Starbucks Turkey
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STARBUCKS TURKEY: WHAT CAN STARBUCKS ADD TO THE 500-YEAR-OLD COFFEE CULTURE Nesrin Korkmaz International Strategic Communication Professor Doshi April 21, 2016 CAMPAIGN DESCRIPTION Starbucks Coffee Company: Starbucks Coffee Company started its operations in 1971 in Seattle, Washington (starbucks.com.tr, n.d.). After being sold to Howard Schultz in 1987, the company began expanding rapidly, first in the United States, then in the global markets (starbucks.com.tr, n.d.). The secret of the company's global success lies behind its vision that was inspired by the Italian coffeehouse experience: to become the third place after home and office where people can enjoy quality coffee over conversations that are nurtured by the sense of community at every Starbucks store (starbucks.com.tr, n.d.). Today, with more than 24,000 stores in 70 countries, Starbucks' name represents one of the largest coffee brands and coffeehouse chains in the world (starbucks.com, n.d.). In the beginning, Starbucks differentiated itself as a company that offers "affordable luxury" to white collar urban dwellers who would be more likely to have a demand for the "third space" in their lives (Mourdoukoutas, 2013). Although the company's American target profile now includes the less educated, the young, and the rural area residents, Starbucks' global consumers still resonate with the initial target segmentation, especially in middle-income countries such as Turkey. Through a partnership with Shaya, which is the branch of a Kuwait-based company that invests in the Turkish retail market, Starbucks Turkey opened its first stores in the three upscale neighborhoods of Istanbul: Bağdat Caddesi, Akmerkez, and Kadiköy in 2003 (shaya.com.tr, n.d. and milliyet.com.tr, 2003). By 2016, the number of Starbucks stores reached to more than 230 in 22 cities across the country (shaya.com.tr, 2016). Coffee Market in Turkey: According to an article on kesfikahve.com (2015) only about 78 percent of Turks drink coffee. This is surprising considering the long-standing coffee culture in Turkey, yet tea is the hot beverage of choice for most Turks. About 95 percent of the Turkish households report to brew tea regularly (Altuntaş, 2015), and, in fact, Turkish people are the biggest tea drinkers in the world (3157 kg of tea per capita per year) according to 2014 statistics (Ferdman, 2014). In comparison, per capita consumption of coffee is low -- only about 550 grams a year according to Ceyhan Pusmaz, the director of Turkey Operations at Coffeeshop Company (Karaboğa, 2014). In spite of the high preference for tea, there is a growing demand for quality coffee among the younger Turks as the booming coffee shop industry can attest (Gonultas, 2015). The first coffee chain brand that opened its stores in Turkey was Gloria Jean's Coffees back in 1999 (gloriajeans.com.tr, n.d.). By opening its first stores in 2003, Starbucks followed the Gloria Jean's Coffees (currently 51 cafes) example. Today, 31 coffee chains (both local and foreign) operate in more than 1,170 stores (Kuburlu, 2015). Starbucks is the market leader with its 234 stores across the country (Kuburlu, 2015). The competition is getting fiercer, yet the barriers to entry are not high in every city as the foreign chains focus on growing in the metropolitan areas only, and local brands focus on expanding their reach to the rest of the country (Kuburlu, 2015). According to store information on their websites, some of the most well-known competitors of Starbucks are Kahve Diyari (134 stores), Kahve Dünyasi (125 cafe and corner shops), Robert's Coffee (49 cafes), Cafe Nero (49 locations), and Gönül Kahvesi (72 cafes). Another trend in the coffee industry is the third wave coffee houses that bring a larger emphasis on the origin and the quality of coffee (the roasting and brewing process) as well as the customer experience (Gillis, 2014). Independent third wave coffee houses are popping up rapidly in major urban areas such as Istanbul, Ankara, and Izmir. They are gaining popularity among the young and educated Turks who are constantly on the look out for the next hip coffee shop (Gillis, 2014). Currently, the coffee industry in Turkey generates nearly ₺500 million (about $180 million) revenue a year, and it is expected to grow 100 percent in the next five years (kesfikahve, 2015). Although the major part of the revenue (about ₺125 million) still goes to the Turkish coffee, the instant coffee brands, the coffee shop chains, and the independent coffee houses have been consistently increasing their shares of the market (Turkish coffee's share dropped by 10 percent in the last two years) (Tuvay, 2015). Starbucks has been the market leader among the coffee house chains, and the increasing interest in coffee and consumption of coffee provide an excellent opportunity to get more Turks to drink Starbucks. However, it is necessary to keep the target audiences loyal to the brand by engaging with them in ways that they prefer. CAMPAIGN OBJECTIVE Although Starbucks has a high brand recognition in Turkey, it is important to strengthen the ties with the target audiences especially considering that there has already been a shift toward the third wave coffee houses in the metropolitan areas. This campaign aims to increase the sales of Starbucks coffee and enhance the loyalty to the brand by 20 percent in the next year among college-educated students and professionals by positioning Starbucks as the place that offers the best coffee and atmosphere for socialization. TARGET AUDIENCE People between the ages of 15 and 30 make up about 25 percent of the overall Turkish population, and nearly 40 percent of this group of young people are college educated. According to a survey conducted by Vivaki Business Intelligence (2013), some of the habits of this segment are as follows: • Open to trying new tastes and experiences and going to cafes and restaurants that offer these experiences, • Have a tendency to consume more sweets and fast food, • Drink espresso based or filtered coffee regularly, • Have a high preference for name brand coffee and coffee shops as the brand's logo is a way of showing off their habits, • Are active users of the Internet and the social networking sites, • Own a smartphone and a laptop, • Identify themselves with the places they live and visit, • Place a high value on family and friend relationships (friend groups and socialization with these groups are the essential part of their lives outside the home). This campaign will target two distinct audience groups in Turkey. The first one includes the current college students in the ages between 18 and 24. About 56 percent of the college students do not live with their parents (if they are going to a university in metropolitan areas, the percentage is even greater), 93 percent of them eat out, and, on average, they spend ₺613 a month (halklailiskiler.com, 2012). The larger share of their spending goes to food and entertainment as 56 percent of them report to go out to eat at a cafe or a restaurant a couple of times a week and nearly half of them go to a fast food restaurant at least once a week (shiftdelete.net, 2015). College students may not have a large budget, but they are the trend setters in the food and beverage industries and are highly influential among their peers. The other group is the young professionals in the ages between 24 and 35. This group contains mainly college-educated professional women and men who have the upper-middle income status. They are also called "beyaz yakali" or "plaza insanlari," which refers to the social and economic status of these Westernized, stylish, and urbanite Turks. This group has a higher disposable income and are more likely to have a young family unit than the first target segment. COUNTRY PROFILE Political Structure: Turkey is a republican parliamentary democracy. Turkey’s constitution (the first one ratified in 1923, the current was proclaimed one in 1982 and amended in 2001, 2007, and 2010) designates the main principles of the state and establishes the organization of the government (CIA, 2016). The constitution also separates the government into three branches: the legislative, executive, and judicial (Aksel, 2013). Although Turkey may seem like a democratic country on paper, there are some problematic areas in practice. Ever since AKP came to power in 2002, the party has been trying to seize more power from the other branches of the government (t24.com, 2016). They did not have much difficulty since they had a majority in the assembly. I also have observed that over the years, AKP was able to displace some of the judges with critical importance and crack down on the military personnel, the journalists, the academics and university students. In short, the party has been working hard on oppressing opposing groups. From my personal experiences, I can say that the AKP’s harsh reaction to Gezi Park protestors in 2013 turned a significant portion of the college educated students and professionals against the party. For many of these young people, Gezi Park protests can be considered a catalytic moment as they became aware of who they are and what their generation represents at large. For Starbucks, this means that the company should stay away from getting involved in politics at all costs (the brand has to work with the government entities, but cannot neglect the consumers either). It is also important to remember that staying away from politics is not always so easy. For example, during the Gezi Park protests, Starbucks’ Taksim branch was highly criticized for not letting protestors in when they were trying to avoid the pepper gas (mynet.com, 2013).