4. Case Study Questions (Total Score: 40 points) Starbucks in China Your Score As a remarkable company, Starbucks Coffee Company has grown into a global brand since its founding in 1970 in Seattle, the United States, concentrating on increasing customer satisfaction by treating each customer with respect and dignity. Nearly 20 years ago in January 1999, Starbucks opened their first store in Beijing basically introducing coffee culture to China. Although Starbucks encountered several challenges in the process of entering the Chinese market. They had successfully expanded its business in over 180 cities of China and opened about 4400 storefronts in these cities by 2020. Starbucks has shown routinely impressive revenue growth. In fiscal Q4 2019, Starbucks reported $803 million in net income, a rise from $756 million in this quarter last year. They also saw revenue rise to $6.75 billion last quarter, up 7.1% from their fiscal Q4 2018 ($6.3 billion). Starbucks started with franchising business mode when it entered Chinese market. Of Starbucks' Chinese outlets, 30% were franchises. Its primary rival in Chinese market is Luckin. While Starbucks offers the warmth and service of cafes designed as a "third space" between home and office, Luckin is about efficiency: its outlets are cashless; customers order in advance through the App and then pick the order up in the store, without having to wait, or by delivery within 18 minutes; the price of a cup of Luckin coffee is much lower than that of Starbucks (about RMB30). In order to maintain its leading position, Starbucks has adopted a series of localization marketing strategies. The complexity of the Chinese markets reflected in the differences in consumer spending power inland is considerably lower than the spending power in coastal cities led to regional partnerships to aid in Starbucks' plans for expansion in China; the partnerships provided consumer insight into Chinese tastes and preferences that helped Starbucks localize to the diverse markets. In northern China, Starbuck runs as a joint venture with Beijing Mei Da coffee company. In eastern China, it partnered with Taiwan-based Uni-President, and in southern China, it worked with Maxim's Caterers in Hong Kong. Starbucks' competitive advantage is built on product, service, and brand attributes, many of which have been shown through market research to be important to Starbucks' customers in China. Western brands have an advantage over local Chinese brands because of a commonly accepted reputation for consistently higher quality products and services, a factor that establishes the Western brands as premium brands in the minds of Chinese consumers. Therefore, the baristas in China were choosen to acted as brand ambassadors to help embed the Starbucks culture in the new market and ensure that high standards for customer service and product quality are maintained at each new and established local store. 1. Please describe search, experience, and credence attributes for Starbucks. (10 points) 2. Please draw a simplified flow charting of service delivery process for Starbucks. (10 points) 3. On the basis of three purchase stages for services (prepurchase stage, service encounter stage, and postpurchase stage), please identify ways Starbucks can use to increase consumer satisfaction. (10 points) 4. Please discuss the key categories that Starbucks can use in designing rate fences to achieve price customization. (10 points)