Marketing Planning Process of the Starbucks Corporation - Assignment Example

Marketing Planning Process EXECUTIVE SUMMARY: Almost every other person is aware of Starbucks. Starbucks has a universal brand image and the company has been able to maintain its brand image all over the world. The company has been operating in most of the countries of the world (Roby, 2011). The management of Starbucks has been coming up with strategies and methods to maintain the position of the market leader in the industry. The company is known for its specialty coffee and consistent innovation in all products. Main focus of Starbucks has been on providing the customers with an experience that they have not witnessed before. For this purpose the management of Starbucks Corporation has been placing huge emphasis on not only external but also internal environment. In this report the external and internal environment of the Starbucks Corporation has been explored in order to identify different strengths and weaknesses of the company and to look for different opportunities and threats. This in turn will allow generating some recommendations for the organisation in order to come up with strategies for further growth and development. INTRODUCTION: Starbucks has been one of the most famous and well known coffee chains in the world. The company has been able to leave behind all competition because of the aggressive marketing and expansion strategies. Starbucks has around 15,000 stores and is present in almost 50 countries all around the world. The organisation entered the UK market in the year 1998 and has been growing since then. Starbucks is the leader in the specialty coffee all over the world. Apart from that Starbucks has been famous for its untiring marketing efforts in order to make coffee a regular part of the life of their customers. Starbucks follow the main strategy of reaching the customers at the places where they usually go like for work, for shopping, for travelling, and for dining. For this purpose the company has established partnerships with different third parties who have similar goals and philosophies. Apart from aggressive marketing, the management of Starbucks Corporation place huge emphasis on innovation in the product line. The management is of the view that the long term growth and success is directly dependent on the innovation in its products i.e. food and coffee. Along with this another factor which is important for long term growth is the customer satisfaction. For this purpose the management of Starbucks Corporation is highly concerned about the consistent customer experience at all outlets. Starbucks has been operating in UK successfully and it has been able to implement the organisational mission and vision in the region. However, it is important to consider that every geographical region has its own preferences and needs and in turn demands customised and specially designed marketing strategies. For this purpose it is important to investigate and understand the external market environment along with the internal organisational environment. By assessing the both external and internal environment, the company is able to identify its strengths and weaknesses along with any opportunities and threats. This enables the organisation to come up effective and efficient marketing strategies for consistent growth and development (Lenz and Engledow, 1986). EXTERNAL MARKETING ENVIRONMENT: In order to come up with effective and efficient marketing strategies it is important for the organisation to investigate and explore the external marketing environment. External factors and stakeholders have direct impact on the marketing strategies of the organisation which in turn effect the growth and performance of the company (Achrol, Reve, and Stern, 1983). In order to grab and retain the position of market leader in the United Kingdom coffee market, it is important for Starbucks to first analyse the overall situation of the market. The coffee market overall in UK has been reporting growth. In the year 2009 the total coffee sales in United Kingdom was reported to be around $ 1,235 million (Mintel 2010). The number of coffee outlets has also been increasing rapidly in the region. (Source: Rodenberg) Starbucks has been the market leader in the UK industry, but after the year 2007 Costa Coffee has more outlets as compared to Starbucks. (Source: Rodenberg) PESTEL Analysis: PESTEL analysis is an important tool to understand the external marketing environment of any organisation. Political: It is important to consider the increasing concern about the fair trade coffee beans. The coffee beans are produced in different developing countries and there are different political regulations associated with it including tariffs and taxes. Economic: Although the UK economy is reporting recovering trend, the effect of recent economic recession can still be witnessed. Because of the economic recession people have become more cautious about spending money because of increasing unemployment and debt. Social/Cultural: Despite of the recent economic recession, people are spending increasing money on coffee. In UK market the consumers spend around 623 million pounds on tea and 738 million pounds on coffee every year. The motive behind visiting the coffee outlets is not only to drink coffee but also to sit there and relax (Nielsen, & Mortensen, 2009). Environment: There has been increased awareness about the methods and ways the coffee beans are produced and grown. Customers prefer fair trade coffee beans, so companies should be careful about the methods of producing the coffee beans, the design of the supply chain, and the methods used for preparing and selling the products. Legal: There are different legal regulations associated with the working conditions, child labor, and other associated matters, as the coffee beans are grown in different third world and developing countries (De Pelsmacker, Driesen, and Rayp, 2005). INTERNAL FACTORS AND ENVIRONMENT: The marketing environmental analysis is incomplete without investigating the internal factors and environment of the organisation. The mission of Starbucks Corporation is based on inspiring and nurturing the human spirit. Starbucks gives considerable importance to the process of providing ultimate experience to the customers. For this purpose the internal environment of the organisation is also designed in similar manner. The organisational culture of Starbucks incorporates the concepts of team work, motivation, and respect. The employees are provided with good working environment so that they are able to give high performance. Apart from this the company has established proper methods and procedures to ensure that the process of purchasing, roasting, and delivering the coffee is performed in effective and efficient manner. The management of Starbucks is aware of the fact that most important asset for them is their human resource. The employees of Starbucks have main role in the success and growth of the organisation. The company has developed such a culture in the organisation that all employees are able to relate and associate them with the work they perform and find their work of high value (Kembell, Hawks, Kembell, Perry, and Olsen, 2002). In order to provide the customers with ultimate experience, Starbucks has designed specialty operations. In this way the company has been able to provide the consistent brand image and personality at all outlets. Apart from this Starbucks has developed a complete set of sourcing guidelines in order to motivate the suppliers of the company to provide quality material and on time delivery. SWOT ANALYSIS: Strengths: Starbucks is growing with the passage of time as the revenues grew from $9.77 billion to $10.71billion in 2010. In addition to the revenues, the net profit of the company also increased in 2010 as it reached $945.6 million. This growing revenue and profitability has been major strengths for Starbucks which will be beneficial in overcoming challenges it is facing (Starbucks Corporation). The other major strength of Starbucks is that it is the largest coffeehouse company across the world (Company Profile) with having more than 17 thousand stores in 50 countries of the world. Not only it is the largest coffee house, but the brands offered by the company have exceptional reputation in the market (Starbucks Corporation). Starbucks has been ranked as Fortune’s most innovative company in 2007 in the food service business (Behar, 2007). Also, BBC (2004) has ranked Starbucks as the market leader in the coffee industry. Starbucks has gained reputation not only in the international market, but it is highly reputable coffee shop in the UK market. Starbucks has been operating in UK market since 1998 and it has 65 coffee shops across UK (Starbucks). Organisational culture of Starbucks is another important strength as the company highly values its employees and it has been ranked among the Fortune top 100 Companies to Work For in 2005 (Starbucks). The environment offered by Starbucks for customers is an important factor which attracts customers. Weaknesses: Pricing strategy of Starbucks coffee against the pricing strategy of competitors is a weakness. Starbucks has faced criticism for offering unhealthy products. Opportunities: There are several opportunities for Starbucks to expand in the global market. In addition to this, there are further opportunities in countries where Starbucks is already operating which can be helpful in increasing sales of the company as well. Starbucks can further improve its technology which can be helpful in coming up with more innovative products. Threats: Increasing competition has been a major threat for the company. As Starbucks is operating in different countries furthermore it is looking to grow and expand its services in different countries, therefore it might be exposed to different political problems where it is already operating and in countries where it is planning to expand. Increase in prices of coffee beans has been a major concern in the last few years. People have started demanding more healthy products which is the reason why generally people have started avoiding coffee as it has caffeine in it. RECOMMENDATIONS: Innovation has been one of the key factors in making Starbucks such a successful brand over the years. Because of innovation, the company has not only been able to survive but expand its services in different parts of the world. Therefore, Starbucks has to continuously work on improving its quality and come up with more and more innovative products. As Starbucks has been operating in different parts of the world, so people in different countries will have different tastes, different preferences and different culture therefore it is important for Starbucks to alter its taste according to the preferences of the country in which it is operating (Warner, 2004). It has to adopt the philosophy of “Think Globally, But Act Locally”. Starbucks even though has its presence in 50 countries but it has to expand more in order to attract more customers and increase its sales. The company could evaluate different regions in the South Asia as well because only few big names in the coffee industry have entered this region, therefore it can be a profitable region to enter for Starbucks. As the increase in coffee bean prices has been a major concern for the company, therefore it can reduce and limit this risk by hedging coffee beans. Starbucks has faced several criticism and ethical problems in the last few years regarding environmental concerns, not using recyclable cups (Ethical Consumption, 2010), wasting of water (Lorraine & Flynn, 2008), quality of coffee (MSNBC, 2007) etc therefore it has to maintain its reputation which has been built in order to maintain its position in the market. CONCLUSION: The name of Starbucks has been associated with growth and development. The company has been able to attract such a huge target market. There is a perception that whatever is introduced by Starbucks will be a success. The company has been known for its constant innovations and technological advancements. All these factors have enabled the organisation to be able to grow and develop not only in United Kingdom but all over the world. List of References Achrol, R, Reve, T, and Stern, L 1983, ‘The Environment of Marketing Channel Dyads: A Framework for Comparative Analysis’, The Journal of Marketing, vol. 47, no. 4, pp. 55-67 BBC News 2004, ‘Store Wars: Cappuccino Kings’, BBC UK. Available from < http://news.bbc.co.uk/2/hi/business/3086727.stm> [Accessed 4 November 2011] Behar, H 2007, ‘It's Not About the Coffee: Leadership Principles from a Life at Starbucks’, Blackstone Audio, Oregon. Company Profile 2010, ‘Starbuck Coffee’. Available from [Accessed 5 November 2011] DE PELSMACKER, P, DRIESEN, L, and RAYP, G 2005, ‘Do Consumers Care about Ethics? Willingness to Pay for Fair-Trade Coffee’, Journal of Consumer Affairs, vol. 39, no. 2, pp. 363–385. Ethical Consumption 2010, ‘Starbucks Disposable Cups Deemed "Unrecyclable" By Major Recycling Companies’, Just Means. Available from < http://www.justmeans.com/Starbucks-Disposable-Cups-Deemed-Unrecyclable-by-Major-Recycling-Companies/21218.html> [Accessed 4 November 2011] Kembell, B, Hawks, M, Kembell, S, Perry, L, and Olsen, L 2002, Catching the Starbucks Fever. Available from http://www.academicmind.com/unpublishedpapers/business/marketing/2002-04-000aag-catching-the-starbucks-fever.html [Accessed 05 November 2011] Lenz, R, and Engledow, J 1986, ‘Environmental analysis units and strategic decision-making: A field study of selected ‘leading-edge’ corporations’, Strategic Management Journal, vol. 7, no. 1, pp. 69–89 Lorraine, V & Flynn B 2008, ‘The great drain robbery’, The Sun. Available from [Accessed 4 November 2011] Mintel 2010, Coffee –UK. Available from http://oxygen.mintel.com/sinatra/oxygen/display/id=479838 [Accessed 05 November 2011] MSNBC 2007, ‘A triple-venti-Americano-decaf surprise?’. Available from [Accessed 4 November 2011] Nielsen, F, & Mortensen T 2009,‘The story of Starbucks’, Cand. Merc. International Marketing and Management. Available from < http://studenttheses.cbs.dk/bitstream/handle/10417/577/ea_elisabeth_finn_nielsen_og_tina_holm_mortensen.pdf?sequence=1> [Accessed 4 November 2011] Roby, L 2011, An Analysis of Starbucks as a Company and an International Business. Liberty University, Lynchburg, VA. Rodenberg, J, Costa Coffee Vs Starbucks: Business Intelligence. Available from http://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdf [Accessed 05 November 2011] Starbucks 2011, ‘Starbucks Company Timeline’. Available from [Accessed 4 November 2011] Starbucks Corporation, Our Company,. Available from < http://www.starbucks.com/about-us/company-information> [Accessed 4 November 2011] Warner, M 2004, ‘Cup of Coffee, Grain of Salt’, New York Times. Available from [Accessed 5 November 2011] Read More