Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 7th International Conference on Economic Management and Green Development
Series Vol. 36 , 10 November 2023
Open
Access | Article
Analysis on the Development Strategy of Starbucks' Layout in Third and Fourth Tier Cities in China
* Author to whom correspondence should be addressed.
Abstract
Recent surveys found that the stores of Starbucks are mostly located in first and second tier cities in China and its objective customers are high income earners. However, in its 2025 expansion plan, the main objective of Starbucks is to enter low tier cities in China due to the high consumption potential in those cities. In order to help Starbucks achieve its plan, this paper will use the SWOT model to analysis internal strength and weakness, external opportunities and threats of Starbucks. The paper found that Starbucks has high user viscosity, strong monopoly power and financial capacity. Besides, the economic conditions in low tier cities are also beneficial to Starbucks such as low cost on daily life bringing out higher level of disposable income and increasing demand for coffee. In the contrast, we found that Starbucks has several problems such as inefficient chain of command, cost pressure due to large investment on digital technology and poor product differentiation. What’s worse, there is fierce battle among other brands and undeveloped consumption concept in the low tier cities. According to the analysis above, we suggest that Starbucks should adopt some strategies such as price discrimination strategy, making product differentiation, increasing investment in digitization and new retail, enhancing the brand influence, seeking for new suppliers with lower prices, shutting down underperforming stores and making improvement on quality of product, service and environment.
Keywords
Starbucks, third and fourth tier cities, SWOT analysis, development strategies
References
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 7th International Conference on Economic Management and Green Development
- ISBN (Print)
- 978-1-83558-093-6
- ISBN (Online)
- 978-1-83558-094-3
- Published Date
- 10 November 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/36/20231775
- Copyright
- 10 November 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited