Starbucks Strategic Plan - Case Study Example

Starbucks’ Strategic Plan Contents Introduction 3 Starbucks’ Strategic plan for the next three years 3 Market segmentationin the next three years 8 The quality and brand-based segment 9 The service-focused segment 9 The partnership-seeking division 9 Marketing channels 10 Conclusion 11 References 12 Introduction Starbucks Corporation is headquartered in the United States and serves the coffeehouses and restaurants industries in its daily business activities. The company has its business network across the globe. The company remains the number one coffee brand in the world. The current Chief Executive officer, Howard Schultz aims at maintains the current number one brand in the world through expansion of the company as well as enhancing sound financial management aspects. This discourse discusses the company’s three-year strategic plan to cover its weaknesses and enhancing expansion apart from sustaining success. Among the strategic plan aims at handling include product pricing, reliance on coffee prices to set product and service prices, as well as negative publicity. The plan of action also aspires to tackle emerging threats including infringement on trademarks, disruptions in the supply market, and increase in the competition alluded to the rise in the number of local cafes that specialize in coffeehouse chains. Starbucks’ Strategic plan for the next three years Several years since the company started, Starbucks has gradually emerged to cut its own niche in the industry as it has applied divergent marketing strategies that are unique and specific markets. The same will apply in the next three years with specific adjustments to suit dynamics in the market as well as remain in line with changes in information and communication technology. The company markets its products and services in a distinct way them more attractive to the clients. The approach meets the needs of customers and other business as well since the company is involved in retail trading and to a small extent business-to-business type trading. However, the management in the company understands that consumers who consume the services and use products from Starbucks constitute the drivers of demand. Technically, consumers directly and indirectly served by Starbucks drive the demand for Starbucks’ services (Donaldson and OToole 2007). Several other factors also underlie the strategic success for Starbucks services and the marketing department for the company understands them. The company has a strategic decision making unit. The unit is complex as responsible managers and departments are specialised. The junior officers have their work outline cut out. They are in charge of materials and supplies that have low risk and low value. When the company is in the process of acquiring new materials that are very important to the operations of the business then, a big team comprising of representatives from almost all the departments are involved. They also take a long time to make decisions because loses that result from such an exercise can deal Starbucks a big financial blow. This team includes experts some who are outsourced. They come to give specialised opinion and then leave the team once they accomplish their role. Starbucks’ has an ephemeral decision-making unit. This dynamism continues to have positive impact to the demand for Starbucks services. When the company began, its market was amorphous and kept on changing. This meant that their first consumers had different interests and motivations. The team that handled large supplies and products could easily work well because of the different people who had different abilities. Juniors that handled low risk and low value deals were in the best place to carry out such responsibilities because they had a one-on-one contact with both the clients and suppliers. At this point, it should be noted that the business levels for Starbucks are export, wholesale, retail, and distribution. Currently, the company boasts, as one of the giants in the industry. A case in point would be analysing the company’s purchase processes. The company will subdivide these processes into four different categories. They will include low risk, low value, high and high value. The junior officers that include supervisors and team leaders will carry out the low risk and low value purchases (Bruhn 2003). Most of these processes will be under distribution. This is because they will be the least and clients and suppliers who will have low volumes. It will be difficult to differentiate those engaged in this business relationship from the company clients because they appear at the lower end of the company structure. Their transactions will not involve more than one employee. It will be certain to the company that the decision will be accurate just as the transaction constituting low financial risk. The knowledge used in making decisions is also very simple. The other two groups that will include low-value, high-risk and low-risk-high value processes will consist of a mixture of technical, purchasing, specialists, and purchasers. Through this system, the company will cut prices in scenario two without compromising on quality. In the first case, Starbucks will put the risk in the service and not in the price, just as it will be the case in scene two. Purchasers are experts in areas where the risk is in the price and not the service and the legal experts would be the specialist where the company puts the risk in the service and not the price. Starbucks will only involve specialists in high-value as well as high-risk transactions. This is when the team involved is made of professionals. Already the company has segmented its market, which is global based on these factors. It has company experts who handle clients with diverse knowledge on the services. They deal with specific and selected clients assigned to them by the management. These employees have all-round knowledge including technology. They will combine various factors during their decision-making exercise. The factors include among others production, finance, and supply. It is identified that along the way the company will its business-to-business aspect. The difference between business-to-business buyers and consumer buyers in this case, will be that the business-to-business buyers are more rational (Block, Block, 2005). This has become one of the drivers of demand for Starbucks products and services. Starbucks understands that the consumer buyers are more emotional as compared to their Business counterparts. The company uses this idea to price its products (Brennan, Canning and McDowell 2011). The business-to-business buyer is more knowledgeable. He buys with the aim of making profit from what he has purchased. This makes him more accountable in all his dealings. The consumer buyers on the other hand, have less knowledge on the items they want to purchase, this makes them vulnerable and easy to manipulate. The business-to-business buyers highly value the return on investment. They come to the market with predetermined minds but are prepared to make comparison with respect to the value derived. Starbucks will utilize this knowledge to design and produce tailor-made goods and services. They also price the goods accordingly and make sure that their goods are delivered on time. This has built trust among the clients. The company will also ensure that in addition to delivering the goods on time, it reduces the damages and assures the clients that the services are safe and secure. Starbucks deals with these among its clients as the only emotional elements. To take care of these emotional factors, the company will invest many resources to make sure that clients do not risk their reputation because of the company supplying products and services that are not steadfast (Dwyer and Tanner 2008). The company brand is undisputed despite the fact the company has competitors. Starbucks’ products are trusted and globally respected because of their efficiency. Various companies have relied upon the products and services offered by the company across the world as secondary in their chain of production. This was because of the studies commissioned by Starbucks to study the market no wonder it has become one of the drivers of its demands. Starbucks Limited is the master roaster, retailer, and retailer of special coffee in more than sixty countries with more than twenty thousand coffeehouses. The company remains the number one brand across the globe. This is one of the strengths of the company. Trust created in one product can be transferred onto the other (Little and Marandi 2003). The company will continue using this to its advantage as it is in a position to introduce new products on the existing markets. This is in addition to expanding its business to Asia and especially China. The company get this to an easy process because of the goodwill that it already enjoys. Experts handle the varieties of services and products by the company as well as handle the logistical engagements. They help in making sure that the products and services are of the highest quality. They add the particular requirements that need to be done by experts. The Starbucks services are refined, with the technical aspects fully installed. The business-to-business buyers are always very sensitive on these factors. The specialists combine various items that are generally suitable to a specific market. The company officials responsible for different products and services have knowledge and skills in their respective areas of duty. The company sales team is highly professional and experienced. The success enjoyed by Starbucks largely depends on this team of few employees but able team. The other driving factor in the company is its application of the Pareto Principle. Starbucks has many clients in North America, Europe and the United States who are always on their sales ledger and are the lifeline of the company (Vitale and Giglierano 2010). Though they are few, the volume of purchases and the Starbucks’ rate of stock turnover on the good sold to them help to maintain the company’s accounts. When profits are calculated based on the zones, selected markets present the lion’s share among the contributions. These zones will be categorised by Starbucks as the heavy spenders every sales period on the company’s scale. This is the team whose products are ranked as high-value, high-risk. They are sensitive customers and as explained earlier the team of experts handles their transactions. The amount products shipped to the heavy spenders hugely differs from the total amounts that are sent to the light buyers. Starbucks has a structured up to date system of managing customer relationships that makes it easy to undertake personalised customer service. All people involved in decision-making process use this system to study the behavioural trends of various customers by tracking the history of transactions. The company will develop efficiency by having the accounts management team that is proactive and responsive. Customers will be at ease with this idea and the implication will be, the company rarely losing customers (Woodside 2010). This will enable Starbucks to concentrate on looking for new markets as it already a strong grip on the existing customers. Starbucks Limited has a highly distinguished personalised customer service (Bingham, & Knowles, 2008). The company’s junior employees who handle most of the products under distribution are very thorough. They know the company clients on a one-on-one basis and this makes the customers to feel at ease when dealing with the company. This system has been received well in their markets that include the Asian region, China, Africa and Russia. Market segmentation in the next three years Starbucks Limited undertakes, wholesale, retail, and distribution business activities with business to business coming on a small scale. First, is its process of segmentation is based on few behavioural trends and secondly based on the needs. This is because the company will sell its products to consumers and to other businesses as well (Bruhn 2003). Therefore, as much as it operates across the globe, it handles the same number of customers that pure companies operating on retail does. The company has divided its market into four segments. The other reason is that most of the company clients are rational. The company notes that it does not serve consumers but other business companies. Price segment This is the smallest segment of all the Starbucks customers. Most of these clients are found in the regions that the company rates as the emerging markets. They include Africa, Russia, and specific parts of Asian-Pacific. The business is these regions are rather small and volumes of sales are low. However, this does not mean that businesses in these zones are not high-risk, high-value (Fill and Fill 2005). It only means that the markets are still operating in small volumes and they are not highly differentiated. The working margins are low. They are strategic to the company because the company has labelled them the emerging markets. This means that Starbucks believes that they will grow gradually to strong business focal points. Other companies would easily rank them as having very low strategic importance. Starbucks understands that these zones have to be nurtured to grow. This is clear in the sense that the company has grown to a market leader in the industry eight years after it was established. The quality and brand-based segment These are company markets in Australia, Europe, North, South and the United States. These customers have strong interests in the quality and do not use the price as the driving factor of their demand (Little and Marandi 2003). The customers are large companies and their volumes of sales are huge. Though their number could be small, they value return on investment. They are the customers listed above as the lifeline of the company. The service-focused segment This is the most complicated of all the customers. They have several issues that drive their demand. The customers place emphasis on the quality of products, variety, promptness in deliver and how they treated after purchasing that is the after sale services (Ellis 2011). They are spread across the market but are mainly found in the large markets. The partnership-seeking division The growth of the Starbucks has seen the emergence of this new type of market segment. It is surprising that Starbucks being a developed company would attract clients who are interested in seeking partnerships (Ford, Berthon, and Brown 2002). These companies aim at seeking reliability and depend on their trusted suppliers to take up the role. They are large companies that trade in large volumes of goods. Marketing channels Starbucks Limited is Service Company that deals in export, wholesale and distribution of coffee and related services across the globe. The business is complex bearing in mind the fact that it operates globally. The company has accelerated innovations in marketing alternatives and it is now faster making it very difficult for competitors. One of the methods the company will be using includes the direct mail services (Block and Block 2005). This is because the company considers this more personal appropriate. It is part of the company’s customer service management. Most of the companies they deal with also deal with thousands of clients making emails less suitable. They are also better means of keeping important documents since direct mails can be kept for future reference. The company also takes marketing in a viral manner. Marketers have called the system atomic marketing. They do not only target their customers because they may not be aware of the potential customers (Ford, Berthon and Brown 2002). They package their adverts to address specific behaviours and offers information that is relevant to potential clients. The company’s marketing strategies are very dynamic. They go out to the field and are not static. Applying mobile marketing strategies is crucial because it takes the company down to meet the clients and potential ones. This helps the company to understand the customer preferences and then design the products and services that are tailor made. Starbucks will go back to own marketing teleprospecting. This makes the company’s marketing team to use the fundamental elements of marketing. The use of the social media by the Starbucks as a marketing channel undergoes critical evaluation to confirm the return on investment that results from the same. Conclusion Most companies envy the position and status enjoyed by Starbucks today. Furthermore, the company seems to float in a lot of excitement following success in the recent years including the introduction of a new brand of coffee. However, this does not provide room for complacence. The new strategic plan will help the company to counter new threats posed by competitors in the industry as well as remaining dynamic in line with contemporary issues in information and communication technology. The proposed strategies including engaging in partnerships with institutions of higher learning as well as other interested partners will help the company to growth further through enhanced research activities. References Bingham, F. & Knowles, P. 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Chichester: John Wiley & Sons. Vitale, R. & Giglierano, J. (2010). Business to business marketing: International. New Jersey: Pearson Education. Wright, R. (2004). Business-to-business marketing: A step-by-step guide. London: FT-Prentice Hall. Woodside, A. (2010). Organizational culture, business-to-business relationships, and inter-firm networks. Bingley: Emerald. Read More