Starbucks Is The Leading Retailer And Roaster Marketing Essay

Starbucks Is The Leading Retailer And Roaster Marketing EssayMy assignment strives to out edge the grocerying strategic approaches to be undertaken for the next year by the Starbucks is the leading retailer and roaster for steel specialty drinking chocolate in the world. It has over7,500 stores located worldwide. As Starbucks continues to expand, it leave encounter all sorts of new crossing markets, with new and demanding customers for unusual and appealing crossroads. Entering this new market, Starbucks will face m either challenges to compete and to retain brand recognition of its primary products, yet increases aw beness of its new product line.Situational analysisComp eachAs Mathew Carmean and his fellows (Sewer, Andy,January 26, 2004 p.70) tell us Starbucks is the leading retailer for roaster and brand specialty chocolate in the world. It has over 7,500 stores, which are located in the United States, Canada, Europe, Asia and the MiddleEast. Besides high quality java dri nks, Starbucks sells bottled coffee drinks, such as Frappuccino andStarbucks DoubleShot.ibisStarbucks revenue is growing by 20% a year and is opening night approximately three stores every day.Starbucks is capable of managing its successful operations by having steady market ripening. It achievedthis by financing by dint of their cash flow preferably of franchising, selling stock or increasing their financialleverage). Its strategy to success is blanket an area completely. This approach is to cuts down onde restry and management termss, short-changeens customer lines at individual stores, and increases pes traffic forall the stores in an area, that gives Starbucks a free-enterprise(a) service.CustomerAt maiden only professionals and educators went to Starbucks, only when now it attracts a much wider demographic of customersincluding people of several(predicate) ethnic backgrounds and ages. Today, Starbucks has the striking number of 25million visitors in its stores each week. This success is due to the combination of high quality drinksand friendly environment with total music, comfortable chairs, and good serve. This reachs theStarbucks experience which customers plenty relate to that lead to brand loyalty. In addition, Starbucksneeds to deal with customers cultural preferences in all its worldwide kettle of fishs to maintain customers loyalty.CompetitorsTo ensure further market growth and be competitive, Starbucks is developing new products for non-coffee drinkers. Starbucks provides its current customers and attracts new customers not only with quality products but also with varieties flavors that customers desire. Starbucks two largest competitors are Dunkin Donuts and Krispy Kreme, both are national chains. These companies use aggressive price-cutting, up to 20%, for their drinks. Other competitors are smalllocal coffeehouses, and other coffee brands like Tullys and Petes Coffee. Their direct competitors for the new product line are Oran ge Julius, Jamba Juice, fast food chains such as McDonalds and Burger King, and other small coffee alternative providers.ComplementorsStarbucks has teamed up with Bank iodine to offer the Starbucks Card Duetto Visa. This is astored- respect card and traditional credit card. Starbucks has also introduced a T-Mobile Hotspot service which allows the Starbucks customer to boast access to wireless net income for a fee.Offering more than services like the Visa card, wireless internet and customized CD will add more value to the Starbucks experience and religious service draw more customers to Starbucks which will lead to higher revenues.Managerial ProblemStarbucks strategic goal is to increase market share of the non-coffee drinker they have begun byintroducing an appurtenance of a product line targeted to this portion. To ensure market growth, Starbuckshas repositi mavend one of its current products, the Frappuccino line, this product has been extended toinclude 3 new flavors Dou ble Chocolate Chip Crme, Vanilla Bean Crme, and Strawberries Crme,introduced passim the summer months. Faced with the challenge of entering a new competitivemarket Starbucks must compete to retain brand recognition of its primary products, yet increaseawareness of its new product line by expanding the retail stores in the international markets.pulverization analysiswill help stress exactly what Starbucks is doing right or wrong. It will provide us an insight on what the company is good at, and in what areas Starbucks could use assistance. Strengths, Weaknesses, Opportunities, and Threats (SWOT) are described underStarbucks SWOT AnalysisStrengthsIt is a orbicular coffee brand built upon a reputation for fine products and services.It has al closely 17,000 stores in 49 countries.The organization has inviolable ethical determine, commitment to the environment, and community activists.WeaknessesThe organization has a strong presence in the United States of America with more than three quarters of its cafes located in the domestic market. In order to reduce business risk, expansion is needed.Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their renewing may falter over time, and product acceptance will come to a halt eventually slowing growth.OpportunitiesThe company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.ThreatsStarbucks success has led to the market entry of many competitors and copycat brands that could pose potential banes. How they combat these threats will determine their future.Starbucks is exposed to rises in the cost of coffee and dairy products.Starbucks is a large company with a competitive advantage that is shrinking because of its huge success. This is because Starbucks model has been copied successfully by its competitors and this poses a serious threat to the company. If Starbucks cannot retain its differentiator strategy, it is doomed to fall out of popularity, as it would end up be a store that is selling nothing more than a cup of coffee.With majority of its stores concentrated in United States, Starbucks is also limiting its growth and exposing itself to risk. Any negative changes in the domestic market could severely faded Starbucks viability as a firm. If Starbucks can retain its strengths and build on opportunities, while suppressing weaknesses and extinguishing threats, it will be able to grow through with(predicate)out the world market.The SWOT analysis also gives a starting point for a discussion on what Starbucks can do to reduce its weaknesses. Due to its large size, Starbucks sets trends for the industry that can be backed up by the volume of their delivery. Exactly how long Starbucks can dominate the market depends on Starbucks itself. Starbucks has a large number of stores for coffee outlets, all of which are owned outright by the corporation and no franchisees. Minimal revenue requirements have been placed on each store, and those that fall short are closed. The company closed down over 600 stores that fell short of its revenue requirements (Fiscal 2008 Annual Report). The large number of stores is a huge asset or a liability, depending on how one assesses the situation. If there is a strong economy and people have disposable income, then there is a benefit on having so many stores to generate revenues. On the other hand, during economic downturns, the vast number of stores will become a huge financial liability. By systematically enforcing revenue requirements for each store, Starbucks will able to maintain or increase its same store sales, and while at the same reducing one of the weaknesses of being so large.The company has managed to maintain the competi tive advantage because it has offered conveniences and an atmosphere customers can enjoy. As long as Starbucks fulfills its customers wants and needs, Starbucks will continue to be a leading force in the market. Starbucks should continue to create more value at its stores. Starbucks has created a perception that it is focuse not just on profits, but also on societal agendas. The companys stores have become a medium for people and communities to come together and promote a better place to live in an environmentally conscious society. Starbucks found a niche market where it identified what makes its customers happy, and has delivered it to them. Continuing to accomplish this will allow Starbucks to maintain its competitive advantage for years to come.Marketing Vision and Mission statement of StarbucksMission Statement of StarbucksTo inspire and nurture the human spirit one person, one cup and one neighborhood at a time.Vision of StarbucksEstablish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.Marketing Objectives of StarbucksTo create a Starbucks experience that makes people come for the coffee,stay for the ambience and environment, and return for the connection.To build an image separate from smaller coffee chains.To cl advance(prenominal) communicate the values and commitments of the Starbucksbusiness to their customers, instead of only growth plans publicized in the media.Marketing strategies Implemented by StarbucksGrowth StrategyThis well-known marketing tool was first published in the Harvard Business Review (1957) in an article called Strategies for Diversification. It is used by marketers who have objectives for growth. Ansoffs matrix offers strategic choices to achieve the objectives. There are 4 main categories for selection.Ansoffs Product/Market MatrixMarket PenetrationWith this approach, Starbucks will try to sell more of the same product to the same customers at a competitive price. Here itwilladvertise, introduce a loyalty scheme, launch special promotions, to encourage more people within the existing market to choose its products, or to use more of it.By working toward this goal, Starbucks wants to open new stores in both new andexisting markets, expand their product development process, and cater to customersneeds to eventually improve their financial position and dominate market share.Market DevelopmentWith this approach, Starbucks will target new markets or new areas of the market. It will try to sell more of the sameproducts to different people. However,we will target different geographical markets at home, use different sales channels, such as online or direct sales if weare soon selling through the trade, target different groups of people, perhaps different age groups, genders or demographic profiles from our normal customers.Product DevelopmentWith this approach, we will sell more things to the same people with new products. Here w e will extend our products by producing different variants, or packaging existing products in new ways.Starbucks can exercise the following product development strategyFresh and rich brewed Italian espressoOffers pastries and other appetizing confectionsSells coffee-related accessories (mugs, coffee makers, cups, espresso, etc.)Expanded sales into supermarkets of whole bean coffeeIntroduction the widely popular drink, Frappuccino, to the publicStrives for satisfied customers and a welcoming environmentWorks to have highest standards of excellence in way of businessOffers newspapers and other reading material, popular music, and InternetaccessAnsoffs matrix is one of the most well know frameworks for deciding upon strategies for growth.CompetitiveStrategyPorter five forcesGeneric strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive a dvantage. separately of the three options are considered within the context of two aspects of the competitive environmentSources of competitive advantage are the products differentiated in any way, or are they the lowest cost producer in an industry?Competitive scope of the market does the company target a wide market, or does it focus on a very narrow, niche market?Michael Porters Analysis of StarbucksMichael Porter, a Harvard Professor introduces his ideology of the Five Forces model that shapes the controversy in the industry. Each force is interrelated and therefore leads into the other to show the elements directly involved in the further success or ultimate success of the firm. Starbucks Coffee Company, throughout its existence since 1971, with its great management team, innovative style of thinking and strong will to succeed in compliance with its mission and vision statements has and continues to overcome its barriers by recognizing such strategic planning as those includ ed in Porters five forces model. The model includes such components as Barriers to Entry, Supplier and Buyer Power, Threat of Substitutions, and most importantly the Industry Competitors. Starbucks throughout its existence has addressed each and every one of Porters forces with a positive edge that has greatly contributed to the success of the company. Starbucks took manyrisks and spent capital that it in truth did not have. To build a corporation based on intuition and a trip to Italy has undoubtedly paid off in the long persuade which is evident throughout the year that Starbucks has been in operation. Howard Schultz, CEO and founder of the company, has stuck to his conviction not to sacrifice long-term integrity and values for short-term profit. He knew if he played his cards right and stuck to his guns it would only be a matter of time that Starbucks would become the world largest coffee industry in the world. He treasured the company to become and international outlet f or coffee consumers which not only included men and woman but also addresses the needs and wants of those of all ages and nationalities, children, students and any other category of people that have and interest in Starbucks diverse product line. With constant dedication to the companys vision and mission statement and believing in the value of market share and name recognition and how critical they are to the success.(http//www.oppapers.com/essays/Michael-Porters-Analysis-Starbucks/33231)Segmentation, Targeting, PositioningSegmentationOne dimension of segmentation will be demographics (age and syndicate status). Starbucks have to selected married couples age 23 50 with children to be our primary target market. According to the research, it is found that these households spend more than other households on non-alcoholic beverages onward from home.The Company will evaluate each segment based upon potential business success. Opportunities will depend upon factors such as the potent ial growth of the segment the state of competitive rivalry within the segment how much profit the segment will deliver how big the segment is how the segment fits with the current delegacy of the company and its vision. Starbucks does not have any special segments or we can say that it is not focusing on a specifically group sooner than company is focusing on the people who want to relax themselves by a taking a cup of coffee and company is providing them the environment that the customers want.TargetingAs the Starbucks is extremely careful ineach step of coffee making, it is trying to maintain a long-standing relationship with its customers and similarly they do not have any real contender threats.Starbucks is will target office workers, with middle to high incomes, who have a desire topurchase premium products.While evaluating the consumer market the conclusion is that the ideal consumers economic profile will beUpper Middle Class, Privileged Class, While the age demographics wi ll be Students and Youngsters, Professionals, Families, and Mature Consumers.Gender and Ethnic or Religious Background is researched to have minimal or no effecton the choices concerning coffee.PositioningPositioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a market and then targeting a consumer, you would proceed to position a product within that market.Remember this important point. Positioning is all about perception. As perception differs from person to person, so do the results of the positioning map e.g what you descry as quality, value for money, etc., and is different to my perception. However, there will be similarities. This is the main strength of this tool. Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition (hence the termpositioning strategy).Store AmbienceGoal To make customers want to lingerSocial Appeal-Offer a sense of community, a p lace where peoplecan come together. corporeal layoutSeating areas to encourage loungingAppear upscale yet invitingAromasSmoking is banned in all storesEmployees are asked to refrain from wearing perfumes orcolognes, and prepared foods are kept covered socustomers would only smell coffee aromas.SoundsPlay soothing CDs that are also for saleOften offer live musicCustomer attendThe company sees a direct link between customer satisfaction andcustomer loyalty.The company believes that employee satisfaction leads to customersatisfaction (Moon).MARKETING MIXProductStarbucks should try to position themselves as a premium product in the coffee industry in Asia bycreating a high standard, introducing innovative products and providing excellent service.They should open new retail stores in the downtown area and also try to maintain the quality control of the coffee beans throughout Asia.Consumers can enjoy theexperience they encounter at Starbucks, and now for those who prove a high quality non-coffee drink canenjoy the same experience. By introducing these new summer drinks, Starbucks will enjoy an entirelynew segment to market its products in Asia. When looking at the sales revenues for the summer drinks it isimportant to consider that some of the existing customers will inevitably cross over and begin consumingthe new drinks. In the end, the expansion of the product line is a wise decision because of the ease ofadoption to Starbucks reputation for quality as well as the low cost of implementation.PricePrice and quality determines the value of the product. Therefore, Starbucks have to base their price strategy on the competition of quality.It alwaystries to deliver the high value promised to the consumers. They have to buy the quality beans,give useful and efficient gentility to staffs, and moreover, make an atmosphere to enjoycoffee. These all justify theirpricing and show how price supported their positioning.PlaceDistribution channels links the organizations pr oduct or service to its consumers andin a producer-consumer (direct supply) channel, as in the case of Starbucks, maintaining apersonnel relationship with the customers is significant (BrassingtonPettitt, 2000).However, from a distribution point of view Starbucks has an advantage by sticking on to itswinning store location formula for its new stores (refer case study). Starbucks always selectedhighly visible locations and opened stores as clusters. As demandwill grow, as these store clustersmake them able to manage the increased traffic and to hold up their competitive position.In thesame way, they can take care about the services provided in the stores. Starbucks invested heavily in training their staffs and did innovativetactics to manage their human capital. Thus they differentiated themselves in the market byconstantly providing higher quality servicesPromotionOne advantage that may set Starbucks apart is the having a solid online marketing program. It should hire fitting onli ne marketing managers to oversee its websites functions and appeal so that consumers to patronize the site will see all the humanitarian work Starbucks is doing and use it as a competitive edge to retain customers and curb product substitution. A search engine optimization campaign should be launched to ensure that anyone searching for terms related to the services Starbucks offers finds the Starbucks website and spends a significant amount of time there. Blogs and forums discussing the humanitarian work of the company may be added to increase consumer awareness of the companys activities.Artworks can be designed to boasteach citys personality, and it is used on traveler mugs andT-shirts, recruitlocal ambassadors from new partners and from customers to promote their brand.The Company is not using advertising but they can use those funds for acquiring key locations and appoint a national dominance before others about specialty coffee bars.Relationship MarketingStarbucks Relationship Marketing activities can be done in two common ways like internally and externally. For example, internally, relationships are enhanced by introducing a cooperative and goal oriented organizational structure with effective control systems, retaining competent management, employing effective operational processes and international expansion strategies. Employees are referred to as partners with both part and full time staff treated evenly by offering both stock options and full medical coverage.Externally, Starbucks core strategy should be centered on building lasting customer relationships through trust and commitment with its stakeholders (Refer case study).After analyzing the information about what media the target audience prefers, we should come up with the following newspapers, internet, outdoor, magazines and radio. Two certain types of magazines are in general used. Those are womens interest and news and entertainment weeklies. Some of the specific vehicles for magazines w ill be Better Homes and Garden, People and National Geographic. As for newspapers, it should be locally distributed carriers that die the Parade supplement. The internet usage varied across a wide variety of content. Therefore, a key word association will be the most local choice to select their certain interests as well as the name Starbucks itself. Radio is also another that will have to change as far as format is concerned. This will vary depending on the market the radio is in. They do share common listening times. These times are from 10am to 3pm, Monday through Friday, and 3pm to 7pm on the weekends. Outdoor being another selection of media to reach our target audience it is a way of being in the community as they move through from one place to another. The location of this will be selected based upon spot market rating for the most showings in the specific areas.FUTURE PROMOTION AND amplification PLANSStarbuckswill be launching more branches all over Asia after developing an evenfirmer hold on the local westward markets. The expansion will be intend for the nextyear that is 2011. The next targets should be India, Srilanka, Pakistan, and in cities of China.For that purpose again the launch will not be very extravagant, but the alreadyestablished repute in the metropolitan of western and the attachment of TV programsand stars will do the required marketing. Ads will be published in the leadingnewspapers and some bill board advertising should also be done. But overall it will below key marketing activity.Allocated budgetshould be kept in mind while launching the product in the Asia. coatingAs stated earlier, Starbucks historically positioned itself as an upscale brand. Due to the economic downturn and increased competition from large quick-service restaurant chains and specialty retailers, the company sees its profits being eroded. The company introduced new products that would appeal to price-skittish customers and implemented techniques that would s tandardize its stores and reduce costs. The new strategy carries with it its own risks.Since Starbucks enjoyed such a rapid growth in its business, the company can expands its stores anywhere in the globe where there is a more profitability. It means that Starbucks stores are as readily available as McDonalds and as such the Starbucks experience the company asserts it provides, might be seen as no different than the experience of McDonalds. As in the case of appealing to galvanic pile market with bottomless coffee, Starbuckss core customer might move to other stores where they perceive the experience is still being provided.If Starbucks continues to increase its storeswhile measuring and implementing of its various cost cutting initiatives, Starbucks is likely to see increased profitability. The company is also introducing 100 new stores in US, and 200 new stores in International markets, which might positively affect the company provided they are successful. Aggressive adoption of no-frills products to bring in new customers could also affect Starbuckss profitability. Until now, any increase in trade good prices are more or less offset by companys high prices, but a no-frills products would put downward pressure on companys profitability, and mayhap even damage Starbucks image as an upscale brand.Biblograhy1) Mathew Carmean, Julie Anstett, Julia Toochette, Joel Ennis, Joey Eaton, Trang P. Huynh , 2003The Starbucks The Non-Coffee Treat2) KatieTewell, Bethany Odom, Kelly Snider, December 12, 2006, Starbucks Marketing Plan3)www.Marketingteacher.com4)http//www.oppapers.com/essays/Michael-Porters-Analysis-Starbucks/33231