An Overview of Starbucks

Starbucks is the world’s largest American coffeehouse chain that operates

in 31,256 stores worldwide. It was founded in Seattle, Washington in 1971.

With the invigorating vision of Howard Schultz (current Executive Chairman), it became
more than a coffeehouse, a third place between work and home. Kevin Johnson is the
current CEO of Starbucks.

SWOT analysis of Starbucks

The SWOT analysis of Starbucks is as follows:

Starbucks Strengths – Internal Strategic

Factors
1. Strong brand image – Starbucks Corporation is the most popular and strongest
brand in the food and beverage industry. Its size, volume, and the number of loyal
customers have kept growing over time. It has  a brand value of $11.7 Billion as per
2019 Interbrand ranking. 
2. Strong financial performance – With an annual revenue of $26.5 billion and profit
of $3.6 Billion in fiscal year 2019, Starbucks has a strong financial position in the
market.
3. Growth in stores:  It increased its number of stores from 1,886 to 31,256 between
1998 and 2019.
4. Extensive international supply chain – Starbucks is known to have an extensive
global network of suppliers. Starbucks sources its coffee beans from three coffee
producing regions, Latin-America, Africa, and Asia-Pacific. 
5. Acquisitions – Company has acquired top 6 companies including Seattle’s Best
Coffee, Teavana, Tazo, Evolution Fresh, Torrefazione Italia Coffee, and Ethos
Water. These acquisitions have proven quite successful for Starbucks.
6. Moderate diversification – Starbucks has also diversified its business operations
by introducing innovative merchandises and food items. One such example is the
addition of ice cubes made of Coffee which results in a stronger Coffee flavor.
7. Quality, Taste and Standardization – Due to its premium blends and delicious
coffees, Starbucks has extended globally. It offers excellent quality and consistently
standardized products in all the locations.
8. Efficiency, Strategic Planning, and Reinvestment Strategy – Starbucks reinvests
its profits in expanding its business in different locations. Its efficient operations
and well-planned strategic decisions have produced many advantages for the
company.
 9. Employee treatment –It treats its employees very well which eventually translates
into happier employees serving customers well. Starbucks has been consistently
listed as one of the Fortune’s Top 100 Places to Work for.
10. Strong Loyalty Program – Starbucks has a great reward program that keeps
customers addicted to its coffee. For every $1, you get 3 stars ($1 = 3 stars). When
you collect 150 stars, you get a free drink (150 stars = 1 free drink). In addition,
reward members get the convenience of mobile payment, pre-order, free birthday
drinks, etc.
11. Gender Neutral Restrooms – Starbucks has introduced gender-neutral restrooms
to protect Lesbian, gay, bisexual, and transgender (LGBT) community against
discrimination. It is in response to Anti-LGBTQ bills that discriminate against
specially transgender people. 

Starbucks Weaknesses – Internal Strategic

Factors
1. High prices – For many middle tiers and working consumers, Starbucks’ offerings
are more costly than McDonald’s and other coffee outlets. Its high prices reduce
affordability for the consumers.
2. Imitability of products – Starbucks doesn’t own the most unique products in the
market. This makes the imitability of products quite easy for other companies. Other
coffee shops and food chains like McDonalds McCafe and Dunkin Donuts offer
almost the same products.
3. Generalized standards for most products – Some of its product offerings are not
aligned with the cultural standards of other markets. For example, in some areas, its
crafted beverages do not associate with the consumer preferences.
 4. European Tax avoidance – Due to its tax avoidance in the UK, it faced several
controversies and criticisms. Reuters’ investigation found out that it didn’t pay tax on
its £1.3 billion of sales in three years prior to 2012.
5. Procurement Practices – Many social and environmental activists criticized the
company for their unethical procurement practices. They claimed that it procures
coffee beans from impoverished third world farmers. It has also been accused of
violating “Fair Coffee Trade” principles.
6. Recall of Products – Over the years Starbucks has recalled a lot of in-demand
products. This can negatively affect the brand image of the company and lead to
the loss of customer base.

In March 2016, Starbucks recalled two products. One was the sausage, egg, and cheddar
breakfast sandwich and the other was cheese and fruit bistro box. The reason for recalling
these products was the threat of contamination and allergens.

During routine testing, it was revealed that the facility that manufactured the breakfast
sandwiches had the presence of Listeria Monocytogenes on the contact surface.

The 250 stores in Arkansas, Texas, and Oklahoma that showcased these sandwiches had
to remove them. The cheese and fruit bistro box was recalled because it contained
the almonds found in the box contained traces of undeclared cashew nuts.

There was no warning label that highlighted the presence of cashew nuts. This could be
potentially life-threatening for people with cashew allergies.

Starbucks Opportunities – External

Strategic Factors
1. Expansion in developing markets – Starbucks has coffeehouses mainly in the US.
Global expansion in emerging economies such as India, China and few regions of
Africa can give a great opportunity to the company.
2. Business diversification and Products Specifications – It can further diversify its
business operations to improve overall revenue growth opportunities. Besides,
developing products as per the customer preferences in the specific target market is
also a profitable opportunity.
3. Introducing new products – As the company is quite popular, introducing new
products and holiday flavors (Peppermint Mocha, Eggnog Latte, Gingerbread Loaf)
under its name would be profitable and welcomed in the markets.
4. Partnerships or alliances with other firms – Co-branding always benefits.
Starbucks has the opportunity to develop partnerships and alliances with major firms.
This would strengthen its presence and market share.
5. Exploit Latest Coffee Trends and Technologies – Although Starbucks is at the
forefront of cutting-edge coffee technology, there is still room for expansion.
From best foam technology to snap-chilling, back to black, and RSI-reducing gizmos,
there are endless possibilities offered by the latest coffee trends and technologies.
 6. Adopt Price Differentiation – Some coffee houses are growing their customer base
rapidly by offering regular and premium coffee to cater to different classes.
Starbucks can offer regular coffee that is priced lower to capture the middle-class
while serving its expensive variety as premium. 
7. Strengthen Online Channels – The pandemic has discouraged in-store
consumption with more coffee drinkers opting for take-away. Starbucks can
strengthen its online sales channels to attract more customers to pick their
coffee curbside or in pickup locations.  
8. Coffee Delivery Service – Currently, customers rely on Uber Eats, Grubhub, and
Postmates for its Starbucks coffee delivery. Starbucks can start its own coffee
delivery service for better customer experience.
9. Coffee Subscription – Panera bread has already started coffee subscription
service. Starbucks can also try new coffee subscription business model to expand its
customer base.  

Starbucks Threats – External Strategic

Factors
1. Competition with low-cost coffee sellers – Many coffeehouses offer products at
an affordable rate. This can threaten the future’s stability of Starbucks which offers
higher prices.
2. Competition with big outlets – Aggressive competition with multinational
companies like Dunkin Donuts and McDonald’s can also pose a threat to its market
position.
3. Imitation – Products can be imitated by both new and old rivals.
4. Third-party Delivery Suppliers (union) Strike– Starbucks’ supply chain consists of
many third-party contractors and stakeholders, which makes it difficult to manage the
entire chain effectively. In 2019, Starbucks coffee houses in the Mid-West grappled
with shortages after employees of a major supplier went on strike.
5. Independent coffeehouse movements – There are many sociocultural threats for
Starbucks. These sociocultural movements support small independent and local
coffeehouse and oppose the expansion of large multinational chains.
6. Controversy on California warning rule – A California judge ruled Starbucks and
other companies in March 2018 to provide warning labels on all their coffee
products. This was about preventing a violation from chemical use that may cause
cancer.
7. Philadelphia arrests – April 2018, two African-American men were arrested at
Starbucks that caused quite a controversy on social media against Starbucks.
Starbucks employees refused them to use the restroom because they didn’t
purchase anything. The CEO Kevin Johnson issued an apology to both men
eventually.
8. Coronavirus – Starbucks has temporarily closed estimated 2000 stores in China
due to the outbreak of coronavirus. Considering Starbucks has 4123 stores in China,
and almost half the stores are closed, it will have negative impact on
their financials in 2020.  
 9. Global Recession – Experts are predicting the ongoing recession would be worse
than previous economic downturns. Starbucks’ revenue has already dropped.
Compared to last year, the revenue of the fiscal year 2020 in quarter 2 is down by
5%, and quarter 3 is down by 38% due to pandemic. 
10. Rising Prices of Raw Coffee Beans – the price of raw coffee beans – Arabica, the
world’s most-produced coffee (representing over 60% of the world’s production), has
increased drastically during the pandemic due to concerns over its availability,
hoarding, and supply chain disruption. Any additional dollar channeled to purchase
raw coffee beans at an increased price reduces Starbucks’ profitability.   

SWOT analysis of Starbucks

Recommendations
Starbucks needs to bring some improvements and advancements in the company to keep
its market position stable and strong.

For this, few recommendations are given below:

 1. Introduce diversification in products and services offerings. This will help
strengthen their position.
2. Bring innovation and technological advancements in the company to deal with the
rising competition and imitation.
3. Resolve the issues with the social activists that oppose international market
players.
4. Reduce prices of the products to attract more customers and increase the
affordability for all classes of consumers.
5. Implement creative marketing campaigns, promotional activities, and branding
strategies.
6. Contribute to community development, participate in Corporate Social
Responsibility (CSR), and sustainability practices.

PESTLE Analysis of Starbucks

Introduction

The macroeconomic environment that Starbucks operates in is characterized by the ongoing global
economic recession, which has dented the purchasing power of the consumers. However, market
research done in the last few months has indicated that consumers have not cut down on their
coffee consumption and instead, are shifting to lower priced options. This means that Starbucks can
still leverage the buying power of the consumers in a manner that would give it a significant
advantage over its rivals by offering cheaper alternatives. Apart from this, Starbucks has already
made some moves to jump on the emerging mobile computing revolution by tying up with Apple to
introduce discounted coupons in the apps used in the iPhones. Further, this exercise has also been
accompanied by co-branding and cross selling which means, that Starbucks is well placed and
poised to reap the benefits of the Smartphone revolution. Having said that, it must be noted that
consumers in the United States are increasingly turning “Ethical Chic” which means that the products
they buy and the brands they consume need to prove that they are following social and
environmental norms in their manufacture. This is the key challenge that Starbucks faces as it
confronts the emerging challenges of the new era of consumer awareness and the galloping
Smartphone revolution.

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.

Conclusion

The preceding analysis proves the point that Starbucks is operating in a relatively stable external
environment. The main reason for this is the fact that it operates in the Food and Beverages space
which means that despite the recession, consumers cut down on the consumption to a certain
extent and not completely. Therefore, the task before Starbucks is to lower costs and increase the
value so that it retains its consumer base and attracts consumer loyalty.

Starbucks’ Social Media Strategy

Most people are familiar with Starbucks on social media. The company’s
many social media accounts are known for their distinctive branding, interactive
posts, and visually pleasing content. The diverse range of content includes
recipes, photography, articles and features. But there’s more than meets the eye.
The stream of content can be broken down into a series of campaigns geared at
creating a greater sense of brand awareness and community. 

Product-based campaigns
Starbucks  focuses on promoting unique and fan-favorite beverages . The brand
knows how popular their flagship items are, but more importantly, they know
their audience craves this kind of content. They’ve even created social accounts
for the Pumpkin Spiced Latte and Frappuccino, where they push relevant and
relatable memes to their die-hard audience. This is also where user-generated
content (UGC) comes in. Consumer images of the more Instagrammable
products, such as the Unicorn Frappuccino, are often selected to be re-shared via
the official channels and also used in influencer campaigns.
 Corporate responsibility-based campaigns
Starbucks uses social change as a marketing tool, positioning themselves as
open-minded and inclusive. The #ExtraShotOfPride campaigns support the
LGBT+ community & the #ExtraShotOfGood campaign is continuous in
various community support that the brand engages in. The brand often shows
the results of its “ethical growing” ethos, thanking consumers for taking part
and strengthening their bond with the brand.

Community-based campaigns
Another facet of Starbucks’ digital strategy is its emphasis on highlighting
individuals and communities. Take a look at the #RedCupArt campaign, which
not only increases engagement, but also provides them with a library of UGC
content. Their Upstanders video series uses storytelling to show acts of courage
and kindness in American communities, localizing the content. And
their Starbucks Stories account highlights various employees of Starbucks and
humanizes the corporation, which is very important in a time when consumers
are distrustful of big brands. 

This sense of community also makes online coffee content social, much like
how they practically invented the modern coffeehouse back in the day.  Outside
of campaigns, they show numerous images on their platforms of friends and
family enjoying drinks of Starbucks coffee together, interspersed with high-
quality content that promotes seasonal products. By doing this, Starbucks has
integrated itself into your social life. 

Note that Starbucks is taking this community-based approach worldwide, too.

 Starbucks’ Mobile App

Aside from their savvy social media presence, Starbucks also launched a wildly
successful mobile app, which allows customers to order ahead, win points, and
get rewards, further incentivizing brand loyalty. In addition to physical rewards,
the brand made drinking coffee a social/gaming activity, giving out relational
benefits for being part of their coffee culture. 

The app was the perfect addition to Starbucks’ marketing strategy and remains
the biggest, most recent addition to Starbucks’ arsenal of digital marketing
strategy tools.

Learning From Starbucks

Not everyone can build their own app, or manage multiple social platforms
successfully. Your digital marketing strategy will, of course, depend on your
company’s budget, resources, and audience. 

Starbucks — an international conglomerate with an audience of millions of

caffeine lovers worldwide — is not your average business. However, there’s a
lot we can learn from the coffee giant.

Starbucks’ digital marketing strategy was carefully designed to forge a deeper

connection with their customers, one that goes beyond mere “coffee.” At the
heart of their strategy is their audience’s wants and needs. Whether it’s allowing
customers to skip long lines, or creating an adorable #Puppuccino hashtag
people can follow, they give their audience more of what they already love —
specialty coffee, convenience and community. 

The One Page Marketing Plan

Since I first created the One Page Marketing Plan template, many people have
asked me to provide a marketing plan example so they can see it in action. So
here it is! The One Page Marketing Plan takes the core components of an
effective marketing plan and condenses them onto a single page. This is
intentional as it forces you to focus on what matters; what are the essential
elements that will make a difference and move the needle. It focuses, clarifies,
and simplifies your marketing planning and actions.

Starbucks Marketing Plan

For the purposes of demonstrating how to build and populate the One Page
Marketing Plan, I've taken Starbucks as a case study. I chose Starbucks as it's a
brand that everyone's familiar with, whilst having many different aspects that
can be used to show the applicability and scope of the One Page Marketing
Plan. I've based this marketing plan example on a real-life brand and used
insights that I've gathered from researching Starbucks' activities and agenda,
yet I want to be clear and transparent that this is not Starbucks' actual plan and
is in no way associated with the company itself in any capacity. I'm merely
using them for inspiration and to illustrate the One Page Marketing Plan in
action. That said, I've tried to make it as representative as possible, with my
own take and ideas for what they should be focussing on and doing.
So, with that in mind, here's Starbucks' One Page Marketing Plan:
As I've constructed this marketing plan example using Starbucks, I've looked at
the brand from a global perspective. I haven't dived in to consider
opportunities at either a regional or local level; for example, one of their major
focus areas is developing the business in China where they've seen significant
growth in the last year. Although further expansion in this territory is a
strategic goal for Starbucks, for the purposes of this illustration I haven't
included it.
As I'm using this as a case study, it's worth reviewing and outlining how and
why I've entered the information in the template as I have, so you can thereby
get a feel for how to build your own One Page Marketing Plans:
Audience
Starbucks themselves have a very clear understanding of their overall
audience, but crucially, also a focussed view on who it is that they're
specifically targeting. As I outlined the Audience pillar within the plan, I
therefore used a lot of inputs from profiles that Starbucks had already built.
This gives a great foundation and grounding for the rest of the plan.
Target Persona
I was able to build a very rich persona from the information available including
not only demographic and sociographic profiles, but also pyschographic,
behavioural, and technographic. This gives a rounded and actionable view of
the target customer which directs a lot of the later thinking. In completing the
One Page Marketing Plan, it's about filtering and condensing all of the
information into the salient and relevant points. You'll also note that I added an
image - the great thing about the One Page Marketing Plan is that you can add
visual references as well - this is a terrific way to bring it to life, making it more
engaging and consumable for your internal and external audiences.
Customer Journey
Starbucks have a very detailed customer journey map that they've created -
the discipline here, therefore, is to represent that in a way which summarises
the outputs, and informs the overall plan. I've concentrated on the key stages
of the customer journey, as well as specific customer touch points that will
later guide our thinking around the marketing channels and tactics & activities
that we intend to use.
Value Proposition
The value proposition talks directly to the value that Starbucks are providing to
their target persona of urbanites: a 'Third Place' outside of their home or work
where they can escape and enjoy great quality coffee in a unique, relaxing, and
friendly atmosphere. In this respect it's both a specific and compelling
statement that encapsulates Starbucks' core offering and differentiators.
Strategies
Having defined, profiled, and understood Starbucks' target audience, I was
then able to build out the marketing strategies to engage, motivate, and
mobilise them to the achievement of Starbucks' business and marketing goals.
Again, I used insights from looking at the available reports, interviews, and
commentary that I could find; but I've then embellished these and added in my
own interpretations and perspectives on what I think Starbucks should focus
on and do.
Marketing Goals
In defining Starbucks' marketing goals, I've leaned heavily on their wider
business goals given that I'm building a global, top-down plan. The defined
marketing goals fall into the purview of marketing, although there will be a
number of different stakeholders and parties involved in their achievement.
This should always be a given - the days of silos are gone! I've also
concentrated on what Starbucks are looking to achieve in 2018, rather than a
shorter or longer-term perspective. Starbucks work to an annual planning
cycle, so it's important that the marketing plan is aligned and ties directly into
where the business is headed. From an operational point-of-view, the goals
should then be broken backwards into small 'sprints' so that actions can be
taken and the results monitored and optimised in the short-term. The ultimate
aim is to get to the 2018 goals, but this approach gives much more scope and
speed to course correct when things aren't working or moving in the right
direction.
Key Strategies
This is where we start getting meaty! The key strategies are the broad
approaches and methods that Starbucks will apply to achieve their marketing
goals. Essentially, it's how they're going to win. These are broader and at a
higher level than the subsequent tactics and activities that will then be applied.
The former begets the latter. The key strategies talk directly to the marketing
goals by outlining how they'll be accomplished.
Pricing & Positioning
In the pricing & positioning section I've outlined the broad pricing policy that I
see Starbucks will want to maintain; that they hold a price premium versus
their competitive set. I've then gone on to identify the specific areas where
they're positioning the brand in direct relation to their competitive set: un-
touchable service, superior convenience, and shared community. These pillars
will lead to the following tactics & activities, as well as competitive messaging
that will consequently be developed. 
Activities
The activities stem from the outlined strategies; they are what will actually be
executed and delivered as part of this marketing program. The activities
highlighted provide a high-level view of the plan; each element would then be
worked up separately with a campaign delivery plan.
Marketing Channels
These are directly informed by the customer journey detailed within the
audience pillar. Based on the touch points that were identified earlier, we can
look to where and how we can best engage with the Starbucks target persona
and start to inject into their decision making process. These are the vehicles
and platforms that Starbucks will use to get their content and message to the
audience. As we develop and iterate the plan, it's important to test these
channels to understand where we're gaining ROI, and where we need to pull
back. This optimisation occurs at both a broad channel mix level, as well as the
specific vehicles used (publications, sites, formats, etc.).
Tactics & Activities
This section gives a high-level perspective on the different marketing programs
and campaigns that Starbucks will put into play. They are devised from all of
the previous inputs;  they make real the strategies that were prescribed
directed to the target persona. In this case, they represent the six priority
activities that should be focused on by the Starbucks team. Anything outside
of these then needs to be justified as to why it should be taking up resources
in terms of time, energy, money, and people. Clearly, there's a lot of detail
behind each of these tactics & activities as to how they'll be executed - one
way to do this is to create separate One Page Marketing Plan docs to scope
out the requirements for each activity as a campaign plan.
Measures of Success
These are the key performance indicators that will be monitored over the
course of the plan representing the primary metrics that drive action and
outcomes. They directly relate back to our marketing goals at a strategic level.
For each measure of success, we need to build a baseline so we can align
actions and events to understand what activities are driving either positive or
negative movements. In this way we can guide the plan to concentrate on the
areas that are producing results. Where activities aren't moving the needle we
need to look at how we can improve or remove from the plan.
Working With The Document
The One Page Marketing Plan is intended to offer a clear and consumable
overview of a company's or brand's marketing plan. It's beauty is in its
simplicity whilst also providing a comprehensive picture of the complete plan.
It's designed so that it can be easily shared, interpreted, and collaborated on
with other stakeholders, partners and agencies.
There is going to be more detail behind it, for instance when it comes to
building out specific plans for the tactics & activities, but the One Page
Marketing Plan gives you the overall view that you can constantly refer to and
use as a reference on an ongoing basis. It contains the fundamental thinking
and plans at a high level that lead to and guide the detail of what you're
actually going to do.
It isn't intended to be one-off exercise. The One Page Marketing Plan is a tool
that should be constantly referred to, reviewed, iterated, and optimised. As
you develop and build your marketing program you should be constantly
learning. How can you better understand the customer? How can you add
more value? How can you create greater impact, standout, and resonance?
How can you improve and do things better? Through a continual process of
design > implement > learn > re-design you can build a more effective and
efficient plan that will meet your goals quicker, and in a more comprehensive
fashion.