BSB126 Marketing Plan PDF

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BSB 126 MARKETING PLAN

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I. SITUATION ANALYSIS Starbucks has received positive feedback from the majority of countries it has set the benchmark for in coffee-shop chains throughout the years, and evidently so with over 27,000 operating stores worldwide (Statista, 2018). However, according to Paul G. Patterson (2010, p.45), a once well-received globalisation marketing strategy with American style roasting techniques however, was not as popular with Australian consumers as originally expected. This then resulted in the closing of more than half the Australian chains in an attempt to salvage profits, but in doing so it further diminished Australia’s respect towards the company (UNSW, 2010, para. 1). The Australian coffee industry has become a complex and extremely competitive market. Multiple competitors catering for individual needs in addition to the low reputation Australia has branded Starbucks (see SWOT for details) makes it a challenge to redeem the otherwise billion-dollar successful business (Marketwatch, 2018). Yet there is still a chance, with a significant marketing budget and evidence of success overseas, there is an opportunity for the brand to improve its rapport with the increasing demand for coffee through alternative strategies to win over consumers. Australian consumers have been spoilt for choice with a plethora of Italian-style coffee shops that offer experienced staff and an appealing environment. Considering the coffee-shop market has been oversaturated with independent cafes making the bulk of profits, Starbucks needs to look to alternative methods that consider the typical time-poor Australian. This focuses on the social macroenvironmental factor as customer wants and needs such as taking into account convenience, speed, efficiency and new trends need to be at the forefront of the new marketing scheme. Technology is ever-increasing, and the coffee industry is no exception to the trend- with 44% of workers claiming to have purchased their own coffee machines (Harris, A. 2015), and 500,000 capsule machines being sold annually (Harris, A. 2015). There is evidently a demand for a more convenient approach to getting the ritual caffeine hit, which is why Starbucks should focus on a new target market and implement a new coffee pod capsule range that directly links to the mobile app.

II. MARKETING GOAL To improve Starbuck’s current situation with Australia, the focus of the marketing goal is to focus on its customer satisfaction by monitoring sales and aiming for a 10% increase in weekly sales by the next financial year.

III. MARKETING STRATEGY The overall market for coffee consumption consists of three groups- those who go out and drink their coffee leisurely in an environment where the coffee suits the unique Australian culture, people who purchase coffee whilst travelling (for example, to/from workplace) and are often pressed for time, and those who make their coffee from home. Each group seeks different benefits from their consumption method; the first group seeking an enjoyable experience focusing on the quality of the beverage, the second group wanting speed of delivery, and the third focusing on the convenience and cost of making their own via avoiding the queue. These groups may occasionally overlap into another style of coffee consumption- for example, individuals who usually make their coffee from home may stop by at a café on their lunch breaks, which provides an opportunity for Starbucks to use a differentiated targeting strategy to appeal to both of the latter groups.

Specifically, the target profile consists of workers in the 25-35 age bracket. This is because the already existing chain stores are placed in high-traffic CBD areas, with the majority of workers passing by falling into the age range. Another reason is because the younger generations of Australia are heavily reliant on technology, with 30.7% (Statista, 2018) being the highest percentile of all consumer electric users falling within this demographic suggests that it is likely they already own a coffee machine. Despite the new product being sold in Supermarkets nationally, those who travel near the already existing cafes are more likely to go in-store and redeem their points, which will be an incentive for them to purchase the coffee pods again. Hence, workers falling within the 25-35 range near CBDs are the target profile.

Considering there is already more than enough small organic cafes around for the coffee supremist, it is logical for Starbucks to reapproach the market with a completely different appeal of offering a speed meets convenience method to target those who benefit more

from these aspects than an organic coffee as seen in the positioning map below. By selling Starbuck’s own coffee pods that are linked with the mobile app to collect points redeemable for in-store coffees and having the option for customers to pre-order their drinks through the app (thus increasing staff speed/efficiency with the reduction in manual POS entries), the value provided to the abovementioned segments increases.

IV. MARKETING TACTICS PRODUCT In order for the new product (coffee pods) to link into the mobile application to work, the packaging needs to clearly show the identifiable brand logo to avoid any confusion. As Starbucks have never introduced this sort of product to Australia before, it is essential that consumers are able to make a connection to the brand when purchasing their pods from supermarkets, otherwise the concept of integrating the app will fail, thus an unsuccessful marketing goal.

A barcode inside the packaging would make it easy for customers to scan and download their points straight onto their mobiles without needing to verify them in-store, this provides convenience and in doing so appeals to the “time-poor consumer”. When choosing aesthetics, earthy colours that tie in to the traditional Starbucks green and the use of eco-friendly materials for both the packaging and the capsules themselves will demonstrate to consumers that the brand are serious about their company values and will appeal more to the target audience than other cheaper brands sold in stores. As Starbuck items are usually only available in its own stores, the distributing of its new product in supermarkets may alter the brand identity. Considering Starbucks is usually associated with premium-priced coffees, consumers may perceive the new product as a luxury alternative to home-brands available and may be more inclined to spend the extra money as they can easily purchase the pods during their grocery shopping.

PRICE A competitive pricing strategy would be most beneficial for Starbucks entering the capsule market as there are already a number of brands on shelves. With home-brand prices averaging around $3.70 and the more luxury brands ranging from $5.00-$7.00 (Woolworths, 2018) for a packet of 10, a suitable price would be around the $4.50-$5.00 mark. Due to Starbucks having a high sales ratio from other countries, the firm can afford to look more toward a competitive pricing strategy to add incentive for consumers initially instead of a profit-orientated goal.

PLACE (DISTRIBUTION) For distribution, using the density of city populations as an advantage means Starbucks can adopt a selective distribution method of selling the product to larger grocery stores such as Coles and Woolworths over small convenience stores with less foot-traffic. The original method of distribution involved no “middle man”, with Starbucks selling direct to the public. However, there are beneficial aspects to using Australian Supermarkets as intermediaries, one being that consumer perception may differ by the disclosing of teaming up with national Australian businesses. Another aspect is that it means a further increase of brand exposure, with the opportunity for customers to shop both in-store and at supermarkets.

An extra method of being able to distribute the product more conveniently would be to add a tool to the Starbucks mobile app where customers can redeem their points collected from purchasing coffee pods and coffees to pre-order items and pick them up as they travel. This is a similar concept to businesses such as UberEATS where convenience and speed of ordering/delivering is effective and very popular amongst Australia and essentially takes the waiting in a store environment out of the picture (James Nguyen, 2017, para 4).

PROMOTION Objective Promotion of new Starbucks

Task- Advertising Used  Social media influencers

coffee capsules

Cost  From $500-$1000 per post

via Instagram app 

Mobile marketing:

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sponsored posts

Starbucks app (already Improve consumer



created) Billboard

perception of brand and

advertisements across

boost sales

Australian CBDs

30,000/ 1,000= 30

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$1,900 per billboard for one month

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20,000/ 1,900= 10 billboards available to advertise

Promoting using social media platforms such as Instagram best suits the target profile of younger people, with 59% of Instagram users aged 18-29 and 33% aged 30-49 (Statista, 2018), it is quickly becoming one of the main forms of advertisement to target younger demographics. According to Salman Aslam (2018), 2018 mobile advertising sales are expected to generate $5billion for companies through the use of social influencers.

Whilst billboard advertising still generates sales when using effective placement, the main source of engagement is expected to derive from social media as it enables seamless integration with direct links customers can click on to navigate to the company app- this is why a larger cut of the marketing budget has been allocated to online advertising. Billboard advertisements placed strategically near Supermarkets and the CBDs are still expected to increase foot-traffic and peak consumers interest in regard to the new product Starbucks has available.

V. REFERENCES 1. Aslam, S. (2018). Instagram by the numbers. Retrieved from https://www.omnicoreagency.com/instagram-statistics/ 2. Gamble, L. (2014) Consumers are willing to pay more for sustainable products. Retrieved from https://www.smh.com.au/lifestyle/consumers-are-willing-to-pay-more-forsustainable-products-20140706-zsumz.html 3. Garango, S. (2015). IBISWorld Industry Reports: Cafes and Coffee Shops in Australia. Retrieved from https://www.konacoffeefarmers.org/wpcontent/uploads/2015/05/Cafes-and-Coffee-Shops-in-Australia-Industry-Report-Apr2015.pdf 4. Harris, A. (2015). Coffee to go. Retrieved from https://www.dailytelegraph.com.au/news/nsw/coffee-to-go-more-aussies-own-coffeemachines-and-are-taking-lessons-to-make-their-own-home-brew/newsstory/321eee24e026bf5bb72d5dbf639497a4 5. Marketwatch (2018). Starbucks Corp. Retrieved from https://www.marketwatch.com/investing/stock/sbux/financials 6. Nielsen. (2015) Green Generation. Retrieved from http://www.nielsen.com/au/en/insights/news/2015/green-generation-millennials-saysustainability-is-a-shopping-priority.html 7. Nguyen, J. (2017). Why UberEATS is succeeding in Australia. Retrieved from https://www.forbes.com/sites/nguyenjames/2017/03/16/why-ubereats-is-changingaustralias-food-scene/#79e825325103 8. Patterson, P. (2010). How local competition defeated a global brand. Retrieved from https://sysyamnos0915.files.wordpress.com/2013/05/1-s2-0-s1441358209000949main.pdf 9. Statista (2017). Number of Starbucks stores worldwide. Retrieved from https://www.statista.com/statistics/266465/number-of-starbucks-stores-worldwide/ 10. Squareup Pty Ltd. (2017). 2017 Square Australian Coffee Report. Retrieved from https://squareup.com/au/townsquare/2017-square-australian-coffee-report

11. UNSW Business School. (2010). What Happened to Starbucks. Retrieved from https://www.businessthink.unsw.edu.au/Pages/Marketing-Lessons-WhateverHappened-to-Starbucks.aspx 12. Woolworths, (2018) Product listings. Retrieved from https://www.woolworths.com.au/shop/browse/drinks/coffee/coffee-capsules

VI. APPENDICES SWOT Strengths  Well-established brand in other countries  Market already aware of company’s existence  Existing chain stores dispersed throughout Australia  High annual revenue for the year 2017 with $22.38 billion USD (Marketwatch, 2018)  Late opening hours compared to competitors  Significant marketing budget to increase brand success Opportunities  Australians spend a significant amount and wellinvested in the coffee culture  Wealth could give an advantage over smaller competitors as cost of business rises  Industry revenue expected growth from 20132018 of 5.1% (IbisWorld, 2018, para. 1)  Use chains current stores in high-traffic areas (CBD) to advantage  Starbucks mission statement to consider environmental impacts and use eco-friendly products appeals to the trend in a greener market seen in younger consumers (Starbucks, 2018)

Weaknesses  Inexperienced baristas hired to minimize expenses (UNSW, 2010, para. 9)  Premium prices compared to average spent on coffee in Australia (Squareup Pte Ltd., 2017, table 3)  Globalized menu doesn’t mesh with target market preferences  Consumers less aware of different products brand offers Threats  Multiple competitors (fast food, cafes and retailers)  Independent coffee shops earning more revenue than other chain stores (IbisWorld, 2014, para. 1)  Independent cafes more likely to have experienced baristas  Current consumer perception of Starbucks unsatisfactory

CDSTEP Culture  Australian coffee culture a mix of Italian-style

Demographics  Main age group of coffee drinkers 51-70 (ABS,

coffee and French cafes (Lee Joliffe, 2010, page 99)  Fresh coffee preferred  Small-no regional differences with no language/culture barriers  Younger generations highly concerned with sustainability when shopping (Nielsen, 2015, para 1) Social  55% consumers willing to pay higher prices from companies making an effort to help the environment (Livia Gamble, 2014, para 6)  Most popular drinks are lattes, cappuccinos and flat whites (Squareup Pty Ltd., 2018) Economics  Avg. weekly earnings as of Nov. 2017- $1 191.70 (ABS, 2018)  People under 35 earning from $900-1 352 a week (ABS, 2013)

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2011-12, para 2) People working 60+ hours averaging at 10.1 cups of coffee per week vs. 8.6 for those not employed (RoyMorgan, 2013, para 3) People working 60+ hours more likely to own a coffee machine (Amy Harris, 2015)

Technology  Approx. 500,000 capsule coffee machines sold annually (Amy Harris, 2015)  Multiple brands implementing apps with ability to pre-purchase food/drink

Political  Easy for new businesses to enter market with low risks (IbisWorld, 2015, p.21)  Food handling and safety regulations  Barista courses...