Starbucks Advertisement for Choco Banana Frappuccino, A Blended Ice Coffee Drink - Term Paper Example

Business Research on the New Starbucks Advertisement for Choco Banana Frappuccino, A Blended Ice Coffee Drink Research Industry Information Size of the Market Pennington (2005) observes that Starbucks specialty coffee has tremendous market size as evident by the nearly fifty per cent of specialty coffee drinkers in the United States alone. Their age ranges from teenager to matured adults. These are the market segments which drink coffee almost everyday. Coffee shops revenue in 2003 reached to $8.47 billion (Pennington, 2005). In the study by Ertz (2004), there is an observed incremental increases in the everyday consumption of specialty coffee. Figures show that the nine per cent in 2000 increased to sixteen per cent in 2004. On the other hand, occasional consumption of specialty coffee has peaked to fifty-six per cent in the same year. Major Competitors and Their Market Mix The Tim Hortons is one of the competitors of the Starbucks. This company has more than two thousand eight hundred stores internationally. Their stores provide customers with coffees, cappuccino, baked products a lunch menu. There are almost a hundred locations which are operated by franchisees (Tim Hortons Inc. Company Overview, 2007). Another competitor is the Diedrich Coffee. This company operates three hundred eighty coffeehouses in the United States of America. Diedrich operates under the Diedrich Coffee, Gloria Jean's, Coffee People, and Coffee Plantation brands. These company offers cappuccino, latte, other Italian-style beverages, food items, whole bean coffees as well as coffee accessories. It has its own roaster facility located in California, U.S.A. It is involve in retail and wholesale of coffee beans. Another competitor, the Tully's Coffee has retracted its expansion plans after meeting financial difficulties due to its expansion programs. Another company, the Peet's Coffee and Tea has sixty-two stores whose principal owners sold the then-fledgling Starbucks in 1987. In the past years, this company has shifted its attention to increasing other distribution channels like grocery stores, online coffee bean sales and service catering. The AFC Enterprises, the number two operator of fast-food chicken restaurants, owns or franchises nearly four thousand chains. It also owns Seattle Coffee. Seattle Coffee Company is the arm of Atlanta-based AFC Enterprises that runs its Seattle's Best Coffee and Torrefazione Italia Coffee. The roughly 220 chains of Seattle Coffee has its own strategic locations with sure markets along with international growth and street-side locations, Schickler told analysts recently. Seattle's Best also is developing a drive-thru kind of store and a possible expansion with a "major" drug-store chain, Schickler said (Peters, 2002). James (2002) explains that a report on the U.S. coffeehouse market by Chicago-based market-research firm Mintel International Group Ltd. Stated that coffee shops chain wishing to expand to reach the size of the Starbucks find difficulties dus to insufficient resources. The solution for this, as recommended by the Mintel International Group Ltd. Is to enter into consolidation agreement in order to meet the desired expansion. This may be possible in the future. Table 1. The Starbucks Company’s Market Mix Strategy. Source: Starbucks U.S. and Japan, China, and Taiwan. http://www-rohan.sdsu.edu/~msaghafi/Starbucks4EMBA.doc Target Market Middle and upper class. Position Function as “the third place” between work and home. Product Mass customization of standardized product. Price Medium to high priced Place Put up numerous coffee shops in highly inhabited locations. Choose heavy-traffic places and strategically visible coffee shops to make certain of the consumers recognition of the brand name. Distribution Retail specialty coffee beverage and whole coffee bean stores, grocery outlet, licensing Promotion Influence nationwide existence and location approach to attain far above the ground brand consciousness. Promotion at the Starbucks coffee shops, giving out Starbucks cards, seasonal promotions, local art promotion, advertising print, outdoor. Target Markets for the Industry As of October 1, 2006, the Company's licensees operated 3,168 stores in the United States of America, alone, excluding its international stores. During fiscal 2006, 426 new International licensed stores were opened. At October 1, 2006, the Company has 2,170 licensed international retail stores. Natural foods customer's profile of Starbucks are usually married, college-educated, 35-45-years old, with an household income of $60,000 and is likely to live in a West-coast city (Griswold, 2000). The target of this company is to provide superior customer service to the coffee drinkers from across all segments of the market. However, based on the past trends of customers coming in, they are from the middle to upper segments of the society (Stoll, 2006). Research on the Starbucks Company Sales Information On April 25, 2005, Starbucks introduced a number of specialty coffee which includes such new drinks as Java Chip (Stoll, 2006) and Strawberry and Cream Frappuccinos” (Schultz and Yang, (1997). The Starbucks has a plan to expand through additional 25,000 stores worldwide”. The company reported earnings of 67 cents a share for fiscal 2003. Table 2. Starbucks Corporation’s Financial Figures for the Fiscal Year-End September 2006. Sales (USD million) 7,786.9 Per cent One-year Growth in Sales 22.3 Net Income (USD million) 564.3 Per cent One-year Growth in Net Income 14.1 Product Mix The Company's retail sales mix by product type during fiscal 2006, consisted of beverages (77%), food (15%), whole bean coffees (3%), and coffee equipment and other goods (5%). Starbucks offer a wide variety of products. Based on the accounts of the Sta. Clarita Valley Living Magazine issue in August 3, 2006, Starbucks stores (on nearly every corner in the SCV) have an extensive selection of frozen drinks. They also went bananas with the Banana Crème Frappuccino, Banana Mocha Frappuccino and Banana Coconut Frappuccino. Currently, Starbucks try fruity flavors. The new Tangerine Frappuccino juice blend is a tangy blend of Tazo Passion tea, tangerine, and a splash of lime flavor blended with ice. The new Pomegranate Frappuccino is made with Tazo green tea, a lively mix of pomegranate and other exotic flavors and blended with ice. Prices: Frappucinos and Blended Crèmes — Caramel/Caramel Light, Mocha/Mocha Light, Coffee/Coffee Light, Java Chip, Caffe Vanilla, Strawberries and Crème, Vanilla Bean, Blackberry Green Tea, Bananas and Crème, Banana Mocha, Banana Coconut, Double Chocolate Chip (pricing varies by drink $2.75 to $4.15). Iced Caffe ($2.60 to $3.45), Iced Macchiato ($3.05 to $3.90), Ice Café ($1.75 to $2.40), Iced Coffee ($1.85 to $2.50) and Iced Coffee Con Leche ($1.85). Target Market Stores did about half of their business by 11 am to cater to more than five million clients every week. Clients would normally comes back to Starbucks coffee shops 15 to 20 times a month, spending perhaps $50 monthly. Some customers were Starbucks fanatics, coming in daily. The Starbucks staff make an effort to learn the names of their regular customers and their favorite drinks. Starbucks is essentially buying a commodity good and selling it as a luxury good. Coffee that is sold as a luxury good is considered "specialty coffee". It must be of a single variety specific to a given growing region, and must be free of a given minimum number of defects per barrel sampling. They are sold in these stores due to popularity or particular taste distinction, but they are not a luxury good, and do not command a higher price. The reason you only ever see blends sold in Starbucks' retail stores is due to their habit of attending coffee auctions and literally buying the leftovers, bags of coffee with too high a number of defects to qualify as specialty coffee. These already inferior beans are usually mixed with high-yield, low-quality, low-grown Arabicas from Vietnam and Brazil in order to keep prices down. Make no mistake, the word "Arabica" does not qualify a coffee as specialty-grade anymore than a burning BMW impaled on a telephone pole qualifies as a luxury car. Now as a consumer, you drink this sort of coffee all the time, in diners or in the office, and you pay 60 cents for it, and fair enough I say. But Starbucks sells you this exact same coffee, intentionally mislabels it as a luxury good, and charges you out the ass for it. Couple that need for higher volume with Starbucks' effective strategies and you have a dire outlook for any poor schmuck who wants to actually buy specialty-grade coffee, since many actual retailers of specialty-grade coffee are put out of business or forced to relocate as a result of these practices (Commodity vs. Luxury vs. Starbucks, 2004). Opportunities/Risks Faced by the Company With more than 7,500 stores already in existence around the world, Starbucks has plans to open 1,300 more stores--many in international locations (Starbucks looks at new opportunities, 2004). In the United States, Starbucks is looking to bring more customers into its stores with products that will appeal to more than just coffee and tea drinkers, Hear Music stores are debuting in the Seattle area and are bringing music lovers and coffee (Starbucks looks at new opportunities, 2004). Efforts to invigorate the frappe product category tend to focus on select issues like new product opportunities such as fortification and functional beverages. If the customers are trying to keep their fat and sugar intake down but still want their frappuchino, this is a healthy drink for them. To Starbucks' credit, they have educated the entire country that it is alright to spend $3 on a latte (James, 2002). In order to support their increasing demand and assist their suppliers, Starbucks guaranteed the purchase of the coffee bean from their farmer subcontractors at premium prices. This is a big risk for the Starbucks Company. Types of Campaigns Used in the Past by the Starbucks Company The type of campaigns use by Starbucks in the past are those breakaway campaigns, packaging, and promotion. As a result of which, Starbucks has become one phenomenal brand by applying breakaway strategies in the Starbucks, Inc. (Kelly and Silverstein, 2005). In the past campaigns of the Starbucks Company, consumers benefit from on-the-spot convenience and a message individually tailored to their needs. Every Starbucks coffee shops consider the incorporation of specific décor and related treatments that reflect the host neighborhood. As with other partnerships, a credible company, the Johnson Development Corporation has partnered with the Starbucks Company through joint ventures finances, marketing operations and development. This joint venture served communities in key metropolitan cities. The jointly owned stores have become the social centers in their communities. Through this, Starbucks inspired the old-fashioned specialty coffee customers. Proposals for an Advertising Campaign for 2007 Objectives Overall Marketing Objective The overall marketing objective of this proposal for an advertising campaign in 2007 is to launch nationally, regionally and internationally with a wide coverage of consumer awareness on the Choco Banana Frappuccino, a blended ice coffee drink of the Starbucks Company. Advertising Objective Through this advertising campaign in 2007, the advertising objective will be to maintain the efforts by the Starbucks Company in sustaining its top status in the industry of specialty coffee. It is also aimed in this advertising campaign in 2007 to sustain its win in an even wider coverage of consumers through maximization of the virtues of top quality product as a vehicle in pushing up sales and consumption nationally, regionally and internationally. Advertising Plan and Strategy Theme The media strategy to be used in the advertising of the Starbucks frappuchino will be the “Mainway’s Morning Assault“ (Hortons, 2002). According to the Strategy Magazine, this media strategy is based on the essential buying and consumption habits of the people. This strategy will make sure that the buyers woke up each day looking for coffee in the morning. Radio artists will be hired to create a radio commercial intended to be announced every morning. The focus will be on the beneficial effects of the ingredients of the Choco Banana Frappuccino. The recipe for the blended Choco Banana Frappuccino are six ounces cold milk, one half ounce chocolate syrup, one half ounce banana syrup and 1 shot espresso. A mix of 30- and 60-second spots will feature famous personalities who are into regular morning coffee habit. Newspaper and in-store headlines will also be launched nationally, regionally and internationally. This will help reinforce the Starbucks brand personality. Through this advertisement, Starbucks can turn specialty coffee into a billion-dollar business, thriving by focusing on how the consumer wants to receive its offering. This offering will include the full experience, the ambience and most specially the service level. The Starbucks will invest in this advertising campaign in 2007 in building its brand by ensuring that the customers have a consistent, positive, enveloping experience, leading to loyalty and strong word-of-mouth. The television, video and cable commercial will show the crowded Starbucks coffeehouses. The service improvements will be depicted in this advertisement showing Starbucks, a company that has satisfactorily serve growing numbers of customers during peak morning rush hours. This innovative product introductions is expected to drive non-peak hour sales. The Internet will be utilized, too. This will be done by extending the brand beyond its core collectibles business with the aim of creating a global trading destination. This will be by offering this Starbucks’ products online. This type of advertisement will take advantage of the customers' heightened sensitivity to value. Through this, the Starbucks Company can shore up its brand in line with the changing customer needs and perceptions. The theme for this advertising campaign in 2007 strategic performance-centered setup and management of a campaign for the next generation frappuccino, cold blended chocolate banana coffee drink for spring and summer. Innovation is where opportunities lie in this product category. If after a quarter of launching the media advertisement 2007 sales become good, this specialty coffee could become a regular menu item of the Starbucks. Media Budget Based on an estimate of media cost using the most current figures, media budget will be set at one hundred fifty five million dollars. This media budget will be used to launch a 2007 campaign in focusing in this innovative frappuchino Starbucks brand and marketing. Brand awareness and marketing will be launch nationally, regionally and internationally. Starbucks will invest in brand improvement, advertising campaign and product launchings. This advertising cost is a controllable expense. Advertising budgets for this advertising campaign 2007 will be divided wisely among Starbucks departments. The method for determining the media budget for this advertising campaign 2007 is based on the two percent of the gross sales of the company in the previous year (2006). There are several ways of applying budget amounts to get the desired advertising effects. Spending too much is an extravagance. However, spending too little can be just as bad in terms of lost sales and diminished visibility. Costs for this advertisement campaign 2007 will be tied to the desired outcomes. Breakdown by Media In terms of dollars as well as time, percentage of media budgets allocated to online advertising is expected will be 50%. The rest will be radio (10%), television / cable (20%), in-store promotion (5%) and print media (15%). All these advertisement contracts will run for one year to ensure recall of the product. Creative Advertisements Advertisement I The perfect way to cool down on a hot summer day is to treat yourself to a chilling treat. You need a few minutes of frozen fun to bring the mercury down. Introducing here a cool treat for everyone – the new bottled Choco Banana Frappuccino, A Blended Ice Coffee Drink! This advertisement will run in all types of media, online advertising as well as radio, television / cable, in-store promotion and print media. This will run everyday nationally, regionally and internationally. In this advertisement, emphasize that there is no other beverage that fit the fast-paced American lifestyle better than specialty coffee. Coffee has stimulating properties that people would look up to first thing in the morning and many end the night with a heady cup of frappuchino. Once people have tasted this frappuchino they would not want to give it up. Besides, more than forty percent of Americans take a daily coffee break. Advertisement II Discover the secret to the sizzling, frosty indulgence, Starbucks Choco Banana Frappuccino, A Blended Ice Coffee Drink. This is guaranteed or double your money back. Starbucks is just a few minutes drive away! This advertisement will run in all types of media, online advertising as well as radio, television / cable, in-store promotion and print media. This will run everyday nationally, regionally and internationally. In this advertisement, specialty coffee will be demonstrated as a coffee that has no defects and has a distinctive flavor in the cup. Therefore, a specialty coffee is not defined by the brewing method -- espresso or drip -- nor a favor. A specialty coffee is one that contains the best green coffee beans roasted to their flavor potential and properly brewed. Frappuchino is one delicious drink worth making and serving up to valued customers. Great attitudes, premium products and fast service keep the Starbucks clients coming several times a week. Frequent Starbucks indulgence is a lifestyle. Marketing this frappuchino will be through continuous turning of innovative ideas into winning programs that will further boost the brand of Starbucks internationally. It is somewhat like sipping a specialty coffee at Starbucks, and you might associate coffee with prosperity. Evaluation and Summation of the Overall Campaign and Reasons for its Success This will surely be a success. Nationwide, regionwide and international advertising campaign in all types of print, visual, online media and other innovative ways is needed to get the word out. How soothing this frappuchino is! Application of creative advertising through the Internet will be an effective and innovative media. It is argued that although creativity is often a critical element in advertising success, excessive emphasis on creativity may inadvertently block the message of the advertisement, thereby entertaining but not informing or persuading the target audience. The recipe is good which will be surely love by the would-be consumers. The product is also different from the rest of the same product category. Most importantly, the product is carried by a good, reliable and trusted name in the industry, the Starbucks. With the Starbucks specialty coffee's continuing growth and diversity, this advertisement will further entice the coffee lovers around the world to intensely indulge in specialty coffee. References Anderson, Rick. 2007. Starbucks: Just Getting Started. Seattle Weekly, June 27, 2003. Independent Media Institute. http://www.alternet.org/story/16273/. Retrieved March 14, 2007. 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