Marketing Mix and the Impact of the Mix on the Development of Starbucks Corporation - Essay Example

Marketing Mix and the Impact of the Mix on the Development of ‘Starbucks Corporation’ The marketing concept emerged in the 1950’s where the total emphasis was laid on the product centric approach which has completely transformed itself into a customer centric approach in the new millennium. The main focus has shifted from merely creating customers for the product to generating and producing products which are apt for the customers. The marketing concept aims to achieve the realization of organizational goal and objective which is the ultimate aim for any strategy implemented in the firm. Today a holistic marketing approach is applied to develop, design and implement the marketing strategies to cope with the complexities and intricacies of marketing activities. One such sphere of the holistic concept is the application of ’Marketing Mix’, a culmination of the four P’s of marketing, Product, Price, Promotion and Place. Decisions relating to Marketing –mix are critical as they influence the market exchange means and the final consumers. These models are effective in allocating or diversifying the expenditure into the most profitable component of the mix. It analyses data from varied resources to strengthen and deepen the understanding of the marketing elements which influence the marketing results such as total market capacity or market potential and the total market share which can be tapped or captured. The first P , ‘Product’ of the mix deals mainly with the features of the wide range of product offered, the quality standards, appealing designs, useful features, the brand image, attractive and compact packaging, size, service extended etc. ‘Price’ includes the market price quoted, the discounts offered, specific allowances proposed, the payment and credit period etc. The ‘Promotion’ mix decides about the sale promotion, the personnel selling, advertisements featured in various media, public relation management, etc. Last but not the least “Promotion’ comprises of channels, assortments, location, inventory and the transport feature. A perfect balance between the four P’s of marketing mix, leads to a successful execution of the marketing strategy. The model of marketing mix has been very well depicted in the case of one such renowned company the ‘Starbucks Corporation’, which was established in 1971 named after Herman Melville’s Moby Dick, the world’s leading retailer, capturing a considerable market share in the product line of ‘coffee’. It was recognized for its local roaster and retailer of coffee beans and ground coffee( The Company,2008) Starbucks success through the number of years down the line id due to its highly dedicated and devoted services offered in maintaining its quality standards, integrity and rich taste of coffee. Starbucks Corporation emphasis more on the quality and past experience rather than the price( Kembel B, Hawks M, Kembel S, Perry L, Olsen L, 2002) The application of the marketing mix model has a major role in the success story of ‘Starbucks Corporation.’ To analyze it from the ‘Product’ mix Starbucks offers a wide range of products such as its beverages which comprise of brewed coffee, hot chocolate, espresso, Frappuccino etc. offerings with pastries, ready-to-eat salads and sandwiches, coffee merchandise, at-home brewing equipment, and whole bean coffee. In addition it also provides bottled beverages like Izze soda, Horizon Organic Milk etc. It offers yummy pastries, salads and sandwiches. Apart from the coffee business it also sweeps over the entertainment and grocery sections. Starbucks has an intense passion for maintaining its quality standards; it selects the best coffee beans around the world, producing the rich signature Starbucks roast with the help of the best expert roasters. Starbucks banned smoking in its stores just to keep up the coffee whiff in the stores and introduces a special packaging of the food where the consumers could smell the sweet fragrance of the coffee only. Starbucks has a very strong brand name and holds a brawny reputation for its new product development and innovativeness. It is a global coffee brand which holds a positive reputation for its superior products and excellent services catering to almost 9000 cafes in almost 40 countries. It offers a uniform system of packaging and services throughout its stores all around the world keeping the richness of the product alive. It has introduced a unique concept of Cafés equipped with cozy fireplaces, comfortable leather chairs, newspapers, couches, with the stores located in the most prominent locations of the town (Thompson A, viewed on 21st May, 2008) The second ‘P’ of marketing mix, the Price. Starbucks Corporation profit figures are quite impressive. It pricing strategy helps it to gain a competitive edge over others, though they are exposed to threats of constant rises in the cost of coffee and dairy products. The pricing of the products is well within the reach of a common man for instance a short brewed coffee costs about $1.00. According to the company strategy low price ‘cannibalizes sales’ on other expensive products offered ( Bissonnette Z, 2008). Starbucks is also known for its premium prices and has to face a tough competition with its rivals in the industry. As far its pricing strategy is concerned Starbucks believes in cultivating strong bonds of relationships even if it has to done by paying a premium price for its coffee. It also accommodates differences by applying location pricing and customer segment pricing. Because the prices fluctuate with the changing external environment, the prices do vary by the seasons and the market conditions. Discounts and long credit periods are discouraged. To minimize the risk of high coffee pricing the company has opted for a fixed price purchase to grab an adequate supply of high quality coffee. The pricing policies for the articles where the company’s logo and symbols are displayed are paid as per the contract and the tangible hardware equipments are paid directly. In Starbucks supply and price can be influenced by varied components in regards to climate, political, and financial circumstances.  ‘Promotional’ techniques and tactics of the company present the organization, as holding on to strong ethical values. The company sells its products through its company-operated retail stores. In addition to this its major promotional method is via his special sales group and supermarkets. It’s direct marketing included the floating of a mail-order catalog that was publishes six times in a period of one year exhibiting choices and range of different coffee assortments, candies and pastries, equipments and accessories. The promotional techniques such as introducing special festival catalogues greatly affect the volume of sale of the organization. An opening of the electronic store in 1997 has added another e-tailing feature in its promotional methods contributing almost 2 percent in its total sales figure. According to the Starbucks management, direct marketing technique would accelerate its retail expansion and explore the new markets and build up the brand image in the existing souk. Advertising strategies used by Starbucks play an important role in its image enhancement .The advertisements were featured in various print media such as well read magazines and leading newspapers because its market segmentation is aiming towards an educated class of people( Kembel B, Hawks M, Kembel S, Perry L, Olsen L, 2002) .It had a strong public relation cell; it was observed that once the company had sent a team of experts to exhilarate the store-opening effort and conduct one-on-one training and awareness campaign. An interesting promotional tactic was applied to ensure that the company meets up with its standards; it introduced the concept of "mystery shoppers" who pretended to be the actual customers and collected the data on each location for the development and improvisation of the stores. Even the people were distributed questionnaires to get an honest feedback and suggestions for advancement in the future. ‘Place’ plays a very decisive role in a marketing strategy, for ‘Starbucks Corporation’. It opened its first outlet in Tokyo in1996, and thereby capturing the U.K markets and opening approximately 100 stores including London and other neighboring areas. Its coverage area is quite vast with almost 29% of its stores located outside the United States covering a major international arena. It’s presence can be noticed in the prime areas running in more than 6,400 Starbucks operated locations, few of them being Seattle's Best Coffee, Torrefazione Italia etc The sale of Diedrich Coffee and Coffee People added up to the Starbucks locations. The concept of ‘Third Place’ is an important feature in the Starbucks location choice. They have made a deep impact in the field of Fair Trade and coffee farmer's lives by purchasing coffee beans directly from the farmers and preserving their rights. The firm’s promotion techniques like establishment of FTC have created awareness among the farmers. Starbuck aims at constant development of its distribution channels. The Starbucks inventory was purchased on a negotiated basis at a considerable price depending on the market conditions. They were subjected to fluctuations and variations depending upon the external environment such as the political and economic variations, the demand and the supply discrepancies, government policies. Etc. Special tactics were applied to promote the brand such as designing of the mugs and T-shirts exclusively for different cities depending on the taste and area of particular preference such as pictures of Paul Revere were printed for the Boston people and at the sane time the Statue of Liberty featured on the T-shirts for New York citizens. Starbucks Turnover ratio signifies that the company maintains a high liquidity rate. It can be well concluded after the analyses done on the implementation of the marketing mix strategy of the Starbucks Corporation that the firm focuses to assure a comfortable atmosphere for its customers rather than creating distinctive interiors. It designs each store as per the place and location it is situated in. Starbucks diversified area of work such as grocery stores, convenience stores, department stores, movie theatres etc clearly displays the extensive vision that the organization carries along the process. Starbucks is firmly believes in having deep and intrinsic public relationships. BIBLIOGRAPHY Bissonnette Z, 2008, Don't get too excited about Starbucks's new $1 coffees, posted on 23rd Jan 2008, Weblogs, Inc, http://www.bloggingstocks.com/2008/01/23/dont-get-too-excited-about-starbuckss-new-1-coffees/ Thompson A, Starbucks Corporation, The McGraw-Hill Companies, viewed on 21st May, 2008 http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html Kembel B, Hawks M, Kembel S, Perry L, Olsen L, 2002, Catching the Starbucks Fever, viewed on 21st May,2008, http://www.academicmind.com/unpublishedpapers/business/marketing/2002-04-000aag-catching-the-starbucks-fever.html The Company, 2008, Starbucks Coffee, viewed on 21st May, 2008, http://www.starbucks.com/aboutus/Company_Profile.pdf Read More