Starbucks marketing report - Essay Example

? Marketing Report Starbucks PESTLE Analysis Starbucks Corporation is one of the leading global US based organizations. This leading coffeehouse chain is headquartered in Washington. This coffeehouse organization is operating its business practices with its 20, 891 retail stores in 62 international countries (Lussier, 2008). The following PESTLE analysis will help to execute an external industry audit. Political High taxation on coffee bean producing farmers in several countries affecting the pricing strategy of Starbucks. Stability of political environment and government is the key factor for Starbuck’s enhanced business performance in global market (Pham-Gia, 2009). International trade tariffs of several countries are affecting business performance of Starbucks. Economical Recent financial crisis and global recession affected the business performance of the organization. Increasing unemployment rate, low disposable income of middle class people and limited purchasing power is the major consequence of global economic slowdown. Volatile exchange rates are also affecting business performance of Starbucks (Preston, 2012). Several competitors’ low pricing strategy is posing real threat to Starbucks. Social People are trying to consume healthy drinks to stay fit and avoid several health hazards. Moreover, people of higher income level are major target customers for this brand. Starbucks always introduce their retail stores in metro cities or urban areas based on number of footfall. The organization is continuously trying to improve the quality of products in order to target health conscious customers. Technological Starbucks is trying to expand their business practices in technologically developed or developing countries in order to apply advanced technology in business process. The organization is continuously trying to enhance their internet facilities. In the year 1998 the organization launched their e-commerce website (Henry, 2008). They are promoting their product through effective social media marketing in global market. Moreover, the organization is trying to improve their business process and effectiveness of R&D through the implementation of advanced technology. Environmental The organization is committing to practice several CSR practices to bring sustainability in society, environment and their business process. Effective communication with employees, customers and vendors is increasing the brand reputation of Starbucks in global market (Pride & Ferrell, 2011). The organization follows environmental rules and regulations of several countries in order to avoid legal challenges. Legal Employment rules and regulations differ from country to country. Restriction on maximum working hours and minimum wage rate need to be considered by the organization in several countries to continue its business operations (Allen, 2012). Lastly, strabucks need to follow health and safety standards to maintain effective work environment. Starbucks SWOT Analysis SWOT analysis of Starbucks will help to determine Starbuck’s internal strengths, weaknesses and external opportunities and threats. Strengths Stable earnings and revenue of Starbucks is major strength of the organization. The organization is ahead of its several potential competitors in terms of financial profitability and strengths. It is the most leading and recognizable brand within global coffeehouse industry. Effective leadership strategy and innovative vision of Strabucks are one of the important assets of organization. Loyal customer base across the globe is the major competitive advantage. Effective location of retail stores based on market demand is the most successful business strategy of Starbucks. Effective brand extension strategy and high quality of products have increased customer preference. Weaknesses Aggressive business expansion strategy can lead to cannibalization. It can dilute the Starbucks experience. People are trying to consume healthy products. It has found out that several products of Starbucks contain high level of fat and calories. In adequate quality of product can reduce the business performance of Starbucks. The organization hugely depends on its major competitive advantage, i.e. retailing of coffee. This strategy can slow down business diversify activities. Several internal supply chain issues are affecting the business operations of Starbucks. Organization is failing to target middle class people due to its premium pricing strategy. Opportunities Starbucks should try to control the quality issues. They need to provide products according to the current market demand. Products of superior quality will help the organization to maintain its market. The organizations should try to expand their business operations in emerging global countries. They should try to maintain sustainability in business practices in order to increase its brand image in global market place. Innovative product and service marketing strategy will develop effective client base in global market place. Threats Increase in the price of several dairy products and coffee is developing critical risk factor for Starbucks. McDonald’s is expanding McCafe stores. Low pricing strategy of McDonald’s is affecting the business performance of Starbucks (Dransfield, 2001). Low disposable income and purchasing power of middle class people due to economic slowdown reduced sales of products. Several employment and legal policies in different countries is posing major threats to Starbucks. Starbucks is one of the leading global organizations within the global coffee chain industry. The organization is focusing on several CSR activities to bring sustainability in the business practices. It is true that the organization is operating its business practices in different countries. Therefore, it is important for the organization to maintain the sustainability in business process. They always follow their organizational values and several business laws in different countries to avoid legal challenges. Recently, people around the globe are trying to consume healthy drink products to avoid health hazards. Starbucks needs to target and tap those customers to secure their market share (Boone & Kurtz, 2011). Moreover, they need to maintain the quality of products in case of product differentiation in various countries. The organization is facing huge competition from its potential competitors. They need to control the business operation cost while introducing new products for the middle class people through competitive pricing strategy. Four Fundamental Areas According to the SWOT analysis of Starbucks, it can be stated that the organization is facing several external environmental problems that are affecting the business performance of the organizations. Marketing objectives may be defined based on following four areas. International Diversification. Competitive Pricing Strategy. Healthy Coffee drinks with zero calorie level. Effective promotional strategy to increase brand awareness and sales of products. SMART Marketing Objectives SMART Marketing objectives will help to enhance the business performance of Starbucks in future. Specific Sales of the products will grow by 10% a year for next three years. Measurable Diversification in four emerging countries in next three years. Attainable Increase sales by 5% in next two quarters. Realistic Achieve a net profit margin of 10% in next three years. Time Obtain 15% market share of Coffee chain industry by 2014. Various types of Marketing Strategies Starbucks can undertake several types of marketing strategies in order to improve their business performance and overcome several issues. The organization can adopt marketing mix strategy in order to enhance their product, pricing, promotional and distribution strategy. Moreover, the organization can implement Porter’s generic strategy to become the leading player based on several parameters, such as cost, focus and differentiation strategy. Positioning is another important strategy that can help marketing team of an organization to position their products and services according to the market demand and customer preferences. Justification of Strategy Adoption Starbucks need to focus on marketing mix strategy and Porter’s generic strategy to improve their business performance and reduce competitive threats. It is true that the organization implemented niche marketing strategy (Mangold, 2010). Recent economic slowdown forced global customers to purchase less and save more. Therefore, it is important for the organization to revise the pricing of products through effective marketing mix strategy. On the other hand, implementation of Porter’s cost leadership generic strategy will help the organization to control operation cost. They need to introduce new products for the people of middle class income level. Moreover, they need to implement competitive pricing strategy for the products. This strategy will help the organization to introduce competitive priced products. Marketing Programmes This part of the study will outline a series of 5 planned marketing actions for above marketing strategies. Marketing Actions Date Promoting through social media network and health magazines. September 1, 2013 They need to offer free trial with regular products through retail stores to develop potential customers. October 15- December 21, 2013. They need to evaluate customer’s idea. Entire January, 2014. They need to implement gold or platinum loyalty plan for potential customers through stores or company websites. From February, 2014. Then they should promote these products in international markets based on market demand of that country. August 1, 2014. Reason behind the Actions It is important for the organization to promote new products before introducing it in the market place. Offering free trial with regular product for 2 months will help the organization to gauge the demand for the newly developed product. Moreover, it will develop effective brand awareness in customer’s mind. The organization should introduce customer feedback process. This strategy will help to consider effective customer idea that can enhance the product performance (Stokes & Lomax, 2008). Customer loyalty plan will motivate the potential customers to consume that product. It will increase the customer’s loyalty towards newly developed product. If the product achieves success in a specific market, then the organization can promote it in other country based on market demand and preference of customers. References Allen, K. (2012). Launching New ventures. Stamford: Cengage Learning. Boone, L., & Kurtz, D. (2011). Contemporary Business. New Jersey: John Wiley & Sons. Dransfield, R. (2001). Corporate Strategy. New York: Hinemann. Henry, A. (2008). Understanding Strategic Management. New York: Oxford University Press. Lussier, R. (2008). Management Fundamentals. Stamford: Cengage Learning. Mangold, C. (2010). Starbucks: Success Strategy and Expansion Problems. Berlin: GRIN Verlag. Pham-Gia, K. (2009). Marketing Strategy of Starbucks. Berlin: GRIN Verlag. Preston, C. (2012). Event Marketing. Sage: London. Pride, W., & Ferrell, O. (2011). Marketing. Stamford: Cengage Learning. Stokes, D., & Lomax, W. (2008). Marketing. Stamford: Cengage Learning. Read More