Marketing Report for Starbucks - Business Plan Example

MARKETING PLAN REPORT FOR STARBUCKS By Location Marketing Plan Report for Starbucks Executive Summary The Starbucks Company is a leading coffee house in the globe. It has over 20,000 stores in different regions of the globe and enjoys a remarkable reputation as one of its strongest assets and resource. In 2011, the company had a 33% of the American coffee market share and registered revenues of about $11.7 billion. The net revenues increased in 2012 and 2013. In 2014, the price of coffee beans seems to be soaring. This places a salient need for the company to adopt effective marketing strategies in order to register increased sales and a higher profitability. This marketing plan discusses the Starbucks target market, pricing strategies, promotions and distribution strategies as well as product strategies. These strategies bring into context the 4Ps marketing mix. The company will continue providing the Starbucks experience to its different target groups. The launching of new products and the adoption of online marketing strategies as well as international expansion will present a major shift in the percentage of sales. The entire marketing plan will cover a period of 3-5 years before its full implementation. The company will increase its budget for marketing purposes to about $200 million. Assessment of the progress will occur in each fiscal year. Starbucks Marketing Objectives Starbucks is a global coffee house with an outstanding reputation in different parts of the globe. Starbucks has been focusing on rapid expansion in an effort to increase its stores both locally and internationally. Specifically, the Starbucks Company intends to register increased sales in the current stores, as well as in the new stores that it is likely to open. Worth noting is the fact that Starbucks has a record of opening three stores on a daily basis. This means that the company needs to adopt a powerful marketing plan that can ensure that each of the stores registers high profit returns. In order to achieve this, Starbucks needs to focus on innovation in an effort to ensure that it provides customers with a wider range of products. In 2013, the stock price margins for the company rose to about 19.4% because the price of coffee beans was lower (‘Behind coffee store sales growth’, 2013, p. 1). The situation is different in 2014 because the prices of coffee beans have been increasing over time. Moreover, the company also needs to focus on online marketing and utilize its online space to the maximum. In addition, Starbucks intends to extend its promotion strategies and maintain the high quality customer service that it currently offers. Target Market Starbucks has identified its target markets. It relies on demographic segmentation, geographic segmentation as well as the psychographic segmentation. One of its main targets comprises of men and women whose age is between 25- 44 years. In the past, this target market has been contributing to about 49% of its sales. The reason why adults form the largest target market for the Starbucks Company is its ability to offer a third place in their lives through the Starbucks experience and atmosphere. Notably, many adults in this age group spent time at home and at work. After work, they may opt for a relaxing atmosphere where they can meet friends or even spend time alone as they enjoy a cup of coffee. Starbucks has been offering exactly what this group needs (Beverages: Starbucks in literacy drive with Tell Me a Story plan 2010, n.p). This explains why the company will continue offering an outstanding atmosphere and experience at all Starbucks coffee houses. Evidently, there is a need to increase the percentage of sales from this group by offering them a wider range of products that suit their taste. In addition, young adults aged between 18 and 24 years form the second largest target market for the Starbucks Company. Forty per cent of Starbucks sales are from this group. Starbucks has been offering the young adults who are mostly in college a place where they can carry out different activities. Starbucks redesigned its stores in an effort to ensure that it can provide students with an additional place where they can have a good time with friends as they take coffee, and even write their term papers as they enjoy a cup of their favourite drink (Blumenstyk 2014, p. 40). The Starbucks experience has been appealing to other college students who come to the coffee houses to study. Children and teenagers also form a target market for the Starbucks Company. Usually, Starbucks offers steamed milk or babyccinos as well as other coffee drinks, which are a favourite with teenagers. Children often visit Starbucks stores alongside their parents. In the case of teenagers, Starbucks is one of the places that they can hang out with their friends or have sometimes to study. Starbucks has remained appealing to this group by offering products that conform to their taste (Donovan 2014, n.p). Starbucks geographical segmentation has enabled it to have coffee stores in over 80 countries. In the next three to five years, the company intends to open more stores in regions such as the Asia Pacific region and Russia, which have a high potential for growth. Through psychographic segmentation, the Starbucks Company targets individuals aged 18 to 44 who view taking coffee as a “cool” activity. Moreover, this group of individuals likes hanging out with friends and spending time with families outside the home setting. Starbucks offers them a third place in their lives where they can go to either after school or after work and meet people as they enjoy coffee (Food & Drink: Starbucks in overhaul to boost global brand growth 2011, n.p). In order to attract more people who like hanging out, the Starbucks Company has formed partnerships and acquisitions that ensure that it offers a wider range of products. In the next three to five years, the company will still have these groups as its target market. By focusing on them, Starbucks can be sure to register an increase percentage of sales from each target group. Pricing Strategy When the Starbucks Company began, it targeted the middle class who could afford averagely priced coffee. However, the Starbucks Company introduced the Starbucks experience, which is not just about the coffee but also about the unique atmosphere and the customer service. By adding a high value to its products, through the purchase of the quality coffee beans, investment in staff training, and the redesigning coffee houses to offer the best experience and the environment to customers (Farrell 2010, p. 21). Its prices became a premium. Evidently, differentiation translated to benefit of the products, which qualifies the company to attach premium prices to the Starbucks experience. Over the years, the company has introduced value added services such as “the breakfast pairings” introduced in 2010. With value added products and services, the prices are likely to be higher. The company innovates highly in an effort to improve both its products and services. Therefore, the Starbucks experience will increase in the next 3 to 5 years (Joseph 2013, n.p). However, the pricing strategy will ensure that the company offers a range of products that vary in price in order to accommodate people from both the middle and upper class. Distribution Strategy The Starbucks Company operates through direct channels by opening company owned stores in different parts of the globe. Moreover, it has adopted the franchising option and has opened about 10,394 franchise stores across the globe, according to statistics released in March 2014. The company owned store number up to 10125 in different regions. This means that the company had 20595 stores on March 2014. As mentioned above, the company has international expansion as one of its core strategies (Sanchanta 2010, n.p). Through this strategy, the company opens about three stores on a daily basis. There are specific regions that will be the focus of expansion in the next three to five years in an effort to increase the sales and profitability. By the end of one year, the company will open about 1500 stores in the Asia Pacific region and South America. During the next three years, China will have more than 1500 stores because the company plans to triple the number of stores to about 1500 in 2015. This means that by 2016, China will have close to 2000 stores. In South Korea, the company intends to register 700 stores in the next three years. In the next five years, the numbers of stores in these regions are likely to soar remarkably. In India, the number of stores will increase in the next three years with further expansion in the next five years. The Starbucks Company has also adopted a direct distribution channel of its packaged coffee and tea (Zmuda 2010, p. 3). This means that these products are available in groceries and drug stores. In the next three to five years, the company will expand the direct distribution channels in an effort to ensure that the packaged products are available to higher numbers of customers. Worth noting is the fact that international expansion of the company has been fuelling growth in the past. Therefore, opening more stores in the future will ensure that the company registers an increased percentage of sales and profitability (Starbucks Plans India Expansion, 2012, n.p). For example, expansion into China and the Asia pacific region registered an 8% increase in sales. If the number of stores in this region increases up to the numbers mentioned above, the percentage increase of sales is likely to be higher. Worth noting is the fact that Starbucks has ventured into online distribution through its mobile application. The availability of the mobile application has registered increased sales for the company because over five million mobile transactions occurred in the United States alone. Therefore, in the next three to five years, the company will increase online shopping opportunities in an effort to promote the customer loyalty and increase the percentage of the sales (Starbucks Unveils Accelerated Global Growth Plans, 2012, n.p). Promotion Strategies Starbucks has been relying on television advertisements, website platforms, as well as email marketing as some of the leading promotion strategies. In the future, the company intends to diversify its online marketing platforms especially on social media. In the next three to five years, the company will introduce an online customer experience platform as well as online contexts that will help the company connect more with the customers and continue understanding their tastes (Starbucks Expands Card, Rewards Programs Across Brands, 2013, n.p). Other promotion strategies include offering a free drink after every 15 visits to the Starbucks stores. Product Strategies The Starbucks has focused on a high level of innovation in an effort to offer customers a wider variety of products suited to their specific needs and tastes. Each year, the company introduces a new product in its menu. This reveals the level of commitment exhibited by the company in its quest to provide premium products to the customers. In the next three to five years, the company will continue its plan of launching a highly innovative premium product on an annual basis. With the emerging healthy eating campaigns, the company will shift its attention to the development of healthy drinks and snacks. The company will therefore introduce them in the menu in the next 3 to 5 years (Starbucks Details Five-Year Plan to Accelerate Profitable Growth and Extend Markets, Channels and Formats around the World at Biennial Investor Conference, 2014, n.p). Estimated Budget In 2013, the company was prepared to spend about $150 million in implementing its marketing strategy. In the next three to five years, the marketing expenses are likely to rise to about $200 million. This is because promotional strategies as well as the cost of producing new products will be higher, according to the objectives highlighted in this marketing plan (Starbucks Corporation 2014, p. 15). Performance Matrix During the first year, in the implementation of this marketing plan, the level of success will be evident in the reports of each quarter. From these reports, the company will be in a position to predict the level of growth that the company will exhibit in three years. By the end of the five-year period, the company will have registered a remarkable growth exhibited by an increased percentage of sales and profitability (Marketing Week: FOOD AND DRINK: Frappuccino launch helps Starbucks extend reach, 2011, n.p). The sales and the marketing team will monitor the trends in an effort to ensure that the implementation of the marketing plan presents the expected results. The company executives will play a critical role in allocating the required funding that will make this plan possible. As highlighted above, the customer remains the most important stakeholder and the response from the customers towards the company’s products and services will translate into an increased percentage of sales. Bibliography Behind coffee store sales growth in Malaysia, Singapore, and Thailand, Starbucks is pushing growth plans in Asia, including China, and is to open its first store in Vietnam in early February in Ho Chi Minh City, the firm said recently, 2013, Pulp & Paper Week, 2013, Business Insights: Essentials, EBSCOhost, viewed 10 December 2014. Beverages: Starbucks in literacy drive with Tell Me a Story plan 2010, Marketing Week, Business Insights: Essentials, EBSCOhost, viewed 10 December 2014. Blumenstyk, G 2014, Starbucks Plan Shines a Light on the Profits in Online Education, The Chronicle of Higher Education, 40, General OneFile, EBSCOhost, viewed 10 December 2014. Donovan, F 2014, Starbucks boosts mobile offerings for the holidays, Fiercemobileit.com, 2014, Business Insights: Essentials, EBSCOhost, viewed 10 December 2014. Food & Drink: Starbucks in overhaul to boost global brand growth 2011, Marketing Week, Business Insights: Essentials, EBSCOhost, viewed 10 December 2014. 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