Starbucks needs to change its business model to appeal to all three consumer segments found in China

Starbucks needs to change its business model to appeal to all three consumer segments found in China

Starbucks needs to change its business model to appeal to all three consumer segments found in China. Currently, Starbucks’ coffee appeals to globalized consumers within China, who have developed similar preferences to consumers in western countries (Jourdan, 2013). Purkayastha et al. (2019) argue that Starbucks has been charging high prices to Chinese consumers because they have blind faith in Western brands. Consumers buy Starbucks coffee explicitly because it is expensive than other coffee brands and Starbucks stores are expensive and luxurious.

Foremost, Starbucks should change its business model to capitalize on the growing popularity of coffee among the localized segment and the semi-global market segment. Secondly, Starbucks should change Chinese consumers’ attitudes by encouraging them to take their orders to go. Reducing the number of customers who take their coffee at the stores will reduce the need to build large stores. Thirdly, Starbucks should extend its supplier range and source new distribution channels to reduce the cost of doing business in China. Finally, Starbucks should follow Luckin’s business model, which focuses on speedy delivery and smaller stores to appeal to China’s local market segment. Ultimately, Starbucks can leverage its brand equity in the coffee retail industry to offer lower-cost “premium” coffee in the Chinese market