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, BEANS & Tea Leaf that generate 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 confident correlation between the GDP per capita and the quantity of coffee consumed. This means that as the economy of Malaysia grows, the marketplace will commence to "thirst" to get more detailed coffee products. According to a industry report (BMI 2009), total coffee sales in Malaysia total to approximately RM 61 Mil in '09 2009 and is defined to be always a growth market as seen in Figure 1
The coffee house business has grown every year. Lifestyle factors converge to help make the coffee industry strong at all times. Coffee house is a location for fast-paced Malaysians to consider passing by as part of their day. As coffee houses provide calm, invigorating ambiance for individuals to socialize, relax or catch up on work. Entertainment on weekend nights draws a young band of enthusiastic customers. The surge in curiosity about coffee drinking among teenagers assures a diverse, receptive, sophisticated customer base now and in the future. Besides, many teenagers now more thinking about meeting one another in coffee house during the blind date through net. Like mentioned at the moment in opportunity of changing lifestyle, older adults also benefit from the fact that for the relatively modest price of the sit down elsewhere and snack, they can talk with their friends, relax or work. Instead of going to a bar and spending money on an alcoholic drink or a restaurant in which a meal usually includes 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 is becoming an all-day activity. Even late at night, many coffee houses are filled with patrons. It's not unusual for a proper located coffeehouse to exceed a daily average of 900 customers. Obviously, the business enterprise of coffee house is unquestionably will continue to grow intensely. Starbucks in Malaysia is jointly owned by Berjaya Corporation and Starbucks Coffee International and has enjoyed a wholesome 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 latest 2009 Annual Report, it was explained 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 with their customers as the third space to relax, other than work and home. Therefore, customers could indulge themselves in to the third place. They concentrate on providing a soothing and special atmosphere to customers. The feature isn't just the specialty product they are available, more importantly, the setting of the store, the backdrop music, the atmosphere and the environment.
In a tea drinking country, coffee stands for the western culture. Despite the fact that at this stage coffee is accepted by certain clients in Malaysia, it becomes increasingly more popular among young generation, especially those who get education overseas. Due to demographic background and consumption power differences, Malaysian drinkers have different perception, understanding and expectations on different coffee houses. The prospective age group falls in to 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 fascination with coffee or anything related to western cultures, nonetheless they do not have sufficient or stable income to support their regular coffee drinking habit. Therefore, nearly all junior customers could become first-time drinkers while not necessarily becoming regular people to the coffee shops. The primary customers between the ages of 20 to 50 possess comparatively more stable disposable income and are prepared to spend their money on something that can make them feel better and improve the quality of these lives.
Among Malaysian people, coffee means 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 restaurant becomes more popular in Malaysia, because of the comfortable environment and everyday atmosphere. This service Starbucks offers, finds an enormous clientele in Malaysia. They don't only offer the service of making a good coffee, but also of fabricating a nice atmosphere of relaxation and pleasure.
In Porter's model, substitute products make reference to products in other industries. To the economist, a threat of substitutes exists when a product's demand is afflicted 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 significantly more alternatives. A detailed substitute product constrains the ability of firms within an industry to raise prices. There are several small Malaysian coffee houses. But as above mentioned these coffee houses do attract a new customer. Strabucks does differentiate itself not only due to premium coffee but particularly because of its service and atmospshere.
Small coffee houses cannot keep up with this kind of service they provide. They are able to neither copy the atmosphere provide nor the weekly premium offers of services. The customers of Strabucks you live the lifestyle of Starbucks. Therefore even if the Malaysian coffee house offers cheaper instant coffee, they can not compete with this kind of lifestyle. Further the tiny shops offer the "Premium Coffee" but also this type of product is not comparable with the service and atmosphere Starbucks offers.
I'm curious about how precisely you folk feel about the 'innovative' marketing of the coffee culture in Malaysia
When I used to be 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 today after being from the country for a few years, I come back to discover a whole new coffee culture by means of 'Old Town White Coffee' which is essentially the original Chinese kopitiam being rejuvenated with a far more modern lay-out and much higher prices!
Kudos to whoever thought of it. . . it's obviously working, judging from the flocks of folks who make it their daily haunt.
Now that's what I call creative marketing. Perchance you might argue that establishments like BEANS and Starbucks cater to an alternative market and demographic? Do you prefer Old Town White Coffee? Would 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 many million dollars for Starbucks to prove to its employees that it was seriously interested in the Starbucks-branded customer experience. When the transaction I observed in the Starbucks that day is duplicated even one time per day in the 11, 000 Starbucks stores that remain open across the world, then I don't think the company should regret even one minute or one penny of that which was spent on its dramatic retraining effort last year.
Customers have always known where they could get a cheaper sit down elsewhere. But Starbucks hasn't just been about coffee for almost all its customers. It's about the experience surrounding the cup of coffee, an experience that continues to be enjoyed by millions of men and women around the world every day, by the way.