Development of Starbucks Coffees Marketing Strategy and Tactics - Research Paper Example

Marketing mix Marketing mix comprises a set of four key decisions that a company has to take into consideration before introducinga new product into the market. These four variables help the managers in an organization to develop appropriate key decisions essential for smooth running of any organization operation. These variables are; product, price, place and promotion (Ferrell, 2010). Product Products serve to be the first variable in the marketing mix. Every organization must make product decisions first before making any marketing plan. Product can usually be divided into three parts i.e. the core product, the augmented product and the tertiary product (Ferrell, 2010). Before a company enters the process of creating a product, it has to answer some questions like; what type of product do they want to sell, what would be the quality of their product and also decide whether they will label their product as only new or sub brand. Based on these questions, some decisions have to be made. These product decisions affect all other marketing mix variables e.g. launching a machine of the highest quality influence the price and marketing strategy to be adopted to promote it. Being the determinant of any other marketing variable, a product features can be altered to make it fit in the marketing mix (Ferrell, 2010). Pricing This variable is largely dependent on other marketing variables therefore calls for regular review. The key factors that affect the price of products are advertising expenses, marketing expenses, distribution cost of the product, cost of creating a product and any damage fluctuation in the market (Dogra, 2007). These factors varies independently thus causing price of a product to bear the brunt of changes for a certain period of time. The change in these other variables calls for reduction or increase in the price of the product accordingly. Other external factors also hugely affect the pricing strategy to be adopted by a company. Competition vastly determines the pricing strategy to be adopted by a company. Especially if, the two companies’ products are substitutes, then a company has to set prices that are appropriate to the so as to avoid losing the market advantage to the competitors. Some companies choose to use pricing as a tool to position their product. Others use pricing as a tool to support sales promotions. They give their esteemed customers sales promotions inform of trade discount (Dogra, 2007). Place This usually refers to the distribution channels a company uses to make its product to the market. A consumer based product requires proper distribution channels to ensure it reaches wider markets at the appropriate time (Ferrell, 2010). Premium consumer product usually requires certain distribution channels as they get transported only in selected stores and centers. Distribution has an enormous impact on the profitability of the commodity. Company that distributes it product on a vast region incurs colossal shipping cost (Dogra, 2007). This expense incurred may be reflected on the prices of the product thus making the product expensive to purchase. This in return lowers the demand of the commodity thus lowering the sales. Low sales leads to reduced profits. So for, a company to maximize benefit of its product, it must ensure that supply chain and logistic decisions get strong attention as they seriously affect costing decisions of a firm. For a successful company, management needs to have a clear proof logistic and supply chain strategy for its distribution. Promotions This variable involves full integration of marketing communications, advertising as well as sales promotion. Promotion in an organization is hugely dependent on the product and pricing strategy. For example, a new product in the market calls for detailed product awareness campaign. An already existing product requires frequent brand recall promotions (Ferrell, 2010). Promotion strategy in an organization significantly influences the segmentation, targeting and positioning of a product. Effective promotions may cause an increase in supply points, increase in cost of the commodity due to increase in brand equity of the commodity. The increase in earnings of a company as a result of advertising may assist the company in launching of more distinct lines of product (Dogra, 2007). However, despite the benefits of promotions, companies need to take proper care when planning on how to implement promotions in the market. Promotions are marketing expenses; thus failure to track it may cause a company to incur more overhead than the returns it gets from such a process (Ferrell, 2010). From the discussion above, we have seen that all the four marketing mix variables are interrelated and particularly affect each other. For example by increasing the pricing of a product, demand of the product may reduce, thus calling for minor distribution points. On the other hand, increase in promotions and brand recognition campaigns, will increase the demand of the products, this in return will call for better pricing and growth in delivery points in order to cater for the high number of customers(Dogra, 2007). . Part b Development of Starbucks Coffees marketing strategy and tactics Starbuck Company sells fresh and cold drinks. Being an American global coffee, it is one of the largest coffee companies in the world. Currently, the company is operating in over sixty one countries globally. To achieve all this success the company senior management has keenly been integrating the four marketing variables in equitable proportions. This has allowed this company to penetrate both local and international market despite the stiff competition (Hoffmann, 2008). Distribution Starbucks management has come out with strategies to enable the company achieve deeper market penetration. Its main goal is to spread its sales to its current customers without necessarily changing its products. To achieve this, company has opted to upgrade its distributions points by adding more stores In its current market areas thus making it easier for more of its customers to visit and buy the products they need (Hoffmann, 2008). In its effort to achieve efficient delivery of its products, the company has partnered with other firms to sell coffee in the supermarkets (Hoffmann, 2008). This has allowed the company to counter check the thrill of competition thus increasing its sales. Promotion Starbuck usually promotes its new product within each region. The company uses posters to promote their products in and outside their stores. Recently the company has embarked on a process to improve its push programmes, prices and product modifications. It has significantly improved it store designs, thus attracting more customers to plug in their stores more often to buy (Hoffmann, 2008).This has led to increase in sales of the company. As a way of promoting its product in the south, where customers tend to come later in the day, Starbuck has added more appealing dessert offerings as well as designed more secure locations (Hoffmann, 2008). This has made more of its customers feel comfortable to hang out in these premises especially in the evenings than in other social sites. This strategy has enabled Starbuck to hold a large market share in the south. Product Starbuck is known for its extra high quality products. Their main product is coffee, but they also provide non-coffee products to their customers. In attempts to increase loyalty of its current customers and to also attract competitors customers to its shops, Starbuck, has opted to develop new products and also to modify its existing product (Hoffmann, 2008).The company is currently increasing its food offerings in an effort to bring customers into its stores during tea breaks, lunch and dinner hours. This has enabled it to successfully increase the amount of the average consumer’s sales. To capture more markets both in America and other international market, Starbuck has decided to consider diversifying its products. It has started a program to start a franchise supplies outside it live market (Hoffmann, 2008). Currently the company is testing two new restaurants concepts i.e. cafe Starbucks and Cicada. These two restaurants are tested in an attempt to make Starbuck products to be more accessible to a large pool of customer. Pricing The company manufactures new summer drinks which it prices at a lower price than the rest of its beverages. This gives the company an opportunity to maximize it sales during the peak seasons when customers are on holidays (Hoffmann, 2008). References Ferrell, O. C.M. D. (2010). Marketing Strategy. Cengage Learning. Hoffmann, S. (2008). Are the 4 Ps of International Marketing of Equal Importance to All Firms. GRIN Verlag. Dogra (2007). Rural Marketing. Tata McGraw-Hill Education. Read More