Executive Summary
This paper aims to analyze the marketing plan for Starbucks. This is aimed at evaluating the effectiveness of the company’s business strategy. The paper will analyze the company using the Porter’s five forces, SWOT analysis, and the competitive analysis. The paper will use the 4Ps analysis to analyze its promotional mix. The paper will also provide financial projections and an implementation plan for the marketing plan.
Company Overview
Starbucks is a coffee company based in America. It is headquartered in Seattle, Washington. Starbucks also runs an elaborate coffeehouse chain in the US and around the world. The company was started in 1971. Since then, Starbucks has grown and expanded to become the largest coffeehouse company all over the world. The company operates in around 65 countries with a host of stores totaling 23, 132. The major business for Starbucks is in the major markets in the world. This is represented by the distribution of the Starbucks stores. For example the US has around 12, 937 stores, China has around 2,004 stores, Canada has 1,416, Japan has around 1,135 stores and The UK has around 849 stores. Starbucks procures coffee beans from across the world and roasts them to make coffee. The Starbucks mantra is in the provision of a wide variety and highest coffee quality to its customer around the world. The company has fused a strong marketing approach with a heavy societal involvement to create a strong brand in the world. The societal involvement consists of Starbuck’s involvement in the environmental or eco-friendly initiatives. The company also has strong CSR-Corporate Social Responsibility initiatives. This embeds the company and its brand in the society and has helped it create a dominant brand that has a massive chunk of the global market share beating the like of Costa Coffee in the international markets, for example, China.
Situational Analysis
The situational analysis will focus on the internal and external environment of the Starbucks Company. This will reveal the health and status of the company in the market as well as internal strengths and weaknesses of the company. This will use three tools; the Porter’s five forces, the SWOT analysis, and the competitive analysis.
Porter’s Five Forces
This analytic tool focuses on the structure of the industry in which Starbucks operates. It focuses on five crucial aspects of the industry such as the rivalry in the industry, the potential of new businesses entering the industry, suppliers, substitutes, and buyers.
The rivalry is rife in the local market with several coffee shops operating in the market. These shops pose a threat to Starbucks because they provide good quality coffee for good prices. However, this is small-scale competition. Competition at the level of Starbucks does not exist much. Starbucks also has an edge in the market because of the exceptional quality of coffee it produces (Alon, Jaffe & Vianelli, 2012). This is born of the fact that the company has vast resources and thus can pick and select the best variety coffee to roast and produce high-quality coffee. As a result, the rivalry is not high in the present market, there is a possibility that this could change in the future.
The process of making coffee is easy to study, and the coffee industry is run with ease, this makes the risk of potential entrants into the industry high. Big companies have also made entries or are in the process of making entries into the coffee industry. Such companies include Dunkin Donut and McDonald. The threat of potential new entrants is high.
The risk of substitutes in the market is high. Several big companies offer products that can serve as substitutes for coffee. These potential substitutes include soft drinks, beer, liquor, and alcohol and fruit juices. The major market target for Starbucks is the youth. Some prefer to party, and others prefer to stay healthy. This means that there is the unpredictability of this market segment, and they can switch from coffee to other substitute products in the market.
The power of suppliers is low. This is because Starbucks deals with farmers directly. The company has signed long-term contracts with farmers and thus the company can control the price of raw materials. The company also provides the expertise and the training to the farmers on how to plant coffee. This enhances the quality of varieties and raw materials that Starbucks obtains. This enhances the quality of its product, coffee.
The market has several options available to the customer. Several local coffee shops have the willingness to offer good quality coffee for cheaper prices than Starbucks. This means that the bargaining power of the buyer is high (Liu, 2015). This is mainly because of the wide range of options at the buyer’s disposal and the low cost of switching.
SWOT Analysis
SWOT analysis focuses on both the internal and external aspects of the business:
External Analysis
Opportunities
Starbucks has the chance to expand into the emerging economies. The company’s traditional market in the West is saturating, and thus the chances of growth and expansion have withered. The company, therefore, can look to the emerging economies with much potential to expand to and explore this untapped potential.
The company mainly distributes through its stores throughout the world. However, there is an opportunity of reaching a far greater customer base if the company expanded its retail services.
Threats
The local cafes are proliferating at a fast rate. This expansion has coincided with the focus on the small and medium-sized businesses that has encouraged the springing up of these cafes. They provide good quality coffee at low prices compared to the pricing policy at Starbucks (Civi & Persinger, 2011). This poses a massive threat to the company is standing in the market in the short- and long-term. Other coffee chains have observed what Starbucks is doing right, and they have adapted their business models to gain on Starbucks posing a sizeable threat.
The developed countries are filled with massive multinationals with vast resources and able to compete. These markets have been filled by these highly competitive and innovative businesses competing with Starbucks. This has led to saturation, and thus it is a threat to the welfare of Starbucks in the developed world markets. It is expensive to do business with cutting-edge technology and innovation needed to differentiate the products in the market.
Internal Analysis
Strengths
The “Starbucks Experience” is one of the main strengths of the company in the market. This refers to the experience that is expertly crafted to the customers when they visit one of Starbucks outlets. They provide premium music, perfectly blended coffee, warm atmosphere and friendly staff (Tripp, 2014). This ‘package’ creates an unrivaled customer experience unique to Starbucks, and that serves as a star attraction to the customers.
The employee management at Starbucks provides the foundation of its dominance in the world market. The company kept its human resources happy and motivated through the provision of extensive benefits. The company also provides remunerations or pay rates that supersede those offered by the competing companies in the market.
Weaknesses
Starbucks’s profits are mainly influenced by the prices of coffee beans. The coffee bean prices also affect the cost of the product (coffee) the company offers to its customers. Factors such as weather conditions, hedge funds have contributed to Starbuck’s inability to control the prices of coffee beans. High costs of coffee beans result in high pricing policy for the coffee in the market. This is not competitive.
Poor publicity has also affected the company. This is because of the company’s stance of becoming greener, poor treatment of suppliers and tax evasion cases as well. These have affected the company’s reputation and brand equity.
Competitive Analysis
Starbucks has sustained its position at the summit of the coffee market segment in the world through innovation and creativity. The company has kept on with innovation regarding customer experiences, new products, and new ideas on how to grow and expand the business not only in the US but also to China and other emerging economies. The competitive concept that Starbucks applies is the ‘differentiate advantage’.
First, the company uses the best quality coffee beans. This is achieved by having deals with the farmers directly and monitoring the planting and growth process of the coffee. This guarantees high standard and high-quality coffee beans. This ensures that the coffee is distinctly high quality and different from the competition.
Starbucks also focuses on the importance of the human resources at its disposal. The company provides training and an enabling environment to ensure the customer performs optimally and meet the customer needs (Alminattaheri, Sorooshian & Agahabakhshi, 2013). Lastly, the company also focuses on the sustainability and eco-friendly aspects of production and distribution in its supply chain. These aspects discussed above are illustrated in the comparative chart below in figure 1.
Figure 1: Comparative Chart
Adopted from Liu (2015)
Objectives
This study proposes to analyze the core competencies of Starbucks and analyze how the company has put to use the resources at its disposal to grow and expand. The study will analyze the strategy or model employed by the company. The study will analyze how the company’s business strategy and model are relevant in today’s market. This will be done through an analysis of the external environment and showing how the company relates and compares with the direct and indirect competition. The study will also analyze the competitive advantage or edge the company has in the market. The segmentation and differentiation police pursued by the company will also be analyzed. This study aims to reveal the strength and most importantly the weak points of the company. These will form the basis for improvement of the business, strategic positioning and adaptation with the dynamism and the turnover in technology and markets as well.
STDP
The segmentation criteria will focus on the coffee market. The core competencies of the company will dictate the segmentation. This is because the company performs best in the segment it can produce high-quality products and meet the customer demand, taste, and preferences. The company’s target is the young population. The youth has an outgoing culture; they will be open to visiting the Starbucks outlets, and, therefore, are a good target for the coffee company. The company’s differentiation policy will be based on innovation. This will involve a creative approach to business ideas, customer experience and the quality of the coffee. The company will establish a village policy with the employee. The employees are a community and have the freedom of through and imagination. This will encourage innovation. The experience of the customer will be instrumental to the differentiation policy (Alon, Jaffe & Vianelli, 2012). The positioning of the company will focus on the quality of the products and the company’s involvement with the community. This involvement will be through the CSR of the company and adherence to the environmental consciousness aspects.
Marketing Strategy
This will be carried out using the 4ps analysis:
Products
Innovation is crucial to ensure that the products capture the imagination of the consumer market. This segment, therefore, focuses on the products the company offers to the market and thus the customers. The major categories of products the company would offer include coffee, pastries, tea, smoothies, Frappuccino beverages and other complimentary supplements such as instant coffee and mugs. This product mix will be open to changes in the future. This will be subject to the alterations in the tastes, preferences of the customers as well as the market trends and competition.
Place
This aspect focuses on the outlet or the place at which the products of the company are offered to the customers. The company mainly utilizes its cafes to provide the customer-company interphase. Other major places of sale or the interaction with the customers include online stores, cafes, retailer chains and the online App that allows customers to interact with the company.
Promotions
This aspect covers the initiatives or activities the company carries out to promote its products among the customers. This is mainly through the conventional advertising media approaches. However, innovative promotional mix approaches are needed to establish a competitive advantage over the competitors in the market locally and internationally (Hollensen, 2015). The major approaches to the promotional mix include advertising, sales, and promotions as well as public relations.
Pricing
The pricing strategy covers the cost of the products that the company produces. The pricing policy is affected by the cost of raw materials and the international market trends. Other aspects such as the cost of labor are also major influencers. The company targets the high-end market. As a result, the pricing of the company’s products is averagely high than the competing companies.
Ethical and Legal Factors
These are crucial segments of the company’s business strategy. The company will employ and develop a culture of itself that adheres to the ethical and legal frameworks of the country in which it is operating (Wolfe et al., 2014). It will consider the human resources protection and rights, the product safety and the taxes as well.
Financial Projections
The financial projections for the next four years are in attached in the Appendix. The product life cycle is expected to take three years. This includes the product development stage, the growth stage, maturity and then the decline stage.
Implementation Plan
The spending on the media promotions of the company and its products will be divided as shown in the figures below:
Adopted from Liu (2015)
Adopted from Liu (2015)
Marketing Technology
The company will employ technology in its marketing mix. The use of social media will feature highly on the company’s tools of choice (Siguaw & Simpson, 2015). Social tagging and trending aspects will be employed to raise awareness and promote the company’s products and promotions or offers.
Control Metrics Analysis
The growth or contraction of the company will be monitored through the sales and the customer turnout. The social media feedback and the comments of the customers on the company website will be monitored as well.
Conclusion
A marketing plan is crucial. The implementation of this marketing plan will provide the company with the firepower it needs in its production, customer relations, CSR, financial management as well as its relations with the human resources as well as its competition. This winning formula will put the company at the summit of the market segment.
References
Alon, I., Jaffe, E., & Vianelli, D. (2012). Global marketing: contemporary theory, practice, and cases.
Aminattaheri, H., Sorooshian, S., & Aghabakhshi, N. (2013, March). Marketing Plan: Starbucks Case Analysis. In EROS 2013: International Conference on Business Knowledge for African Development.
Civi, E., & Persinger, E. S. (2011). Marketing Plan Competition For Experiential Learning. American Journal of Business Education (AJBE), 4(12), 51-60.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Liu, C. L. (2015). Internet Marketing Strategies and Customer Loyalty: A Case Study of Starbucks Coffee.
Siguaw, J. A., & Simpson, P. M. (2015). A marketing plan for marketing instruction: A satirical look at student comments. In Creating and Delivering Value in Marketing (pp. 129-133). Springer International Publishing.
Tripp, C. D. (2014). An integrated marketing plan and strategic analysis for birthline pregnancy services (Doctoral dissertation, THE COLLEGE OF ST. SCHOLASTICA).
Wolfe, D., Silmon, V., Plesko, T., & Miller, K. (2014). Marketing Plan: Dallas Integrated Corridor Management (ICM) Demonstration Project (No. FHWA-JPO-14-112).
Appendix
Innovative Writers 