Environmental Factors Affecting Starbucks Marketing Decisions - Essay Example

During the contemporary period, it can be d that the environment in which businesses operate is dynamic and ever changing. Against this background, it can also be seen that there are various environmental factors that affect domestic and global marketing decisions. With the aid of a critical analysis of the case study for Starbucks which operates in a global market, this essay seeks to analyse and evaluate how some of these factors relate to the organisation’s marketing decisions. Basically, “marketing is the art of finding, developing and profiting from opportunities,” (Kotler 1999). In order ascertain how environmental factors can affect both domestic and global marketing decisions made by Starbucks, it is important to outline its general structure. According to its official website, Starbucks was established in 1985 and is the premier roaster and retailer of specialty coffee in the world. Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees and a lot of other beverages related to its brand mainly through its company operated stores as well as other retail shops and it operate globally. The environment in which Starbucks operates is dynamic and is characterized by risks and uncertainties. Global economic interdependence has an influence on the marketing decisions made by the organisation. The economic policies made by the organisation are strongly influenced by economic conditions in the US and other international markets. The recent economic recession did not spare Starbucks since it affected almost all facets of the economy across the spectrum. The result is that people will have less disposable income which negatively affects the sales of the organisation’s products. According to its annual financial statement, the company experienced a negative trend of traffic for customers in its 2009 fiscal year. The organisation is also bound by trade practices as well as agreements such as North American Free Trade Agreement (NAFTA). The decisions made should comply with these since any attempt to evade them will result in legal action being taken against them for violating internationally ratified treaties that guide the operations of business. According to Armstrong & Kotler (2009), demographics and infrastructure play a very important role in shaping the decisions made by marketers. During the contemporary period, it can be noted that demographics are constantly changing and the marketers must be cognisant of the needs and interests of the customers. Economic trends such as upper, middle and lower income classes ought to be taken into consideration when making a marketing decision. The targeted people must be ready, willing and able to buy the product on the market. It can be seen that the target market for Starbucks is comprised of the rich and affluent citizens. Going to a coffee shop is widely viewed a luxury by ordinary people. The infrastructure should also be able to support the establishment of business of this magnitude given that it is primarily involved with affluence hence ought to be located in up-market areas. Culture plays a significant role in shaping the behavior of people and the way they perceive particular products. Before targeting a particular cluster of people, it is imperative for Starbucks to understand the culture of the people comprising that target market. Observing the norms of the society is the foundation of establishing mutual understanding which may lead to the success of whatever product. That is, the better the relationship, the more trust that is built where people’s cultural values in a targeted area are not violated. The concepts of social responsibility, ethics as well as legal obligations play a very important role as far as the viability of Starbucks’ viability is concerned. The organisation is mainly driven by its global responsibility strategy. “Social responsibility is the concept that maintains that businesses are part of the larger society in which they operate and are accountable to the society for their actions,” (Kotler 1999). In other words, there is need for marketers to strike a fine balance between the needs and interests of customers, needs of the environment and the need for business to realise their profitable financial goals. This goes hand in hand with the concept of ethics, which is loosely defined as an attempt to differentiate between something good and bad. The company should practice ethical marketing. Each organisation operating in a particular country is influenced by the political systems obtaining in that country as well as its international relations. Starbucks’ operations are guided by the legal framework in different countries it operates. Labour rule such as those prohibiting organisations to discriminate workers on the basis of race, gender or culture play a big role in influencing its strategy. Its global responsibility strategy is also entrenched in the firm belief that compliance with the dictates of the political systems promotes good international relations. By virtue of operating globally, there is every need for the organisation to ensure that it creates a positive image and does not violate regulations that are primarily meant to give direction and guidelines on how the businesses ought to operate. Fair trade practices across borders greatly help the organisations to foster good relations with different countries across the globe. Political systems in countries are mainly concerned with ensuring conformity where organisations are not expected to violate the regulations. However, in volatile countries, it may be difficult for Starbucks to effectively operate. “The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. ("FCPA"), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business,” (US depertment of Justice N.D). Starbucks is influenced by this piece of legislation to a greater extent since it is unlawful for company officials to solicit for bribes with the aim of getting favors as far as business opportunities are concerned. Companies are guided in their operations by the legal framework of the country in which they are operating and Starbucks is not an exceptional case. It is expected to comply with all the legal obligations both in the US as and internationally. Internationally, there are organisations such as the World Trade Organisation (WTO), International Monitory Fund (IMF) and World Bank which are responsible for ratifying proposal by member state into law. All businesses are expected to comply with the regulations set forthwith under these organisations. “All companies face technological disruption if not obsolescence,” (Kotler 1999). During the contemporary period, it can be noted that changes in new information and communication technology particularly the use of the internet have brought about dramatic changes to the ways businesses operate these days. Both global and marketing decisions are greatly influenced by the use of the internet. It can be noted that Starbucks has also long joined the bandwagon and it uses the internet to market its products. Thus colorful and vivid images are used when it markets its products on the internet. This has several advantages in that marketing decisions can be made swiftly and they can instantly reach all corners of the globe. Basically, it can be noted that the internet covers the whole globe and it is instantaneous which makes communication relatively easy. It is possible to get feedback from the customers through the use of the internet which can help Starbucks to make informed decisions as far as its international growth strategy through expansion is concerned. It is also a bit easy to gather information about a particular market through the use of the internet. References Armstrong G & Kotler P. (2009). Marketing. An Introduction. Ninth Edition Prentice Hall, Inc. A Pearson Education Company. Kotler P. (1999), Kotler on Marketing: How to create, win and dominate Markets, Free Press, London. McCarthy J.E & Perreault W.D, Basic Marketing, International student Edition, 10th Edition, Irwin, Boston Perreault Jnr, W. D. (1996), Basic Marketing: A Global Managerial Approach, 12th Edition, Irwin McGraw-Hill, USA. North American Free Trade Agreement (N.D.) Retrieved October 15, 2010. http://www.referenceforbusiness.com/small/Mail-Op/North-American-Free-Trade-Agreement-NAFTA.html Starbucks Corporation Fiscal 2009 Annual Starbucks Corporation Fiscal 2009 Annual Report United States Department of Justice (N.D.). Foreign Practices Act: An Overview. Retrieved October 15 2010. http://www.justice.gov/criminal/fraud/fcpa/ Read More