Business model of MNCs (Goh Wei Ching 18WBR09374)

Product differentiation

Product differentiation strategy is a marketing process of distinguishing a product

from others. The difference could make the product unique and attractive (Kelchner,
2019). As stated before, Starbucks offering nutritional foods which includes ‘light’
beverages, quality ingredients, moderate portion sizes and sensible calories amounts.
As the nutritional foods is target to those health-conscious individuals. Another
example is Costa also differentiated its beverages in different categories such as dairy
free, nut free, soya free, vegan, vegetarian and others (Appendix 1). Apart from that,
both Costa and Starbucks allow every customer customized their beverage based on
their preferences. Customers can request the sugar level, ice level, special flavor, extra
shots and extra hot or warm to the beverage (Matthew, 2016). The advantage of
product differentiation can achieve competitive advantage by way of enhance the
willingness of customers to pay for the products and services.

Market Localization

Localization is the adaption of an application, product or document content to meet

the cultural, language and other requirements of target market. A good product
localization strategy can helps to popularize brand globally. In Malaysia, most of the
citizens are Islam which only can serve by Halal foods and drinks. Therefore,
Starbucks Malaysia prepared its products in the way of Halal in order to adapt in
Malaysian market. Starbucks also recognize the appetites of Malaysian by introduced
spicy and hot meals such as Hot Spicy Chicken with Wild Rice, Chili Tuna Danish
and Spicy Chicken Pocket which under the Power Lunch category (Appendix 2).
However in U.S, hot and spicy foods are less favourable to American. For the aspect
of environment, Costa coffee also provides innovative designs for their coffee shop in
China. It is because Chinese has a culture which they to meet in large groups in a
comfortable environment for a long time. The Costa coffee in China have tables and
more chairs that can put together to accommodate groups (Day Translation, 2019). On
the other hand, European is more on ‘grab and go’ style which use usually 10-15
minutes to have a coffee. Both Starbucks and Costa also started serving tea before
selling coffee as Chinese have drinking tea culture (IvyCoffee, N.d.). With the
localization, the company is able to increase its market share in the world.
Subscription service

The subscription business model is a service that customers need to pay a recurring
fee in monthly or annually to access a product. Nowadays, consumers are seeking a
simple and hassle-free shopping experience as the mobile payments is rising in
popularity. The consumers can easily to set up a subscription and they no need to
worry about reorders. The subscription model is convenient to consumers in term of
purchasing process (Tomaro, 2015). For example, in U.S., Starbucks is launching a
subscription service in which to offers customers opportunity to purchase coffees that
only available at Roastery. Generally, they are offering this option for the customers
that most loyal to their brands. Starbucks said they will deliver coffee once a month
and customers will receive their coffee within three to five days of being roasted. The
services can be processed through online and orders are available for one, three, six or
the full year increments. The subscription fees are $24.99, %72, $144 and $288
respectively (Taylor, 2015). However, the Costa only provides delivery service rather
than subscription service. With the subscription model, Starbucks can ensures that
they have high customer retention which able to retain a large portion of customers on
a consistent basis (Tondon, 2015).

Advanced Technology

As a technology-centric world, technological advantage can helps business to increase

sales, improved productivity or even market domination (MIKOLUK, 2014). As
mentioned before, Costa coffee runs a loyalty program in UK, Costa Coffee Club, to
their frequent customers. After that, Costa coffee has launched Costa Collect for their
Coffee Club members. The Costa Collect is a service that allows their members pre-
order beverages before collecting at their selected store through their Costa Coffee
Club apps. The customers can done their payment by using credit and debit card
details uploaded to the app. After the payment, the VAT receipts would be sent for
easy send tracking (365Retail, 2018). Furthermore, Costa app can also act as digital
loyalty card. The club members just need to open the app and hold the phone screen
points towards the scanner than wait for the beep sound (Tom, 2018). The customers
can also earn points on purchases of products. Another example for Starbucks coffee
is they had integrating technology into a wide range of business procedures and
processes such as communication of the marketing message, new product
development, monitoring the level of customer satisfaction and completing sales. The
value creation via integrated technology by Starbucks include the introduced of
Mobile Order and Pay Feature. That technology allows customers purchase products
without queuing up and sending notifications to customers when their orders made
through the mobile app are ready to collect. It also allows the launch of voice ordering
app which convenient to their customers (Dudovskiy, 2017).

( 843 words)
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Appendix 1: Categories of Beverages

Source: Costa Coffee, UK 2019

Appendix 2: Hot and Spicy food menu

Source: Starbucks Malaysia, 2019