Wilson and Gilligan (2005) gave geographic, geodemographic, demographic, behavioural and psychographic as bases for market segmentation. In this plan, the demographic characteristics of Oslo were utilized to establish it as the target market among all other cities in Norway. The estimated population of Oslo is 560,484. Twenty five percent (25%) of Oslo’s population consists of immigrants, Norwegian of Pakistani descent make up 20,036 of the cities inhabitants, followed by Somalians (9,708), Swedes (7,462) and Sri Lankans Tamils (7,128).
At a record rate of nearly 2 percent annually, Oslo’s population increases dramatically as migration trend continues to increase. (CIA Factbook). Hence, the presence of handful immigrants serves as indication that the city is more open to varied cultures. It has been previously identified that the youth is a more popular consumer of coffee. Strategically, Oslo is also the home to many of the nation’s higher educational institutions like the University of Oslo, Oslo University College, Norwegian School of Management, Oslo School of Architecture and Design, Norwegian Academy of Music, and Oslo School of Management, among many others.
This brings Starbucks closer to the younger consumer group and positions Starbucks with a competitive advantage. The availability of air, train and sea transportation also makes Oslo an attractive market. The Oslo Airport, Gardermoen is Scandinavia’s second largest and fastest growing airport served by a high speed train. Oslo Sentralstasjon, the main railway station in Oslo, links the city to Trondheim, Bergen, Stavanger, Stockholm (Sweden), Gothenburg (Sweden) and Copenhagen (Denmark).
In 2004 Norwegian trains were Europe’s third most punctual national train company. Further, the city’s port is the largest general cargo port in the country and its leading passenger gateway. Annually about 6,000 ships dock at the Port of Oslo with a total of 6 million tonnes of cargo and over five million passengers (CIA Factbook). Starbucks may branch out in these major areas of transportation to take advantage of the high traffic of passengers.
This can also serve as a good strategic marketing as more people of Norway and neighboring states experience Starbucks coffee in these linking venues. On the other hand, the possible risks of introducing Starbucks in Oslo are as follows: 1. Resistance to American culture that has been strongly identified with Starbucks. The values and attitudes of Norwegian may be different to the established values of Starbucks. Thus, there is a need to align these differences.
Language may become a barrier in introducing Starbucks in Norway. This compels Starbucks to study carefully the language that will be used in its advertisement campaigns. 3. Difference in currency and rate fluctuation may pose as a challenge for Starbucks in determining the standard price for its products. Starbucks have proven in their international branches that they were able to take advantage of the opportunities presented in their foreign markets and tackle strategically the threats of competing internationally.
This attribute gives strength to the feasibility of giving Oslo the unique coffee experience present only in Starbucks. Initially, Starbucks may project a safe 10% share of the market based on the population of Oslo. This will yield a daily gross sales of $84,072. 00 based on a $1. 50 per cup of coffee sold to the target market. Annually, Oslo Starbucks can generate $30,686,499 of gross sales. This target is feasible because it has been established that Oslo is an attractive market.
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