Unit 4 Marketing principle




Unit 4 Marketing principle Starbucks case

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The paper is trying to evaluate the marketing strategiesof Starbucks and their international expansion. The paper would look into different elements of marketing process, focusing on STP strategy, deploying marketing mix elements and using marketing mix elements in different situations for the organization. Present paper would deploy these marketing principles in order to help Starbucks to evolve with exclusive marketing planning process.

Task-1

Start your report by explaining the various elements of marketing process based on the Starbucks
Marketing is nothing but a managerial and social process where in Organizations attempts to develop a strong relationship with customers by offering valuable services to customers in order to earn value from them. It is very imperative to understand what existing and potential customers want to know their needs so that appropriate services can be offered to them and in return value can be generated from customers. And customer relationship management activities (Best, 2004) are a very important tool in this. The process of analysing marketing opportunities, selecting target markets, developing the marketing mix and managing the marketing effort is known as marketing process.Four elements of marketing process for Starbucksinclude:
1.      Analyzing the situation faced by Starbucks at present: Situation analysis can be viewed in terms of analysis of the external environment and an internal analysis by the firm.  SWOT (Strengths, weaknesses, opportunities and threats) analysis framework can be used to conduct internal analysis of the organizationfor Starbucks while external analysis depends upon the external environment such as political, environmental, technological, social, economic and legal.
2.      Developing unique marketing strategy for the organization: unique marketing strategy is derived by the organizational objectives of Starbucks. Market Segmentation, target market selection and positioning the product within the target market would be defined for Starbucks and uniquemarketing strategy would be developed. 
3.      Develop elements of marketing mix for Starbucks: Based on marketing strategy for Starbucks following actions will be taken on marketing mix elements
a.      Product development
b.      Pricing decision
c.       Distribution contracts
d.      Promotional campaign development
4.      Implementation and control of marketing strategy: Result of the marketing efforts would be monitored closely. With changes in market conditions, marketing mix elements will be adjusted accordingly.
1.1 Prepare a SWOT analysis of Starbucks and explain the importance of using SWOT analysis marketing tool
Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington, United States. Starbucks is the largest coffeehouse company in the world. SWOT analysis of Starbucks can be given as under:
Strength
Weakness
1.      Global coffee brand built upon a reputation for fine products and services
2.      Image of quality products
3.      Starbucks has a significant geographical presence across the globe (10000 cafĂ© and 17000 coffee shops in 40 countries)
4.      High profitability ($8.0 m in FY 2013)
5.       Starbucks is known for its highly knowledge base employees.

1.      Price of the products of Starbucks is very high as compared to the products offered by its competitors such as Costa Coffee and McDonalds
2.      Competition between two stores of the company is another area of concern
3.      Additional food products such as Salad and Sandwiches are creating low profit.
4.      By aggressive expansion and high saturation due to overcrowding in the market leads to self-cannibalization and diminishes long term growth targets of Starbucks

Opportunities
Threat
1.      With increase saturation and self-cannibalization of the US market, Starbucks international strategy becomes very important. Starbucks has made good inroad into many countries by making joint ventures.
2.      Starbucks has leveraged the use of mobile applications and has an investment partnership with Square, a mobile payments app that is integrated with its Starbucks app. This creates an ease of use process for customers, aligns customer loyalty through reward programs.
3.      Adding new products into its offerings to increase revenue.
4.       New distribution channel.
1.      Biggest threat that Starbucks faces with the market being at a mature stage, there is increased pressure on Starbucks from its competitors like Dunkin Brands, McDonalds, Costa Coffee, CCD, mom and pop specialty coffee stores.
2.      High price of Starbucks’s products is a threat to lose customers to its competitors.
3.      Huge investment in large number of stores can leads to financial threat
4.      Rising dairy costs.
5.      Market saturation and economic slowdown.
6.      The shift of consumers toward more healthy products and the risk of coffee culture being just a fad represent a threat for Starbucks going into the future.


SWOT analysis is animportant framework for generating strategic alternatives from a situation analysis. Identification of SWOTs is important because they can inform later steps in planning to achieve the objective for Starbucks. SWOT is the foundation for evaluating the internal potential and limitations and the probable/likely opportunities and threats from the external environment.
1.2 Next present and evaluate the marketing objectives of Starbucks and explain how defining marketing objectives can help a business to develop marketing strategies. How does this contribute to the benefits of costs such as market orientation as customer satisfaction, desired quality, service or consumer care, relationship marketing etc.
The marketing objectives of Starbucks can be given as under:
§  To reposition their brand:To retain existing consumers and build new consumers base brand repositioning is required to differentiate Starbuck’s brand from its competitors.
§  Promotional Strategies:Starbucks will continue to adopt new promotional outlets in order to reach consumers.An active participation on Web 2.0 platforms, televisions advertisements, and email marketing will all be utilized to promote products and initiatives.
§  Development of new business: Adding new food categories, adding new stores with new national and international locations is imperative toincrease Starbucks business.
§  To develop global marketing mix: Global marketing mix with local marketing strategies according to specific market is very important to become a global brand.
Marketing strategy of the organization is dependent upon the objectives of the organization. Therefore it becomes important that Organizational objectives should be defined properly. By defining marketing objectives for Starbucks their target audience and overall goals would be clear and these would form the marketing mix for the organization.
Market orientation helps Starbucks to collect the information pertaining to customers and fulfilling these needs by making them a part of the overall marketing objectives for the organization (Baines et al, 2011). 

Task-2

In the next task you will focus on the concepts of segmentation, targeting and positioning (STP strategy)
2.1 Start this task by analyzing three micro and three macro environmental factors influencing marketing decisions in Starbucks
Three macro environmental forces affecting decision making in Starbucks can be given as under:
1. Political and legal factors:Starbucks needs to import coffee beans from different parts of the world. Starbucks must worry about increases taxes and tariffs from many parts of the world like South America and Africa. Because of the nature of politics, it may be very hard to predict  how reliable their sources of beans are, so Starbucks must continually has alternatives for importing coffee to supply its demands.
ers looking for taste of good coffee and premium brand

Task-3

In task 3 you will start analyzing marketing mix elements which are in the heart of all marketing strategies. As before, think about Starbucks while addressing all the elements of this task.
One of the major concepts in the modern marketing is once the company has decided its overall marketing strategy than it should plan the details of the marketing mix. "Marketing mix is the set of controllable, tactical marketing tools (product, price, place, and promotion) that the firm blends to produce the response it wants in the target market" (Kotler and Armstrong, 2006). Starbucks has a made good decisions on marketing mix tool.
http://www.learnmarketing.net/marketingmixdiagram.jpg
Figure 1: Showing the marketing mix elements
3.1 Start by explaining how products in Starbucks are developed in order to make sure that competitive advantage is sustained. You should focus here on differences in products between Starbucks and different coffee shop. Provide at least two examples.
"Product means the goods and services combination the company offers to the target market". Starbucks has used Brand name, Quality, Variety and Services as their Product tool which can be concluded by this statement, Starbucks with a good Brand name provides best Quality and with the Variety of Products. Initially Starbucks started with the coffee than it has included non-fat milk, cold blended beverages. But and services (Reid &Bojanic, 2010).               unit 8 research project 
3.5 Finally at the end of this task you were asked to provide short analysis of additional elements of the extended marketing mix based on the examples of Starbucks.  
There are basically three added components of Starbucks which are important in order to extend their marketing mix and these elements are processes, physical evidences and People. Starbucks is a very process oriented organization. It invests money and time in framing processes and making sure that all these process are implemented properly in the organization. Starbucks makes use of the blue printing technologies like flow charts and presentations through diagram in order to improve the planning and processes deployed in the organization (Britten, 2012). Starbucks have several processes such as Artificial intelligence, stimulation and forecasting in place so as to improve the overall forecasting and data analysis processes deployed in the organization. Human resources are the vital component of the overall strategy for organization. Starbucks invest lot of cost in hiring right people; make special training arrangements to train the hire people so that they can polish as per the objectives of the organization. Only train staff can offer best services and products to its customers. For that Starbucks has deployed exclusive training program and recruitment program. Some of the additional privileges offers by Starbucks include free Wi-Fi, music, trained employees, art work, comfortable chair and right combination of lighting. All these stuff helps Starbucks in providing a pleasant ambiance to its customers. The store environment in Starbucks is comfortable for students, researchers and readers etc.

Task-4

Last task is to present your ability to use the marketing mix in different contexts.
4.1 To begin with you are asked to plan and prepare marketing mix for two different segments of market in Starbucks. Use here an example of one existing segment and propose the second, new one. Design for both segment marketing mix plan (4P).
The two segments selected in the present context are Segment A and Segment B wherein segment A is existing consumer segment of Starbucks. Segment A consist of young age consumers in age range from 19 to 29 years having educational qualification as graduate or post-graduate and income range in moderate to high range. Segment B for Starbucks would include people in age from 20 years to 45 years, married, graduateall coffee demand while Starbucks needs to make aggressive expansion in world market for promoting their products. There are number of factors which differentiate international market and local/domestic markets. Some of these factors are international joint ventures, gender issues, cultural differences, marketing channels and consumer preferences etc. It was in 1996 when Starbucks made an attempt and enter into joint venture with one of the local player of Japan named SAZABY Inc prevailing in market (Nagle and Holden, 2012). Starbucks adopted strategies such as buying out competitor’s lease, intentional operations at loss andclustering of services within a small area. Starbucks make their international foray in UK with buying out Seattle coffee company and impacted consumers through capital and influence of this company. Using local taste, deploying global human resource and mergers & acquisition in international markets are some of the major global strategies deployed by Starbucks in international markets.

Conclusion

This paper has focused on laying down marketing strategies for Starbucks. This paper is highlighting the analysis of internal and external environment, deployment of STP strategy; building marketing mix and analysis of marketing mix in different situations overall marketing planning for Starbucks have been deployed. This would help Starbucks in order to maintain competitive advantage in highly competitive marketplace.

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