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Diploma in Business (Marketing)
Unit Number and Title
Unit 4 Marketing Principles
Starbucks is the leader in the coffee market with a large number of stores and coffeehouses in more than 60 countries in the world. Starbucks provides the existing and potential customers with a wide range of premium products and services. This organisation maintains the quality of its products and services starting from the supply of the coffee beans to the distribution of the coffee products along with the services provided at the stores. To gain and maintain such a large share in the market, Starbucks implements a number of marketing strategies which work in the direction of the achievement of the organisational goals and objectives (Austin, 2006). All of these marketing strategies allow the marketing professionals in the organisation to increase the sales, strengthening of the brand image, popularity and repeat purchase. The management of Starbucks provides a lot of focus to the marketing strategies of the organisation. All of these marketing principles and activities include advertising and promotional activities as well, which ensures perfect exposure to the products of Starbucks.
The SWOT analysis of an organisation allows the identification and analysis of various factors that affect the business of the organisation in a particular market. The SWOT analysis allows the factors such as strengths, weaknesses, opportunities and threats to the particular organisation to be identified and analysed in the particular market. Starbuck is one of the lead runners in the business of the coffee in the entire world. It is the most popular brand which is the retailer and marketer of all the premium coffees in the world.
Starbucks has more than 60000 coffeehouses which are spread over 60 countries in all over the
world. Some of the strengths which can be identified in the SWOT analysis of Starbucks are the brand image, the total revenue of the organisation, the customer loyalty of the brand, the incomparable experience of the Starbucks and the highly efficient employee management program. Some of the weaknesses revealed in the SWOT analysis are the pricing strategies used for the products and the close relations of the price of the coffee beans on the profit of the organisation. Starbucks can reveal a number of opportunities in the particular market, such as expansion in the sale strategies, expansion of the network of the suppliers, expansion of the business to the untapped markets and the increase in the number of offerings in the coffeehouses. The SWOT analysis of Starbucks reveals a number of threats to the business of the organisation, such as the increasing behaviour of the customers to avoid consumption of caffeine and increase in competition due to implementation of various marketing strategy by the various other organisations in the same industry (Austin, 2006).
The definition of the marketing objective in Starbucks allows all the implemented marketing strategies to work in a same direction of achieving that objective. The marketing objective of Starbucks provide all the marketing plainning and operations of the organisation a single set of motivations. The marketing objective defines what exactly has to be achieved by the marketing operations of Starbucks.
The marketing objectives of Starbucks to provide the marketing department of the organisation to lay the foundation of all the marketing strategies. Starbucks is targeting the potential
customers from the age 18 to 40 in the entire world according to the marketing objective defined in the organisation. The organisation is targeting customers of both the genders who are in either middle or higher socio economic status in the corresponding market. The targeted potential customers of Starbucks are the college students along with the professionals. This market segmentation and targeting strategies of the organisation depend on the marketing objective of the organisation.
The marketing objective of Starbucks adhere to the S.M.A.R.T criteria which defines the objectives to be specific, measurable, achievable, and relevant and time bound. These marketing objectives allow the professionals in the organisation to measure the customer satisfaction due to the current products and services of Starbucks. All of these marketing objectives also allows the organisation to determine the required quality of the products and services provided to the customers by Starbucks. The determined marketing objectives of the organisation allows the marketing professionals of the organisation to position the brand according to the customers’ needs and requirements, which in turn ensures the highest profits (CEO, 2004). The costs of market orientation process involves the implementation costs of the relevant strategies according to the goals and objectives of the organisation. The benefits of the market orientation allows the marketing activities of the organisation to be effective and efficient enough to satisfy the needs of the customers in the corresponding market by adhering to the principles and objectives of the organisation.
There are a number of marketing operations which are included in the business model of Starbucks. Some of the environmental factors present in the corresponding markets of Starbucks affect the marketing decisions in the organisation (Friedman, 2003).
Economical factor: The economic status of the market of Starbucks affects the marketing operations in the organisation. The better economic status of the market of Starbucks allows it to provide the customers with a broad range of offerings and better services.
Political factor: The political situation of the market of Starbucks affects the marketing operations and decisions of Starbucks. The political situations of the market determines the rules and regulations of the market regarding the operations of an organisation. All of these rules and regulations affect the marketing operations of Starbucks.
Cultural factor: The culture of the corresponding market of Starbucks affects the marketing decisions of the organisation heavily. The offerings of Starbucks should be accepted by the cultural norms and practices of the corresponding market. The global operations of the Starbucks are affected by the preferences pf the local people in the corresponding society such as a different preferences for snacks in the Asian operations of the organisation.
Competitors: The presence of other similar organisations in the same industry in the corresponding market poses a challenge for the marketing operations of Starbucks. So the marketing professionals of the organisation take the marketing decisions to tackle the situations created due to the competitors in the market (Friedman, 2003). Some of the competitors of Starbucks are McDonalds, Barista, Nestle and Dunkin’ Brands Group.
Suppliers: The quality and efficiency of the suppliers present in the corresponding market of Starbucks affects the marketing decisions taken in the organisation. The marketing decisions of the organisation act towards the smooth completion of the marketing operation in sync with the suppliers present in the market. Some of the biggest suppliers of Arabica coffee for Starbucks are Vietnam, Columbia and Brazil.
Customers: The marketing decisions of Starbucks depend a lot on the characteristics of the customers present in the corresponding market.
The market of Starbucks can be defined as a collection of potential customers having different requirements and needs. The entire market can be divided into subgroups of customers having similar set of needs and requirements. Each of the subgroups of customers present in the market can be targeted by the use of a specific set of marketing strategies. This allows Starbucks to focus on a particular group of customers with a particular marketing strategy. This in turn increases the efficiency of the organisation to identify, anticipate, analyse and satisfy the needs of the customers present in the market. Starbucks uses both demographic and geographic segmentation principles to divide the entire market into relatively smaller groups.
The segmentation criteria used by Starbucks in this principle is the age of the customers which should be between 25 and 40. So the marketing strategies of Starbucks focus on the potential customers of age between 25 and 40 which is close to half of the entire business of the organisation. The group of customers having age between 25 and 40 are generally professionals with medium to high salaries. Another segment targeted next by Starbucks is of the potential customers of age between 18 and 24 which defines 40% of the total business of the organisation. These customers are generally college going students and relatively younger customers (Friedman, 2003).
Starbucks divides the entire market into segments based on the geographic location. The organisation generally establishes its coffeehouses in locations with high socio-economic status and near college campuses. The organisation uses the marketing strategies to determine the geographic locations which ensure high sales and profits.
Starbucks offers a wide range of products and services to its customers all over the world. The specifications and quality of the products and services are managed to ensure the highest customer satisfaction and sales. Starbucks implements a number of targeting strategies depending on the type of the product or service and the needs of the customers. One of the products of Starbucks is its world famous range of the dark roast coffees. This provides the customers with a premium coffee experience. As part of the targeting strategy, Starbucks focuses on the customers in the market with the age in between 25 and 40. Starbucks targets this segment of the market which is generally consists of the professionals in managerial processes.
The main target of this product by Starbucks is the professionals and managers gathering in the coffeehouse or offices for meetings or discussions. The products in the dark roast coffee range allows the people working in the hectic schedule of the corporate world, to enjoy the unique and premium experience of Starbucks. This targeting strategy of Starbucks is focused around the fact that the organisation allows the soul of each of the customers to enjoy the premium products and services of the organisation. This product range of Starbucks also targets some of the potential customers in the age range of 18 to 24, who are generally college students and comparatively younger crowd. This product range focuses on these customers ready to experience the premium coffees either on a regular basis or occasional basis (Thompson, 2004).
The buyer behaviour defines the process or the set of processes the customers go through while buying a product or service of Starbucks. The buyer behaviour of the customers consists of the first step of identifying the needs. The customer first realizes his or her needs for one of the products or services of Starbucks. Then the customer gathers information regarding all the other organizations providing the same products and services. The next step is the most crucial one, in which the customer compares the product or service of Starbucks with all the alternatives present in the market. So the marketing strategies of Starbucks are implemented in such a way that they are in sync with the buyer behaviour of the potential customers of the organisation (Friedman, 2003).
The buyer behaviour of the customers of Starbucks is affected by a number of environmental factors such as cultural background, social status, occasions, seasons etc. The situations of the market affects the buyer behaviour of the customers. Consider the time of the Christmas holidays in USA. In this situation, the people in the market generally look for a place to sit in groups and enjoy a nice cup of coffee. So the marketing strategies of Starbucks focuses on the ambiance and services in the coffeehouses. The season in the market of Starbucks also affects the marketing strategies of the organisation. In the winter season, most of the people like to have a cup of coffee. So the marketing strategies of Starbucks focus on increasing the number of sales in the season of winter (Thompson, 2004).
The services and products provided by Starbucks allows it to be positioned as a high end provider of great ambiance with very high quality coffee products. The dark roast coffee products can be positioned as the product suitable to the professionals in managerial roles in any of the official meetings and discussions.
The marketing activities of the organisation are affected by the buyer behaviour in different situations. Suppose a number of people working in managerial roles in various corporate offices walk into the store for a formal meeting. Then they will be looking for hot beverages over the discussion in the meeting. The marketing activity of the organisation focuses on providing coffee which allows the business professionals to have a successful meeting. The same marketing activity is also relevant to a situation of a number of businessmen walking into the store for having a meeting with their client.
The marketing mix of an organisation defines the factors on which its marketing strategies are focused. Starbucks manages its marketing strategies and marketing operations according to the defined marketing mix for the particular range of products. One of the most in important factors in the marketing mix is the competitive advantage. The competitive advantage of Starbucks is defined by its capacity to provide better products and services in comparison to the other organizations in the same industry. Some of the large competitors of Starbucks are Dunkin's Donuts, McDonald's and Caribou coffee. Starbucks uses some of the below mentioned marketing strategies to gain and maintain the competitive advantage in the corresponding market. Starbucks focuses on the customer experience in its stores to ensure long and close relationship with the customers. Starbucks focuses on the ambiance in the coffeehouses and the accessibility of the stores. This allows the organisation to build and maintain strong and long term relationship with the customers. Starbucks has also started a rewards program in which the customers are benefited due to repeat purchases. This allows the organisation to attract and hold more customers. Starbucks uses state of the art coffee machines and highest quality coffee beans to maximize the premium experience of the customers (Thompson, 2004). This in turn strengthens the brand image and customer loyalty. All of these marketing strategies of Starbucks allows the organisation to gain and maintain competitive advantage over all the other organizations in the same industry.
The coffee market in the world is somewhat scattered around the globe. So general distribution channel used by the coffee retailers include a large number of market intermediaries. The coffee beans reach the actual retailers after going through a number of market intermediaries. This may include a number of risks to the customer satisfaction. To ensure the satisfactory quality of the coffee beans in the products, Starbucks gets the supply of the coffee beans directly from the selected coffee growers. Then Starbucks uses a hybrid combination of the distribution channels to ensure that the customers' satisfaction and convenience are maintained. Starbucks sells its products in its own stores which are located in the most convenient and accessible locations in the market (Smith, 1996).
The organisation also focuses on the excellent condition of the ambiance in its stores and coffeehouses. The customers are also provided with a number of his quality products and services in the coffeehouses to ensure that their satisfaction levels are fulfilled. Another distribution channel used by Starbucks is the large retail stores and supermarkets which contain the various range of products of the brand. This allows the customers to conveniently purchase the products of Starbucks in case of unavailability of the coffeehouses or stores of the brand. Another distribution channel used by Starbucks is the hotels, Airlines and other convention centres having tie ups with the brand. This allows the customers to be satisfied by the various range of the products of the brand at any point of time and place (Friedman, 2003).
Starbucks is the leader of the coffee market which holds a lot more market share in comparison to any of its competitors. The organisation uses a number of pricing strategies for its wide variety of products which are dependent on a number of factors. Starbucks implements its pricing strategies based on the below mentioned factors.
Starbucks maintains a unique factor about its products and services which differentiates it from the rest of the competition in the market. Starbucks ensures the high quality of the coffee beans used in its products which in turn increase the quality of the product. The pricing strategy of Starbucks is heavily dependent on this factor of uniqueness and excellent quality. Starbucks maintains this unique and excellent quality of its products and services to justify their slightly high price (Pennacchiotti, 2011).
Starbucks is the leader in the coffee market holding the largest amount of market shares in comparison to any of its competitors. This causes the organisation to implement some pricing strategies which allows the organisation to charge higher price for its products and services. Starbucks also uses the relative value pricing strategy in which it provides a wide range of products and services starting from low values to premium values. The presence of low value products allows Starbucks to justify the high price of the premium products by comparing them to the low value products.
Promotional activities are one of the most important activities in an organization. These activities allows the marketing professionals in the organization to position the brand or a particular product of the brand according to the requirements of the existing and potential customers in the market. Starbucks uses a number of promotional strategies to make the potential customer curious about their products and services.
One of the promotional activity used by Starbucks in their stores and coffeehouses is the introduction of the rewards program. This allows the customers to gain some rewards points by buying some of the products, which they can redeem after reaching a minimum amount. This creates some level of curiosity in the minds of the customers and allows the sale of the Starbucks products to increase by significant amount.
Another promotional activity used by Starbucks is the usage of the social networking sites to provide the customers with the latest news regarding the new products of the company. This also allows the customers to follow the various promotional activities used by Starbucks. Regular presence in the social networking platform also allows Starbucks to increase its brand value, popularity and repeat purchase. Starbucks uses Pinterest, Facebook, Google+ and Twitter to maintain its online presence in the internet.All of the implemented promotional activities of Starbucks work together in the direction of achieving the common marketing principles and objectives of satisfying all the people in a particular market through their high quality products and services (Moon, 2003).
The 4 Ps of the marketing mix are the four factors which affect the marketing operations and decisions of Starbucks. Apart from these four, there are three extra factors which are a part of the extended marketing mix. These factors are the process, people and physical evidence.
The entire strength of Starbucks has been divided into the organisational structure which consists of various roles and responsibilities which allows the organisational processes to be executed in a smooth manner. Each of the person in Starbucks has a definite set of roles and responsibilities which contribute towards the goals and objectives of the organisation. This element of the marketing mix includes all the people working in various business activities in the organisation. So the element includes the salespersons, the managers, the customer care representatives and everyone else having definite roles and responsibilities in the organisation.
Starbucks operates in more than 60 countries with a large number of stores and coffeehouses. Starbucks also has tie-ups with a number of hotels and airlines which provide the products of Starbucks to their customers. The products of Starbucks are also sold in the large retail stores and supermarkets to allow the customers to buy them conveniently. Starbucks also has a number of other processes in the US including the food service accounts (Michelli, 2006). This element of the marketing mix focuses on the various functionality of the organisation’s products and the benefits they provide to the customers of the organisation.
The logo of Starbucks is present on each and every product, store and coffeehouse of the organisation which adheres to all legal regulations. Starbucks provides all the information regarding its business, business partners, products, services, diversities and career opportunities in their public website which is put in the internet by adhering to all the corresponding rules and regulations.
Consider the market segment of Starbucks containing the youths of ages between 18 and 24. The product which is used to focus on this segment of the market of Starbucks is the range cold beverages of Starbucks. The Iced Coffees of various flavours are used to focus on the female customers in this age range. The price of the product is kept in a medium range by making it a non-premium product. This allows the customers present in this segment of the market research to buy these products easily and in turn leads to more sales. The location of the stores and coffeehouses to focus on this particular set of product and price is chosen to be near colleges and other restaurants, which allows the young mass to enjoy these products and services conveniently. These products are also made available in the malls and supermarkets considering the frequent presence of the young mass there. The promotional activities to focus on this particular segment of the market can be executed on the social networking sites and other sites to attract more number of corresponding customers.
Another market segment which can be focused is the customers with the ages between 25 to 40 who are generally businessmen and managerial professionals. Some of the products such as Featured Dark Roast and Pike Place Roast can be used to focus on these professionals with a very hectic schedule. The price of these products can be maintained in the higher end by making them the premium offerings of Starbucks. The place of the stores and coffeehouses should be kept close to the offices which allows the quick availability of a place for a meeting with great ambiance and a cup of coffee. The promotional strategy to focus on this segment of the market can be executed by allowing the customers to have access to a number of other products in the stores (MacDonald, 2007).
Each of the organisations in the current market can provide a number of services along with their products to the existing and potential customers in the market. The marketing operations of a product and a service are different due to a number of factors. The marketing activities of a product can show the potential customers regarding the various features of the product. These activities allow the customers to physically see the features provided in the product which helps them to take the buying decisions. But in case of a service, the marketing activities can only try to assure the potential customers regarding the capability of the service to satisfy the needs of the customers.
Consider the LCD manufacturer Sony which provides a wide range of LCDs to various markets all over the world. The company provides a number of aftersales services to the customers. The products of Sony can be marketed through the various marketing strategies which allows the customers to look and feel the products. The aftersales services can only be described and assured instead of showing them to the customers.
Similarly for Starbucks, the products of wide range of hot and cold beverages are advertised through the conventional and modern channels of advertisement. But the services provided in the coffeehouses and stores are provided to the customers at the time of buying any one of the products provided by Starbucks (Gallaugher, 2010).
The differences between the B2B and B2C marketing can be described on the basis of the 4 Ps of marketing. The products is kept in focus for the B2C marketing. But the B2B marketing focuses more on a solution that benefits the targeted business. The place of the B2C marketing is one of the most important elements, which is replaced by the access to the solutions in case of B2B marketing. The price in the B2C marketing is replaced by the value in B2B marketing which defines the relevant value that the targeted business holds for the solution. The promotional activities of the B2C marketing is not maintained in the B2B marketing also. The B2B marketing allows the business professionals to focus on educating the targeted business regarding the various features of the solutions.
Domestic marketing can be defines by the marketing activities which are restricted by the political borders of a country. But international marketing encompasses the borders of the countries and does marketing activities in the entire globe. The activities in domestic marketing are focused on the political situation of the country of operation only but in case of international marketing, an organisation has to consider the rules and regulations of all the involved countries. Similarly the domestic marketing strategies focuses only on the organisations in the same industry operating in the same country. But in case of international marketing, the organisation has to focus on all the competitors in the global market. The marketing activities in domestic marketing allows the marketing professional to consider the macro and micro environmental factors of the one country. But in case of international marketing, the marketing professionals have to focus on the macro and micro environmental factors of all the involved countries.
An organisation marketing in a single country is generally aware of all the challenges and threats in the market. But in case of international marketing, an organisation may face a number of unknown and unexpected challenges and threats in the market. The activities in the international marketing may face a number of resource issues in terms of the workers, natural resources or technological resources (Gaudio, 2003).
Starbucks also use a number of strategies to complete the marketing activities in the global market. Some of the international marketing strategies used by Starbucks are merging with the competitors in the foreign markets, acquiring one of the competitors in the foreign market, operating internationally at a loss initially and combining several locations in a small geographic area.Starbucks faced a challenge by the stores of the chain McDonaldswhich has lower price range for their various products. The global marketing of Starbucks caused it to compete with some of these quality products with lower price range. Some of the other competitors in the global market include Café Coffee Day, Barista etc. The expansion of Starbuck’s business into the Asian countries were challenged by the preferences of the local crowd for various other types of snacks along with the regular products of the company.
Some of the large competitors of Starbucks are Dunkin's Donuts, McDonald's and Caribou coffee. Starbucks uses a number of marketing strategies to gain and maintain competitive advantage over all the organisation in the same industry and market. All the marketing strategies of Starbucks are implemented according to the marketing mix defined for the organisation. All of these marketing strategies of the organisation allows it to gain a large share of the market in the corresponding industry. The implementation of effective and efficient marketing strategies has allows Starbucks to be the market leader of the coffee industry (Gallaugher, 2010).
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