As a marketing consultant, a report will be conducted to analyse the marketing strategy of an organisation and to identify the alternative marketing strategies to facilitate business growth. Starbucks Starbucks, a key performer in the gourmet coffee sector and also in the specialty Eateries industry is segmented in the service industry. Starbucks was first introduced in Seattle, Washington USA in 1985, and then worldwide. Starbucks specialises in brewed coffee, hot chocolate, espresso – based drink, teas, frappuccinos and fruit smoothies.
From 2008 onwards Starbucks owned over 16,226 stores worldwide, along with 11,434 stores located in the United States. PESTLE analysis on Starbucks (marketingteacher. com) The main challenges in the market environment that are likely to impact on the Starbucks brand would be as follows: The pestle aims to make a list of macro environmental factors impacting on your organisation. (Flexible, P et al 2005:105) Political The political factors will consist of: * The relationship between trading countries – Starbucks is one of the major exports of developing countries.Behind Oil, coffee is the second largest product in the world.
As it is influential on the lives of people who are involved in coffee growing, trading and manufacturing. For those who are coffee growing it is absolutely vital they receive fair trade and price for their harvest in order to survive. * Political trends – in relation to civilizing and developing concerns towards coffee trading, there has been a political debate regarding this, and to generate relationships between developed countries. Government policies- bringing in new initiatives for Starbucks can have an effect on their trading internationally. * Taxation- the government rising taxation can have a huge impact on Starbucks, this means Starbucks will be making less profit or to put their prices up. Environmental * Due to the Global warming, Starbucks has taken under consideration of their management in production of raw materials as it could be disturbing the climate effect. This is where re-cycle cups are utilised to be environmentally friendly.
Therefore Starbucks has taken action by practicing a three year climate change Mitigation strategy as this is designed by purchasing renewable energy, focusing on energy conservation, and advocating for cooperative action. * To be environmentally friendly, Starbucks has bought 100% renewable energy certificates, balance 124million pounds of CO2. * They have been advance in buying new tools and machinery to be more energy efficient, also software is provided to all stores to control the energy consumption. Social Starbucks can to take under consideration the social aspects of their product or coffee, as coffee plays a significant role in people’s lives.
* Demographic – “increasing average age via demographic change in many countries is reducing the market base” (Griffiths, A et al 2005:612) Where Target audience seemed to be more of young age group rather than the older age group. * Lifestyle patterns and changes – anti-obesity force is motivated on simple lifestyle and their food and drinks would have liked to be of low calories, people are less likely to purchase. To create a better atmosphere, ‘idea’ stores are place in libraries and museum to sell their coffee with other products.
* Ethnic and Religious difference – The same way many people look out for non-vegetarian and food that is not halal, coffee as a drink is associated similarly, where the coffee was tested in many religious places such as Mecca, they discovered that it was more of a “heretic” substance as much as wine was. Muslims used coffee as an intoxicant instead of wine. Therefore Starbucks could make their products suitable for all religions/cultures. * Increased in public awareness of corporate social responsibility.Technological * “New technologies are increasing the output per acres of coffee growers and the increased supply is reducing world coffee pricing” (Griffiths, A et al 2005:612) * Consequently Starbucks must reduce prices due to people buying new machines and this makes it more competitive for Starbucks. * Information and Communication – ingredients are easily found and available on the net.
The information and store locator is also obtainable off the website. Legal * New legislation may be taken place of the pub opening hours, to extend the hours longer, as it is more likely to keep away Starbucks customers from drinking coffee. Smoking ban in public place has taken place, as this gives an advantage for Starbucks towards their non smoking environment they created. * Starbucks may have to negotiate when new laws for trading takes place, by following the trading policies to protect the companies in Restrictive Trade practices (1956 and 1976) and the Fair trading Act (1973) * Guarantee Consumer rights and good service such as the Sale of Goods Act (1979) and the Trade Description Act (1968) has been taken place. Also ensure their advertising, labelling and branding is not misleading and deceptive. Economical * “more buoyant than expected global growth from 2004 onwards is likely to raise real incomes per head in many key markets” (Griffiths, A et al 2005:612) * Changes in disposable income could influence purchase levels. * Starbucks has rapidly enhanced their economy as they represent 3.
7% increased their market share of fair- trade in coffee. Micro- EnvironmentCostumers – satisfaction from the costumers is absolute vital, in order for Starbucks to survive they need their customers. Therefore the company must create a long term relationship with the staff and customers by bonding to keep up with good business. Starbucks has a tendency of providing good product and services in which costumers could return and be more consistent. Suppliers – more coffee is supplied than what is actually sold, due to farmers in the less developed countries coffee not been purchased frequently.
Whilst Starbucks must make sure that they have a good relationship with their suppliers given that this could have an effect on their brand and the costumers buying behaviour. Competitors – Starbuck company must consider their marketing mix competitors, where price, place, product is available and purchased is very important, and making sure the organisation having a strong brand as their unique resource in the retail market in which others may find hard to imitate. Having capabilities in terms of resources or competences that are different from other organisation is, of itself, not a basis of competitive advantage”(Johnson, G et al 2004:121), Where an organisation is at an advantage by creating a unique capability others do not have and justify their profit weigh against those with less capabilities of the resources.
By having the right price in which all costumers can afford, being in the right place where there is completion and having the right product to satisfy the costumers needs. SWOT Analysis for Starbucks (Bizstrategies. com)SWOT analysis distinguishes the strength, weaknesses, opportunity and threats of an organisation; in this case SWOT analysis on Starbucks will be given. Strengths Global Presence – Starbucks has have been owned managed by the company worldwide across thirty two countries also located in high traffic areas, as a result the recognition of the brand and strong customer is established. Expansion of food items – Starbucks has brought in new pre-packaged sandwiches and salads in their lunch menu for expanding. Around 1,2000 stores has offered warm breakfast sandwiches, this has equally hugely expanded their stores.This has then created competition over other companies such as McDonalds, in which starbucks offers warm sandwiches with their coffee.
Increase in revenues and profits – Starbucks is a good profitable organisation, In 2004 they made more than $6milliion and produced revenues up to $5million. Reputation of social responsibility (both internally e. g treatment of own staff – and externally- e. g links with fair-trade organisation) (Wall, S et al 2008:616) A Disciplined Innovator- Starbucks successfully runs its innovation timeline creating stability sales in same stores.The company launched new frappuccinos blended beverages and producing new products as this benefits in competition with other companies. Weaknesses Although Starbucks are located globally and claim to have different products to other stores however they still come across as engaging in similar products and environment as others.
(Wall, S et al 2008:616) Staff – It cost Starbucks for higher staff than the competitor. The Starbuck organisation is more reliant on their competitive advantage in selling their coffee as this could be a downside when they decide the need to expand in other divisions.Problems in international operations – Starbucks are confronting problems concerning their expansion in some of their international businesses, seeing that they have been unsuccessful with their several openings. Where Deleck group closed its six Starbucks stores in Tel Aviv, consequently this had negative influence on the international operations and the growth prospect. Opportunities Growth in coffee market – over the years starbucks speciality of their coffee has been rising from $21 billion to $22 billion, in having over 40 % f market share of the specialty coffee market, as a result this could give the starbuck an opportunity in rising their growth and expansion in the future. Fair trade product – this is where new products and services where they are able to retail in their cafes, such as in California they let costumers burn their own CD. Market expansion – Starbuck company is taking an advantage their opportunity in expanding further internationally in India, Brazil and Russia.
Also for China having the largest urban population and increase in coffee expenditure, this means Starbucks has an opportunity to expand with China for market growth.New products – Starbucks has signed an agreement with the wine and spirit group Jim Beam Brand in order to expand their beverages. Due to high demands from costumers associated with liquer and coffee this gives starbucks an opportunity on development and marketing. Threats Cost – the cost of coffee and dairy product may increase which could affect the company’s expenditure and costumers. In future other new products launched and retailed could replace the key product which is coffee selling.Slowing US retail sales – “Before reaching saturation point, US retail sales growth will slow considerably over the next three to five years, further increasing the pressure on the international division to justify the company’s investment in expansion”.
(ricpeterson. com) This could be a threat to Starbucks in concerning their profit and domestic retail growth. Porters five forces analysis Threats of new entrant * The economy of sales are going down due to the price of Starbucks opening new stores the size of the economy is not expanded as it already has numerous stores. The capital of requirement are low, in order to create a barrier between entrants the property cost is not sufficient. * Whilst having the similar coffee to other rivals, Starbucks still succeed in differentiating their product by selling the experience speciality coffee. * It is important for the costumer to have emotional bond with the coffee brand rather than replacing to other speciality coffee.
Bargaining power of suppliers * Suppliers are paying more attention to the buyers due to many exporters competing for the business however receiving few buyers. As for coffee seen as goods or product the supplier’s product is hardly distinguished. * Buyers have an opportunity of purchasing from many other suppliers in order to expand their product and be more cautious as a result the suppliers exchange cost are relatively low.
* There is less utilization which means more prepared coffee is sold. Bargaining power of buyers * Starbucks selling good taste of coffee means more buyers. * If loyalty is given to costumers then they are likely to be prepared to pay for high prices. There are difference between the buyer and suppliers where buyers are receiving good experienced coffee rather than just coffee. * Offering services such as delivering or ordering good via phone or internet could expand their products.Threat of substitute products * Substitute products such as soda, wine juices and other beverages could be a threat to Starbuck’s because consumers may prefer other products. * In international countries if the competitors such as the fast food industry can satisfy the needs for the costumers then this will be a threat to Starbucks in selling their coffee.
Although Starbucks sells coffee and other beverages whilst restaurants provide drinks with free refill, as this could be a threat in concerning costumers switching to restaurants. Competitive Rivalry * Competitors include other coffee and tea leaf houses such as Costa coffee, Caribou coffee etc. * Privately owned relatively small coffee houses. * Coffee can be provided by other secondarily such as McDonalds and Burger King. Starbuck’s marketing mix Products/Services * Coffee and Whole bean coffees * Other beverages such as bottled frappuccinos Pastries and other confectionaries * Participation of new products and improvement of existing products * Coffee mugs and coffee making equipment are also available.
* Technology such as wireless internet and CD burners are also available in stores. (ricpeterson. com) Place * Vertical channel integration used therefore products easily and effectively distributed to consumers.
* Adapt corporate vertical marketing system, which suggests that they own and operate their own production and storage facilities. * Quality standards implemented in Starbuck’s coffee farms in Mexico. No Franchises of retail stores, therefore Starbucks corporation has full control of management and operations amongst all the retail stores. Price * Pricing based on competition * High end pricing scheme * Quality products and services * Speciality coffee priced at average rate Promotion * Rely on publicity, conferences, T. V advertisement and newspapers.
* Use of sponsorship as their main source of publicity strategy. * Offering services and supplying coffee and beverages through the office beverage Service and Office Delivery service.