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Strategic direction
1 a) Starbucks mission is to establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining their uncompromising principles while they grow. Their guiding
principles are:

Provide a great work environment and treat each other with respect and dignity.
Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery
of our coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to our communities and our environment.

Recognize that profitability is essential to our future success.1

1 b) Target market: is men and women aged 25 to 40. They account for almost half (49 percent)
of its total business. Starbucks' appeal to this consumer age group through hip, contemporary
design that is consistent in its advertising and decor, and working to keep its products current as
status symbols.2
Starbucks needs to expand its current international markets in order to diversify its income
base. The company has expanded greatly in the last few years into international markets.
Starbucks has doubled in the amount of stores it possesses since 2004, but it has consistently
stayed at only a 30% international market (Starbucks Coffee Company- Investor RelationsFinancial Highlights, 2009) Currently 11,131 stores are in the United States verses only 5,727
stores throughout the rest of the world (Starbucks Corporation, 2010). No matter where
Starbucks goes as a corporation, it still has to consider the market of people it is selling its
products to. Tea is the common beverage of Britain and other countries, while Mormon
populations will not drink tea or coffee because of their religious background and heritage.
Although Starbucks needs to broaden its market scope, it must take time and put in the proper
amount of research when going into different communities and countries.3
1 c) Political factors impacting Starbucks Coffee include political stability in local and global
markets, as well as, the extent of international relationships between Starbucks home country

US and countries in African continent and Latin America that harvest coffee for the company,
and other countries where Starbucks operates its stores.
Economic factors that affect Starbucks in global markets include changes in exchange rate
between USD and local currencies in international markets, tax rates, and changes in pay rates
in each individual market where the company operates its stores. Most notably, the global
financial and economic crisis of 2007 2009 and its effects on consumer buyer behaviour have
resulted in significant economic challenges for the company.

Social factors such as changing values in society, shifts in consumer lifestyles, and
demographic changes do have implications on Starbucks revenues on certain ways.
Globalisation of lifestyles and spread of western culture amongst developing countries in Asian
and African continents can be specified as one of the most significant social factors that has had
positive effects on Starbucks growth prospects. However, certain social factors such as
increasing health concern amongst population in relation to caffeine and sugar consumption
belong to the list of key social issues Starbucks has to deal with.
Technological factors may impact Starbucks operations through innovations in coffee
preparation processes, as well as, agricultural innovations. Key issues in this area may relate to
Starbucks competitors gaining competitive advantage thorough technological innovations in
various business processes and patenting these innovations creating a barrier for Starbucks to
share the benefits.
Environmental factors represent another source of substantial challenges for Starbucks Coffee.
These challenges are associated with potential damage to brand image to be caused by
activities of a wide range of environmental groups assisted by the media.
Legal factors are associated with general and industry-specific rules and regulations that may
affect profitability and long-term growth of Starbucks Coffee. Moreover, certain practices by the
company may trigger negative legal implications for the business.4
Threat of New Entrants: Moderate

There is a moderate threat of new entrants into the industry.

The industrys saturation is moderately high with a monopolistic competition structure.
At a localized level, small coffee shops can compete with the likes of Starbucks because
there are no switching costs for the consumers.
Even thought its a competitive industry, the possibility of new entrants to be successful
in the industry is moderate.
There is a moderately high barrier for the new entrants as they differentiate themselves
from Starbucks product quality, its prime real estate locations, and its store ecosystem
The expected retaliation from well established companies for brand equity, resources,
prime real estate locations and price competition are moderately high, which creates a
moderate barrier to entry.

Threat of Substitutes: High

There are many reasonable substitute beverages to coffee, which are mainly tea, fruit
juices, water, soft drinks, energy drinks etc. Bars and Pubs with non/alcoholic beverages
could also substitute for the social experience of Starbucks.
Consumers could also make their own home produced coffee with household premium
coffee makers at a fraction of the cost for buying from premium coffee retailers like
There are no switching costs for the consumers for switching to substitutes, which
makes the threat high.

Bargaining Power of Buyers : Moderate to Low Pressure

There are many different buyers and no single buyer can demand price concession.
It offers differentiated products with a diverse consumer base, which make relatively low
volume purchases, which erodes the buyers power.
Consumers have a moderate sensitivity in premium coffee retailing as they pay a
premium for higher quality products but are watchful of excessive premium in relation
product quality.
Bargaining Power of Suppliers : Low to Moderate Pressure

The main inputs into the value chain of Starbucks is coffee beans and premium Arabica
coffee grown in select regions which are standard inputs, which makes the cost of
switching between substitute suppliers, moderately low.
Starbucks, with its size and scale, has the power to take advantage of its suppliers but it
gives its suppliers a fair partnership status, which yields them some moderately,
low power.
The suppliers in the industry also pose a low threat of competing against Starbucks,
which lowers their power.
Starbucks also forms a highly important part of the suppliers business, due its size and
scope, which make the power of the suppliers lower. Given these factors, suppliers pose
a moderately low bargaining power.

Intensity of Competitive Rivalry : High to Moderate

The industry has a monopolistic competition, with Starbucks having the largest markets
share and its closest competitors also having a significant market share, creating
significant pressure on Starbucks.
Consumers do have any cost of switching to other competitors, which crates high
intensity in rivalry.
Starbucks maintain some competitive advantage as it differentiates its products with
premium products and services, which cause a moderate level of intensity in
The industry is mature and growth rate has been moderately low which cause the
intensity of competition among the companies to be moderately high due to all of them
seeking to increase market shaper from established firms like Starbucks.
This industry does not have over capacity currently and all these factors contribute to the
intensity among rivals to be moderately high.

The strength of forces and the profitability coffee and snacks industry are Moderate.5

1 d) Starbucks promotes equal opportunity in its hiring practices, makes recruiting decisions
based solely on job-related criteria and does not use forced labor. When employing partners
under the age of 18, managers must comply with all Starbucks-established or legally required
limitations on minimum hiring age, and on hours and tasks performed by these partners to
ensure any work performed does not hamper the partner's education, health, safety, and mental
or physical development. Also at Starbucks they treat each other with respect and dignity. This
means that all partners are entitled to work in an environment that is free of harassment,
bullying and discrimination.6
Such as Sex Discrimination Act 1984, Racial Discrimination Act 1975.
Marketing performance
2 a) In 2011 Starbucks did a coffee giveaway for Blonde Roast that was promoted through its
social channels. One of the central features was a Facebook app that allowed people to learn
about the new product, claim a free cup of blonde roast and send e-cards to their friends.
Starbucks also tweeted about the new brew and product giveaway, with some posts directing
people back towards the Facebook app. Starbucks also invested in Facebook ads and Twitter
ads that were targeted at certain cities to make them more personalised. This is a fairly simple
but well-coordinated social campaign that likely had a big impact on promoting awareness of the
new coffee.
On the other hand just to show that even the biggest brands fall victim to social fails. As a PR
stunt Starbucks displayed Twitter messages that used the hashtag #spreadthecheer on a big
screen next to an ice rink at the Natural History Museum in London, but forgot to actually
monitor what was being posted. Coming hot on the heels of the scandal over Starbucks UK
taxes, the wall unsurprisingly became a prime target for angry taxpayers. 7

2 b)

Starbucks has operations in over 60 countries

Starbucks is also the most recognized brand in the coffeehouse segment
Brand recognition
Location and aesthetic appeal of its stores
Highly knowledge base employees
Diverse product mix
Customer base loyalty


Expensive products
Aggressive diminishes long term growth targets.
Overdependence in the US market
Negative large corporation image

Coffee culture clash between countries


Expansion into emerging markets

Expanding product mix and offerings
Expansion of retail operation
Technological advances
New distribution channels
Brand extension


Increased competition
Price volatility in global market
Developed countries market saturation
Developed countries economy
Changing consumer tastes and lifestyle choices8

2 c) In October 2013 Starbucks launched a Tweet-a-Coffee campaign that enabled people to

give the gift of a $5 gift card just by putting both @tweetacoffee and a friend's handle in a
The coffee wasnt free though and in order for it to work users had to link their Starbucks
account to Twitter and their credit card to the account.
Analysis by research firm Keyhole found that by December more than 27,000 fans had tweeted
a coffee and that 34% of users bought multiple gift cards. It suggested that around $180,000
worth of coffee had been bought through the promotion.
Even more importantly for Starbucks, it now knows the Twitter handle, mobile phone ID and
customer ID for at least 54,000 customers.9
This is a great example of the use of social media affectively. The promotion let the company to
be in the trending topics, letting more people to see it and also gave the chance to the loyal
customers to suggest their friends the products of the company is offering.
Customers of Starbucks can pay for their coffee through an app on their mobile phones. This is
not a well-known fact for most of the coffee drinkers. Advertisements and even small posters in
Starbucks stores can spread this. This can be very advantageous for Starbucks against its
3 ) Marketing opportunities

Starbucks biggest growth is in its International segment. The emerging markets of Brazil, India,
China, South Africa and Mexico with a growing middle-class population continue to offer
significant opportunities to add new stores and serve more customers.
Starbucks should grow in these emerging markets by winning locally. Starbucks must remain
relevant to the customer in order to grow in these markets, and its management teams should
have the freedom to operate within their overall framework to tailor store format, introduce local
product mix and price points to the needs, lifestyles and tastes of each individual
Starbucks has great growth opportunities in Tea and Fresh Juice products mix. They should
build up these products along the same line of their core coffee products. Also as consumer
tastes and lifestyle shift towards more snacks and beverages options, Starbucks should tailor its
menus and expand to give healthier product offerings in its mix.
Coffee beans are a significant input into Starbucks value chain and there have been wide
fluctuations in the market prices of high quality coffee beans. Starbucks could mitigate this price
volatility risky by implementing an effective hedging strategy like future contracts to lock in their
estimated quantity inputs at a low swing price so that the future costs can be managed to a
greater extent.
Starbucks invest very little in advertising and marketing initiatives. It would be recommended
that Starbucks make significant investments in advertising and marketing initiatives in the face
of increased competition in the market.
Their mobile apps business drove 10% of the sales in the US, so it would be recommended for
further building to stream lining ease of use and payment process which would help drive more
customers, decrease wait time in stores and increase efficiency. Integrating Starbucks loyalty
program with the mobile application would also be recommended.11
4 a) The dye used in food and beverage items at Starbucks to give a brightly coloured reddish
hue is derived from tiny crushed beetles. The dye, known as cochineal dye, is used in many
other products such as lipstick, yogurt and shampoo. The use of this dye makes the
consumption of these food or beverage items not vegan-friendly. A petition started on that prompted Starbucks to reformulate the products containing this dye with a
replacement using lycopene, which is derived from tomatoes.
Starbucks acknowledged that the dye used in certain products contained the cochineal dye.
However, the dye is used frequently in many companies and products so Starbucks did not
apologize for the use of this ingredient but reported that the company underwent a thorough
evaluation and decided to remove it from the ingredient list. The petition had
received a lot of attention and with over 6,000 signatures gathered, which was the main
motivation for Starbucks to make the change. Starbucks, in keeping accordance with their
mission statement and drive to be environmentally friendly, decided to head the potential crisis
head on and rectify the problem before it received any more negative attention from consumers
or the media. Starbucks acknowledged the issue and then used bolstering and corrective action
to move forward with the change.
4 b) Starbucks identified a specific time frame in which the new reformulated beverages can be
expected in store- June 2013. The Starbucks Company took notice of the influx of negative
feedback for the use of cochineal dye and announced the change on their company blog. The
evaluation and consideration of feedback from loyal consumers prevents the issue from
becoming a crisis or creating any negative media attention.

The Wall Street Journal reported that the company's U.S. president, Cliff Burrows, said that
"after a thorough, yet fastidious, evaluation, I am pleased to report that we are reformulating the
affected products to assure the highest quality possible.

Executive summary
Starbucks is a strong corporation that is in a growing industry. Starbucks is taking a strong stand
in the coffee industry and initiating promising strategic and environmental goals. It is also
securing coffee supplies from India as well as China in order to keep its costs under control.
Over the next few years, Starbucks will continue to grow in the international market. Most of its
stores are currently domestic, but over the next few years the percentage of foreign stores will
escalate. Starbucks is handling the transition from a domestic to international company very
smoothly. It is taking the right steps to allow it to succeed in its long term goals. Starbucks is a
company that takes their global product and customizes it to fit local and cultural needs of
different regions and communities. They have a transnational business model that allows them
to have a universal product that can be tailored to fit national needs. Starbucks has to be aware
of the changes in the government and culture in order to better forecast the problems that they
will be facing. It is important for Starbucks to continue its strong system of communication in
order to continue growing as a business.
There are many organizational and managerial implications of running an international
business, but Starbucks is working diligently to overcome those problems. One problem that
they had to overcome is the ability to understand the international context. It is important to
understand a culture before a company begins marketing to a different country or region. The
BRIC nations are going to play a major part in the future of Starbucks as they begin to grow and
influence the coffee market. These nations have millions of people that are begging to embrace
coffee, and it is important that Starbucks has a strong market presence in these areas. If
Starbucks expands internationally through the undertaking of new countries, it will be difficult
and time consuming, but it will also greatly improve their company as a whole. But in the end,
the undertaking of new regions and countries will allow Starbuck to gain a strong hold on the
coffee industry as a whole. By opening additional stores in the countries that Starbucks already
is currently marketing to, Starbucks can expand internationally without the additional funds for
research and without the additional time and money it takes by expanding into a new market.
Starbucks has a strong international business model, but it still has to continue building its goals
and expectations. Starbucks will never be finished growing as a business; therefore, it is
important to keep its goals in mind and its strategies in place in order to overcome any obstacle
that might stand in its way.


1) Strategic Organisation documents

The mission, vision and values of an organisation are generally defined and recorded in a range
of documents. These are important sources of information for the marketing manager in
determining what the marketing department needs to achieve. These sources include the:

Strategic plan
Marketing plan
Annual report
Customer service charter
Policy and procedure documents.

Strategic Plan

The strategic plan is a document that establishes the overall direction of the organisation it
includes the vision, mission, values, goals and objectives of the organisation and how these are
going to be achieved.

Marketing plan

A marketing plan is a document outlining the strategic marketing objectives of an organisation

and explains all the activities required to implement them. It becomes the basis for internal
communication, distribution of task and responsibilities and allocation of resources.

As the marketing manager, you must ensure that the marketing efforts of the organisation are
directed towards achieving the objectives outlined in the marketing plan. This document should
become a constant source of reference throughout the marketing management process.

Annual report

The organisations annual report is a comprehensive document detailing the organisations

financial performance and activities for the year. The content of this report may include pricing
trends, company market involvement, individual reports from the chief executives officer and
chief financial officer in addition to the required financial documents.

Customer service charter

A customer service charter is a published document aimed at informing both staff and
customers of the services provided and objectives of the organisation. This sets the customers
expectations at a level that must be met by the organisation. A customer service charter can be
as specific as defining how many times the phone may ring before it must be answered.

Policies and procedures

Policies and procedures document how an organisation functions. They exist to provide a
common way of approaching routine tasks and to ensure the organisation complies with its legal
and ethical obligations.

As the marketing Manager, you must be aware of the policies that affects you and ensure that
your team and outcomes they achieve, abide by these policies. While these policies will cover
every area of business operation, there are a number that directly affect or are influenced by
marketing activities. Some of these are:

Customer service
Product development
Document design and control

Policies should be reviewed regularly, to ensure they are still current and relevant to the tasks
being undertaken
2) As the marketing manager, you must ensure that the marketing efforts of the organisation are
directed towards achieving the objectives outlined in the marketing plan. This document should
become a constant source of reference throughout the marketing management process.

Consult Stakeholders

There are a number of different people in an organisation who will be interested in or affected
by, the marketing objectives you establish; therefore it is important to involve them in he process
of developing objectives. These stakeholders may include:

Chief Executive Officer

Board of Directors
Other manager

Informed people are supportive people. By involving key stakeholders in setting your marketing
objectives, you will ensure that they ownership of the objectives and once in place, support their
achievements. Key stakeholders may also assist in the process of developing marketing
objectives in the following ways:

Provide valuable feedback on the current status of the organisation

Confirm the mission, vision ana values
Assist with research and analysis of opportunities
Analyse the external and internal factors
Support implementation of the objectives.

Value chain analysis
A value chain analysis can help an organisation to harness its strengths. The value chain, also
known as value chain analysis, is a concept that was first described and popularised by Micheal
Porter in his 1985 bestseller, Competitive advantage: Creating and sustaining superior
performance. A value chain is a series of interlinked value-adding activities that convert inputs
into outputs, which, in turn, adds to the bottom line and helps to create competitive advantage.

Products pass through all activities of the chain in sequential order at each stage the product
gain some value. The purpose of each activity in the value chain is to:

Create value for the customer

Establish a price that exceeds the cost of producing the product, therefore generating s

A value chain typically consist of these core (primary) activities, which contribute directly to
creating a product or service for the customer:

Inbound distribution or logistics

Manufacturing operations
Outbound distribution or logistics
Marketing and selling
After-sales service.

The product life cycle

A product goes through different stages which can be labelled as Introduction, growth,
maturity and decline. These stages considered together represent a products lifecycle.
Marketing can target a range of products (a brand), a single product or the organisation as a
whole. Your marketing approach should vary according to what it is that the organisation wishes
to market. Your marketing may also need to vary based on the life cycle of product. A new
product will require a different approach compared to an established product. For example, you
can focus more on the proven value of an established product, whereas, efforts need to be
focused on convincing customers of the value of new product.

Marketing Mix

Marketing mix is the blend of product, price, place and promotion that will engage with the target
market. All four of these variables must be considered and acted upon to produce the best
result. The mix is only as good as good as its weakest component. The aim of this process is to
gain advantage over competitors and achieve competitive success.

Product Product always needs to be addressed first. It is the heart of the marketing
mix. As well as the discreet product or service, you should also consider customer
benefit, warranty, service following sale, brand, company image, delivery, installation,
Place When and where the customer requires the product. This includes storage and
transportation (keeping in mind that the product must reach its final destination in a
usable condition) as well as distribution.
Promotion The aim of promotion is to engage with the target market by informing,
educating, persuading and reminding them about the benefits of an organisation or
product. Personal selling, advertising, sales promotion and public relations are all type
of promotion activity.
Price This is what the buyer must exchange for product. Price is the most flexible of
the components; it may be lowered or raised relatively frequently compared to other
aspects of the mix. Price is an important competitive weapon



Strategic analysis

Operation analysis

Tactical analysis


Integrally related
Enterprise risk
Multiple Probability
Impact Graph
Long term
To identify clear
broader goals that
advance the overall
organization and
organize resources.
Done by top level
Internal and external
Covers whole

Integrally related
Enterprise risk
Multiple Probability
Impact Graph
Utilize specific
resource to achieve
sub-goals that
support defined
Done by middle
level management
Internal business
Covers particular
Needs to be done
before strategic
analysis tech.

Integrally related
Enterprise risk
Multiple Probability
Impact Graph
Shorter term
Utilize specific
resource to achieve
sub-goals that support
defined mission
Covers particular unit
Internal business


Marketing metrics

Marketing metrics are a set of measures that are utilised to determine the marketing
performance of the organisation. To effectively achieve this aim, the chosen metrics should
reflect the organisation. To effectively achieve this aim, the chosen metrics should reflect the
organisations industry and strategic position at a point in time.

Again, the metrics should relate to the mission and strategy of the organisation and should
investigate the following areas.
Customer satisfaction

If customers are not satisfied with an organisation, they will eventually find another organisation
that meets their needs making customer satisfaction vitally important to an organisation. Poor
customer satisfaction is usually an indicator of future decline, even if the current situation is

Marketing share

Marketing share refers to the organisations revenues as portion of total revenue generated for
that market. Market share can be determined by comparing total sales of the organisation to
total sales across the industry or by identifying the organisations respective share of usage by

More specific metrics may be used to determine market share vary and should be specific to
the market and organisational strategy.

Brand equity

This is the intangible value added to product because of the brand it bears. This may be
acquired through effective marketing, to the extent that brand becomes synonymous with the
product for example, Kleenex for tissues or Blue-tack for re-usable adhesives. Brans equity
may be determined on the three levels: the organisational level, product level and customer

At the organisational level, the value of the brand as an intangible asset is determined by:

Firm value (tangible assets + measureable intangible assets)

=brand equity

The second level is the product. This may be determined by comparing the price of equivalent
branded and no-name products, assuming that all other variables are controlled. Revenue
should also be considered, to better understand the value of brand equity at the product level.

The third level to consider when determining brand equity is that of the customer. At the
customer level, you should consider the organisations mind share, i.e. how aware consumers
are of the organisations brand. This may be determined by the formula:

Respondents with unaided awareness =mind share(%)

Total respondents

Establish Marketing Objectives

Now that you have completed all of the preparatory work, you can move on to establishing
marketing objectives for your organisation. This final step requires you to develop marketing
objectives based on your understanding of the organisation`s expectations and capabilities, and
in the context of the marketing opportunities you previously evaluated.

For each marketing objective you establish, it is important to fully examine the risk management
strategies required to ensure that the objective is able to met by the organisation.

Finally, you need to document all of your work to date by recording the marketing objectives in
writing and make this document available to management and relevant key stakeholders.

What skills will you need?

In order to establish marketing objectives, you must be able to:

Develop marketing objectives

Ensure objectives are consistent and compatible with the organisation`s capabilities and
Ultilise risk management strategy
Document and report on marketing objectives.

Business and market needs

The marketing objectives you establish are projections of what you intend to achieve in the
future, so you must ensure that they are consistent with the forecast needs of both the business
and the market itself.

Trend analysis is an effective way for companies to determine future results in economic
marketplaces. A business trend analysis is a study of a company`s financial performance over
an extended period of time. Reviewing past information can provide you with information
regarding current trends and where a market niche may be for a product.

Technology provides you with an incredible amount of information. However, raw data by itself
does not provide much assistance in developing marketing. It is the conversion of this raw data
into significant facts, relationships, trends and patterns that gives your organisation a
competitive edge,

The ability to accurately gauge customer response to changes in your business strategy and
other environmental factors gives you a powerful competitive advantage. It will assist you in
making analytical decisions about which marketing opportunities to pursue.

Trend analysis can also provide critical economic information about current business situations,
by identifying products trends, determining the strength of an industry or capitalizing on
emerging markets. Trend analysis also helps to eliminate uncertainties in business, such as
slow sales, overstocking products and seasonal consumer demand.
Trend analysis

Organisations operate in an ever changing environment ; it is imperative to constantly monitor

market trends and developments to determine the best marketing strategy.

These trends and developments can include:

Demographic trends
Ecological and environmental trends
Economic trends (local, regional, national, international)
Political/government activities, for example, interest rates, deregulation
Industry trends
Penetration of new technologies
Social and cultural factors.

The process of identifying trends is critical for both long-term forecasting; providing a better
understanding of what industry can expect for the future.

Political events

Political events such as elections may influence business activities or markets relevant to your
business activities. War or internal conflicts in the international arena can create unstable
environments that may have a negative effect on the success of the business activity planned

for the chosen market. More generally, in times of crisis consumer behavior changes to a focus
on security and basic life requirements such as essential food items, shelter and basic health

Less dramatic changes such as adjustments to legislative requirements can have serious
impacts on your business by affecting your customer`s purchasing habits.

Economic trends

Economic trends refer to those that influence the money available for consumers to spend and
the factors that influence how spend it. This includes factors such as average household
income, unemployment data, gross national product, inflation, interest rates and business
cycles. Your data may have identified long-term changes in the economic prosperity of the
target market that may also have influenced their levels of disposable income and how they
choose to spend it.

These trends, both positive and negative, should be explored so that you can determine what
impact they may have on the planned marketing activity in target market.