Starbucks & Coca-Cola: Fostering International Tastes Through Localization
Depending on how well you know me, you can easily pinpoint my mood based on whether I’ve invested consumer dollars into one of two companies each day: Starbucks and Coca-Cola. Like many consumers, I’m passionate about my caffeine fix and require a dosage via Starbucks coffee or Diet Coke on the daily. As a passionate and ready consumer, I became interested in learning more about these two wildly successful companies. Does everyone across the world share my interest in Starbucks blonde roasts and Diet Coke? How are both companies achieving such success in countries where markets differ widely?
The Original Starbucks – “The Third Place”
Let’s consider Starbucks first. Although many know that the first Starbucks store opened in Seattle, WA, it is not widely known that the concept of the Starbucks space we know and love – that “meeting space” vibe known as the “third-place” – originated internationally. It all began in 1982, just over ten years after the first Starbucks store opened (Starbucks 2019). At the time, then-marketing director (and future CEO) Howard Schultz traveled to Milan, Italy, and experienced the “third-place” concept that Starbucks adopts today. He gained a vision for Starbucks. He imagined that Starbucks could serve as a place for people to enjoy a comfortable alternative to work and home – a “third place” for business meetings, a relaxing coffee break, or connection with friends.
As Starbucks states on their website, “[Schultz] had a vision to bring the Italian coffeehouse tradition back to the United States. A place for conversation and a sense of community. A third place between work and home” (Starbucks 2019). This vision is more than just a lovely thought – it’s a concept that translates across cultures and nations. People crave community. As such, people crave that third place. And while they’re there? Might as well purchase a cup of coffee (and a tea…and a scone…)
The success of Starbucks grew rapidly both across the United States and internationally, with 30,000 locations in 70 countries internationally (Starbucks 2019). Aside from creating that universally-appealing third place, how else was Starbucks able to adapt so successfully to please billions of international customers?
Starbucks – International Expansion
In 1987, Starbucks Corporation opened its first international location in Vancouver, Canada. Nine years later, in 1996, it opened shops in Japan and Singapore, as the first international locations outside of North America (Starbucks 2019). Over the course of the next three years, locations opened in the Philippines, England, Malaysia, New Zealand, Taiwan, Thailand, China, Kuwait, Lebanon, and South Korea. Given the success of these shops (leading to many other international openings as the years went on) it is evident that Starbucks was strategic in determining its global locations, choosing countries with similar target segments.
According to the article “How Starbucks Adapts to Other Cultures,” Starbucks relies greatly on market research and localization: “with localization, Starbucks is able to adapt to the tastes of different cultures” (Day Translations 2019). The article describes specific steps that Starbucks takes in different countries to establish a following among the locals, “mixing local products with innovative store designs” as a general rule of thumb and taking specific interests of each country and culture into account (Day Translations 2019). For instance, Starbucks’s research on Chinese consumers, who largely prefer tea to coffee, incentivized them to market their teas more heavily than coffee in that country. Further, “because Chinese consumers love to meet in large groups, the stores in China have tables that can be put together to accommodate groups” (Day Translations 2019). Simple adjustments make all the difference for pleasing international markets.
Coca-Cola is another company that has enjoyed international fame largely as a result of localization. Historically, it struggled with frequent “copycatting” competitors attempting to reproduce the look of the product and taste of the beverage. After extensive efforts to create universally consistent product design, Coca-Cola emerged ready to expand internationally. Today, as a “total beverage company” Coca-Cola “[offers] over 500 brands in more than 200 countries and territories,” making it evident that my love for Coca-Cola is shared on a global scale (Coca-Cola 2019).
Similar to Starbucks, The Coca-Cola Company adjusts to accommodate global markets. However, according to their website, Coca-Cola adjusts more factors related to product transport or environmental factors than product recipes or offerings. For instance, Coca-Cola has utilized “local transportation methods such as paddling canoes up rivers to distribute their products to remote villages,” “use[d] solar panels on their coolers” in humid climates and elected to sell beverages in “glass bottles that are recycled up to 70 times in certain poverty-stricken places” (Coca-Cola 2019).
Two International Success Stories Thanks to Localization
To conclude, both methods allow both Starbucks and Coca-Cola to simultaneously blend in with local culture and retain a recognizable global brand. Customers are more likely to welcome products or operations that adapt to the needs of their environment and companies are able to reach customer segments that are simply not interested in their products without adaptation.
And as for me? Just happy to rest assured that my daily fix of caffeine is appreciated in 70-200 countries (depending on the beverage) and grateful for localization techniques practiced by Starbucks and Coca-Cola having paved that path for me and millions of fellow caffeine-addicts.