Our Lady of Fatima University – Pampanga Campus

Brgy. Dela Paz Norte, McArthur Highway, City of San Fernando, Pampanga, Philippines

Marketing Plan

Starbucks Coffee
Vista Mall, Brgy. San Agustin, San Fernando City, Pampanga.

Proponents:
Mark Andrei S. Sotto and Marvin Bacho Jr
MGMT – 2R

Passed to:
Ms. Kisses Dayle Manio
1. Executive Summary

A. Summary of Situation Analysis

Starbucks Coffee has been established as one of the most recognizableand successful coffee
brands in the world. The coffee market is drasticallychanging on a daily basis and this section of
the marketing plan is designed toshow where Starbucks is in this current market.

B. Summary of Marketing Objectives

Starbucks is one of the most recognized and biggest coffee brands in the globe. It started in the
U.S. in 1971 and today has become the largest coffee selling firm in the world. This unassailed
position is a result of careful deliberation by way of numerous strategies and careful and well
thought out international expansion into key territories. Even with its higher than normal
pricing, Starbucks is able to hold its head high up above the competition primarily due to the
quality of its offerings and secondary due to the ambience offered at its stores. Starbucks lays a
lot of emphasis on the coffee drinking experience as a whole and not just coffee drinking at its
outlets that is a part of its success story.

C. Summary of Marketing Strategies

Starbucks uses geographic and demographic segmentation strategy to make its particular type
of offerings available to customers accordingly.

Selective targeting strategy is used by the Costa coffee as being present in more than 70
countries which are geographically separated, following selective strategy is helping the
company in catering to the needs of the customers and introducing new products as per the
demand pattern.

It has positioned itself on value-based positioning so that to create imaginary stimulus in the
minds of the consumers with their intangible offerings along with the main product.
 D. Summary of Financial Projections

2. Mission and Vision

Mission:

“The mission of Starbucks is to establish Starbucks as the premier purveyor of the finest coffee
in the world while maintaining our uncompromising principles while we grow”

1)Provide a great work environment and treat each other with respectand dignity
2)Embrace diversity as an essential component in the way we dobusiness.
3)Apply the highest standards of excellence to the purchasing, roastingand fresh delivery of our
coffee.
4)Develop enthusiastically satisfied customers all of the time
5)Contribute positively to our communities and our environment6)Recognize that profitability
is essential to our future success
Vision:
To inspire and nurture the human spirit – one person, one cup and oneneighborhood at a time

3. The Company

3.1 Brief History

In the United States of America:

Starbucks was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker. At first,
the coffee company only sold coffee beans and didn’t offer the premium coffee drinks it's
known for now.

The famous logo, inspired by Norse woodcutting that contained a siren, the mermaid-
like figure has been with the company since its inception (although it has undergone a few
redesigns).

In 1986, the original owners sold Starbucks to former manager Howard Schultz, who
took the brand and helped build it into the coffee behemoth it is today.

In the Philippines:

December 4, 1997, the Philippines had its first taste of the Starbucks Experience with its
very first branch at the 6750 Ayala Building in Makati City. Starbucks has since won the hearts
of the Filipinos.

The opening of the 6750 Ayala store marked an important milestone in our history – the
Philippines became the third market to open outside North America.

The tradition of warm hospitality, constant need for connection, and love for coffee –
these are the qualities that make Starbucks Coffee and the Filipino people a great culture fit.
3.2 Internal Environment

In Starbucks, its culture is equivalent to the internal environment, in another word, its culture
has the greatest impact on the decision making process. The company is committed to
developing a culture of “legendary service” that it even hired a cultural anthropologist, Barbara
Perry, to help strengthen its foundations for customer care. The company bases its culture on
training and motivating employees, known as “partners.” It entrusts its human resources
department as the “guardian” of the culture built on “passion” for service.

4. The Product/ Service

Starbucks product-mix expanded from 30 varieties of whole bean coffeesto eco-friendly

cappuccino, coffee makers, and other Starbuck paraphernalia. Itsproduct offerings have also
expanded beyond pastries and coffee to oatmeal,smoothies, and wraps to keep up with the
competition and satisfy more customer needs.

The company has also been constantly introducing new products, such as"Instant via Ready"
and "Full Leaf Tazo Tea Lattes" and "Tazo Tea Infusions".The Instant via Ready is an instant
coffee that the company claims isindistinguishable from its regular brewed coffee (Jargon). Full
Leaf Tazo TeaLattes and Tazo Tea Infusions are the company's new tea offerings throughwhich
it hopes to attract tea drinkers. The company also offers Starbucks coffeeand cappuccino
makers for consumers who wish to replace their existing homecoffee makers.

5. The overall Market (customer)

5.1 Market Size Estimates

The company’s revenue growth also reflects its success: Starbucks’ annual revenue almost
tripled in the last ten years, reaching 22.39 billion U.S. dollars in 2017. Further continuing its
global expansion, Starbucks increased its number of establishments by around two thousand
during 2017, totaling 27,339 stores by the end of the fiscal year. Well over half of the
company’s coffee shops are found in its home country, the United States. A Nielsen
Scarborough survey found that over 37.8 million Americans had visited a Starbucks within the
last 30 days.

5.1.1. Current
The Company is now aimed at becoming a major player in international market and the
situations worldwide also seems to be in favor of the Starbuck’s business. The company sets its
goals to changing people’s lives all around world. The present scenario shows that the company
is near to achieve its targets as its current situation in the international market and better
performance by its ventures throughout the world. Starbucks have presently doing its business
successfully in countries like Australia, Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait,
Lebanon, Malaysia, New Zealand, Oman, Peoples Republic of China, Philippines, Qatar, Saudi
Arabia, Singapore, South Korea, Switzerland, Taiwan, Thailand, United Arab Emirates, Egypt,
United Kingdom and the United States.

5.1.2. Trends and Future growth

Expanding Digital Relationships
Building on the innovations of the Starbucks® App, Johnson shared details of a strategy aimed
to grow digital relationships with the more than 60 million current U.S. customers per month
who are not yet members of Starbucks Rewards.

In addition to opening the App’s Mobile-Order-and-Pay capabilities to non-Starbucks Rewards

members this month, Starbucks will unveil a series of campaigns – inside and outside stores –
designed to build personalized digital relationships with customers that create new revenue
opportunities.

“When it comes to how a retailer focuses on the customer, we see too many examples of
businesses choosing between an experience that solely focuses on convenience or one that
simply highlights community,” said Johnson. “But we don’t believe there needs to be this type
of a tradeoff, and our third place can and will continue to unite both experiences.”

Starbucks China Looks to the Future

The number of stores in China has grown from 800 to 3,200 in the past five years, with an
average of one new store opening every 15 hours. Customers and partners connect with
Starbucks in unprecedented ways in China, in Starbucks stores as well as through social impact
in the community.

“We are humbled by how customers have embraced our third place experience, while the core
of our success in China has been our partners, who deliver the unique moments of connections
with our customers each day,” said Wong. “As a key growth engine for Starbucks, we are
excited to continue to scale and imagine what is possible for Starbucks in China.”

Starbucks remains on track to open more than 5,000 stores in China by 2021 and will continue
to drive market-leading and locally relevant innovation in coffee, store design and digital
engagement to meet the lifestyle aspirations of its Chinese customers while contributing
positively to the communities it serves.

5.1.3. Expected Market

Over the next five years, the analysts that follow this company are expecting it to grow earnings
at an average annual rate of 14%. This year, analysts are forecasting earnings increase of
16.31% over last year. Analysts expect earnings growth next year of 9.46% over this year's
forecasted earnings.

5.2 Market Segments

5.2.1. Geographic
5.2.2. Demographic
5.2.3. Psychographic
5.2.4. Behavioral

Type of Segmentation
segmentation criteria Starbucks target customer segment

US, Canada, Latin America, Europe, Middle East, Africa, China and Asia Pacific
Region region

Geographic
Density Urban

Age 22 – 60

Gender Males & Females

Bachelor Stage young, single people not living at home

Newly Married Couples young, no children

Full Nest I youngest child under six

Demographic Full Nest II youngest child six or over

Life-cycle stage
 Full Nest III older married couples with dependent children

Occupation Students, employees, professionals

Degree of loyalty ‘Hard core loyals’

Enjoying quality coffee in a relaxing atmosphere

A place to chat with friends and relatives

A place to work
Benefits sought

Personality Easygoing, determined and ambitious

Behavioral User status Regular users

Social class Middle and upper class

Mainstreamer
Aspirer

Succeeder

Explorer

Reformer
Psychographic Lifestyle[1]

5.3 Description of the characteristics of target customers

5.3.1. Needs and Benefits

Starbucks has several features that help them continue to succeed in their coffee segment.
They have many specialty coffee selections, flavors, and variety.For example, ice coffees,
frappuccinos, smoothies, tea, and holiday specialtydrinks in different seasons.Advantages of
Starbucks include the atmosphere that going into aStarbucks portrays. Many people go to
Starbucks for the surroundings and to“hang out”, not just to enjoy their coffee. The employees
or “baristas” have beentrained not only about the Starbucks Corporation, but about the coffee
market asa whole. Starbucks continues to higher people that enjoy there type of surroundings
and love what they do. It is an advantage to see a happy employeewho enjoys their job; it
makes the consumer’s experience that more enjoyable.Benefits of Starbucks are the free Wi-Fi
service so the businessprofessionals can come in and work on a lunch break or in the evenings.
This is
also beneficial for college students to study during finals week. Starbucks is allabout the
experience and being able to provide their consumers a high qualitycoffee. I believe that is also
a benefit; they only provide the best coffee, which is why they charge a higher price.

5.3.2. Product usage

Starbucks’ product usually patronized by professionals. Also, students, especially College
Students avails Starbucks’ Coffee. They avail products of the said Coffee Shop for refreshments.

5.3.3. Attitudes of customers

Mostly, people who patronize products from Starbucks usually have a good comments after
they bought coffee from the Shop. Also, they advertise/indorse the said Product to their
friends, colleagues, and also to their Families.

5.4 Description of purchasing process

We know our success as a company is linked to the success of the thousands of farmers who
grow our coffee. That’s why we’re working to ensure a long-term supply of high-quality coffee
through our responsible coffee purchasing practices and by investing in farmers and their
communities. We have found that we can serve a great cup of coffee while helping to improve
the lives of farmers and protecting the planet.

Fluctuating commodity prices in 2011 made coffee purchasing exceptionally challenging for
specialty coffee roasters and retailers, including Starbucks. Despite the volatile market, we
were able to continue our commitment to buying and serving high-quality coffee that is
responsibly grown and ethically traded through our responsible coffee purchasing practices,
farmer support centers, loan programs and environmental efforts with Conservation
International (CI).

6. Competition and Market Share

6.1. Identification of Primary competitors

Starbucks has been fighting its competitors – Dunkin' Donuts and McDonald's – for the top
position as coffee king for several years. The company, which began close to 50 years ago with
one store, has experienced phenomenal growth and success. It's often considered the go-to
coffee place to work and socialize, a concept that corresponds with the company's marketing
approach.

6.2. Possible new competitors

Coffee is not only sold in large chains but it is also sold in local bakeries and small coffee
centers. In fact, travel sites are generally full of coffee shops you should experience in a place
that you visit. These coffee shops are famous for their personalized service and the friendly
staff whom you know very well. As a result, the 100’s of coffee shops around the corner are the
most widespread Starbucks Competitors and a true competitor for the coffee chain. Starbucks
has itself strived hard to become the coffee shop around the corner. But across the world,
there are many many coffee shops which become an unorganized Starbucks Competitors.

6.3. Financial Strength of Competitors

"In 2017, we made significant progress positioning Dunkin' Donuts as America's most-loved,
beverage-led, on-the-go brand. Morning comparable store sales increased each quarter
sequentially, and we had our highest quarterly beverage comparable sales of the year in the
fourth quarter of 2017, driven by iced coffee and Frozen Dunkin' Coffee. Our strategic focus on
morning sales yielded improved customer counts in that critical daypart during the last three
quarters of the year and we are actively working to drive afternoon traffic through p.m.
beverages and food along with all-day value offers that kicked-off in January. Additionally, in
2017, we believe that Dunkin' Donuts was once again one of the fastest growing retail brands
by unit count in the country," said Nigel Travis, Dunkin' Brands Chairman and CEO. "Other
accomplishments during 2017 included adding more than two million members to the Perks
loyalty program bringing total membership to approximately 8 million, increasing out-of-
restaurant retail sales of Dunkin' branded consumer packaged goods by greater than 30
percent, and successfully testing a simplified menu across 1,000 restaurants. We strongly
believe the simplified menu, which is expected to roll-out nationally by the end of the first
quarter, will improve franchisees' profitability and enable us to better serve customers."

6.4. Current Pricing Strategy

Starbucks sets its prices on a simple idea: high value at moderate cost. When people feel like
they are getting a good deal for their money, they are more likely to pay a higher cost. Quality is
key. Starbucks has to maintain strict quality controls in its coffee sourcing as well as in its
customer service and peripheral products to justify its costs.
Starbucks products are priced higher than most other brand coffees due to the image its brand
carries. However, they knew just how to put a higher price and yet get their targeted market to
buy their coffees without thinking twice. Starbucks began to offer P55 bottomless 8 oz. cup of
coffee, with unlimited refills that cost approximately 50 cents less than any other Starbucks
products. They also implemented “value strategies” that emphasized more on inexpensive
products rather than being perceived as unaffordable to price-skittish consumers. For example,
the introduction of the P215 “breakfast pairings,” including popular breakfast items paired with
a coffee, and highlights P110 brewed coffees instead of the more expensive specialty drinks.

When quality becomes the desire of the target market, then pricing is no longer much of an
issue. That is somewhat the case for Starbucks. They have created such an ‘experience’ – the
‘Starbucks experience’ – that most of their customers go back to them for their coffees because
of the ambience, comfort and their great coffee, even if they could get an almost similar coffee
for half the price at some other coffee outlet.

6.5. Current Promotional Strategy

Starbucks has implemented numerous promotions to reach its targeted market. One of the
promotions that Starbucks has used is the Starbucks Card. Starbucks Card is a technique that
gives customers the opportunity to promote Starbucks’s products through a referral system.
When a customer purchases a gift card, it not only shows brand loyalty, but it also provides the
company with free advertising, and brings in new customers. Starbucks also provides a card for
corporate sales, which are used for extrinsic rewards to show employee appreciation for a job
well done, or a gift to a client.

Another promotional implementation is that they deliver coffees to offices or work places
without any coffee size restrictions. There are very few or rare coffee outlets that are willing to
deliver without placing any conditions or restrictions.

Thirdly, they appeal to a diverse customer base by offering international teas and coffees to
accommodate those customers that want a taste from home or for locals that enjoy tea.

Lastly, using the aid of performing a ‘good deed’ as a means for promotion – Starbucks
contributes to several non-profit organizations as a way to improve brand image and awareness
in local communities.
7. External Environmental Factors (PESTLE ANALYSIS)

Political
The key political imperative that Starbucks faces is the concerns over sourcing of its raw
materials that has attracted the attention of the politicians in the West and in the countries
from where it sources its raw materials. This is the reason why Starbucks is keen on adhering to
social and environmental norms and to follow sourcing strategies that are appropriate and in
conformance to the “Fair Trade” practices that have been agreed upon by global corporations
and the governments of the developing and the developed countries.
The other political imperative that Starbucks faces is the need to adhere to the laws and
regulations in the countries from where it sources its raw materials. This has been necessitated
because of activism and increased political awareness in the developing countries, which form
the basis for Starbucks’ sourcing strategies.
The third political imperative, which Starbucks faces, is the regulatory pressures within
its home market in the United States because of greater scrutiny of the business processes that
multinationals based in the US are now subject to.

Economic
The foremost external economic driver for Starbucks is the ongoing global economic
recession, which as explained in the introduction has dented the profitability of many
companies.
However, studies have shown that consumers instead of cutting down on their coffee
consumption are shifting to lower priced alternatives which is an opportunity for Starbucks.
Of course, the company still has to contend with rising operational and labor costs as
the inflationary macroeconomic environment coupled with the falling profitability is squeezing
the company from both ends of the spectrum.

Socio-Cultural
Though Starbucks can offer cheaper alternatives as mentioned previously, it has to do
so without sacrificing the quality and this is the key socio cultural challenge that the company
faces as it expands its consumer base to include the consumers from the lower and the middle
tiers of the income pyramid.
Apart from this, the “green” and the “ethical chic” consumers who fret about the social
and environmental costs of the brands they consumer means that Starbucks has to be
cognizant of this trend.
 Third, the retiring baby boomer generation means that spending by the older
consumers is likely to taper off and hence, Starbucks would have to lookout for tapping the Gen
X and the Millennials as part of its strategy.

Technological
Starbucks is well poised to reap the benefits of the emerging mobile wave and as it has
tied up with Apple to introduce app based discount coupons, it can expect to ride the mobile
wave with ease.
The company has already introduced Wi-Fi capabilities in its outlets so that consumers
can surf the web and do their work while sipping coffee. This is indeed an added value to the
Starbucks brand and something, which enhances the consumer experience.
It can also introduce mobile payments and this is something that it is already testing out
in pilot locations in the United States.

Legal
Starbucks has to ensure that it does not run afoul of the laws and regulations in the
countries from which it sources its raw materials as well as the home markets in the United
States.

Environmental
There have been several concerns about the business practices of Starbucks from the
activists, international advocacy groups, and from the consumers themselves. Therefore,
Starbucks has to take into account these concerns if it has to continue holding on to the trust it
enjoys with its consumers.

8. SWOT ANALYSIS
Strengths
 High visibility locations to attract customers
 Established logo, developed brand, copyrights, trademarks, website and patents
 Company operated retail stores, International stores (no franchises)
 Valued and motivated employees, good work environment
 Good relationships with suppliers
 Industry market leader with a globally renowned brand
 Customer base loyalty
  Product is the last socially accepted addiction
 Widespread and consistent
 Knowledge based

Weaknesses
 Size
 Lack of internal focus (too much focus on expansion)
 Ever increasing number of competitors in a growing market
 Self cannibalization
 Cross functional management
 Product pricing (expensive)

Opportunities
 Expansion into retail operations
 Technological advances
 New distribution channels (delivery)
 New products
 Distribution agreements
 Brand extension
 Emerging international markets
 Continued domestic expansion/domination of segment

Threats
 Increased competition from coffee shops and others (restaurants, street carts,
supermarkets)
 US market saturation
 Coffee price volatility in developing countries
 Negative publicity from poorly treated farmers in supplying countries
 Consumer trends toward more healthy ways and away from caffeine
 Fragile state of worldwide production of specialty coffees
 Alienation of younger, domestic market segments
 Corporate behemoth image
 Cultural and Political issues in foreign countries
9. Marketing Strategy
Starbucks has a distinct marketing strategy that starts right from its products. It has
differentiated itself from the others based on the premium quality of its coffee. From its
humble origins in Seattle, the brand has spread throughout the world to become the number
one coffee retail brand. It’s an international brand and the newest chapter in its growth story is
the Asian part. Starbucks has used the formula of quality based product differentiation which
has resulted in very high level of popularity and loyalty. However, its entire marketing strategy
is not limited to products only but Starbucks is equally unique in other aspects of its marketing
and promotion strategy. Still, product quality must be considered the central pillar of its
marketing efforts. Great quality has several benefits. First of all it helps with reputation
management. Great taste equals higher popularity. As a brand, Starbucks has acquired great
reputation over time for the quality of its products, their flavor and for unequalled customer
service. A lot of marketing takes place at those stores and through brand merchandise. Great
customer service has also added to the brand’s positive reputation. Its new focus on marketing
and advertising has resulted in better sales and increased brand recognition.