement

“Embrace diversity as an essential component in the way we do

business”

is maintained in Starbucks in HK

Strategies for the success of Starbucks in Hong Kong

Quality of Coffee and Contributions for the Environment and Community

Strategies: Quality of Coffee and Contributions for the Environment and Communi

ty• This commitment to superlative quality is our

promise to you

-- finest beans the world has to offer

• an increasingly healthy lifestyle and concern much more about environmental conservation.

-- beginning in 2004, certified organic coffee will also be available in Hong Kong

• offers a variety of decaffeinated coffee to fit the need of customers

Strategies: Quality of Coffee and Contributions for the Environment and Communi

ty

Starbucks has maintained the two guiding principles of the mission statement:

• Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee

• Contribute positively to our communities and our environment

Strategies for the success of Starbucks in Hong Kong

Customers’ satisfaction

Strategies: Customers’ satisfaction

• To study that, we have conducted interviews with the costumers in Starbucks.

Strategies: Customers’ satisfaction Consumers’ interview and result’s

analysis

Strategies: Customers’ satisfaction Consumers’ interview

Two interviews have been conducted in two branches of Starbucks

• Millennium City next to the Standard and Chartered Bank Tower

• Maritime Square which is a shopping mall

Strategies: Customers’ satisfaction Consumers’ interview

• price and quality• overall ambience • design • service of staff• information technology • impression

Strategies: Customers’ satisfaction Consumers’ interview

Millennium CityBackground•Kwun Tong•located on the ground floor of the Standard and Chartered Tower.

opening hour: •9a.m. to 6p.m. (Monday to Friday) •9a.m. to 1p.m. (weekends)•closed (Saturday and on Sunday) (exactly the same as the operating hour of the banking tower)

Strategies: Customers’ satisfaction Consumers’ interview

Millennium City

Consumers : white collar

Time: 5:30 p.m.

Purposes of Coming to Starbucks:

Taking rest after the whole day work

Strategies: Customers’ satisfaction Consumers’ interview

Millennium City• Price : too high • Quality :service, food

and drinks is acceptable

• Design: the design maintain the tranquility and peaceful environment

Strategies: Customers’ satisfaction Consumers’ interview

Millennium City

Training of Staff• Male: did not care if staff were well-equipped

with professional coffee related knowledge

• Female: care about the helpful and efficient service in helping consumers to choose coffee

Strategies: Customers’ satisfaction Consumers’ interview

Millennium City• Atmosphere: was the key factor for them to

come back or not.

The white-collar utilized the Starbucks as:

- relaxing place after the whole day work

- conference room on reached consensus on business project

Strategies: Customers’ satisfaction Consumers’ interview

Millennium CityInformation Technology: • the provision of the wireless broadband

service determined by the land owner of the shop location rather than by the Starbucks.

Consumers:• supported the expansion of wireless

broadband service to each branch

• this would become additional benefit.

Strategies: Customers’ satisfaction Consumers’ interview

Maritime Square

Background• Located in Tsing Yi• an open space at the main entrance • a junk boat design• Opening hour:

8am.-10:30 pm

(Mon to Sun)

Strategies: Customers’ satisfaction Consumers’ interview

Maritime Square

• Interviewees: couples, families, young people and foreigners

• Purpose>have a break after shopping

>enjoy a time gathering with family and friends • Time: 2pm

Strategies: Customers’ satisfaction Consumers’ interview

Maritime Square

Food and Service• Coffee

– 80% thought the quality and taste of Starbucks coffee was satisfactory

• Pastries– Most of the interviewees thought the pastries

were tasty and of great variety

Strategies: Customers’ satisfaction Consumers’ interview

Maritime Square• Price

– 60% thought that the price was fairly reasonable and acceptable

• service of staff– Most found the

services provided by the staff satisfactory

.

Strategies: Customers’ satisfaction Consumers’ interview

Maritime Square

Ambience of the store• Half of the interviewees agreed that the

atmosphere in Starbucks is relaxing• But crowded and noisy• 60% of customers do not notice or care

about the boat design

Strategies: Customers’ satisfaction Consumers’ interview

Maritime Square

Information Technology• All the customers prefer having the wireles

s broadband service

Overall Impression • 60% - relaxing atmosphere • 10% - quality coffee

Strategies: Customers’ satisfactionAnalysis

• For many consumers, Starbucks is not only a place that offers interesting coffee related drinks but it is also a “third place” where they can escape, reflect, read, chat or listen

• Starbucks Experience that the manager stressed, “Starbucks Coffee is more than a drink…. It’s an indulgence, a small personal ritual…. you get great people, first-rate music and a comfortable, upbeat meeting place”

Strategies: Customers’ satisfactionAnalysis

• pays attention to consumers’ advice and suggestion

• enrich consumers’ knowledge of coffee, leaflets are provided in retail shops

Strategies: Customers’ satisfaction

Starbucks has shown its success in maintaining the mission statement:

“Develop enthusiastically satisfied customers all of the time”

has been achieved

Conclusion

Conclusion• specialty coffee business is not only about c

offee components and factors in the growth of the s

pecialty coffee business: - A great variety of Arabica coffee beans - the right mix of pastries - savories and hard goods - store design, - employee training

- overall ambience

Conclusion

• gains its success by maintaining the six guiding principles of the company’s mission statement

• showing diversity and creativity in considerations of matching the local culture of Hong Kong.

THE ENDThank You MembersRachel Ha

Carrie CheungKaren ChengJostan Wong