Marketing Strategies for Starbucks Corporation - Case Study Example

ACTIVITY B. - ACTIVITY Complete Tasks 1, 2, 3 and 4 in Activity B. Choose a product or service related to your workplace or training environment. Check the suitability of your chosen product or service with your assessor, prior to completing the assessment activities. Your assessor will determine if you need to choose an alternative product or service and will explain the reasons why. Product or service: coffee and beverages producing company Related workplace, training environment or industry: Starbucks Corporation Task 1: Internal research Research information on the internal business environment Respond to the following questions. The information you provide in this assessment activity will be used to help you complete assessment activities C & D. Outline your establishment's core business activities. If you're not currently employed, list the core business activities most relevant to the product or service you've chosen to promote from your training environment. Distributing food staff to houses Offering high quality food and beverages to its customers Providing the best services to keep customers satisfied Define the establishment's customer base. If you're not currently employed, define the customer base most relevant to the product or service you've chosen to promote from your training environment. Large companies that offer meals to their employees Homes that request for home delivery of the company’s products Personal consumers who visit the corporation’s store everyday Describe the establishment's values and current business direction. If you're not currently employed, list the values and direction most relevant to your training environment and the product or service you've chosen to promote. Starbucks Corporation’s is determined to provide the best quality products meeting the customer requirement to help uphold legal values. The corporation is determined to increase the sales revenue and profits through increased market share to help curb the competition that the company faces from other competitors [Gar05]. Describe past marketing conducted by the establishment and its effectiveness. If you're not currently employed, describe the sort of information you'd refer to for this knowledge. Diversification and market penetration were the major marketing strategies used before. They were effective for the corporation as it is currently the second placed organization in terms of performance and the revenues collected [Geo00]. What products/services are underperforming and what is causing the poor performance? If you're not currently employed, describe where you'd find this information and why it's important to the planning process. Home delivery of food and beverages is underperforming as they choose to avoid the risks that may be accompanied with the service. They, therefore, choose to directly go to the retailing store to have the services provided to them there. Task 2: External research • Research information on the external business environment. • Respond to the following questions. • The information you provide in this assessment activity will be used to help you complete assessment activities C & D. Who are your major competitors? (This might be related to your workplace, training environment or specifically to the product or service you've selected.) McDonalds Costa Coffee Tully’s Coffee Doutor Coffee Dunkin’ Donuts Panera Bread Caribou Coffee Company Inc. Subway What are the demographics of your client base and the immediate area? (This might be related to your workplace, training environment or specifically to the product or service you've selected.) Disposable income and purchasing power Geographical region Leisure activities Describe any projected changes in labour force, population or economic activities that may impact on operations at the establishment or within the industry you're researching. Economic activities of any given household determine their size of disposable income. The better the returns an economic activity provides, the more of the company’s products that the household is likely to use. The labour force of Starbucks Corporation is also a determinant of the operations of the industry. Well informed labour force means that the company is able to produce better quality products. Similarly, the company will also enjoy better services for their customers [Gar05]. Are there any emerging issues, technologies, customer trends or developments that impact on operations at the establishment or within the industry you're researching? The emerging trends that impact on the operations of the organization are the customer needs and requirements. The consumer needs keep on changing every single day and it is up to the corporation to ensure they meet the demand of all the consumers through the production of different products and support services. Are there any legal, ethical or environmental constraints that impact on operations at the establishment or within the industry you're researching? Legal registration fees Laws and regulations protecting all the stakeholders Insurance policies for safety issues Legal liability in case the employees or customers suffer damages from the negligence caused by the company ACTIVITY C - DEVELOP MARKETING Develop marketing strategies Using the information from Assessment Activity B, suggest appropriate marketing strategies to promote the product or service you selected. Make sure they're consistent with the direction, values and business plans you defined in Activity B. Explain why you have chosen these strategies and what you hope to achieve by implementing them. There are numerous options available, so choose the strategies that you think are most realistic, achievable and financially viable for the establishment. Keep your responses brief; the detail of your strategies will be provided in your marketing plan in Assessment Activity D. Suggested marketing strategies: Market penetration New product development Market development Diversification Define the establishments or product/service USP (unique selling position). You will use this information in Assessment Activity D. The unique selling position refers to the selling of your personal image before you can get to sell the product and services you have for the public. The policy is efficient especially where the products being provided for sale are familiar with the products and services. Task 3: SWOT analysis Complete a SWOT analysis based on the information you've provided in Task 1 and Task 2. Strengths 1. Starbucks Corporation’s product differentiation strategy is as a result of strong marketing orientation, customization of products, commitment to high-quality products, and support services such as after sale services. 2. A long-term relationship with the primary and secondary consumers has resulted in shared knowledge of the products and services requirements. As a result, the corporation enjoyed great devotion to quality values, and a common vision all through the development and production procedure of the company’s products and services. 3. The high proportion of records of Starbucks Corporation shows that they have a strong base of satisfied customers, as well as positive communication, which generates new businesses each year as well as increasing the revenue collections due to the large size of customer loyalty. There is slight turnover amongst the employees who are well remunerated and liked by customers. 4. The fairly small size of the employees promotes friendship with co-workers and customers and fosters communication and rapid response to the clients’ needs. Weaknesses 1. The highly federalized management chain of command and lack of executive backup may hamper creativity and growth. Very few people hold enough knowledge to manage the creativity and growth that has been proposed in the organization. The few knowledgeable people are at times not provided with the necessary resources to foresee the implementation of the proposed creations 2. Despite the triumphant, long-term relationship with the supplier, the single-sourcing strategy could make Starbucks Corporation vulnerable in the event of a failure of the systems or obsoleteness of the technology in use. 3. Starbucks Corporation’s heavily relies on indirect marketing that make the services that are provided for by its employees to its customers. Indirect marketing would mean that the organization does not have a physical address to serve her customers after the sale of their products. The after sale services are only done on the website for those areas that the corporation does not have physical addresses. They also decide to offer home deliveries for those customers who live in areas where the corporation does not have a physical address 4. Both the client base and the product line of Starbucks Corporation lack diversification. Reliance on current rates could breed satisfaction thus invite competition, or at some point creates a false sense of customer satisfaction. Starbucks Corporation would end up developing products that would not be appreciated by the current customers and would end up bringing the business to an end [Joh14]. Opportunities 1. Advertising expenditures in the Starbucks Corporation exceed $1 million annually. Starbucks Corporation has been specializing in the advertisements as the competition they face from the competitors can only be reduced through non-price competition. Most of the companies usually have the same products and services thus they can only engage in non-price competition to keep their competitors at bay [Pet12]. 2. Technological advances and other forms of technological adoption have not only freed up time for Starbucks Corporation and introduced greater efficiency but also have increased the amount of effectiveness of the products. Starbucks Corporation has advanced the computer technology to ensure that the products and services that they offer to customers are of the best quality. 3. Starbucks Corporation looks for ways to develop and maintain customer relationships rather than just to make sales. The maintenance of this relationship could be made in the form of agreeable premiums or gifts that are valuable to the customer [Dav091]. Threats 1. Competition is a major problem that Starbucks Corporation faces. Categorizing the corporation with the type of products and services that they provide, Starbucks Corporation is the second largest corporation in term of revenue collection. Since they have been all in operations over the years, the corporations have been keen to increase market capitalization through each financial period [Ste01]. 2. The theft of trade secrets of Starbucks Corporation and the piracy of software has been impossible to control for the corporation and, as a result, they end up losing millions of potential revenue Task 4: Sources of information What sources of information did you use to complete this assessment activity? Books Journals Starbucks Corporation’s website Journal articles and reports What is your desired market position? Starbucks Corporation’s has improved its performance over the years commanding a large market share. However, competition is still a major problem that they face and as a result, they should device means through which they can curb the competition. Better products, targeting the right consumers and cheaper products would increase the market base of the company [Jea01]. Define the 7Ps in the marketing mix and how they relate to your strategies. Product The products of the corporation are the major reason why Starbucks Corporation’s has come into business. The product penetration strategy entails the introduction of new products into already existing markets thus product, as marketing mix that relates to Starbucks Corporation’s strategies. Price Considering the disposable income of households, the corporation should consider the prices at which they set their products. Where the income is higher the corporation should consider market segregation and charge higher prices and where the income is lower, they should charge lower prices. Place The place in the marketing mix is a determinant of the distribution procedure to be used for the products. In areas that are closer, Starbucks Corporation’s should consider direct marketing while in the far zones; the corporations should consider indirect marketing. Promotion Promotion provides an increased expenditure for the corporation. The promotion services are a part of the marketing strategies as they encourage the consumers to use the company’s products. People People mainly refer to the consumers of the products. It is through consumption that the corporation can make revenue. It is therefore the primary role of the corporation to ensure customer loyalty for continued purchase of the company’s products. Process The processes involved in the products of the company’s products make it unique. The processes determine the technology to adopt and other variable factors. Physical evidence Physical evidence provides for increased loyalty of the consumers. Having a physical address where consumers can have their issues listened to and solved. Physical address also provides better services to the customers. List any legal or ethical constraints that apply to your planned marketing strategies. Legal registration fees Legal liability in case the employees or customers suffer loss from the negligence caused by the company Laws and regulations protecting all the stakeholders Insurance policies for safety issues If you completed this assessment task in your current workplace, who did you consult with when developing appropriate strategies for your establishment? If you completed this assessment task based on a product or service from your training environment, who would you consult with prior to commencing your marketing plan? The management team of the organization are the decision makers of the policies affecting the organizations. Any proposed change has to be approved by the management team, particularly the senior managers. For this reason, the best person to consult prior to commencing the marketing plan is the human resource manager. Describe any technology that might assist you with marketing strategies. Information technology Communication technology Outline the costs that may be incurred in implementing the proposed marketing strategies. Advertising Public relations Research and development costs Production costs Marketing costs Travelling costs ACTIVITY D – PREPARE MARKETING PLAN Complete Tasks 1 and 2 in Activity D. Task 1.-Develop marketing plan Using the information from Assessment Activity B and the strategies you developed in Assessment Activity C, prepare a detailed marketing plan. A suggested contents page has been included for your reference. You may adapt or modify it to suit your needs. You may even like to try using an online marketing plan template such as the one available from www.business.gov.au. Note: When completing the financial section of your marketing plan, it is not necessary to provide actual figures or budgets. Simply include templates or a list of what you would include if the marketing plan were to be completed in full. Introduction The marketing plan is carried out for Starbucks Corporation to help reduce the problems and threats that the company faces and in turn over turn them to opportunities and strengths to help outdo the competition from the other companies. Executive summary The evaluation of the company’s strengths and weaknesses, opportunities and threats through the SWOT analysis served as the foundation to be used by the corporation for strategic analysis, developing marketing objectives and a marketing plan. The plan focuses on the corporation’s growth tactic, suggesting means through which it can establish a good customer relationship. Similarly, the corporation engages on the development of new products that are targeted to specific the customer niches [Guy07]. The business Starbucks Corporation is a multinational food producing corporation whose headquarters are in Seattle, Washington, United States. It was once a family business before it expanded to provide information technology and network provider around the world. The corporation specializes in food and beverages especially in the production and sale of coffee. One of the major challenges that Starbucks Corporation faces is in the development of better products to increase its profits and ensure optimal resource utilization to curb the competition that it faces from other corporations. As of today, Starbucks Corporation is the second largest corporation in the industry with the first being McDonalds. Situational analysis The analysis is done to understand the forces that affect the marketing environment of Starbucks Corporation. Among the identified forces are Competitive forces, Economic force, Technological force, Sociocultural forces, Political forces and Legal and regulatory forces. Competition is standard to every company that operates in other market structures other than the monopoly. Competition within the food based segment is high. The economic forces provide for promotional activities for value addition in the corporation [Por03]. Marketing objectives Starbucks Corporation produces and sells coffee and beverages as their main products, as well as offers support services complementing the products. The main objective Starbucks Corporation’s is to achieve collective growth in net profit through increased sales. Starbucks Corporation should create new products that are able to utilize the current technology, equipment, and knowledge base [Col08]. Target market The target market specifies and describes a plan that is aimed at proposing strategies that the organization will focus on for their marketing efforts [Suj09]. Oracle Corporation targets the consumers directly for their products. Both the large-scale consumers and the small scale consumers are equally important to the corporation and are thus treated with equality. Marketing strategies Ansoff identifies four main marketing strategies that corporations can successfully use to increase their revenue collections and recorded profits through each financial period. Market development, product development, market penetration and diversification are the major marketing strategies that can be used [Pan12]. For Starbucks Corporation, only product development and market penetration can be used in their business plan as the corporation already has set up stalls all around the world. The corporation can only strive to provide the consumers with new products that are differentiated from the already existing products or they can engage in non-price marketing strategies like promotional activities and advertisements as the market penetration strategy [Sat09]. Marketing tactics Starbucks Corporation’s promotes bulk production and sales as they are cheaper in the long run. Where possible, since the organization produces products in a lump sum, they should also try to provide market and sell their goods in large scale [Jos081] Marketing budget Marketing expense Budget 2010 2011 2012 2013 Advertising 57000 65000 75000 100000 Internet services 51000 65000 75000 125000 distribution 10500 15000 20000 30000 Public relations 85000 105000 115000 165000 Others 12000 25000 40000 60000 Total sales and marketing expense 215500 275000 325000 480000 Percentage of sales 36.40% 30.56% 28.26% 26.30% Contribution margin 211,500 475000 647000 1,133,000 Task 2: Written questions Who did you consult with during the development of your marketing plan? Marketing researchers Financial institutions Why is it important to involve others in the planning process? With the involvement of others in the planning process, better decisions are made as there are discussions made to prepare a quality planning process that is cost effective and promises better quality results. Briefly outline the steps you'd take to implement your plan. Review current organization practices Develop well discussed policies and programs Devise an evaluation strategy Allocate responsibilities for each strategy and duty Develop communication strategies How would you document each stage of implementation? Implementation of the marketing plan should be done in phases. After each stage of the marketing plan is completed, an audit of the plan should be conducted to ensure that they identify the problems and strengths that are in the plan. How would you monitor your marketing plan? The best way to monitor a marketing plan is through the audit marketing method. It concentrates on examining on the strategies and objectives to identify the problem areas and opportunities that may arise. How would you ensure the marketing activities are implemented in a cost-effective manner? The plan should focus on the goals of the marketing plan. Similarly, they should ensure that the plan is conducted in a fixed timeline. Having conducted such strategic marketing activities, the organization would have the plan being cost-effective [Eve10]. Based on the type of marketing strategies you've planned what marketing reports would you produce to analyse their effectiveness? Resource utilization reports Financial management reports Time management reports What technology would you use? Information technology Under what circumstances might you need to adjust your marketing plan? Where the plan timeline is over and the plan has not been fully implemented yet Where the actual costs exceed the budgeted costs Where the plan does not bring out the expected competitive advantage over the other companies Who would you inform once adjustments are made? The leader of the implementation of the marketing research should be informed first for any changes that are to be implemented in the marketing plan. REFERENCES Gar05: , (Gary, 2005), Geo00: , (George & Jacques, 2000), Joh14: , (John, 2014), Pet12: , (Peter & Susan, 2012), Dav091: , (David, et al., 2009), Ste01: , (Stephen, 2001), Jea01: , (Jean & Jean, 2001), Guy07: , (Guy & Emma, 2007), Por03: , (Porter & Ketels, 2003), Col08: , (Colarelli, 2008), Suj09: , (Suja, 2009), Pan12: , (Panos, 2012), Sat09: , (Satyendra, 2009), Jos081: , (Joshua, 2008), Eve10: , (Everett, 2010), Read More