A Study On The Possibility Of Chinese Teahouses' Overseas Operation

In recent years, customers all around the world have an increasing demand on goods and services that can improve their life quality and satisfy their spiritual needs due to the higher income and the prosperity of the market. People are increasingly tend to pay for recreation, pay for things that can meet their spiritual needs rather than only limited to materials that we human beings live on.The American coffee chain Starbucks has made great achievements in satisfying customers'needs on recreation and accordingly realized its globalization by a serious of international marketing strategies, such as renewing the core value of its products, cultural marketing, experience marketing and so on. By now, it has over 13,000 retail locations in 39 countries. According to Business Weekly, in 2001, Starbucks ranked the 88th in Globally Top 100 Brands with its 18 billion brand value, which was also the "biggest winner" in that year for it realized the greatest growth (38%) in brand value. Then with almost the same functions, what can Chinese teahouses learn from Starbucks? This thesis will mainly focus on inspirations and implications of Starbucks'international marketing strategies to Chinese teahouses business.The first chapter gives a brief introduction of the entire thesis, including the background of this thesis and the structure of it. The second chapter is a general review of Chinese teahouses. Firstly, it introduces the brief history of teahouses. Chinese teahouses firstly emerged in Jin Dynasty and have been in company with the Chinese people for more than five thousand years. In Qing Dynasty, teahouses have reached its peak both in amount and popularity. A teahouse is more of a platform to promulgate, exhibit and inherit tea culture than simply a place to drink a cup of tea. It has always been an ideal place for people to taste a cup of tea and have recreation. In recent years, teahouses have gained rapid development, they again become popular in lots of cities in China, but meanwhile they have to face more competition. So in order to develop further and become strong, more and more teahouses choose to set up chains overseas. Secondly, the author discusses tea culture and the connection between tea culture and the traditional philosophies of China—Confucianism and Taoism. The essence of Chinese tea culture is harmony. As a part of Nature, human beings have a tight lie with the other parts of Nature. Only when human beings can get along harmoniously with the other parts of Nature, can human beings be a harmonious entity. Thirdly, the author presents the analysis of both home market and overseas market of Chinese teahouses. Meanwhile, the author points out the existing problems in the operation of these teahouses, such as lack of innovation and lack of the sense of marketing strategies.Chapter Three is a case study which fully demonstrates the international marketing strategies of Starbucks, including its company profile, mission statement, target market, marketing mix and so on. First opening its store in 1971, Starbucks at that was a small coffee store at Pike Street Market in Seattle with the intent of being a coffee bean retailer and coffee equipments seller until Howard Schultz joined it in 1982. Howard Schultz tended to make Starbucks a coffee store with Italian espresso bar atmosphere. This notion, however, did not get support from the other three partners Zev Siegel, Jerry Baldwin and Gordon Bowker. So in 1984, Howard Schultz left Starbucks to open his own coffee store with his nation. Then in 1987, Schultz came back to Starbucks and purchased it.On its website, we can find the most important objective of Starbucks from the following statements:"The company's objective is to establish Starbucks as the most recognized and respected band in the world." Now Starbucks has over 13,000 coffee shops in 39 countries, of which 4,200 are licensed and franchised and 6,000 are owned. According to Business Weekly, in 2001, Starbucks ranked the 88th in Globally Top 100 Brands with its 18 billion brand value, which was also the "biggest winner" in that year for it realized the greatest growth (38%) in brand value. The secret of Starbucks' success lies in marketing. From experience marketing, cultural marketing to its marketing mix, Starbucks has implemented a set of effective and excellent marketing strategies which have ensured Starbucks to be profitable and popular as a service organization. Firstly, Starbucks has a set of excellent marketing mix including product strategy, place strategy, promotion strategy and price strategy. In product strategy, Starbucks redefines the core value of its product. It switches from selling coffee to selling coffee culture and the experiences in Starbucks. Thus it has finished the transformation from selling tangible products to selling intangible ones. By this change, Starbucks has endowed its coffee with unique features and make its coffee different from others. This product differentiation is fairly critical for service marketing. Also, Starbucks implements different types of business organization structures:joint ventures, licensing and sole proprietorship ventures according to the local market. Although with different business Cooperation partners, Starbucks all over the world use the unified brand. In promotion, the main focus of Starbucks promotion is word of mouth. They want their products and customers service to exceed the expectation of their customers that they will tell their friends about it. There are also other forms of promotion like advertising, public relationships and personal selling. About price strategy, actually Starbucks prices have received numerous criticisms for the price of its products. Price for a cup of coffee in Starbucks is relatively higher than that in other coffee stores. In 2006, the average price of an order was $3.85. However, this price seems does not bring passive influence on the popularity and income of Starbucks. Considering the remarkable success of Starbucks, a complete and systematic analysis of its international marketing strategies will definitely of great inspiration and significance to Chinese teahouses.Also in this chapter, the author discusses Starbucks' marketing strategies in China, mainly focusing on the adjustments it makes to cater to the Chinese customers. When firstly began its business in China, Starbucks made a lot of surveys. Accordingly, it made adaptations. For example, it adjusted the target market, enlarge the area for each store in China and do business in different time slots.In Chapter Four and Chapter Five, the author discusses the international marketing strategies of Chinese teahouses. Chapter Four begins with the feasibility analysis of Chinese teahouses overseas marketing. And after the analysis of mainly four reasons we draw the conclusion that it is feasible for Chinese teahouses to market overseas. Firstly tea itself has the function of healthcare, which will abstract the foreign customers who attach much importance on health. Secondly, with the 2008 Beijing Olympic Games and 2010 Shanghai Expo, people overseas are increasingly interested in Chinese culture. Tea culture, which gives good expression to Chinese culture, will undoubtedly gain great popularity overseas. Thirdly, about 20 millions of people in more than 160 countries preserve the tradition of tea-drinking, which is the basement for Chinese teahouses to market overseas. Finally, foreign citizens of Chinese origin are also a great group of target customers.Next in this chapter, the author presents the characteristics of teahouse service and the cultural content of teahouse marketing together with the related theories of service marketing and cultural marketing. Teahouses, as a platform to promulgate, exhibit and inherit tea culture, have always been an ideal place for people to taste a cup of tea and have recreation. Just like Starbucks, the product of teahouses is not simply a cup of tea, but more of the Chinese tea culture or even Chinese culture, Oriental culture. So how can the customers feel and appreciate the culture? That is from the service we provide. We also should focus on cultural marketing and experience marketing. On cultural marketing, we should comment to change the intangible elements into tangible things to enable the customers watch, touch and feel the culture. We can realize this by both of the inner decorations and the offerings, performances and service process. On experience marketing, what we want to provide to the customers is the pleasant and enjoyable experience. In teahouses, people can chat with their friends while sipping a cup of genuine Chinese tea in a small forest of bamboo. Meanwhile what you hear is light music played by some traditional Chinese musical equipment like Yangqin, Pipa and Erhu. The waitresses walking around are all young and gentle Chinese girls dressed in Qipao, the traditional costume for Chinese females. When you are in such a peaceful and harmonious place, how wonderful the experience will be!Chapter Five is the analysis of marketing mix for Chinese teahouses. The author analyzes the marketing mix with the theory of 7ps for service marketing to get a complete and systematic strategy for Chinese teahouses. The 7ps are separately Product, Place/Channel, Price, Promotion, Participants, Physical Evidence and Process. On product, like Starbucks, what we provide is more of tea culture and the experience rather than only limited to tea or snacks. The tangible products that teahouses provide are various teas. On the one hand, we should ensure the quality of the tea we provide. On the other hand, we should pay much attention to the variety of our products. Actually, the intangible product is a place to have recreation and enjoy tea culture. The core value of the products is customer experience. On channel, as organizations that focus on service providing, Chinese teahouses should lay enough control to their business cooperation partners to ensure the quality of the tangible products and service provided, especially at the beginning stage. Thus the best choice will be sole proprietorship ventures and joint ventures. On price, a multi-level and popularized price system can enable much more customers to experience tea culture and ensure profits to teahouses. On promotion, we should focus on (1) develop a word-of-mouth communication network; (2) promise what is possible; (3) make tangible the intangible; (4) differentiate the service product via the service delivery process. On Physical Evidence, there are mainly two ways to make teahouses impressive. On the one hand, the inner decorations should be full of Chinese elements. On the other hand, Chinese teahouses should design and spread a unique and eye-catching logo to improve the popularity. On participants, Chinese teahouses have to manage both the employees and the customers. About managing employees, the most effective method is training while managing the customers, and we should focus on studying their needs and wants to satisfy them well. Last but not the least, the process, Chinese teahouses should encourage the customer to participate in the process more to gain more delightful experience.The last part of this chapter is a brief introduction of Lao She teahouse, mainly focus on how it operates both home and overseas. The atmosphere and process of Lao She teahouse can immediately bring the customers to the old days of China, mainly similar with teahouses in Ming Dynasty.Chapter Six is a conclusion of the whole thesis.