Case study

    1.    

   If you were in charge how would you explain the

   pricing issues of Starbucks coffee?

    After Starbucks raised prices in early 2012, a lot of

   Starbucks fans in China complained the raising price on the Internet. If I were

   in charge, I would say the pricing issue is because Starbucks China adopts

   different strategies.

    First, Starbuck has different meanings to Chinese people

   from us people. Chinese people view Starbuck as a place to show their social

   status. Business can use Starbucks as a meeting place. Wealthy people use

   Starbuck to improve their life quality. However, in USA, Starbucks is nothing

   but a coffee shop. Most of US people will just take a cup of coffee to go. They

   don’t think Starbuck can offer them a business-meeting place. Chinese people

   expect more from Starbucks. In my personal experience, my high school mates

   often think that Starbuck is not the place for them. My high school mates think

   Starbuck are more for business people. Thus, Starbuck’s price differs because

   its target audiences are different.

    Second, personally, I think we should look over the cost

   that Starbucks faces in China. In china, Starbuck will have low labor costs,

   low material costs, but a high rental cost. Chinese housing price is sky high.

   A lot of working classes can only buy an apartment by spending entire savings

   of their life. In some places, rent can be around $2,000 per day. Thus, the

   high renting fee can be the part of explanations of the high coffee price.

    Third, compare to the teahouse in China, I think Starbucks

   charged a fair price. Although a lot of people think that Chinese people are

   becoming more westernized, in fact Chinese people still remains distinctly

   Chinese. Chinese people are just becoming more modern. Teahouses are still the

   traditional leisure for Chinese people, and a cup of tea is still more common

   than a cup of coffee. However, in a lot of teahouse, a cup of tea is priced RMB

   50, which is more expensive than a cup of tea offered in Starbucks. From this

   perspective, I think Starbuck’s coffee still has its competitive power.

    2.    

   Should Starbucks be considered a global “snob”

   brand?

    I do not think Starbucks can be considered as a global

   “snob” brand. Actually, I think it’s a basis. Whatever brand considered as

   “snob” brand in china is because they charge more in china than foreign

   countries. This sometimes is just because of different brand positioning

   strategies.  For example, Haagen-Dazs is

   considered as a “snob” brand in China, because a lot of people think that

   Haagen-Dazs charges more money in China than in American. However, Americans

   can only get Haagen-Dazs from supermarket. In China, Chinese people can get

   Haagen-Dazs from a fine decorated dessert place. The ice cream Haagen-Dazs

   offered in china looks way more pretty than in America. People can also have an

   afternoon leisure time in Haagen-Dazs. With these values plus together,

   Haagen-Dazs has its reasons for charging high price.

    On the other hand, sensational articles always influence

   Chinese people. People get angry with the “snob” company when they learned they

   get higher price from sensational articles. Sometimes People will never

   appreciate what they owned, people would only complain what they suffered. Patriotism

   is always a tool of a sensational article. A sensational article can easily

   make a person to hate a foreign company by offering a set of data and a series

   of analysis, which seems rational. However, the biggest problem of a

   sensational article is that it is not neutral. Sensational article sometimes

   does not have the opposite opinion, and people will often get emotional from

   these special articles without critical thoughts. In my definition of a “snob”

   company is getting more profits by offering the same services and products. Other

   than that, I think price difference is due to the different marketing

   strategies a company adapts to a region. In Starbucks case, I think Starbucks

   clearly used a different strategy in china from USA. If you compare two store

   in china and America, you can see a huge different. Chinese Starbucks is

   general bigger than Starbucks store in America. Therefore, in my opinion,

   Starbucks is not a “snob” company.