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Malaysia has a strong coffee drinks culture. A survey showed that the average Malaysian drinks 2.38 cup of coffee daily. Coffee drinking culture has been cultivated by the continued expansion of retail cafe businesses of both international brands such as Starbucks , Coffee Bean & Tea Leaf that bring in the “cafe culture” from the West and other domestic brands such as Chinese Kopitiam, Old Town White Coffee that build on the local coffee-shop culture. Further research shows a positive correlation between the GDP per capita and the amount of coffee consumed. This means that as the economy of Malaysia grows, the market will begin to “thirst” for more coffee products. According to a industry report (BMI 2009), total coffee sales in Malaysia total to approximately RM 61 Mil in 2009 and is set to be a growth market as seen in Figure 1
The coffee house business has grown every year. Lifestyle factors converge to make the coffee industry strong at all times. Coffee house is a place for fast-paced Malaysians to consider passing by as a part of their day. As coffee houses provide calm, invigorating ambiance for people to socialize, relax or catch up on work. Entertainment on weekend nights draws a young group of enthusiastic customers. The surge in interest in coffee drinking among young people assures a diverse, receptive, sophisticated customer base now and in the future. Besides, many young people now more keen on meeting each other in coffee house during the blind date through net. Like mentioned just now in opportunity of changing lifestyle, older adults also enjoy the fact that for the relatively modest price of a cup of coffee and snack, they can meet with their friends, relax or work. Instead of going to a bar and paying for an alcoholic drink or a restaurant where a meal usually comes with a hefty price tag, the coffeehouse is an intimate yet inexpensive venue.
Coffee drinking is now an all-day activity. Once concentrated in the early morning hours or mid-afternoon, in recent years coffee drinking has become an all-day activity. Even late at night, many coffee houses are packed with patrons. It’s not unusual for a well located coffeehouse to exceed a daily average of 900 customers. Obviously, the business of coffee house is definitely will continue to grow intensely. Starbucks in Malaysia is jointly owned by Berjaya Corporation and Starbucks Coffee International and has enjoyed a healthy growth within the Malaysian market since it’s first outlet opened in 1998. At present, there are 119 stores thru out Malaysia (Starbucks Malaysia Website 2010). In Berjaya corporation’s most recent 2009 Annual Report, it was stated that there was a 14% increase in revenue from previous year due to the continued growing acceptance of the brand and products as well as new outlet openings. Starbucks providing high quality coffee, unique atmosphere, and high quality customers services and position themselves to their customers as the third space to relax, other than work and home. Therefore, customers could indulge themselves into the third place. They focus on providing a relaxing and special atmosphere to customers. The selling point is not only the specialty product they are selling, more importantly, the setting of the store, the background music, the atmosphere and the environment.
In a tea drinking country, coffee stands for the western culture. Even though at this stage coffee is accepted by certain clients in Malaysia, it becomes more and more popular among young generation, especially those who get education overseas. Because of demographic background and consumption power differences, Malaysian drinkers have different perception, understanding and expectations on different coffee houses. The target age group falls into the range of 18 to 50 in Malaysia who usually has decent jobs, stable disposable incomes, and understands or tries to understand western cultures and lifestyles. On the other hand, youth under 18 have great curiosity about coffee or anything related to western cultures, but they do not have sufficient or stable income to support their regular coffee drinking habit. Therefore, the majority of junior customers may become first-time drinkers while not necessarily becoming regular visitors to the coffee shops. The main customers between the ages of 20 to 50 possess comparatively more stable disposable income and are willing to spend their money on something that can make them feel better and improve the quality of their lives.
Among Malaysian people, coffee stands for western culture and ideology. Sipping a cup of coffee, with a strange foreign name, on a relaxing afternoon represents a higher standard of life in Malaysia. In addition, discussing business in a warm and nicely designed coffee shop becomes more popular in Malaysia, because of the comfortable environment and casual atmosphere. This service Starbucks offers, finds a huge clientele in Malaysia. They do not only offer the service of making a good coffee, but also of creating a nice atmosphere of relaxation and pleasure.
In Porter’s model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a product’s demand is affected by the price change of a substitute product. A product’s price elasticity is affected by substitute products – as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices. There are many small Malaysian coffee houses. But as above mentioned these coffee houses do attract a different customer. Strabucks does differentiate itself not only because of the premium coffee but particularly because of its service and atmospshere.
Small coffee houses cannot keep up with this kind of service they offer. They can neither copy the atmosphere provide nor the weekly premium offers of new products. The customers of Strabucks are living the lifestyle of Starbucks. Therefore even if the Malaysian coffee house offers cheaper instant coffee, they cannot compete with this kind of lifestyle. Further the small shops offer the “Premium Coffee” but also this kind of product is not comparable with the service and atmosphere Starbucks offers.
I’m curious about how you folk feel about the ‘innovative’ marketing of the coffee culture in Malaysia
When I was a kid, the Chinese kopitiams used to be the common coffee place. Then came the Westernised coffee places like Coffee Bean and Starbucks, etc. And now after being out of the country for a few years, I come back to discover a whole new coffee culture in the form of ‘Old Town White Coffee’ which is essentially the traditional Chinese kopitiam being rejuvenated with a more modern lay-out and much higher prices!
Kudos to whoever thought of it… it’s obviously working, judging from the flocks of people who make it their daily haunt.
Now that’s what I call creative marketing. Perhaps you might argue that establishments like Coffee Bean and Starbucks cater to a different market and demographic? Do you like Old Town White Coffee? Does it appeal to you? I have to say that I am a fan of the white coffee (being from Ipoh myself! ) and the buttered toast is delish! Though a tad over-priced
It took 21,000 hours and several million dollars for Starbucks to prove to its employees that it was serious about the Starbucks-branded customer experience. If the transaction I observed in the Starbucks that day is duplicated even once per day in the 11,000 Starbucks stores that remain open around the world, then I don’t think the company should regret even one minute or one penny of what was spent on its dramatic retraining effort last year.
Customers have always known where they could get a cheaper cup of coffee. But Starbucks has never just been about coffee for the vast majority of its customers. It’s about the experience surrounding the cup of coffee, an experience that is still enjoyed by millions of people around the world every day, by the way.
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