Study Marketing mix adaptation in the Pearson Edexcel A Level Business specification, including the knowledge, application and evaluation needed for exam questions and mark-scheme responses.
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Extract G
Starbucks increases efforts to compete for market share in China
In the past decade, the number of Starbucks stores in the Chinese mainland increased nearly ten times, and it will reach 6,000 by the end of 2022. Faced with pressure from competitors such as Luckin Coffee and Tims China, Starbucks has been changing its strategy for tackling the country’s domestic market. By 2025, it plans to open 3,000 new stores, covering 300 cities in China, at an average rate of one new store every nine hours. In addition to this, the business will make full use of its digital platform and continue to develop its delivery business. In 2022, orders for Starbucks’ products from mobile platforms in China accounted for 47% of its revenues, which mainly corresponded to the pick-up and food delivery businesses. At present, there are more than 5,000 exclusive delivery riders and it takes only 19 minutes on average to deliver Starbucks coffee to customers. By 2025, the business plans to double the sales volume of its delivery business. The sale of bottled coffee in supermarkets, is now seen as a way of increasing Starbucks’ revenue in the Chinese market. It plans to supply ready-to-drink coffee to 550,000 supermarkets and convenience stores by 2025. Coffee-related goods and gifts are also expected to help achieve an annual growth rate of 30% in sales with the help of e-commerce channels.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance. The indicative content below exemplifies some of the points that candidates may make but this does not imply that any of these must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Place is one of the 4 Ps in the marketing mix and refers to how the
customer accesses and buys the product or service
- It covers not just where the purchase takes place but the channels used to get the product to the customer and the means by which the
customer buys the product
- Increasingly, this involves a digital platform rather than a physical
outlet
- Starbucks started as a single shop in Seattle but has expanded all over the globe
- It is still expanding its physical outlets, with 3,000 new ones planned in
China over the next three years. So place, in the physical sense, is still
a crucial part of Starbucks' marketing strategy
- In order to compete for market share against competitors such as
Luckin Coffee, Starbucks is developing its digital platform and growing
its online business, another way (or place) in which customers can buy
its products
- It plans to double the sales of its delivery business by 2025 and
increase online sales by an annual 30%
- Another change in its strategy is to supply bottled and canned coffee to over 550,000 supermarkets and stores by 2025, thus giving customers yet another way to buy
- It would seem therefore that for Starbucks, place is a crucial part of both its marketing strategy and marketing mix
- However, this does not mean that other factors are not important in its growth strategy
- Unless the product is perceived by customers to be of good quality they will not buy it in preference to Luckin Coffee or other rivals, therefore
Starbucks needs to make sure that the product appeals to consumers
- If the expansion into the supermarkets is to be successful they will have to develop the right type of canned and bottled drinks that will appeal to consumers, this again shows the importance of the product
- Even if the product is what the consumers want, the price has to be set at the right level. China is a competitive market, if it is too high they will not sell and if it is too low it may not be profitable
- The final 'P' of promotion is also important because unless potential
customers are aware of the range of products and services that
Starbucks has to offer they will not buy them. Therefore Starbucks
must ensure that suitable promotional campaigns are in place
- From Starbucks' point of view it would seem that in China, place is the
most important factor but the other 3 Ps are also important
- For other global businesses it will depend on what they are trying to achieve, the nature of their products and the market they are operating
in
| Level | Mark | Descriptor |
|---|---|---|
| 0 | No rewardable material. | |
| Level 1 | 1-4 | Isolated elements of knowledge and understanding. Weak or no relevant application of business examples. An argument may be attempted but will be generic and fail to connect causes and/or consequences. |
| Level 2 | 5-8 | Elements of knowledge and understanding, which are applied to the business example. Arguments and chains of reasoning are presented but connections between causes and/or consequences are incomplete. Attempts to address the question. A comparison or judgement may be attempted but it will not successfully show an awareness of the key features of business behaviour or business situation. |
| Level 3 | 9-14 | Accurate knowledge and understanding, supported by relevant and effective use of the business behaviour/context. Uses developed chains of reasoning, so that causes and/or consequences are complete, showing an understanding of the question. Arguments are well developed. Quantitative and/or qualitative information is introduced in an attempt to support judgements, a partial awareness of the validity and/or significance of competing arguments and may lead to a conclusion. |
| Level 4 | 15-20 | Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context. Uses well-developed and logical, coherent chains of reasoning, showing a range of causes and/or effect(s). Arguments are fully developed. Quantitative and/or qualitative information is/are used well to support judgements. A full awareness of the validity and significance of competing arguments/factors, leading to balanced comparisons, judgements and an effective conclusion that proposes a solution and/or recommendations. |