Market Analysis for Starbucks - Assignment Example

Executive Summary Starbucks coffee has looked towards identifying the different factor which has an effect on their working and based on it has looked towards developing strategies to deal with those. Starbucks has identified that they need to develop their brand image, ensure customer loyalty and look towards strategies which will help them to consolidate their business in the future. The marketing strategies also show that Starbucks has looked towards developing their product line by adding new products and aims at targeting the upper and middle class population. This has helped them to position their product differently in comparison to the customer and has also looked towards ensuring that the prices charged by them matches their positioning. Starbucks to increase awareness has also looked towards marketing and by looking at different factors they have been able to develop strategies to monitor it and control it better. This has helped them develop their business and will help them in the future to further improve it. Table of Contents Introduction 3 Market Analysis 3 Marketing Objectives 4 Target Market & Segmentation 7 Market Positioning 8 7 P’s of Marketing 9 Implementation & Control 13 Conclusion 13 References 14 Introduction Starbucks which started their business in 1971 has grown and with continuous innovation and changes has developed the coffee industry. This has provided an opportunity for other provides to look into and has increased the opportunities of higher profits. The increasing demand for coffee and the change in the attitude of customers towards this provides an opportunity for the different players to market their services (Starbucks, 2012). Starbucks has thereby ensured that they are able to target a large audience and ensure better opportunity Market Analysis Starbucks initiative to shape the coffee market through continuous service improvement, product innovation, expanding globally and ensuring proper location has helped Starbucks to reduce the effect of external analysis on their working culture. Starbucks has looked towards products which are of high quality at a slightly higher price and at the same time ensuring increase in product offerings. This has helped Starbucks develop a brand image and work on their internal strengths which has grown them into a market power and has helped the business earn higher profits. The SWOT analysis highlights improved efficiency and being able to work on the different aspect of business which has helped them to stay ahead from competition which is intensifying due to the wide possible profits that the market presents. Starbucks through their enduring efforts and objectives will look towards occupying the position of the market leader and will continue to satisfy customers due to quality performance in all areas. Marketing Objectives The analysis of the market and the SWOT analysis help to find out certain areas that Starbucks need to lay stress on and improve their working style to facilitate better growth. These areas are both internal and external to the organization and working on them will help to facilitate better strategies which can be implemented for the growth of the business. Some of the identified marketing objectives are as Strategy to renew the name brand name of Starbucks: This is one of the most important activities that the management needs to realize and develop steps because people feel that the coffee served by Starbucks is comparable to that of McDonalds. This has made people doubt whether paying additional cost for Starbucks is justifiable or not. The management needs to bring forward the customers that Starbucks is superior in quality and service due to which the customer has to pay a premium in comparison to others. For this Starbucks has to take an aggressive attitude especially while advertising and should ensure that they clearly educate the public about the uniqueness and specialty of coffee served by them in comparison to other. Starbucks while developing advertising campaign needs to concentrate on their core business which is coffee and has to look towards using other ways along with the in store promotional activities which the company recently relies on. This will help to develop the required strategy which will help Starbucks to strengthen its brand name and ensure better flow of customers for its business (Buckstein, 2010). Building & Retaining Customer Loyalty: Intensifying competition and increase in the number of alternatives available to the customers with regard to coffee has made them jump from one brand to another. This requires that Starbucks looks towards having some customer retention program. Starbucks also has a retention program like a loyalty bonus card where customers are provided points when they drink coffee and this can be redeemed online by purchasing goods from the points. The fact that the program offered by Starbucks is similar to other provided by different competitors it leaves towards little differentiation. This thereby makes it difficult for Starbucks to differentiate thir product or services from others. This will require that Starbucks develops some new loyalty programs which is different from other competitors so that customers look towards having coffee at Starbucks which will thereby help to grow the importance and improve the customer loyalty program for Starbucks (Buckstein, 2010) Focus on Cost Efficiency: The manner in which all economies are experiencing a difficult time to sustain growth and increasing cost is also putting pressure on Starbucks as it is no exception (World Bank, 2010). Also, the fact that Starbucks has looked towards diversifying its business into non core areas like music, films and books has diluted their share. This has increased the burden on their financials and has increased the cost for the business. This requires that Starbucks looks at concentrating on their core business and aims to develop other business through that. One way forward in this direction can be by developing new stores through better expansion strategy. This will help Starbucks to spread their chain and while looking to do so the stores should be developed in a manner where it is able to concentrate on their core business which is coffee but at the same time also develop their other business. This strategy will help Starbucks to diversify their risk to a large extent and will help them to concentrate on their business and ensure that cost is reduced by better strategy (Thompson & Strickland, 1999). Developing strategy towards future growth: Starbucks to sustain the competitive market needs to look towards developing strategy for the future. The manner in which new players are entering the market and the intensifying competition has made it all the more likely. This requires that Starbucks looks towards developing strategies where they focus on entering the corporate sector and looks towards expansion strategy by having more stores at different locations. Entering the corporate sector will provide Starbucks to get an advantage as they will be provided with a niche sector where they can aim and grow their business due to increase demand for ready to coffee from the corporate sector. This will act as a helping hand for Starbucks as this will help them to develop their business further at the same time ensure that better strategies can be developed which will help them in the future to improve their business. Thus, there are different areas which have been highlighted from the SWOT analysis which Starbucks need to focus on as developing this will help to ensure better strategies and help to develop their business to yield better effectiveness in their services (NCA, 2008). Target Market & Segmentation Starbucks has looked towards developing its market for coffee by ensuring that they deliver quality products and services. The way in which the demand for coffee has grown can be attributed to a large extent on the fact that more and more young people are looking towards purchasing roast and ground coffee because of its superior taste which ensures that the customer get something extra. This in addition to the fact that the number of people consuming instant coffee has decreased and has increased the demand for brewed coffee which has thereby made Starbucks to ensure that their target market and segmentation is developed accordingly This has made Starbucks look towards targeting the middle and upper class along with working professionals and the younger generation. This has led Starbucks segment the customer based on their age profile and income level as based on age Starbucks looks towards younger generation along with middle and aged people whom they were eyeing from the beginning. Starbucks in their endeavor to supply quality brewed coffee has looked towards ensuring that their product is still aimed at the upper and middle class due to the slightly higher rate associated with their coffee in comparison to other instant coffee providers. This thereby helps to understand that the target customers for Starbucks is people belonging to the middle and upper class along with working professionals and youngster who due to their busy life schedule prefer ready to go coffee. The target market selected by Starbucks fits the rapidly changing society as there is an increased demand for quick services due to decreasing time of customers as a result of heavy work schedule. Despite decreasing time consumers still have a preference towards quality and don’t want to compromise on quality and prefer food and drinks which are good in quality and superior services. Starbucks based on different findings has also ensured that targeting people to the age of 55+ contributes towards their growth stimulus as people pertaining to this age prefer coffee and are loyal (Bureau of Labor Statistics, 2011). This has made Starbucks lay special efforts to ensure that superior quality coffee is provided to them so that they have a segment of customers who are loyal. This in addition to the growing importance to quality being laid by the younger generation has transformed the business and has made Starbucks ensure quality in targeting their customers and ensuring superior services to retain them. Market Positioning Starbucks coffee has positioned itself as a premium instant coffee which serves the customer ready and hot coffee at the minimum time possible. Starbucks has worked on a differentiation strategy by ensuring quality coffee which is available in the ready go format where customers are able to drink coffee quickly due to quickness in service. The positioning statement gets reflected by the fact that the company is looking to aim customers belonging to the middle to upper class along with working professionals (Northey, 2007). Starbucks to differentiate itself from other coffee manufacturers has looked towards adopting a different positioning statement as it sells it coffee by stating that it is brewed which makes customers get a sense of freshness and taste in comparison to other coffee producers who look towards using instant coffee. Starbucks has thereby positioned its coffee differently from other players in the market. This is seen from the perception map which helps to understand the positioning of Starbucks Starbucks as seen from the above positioning map shows that it has been able to differentiate itself from other players in the market due to superior quality and service. The fact that Starbucks has ensured that their positioning is different from others in the market it has developed a niche market for the coffee player to ensure better sales and an opportunity to grow its business (Moreno, 2008). 7 P’s of Marketing This aspect helps to understand the manner in which the different factors have an effect on the marketing strategies and are internal to the company which thereby helps to understand the different factors which has an effect on the marketing strategies. The 7 P’s of marketing as applicable to Starbucks is as Product: Starbucks look towards offering different varieties and blend of coffee which shows that they offer more than 30 different type of coffee. In addition to it Starbucks has increased their product range and has led towards dealing in different products like music, books, films, coffee mugs, and similar other products. While looking to offer different products the company has looked towards ensuring that the beverage sale contributes towards 77% percent whereas food items and other products contribute around 15% and 8% respectively (Datamonitor, 2010). The fact that Starbucks depends heavily on beverage and the other products haven’t been able to generate the same sale has affected the business of Starbucks and has increased the risk for the business. Starbucks has regularly looked towards adding products to its kitty be ensuring that they look towards adding products like “Dulce de Leche Latte” and “Dulce de Leche Frappuccino” and similar other products on a regular basis. Further, Starbucks has looked towards ensuring that new and innovative products are developed time and again some of which has helped to develop the business but some have failed. This requires that Starbucks understand the market requirements better and based on it look towards adding products so that the customers have more choices and the business is able to sustain along term advantage by having new products in their product line (Hannan, 2011). Price: Starbucks has ensured that the price charged by them for their products matches the positioning statement that Starbucks has presented as they look to target the upper and middle class. The price charged by Starbucks is as per their perceived brand image and the growth potential that the company has. To ensure effectiveness in pricing Starbucks has looked towards ensuring that at a price of $1 bottomless 8 oz. of coffee with unlimited refills which is cheaper by 50 cents in comparison to the price charged on a regular basis has been one of the attractions that Starbucks has looked towards in its pricing method (Datamonitor, 2010). Along with it the company has adopted a flexible approach and has ensured that they make a breakfast pairing where breakfast and coffee are charged combine and is slightly cheaper that it would have been otherwise. Thus, the pricing strategy adopted by Starbucks is aimed reflecting its positioning statement and looks towards ensuring that the customer is able to develop better pricing mechanism Place: Starbucks has ensured that they have store at all the places where having stores will increase the business for the coffee giant. The coffee provider has looked towards identifying all the opportunities that the market provides and based on it has looked towards opening stores. Along with their individual stores Starbucks has opened their coffee outlets in big chains like Target and Barnes & Noble where the inflow of potential customers is high (Datamonitor, 2010). While opening new stores Starbucks has laid emphasis on ascertaining that people can sit in their stores and listen to music and read books. The emphasis has helped Starbucks select the store location with utmost importance which has helped them to increase sale (ICO, 2011) Promotion: Starbucks has been constantly promoting its coffee as specially brewed coffee which is fresh. The coffee producer has relied on in store promotions and has also looked towards diverse range of loyalty programs to promote its brand. Further, being in the business for ages has ensured that the logo of Starbucks is easily recognized by many which have helped them to grow their business and ensure better mechanism to promote their stores. The all round development and different promotion schemes has evolved in developing better brand image (ICO, 2011) People: Starbucks has also ensured that they hire the best available talent. The company has worked on a strategy where they hire people based on the local requirements of each stores. Specialized training is provided to the employees so that the necessary skills can be imparted to them and developed. This has helped Starbucks to evolve their business and ensure better services and satisfaction due to well trained and skilled employees that the organization has (Gamble & Thompson, 2011) Process: Since Starbucks work in the service industry the process has an important place in accordance with customer satisfaction. Starbucks has looked towards developing their process and ensures that they look towards providing the customers with the complete picture as the brewing of coffee takes place in front of them. In addition to it Starbucks has ensured that the entire process of delivering quality service to the customer is developed in such a manner that customer satisfaction is maximized (Datamonitor, 2010). Physical Evidence: The level of satisfaction that the customer has reveals the degree of physical evidence as services are intangible. Starbucks on this aspect has ensured that quality services are provided to the customer so that better customer satisfaction can be achieved. This has resulted in the growth of loyal customers and more and more customer looking towards Starbucks which reflects the manner in which Starbucks has been able to satisfy its customers. Implementation & Control This is an important step as being able to develop strategies and implementing them properly ensures that the company will be able to get the benefit of it. Starbucks on this front has an advantage as the strategies made by them have been implements. This can be seen from the growth of stores in all potential destinations which has helped them to grow their business and ensure better strategies to manage the business. In addition to it Starbucks has also been able to implement various strategies so that control can be exercised over it. This has helped them to use the strategies to the fullest advantage and has helped Starbucks to be able to implement different strategies which has grown their business to new heights. Conclusion Starbucks has thereby looked towards developing their marketing strategies and other areas effectively so that the business is able to gain efficiency and has better control. The company has identified the different aspect of marketing and has looked to use it in a manner that grows their business. Starbucks has identified the most important factors and based on it look towards developing their strategies so as to sustain growth References Bureau of Labor Statistics. 2011. REGIONAL AND STATE UNEMPLOYMENT —2010 ANNUAL AVERAGES. Washington, D.C.: Department of Labor Buckstein, J. 2010. Savvy Shoppers in a Brave New World. Bottom Line, 26(4), p. 28. Datamonitor. 2010. Drinks Market Watch: Starbucks. Datamonitor Gamble, J. E., & Thompson, Jr., A. A. 2011. Essentials of Strategic Management. New York: McGraw-Hill Irvin. Hannan, M. T. 2011. Organizational Analysis. Encyclopedia Britannica ICO. 2011. The Story of Coffee. Retrieved July 18 2012, from The international Coffee Organization: http://www.ico.org/coffee_story.asp Moreno, J. 2008. CONSUMERS / Blending coffee and frugality / A once-piping-hot trend cools off as java lovers try to economize. Houston Chonicle, p. 1 Northey, J. 2007. The Canadian coffee consumer: Understanding consumer preferences for Fair Trade coffee products. University of Guelph (Canada). Canada: A&I. NCA. 2008. National Coffee Association of the USA, Inc. National Coffee Drinking Trends 2008. NCA Market Resources Starbucks. 2012. Satrbucks Office Coffee. Retrieved July 18 2012, from www.starbucks.com: http://www.starbucks.com/business/office-coffee Thompson, Jr., A. A., & Strickland, A. 1999. Strategic Management (11 ed.). Mcgraw-Hill World Bank. 2010. Global Economic Prospects: Fiscal Headwinds and Recovery. World Bank Read More