Understand the individual elements of the extended marketing mix: Starbucks - Assignment Example

?Marketing Starbucks was established in 1971 as a small coffee outlet in Seattle. Over the years, the company has experienced tremendous growth and global recognition in the coffee and beverage industry (Pride 2011). The company has attained global leadership position in provision of the best coffee and unmatched customer experience. The mission of the company is to inspire and nurture human spirit (Pride 2011). The company is geared at enhancing customer experience through its marketing mix and product distribution strategies. Starbuck offers a wide product portfolio. Marketing Introduction The company specializes in coffee and other related beverages. Other products include non-fat milk, Frappuccino and gingerbread latte that is mainly sold during Christmas festivals. These include Italian espresso beverages, Tazo tea, blended creams, vanilla and other coffee brewing equipments (Pride 2011). Starbuck prices consider the costs of production. The company is geared at maintaining lower prices in most of the products including the quality coffee and tea. The company adjusts its prices depending on the changing prices of raw materials such as coffee beans in order to remain profitable. The company allows customer convenience in its place and distribution network. The coffee stores are strategically located in consumer chain stores, airports and sports clubs (Pride 2011). The company has extensive distribution network of coffee houses, stores, and franchise shops. In its promotional activities, the company stresses the quality of coffee and unique customer experience at Starbuck’s facilities over the prices. The company is geared at understanding the customers’ suggestions and receiving feedbacks from customers. The company has a reward program for loyal customers and has introduced Starbuck’s card which customers can utilize in making purchases (Pride 2011). In the extended marketing mix, Starbuck’s processes mainly include international license agreements and joint ventures (Pride 2011). Specialty operations in North American market include retail outlets. The company has implemented superior brewing technique that retains the original coffee taste and nutrients. The grinding process of the whole coffee beans ensures that the original aroma is maintained (Pride 2011). The company also procures the best whole beans from South American markets depending on a set criterion that ensures quality standards are maintained. Starbuck’s marketing mix also considers the people resources. The company is geared at attracting and developing the best coffee brewers and customer service personnel. The management led by Howard Schultz is committed to the mission and vision of the company through making strategic decisions that aim at accomplishing the objectives of the company (Pride 2011). Excellent customer service and relationships management is key to the success of Starbuck. Starbuck has not ignored the physical evidence that is critical in enhancing the customer experience in Starbuck coffee outlets. The coffee outlets provide a cool and ambient atmosphere where customers can relax and take coffee. The coffee outlets have enough parking lots for customers and provide added services like entertainment or magazines that are intended to enhance the customer experience at Starbuck’s outlets (Pride 2011). Starbuck’s product development and competitive advantage Starbuck’s products and brands contain certain benefits and features that are aimed at sustaining a competitive advantage in coffee industry. Starbuck’s coffee offers certain features and benefits that aim at retaining the market share and enhancing customer experience (Pride 2011). The first feature is emphasis on product quality through satisfying customers with delicious coffee with rich aroma. The ‘third place’ concept ensures that Starbuck’s coffee outlets provide an atmosphere where customers can relax away from home or work while enjoying their beverages. According to total product concept, the product consists of the core product, the tangible product and augmented product (Pride 2011). The core product offered by Starbuck is coffee while the tangible product consists of the associated physical benefits such as brand recognition, stylish designed coffee mugs and packaging of coffee beans (Pride 2011). Other tangible benefits that customers experience include the rich aroma, and variety of brands. The augmented coffee product offered by Starbucks includes the additional services which differentiate Starbuck’s coffee from that of competitors. These include the motivated employees, excellent brewing technology, visible coffee outlets, coffee delivery arrangements and cool atmosphere that include entertainment (Pride 2011). The coffee product line consists of Blonde roast coffee, dark roast coffee, flavored coffee, organic Yukon blend. Starbuck has a wide product mix that consists of coffee, chocolate beverages, petites, sandwiches, ice creams, fruit juices, yogurts, host breakfast and bakery products. Starbuck relies on customer suggestions in new product development (Pride 2011). The company starts by idea generation, screening the ideas for profitability and then concept development and testing. The company implements the marketing strategies for the new products and business analysis of the viability of the new product. If the analysis proves the new product to be viable, the company will develop the product and do market testing. After test marketing, Starbuck will commercialize the new product. Starbuck coffee has a long life cycle due to brand recognition and quality. Starbuck coffee products are currently at maturity stage thus the company has been forced to diversify in other associated beverages in order to maintain profitability (Pride 2011). How distribution provides customer convenience Starbuck ensures customer convenience through setting up coffee outlets that are strategically located in visible locations and near major shopping areas. The company utilizes multiple distribution channels for its coffee products (Pride 2011). The first channel involves direct selling in retail system through the company-owned coffee retail outlets. The company also sells through shopping centers and supermarkets. The company has entered in many distribution agreements with major international hotels, airlines and coffee suppliers. Licensing agreements enable other companies such as Kraft Foods sell branded packaged coffee and Tazo teas in warehouse clubs and grocery shops in UK and US markets (Pride 2011). Starbucks also relies on outside intermediaries and brokers and has direct contact with exporters of green coffee. Whole and ground bean coffees are mainly distributed through warehouse clubs and grocery shops. The coffee is traded on negotiated basis in order to reduce the risks of price increases or decline in supply. The company has formed long term contracts with suppliers (Pride 2011). Price and organizational and market objectives Starbuck utilizes numerous pricing strategies for its products. The company uses a premium pricing strategy for its recognized brands due to the psychological association with quality. The company adjusts its prices upwards depending on the changing economic conditions in the market (Pride 2011). The company factors the costs of raw materials and water in determining the retail prices of coffee. One of the core objectives of the company is to make a profit thus a considerable mark up is included in the final consumer prices (Pride 2011). In order to attract demand during off-peak seasons, the company lowers its prices in certain market segments. The company has been able to remain competitive in pricing through keeping its coffee prices lower that prices charged by competitors like McDonalds. The company has adhered to all ethical requirements in its business processes by avoiding discrimination on pricing and respecting all employees (Pride 2011). Promotional activities Starbuck is committed to aggressive marketing communications and maintaining cordial relationships with all customers. Promotional activities mainly include personal selling through passionate baristas and word of mouth from satisfied customers. The company also engages in public relations activities through charitable contributions, parties, nationwide coffee break and juicy paintings. Starbuck utilizes the pull strategy model by promoting and advertising directly to the consumer (Pride 2011). Sales promotions to consumers include sample vans, short coffee cups, holiday websites, newspaper advertisements and radio advertisements. The company also offers incentive cards like the loyalty program that rewards regular customers. Starbucks coffee has created an online community that rewards customers for making referrals to their friends through blogs, and social marketing platforms such as twitter and Facebook. The company has implemented both internet and online marketing through enabling customers to make reservations and make home delivery orders through the company website depending on customer locations (Pride 2011). Extended marketing mix These are the soft elements of the promotional mix and include the people, process management and physical evidence. Starbuck people are the most valuable assets of the company. Starbucks attracts, and trains the most talented baristas and customer service personnel. All people in the company are treated with dignity and respect (Pride 2011). The company also values diversity in work force since it value it has employees workers from different cultural origins. All customer service employees treat customers with respect, and are passionate about selling (Pride 2011). Customer complains and queries are answered promptly thus maintaining cordial relationships and satisfied customers. Starbuck is also committed to process management. The company procurement of raw beans ensures the standards of quality are maintained. The grounding, roasting of beans and preparation of coffee ensures that the original aroma, taste and nutrients are preserved (Pride 2011). The company ensures customers experience the physical evidence in coffee outlets. The coffee outlets and stores are conveniently located in shopping places where there is enough parking and cool atmosphere. Additional services such as newspapers, books and entertainment at the coffee outlets ensures that customers experience unique and memorable experience while having their coffee (Pride 2011). Conclusion The marketing mix consists of the product, place, price and promotional activities that aim at attracting and retaining customers. The product consists of the core product and additional features. The prices consists of pricing strategies intended to meet the objectives of the organization while promotion entails all integrated marketing communications that aim at persuading customers to purchase products. The place includes the distribution channels that aim at ensuring customer convenience. The extended marketing mix includes also the people resources, the management of processes in the organization and physical evidence of the services. Bibliography: Pride, W.M. 2011. Marketing principles. Melbourne. Cengage Learning. Read More