Starbucks History and Mission Statement

Discuss about the Starbucks Marketing Plan Proposal.

Established in 1971 in the USA, Starbucks is among the top coffee retailer in the world.it serves markets worldwide with over 1500 store outlets in Australia, Germany, Canada, Malaysia and Russia. Due to the production of quality coffee, the firm enjoys a wide market share in the global coffee market. Among the key strategies to increase its market share, is the use of joint ventures with both local and international coffee shops and restaurants. By working with such business entities, the firm seeks to create values aimed at meeting most of its objectives. Edged to inspire and nature human spirit, Starbucks coffee obtains is value by minding the welfare of the society, fighting all odds to ensure the growth of the firm as well as delivering its best and being liable for the results  (Mission Statement). The firm is performance driven with the main aim of ensuring human sustainability.

The firm applies the porter’s five-force strategy in order to dominate the coffee industry in the world. The firm has a diverse variety of products as such it considers all the possible ways of making the coffee so unique in order to meet the demands of the customers. The firm’s SWOT analysis makes it beat its competitors in the market. The analysis gives the firm an upper hand in the way that Starbucks in describing its main competencies, which include brand awareness, large market, base as well as diverse products, which yield the firm competitive advantage over rivals. Much as the firm is among the global champions in the coffee industry, there is the need for the firm to conduct a deeper market research in order to maintain the uniqueness of the brand in the market.

The main marketing goal for Starbucks is that of market penetration. Research shows that globally the consumption rate of coffee is growing at a rate of 2%.In India for instance; the per capita consumption is approximately eighty-five grams while the same in the USA is six kilograms (“Starbucks Unveils Growth Strategy at 2018 Annual Meeting,” 2018). This gives the firm the advantage of penetrating to developing nations since its consumption is limited.

Development of a marketing strategy is key for all firms, which yearn to take over global markets (Kumavat, 2012). This is the c

ase of Starbucks as it thrives to expand its brand into markets of developing countries.in developing a proper marketing strategy, the firm needs to identify the target market and define its value proposition. The main market segments for Starbucks are geographic, demographic, psychographic and behavioral. All these segments are according to the specific needs of the targeted consumers of each segment. Demographic segmentation, for instance, focuses on the people in the age group between 22 years to 60 years. It as well comprises of individuals of both genders in different life cycles. According to life cycles, the products of Starbucks focuses on the young couples who are yet to get children, the bachelors as well as old married couples with dependent children. The products of the firm suit all modes of occupations including and not limited to students, professionals and all other employees (Talpau and Boscor, 2011). Geographic segmentation focuses on the people living in urban areas of USA, Canada, Pacific Asia, Latin America, Middle East, Africa, Europe and China. According to research, America is the best performing geographic segment of the firm. This gives rise to the need for the firm to explore other foreign developing markets such as Africa, where the brand is not so popular (Dudovskiy, 2017). Behavioral segmentation relates to the buying patterns and behaviors of the customers. Under this, the market is segmented in relation to the levels of loyalty such as die-hard consumers of the products, status, personality and the reasons why the consumers seek Starbucks products. There are various reasons why consumers prefer Starbucks coffee as opposed to that of other firms. For instance, most consumers prefer it due to its quality since it beats that of the competitors. Other prefer Starbucks since unlike other brands, it provides a serene place to hang out with family and friends.

Porter’s Five-Force Strategy

Product

Basing on the major market segments, targeting on the geographic segment is of immense to the firm since this segment is yet to be maximally explored. In exploring geographic segments, Starbucks needs to increase its outlets in Africa and Pacific Asia  (Haskova, 2015). The firm needs to target the urban centers in these regions with the major food joints. Formation of joint ventures with other eateries in these regions especially for those products, which have joint demand with the products of Starbucks, will boost the brand’s knowledge in such markets. The firm can as well gear in their advertising in such regions to ensure that most people know the brand. Knowledge of the brand can increase its consumptions rate in new markets. In penetrating such markets, the firm needs to undertake a research on the consumptions patterns of the people in these markets and direct a specific product, which will blend with the needs of such markets.

The marketing strategy adopted by Starbucks makes it one of the most used consumer product in the USA and Europe. This clearly shows that in the European world, the brand has a strong existence in the market. This however as opposed to the Pacific Asia region and Africa where the brand is yet to take over the markets. In order to make the product sale in new markets, few developments need to be done on the product. The use of crowdsourcing as a means of getting insights from the consumers has enabled the firm to work on their product to make it meet the market demands. Most firms invest in brand changes in order to make their brands sell, but for Starbucks, the brand modification is not necessary since the firm customizes its products to meet the demand of the consumers. In order to penetrate other markets, the firm needs to conduct a market study of such markets, know the needs of such markets and tailor their products to meet such demands.

Price

Pricing decisions are among the critical decisions that the management of a firm undertakes. Before coming with a price, the management considers a number of pricing models, which suits its products and the current economic or fiscal conditions of a firm. For a firm like Starbucks, adoption of value-based pricing will be of the essence. Coffee from Starbucks comes in different variety as such it has different types of consumers. Based on the quality of the product and the level of income of the diverse nature of consumers, the firm needs to adopt value-based pricing model. This as well will mean that all levels of income earners will be able to buy coffee from Starbucks (Kernstock, Brexendorf, & Powell, 2017). Much as competitors pose threats to a firm, concentrating on their prices is not appropriate since some of their prices are set to lure more customers to consume their products. Starbucks is a market leader as such the quality of its products itself just attracts customers, most customers are proud to be associated with products of market leaders (“Starbucks Pricing and Promotion Strategies,” 2015). Provision of incentives will be key in attracting and retaining more customers. This will be in the way that for every customer that a loyal customer invites to the Starbucks, the loyal customer is rewarded. Incentives as well will be given in terms of frequency of visiting and the type of product purchased.

SWOT Analysis of Starbucks

Distribution

Distribution gives the means through which a product gets to the potential consumers (Helmikuuta). Starbucks adopts a hybrid distribution channel, essentially, this means it does not stick to one single distribution channel. The firm uses direct retail for the stores that it owns; this helps the firm to reduce its distribution costs. The firm as well gets into contracts with hotels, supermarkets, office coffee suppliers and airlines to help in distribution of its products  (Leung, Cheung, & Chu, 2014). This works to the advantage of the firm since it helps in widening its markets. However, in order to avoid channel conflict, this needs to be undertaken with caution. Starbucks distribution intensity plays a vital role in maintaining the firms brand equity. This is because their customers see the brand in almost every mall they shop in. Starbucks distribution intensity is not restricted to America only but spreads out to additional thirty-five nations in the world. This makes the firm to have a wide market in other global markets. The Starbucks card increases the distribution intensity of the firm since by virtue of having the card; most consumers are lured toward getting a taste of Starbucks coffee.

Promotion

In order to create brand awareness, product promotion is very essential. This calls for the application of the appropriate IMC tools in order to meet the marketing goals of the firm  (Thompson, 2012). Given AUD$ 50,000, it will be appropriate to inject more of the funds into advertising, since advertising is fast and reaches to a wide range of consumers. Given the regions where the products are not well known, more funds need to be directed in such regions including Africa, Australia and parts of Pacific Asia. Africa and Pacific Asia, for instance, will be allocated with 20 AUD$ each since the product is new and its knowledge of such markets is partial. Investing in advertising in such regions will help in boosting the consumer base and hence the revenue collected by the firm from such markets. For Australia, the product is known, so investing in promotion in this region will play the role of adding up to the number of the existing consumer base (Bhasin, 2018). On effective use of the proportions of the allocated funds, the firm expects to increase its market base and be placed better off than most of the competitors. An increase in the market share will see to it that the sales of the firm are boosted hence the profits will increase.

Marketing Strategy for Starbucks

A firms SWOT analysis is key in judging its competitive advantage in the industry. In conducting the SWOT analysis, the firm is able to evaluate its strengths and develop measures to address the weaknesses, threats and opportunities. To the firm, this analysis seeks to address the internal and external environments that affect the firm. Much as the firm is a global brand, several factors affect the efficiency of the operations of the firm. The results of this analysis prove that the firm is strong but still faces some threats in several world markets.

Strengths

This element of SWOT analysis deals with the internal business environment. The major business strengths of the firm include possession of a strong brand image, an extensive worldwide logistics and supply chain as well the diversity of business through subsidiaries such as Ethos Waters and Teavana. The firm has a developing population of loyal consumers in addition to a global network of suppliers who ensure the firm remains relevant and efficient in the market. Basing on the strengths of the firm, it is evident that the firm is resilient through the creation of diversity and a strong system of logistics and supply chain.

Weaknesses

This element in SWOT analysis shows the internal factors such as shortcomings, which affect the firm’s development. The main weakness is that of imitable products where most competitors take advantage. The pricing models used by the firm are not user efficient since the prices do not favor the low earning groups in the society. According to the results of the firm’s weaknesses, the firm needs to innovate its products to beat the issue of imitable products by the competitors.

Opportunities

Opportunities set the external factors that a firm can adapt to grow its business. The main opportunities of the firm include the need to expand to Pacific Asia, Middle East and Africa, Diversification of product mix and partnerships with other firms in the global market to strengthen the competitive position of the firm in the industry. The results of the study show that the firm can achieve global growth by taking to account these opportunities.

Threats

In respect to SWOT analysis, threats refer to those external factors that can lead to reduced business performance. Among the key threats to Starbucks, include competition from other coffee selling firms such as McDonalds and Dunkin’ Donuts, Imitation of Starbucks products as the likes of Stars and Bucks a prominent coffee house in Palestine and Independent coffee houses, which fight for the existence of independent coffee houses as opposed to large coffee houses such as Starbucks. In relation to this, the firm needs tenure that it remains competitive in the market amid the threats posed by other coffee houses in the market.

References

Bhasin, H. (2018, March 5). Marketing Strategy of Starbucks – Starbucks Marketing Strategy. Retrieved from https://www.marketing91.com/marketing-strategy-starbucks/

Dudovskiy, J. (2017, April 15). Starbucks Segmentation, Targeting and Positioning ? Targeting Premium Customers with Quality Products and Service – Research-Methodology. Retrieved from https://research-methodology.net/starbucks-segmentation-targeting-and-positioning-targeting-premium-customers-with-quality-products-and-service/

Haskova, K. (2015). Starbucks Marketing Analysis. CRIS – Bulletin of the Centre for Research and Interdisciplinary Study, 2015(1). doi:10.1515/cris-2015-0002

Helmikuuta, K. (n.d.). Starbucks? Distribution Channel. Retrieved from https://thecoffeeteam.blogspot.co.ke/2012/02/starbucks-distribution-channel.html

Kernstock, J., Brexendorf, T. O., & Powell, S. M. (2017). Introduction: Luxury Brand Management Insights and Opportunities. Advances in Luxury Brand Management, 1-24. doi:10.1007/978-3-319-51127-6_1

Kumavat, P. P. (2012). A Book Review On Principles Of Marketing Management 14Th Edition By Philip Kotler And Gary Armstrong. International Journal of Scientific Research, 1(4), 83-85. doi:10.15373/22778179/sep2012/29

Leung, J., Cheung, W., & Chu, S. (2014). Aligning RFID applications with supply chain strategies. Information & Management, 51(2), 260-269. doi:10.1016/j.im.2013.11.010

Mission Statement. (n.d.). Retrieved from https://www.starbucks.com/about-us/company-information/mission-statement

Starbucks Pricing and Promotion Strategies. (2015, March 23). Retrieved from https://www.ukessays.com/essays/marketing/the-starbucks-coffee-concept-analysis-marketing-essay.php

Starbucks Unveils Growth Strategy at 2018 Annual Meeting. (2018, March 21). Retrieved from https://news.starbucks.com/press-releases/starbucks-unveils-innovative-growth-strategy-at-2018-annual-meeting

Talpau, A., & Boscor, D. (2011). Customer-oriented marketing-A strategy that guarantees success: Starbucks and McDonald’s. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 4(1), 51.

Thompson, S. (2012, August 15). Objectives & Task Method Marketing. Retrieved from https://yourbusiness.azcentral.com/objectives-task-method-marketing-1406.html