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Diploma in Business (Marketing)
Unit Number and Title
Unit 4 Marketing Strategic Concepts of Starbucks
this Unit 4 Marketing Strategic Concepts Starbucks play the key role for an organisation to increase its product awareness and sales volume which will leads high profitability and growth rate of the organisation. In this report different marketing strategy and tools of starbucks is discussed and analysed. Starbucks is a multinational organization based on uk who operates its business in all continents more than 12 countries and its main service or products are grocery products such as fresh food, food cupboard, bakery, baby food etc. Starbucks is publicly listed on london stock exchange and starbucks has market capitalization approximately 20 billion pounds (starbucks plc, 2015).
Figure 1 marketing process of starbucks
In the below section swot analysis for starbucks is conducted and depicted:
The process in which information related with the hidden needs and wants of the consumer is gathered is known as marketing orientation. It is necessary that organisations indulge in the competitive market to analyse the needs and wants of the costumers available in the market. Marketing orientation helps the company to develop effective set of strategies and provides the direction with the effect of which company could develop the products and services (lindgreen, 2010. Marketing orientation helps in coordinating marketing campaign between the company and its targeted customers. Marketing orientation helps in increasing the sale of the organisation with the effect of which company could move on the path of success and sustainability and helps in attaining competitive advantage in the market.
Market research includes market research, market testing, and customer focus. Starbucks also focus on the marketing orientation aspects so that it could ensures that needs and wants of people available in the market could be fulfilled. Starbucks is an organisation which focuses on the customers available in the market and tries to ensure that its customer could get what they expect from the company.
Starbucks do market research in which it gather the information from the feedback that people provide in relation with the products and services it provide to the target customers. In depth market research is done by starbucks so as to gather appropriate information related with the market and needs and wants of the people available in the market (lindgreen, 2010).
Marketing testing is done by starbucks before it enters into the market. It is necessary for a company to test the market requirements and competitive strategy that will e required to obtain by the company so as to sustain in that market. Various marketing strategies is used by starbucks, but before applying it to the market it test that particular strategy that whether it will be helpful for the organisation or not.
Starbucks is a consumer focused organisation. It is not product focused, starbucks ensures that consumers attached with the products and services of it should remain happy and should get what they want. With the help of market research starbucks bring changes in the product and ensures that its consumers could get what they want (qu and yang, 2012).
Macro and micro environment: micro means small and macro means big. When a company think about the factors, they need to think about these two factors which is named as micro and macro factors. For a company the macro factors are the economy, society, culture, politics, and technology and the ecology. The micro factors are consumers and competitors.
Starbucks normal business operation is greatly influenced by its surrounding micro and macro environmental variables and some of these are controllable and certain and some of those are uncertain and uncontrollable (chao and yu, 2004).
Figure 3 factors influence starbucks’ marketing process
Macro and micro environment for starbucks: starbucks business performance is strongly correlated with the economic condition of the country where it operates its business. In year 2007 when the asian crisis is occurred the business performance of starbucks in asian countries was also very poor.starbucks has to change its business strategy and marketing strategy while conducting their business in different countries according to the cultural preference of these countries.
Buyer’s behaviour can be any kind of but the sellers should not do anything that the buyers got angry. Sometimes, their taste of different products changes according to the change of environment or the change of personal variables. Social factors sometimes work as a stimulation and force to choose from that perspective.
While starting its business in asian countries like china, singapore, thailand, starbucks had to change its business and marketing strategy according to cultural preference of these countries. Starbucks is also has to change its marketing process according to its competitors marketing decisions. Starbucks is facing strong competition from its competitors such as wal-mart stores, sainsbury, and carrefour etc. Another micro environmental factor, which influences the marketing strategy most significantly, is the customer group of starbucks. Customer group of starbucks is mainly responsible for design of starbucks marketing policy. Other important macro environmental factors are political issues, technological development, social and ecological circumstance.
Market segmentation: market segmentation is none other than segmenting the entire market of starbucks on the basis of several factors or criteria’s, which will be described below. By segmenting the entire marketing starbucks can define its target customers and select suitable marketing strategy for these segments which will reduce the required resource and staff required to fulfil these customer demands and wants (awan, 2014).
Figure 4 market segmentation criteria of starbucks
Starbucks is segmenting its entire market on the basis of four main variables and these are geographic issues, demographic issues, psychographic issues, and behaviouralissues. Starbucks it’s operating its business all over the world and to run business efficiently starbucks is segment its entire market in basis of countries such as asian countries, south asian, south east asian, western europe, east europe, sub-sahara etc. Starbucks also target or segment its market basis on age, gender, and sex and income level. Starbucks’s major market segment is middle age, child age group. Starbucks is segmenting its market on psychographic issues such as life style, social class, and personality. Starbucks major market segment is household and middle and high class people. Starbucks is tries to segment its market on some behavioural issues such as customer loyalty, attitude and product usage rate (ray chaudhuri, 2014).
Targeting is the strategy with the effect of which an organisation could select the potential customers with the help of which business could sale its products and services in the market in an effective manner. Targeting could e done by segmenting the market; it is the process of bifurcating the market according to behaviour, needs and wants of the people. Segmentation is one of the best way with the help of which targeting could be done (lindgreen, 2010). There are several targeting strategies adopting which will help starbucks to target the customers available in the market. For different products and services starbucks has to follow different targeting strategy because different products are made for different customers and accordingly the organisation have to ensure that customer of which age groups, which gender will prefer which type of products and services. It is necessary that starbucks should do the targeting according to the products it is offering to the market and choice and preferences of the people available in the market.
There are varieties of products that are availed by starbucks in the target market like espresso and coffee, frappuccino, smoothies, starbucks refreshers, etc. To ensure that more and more customers could get attracted towards the product starbucks will have to target the market like to attract children available in the market starbucks will have to ensure that it should do the marketing of smoothies for children as children like to have smoothies rather than coffee or anything else. For the sale of frappuccino starbucks will have to target middle aged people as they will prefer to have these kind of things. Hence, in short starbucks will have to target the market by segmenting them according to the products it is availing to the people.
People present in the market have different set of mind sets and thong differently. Their reactions are different; their mentality is different in relation with the products and services. It is necessary that starbucks should understand the buyer’s behaviour so as to ensure that it could make effective sale in the market. There are several stages of consumer buyer behaviour that are necessary to be understood by starbucks so as to develop marketing strategies and to provide effective services to the target customers (kotler and keller, 2009). These stages are cultural, social, personal and psychological. Starbucks will have to understand all these aspects of consumers so that they could get attracted towards the products and services provided by it.
Starbucks provide products which can fulfil daily requirements of the consumer like products of starbucks are culturally acceptable in the market, people living effective social life prefer to purchase the products of the company, and products of starbucks are available for all age and lifestyle of the people. Psychology of people is understood with the help of market survey and products are developed accordingly.
People in the market have the psychology to purchase new products which could be availed easily and at less prices. Hence, this type of psychology of the people could affect the sale of starbucks. Sometimes some of the products are not socially acceptable due to which people do not prefer to purchase those products; this could also affect the sale of starbucks. Some of the people have the culture of buying the products which are being used by the heredity; this also affects the sale of starbucks (solomon, polegato and zaichkowsky, 2005).
Hence starbucks will have to develop effective marketing strategies so that consumers could get attracted towards the product and personal selling is one of the best strategy that could help starbucks so as to attract effective number of people towards its products and services.
Positioning: market positioning refers the process of creating brand image, product awareness and mental perception about a product or service of starbucks towards the target buyers. Starbucks can design its new marketing positioning strategy using several processes, which are described, in the following section.
Figure 6 market positioning strategy of starbucks
For the positioning of the products and services of starbucks it is necessary that it should focus on various aspects like its products like the coffee and other beverages it is providing should be different, they should be striking so that it could strike the mind of the customers with the effect of which they could get attracted towards the products and services of starbucks, and lastly creativity, it is necessary that innovative coffee and shakes should be provided by starbucks to its customers which could help in attracting the customers towards its products and services. Differentiated products which are creative can strike the mind of customers and could help in attracting effective number of customers towards the products provided by the organisation. Such type of strategy will also help in attaining competitive advantage in the market. Product development and market development are the two aspects that will help in product positioning of the products and services of starbucks (hooley, saunders and piercy, 2004).
Starbucks is losing its market share and profitability in recent year. To recapture its market share and profitability and to maximize shareholders value, starbucks needs to develop some competitive advantage over its competitors, which will leads to higher profitability.
It is necessary that starbucks should focus on the product development strategy so as to ensure that it could recover the losses it is facing in the market which are affecting the goodwill of the company(annacchino, 2007). Product development will help in attracting effective number of people towards its product and will help in attaining competitive position in the market. Starbucks will have to develop different quality levels of the products it is offering to the target customers. Developing different level of quality will lead to set different level of pricing which will help in covering people of every segment. In present scenario quality of the products of starbucks is very high there is no doubt but to maintain the quality starbucks keeps the high price of its coffee. This affects the customers due to which it fails to attract effective number of customers towards its product. Customers of high class only get attracted towards the products of starbucks (baker and hart, 2007). It is necessary to cover all the level of people so as to increase the sale of the products and services.
To increase the sales volume and customer satisfaction, starbucks need to develop an efficient distribution channel for its new product and to do that starbucks has to consider several issues which are described in the following section.
Starbucks has to choose and design a distribution channel through which starbucks can serve its target customer most convenient way. Starbucks should select its product distribution channel on basis of degree of customer service required by the target customers. Starbucks should design a distribution channel of its products, which is the most cost saving process and will provide high accessibility to its target customers. Starbucks also needs to consider the number of target customer in the target market segments, the geographic and regional location of the target customers of household chore products, the amount of average transaction value and the average usage rate of the products by the target consumers (forsyth, 2012).
Starbucks is build a large distribution channel for its target customer convenience and this distribution channel consist of starbucks’s sales representatives, value added reseller, dynamic sales team, wholesaler, retailers, dealers, sales agent and online networking etc. Starbucks have an effective distribution channels like it avails its cafe’s in almost every place from where effective number of people could get attracted towards the products of it. It has the cafes in the colleges, railway stations, shopping malls and the tourist attraction places. Cafes are providing effective services to the target customers with the effect of which people of other countries are also getting attached with the products of starbucks (baker and hart, 2007).
Price of the products plays a very vital role in reflecting the objectives and market conditions of the organisation. It is necessary that an organisation should create the price according to the market conditions and the objectives it has set so as to sustain in the market. In the same manner price of the products of starbucks are high because its objective is to avail quality product to the target population (kirzner, boettke and sautet, 2011). Starbucks aims at delivering quality products to the target customers and do not prefer to compromise with the quality of the products it is providing to the target population.
Market condition of a company could be evaluated by the price of the products it is availing to the target population. If the price of the products remains same then it means that company is generating effective amount of revenue from the market, if prices are decreased it means that the company is not doing well in the market. Hence, it becomes necessary for every organisation to set the price which could help it in attaining its targeted objectives and ensuring sustainability in the market.
Competitor of starbucks is peet’s coffee, it is a tough competitor for starbucks as it has affected the market of it. It is necessary that starbucks should use competitive pricing strategy so that it could avail the product and services at competitive price this will help in ensuring the success of starbucks in the market (yourarticlelibrary, 2015).
To achieve the marketing objectives starbucks has to undertake some market promotional activities to increase its product demand and sales volume and product awareness to its target consumers.
Figure 10 marketing promotional tools used by starbucks
Starbucks is using different traditional tools for increasing its product marketing such as mass media, billboards, directories, point of purchase display, television networks, radio stations, newspaper and magazines etc. Starbucksis also using different digital technology for promoting its household product marketing such as online marketing, email marketing, social media, blogs etc. And by using these tools starbucks is able to expand its marketing process. Starbucks is also using different public relations tools such as press releases, newsletters, press conferences and news reports to promote its brand name and product awareness which will lead higher product demand and sales (asif, 2013).
For example: starbucks promotes its product on social media like facebook, youtube and twitter so that more people could get attracted towards the products of the company and also uses personal selling as every employee working in starbucks provides information related with every product so as to make people understand what they are eating and drinking. Such type of promotional activities develops trust among the target population and helps in attracting effective number of population towards the products and services.
Extended marketing mix program by starbucks: starbucks extended their marketing mix strategies and some tools are also conducted by the starbucks.it is important tools for starbucks marketing process which work beyond the conventional marketing mix tools and help starbucks to increase its market share through higher profit growth and sales volume.
Figure 11 extended marketing mix tools of starbucks
Source: (richter, 2012)
The first element of starbucks extended marketing mix program is people and by improving this marketing element starbucks will be able to increase the service and quality of its products, it will help starbucks to maintain a strong relationship marketing department, it will offer marketing training program for starbucks workforce and will improve the efficiency of internal marketing process (richter, 2012).
Some other marketing mix tools of starbucks: another marketing mix toolof starbucks is physical evidence, which consists of ownership evidence of starbucks plc, product or service design, packaging, corporate identity of starbucks and environment andhelps to improve the market promotion.
The last element of extended marketing mix program is process, which refers the activities, procedure, and protocols through which starbucks is providing its new products or service to its target consumers.
Marketing mix is one of the most effective strategies which is necessary for every organisation. Marketing mix include product, price, place and promotion which are the necessary aspects for every organisation to understand. Starbucks should set the price of the products according to the demographics and geographic aspects. As it avails the product in many countries, it becomes necessary that starbucks should avail the products and price according to the geographic regions.
For example: if starbucks wants to develop its market in india then it becomes necessary that it should avail the products at cheaper rates and should avail variety of products so that people of india could get attracted towards the products and services of starbucks (kotler and keller, 2009).
Starbucks should also focus on the demographics; it should provide products and services for the people of all type of age. Doing so will help in increasing the sale of the product.
For example: starbucks should provide milk shakes and chocolate shakes for the children and various coffees for the youth so that people could get attracted towards the products in an effective manner (kirzner, boettke and sautet, 2011).
Serving the consumers is a different thing and serving the businesses becomes a totally different aspect. If a company like starbucks wants to avail its products and services to the businesses available in the market then it will have to increase its production and will have to ensure that quality remains the same (yourarticlelibrary, 2015). When a company serves a whole business then it becomes necessary that taste and quality of the product should remain same because it will have to serve it on daily basis and will have to produce in a huge amount which could affect the quality of the product.
Any change in the taste and quality of the product could ruin the goodwill of whole business if starbucks will serve its products and services to the businesses (kotler, 2009). Here it is the matter of serving huge number of people and when a company provides products and services to the consumers then it remains with the single customer. Hence, if starbucks will do marketing of its products and services for businesses then it will have to become more conscious about the quality and taste of the products it is providing to the business.
As a multinational organisation starbucks operate its business across its national boarder and while designing the market strategy for foreign countries starbucks has to consider more factors than the domestic marketing which are described below.
Difference between starbucks and international marketing and domestic marketing:
International marketing has a broader scope on the other hand domestic marketing has a limited scope.
Competition in the international marketing increases because various companies are available in the international market, on the other hand domestic market have less competitors and effective competitive strategies could be made so as to fight with the competitors of domestic market.
Government policies hinder in the business process in international market whereas there are no such restrictions in the domestic market.
Moving in the international market helps in developing goodwill of the company on the other hand domestic market have limited scope of goodwill (pasco and le ster-beaumevieille, 2007).
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