Professional Documents
Culture Documents
1. Introduction……………………………………………………………………………………Page 4
2. Situational Analysis……………………………………………………………………………Page 5-11
2.1. Market Overview……………………………….……………………….………………….Page 5
2.2. Lifecycle Stage………….…………………………….………………………………………Page 5
2.3. SWOT Analysis…………………………………………………………………………….….Page 6-7
2.4. Market Environment Analysis…………………………………….…………………..Page 8-11
2.4.1. Porter’s Five Force Analysis………..………………………………………………..Page 8-9
2.4.2. PESTLE Analysis……………………………………………………………………………Page 10-11
3.1. Segmentation………………………………………………………………………………….Page 11
3.2. Target Market Profile……...……………………………………………………….……..Page 12
3.3. Positioning……………………………………………………………………………………….Page 13
4.1. Marketing Objectives ………………………………………………………………………Page 14
4.2. Marketing Strategies………………………………………………………………………..Page 14-15
4.2.1. BCG Matrix…………………………………………………………………………………….Page 14
4.2.2. Ansoff Matrix…………………………………………………………………………………Page 14
4.2.3. Strategic Alliances………………………………………………………………………….Page 15
4.2.4. Porter’s Generic Strategy……………………………………………………………….Page 15
5. Implementation of Strategy………………………………………………………………...Page 16-19
5.1. Marketing Mix………………………………………………………………………………….Page 16-18
5.2. Branding ………………………………………………………………………………………….Page 196.
Suggestion & Control….……………………………………………………………………….Page 20
7. Conclusion…………………………………………………………………………………………..Page 21
8. Reference…………………………………………………………………………………………….Page 22-25
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1. Introduction:
Starbucks is one of the biggest company in the specialty coffee market in the world,
operating in 62 countries. It has been proven to be very successful in retail coffee market
due to its well-planned marketing strategy (Forbes.com, 2013). In order to achieve success,
Starbucks has utilised a strong strategic marketing plan.
Even though the very first objective of Starbucks is to make profits, the mere purpose of
Starbucks should be creating customers rather than focusing on making profits (Winer, 2007,
p6). Levitt (1986) also emphasized on keeping and creating customers. Customer based
strategy is also referred as marketing concept (Hooley et al, 2012, p29). Marketing is a
process of identifying, anticipating and satisfying customers’ requirements (Cim.co.uk, 2015).
Starbucks is also determined to establish themselves as a lovable brand among consumers
(Starbucks.com, 2015). Marketing plan of Starbucks is devised based on establishing
customer satisfaction.
Pride & Ferrell (2014) demonstrate marketing as more than advertising and selling; it is a
strategy of development and management of product that will satisfy needs of customers
(p5). Customers buy products for benefits that fulfil their needs (Winer, 2007, p12). A strong
strategic plan should include a set of strategies which will create desire for Starbucks
products among customers. Strategic marketing plan is not only focused on satisfying
customer’s needs. It should be able help identifying customers as well (Cim.co.uk, 2015).
By developing a strong strategic marketing plan, Starbucks will be able to improve profits and
sales performance (Cadogan, 2012). It will also allow Starbucks to understand about
competitors in the market using situational analysis and develop strategies to achieve
competitive advantage. According to Kotler et al (2012), a successful marketing plan allows
companies to understand, create and sustain customer-perceived value (p95). It also allows
companies to stand out in the market.
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2. Situational analysis:
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2.3 SWOT Analysis:
Starbucks SWOT has conducted by mainly analysing data from Starbucks.com (2015) and
Keynote .co.uk (2015).
Strength:
• Strong market position: Starbucks is the market leader in the retail
coffee industry. Sales are increasing every year in a steady rate.
• Global brand recognition: Starbucks is operating in 62 countries around
the world. Because of its wide geographical presence, Starbucks has
been voted 91st in the best global brands list 2013 (Geereddy, 2015).
• Enormous number of branches: Starbucks has huge number of branches
in the world. Density of branches are also very high. According to
Burkeman (2007), there are around 164 Starbucks branches in a 5 miles
radius in London. Most of the branches are placed in prime location.
• Diversified product list: Starbucks product portfolio is very extensive
ranging from coffee, tea, ready-made meals and etc.
• Loyal customers.
• Technology and environmental friendly attitude: Starbucks has
developed a mobile applications and cards for rewards for its users. It is
also famous for its community works for both suppliers and customers.
Weakness:
• Negative image issue: It has recently been scrutinised for skipping tax in
the UK (Smale,2015).
• Overcrowded product portfolio: Starbucks has a very large and complex
number of products. It spends a lot of resources in developing new
products every year.
• Premium priced products.
• Dependence on coffee industry.
• Complex global management.
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Opportunities:
• Coffee industry is expanding globally.
• Scope of emerging markets: New emerging countries such as India and
Brazil could become a market (Lynn et al, 2011).
• Expansion of product offerings in online and supermarkets.
• Brand extension: Starbucks brand portfolio could be expanded in other
markets because it’s a widely known brand.
• Use of vending machines: By setting up more vending coffee pouring
machines, Starbucks can reduce costs and enhance their brand
representation.
• It can become a more socially responsible brand and establish strong
emotional connections.
Threats:
• Huge pressure from increased competition: Coffee industry is a very
competitive industry. Fast food companies like McDonalds and Subway
have started exploring this market.
• Fluctuation in US economy can cause damage in a great extent because
Starbucks is dependent on US sales.
• Change in people’s lifestyle: People are becoming more aware about
sugar and calories they consume (Ruhs, 2012).
• Warm weather: There is a huge increase in temperatures around the
world. If it becomes too hot, consumers are less likely to consume coffee.
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2.4 Market Environment Analysis:
In order to survive in the competitive market, Starbucks must analyse its marketing
environment (Kotler et al, 2012; p174). Marketing environment is divided into two sections
such as micro environment and macro environment. Immediate surroundings of a company
is called micro environment. It consists of customers, competitors, suppliers and distributors.
Macro environmental factors can be analysed using Porter’s five forces model. On the other
hand, macro environment consists of external elements such as political, environmental,
social, technological, ecological and legal factors. These can be analysed using PESTLE
analysis
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o Tea is the main substitutes of coffee. Caffeine
Threat of drinks, fruit juice, water and soda drinks are also
prime substitutes.
Substitutes: o Instant coffee products.
Low
o Huge number of competitors in retail coffee
industry.
Intensity of o Main competitors are major organisations such as
Costa, McDonald’s are also doing global business.
Competitive o McDonald’s coffee is relatively cheap (Kurtz, 2012).
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2.4.2. PESTLE Analysis:
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❖ Introduction of new laws on consumption of
caffeine related drinks.
Legal: ❖ Laws in operating countries can differentiate.
❖ Increase in National minimum wages of staffs.
3.1. Segmentation:
According to Weinstein (2004), segmentation is an integral part of developing a successful
marketing strategy. It is referred as the process of segmenting market into distinct group
with homogeneous interests (Bose, 2012, p114). It is essential to divide market into
segments because ‘understanding how buyers needs and wants vary is essential in designing
effective marketing strategies’ (Cravens & Piercy, 2013).
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➢ Gender: Both male and female.
➢ Income Group: ABC1.
➢ Education: Graduates.
➢ Occupation: Higher managerial, intermediate managerial, supervisory or clerical and
junior managerial.
➢ Social Class: Upper middle, middle and lower middle class.
3.3. Positioning:
Positioning is described as the marketing programmes that are developed based on the
appropriateness of targeted segments (Venter et al, 2015). According Kotler et al (2012,
p396), the goal of positioning is to ‘establish the brand in the mind of consumers in order to
maximise the potential benefits to the firm’.
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Figure 2: Positioning map of retail coffee market (Kotler et al, 2012, p405)
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4.2. Marketing Strategies:
4.2.1. BCG Matrix:
BCG Matrix permits companies to maintain its portfolio by acknowledging the relative
market share position and industry market growth (Armstrong & Kotler, 2003). The BCG
Matrix identifies 4 cells such as Question Marks, Stars, Cash Cows and Dogs (Wilson &
Gilligan, 1998, p312). 'Stars represent units with high market shares in high-growth market'
(Kurtz, 2012).
According to Starbucks.com (2015), business of Starbucks has been increasing in a high rate.
So it can be determined that it has a high position in sales growth rate. Coffee industry is
also increasing in a high rate every year (Keynote.co.uk, 2014). As Starbucks is in Star
position, it will need to invest heavily (Wilson & Gilligan, 1998).
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5. Implementation of Strategies:
Product:
Starbucks has a wide product list to fulfil the needs of its buyers.
✓ Coffee related drinks are the main products of Starbucks. Starbucks is keeping its
core in coffee industry due to the growth of coffee industry.
✓ It is selling not only hot drinks but also cold drinks to be able to make money in
summer and warm weather condition.
✓ By adding sandwiches, Panini, biscuits, pastries and etc. to its product line, Starbucks
has been able to bulk sales.
✓ Salads are being sold for healthy lifestyle lovers.
✓ Syrups are being added instead of sugars to encourage people to believe Starbucks
products as low calorie products.
✓ In order to compete with instant coffee products, Starbucks has developed their own
instant coffee products range.
✓ Starbucks has made alliances with different supermarkets to produce products for
them. For example, Starbucks's cold coffees are sold in supermarkets.
Price:
✓ Price is kept high to keep itself as a 'high quality' brand in consumers mind.
✓ But price is not higher than main competitors to keep switching cost to low level.
✓ Different sizes are used to accommodate customers’ needs. Tall, Grande and small
are priced differently to meet customers’ budgets.
Place:
✓ Starbucks is expanding its business globally to increase sales, covering 62 countries.
There are over 21,000 stores of Starbucks around the world. In 2013, Starbucks has
established 1599 new stores (Statista.com, 2015).
✓ It formed alliances with other local shops to integrate with them by setting up
machines. For eg. Starbucks alliances with University of Chester.
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✓ It has positioned its stores in 'high-traffic' areas to attract consumers.
✓ Stores are placed in clusters to achieve maximum brand awareness (Burkeman,
2007).
Promotion:
✓ It's more focused on building relationships with consumers rather than heavy
advertising. It is merely dependent on 'word of mouth'.
✓ Starbucks takes CSR very strongly. They have developed numerous number of
community projects to establish themselves as a socially responsible brand.
✓ Starbucks cards are introduced to retain loyal customers.
✓ Starbucks uses 'social-media' as platforms to promote its new products because it
has huge popularity there (Boychenko, 2012).
People:
✓ It has positioned itself as a 'friendly' brand by providing high quality customer
service.
✓ Staffs are given training to provide quality service.
✓ A lot of welfare programmes are utilised to improve and encourage workforce.
Process:
✓ Starbucks's staffs write consumers name on products which builds a stronger
relationship with consumers.
✓ There is a little waiting time but consumers are always kept informed.
✓ System is developed for convenience of consumers.
✓ 'My Starbucks Idea' has been introduced to get customer feedbacks and supports.
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Physical Evidence:
✓ Starbucks has used colour green in their identity to promote itself as environmental
friendly.
✓ It uses modern architectural design to present its stores.
✓ It provides all kinds of information about its products and business through
Starbucks.com.
✓ Most of its products are sold through stores.
✓ Starbucks designs it stores in a way to make people enjoy coffee. For example, it uses
to ambience music in stores.
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6. Suggestion & Control:
Even though business of Starbucks is growing, there are some steps can be taken to improve
effectiveness of marketing plan. Below they are explained;
• Starbucks is investing very little amount of money in advertising and promotions. It
will have to allocate more budget in advertising to gain competitive advantage (Crain,
2011).
• By extending its product range to fruit drinks, Starbucks can achieve higher sales
rates (Gerreddy, 2015).
• It can use focused differentiation technique to approach the market rather than
using differentiation technique (Shaw, 2012). Latif et al (2014) also says that,
Starbucks could gain more success if they provide economical products.
• 50% of income of Starbucks comes from the sales in U.S.A., it needs to focus on
emerging markets. ‘China, India and Brazil are expected to be among the world's
largest economies by the year 2050’ (Lynn et al, 2011). If Starbucks do not focus
more on emerging markets, it will have to lose business.
• By providing healthy alternatives of their products, Starbucks will be able to react to
current trends. According to Ruhs (2012) ‘heart-healthy or gluten-free products can
significantly impact sales’.
• It is very essential to become a socially responsible brand by using CSR techniques.
Because it will allow Starbucks to achieve competitive advantage (Wang & Anderson,
2011). More involvement with communities especially at University and college could
create a strong effect.
• Forming alliances with smaller shops to provide Starbucks branded coffee and other
products could leads to high increase in sales (Kotler et al, 2012).
• Targeting new segments such as teens could be crucial in developing a better
strategy for future (Latif et al, 2014).
• Starbucks is already famous for providing free ‘Wi-Fi’ at stores as added benefits in
stores (Fitzgerald, 2013). It can add new services such as ‘Library’ and ‘entertainment
stores’ using their mobile app to add benefits for their customers.
7. Conclusion:
Smale (2015) has argued that sales of Starbucks are going to go down because of low level of
differentiation with competitors. To sustain its situation, Starbucks will need to plan ahead. It
will need to plan marketing activity by analysing environments (Pettitt & Brassington, 2003).
In terms of planning, Starbucks must keep in mind to be customer-focused to create value
for its target market (Cravens & Piercy, 2013). It is also necessary to make control if it’s
needed to meet trends and environments (Hooley et al 2012). If they can apply strategies
effectively, they will become a very successful company (Kotler et al, 2012).
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