How Luckin Uses Technology and Marketing to Challenge Starbucks

Luckin Coffee, was incorporated just two years ago in June 2017 and began operations in October of that year. In that 18 months since then, it has grown from a single trial store in Beijing to 2370 wholly-owned stores in 28 cities. It took Starbucks 20 years to grow the same amount of stores. There are two key factors which contributes to Luckin’s market value of USD 5 billion today, marketing strategy and technology.

Luckin’s popularity in China is a successful viral marketing case studies which helps them to grow from 0 to 17 millions consumers. One of its greatest selling point is their mobile application. With just a few taps on their mobile application, hot and fresh coffee will be delivered straight to their doorstep. Luckin gives away its first coffee to a new subscriber to its app. A friend referral to the app gets customers another free coffee. 

The company’s main goal was to infiltrate social media friend circles, so they focused on WeChat Moment LBS ads. They could also reply on word-of-mouth shared among friends thanks to all those aforementioned free coffees. All these digital marketing efforts played a key role to the growth of Luckin Coffee.

Influencer marketing is very common in China, so it’s unsurprising to note that Luckin Coffee has appointed Chang Chen and Tang Wei as brand ambassadors. This shows how important it is to engage with someone who can help to bring in the right potential consumer. In Avixity, we always help our clients to find the right influencer who has a fan base which shares the traits of client’s target audience demographic profiles.

Technology is key for the company, which Luckin says its uses to standardise its operations and, through the use of AI, to analyse customer behaviour to better select products and services. It’s mobile app is also a big part of the company’s operations. It is important to recognise that Luckin is an internet company. Its marketing strategy largely resemble other Chinese internet startups; the company gives away “red packets” (promo coupons) to those who invite WeChat friends to register on the Luckin app, not unlike how ride-hailing Didi Chuxing and food delivery app Meituan incentivized users during their early phases.