27 MAY. 2010

Starbucks continues brand localization in China

As the Dragon Boat Festival approaches, many international food chains are launching their special products for this traditional Chinese festival. Starbucks stood out last year when it launched its “ice zongzi” and received positive feedback from consumers. This year, Starbucks is taking their localization attempts one step further and releasing Dragon Dumplings with 5 tastes and colors, which represent 5 blessings: coffee stands for warm love, gold for bright future, green for persistence, rose red for good luck, and white for peace. There are already many local and foreign brands offering customized moon cakes surrounding the Mid Autumn festival in China, will zongzi for Dragon Boat festival be the next big thing?

Often cited as one of the most successful cases of localization in China, KFC regularly launches Chinese food products to appeal to local consumer tastes. This has contributed greatly to KFC’s brand equity in the Chinese market and boosted profitability. However, in contrast to fast-food chains, Starbucks is famous for their Western coffee tastes and their elegant in-store atmosphere and service. Observers have wondered whether overly local offerings such as Chinese zongzi could negatively impact Starbucks’ brand image among Chinese consumers, who often associate “foreignness” with quality and are therefore willing to pay a higher price. Some critics feel Starbucks is only offering these local products to boost sales revenue without giving attention to their brand consistency and loyal consumer base.
Starbucks appears to be aware of the delicate balance between maintaining their global brand image and customizing their offering for local consumer needs. The ice zongzi are fairly consistent with Starbucks’ brand image as they have a high price, elaborate packaging and Western style taste, especially the frappuccino-flavored zongzi. Catering to Chinese traditions can help build brand esteem in an important market where the buying power of consumers is steadily increasing. These special product offerings can also be seen as ways to stimulate conversation in the media and online, contributing to the brand’s marketing and public relations efforts.
In short, Starbucks should always strive to find a balance between their global and local brand image. Offering zongzi at Dragon Boat Festival should not be harmful for the brand, rather, it can contribute to building their brand equity in China.
(See our post from last year’s Dragon Boat Festival – Starbucks Goes Glocal in China and our recent post on Starbucks tea in China. )

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