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    318 views61 pages

    Starbucks

    Uploaded by

    Julie
    Marketing strategy analysis for starbucks

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    Assignment 1 by Julie George Submission date: 05-Feb-2020 11:02AM (UTC+0800) Submission ID: 1250770160 File name: MBA6133_Assignment_1.docx (5.62M) Word count: 8196 Character count: 46900 9 INTRODUCTION 10 STARBUCKS MALAYSIA ™ Starbucks in Malaysia is operated by the Berjaya Starbucks Coffee Company Sdn, Bhd. The mode of entry to Malaysia is through licensing. Berjaya Corporation Berhad is the company that obtained the license in order to be able to operate Starbucks Coffee Company locally. Berjaya Starbucks Coffee Company Sdn. Bhd was then formed and jointly owned by Starbucks Coffee International and Berjaya Corporation Berhad ‘The first store was opened on 17 December 1998 in Kuala Lumpur and as of today, there are 300 stores in Malaysia including Sabah and Sarawak. Starbuck's 300" store was opened at Bukit Bimung Junction, Suirbucks Colle Malaysia is basically Wing similar product range such as coffee and espresso beverages, avcessories, gifts, pastries and souvenirs. 2.0 MACROENVIRONMENT 2.1 THE DEMOGRAPHIC ENVIRONMENT — Si G In 2019, the population growth in Malaysia is estimated at 32.6 million, showing a decrease by only 0.6% compared to 2018, The age structure in Malaysia is dominated by the age group between 15-64 years. = ae a eee ean 2019 = 32,581.4 —-29,376.9 (3.204.5 06 (3.6) Estimates Median Age co it os » (he) i a | c 233 700 67 Em = 97 65 ieee 2019 2018 |: Estimates Figure I: Population, Age Group and Growth Rate Sources Depuriment of Statistics Mataysia MACROENVIRONMENT - DEMOGRAPHIC The age group 15 ~ 64 years consists of students, working adults and recently retired people. This group are also coffee lovers. The current target customers for Starbucks are students and ‘working adults. Opportunities for Starbucks are: Continue focusing on students and working adults. Starbucks should continue focusing on this group of customers as they contribute to a high number in the population. This group are usually fun loving and loves hanging out Therefore, to increase their visit, Starbucks can host events such as Halloween Party or New Year's Eve celebration or occasionally have live bands. Promotions can be arranged, for example, everyone who comes dressed up are eligible for a free drink Celebrities can be invited to perform or host the event. This is important to differentiate Starbucks as the ambience and Third Place concept is imitable by many new cafes that has sprung up recently. Widen customer profile to include recent retirees (ages between 60 — 64) ‘nis group ot people love to arrange reunions with their eX-colleagues or other trends to fill up their newfound free time. Starbucks can cater for this group by offering special discounts tor senior citizens. “INo sugar” options can be added as normally they are ‘more proactive about their health. This will encourage them to revisit or spend longer time at Starbucks stores. 2.2.0HE POLITICA, ENVIRONMENT ‘The political-legal environment Consists Of government agencies, laws and) regulations that industries influence individuals and organizations. Some laws can increave the growth of cer while some can disrupt the growth of industries. Political stability and economic growth are interrelated. Political instability can cause reduction in investments and reduce the rate of economic growth. Under the present leadership of Prime Minister Tun Dr. Mahathir bin Mohamad, the country is stable and peaceful. A foreign policy that is practical and positive has been set up. The policy facilitates trade and attracts forcign investments. This policy therefore encourages companies like Starbucks to expand their business in Malaysi One of the regulations that Starbucks must comply to in Malaysia isthe halal certification. In November 2018, the government introduced a sugar tax to reduce consumption of beverages, with high sugar Jevel. Effective I* July 2019, any sugary soft drinks that contains more than 5 grams of sugar pet 100m! or juice/vegetable-based drinks that contain more than 12. grams of sugar per 100ml will incur a MYRO.40 taxfliter. Opportunity Analysis and Tdentificat MACROENVIRONMENT — POLITICAL-LEGAL Starbucks Malaysia need to react to the sugar tax even though their products are not impacted. ‘They should innovate and explore low sugar alternatives for their products. As other beverage ‘manufacturers who are impacted by the sugar tax take action to introduce low sugar alternatives, the public’s awareness on the negative health effects of sugar will be heightened. When the trend to choose low sugar altematives becomes stronger, it might be too late for Starbucks Malaysia to innovate and therefore may lose a significant market share. 2.3. THE ECONOMIC ENVIRONME! The term economic environment refers to the economic conditions and the nature of the ecemamy that plays an important role in the purchasing hal of cansiimers andl the performance, of businesses. Businesses cannot control the economic environment; therefore, they need to evaluate economic conditions before choosing to pursue a strategy or enter a market Recession/Economy Sluggishness ‘The recession that happened in 20U8 has attected the taith of consumers in the economy. ‘The pursuit of mindless shopping will not be considered whenever there is a slowdown of the economy. On the contrary, consumers will compare prices, services and rely on discounts. The World Bank has maintained Malays Ss economic growth at 4.6%. There is heightened uncertainty in dhe external inoument, The global denrainl slowdown fur elective sectory are affecting economy growth and many companies are restructuring and cutting down manpower. ‘This affects the spending trend of consumers. The weakening ringgit will have. an impact for Starbucks, Starbucks need to review their pricing and promotion to avoid customers from shifting to competitors who offer cheaper price. Opportunity Analysis and Identification MACROENVIRONMENT — ECONOMIC During economy slowdown, Starbucks Malaysia can introduce product bundling. They can have set meals that consists of food and beverages. The cost of purchasing the set meals will be ‘much lower than getting them individually. The type of set meals ean be changed on a monthly basis 90 that the customers are attracted to the variety of meals and drinks that they ean get euch ‘month. This will help to retain and attract new customers. 2.4 THE SOCIO-CULTURAL ENVIRONMENT, Coffee Drinking Culture According to The Sun, dated 11 May 2017, Malaysians have a strong coffee drinking culture, whereby an average Malaysian is expected to consume about 2.5 cups of coffee in a day. Starhucks therefore has the potential to penetrate the market for coffee lovers in Malaysia Health Conscious Lifestyle Consumer trends are moving to is healthier choices. According to a blog by Timi Gustafson, Registered Dietitian and Health Counselor, consumers are no longer purely reactive but proactive, when it comes to health matters. This shift in consumers’ awareness and behavior is ‘more prevalent in the millennials, who are ready to pay a premium price for healthier options. Even the baby boomers, especially those with nigher education tevel and higher disposable income, are shifting towards “healthy aging” and are focusing on good health, active retirement, longevity and independence. The current product offering at Starbucks has opportunity to further support or influence this change in trend. The list provided below compiled by the Health Weight Forum wet clearly shows that consumers having a simple euffee ad rmuftin brektast ae consuming over 1000 calories. [Feet Sarbact) [estore Tor ae [cesar Rae ps0 fs [cakes Comaron [cake Lamon Baa [csoporae Sov [Goprccne Whole [reel Macht 56 [ceramel Mshiate = Neots ME cosisan Cnecoite [cect Gace Nolaeer [ccna Bair [Eeeressne- Choc Boca [raceeccne Bock Nef: Bana Bas si: Lovet Ravan Daight [tite Choccae Necks 3% Figure 2: Calories Content Source: hutps:/iwww-organicconsumers.orginews/starbucks-coffee-and-vour-health-bucking- starbucks-experience Opportunity Analysis and Identification MACROENVIRONMENT ~ HEALTH CONSCIOUS LIFESTYLE, 1. Add calorie to the menu Starbucks Malaysia can add the calorie level of its beverages and food in its menu so that customers can be more aware of the calorie level that they are consuming. For example, the cold foam iced cappuccino has 57 calories and the nitro cold brew has 4 calories. This will be very convenient for its customers who are health conscious and are counting their calones every day. 2. Innovate and introduce healthier options ‘Starbucks Malaysia should introduce a section in their menu for new innovations that are healthier options containing antioxidants or fresh fruit or drinks without sugar. They ar abo vlfer vegetarian aly aul bundle these will Tow caluiic dhinks w emuuraye health conscious customers to visit more frequently. Eco-Friendly Culture Environmental issues like global warming and rise of plastic wastes are on the rise, Consumers are going green. Global data released by GlobalWebIndex shows that millennials are leading the ‘way in the preference for environmentally friendly products. Consumer packaged goods (CPG) brands will be affected by this shift in trend as they rely heavily on plastic packaging material. Figure 3: Ecofriendly Products Preference by Generation Source: GlobalWebIndex 02 2018 Base: 111,899 Internet Users aged 16 - 64 Household cleaning products Personal care products Food Electronic devices Clothes/shoes/bags cars Tealcoffee/other hot drinks Childcare products Furniture Travel Alcoholic drinks Figure 4: Ecofriendly Products Preference by Product Category Source: GlobalWebIndex 13-15 September 2018 Base: 1,329 (U.S.) & 1,305 (UK) Internet Users aged 16-64, 0 , is and Identificat MACROENVIRONMENT ~ ECO-FRIENDLY CULTURE 1. Develop edible straws A lot of beverages offered by Starbucks cannot be consumed comfortably without a straw. Though customers have the intention to embrace the eco-friendly culture, they find it difficult to enjoy their cold beverages without a straw. Starbucks can consider working with local companies to develop straws that are edible, making them ‘environment friendly. 40 MICROENVIRONMENT 3. CUSTOMERS Marketing strategies should concider identifying, understanding and mesting the needs of customers. Starbucks customers can be described as follows: High Income, High Spenders The customers that visit Starbucks normally are people with high income and are high spenders. Middle-income customers who may not be willing to spend on luxury items often, but still ‘willing to spend on their favourite cup of coffee are also part of Starbucks customers Urban, On-the-Go ‘This group of people are usually busy and are mortly diving from place to place for work or for personal reasons like sending their children to school or going to the gym. They may not stay in the big citios, but their lifestyle reflects an urban lifestyle, Technology Early Adopters This group of customers, usually students and working adults, are between ages 0 60 years, They depend on their smartphones and laptops to get things done. This group view Starbucks as 4 mini office to sip their favourite beverage while doing their work, Socially Conscious ‘The socially conscious group of customers are attracted to the sustainable commitments of the brands that they purchase. They support corporate social responsibility and green initiatives: Opportunity Analysis and Identification MICROENVIRONMENT - CUSTOMERS 1, Customers who are using their laptops ‘A section can be cordoned off for customers wanting to do their work on their laptops. In this section, tables and chairs with lumbar protection can be placed. This encourages customers to spend longer time in Starbucks thus increasing the chances to purchase ‘more products and to revisit Starbucks frequently. It also reflects Starbucks concern for ergonomics issue Corporate Social Respon: CSR) Starbucks is known for its responsibility towards the environment and towards the community. With a variety of programs, Starbucks has proven to be proactive in its CSR acti jes. Starbucks should look into customer involvement in their programs through the number of points obtained. If they have accumulated a certain number of points, they can be cligible to a lucky draw that entitles them to travel and participate in CSR projects overseas 3.2 COMPETITORS Competitors arise when there are many companies that sell idei I products and supplies their products to the same group of customers. In Malaysia, Starbucks competes with Coffee Bean & Tea Leaf, Dunkin’ Donuts, Costa Coffee, McDonalds and local coffee competitors like Old ‘Town White Coffee as shown below: Table 1A Comparison between Starbucks and its Competitors Category ‘Starbucks Dunkin’ Donuts [McDonalds | The Coffee Bean & Tea Leaf Branding Brand Yes Yes Yes Yes Popularity Brand Strength | 86.2 NIA 903 NIA Index (BSI) (BrundFinance, 2020) Branding Extent | 6 Brands: ‘PBrands: 3 Brands Tbrand (Starbucks, (Dunkin’ Donuts- | (McDonald's - Teavana®,La | US.-Baskin- | McCare@ - Boulange ©, Robbins-U.S) | Ronald Evolution Fresh McDonald) 1M, Seattle's Best Coffee, Tazo Tea) Size of Global Global Global Global organization 10 Payment Options ‘ApplePay Yeo Yeo Yer No Support PayPal Support | Yes No No No Google Pay | No No No No Support Debit & Prepaid | No Yes Yes No Cara Supprnt Pricing and Discount Policies Price Na No No No ‘Adjustment Policies Official Coupon | No No No No Support Sales and No Yes No No Promotion student No | No No [Yee Discount Policies Senior Discount | No No Yes No Policies Birthday Yes Yes No Yes Discount Policies Coupon No No No No Stacking Yes Yes Yes Yes Customer Service Features Yes No No Yes Yer No No Yeu ‘Support Money-Back | Yes Yes No Yes Guarantee Polie Social Media| No No No No Presence Contact Yes Yes Yer Yes Information Availability Website Features Website Yes Yes Yes Yes Security & a Privacy Policies | T i I Marketing Programs Affiliate Yes Yes No Yes | Programs Other Features Ethical Practices | Yes Yes Yes No Prosiuct and Services Product 3 product groups | Donuts’ Coffee Beverage Diversity Handcrafted Hot Beverages | Hot Drinks Food Beverages: eed Beverages | Cakes from | Holiday Customizable Sandwiches Secret Recipe | offerings Drink Merchand Breakfast all Food: Packed Ground day Rise and Shine, | Coffee, Mugs, Gourmet and Power Lunch, | Tumblers, Mr Bakery Goffe Break Clever Coffee Merchandi Dripper, Gift Coffee- and tea: | Vouchers brewing equipment, mugs, packaged goods, ‘music, books and gifts.) ‘Number of 18-45 years 99% middle-class | Students 18 to 40 years market segments, people Café goers served Youngsters/ Working adults Working 15-45 years —"“grab and go” acilts/Students People on tight Mindset: coffee- | schedule drinking is, Swuul"aulveutusvus Features * Starbucks |e Improveguest_ * Upgraded [+ Coffee Joint Experience experience & | espresso = with whole © Comment Cards | increase Machines sit-down © Starbucks franchisee Better milk meals Customer profitability steaming (breakfast Comections —_|* DD Perks technology ‘and lunches) (SCO) website | loyalty program Partnering mainly © Conporate © Baskin - with Coca- pasta, with a Social Robbins online | Cola Co. - 10% tie-up Responsibility | cake ordering | introduce discount © Flavor-lock —|# Mobile ready to-dtink | with certain bags paymentand | McCafé credit cards © Coffee freshly | advance Frappé © Online brewed every | _ordering&: beveragesin | ordering of 2 hour sifting three flavors: | pastries! + Drinks with caramel, custom low-fat/organic vanilla made cakes milk &mocha | Multi- beverage machine Table 2: A Comparison between Starbucks and Local Competitor Category ‘Starbucks ‘Old Town White Coffee Product Diversity | Variation of coffee Only one type of cofiee innovation Fast Slow Food Variety | Offers light food Offers local food and other heavy food Offers seasonal menu: Offers seasonal menu Price High | Reasonable/A ffordable/Product Bundling Place Located in heavy traffic area | Located in strategic areas Eascomer ‘Students, high income gioup | Students, workers, Families tunity Analysis and Identification MICROENVIRONMENT - COMPETITORS, Starbucks can look at competitor's strengths and weaknesses to set up their own marketing strategies, '* “McDonald's scored better than Starbucks in the Brands Strength Index. Starbucks need to increase efforts in marketing investment, stakeholder equity and business performance. = Starbucks eats ide discounts fur seation citizens (W increase Customers ay due by MeDonals or provide student discounts like CBTL. ‘© Starbucks can increase its social media presence as all its competitors does not have a strong presence. ‘© Starbucks can use CBTL's good range of meals for lunch servings as an idea to expand its product range so that it can capture the need of working adults, ‘+ McDonalds has had partnerships with Coca Cola to develop a new beverage. Starbucks can consider starting partnerships to expand its product range 13 AASUPPLIERS Coffee Sourcing Table 3: Comparison of Coffee Sourcing between Starbucks and its Competitors Category Starbucks Dunkin’ Donuts [McDonalds | The Coffee Bean & Tea Leaf (CBTL) Coffee Source | Arabica coffee | Arabica coffee | A blend of ‘The top 1% from three key | from Latin arabica coffee | (found at growing regions, | America beans grown in | altitudes of Latin America, Brazil, 6.000 feet) of Africa, and Asia- Colombia, Arabica beans Pacific Guatemala, and_ | from East Costa Rica Africa, Latin America and the Pact Starbucks is getting its coffee trom imilar sources to its competitors. However, CBTL is very specific in their coffee sourcing. Starbucks is wolved in ethical sourcing. ‘Supplier Relationship Starbucks has developed strong internal and external relationship with its suppliers. This enables Starbucks to purchase high quality coffee beans consistently. This directly contributes to the high-quality products offered by Starbucks to its customers, Coffee and Farmer Equity (C.A.F.E) Practices Starbucks developed the C.A.R.E practices together with Conservation Intemational. This guideline reflects the principle of ethical sourcing that focuses on product quality, economic accountability, social responsibility and environmental leadership. Starbucks’ preferred suppliers BR those that are approved by the GAIBIE practices. Through GUAIBIE, Starbucks can SHE that farmers are sending their children to school and land is being conserved. Fair Trade Starbucks started purchasing Fair Trade Coffee in 2000. When Starbucks pay Fairtrade premium, it ic wed hy the producer ta invest in the social and community investments 14 Starbucks is a member of the Ethical Tea Partnershi the condition in the tea industry Through this pmgram, the tea growing comm provided with economic advancement, health services and youth involvement ‘They work with other buyers to improve The Cocoa Practices ‘This program is designed to verify the supply chain for cocoa that will be used to produce Starbucks’ products. rough this program, Starbucks can provide sustainability information to its producers and producer organizations. The program will improve the market competitiveness of cocoa farmers, When farmers improve their performance, they can eam a higher premium, Opportunity Analysis and Identification MICROENVIRONMENT — SUPPLIERS Coffee Bean Price Volatility Starbucks depends on a regular and predictable supply of coffee beans. There has been price ‘Volatility in the coffee market. To ensure that Starbucks is not impacted by the price volatility, they must set up effective hedging. 15 34 PUBLIC Public is any group hhas or potentially has an interest in the abi organization in achieving ity objectives. Public consists of local people, ne protection group and environmentalist The public bei coffee: me customers of Starbucks because of 3 reasons besides the quality of the ‘© Coffee Experience is More Important than Actual Quality of Coffee. © Personal Reward © Familiarity Some positive and negative feedback from the public are shown below. Mainly comments are wiven abut die stall aud the service. Staluchs ced W improve diese W farther culiauce the value creation and standardize performance at all outlets. (Gaik Hong » Starbucks Malaysia 16 ‘Astley Ng Weng Hoong > Starbucks a Geta tree upgrade from Tal Grande due to someone accidently took my eink. Thanks to the stall from Starbucks Ipoh Parade for this kind este ob de ee Josephine Jojo > Starbucks Malaysia @ sank you to brightens our moring...barsta ararmel Nurul, mocta Azrat& late AZizUl.Keep Up he joyful smlle..cheerrssss!!! Momok Makin Kairiza Ak at Starbucks Drive Thru @ Dana Chow » Starbucks Malaysia Max 1 Rawang @ Having my usual Green Tea Latte withthe awesome. ‘Starbucks team at Starbucks R&R Rawang @ Thumbs up for great hospitality and high quality rink dy Wacken Lewis > Starbucks Malaysia =~" Joke Starbucks Malaysia = Fbrun Q a Received email saying that can enjoy 50% off. When {90 to outet purchase, outlet say second cup only 50%! Email totaly never state about second cup but ule say is second cuol Pls advice! (ou guys need to educate those sales staff property. nly 1 drink entitled to 60% discount. Then | go to he other branch, the sales staf there sald "you buy 0 rinks, al also entitle for 80% discount” Derrick Tang > Starbucks Malaysia This Is the 2nd time it happen again. Redeem 1 drink) but system deducted both of my rewards. What kind of system are you all having? Pls return my reward! Figure 5: Public Feedback v7 Opportunity Analysis and Identification | MICROENVIRONMENT ~ PUBLIC 1. Act upon public feedback Starbucks Malaysia need to review and take actions to resolve the issues reported by the public. For example, all their employees need to be trained regarding new products, and new promotional items so that they can disseminate the right and consistent information to the public about new offerings. Starbucks should also improve the mobile app and upgrade it from time to ime to avoid complaints ahont service 2. Benchmark best practices should also benchmark the good practices and the methods used by wroucks Malays stores to enhance customer satisfaction. Stores receiving a lot of good comments from the public should he rewarded. The best practices especially regarding customer service, service speed, store cleanliness and beverage quality consistency should be shared and standardized across all sites. 3. Halal Certi For Malaysian Muslim consumers, halal certification plays an important role in determining choice of store. Halal certification is frequently raised as a concem Starbucks can help alleviate these concems by ensuring that the certificate is always ‘valid and displayed at a prominent area in their stores 18 4.0 OPPORTUNITY AND ORGANIZATION MATC! SWOT ANALYSIS - STRENGTHS ‘+ tughiy recognized brand in) the cofechouse market segment ‘Ranked 57 inthe best global brands of 2018 “consistent qualty even though customization is dane ‘Good product mixthat caters toll age groups and demographic factor “Seasonal product to attract Located in strategie places— ) high-traffic and high-vsiblity areas such a ofice areas, Shopping malls and university campuses. oe cette So Product Min cf) a ee = eam cae, femmes ep) Q 4 ‘Starbucks App is avaliable in both Apple and Android Sines! ‘Every year, significant amount ‘of investments is made in ‘Starbucks Rewards Program ‘and Starbucks Card + starbucks Card value car rogram thats integrated with customer's mobile application, provigesgirng land increszes cardholders sit to thelr stores ‘Highly skilled and knowledgeable employees + G00 customer service reflected ~ employees have great benefits ike stock Options, retirement accounts and a healthy culture Cerna Loyalty ¢ Ped cou i ‘Great atmosnhere, free WI- ‘good music Stores are considered "Third Place” berides home and ‘work for thelr customers, ‘Amesting spot forthe ‘community “part ofthe ‘Starbucks Experience * Support recveling and waste eduction programs to build goodwill among customers. on ona Se rors 19 Opportunity Analysis and Identification Starbucks Malaysia need to ensure that the strengths identified are enhanced and sustained in onder to mainta its competitive advantage. Same of the strengths that should be focused on are as shown below: STRENGTHS ‘Hiich Quality Products/Diverse Products Mix Starbucks Malaysia should ensure that all its baristas and employees receive adequate training on the job as they have many stores worldwide, The training plan should be standardized across all stores. This is especially important as Starbucks allows customization of drinks. The quality should be the same across sites. A recertification rogram should be done annually to evaluate and maintain the skills of all their employees. Location of Stores While sclevting stategit locations ty set up theit new outlets, the maagenent cant consider the top 20 highly populated areas. Within this area, the management can zoom into locations where people in the age group of 15 to 64 are located. This will help to ensure good return on investments (ROI), Use of Technology and Mobile Outlets & Customer Base Loyalty More people settle their bills and shopping online, Starbucks should ensure that all the bugs in their mobile apps are regularly monitored and fixed to ensure that customer satisfaction is not affected, The features in the mobile apps must be enhanced and upgraded according to the latest trends to keep customers interested. The Starbucks Rewards program should be integrated into the mobile apps. 20 SWOT ANALYSIS - WEAKNESSES ‘ Premium pricing -aimcuty ©) (+ Mustmantaln vgn control penetrate developing countries ‘on labour practices and ‘customers may tend to opt for responsibilty ‘heaper competion’ products uch a¢ 01 Town cotee nd Medonales Expensive products fo Opportunity Analysis and Identification WEAKNESSES 1. Competitive Pricing During Economy Sluggishness In onder to retain customers and avoid them from selecting cheaper options, Starbucks can introduce a variety of set menus (price bundling). Customers will be able to get cheaper prices if they purchase a set meal compared to individual purchases, 2. Negative large corporation image By treating their employees as their partners, Starbucks has done well in terms of good labour practices. Starbuck: har also contributed to the community through their Corporate Social Responsibility Programs. Starbucks need to sustain and increase these actions. Besides that, Starbucks can display their halal certification to gain customer's 2 SWOT ANALYSIS - OPPORTU! ‘Starbucks App inteprted with 2 ‘mobile payment va ts partnartnip with Square, 9 ‘mabile payments app. ‘customers can order ane pay ‘without having fo queve (= vertring into tee and fit |ules wth a smart acquisition ‘ratgy sucha Teavana in 2012 ‘and Evolution fresh n 2011 Signieant opportunities to ‘capture new markets ccs ) oa eres es current its not convenient to purchase Starbucks packed Coles products In Malaysia + Can expands etal operations tomate he paied products ‘more acess to consumers Expansion of Retail Ceeernn Opportunity Analysis and Identification ‘introduced a beta version of a delvery system caled Mobile Pour + Can expand their product sdstotion system New Distribution ‘OPPORTUNITIES 1. Product Extension shifting towards healthier products. 2. Technological Advances guaranteed, Starbucks need to build up the tea and fresh juices product mixes along the same line of their core coffee products. This is due to the good growth opportunities as customers are Customers are now leading busy lifestyles and are always doing things online. ‘Therefore, it is important for Starbucks to constantly upgrade their app. If customers ean. order ahead, and collect their food or meal upon arriving, their satisfaction will be 2 3. Retail Operation/New Distribution Channels Another growth sector is its packaged coffee packets. Starbucks through its global coffee alliance with Nestle has introduced Starbucks At Home. This alliance will enable effective delivery of Starbucks Consumer Packaged Goods and Food Service coffee and tea products around the world, The products will also be available via Lazada and Nescafe Dolce Gusto’s webstore. (M.,2019) SWOT ANALYSIS - THREATS “yas reo main eompatere within coffee outlet industries (shi towarde heather produae) _( An annual training plan need to be set up for all Starbucks employees as 85% of customers say they enjoy the interaction with employees. The soft and hard skills of employees can be enhanced across stores. i Survey forms n be distributed regularly, and results analyzed to understand customer needs and changing trends. Starbucks can react to customer needs and retain them by taking appropriate action based on the feedback: > Key performance indicators such as speed of service and cleanliness can be established at every store with a target provided. Stores that are not performing well can be identified and improvement actions can be developed. 26 Resonance + Strong Brand recognition but easy toswiteh e.g. McDonalds + High attachment long relationships but donot buy frequently + High Customer Loyalty Feeling Socal approval sRelaxation sAccessible Sudgment ‘Cradinlity Global brand saricta *Aality: Premium brand ‘imagery (ProductServceimage) *Brand Personality - Modern lfestylef Trendy shu Place *Good Ambience *Sophisticated Performance Uniqueness: Design of Store Goad quality ingrediante varity of products Customization alowed Superior Service: Friendly ‘High recognition - Coffee! Environment) Premium Well enown brand Figure 6: Brand Equity Pyramid Brand equity refers to the value of customer's perception ofa brand, Starbucks has strong brand equity that is contributed by Starbuck's gobust set of branding building blocks. In tems of brand identity, Starbucks is known for its wide Variety! OF Specialy” GOfGE GFInKS that. satisfies customer's individual preferences in a eustomized way. Starbucks has strengthened its identity by being involved from the selection and purchase of coffee beans to its roasting and blending ntl its consumption. This translates to the brand image whereby Starbucks is always related to premium coffee. Besides that, Starbucks is perceived as an up-scale experience. The company owned coffee houses are viewed as “third place”- not work not home. The aroma of beans, premium tasting coffee, artwork and merchandize displayed, contemporary music in the background and the feel of cozy, clean tables and chairs all blend in to evoke the romance of coffee kntown as the Starbucks experience. Starbucks has been able to obtain a strong emotional brand response from its customers, Customers relate to social approval and premium coffee ‘when they think of Starbucks. Starbucks has created strong brand resonance as their customers are very loyal and frequently revi it Starbucks to have their favourite cup of coffee. This is 27 realized through Starbucks annual growth rate of sales and profits exceeding 50% throughout the 1990s (Keller 2003) However, Starbucks need to tke continuous and proactive marketing actions to reinforce its brand equity ‘* Strategies to Renew the Starbucks Brand Name Starbucks need to remove the general perception that competitor's cofve like McDonalds is comparable. Starbucks need to be more age ssive in their advertising campaigns. Instead of focusing on their merchandise, Starbucks should focus on their core product, which is coffee. Starbucks should diversify their advertising channels by usin; Internet, printed and visual media, Marketing actions must convey the brand meaning to customers through media advertising, promotions, event sponsorship and corporate social responsibility involvement. ‘© Product Differentiation Strategies Starbucks must continue product innovation and can consider glocalization to suit local tastes and experiences as Malaysians love their rice and noodle varieties. Extensive Re arch and development efforts can develop new flavours and blends. Novel product development will be a good advertising tool. 28 ‘LO MARKET SEGMENTATION ‘The market segmentation process idemtifies factors that allow dividing of the market into well- defined slices. Different marketing strategies can then be applied to meet the segments distinct needs and wants, The following is the market segmentation done for Starbucks Malaysia, 7.1 GEOGRAPHIC SEGMENTATION + The current population of Malaysia is 32,146,917 as of Sunday, December 22, 2019, based ‘on Worldometers elaboration of the latest United Nations data. The yearly population growth is 1.34%. The population density in Malaysia is 97 per Km? (252 people per mi’), 77.8 % of the population is urban (24,862,312 people in 2019), + The top 20 cities that is highly populated is as shown in the chart below. sngarean Sr sh Figure 7: Top 20 Highly Populated Cities Source: Department of Statistics Malaysia 29 Based on this chart, Starbucks can identify targeted locations to expand their stores. They can focus on the top 10 areas or top 20 areas that are highly populated, for example Kota Bhanu, Kuala Lumpur, Klang, Kampung Baru Subang, Johor Bahru, Subang Jaya, Ipoh, Kuching, Petaling Jaya and Shah Alam. New stores can be located at locations that are not saturated. 72 DEMOGRAPUIC SI Age and Generational Group ‘The chart below shows the population projected by broad age group in 2020. NTATION 5 years old and older: 7.2% 5. 55-64 years: 8.3% J, ei ves os 284% 15-24 years: 17.1 25-54 years: 43.9% Figure 8: Age and Generational Group Source: Department of Statistics Malaysia ‘The median age in Malaysia is 28.6 years. The highest age group is 25- 54 years who also happen to be the coffee drinkers age group. By matching the top 20 cities to the places where this age group is located, Starbucks can identify better locations to expand. Family and HouseholdiIncome!Social Class Household income is defined as the total income received or accrued by members of households. In 2016, there has been an increase by 6.6% per annum at nominal value for median household 30 income in Malaysia. The top 7 states that reported the highest median monthly income are W.P. Kuala Lumpur, W.P. Putrajaya, Selangor, WP. Labuan, Johor, Melaka and Pulau Pinang. ma = % rw 22 RR we Kata Lumpur ) ——— ern 75 MIN «————Seangor o* seed We Labuan > Johor 124 Melaka oS ists 72 MH Neer sembian a —| le 10s Sarawak oa 2 ent so RN Pahang 135 AM) Kedah fo — nom som «mmo Figure 9: Family and Household Income ‘Source: Department of Statistics Malaysia ‘The household expenditure survey done in 2016 shows that Malaysians firstly spend a major part of their income in housing, water, electricity, gas and other fuels. After satisfying these basic needs, they spend on food and nonPalCobole Beverages. This is favouruble towards the nature of business of Starbucks. 31 Transport fam Housing, water, electricity 2s bother fuels Figure 10: Spending Pattern Source: Department of Statistics Malaysia WE Labuan Puke Terengganu WEP Kuala Lump muse were rf Sembilan ue WE Putas Pahang Re 971 rua Perak aia “hod maar att Figure 11: Compounded Annual Growth Rate (2014 ~ 2016) (%) Source: Department of Statistics Malaysia 32 ;QUARTERS == _HOUSEHOLDS ate e 28 a amt tg prt then ecg Figure 19 Howcehold Statistics Source: Department of Statistics Malaysia ‘The number of houscholds inercased in 201 by 0.1 million respectively. The average household size remained at 4 persons in 2019. a ‘HOUSEHOLD GROUF = seanannnnna si iia susie dae rans ghRARRARARA JAARAAARAAR EE RARAARRAAA Hise, RARAAAAAAA SRR AR RR RAR R weer aa eaeeeeee taal rag BARRA AAA RA SS Figure 13> Median Monthly Inceme hy Household Group Source: Department of Statisties Malaysia 33 Based on the infographics above. we can conclude that most Malaysians full into the upper and idle class social class which makes luxury products affordable, Education ‘The number of employed persons with secondary education is the highest category both in 2017 and 2018, with a decline by only 0.2% in 2018 as compared to 2017. This is followed by the persons employed with tertiary education, which shows an increase by 0.5% 2018. This is also jghly educated employed persons in Mulysi. 2017 2018 Notoratedsenien vin centey Teri aw Figure 14: Education Level Statistics (2017 vs 2018) Favourable towards Starbucks a there are more @Orbo § Bees Orme Source: Department of Statistics Malaysia 7.3 PSYCHOGRAPHIC SEGMENTATION The psychographic segmentation relies on customer personality traits, lifestyle or values and can be used to provide a richer understanding of consumers. According to a survey done by Kisi. Kuala Lumpur has been ranked as the 4" overworked cities. ‘Therefore, Malaysians are expected to have poor work-life balance, spend longer hours in the office and do not exercise. They will be stressed and will look for avenues to relax their bodies and minds after a long day at work. 34 Top Overworked Citi Ra UL} om a preand Ewa Figure 15; Top Overworked Cities in the Ranking Source: hups:(hwww getkisi.com/work-life-balance Health In Malaysia, obesity has been reported as an increasing problem for the past 5 years by the National! Health and Morbidity Survey Malaysia (NHMS) 2011 and 2015 (NSM Nur, R Ambak, NM Zaki... - BMC ..., 2018) ones . —— sas g nas é 2 esas 200 8 s suayansysvegrre|es Age in Years Figure 16: Prevalence of Obesity among Malaysians. 35 Based on this chart. we can deduce that there might be two type of consumers. One that favours high calorie food and beverages and another group that might be actively taking steps to reduce their weight by reducing intake of high calorie food and beverases. Personality Experiencers Experiencers are consumers who are motivated by self-expression. They look for variety and stimulation which can be found in outdoor recreation, social activities and social media. 6.73% Figure 17: Soctal Media Stats in Malaysia ~ November 2019 Source: hiaps:ifgs statcounter comisocial-media-statsialtimalaysia In their latest Digital 2019 report. Hootsuite and We Are Social reported that Malaysia Was ranked the S® highest globally and in Southeast Asia for mobile social media penetration. Experiencers contributed to this statistic. Innovators Innovators are sophisticated, successful, work. in multinational companies and are westernized. ‘They have high self-esteem and can accept new ideas and technologies casily. Innovators are very active consumers. The purchases that they make reflect cultivated tastes for upscale products. As Malaysia has an increase in tertiary educated employees, this group of consumers do exist in the Malaysian market 7A BEHAVIOURIAL SEGMENTATION ‘This segmentation divides consumers into groups based on the similarities in benefits sought and usage pattern of products, 36 ‘Benefits Sought Needs and Benefits ~ PricesGood Deals Malaysians are price se itive buyers. They go through great lengths to get deals during shopping for items that they need. This should be noted by Starbucks when setting up marketing strategies. % of consumers wro strongly agree/agre 7 6 0 Thavea strict usually make aI gothrough alot of | take advantage of budgetfor point tolookat effort to buy my special offers or household

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