Marketing Strategies - Starbucks PDF

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assignment regarding the strategies for the starbucks when it moved internationally to india...

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Starbucks – Marketing Analysis

Global Markets and Strategies MKT8035

Instructor-Amrita Jassar

Yohana Walicek Gambarini-8409963 Virender Singh Thind-8625371 Gouri Sharma-8619700 Rosy Rai-8632161

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Table of Contents Introduction..................................................................................................................................................3 Situational Analyses...................................................................................................................................4 Strengths.....................................................................................................................................................4 Weaknesses...........................................................................................................................................4 Opportunities.........................................................................................................................................5 Threats....................................................................................................................................................5 Target Market.........................................................................................................................................6 Marketing Mix........................................................................................................................................6 Product....................................................................................................................................................6 Place........................................................................................................................................................7 Price.........................................................................................................................................................7 Promotion...............................................................................................................................................7 References.................................................................................................................................................. 9

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Introduction

Starbucks originally began in 1971 with only one store at Seattle’s Pike Place Market, selling whole bean and ground coffee, tea and spices. In 1982 Howard Schultz was the head of marketing at fours stores of this small company. So, in a filed trip to Milan Howard had several insights about the real coffee should be, the human connection in the stores and the feelings that all costumers should have when tasting a good coffee. His ideas were not well taking by the bosses, basically he gave up of his managing position in 1986 and opened his own coffee store. A 16 months later Howard was able to buy the 4 stores from Starbucks, with the amount of $3.8 million raised from investors. Since Starbucks name was had a respect reputation the new owner decided to keep the brand and name. Starbucks is named after the first mate in Herman Melville’s Moby Dick, and the logo is also inspired by the sea – featuring a twin-tailed siren from Greek mythology. The main objective at this point was to elevate the quality of coffee in America. At the 80 and mid 90 technological communication and internet started to arise; people began to use your own devices in anywhere. Seeing this situation, the idea of, “A social yet personal environment between one’s house and job, where people can connect with others and reconnect with themselves. From the beginning, Starbucks set out to provide such an invaluable opportunity.” [ CITATION How11 \l 4105 ] Today Starbucks has involved millions of people around the world with its coffee and the environment of a receptible place to stay how much people would like.[ CITATION How11 \l 4105 ]

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Situational Analyses Strengths  Strong Financial Performance – With a market share of $81 billion, Starbucks has a stable financial place in the market. It has also increased its number of stores from 1,886 to 29,324 between 1998 and 2018.  Taste, Quality and Standardization – With its first-class delicious and blends coffees, Starbucks has extended globally. It offers consistently standardized and excellent quality products in every location.  Strong Brand Picture – Starbucks s the most renowned and strongest name in the beverage and food industry. Its volume, size, and the number of loyal customers has kept increasing over time.  Widespread global supply chain – Starbucks is acknowledged to have a widespread international network of suppliers. It sources its coffee beans from three main coffee producing regions, Africa, Asia-Pacific, and Latin-America.  Modest diversification – Starbucks has also extended its operations by introducing food items and innovative merchandises. One example is the addition of strong flavoured ice cubes made of Coffee. Weaknesses  Unaffordable due to high prices– Starbucks offerings for many middle tiers and working consumers are very costly than McDonald’s and other coffee outlets.  Procurement Practices – Many social and environmental activists criticized the company for their unethical procurement practices. They claimed that it procures

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coffee beans from impoverished third world farmers. It has also been accused of violating “Fair Coffee Trade” principles.  Piracy of products – Starbucks doesn’t own the most unique products in the market. for other companies this makes easy to copy all the products. Other food and coffee shop chains like Dunkin Donuts provides almost the same products.  Recall of Products- lots of products have been recalled by Starbucks over the past years. This can adversely impact the company's brand name and lead to client base loss.  Example: In March 2016, Starbucks recalled two products, cheese and fruit bistro box and sandwich the other was sausage, egg, and cheddar breakfast.  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. Opportunities  Introducing new products – As the company is famous for introducing new products and holiday flavors (e.g. Eggnog Latte, Peppermint Mocha) under its name and it would be welcomed in the markets and profitable as well.  Extension in developing markets – Starbucks mainly has its coffee houses in the United States. And entering in a few new areas like China, India and few African regions has given a great opportunity to the company. Therefore, more extension into similar areas can help to create huge scope.  Alliances or Partnerships with other businesses –Starbucks has the opportunity to grow more through alliances and partnerships with major firms. This would strengthen its share and presence in the market.

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 Products Specifications and Business diversification– It can further expand its business operations to improve overall opportunities of revenue growth. Besides, developing new products as per the customer needs in the target market is also a profitable prospect. Threats  Competition with big brands – Aggressive competition with big MNC’s like McDonald’s, Dunkin Donuts etc. can also impose a threat to its market share.  Competition with local and low-price coffee sellers – Many coffee sellers offer products at a very affordable price. Future’s stability of Starbucks which offers higher prices can be threaten by this.  Piracy– Products can be easily imitated by both old and new rivals.  Controversy on California warning rule – A California judge ruled other companies and Starbucks in March 2018 to provide warning labels on all their coffee products. This was about preventing a violation from chemical use which may cause cancer. Target Market The global coffee giant moved to Asia to capture the food and beverages market. Asia is home to two of the major growing economies in the world namely China and India. Strategic importance of Asia for the company is greater as it has almost 8600 outlets out of which around 40% stores are in China. The Chinese market has a great potential as the annual per capita consumption of coffee is just 0.5 cup as compared to US where it is 300 cups per person. Both India and China are considered tea drinking countries so in order to grow in these countries Starbucks has introduced tea in their offerings along side coffee. In India Starbucks, joint ventured with tata global beverages to start its chain there. Starbucks planned to double the numbers to its stores in the Asia pacific region. China has replaced Canada as the second largest market by store count after US.

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Marketing Mix Product As we all know Starbucks is the globally leading brand of coffee. Further it offers us products which are unmatchable with any other company. To attract all kinds of customers Starbucks entered in various other product categories in its marketing mix other than its speciality in coffee. Following are the products provided: 1. Format- whole bean and VIA 2. Baked goods 3. Roast – Blonde, Medium, Dark 4. smoothies 5. Caffeine- regular Decaf 6. Frappuccino 7. Flavoured and unflavoured 8. Other foods and Beverages 9. Merchandise (instant coffee and mug) Place Initially Starbucks use to sell its products through coffeehouses. Soon it started online store to sell its product. But in 2017, Starbucks ended this operation and focused on instore experience in motar coffeehouse. Due to the change in technology Starbucks came up with an idea of Mobile Apps, which allows the customers to place the order conveniently so that they could get their foods and drinks at the company’s coffeehouse.

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This app and website further include all the information of each and every aspects of coffee making act. The online website even consists of location, speciality stores, menu, benefits and other information. Today Starbucks is in more than 70 countries in Africa, North America, Oceania, Asia, South America and Europe, which includes approximately 5000 licensed locations. USA has the maximum Price This refers to the pricing strategy framed by the company to determine the amount of money the customers have to pay in exchange of companies’ services and goods. Starbucks carries out the Premium Price Strategy. Premium pricing (also called image pricing or prestige pricing) is the practice of keeping the price of one of the products or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price (Premium Pricing, 2019) The prices are relatively high than other competitors (example McDonald’s Premium Roast) Starbucks have.Due to the high end technology and quality the company offers with the best customer servive the high price is very well justified. Promotion Due to various activities and initiatives Starbucks is in the top of the mind brand. Other than advertisements, Starbucks even promotes its brand through communication and interpersonal relations. Its promotion mix is as follows; 1. Word of mouth marketing This method focuses on providing the best customer services so that the customers spread positive words regarding the company. 2. Public Relations

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Starbucks keep on making efforts towards the wellbeing of the society even though it was not always a success. For example the Race Together, campaign was a failure and was criticized by many. 3. Technology Tweet a coffee campaign in 2013, feedback system – My Starbucks Idea, gifts cards with free Wi-Fi, mobile apps, prepaid cards are few of the examples . 4. Sales Promotion Sales promotions are used in Starbucks Rewards, which is a program involving freebies that customers can avail after purchasing a certain amount of the company’s products (Starbucks Rewards, 2019) 5. Advertising The company advertise their products through television, print media and the internet. In 2016 it is recorded that Starbucks spent $248.6 millions on advertising.

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References

Ambler, P. (2019, march 13). Kevin Johnson Accelerates Starbucks Expansion Across Asia Amid Intensifying Competition. Retrieved from www.forbes.com: https://www.forbes.com/sites/pamelaambler/2019/03/13/starbucks-accelerates-expansionacross-asia-amid-intensifying-competition/#645f8ccf2221 Garnick, C. (2016, november 22). Starbucks boosts marketing spend and three other 2016 takeaways. Retrieved from www.bizjournals.com: https://www.bizjournals.com/seattle/news/2016/11/21/starbucks-boosts-marketing-spend-2016takeaways.html roxburgh, A. l. (2014, january 08). THE RISE AND RISE OF STARBUCKS IN ASIA. Retrieved from www.fcsi.org: https://www.fcsi.org/foodservice-consultant/asia-pacific/the-asian-expansion-ofstarbucks/ Schultz, H. (2011). Onward How Starbucks Fought For Its Life Without Losing Its Soul. New York: Rodale Books. Schultz, H. (2015, march 22). A Letter from Howard Schultz to Starbucks Partners Regarding Race Together. Retrieved from stories.starbucks.com: https://stories.starbucks.com/stories/2015/aletter-from-howard-schultz-to-starbucks-partners-regarding-race-together/

Bstrategyhub. (2019). Starbucks SWOT 2019 | SWOT Analysis of Starbucks. Retrieved June 10,2019 from https://bstrategyhub.com/swot-analysis-of-starbucks-starbucks-swot/

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Mbaskool. (2019) Starbucks Marketing Mix (4Ps) Strategy. Retrieved June 11, 2019, from https://www.mbaskool.com/marketing-mix/services/17140-starbucks.html

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