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Diploma in Business (Marketing)
Unit Number and Title
Unit 4 Marketing Principles - Starbuck Coffee
The concept of Marketing is a very important for business to be competitive in the market. The concept of marketing varies time by time. Now a day, in the concept of marketing company sells its idea, product and services depends on the need of the present and prospective customer. In the other word, we can say that the organisation makes the products according to the needs of the customers or consumer and then sell it. The Starbuck coffee has different flavour in coffee for the different age group and makes changes in its flavour time by time. To get a clear view of marketing process, I am taking the Starbuck cafe as an example to understand the concept of marketing and will show the SWOT analysis and will define the objective and the various term of marketing. The star buck’s first coffee shop was at Seattle, Washington in1971. Till today, it has approximately 2372 stores across 62different countries.
Starbuck offers a wide range of hot and cold beverage and some packed item like sandwiches, burgers and pastries. Starbuck always is putted on the first rank by the coffee lovers. Starbuck is one of the famous coffee houses in the US and UK and Starbuck is the only example among the coffee houses in which it is get to see the introduction of a new product is according to the right customer of the right age group. And it is fully aware of what to introduce in the market at which time (Wang, 2007). There are various elements of marketing in which Starbuck work as a king like these are consumer behaviour, customer orientation, marketing environment, customer satisfaction and promotional activity. In the Starbuck, customer gets a feel that he or she is very special for him the cafe. And it always offers a value added services to their regular customer with a full satisfaction and great taste. Starbuck never spent a huge amount of money on the promotional activity instead of this it believes in brand positioning and mouth to mouth publicity. To explain the marketing process of the Starbuck it is important to go through the SWOT analysis.
SWOT analysis: SWOT analysis is a marketing tool which is use to find out the assets and liability of the organisation and also explain the opportunities and threats present in the market.
For an organisation SWOT analysis is very crucial because only with the help of swot analysis the organisation may get the real threat and opportunities present in the external market and strength and weakness in their internal organisation. SWOT analysis is a first step of marketing for any product of organisation. Marketing is basically depends on the organisation’s assumption and the competitor’s calculation (Jobber & Ellis-Chadwick, 2012).
Marketing objective of Starbuck: Marketing objective is outcome of the marketing activity and it is accomplished through the various marketing plan. To set any marketing objective, the organisation should be very sure that it should be realistic and specific. A clear objective always carries a strong marketing strategy. The marketing objective of Starbuck is to attract the more customers and get customer loyalty and provide them more satisfaction then other competitor.
Marketing orientation is process in which the market research is conducted by the organization to anticipate the exact need and the wants of the customer of the targeted market and then make the product accordingly so that they can fulfil the need to satisfy the customer. Starbuck conducts such type of research after a small time period to find out the change in the taste of customer. Starbuck also maintain a highly customer relationship and make feel them very important to the cafe. For an example: around 2012 in UK started approach in which if a customer visited their coffee shop and ordered coffee then they also asked their name and wrote their name on coffee cup and when the same customer came to their shop again, they wondered that local staff of Starbuck still remembered their name (Armstrong &Cunningham, 2012). This type of approach is very useful to maintain the good relationship between the customer and the organization. With this approach of Starbuck the customer got a personal feel.
Starbuck is very good in providing value added services or benefits to their customer with the help of marketing orientation . Because of market orientation, Starbuck always plans such type of offer through which it can easily attract the good number of customer at small time period which is beneficial for customer and organization as well. The numbers of the competitors are also increasing in the market; market orientation process makes Starbuck to focus on the building a long term relationship with their customer by identify the new change in the behaviour and the expectation of the customer so that the cafe can beat the competitions. Besides this, there are many benefits that Starbuck have through market orientation. These are as follows:
As described, the market orientation provides the various benefits to cafe by satisfying the need of the customer. In lieu of these described benefits, Starbuck has to pay a huge amount to the process of market orientation. So the cost factor of market orientation is very high. The cost associated with the element of market orientation is as follows:
No matter how big or popular a brand has become, it will always face the competition in the market from the new products and from the new companies in the market. But there is always a competitive advantage of an established rand is that company does not have to put much effort to gain the confidence of the customers as they are already happy with the previous products of the company. In case of Star Bucks, company has the trust of the customers, but even then, when a new product is developed, company has to define a strategy to sustain the competitive advantage (Thorson & Duffy, 2011). Company has the competitive advantage but the new product of the company should be developed to sustain that competitive advantage. For example, when a customer tries the new coffee product of the Star bucks, he should feel that it’s even better than the earlier products of the company.
Hence, the improved quality of a new product while developing that product is always essential to sustain the competitive advantage. Star Bucks also has to make sure that the previous feedbacks of the customers are considered and implemented during the development of the product. As discussed above that Starbuck’s store in Japan is a good example of competitive advantage. When Starbuck has decided to open its store in Japan then it focus only on the non-smoking zone to gain the competitive advantage as no other company started its chain in non-smoking zone. The Starbuck has got the huge brand recognition from here. And in Taiwan also, to beat the competition it has launched first ready to drink coffee.
A distribution channel is the way in which the company product reaches to the end user. A typical distribution channel of any product is provided in the below figure.
It is clearly seen that the distribution starts at the highest level, i.e. at the manufacturer and finish at the customer, i.e. end user. But in between these 2 levels there are many other levels such as the broker, wholesaler, retailer and home delivery salesman. This is kind of a chain and every product has to go through this distribution channel. Although, there is a new distribution channel, which is redefined by the e-commerce or online shopping. In this kind of distributor channel, customer is directly connected to the manufacturer and buys the product directly from the company through online shopping which is delivered to the customer at his home either by the company agents or courier service.
The distribution strategy adopted by Starbuck to provide the customer conveniences are as follows:
Most of the people would say that the prices of a product are set by the manufacturer of the product, but this is not entirely true. It is really the customer and the competition in the market which sets the prices of Star Bucks products. Since, Star Bucks is a big brand, it allows company a bit advantage while setting up the price of a particular product. The company could sell a product on the higher price than their competitors are charging for the same product (Hawkins & Mothersbaugh, 2009). The reason again is the brand and the customer’s trust and loyalty to the brand. But it does not mean that company could set the prices much heavy to earn the extra profit. In this case, the customers would like to try the product of other company and if he likes it and the price is very cheaper than the Star Bucks’ product, company will definitely loose the customer. This is why Star Bucks has to be very cautious while setting up the prices of their products. The pricing strategy which Star bucks use in setting up the prices is the premium pricing strategy. In this business strategy , Starbuck set the price of the product high as it is perception of the targeted market that the high price means high value and quality of product. The premium pricing also increases the competitive advantage and brand awareness for the company.
Promotion activities are of great importance for every product in the company, but when it comes to an established brand like Star Bucks, the promotion becomes easier as there are people who already know the brand and when go to a store for shopping, they ask the product by its name. But still, Promotion is required as company keeps launching new products and to make the customers aware of the new product promotion is required. Starbuck cafe is one of those organisations which use the quality of its products as it promotion. Starbuck offers the best quality of product and believe in mouth to mouth publicity. They believe that the best promotion of the product is done by its customers. Even for new country and new stores they never use any international campaign and even construct the store very fast and do the promotion with the help of this store “Starbucks everywhere” (Yu, 2013).
The marketing mix is a 7 P’s process:
The first 4 Ps of marketing are already discussed in the previous sections of the paper and now the additional three will be explained which are People, Process and Physical Evidence.
People: Although the people are not directly involved in the marketing mix, but somehow they affect the marketing process. For example, the employees of Star Bucks represent the brand of the company and wherever they go they leave a trail of the brand. How these employees behave and how the other people, i.e. the customers are affected by their attitude helps the company in marketing.
Process: The process of marketing mix is very critical and it also includes different sub processes. How a strategy of marketing is planned and implemented through a smooth process defines the brand. Not only the process of marketing but also the process of product development, its delivery to the customer also affects Starbuck marketing campaign. As Starbuck cafe is known for its quality of the coffee and the services offered by the staffs. So, Starbuck cafe regular checks the process of how the employees are offering the services.
Physical environment: The physical environment is mainly related to the environment of Starbuck’s stores and outlets. The ambience in which people sit and enjoy the coffee is very important. If a person is able to relax while sipping the coffee, it’s definitely a positive point for the marketing process.
To introduce a new product into the market is very important to evaluate 7 P’s of marketing. The marketing mix of any product explains the type of product and in which market it should be introduce. Here we will elaborate the marketing mix of two segments (Demographical and geographical segment):
Marketing mix for Demographical segment: main targeted customers for this segment are students, professionals, and planning to target old people too and marketing mix is as follows:
Marketing mix for Geographical segment: in geographical segment, the Starbucks divide the market according to the location, region especially into the countries etc. The marketing mix for this segment is mentioned below:
For Starbuck, Marketing products to business (B2B) rather than consumers (B2C) is entirely a new thing and most of the process could be differentiated from B2C marketing as per the points given below:
International marketing and domestic marketing have their own different strategies for Starbuck and these strategies could not be used in exchange. The difference between domestic and international marketing is as follows:
To anticipate the need of the customer the marketer conducts the various types of researches and market analyses and the promotional activity to persuade the clients to buy it. The process of marketing also include the different technique to communicate the product or services to the customer of the targeted market at the best possible price these technique are market analysis, segmentation, consumer behaviour, pricing, promotion, publicity. The main motive behind this entire concept is to satisfy the need and wants of the customer and consumer at the profitable price. To run a business in the new market at different place the organisation examines some factors related to politics, economic, legal, and culture of the new area and make their marketing decision accordingly. Starbuck also go through this environment scanning and take decision to raise the graph of growth chart.
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