Marketing Plan for Starbucks - Case Study Example

Marketing Plan for STARBUCKS 8/29 Marketing Plan for STARBUCKS Executive Summary Starbucks coffee store has grown from a tiny coffee shop byZiev Siegel, Gordon Bowker, and Gerald Baldwin in 1971 to worldwide favorite coffee of all. It has more than ten thousand coffee shops in almost more than thirty countries of the world. Of these ten thousand, four thousand and two hundred shops are licensed and franchised too. Rests of the outlets are owned by the company itself. The main motto of Starbucks is to establish as the “most well-recognized and respected brand all around the globe” (Moon, 2003). The current growth of Starbucks relies on product innovation, retail expansion, and also service advancement. It is due to the fact that Starbucks wants to accomplish long-range goals which were set by the chairman Howard Schultz. He enlightened the motto by quoting it, “The idea of Starbucks was to produce a chain of coffeehouses that would then come at third place in America. Today, most Americans dwell in just two places throughout their lives- work and home. Americans need to find a third place where they can enjoy and relax and just be themselves.” He visualized a place which will be different from work or home, a place that will be different for different people (Moon, 2003). By following this rule, Starbucks plans to open new stores by expanding in new markets, as well as open stores in existing markets. Also by increasing their product development method, and provide service to customers that they need to successfully enhance their financial position and also capture the maximum market share (Starbucks Official Website, 2012). Introduction The Starbucks Corporation is based in Seattle, Washington and is an internationally recognized coffeehouse chain and company. It sells espresso based hot drinks and drip brewed coffee, coffee beans, Panini, snacks, sweet pastries, cold and hot sandwiches, salads, coffee beans and items such as tumblers and mugs. The company also markets music, film, and books and has a Starbucks Entertainment division. It also has a Hear Music brand. Most of the products by the company are either local or seasonal. Starbucks coffee and ice-cream are also sold at grocery stores (Starbucks Official Website, 2012). Market Analysis Relative Market Share www.starbucks.com SWOT Analysis Strengths Starbucks came in one of the Fortune Top 100 Companies to Work For in the year 2005. The company is valued among its employees. It is a very profitable corporation which earned more than six hundred million dollars in the year 2004. Company also produced revenue of around five thousand dollars during the same year. It is a worldwide recognized brand of coffee which has a good reputation for its best services and products. It has more than nine thousand cafes in more than forty countries. The corporation has well-built ethical values and has a ethical mission statement as well which is, ‘Starbucks is inclined towards a role of ecological leadership in all areas of business’ (Starbucks Annual Report, 2011). Weaknesses Starbucks is known for its new product innovation and art of creativity. But, they remain susceptible to the prospect that their development may weaken sometime. The firm has strong presence in America with almost more than 1/3 of their cafes situated in their home market. It is often thought that they need to spread in different countries so that their business risk is spread out. The corporation is basically based on competitive advantage which is retail of coffee. This could trigger a slow and gradual diversification into other sectors of the business that needs improvement (Starbucks Annual Report, 2011). Opportunities Starbucks makes use of its opportunities smartly. The company made a CD burning service in 2004 in Santa Monica (located in California USA) café in a partnership with Hewlett Packard where customers can produce their own music CD. Fair Trade products can be retailed in their cafes as innovative products and services. The company can also look into expanding globally. Potential markets include Pacific Rim and India. Co-branding is also an opportunity for the firm to expand its operations to food and drink and begin brand franchising (Starbucks Annual Report, 2011). Threats Nobody can predict if coffee will remain popular among consumers in the future or another beverage will take over this industry. The cost of coffee and dairy products is increasing rapidly. Since its beginning in Pike Place Market, in Seattle in 1971, Starbucks has been exposed to many copy cat brands and competitors that cause threats for Starbucks (Starbucks Annual Report, 2011). Financials As of 2011 Net Revenues (in Billions) Years Net Revenues (in Billions) 2007 $9.4 2008 $10.4 2009 $9.8 2010 $10.7 2011 $11.7 www.starbucks.com (Annual Report 2011) Marketing Strategy Starbucks has attempted to increase their brand awareness and has taken several steps in order to conform to the criterion of the leading companies in the industry. It has set its own target market and targeted them specifically by designing a marketing plan. The marketing mix is strictly followed by the company so as to attract the consumers in a flourishing industry. The four elements of the marketing mix are described below: Product Starbucks has an extensive range of products to offer. From eco-friendly coffee makers, cappuccino, to whole bean coffee Starbucks have established great dimensions in coffee. Its product range has grown from coffee and pastries to smoothies, oatmeal, and wraps to keep in line with competition as well as satisfy its customers. It has also enhanced its product line to innovative products such as Tazo Tea Infusion and Instant via Ready. “Tazo Tea Infusions” and “Full Leaf Tazo Tea” Lattes are the new offerings by the company by which it plans to attract the tea lovers towards the brand. “Instant via Ready” is an instant coffee which is different from the regular brewed coffee by the company known as Jargon. Company also caters Starbucks cappuccino and coffee makers for customers who want to replace their existing coffee makers at home (Edwards, 2008). Price Starbucks has always charged a premium price for its products from its consumers. It is due to the affluent image linked to its brand. The company has now begin to offer bottomless 8 ounces cup of coffee, which you can get with unlimited refills which is priced 50cents less than any other Starbucks product (Jennings, 2009). Place Starbucks is simply found anywhere, yet everywhere. It can be found anywhere where it attracts heavy traffic for its stores. The location of Starbucks is very favorable for individuals who are on the go and enjoy listening to music or reading. The new endeavor by Starbucks is to “localize” it by setting stealth outlets where store will be named after the street it is situated on and products have no Starbucks logo on them, rather name of the street they are situated in (Allison, 2009). Promotion There are several promotional methods used by Starbucks to promote its brand. These are as follows: Starbucks cards are used by the company to offer customers the chance to endorse the products of the company via referral system. Gift card not only promotes brand loyalty but also attracts new customers. Starbucks delivers coffee services to office without any restrictions on size. Philanthropy as a means for promotion- Starbucks gives services to non-profit firms to enhance its brand image and also to create brand awareness among different communities (Starbucks Annual Report, 2011). Potential Risks Every prospering company has some risks. Starbucks do so too. The major risk Starbucks face is that consumers might not react optimistically to the changes and alterations made. There are not enough employees at Starbucks to cater the needs of customers during the rush hours which lead to long ques. There have been claims of discrimination and prejudice over the price of Starbucks’ products sales which can have a negative impact on the youth. Furthermore, the costs attached with the proposed changes are also a very big risk (Starbucks Annual Report, 2011). Short and Long Term Projections The short term goals for Starbucks include the expansion of Starbucks market worldwide everywhere possible and yet profitable. Starbucks does not franchise though, it can license its products or come in mutual agreements with different parties. The long term projection of Starbucks is to be as much as a recognized brand as Coke (Starbucks Annual Report,2011). Conclusion Starbucks is growing worldwide with its immense marketing efforts. It is applying “value strategies” that would highlight more on the inexpensive products made of coffee than being considered as unaffordable and expensive. For instance, the company introduced $3.95 pairing of breakfast which includes its most wanted breakfast items with coffee, and also highlighted the $2 brewed coffees except the costly specialty beverages. The explanation of company’s history, with regard to the present practices of marketing, allows one to define Starbucks strategy of marketing as ‘differentiator’. As explained before, coffee is available everywhere these days and Starbucks has to stand out as an experience rather than just selling coffee (Jennings, 2009). Recommendations The company needs to stand out as a corporation that not only sells coffee, but sells ‘experience’. In order to give experience, company is focusing on differentiating products and every outlet by giving it a street name to satisfy the specific needs of the customers. Company has changed the logo according to every street and every neighborhood to make it more localized. But, then what about the Starbucks globally recognized logo? Starbucks needs to maintain its logo and name. It needs to sell its products by giving the products and services in a Starbucks style. Starbucks needs to maintain its uniqueness in the market place. Discounting its products is definitely not an option for Starbucks as it needs to reinforce prestige to its products. By changing the logo, that prestige and class of Starbucks people look towards is deteriorating. Starbucks need to maintain its formal old logo and work with it. Starbucks needs to tweak its drip coffee so that it is less bitter. Starbucks need to have an on call to fill in staff because there are times at Starbucks when it is jam packed and there is no cashier. So customers leave the line when twenty people are already waiting there. It should also have a centralized food refill or replacement area because they are out of resources most of the times. Starbucks should also offer free Wi-Fi service in its coffee house so that customers feel at home. Also, Starbucks need to have a variety of drips- both light and dark because nowadays it is must. Starbucks should improve the third place environment. It has a high turnover rate which the management should look into and consider employee issues and try to solve them so that employee turnover reduces. Mostly, managers are sent to other places, i.e. other stores, so that their performance can be improved but the genuine reason might be too much work for one employee. To decrease the rate of employee turnover, Starbucks should give benefits to the older employees whenever possible. It should increase the performance rather than just caring for economic reasons. Additionally, Starbucks should buildup and maintain a good reward system for all employees and features activities such as ‘employee of the month award’. Lastly, a developed system of standard employee meetings and communications should be pertained in the corporation. Starbucks has a poor handicapped facility which should improve urgently. The condition of restrooms is not good and it is not equipped with any baby changing area. Starbucks should immediately enhance the quality of restrooms. It should redesign the restroom and create a distinct room for supplies from the bathroom or to move cleaning things to another area. A baby changing room should be added immediately. The front door should be upgrades and there should be restrooms for the handicapped. Also, employee attention should be focused on washroom cleanliness. Rather than discounting products or adapting localization, Starbucks needs to concentrate on its differentiated atmosphere. It should take advantage of its entertainment budget to recruit outside entertainers such as book or poetry readers. Also, games and activities should be displayed immensely in the coffee house. A third place should be more like a “scene” for Starbucks. References Moon, Youngme, and John Quelch (2003). Starbucks: Delivering Customer Service. Harvard College. Boston: Harvard Business School, 1-20. Jennings, Lisa(8 March, 2009)."Upscale brands positioned as less luxury, more valuable." v43 i10 p1(2). Nations Restaurant News. ONLINE. Available at: http://galenet.galegroup.com.proxy.lib.wayne.edu/servlet/BCRC?vrsn=unknown&locID=lom_waynesu&srchtp=glbc&cc=1&c=52&mode=c&ste=72&tpc=Products+%26amp;+Services&tbst=tsCM&tab=2&ccmp=Starbucks+Corp.&mst=starbucks&n=25&docNum=A196051969&bConts=13247&finalAuth=true Edwards, Marce (30 December, 2008) "New tea drinks coming to a Starbucks near you." The News Tribune. ONLINE. Available at: http://blogs.thenewstribune.com/business/2008/12/30/new_tea_drinks_coming_to_a_starbucks_nea Allison, Melissa (16 July, 2009). "Starbucks tests new names for stores." The Seattle Times. ONLINE. Available at: http://seattletimes.nwsource.com/html/localnews/2009479123_starbucks16.html Starbucks Annual Report (2011). ONLINE. Available at: www.starbucks.com Starbucks Official Website (2012). ONLINE. Available at: www.starbucks.com Read More