Marketing process and strategies are very essential in positioning a product in the eye of a customer. In this BITE College Marketing Principles assignment report we would detail various aspects related to marketing using the case-study of Starbucks. The first section would include the key elements of marketing mix and study of marketing orientation. We would also do a SWOT analysis on the Starbucks. In the second section we would analyse the macro and micro environmental factors that affect the marketing in Starbucks. We would then move to detail the aspects related to segmentation marketing creating sample segments. We would also analyse the targeting strategies that could be used by Starbucks in order to promote a product. The buyer behaviour change also affects the marketing strategies. We would also advance from the 4 P’s of marketing mix to 7 P’s of marketing mix after detailing about the example of the product of Starbucks and its positioning. A section would be dedicated to integration of promotional activities. In the last section, we would plan marketing mixes for two different segments identified in the second task. In the end we would do an analysis on how international marketing differs from domestic marketing. This study will be done keeping in mind the marketing aspects related to Starbucks marketing management.
Macro and Micro Environmental Factors in Marketing
There are various macro and micro environmental factors that affect the marketing strategy and decisions in Starbucks. In this section we would enumerate and demonstrate those factors.
In this category, we would discuss the impact of economy, Politics Population distribution over the marketing process of an organization keeping our focus on Starbucks.
- Economy- Marketing a certain product in an area needs to be judged based on the economic factors of the locality. Marketing a particular high cost product in a middle class locality could be a money waste, because the pocket strength of the targeted customer might allow to go for buying the product. Thus, economic factors needs to be kept in mind.
- Politics- Legislative norms and regulation need to be followed while marketing any product. For example, if any product could cause harm to the sentiments on certain community, then this case might come under law. Thus, marketing team needs so take care of these aspects very well.
- Demography- Intensity of marketing could be dependent on the population distribution of the locality. Intensity could increase at the areas of high population, as there is a greater probability of the visibility index of the marketing tool there. AT the places of lower population, the marketing intensity could be moderate, as there is lesser probability of the product getting visible.
Three chief microscopic factors for Starbucks marketing are suppliers, third parties and customers. Those are described below:
- Suppliers- Manufacturing the end products always depends upon the quality of raw materials provided by the concerned vendors. Starbucks also has a dependency on the vendor and their products to be delivered. Supply of coffee beans and their price has always been a concern on the coffee products manufacturing companies. Thus, good response from the suppliers help in executing the planned tactics well and getting products for the customer available well in time as per the marketing strategies.
- Intermediate Parties- Stakeholders like transporters and distributions and promoters also need proper attention from the analysers of marketing mix. Starbucks has a smooth network which helps in stabilizing the third party affairs.
- Customers- Customers are the most crucial aspect of the marketing process. Any product that they produce is manufactured based on the customer dislikes. Starbucks enforces on keeping the class customers, which apparently are permanent customer to them, satisfied and happy. Branding of a product is done to keep the customers interested (Moorman, 1993).
Starbucks: SWOT Analysis
|1. Being a big organization, Starbucks can always invest on expanding the business and creating new products. 2. It has a broad base of customers around the world among the upper class and upper middle class.||1. Increase in prices of items from vendors sometimes causes difficulties to Starbucks. 2. Prices of the products are on higher side.|
|1. Expansion needs to be done for the country’s banking on the brand of Starbucks. 2. Starbucks can target youngsters of developing countries like China, Brazil and America.||1. Competition from rivals in South Asia like Café Coffee Day. 2. Increase in price of coffee beans would force Starbucks to revise coffee prices.|
A) Key Elements of the Marketing Process
Elements of Marketing can be categorized into various types based on the parameters we use for categorization.For Starbucks, we have two basic elements at the end-points of the marketing principles. One of them is Customers and other is the Marketing Environment. We would detail about these two elements in this section.
Customers:It is a crucial element in marketing, as customers are very much in target in the strategy of Starbucks Marketing team. Launch of any products is done keeping an eye on the customer to be targeted. Spending on marketing strategies and procedures depends on the customer coverage by a particular product, or the potential capability of a product. For covering high class customers, advertisements at airports and hotels are useful. Similarly electronic media advertisements and promotion also come very handy in marketing certain products. Marketing team also needs to focus on retaining customer interest on the product by improvisations.
Marketing Environment:Marketing environment also plays a huge role in marketing activities. Promotional activities should be done in such a way that there is no negative impact in market. A thought on rival companies needs to be taken care of. However, in real-time American and European coffee retail markets, Starbucks is way ahead of its rival companies and has its monopoly and class at various regions. But for expansion of business, it is important to keep the marketing and business environment in mind, especially while expanding the business to the Asian countries (Grönroos, 2004).
B) Marketing orientation: Benefits and costs
Marketing orientation also play a key role in effectiveness of the marketing processes. Marketing process can either be handled either by the marketing management team of the organization or by any external agency. Bothe the product units and the marketing unit needs to be in synch to effectively drive the marketing process. Starbucks team analyses the marketing trends properly to plan the marketing strategies. However, in Starbucks the strategy-making is done by the internal resource management team, thus it is easier to get synched up with the production team. This is important because, the amount of might and work that is been put on manufacturing a quality product could go in vain, if the marketing is not done keeping the right ideas in mind. Costs of marketing orientation seems minimal in front of the profit indices once a marketing strategy works well for an organization. Thus, keeping the marketing orientation properly helps the organization to regularize the marketing costs, which in turn helps the organization (Gummesson, 1991).
C) Segmentation Criteria for Starbucks
In segmentation marketing, we divide the customers in various segments. Marketing planning and execution based on the segments and the people in the segment. Different strategies are devised for different segments of customers and a given product is positioned or branded based on the strengths and utilities of the product for the targeted customers. In this section, we would discuss two possible segments: Children below 15 years and Youth Girl’s Segments (Dickson, 1987)
Children below 15 years
There is a wide variety of products that keep the children below 15 years interested. This segment of customers generally coming from affluent families consider the fancy and high class products which are good at showcasing the class. Cotton Candy Frappuccino is one example of such product, which we would discuss in upcoming sections. Marketing team need to identify the television channels which are most watched by this age group. Fancy advertisements can be constructed and shown in the breaks of these TV program to place the product in the mind of the children. Similarly at amusement parks, malls and multiplexes, the products can be advertised.
Young girls from affluent families can be targeted using certain marketing planning. This group needs to be segmented out from the normal group because of various parameters. Firstly, the segment should be targeted showcasing the class of the products. College going girl would definitely try certain products to sustain the classy trends going on. Moreover, this segment of customer is very much health conscious and the calories that are contributed to the product.This is also one aspect to brand a product for this segment.
D) Targeting Strategies for Starbucks Product: Cotton Candy Frappuccino
Cotton Candy Frappuccino is a product contains vanilla beans along with Raspberry syrup which is designed very much to keep children interested in the product. One more aspect to it that it doesn’t contain added caffeine, which makes it a better option for the parents to get it for their kids. Electronic media advertisements were designed to target the children. The main aspect to it to brand the product among children. An analysis on most watch TV serials by the children could go handy in the marketing of this product. Moreover, places which are frequently visited by children like amusement parks and multiplexes were targeted for putting banners and doing promotional events. From the manufacturing point of view, the taste related to Cotton Candy has been designed to attract children. This solves a bigger purpose. In general when a couple goes out for shopping with children and takes some time out to visit the Starbucks, there should enough choices for children to choose their product. Cotton Candy Frappuccino adds to the wish list of this segment of the customers. Similarly, the additional raspberry syrup adds to the taste, as far as keeping the children interested for the product is concerned (Duffy, 2005).Cotton Candy Frappuccino
E) Effectsof Buyer Behaviour in different buying situations
For planning marketing strategies, change in buyer behaviour needs to be considered. Sometimes too much planning over the manufacturing side may lead into heavy losses, if the buyer behaviour is not anticipated.
Example 1- Behaviour of Children below 15 years
For children below 15 years, the biggest advantage with planning the marketing mix is that there would be lesser chances of shift in trends for some time, once the product is established. Thus, the marketing needs all the push in establishing the class of the product first up and the advertisement need to be very innovative so that desire to get the product would increase for the customers. Moreover, the quality of the product need to be very fine in order to meet the expectations and sustain in the market. One more thing for children specially around 12-14 years of age is that the product should not look girlish, as this would result in resistance from the boys of 12 -14 years to reject the product.
Example 2- Behaviour of Youth Girls
This segment of customer is trickier in anticipating the upcoming trends. However, keeping the status up forces the youth from affluent families to continue with the classy products. Thus, the simple business strategy to keep the product quality high can work to a great extent. One more thing is that the calorie content of the product needs to be kept to lowest possible, to sustain this segment of the customers.
F) Positioning for a selected product
As discussed in the previous section, segmentation marketing is an important aspect in marketing certain products. But the segmentation strategy is a waste of the product is not positioned properly. The customers need to be realized that a certain product is manufactured for them. Positioning a product literally means to place the product into the eyes of the set of customer through various marketing strategies. A single product can be positioned in a different way to different segments. Cotton Candy Frappuccino can be branded for then children as a product of taste and symbol of cotton candy in a classy manner. Similarly he same product can be branded a classy caffeine free product which is quite fancy in looks for the youth girls. Thus, positioning a product is very important for an organization in order to make the segmentation marketing a success (Graham, 2008).
G) Marketing Plan
Products Development to sustain competitive advantage
This section would be dedicated to comparison of Starbucks with a rival company in product development. We would compare the marketing operations of Starbucks with Café Coffee Day.
Competition in European and American countries
Starbucks has altogether a unique customer cover in the European and American countries. The customers are well targeted by the marketing team and the brand value of the products is kept at a position. Rivals like Café coffee day are way behind in term of market position, branding, sales and various other financial indices. But, to hold the edge over the companies is very important.
Competition in Asian countries
The food habits are pretty different in Asian countries. Starbucks has not been very much established in the Asian countries which are developing. Café Coffee Day has better condition in the south Asian countries. They have realized the people there have preferences towards food products rather than beverages. So, to add on, they have added variety in food products. Almost close to thirty percent coffee consumption across the globe is contributed by the Asian countries. Thus, Starbucks need to concentrate on capturing the market.
4 Ps of Marketing and Arrangement of Distribution
Distribution tactics are very crucial for Starbucks.It is also important to consider 4Ps of marketing- Price, Product, Place and Promotion.
Price- Setting of price reflects the business objective of the organization. Price needs to be kept based on the reach of the target customers. All the marketing plans and strategies are designed based on the pricing of the product, as it straight away reflects on the expenses that need to be done for the product. It also sets the way to determine the class of customers to be targeted.
Product- Product quality needs to be as per the brand and pricing. If the price is on higher side then the customer should be satisfying on purchasing the product. Thus, the product needs to have a synch with the price.
Picture: 4 P’s of marketing mix. Source: www.notesdesk.com
Place- A particular segment needs to be targeted on certain places. Like youth can be targeted at multiples and malls. Advertisements between cartoon television shows can be done in order to target the children.
Promotion- Promotion needs to be as per the money invested on it. It is always crucial for the marketing team to determine, which marketing strategy would fetch more brand value to them. Thus, the expenses on marketing should be planned based on the good anticipation over the return value (Constantinides, 2006).
Price Setting to reflect Organization’s objectives in Starbucks
Starbucks always keeps a considerable amount of price for the goods produced by them. This tells what kind of intent they put into manufacturing the product.The main aim is to give the buyers best possible experience inside the stores. On a broader look, the prices of Starbucks product always look on higher side when compared to similar products of other companies. But the quality of product is always top class, when it comes to delivering the quality. Also, customer delight is of utter importance for them. Starbucks wishes to keep the permanent customer happy and the pricing does not always matter for these permanent customers. For the Starbucks administration, the pricing keeps them away from some rivals in terms of quality and brand value. Thus, pricing always reflects the mind-set of any organization.
H) Planning marketing mixes for two different segments in consumer markets
This section would be dedicated to planning the four marketing mixes for a particular product Cotton Candy Frappuccino for two different segments identified by us in the previous sections. The two segments would be children below 15 years and youth girls’ section
Marketing mixes for Children below 15 years
For children below 15 years below are the marketing strategies that can be used keeping mind the 4 Ps:
Product-Lesser caffeine in the product would help the children to consume the product more frequently. Also, the product is kept as fancy to be liked by the children.
Price- Price kept at reasonably higher rates to maintain the class of the product. Also, the quality of the product is very well balanced and taste factor is also kept in mind.
Place-Place for promotions are generally advertisements through print media and electronic media. Advertisements breaks between animated TV shows is also targeted for the promotional advertisements of the product.
Promotion-Promotions are done through electronic media mainly, well integrated with promotions in multiplexes and malls.
Marketing mixes for Youth girls
Product: Product is kept fancy and also higher from the reach of lower middle class to give the product an edge over others. Affluent customers generally take pride in purchasing high cost products, thus this can be utilized by the Starbucks management.
Price: Price is not a worry for the affluent youth girls’ section unless it is low on calories and there is uniqueness with the product.
Place: Starbucks always tries to provide a wonderful coffee experience to the customers. The place for it can be any good coffee centre of Starbucks in malls or somewhere.
Promotion: Promotions again can be done in multiplexes, colleges and malls. Schools and colleges can be target for promotion as far as this segment of customer is concerned.
I) Integration of Promotional activities to achieve marketing objectives
Promotional activities play a huge role in marketing of a product. Starbucks manage the promotional activities pretty well. There are plenty of opportunities to promote the products. For high class customers, they can target places like airports and top residency hotels. For youth they can target multiplexes and malls. One more weapon for promotion is through social media. Social media websites such as Facebook and twitter are exclusively used Starbucks marketing team to promote their products. It is easier cost effective method of branding certain products. Newspaper and television advertisements are also common ways of promoting Starbucks products. The most important thing is to integrate all the promotional activities so that the effectiveness of the overall campaign is maximum. Certain areas are targeted for certain customer. Which product to market and where to market and how to market are some of the important question, which the marketing management decides. The promotional activities are planned such that there should not be too much expense on a certain product or area. All this is decided by the initial acceptance factor of a product among the target customers. Thus, integrating the promotional activities in an effective manner is very important (Belch, 2008).
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J) Additional elements of extended marketing Mix
Apart from Price, Place, Product and Promotion, 3 more elements can be added to the elements of marketing mix. These are generally referred to as additional elements of marketing mix. Altogether these seven elements are called 7 Ps of marketing mix. The additional elements include Process, People and Physical environment.
Process- Process involves the formalities from the manufacturing of a product, to putting it into the retail market for a customer to buy. The process should be set in such a way that, the quality of the product is as per the expectations. All the stakeholders like vendor, distributors, transporters and store persons have to play an important roles in the process
People- Employees, customers and investors are the three kind of people that are involved in whole process. All three need to be happy and satisfied. An investor should be made to believe that everything is going as per the plan and goals of the organization. Customer delight has always been a key area of focus for Starbucks. Also, the employees need to be well trained and well paid as well, to make the things go smoother.
Physical Environment- Branding the product keeping the physical environment in mind is also very important for every product. Products should be manufactured based on the taste and likes of a particular segments of customer.
These are the three additional Ps that need to be kept in mind to have the marketing process more streamlined and effective (Armstrong, 2001).
Picture: Additional Elements of marketing mix. Source: http://freenomads.com
K) Services to Business Organizations
It is important to brand the image in business organizations as well. Especially with Starbucks which targets the affluent customers, bagging and sustaining some corporate customer is very essential.Keeping a collaboration with big business organizations helps not only in sales, but also the branding of products.In corporate sector with relatively young population, people keep trying for the new products and the variety of products. This can be utilized by the Starbucks organization well. In certain south Asian countries, organizations like CCD have set up a lot of retail centres inside the campuses only. This can be replicated by Starbucks as well. As corporate sector generally marks the individual with good salaries, so these customers can be targeted keeping on mind the higher level price setting of Starbucks. Also, these kind of investments are rather fruitful, as they guarantee a certain amount of sales to be covered by the retail centre. Thus, it is also crucial to keep in mind the services provide to the business organizations as well.
L) International marketing vs. domestic marketing
There are differences between international marketing and domestic marketing, due to various factors. For example differences in differences, economic factors and political factors.We would try to deduce how the international marketing quite different from domestic marketing for an organisation by example of Starbucks (Cateora, 1975).
This section would first include the emergence of Starbucks in UK market. Firstly they acquired the Seattle Coffee company in the UK. The Seattle coffee companies had various stores across the United Kingdom, which were running in losses, thus they were forced to sell these out to Starbucks. Starbucks made use of the opportunity and acquired these stores and due to better marketing strategies and good brand building across the United Kingdom, they established themselves as the leading coffee products retailer.
But at the international level the scenario is different, In South Asian countries, people also prefer food products along with coffee products to consume. This was utilized by the rival company café coffee day by introducing wide varieties of food products. This in turn helped them to sell the coffee beverages more effectively. Similarly Starbucks will have to deal with such adaptations in the Asian countries in order to grow more, internationally. Thus, the tactics of marketing products in a domestic environment and in international environment are totally different.
Marketing strategies are always crucial for the organizations of they want to brand the products to the customers. Segmentation marketing is always a useful tool in simplifying the process at the ground level. But it requires tactics like targeting and positioning in order to be effective. The segments need to be properly divided and the marketing mixed need to be applied differently for different segments. In addition to the 4 P’s of marketing, 3 additional were studies and these come pretty handy if we consider them. All these strategies have to be designed quite differently for international marketing. Thus, proper planning in marketing certain products always help the business organizations.