Introduction
Starbucks is a coffee retailer which deals with the purchase roasting and sale of whole bean coffee in the whole world. in its retail shops, starbucks has specialized in offering coffee products which are of high quality and tasty like espresso beverages, brewed coffees, cold branded beverages, coffee related accessories and facilities, a selection of premium teas and several admiring food items. Their objective is to develop a marketing plan to successfully distribute its products to its shops and licensed franchisees located world wide within a projected time frame. The industry in which it operates is highly competitive as there are several product lines forcing it to have a need of developing a new marketing plan. this company has started by indentifying its mission statement to clearly show its strategic plans.
Mission statement
The company’s mission statement includes it principles and the market position they intend to have in world. In this case, the mission statement goes as follows: Starbuck Company is a quality conscious seller of the finest coffee products and services that aims to produce and distribute customized premium brewed coffee to their consumers with different flavours and styles that satisfy the customer needs and tastes.
Target Market
Starbucks’ current marketing policy is to market to the youth. Starbucks gives all members of the community a place to meet and socialize. The customer is given an environment that is enjoyable to relax for a cup of well brewed coffee, customers enjoy together with friends in a wide space and the new music in the air always. They seen their customers base grow, get diversified into all members of the family that is children, parents and other family members. The company’s main aim is to provide high quality product that is diversified for all of their customers. Their marketing practices all endure careful analysis to ensure that they are appropriate for the community and customers (Starbucks, 2007).
Competition analysis
Starbucks’ top competitors include Dunkin’ Brands Inc., Nestlé, and Tim Hortons (Hoovers, 2007). They are the market leaders in the brewed coffee market and well as in the distribution. They are also the leaders in corporate sustainability among the industry players by ensuring the environment is taken care of. Its reputation has been built upon its fine products and services; especially since it prides itself in having exceptional customer service and interaction. With the increase amount of expansions that Starbucks has been experiencing, it has lost a sense of this consumer experience and it must regain it immediately. Starbucks’ competitive advantage is their ability to provide consumers with customized premium brewed coffee to their liking. Customers are able to choose from various flavors and styles of coffee that are changed frequently in order to satisfy customers’ needs. They have given their customers a leeway to choose how their coffee is brewed in other words the customers get want not what Starbucks wants. Before Starbucks came along, consumers say coffee as one specific and basic type; no one ever imagined all the flavors and ideas Starbucks has brought into the coffee business. This is what gave Starbucks its competitive advantage over its competitors, but now that the market is shifting and consumers are demanding something different, which means that in order for Starbucks to continue having this competitive advantage it must follow consumer demands and improve its product and services to their demands (Hoovers, 2007).
Strategic Plans to Overcome Porter’s Five Forces
Starbucks in Eastern Europe has implemented many strategies to overcome the issues that arise from Porter’s Five Forces. European market demands a well brewed coffee. Starbucks has risen to meet this challenge in their eastern European coffee house outlets. The fifty-percent growth rate in sales eastern European experienced between 2005 and 2005 precipitated the need to initiate new strategies to maintain and continue growth. Starbucks had to face Porter’s force of rivalry among competing firms. One way Starbucks was able to overcome a bit of the competition was its partnership while working in partnership they opened various outlets that increased the market share. Starbucks’s concern during this period wasn’t so much Porter’s forces of threat of new entrants or rivalry among competing firms. Starbuck was determined to become customer focused in its efforts to reach a point of dominating fifteen percent of the global portion of the market.
Another part of the European market Starbuck has experienced great success with is customers fifty-three and above. They received some of the highest ratings from customer satisfaction. This customer base shows loyalty and preference for Starbuck’s coffee. Starbuck Eastern Europe has this cross-section of the coffee market already and doesn’t have to implement as many new approaches to maintain this part of their customer base. Also, Starbuck expanded its manufacturing facilities to ensure growth in sales.
The joint venture of Starbucks in Eastern Europe was surprising, yet a strategic moved. This helped them to appear as European friendly as opposed to an outsider coming into the European market to invade it. This helped Starbucks to not be viewed as much as a threat as a new entrant into the European beverage industry. Starbucks systematically opened new outlets between 2006 and 2008.The rapid expansion allowed Starbucks to secure a strong place in the East Europe market. They were praised for the great coffee brews, creative marketing and cost effectiveness in distribution.
Starbucks’s stance in the situation is that they wanted to buy quality products, with simplicity, and economic efficiency. If they had what Starbucks was looking for this made them a prime candidate to be a large supplier. This effort helped to keep competition at bay that may offer substitute products or services since Starbucks was giving customers choices. This broad differentiation strategy helped to please many facets of the European coffee market. This one of the five competitive strategies proved to be a successful choice for the efforts of Starbucks.
SWOT Analysis
Strengths:
- It has many coffee shops in Eastern Europe.
- Starbucks has the customer loyalty and relationships it has built with its consumer base. Customers are practically fanatics of Starbucks, and a majority of them are loyal to the brand.
- Starbucks’ customer base; they target all age groups, children, teenagers, parents, working class, students, etc.
- Starbucks has gained a large market share and consumer awareness with its brand. It had done a great job marketing its brand to consumers and getting its products and service out in the market.
- Profitability
- Strong Financial Position
Weaknesses:
- Starbucks raised prices causing customers who face higher food, fuel and housing expenses to go competitors for cheaper coffee.
- Its coffee shops are not spacious and with their settings and store layouts it makes customers feel crammed up when waiting in line.
- Lack of growth in the warm meals for breakfast and lunch division
- For the first time in Starbucks history, their number of visitors to its store fell.
Opportunities:
- Running national television advertising campaign
- Shorter customer lines and making their local coffee shops more efficient
- Keeping some seasonal drinks on the menu longer
- Plans to open more new cafes in the coming year
Threats:
- The slowdown in traffic and expansion overshadowed a 35 percent gain in fourth quarter earnings.
- The forecast of growth of revenue will be below what is expected because of financial crisis
- The customers have been affected by the financial crisis.
- Increased amount of competitors trying to mimic the Starbucks experience
- Rise of consumers looking for grab-and-go convenience and dashboard dining which emphasizes those who can offer convenient and speedy services.
Marketing MIX
Product
The product to be offered by star buck company will be positioned as a high quality, tasty and readily reliable coffee products and services. They have a Strong brand name and distinctive service. The company is in business of buying, blending and the sale of coffee in the market. They distribute brewed coffee, various beverages related to coffee and other foods that can be taken together with coffee. They distribute equipment that is used in ensuring coffee is served well in any environment such as vending equipment.
Starbucks has used its chain to branch out into other retail segments such as selling CDs, books, and other lifestyle products. Starbucks also continues to invest in product development to expand its brand into new customer segments. Starbucks is developing its own vending machines to deliver premium coffees to customers on the go. They also have a licensing deal with Beam Global Spirits & Wine, which as produced a line of Starbucks coffee liqueurs. At Starbucks’ coffeehouses, the company is expanding their menu with breakfast items and other hot foods to help increase its revenue from food sales and to entice customers to spend more time at its outlets. It also continues to add new blends to its selection of coffee drinks (Hoovers, 2007).
Price
The price objective is to protect affordability. The product is of high quality that is appealing and suitable for all customers but it should be cost competitive. For price sensitive products payments offered are flexible and discounts are provided to volume purchases. This is a key strategy to the company bearing in mind that the current economic crisis will cause the target market to maximize their budgets and save their costs.The customer has the option of purchasing their products online. Pursue a “value for money” low cost strategy to gain rapid sales and market share.
The price is evaluated after considering the demand; if the demand is high the price on the products, will slightly go up so as to improve the profit margin at the maturity stage in the product life cycle. The Starbucks also offers periodic price discounts in special occasions.
Placing
The objective is to distribute the product to as many customers as possible. This represents location/s where the products and services from a company are found and can be purchased. This mainly refers to distribution channels of the company which could be physical stores or even virtual stores found on the internet. Starbucks has managed to create a number of distribution channels that has ensured that its products reach a wide market. The company has independent distributors, subsidiaries and licensees in other countries who sell the company products.
In terms of distribution strategies, the following are the key initiatives:
- Secure lease space in high traffic, accessible retail outlets in department stores and malls;
- Distribute products to well-known specialty retail stores that focus primarily on consumer goods and small appliances;
- Support distribution locations with adequate, attractive, and highly visible marketing collaterals, signage, and product catalogs
Promotion
Star buck will pursue a promotions objective of generating a variety of high quality products that appeal and are appropriate for all customers. The marketing practices undergo proper analysis to make sure that they are appropriate to the community and customers.Promotion is by advertising through its network of walk-in. More recently Starbucks has also featured on a number of television programmes. This involves creating awareness and attention to the restaurant to its consumers. Starbucks chooses to advertise in the local press commercial television, billboards and Radio. There will also be a sales promotion which will involve; Temporary price-reduction to attract new consumers and also retain the old consumers that the Starbucks would have captured.
References
Armstrong G. & Kotler P. (2007). Consumer Markets: Influences on consumer behavior, Principles of Marketing.
Barlon, K. (2006): The concept of the marketing mix Presentation on marketing management, Vol. 1, Oulu University -Finland
Chekitan S. D and Schultz, D. E (2005): In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century, Marketing Management
Hoovers, (2007). “Starbucks Corporation.” Hoover’s Company Information, Austin Texas. Web.
Schaik J.L., (2002); The Task of Marketing Management; J.L. van Schaik (Pity) ltd
Starbucks, (2007). “Marketing Policy at Starbucks.” Starbucks: About Us. Web.
Winer, R.S. (2007). Marketing Management; Prentice Hall, Upper Saddle River, NJ.