Marketing strategy in the globalization: the case of Starbucks and Levi’s

 These days, there is a popular news in China that the CCTV (Chinese official television station) compares the price of Starbucks coffee around the world.  Then the reporter made the conclusion that the price of a medium size Starbucks coffee in China is one of the highest prices in the world and even higher than the America. However, I believe the cost of labor and raw material in China is much cheaper than in America. Based on these basic conclusions, why Starbucks sell higher price in China than in America where people have a much higher average income.

In my memory, when I was in a university in China, I think people who are willing to go to Starbucks have middle or higher income and like the style of America. They may not really like coffee, but they like the feeling of drinking a cup of latte and reading a book. In my opinion, this is kind of a psychological need as not everyone can afford a coffee which cost them 3 hours salary. However, when I studied in UBC, I found that compared to people’s income, the Starbuck coffee is cheap. And people here do have culture of drinking coffee. Another example that comes into my mind is Levi’s. When I am in middle school, students who wear Levi’s jeans were quite proud. At that time, about ten years ago, a pair of the classic Levi’s 501 is about 800 Yuan (about $120). At that time, the price of similar products from a Chinese brand is about 140 Yuan. Then I believe that Levi’s is a high level brand. However, I went to the outlets in Seattle a few days ago, the price of classic Levi’s 501is about 50 to 60 dollars.

In both cases, the targeting and marketing strategy play an important role in companies’ global expansion. A company should find out who are the main potential customers and what they really want from the products. In both case, the psychological need is quite important. Thus, high price may not be a problem. In other word, high price may be a essential element.